Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 31, 2017 | Jun. 30, 2016 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | SORL Auto Parts Inc | ||
Entity Central Index Key | 714,284 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 14,540,298 | ||
Trading Symbol | SORL | ||
Entity Common Stock, Shares Outstanding | 19,304,921 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 8,057,155 | $ 30,230,828 |
Accounts receivable, net, including $5,025,509 and $- from related parties at December 31, 2016 and 2015, respectively | 102,129,294 | 71,823,328 |
Bank acceptance notes from customers | 42,697,276 | 22,870,791 |
Short term investments | 0 | 61,007,709 |
Inventories, net | 65,776,517 | 73,661,860 |
Prepayments | 10,797,601 | 3,350,607 |
Current portion of prepaid capital lease interest | 0 | 93,458 |
Restricted cash | 5,476,621 | 785,999 |
Other current assets | 1,124,608 | 1,241,864 |
Deferred tax assets | 3,210,575 | 2,909,729 |
Total Current Assets | 239,269,647 | 267,976,173 |
Property, plant and equipment, net | 53,737,706 | 37,561,905 |
Land use rights, net | 8,309,333 | 13,232,149 |
Intangible assets, net | 11,438 | 23,854 |
Security deposits on lease agreement | 0 | 1,759,975 |
Total Non-Current Assets | 62,058,477 | 52,577,883 |
Total Assets | 301,328,124 | 320,554,056 |
Current Liabilities | ||
Accounts payable and bank acceptance notes to vendors, including $1,953,707 and $1,133,537 due to related parties at December 31, 2016 and 2015, respectively. | 65,672,626 | 35,292,277 |
Deposit received from customers | 22,733,742 | 20,012,087 |
Short term bank loans | 27,416,376 | 23,367,207 |
Income tax payable | 996,522 | 0 |
Accrued expenses | 20,103,392 | 13,870,587 |
Capital lease obligations | 0 | 3,519,949 |
Other current liabilities | 2,013,943 | 2,067,449 |
Total Current Liabilities | 138,936,601 | 98,129,556 |
Non-Current Liabilities | ||
Total Liabilities | 138,936,601 | 98,129,556 |
Equity | ||
Preferred stock - no par value; 1,000,000 authorized; none issued and outstanding as of December 31, 2016 and 2015 | 0 | 0 |
Common stock - $0.002 par value; 50,000,000 authorized, 19,304,921 issued and outstanding as of December 31, 2016 and 2015 | 38,609 | 38,609 |
Additional paid-in capital | (28,582,654) | 42,199,014 |
Reserves | 15,129,935 | 13,207,972 |
Accumulated other comprehensive income | 6,117,042 | 15,662,639 |
Retained earnings | 146,352,530 | 129,055,099 |
Total SORL Auto Parts, Inc. Stockholders' Equity | 139,055,462 | 200,163,333 |
Noncontrolling Interest In Subsidiaries | 23,336,061 | 22,261,167 |
Total Equity | 162,391,523 | 222,424,500 |
Total Liabilities and Equity | $ 301,328,124 | $ 320,554,056 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Accounts receivable, related party | $ 5,025,509 | $ 0 |
Accounts payable, related party | $ 1,953,707 | $ 1,133,537 |
Preferred stock, par or stated value per share | $ 0 | $ 0 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value per share | $ 0.002 | $ 0.002 |
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 Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Sales | $ 272,120,504 | $ 218,656,886 |
Include: sales to related parties | 13,436,421 | 7,781,763 |
Cost of sales | 199,216,223 | 159,246,468 |
Gross profit | 72,904,281 | 59,410,418 |
Expenses: | ||
Selling and distribution expenses | 29,837,757 | 22,681,469 |
General and administrative expenses | 15,206,423 | 14,100,715 |
Impairment on long-lived assets | 0 | 561,847 |
Research and development expenses | 7,709,533 | 7,358,563 |
Loss on disposal of subsidiary | 0 | 3,170,821 |
Total operating expenses | 52,753,713 | 47,873,415 |
Other operating income, net | 3,041,701 | 3,204,286 |
Income from operations | 23,192,269 | 14,741,289 |
Interest income | 1,047,667 | 1,102,447 |
Government grants | 832,264 | 768,607 |
Other income | 1,244,078 | 2,217,204 |
Interest expenses | (887,097) | (1,269,091) |
Other expenses | (807,858) | (1,000,613) |
Income before provision for income taxes | 24,621,323 | 16,559,843 |
Provision for income taxes | 3,266,413 | 2,034,776 |
Net income | 21,354,910 | 14,525,067 |
Net income attributable to noncontrolling interest in subsidiaries | 2,135,516 | 1,216,581 |
Net income attributable to common stockholders | 19,219,394 | 13,308,486 |
Comprehensive income: | ||
Net income | 21,354,910 | 14,525,067 |
Foreign currency translation adjustments | (10,606,219) | (13,194,113) |
Comprehensive income | 10,748,691 | 1,330,954 |
Comprehensive income attributable to noncontrolling interest in subsidiaries | 1,074,894 | (123,965) |
Comprehensive income attributable to common shareholders | $ 9,673,797 | $ 1,454,919 |
Weighted average common share - basic | 19,304,921 | 19,304,921 |
Weighted average common share - diluted | 19,304,921 | 19,304,921 |
EPS - basic | $ 1 | $ 0.69 |
EPS - diluted | $ 1 | $ 0.69 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash Flows From Operating Activities | ||
Net Income | $ 21,354,910 | $ 14,525,067 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Allowance for doubtful accounts | 395,491 | 2,042,952 |
Depreciation and amortization | 7,239,908 | 7,409,441 |
Deferred income tax | (502,903) | (1,183,270) |
Gain on disposal of property and equipment | 0 | (47,556) |
Loss on disposal of subsidiary | 0 | 3,170,821 |
Impairment on long-lived assets | 0 | 561,847 |
Changes in assets and liabilities: | ||
Account receivable | (39,422,631) | (10,617,554) |
Bank acceptance notes from customers | (21,991,160) | (6,446,881) |
Other currents assets | (291,979) | (412,073) |
Inventories, net | 3,281,901 | 5,100,033 |
Prepayments | (7,366,749) | 299,376 |
Prepaid capital lease interest | 90,373 | 273,896 |
Accounts payable and bank acceptance notes to vendors | 31,988,447 | 22,657,753 |
Income tax payable | 1,314,808 | (1,372,293) |
Deposits received from customers | 4,135,536 | 2,126,933 |
Other current liabilities and accrued expenses | 5,201,618 | 1,225,759 |
Net Cash Flows Provided By Operating Activities | 5,427,570 | 39,314,251 |
Cash Flows From Investing Activities | ||
Change in short term investments | 58,993,591 | (29,015,636) |
Acquisition of property, equipment, plant and land use right | (15,889,693) | (3,062,369) |
Proceeds of disposal of property and equipment | 0 | 47,571 |
Advance to related party | (18,247,384) | 0 |
Repayment from related party | 18,247,384 | 0 |
Change in restricted cash | (4,897,377) | (809,344) |
Cash paid for disposal of subsidiary | 0 | (99,915) |
Net Cash Flows Provided by (Used In) Investing Activities | 38,206,521 | (32,939,693) |
Cash Flows From Financing Activities | ||
Proceeds from bank loans | 53,895,058 | 38,313,044 |
Repayment of bank loans | (48,153,831) | (24,218,204) |
Distribution to controlling shareholders in connection with plant and land use rights exchange with entity under common control | (70,781,668) | 0 |
Repayment of capital lease | (1,779,040) | (3,624,493) |
Net Cash Flows Provided By (Used In) Financing Activities | (66,819,481) | 10,470,347 |
Effects on changes in foreign exchange rate | (1,011,717) | (623,674) |
Net change in cash and cash equivalents | (22,173,673) | 16,221,231 |
Cash and cash equivalents- beginning of the year | 30,230,828 | 14,009,597 |
Cash and cash equivalents - end of the year | 8,057,155 | 30,230,828 |
Supplemental Cash Flow Disclosures: | ||
Interest paid | 807,587 | 1,108,388 |
Income taxes paid | 3,284,070 | 4,590,244 |
Non-cash Investing and Financing Transactions | ||
Transfer of plant and land use right to entity under common control | 17,342,372 | 0 |
Liabilities assumed in connection with the plant and land use right exchange | $ 5,351,196 | $ 0 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Reserves [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income [Member] | Stockholders' Equity [Member] | Non-controlling Interest [Member] |
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 | |||||||
Disposal of subsidiary | 903,916 | $ 0 | 0 | 0 | 0 | 0 | 0 | 903,916 |
Net income | 14,525,067 | 0 | 0 | 0 | 13,308,486 | 0 | 13,308,486 | 1,216,581 |
Foreign currency translation adjustment | (13,194,113) | 0 | 0 | 0 | 0 | (11,853,567) | (11,853,567) | (1,340,546) |
Transfer to reserve | 0 | 0 | 0 | 1,188,440 | (1,188,440) | 0 | 0 | 0 |
Balance at Dec. 31, 2015 | 222,424,500 | $ 38,609 | 42,199,014 | 13,207,972 | 129,055,099 | 15,662,639 | 200,163,333 | 22,261,167 |
Balance, shares at Dec. 31, 2015 | 19,304,921 | |||||||
Net income | 21,354,910 | $ 0 | 0 | 0 | 19,219,394 | 0 | 19,219,394 | 2,135,516 |
Foreign currency translation adjustment | (10,606,219) | 0 | 0 | 0 | 0 | (9,545,597) | (9,545,597) | (1,060,622) |
Distribution to controlling shareholders in connection with plant and land use rights exchange with entity under common control | (70,781,668) | 0 | (70,781,668) | 0 | 0 | 0 | (70,781,668) | 0 |
Transfer to reserve | 0 | 0 | 0 | 1,921,963 | (1,921,963) | 0 | 0 | 0 |
Balance at Dec. 31, 2016 | $ 162,391,523 | $ 38,609 | $ (28,582,654) | $ 15,129,935 | $ 146,352,530 | $ 6,117,042 | $ 139,055,462 | $ 23,336,061 |
Balance, shares at Dec. 31, 2016 | 19,304,921 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2016 | |
DESCRIPTION OF BUSINESS [Abstract] | |
DESCRIPTION OF BUSINESS | SORL Auto Parts, Inc. (together with its subsidiaries, “we,” “us,” “our” or the “Company” or “SORL”), a Delaware corporation incorporated on March 24, 1982, is principally engaged in the manufacture and distribution of vehicle brake systems and other key safety-related components, through its 90 The Joint Venture was formed in the People’s Republic of China (“PRC” or “China”) as a Sino-Foreign joint venture on January 17, 2004, pursuant to the terms of a Joint Venture Agreement between the Ruili Group Co., Ltd. (the “Ruili Group”), a related party under common control, and Fairford Holdings Limited (“Fairford”), a wholly owned subsidiary of the Company. The Ruili Group was, incorporated in China in 1987 and specializes in the development, production and sale of various kinds of automotive parts. Fairford and the Ruili Group contributed 90 10 On November 11, 2009, the Company, through its wholly owned subsidiary, Fairford, entered into 60 30 10 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
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. The results of subsidiaries acquired or disposed of during the respective periods are included in the consolidated statements of income and comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate. The portion of the income or loss applicable to non-controlling interests in subsidiary undertakings is reflected in the consolidated statements of income and comprehensive income. c. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“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, restricted cash, short term investments, accounts receivables and payables, prepaid expenses, deposits and other current assets, short term bank loans, deposit received from customers and other payables and accruals, the carrying amounts approximate fair values due to their short maturities. Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, freemarket dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature. 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. 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 10.0% of its total revenues for the year ended December 31, 2016. 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. Interest rate risk - The interest rate of short-term bank borrowings obtained in 2016 ranged from 0.55 4.57 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. Term deposits in the amount of $ 21,667,802 140,000,000 March 24, 2015 March 24, 2016 Term deposit in the amount of $ 6,190,800 40,000,000 December 17, 2015 June 17, 2016 Term deposit in the amount of $ 3,317,650 22,000,000 i. RESTRICTED CASH Restricted cash mainly represents bank deposits used to pledge the bank acceptance notes. The Company entered into credit agreements with commercial banks in China (“endorsing banks”) which agree to provide credit within stipulated limits. Within the stipulated credit limits, the Company can issue bank acceptance notes to its suppliers as payments for the purchases. In order to issue bank acceptance notes, the Company is generally required to make initial deposits or pledge note receivables to the endorsing banks in amounts of certain percentage of the face amount of the bank acceptance notes to be issued by the Company. The cash in such accounts is restricted for use over the terms of the bank acceptance notes, which are normally three to six months. j. 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. k. 