Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 17, 2015 | Jun. 30, 2014 | |
Document and Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | FALSE | ||
Document Period End Date | 31-Dec-14 | ||
Entity Registrant Name | SORL Auto Parts Inc | ||
Entity Central Index Key | 714284 | ||
Trading Symbol | sorl | ||
Current Fiscal Year End Date | -19 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 19,304,921 | ||
Entity Public Float | $23,916,009 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current Assets | ||
Cash and cash equivalents | $14,009,597 | $28,241,983 |
Short term investments | 34,838,757 | |
Accounts receivable, net | 68,171,387 | 57,912,384 |
Bank acceptance notes from customers | 17,626,704 | 20,186,787 |
Inventories | 84,186,766 | 76,364,019 |
Prepayments, including $83,206 and $- due from related parties at December 31, 2014 and 2013, respectively | 4,663,002 | 3,773,750 |
Current portion of prepaid capital lease interest | 282,280 | 453,053 |
Other current assets | 1,282,182 | 2,537,300 |
Deferred tax assets | 1,868,371 | 1,392,955 |
Total Current Assets | 226,929,046 | 190,862,231 |
Non-Current Assets | ||
Property, plant and equipment, net | 43,550,927 | 45,469,013 |
Land use rights, net | 14,421,729 | 14,409,170 |
Intangible assets, net | 37,661 | 50,271 |
Security deposits on lease agreement | 1,867,719 | 1,818,244 |
Non-current portion of prepaid capital lease interest | 99,180 | 371,355 |
Total Non-Current Assets | 59,977,216 | 62,118,053 |
Total Assets | 286,906,262 | 252,980,284 |
Current Liabilities | ||
Accounts payable, including $136,609 and $810,310 due to related parties at December 31,2014 and 2013, respectively. | 13,867,316 | 13,290,282 |
Deposits received from customers | 19,045,172 | 13,931,658 |
Short term bank loans | 9,539,476 | 4,526,863 |
Income tax payable | 1,101,103 | 494,658 |
Accrued expenses | 13,561,163 | 10,066,969 |
Current portion of capital lease obligations | 3,735,438 | 3,636,488 |
Other current liabilities, including $17,681 and $94,246 due to related parties at December 31, 2014 and 2013, respectively. | 2,131,527 | 256,430 |
Total Current Liabilities | 62,981,195 | 46,203,348 |
Non-Current Liabilities | ||
Non-current portion of capital lease obligations | 3,735,437 | 7,272,975 |
Total Non-Current Liabilities | 3,735,437 | 7,272,975 |
Total Liabilities | 66,716,632 | 53,476,323 |
Equity | ||
Preferred stock - no par value; 1,000,000 authorized; none issued and outstanding as of December 31, 2014 and 2013 | ||
Common stock - $0.002 par value; 50,000,000 authorized, 19,304,921 issued and outstanding as of December 31, 2014 and 2013 | 38,609 | 38,609 |
Additional paid-in capital | 42,199,014 | 42,199,014 |
Reserves | 12,019,532 | 10,609,435 |
Accumulated other comprehensive income | 27,516,206 | 22,465,720 |
Retained earnings | 116,935,053 | 104,544,120 |
Total SORL Auto Parts, Inc. Stockholders' Equity | 198,708,414 | 179,856,898 |
Noncontrolling Interest In Subsidiaries | 21,481,216 | 19,647,063 |
Total Equity | 220,189,630 | 199,503,961 |
Total Liabilities and Equity | $286,906,262 | $252,980,284 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Consolidated Balance Sheets [Abstract] | ||
Prepayments, related party | $83,206 | |
Accounts payable, related party | 136,609 | 810,310 |
Other current liabilities, related party | $17,681 | $94,246 |
Preferred stock, par or stated value per share | ||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value per share | $0 | $0.00 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 19,304,921 | 19,304,921 |
Common stock, shares outstanding | 19,304,921 | 19,304,921 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income and Comprehensive Income (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Consolidated Statements of Income and Comprehensive Income [Abstract] | ||
Sales | $237,654,865 | $208,571,812 |
Include: sales to related parties | 1,618,349 | 2,524,019 |
Cost of sales | 170,793,868 | 149,949,176 |
Gross profit | 66,860,997 | 58,622,636 |
Expenses: | ||
Selling and distribution expenses | 23,676,176 | 20,906,914 |
General and administrative expenses | 18,011,110 | 17,379,521 |
Research and development expenses | 7,601,342 | 7,550,010 |
Total operating expenses | 49,288,628 | 45,836,445 |
Other operating income | 2,270,147 | 2,074,520 |
Income from operations | 19,842,516 | 14,860,711 |
Other income | 606,112 | 524,370 |
Interest expense | -1,135,177 | -1,399,851 |
Other expense | -1,273,053 | -1,410,141 |
Income before provision for income taxes | 18,040,398 | 12,575,089 |
Provision for income taxes | 2,872,912 | 2,048,056 |
Net income | 15,167,486 | 10,527,033 |
Net income attributable to noncontrolling interest in subsidiaries | 1,366,456 | 1,164,068 |
Net income attributable to common stockholders | 13,801,030 | 9,362,965 |
Comprehensive income | ||
Net income | 15,167,486 | 10,527,033 |
Foreign currency translation adjustments | 5,518,183 | 505,247 |
Comprehensive income: | 20,685,669 | 11,032,280 |
Comprehensive income attributable to noncontrolling interest in subsidiaries | 1,834,153 | 1,223,603 |
Comprehensive income attributable to common stockholders | $18,851,516 | $9,808,677 |
Weighted average common share - Basic | 19,304,921 | 19,304,921 |
Weighted average common share - Diluted | 19,304,921 | 19,304,921 |
EPS - Basic | $0.71 | $0.49 |
EPS - Diluted | $0.71 | $0.49 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash Flows From Operating Activities | ||
Net income | $15,167,486 | $10,527,033 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Allowance for doubtful accounts | 2,658,641 | 2,808,960 |
Depreciation and amortization | 7,386,953 | 7,188,064 |
Deferred income taxs | -431,640 | -995,102 |
Loss on disposal of property and equipment | 53,052 | 5,089 |
Write-down of inventories | 139,572 | 28,709 |
Changes in assets and liabilities: | ||
Accounts receivable | -11,017,981 | -3,916,133 |
Bank acceptance notes from customers | 3,067,636 | -10,050,861 |
Other currents assets | 1,200,416 | -2,779,274 |
Inventories | -5,836,031 | -19,454,080 |
Prepayments | -776,251 | 2,207,828 |
Prepaid capital lease interest | 459,134 | 630,521 |
Accounts payable | 211,449 | 3,577,338 |
Income tax payable | 585,087 | 494,050 |
Deposits received from customers | 4,670,996 | 7,306,556 |
Other current liabilities and accrued expenses | 5,022,675 | 3,775,285 |
Net Cash Flows Provided By Operating Activities | 22,561,194 | 1,353,983 |
Cash Flows From Investing Activities | ||
Acquisition of property and equipment | -4,003,170 | -4,877,633 |
Proceeds of disposal of property and equipment | 63,460 | 14,301 |
Change in security deposit on lease agreement | 66,170 | |
Change in short term investments | -34,371,133 | |
Net Cash Flows from Investing Activities | -38,310,843 | -4,797,162 |
Cash Flows From Financing Activities | ||
Proceeds from bank loans | 34,318,277 | 60,979,931 |
Repayment of bank loans | -29,524,282 | -70,935,757 |
Repayment of capital lease | -3,685,299 | -14,103,295 |
Proceeds from capital lease | 14,527,922 | |
Net Cash Flows Provided By (Used In) Financing Activities | 1,108,696 | -9,531,199 |
Effects on changes in foreign exchange rate | 408,567 | -36,992 |
Net change in cash and cash equivalents | -14,232,386 | -13,011,370 |
Cash and cash equivalents- beginning of the year | 28,241,983 | 41,253,353 |
Cash and cash equivalents - end of the year | 14,009,597 | 28,241,983 |
Supplemental Cash Flow Disclosures: | ||
Interest paid | 1,135,177 | 1,399,851 |
Income taxes paid | $2,714,779 | $2,418,239 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Stockholders' Equity (USD $) | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Reserves [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income [Member] | Total SORL Auto Parts, Inc. Stockholders' Equity [Member] | Noncontrolling Interest [Member] |
Balance at Dec. 31, 2012 | $188,471,681 | $38,609 | $42,199,014 | $9,676,183 | $96,114,407 | $22,020,008 | $170,048,221 | $18,423,460 |
Balance, shares at Dec. 31, 2012 | 19,304,921 | |||||||
Net income | 10,527,033 | 9,362,965 | 9,362,965 | 1,164,068 | ||||
Foreign currency translation adjustment | 505,247 | 445,712 | 445,712 | 59,535 | ||||
Transfer to reserve | 933,252 | -933,252 | ||||||
Balance at Dec. 31, 2013 | 199,503,961 | 38,609 | 42,199,014 | 10,609,435 | 104,544,120 | 22,465,720 | 179,856,898 | 19,647,063 |
Balance, shares at Dec. 31, 2013 | 19,304,921 | 19,304,921 | ||||||
Net income | 15,167,486 | 13,801,030 | 13,801,030 | 1,366,456 | ||||
Foreign currency translation adjustment | 5,518,183 | 5,050,486 | 5,050,486 | 467,697 | ||||
Transfer to reserve | 1,410,097 | -1,410,097 | ||||||
Balance at Dec. 31, 2014 | $220,189,630 | $38,609 | $42,199,014 | $12,019,532 | $116,935,053 | $27,516,206 | $198,708,414 | $21,481,216 |
Balance, shares at Dec. 31, 2014 | 19,304,921 | 19,304,921 |
DESCRIPTION_OF_BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2014 | |
DESCRIPTION OF BUSINESS [Abstract] | |
DESCRIPTION OF BUSINESS | NOTE 1 - DESCRIPTION OF BUSINESS |
The Company is principally engaged in the manufacture and distribution of vehicle brake systems and other key safety-related components, through its 90% ownership of Ruian China and 60% ownership of SORL International Holding, Ltd. ("SIH") in Hong Kong. The Company distributes products both in China and internationally under SORL trademarks. The Company's product range includes 65 categories and over 2000 different specifications. | |
On November 11, 2009, the Company entered into a joint venture agreement with MGR, a Hong Kong-based global auto parts distribution specialist firm and a Taiwanese investor. The new joint venture was named SIH. SORL holds a 60% interest in the joint venture, MGR Hong Kong Limited (“MGR”), a Hong Kong-based global auto parts distribution specialty firm, holds a 30% interest, and the Taiwanese investor holds a 10% interest. SIH is primarily devoted to expanding SORL's international sales network in Asia-Pacific and creating a larger footprint in Europe, the Middle East and Africa with a target to create a truly global distribution network. Based in Hong Kong, SIH is expanding and establishing channels of distribution in international markets. | |
On February 8, 2010, the Company sold 1,000,000 shares of its common stock to selected institutional investors at a price of $10.00 per share pursuant to a registered direct offering. This transaction provided net proceeds of approximately $9.4 million. On March 9, 2010, through Fairford, SORL invested $9.4 million in its operating subsidiary, the Joint Venture. To maintain the 10% shareholding in the Joint Venture, the Ruili Group increased its capital investment by $1.0 million. Accordingly, SORL continues to hold a 90% controlling interest in the operating subsidiary. The total paid-in capital of the Joint Venture increased from $43.4 million to $53.8 million. | |
On August 31, 2010, the Company, through the Joint Venture, executed an Agreement to acquire the assets of the hydraulic brake, power steering, and automotive electrical operations of the Ruili Group (a related party under common control, the “Seller”). As a result of this acquisition, the Company's product offerings expanded to both commercial and passenger vehicles' brake systems and other key safety-related auto parts. The purchase price was RMB 170 million, or approximately $25 million. The transaction was accounted for using the book value of assets acquired, consisting primarily of machinery and equipment, inventory, accounts receivable and patent rights, used or usable in connection with the acquired segment of the auto parts business of the Seller. The Company purchased the machinery and equipment, inventory, accounts receivable at book values of $8.0 million, $8.0 million and $5.2 million, respectively. The Company did not acquire any of the assets of the Seller other than those in the segment of Seller's business described above. The excess of consideration over the carrying value of net assets received has been recorded as a decrease in the additional paid-in capital of the Company. | |
The acquisition was accounted for as a transaction between the entities under common control because the CEO of the Company owns 63% of the registered capital of Ruili Group, and owns more than 50% of the outstanding common stock of SORL, together with his wife and his brother. This results in the acquisition being accounted for using the historical costs of the financial statements of the Seller. The consolidated financial statements have been prepared as if the acquisition took place at the earliest time presented. The assets purchase was deemed to be the acquisition of a business. | |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||
Dec. 31, 2014 | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
a. | ACCOUNTING METHOD | ||
The Company uses the accrual method of accounting for financial statement and tax return purposes. | |||
b. | PRINCIPLES OF CONSOLIDATION | ||
The consolidated financial statements include the accounts of SORL Auto Parts, Inc. and its majority owned subsidiaries. All inter-company balances and transactions have been eliminated in the consolidation. | |||
c. | USE OF ESTIMATES | ||
The preparation of financial statements in conformity with U.S GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management makes its best estimate of the outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Actual results could differ from those estimates. | |||
d. | FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
For certain of the Company's financial instruments, including cash and cash equivalents, short term investments, trade receivables and payables, prepaid expenses, deposits and other current assets, short-term bank borrowings, accounts payable, and other payables and accruals, the carrying amounts approximate fair values due to their short maturities. | |||
e. | RELATED PARTY TRANSACTIONS | ||
A related party is generally defined as (i) any person that holds 10% or more of the Company's securities and their immediate families, (ii) the Company's management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company conducts business with its related parties in the ordinary course of business. All transactions have been recorded at fair market value of the goods and services exchanged. | |||
f. | FINANCIAL RISK FACTORS AND FINANCIAL RISK MANAGEMENT | ||
The Company is exposed to the following risk factors: | |||
(i) Credit risks - The Company has policies in place to ensure that sales of products are made to customers with an appropriate credit history. The Company performs ongoing credit evaluations with respect to the financial condition of its creditors, but does not require collateral. In order to determine the value of the Company's accounts receivable, the Company records a provision for doubtful accounts to cover probable credit losses. Management reviews and adjusts this allowance periodically based on historical experience and its evaluation of the collection of outstanding accounts receivable. The Company has a concentration of credit risk due to geographic sales as a majority of its products are marketed and sold in the PRC. The Company has no customer that accounts for more than 5.0% of its total revenues for the year ended December 31, 2014. | |||
