Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 14, 2017 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | SORL Auto Parts Inc | |
Entity Central Index Key | 714,284 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | SORL | |
Entity Common Stock, Shares Outstanding | 19,304,921 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash and cash equivalents | $ 7,653,174 | $ 8,057,155 |
Accounts receivable, net, including $0 and $5,025,509 from related parties at September 30, 2017 and December 31, 2016, respectively | 125,807,155 | 102,129,294 |
Bank acceptance notes receivable | 66,563,935 | 42,697,276 |
Inventories | 83,079,686 | 65,776,517 |
Prepayments, current, including $138,075 and $0 from related parties at September 30, 2017 and December 31, 2016, respectively | 11,811,104 | 10,797,601 |
Advances to related party | 9,011,700 | 0 |
Restricted cash | 700,974 | 5,476,621 |
Other current assets | 6,632,395 | 1,124,608 |
Deferred tax assets | 3,312,529 | 3,210,575 |
Total Current Assets | 314,572,652 | 239,269,647 |
Property, plant and equipment, net | 72,977,873 | 53,737,706 |
Land use rights, net | 14,796,670 | 8,309,333 |
Intangible assets, net | 5,263 | 11,438 |
Prepayments, non-current | 9,184,597 | 0 |
Total Non-Current Assets | 96,964,403 | 62,058,477 |
Total Assets | 411,537,055 | 301,328,124 |
Current Liabilities | ||
Accounts payable and bank acceptance notes to vendors, including $2,188,003 and $1,953,707 to related parties at September 30, 2017 and December 31, 2016, respectively | 70,124,109 | 65,672,626 |
Deposits received from customers | 40,656,344 | 22,733,742 |
Short term bank loans | 77,779,094 | 27,416,376 |
Income tax payable | 1,972,847 | 996,522 |
Accrued expenses | 19,981,863 | 20,103,392 |
Due to related party | 4,129,808 | 0 |
Other current liabilities | 2,695,541 | 2,013,943 |
Total Current Liabilities | 217,339,606 | 138,936,601 |
Total Liabilities | 217,339,606 | 138,936,601 |
Equity | ||
Preferred stock - no par value; 1,000,000 authorized; none issued and outstanding as of September 30, 2017 and December 31, 2016 | 0 | 0 |
Common stock - $0.002 par value; 50,000,000 authorized, 19,304,921 issued and outstanding as of September 30, 2017 and December 31, 2016 | 38,609 | 38,609 |
Additional paid-in capital | (28,582,654) | (28,582,654) |
Reserves | 17,273,279 | 15,129,935 |
Accumulated other comprehensive income | 13,308,933 | 6,117,042 |
Retained earnings | 165,642,629 | 146,352,530 |
Total SORL Auto Parts, Inc. Stockholders' Equity | 167,680,796 | 139,055,462 |
Noncontrolling Interest in Subsidiaries | 26,516,653 | 23,336,061 |
Total Equity | 194,197,449 | 162,391,523 |
Total Liabilities and Equity | $ 411,537,055 | $ 301,328,124 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Prepayments, related party | $ 138,075 | $ 0 |
Accounts receivable, related party | 0 | 5,025,509 |
Accounts payable, related party | $ 2,188,003 | $ 1,953,707 |
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 ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Sales | $ 101,329,628 | $ 63,706,397 | $ 267,589,953 | $ 192,917,633 |
Include: sales to related parties | 7,401,464 | 3,315,026 | 13,479,162 | 11,518,005 |
Cost of sales | 74,027,933 | 44,794,499 | 194,703,290 | 136,657,152 |
Gross profit | 27,301,695 | 18,911,898 | 72,886,663 | 56,260,481 |
Expenses: | ||||
Selling and distribution expenses | 8,283,704 | 7,949,947 | 22,877,889 | 20,637,464 |
General and administrative expenses | 4,761,787 | 4,878,979 | 13,517,222 | 16,717,966 |
Research and development expenses | 2,941,243 | 2,409,891 | 7,477,902 | 6,533,540 |
Total operating expenses | 15,986,734 | 15,238,817 | 43,873,013 | 43,888,970 |
Other operating income, net | 473,610 | 60,659 | 1,185,958 | 144,715 |
Income from operations | 11,788,571 | 3,733,740 | 30,199,608 | 12,516,226 |
Interest income | 16,150 | 33,979 | 38,175 | 1,047,667 |
Government grants | 1,006,033 | 424,029 | 1,119,337 | 569,041 |
Other income | 47,262 | 212,513 | 47,976 | 763,534 |
Interest expenses | (804,499) | (214,974) | (1,827,835) | (515,547) |
Other expenses | (886,782) | (155,261) | (1,536,921) | (582,820) |
Income before income taxes provision | 11,166,735 | 4,034,026 | 28,040,340 | 13,798,101 |
Income taxes provision | 1,627,721 | 435,534 | 4,225,404 | 1,677,987 |
Net income | 9,539,014 | 3,598,492 | 23,814,936 | 12,120,114 |
Net income attributable to noncontrolling interest in subsidiaries | 953,901 | 359,849 | 2,381,493 | 1,212,011 |
Net income attributable to common stockholders | 8,585,113 | 3,238,643 | 21,433,443 | 10,908,103 |
Comprehensive income: | ||||
Net income | 9,539,014 | 3,598,492 | 23,814,936 | 12,120,114 |
Foreign currency translation adjustments | 3,856,038 | (1,109,719) | 7,990,990 | (4,599,246) |
Comprehensive income | 13,395,052 | 2,488,773 | 31,805,926 | 7,520,868 |
Comprehensive income attributable to noncontrolling interest in subsidiaries | 1,339,505 | 248,877 | 3,180,592 | 752,086 |
Comprehensive income attributable to common stockholders | $ 12,055,547 | $ 2,239,896 | $ 28,625,334 | $ 6,768,782 |
Weighted average common share - basic | 19,304,921 | 19,304,921 | 19,304,921 | 19,304,921 |
Weighted average common share - diluted | 19,304,921 | 19,304,921 | 19,304,921 | 19,304,921 |
EPS - basic | $ 0.44 | $ 0.17 | $ 1.11 | $ 0.57 |
EPS - diluted | $ 0.44 | $ 0.17 | $ 1.11 | $ 0.57 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash Flows From Operating Activities | ||
Net income | $ 23,814,936 | $ 12,120,114 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Allowance for doubtful accounts | 759,854 | 6,328,318 |
Depreciation and amortization | 6,623,082 | 5,357,366 |
Deferred income tax | 42,583 | (1,253,285) |
Changes in assets and liabilities: | ||
Accounts receivable | (19,276,498) | (21,237,420) |
Bank acceptance notes receivable | 2,056,320 | (22,588,093) |
Other current assets | (2,317,124) | (360,110) |
Inventories | (13,792,530) | 8,225,129 |
Prepayments, current | (1,312,081) | (5,240,758) |
Prepaid capital lease interest | 0 | 86,777 |
Accounts payable and bank acceptance notes to vendors | 1,347,005 | 15,400,637 |
Income tax payable | 909,912 | 1,153,011 |
Deposits received from customers | 16,516,529 | 4,217,264 |
Other current liabilities and accrued expenses | (371,575) | 1,086,934 |
Net Cash Flows Provided By Operating Activities | 15,000,413 | 3,295,884 |
Cash Flows From Investing Activities | ||
Change in short term investments | 0 | 60,567,408 |
Acquisition and prepayments of property, plant and equipment and land use rights | (36,882,570) | (12,266,591) |
Deposit for acquisition of land use rights | (2,982,537) | 0 |
Advances to related party | (8,919,241) | (18,247,384) |
Repayment of advances to related party | 0 | 18,247,384 |
Change in restricted cash | 4,871,113 | (4,193,003) |
Net Cash Flows Provided By (Used In) Investing Activities | (43,913,235) | 44,107,814 |
Cash Flows From Financing Activities | ||
Proceeds from bank loans | 84,149,040 | 39,309,937 |
Repayment of bank loans | (36,149,680) | (37,110,783) |
Proceeds from related parties | 93,191,843 | 0 |
Repayments to related parties | (113,071,629) | 0 |
Distribution to controlling shareholder in connection with plant and land use rights exchange with entity under common control | 0 | (70,781,668) |
Repayment of capital lease | 0 | (1,779,040) |
Net Cash Flows Provided By (Used In) Financing Activities | 28,119,574 | (70,361,554) |
Effects on changes in foreign exchange rate | 389,267 | 216,995 |
Net change in cash and cash equivalents | (403,981) | (22,740,861) |