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. Category Estimated Useful Life (Years) Buildings 10 20 Machinery and equipment 5 10 Electronic equipment 5 Motor vehicles 5 10 Leasehold improvements 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. l. 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 40 m. 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. n. INTANGIBLE ASSETS Intangible assets represent mainly the patent of technology. 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. o. 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. The allowances are calculated based on a detailed review of certain individual customer accounts, historical collectibiliity rates, a general provision based on aging 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. p. NOTES RECEIVABLE Notes receivable, generally due within six months, 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. As of December 31, 2016, notes receivables in the amount of $ 32,916,198 135,329 538,517 q. 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 exists, 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. r. INCOME TAXES The Company accounts for income taxes under the provision of FASB ASC 740-10, Income Taxes s. 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 the appropriate historical rate. Revenue and expenses are translated at average exchange rates during the period. 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 included in the results of operations as incurred. 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 were $ 7,709,533 7,358,563 v. SHIPPING AND HANDLING COSTS Shipping and handling cost are classified as selling expenses and are expensed as incurred. Shipping and handling costs were $ 6,529,999 4,428,406 w. ADVERTISING COSTS Advertising costs are classified as selling expenses and are expensed as incurred. Advertising costs were $ 239,301 285,844 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 $ 2,503,950 2,047,684 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 the lease term is equal to 75% of the estimated economic life of the leased property or more aa. COST OF SALES Cost of sales consists primarily of materials costs, applicable local government levies, freight charges, purchasing and receiving costs, inspection costs, employee compensation, depreciation and related costs, which are directly attributable to production. Write-down of inventories to lower of cost or market is also recorded in cost of sales, if any. bb. GOVERNMENT GRANTS Government grants include cash subsidies as well as other subsidies received from the PRC government by the Joint Venture. Such subsidies are generally provided as incentives from the local government to encourage the expansion of local business. Government grants are recognized when received and all the conditions specified in the grant have been met. Capital grants received in advance of the acquisition of equipment are recorded initially in other current liabilities and then offset against the cost of the related equipment upon acquisition. cc. SEGMENT REPORTING ASC Topic 280 requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. During the years ended December 31, 2016 and 2015, the Company operated in two reportable business segments: (1) commercial vehicles brake systems (2) passenger vehicles brake systems. dd. DISPOSAL OF SUBSIDIARY On December 15, 2015, the Company entered into an agreement to dispose of its entire 60 10 77 600 The Company determined that the disposal of SIH did not constitute a discontinued operation as it did not represent a strategic shift and the operation capacity of SIH was absorbed by the Joint Venture, the other subsidiary of the Company. ee. RECENTLY ISSUED FINANCIAL STANDARDS On April 2016, the FASB issued ASU 2016- 10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”. The amendments add further guidance on identifying performance obligations and also to improve the operability and understandability of the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. Public entities should apply the amendments for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein. Early application for public entities is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. On May 2016, the FASB issued ASU 2016-11, “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting”. The amendments rescinds SEC paragraphs pursuant to two SEC Staff Announcements at the March 3, 2016 Emerging Issues Task Force (EITF) meeting. Specifically, registrants should not rely on the following SEC Staff Observer comments upon adoption of Topic 606: (1) Revenue and Expense Recognition for Freight Services in Process, which is codified in paragraph 605-20-S99-2; (2) Accounting for Shipping and Handling Fees and Costs, which is codified in paragraph 605-45-S99-1; (3) Accounting for Consideration Given by a Vendor to a Customer (including Reseller of the Vendor’s Products), which is codified in paragraph 605-50-S99-1; and (4) Accounting for Gas-Balancing Arrangements (i.e., use of the “entitlements method”), which is codified in paragraph 932-10-S99-5. The amendment is effective upon adoption of ASU 2014-09. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients”. The amendments, among other things: (1) clarify the objective of the collectability criterion for applying paragraph 606-10-25-7; (2) permit an entity to exclude amounts collected from customers for all sales (and other similar) taxes from the transaction price; (3) specify that the measurement date for noncash consideration is contract inception; (4) provide a practical expedient that permits an entity to reflect the aggregate effect of all modifications that occur before the beginning of the earliest period presented when identifying the satisfied and unsatisfied performance obligations, determining the transaction price, and allocating the transaction price to the satisfied and unsatisfied performance obligations; (5) clarify that a completed contract for purposes of transition is a contract for which all (or substantially all) of the revenue was recognized under legacy GAAP before the date of initial application, and (6) clarify that an entity that retrospectively applies the guidance in Topic 606 to each prior reporting period is not required to disclose the effect of the accounting change for the period of adoption. These amendments are effective for public entities for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”. These amendments provide cash flow statement classification guidance for: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned Life Insurance Policies; (6) Distributions Received from Equity Method Investees; (7) Beneficial Interests in Securitization Transactions; and (8) Separately Identifiable Cash Flows and Application of the Predominance Principle. These amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early application is permitted, including adoption in an interim period. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. In October 2016, the FASB issued ASU 2016-17, “Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control”. These amendments change the evaluation of whether a reporting entity is the primary beneficiary of a variable interest entity by changing how a reporting entity that is a single decision maker of a variable interest entity treats indirect interests in the entity held through related parties that are under common control with the reporting entity. If a reporting entity satisfies the first characteristic of a primary beneficiary (such that it is the single decision maker of a variable interest entity), the amendments require that reporting entity, in determining whether it satisfies the second characteristic of a primary beneficiary, to include all of its direct variable interests in a variable interest entity and, on a proportionate basis, its indirect variable interests in a variable interest entity held through related parties, including related parties that are under common control with the reporting entity. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity adopts the pending content that links to this paragraph in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”. These amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments do not provide a definition of restricted cash or restricted cash equivalents. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. In December 2016, the FASB issued ASU No. 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers”. The amendments in ASU 2016-20 affect narrow aspects of the guidance issued in ASU 2014-09 including Loan Guarantee Fees, Contract Costs, Provisions for Losses on Construction-Type and Production-Type Contracts, Disclosure of Remaining Performance Obligations, Disclosure of Prior Period Performance Obligations, Contract Modifications, Contract Asset vs. Receivable, Refund Liability, Advertising Costs, Fixed Odds Wagering Contracts in the Casino Industry, and Costs Capitalized for Advisors to Private Funds and Public Funds. The amendments in this ASU is effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. Early adoption is permitted under certain circumstances. The amendments should be applied prospectively as of the beginning of the period of adoption. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. |
RECLASSIFICATIONS
RECLASSIFICATIONS | 12 Months Ended |
Dec. 31, 2016 | |
Prior Period Adjustment [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, 2016 | |
RELATED PARTY TRANSACTIONS [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 4 - RELATED PARTY TRANSACTIONS The Company continues to purchase primarily 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 automotive components from four other related parties, Guangzhou Ruili Kormee Automotive Electronic Co., Ltd. (“Guangzhou Kormee”), Ruian Kormee Vehicle Brake Co., Ltd. (“Ruian Kormee”), Ruili MeiLian Air Management System (LangFang) Co., Ltd (Ruili MeiLian) and Shanghai Dachao Electric Technology Co., Ltd. (“Shanghai Dachao”). Guangzhou Kormee and Ruili Meilian are controlled by the Ruili Group and Ruian Kormee is the wholly-owned subsidiary of Guangzhou Kormee. Ruili Group owns 49 For Years Ended December 31, 2016 2015 PURCHASES FROM: Guangzhou Kormee Vehicle Brake Technology Development Co., Ltd. $ 793,861 $ 1,488,151 Ruian Kormee Vehicle Brake Co., Ltd. 1,329,135 765,971 Ruili MeiLian Air Management System (LangFang) Co., Ltd 1,787,921 Shanghai Dachao Electric Technology Co., Ltd. 110,446 80,603 Ruili Group Co., Ltd. 4,011,206 3,199,511 Total Purchases $ 8,032,569 $ 5,534,236 SALES TO: Guangzhou Kormee Vehicle Brake Technology Development Co., Ltd. $ 719,419 $ 946,061 Ruian Kormee Vehicle Brake Co., Ltd. 37,325 38,753 Ruili Group Co., Ltd. 13,436,421 7,781,763 Total Sales $ 14,193,165 $ 8,766,577 During the years ended December 31, 2016 and 2015, for the sales mentioned above, the sales to Guangzhou Kormee and Ruian Kormee represent sales of scrap materials and the related operating results were included in other operating income, net 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, 2016 2015 ACCOUNTS RECEIVABLE FROM RELATED PARTIES Ruili Group Co., Ltd. $ 4,361,010 $ Guangzhou Kormee Vehicle Brake Technology Development Co., Ltd. 664,499 Total $ 5,025,509 $ ACCOUNTS PAYABLE AND BANK ACCEPTANCE NOTES TO RELATED PARTIES Ruian Kormee Vehicle Brake Co., Ltd. $ 628,310 $ 340,175 Guangzhou Kormee Vehicle Brake Technology Development Co., Ltd. 75,968 Shanghai Dachao Electric Technology Co., Ltd. 100,441 19,751 Ruili MeiLian Air Management System (LangFang) Co., Ltd 1,224,956 Ruili Group Co., Ltd. 697,643 Total $ 1,953,707 $ 1,133,537 During the year ended December 31, 2016, the Company provided an interest- free borrowing of $ 18,247,384 The Company also entered into several lease agreements with related parties, see Note 18 for more details. During the years ended December 31, 2016 and 2015, the Company borrowed labor from Ruili Group and incurred wage expenses of $ 0 5,052,213 In addition, the Company pledged a 6-month fixed term deposit of RMB 22,000,000 3,317,650 July 13, 2016 The Company provided a guarantee for the credit line granted to Ruili Group by Bank of Ningbo in a maximum amount of RMB 168,000,000 25,871,627 March 24, 2015 March 24, 2016 The Company provided a guarantee for the credit line granted to Ruili Group by China Everbright Bank in the amount of RMB 60,000,000 9,239,867 February 26, 2015 The Company provided a guarantee for the credit line granted to Ruili Group by China Guangfa Bank in the amount of RMB 54,000,000 8,315,880 September 22, 2015 The Company pledged its term deposit of RMB 40,000,000 