Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 11, 2022 | |
Document Information Line Items | ||
Entity Registrant Name | SMART POWERR CORP. | |
Trading Symbol | CREG | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 7,358,052 | |
Amendment Flag | false | |
Entity Central Index Key | 0000721693 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Sep. 30, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 000-12536 | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 90-0093373 | |
Entity Address, Address Line One | Rong Cheng Yun Gu Building Keji 3rd Road | |
Entity Address, Address Line Two | Yanta District | |
Entity Address, City or Town | Xi An City | |
Entity Address, Address Line Three | Shaan Xi Province | |
Entity Address, Country | CN | |
Entity Address, Postal Zip Code | 710075 | |
City Area Code | (011) | |
Local Phone Number | 86-29-8765-1098 | |
Title of 12(b) Security | Common Stock, $0.001 par value | |
Security Exchange Name | NASDAQ | |
Entity Interactive Data Current | Yes |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
CURRENT ASSETS | ||
Cash | $ 136,216,292 | $ 152,011,887 |
VAT receivable | 170,283 | 189,622 |
Prepaid expenses | 35,253 | 34,872 |
Other receivables | 876,987 | 880,612 |
Total current assets | 137,298,815 | 153,116,993 |
NON-CURRENT ASSETS | ||
Long term deposit | 15,438 | 17,192 |
Operating lease right-of-use assets, net | 75,673 | 132,549 |
Fixed assets, net | 5,144 | 5,728 |
Total non-current assets | 96,255 | 155,469 |
TOTAL ASSETS | 137,395,070 | 153,272,462 |
CURRENT LIABILITIES | ||
Accounts payable | 69,914 | 77,854 |
Taxes payable | 3,053,180 | 3,075,233 |
Accrued interest on notes | 245,514 | 333,443 |
Notes payable, net of unamortized OID of $62,500 and $225,605, respectively | 5,666,477 | 6,741,444 |
Accrued liabilities and other payables | 567,190 | 632,808 |
Operating lease liability | 60,234 | 67,920 |
Due to related parties | 24,743 | 27,357 |
Payable for purchase of 10% equity interest of Zhonghong | 422,547 | 470,537 |
Interest payable on entrusted loans | 340,636 | 379,323 |
Entrusted loan payable | 10,845,376 | 12,077,105 |
Total current liabilities | 21,295,811 | 23,883,024 |
NONCURRENT LIABILITIES | ||
Income tax payable | 4,566,625 | 4,566,625 |
Operating lease liability | 64,628 | |
Total noncurrent liabilities | 4,566,625 | 4,631,253 |
Total liabilities | 25,862,436 | 28,514,277 |
CONTINGENCIES AND COMMITMENTS | ||
STOCKHOLDERS’ EQUITY | ||
Common stock, $0.001 par value; 100,000,000 shares authorized, 7,358,052 and 7,044,408 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | 7,358 | 7,044 |
Additional paid in capital | 163,549,358 | 161,531,565 |
Statutory reserve | 15,166,584 | 15,180,067 |
Accumulated other comprehensive income (loss) | (10,808,563) | 3,321,189 |
Accumulated deficit | (56,382,103) | (55,281,680) |
Total Company stockholders’ equity | 111,532,634 | 124,758,185 |
TOTAL LIABILITIES AND EQUITY | $ 137,395,070 | $ 153,272,462 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Notes payable (in Dollars) | $ 62,500 | $ 225,605 |
Equity interest rate | 10% | 10% |
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 7,358,052 | 7,044,408 |
Common stock, shares outstanding | 7,358,052 | 7,044,408 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenue | ||||
Contingent rental income | ||||
Interest income on sales-type leases | ||||
Total operating income | ||||
Operating expenses | ||||
Bad debts reversal | (34,581) | |||
General and administrative | $ 168,758 | $ 380,040 | 552,264 | 798,773 |
Total operating expenses | 168,758 | 380,040 | 552,264 | 764,192 |
Loss from operations | (168,758) | (380,040) | (552,264) | (764,192) |
Non-operating income (expenses) | ||||
Loss on note conversion | (58,436) | (121,121) | (61,155) | |
Interest income | 105,661 | 109,269 | 329,576 | 302,426 |
Interest expense | (340,732) | (165,854) | (571,050) | (1,212,469) |