Cash and cash equivalents- beginning of the period | 8,057,155 | 30,230,828 |
Cash and cash equivalents - end of the period | 7,653,174 | 7,489,967 |
Supplemental Cash Flow Disclosures: | ||
Interest paid | 1,255,540 | 575,349 |
Income taxes paid | 3,272,909 | 2,340,720 |
Non-cash Investing and Financing Transactions | ||
Transfer of plant and land use right to entity under common control | 0 | 17,342,372 |
Liabilities assumed in connection with the plant and land use right exchange | 0 | 5,351,196 |
Loans from related party in the form of bank acceptance notes | $ 23,515,527 | $ 0 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - 9 months ended Sep. 30, 2017 - 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, 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 | |||||||
Net income | 23,814,936 | $ 0 | 0 | 0 | 21,433,443 | 0 | 21,433,443 | 2,381,493 |
Foreign currency translation adjustment | 7,990,990 | 0 | 0 | 0 | 0 | 7,191,891 | 7,191,891 | 799,099 |
Transfer to reserve | 0 | 0 | 0 | 2,143,344 | (2,143,344) | 0 | 0 | 0 |
Balance at Sep. 30, 2017 | $ 194,197,449 | $ 38,609 | $ (28,582,654) | $ 17,273,279 | $ 165,642,629 | $ 13,308,933 | $ 167,680,796 | $ 26,516,653 |
Balance, shares at Sep. 30, 2017 | 19,304,921 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | NOTE A - 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 a joint venture agreement with MGR Hong Kong Limited (“MGR”), a Hong Kong-based global auto parts distribution specialist firm and an unaffiliated Taiwanese individual investor. The joint venture was named SORL International Holding, Ltd. (“SIH”) based in Hong Kong. SORL held a 60 30 10 |
BASIS OF PRESENTATION AND SIGNI
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | NOTE B - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (1) BASIS OF PRESENTATION The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries. All intercompany balances and transactions have been eliminated in the consolidation. Certain information and footnote disclosures normally included in financial statements prepared in conjunction with generally accepted accounting principles have been condensed or omitted as permitted by the rules and regulations of the United States Securities and Exchange Commission (“SEC”), although the Company believes that the disclosures contained in this report are adequate to make the information presented not misleading. The consolidated balance sheet information as of December 31, 2016 was derived from the consolidated audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. These consolidated financial statements should be read in conjunction with the annual consolidated audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, and other reports filed with the SEC. The accompanying unaudited interim consolidated financial statements reflect all adjustments of a normal and recurring nature which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year taken as a whole. (2) SIGNIFICANT ACCOUNTING POLICIES The Company uses the accrual method of accounting for financial statement and tax return purposes. The preparation of financial statements in conformity with U.S generally accepted accounting principles 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. For certain of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, bank acceptance notes receivable, inventories, current prepayments, other current assets, deferred tax assets, accounts payable and bank acceptance notes to vendors, short term bank loans, deposits received from customers, income tax payable, accrued expenses and other current liabilities, 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, free market 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. 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 six to twelve months. A related party is generally defined as (i) any person that holds 10 Bank acceptance notes receivable, generally due within six months and with specific payment terms and definitive due dates, are comprised of the notes issued by some customers to pay certain outstanding receivable balances to the Company, and the notes issued by the customers of related parties and transferred to the Company as loans from related parties. Bank acceptance notes do not bear interest. As of September 30, 2017 and December 31, 2016, bank acceptance notes receivable in the amount of $ 54,781,712 32,916,198 Revenue from the sale of goods is recognized when the risks and rewards of ownership of the goods have transferred to the buyer. The transfer is decided by several factors, including factors such as when persuasive evidence of an arrangement exits, delivery has occurred, the sales price is fixed or determinable, and collection is reasonably assured. Revenue consists of the invoice value for the sale of goods net of value-added tax, 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. 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. 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, United States dollars (“US$”). All assets and liabilities are translated at the current rate. The stockholders’ equity accounts are translated at the appropriate historical rates. Revenue and expenses are translated at the weighted average rates in effect on the transaction dates. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. |
RECENTLY ISSUED ACCOUNTING PRON
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2017 | |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS [Abstract] | |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | NOTE C RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In January 2017, the FASB issued ASU 2017-03, “ Accounting Changes and Error Corrections (Topic 250) and Investments - Equity Method and Joint Ventures (Topic 323) |
RECLASSIFICATIONS
RECLASSIFICATIONS | 9 Months Ended |
Sep. 30, 2017 | |
Prior Period Adjustment [Abstract] | |
RECLASSIFICATIONS | NOTE D RECLASSIFICATIONS Certain prior period 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 | 9 Months Ended |
Sep. 30, 2017 | |
RELATED PARTY TRANSACTIONS [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE E - 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 Kormee Automotive Electronic Control Technology Co., Ltd. (“Guangzhou Kormee”), Ruian Kormee Automobile Braking 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 Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 PURCHASES FROM: Guangzhou Kormee Automotive Electronic Control Technology Co., Ltd. $ 124,340 $ 138,580 $ 1,449,946 $ 826,474 Ruian Kormee Automobile Braking Co., Ltd. 328,680 450,665 1,085,483 807,769 Ruili MeiLian Air Management System (LangFang) Co., Ltd. 1,457,104 3,613,415 Shanghai Dachao Electric Technology Co., Ltd. 82,671 55,230 116,415 Ruili Group Co., Ltd. 1,335,449 1,027,210 3,845,123 2,972,963 Total Purchases $ 3,245,573 $ 1,699,126 $ 10,049,197 $ 4,723,621 SALES TO: Guangzhou Kormee Automotive Electronic Control Technology Co., Ltd. $ 3,125,127 $ 1,529,583 $ 4,874,568 $ 3,174,040 Ruian Kormee Automobile Braking Co., Ltd. 103,242 115,429 9,477 Ruili MeiLian Air Management System (LangFang) Co., Ltd. 245,735 634,022 Ruili Group Co., Ltd. 3,927,360 1,785,443 7,855,143 8,334,488 Total Sales $ 7,401,464 $ 3,315,026 $ 13,479,162 $ 11,518,005 September 30, December 31, 2017 2016 ACCOUNTS RECEIVABLE FROM RELATED PARTIES Ruili Group Co., Ltd. $ $ 4,361,010 Guangzhou Kormee Automotive Electronic Control Technology Co., Ltd. 664,499 Total $ $ 5,025,509 PREPAYMENTS TO RELATED PARTIES Guangzhou Kormee Automotive Electronic Control Technology Co., Ltd. $ 63,025 $ Shanghai