6,159,911 December 17, 2015 June 17, 2016 The Company provided a guarantee for the credit line granted to Ruili Group by the Bank of Ningbo in the amount of RMB 108,000,000 17,182,404 August 22, 2014 August 21, 2015 The Company provided a guarantee for the credit line granted to Ruili Group by Bank of Ningbo in the amount of RMB 150,000,000 21,623,180 The Company provided a guarantee for the credit line granted to Ruili Group by the China Merchants Bank in the amount of RMB 50,000,000 7,699,889 July 29, 2015 40,000,000 5,766,181 October 24, 2016 The Company provided a guarantee for the credit line granted to Ruili Group by China Guangfa Bank in the amount of RMB 200,000,000 28,830,907 May 22, 2016 May 22, 2017 On September 28, 2007, the Company purchased the land use rights and factory facilities located at No. 1169 Yumeng Road, Rui'an Economic Development Zone, Rui'an City, Zhejiang Province, the People's Republic of China (collectively, the “Dongshan Facility”) from Ruili Group for an aggregate purchase price of approximately $ 20 6.7 14.0 154 20.4 69.4 9.1 4,560,000 745,220 3 On May 5, 2016, the Company, through its principal operating subsidiary, entered into a Purchase Agreement (the “Purchase Agreement”) with Ruili Group, pursuant to which the Company agreed to purchase the land use rights and factory facilities located at No. 2666 Kaifaqu Avenue, Rui’an Economic Development Zone, Rui’an City, Zhejiang Province, the People’s Republic of China (the “Development Zone Facility”). In exchange for the Development Zone Facility, the Company agreed to transfer back to the Ruili Group the Dongshan Facility owed by the Company, plus RMB 501,000,000 76,533,000 58,714 157,619 The cash consideration in the amount of RMB 481,000,000 73,478,000 20,000,000 3,016,000 89,229 125 19.1 626 95.6 15.0 2.3 3 Since the Purchase Agreement was entered into between entities under common control, the transaction was recorded at historical costs. The excess of total cash consideration over the difference between the carrying value of assets received and assets transferred to Ruili Group, was reflected as a reduction of shareholders’ equity. |
ACCOUNTS RECEIVABLE, NET
ACCOUNTS RECEIVABLE, NET | 12 Months Ended |
Dec. 31, 2016 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE, NET | NOTE 5 - ACCOUNTS RECEIVABLE, NET December 31, December 31, 2016 2015 Accounts receivable $ 113,815,711 $ 83,898,730 Less: allowance for doubtful accounts (11,686,417) (12,075,402) Account receivable balance, net $ 102,129,294 $ 71,823,328 No customer individually accounted for more than 10% of our revenues or accounts receivable for the years ended December 31, 2016 and 2015. The changes in the allowance for doubtful accounts at December 31, 2016 and December 31, 2015 were summarized as follows: December 31, December 31, Beginning balance $ 12,075,402 $ 6,475,587 Add: Increase to allowance 395,491 6,025,485 Less: Accounts written off Effects on changes in foreign exchange rate (784,476) (425,670) Ending balance $ 11,686,417 $ 12,075,402 4,320,748 |
INVENTORIES, NET
INVENTORIES, NET | 12 Months Ended |
Dec. 31, 2016 | |
INVENTORIES [Abstract] | |
INVENTORIES, NET | NOTE 6 - INVENTORIES, NET December 31, December 31, Raw Materials $ 20,121,513 $ 13,038,945 Work-in-process 14,843,653 28,786,709 Finished Goods 30,811,351 31,836,206 Less: Write-down of inventories Total Inventory $ 65,776,517 $ 73,661,860 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2016 | |
PROPERTY, PLANT AND EQUIPMENT [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | NOTE 7 - PROPERTY, PLANT AND EQUIPMENT December 31, December 31, Machinery $ 87,694,677 $ 50,680,639 Molds 1,257,841 1,343,730 Office equipment 2,021,982 2,077,411 Vehicles 2,246,203 1,983,028 Buildings 15,826,738 7,756,917 Machinery held under capital lease - 29,012,601 Leasehold improvements 458,566 489,878 Sub-total 109,506,007 93,344,204 Less: accumulated depreciation (55,768,301) (55,782,299) Property, plant and equipment, net $ 53,737,706 $ 37,561,905 Depreciation expense charged to operations was $ 6,943,941 7,029,214 During the year ended December 31, 2015, the management identified one of the buildings of the Dongshan Facility with carrying value of $ 545,642 322,388 561,847 In connection with the execution of the Purchase Agreement in May 2016, the Company exchanged the Dongshan Facility plus RMB 501 76.5 15.8 |
LAND USE RIGHTS
LAND USE RIGHTS | 12 Months Ended |
Dec. 31, 2016 | |
Land Use Rights [Abstract] | |
LAND USE RIGHTS | December 31, December 31, Cost $ 8,473,362 $ 16,182,560 Less: Accumulated amortization (164,029) (2,950,411) Land use rights, net $ 8,309,333 $ 13,232,149 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. In connection with the execution of the Purchase Agreement in May 2016, the Company exchanged the Dongshan Facility plus RMB 501 76.5 . Amortization expenses were $284,717 and $368,247 for the years of 2016 and 2015, respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
INTANGIBLE ASSETS | NOTE 9 - INTANGIBLE ASSETS Gross intangible assets were $ 159,744 148,306 11,438 178,751 154,897 23,854 11,250 11,980 2017 2018 2019 2020 2021 Thereafter $ 8,291 $ 3,147 $ - $ - $ - $ - |
PREPAYMENTS
PREPAYMENTS | 12 Months Ended |
Dec. 31, 2016 | |
Other Assets [Abstract] | |
PREPAYMENTS | NOTE 10 - PREPAYMENTS December 31, December 31, Raw material suppliers $ 5,799,649 $ 3,210,160 Equipment purchases 4,997,952 140,447 Total prepayments $ 10,797,601 $ 3,350,607 |
DEFERRED TAX ASSETS AND DEFERRE
DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES | 12 Months Ended |
Dec. 31, 2016 | |
DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES [Abstract] | |
DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES | NOTE 11- DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES December 31, December 31, Deferred tax assets - current Allowance for doubtful accounts $ 1,798,894 $ 1,860,379 Revenue (net of cost) 76,719 45,815 Unpaid accrued expenses 357,352 180,174 Warranty 977,610 875,751 Deferred tax assets 3,210,575 2,962,119 Valuation allowance Net deferred tax assets - current $ 3,210,575 $ 2,962,119 Deferred tax liabilities - current Others 52,390 Deferred tax liabilities - current 52,390 Net deferred tax assets - current $ 3,210,575 $ 2,909,729 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. |
SHORT TERM BANK LOANS
SHORT TERM BANK LOANS | 12 Months Ended |
Dec. 31, 2016 | |
SHORT-TERM BANK LOANS [Abstract] | |
SHORT-TERM BANK LOANS | NOTE 12 SHORT TERM BANK LOANS December 31, December 31, Secured $ 27,416,376 $ 23,367,207 The Company obtained those short term loans from Bank of China, Bank of Ningbo, Agricultural Bank of China, and China Construction Bank, respectively, to finance general working capital as well as new equipment acquisition. Interest rate for the loans outstanding during the year ended December 31, 2016 ranged from 0.55 5.35 April 28, 2017 December 23, 2017 4,484,755 15,836,158 751,768 730,574 $ 1,987,891 Pledged and guaranteed by Ruili Group, a related party, with its land and buildings. Guaranteed by Ruili Group, a related party, and Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company’s principal stockholders. $ 2,816,780 Pledged and guaranteed by Ruili Group, a related party, with its land and buildings. Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company’s principal stockholders. $ 11,052,328 Guaranteed by Ruili Group., a related party, Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company’s principal stockholders. $ 5,793,196 Guaranteed by Ruili Group, a related party. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2016 | |
Accounts Payable and Accrued Liabilities [Abstract] | |
ACCRUED EXPENSES | NOTE 13 - ACCRUED EXPENSES December 31, December 31, 2016 2015 Accrued payroll $ 6,267,794 $ 4,049,357 Accrued warranty expenses 6,517,402 5,838,343 Other accrued expenses 7,318,196 3,982,887 Total accrued expenses $ 20,103,392 $ 13,870,587 |
CAPITAL LEASE OBLIGATIONS
CAPITAL LEASE OBLIGATIONS | 12 Months Ended |
Dec. 31, 2016 | |
CAPITAL LEASE OBLIGATIONS [Abstract] | |
CAPITAL LEASE OBLIGATIONS | NOTE 14 CAPITAL LEASE OBLIGATIONS December 31, December 31, Total capital lease obligations $ $ 3,519,949 Less: current portion (3,519,949) Non-current portion $ $ 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 7.95 January 4, 2017 48 6.4 28,396,853 91,428,571 14,545,950 11,428,571 1,818,244 10,705,357 1,703,212 303,041 |
RESERVE
RESERVE | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
RESERVE | NOTE 15 RESERVE December 31, December 31, Statutory surplus reserve fund $ 15,129,935 $ 13,207,972 Total $ 15,129,935 $ 13,207,972 Pursuant to the relevant laws and regulations of Sino-Foreign joint venture enterprises, the profits of the Company's subsidiary, which are based on its PRC statutory financial statements, are available for distribution in the form of cash dividends after it has 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 U.S. 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, 2016 | |
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. 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 25 December 31, December 31, 2016 2015 US statutory income tax rate 35.00 % 35.00 % Valuation allowance recognized with respect to the loss in the US company -35.00 % -35.00 % HK statutory income tax rate 16.50 % 16.50 % Valuation allowance recognized with respect to the loss in the HK company -16.50 % -16.50 % 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 -2.88 % -3.33 % Effects of expenses not deductible for tax purposes 0.61 % 1.26 % Other items 0.54 % -0.64 % Effective tax rate 13.27 % 12.29 % 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 2016 and 2015, there were no penalties and interest, which generally are recorded in the general and administrative expenses or in the tax expenses. December 31, December 31, Current $ 2,763,510 $ 3,179,989 Deferred 502,903 (1,145,213) Total $ 3,266,413 $ 2,034,776 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, 2016 and 2015. |
NON-CONTROLLING INTEREST IN SUB
NON-CONTROLLING INTEREST IN SUBSIDIARIES | 12 Months Ended |
Dec. 31, 2016 | |
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 40 60 Net income attributable to non-controlling interest in subsidiaries amounted to $ 2,135,516 1,216,581 2016 2015 10% non-controlling interest in Ruian $ 2,135,516 $ 1,320,489 40% non-controlling interest in SIH (103,908) Total $ 2,135,516 $ 1,216,581 |
OPERATING LEASES WITH RELATED P
OPERATING LEASES WITH RELATED PARTIES | 12 Months Ended |
Dec. 31, 2016 | |
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 to rent 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 RMB 2,100,000 333,688 In May 2009, Ruian entered into a lease agreement with Ruili Group 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, under which Ruian leased 89,229 8,137,680 1,293,070 The lease expenses were $ 716,656 1,623,405 2017 2018 2019 2020 2021 Thereafter Operating Lease Commitments $ 302,725 $ 302,725 $ 302,725 $ 302,725 $ 302,725 $ 302,724 |
WARRANTY CLAIMS
WARRANTY CLAIMS | 12 Months Ended |
Dec. 31, 2016 | |
WARRANTY CLAIMS [Abstract] | |
WARRANTY CLAIMS | NOTE 19 WARRANTY CLAIMS Warranty claims were $ 2,503,950 2,047,684 Beginning balance at January 1, 2016 $ 5,838,343 Aggregate increase for new warranties issued during current period 2,503,950 Aggregate reduction for payments made and effect of exchange rate fluctuation (1,824,891) Ending balance at December 31, 2016 $ 6,517,402 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2016 | |