Gain on termination of buy-back agreement of Chengli project | 179 | 3,156,138 | ||
Other expenses, net | (30,854) | (50,790) | (162,536) | (121,026) |
Total non-operating income (expenses), net | (265,925) | (165,632) | (525,131) | 2,063,914 |
Income (loss) before income tax | (434,683) | (545,672) | (1,077,395) | 1,299,722 |
Income tax expense (benefit) | 12,954 | 10,902 | 36,511 | (87,051) |
Net income (loss) | (447,637) | (556,574) | (1,113,906) | 1,386,773 |
Other comprehensive items | ||||
Foreign currency translation income (expense) | (7,199,437) | (565,170) | (14,129,752) | 702,515 |
Comprehensive income (loss) | $ (7,647,074) | $ (1,121,744) | $ (15,243,658) | $ 2,089,288 |
Weighted average shares used for computing basic and diluted income (loss) per share (in Shares) | 7,358,052 | 6,615,759 | 7,320,355 | 5,175,164 |
Basic and diluted net income (loss) per share (in Dollars per share) | $ (0.06) | $ (0.08) | $ (0.15) | $ 0.27 |
Consolidated Statements of Op_2
Consolidated Statements of Operations and Comprehensive Income (Unaudited) (Parentheticals) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement [Abstract] | ||||
Weighted average shares used for computing basic and diluted income (loss) per share | 7,358,052 | 6,615,759 | 7,320,355 | 5,175,164 |
Basic and diluted net income (loss) per share | $ (0.06) | $ (0.08) | $ (0.15) | $ 0.27 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders’ Equity (Unaudited) - USD ($) | Common Stock | Paid in Capital | Statutory Reserves | Other Comprehensive Income (Loss) | Accumulated Deficit | Total |
Balance at Dec. 31, 2020 | $ 3,177 | $ 119,748,999 | $ 15,155,042 | $ 273,440 | $ (43,026,465) | $ 92,154,193 |
Balance (in Shares) at Dec. 31, 2020 | 3,177,050 | |||||
Net income (loss) for the period | (277,224) | (277,224) | ||||
Shares to be issued | 38,253,041 | 38,253,041 | ||||
Transfer to statutory reserves | 1,538 | (1,538) | ||||
Foreign currency translation loss | (1,140,163) | (1,140,163) | ||||
Balance at Mar. 31, 2021 | $ 3,177 | 158,002,040 | 15,156,580 | (866,723) | (43,305,227) | 128,989,847 |
Balance (in Shares) at Mar. 31, 2021 | 3,177,050 | |||||
Balance at Dec. 31, 2020 | $ 3,177 | 119,748,999 | 15,155,042 | 273,440 | (43,026,465) | 92,154,193 |
Balance (in Shares) at Dec. 31, 2020 | 3,177,050 | |||||
Net income (loss) for the period | 1,386,773 | |||||
Balance at Sep. 30, 2021 | $ 6,729 | 159,591,760 | 15,174,627 | 975,955 | (41,659,277) | 134,089,794 |
Balance (in Shares) at Sep. 30, 2021 | 6,729,030 | |||||
Balance at Mar. 31, 2021 | $ 3,177 | 158,002,040 | 15,156,580 | (866,723) | (43,305,227) | 128,989,847 |
Balance (in Shares) at Mar. 31, 2021 | 3,177,050 | |||||
Net income (loss) for the period | 2,220,571 | 2,220,571 | ||||
Conversion of long-term notes into common shares | $ 54 | 502,665 | 502,719 | |||
Conversion of long-term notes into common shares (in Shares) | 54,348 | |||||
Issuance of common stock for equity financing | $ 3,320 | (3,320) | ||||
Issuance of common stock for equity financing (in Shares) | 3,320,000 | |||||
Return of shares issued to CEO for equity financing | $ (60) | (691,260) | (691,320) | |||
Return of shares issued to CEO for equity financing (in Shares) | (60,000) | |||||
Transfer to statutory reserves | 14,774 | (14,774) | ||||
Foreign currency translation loss | 2,407,848 | 2,407,848 | ||||
Balance at Jun. 30, 2021 | $ 6,491 | 157,810,125 | 15,171,354 | 1,541,125 | (41,099,430) | 133,429,665 |
Balance (in Shares) at Jun. 30, 2021 | 6,491,398 | |||||
Net income (loss) for the period | (556,574) | (556,574) | ||||
Conversion of long-term notes into common shares | $ 207 | 1,558,228 | 1,558,435 | |||
Conversion of long-term notes into common shares (in Shares) | 206,382 | |||||
Stock Compensation expense | $ 31 | 223,407 | 223,438 | |||
Stock Compensation expense (in Shares) | 31,250 | |||||
Transfer to statutory reserves | 3,273 | (3,273) | ||||