Dachao Electric Technology Co., Ltd. 75,050 Total $ 138,075 $ ADVANCES TO RELATED PARTY Ruili Group Co., Ltd. $ 9,011,700 $ Total $ 9,011,700 $ ACCOUNTS PAYABLE AND BANK ACCEPTANCE NOTES TO RELATED PARTIES Ruian Kormee Automobile Braking Co., Ltd. $ $ 628,310 Shanghai Dachao Electric Technology Co., Ltd. 100,441 Ruili MeiLian Air Management System (LangFang) Co., Ltd. 2,188,003 1,224,956 Total $ 2,188,003 $ 1,953,707 DUE TO RELATED PARTY Ruian Kormee Automobile Braking Co., Ltd. $ 4,129,808 $ Total $ 4,129,808 $ The balance of advances to related party represents the advances from the Company to Ruili Group. The advances to Ruili Group are non-interest bearing, unsecured and due on demand. During the nine months ended September 30, the Company advanced cash in the amount of $ 8,919,241 92,459 The balance of due to related party represents the loans the Company obtained from related parties for working capital purposes. The borrowings from related parties are interest free, unsecured and repayable on demand. During the nine months ended September 30, 2017, the Company obtained loans from related parties in the amount of $ 93,191,843 5,829,744 87,362,099 23,515,527 113,071,629 1,742,308 111,329,321 494,067 The Company entered into a lease agreement with Ruili Group, see Note M for more details. 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 May 30, 2016 May 14, 2017 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 The Company provided a guarantee for the credit line granted to Ruili Group by China Guangfa Bank in a maximum amount of RMB 69,000,000 10,092,000 November 16, 2016 January 16, 2018 The Company provided a guarantee for the credit line granted to Ruili Group by Bank of Ningbo in a maximum amount of RMB 180,000,000 26,328,000 June 30, 2017 |
ACCOUNTS RECEIVABLE, NET
ACCOUNTS RECEIVABLE, NET | 9 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE, NET | NOTE F - ACCOUNTS RECEIVABLE, NET September 30, December 31, Accounts receivable $ 138,797,272 $ 113,815,711 Less: allowance for doubtful accounts (12,990,117) (11,686,417) Accounts receivable, net $ 125,807,155 $ 102,129,294 No customer individually accounted for more than 10% of our revenues or accounts receivable for the nine months ended September 30, 2017 and 2016. The changes in the allowance for doubtful accounts on September 30, 2017 and December 31, 2016 are summarized as follows: September 30, December 31, 2017 2016 Beginning balance $ 11,686,417 $ 12,075,402 Add: increase to allowance 759,854 395,491 Effects on changes in foreign exchange rate 543,846 (784,476) Ending balance $ 12,990,117 $ 11,686,417 |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 30, 2017 | |
INVENTORIES [Abstract] | |
INVENTORIES | NOTE G - INVENTORIES September 30, December 31, 2017 2016 Raw materials $ 23,592,541 $ 20,121,513 Work-in-process 13,382,666 14,843,653 Finished goods 46,104,479 30,811,351 Total inventories $ 83,079,686 $ 65,776,517 |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 9 Months Ended |
Sep. 30, 2017 | |
PROPERTY, PLANT AND EQUIPMENT [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | September 30, December 31, Machinery $ 111,277,530 $ 87,694,677 Molds 1,314,717 1,257,841 Office equipment 2,385,454 2,021,982 Vehicles 3,291,065 2,246,203 Buildings 19,042,848 15,826,738 Leasehold improvements 479,301 458,566 Sub-total 137,790,915 109,506,007 Less: accumulated depreciation (64,813,042) (55,768,301) Property, plant and equipment, net $ 72,977,873 $ 53,737,706 Depreciation expense incurred was $ 6,353,494 5,110,014 In May 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 exchange the land use rights and factory facilities located at No. 1169 Yumeng Road, Rui'an Economic Development Zone, Rui'An City, Zhejiang Province, China (the “Dongshan Facility”), purchased in 2007 from Ruili Group, plus RMB 501.00 76.50 4.56 0.75 15.00 2.30 3 In July 2017, Ruian, a subsidiary of the Company, purchased plants and the associated land use rights from Yunding Holding Group Co., Ltd. in cash at the purchase price of RMB 60.06 8.87 58.95 8.88 42.35 6.38 16.60 2.50 33,141 25,016 |
LAND USE RIGHTS, NET
LAND USE RIGHTS, NET | 9 Months Ended |
Sep. 30, 2017 | |
Land Use Rights [Abstract] | |
LAND USE RIGHTS, NET | NOTE I LAND USE RIGHTS, NET September 30, December 31, 2017 2016 Cost $ 15,237,587 $ 8,473,362 Less: accumulated amortization (440,917) (164,029) Land use rights, net $ 14,796,670 $ 8,309,333 In connection with the execution of the Purchase Agreement in May 2016, the Company exchanged the Dongshan Facility plus RMB 501.00 76.50 8.47 In July 2017, Ruian, a subsidiary of the Company, purchased plants and the associated land use rights from Yunding Holding Group Co., Ltd. in cash at the purchase price of RMB 60.06 8.87 42.35 6.38 During the three months ended September 30, 2017, the Company also prepaid the amount of RMB 10.01 1.51 20.00 3.01 |
DEFERRED TAX ASSETS
DEFERRED TAX ASSETS | 9 Months Ended |
Sep. 30, 2017 | |
Components of Deferred Tax Assets and Liabilities [Abstract] | |
DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES | NOTE J - DEFERRED TAX ASSETS September 30, December 31, 2017 2016 Deferred tax assets - current Allowance for doubtful accounts $ 2,019,545 $ 1,798,894 Revenue (net of cost) (128,438) 76,719 Unpaid accrued expenses 237,055 357,352 Warranty 1,184,367 977,610 Deferred tax assets 3,312,529 3,210,575 Valuation allowance Deferred tax assets - current $ 3,312,529 $ 3,210,575 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 the U.S. as the Company had no taxable income for the reporting periods. 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 | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
SHORT-TERM BANK LOANS | NOTE K SHORT-TERM BANK LOANS Bank loans represented the following as of September 30, 2017 and December 31, 2016: September 30, December 31, 2017 2016 Secured $ 77,779,094 $ 27,416,376 The Company obtained those short term loans from Bank of China, Bank of Ningbo, Agricultural Bank of China, China Zheshang Bank, Industrial and Commercial Bank of China, Oversea-Chinese Banking Corporation Limited and China Construction Bank, respectively, to finance general working capital as well as new equipment acquisitions. Interest rates for the loans outstanding during the nine months ended September 30, 2017 ranged from 0.55% to 5.22% per annum. The maturity dates of the loans existing as of September 30, 2017 ranged from October 2, 2017 to September 26, 2018. As of September 30, 2017 and December 31, 2016, the Company’s accounts receivables of $6,349,443 and $4,484,755, respectively, were pledged as collateral under loan arrangements. The interest expenses for short-term bank loans were $804,499 and $214,974 for the three months ended September 30, 2017 and 2016, respectively. The interest expenses, including discount fees, were $1,827,835 and $515,547 for the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017, corporate or personal guarantees provided for those bank loans were as follows: $ 5,611,817 Guaranteed by Ruili Group, a related party. $ 2,944,146 Pledged by Ruili Group, a related party, with its land and buildings. Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both of who are the Company’s principal stockholders. $ 14,227,576 Guaranteed by Ruili Group, a related party, Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both of who are the Company’s principal stockholders. $ 24,861,004 Pledged by the Company with its bank acceptance notes. $ 22,600,913 Pledged by Hangzhou Ruili Zhiye Development Ltd., a related party under common control of Ruili Group, with its properties. Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both of who are the Company’s principal stockholders. $ 6,026,910 Pledged by the Company’s land and properties. Guaranteed by Ruili Group, Xiaoping Zhang, who is one of the Company’s principal stockholders. $ 1,506,728 Pledged by Ruili Group, a related party, with its land and buildings. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE L - 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 2015, the Joint Venture was awarded the Chinese government's "High-Tech Enterprise" designation for a third time, which is valid for three years and it continues to be taxed at the 15 Nine Months Ended Nine Months Ended 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 % China statutory income tax rate 25.00 % 25.00 % Effects of income tax exemptions and reliefs -10.00 % -10.00 % Effects of additional deduction allowed for R&D expenses -1.86 % -3.54 % Effects of expenses not deductible for tax purposes 0.54 % 0.74 % Other items 1.39 % -0.04 % Effective tax rate 15.07 % 12.16 % 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 recorded for the United States. In the nine months ended September 30, 2017, there were no penalties and interest, which generally are recorded in the general and administrative expenses or in the tax expenses. The Nine Months Ended Nine Months Ended Current $ 4,199,727 $ 2,942,048 Deferred 25,677 (1,264,061) Total $ 4,225,404 $ 1,677,987 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 September 30, 2017 and December 31, 2016. |
OPERATING LEASES WITH RELATED P
OPERATING LEASES WITH RELATED PARTY | 9 Months Ended |
Sep. 30, 2017 | |
Leases, Operating [Abstract] | |
OPERATING LEASE WITH RELATED PARTY | NOTE M OPERATING LEASES WITH RELATED PARTY In December 2006, Ruian entered into a lease agreement with Ruili Group Co., Ltd. for the lease of two apartment buildings. These two apartment buildings are for Ruian’s management personnel and staff, respectively. The initial lease term was 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 The lease expenses were $ 684,252 1,402,658 |
WARRANTY CLAIMS
WARRANTY CLAIMS | 9 Months Ended |
Sep. 30, 2017 | |
WARRANTY CLAIMS [Abstract] | |
WARRANTY CLAIMS | NOTE N - WARRANTY CLAIMS Warranty claims were $ 2,261,311 1,741,415 Beginning balance at January 1, 2017 $ 6,517,402 Aggregate increase for new warranties issued during current period 2,261,311 Aggregate reduction for payments made (1,207,221) Effect of exchange rate fluctuation 324,288 Ending balance at September 30, 2017 $ 7,895,780 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2017 | |
SEGMENT INFORMATION [Abstract] | |
SEGMENT INFORMATION | NOTE O 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. Nine Months Ended September 30, 2017 2016 SALES TO EXTERNAL CUSTOMERS Commercial vehicles brake systems $ 223,937,534 $ 157,362,913 Passenger vehicles brake systems 43,652,419 35,554,720 Sales $ 267,589,953 $ 192,917,633 INTERSEGMENT SALES Commercial vehicles brake systems $ $ Passenger vehicles brake systems GROSS PROFIT Commercial vehicles brake systems $ 61,485,066 $ 45,768,683 Passenger vehicles brake systems 11,401,597 10,491,798 Gross profit $ 72,886,663 $ 56,260,481 Selling and distribution expenses 22,877,889 20,637,464 General and administrative expenses 13,517,222 16,717,966 Research and development expenses 7,477,902 6,533,540 Other operating income, net 1,185,958 144,715 Income from operations 30,199,608 12,516,226 Interest income 38,175 1,047,667 Government grants 1,119,337 569,041 Other income 47,976 763,534 Interest expenses (1,827,835) (515,547) Other expenses (1,536,921) (582,820) Income before income tax expense $ 28,040,340 $ 13,798,101 CAPITAL EXPENDITURE Commercial vehicles brake systems $ 30,791,780 $ 9,994,389 Passenger vehicles brake systems 6,090,790 2,272,202 Total $ 36,882,570 $ 12,266,591 DEPRECIATION AND AMORTIZATION Commercial vehicles brake systems $ 5,538,902 $ 4,375,484 Passenger vehicles brake systems 1,084,180 981,882 Total $ 6,623,082 $ 5,357,366 September 30, December 31, TOTAL ASSETS Commercial vehicles brake systems $ 346,308,432 $ 248,023,179 Passenger vehicles brake systems 65,228,623 53,304,945 Total $ 411,537,055 $ 301,328,124 September 30, December 31, LONG LIVED ASSETS Commercial vehicles brake systems $ 81,595,545 $ 51,080,332 Passenger vehicles brake systems 15,368,858 10,978,145 Total $ 96,964,403 $ 62,058,477 |
CONTINGENCIES
CONTINGENCIES | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE P CONTINGENCIES (1) 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 (approximately $745,220). This amount was determined based on a 3% tax rate on the consideration paid for the Dongshan Facility in the transaction, which the Company considered as the most probable amount of tax liability. The Dongshan Facility was transferred back to Ruili Group on May 5, 2016. (2) The information of lease commitments is provided in Note M. (3) The information of guarantees and assets pledged is provided in Note E. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE Q SUBSEQUENT EVENTS During the subsequent period, the Company obtained short term loans for the total amount of approximately $ 13,809,000 4.10 5.22 1,387,000 In the same period, the Company repaid loan principals as well as interests for the total amount of approximately $ 4,793,000 On October 20, 2017, the Company entered into a State-owned Construction Land Use Right Transfer Agreement with Rui’an Land Resources Bureau to purchase the land use rights located at the intersection of Xianghe Road and North Wansong Road, Binhai New District, Rui’an City, Zhejiang Province, China, with an area of 35,483 50.03 7.54 10.01 1.51 20.00 3.01 20.00 3.01 |
BASIS OF PRESENTATION AND SIG24
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
ACCOUNTING METHOD | a. ACCOUNTING METHOD The Company uses the accrual method of accounting for financial statement and tax return purposes. |
USE OF ESTIMATES | b. USE OF ESTIMATES The preparation of financial statements in conformity with U.S generally accepted accounting principles 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 | c. FAIR VALUE OF FINANCIAL INSTRUMENTS For certain of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, bank acceptance notes receivable, inventories, current prepayments, other current assets, deferred tax assets, accounts payable and bank acceptance notes to vendors, short term bank loans, deposits received from customers, income tax payable, accrued expenses and other current liabilities, 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, free market 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. |
RESTRICTED CASH | d. 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 six to twelve months. |
RELATED PARTY TRANSACTIONS | e. RELATED PARTY TRANSACTIONS A related party is generally defined as (i) any person that holds 10 |
BANK ACCEPTANCE NOTES RECEIVABLE | f. BANK ACCEPTANCE NOTES RECEIVABLE Bank acceptance notes receivable, generally due within six months and with specific payment terms and definitive due dates, are comprised of the notes issued by some customers to pay certain outstanding receivable balances to the Company, and the notes issued by the customers of related parties and transferred to the Company as loans from related parties. Bank acceptance notes do not bear interest. As of September 30, 2017 and December 31, 2016, bank acceptance notes receivable in the amount of $ 54,781,712 32,916,198 |