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. Before the disposal of SIH, the Company also had long-lived assets located in Hong Kong. The Company and its subsidiaries do not have long-lived assets in the United States for the reporting periods. Years Ended December 31, 2016 2015 NET SALES TO EXTERNAL CUSTOMERS Commercial vehicles brake systems $ 223,995,265 $ 178,672,655 Passenger vehicles brake systems 48,125,239 39,984,231 Net sales $ 272,120,504 $ 218,656,886 INTERSEGMENT SALES Commercial vehicles brake systems $ $ Passenger vehicles brake systems Intersegment sales $ $ GROSS PROFIT Commercial vehicles brake systems $ 62,760,714 $ 48,652,822 Passenger vehicles brake systems 10,143,567 10,757,596 Gross profit $ 72,904,281 $ 59,410,418 OPERATING EXPENSES Selling and distribution expenses 29,837,757 22,681,469 General and administrative expenses 15,206,423 14,100,715 Impairment on long-lived assets - 561,847 Research and development expenses 7,709,533 7,358,563 Loss on disposal of subsidiary - 3,170,821 Total operating expenses 52,753,713 47,873,415 Other operating income, net 3,041,701 3,204,286 Income from operations 23,192,269 14,741,289 Interest income 1,047,667 1,102,447 Government grants 832,264 768,607 Other income 1,244,078 2,217,204 Interest expenses (887,097) (1,269,091) Other expenses (807,858) (1,000,613) Income before income tax expense $ 24,621,323 $ 16,559,843 CAPITAL EXPENDITURE Commercial vehicles brake systems $ 13,078,806 $ 2,511,143 Passenger vehicles brake systems 2,810,887 551,226 Total $ 15,889,693 $ 3,062,369 DEPRECIATION AND AMORTIZATION Commercial vehicles brake systems $ 5,959,168 $ 6,054,254 Passenger vehicles brake systems 1,280,740 1,355,187 Total $ 7,239,908 $ 7,409,441 December 31, 2016 December 31, 2015 TOTAL ASSETS Commercial vehicles brake systems $ 248,023,179 $ 261,924,719 Passenger vehicles brake systems 53,304,945 58,629,337 Total $ 301,328,124 $ 320,554,056 December 31, 2016 December 31, 2015 LONG LIVED ASSETS Commercial vehicles brake systems $ 51,080,332 $ 42,961,388 Passenger vehicles brake systems 10,978,145 9,616,495 Total $ 62,058,477 $ 52,577,883 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 21 COMMITMENTS AND CONTINGENCIES (1) As described in Note 7, the Company purchased the Dongshan Facility from Ruili Group in 2007 and subsequently transferred the plants and land use right to Ruili Group. The Company has never obtained the land use right certificate nor the property ownership certificate of the building for the Dongshan Facility. The Company reserved the relevant tax amount of RMB 4,560,000 745,220 3 (2) The information of lease commitments is provided in Note 14 and Note 18. (3) The information of guarantees and assets pledged is provided in Note 4. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 22 SUBSEQUENT EVENTS On January 19, 2017, the Company entered into a loan agreement with Rui’An Branch, Agricultural Bank of China to borrow RMB 30,000,000 4,324,636 January 18, 2018 On March 10, 2017, the Company entered into a loan agreement with Rui’An Branch, Agricultural Bank of China to borrow RMB 30,000,000 4,324,636 March 9, 2018 On March 10, 2017, the Company entered into a loan agreement with Rui’An Branch, Agricultural Bank of China to borrow RMB 20,000,000 2,883,091 March 9, 2018 |
ADDITIONAL INFORMATION-FINANCIA
ADDITIONAL INFORMATION-FINANCIAL STATEMENT SCHEDULE I | 12 Months Ended |
Dec. 31, 2016 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Additional Information-Financial Statement Schedule I | ADDITIONAL INFORMATIONFINANCIAL 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, 2016 and 2015 December 31, 2016 December 31, 2015 ASSETS Current Assets: Cash and cash equivalents $ - $ 80,910 Other current assets 86,828 6,161 Total Current Assets 86,828 87,071 Investments in subsidiaries 136,058,544 187,423,606 TOTAL ASSETS $ 136,145,372 $ 187,510,677 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Other current liability 2,921,411 2,921,411 Total Current Liabilities 2,921,411 2,921,411 Total Liabilities 2,921,411 2,921,411 Stockholders' Equity: Preferred stock - no par value; 1,000,000 authorized; none issued and outstanding as of December 31, 2016 and 2015 - - Common stock - $0.002 par value; 50,000,000 authorized, 19,304,921 issued and outstanding as of December 31, 2016 and 2015 38,609 38,609 Additional paid-in capital (28,582,654) 42,199,014 Retained earnings 161,768,006 142,351,643 Total Stockholders' Equity 133,223,961 184,589,266 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 136,145,372 $ 187,510,677 Financial Information of Parent Company STATEMENTS OF INCOME For The Years Ended December 31, 2016 and 2015 For Years Ended December 31, 2016 2015 Investment income $ 19,416,606 $ 11,884,396 Gain from disposal of subsidiary - 77 Financial expenses 243 126 Net income attributable to stockholders $ 19,416,363 $ 11,884,347 Weighted average common share - Basic 19,304,921 19,304,921 Weighted average common share - Diluted 19,304,921 19,304,921 EPS - Basic $ 1.01 $ 0.62 EPS - Diluted $ 1.01 $ 0.62 Financial Information of Parent Company STATEMENTS OF CASH FLOWS For The Years Ended December 31, 2016 and 2015 For Years Ended December 31, 2016 2015 Cash flow from operating activities: Net income $ 19,416,363 $ 11,884,347 Adjustments to reconcile net income to net cash used in operating activities : Investment in subsidiaries (19,416,606) (11,884,396) Other current liabilities (80,667) (77) Net cash used in operating activities (80,910) (126) Net change in cash and cash equivalents (80,910) (126) Cash and cash equivalents, beginning of the year 80,910 81,036 Cash and cash equivalents, end of the year $ - $ 80,910 Financial Information of Parent Company STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY For The Years Ended December 31, 2016 and 2015 Additional Number Common Paid-in Retained Shareholders' of Share Stock Capital Earnings Equity Balance - December 31, 2014 19,304,921 $ 38,609 $ 42,199,014 $ 130,467,296 $ 172,704,919 Net income - - - 11,884,347 11,884,347 Balance - December 31, 2015 19,304,921 38,609 42,199,014 142,351,643 184,589,266 Net income - - - 19,416,363 19,416,363 Distribution to controlling shareholders in connection with plant and land use rights exchange with entity under common control - - (70,781,668) - (70,781,668) Balance - December 31, 2016 19,304,921 $ 38,609 $ (28,582,654) $ 161,768,006 $ (133,223,961) |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
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. The results of subsidiaries acquired or disposed of during the respective periods are included in the consolidated statements of income and comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate. The portion of the income or loss applicable to non-controlling interests in subsidiary undertakings is reflected in the consolidated statements of income and comprehensive income. |
USE OF ESTIMATES | c. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“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, restricted cash, short term investments, accounts receivables and payables, prepaid expenses, deposits and other current assets, short term bank loans, deposit received from customers and other payables and accruals, the carrying amounts approximate fair values due to their short maturities. Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, freemarket dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature. |
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. |
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 10.0% of its total revenues for the year ended December 31, 2016. 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. Interest rate risk - The interest rate of short-term bank borrowings obtained in 2016 ranged from 0.55 4.57 |
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. |
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. Term deposits in the amount of $ 21,667,802 140,000,000 March 24, 2015 March 24, 2016 Term deposit in the amount of $ 6,190,800 40,000,000 December 17, 2015 June 17, 2016 Term deposit in the amount of $ 3,317,650 22,000,000 |
RESTRICTED CASH | i. RESTRICTED CASH Restricted cash mainly represents bank deposits used to pledge the bank acceptance notes. The Company entered into credit agreements with commercial banks in China (“endorsing banks”) which agree to provide credit within stipulated limits. Within the stipulated credit limits, the Company can issue bank acceptance notes to its suppliers as payments for the purchases. In order to issue bank acceptance notes, the Company is generally required to make initial deposits or pledge note receivables to the endorsing banks in amounts of certain percentage of the face amount of the bank acceptance notes to be issued by the Company. The cash in such accounts is restricted for use over the terms of the bank acceptance notes, which are normally three to six months. |
INVENTORIES | j. 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. |
PROPERTY, PLANT AND EQUIPMENT | k. 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. Category Estimated Useful Life (Years) Buildings 10 20 Machinery and equipment 5 10 Electronic equipment 5 Motor vehicles 5 10 Leasehold improvements 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 | l. 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 40 |
IMPAIRMENT OF LONG-LIVED ASSETS | m. 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 | n. INTANGIBLE ASSETS Intangible assets represent mainly the patent of technology. 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 | o. 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. The allowances are calculated based on a detailed review of certain individual customer accounts, historical collectibiliity rates, a general provision based on aging 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 | p. NOTES RECEIVABLE Notes receivable, generally due within six months, 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. As of December 31, 2016, notes receivables in the amount of $ 32,916,198 135,329 538,517 |
REVENUE RECOGNITION | q. 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 exists, 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 | r. INCOME TAXES The Company accounts for income taxes under the provision of FASB ASC 740-10, Income Taxes |
FOREIGN CURRENCY TRANSLATION | s. 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 the appropriate historical rate. Revenue and expenses are translated at average exchange rates during the period. 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 included in the results of operations as incurred. |
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 were $ 7,709,533 7,358,563 |
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 $ 6,529,999 4,428,406 |
ADVERTISING COSTS | w. ADVERTISING COSTS Advertising costs are classified as selling expenses and are expensed as incurred. Advertising costs were $ 239,301 285,844 |
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 $ 2,503,950 2,047,684 |
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 the lease term is equal to 75% of the estimated economic life of the leased property or more |
COST OF SALES | aa. COST OF SALES Cost of sales consists primarily of materials costs, applicable local government levies, freight charges, purchasing and receiving costs, inspection costs, employee compensation, depreciation and related costs, which are directly attributable to production. Write-down of inventories to lower of cost or market is also recorded in cost of sales, if any. |
GOVERNMENT GRANTS | bb. GOVERNMENT GRANTS Government grants include cash subsidies as well as other subsidies received from the PRC government by the Joint Venture. Such subsidies are generally provided as incentives from the local government to encourage the expansion of local business. Government grants are recognized when received and all the conditions specified in the grant have been met. Capital grants received in advance of the acquisition of equipment are recorded initially in other current liabilities and then offset against the cost of the related equipment upon acquisition. |
SEGMENT REPORTING | cc. SEGMENT REPORTING ASC Topic 280 requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. During the years ended December 31, 2016 and 2015, the Company operated in two reportable business segments: (1) commercial vehicles brake systems (2) passenger vehicles brake systems. |
DISPOSAL OF SUBSIDIARY | dd. DISPOSAL OF SUBSIDIARY On December 15, 2015, the Company entered into an agreement to dispose of its entire 60 10 77 600 The Company determined that the disposal of SIH did not constitute a discontinued operation as it did not represent a strategic shift and the operation capacity of SIH was absorbed by the Joint Venture, the other subsidiary of the Company. |