Foreign currency translation loss | (565,170) | (565,170) | ||||
Balance at Sep. 30, 2021 | $ 6,729 | 159,591,760 | 15,174,627 | 975,955 | (41,659,277) | 134,089,794 |
Balance (in Shares) at Sep. 30, 2021 | 6,729,030 | |||||
Balance at Dec. 31, 2021 | $ 7,044 | 161,531,565 | 15,180,067 | 3,321,189 | (55,281,680) | 124,758,185 |
Balance (in Shares) at Dec. 31, 2021 | 7,044,408 | |||||
Net income (loss) for the period | (441,459) | (441,459) | ||||
Conversion of long-term notes into common shares | $ 314 | 2,017,793 | 2,018,107 | |||
Conversion of long-term notes into common shares (in Shares) | 313,644 | |||||
Transfer to statutory reserves | (22,277) | 22,277 | ||||
Foreign currency translation loss | 600,181 | 600,181 | ||||
Balance at Mar. 31, 2022 | $ 7,358 | 163,549,358 | 15,157,790 | 3,921,370 | (55,700,862) | 126,935,014 |
Balance (in Shares) at Mar. 31, 2022 | 7,358,052 | |||||
Balance at Dec. 31, 2021 | $ 7,044 | 161,531,565 | 15,180,067 | 3,321,189 | (55,281,680) | 124,758,185 |
Balance (in Shares) at Dec. 31, 2021 | 7,044,408 | |||||
Net income (loss) for the period | (1,113,906) | |||||
Balance at Sep. 30, 2022 | $ 7,358 | 163,549,358 | 15,166,584 | (10,808,563) | (56,382,103) | 111,532,634 |
Balance (in Shares) at Sep. 30, 2022 | 7,358,052 | |||||
Balance at Mar. 31, 2022 | $ 7,358 | 163,549,358 | 15,157,790 | 3,921,370 | (55,700,862) | 126,935,014 |
Balance (in Shares) at Mar. 31, 2022 | 7,358,052 | |||||
Net income (loss) for the period | (224,810) | (224,810) | ||||
Transfer to statutory reserves | 4,443 | (4,443) | ||||
Foreign currency translation loss | (7,530,496) | (7,530,496) | ||||
Balance at Jun. 30, 2022 | $ 7,358 | 163,549,358 | 15,162,233 | (3,609,126) | (55,930,115) | 119,179,708 |
Balance (in Shares) at Jun. 30, 2022 | 7,358,052 | |||||
Net income (loss) for the period | (447,637) | (447,637) | ||||
Transfer to statutory reserves | 4,351 | (4,351) | ||||
Foreign currency translation loss | (7,199,437) | (7,199,437) | ||||
Balance at Sep. 30, 2022 | $ 7,358 | $ 163,549,358 | $ 15,166,584 | $ (10,808,563) | $ (56,382,103) | $ 111,532,634 |
Balance (in Shares) at Sep. 30, 2022 | 7,358,052 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ (1,113,906) | $ 1,386,773 |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Amortization of OID and debt issuing costs of notes | 163,105 | 118,750 |
Stock compensation expense | 223,438 | |
Operating lease expenses | 49,771 | 50,812 |
Bad debt reversal | (34,581) | |
Loss on note conversion | 121,121 | 61,155 |
Interest expense | 229,015 | 818,914 |
Gain on termination of buy-back agreement of Chengli Project | (3,156,138) | |
Changes in assets and liabilities: | ||
Accounts receivable | 345,808 | |
Prepaid expenses | (5,215) | 19,253 |
Other receivables | 2,376 | 1,981 |
Advance to suppliers | (850,000) | |
VAT receivable | (186,817) | |
Taxes payable | (19,901) | (707,917) |
Payment of lease liability | (66,362) | (67,750) |
Accrued liabilities and other payables | 330,871 | 392,401 |
Net cash used in operating activities | (309,125) | (1,583,918) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Issuance of notes payable | 5,000,000 | |
Issuance of common stock | 37,561,721 | |
Net cash provided by financing activities | 42,561,721 | |
EFFECT OF EXCHANGE RATE CHANGE ON CASH | (15,486,470) | 740,273 |
NET INCREASE (DECREASE) IN CASH | (15,795,595) | 41,718,075 |
CASH, BEGINNING OF PERIOD | 152,011,887 | 107,804,013 |
CASH, END OF PERIOD | 136,216,292 | 149,522,088 |
Supplemental cash flow data: | ||
Income tax paid | 56,495 | 197,296 |
Interest paid | ||
Supplemental disclosure of non-cash operating activities | ||
Settlement of entrusted loan resulting from termination of buy-back option for Chengli project | 29,149,705 | |
Adoption of ASC 842-right-of-use asset | 191,200 | |
Adoption of ASC 842-operating lease liability | 191,200 | |