REVENUE RECOGNITION | g. 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. The transfer is decided by several factors, including factors such as when persuasive evidence of an arrangement exits, delivery has occurred, the sales price is fixed or determinable, and collection is reasonably assured. Revenue consists of the invoice value for the sale of goods net of value-added tax, 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. |
COST OF SALES | h. 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. |
FOREIGN CURRENCY TRANSLATION | i. 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, United States dollars (“US$”). All assets and liabilities are translated at the current rate. The stockholders’ equity accounts are translated at the appropriate historical rates. Revenue and expenses are translated at the weighted average rates in effect on the transaction dates. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
RELATED PARTY TRANSACTIONS [Abstract] | |
Schedule of Related Party Transactions | The following related party transactions occurred during the three and nine months ended September 30, 2017 and 2016: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 PURCHASES FROM: Guangzhou Kormee Automotive Electronic Control Technology Co., Ltd. $ 124,340 $ 138,580 $ 1,449,946 $ 826,474 Ruian Kormee Automobile Braking Co., Ltd. 328,680 450,665 1,085,483 807,769 Ruili MeiLian Air Management System (LangFang) Co., Ltd. 1,457,104 3,613,415 Shanghai Dachao Electric Technology Co., Ltd. 82,671 55,230 116,415 Ruili Group Co., Ltd. 1,335,449 1,027,210 3,845,123 2,972,963 Total Purchases $ 3,245,573 $ 1,699,126 $ 10,049,197 $ 4,723,621 SALES TO: Guangzhou Kormee Automotive Electronic Control Technology Co., Ltd. $ 3,125,127 $ 1,529,583 $ 4,874,568 $ 3,174,040 Ruian Kormee Automobile Braking Co., Ltd. 103,242 115,429 9,477 Ruili MeiLian Air Management System (LangFang) Co., Ltd. 245,735 634,022 Ruili Group Co., Ltd. 3,927,360 1,785,443 7,855,143 8,334,488 Total Sales $ 7,401,464 $ 3,315,026 $ 13,479,162 $ 11,518,005 September 30, December 31, 2017 2016 ACCOUNTS RECEIVABLE FROM RELATED PARTIES Ruili Group Co., Ltd. $ $ 4,361,010 Guangzhou Kormee Automotive Electronic Control Technology Co., Ltd. 664,499 Total $ $ 5,025,509 PREPAYMENTS TO RELATED PARTIES Guangzhou Kormee Automotive Electronic Control Technology Co., Ltd. $ 63,025 $ Shanghai Dachao Electric Technology Co., Ltd. 75,050 Total $ 138,075 $ ADVANCES TO RELATED PARTY Ruili Group Co., Ltd. $ 9,011,700 $ Total $ 9,011,700 $ ACCOUNTS PAYABLE AND BANK ACCEPTANCE NOTES TO RELATED PARTIES Ruian Kormee Automobile Braking Co., Ltd. $ $ 628,310 Shanghai Dachao Electric Technology Co., Ltd. 100,441 Ruili MeiLian Air Management System (LangFang) Co., Ltd. 2,188,003 1,224,956 Total $ 2,188,003 $ 1,953,707 DUE TO RELATED PARTY Ruian Kormee Automobile Braking Co., Ltd. $ 4,129,808 $ Total $ 4,129,808 $ |
ACCOUNTS RECEIVABLE, NET (Table
ACCOUNTS RECEIVABLE, NET (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
ACCOUNTS RECEIVABLE [Abstract] | |
Schedule of Allowance for Doubtful Accounts | Accounts receivable, net, consisted of the following: September 30, December 31, Accounts receivable $ 138,797,272 $ 113,815,711 Less: allowance for doubtful accounts (12,990,117) (11,686,417) Accounts receivable, net $ 125,807,155 $ 102,129,294 No customer individually accounted for more than 10% of our revenues or accounts receivable for the nine months ended September 30, 2017 and 2016. The changes in the allowance for doubtful accounts on September 30, 2017 and December 31, 2016 are summarized as follows: September 30, December 31, 2017 2016 Beginning balance $ 11,686,417 $ 12,075,402 Add: increase to allowance 759,854 395,491 Effects on changes in foreign exchange rate 543,846 (784,476) Ending balance $ 12,990,117 $ 11,686,417 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
INVENTORIES [Abstract] | |
Schedule of Inventories | September 30, December 31, 2017 2016 Raw materials $ 23,592,541 $ 20,121,513 Work-in-process 13,382,666 14,843,653 Finished goods 46,104,479 30,811,351 Total inventories $ 83,079,686 $ 65,776,517 |
PROPERTY, PLANT AND EQUIPMENT28
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
PROPERTY, PLANT AND EQUIPMENT [Abstract] | |
Schedule of Property, Plant and Equipment | Property, plant and equipment were consisted of the following on September 30, 2017 and December 31, 2016: September 30, December 31, Machinery $ 111,277,530 $ 87,694,677 Molds 1,314,717 1,257,841 Office equipment 2,385,454 2,021,982 Vehicles 3,291,065 2,246,203 Buildings 19,042,848 15,826,738 Leasehold improvements 479,301 458,566 Sub-total 137,790,915 109,506,007 Less: accumulated depreciation (64,813,042) (55,768,301) Property, plant and equipment, net $ 72,977,873 $ 53,737,706 |
LAND USE RIGHTS, NET (Tables)
LAND USE RIGHTS, NET (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Land Use Rights [Abstract] | |
Schedule Of Land Rights | The balances for land use rights, net as of September 30, 2017 and December 31, 2016 are as the following: September 30, December 31, 2017 2016 Cost $ 15,237,587 $ 8,473,362 Less: accumulated amortization (440,917) (164,029) Land use rights, net $ 14,796,670 $ 8,309,333 |
DEFERRED TAX ASSETS (Tables)
DEFERRED TAX ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Components of Deferred Tax Assets and Liabilities [Abstract] | |
Schedule of Deferred Tax Assets and Liabilities | Deferred tax assets were consisted of the following as of September 30, 2017 and December 31, 2016: September 30, December 31, 2017 2016 Deferred tax assets - current Allowance for doubtful accounts $ 2,019,545 $ 1,798,894 Revenue (net of cost) (128,438) 76,719 Unpaid accrued expenses 237,055 357,352 Warranty 1,184,367 977,610 Deferred tax assets 3,312,529 3,210,575 Valuation allowance Deferred tax assets - current $ 3,312,529 $ 3,210,575 |
SHORT-TERM BANK LOANS (Tables)
SHORT-TERM BANK LOANS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Bank Loans | Bank loans represented the following as of September 30, 2017 and December 31, 2016: September 30, December 31, 2017 2016 Secured $ 77,779,094 $ 27,416,376 |
Schedule of Personal or Corporate Guarantees | As of September 30, 2017, corporate or personal guarantees provided for those bank loans were as follows: $ 5,611,817 Guaranteed by Ruili Group, a related party. $ 2,944,146 Pledged by Ruili Group, a related party, with its land and buildings. Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both of who are the Company’s principal stockholders. $ 14,227,576 Guaranteed by Ruili Group, a related party, Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both of who are the Company’s principal stockholders. $ 24,861,004 Pledged by the Company with its bank acceptance notes. $ 22,600,913 Pledged by Hangzhou Ruili Zhiye Development Ltd., a related party under common control of Ruili Group, with its properties. Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both of who are the Company’s principal stockholders. $ 6,026,910 Pledged by the Company’s land and properties. Guaranteed by Ruili Group, Xiaoping Zhang, who is one of the Company’s principal stockholders. $ 1,506,728 Pledged by Ruili Group, a related party, with its land and buildings. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | The reconciliation of the effective income tax rate of the Company to the statutory income tax rate in the PRC for the nine months ended September 30, 2017 and 2016 is as follows: Nine Months Ended Nine Months Ended 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 % China statutory income tax rate 25.00 % 25.00 % Effects of income tax exemptions and reliefs -10.00 % -10.00 % Effects of additional deduction allowed for R&D expenses -1.86 % -3.54 % Effects of expenses not deductible for tax purposes 0.54 % 0.74 % Other items 1.39 % -0.04 % Effective tax rate 15.07 % 12.16 % |