RECENTLY ISSUED FINANCIAL STANDARDS | ee. RECENTLY ISSUED FINANCIAL STANDARDS On April 2016, the FASB issued ASU 2016- 10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”. The amendments add further guidance on identifying performance obligations and also to improve the operability and understandability of the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. Public entities should apply the amendments for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein. Early application for public entities is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. On May 2016, the FASB issued ASU 2016-11, “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting”. The amendments rescinds SEC paragraphs pursuant to two SEC Staff Announcements at the March 3, 2016 Emerging Issues Task Force (EITF) meeting. Specifically, registrants should not rely on the following SEC Staff Observer comments upon adoption of Topic 606: (1) Revenue and Expense Recognition for Freight Services in Process, which is codified in paragraph 605-20-S99-2; (2) Accounting for Shipping and Handling Fees and Costs, which is codified in paragraph 605-45-S99-1; (3) Accounting for Consideration Given by a Vendor to a Customer (including Reseller of the Vendor’s Products), which is codified in paragraph 605-50-S99-1; and (4) Accounting for Gas-Balancing Arrangements (i.e., use of the “entitlements method”), which is codified in paragraph 932-10-S99-5. The amendment is effective upon adoption of ASU 2014-09. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients”. The amendments, among other things: (1) clarify the objective of the collectability criterion for applying paragraph 606-10-25-7; (2) permit an entity to exclude amounts collected from customers for all sales (and other similar) taxes from the transaction price; (3) specify that the measurement date for noncash consideration is contract inception; (4) provide a practical expedient that permits an entity to reflect the aggregate effect of all modifications that occur before the beginning of the earliest period presented when identifying the satisfied and unsatisfied performance obligations, determining the transaction price, and allocating the transaction price to the satisfied and unsatisfied performance obligations; (5) clarify that a completed contract for purposes of transition is a contract for which all (or substantially all) of the revenue was recognized under legacy GAAP before the date of initial application, and (6) clarify that an entity that retrospectively applies the guidance in Topic 606 to each prior reporting period is not required to disclose the effect of the accounting change for the period of adoption. These amendments are effective for public entities for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”. These amendments provide cash flow statement classification guidance for: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned Life Insurance Policies; (6) Distributions Received from Equity Method Investees; (7) Beneficial Interests in Securitization Transactions; and (8) Separately Identifiable Cash Flows and Application of the Predominance Principle. These amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early application is permitted, including adoption in an interim period. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. In October 2016, the FASB issued ASU 2016-17, “Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control”. These amendments change the evaluation of whether a reporting entity is the primary beneficiary of a variable interest entity by changing how a reporting entity that is a single decision maker of a variable interest entity treats indirect interests in the entity held through related parties that are under common control with the reporting entity. If a reporting entity satisfies the first characteristic of a primary beneficiary (such that it is the single decision maker of a variable interest entity), the amendments require that reporting entity, in determining whether it satisfies the second characteristic of a primary beneficiary, to include all of its direct variable interests in a variable interest entity and, on a proportionate basis, its indirect variable interests in a variable interest entity held through related parties, including related parties that are under common control with the reporting entity. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity adopts the pending content that links to this paragraph in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”. These amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments do not provide a definition of restricted cash or restricted cash equivalents. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. In December 2016, the FASB issued ASU No. 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers”. The amendments in ASU 2016-20 affect narrow aspects of the guidance issued in ASU 2014-09 including Loan Guarantee Fees, Contract Costs, Provisions for Losses on Construction-Type and Production-Type Contracts, Disclosure of Remaining Performance Obligations, Disclosure of Prior Period Performance Obligations, Contract Modifications, Contract Asset vs. Receivable, Refund Liability, Advertising Costs, Fixed Odds Wagering Contracts in the Casino Industry, and Costs Capitalized for Advisors to Private Funds and Public Funds. The amendments in this ASU is effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. Early adoption is permitted under certain circumstances. The amendments should be applied prospectively as of the beginning of the period of adoption. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN31
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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 10 20 Machinery and equipment 5 10 Electronic equipment 5 Motor vehicles 5 10 Leasehold improvements |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
RELATED PARTY TRANSACTIONS [Abstract] | |
Schedule of Related Party Transactions | The following related party transactions occurred for the years ended December 31, 2016 and 2015: For Years Ended December 31, 2016 2015 PURCHASES FROM: Guangzhou Kormee Vehicle Brake Technology Development Co., Ltd. $ 793,861 $ 1,488,151 Ruian Kormee Vehicle Brake Co., Ltd. 1,329,135 765,971 Ruili MeiLian Air Management System (LangFang) Co., Ltd 1,787,921 Shanghai Dachao Electric Technology Co., Ltd. 110,446 80,603 Ruili Group Co., Ltd. 4,011,206 3,199,511 Total Purchases $ 8,032,569 $ 5,534,236 SALES TO: Guangzhou Kormee Vehicle Brake Technology Development Co., Ltd. $ 719,419 $ 946,061 Ruian Kormee Vehicle Brake Co., Ltd. 37,325 38,753 Ruili Group Co., Ltd. 13,436,421 7,781,763 Total Sales $ 14,193,165 $ 8,766,577 December 31, December 31, 2016 2015 ACCOUNTS RECEIVABLE FROM RELATED PARTIES Ruili Group Co., Ltd. $ 4,361,010 $ Guangzhou Kormee Vehicle Brake Technology Development Co., Ltd. 664,499 Total $ 5,025,509 $ ACCOUNTS PAYABLE AND BANK ACCEPTANCE NOTES TO RELATED PARTIES Ruian Kormee Vehicle Brake Co., Ltd. $ 628,310 $ 340,175 Guangzhou Kormee Vehicle Brake Technology Development Co., Ltd. 75,968 Shanghai Dachao Electric Technology Co., Ltd. 100,441 19,751 Ruili MeiLian Air Management System (LangFang) Co., Ltd 1,224,956 Ruili Group Co., Ltd. 697,643 Total $ 1,953,707 $ 1,133,537 |
ACCOUNTS RECEIVABLE, NET (Table
ACCOUNTS RECEIVABLE, NET (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
ACCOUNTS RECEIVABLE [Abstract] | |
Schedule of Allowance for Doubtful Accounts | Accounts receivable, net consisted of the following: December 31, December 31, 2016 2015 Accounts receivable $ 113,815,711 $ 83,898,730 Less: allowance for doubtful accounts (11,686,417) (12,075,402) Account receivable balance, net $ 102,129,294 $ 71,823,328 No customer individually accounted for more than 10% of our revenues or accounts receivable for the years ended December 31, 2016 and 2015. The changes in the allowance for doubtful accounts at December 31, 2016 and December 31, 2015 were summarized as follows: December 31, December 31, Beginning balance $ 12,075,402 $ 6,475,587 Add: Increase to allowance 395,491 6,025,485 Less: Accounts written off Effects on changes in foreign exchange rate (784,476) (425,670) Ending balance $ 11,686,417 $ 12,075,402 |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
INVENTORIES [Abstract] | |
Schedule of Inventories | On December 31, 2016 and December 31, 2015, inventories consisted of the following: December 31, December 31, Raw Materials $ 20,121,513 $ 13,038,945 Work-in-process 14,843,653 28,786,709 Finished Goods 30,811,351 31,836,206 Less: Write-down of inventories Total Inventory $ 65,776,517 $ 73,661,860 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
PROPERTY, PLANT AND EQUIPMENT [Abstract] | |
Schedule of Property, Plant and Equipment | Property, plant and equipment consisted of the following, on December 31, 2016 and December 31, 2015: December 31, December 31, Machinery $ 87,694,677 $ 50,680,639 Molds 1,257,841 1,343,730 Office equipment 2,021,982 2,077,411 Vehicles 2,246,203 1,983,028 Buildings 15,826,738 7,756,917 Machinery held under capital lease - 29,012,601 Leasehold improvements 458,566 489,878 Sub-total 109,506,007 93,344,204 Less: accumulated depreciation (55,768,301) (55,782,299) Property, plant and equipment, net $ 53,737,706 $ 37,561,905 |
LAND USE RIGHTS (Tables)
LAND USE RIGHTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Land Use Rights [Abstract] | |
Schedule Of Land Rights | December 31, December 31, Cost $ 8,473,362 $ 16,182,560 Less: Accumulated amortization (164,029) (2,950,411) Land use rights, net $ 8,309,333 $ 13,232,149 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Future estimated amortization expense is as follows: 2017 2018 2019 2020 2021 Thereafter $ 8,291 $ 3,147 $ - $ - $ - $ - |
PREPAYMENTS (Tables)
PREPAYMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Other Assets [Abstract] | |
Schedule of Prepayments | Prepayments consisted of the following as of December 31, 2016 and December 31, 2015: December 31, December 31, Raw material suppliers $ 5,799,649 $ 3,210,160 Equipment purchases 4,997,952 140,447 Total prepayments $ 10,797,601 $ 3,350,607 |
DEFERRED TAX ASSETS AND DEFER39
DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES [Abstract] | |
Schedule of Deferred Tax Assets and Liabilities | Deferred tax assets as of December 31, 2016 and December 31, 2015 comprise of the following: December 31, December 31, Deferred tax assets - current Allowance for doubtful accounts $ 1,798,894 $ 1,860,379 Revenue (net of cost) 76,719 45,815 Unpaid accrued expenses 357,352 180,174 Warranty 977,610 875,751 Deferred tax assets 3,210,575 2,962,119 Valuation allowance Net deferred tax assets - current $ 3,210,575 $ 2,962,119 Deferred tax liabilities - current Others 52,390 Deferred tax liabilities - current 52,390 Net deferred tax assets - current $ 3,210,575 $ 2,909,729 |
SHORT TERM BANK LOANS (Tables)
SHORT TERM BANK LOANS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SHORT-TERM BANK LOANS [Abstract] | |
Schedule of Bank Loans | Bank loans represented the following as of December 31, 2016 and December 31, 2015: December 31, December 31, Secured $ 27,416,376 $ 23,367,207 |
Schedule of Personal or Corporate Guarantees | As of December 31, 2016, corporate or personal guarantees provided for those bank loans were as follows: $ 1,987,891 Pledged and guaranteed by Ruili Group, a related party, with its land and buildings. Guaranteed by Ruili Group, a related party, and Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company’s principal stockholders. $ 2,816,780 Pledged and guaranteed by Ruili Group, a related party, with its land and buildings. Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company’s principal stockholders. $ 11,052,328 Guaranteed by Ruili Group., a related party, Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company’s principal stockholders. $ 5,793,196 Guaranteed by Ruili Group, a related party. |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounts Payable and Accrued Liabilities [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses consisted of the following as of December 31, 2016 and December 31, 2015: December 31, December 31, 2016 2015 Accrued payroll $ 6,267,794 $ 4,049,357 Accrued warranty expenses 6,517,402 5,838,343 Other accrued expenses 7,318,196 3,982,887 Total accrued expenses $ 20,103,392 $ 13,870,587 |
CAPITAL LEASE OBLIGATIONS (Tabl
CAPITAL LEASE OBLIGATIONS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
CAPITAL LEASE OBLIGATIONS [Abstract] | |
Schedule of Capital Lease Obligations | December 31, December 31, Total capital lease obligations $ $ 3,519,949 Less: current portion (3,519,949) Non-current portion $ $ |
RESERVE (Tables)
RESERVE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Reserve | The reserve funds were comprised of the following: December 31, December 31, Statutory surplus reserve fund $ 15,129,935 $ 13,207,972 Total $ 15,129,935 $ 13,207,972 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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, 2016 and 2015 is as follows: December 31, December 31, 2016 2015 US statutory income tax rate 35.00 % 35.00 % Valuation allowance recognized with respect to the loss in the US company -35.00 % -35.00 % HK statutory income tax rate 16.50 % 16.50 % Valuation allowance recognized with respect to the loss in the HK company -16.50 % -16.50 % 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 -2.88 % -3.33 % Effects of expenses not deductible for tax purposes 0.61 % 1.26 % Other items 0.54 % -0.64 % Effective tax rate 13.27 % 12.29 % |