(ii) Liquidity risks - Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and ability to close out market positions. | |||
(iii) Interest rate risk - The interest rate of short-term bank borrowings obtained in 2014 ranged from 1.58% to 6.45% and the term ranged from approximately two months 15 months. The Company's income and cash flows are substantially independent of changes in market interest rates. The Company has no significant interest-bearing assets. The Company's policy is to maintain all of its borrowings in fixed rate instruments. | |||
g. | CASH AND CASH EQUIVALENTS | ||
The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. | |||
h. SHORT TERM INVESTMENTS | |||
The Company's short term investments include term deposits with an original maturity from three months to one year with financial institutions. | |||
i. | INVENTORIES | ||
Inventories are stated at the lower of cost or net realizable value, with cost computed on a weighted-average basis. Cost includes all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. | |||
j. | PROPERTY, PLANT AND EQUIPMENT | ||
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The initial cost of the asset comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Depreciation is calculated using the straight-line method over the estimated useful life of the respective assets as follows: | |||
Category | Estimated Useful Life(Years) | ||
Buildings | 20-Oct | ||
Machinery and equipment | 10-May | ||
Electronic equipment | 5 | ||
Motor vehicles | 10-May | ||
Leasehold improvements | The lesser of remaining lease term or 10 | ||
Significant improvements are capitalized when it is probable that the expenditure resulted in an increase in the future economic benefits expected to be obtained from the use of the asset beyond its originally assessed standard of performance. When improvements are made to real property and those improvements are permanently affixed to the property, the title to those improvements automatically transfers to the owner of the property. The lessee's interest in the improvements is not a direct ownership interest but rather it is an intangible right to use and benefit from the improvements during the term of the lease. | |||
Routine repairs and maintenance are expensed when incurred. Gains and losses on disposal of fixed assets are recognized in the income statement based on the net disposal proceeds less the carrying amount of the assets. | |||
k. | LAND USE RIGHTS | ||
According to the law of China, the government owns all the land in China. Companies or individuals are authorized to possess and use the land only through land use rights granted by the Chinese government. Land use rights are being amortized using the straight-line method over the estimated useful life of 45 years. | |||
The Company purchased the land use rights from Ruili Group, a related party. The Company has not yet obtained the land use right certificate. | |||
l. | IMPAIRMENT OF LONG-LIVED ASSETS | ||
Long-lived assets, such as property, plant and equipment and other non-current assets, including intangible assets, are reviewed periodically for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss is recognized when the estimated undiscounted cash flows associated with the asset or group of assets is less than their carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value. | |||
m. | INTANGIBLE ASSETS | ||
Intangible assets represent mainly the patent of technology, plus the computer software. Intangible assets are measured initially at cost. Intangible assets are recognized if it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. After initial recognition, intangible assets are measured at cost less any impairment losses. Intangible assets with definite useful lives are amortized on a straight-line basis over their useful lives. | |||
n. | ACCOUNTS RECEIVABLES AND ALLOWANCE FOR BAD DEBTS | ||
The Company presents accounts receivables, net of allowances for doubtful accounts and returns, to ensure accounts receivable are not overstated due to being uncollectible. Accounts receivables generated from credit sales have general credit terms of 90 days for Chinese aftermarket customers. | |||
The allowances are calculated based on a detailed review of certain individual customer accounts, historical rates and an estimation of the overall economic conditions affecting the Company's customer base. The Company reviews a customer's credit history before extending credit. If the financial condition of its customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. | |||
The Company will write off the uncollectible receivables once any customers are bankrupt or there is a remote possibility that the Company will collect the outstanding balance. The write-off must be reported to the local tax authorities and the Company must receive official approval from them. To date, the Company has not written off any account receivables. | |||
o. | NOTES RECEIVABLE | ||
Notes receivable generally due within 30 to 60 days are issued by some customers to pay certain outstanding receivable balances to the Company with specific payment terms and definitive due dates. Notes receivable do not bear interest. | |||
p. | REVENUE RECOGNITION | ||
Revenue from the sale of goods is recognized when the risks and rewards of ownership of the goods have transferred to the buyer including factors such as when persuasive evidence of an arrangement exits, delivery has occurred, the sales price is fixed and determinable, and collection is probable. Revenue consists of the invoice value for the sale of goods and services net of value-added tax (“VAT”), rebates and discounts and returns. The Company nets sales return in gross revenue, i.e., the revenue shown in the income statement is the net sales. | |||
q. | INCOME TAXES | ||
The Company accounts for income taxes under the provision of FASB ASC 740-10, Income Taxes, or ASC 740-10, whereby deferred income tax assets and liabilities are computed for differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary; to reduce deferred income tax assets to the amount expected to be realized. | |||
r. | FOREIGN CURRENCY TRANSLATION | ||
The Company maintains its books and accounting records in RMB, the currency of the PRC, The Company's functional currency is also RMB. The Company has adopted FASB ASC 830-30 in translating financial statement amounts from RMB to the Company's reporting currency, U.S. dollars (“US$”). All assets and liabilities are translated at the current rate. The stockholders' equity accounts are translated at appropriate historical rate. Revenue and expenses are translated at the weighted average rates in effect on the transaction dates. | |||
Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of stockholders' equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are include in the results of operations as incurred. | |||
s. | STOCK-BASED COMPENSATION | ||
Stock-based compensation expense is recognized based on grant-date fair value estimated in accordance with an authoritative pronouncement. The Company recognizes the compensation costs net of a forfeiture rate on a straight-line basis over the requisite service period of the award with a corresponding impact reflected in additional paid-in capital. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of stock compensation expense to be recognized in future periods. | |||
t. | EMPLOYEES' BENEFITS | ||
Mandatory contributions are made to Government's health, retirement benefit and unemployment schemes at the statutory rates in force during the period, based on gross salary payments. The cost of these payments is charged to the statement of income in the same period as the related salary costs. | |||
u. | RESEARCH AND DEVELOPMENT EXPENSES | ||
Research and development costs are classified as general and administrative expenses and are expensed as incurred. Research and development expenses was $7,601,342 for the year ended December 31, 2014, as compared with $7,550,010 for the year ended December 31, 2013, respectively. | |||
v. | SHIPPING AND HANDLING COSTS | ||
Shipping and handling cost are classified as selling expenses and are expensed as incurred. Shipping and handling costs were $5,610,737 and $3,980,078 for the years ended December 31, 2014 and 2013, respectively. | |||
w. | ADVERTISING COSTS | ||
Advertising costs are classified as selling expenses and are expensed as incurred. Advertising costs were $339,551 and $270,145 for the years ended December 31, 2014 and 2013, respectively. | |||
x. | WARRANTY CLAIMS | ||
The Company provides for the estimated cost of product warranties when the products are sold. Such estimates of product warranties were based on, among other things, historical experience, product changes, material expenses, and service and transportation expenses arising from the manufactured product. Estimates will be adjusted on the basis of actual claims and circumstances. Warranty claims were $2,374,861 and $2,163,950 for the years ended December 31, 2014 and 2013, respectively. | |||
y. | PURCHASE DISCOUNTS | ||
Purchase discounts represent discounts received from vendors for purchasing raw materials and are netted in the cost of goods sold, if applicable. | |||
z. | LEASE COMMITMENTS | ||
The Company has adopted FASB Accounting Standard Codification, or ASC 840, Lease. If the lease terms meet one or all of the following four criteria, it will be classified as a capital lease, otherwise, it is an operating lease: (1) The lease transfers the title to the lessee at the end of the term; (2) the lease contains a bargain purchase option; (3) the lease term is equal to 75% of the estimated economic life of the leased property or more; (4) the present value of the minimum lease payment in the term equals or exceeds 90% of the fair value of the leased property. | |||
aa. | RECENTLY ISSUED FINANCIAL STANDARDS | ||
In April 2014, the Financial Accounting Standard Board, or the FASB issued Accounting Standards Update, or ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in the ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. It also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance in U.S. GAAP. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The amendments in the ASU are effective in the first quarter of 2015 for public organizations with calendar year ends. Early adoption is permitted. The Company does not expect the adoption to have a significant impact on its consolidated financial statements. | |||
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, or ASU 2014-09. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets. ASU 2014-09 will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. ASU 2014-09 also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchanged for those goods or services. The standard is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption of ASU 2014-09 is not permitted. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. | |||
In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. The amendment in the ASU provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity's ability to continue as a going concern. The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. Earlier adoption is permitted. The Company does not expect the adoption to have a significant impact on its consolidated financial statements. |
RECLASSIFICATIONS
RECLASSIFICATIONS | 12 Months Ended |
Dec. 31, 2014 | |
RECLASSIFICATIONS [Abstract] | |
RECLASSIFICATIONS | NOTE 3 - RECLASSIFICATIONS |
Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings and financial position. |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
RELATED PARTY TRANSACTIONS [Abstract] | |||||||||
RELATED PARTY TRANSACTIONS | NOTE 4 - RELATED PARTY TRANSACTIONS | ||||||||
The Company continues to purchase packaging materials from the Ruili Group. The Ruili Group is the minority stockholder of Joint Venture and is collectively controlled by Mr. Xiao Ping Zhang, his wife Ms. Shu Ping Chi, and his brother Mr. Xiao Feng Zhang. In addition, the Company purchases from two other related parties, Guangzhou Kormee Vehicle Brake Technology Development Co., Ltd. (“Guangzhou Kormee”) and Ruian Kormee Vehicle Brake Co., Ltd. (“Ruian Kormee”). Guangzhou Kormee is controlled by the Ruili Group and Ruian Kormee is the wholly-owned subsidiary of Guangzhou Kormee. The Company also sells certain automotive products to Guangzhou Kormee, Ruian Kormee and the Ruili Group. MGR holds a 30% interest in SIH. The stockholders of MGR are the management of SIH. | |||||||||
The following related party transactions occurred for the years ended December 31, 2014 and 2013: | |||||||||
For Years Ended December 31, | |||||||||
2014 | 2013 | ||||||||
PURCHASES FROM: | |||||||||
Guangzhou Kormee Vehicle Brake Technology Development Co., Ltd. | $ | 2,194,995 | $ | 2,066,084 | |||||
Ruian Kormee Vehicle Brake Co., Ltd. | 1,250,174 | 1,760,213 | |||||||
Ruili Group Co., Ltd. | 3,740,032 | 3,868,875 | |||||||
Total Purchases | $ | 7,185,201 | $ | 7,695,172 | |||||
SALES TO: | |||||||||
Guangzhou Kormee Vehicle Brake Technology Development Co., Ltd. | $ | 278,382 | $ | 693,122 | |||||
Ruian Kormee Vehicle Brake Co., Ltd. | 213,974 | 87,868 | |||||||
Ruili Group Co., Ltd. | 1,618,349 | 1,743,029 | |||||||
Total Sales | $ | 2,110,705 | $ | 2,524,019 | |||||
During the year ended December 31, 2014, for the sales mentioned above, the sales to Guangzhou Kormee and Ruian Kormee were sales of scrap materials and were included in other operating income in the consolidated statements of income and comprehensive income. The sales to Ruili Group were included in sales in the consolidated statements of income and comprehensive income. | |||||||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
PREPAYMENTS TO RELATED PARTIES | |||||||||
Ruian Kormee Vehicle Brake Co., Ltd. | $ | 83,206 | $ | — | |||||
Total | $ | 83,206 | $ | — | |||||
ACCOUNTS PAYABLE TO RELATED PARTIES | |||||||||
Ruian Kormee Vehicle Brake Co., Ltd. | $ | — | $ | 445,896 | |||||
Guangzhou Kormee Vehicle Brake Technology Development Co., Ltd. | 59,011 | — | |||||||
Ruili Group Co., Ltd. | 77,598 | 364,414 | |||||||
Total | $ | 136,609 | $ | 810,310 | |||||
OTHER PAYABLES TO RELATED PARTIES | |||||||||
MGR Hong Kong Limited | $ | 17,681 | $ | 94,246 | |||||
Total | $ | 17,681 | $ | 94,246 | |||||
The Company entered into several lease agreements with related parties, see Note 18 for more details. | |||||||||