Schedule of Income Tax Provision | provisions for income taxes for the nine months ended September 30, 2017 and 2016, respectively, are summarized as follows: Nine Months Ended Nine Months Ended Current $ 4,199,727 $ 2,942,048 Deferred 25,677 (1,264,061) Total $ 4,225,404 $ 1,677,987 |
WARRANTY CLAIMS (Tables)
WARRANTY CLAIMS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
WARRANTY CLAIMS [Abstract] | |
Schedule of Accrued Warranty Expenses | The movement of accrued warranty expenses for the nine months ended September 30, 2017 was as follows: Beginning balance at January 1, 2017 $ 6,517,402 Aggregate increase for new warranties issued during current period 2,261,311 Aggregate reduction for payments made (1,207,221) Effect of exchange rate fluctuation 324,288 Ending balance at September 30, 2017 $ 7,895,780 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
SEGMENT INFORMATION [Abstract] | |
Schedule of Segment Information, by Segment | All of the Company’s long-lived assets are located in the PRC. The Company and its subsidiaries do not have long-lived assets in the United States for the reporting periods. Nine Months Ended September 30, 2017 2016 SALES TO EXTERNAL CUSTOMERS Commercial vehicles brake systems $ 223,937,534 $ 157,362,913 Passenger vehicles brake systems 43,652,419 35,554,720 Sales $ 267,589,953 $ 192,917,633 INTERSEGMENT SALES Commercial vehicles brake systems $ $ Passenger vehicles brake systems GROSS PROFIT Commercial vehicles brake systems $ 61,485,066 $ 45,768,683 Passenger vehicles brake systems 11,401,597 10,491,798 Gross profit $ 72,886,663 $ 56,260,481 Selling and distribution expenses 22,877,889 20,637,464 General and administrative expenses 13,517,222 16,717,966 Research and development expenses 7,477,902 6,533,540 Other operating income, net 1,185,958 144,715 Income from operations 30,199,608 12,516,226 Interest income 38,175 1,047,667 Government grants 1,119,337 569,041 Other income 47,976 763,534 Interest expenses (1,827,835) (515,547) Other expenses (1,536,921) (582,820) Income before income tax expense $ 28,040,340 $ 13,798,101 CAPITAL EXPENDITURE Commercial vehicles brake systems $ 30,791,780 $ 9,994,389 Passenger vehicles brake systems 6,090,790 2,272,202 Total $ 36,882,570 $ 12,266,591 DEPRECIATION AND AMORTIZATION Commercial vehicles brake systems $ 5,538,902 $ 4,375,484 Passenger vehicles brake systems 1,084,180 981,882 Total $ 6,623,082 $ 5,357,366 September 30, December 31, TOTAL ASSETS Commercial vehicles brake systems $ 346,308,432 $ 248,023,179 Passenger vehicles brake systems 65,228,623 53,304,945 Total $ 411,537,055 $ 301,328,124 September 30, December 31, LONG LIVED ASSETS Commercial vehicles brake systems $ 81,595,545 $ 51,080,332 Passenger vehicles brake systems 15,368,858 10,978,145 Total $ 96,964,403 $ 62,058,477 |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details Textual) | Sep. 30, 2017 | 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 | 49.00% | 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% |
BASIS OF PRESENTATION AND SIG36
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details Textual) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 | Nov. 11, 2009 |
Notes Receivable [Member] | |||
Summary of Significant Accounting Policy [Line Items] | |||
Pledged assets amount | $ 54,781,712 | $ 32,916,198 | |
Taiwanese Investor [Member] | |||
Summary of Significant Accounting Policy [Line Items] | |||
Ownership percentage | 10.00% | 10.00% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Related Party Transaction [Line Items] | ||||
PURCHASES FROM: | $ 3,245,573 | $ 1,699,126 | $ 10,049,197 | $ 4,723,621 |
SALES TO: | 7,401,464 | 3,315,026 | 13,479,162 | 11,518,005 |
Guangzhou Kormee Automotive Electronic Control Technology Co., Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
PURCHASES FROM: | 124,340 | 138,580 | 1,449,946 | 826,474 |
SALES TO: | 3,125,127 | 1,529,583 | 4,874,568 | 3,174,040 |
Ruian Kormee Automobile Braking Co., Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
PURCHASES FROM: | 328,680 | 450,665 | 1,085,483 | 807,769 |
SALES TO: | 103,242 | 0 | 115,429 | 9,477 |
Ruili MeiLian Air Management System (LangFang) Co., Ltd [Member] | ||||
Related Party Transaction [Line Items] | ||||
PURCHASES FROM: | 1,457,104 | 0 | 3,613,415 | 0 |
SALES TO: | 245,735 | 0 | 634,022 | 0 |
Shanghai Dachao Electric Technology Co., Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
PURCHASES FROM: | 0 | 82,671 | 55,230 | 116,415 |
Ruili Group, Co., Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
PURCHASES FROM: | 1,335,449 | 1,027,210 | 3,845,123 | 2,972,963 |
SALES TO: | $ 3,927,360 | $ 1,785,443 | $ 7,855,143 | $ 8,334,488 |
RELATED PARTY TRANSACTIONS (D38
RELATED PARTY TRANSACTIONS (Details 1) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Related Party Transaction [Line Items] | ||
ACCOUNTS RECEIVABLE | $ 0 | $ 5,025,509 |
ACCOUNTS PAYABLE | 2,188,003 | 1,953,707 |
Guangzhou Kormee Automotive Electronic Control Technology Co., Ltd. [Member] | ||
Related Party Transaction [Line Items] | ||
ACCOUNTS RECEIVABLE | 0 | 664,499 |
Ruian Kormee Vehicle Brake Co., Ltd. [Member] | ||
Related Party Transaction [Line Items] | ||
ACCOUNTS PAYABLE | 0 | 628,310 |
Ruili Group Co Ltd [Member] | ||
Related Party Transaction [Line Items] | ||
ACCOUNTS RECEIVABLE | 0 | 4,361,010 |
Shanghai Dachao Electric Technology Co., Ltd. [Member] | ||
Related Party Transaction [Line Items] | ||
ACCOUNTS PAYABLE | 0 | 100,441 |
Ruili MeiLian Air Management System (LangFang) Co., Ltd [Member] | ||
Related Party Transaction [Line Items] | ||
ACCOUNTS PAYABLE | $ 2,188,003 | $ 1,224,956 |
RELATED PARTY TRANSACTIONS (D39
RELATED PARTY TRANSACTIONS (Details 2) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Due to Related Parties, Current | $ 4,129,808 | $ 0 |
Due from Affiliate, Current | 9,011,700 | 0 |
Due from Other Related Parties, Current | 138,075 | 0 |
Ruian Kormee [Member] | ||
Due to Related Parties, Current | 4,129,808 | 0 |
Ruili Group Co Ltd [Member] | ||
Due from Affiliate, Current | 9,011,700 | 0 |
Guangzhou Kormee Automotive Electronic Control Technology Co., Ltd. [Member] | ||
Due from Other Related Parties, Current | 63,025 | 0 |
Shanghai Dachao Electric Technology Co., Ltd. [Member] | ||
Due from Other Related Parties, Current | $ 75,050 | $ 0 |
RELATED PARTY TRANSACTIONS (D40
RELATED PARTY TRANSACTIONS (Details Textual) | 9 Months Ended | |||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017CNY (¥) | Jan. 17, 2004 | |
Related Party Transaction [Line Items] | ||||
Repayments of Related Party Debt | $ 113,071,629 | $ 0 | ||
Effect of Exchange Rate on Cash and Cash Equivalents | 389,267 | 216,995 | ||
Proceeds from Related Party Debt | $ 93,191,843 | $ 0 | ||
Ruili Group Co Ltd [Member] | ||||
Related Party Transaction [Line Items] | ||||
Ownership percentage | 49.00% | 49.00% | 10.00% | |
Repayments of Related Party Debt | $ 111,329,321 | |||
Effect of Exchange Rate on Cash and Cash Equivalents | 92,459 | |||
Proceeds from Notes Payable | 23,515,527 | |||
Proceeds from Related Party Debt | 87,362,099 | |||
Origination of Notes Receivable from Related Parties | $ 8,919,241 | |||
Ruili Group Co Ltd [Member] | Credit Line by Bank of Ningbo [Member] | ||||
Related Party Transaction [Line Items] | ||||