Supplemental disclosure of non-cash financing activities | ||
Conversion of notes into common shares | $ 1,896,986 | $ 2,000,000 |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Sep. 30, 2022 | |
Organization and Description of Business [Abstract] | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Smart Powerr Corp. (the “Company” or “SPC”) was incorporated in Nevada, and was formerly known as China Recycling Entergy Corporation. The Company, through its subsidiaries, provides energy saving solutions and services, including selling and leasing energy saving systems and equipment to customers, and project investment in the Peoples Republic of China (“PRC”). The Company’s organizational chart as of September 30, 2022 is as follows: Erdos TCH – Joint Venture On April 14, 2009, the Company formed a joint venture (the “JV”) with Erdos Metallurgy Co., Ltd. (“Erdos”) to recycle waste heat from Erdos’ metal refining plants to generate power and steam to be sold back to Erdos. The name of the JV was Inner Mongolia Erdos TCH Energy Saving Development Co., Ltd. (“Erdos TCH”) with a term of 20 years. Erdos contributed 7% of the total investment of the project, and Xi’an TCH Energy Technology Co., Ltd. (“Xi’an TCH”) contributed 93%. On June 15, 2013, Xi’an TCH and Erdos entered into a share transfer agreement, pursuant to which Erdos sold its 7% ownership interest in the JV to Xi’an TCH for $1.29 million (RMB 8 million), plus certain accumulated profits. Xi’an TCH paid the $1.29 million in July 2013 and, as a result, became the sole stockholder of the JV. Erdos TCH currently has two power generation systems in Phase I with a total of 18 MW power capacity, and three power generation systems in Phase II with a total of 27 MW power capacity. On April 28, 2016, Erdos TCH and Erdos entered into a supplemental agreement, effective May 1, 2016, whereby Erdos TCH cancelled monthly minimum lease payments from Erdos, and started to charge Erdos based on actual electricity sold at RMB 0.30 / KWH. The selling price of each KWH is determined annually based on prevailing market conditions. In May 2019, Erdos TCH ceased its operations due to renovations and furnace safety upgrades of Erdos, and the Company initially expected the resumption of operations in July 2020, but the resumption of operations was further delayed due to government’s mandate for Erdos to significantly lower its energy consumption per unit of GDP by implementing a comprehensive technical upgrade of its ferrosilicon production line to meet the City’s energy-saving targets. Erdos is currently researching the technical rectification scheme. Once the scheme is determined, Erdos TCH will carry out technical transformation for its waste heat power station project. During this period, Erdos will compensate Erdos TCH RMB 1 million ($154,238) per month, until operations resume. The Company has not recognized any income due to the uncertainty of collection. In addition, Erdos TCH has 30% ownership in DaTangShiDai (BinZhou) Energy Savings Technology Co., Ltd. (“BinZhou Energy Savings”), 30% ownership in DaTangShiDai DaTong Recycling Energy Technology Co., Ltd. (“DaTong Recycling Energy”), and 40% ownership in DaTang ShiDai TianYu XuZhou Recycling Energy Technology Co, Ltd. (“TianYu XuZhou Recycling Energy”). These companies were incorporated in 2012 but had no operations since then nor has any registered capital contribution been made. Chengli Waste Heat Power Generation Projects On July 19, 2013, Xi’an TCH formed a new company, “Xi’an Zhonghong New Energy Technology Co., Ltd.” (“Zhonghong”), of which it owns 90% of Zhonghong, with HYREF owning the other 10%. Zhonghong provides energy saving solution and services, including constructing, selling and leasing energy saving systems and equipment to customers. On December 29, 2018, Shanghai TCH entered into a Share Transfer Agreement with HYREF, pursuant to which HYREF transferred