In addition, the Company provided guarantee for the credit line granted to Ruili Group by the Bank of Ningbo in the amount of RMB108,000,000 (approximately $17,182,404) for the period from September 26, 2013 to September 25, 2014, which was renewed in 2014 for a term from August 22, 2014 to August 21, 2015. The Company also provides guarantee for Ruili Group related to the credit line granted by China Zheshang Bank in the amount of RMB 146,960,000 (approximately $24,016,996) for the period from December 9, 2014 to December 9, 2015. |
ACCOUNTS_RECEIVABLE_NET
ACCOUNTS RECEIVABLE, NET | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
ACCOUNTS RECEIVABLE, NET [Abstract] | |||||||||
ACCOUNTS RECEIVABLE, NET | NOTE 5 - ACCOUNTS RECEIVABLE, NET | ||||||||
Accounts receivable, net consisted of the following: | |||||||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Accounts receivable | $ | 74,646,974 | $ | 61,725,799 | |||||
Less: allowance for doubtful accounts | (6,475,587 | ) | (3,813,415 | ) | |||||
Account receivable balance, net | $ | 68,171,387 | $ | 57,912,384 | |||||
No customer individually accounted for more than 10% of our revenues or accounts receivable for the years ended December 31, 2014 and 2013. The changes in the allowance for doubtful accounts at December 31, 2014 and December 31, 2013 were summarized as follows: | |||||||||
31-Dec-14 | 31-Dec-13 | ||||||||
Beginning balance | $ | 3,813,415 | $ | 998,492 | |||||
Add: Increase to allowance | 2,662,172 | 2,814,923 | |||||||
Less: Accounts written off | — | — | |||||||
Ending balance | $ | 6,475,587 | $ | 3,813,415 | |||||
INVENTORIES
INVENTORIES | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
INVENTORIES [Abstract] | |||||||||||||
INVENTORIES | NOTE 6 - INVENTORIES | ||||||||||||
On December 31, 2014 and December 31, 2013, inventories consisted of the following: | |||||||||||||
December 31, | December 31, | ||||||||||||
2013 | |||||||||||||
2014 | |||||||||||||
Raw Materials | $ | 11,934,720 | $ | 12,380,061 | |||||||||
Work in process | 30,020,125 | 31,546,330 | |||||||||||
Finished Goods | 42,400,202 | 32,466,337 | |||||||||||
Less: Write-down of inventories | (168,281 | ) | (28,709 | ) | |||||||||
Total Inventory | $ | 84,186,766 | $ | 76,364,019 |
PROPERTY_PLANT_AND_EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
PROPERTY, PLANT AND EQUIPMENT [Abstract] | |||||||||
PROPERTY, PLANT AND EQUIPMENT | NOTE 7 - PROPERTY, PLANT AND EQUIPMENT | ||||||||
Property, plant and equipment consisted of the following, on December 31, 2014 and December 31, 2013: | |||||||||
31-Dec-14 | 31-Dec-13 | ||||||||
Machinery | $ | 51,619,990 | $ | 46,475,961 | |||||
Molds | 1,425,992 | 1,388,218 | |||||||
Office equipment | 2,257,208 | 1,960,476 | |||||||
Vehicles | 2,040,061 | 2,248,280 | |||||||
Buildings | 9,152,959 | 8,910,501 | |||||||
Machinery held under capital lease | 29,012,601 | 28,396,853 | |||||||
Leasehold improvements | 562,521 | 552,630 | |||||||
Sub-Total | 96,071,332 | 89,932,919 | |||||||
Less: Accumulated depreciation | (52,520,405 | ) | (44,463,906 | ) | |||||
Property, plant and equipment, net | $ | 43,550,927 | $ | 45,469,013 | |||||
Depreciation expense charged to operations was $6,998,738 and $6,802,293 for the years ended December 31, 2014 and 2013, respectively. |
LAND_USE_RIGHTS
LAND USE RIGHTS | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
LAND USE RIGHTS [Abstract] | |||||||||||||
LAND USE RIGHTS | NOTE 8 – LAND USE RIGHTS | ||||||||||||
December 31, | December 31, | ||||||||||||
2014 | 2013 | ||||||||||||
Cost | $ | 17,173,243 | $ | 16,718,332 | |||||||||
Less: Accumulated amortization | (2,751,514 | ) | (2,309,162 | ) | |||||||||
Land use rights, net | $ | 14,421,729 | $ | 14,409,170 | |||||||||
According to the law of China, the government owns all the land in China. Companies and individuals are authorized to possess and use the land only through land use rights granted by the Chinese government. The Company purchased the above land use rights from Ruili Group, a related party, as well as the building on the land in the total amount of approximately $20 million (including a building of approximately $6.7 million). The Company has been negotiating with the government for a reduction in or exemption from the tax being sought by the government in connection with the transfer of the land use rights and the building, and pending resolution of that issue. Due to the lack of resolution of the issue, the land use right certificate and the property ownership certificate have not been issued to the Company. There is no assurance that the Company can conclude the negotiations with the government and obtain a favorable result. The Company reserved the relevant tax amount of RMB 4,560,000 (approximately $745,220). This amount was determined based on a 3% tax rate on the consideration paid for the land use right in the transaction, which the Company considered as the most probable amount of tax liability. This amount also represented the maximum amount of tax the Company expects to pay if the negotiation with the local government ultimately is not successful. Amortization expenses were $374,425 and $369,008 for the years of 2014 and 2013, respectively. |
INTANGIBLE_ASSETS
INTANGIBLE ASSETS | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||
INTANGIBLE ASSETS [Abstract] | |||||||||||||||||||||||
INTANGIBLE ASSETS | NOTE 9 - INTANGIBLE ASSETS | ||||||||||||||||||||||
Gross intangible assets were $181,099, less accumulated amortization of $143,438 for net intangible assets of $37,661 as of December 31, 2014. Gross intangible assets were $176,302, less accumulated amortization of $126,031 for net intangible assets of $50,271 as of December 31, 2013. Amortization expenses were $13,790 and $16,763 for the years ended December 31, 2014 and 2013 respectively. Future estimated amortization expense is as follows: | |||||||||||||||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | ||||||||||||||||||
$ | 12,347 | $ | 12,347 | $ | 9,399 | $ | 3,568 | $ | - | $ | - |
PREPAYMENTS
PREPAYMENTS | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
PREPAYMENTS [Abstract] | |||||||||||||
PREPAYMENTS | NOTE 10 - PREPAYMENTS | ||||||||||||
Prepayments consisted of the following as of December 31, 2014 and December 31, 2013: | |||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||
Raw material suppliers | $ | 2,938,396 | $ | 3,046,585 | |||||||||
Equipment purchases | 1,724,606 | 727,165 | |||||||||||
Total prepayments | $ | 4,663,002 | $ | 3,773,750 |
DEFERRED_TAX_ASSETS_AND_DEFERR
DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES [Abstract] | |||||||||||||
DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES | NOTE 11- DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES | ||||||||||||
Deferred tax assets as of December 31, 2014 and December 31, 2013 comprise of the following: | |||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||
Deferred tax assets - current | |||||||||||||
Allowance for doubtful accounts | $ | 990,496 | $ | 578,928 | |||||||||
Revenue (net of cost) | 8,653 | ||||||||||||
Unpaid accrued expenses | 180,392 | 105,558 | |||||||||||
Warranty | 848,566 | 699,816 | |||||||||||
Deferred tax assets | 2,019,454 | 1,392,955 | |||||||||||
Valuation allowance | ― | ― | |||||||||||
Net deferred tax assets - current | $ | 2,019,454 | $ | 1,392,955 | |||||||||
Deferred tax liabilities - current | |||||||||||||
Revenue (net of cost) | $ | 151,083 | $ | ― | |||||||||
Deferred tax liabilities - current | 151,083 | ― | |||||||||||
Net deferred tax assets - current | $ | 1,868,371 | $ | 1,392,955 | |||||||||
Deferred taxation is calculated under the liability method in respect of taxation effect arising from all timing differences, which are expected with reasonable probability to realize in the foreseeable future. The Company and its subsidiaries do not have income tax liabilities in U.S. as the Company had no U.S. taxable income for the reporting period. The Company's subsidiary registered in the PRC is subject to income taxes within the PRC at the applicable tax rate. |
SHORTTERM_BANK_LOANS
SHORT-TERM BANK LOANS | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
SHORT-TERM BANK LOANS [Abstract] | |||||||||||||
SHORT-TERM BANK LOANS | NOTE 12 –SHORT-TERM BANK LOANS | ||||||||||||
Bank loans represented the following as of December 31, 2014 and December 31, 2013: | |||||||||||||
December 31, | December 31, | ||||||||||||
2014 | 2013 | ||||||||||||
Secured | $ | 9,539,476 | $ | 4,526,863 | |||||||||
The Company obtained those short term loans from Bank of China and Agricultural Bank of China, respectively, to finance general working capital as well as new equipment acquisition. Interest rate for the loans ranged from 1.58% to 3.33% per annum. The maturity dates of the loans ranged from January 13, 2015 to November 27, 2015. As of December 31, 2014 and 2013, the Company's accounts receivables of $12,328,735 and $5,833,625, respectively, were pledged as collateral under loan arrangements. | |||||||||||||
As of December 31, 2014, corporate or personal guarantees provided for those bank loans were as follows: | |||||||||||||
$5,378,092 | Guaranteed by Ruili Group Co., Ltd., a related party. | ||||||||||||
$4.161,384 | Guaranteed by Ruili Group Co., Ltd., a related party, Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, the Company's principal stockholders. |
ACCRUED_EXPENSES
ACCRUED EXPENSES | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
ACCRUED EXPENSES [Abstract] | |||||||||||||
ACCRUED EXPENSES | NOTE 13 - ACCRUED EXPENSES | ||||||||||||
Accrued expenses consisted of the following as of December 31, 2014 and December 31, 2013: | |||||||||||||
December 31, | December 31, | ||||||||||||
2014 | |||||||||||||
2013 | |||||||||||||
Accrued payroll | $ | 2,859,430 | $ | 1,688,090 | |||||||||
Accrued warranty expenses | 5,657,106 | 4,665,439 | |||||||||||
Other accrued expenses | 5,044,627 | 3,713,440 | |||||||||||
Total accrued expenses | $ | 13,561,163 | $ | 10,066,969 | |||||||||
CAPITAL_LEASE_OBLIGATIONS
CAPITAL LEASE OBLIGATIONS | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
CAPITAL LEASE OBLIGATIONS [Abstract] | |||||||||||||
CAPITAL LEASE OBLIGATIONS | NOTE 14 –CAPITAL LEASE OBLIGATIONS | ||||||||||||
December 31, | December 31, | ||||||||||||
2014 | 2013 | ||||||||||||
Total capital lease obligations | $ | 7,470,875 | $ | 10,909,463 | |||||||||
Less: current portion | $ | (3,735,438 | ) | $ | (3,636,488 | ) | |||||||
Non-current portion | $ | 3,735,437 | $ | 7,272,975 | |||||||||
On September 13, 2011, the Company entered into a leasing agreement with International Far Eastern Leasing Co., Ltd., a subsidiary of China Sinochem Corporation, for a term of 60 months and an interest rate of 7.95% per annum, payable monthly in arrears. To reduce the financing expense, the Company entered into a new leasing agreement with International Far Eastern Leasing Co., Ltd. in December 2012 and terminated the original agreement. The lease inception date of the new lease agreement is January 4, 2013 and the termination date is January 4, 2017. The duration of the new agreement is 48 months with an interest rate of 6.4% per annum and is secured with the Company's equipment in the original cost of $28,396,853. The capital lease obligation obtained by the Company is RMB 91,428,571 (approximately $14,545,950) and the Company is required to maintain a security deposit of RMB 11,428,571 (approximately $1,818,244). The Company prepaid all interests of RMB 10,705,357 (approximately $1,703,212) after the discount and is obligated for the payment of RMB 1,904,761.9 (approximately $303,041) monthly. The prepaid interest for capital lease obligation is amortized over the life of capital lease agreement using the effective interest method. | |||||||||||||
RESERVE
RESERVE | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
RESERVE [Abstract] | |||||||||||||
RESERVE | NOTE 15 – RESERVE | ||||||||||||
The reserve funds were comprised of the following: | |||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||
Statutory surplus reserve fund | $ | 12,019,532 | $ | 10,609,435 | |||||||||
Total | $ | 12,019,532 | $ | 10,609,435 | |||||||||
Pursuant to the relevant laws and regulations of Sino-Foreign joint venture enterprises, the profits of the Company's subsidiary, which are based on their PRC statutory financial statements, are available for distribution in the form of cash dividends after they have satisfied all the PRC tax liabilities, provided for losses in previous years, and made appropriations to reserve funds, as determined at the discretion of the board of directors in accordance with PRC accounting standards and regulations. | |||||||||||||
As stipulated by the relevant laws and regulations for enterprises operating in the PRC, Ruian is required to make annual appropriations to the statutory surplus funds. In accordance with the relevant PRC regulations and the articles of association of the respective companies, Ruian is required to allocate a certain percentage of its profits after taxation, as determined in accordance with PRC accounting standards applicable to the Company, to the statutory surplus reserve until such reserve reaches 50% of the registered capital of the Company. | |||||||||||||
Net income as reported in the US GAAP financial statements differs from that as reported in the PRC statutory financial statements. In accordance with the relevant laws and regulations in the PRC, the profits available for distribution are based on the statutory financial statements. If Ruian has foreign currency available after meeting its operational needs, Ruian may make its profit distributions in foreign currency to the extent foreign currency is available. Otherwise, it is necessary to obtain approval and convert such distributions at an authorized bank. The reserve fund consists of retained earnings which have been allocated to the statutory reserve fund. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
INCOME TAXES [Abstract] | |||||||||||||
INCOME TAXES | NOTE 16 - INCOME TAXES | ||||||||||||
The Joint Venture is registered in the PRC, and is therefore subject to state and local income taxes within the PRC at the applicable tax rate on the taxable income as reported in the PRC statutory financial statements in accordance with relevant income tax laws. | |||||||||||||
The Company increased its investment in the Joint Venture as a result of its financing in December, 2006. In 2009, the Joint Venture was awarded the Chinese government's "High-Tech Enterprise" designation. The High-Tech Enterprise certificate is valid for three years and provided for a reduced tax rate of 15% for years 2009 through 2011. The Company used a tax rate of 25% for the first three quarters of 2012. In December 2012, the Joint Venture passed the re-assessment of "High-Tech Enterprise" designation by the government, according to relevant PRC income tax laws. Accordingly, it continues to be taxed at a 15% rate in 2012 through 2014. | |||||||||||||
The reconciliation of the effective income tax rate of the Joint Venture to the statutory income tax rate in the PRC for the years ended on December 31, 2014 and 2013 is as follows: | |||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||