Guarantee end date | May 14, 2017 | |||
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 One [Member] | ||||
Related Party Transaction [Line Items] | ||||
Effect of Exchange Rate on Cash and Cash Equivalents | $ 494,067 | |||
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 | |||
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 | |||
Debt Instrument, Maturity Date | Apr. 18, 2018 | |||
Ruili Group Co Ltd Two [Member] | China Guangfa Bank [Member] | ||||
Related Party Transaction [Line Items] | ||||
Guarantee amount | $ 10,092,000 | 69,000,000 | ||
Guarantee start date | Nov. 16, 2016 | |||
Guarantee end date | Jan. 16, 2018 | |||
Ruili Group Co Ltd Two [Member] | Bank of Ningbo [Member] | ||||
Related Party Transaction [Line Items] | ||||
Guarantee amount | $ 26,328,000 | ¥ 180,000,000 | ||
Guarantee start date | Jun. 30, 2017 | |||
Guarantee end date | Jun. 30, 2020 | |||
Ruian Kormee [Member] | ||||
Related Party Transaction [Line Items] | ||||
Repayments of Related Party Debt | $ 1,742,308 | |||
Proceeds from Related Party Debt | $ 5,829,744 |
ACCOUNTS RECEIVABLE, NET (Detai
ACCOUNTS RECEIVABLE, NET (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Concentration Risk [Line Items] | ||
Accounts receivable | $ 138,797,272 | $ 113,815,711 |
Less: allowance for doubtful accounts | (12,990,117) | (11,686,417) |
Accounts receivable, net | $ 125,807,155 | $ 102,129,294 |
ACCOUNTS RECEIVABLE, NET (Det42
ACCOUNTS RECEIVABLE, NET (Details 1) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Concentration Risk [Line Items] | ||
Beginning balance | $ 11,686,417 | $ 12,075,402 |
Add: increase to allowance | 759,854 | 395,491 |
Effects on changes in foreign exchange rate | 543,846 | (784,476) |
Ending balance | $ 12,990,117 | $ 11,686,417 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Inventory [Line Items] | ||
Raw materials | $ 23,592,541 | $ 20,121,513 |
Work-in-process | 13,382,666 | 14,843,653 |
Finished goods | 46,104,479 | 30,811,351 |
Total inventories | $ 83,079,686 | $ 65,776,517 |
PROPERTY, PLANT AND EQUIPMENT44
PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Sub-total | $ 137,790,915 | $ 109,506,007 |
Less: accumulated depreciation | (64,813,042) | (55,768,301) |
Property, plant and equipment, net | 72,977,873 | 53,737,706 |
Machinery [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Sub-total | 111,277,530 | 87,694,677 |
Molds [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Sub-total | 1,314,717 | 1,257,841 |
Office equipments [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Sub-total | 2,385,454 | 2,021,982 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Sub-total | 3,291,065 | 2,246,203 |
Buildings [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Sub-total | 19,042,848 | 15,826,738 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Sub-total | $ 479,301 | $ 458,566 |
PROPERTY, PLANT AND EQUIPMENT45
PROPERTY, PLANT AND EQUIPMENT, NET (Details Textual) | 1 Months Ended | 9 Months Ended | |||||||
Jul. 31, 2017USD ($)am² | Jul. 31, 2017CNY (¥) | May 31, 2016USD ($) | May 31, 2016CNY (¥) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017CNY (¥) | Jul. 31, 2017CNY (¥)am² | May 31, 2016CNY (¥) | |
Property, Plant and Equipment [Line Items] | |||||||||
Depreciation | $ 6,353,494 | $ 5,110,014 | |||||||
Capital Expenditures Incurred but Not yet Paid | $ 76,500,000 | ||||||||
Tax Amount Reserved for Land Use Rights | ¥ | ¥ 4,560,000 | ||||||||
Tax Rate Land Use Rights | 3.00% | 3.00% | |||||||
Payments to Acquire Property, Plant, and Equipment | $ 36,882,570 | $ 12,266,591 | |||||||
Ruili Group [Member] | |||||||||
Property, Plant and Equipment [Line Items] | |||||||||
Machinery and Equipment, Gross | $ 2,500,000 | ¥ 16,600,000 | |||||||
Area Of Building | a | 33,141 | 33,141 | |||||||
Area of Land | m² | 25,016 | 25,016 | |||||||
Ruili Group [Member] | Use Rights [Member] | |||||||||
Property, Plant and Equipment [Line Items] | |||||||||
Land | $ 6,380,000 | ¥ 42,350,000 | |||||||
Ruili Group [Member] | Maximum [Member] | |||||||||
Property, Plant and Equipment [Line Items] | |||||||||
Payments to Acquire Property, Plant, and Equipment | 8,870,000 | ¥ 60,060,000 | |||||||
Ruili Group [Member] | Minimum [Member] | |||||||||
Property, Plant and Equipment [Line Items] | |||||||||
Payments to Acquire Property, Plant, and Equipment | $ 8,880,000 | ¥ 58,950,000 | |||||||
Dongshan Facility [Member] | |||||||||
Property, Plant and Equipment [Line Items] | |||||||||
Capital Expenditures Incurred but Not yet Paid | 76,500,000 | ¥ 501,000,000 | |||||||
Tax Amount Reserved for Land Use Rights | 750,000 | $ 745,220 | ¥ 4,560,000 | ||||||
Development Zone Facility [Member] | |||||||||
Property, Plant and Equipment [Line Items] | |||||||||
Tax Amount Reserved for Land Use Rights | $ 2,300,000 | ¥ 15,000,000 | |||||||
Tax Rate Land Use Rights | 3.00% | 3.00% |
LAND USE RIGHTS, NET (Details)
LAND USE RIGHTS, NET (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Cost | $ 15,237,587 | $ 8,473,362 |
Less: Accumulated amortization | (440,917) | (164,029) |
Land use rights, net | $ 14,796,670 | $ 8,309,333 |
LAND USE RIGHTS, NET (Details T
LAND USE RIGHTS, NET (Details Textual) ¥ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
Jul. 31, 2017USD ($) | Jul. 31, 2017CNY (¥) | May 31, 2016USD ($) | May 31, 2016CNY (¥) | Sep. 30, 2017USD ($) | Sep. 30, 2017CNY (¥) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017CNY (¥) | Jul. 31, 2017CNY (¥) | |
Land Use Rights [Line Items] | ||||||||||
Capital Expenditures Incurred but Not yet Paid | $ 76,500,000 | |||||||||
Payments to Acquire Property, Plant, and Equipment | $ 36,882,570 | $ 12,266,591 | ||||||||
Yunding Holding Group Co [Member] | ||||||||||
Land Use Rights [Line Items] | ||||||||||
Payments to Acquire Property, Plant, and Equipment | $ 8,870,000 | ¥ 60,060 | ||||||||
Ruili Group Co Ltd [Member] | Land Use Rights [Member] | ||||||||||
Land Use Rights [Line Items] | ||||||||||
Land | $ 6,380,000 | ¥ 42,350 | ||||||||
Dongshan Facility [Member] | ||||||||||
Land Use Rights [Line Items] | ||||||||||
Capital Expenditures Incurred but Not yet Paid | 76,500,000 | ¥ 501,000 | ||||||||
Dongshan Facility [Member] | Land Use Rights [Member] | ||||||||||
Land Use Rights [Line Items] | ||||||||||
Payments to Acquire Intangible Assets | $ 8,470,000 | $ 1,510,000 | ¥ 10,010 | |||||||
Deposit Assets | $ 3,010,000 | $ 3,010,000 | ¥ 20,000 |
DEFERRED TAX ASSETS (Details)
DEFERRED TAX ASSETS (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Deferred tax assets - current | ||
Allowance for doubtful accounts | $ 2,019,545 | $ 1,798,894 |
Revenue (net of cost) | (128,438) | 76,719 |
Unpaid accrued expenses | 237,055 | 357,352 |
Warranty | 1,184,367 | 977,610 |
Deferred tax assets | 3,312,529 | 3,210,575 |
Valuation allowance | 0 | |
Deferred tax assets - current | $ 3,312,529 | $ 3,210,575 |
SHORT-TERM BANK LOANS (Details)
SHORT-TERM BANK LOANS (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Secured | $ 77,779,094 | $ 27,416,376 |
SHORT-TERM BANK LOANS (Details
SHORT-TERM BANK LOANS (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Ruili Group Co Ltd And Related Parties And Shareholders One [Member] | |||||
Short-term Debt [Line Items] | |||||
Corporate or personal guarantees | $ 2,944,146 | $ 2,944,146 | |||
Ruili Group Co Ltd And Related Parties And Shareholders Two [Member] | |||||
Short-term Debt [Line Items] | |||||
Corporate or personal guarantees | 14,227,576 | 14,227,576 | |||
Ruili Group Co Ltd And Related Parties And Shareholders Three [Member] | |||||