its 10% ownership in Zhonghong to Shanghai TCH for RMB 3 million ($0.44 million). The transfer was completed on January 22, 2019. The Company owns 100% of Xi’an Zhonghong after the transaction. On July 24, 2013, Zhonghong entered into a Cooperative Agreement of CDQ and CDQ WHPG Project (Coke Dry Quenching Waste Heat Power Generation Project) with Boxing County Chengli Gas Supply Co., Ltd. (“Chengli”). The parties entered into a supplement agreement on July 26, 2013. Pursuant to these agreements, Zhonghong will design, build and maintain a 25 MW CDQ system and a CDQ WHPG system to supply power to Chengli, and Chengli will pay energy saving fees (the “Chengli Project”). On December 29, 2018, Xi’an Zhonghong, Xi’an TCH, HYREF, Guohua Ku, and Mr. Chonggong Bai entered into a CDQ WHPG Station Fixed Assets Transfer Agreement, pursuant to which Xi’an Zhonghong transferred Chengli CDQ WHPG station (‘the Station”) as the repayment for the loan of RMB 188,639,400 ($27.54 million) to HYREF. Xi’an Zhonghong, Xi’an TCH, Guohua Ku and Chonggong Bai also agreed to a Buy Back Agreement for the Station when certain conditions are met (see Note 8). The transfer of the Station was completed on January 22, 2019, when the Company recorded a $624,133 loss from this transfer. However, because the loan was not deemed repaid due to the buyback provision (See Note 8 for detail), the Company kept the loan and the Chengli project in its consolidated financial statements (“CFS”) until April 9, 2021. The Buy Back Agreement was terminated on April 9, 2021, HYREF did not execute the buy-back option and did not ask for any additional payment from the buyers other than keeping the CDQ WHPG station. Formation of Zhongxun On March 24, 2014, Xi’an TCH incorporated a subsidiary, Zhongxun Energy Investment (Beijing) Co., Ltd. (“Zhongxun”) with registered capital of $5,695,502 (RMB 35,000,000), which must be contributed before October 1, 2028. Zhongxun is 100% owned by Xi’an TCH and will be mainly engaged in project investment, investment management, economic information consulting, and technical services. Zhongxun has not commenced operations nor has any capital contribution been made as of the date of this report. Formation of Yinghua On February 11, 2015, the Company incorporated a subsidiary, Shanghai Yinghua Financial Leasing Co., Ltd. (“Yinghua”) with registered capital of $30,000,000, to be paid within 10 years from the date the business license is issued. Yinghua is 100% owned by the Company and will be mainly engaged in financial leasing, purchase of financial leasing assets, disposal and repair of financial leasing assets, consulting and ensuring of financial leasing transactions, and related factoring business. Yinghua has not commenced operations nor has any capital contribution been made as of the date of this report. Other Events In December 2019, a novel strain of coronavirus (COVID-19) was reported, and the World Health Organization declared the outbreak to constitute a “Public Health Emergency of International Concern.” This contagious disease outbreak, which continues to spread to additional countries, and disrupts supply chains and affecting production and sales across a range of industries as a result of quarantines, facility closures, and travel and logistics restrictions in connection with the outbreak. The COVID-19 outbreak impacted the Company’s operations for the first quarter of 2020. However, as a result of PRC government’s effort on disease control, most cities in China were reopened in April 2020, the outbreak in China is under the control. From April 2020 to the end of 2021, there were some new COVID-19 cases discovered in a few provinces of China, however, the number of new cases are not significant due to PRC government’s strict control. From January 2022 to date, COVID-19 case fluctuated and increased again in many cities of China including Xi’an Province