US Statutory income tax rate | 35 | % | 35 | % | |||||||||
Valuation allowance recognized with respect to the loss in the US company | -35 | % | -35 | % | |||||||||
HK Statutory income tax rate | 16.5 | % | 16.5 | % | |||||||||
Valuation allowance recognized with respect to the loss in the HK company | -16.5 | % | -16.5 | % | |||||||||
China statutory income tax rate | 25 | % | 25 | % | |||||||||
Effect of income tax exemptions and reliefs | -10 | % | -10 | % | |||||||||
Effects of additional deduction allowed for R&D expenses | -1.81 | % | -4.5 | % | |||||||||
Effects of expenses not deductible for tax purposes | 1.47 | % | 4.08 | % | |||||||||
Other items | 1.26 | % | 1.71 | % | |||||||||
Effective tax rate | 15.92 | % | 16.29 | % | |||||||||
Income taxes are calculated on a separate entity basis. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. There currently is no tax benefit or burden recorded for the entity located in U.S. The tax authority may examine the tax returns of the Company three years after the year ended. In the years of 2014 and 2013, there were no penalties and interest, which generally are recorded in the general and administrative expenses or in the tax expenses. The provisions for income taxes for the years ended December 31, 2014 and 2013, respectively, are summarized as follows: | |||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||
Current | $ | 3,304,552 | $ | 3,043,158 | |||||||||
Deferred | (431,640 | ) | (995,102 | ) | |||||||||
Total | $ | 2,872,912 | $ | 2,048,056 | |||||||||
ASC 740-10 requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. The management evaluated the Company's tax positions and considered that no provision for uncertainty in income taxes was necessary as of December 31, 2014 and 2013. | |||||||||||||
NONCONTROLLING_INTEREST_IN_SUB
NON-CONTROLLING INTEREST IN SUBSIDIARIES | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
NON-CONTROLLING INTEREST IN SUBSIDIARIES [Abstract] | |||||||||||||
NON-CONTROLLING INTEREST IN SUBSIDIARIES | NOTE 17 –NON-CONTROLLING INTEREST IN SUBSIDIARIES | ||||||||||||
Non-controlling interest in subsidiaries represents a 10% non-controlling interest, owned by Ruili Group Co., Ltd., in Ruian, and a 40% non-controlling interest, owned by the Company's Joint Venture Partners, in SIH. Net income attributable to non-controlling interest in subsidiaries amounted to $1,366,456 and $1,164,068 for the years ended December 31, 2014 and 2013, respectively. | |||||||||||||
2014 | 2013 | ||||||||||||
10% non-controlling interest in Ruian | $ | 1,566,774 | $ | 1,036,948 | |||||||||
40% non-controlling interest in SIH | (200,318 | ) | 127,120 | ||||||||||
Total | $ | 1,366,456 | 1,164,068 | ||||||||||
OPERATING_LEASES_WITH_RELATED_
OPERATING LEASES WITH RELATED PARTIES | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
OPERATING LEASES WITH RELATED PARTIES [Abstract] | |||||||||||||||||||||||||
OPERATING LEASES WITH RELATED PARTIES | NOTE 18 – OPERATING LEASES WITH RELATED PARTIES | ||||||||||||||||||||||||
In December 2006, Ruian entered into a lease agreement with Ruili Group Co., Ltd. for the lease of two apartment buildings. These two apartment buildings are for Ruian's management personnel and staff, respectively. The lease term is from January 2013 to December 2016. This lease was amended in 2013, with a new lease term from January 1, 2013 to December 31, 2022. The annual lease expense is RMB2,100,000 (approximately USD$333,688). | |||||||||||||||||||||||||
In May 2009, Ruian entered into a lease agreement with Ruili Group Co., Ltd. for the lease of a manufacturing plant. The lease term is from September 2009 to May 2017. | |||||||||||||||||||||||||
In August 2010, a new lease agreement was signed between Ruian and Ruili Group Co., Ltd., under which Ruian leased 32,410 square meters manufacturing plant for its new purchased passenger vehicles brake systems business. The lease term is from September 2009 to August 2020. This lease was amended in 2013. The amended lease term is from January 1, 2013 to December 31, 2017. The annual lease expense is RMB8,137,680 (approximately USD$1,293,070). | |||||||||||||||||||||||||
The lease expenses were $1,650,640 and $1,626,759 for the years ended December 31, 2014 and 2013, respectively. As of December 31, 2014, future minimum rental payments are as follows: | |||||||||||||||||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | ||||||||||||||||||||
Operating Lease Commitments | $ | 1,673,097 | $ | 1,673,097 | $ | 1,673,097 | $ | 343,193 | $ | 343,193 | $ | 1,029,580 | |||||||||||||
WARRANTY_CLAIMS
WARRANTY CLAIMS | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
WARRANTY CLAIMS [Abstract] | |||||
WARRANTY CLAIMS | NOTE 19 - WARRANTY CLAIMS | ||||
Warranty claims were $2,374,861 and $2,163,950 for the years ended December 31, 2014 and 2013 respectively. Warranty claims are classified as accrued expenses on the balance sheet. The movement of accrued warranty expenses for the year ended December 31, 2014 is as follows: | |||||
: | |||||
Beginning balance at January 1, 2014 | $ | 4,665,439 | |||
Aggregate increase for new warranties issued during current period | 2,374,861 | ||||
Aggregate reduction for payments made | (1,383,194 | ) | |||
Ending balance at December 31, 2014 | $ | 5,657,106 | |||
SEGMENT_INFORMATION
SEGMENT INFORMATION | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
SEGMENT INFORMATION [Abstract] | |||||||||
SEGMENT INFORMATION | NOTE 20– SEGMENT INFORMATION | ||||||||
The Company produces brake systems and other related components for different types of commercial vehicles (“Commercial Vehicle Brake Systems”). On August 31, 2010, the Company through Ruian, executed an Asset Purchase Agreement to acquire, and purchased, a segment of the passenger vehicle auto parts business (“Passenger Vehicle Brake Systems”) of Ruili Group. As a result of this acquisition, the Company's product offerings were expanded to both commercial and passenger vehicles' brake systems and other key safety-related auto parts. | |||||||||
The Company has two operating segments: Commercial Vehicle Brake Systems and Passenger Vehicle Brake Systems. | |||||||||
All of the Company's long-lived assets are located in the PRC and Hong Kong. The Company and its subsidiaries do not have long-lived assets in the United States for the reporting periods. | |||||||||
For Years Ended December 31, | |||||||||
2014 | 2013 | ||||||||
NET SALES TO EXTERNAL CUSTOMERS | |||||||||
Commercial vehicles brake systems | $ | 193,984,778 | $ | 169,270,207 | |||||
Passenger vehicles brake systems | 43,670,087 | 39,301,605 | |||||||
Net sales | $ | 237,654,865 | $ | 208,571,812 | |||||
INTERSEGMENT SALES | |||||||||
Commercial vehicles brake systems | $ | — | $ | — | |||||
Passenger vehicles brake systems | — | — | |||||||
Intersegment sales | $ | — | $ | — | |||||
GROSS PROFIT | |||||||||
Commercial vehicles brake systems | $ | 54,575,006 | $ | 47,576,255 | |||||
Passenger vehicles brake systems | 12,285,991 | 11,046,381 | |||||||
Gross profit | $ | 66,860,997 | $ | 58,622,636 | |||||
Other operating income | 2,270,147 | 2,074,520 | |||||||
Selling and distribution expenses | 23,676,176 | 20,906,914 | |||||||
General and administrative expenses | 18,011,110 | 17,379,521 | |||||||
Research and development expenses | 7,601,342 | 7,550,010 | |||||||
Income from operations | 19,842,516 | 14,860,711 | |||||||
Interest expense | (1,135,177 | ) | (1,399,851 | ) | |||||
Other income | 606,112 | 524,370 | |||||||
Other expense | (1,273,053 | ) | (1,410,141 | ) | |||||
Income before income tax expense | $ | 18,040,398 | $ | 12,575,089 | |||||
CAPITAL EXPENDITURE | |||||||||
Commercial vehicles brake systems | $ | 3,267,571 | $ | 3,958,531 | |||||
Passenger vehicles brake systems | 735,599 | 919,102 | |||||||
Total | $ | 4,003,170 | $ | 4,877,633 | |||||
DEPRECIATION AND AMORTIZATION | |||||||||
Commercial vehicles brake systems | $ | 6,029,569 | $ | 5,833,603 | |||||
Passenger vehicles brake systems | 1,357,384 | 1,354,461 | |||||||
Total | $ | 7,386,953 | $ | 7,188,064 | |||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
TOTAL ASSETS | |||||||||
Commercial vehicles brake systems | $ | 234,186,022 | $ | 205,310,702 | |||||
Passenger vehicles brake systems | 52,720,240 | 47,669,582 | |||||||
Total | $ | 286,906,262 | $ | 252,980,284 | |||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
LONG LIVED ASSETS | |||||||||
Commercial vehicles brake systems | $ | 48,956,149 | $ | 50,413,024 | |||||
Passenger vehicles brake systems | 11,021,067 | 11,705,029 | |||||||
Total | $ | 59,977,216 | $ | 62,118,053 | |||||
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||
Dec. 31, 2014 | |||
COMMITMENTS AND CONTINGENCIES [Abstract] | |||
COMMITMENTS AND CONTINGENCIES | NOTE 21 - COMMITMENTS AND CONTINGENCIES | ||
-1 | According to the law of China, the government owns all the land in China. Companies and individuals are authorized to possess and use the land only through land use rights granted by the Chinese government. The Company purchased the land use rights and the building on the land from Ruili Group for approximately $20 million on September 28, 2007. The Company has not yet obtained the land use right certificate nor the property ownership certificate of the building. There is no new development of negotiations regarding taxes related to the land use rights. Although the Company plans to conclude negotiations with the local government and to obtain the land use right certificate as soon as practicable, the Company is unable to predict when the negotiations will be resolved or concluded. There is no assurance that the Company can obtain the land use right certificate. Even if it is unable to resolve the tax issues and obtain the land use right certificate for the land and related building, there will be no potential adverse implication on the Company. Also see Note 8. | ||
-2 | The information of lease commitments is provided in Note 14 and Note 18. | ||
-3 | The Company provided the guarantee for the credit line granted to Ruili Group by the Bank of Ningbo in the amount of RMB108,000,000 (approximately $17,182,404) for the period from September 26, 2013 to September 25, 2014, which was renewed in 2014 for a term from August 22, 2014 to August 21, 2015. The Company also provides the guarantee for Ruili Group related to the credit line granted by China Zheshang Bank in the amount of RMB 146,960,000 (approximately USD$24,016,996) from December 9, 2014 to December 9, 2015. | ||
Additional_InformationFinancia
Additional Information-Financial Statement Schedule I | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Additional Information-Financial Statement Schedule I [Abstract] | |||||||||||||||||||||
Additional Information-Financial Statement Schedule I | ADDITIONAL INFORMATION─FINANCIAL STATEMENT SCHEDULE I | ||||||||||||||||||||
This financial statements schedule has been prepared in conformity with U.S. GAAP. | |||||||||||||||||||||
SORL AUTO PARTS, INC. | |||||||||||||||||||||
This financial statements schedule has been prepared in conformity with U.S. GAAP. The parent company financial statements have been prepared using the same accounting principles and policies described in the notes to the consolidated financial statements, with the only exception being that the Company accounts for its subsidiaries using the equity method. Please refer to the notes to the consolidated financial statements presented above for additional information and disclosures with respect to these financial statements. | |||||||||||||||||||||
Financial Information of Parent Company | |||||||||||||||||||||
BALANCE SHEETS | |||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2014 | |||||||||||||||||||||
2013 | |||||||||||||||||||||
ASSETS | |||||||||||||||||||||
Current Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 81,036 | $ | 81,036 | |||||||||||||||||
Other current assets | 6,161 | 6,161 | |||||||||||||||||||
Total Current Assets | 87,197 | 87,197 | |||||||||||||||||||
Investments in subsidiaries | 175,539,210 | 161,438,242 | |||||||||||||||||||
TOTAL ASSETS | $ | 175,626,407 | $ | 161,525,439 | |||||||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||||||||
Current Liabilities: | |||||||||||||||||||||
Other current liability | 2,921,488 | 2,921,488 | |||||||||||||||||||
Total Current Liabilities | 2,921,488 | 2,921,488 | |||||||||||||||||||
Total Liabilities | 2,921,488 | 2,921,488 | |||||||||||||||||||
Stockholders' Equity: | |||||||||||||||||||||
Preferred stock - no par value; 1,000,000 authorized; none issued and outstanding as of December 31, 2014 and December 31, 2013 | - | - | |||||||||||||||||||
Common stock - $0.002 par value; 50,000,000 authorized, 19,304,921 issued and outstanding as of December 31, 2014 and 2013 | 38,609 | 38,609 | |||||||||||||||||||
Additional paid-in capital | 42,199,014 | 42,199,014 | |||||||||||||||||||
Retained earnings | 130,467,296 | 116,366,328 | |||||||||||||||||||
Total Stockholders' Equity | 172,704,919 | 158,603,951 | |||||||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 175,626,407 | $ | 161,525,439 | |||||||||||||||||
Financial Information of Parent Company | |||||||||||||||||||||
STATEMENTS OF INCOME | |||||||||||||||||||||
For Years Ended December 31, | |||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Investment income | $ | 14,100,968 | $ | 9,332,525 | |||||||||||||||||
General and administrative expenses | - | 130 | |||||||||||||||||||
Net income attributable to stockholders | $ | 14,100,968 | $ | 9,332,395 | |||||||||||||||||
Weighted average common share - Basic | 19,304,921 | 19,304,921 | |||||||||||||||||||
Weighted average common share - Diluted | 19,304,921 | 19,304,921 | |||||||||||||||||||
EPS - Basic | $ | 0.73 | $ | 0.48 | |||||||||||||||||
EPS - Diluted | $ | 0.73 | $ | 0.48 | |||||||||||||||||
Financial Information of Parent Company | |||||||||||||||||||||
STATEMENTS OF CASH FLOWS | |||||||||||||||||||||
For Years Ended December 31, | |||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Cash flow from operating activities: | |||||||||||||||||||||
Net income | $ | 14,100,968 | $ | 9,332,395 | |||||||||||||||||
Adjustments to reconcile net income to net cash used in operating activities : | |||||||||||||||||||||
Investment in subsidiaries | (14,100,968 | ) | (9,332,525 | ) | |||||||||||||||||
Net cash used in operating activities | - | (130 | ) | ||||||||||||||||||
Net change in cash and cash equivalents | - | (130 | ) | ||||||||||||||||||
Cash and cash equivalents, beginning of period | 81,036 | 81,166 | |||||||||||||||||||
Cash and cash equivalents, end of period | $ | 81,036 | $ | 81,036 | |||||||||||||||||
Financial Information of Parent Company | |||||||||||||||||||||
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | |||||||||||||||||||||
For Years Ended December 31, 2014 and 2013 | |||||||||||||||||||||