Schedule of Income Tax Provision | The provisions for income taxes for the years ended December 31, 2016 and 2015, respectively, are summarized as follows: December 31, December 31, Current $ 2,763,510 $ 3,179,989 Deferred 502,903 (1,145,213) Total $ 3,266,413 $ 2,034,776 |
NON-CONTROLLING INTEREST IN S45
NON-CONTROLLING INTEREST IN SUBSIDIARIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
NON-CONTROLLING INTEREST IN SUBSIDIARIES [Abstract] | |
Schedule of Non-controlling Interest | 2016 2015 10% non-controlling interest in Ruian $ 2,135,516 $ 1,320,489 40% non-controlling interest in SIH (103,908) Total $ 2,135,516 $ 1,216,581 |
OPERATING LEASES WITH RELATED46
OPERATING LEASES WITH RELATED PARTIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Assets, Current [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | 2017 2018 2019 2020 2021 Thereafter Operating Lease Commitments $ 302,725 $ 302,725 $ 302,725 $ 302,725 $ 302,725 $ 302,724 |
WARRANTY CLAIMS (Tables)
WARRANTY CLAIMS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
WARRANTY CLAIMS [Abstract] | |
Schedule of Accrued Warranty Expenses | The movement of accrued warranty expenses for the year ended December 31, 2016 is as follows: Beginning balance at January 1, 2016 $ 5,838,343 Aggregate increase for new warranties issued during current period 2,503,950 Aggregate reduction for payments made and effect of exchange rate fluctuation (1,824,891) Ending balance at December 31, 2016 $ 6,517,402 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SEGMENT INFORMATION [Abstract] | |
Schedule of Segment Information, by Segment | Years Ended December 31, 2016 2015 NET SALES TO EXTERNAL CUSTOMERS Commercial vehicles brake systems $ 223,995,265 $ 178,672,655 Passenger vehicles brake systems 48,125,239 39,984,231 Net sales $ 272,120,504 $ 218,656,886 INTERSEGMENT SALES Commercial vehicles brake systems $ $ Passenger vehicles brake systems Intersegment sales $ $ GROSS PROFIT Commercial vehicles brake systems $ 62,760,714 $ 48,652,822 Passenger vehicles brake systems 10,143,567 10,757,596 Gross profit $ 72,904,281 $ 59,410,418 OPERATING EXPENSES Selling and distribution expenses 29,837,757 22,681,469 General and administrative expenses 15,206,423 14,100,715 Impairment on long-lived assets - 561,847 Research and development expenses 7,709,533 7,358,563 Loss on disposal of subsidiary - 3,170,821 Total operating expenses 52,753,713 47,873,415 Other operating income, net 3,041,701 3,204,286 Income from operations 23,192,269 14,741,289 Interest income 1,047,667 1,102,447 Government grants 832,264 768,607 Other income 1,244,078 2,217,204 Interest expenses (887,097) (1,269,091) Other expenses (807,858) (1,000,613) Income before income tax expense $ 24,621,323 $ 16,559,843 CAPITAL EXPENDITURE Commercial vehicles brake systems $ 13,078,806 $ 2,511,143 Passenger vehicles brake systems 2,810,887 551,226 Total $ 15,889,693 $ 3,062,369 DEPRECIATION AND AMORTIZATION Commercial vehicles brake systems $ 5,959,168 $ 6,054,254 Passenger vehicles brake systems 1,280,740 1,355,187 Total $ 7,239,908 $ 7,409,441 December 31, 2016 December 31, 2015 TOTAL ASSETS Commercial vehicles brake systems $ 248,023,179 $ 261,924,719 Passenger vehicles brake systems 53,304,945 58,629,337 Total $ 301,328,124 $ 320,554,056 December 31, 2016 December 31, 2015 LONG LIVED ASSETS Commercial vehicles brake systems $ 51,080,332 $ 42,961,388 Passenger vehicles brake systems 10,978,145 9,616,495 Total $ 62,058,477 $ 52,577,883 |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details Textual) | Dec. 31, 2016 | Dec. 15, 2015 | Nov. 11, 2009 | Jan. 17, 2004 |
Ruian [Member] | ||||
Description Of Business [Line Items] | ||||
Ownership percentage | 90.00% | |||
Ruili Group, Co., Ltd. [Member] | ||||
Description Of Business [Line Items] | ||||
Ownership percentage | 10.00% | |||
SORL International Holding, Ltd. [Member] | ||||
Description Of Business [Line Items] | ||||
Ownership percentage | 60.00% | |||
MGR Hong Kong Limited [Member] | SIH [Member] | ||||
Description Of Business [Line Items] | ||||
Ownership percentage | 30.00% | |||
Taiwanese Investor [Member] | ||||
Description Of Business [Line Items] | ||||
Ownership percentage | 10.00% | 10.00% | ||
Fairford [Member] | ||||
Description Of Business [Line Items] | ||||
Ownership percentage | 90.00% |
SUMMARY OF SIGNIFICANT ACCOUN50
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Buildings [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 10 years |
Buildings [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 20 years |
Machinery and Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
Machinery and Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 10 years |
Electronic Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
Motor vehicles [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
Motor vehicles [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 10 years |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Estimated Useful Lives | The lesser of remaining lease term or 10 |
SUMMARY OF SIGNIFICANT ACCOUN51
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) | Dec. 15, 2015USD ($) | Dec. 15, 2015HKD | Jun. 17, 2016USD ($) | Dec. 31, 2016USD ($) | Mar. 24, 2016USD ($) | Dec. 31, 2015USD ($) | Jul. 13, 2016USD ($) | Jul. 13, 2016CNY (¥) | Jun. 17, 2016CNY (¥) | Mar. 24, 2016CNY (¥) | Nov. 11, 2009 | Jan. 17, 2004 |
Summary of Significant Accounting Policy [Line Items] | ||||||||||||
Research and Development Expense | $ 7,709,533 | $ 7,358,563 | ||||||||||
Shipping, Handling and Transportation Costs | 6,529,999 | 4,428,406 | ||||||||||
Advertising Expense | 239,301 | 285,844 | ||||||||||
Product Warranty Accrual, Warranties Issued | $ 2,503,950 | 2,047,684 | ||||||||||
Lease Terms | the lease term is equal to 75% of the estimated economic life of the leased property or more | |||||||||||
Line of Credit Facility, Collateral Fees, Amount | $ 135,329 | $ 538,517 | ||||||||||
SIH [Member] | ||||||||||||
Summary of Significant Accounting Policy [Line Items] | ||||||||||||
Proceeds from Sale of Equity Method Investments | $ 77 | HKD 600 | ||||||||||
Equity interest in its subsidiary | 60.00% | 60.00% | 60.00% | |||||||||
Notes Receivable [Member] | ||||||||||||
Summary of Significant Accounting Policy [Line Items] | ||||||||||||
Pledged assets amount | $ 32,916,198 | |||||||||||
Ruili Group Co Ltd [Member] | ||||||||||||
Summary of Significant Accounting Policy [Line Items] | ||||||||||||
Ownership percentage | 10.00% | |||||||||||
Ruili Group Co Ltd [Member] | Time Deposits [Member] | ||||||||||||
Summary of Significant Accounting Policy [Line Items] | ||||||||||||
Pledged assets amount | $ 21,667,802 | $ 3,317,650 | ¥ 22,000,000 | ¥ 140,000,000 | ||||||||
Maturity date, Start | Mar. 24, 2015 | |||||||||||
Maturity date, End | Mar. 24, 2016 | |||||||||||
Hangzhou Xiangwei Wuzi Co [Member] | Time Deposits [Member] | ||||||||||||
Summary of Significant Accounting Policy [Line Items] | ||||||||||||
Pledged assets amount | $ 6,190,800 | ¥ 40,000,000 | ||||||||||
Maturity date, Start | Dec. 17, 2015 | |||||||||||
Maturity date, End | Jun. 17, 2016 | |||||||||||
Taiwanese Investor [Member] | ||||||||||||
Summary of Significant Accounting Policy [Line Items] | ||||||||||||
Ownership percentage | 10.00% | 10.00% | 10.00% | |||||||||
Minimum [Member] | ||||||||||||
Summary of Significant Accounting Policy [Line Items] | ||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 0.55% | |||||||||||
Maximum [Member] | ||||||||||||
Summary of Significant Accounting Policy [Line Items] | ||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.57% | |||||||||||
Use Rights [Member] | ||||||||||||
Summary of Significant Accounting Policy [Line Items] | ||||||||||||
Finite-Lived Intangible Asset, Useful Life | 40 years | |||||||||||
Notes Payable to Banks [Member] | ||||||||||||
Summary of Significant Accounting Policy [Line Items] | ||||||||||||
Maturity date, Start | Apr. 28, 2017 | |||||||||||
Maturity date, End | Dec. 23, 2017 | |||||||||||
Notes Payable to Banks [Member] | Minimum [Member] | ||||||||||||
Summary of Significant Accounting Policy [Line Items] | ||||||||||||
Debt Instrument, Term | 3 months | |||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 0.55% | |||||||||||
Notes Payable to Banks [Member] | Maximum [Member] | ||||||||||||
Summary of Significant Accounting Policy [Line Items] | ||||||||||||
Debt Instrument, Term | 1 year | |||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.35% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | ||
PURCHASES FROM: | $ 8,032,569 | $ 5,534,236 |
SALES TO: | 14,193,165 | 8,766,577 |
Guangzhou Kormee Vehicle Brake Technology Development Co., Ltd. [Member] | ||
Related Party Transaction [Line Items] | ||
PURCHASES FROM: | 793,861 | 1,488,151 |
SALES TO: | 719,419 | 946,061 |
Ruian Kormee Vehicle Brake Co., Ltd. [Member] | ||
Related Party Transaction [Line Items] | ||
PURCHASES FROM: | 1,329,135 | 765,971 |
SALES TO: | 37,325 | 38,753 |
Ruili MeiLian Air Management System (LangFang) Co., Ltd [Member] | ||
Related Party Transaction [Line Items] | ||
PURCHASES FROM: | 1,787,921 | 0 |
Shanghai Dachao Electric Technology Co., Ltd. [Member] | ||
Related Party Transaction [Line Items] | ||
PURCHASES FROM: | 110,446 | 80,603 |
Ruili Group, Co., Ltd. [Member] | ||
Related Party Transaction [Line Items] | ||
PURCHASES FROM: | 4,011,206 | 3,199,511 |
SALES TO: | $ 13,436,421 | $ 7,781,763 |
RELATED PARTY TRANSACTIONS (D53
RELATED PARTY TRANSACTIONS (Details 1) | Dec. 31, 2016USD ($) | May 05, 2016USD ($) | May 05, 2016CNY (¥) | Dec. 31, 2015USD ($) |
Related Party Transaction [Line Items] | ||||
ACCOUNTS RECEIVABLE | $ 5,025,509 | $ 0 | ||
ACCOUNTS PAYABLE | 1,953,707 | 1,133,537 | ||
Ruian Kormee Vehicle Brake Co., Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
ACCOUNTS PAYABLE | 628,310 | 340,175 | ||
Ruili Group Co Ltd [Member] | ||||
Related Party Transaction [Line Items] | ||||
ACCOUNTS RECEIVABLE | 4,361,010 | 0 | ||
ACCOUNTS PAYABLE | 0 | $ 73,478,000 | ¥ 481,000,000 | 697,643 |
Guangzhou Kormee Vehicle Brake Technology Development Co., Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
ACCOUNTS RECEIVABLE | 664,499 | 0 | ||
ACCOUNTS PAYABLE | 0 | 75,968 | ||
Shanghai Dachao Electric Technology Co., Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
ACCOUNTS PAYABLE | 100,441 | 19,751 | ||
Ruili MeiLian Air Management System (LangFang) Co., Ltd [Member] | ||||
Related Party Transaction [Line Items] | ||||
ACCOUNTS PAYABLE | $ 1,224,956 | $ 0 |
RELATED PARTY TRANSACTIONS (D54
RELATED PARTY TRANSACTIONS (Details Textual) | 1 Months Ended | 12 Months Ended | |||||||
Sep. 28, 2007USD ($) | Sep. 28, 2007CNY (¥) | Dec. 31, 2016USD ($)m² | Dec. 31, 2015USD ($) | Dec. 31, 2016CNY (¥)m² | May 05, 2016USD ($)m² | May 05, 2016CNY (¥)m² | Sep. 28, 2007CNY (¥) | Jan. 17, 2004 | |
Related Party Transaction [Line Items] | |||||||||
Accounts Payable, Related Parties, Current | $ 1,953,707 | $ 1,133,537 | |||||||
Payments to Fund Long-term Loans to Related Parties | 18,247,384 | 0 | |||||||
Land Held For Use Total Asset Appraised Value | $ 20,400,000 | ¥ 154,000,000 | |||||||
Noncash or Part Noncash Acquisition, Fixed Assets Acquired | $ 9,100,000 | ¥ 69,400,000 | |||||||
Tax Amount Reserved for Land Use Rights | $ 745,220 | ¥ 4,560,000 | |||||||
Tax Rate Land Use Rights | 3.00% | 3.00% | 3.00% | 3.00% | |||||
Dongshan Facility [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Area of Land | m² | 58,714 | 58,714 | |||||||
Real Estate Facility Appraised Value | $ 19,100,000 | ¥ 125,000,000 | |||||||
Development Zone Facility [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Area of Land | m² | 157,619 | 157,619 | |||||||
Tax Amount Reserved for Land Use Rights | 2,300,000 | 15,000,000 | |||||||
Real Estate Facility Appraised Value | $ 95,600,000 | ¥ 626,000,000 | |||||||
Brake Systems Business [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Area of Land | m² | 89,229 | 89,229 | |||||||
Ruili Group Co Ltd [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Guarantee amount | $ 76,533,000 | ¥ 501,000,000 | |||||||
Wage expense | $ 0 | 5,052,213 | |||||||
Ownership percentage | 10.00% | ||||||||
Accounts Payable, Related Parties, Current | 0 | $ 697,643 | 73,478,000 | 481,000,000 | |||||
Due to Affiliate, Current | $ 3,016,000 | ¥ 20,000,000 | |||||||
Payments to Fund Long-term Loans to Related Parties | 18,247,384 | ||||||||
Ruili Group Co Ltd [Member] | Land Use Right Facility [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Payments to Acquire Property, Plant, and Equipment | 20,000,000 | ||||||||