Short-term Debt [Line Items] | |||||
Corporate or personal guarantees | 6,026,910 | 6,026,910 | |||
Ruili Group Co Ltd And Related Parties And Shareholders Four [Member] | |||||
Short-term Debt [Line Items] | |||||
Corporate or personal guarantees | 1,506,728 | 1,506,728 | |||
Ruili Group Co Ltd And Related Party [Member] | |||||
Short-term Debt [Line Items] | |||||
Corporate or personal guarantees | 5,611,817 | 5,611,817 | |||
Hangzhou Ruili Zhiye Development Ltd [Member] | |||||
Short-term Debt [Line Items] | |||||
Corporate or personal guarantees | 22,600,913 | 22,600,913 | |||
Bank Acceptance Notes [Member] | |||||
Short-term Debt [Line Items] | |||||
Corporate or personal guarantees | 24,861,004 | $ 24,861,004 | |||
Short Term Bank Loans [Member] | |||||
Short-term Debt [Line Items] | |||||
Maturity date, Start | Oct. 2, 2017 | ||||
Maturity date, End | Sep. 26, 2018 | ||||
Interest expenses | 804,499 | $ 214,974 | $ 1,827,835 | $ 515,547 | |
Accounts receivable pledged as collateral | $ 6,349,443 | $ 6,349,443 | $ 4,484,755 | ||
Short Term Bank Loans [Member] | Minimum [Member] | |||||
Short-term Debt [Line Items] | |||||
Debt Instrument, Interest Rate, Stated Percentage | 0.55% | 0.55% | |||
Short Term Bank Loans [Member] | Maximum [Member] | |||||
Short-term Debt [Line Items] | |||||
Debt Instrument, Interest Rate, Stated Percentage | 5.22% | 5.22% |
INCOME TAXES (Details)
INCOME TAXES (Details) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax [Line Items] | ||
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%) |
China statutory income tax rate | 25.00% | 25.00% |
Effect of income tax exemptions and reliefs | (10.00%) | (10.00%) |
Effects of additional deduction allowed for R&D expenses | (1.86%) | (3.54%) |
Effects of expenses not deductible for tax purposes | 0.54% | 0.74% |
Other items | 1.39% | (0.04%) |
Effective tax rate | 15.07% | 12.16% |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
INCOME TAXES [Abstract] | ||||
Current | $ 4,199,727 | $ 2,942,048 | ||
Deferred | 25,677 | (1,264,061) | ||
Total | $ 1,627,721 | $ 435,534 | $ 4,225,404 | $ 1,677,987 |
INCOME TAXES (Details Textual)
INCOME TAXES (Details Textual) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes [Line Items] | |||
High-Tech Enterprise income tax rate | 15.00% | 15.00% | 15.00% |
OPERATING LEASES WITH RELATED54
OPERATING LEASES WITH RELATED PARTY (Details Textual) | 9 Months Ended | ||
Sep. 30, 2017USD ($) | Sep. 30, 2017CNY (¥) | Sep. 30, 2016USD ($) | |
Operating Leased Assets [Line Items] | |||
Lease expenses | $ 684,252 | $ 1,402,658 | |
Apartment Buildings [Member] | Ruili Group [Member] | |||
Operating Leased Assets [Line Items] | |||
Annual lease expense | $ 333,688 | ¥ 2,100,000 |
WARRANTY CLAIMS (Details)
WARRANTY CLAIMS (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Beginning balance at January 1, 2017 | $ 6,517,402 | |
Aggregate increase for new warranties issued during current period | 2,261,311 | $ 1,741,415 |
Aggregate reduction for payments made | (1,207,221) | |
Effect of exchange rate fluctuation | 324,288 | |
Ending balance at September 30, 2017 | $ 7,895,780 |
WARRANTY CLAIMS (Details Textua
WARRANTY CLAIMS (Details Textual) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Standard and Extended Product Warranty Accrual, Increase for Warranties Issued | $ 2,261,311 | $ 1,741,415 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||||
Sales | $ 101,329,628 | $ 63,706,397 | $ 267,589,953 | $ 192,917,633 | |
Gross profit | 27,301,695 | 18,911,898 | 72,886,663 | 56,260,481 | |
OPERATING EXPENSES | |||||
Selling and distribution expenses | 8,283,704 | 7,949,947 | 22,877,889 | 20,637,464 | |
General and administrative expenses | 4,761,787 | 4,878,979 | 13,517,222 | 16,717,966 | |
Research and development expenses | 2,941,243 | 2,409,891 | 7,477,902 | 6,533,540 | |
Other operating income, net | 473,610 | 60,659 | 1,185,958 | 144,715 | |
Income from operations | 11,788,571 | 3,733,740 | 30,199,608 | 12,516,226 | |
Interest income | 16,150 | 33,979 | 38,175 | 1,047,667 | |
Government grants | 1,006,033 | 424,029 | 1,119,337 | 569,041 | |
Interest expenses | (804,499) | (214,974) | (1,827,835) | (515,547) | |
Other expenses | (886,782) | (155,261) | (1,536,921) | (582,820) | |
Other income | 47,262 | 212,513 | 47,976 | 763,534 | |
Income before income tax expense | 11,166,735 | $ 4,034,026 | 28,040,340 | 13,798,101 | |
CAPITAL EXPENDITURE | 36,882,570 | 12,266,591 | |||
DEPRECIATION AND AMORTIZATION | 6,623,082 | 5,357,366 | |||
TOTAL ASSETS | 411,537,055 | 411,537,055 | $ 301,328,124 | ||
LONG LIVED ASSETS | 96,964,403 | 96,964,403 | 62,058,477 | ||
Commercial Vehicles Brake Systems [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Sales | 223,937,534 | 157,362,913 | |||
Gross profit | 61,485,066 | 45,768,683 | |||
OPERATING EXPENSES | |||||
CAPITAL EXPENDITURE | 30,791,780 | 9,994,389 | |||
DEPRECIATION AND AMORTIZATION | 5,538,902 | 4,375,484 | |||
TOTAL ASSETS | 346,308,432 | 346,308,432 | 248,023,179 | ||
LONG LIVED ASSETS | 81,595,545 | 81,595,545 | 51,080,332 | ||
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 | 43,652,419 | 35,554,720 | |||
Gross profit | 11,401,597 | 10,491,798 | |||
OPERATING EXPENSES | |||||
CAPITAL EXPENDITURE | 6,090,790 | 2,272,202 | |||
DEPRECIATION AND AMORTIZATION | 1,084,180 | 981,882 | |||
TOTAL ASSETS | 65,228,623 | 65,228,623 | 53,304,945 | ||
LONG LIVED ASSETS | $ 15,368,858 | 15,368,858 | $ 10,978,145 | ||
Passenger Vehicles Brake Systems [Member] | INTERSEGMENT SALES [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Sales | $ 0 | $ 0 |
CONTINGENCIES (Details Textual)
CONTINGENCIES (Details Textual) | Sep. 30, 2017USD ($) | Sep. 30, 2017CNY (¥) | May 31, 2016USD ($) | May 31, 2016CNY (¥) |
Contingencies [Line Items] | ||||
Relevant tax amount reserved | ¥ 4,560,000 | |||
Tax rate, land use right | 3.00% | 3.00% | ||
Dongshan Facility [Member] | ||||
Contingencies [Line Items] | ||||
Relevant tax amount reserved | $ 745,220 | $ 750,000 | ¥ 4,560,000 |
SUBSEQUENT EVENTS (Details Text
SUBSEQUENT EVENTS (Details Textual) ¥ in Thousands | Nov. 14, 2017USD ($) | Oct. 20, 2017USD ($)m² | Oct. 20, 2017CNY (¥) | Oct. 20, 2017CNY (¥)m² |
Minimum [Member] | ||||
Subsequent Event [Line Items] | ||||
Debt Instrument, Maturity Date | Dec. 9, 2017 | |||
Maximum [Member] | ||||
Subsequent Event [Line Items] | ||||
Debt Instrument, Maturity Date | Aug. 8, 2018 | |||
Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Repayments of Debt | $ 4,793,000 | |||
Area of Land | m² | 35,483 | 35,483 | ||
Short-term Debt | $ 13,809,000 | |||
Prepaid Deposits | $ 3,010,000 | ¥ 20,000 | ||
Subsequent Event [Member] | Use Rights [Member] | ||||
Subsequent Event [Line Items] | ||||
Payments To Acquire Intangible Assets, Refundable Deposit | 3,010,000 | ¥ 20,000 | ||
Payments to Acquire Intangible Assets | 1,510,000 | 10,010 | ||
Subsequent Event [Member] | Minimum [Member] | ||||
Subsequent Event [Line Items] | ||||
Debt Instrument, Interest Rate, Stated Percentage | 4.10% | |||
Subsequent Event [Member] | Maximum [Member] | ||||
Subsequent Event [Line Items] | ||||
Debt Instrument, Interest Rate, Stated Percentage | 5.22% | |||
Subsequent Event [Member] | Maximum [Member] | Use Rights [Member] | ||||
Subsequent Event [Line Items] | ||||
Payments to Acquire Intangible Assets | $ 7,540,000 | ¥ 50,030 | ||
Subsequent Event [Member] | Pledged Accounts Receivable [Member] | ||||
Subsequent Event [Line Items] | ||||
Pledged Assets Separately Reported, Finance Receivables Pledged as Collateral, at Fair Value | $ 1,387,000 |