Additional | Total | ||||||||||||||||||||
Number | Common | Paid-in | Retained | Stockholders' | |||||||||||||||||
of Share | Stock | Capital | Earnings | Equity | |||||||||||||||||
Beginning Balance - January 1, 2014 | 19,304,921 | $ | 38,609 | $ | 42,199,014 | $ | 116,366,328 | $ | 158,603,951 | ||||||||||||
Net Income | - | - | - | 14,100,968 | 14,100,968 | ||||||||||||||||
Ending Balance - December 31, 2014 | 19,304,921 | $ | 38,609 | $ | 42,199,014 | $ | 130,467,296 | $ | 172,704,919 | ||||||||||||
Additional | Total | ||||||||||||||||||||
Number | Common | Paid-in | Accumulated | Stockholders' | |||||||||||||||||
of Share | Stock | Capital | Earnings | Equity | |||||||||||||||||
Beginning Balance - January 1, 2013 | 19,304,921 | $ | 38,609 | $ | 42,199,014 | $ | 107,033,933 | $ | 149,271,556 | ||||||||||||
Net Income | - | - | - | 9,332,395 | 9,332,395 | ||||||||||||||||
Ending Balance - December 31, 2013 | 19,304,921 | $ | 38,609 | $ | 42,199,014 | $ | 116,366,328 | $ | 158,603,951 | ||||||||||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||
Dec. 31, 2014 | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||
ACCOUNTING METHOD | a. | ACCOUNTING METHOD | |
The Company uses the accrual method of accounting for financial statement and tax return purposes. | |||
PRINCIPLES OF CONSOLIDATION | b. | PRINCIPLES OF CONSOLIDATION | |
The consolidated financial statements include the accounts of SORL Auto Parts, Inc. and its majority owned subsidiaries. All inter-company balances and transactions have been eliminated in the consolidation. | |||
USE OF ESTIMATES | c. | USE OF ESTIMATES | |
The preparation of financial statements in conformity with U.S GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management makes its best estimate of the outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Actual results could differ from those estimates. | |||
FAIR VALUE OF FINANCIAL INSTRUMENTS | d. | FAIR VALUE OF FINANCIAL INSTRUMENTS | |
For certain of the Company's financial instruments, including cash and cash equivalents, short term investments, trade receivables and payables, prepaid expenses, deposits and other current assets, short-term bank borrowings, accounts payable, and other payables and accruals, the carrying amounts approximate fair values due to their short maturities. | |||
RELATED PARTY TRANSACTIONS | e. | RELATED PARTY TRANSACTIONS | |
A related party is generally defined as (i) any person that holds 10% or more of the Company's securities and their immediate families, (ii) the Company's management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company conducts business with its related parties in the ordinary course of business. All transactions have been recorded at fair market value of the goods and services exchanged. | |||
FINANCIAL RISK FACTORS AND FINANCIAL RISK MANAGEMENT | f. | FINANCIAL RISK FACTORS AND FINANCIAL RISK MANAGEMENT | |
The Company is exposed to the following risk factors: | |||
(i) Credit risks - The Company has policies in place to ensure that sales of products are made to customers with an appropriate credit history. The Company performs ongoing credit evaluations with respect to the financial condition of its creditors, but does not require collateral. In order to determine the value of the Company's accounts receivable, the Company records a provision for doubtful accounts to cover probable credit losses. Management reviews and adjusts this allowance periodically based on historical experience and its evaluation of the collection of outstanding accounts receivable. The Company has a concentration of credit risk due to geographic sales as a majority of its products are marketed and sold in the PRC. The Company has no customer that accounts for more than 5.0% of its total revenues for the year ended December 31, 2014. | |||
(ii) Liquidity risks - Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and ability to close out market positions. | |||
(iii) Interest rate risk - The interest rate of short-term bank borrowings obtained in 2014 ranged from 1.58% to 6.45% and the term ranged from approximately two months 15 months. The Company's income and cash flows are substantially independent of changes in market interest rates. The Company has no significant interest-bearing assets. The Company's policy is to maintain all of its borrowings in fixed rate instruments. | |||
CASH AND CASH EQUIVALENTS | g. | CASH AND CASH EQUIVALENTS | |
The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. | |||
INVENTORIES | i. | INVENTORIES | |
Inventories are stated at the lower of cost or net realizable value, with cost computed on a weighted-average basis. Cost includes all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. | |||
SHORT TERM INVESTMENTS | h. SHORT TERM INVESTMENTS | ||
The Company's short term investments include term deposits with an original maturity from three months to one year with financial institutions. | |||
PROPERTY, PLANT AND EQUIPMENT | j. | PROPERTY, PLANT AND EQUIPMENT | |
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The initial cost of the asset comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Depreciation is calculated using the straight-line method over the estimated useful life of the respective assets as follows: | |||
Category | Estimated Useful Life(Years) | ||
Buildings | 20-Oct | ||
Machinery and equipment | 10-May | ||
Electronic equipment | 5 | ||
Motor vehicles | 10-May | ||
Leasehold improvements | The lesser of remaining lease term or 10 | ||
Significant improvements are capitalized when it is probable that the expenditure resulted in an increase in the future economic benefits expected to be obtained from the use of the asset beyond its originally assessed standard of performance. When improvements are made to real property and those improvements are permanently affixed to the property, the title to those improvements automatically transfers to the owner of the property. The lessee's interest in the improvements is not a direct ownership interest but rather it is an intangible right to use and benefit from the improvements during the term of the lease. | |||
Routine repairs and maintenance are expensed when incurred. Gains and losses on disposal of fixed assets are recognized in the income statement based on the net disposal proceeds less the carrying amount of the assets. | |||
LAND USE RIGHTS | k. | LAND USE RIGHTS | |
According to the law of China, the government owns all the land in China. Companies or individuals are authorized to possess and use the land only through land use rights granted by the Chinese government. Land use rights are being amortized using the straight-line method over the estimated useful life of 45 years. | |||
The Company purchased the land use rights from Ruili Group, a related party. The Company has not yet obtained the land use right certificate. | |||
IMPAIRMENT OF LONG-LIVED ASSETS | l. | IMPAIRMENT OF LONG-LIVED ASSETS | |
Long-lived assets, such as property, plant and equipment and other non-current assets, including intangible assets, are reviewed periodically for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss is recognized when the estimated undiscounted cash flows associated with the asset or group of assets is less than their carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value. | |||
INTANGIBLE ASSETS | m. | INTANGIBLE ASSETS | |
Intangible assets represent mainly the patent of technology, plus the computer software. Intangible assets are measured initially at cost. Intangible assets are recognized if it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. After initial recognition, intangible assets are measured at cost less any impairment losses. Intangible assets with definite useful lives are amortized on a straight-line basis over their useful lives. | |||
ACCOUNTS RECEIVABLES AND ALLOWANCE FOR BAD DEBTS | n. | ACCOUNTS RECEIVABLES AND ALLOWANCE FOR BAD DEBTS | |
The Company presents accounts receivables, net of allowances for doubtful accounts and returns, to ensure accounts receivable are not overstated due to being uncollectible. Accounts receivables generated from credit sales have general credit terms of 90 days for Chinese aftermarket customers. | |||
The allowances are calculated based on a detailed review of certain individual customer accounts, historical rates and an estimation of the overall economic conditions affecting the Company's customer base. The Company reviews a customer's credit history before extending credit. If the financial condition of its customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. | |||
The Company will write off the uncollectible receivables once any customers are bankrupt or there is a remote possibility that the Company will collect the outstanding balance. The write-off must be reported to the local tax authorities and the Company must receive official approval from them. To date, the Company has not written off any account receivables. | |||
NOTES RECEIVABLE | o. | NOTES RECEIVABLE | |
Notes receivable generally due within 30 to 60 days are issued by some customers to pay certain outstanding receivable balances to the Company with specific payment terms and definitive due dates. Notes receivable do not bear interest. | |||
REVENUE RECOGNITION | p. | REVENUE RECOGNITION | |
Revenue from the sale of goods is recognized when the risks and rewards of ownership of the goods have transferred to the buyer including factors such as when persuasive evidence of an arrangement exits, delivery has occurred, the sales price is fixed and determinable, and collection is probable. Revenue consists of the invoice value for the sale of goods and services net of value-added tax (“VAT”), rebates and discounts and returns. The Company nets sales return in gross revenue, i.e., the revenue shown in the income statement is the net sales. | |||
INCOME TAXES | q. | INCOME TAXES | |
The Company accounts for income taxes under the provision of FASB ASC 740-10, Income Taxes, or ASC 740-10, whereby deferred income tax assets and liabilities are computed for differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary; to reduce deferred income tax assets to the amount expected to be realized. | |||
FOREIGN CURRENCY TRANSLATION | r. | FOREIGN CURRENCY TRANSLATION | |
The Company maintains its books and accounting records in RMB, the currency of the PRC, The Company's functional currency is also RMB. The Company has adopted FASB ASC 830-30 in translating financial statement amounts from RMB to the Company's reporting currency, U.S. dollars (“US$”). All assets and liabilities are translated at the current rate. The stockholders' equity accounts are translated at appropriate historical rate. Revenue and expenses are translated at the weighted average rates in effect on the transaction dates. | |||
Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of stockholders' equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are include in the results of operations as incurred. | |||
STOCK-BASED COMPENSATION | s. | STOCK-BASED COMPENSATION | |
Stock-based compensation expense is recognized based on grant-date fair value estimated in accordance with an authoritative pronouncement. The Company recognizes the compensation costs net of a forfeiture rate on a straight-line basis over the requisite service period of the award with a corresponding impact reflected in additional paid-in capital. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of stock compensation expense to be recognized in future periods. | |||
EMPLOYEES' BENEFITS | t. | EMPLOYEES' BENEFITS | |
Mandatory contributions are made to Government's health, retirement benefit and unemployment schemes at the statutory rates in force during the period, based on gross salary payments. The cost of these payments is charged to the statement of income in the same period as the related salary costs. | |||
RESEARCH AND DEVELOPMENT EXPENSES | u. | RESEARCH AND DEVELOPMENT EXPENSES | |
Research and development costs are classified as general and administrative expenses and are expensed as incurred. Research and development expenses was $7,601,342 for the year ended December 31, 2014, as compared with $7,550,010 for the year ended December 31, 2013, respectively. | |||
SHIPPING AND HANDLING COSTS | v. | SHIPPING AND HANDLING COSTS | |
Shipping and handling cost are classified as selling expenses and are expensed as incurred. Shipping and handling costs were $5,610,737 and $3,980,078 for the years ended December 31, 2014 and 2013, respectively. | |||
ADVERTISING COSTS | w. | ADVERTISING COSTS | |
Advertising costs are classified as selling expenses and are expensed as incurred. Advertising costs were $339,551 and $270,145 for the years ended December 31, 2014 and 2013, respectively. | |||
WARRANTY CLAIMS | x. | WARRANTY CLAIMS | |
The Company provides for the estimated cost of product warranties when the products are sold. Such estimates of product warranties were based on, among other things, historical experience, product changes, material expenses, and service and transportation expenses arising from the manufactured product. Estimates will be adjusted on the basis of actual claims and circumstances. Warranty claims were $2,374,861 and $2,163,950 for the years ended December 31, 2014 and 2013, respectively. | |||
PURCHASE DISCOUNTS | y. | PURCHASE DISCOUNTS | |
Purchase discounts represent discounts received from vendors for purchasing raw materials and are netted in the cost of goods sold, if applicable. | |||
LEASE COMMITMENTS | z. | LEASE COMMITMENTS | |
The Company has adopted FASB Accounting Standard Codification, or ASC 840, Lease. If the lease terms meet one or all of the following four criteria, it will be classified as a capital lease, otherwise, it is an operating lease: (1) The lease transfers the title to the lessee at the end of the term; (2) the lease contains a bargain purchase option; (3) the lease term is equal to 75% of the estimated economic life of the leased property or more; (4) the present value of the minimum lease payment in the term equals or exceeds 90% of the fair value of the leased property. | |||
RECENTLY ISSUED FINANCIAL STANDARDS | aa. | RECENTLY ISSUED FINANCIAL STANDARDS | |
In April 2014, the Financial Accounting Standard Board, or the FASB issued Accounting Standards Update, or ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in the ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. It also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance in U.S. GAAP. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The amendments in the ASU are effective in the first quarter of 2015 for public organizations with calendar year ends. Early adoption is permitted. The Company does not expect the adoption to have a significant impact on its consolidated financial statements. | |||