Payments to Acquire Buildings | 6,700,000 | ||||||||
Payments to Acquire Intangible Assets | $ 14,000,000 | ||||||||
Ruili Group Co Ltd [Member] | Shanghai Dachao [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Ownership percentage | 49.00% | 49.00% | |||||||
Ruili Group Co Ltd [Member] | 6-month Fixed Term Deposit 1 [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Pledged assets amount | $ 3,317,650 | ¥ 22,000,000 | |||||||
Pledged Assets, Maturity Date | Jul. 13, 2016 | ||||||||
Ruili Group Co Ltd [Member] | Credit Line by Bank of Ningbo [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Guarantee amount | $ 25,871,627 | 168,000,000 | |||||||
Guarantee start date | Mar. 24, 2015 | ||||||||
Guarantee end date | Mar. 24, 2016 | ||||||||
Ruili Group Co Ltd [Member] | Credit Line by China Everbright Bank [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Guarantee amount | $ 9,239,867 | 60,000,000 | |||||||
Guarantee start date | Feb. 26, 2015 | ||||||||
Ruili Group Co Ltd [Member] | Credit Line by China Guangfa Bank [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Guarantee amount | $ 8,315,880 | 54,000,000 | |||||||
Guarantee start date | Sep. 22, 2015 | ||||||||
Ruili Group Co Ltd [Member] | Credit Line by China Merchants Bank [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Guarantee amount | $ 7,699,889 | 50,000,000 | |||||||
Guarantee start date | Jul. 29, 2015 | ||||||||
Ruili Group Co Ltd [Member] | Credit Line by Bank of Ningbo [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Guarantee amount | $ 17,182,404 | 108,000,000 | |||||||
Guarantee start date | Aug. 22, 2014 | ||||||||
Guarantee end date | Aug. 21, 2015 | ||||||||
Hangzhou Xiangwei Wuzi Co [Member] | 6-month Fixed Term Deposit 2 [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Pledged assets amount | $ 6,159,911 | 40,000,000 | |||||||
Maturity date, Start | Dec. 17, 2015 | ||||||||
Maturity date, End | Jun. 17, 2016 | ||||||||
Ruili Group Co Ltd One [Member] | Credit Line by Bank of Ningbo [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Guarantee amount | $ 21,623,180 | 150,000,000 | |||||||
Guarantee start date | May 30, 2016 | ||||||||
Guarantee end date | May 14, 2017 | ||||||||
Ruili Group Co Ltd One [Member] | Credit Line by China Guangfa Bank [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Guarantee amount | $ 28,830,907 | 200,000,000 | |||||||
Guarantee start date | May 22, 2016 | ||||||||
Guarantee end date | May 22, 2017 | ||||||||
Ruili Group Co Ltd One [Member] | Credit Line by China Merchants Bank [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Guarantee amount | $ 5,766,181 | ¥ 40,000,000 | |||||||
Guarantee start date | Oct. 24, 2016 |
ACCOUNTS RECEIVABLE, NET (Detai
ACCOUNTS RECEIVABLE, NET (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Concentration Risk [Line Items] | ||
Accounts receivable | $ 113,815,711 | $ 83,898,730 |
Less: allowance for doubtful accounts | (11,686,417) | (12,075,402) |
Account receivable balance, net | $ 102,129,294 | $ 71,823,328 |
ACCOUNTS RECEIVABLE, NET (Det56
ACCOUNTS RECEIVABLE, NET (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Concentration Risk [Line Items] | ||
Beginning balance | $ 12,075,402 | $ 6,475,587 |
Add: Increase to allowance | 395,491 | 6,025,485 |
Less: Accounts written off | 0 | 0 |
Effects on changes in foreign exchange rate | (784,476) | (425,670) |
Ending balance | $ 11,686,417 | $ 12,075,402 |
ACCOUNTS RECEIVABLE, NET (Det57
ACCOUNTS RECEIVABLE, NET (Details Textual) | Dec. 31, 2015USD ($) |
SIH [Member] | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Accounts receivable, related parties | $ 4,320,748 |
INVENTORIES, NET (Details)
INVENTORIES, NET (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Inventory [Line Items] | ||
Raw Materials | $ 20,121,513 | $ 13,038,945 |
Work-in-process | 14,843,653 | 28,786,709 |
Finished Goods | 30,811,351 | 31,836,206 |
Less: Write-down of inventories | 0 | 0 |
Total Inventory | $ 65,776,517 | $ 73,661,860 |
PROPERTY, PLANT AND EQUIPMENT59
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Sub-total | $ 109,506,007 | $ 93,344,204 |
Less: accumulated depreciation | (55,768,301) | (55,782,299) |
Property, plant and equipment, net | 53,737,706 | 37,561,905 |
Machinery [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Sub-total | 87,694,677 | 50,680,639 |
Molds [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Sub-total | 1,257,841 | 1,343,730 |
Office equipments [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Sub-total | 2,021,982 | 2,077,411 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Sub-total | 2,246,203 | 1,983,028 |
Buildings [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Sub-total | 15,826,738 | 7,756,917 |
Machinery held under capital lease [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Sub-total | 0 | 29,012,601 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Sub-total | $ 458,566 | $ 489,878 |
PROPERTY, PLANT AND EQUIPMENT60
PROPERTY, PLANT AND EQUIPMENT (Details Textual) ¥ in Millions | 1 Months Ended | 12 Months Ended | ||
May 31, 2016USD ($) | May 31, 2016CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Property, Plant and Equipment [Line Items] | ||||
Depreciation | $ 6,943,941 | $ 7,029,214 | ||
Property, Plant and Equipment, Gross | 109,506,007 | 93,344,204 | ||
Net of accumulated depreciation | 55,768,301 | 55,782,299 | ||
Impairment of Long-Lived Assets Held-for-use | 0 | 561,847 | ||
Dongshan Facility [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, Plant and Equipment, Gross | 545,642 | |||
Net of accumulated depreciation | 322,388 | |||
Capital Expenditures Incurred but Not yet Paid | $ 76,500,000 | ¥ 501 | ||
Payments to Acquire Buildings | $ 15,800,000 | |||
Buildings [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, Plant and Equipment, Gross | $ 15,826,738 | 7,756,917 | ||
Impairment of Long-Lived Assets Held-for-use | $ 561,847 |
LAND USE RIGHTS (Details)
LAND USE RIGHTS (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Cost | $ 8,473,362 | $ 16,182,560 |
Less: Accumulated amortization | (164,029) | (2,950,411) |
Land use rights, net | $ 8,309,333 | $ 13,232,149 |
LAND USE RIGHTS (Details Textua
LAND USE RIGHTS (Details Textual) ¥ in Millions | 1 Months Ended | 12 Months Ended | ||
May 31, 2016USD ($) | May 31, 2016CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Land Use Rights [Line Items] | ||||
Amortization expense, land use rights | $ 284,717 | $ 368,247 | ||
Dongshan Facility [Member] | ||||
Land Use Rights [Line Items] | ||||
Capital Expenditures Incurred but Not yet Paid | $ 76,500,000 | ¥ 501 | ||
Dongshan Facility [Member] | Land Use Rights [Member] | ||||
Land Use Rights [Line Items] | ||||
Payments to Acquire Intangible Assets | $ 8,500,000 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) | Dec. 31, 2016USD ($) |
2,017 | $ 8,291 |
2,018 | 3,147 |
2,019 | 0 |
2,020 | 0 |
2,021 | 0 |
Thereafter | $ 0 |
INTANGIBLE ASSETS (Details Text
INTANGIBLE ASSETS (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Gross intangible assets | $ 159,744 | $ 178,751 |
Less: accumulated amortization | 148,306 | 154,897 |
Net intangible assets | 11,438 | 23,854 |
Amortization expense | $ 11,250 | $ 11,980 |
PREPAYMENTS (Details)
PREPAYMENTS (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Raw material suppliers | $ 5,799,649 | $ 3,210,160 |
Equipment purchases | 4,997,952 | 140,447 |
Total prepayments | $ 10,797,601 | $ 3,350,607 |
DEFERRED TAX ASSETS AND DEFER66
DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax assets - current | ||
Allowance for doubtful accounts | $ 1,798,894 | $ 1,860,379 |
Revenue (net of cost) | 76,719 | 45,815 |
Unpaid accrued expenses | 357,352 | 180,174 |
Warranty | 977,610 | 875,751 |
Deferred tax assets | 3,210,575 | 2,962,119 |
Valuation allowance | 0 | 0 |
Net deferred tax assets - current | 3,210,575 | 2,962,119 |
Deferred tax liabilities - current | ||
Others | 0 | 52,390 |
Deferred tax liabilities - current | 0 | 52,390 |
Net deferred tax assets - current | $ 3,210,575 | $ 2,909,729 |
SHORT TERM BANK LOANS (Details)
SHORT TERM BANK LOANS (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
SHORT-TERM BANK LOANS [Abstract] | ||
Secured | $ 27,416,376 | $ 23,367,207 |
SHORT TERM BANK LOANS (Details
SHORT TERM BANK LOANS (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Minimum [Member] | ||
Short-term Debt [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 0.55% | |
Maximum [Member] | ||
Short-term Debt [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 4.57% | |
Ruili Group Co Ltd And Related Parties And Shareholders One [Member] | ||
Short-term Debt [Line Items] | ||
Corporate or personal guarantees | $ 1,987,891 | |
Ruili Group Co Ltd And Related Parties And Shareholders Two [Member] | ||
Short-term Debt [Line Items] | ||
Corporate or personal guarantees | 2,816,780 | |
Ruili Group Co Ltd And Related Parties And Shareholders Three [Member] | ||
Short-term Debt [Line Items] | ||
Corporate or personal guarantees | 11,052,328 | |
Ruili Group Co Ltd And Related Party [Member] | ||
Short-term Debt [Line Items] | ||
Corporate or personal guarantees | $ 5,793,196 | |
Short Term Bank Loans [Member] | ||
Short-term Debt [Line Items] | ||
Maturity date, Start | Apr. 28, 2017 | |
Maturity date, End | Dec. 23, 2017 | |
Interest expenses | $ 751,768 | $ 730,574 |
Accounts receivable pledged as collateral | $ 4,484,755 | $ 15,836,158 |
Short Term Bank Loans [Member] | Minimum [Member] | ||
Short-term Debt [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 0.55% | |
Short Term Bank Loans [Member] | Maximum [Member] | ||
Short-term Debt [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 5.35% |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Accrued payroll | $ 6,267,794 | $ 4,049,357 |
Accrued warranty expenses | 6,517,402 | 5,838,343 |
Other accrued expenses | 7,318,196 | 3,982,887 |
Total accrued expenses | $ 20,103,392 | $ 13,870,587 |
CAPITAL LEASE OBLIGATIONS (Deta
CAPITAL LEASE OBLIGATIONS (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Total capital lease obligations | $ 0 | $ 3,519,949 |
Less: current portion | 0 | (3,519,949) |
Non-current portion | $ 0 | $ 0 |
CAPITAL LEASE OBLIGATIONS (De71
CAPITAL LEASE OBLIGATIONS (Details Textual) | Sep. 13, 2011 | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015USD ($) |
Debt Instrument [Line Items] | |||||
Security deposits on lease agreement | $ 0 | $ 1,759,975 | |||
Capital Lease Obligations [Member] | |||||
Debt Instrument [Line Items] | |||||
Lease expiration date | Jan. 4, 2017 | Jan. 4, 2017 | |||
Lease collateral amount | $ 28,396,853 | ||||
Capital lease obligation obtained | 14,545,950 | ¥ 91,428,571 | |||
Security deposits on lease agreement | 1,818,244 | ¥ 11,428,571 | |||
Capital lease, periodic payment amount | $ 303,041 | 1,904,761.9 | |||
Interest rate | 7.95% | 6.40% | 6.40% | ||
Capital lease, prepaid interest | $ 1,703,212 | ¥ 10,705,357 | |||
Debt Instrument, Term | 60 months | 48 months | 48 months |
RESERVE (Details)
RESERVE (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Statutory Accounting Practices [Line Items] | ||
Statutory surplus reserve fund | $ 15,129,935 | $ 13,207,972 |
Total | $ 15,129,935 | $ 13,207,972 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
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 | (2.88%) | (3.33%) |
Effects of expenses not deductible for tax purposes | 0.61% | 1.26% |
Other items | 0.54% | (0.64%) |
Effective tax rate | 13.27% | 12.29% |
HONG KONG | ||
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%) |
UNITED STATES | ||
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%) |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
INCOME TAXES [Abstract] | ||
Current | $ 2,763,510 | $ 3,179,989 |
Deferred | 502,903 | (1,145,213) |
Total | $ 3,266,413 | $ 2,034,776 |
INCOME TAXES (Details Textual)
INCOME TAXES (Details Textual) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes [Line Items] | ||
"High-Tech Enterprise" income tax rate | 15.00% | |
US Statutory income tax rate | 25.00% | 25.00% |
NON-CONTROLLING INTEREST IN S76
NON-CONTROLLING INTEREST IN SUBSIDIARIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Net income attributable to noncontrolling interest in subsidiaries | $ 2,135,516 | $ 1,216,581 |
Ruili Group [Member] | ||
Net income attributable to noncontrolling interest in subsidiaries | 2,135,516 | 1,320,489 |
SORL International Holding, Ltd. [Member] | ||
Net income attributable to noncontrolling interest in subsidiaries | $ 0 | $ (103,908) |