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, or ASU 2014-09. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets. ASU 2014-09 will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. ASU 2014-09 also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchanged for those goods or services. The standard is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption of ASU 2014-09 is not permitted. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. | |||
In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. The amendment in the ASU provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity's ability to continue as a going concern. The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. Earlier adoption is permitted. The Company does not expect the adoption to have a significant impact on its consolidated financial statements. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||
Dec. 31, 2014 | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||
Schedule of Property, Plant and Equipment by Estimated Useful Life | Depreciation is calculated using the straight-line method over the estimated useful life of the respective assets as follows: | ||
Category | Estimated Useful Life(Years) | ||
Buildings | 20-Oct | ||
Machinery and equipment | 10-May | ||
Electronic equipment | 5 | ||
Motor vehicles | 10-May | ||
Leasehold improvements | The lesser of remaining lease term or 10 |
RELATED_PARTY_TRANSACTIONS_Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
RELATED PARTY TRANSACTIONS [Abstract] | |||||||||
Schedule of Related Party Transactions | For Years Ended December 31, | ||||||||
2014 | 2013 | ||||||||
PURCHASES FROM: | |||||||||
Guangzhou Kormee Vehicle Brake Technology Development Co., Ltd. | $ | 2,194,995 | $ | 2,066,084 | |||||
Ruian Kormee Vehicle Brake Co., Ltd. | 1,250,174 | 1,760,213 | |||||||
Ruili Group Co., Ltd. | 3,740,032 | 3,868,875 | |||||||
Total Purchases | $ | 7,185,201 | $ | 7,695,172 | |||||
SALES TO: | |||||||||
Guangzhou Kormee Vehicle Brake Technology Development Co., Ltd. | $ | 278,382 | $ | 693,122 | |||||
Ruian Kormee Vehicle Brake Co., Ltd. | 213,974 | 87,868 | |||||||
Ruili Group Co., Ltd. | 1,618,349 | 1,743,029 | |||||||
Total Sales | $ | 2,110,705 | $ | 2,524,019 | |||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
PREPAYMENTS TO RELATED PARTIES | |||||||||
Ruian Kormee Vehicle Brake Co., Ltd. | $ | 83,206 | $ | — | |||||
Total | $ | 83,206 | $ | — | |||||
ACCOUNTS PAYABLE TO RELATED PARTIES | |||||||||
Ruian Kormee Vehicle Brake Co., Ltd. | $ | — | $ | 445,896 | |||||
Guangzhou Kormee Vehicle Brake Technology Development Co., Ltd. | 59,011 | — | |||||||
Ruili Group Co., Ltd. | 77,598 | 364,414 | |||||||
Total | $ | 136,609 | $ | 810,310 | |||||
OTHER PAYABLES TO RELATED PARTIES | |||||||||
MGR Hong Kong Limited | $ | 17,681 | $ | 94,246 | |||||
Total | $ | 17,681 | $ | 94,246 | |||||
ACCOUNTS_RECEIVABLE_NET_Tables
ACCOUNTS RECEIVABLE, NET (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
ACCOUNTS RECEIVABLE, NET [Abstract] | |||||||||
Schedule of Accounts Receivable, Net | |||||||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Accounts receivable | $ | 74,646,974 | $ | 61,725,799 | |||||
Less: allowance for doubtful accounts | (6,475,587 | ) | (3,813,415 | ) | |||||
Account receivable balance, net | $ | 68,171,387 | $ | 57,912,384 | |||||
31-Dec-14 | 31-Dec-13 | ||||||||
Beginning balance | $ | 3,813,415 | $ | 998,492 | |||||
Add: Increase to allowance | 2,662,172 | 2,814,923 | |||||||
Less: Accounts written off | — | — | |||||||
Ending balance | $ | 6,475,587 | $ | 3,813,415 | |||||
INVENTORIES_Tables
INVENTORIES (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
INVENTORIES [Abstract] | |||||||||||||
Schedule of Inventories | On December 31, 2014 and December 31, 2013, inventories consisted of the following: | ||||||||||||
December 31, | December 31, | ||||||||||||
2013 | |||||||||||||
2014 | |||||||||||||
Raw Materials | $ | 11,934,720 | $ | 12,380,061 | |||||||||
Work in process | 30,020,125 | 31,546,330 | |||||||||||
Finished Goods | 42,400,202 | 32,466,337 | |||||||||||
Less: Write-down of inventories | (168,281 | ) | (28,709 | ) | |||||||||
Total Inventory | $ | 84,186,766 | $ | 76,364,019 |
PROPERTY_PLANT_AND_EQUIPMENT_T
PROPERTY, PLANT AND EQUIPMENT (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
PROPERTY, PLANT AND EQUIPMENT [Abstract] | |||||||||
Schedule of Property, Plant and Equipment | Property, plant and equipment consisted of the following, on December 31, 2014 and December 31, 2013: | ||||||||
31-Dec-14 | 31-Dec-13 | ||||||||
Machinery | $ | 51,619,990 | $ | 46,475,961 | |||||
Molds | 1,425,992 | 1,388,218 | |||||||
Office equipment | 2,257,208 | 1,960,476 | |||||||
Vehicles | 2,040,061 | 2,248,280 | |||||||
Buildings | 9,152,959 | 8,910,501 | |||||||
Machinery held under capital lease | 29,012,601 | 28,396,853 | |||||||
Leasehold improvements | 562,521 | 552,630 | |||||||
Sub-Total | 96,071,332 | 89,932,919 | |||||||
Less: Accumulated depreciation | (52,520,405 | ) | (44,463,906 | ) | |||||
Property, plant and equipment, net | $ | 43,550,927 | $ | 45,469,013 |
LAND_USE_RIGHTS_Tables
LAND USE RIGHTS (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
LAND USE RIGHTS [Abstract] | |||||||||||||
Schedule of Land Use Rights | December 31, | December 31, | |||||||||||
2014 | 2013 | ||||||||||||
Cost | $ | 17,173,243 | $ | 16,718,332 | |||||||||
Less: Accumulated amortization | (2,751,514 | ) | (2,309,162 | ) | |||||||||
Land use rights, net | $ | 14,421,729 | $ | 14,409,170 |
INTANGIBLE_ASSETS_Tables
INTANGIBLE ASSETS (Tables) | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||
INTANGIBLE ASSETS [Abstract] | |||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Future estimated amortization expense is as follows: | ||||||||||||||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | ||||||||||||||||||
$ | 12,347 | $ | 12,347 | $ | 9,399 | $ | 3,568 | $ | - | $ | - |
PREPAYMENTS_Tables
PREPAYMENTS (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
PREPAYMENTS [Abstract] | |||||||||||||
Schedule of Prepayments | Prepayments consisted of the following as of December 31, 2014 and December 31, 2013: | ||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||
Raw material suppliers | $ | 2,938,396 | $ | 3,046,585 | |||||||||
Equipment purchases | 1,724,606 | 727,165 | |||||||||||
Total prepayments | $ | 4,663,002 | $ | 3,773,750 |
DEFERRED_TAX_ASSETS_AND_DEFERR1
DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES [Abstract] | |||||||||||||
Schedule of Deferred Tax Assets and Liabilities | Deferred tax assets as of December 31, 2014 and December 31, 2013 comprise of the following: | ||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||
Deferred tax assets - current | |||||||||||||
Allowance for doubtful accounts | $ | 990,496 | $ | 578,928 | |||||||||
Revenue (net of cost) | 8,653 | ||||||||||||
Unpaid accrued expenses | 180,392 | 105,558 | |||||||||||
Warranty | 848,566 | 699,816 | |||||||||||
Deferred tax assets | 2,019,454 | 1,392,955 | |||||||||||
Valuation allowance | ― | ― | |||||||||||
Net deferred tax assets - current | $ | 2,019,454 | $ | 1,392,955 | |||||||||
Deferred tax liabilities - current | |||||||||||||
Revenue (net of cost) | $ | 151,083 | $ | ― | |||||||||
Deferred tax liabilities - current | 151,083 | ― | |||||||||||
Net deferred tax assets - current | $ | 1,868,371 | $ | 1,392,955 |
SHORTTERM_BANK_LOANS_Tables
SHORT-TERM BANK LOANS (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
SHORT-TERM BANK LOANS [Abstract] | |||||||||||||
Schedule of Bank Loans | Bank loans represented the following as of December 31, 2014 and December 31, 2013: | ||||||||||||
December 31, | December 31, | ||||||||||||
2014 | 2013 | ||||||||||||
Secured | $ | 9,539,476 | $ | 4,526,863 | |||||||||
Schedule of Personal or Corporate Guarantees | As of December 31, 2014, corporate or personal guarantees provided for those bank loans were as follows: | ||||||||||||
$5,378,092 | Guaranteed by Ruili Group Co., Ltd., a related party. | ||||||||||||
$4.161,384 | Guaranteed by Ruili Group Co., Ltd., a related party, Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, the Company's principal stockholders. |
ACCRUED_EXPENSES_Tables
ACCRUED EXPENSES (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
ACCRUED EXPENSES [Abstract] | |||||||||||||
Schedule of Accrued Expenses | Accrued expenses consisted of the following as of December 31, 2014 and December 31, 2013: | ||||||||||||
December 31, | December 31, | ||||||||||||
2014 | |||||||||||||
2013 | |||||||||||||
Accrued payroll | $ | 2,859,430 | $ | 1,688,090 | |||||||||
Accrued warranty expenses | 5,657,106 | 4,665,439 | |||||||||||
Other accrued expenses | 5,044,627 | 3,713,440 | |||||||||||
Total accrued expenses | $ | 13,561,163 | $ | 10,066,969 |
CAPITAL_LEASE_OBLIGATIONS_Tabl
CAPITAL LEASE OBLIGATIONS (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
CAPITAL LEASE OBLIGATIONS [Abstract] | |||||||||||||
Schedule of Capital Lease Obligations | December 31, | December 31, | |||||||||||
2014 | 2013 | ||||||||||||
Total capital lease obligations | $ | 7,470,875 | $ | 10,909,463 | |||||||||
Less: current portion | $ | (3,735,438 | ) | $ | (3,636,488 | ) | |||||||
Non-current portion | $ | 3,735,437 | $ | 7,272,975 |
RESERVE_Tables
RESERVE (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
RESERVE [Abstract] | |||||||||||||
Schedule of Reserve Funds | The reserve funds were comprised of the following: | ||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||
Statutory surplus reserve fund | $ | 12,019,532 | $ | 10,609,435 | |||||||||
Total | $ | 12,019,532 | $ | 10,609,435 |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
INCOME TAXES [Abstract] | |||||||||||||
Schedule of Effective Income Tax Rate Reconciliation | The reconciliation of the effective income tax rate of the Joint Venture to the statutory income tax rate in the PRC for the years ended on December 31, 2014 and 2013 is as follows: | ||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||
US Statutory income tax rate | 35 | % | 35 | % | |||||||||
Valuation allowance recognized with respect to the loss in the US company | -35 | % | -35 | % | |||||||||
HK Statutory income tax rate | 16.5 | % | 16.5 | % | |||||||||
Valuation allowance recognized with respect to the loss in the HK company | -16.5 | % | -16.5 | % | |||||||||
China statutory income tax rate | 25 | % | 25 | % | |||||||||
Effect of income tax exemptions and reliefs | -10 | % | -10 | % | |||||||||
Effects of additional deduction allowed for R&D expenses | -1.81 | % | -4.5 | % | |||||||||
Effects of expenses not deductible for tax purposes | 1.47 | % | 4.08 | % | |||||||||
Other items | 1.26 | % | 1.71 | % | |||||||||
Effective tax rate | 15.92 | % | 16.29 | % | |||||||||
Schedule of Income Tax Provision | The provisions for income taxes for the years ended December 31, 2014 and 2013, respectively, are summarized as follows: | ||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||
Current | $ | 3,304,552 | $ | 3,043,158 | |||||||||
Deferred | (431,640 | ) | (995,102 | ) | |||||||||
Total | $ | 2,872,912 | $ | 2,048,056 |
NONCONTROLLING_INTEREST_IN_SUB1
NON-CONTROLLING INTEREST IN SUBSIDIARIES (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
NON-CONTROLLING INTEREST IN SUBSIDIARIES [Abstract] | |||||||||||||
Schedule of Noncontrolling Interest | 2014 | 2013 | |||||||||||
10% non-controlling interest in Ruian | $ | 1,566,774 | $ | 1,036,948 | |||||||||
40% non-controlling interest in SIH | (200,318 | ) | 127,120 | ||||||||||
Total | $ | 1,366,456 | 1,164,068 |
OPERATING_LEASES_WITH_RELATED_1
OPERATING LEASES WITH RELATED PARTIES (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Assets, Current [Abstract] | |||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments | As of December 31, 2014, future minimum rental payments are as follows: | ||||||||||||||||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | ||||||||||||||||||||
Operating Lease Commitments | $ | 1,673,097 | $ | 1,673,097 | $ | 1,673,097 | $ | 343,193 | $ | 343,193 | $ | 1,029,580 |
WARRANTY_CLAIMS_Tables
WARRANTY CLAIMS (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
WARRANTY CLAIMS [Abstract] | |||||
Schedule of Accrued Warranty Expenses | The movement of accrued warranty expenses for the year ended December 31, 2014 is as follows: | ||||
: | |||||
Beginning balance at January 1, 2014 | $ | 4,665,439 | |||
Aggregate increase for new warranties issued during current period | 2,374,861 | ||||
Aggregate reduction for payments made | (1,383,194 | ) | |||
Ending balance at December 31, 2014 | $ | 5,657,106 |
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Assets, Noncurrent [Abstract] | |||||||||
Schedule of Segment Information, by Segment | |||||||||
For Years Ended December 31, | |||||||||
2014 | 2013 | ||||||||
NET SALES TO EXTERNAL CUSTOMERS | |||||||||
Commercial vehicles brake systems | $ | 193,984,778 | $ | 169,270,207 | |||||
Passenger vehicles brake systems | 43,670,087 | 39,301,605 | |||||||
Net sales | $ | 237,654,865 | $ | 208,571,812 | |||||
INTERSEGMENT SALES | |||||||||
Commercial vehicles brake systems | $ | — | $ | — | |||||
Passenger vehicles brake systems | — | — | |||||||
Intersegment sales | $ | — | $ | — | |||||
GROSS PROFIT | |||||||||
Commercial vehicles brake systems | $ | 54,575,006 | $ | 47,576,255 | |||||
Passenger vehicles brake systems | 12,285,991 | 11,046,381 | |||||||
Gross profit | $ | 66,860,997 | $ | 58,622,636 | |||||
Other operating income | 2,270,147 | 2,074,520 | |||||||
Selling and distribution expenses | 23,676,176 | 20,906,914 | |||||||
General and administrative expenses | 18,011,110 | 17,379,521 | |||||||
Research and development expenses | 7,601,342 | 7,550,010 | |||||||
Income from operations | 19,842,516 | 14,860,711 | |||||||
Interest expense | (1,135,177 | ) | (1,399,851 | ) | |||||
Other income | 606,112 | 524,370 | |||||||
Other expense | (1,273,053 | ) | (1,410,141 | ) | |||||
Income before income tax expense | $ | 18,040,398 | $ | 12,575,089 | |||||
CAPITAL EXPENDITURE | |||||||||
Commercial vehicles brake systems | $ | 3,267,571 | $ | 3,958,531 | |||||
Passenger vehicles brake systems | 735,599 | 919,102 | |||||||
Total | $ | 4,003,170 | $ | 4,877,633 | |||||
DEPRECIATION AND AMORTIZATION | |||||||||
Commercial vehicles brake systems | $ | 6,029,569 | $ | 5,833,603 | |||||
Passenger vehicles brake systems | 1,357,384 | 1,354,461 | |||||||
Total | $ | 7,386,953 | $ | 7,188,064 | |||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
TOTAL ASSETS | |||||||||
Commercial vehicles brake systems | $ | 234,186,022 | $ | 205,310,702 | |||||
Passenger vehicles brake systems | 52,720,240 | 47,669,582 | |||||||
Total | $ | 286,906,262 | $ | 252,980,284 | |||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
LONG LIVED ASSETS | |||||||||
Commercial vehicles brake systems | $ | 48,956,149 | $ | 50,413,024 | |||||
Passenger vehicles brake systems | 11,021,067 | 11,705,029 | |||||||
Total | $ | 59,977,216 | $ | 62,118,053 |
Additional_InformationFinancia1
Additional Information-Financial Statement Schedule I (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Assets, Noncurrent [Abstract] | |||||||||||||||||||||
Schedule of Condensed Consolidated Statement of Changes in Stockholders' Equity | Financial Information of Parent Company | ||||||||||||||||||||
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | |||||||||||||||||||||
For Years Ended December 31, 2014 and 2013 | |||||||||||||||||||||
Additional | Total | ||||||||||||||||||||
Number | Common | Paid-in | Retained | Stockholders' | |||||||||||||||||
of Share | Stock | Capital | Earnings | Equity | |||||||||||||||||
Beginning Balance - January 1, 2014 | 19,304,921 | $ | 38,609 | $ | 42,199,014 | $ | 116,366,328 | $ | 158,603,951 | ||||||||||||
Net Income | - | - | - | 14,100,968 | 14,100,968 | ||||||||||||||||
Ending Balance - December 31, 2014 | 19,304,921 | $ | 38,609 | $ | 42,199,014 | $ | 130,467,296 | $ | 172,704,919 | ||||||||||||
Additional | Total | ||||||||||||||||||||
Number | Common | Paid-in | Accumulated | Stockholders' | |||||||||||||||||
of Share | Stock | Capital | Earnings | Equity | |||||||||||||||||
Beginning Balance - January 1, 2013 | 19,304,921 | $ | 38,609 | $ | 42,199,014 | $ | 107,033,933 | $ | 149,271,556 | ||||||||||||
Net Income | - | - | - | 9,332,395 | 9,332,395 | ||||||||||||||||
Ending Balance - December 31, 2013 | 19,304,921 | $ | 38,609 | $ | 42,199,014 | $ | 116,366,328 | $ | 158,603,951 | ||||||||||||
Schedule of Condensed Balance Sheets | Financial Information of Parent Company | ||||||||||||||||||||
BALANCE SHEETS | |||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2014 | |||||||||||||||||||||
2013 | |||||||||||||||||||||
ASSETS | |||||||||||||||||||||
Current Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 81,036 | $ | 81,036 | |||||||||||||||||
Other current assets | 6,161 | 6,161 | |||||||||||||||||||
Total Current Assets | 87,197 | 87,197 | |||||||||||||||||||
Investments in subsidiaries | 175,539,210 | 161,438,242 | |||||||||||||||||||
TOTAL ASSETS | $ | 175,626,407 | $ | 161,525,439 | |||||||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||||||||
Current Liabilities: | |||||||||||||||||||||
Other current liability | 2,921,488 | 2,921,488 | |||||||||||||||||||
Total Current Liabilities | 2,921,488 | 2,921,488 | |||||||||||||||||||
Total Liabilities | 2,921,488 | 2,921,488 | |||||||||||||||||||
Stockholders' Equity: | |||||||||||||||||||||
Preferred stock - no par value; 1,000,000 authorized; none issued and outstanding as of December 31, 2014 and December 31, 2013 | - | - | |||||||||||||||||||
Common stock - $0.002 par value; 50,000,000 authorized, 19,304,921 issued and outstanding as of December 31, 2014 and 2013 | 38,609 | 38,609 | |||||||||||||||||||
Additional paid-in capital | 42,199,014 | 42,199,014 | |||||||||||||||||||
Retained earnings | 130,467,296 | 116,366,328 | |||||||||||||||||||
Total Stockholders' Equity | 172,704,919 | 158,603,951 | |||||||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 175,626,407 | $ | 161,525,439 | |||||||||||||||||
Schedule of Condensed Statements of Income | Financial Information of Parent Company | ||||||||||||||||||||
STATEMENTS OF INCOME | |||||||||||||||||||||
For Years Ended December 31, | |||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Investment income | $ | 14,100,968 | $ | 9,332,525 | |||||||||||||||||
General and administrative expenses | - | 130 | |||||||||||||||||||
Net income attributable to stockholders | $ | 14,100,968 | $ | 9,332,395 | |||||||||||||||||
Weighted average common share - Basic | 19,304,921 | 19,304,921 | |||||||||||||||||||
Weighted average common share - Diluted | 19,304,921 | 19,304,921 | |||||||||||||||||||
EPS - Basic | $ | 0.73 | $ | 0.48 | |||||||||||||||||
EPS - Diluted | $ | 0.73 | $ | 0.48 | |||||||||||||||||
Schedule of Condensed Statements of Cash Flows | Financial Information of Parent Company | ||||||||||||||||||||
STATEMENTS OF CASH FLOWS | |||||||||||||||||||||
For Years Ended December 31, | |||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Cash flow from operating activities: | |||||||||||||||||||||
Net income | $ | 14,100,968 | $ | 9,332,395 | |||||||||||||||||
Adjustments to reconcile net income to net cash used in operating activities : | |||||||||||||||||||||
Investment in subsidiaries | (14,100,968 | ) | (9,332,525 | ) | |||||||||||||||||
Net cash used in operating activities | - | (130 | ) | ||||||||||||||||||
Net change in cash and cash equivalents | - | (130 | ) | ||||||||||||||||||
Cash and cash equivalents, beginning of period | 81,036 | 81,166 | |||||||||||||||||||
Cash and cash equivalents, end of period | $ | 81,036 | $ | 81,036 | |||||||||||||||||
DESCRIPTION_OF_BUSINESS_Detail
DESCRIPTION OF BUSINESS (Details) | 0 Months Ended | 12 Months Ended | 1 Months Ended | |||||||||||||||
Feb. 08, 2010 | Dec. 31, 2014 | Dec. 31, 2013 | Aug. 31, 2010 | Aug. 31, 2010 | Aug. 31, 2010 | Aug. 31, 2010 | Aug. 31, 2010 | Dec. 31, 2014 | Mar. 09, 2010 | Dec. 31, 2014 | Dec. 31, 2014 | Mar. 09, 2010 | Feb. 08, 2010 | Nov. 11, 2009 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | |
USD ($) | USD ($) | USD ($) | Asset acquisition agreement, Ruili Group [Member] | Asset acquisition agreement, Ruili Group [Member] | Asset acquisition agreement, Ruili Group [Member] | Asset acquisition agreement, Ruili Group [Member] | Asset acquisition agreement, Ruili Group [Member] | Ruili Group Co., Ltd., [Member] | Ruili Group Co., Ltd., [Member] | Ruili Group Co., Ltd., [Member] | SORL International Holding, Ltd. [Member] | SORL International Holding, Ltd. [Member] | SORL International Holding, Ltd. [Member] | SORL International Holding, Ltd. [Member] | SORL International Holding, Ltd. [Member] | MGR Hong Kong Limited [Member] | Taiwanese Investor [Member] | |
USD ($) | CNY | Machinery and Equipment [Member] | Inventory [Member] | Accounts Receivable [Member] | USD ($) | Chief Executive Officer [Member] | USD ($) | USD ($) | Chief Executive Officer [Member] | SIH Joint Venture [Member] | SIH Joint Venture [Member] | |||||||
USD ($) | USD ($) | USD ($) | ||||||||||||||||
Description Of Business [Line Items] | ||||||||||||||||||
Ownership Percentage | 90.00% | 63.00% | 60.00% | 60.00% | 50.00% | 30.00% | 10.00% | |||||||||||
Common stock, price per share | $10 | |||||||||||||||||
Stock issued, shares | 1,000,000 | |||||||||||||||||
Proceeds from share issuance | $9,400,000 | |||||||||||||||||
Investment in subsidiaries | 1,000,000 | 9,400,000 | ||||||||||||||||
Noncontrolling interest in subsidiary | 10.00% | 40.00% | ||||||||||||||||
Purchase price of acquired entity | 8,000,000 | 8,000,000 | 5,200,000 | |||||||||||||||
Purchase price of assets acquired | 4,003,170 | 4,877,633 | 25,000,000 | 170,000,000 | ||||||||||||||
Additional paid-in capital | 42,199,014 | 42,199,014 | 43,400,000 | |||||||||||||||
Increased paid in capital | $53,800,000 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Short-term Debt [Line Items] | ||
Short-term loans, minimum interest rate | 1.58% | |
Short-term loans, maximum interest rate | 3.33% | |
Research and development expenses | $7,601,342 | $7,550,010 |
Shipping and handling costs | 5,610,737 | 3,980,078 |
Advertising expense | 339,551 | 270,145 |
Warranty costs | $2,374,861 | $2,163,950 |
Lease agreement terms | The lease term is equal to 75% of the estimated economic life of the leased property or more. | |
Bank Loans [Member] | ||
Short-term Debt [Line Items] | ||
Short-term loans, minimum interest rate | 1.58% | |
Short-term loans, maximum interest rate | 6.45% | |
Bank Loans [Member] | Maximum [Member] | ||
Short-term Debt [Line Items] | ||
Short-term loans, term | 15 months | |
Bank Loans [Member] | Minimum [Member] | ||
Short-term Debt [Line Items] | ||
Short-term loans, term | 2 months | |
Land use rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization period | 45 years |
SUMMARY_OF_SIGNIFICANT_ACCOUNT4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Estimated Useful Lives of Property Plant and Equipment) (Details) | 12 Months Ended |
Dec. 31, 2014 | |
Buildings [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (Years) | 10 years |
Buildings [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (Years) | 20 years |
Machinery and equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (Years) | 5 years |
Machinery and equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (Years) | 10 years |
Electronic equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (Years) | 5 years |
Motor vehicles [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (Years) | 5 years |
Motor vehicles [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (Years) | 10 years |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (Years) | The lesser of remaining lease term or 10 |
RELATED_PARTY_TRANSACTIONS_Sch
RELATED PARTY TRANSACTIONS (Schedule of Related Party Transactions) (Details) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
USD ($) | USD ($) | Guangzhou Kormee Vehicle Brake Technology Development Co., Ltd. [Member] | Guangzhou Kormee Vehicle Brake Technology Development Co., Ltd. [Member] | Ruian Kormee Vehicle Brake Co., Ltd. [Member] | Ruian Kormee Vehicle Brake Co., Ltd. [Member] | Ruili Group Co., Ltd., [Member] | Ruili Group Co., Ltd., [Member] | Ruili Group Co., Ltd., [Member] | Ruili Group Co., Ltd., [Member] | Ruili Group Co., Ltd., [Member] | Ruili Group Co., Ltd., [Member] | MGR Hong Kong Limited [Member] | MGR Hong Kong Limited [Member] | |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Credit Line By Bank Of Ningbo [Member] | Credit Line By Bank Of Ningbo [Member] | Credit Line By China Zheshang Bank [Member] | Credit Line By China Zheshang Bank [Member] | USD ($) | USD ($) | |||
USD ($) | CNY | USD ($) | CNY | |||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Total Purchases | $7,185,201 | $7,695,172 | $2,194,995 | $2,066,084 | $1,250,174 | $1,760,213 | $3,740,032 | $3,868,875 | ||||||
Total Sales | 1,618,349 | 2,524,019 | 278,382 | 693,122 | 213,974 | 87,868 | 1,618,349 | 1,743,029 | ||||||
Total prepayment to related parties | 83,206 | 83,206 | ||||||||||||
Total accounts payable to related parties | 136,609 | 810,310 | 59,011 | 445,896 | 77,598 | 364,414 | ||||||||
Total other payables to related parties | 17,681 | 94,246 | 17,681 | 94,246 | ||||||||||
Guarantee amount | $17,182,404 | 108,000,000 | $24,016,996 | 146,960,000 |
ACCOUNTS_RECEIVABLE_NET_Schedu
ACCOUNTS RECEIVABLE, NET (Schedule of Accounts Receivable) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
ACCOUNTS RECEIVABLE, NET [Abstract] | ||
Accounts receivable | $74,646,974 | $61,725,799 |
Less: allowance for doubtful accounts | -6,475,587 | -3,813,415 |
Accounts receivable balance, net | 68,171,387 | 57,912,384 |
Beginning balance | 3,813,415 | 998,492 |
Add: Increase to allowance | 2,662,172 | 2,814,923 |
Less: Accounts written off | ||
Ending balance | $6,475,587 | $3,813,415 |
INVENTORIES_Schedule_of_Invent
INVENTORIES (Schedule of Inventories) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
INVENTORIES [Abstract] | ||
Raw Materials | $11,934,720 | $12,380,061 |
Work in process | 30,020,125 | 31,546,330 |
Finished Goods | 42,400,202 | 32,466,337 |
Less: Write-down of inventories | -168,281 | -28,709 |
Total Inventory | $84,186,766 | $76,364,019 |
PROPERTY_PLANT_AND_EQUIPMENT_S
PROPERTY, PLANT AND EQUIPMENT (Schedule of Property, Plant and Equipment) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $96,071,332 | $89,932,919 |
Less: accumulated depreciation | -52,520,405 | -44,463,906 |
Property, plant and equipment, net | 43,550,927 | 45,469,013 |
Depreciation | 6,998,738 | 6,802,293 |
Machinery [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 51,619,990 | 46,475,961 |
Molds [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 1,425,992 | 1,388,218 |
Office equipments [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 2,257,208 | 1,960,476 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 2,040,061 | 2,248,280 |
Buildings [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 9,152,959 | 8,910,501 |
Machinery held under capital lease [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 29,012,601 | 28,396,853 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $562,521 | $552,630 |
LAND_USE_RIGHTS_Narrative_Deta
LAND USE RIGHTS (Narrative) (Details) | 12 Months Ended | 1 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Sep. 28, 2007 | |
USD ($) | USD ($) | CNY | Ruili Group Co Ltd [Member] | |
USD ($) | ||||
Land Use Rights [Line Items] | ||||
Amortization expense, land use rights | $374,425 | $369,008 | ||
Payment to acquire land use rights and building | 20,000,000 | |||
Payment to acquire building | 6,700,000 | |||
Tax rate, land use right | 3.00% | |||
Relevant tax amount reserved | $745,220 | 4,560,000 |
LAND_USE_RIGHTS_Schedule_of_La
LAND USE RIGHTS (Schedule of Land Use Rights) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
LAND USE RIGHTS [Abstract] | ||
Cost | $17,173,243 | $16,718,332 |
Less: Accumulated amortization | -2,751,514 | -2,309,162 |
Land use rights, net | $14,421,729 | $14,409,170 |
INTANGIBLE_ASSETS_Narrative_De
INTANGIBLE ASSETS (Narrative) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
INTANGIBLE ASSETS [Abstract] | ||
Gross intangible assets | $181,099 | $176,302 |
Less: accumulated amortization | 143,438 | 126,031 |
Net intangible assets | 37,661 | 50,271 |
Amortization expense | $13,790 | $16,763 |
INTANGIBLE_ASSETS_Schedule_of_
INTANGIBLE ASSETS (Schedule of Future Estimated Amortization Expense) (Details) (USD $) | Dec. 31, 2014 |
INTANGIBLE ASSETS [Abstract] | |
2015 | $12,347 |
2016 | 12,347 |
2017 | 9,399 |
2018 | 3,568 |
2019 | |
Thereafter |
PREPAYMENTS_Schedule_of_Prepay
PREPAYMENTS (Schedule of Prepayments) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
PREPAYMENTS [Abstract] | ||
Raw material suppliers | $2,938,396 | $3,046,585 |
Equipment purchases | 1,724,606 | 727,165 |
Total prepayments | $4,663,002 | $3,773,750 |
DEFERRED_TAX_ASSETS_AND_DEFERR2
DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES (Schedule of Deferred Tax Assets and Liabilities) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred tax assets - current | ||
Allowance for doubtful accounts | $990,496 | $578,928 |
Revenue (net of cost) | 8,653 | |
Unpaid accrued expenses | 180,392 | 105,558 |
Warranty | 848,566 | 699,816 |
Deferred tax assets | 2,019,454 | 1,392,955 |
Valuation allowance | ||
Net deferred tax assets - current | 2,019,454 | 1,392,955 |
Deferred tax liabilities - current | ||
Revenue (net of cost) | 151,083 | |
Deferred tax liabilities - current | 151,083 | |
Net deferred tax assets - current | $1,868,371 | $1,392,955 |
SHORTTERM_BANK_LOANS_Schedule_
SHORT-TERM BANK LOANS (Schedule of Bank Loans) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
SHORT-TERM BANK LOANS [Abstract] | ||
Secured | $9,539,476 | $4,526,863 |
SHORTTERM_BANK_LOANS_Narrative
SHORT-TERM BANK LOANS (Narrative) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Short-term Debt [Line Items] | ||