NON-CONTROLLING INTEREST IN S77
NON-CONTROLLING INTEREST IN SUBSIDIARIES (Details Textual) - USD ($) | Dec. 15, 2015 | Dec. 31, 2016 | Dec. 31, 2015 |
Noncontrolling Interest [Line Items] | |||
Net income attributable to noncontrolling interest in subsidiaries | $ 2,135,516 | $ 1,216,581 | |
SIH [Member] | |||
Noncontrolling Interest [Line Items] | |||
Equity interest in its subsidiary | 60.00% | 60.00% | |
Ruili Group Co Ltd [Member] | |||
Noncontrolling Interest [Line Items] | |||
Noncontrolling interest in subsidiary | 10.00% | ||
Net income attributable to noncontrolling interest in subsidiaries | $ 2,135,516 | 1,320,489 | |
Sorl International Holding Ltd [Member] | |||
Noncontrolling Interest [Line Items] | |||
Noncontrolling interest in subsidiary | 40.00% | ||
Net income attributable to noncontrolling interest in subsidiaries | $ 0 | $ (103,908) |
OPERATING LEASES WITH RELATED78
OPERATING LEASES WITH RELATED PARTIES (Details) | Dec. 31, 2016USD ($) |
OPERATING LEASES WITH RELATED PARTIES [Abstract] | |
2,017 | $ 302,725 |
2,018 | 302,725 |
2,019 | 302,725 |
2,020 | 302,725 |
2,021 | 302,725 |
Thereafter | $ 302,724 |
OPERATING LEASES WITH RELATED79
OPERATING LEASES WITH RELATED PARTIES (Details Textual) | 12 Months Ended | ||
Dec. 31, 2016USD ($)m² | Dec. 31, 2016CNY (¥)m² | Dec. 31, 2015USD ($) | |
Operating Leased Assets [Line Items] | |||
Lease expenses | $ | $ 716,656 | $ 1,623,405 | |
Apartment Buildings [Member] | Ruili Group [Member] | |||
Operating Leased Assets [Line Items] | |||
Annual lease expense | $ 333,688 | ¥ 2,100,000 | |
Manufacturing Plant [Member] | Ruili Group [Member] | |||
Operating Leased Assets [Line Items] | |||
Area of manufacturing plant | m² | 89,229 | 89,229 | |
Annual lease expense | $ 1,293,070 | ¥ 8,137,680 |
WARRANTY CLAIMS (Details)
WARRANTY CLAIMS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Beginning balance at January 1, 2016 | $ 5,838,343 | |
Aggregate increase for new warranties issued during current period | 2,503,950 | $ 2,047,684 |
Aggregate reduction for payments made and effect of exchange rate fluctuation | (1,824,891) | |
Ending balance at December 31, 2016 | $ 6,517,402 | $ 5,838,343 |
WARRANTY CLAIMS (Details Textua
WARRANTY CLAIMS (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Product Warranty Accrual, Warranties Issued | $ 2,503,950 | $ 2,047,684 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | ||
Sales | $ 272,120,504 | $ 218,656,886 |
Gross profit | 72,904,281 | 59,410,418 |
OPERATING EXPENSES | ||
Selling and distribution expenses | 29,837,757 | 22,681,469 |
General and administrative expenses | 15,206,423 | 14,100,715 |
Impairment on long-lived assets | 0 | 561,847 |
Research and development expenses | 7,709,533 | 7,358,563 |
Loss on disposal of subsidiary | 0 | (3,170,821) |
Total operating expenses | 52,753,713 | 47,873,415 |
Other operating income, net | 3,041,701 | 3,204,286 |
Income from operations | 23,192,269 | 14,741,289 |
Interest income | 1,047,667 | 1,102,447 |
Government grants | 832,264 | 768,607 |
Other income | 1,244,078 | 2,217,204 |
Interest expenses | (887,097) | (1,269,091) |
Other expenses | (807,858) | (1,000,613) |
Income before income tax expense | 24,621,323 | 16,559,843 |
CAPITAL EXPENDITURE | 15,889,693 | 3,062,369 |
DEPRECIATION AND AMORTIZATION | 7,239,908 | 7,409,441 |
TOTAL ASSETS | 301,328,124 | 320,554,056 |
LONG LIVED ASSETS | 62,058,477 | 52,577,883 |
INTERSEGMENT SALES [Member] | ||
Segment Reporting Information [Line Items] | ||
Sales | 0 | 0 |
Commercial Vehicles Brake Systems [Member] | ||
Segment Reporting Information [Line Items] | ||
Sales | 223,995,265 | 178,672,655 |
Gross profit | 62,760,714 | 48,652,822 |
OPERATING EXPENSES | ||
CAPITAL EXPENDITURE | 13,078,806 | 2,511,143 |
DEPRECIATION AND AMORTIZATION | 5,959,168 | 6,054,254 |
TOTAL ASSETS | 248,023,179 | 261,924,719 |
LONG LIVED ASSETS | 51,080,332 | 42,961,388 |
Commercial Vehicles Brake Systems [Member] | INTERSEGMENT SALES [Member] | ||
Segment Reporting Information [Line Items] | ||
Sales | 0 | 0 |
Passenger Vehicles Brake Systems [Member] | ||
Segment Reporting Information [Line Items] | ||
Sales | 48,125,239 | 39,984,231 |
Gross profit | 10,143,567 | 10,757,596 |
OPERATING EXPENSES | ||
CAPITAL EXPENDITURE | 2,810,887 | 551,226 |
DEPRECIATION AND AMORTIZATION | 1,280,740 | 1,355,187 |
TOTAL ASSETS | 53,304,945 | 58,629,337 |
LONG LIVED ASSETS | 10,978,145 | 9,616,495 |
Passenger Vehicles Brake Systems [Member] | INTERSEGMENT SALES [Member] | ||
Segment Reporting Information [Line Items] | ||
Sales | $ 0 | $ 0 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Textual) | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | May 05, 2016 |
Contingencies [Line Items] | |||
Relevant tax amount reserved | $ 745,220 | ¥ 4,560,000 | |
Tax rate, land use right | 3.00% | 3.00% | 3.00% |
SUBSEQUENT EVENTS (Details Text
SUBSEQUENT EVENTS (Details Textual) - Subsequent Event [Member] - Rui’An Branch, Agricultural Bank of China [Member] | Mar. 10, 2017USD ($) | Jan. 19, 2017USD ($) | Mar. 10, 2017CNY (¥) | Jan. 19, 2017CNY (¥) |
Subsequent Event [Line Items] | ||||
Secured Long-term Debt, Noncurrent | $ 4,324,636 | ¥ 30,000,000 | ||
Debt Instrument, Maturity Date | Jan. 18, 2018 | |||
Debt Instrument, Description of Variable Rate Basis | fixed annual interest rate of the 1-year fixed loan prime rate on the day prior to the contract date plus 5 basis points | |||
Debt One [Member] | ||||
Subsequent Event [Line Items] | ||||
Secured Long-term Debt, Noncurrent | $ 4,324,636 | ¥ 30,000,000 | ||
Debt Instrument, Maturity Date | Mar. 9, 2018 | |||
Debt Instrument, Description of Variable Rate Basis | fixed annual interest rate of the 1-year fixed loan prime rate on the day prior to the contract date plus 9.35 basis points | |||
Debt Two [Member] | ||||
Subsequent Event [Line Items] | ||||
Secured Long-term Debt, Noncurrent | $ 2,883,091 | ¥ 20,000,000 | ||
Debt Instrument, Maturity Date | Mar. 9, 2018 | |||
Debt Instrument, Description of Variable Rate Basis | fixed annual interest rate of the 1-year fixed loan prime rate on the day prior to the contract date plus 9.35 basis points |
ADDITIONAL INFORMATION-FINANC85
ADDITIONAL INFORMATION-FINANCIAL STATEMENT SCHEDULE I (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Current Assets: | |||
Cash and cash equivalents | $ 8,057,155 | $ 30,230,828 | $ 14,009,597 |
Other current assets | 1,124,608 | 1,241,864 | |
Total Current Assets | 239,269,647 | 267,976,173 | |
TOTAL ASSETS | 301,328,124 | 320,554,056 | |
Current Liabilities: | |||
Other current liability | 2,013,943 | 2,067,449 | |
Total Current Liabilities | 138,936,601 | 98,129,556 | |
Total Liabilities | 138,936,601 | 98,129,556 | |
Stockholders' Equity: | |||
Preferred stock - no par value; 1,000,000 authorized; none issued and outstanding as of December 31, 2016 and 2015 | 0 | 0 | |
Common stock - $0.002 par value; 50,000,000 authorized, 19,304,921 issued and outstanding as of December 31, 2016 and 2015 | 38,609 | 38,609 | |
Additional paid-in capital | (28,582,654) | 42,199,014 | |
Total Stockholders' Equity | 139,055,462 | 200,163,333 | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 301,328,124 | 320,554,056 | |
Parent Company [Member] | |||
Current Assets: | |||
Cash and cash equivalents | 0 | 80,910 | 81,036 |
Other current assets | 86,828 | 6,161 | |
Total Current Assets | 86,828 | 87,071 | |
Investments in subsidiaries | 136,058,544 | 187,423,606 | |
TOTAL ASSETS | 136,145,372 | 187,510,677 | |
Current Liabilities: | |||
Other current liability | 2,921,411 | 2,921,411 | |
Total Current Liabilities | 2,921,411 | 2,921,411 | |
Total Liabilities | 2,921,411 | 2,921,411 | |
Stockholders' Equity: | |||
Preferred stock - no par value; 1,000,000 authorized; none issued and outstanding as of December 31, 2016 and 2015 | 0 | 0 | |
Common stock - $0.002 par value; 50,000,000 authorized, 19,304,921 issued and outstanding as of December 31, 2016 and 2015 | 38,609 | 38,609 | |
Additional paid-in capital | (28,582,654) | 42,199,014 | |
Retained earnings | 161,768,006 | 142,351,643 | |
Total Stockholders' Equity | 133,223,961 | 184,589,266 | $ 172,704,919 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 136,145,372 | $ 187,510,677 |
ADDITIONAL INFORMATION-FINANC86
ADDITIONAL INFORMATION-FINANCIAL STATEMENT SCHEDULE I (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Condensed Financial Statements, Captions [Line Items] | ||
Gain from disposal of subsidiary | $ 0 | $ (3,170,821) |
Net income attributable to stockholders | $ 19,219,394 | $ 13,308,486 |
Weighted average common share - Basic | 19,304,921 | 19,304,921 |
Weighted average common share - Diluted | 19,304,921 | 19,304,921 |
EPS - Basic | $ 1 | $ 0.69 |
EPS - Diluted | $ 1 | $ 0.69 |
Parent Company [Member] | ||
Condensed Financial Statements, Captions [Line Items] | ||
Investment income | $ 19,416,606 | $ 11,884,396 |
Gain from disposal of subsidiary | 0 | 77 |
Financial expenses | 243 | 126 |
Net income attributable to stockholders | $ 19,416,363 | $ 11,884,347 |
Weighted average common share - Basic | 19,304,921 | 19,304,921 |
Weighted average common share - Diluted | 19,304,921 | 19,304,921 |
EPS - Basic | $ 1.01 | $ 0.62 |
EPS - Diluted | $ 1.01 | $ 0.62 |
ADDITIONAL INFORMATION-FINANC87
ADDITIONAL INFORMATION-FINANCIAL STATEMENT SCHEDULE I (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flow from operating activities: | ||
Net income | $ 19,219,394 | $ 13,308,486 |
Adjustments to reconcile net income to net cash used in operating activities : | ||
Net cash used in operating activities | 5,427,570 | 39,314,251 |
Net change in cash and cash equivalents | (22,173,673) | 16,221,231 |
Cash and cash equivalents- beginning of the year | 30,230,828 | 14,009,597 |
Cash and cash equivalents - end of the year | 8,057,155 | 30,230,828 |
Parent Company [Member] | ||
Cash flow from operating activities: | ||
Net income | 19,416,363 | 11,884,347 |
Adjustments to reconcile net income to net cash used in operating activities : | ||
Investment in subsidiaries | (19,416,606) | (11,884,396) |
Net cash used in operating activities | (80,910) | (126) |
Other current liabilities | (80,667) | (77) |
Net change in cash and cash equivalents | (80,910) | (126) |
Cash and cash equivalents- beginning of the year | 80,910 | 81,036 |
Cash and cash equivalents - end of the year | $ 0 | $ 80,910 |
ADDITIONAL INFORMATION-FINANC88
ADDITIONAL INFORMATION-FINANCIAL STATEMENT SCHEDULE I (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Balance | $ 200,163,333 | |
Balance, shares | 19,304,921 | |
Net Income | $ 19,219,394 | $ 13,308,486 |
Distribution to controlling shareholders in connection with plant and land use rights exchange with entity under common control | (70,781,668) | |
Balance | $ 139,055,462 | $ 200,163,333 |
Balance, shares | 19,304,921 | 19,304,921 |
Parent Company [Member] | ||
Balance | $ 184,589,266 | $ 172,704,919 |
Net Income | 19,416,363 | 11,884,347 |
Distribution to controlling shareholders in connection with plant and land use rights exchange with entity under common control | (70,781,668) | |
Balance | 133,223,961 | 184,589,266 |
Common Stock [Member] | ||
Distribution to controlling shareholders in connection with plant and land use rights exchange with entity under common control | 0 | |
Common Stock [Member] | Parent Company [Member] | ||
Balance | $ 38,609 | $ 38,609 |
Balance, shares | 19,304,921 | 19,304,921 |
Net Income | $ 0 | $ 0 |
Distribution to controlling shareholders in connection with plant and land use rights exchange with entity under common control | 0 | |
Balance | $ 38,609 | $ 38,609 |
Balance, shares | 19,304,921 | 19,304,921 |
Additional paid-in capital [Member] | ||
Distribution to controlling shareholders in connection with plant and land use rights exchange with entity under common control | $ (70,781,668) | |
Additional paid-in capital [Member] | Parent Company [Member] | ||
Balance | 42,199,014 | $ 42,199,014 |
Net Income | 0 | 0 |
Distribution to controlling shareholders in connection with plant and land use rights exchange with entity under common control | (70,781,668) | |
Balance | (28,582,654) | 42,199,014 |
Accumulated deficit [Member] | ||
Distribution to controlling shareholders in connection with plant and land use rights exchange with entity under common control | 0 | |
Accumulated deficit [Member] | Parent Company [Member] | ||
Balance | 142,351,643 | 130,467,296 |
Net Income | 19,416,363 | 11,884,347 |
Distribution to controlling shareholders in connection with plant and land use rights exchange with entity under common control | 0 | |
Balance | $ 161,768,006 | $ 142,351,643 |