Short-term loans, minimum interest rate | 1.58% | |
Short-term loans, maximum interest rate | 3.33% | |
Maturity date, minimum | 13-Jan-15 | |
Maturity date, maximum | 27-Nov-15 | |
Bank Loans [Member] | ||
Short-term Debt [Line Items] | ||
Short-term loans, minimum interest rate | 1.58% | |
Short-term loans, maximum interest rate | 6.45% | |
Collateral amount under loan arrangements | $12,328,735 | $5,833,625 |
Ruili Group Co., Ltd., [Member] | ||
Short-term Debt [Line Items] | ||
Corporate or personal guarantees | 5,378,092 | |
Ruili Group Co., Ltd. and related parties [Member] | ||
Short-term Debt [Line Items] | ||
Corporate or personal guarantees | $4.16 |
ACCRUED_EXPENSES_Schedule_of_A
ACCRUED EXPENSES (Schedule of Accrued Expenses) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
ACCRUED EXPENSES [Abstract] | ||
Accrued payroll | $2,859,430 | $1,688,090 |
Accrued warranty expenses | 5,657,106 | 4,665,439 |
Other accrued expenses | 5,044,627 | 3,713,440 |
Total accrued expenses | $13,561,163 | $10,066,969 |
CAPITAL_LEASE_OBLIGATIONS_Sche
CAPITAL LEASE OBLIGATIONS (Schedule of Capital Lease Obligations) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
CAPITAL LEASE OBLIGATIONS [Abstract] | ||
Total Capital Lease Obligations | $7,470,875 | $10,909,463 |
Less: Current portion | -3,735,438 | -3,636,488 |
Non-current portion | $3,735,437 | $7,272,975 |
CAPITAL_LEASE_OBLIGATIONS_Narr
CAPITAL LEASE OBLIGATIONS (Narrative) (Details) | Dec. 31, 2014 | Dec. 31, 2013 | Sep. 13, 2011 | Dec. 31, 2014 | Dec. 31, 2014 |
USD ($) | USD ($) | Capital Lease Obligations [Member] | Capital Lease Obligations [Member] | Capital Lease Obligations [Member] | |
USD ($) | CNY | ||||
Debt Instrument [Line Items] | |||||
Lease term | 60 months | 48 months | 48 months | ||
Lease Expiration Date | 4-Jan-17 | 4-Jan-17 | |||
Interest rate | 7.95% | 6.40% | 6.40% | ||
Lease collateral amount | $28,396,853 | ||||
Capital lease oblication obtained | 14,545,950 | 91,428,571 | |||
Security deposits on lease agreement | 1,867,719 | 1,818,244 | 1,818,244 | 11,428,571 | |
Capital lease, prepaid interest | 1,703,212 | 10,705,357 | |||
Capital lease, frequency of payments | Monthly | Monthly | |||
Capital lease, periodic payment amount | $303,041 | 1,904,761.90 |
RESERVE_Schedule_of_Reserve_Fu
RESERVE (Schedule of Reserve Funds) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
RESERVE [Abstract] | ||
Statutory surplus reserve fund | $12,019,532 | $10,609,435 |
Total | $12,019,532 | $10,609,435 |
INCOME_TAXES_Narrative_Details
INCOME TAXES (Narrative) (Details) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
INCOME TAXES [Abstract] | ||
China statutory income tax rate | 25.00% | 25.00% |
INCOME_TAXES_Schedule_of_Effec
INCOME TAXES (Schedule of Effective Tax Rate Reconciliation) (Details) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax [Line Items] | ||
China statutory income tax rate | 25.00% | 25.00% |
Effect of income tax exemptions and reliefs | -10.00% | -10.00% |
Effects of additional deduction allowed for R&D expenses | -1.81% | -4.50% |
Effects of expenses not deductible for tax purposes | 1.47% | 4.08% |
Other items | 1.26% | 1.71% |
Effective tax rate | 15.92% | 16.29% |
US [Member] | ||
Income Tax [Line Items] | ||
Foreign Statutory income tax rate | 35.00% | 35.00% |
Valuation allowance recognized with respect to the loss in the company | -35.00% | -35.00% |
Hong Kong [Member] | ||
Income Tax [Line Items] | ||
Foreign Statutory income tax rate | 16.50% | 16.50% |
Valuation allowance recognized with respect to the loss in the company | -16.50% | -16.50% |
INCOME_TAXES_Schedule_of_Provi
INCOME TAXES (Schedule of Provision for Income Taxes) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
INCOME TAXES [Abstract] | ||
Current | $3,304,552 | $3,043,158 |
Deferred income taxs | -431,640 | -995,102 |
Total | $2,872,912 | $2,048,056 |
NONCONTROLLING_INTEREST_IN_SUB2
NON-CONTROLLING INTEREST IN SUBSIDIARIES (Schedule of Noncontrolling Interest) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Noncontrolling Interest [Line Items] | ||
Net income attributable to noncontrolling interest in subsidiaries | $1,366,456 | $1,164,068 |
Ruili Group Co., Ltd., [Member] | ||
Noncontrolling Interest [Line Items] | ||
Net income attributable to noncontrolling interest in subsidiaries | 1,566,774 | 1,036,948 |
Noncontrolling interest in subsidiary | 10.00% | |
SORL International Holding, Ltd. [Member] | ||
Noncontrolling Interest [Line Items] | ||
Net income attributable to noncontrolling interest in subsidiaries | ($200,318) | $127,120 |
Noncontrolling interest in subsidiary | 40.00% |
OPERATING_LEASES_WITH_RELATED_2
OPERATING LEASES WITH RELATED PARTIES (Narrative) (Details) | 12 Months Ended | ||||||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | |
USD ($) | USD ($) | Ruili Group Co., Ltd., [Member] | Ruili Group Co., Ltd., [Member] | Ruili Group Co., Ltd., [Member] | Ruili Group Co., Ltd., [Member] | Ruili Group Co., Ltd., [Member] | Ruili Group Co., Ltd., [Member] | Ruili Group Co., Ltd., [Member] | |
Apartment Buildings [Member] | Apartment Buildings [Member] | Apartment Buildings [Member] | Manufacturing Plant [Member] | Manufacturing Plant [Member] | Manufacturing Plant [Member] | Manufacturing Plant [Member] | |||
USD ($) | CNY | First Lease Agreement [Member] | USD ($) | CNY | First Lease Agreement [Member] | Second Lease Agreement [Member] | |||
sqm | |||||||||
Operating Leased Assets [Line Items] | |||||||||
Number of apartments | 2 | 2 | |||||||
Lease beginning date | 1-Jan-13 | 1-Jan-13 | 1-Jan-13 | 1-Jan-13 | 1-Jan-13 | 1-Sep-09 | 1-Sep-09 | ||
Lease expiration date | 31-Dec-22 | 31-Dec-22 | 31-Dec-16 | 31-Dec-17 | 31-Dec-17 | 31-May-17 | 31-Aug-20 | ||
Area of manufacturing plant | 32,410 | 32,410 | |||||||
Lease expenses | $1,650,640 | $1,626,759 | $333,688 | 2,100,000 | $1,293,070 | 8,137,680 |
OPERATING_LEASES_WITH_RELATED_3
OPERATING LEASES WITH RELATED PARTIES (Schedule of Future Minimum Rental Payments) (Details) (USD $) | Dec. 31, 2014 |
OPERATING LEASES WITH RELATED PARTIES [Abstract] | |
2015 | $1,673,097 |
2016 | 1,673,097 |
2017 | 1,673,097 |
2018 | 343,193 |
2019 | 343,193 |
Thereafter | $1,029,580 |
WARRANTY_CLAIMS_Schedule_of_Ac
WARRANTY CLAIMS (Schedule of Accrued Warranty Expenses) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
WARRANTY CLAIMS [Abstract] | ||
Beginning balance at January 01, 2014 | $4,665,439 | |
Aggregate increase for new warranties issued during current period | 2,374,861 | 2,163,950 |
Aggregate reduction for payments made | -1,383,194 | |
Ending balance at December 31, 2014 | $5,657,106 | $4,665,439 |
SEGMENT_INFORMATION_Schedule_o
SEGMENT INFORMATION (Schedule of Segment Information, by Segment) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Segment Reporting Information [Line Items] | ||
Sales | $237,654,865 | $208,571,812 |
Gross profit | 66,860,997 | 58,622,636 |
Other operating income | 2,270,147 | 2,074,520 |
Selling and distribution expenses | 23,676,176 | 20,906,914 |
General and administrative expenses | 18,011,110 | 17,379,521 |
Research and development expenses | 7,601,342 | 7,550,010 |
Income from operations | 19,842,516 | 14,860,711 |
Interest expense | -1,135,177 | -1,399,851 |
Other income | 606,112 | 524,370 |
Other expense | 1,273,053 | 1,410,141 |
Income before income tax expense | 18,040,398 | 12,575,089 |
CAPITAL EXPENDITURE | 4,003,170 | 4,877,633 |
DEPRECIATION AND AMORTIZATION | 7,386,953 | 7,188,064 |
Total Assets | 286,906,262 | 252,980,284 |
Long Lived Assets | 59,977,216 | 62,118,053 |
INTERSEGMENT SALES [Member] | ||
Segment Reporting Information [Line Items] | ||
Sales | ||
Commercial Vehicles Brake Systems [Member] | ||
Segment Reporting Information [Line Items] | ||
Sales | 193,984,778 | 169,270,207 |
Gross profit | 54,575,006 | 47,576,255 |
CAPITAL EXPENDITURE | 3,267,571 | 3,958,531 |
DEPRECIATION AND AMORTIZATION | 6,029,569 | 5,833,603 |
Total Assets | 234,186,022 | 205,310,702 |
Long Lived Assets | 48,956,149 | 50,413,024 |
Commercial Vehicles Brake Systems [Member] | INTERSEGMENT SALES [Member] | ||
Segment Reporting Information [Line Items] | ||
Sales | ||
Passenger Vehicles Brake Systems [Member] | ||
Segment Reporting Information [Line Items] | ||
Sales | 43,670,087 | 39,301,605 |
Gross profit | 12,285,991 | 11,046,381 |
CAPITAL EXPENDITURE | 735,599 | 919,102 |
DEPRECIATION AND AMORTIZATION | 1,357,384 | 1,354,461 |
Total Assets | 52,720,240 | 47,669,582 |
Long Lived Assets | 11,021,067 | 11,705,029 |
Passenger Vehicles Brake Systems [Member] | INTERSEGMENT SALES [Member] | ||
Segment Reporting Information [Line Items] | ||
Sales |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details) (Ruili Group Co., Ltd., [Member]) | 1 Months Ended | ||||
Sep. 28, 2007 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | |
USD ($) | Credit Line By Bank Of Ningbo [Member] | Credit Line By Bank Of Ningbo [Member] | Credit Line By China Zheshang Bank [Member] | Credit Line By China Zheshang Bank [Member] | |
USD ($) | CNY | USD ($) | CNY | ||
Commitments and Contingencies [Line Items] | |||||
Payment to acquire land use rights and building | $20,000,000 | ||||
Guarantee amount | $17,182,404 | 108,000,000 | $24,016,996 | 146,960,000 |
Additional_InformationFinancia2
Additional Information-Financial Statement Schedule I (Schedule of Balance Sheets) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Current Assets | |||
Cash and cash equivalents | $14,009,597 | $28,241,983 | $41,253,353 |
Other current assets | 1,282,182 | 2,537,300 | |
Total Current Assets | 226,929,046 | 190,862,231 | |
Total Assets | 286,906,262 | 252,980,284 | |
Current Liabilities | |||
Other current liability | 2,131,527 | 256,430 | |
Total Current Liabilities | 62,981,195 | 46,203,348 | |
Total Liabilities | 66,716,632 | 53,476,323 | |
Stockholders' Equity | |||
Preferred stock - no par value; 1,000,000 authorized; none issued and outstanding as of December 31, 2014 and 2013 | |||
Common stock - $0.002 par value; 50,000,000 authorized, 19,304,921 issued and outstanding as of December 31, 2014 and 2013 | 38,609 | 38,609 | |
Additional paid-in capital | 42,199,014 | 42,199,014 | |
Total SORL Auto Parts, Inc. Stockholders' Equity | 198,708,414 | 179,856,898 | |
Total Liabilities and Equity | 286,906,262 | 252,980,284 | |
Parent Company [Member] | |||
Current Assets | |||
Cash and cash equivalents | 81,036 | 81,036 | 81,166 |
Other current assets | 6,161 | 6,161 | |
Total Current Assets | 87,197 | 87,197 | |
Investment in subsidiaries | 175,539,210 | 161,438,242 | |
Total Assets | 175,626,407 | 161,525,439 | |
Current Liabilities | |||
Other current liability | 2,921,488 | 2,921,488 | |
Total Current Liabilities | 2,921,488 | 2,921,488 | |
Total Liabilities | 2,921,488 | 2,921,488 | |
Stockholders' Equity | |||
Preferred stock - no par value; 1,000,000 authorized; none issued and outstanding as of December 31, 2014 and 2013 | |||
Common stock - $0.002 par value; 50,000,000 authorized, 19,304,921 issued and outstanding as of December 31, 2014 and 2013 | 38,609 | 38,609 | |
Additional paid-in capital | 42,199,014 | 42,199,014 | |
Retained earnings | 130,467,296 | 116,366,328 | |
Total SORL Auto Parts, Inc. Stockholders' Equity | 172,704,919 | 158,603,951 | 149,271,556 |
Total Liabilities and Equity | $175,626,407 | $161,525,439 |
Additional_InformationFinancia3
Additional Information-Financial Statement Schedule I (Schedule of Statements of Income) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Condensed Financial Statements, Captions [Line Items] | ||
General and administrative expenses | $18,011,110 | $17,379,521 |
Net income attributable to common stockholders | 13,801,030 | 9,362,965 |
Weighted average common share - Basic | 19,304,921 | 19,304,921 |
Weighted average common share - Diluted | 19,304,921 | 19,304,921 |
EPS - Basic | $0.71 | $0.49 |
EPS - Diluted | $0.71 | $0.49 |
Parent Company [Member] | ||
Condensed Financial Statements, Captions [Line Items] | ||
Investment income | 14,100,968 | 9,332,525 |
General and administrative expenses | 130 | |
Net income attributable to common stockholders | $14,100,968 | $9,332,395 |
Weighted average common share - Basic | 19,304,921 | 19,304,921 |
Weighted average common share - Diluted | 19,304,921 | 19,304,921 |
EPS - Basic | $0.73 | $0.48 |
EPS - Diluted | $0.73 | $0.48 |
Additional_InformationFinancia4
Additional Information-Financial Statement Schedule I (Schedule of Statements of Cash Flows) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flow from operating activities: | ||
Net income | $13,801,030 | $9,362,965 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Changes in other current assets | 1,200,416 | -2,779,274 |
Net Cash Flows Provided By Operating Activities | 22,561,194 | 1,353,983 |
Net change in cash and cash equivalents | -14,232,386 | -13,011,370 |
Cash and cash equivalents- beginning of the year | 28,241,983 | 41,253,353 |
Cash and cash equivalents - end of the year | 14,009,597 | 28,241,983 |
Parent Company [Member] | ||
Cash flow from operating activities: | ||
Net income | 14,100,968 | 9,332,395 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Investment in subsidiaries | -14,100,968 | -9,332,525 |
Net Cash Flows Provided By Operating Activities | -130 | |
Net change in cash and cash equivalents | -130 | |
Cash and cash equivalents- beginning of the year | 81,036 | 81,166 |
Cash and cash equivalents - end of the year | $81,036 | $81,036 |
Additional_InformationFinancia5
Additional Information-Financial Statement Schedule I (Schedule of Stockholders' Equity) (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Condensed Financial Statements, Captions [Line Items] | |||
Balance | $179,856,898 | ||
Balance, shares | 19,304,921 | ||
Net income | 13,801,030 | 9,362,965 | |
Balance | 198,708,414 | 179,856,898 | |
Balance, shares | 19,304,921 | 19,304,921 | |
Common Stock [Member] | |||
Condensed Financial Statements, Captions [Line Items] | |||
Balance, shares | 19,304,921 | ||
Balance, shares | 19,304,921 | 19,304,921 | 19,304,921 |
Parent Company [Member] | |||
Condensed Financial Statements, Captions [Line Items] | |||
Balance | 158,603,951 | 149,271,556 | |
Net income | 14,100,968 | 9,332,395 | |
Balance | 172,704,919 | 158,603,951 | |
Parent Company [Member] | Common Stock [Member] | |||
Condensed Financial Statements, Captions [Line Items] | |||
Balance | 38,609 | 38,609 | |
Balance, shares | 19,304,921 | 19,304,921 | |
Net income | |||
Balance | 38,609 | 38,609 | |
Balance, shares | 19,304,921 | 19,304,921 | |
Parent Company [Member] | Additional paid-in capital [Member] | |||
Condensed Financial Statements, Captions [Line Items] | |||
Balance | 42,199,014 | 42,199,014 | |
Net income | |||
Balance | 42,199,014 | 42,199,014 | |
Parent Company [Member] | Accumulated Earnings (Deficit) [Member] | |||
Condensed Financial Statements, Captions [Line Items] | |||
Balance | 116,366,328 | 107,033,933 | |
Net income | 14,100,968 | 9,332,395 | |
Balance | $130,467,296 | $116,366,328 |