where the Company is located; as a result of such increases, there have been periodic short-term lockdowns and restrictions on travel in Xi’an Province and other areas of China, the Company’s operations have been adversely impacted by the travel and work restrictions imposed on a temporary basis in China to limit the spread of COVID-19. On July 27, 2021, the Company filed a certificate of change to the Company’s Articles of Incorporation with the Secretary of State of the State of Nevada to increase the total number of the Company’s authorized shares of common stock from 10,000,000 to 100,000,000, par value $0.001 per share. On March 3, 2022, the Company filed with the Secretary of State of the State of Nevada a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation to change our corporate name from China Recycling Energy Corporation to Smart Powerr Corp, effective March 3, 2022. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited financial information as of and for the nine and three months ended September 30, 2022 was prepared in accordance with accounting principles generally accepted in the U.S.(“US GAAP”) for interim financial information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments, unless otherwise indicated) considered necessary for a fair presentation of our financial position at such date and the operating results and cash flows for such periods. Operating results for the nine and three months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period. The interim consolidated financial information should be read in conjunction with the Financial Statements and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, previously filed with the SEC on September 13, 2022. Basis of Consolidation The CFS include the accounts of SPC and its subsidiaries, Shanghai Yinghua Financial Leasing Co., Ltd. (“Yinghua”) and Sifang Holdings; Sifang Holdings’ wholly owned subsidiaries, Huahong New Energy Technology Co., Ltd. (“Huahong”) and Shanghai TCH Energy Tech Co., Ltd. (“Shanghai TCH”); Shanghai TCH’s wholly-owned subsidiary, Xi’an TCH Energy Tech Co., Ltd. (“Xi’an TCH”); and Xi’an TCH’s subsidiaries, 1) Erdos TCH Energy Saving Development Co., Ltd (“Erdos TCH”), 100% owned by Xi’an TCH, 2) Zhonghong, 90% owned by Xi’an TCH and 10% owned by Shanghai TCH, and 3) Zhongxun, 100% owned by Xi’an TCH. Substantially all the Company’s revenues are derived from the operations of Shanghai TCH and its subsidiaries, which represent substantially all the Company’s consolidated assets and liabilities as of September 30, 2022. However, there was no revenue for the Company for the nine and three months ended September 30, 2022 and 2021. All significant inter-company accounts and transactions were eliminated in consolidation. Uses and Sources of Liquidity For the nine months ended September 30, 2022 and 2021, the Company had a net loss of $1.11 million and net income of $1.39 million, respectively. For the three months ended September 30, 2022 and 2021, the Company had net losses of $0.45 million and $0.56 million. The Company had an accumulated deficit of $56.38 million as of September 30, 2022. The Company disposed all of its systems and currently holds five power generating systems through Erdos TCH, the five power generating systems are currently not producing any electricity. The Company is in the process of transforming and expanding into an energy storage integrated solution provider. The Company plans to pursue disciplined and targeted expansion strategies for market areas the Company currently does not serve. The Company actively seeks and explores opportunities to apply energy storage technologies to new industries or segments with high growth potential, including industrial and commercial complexes, large scale photovoltaic (PV) and wind power stations, remote islands without electricity, and smart energy cities with multi-energy supplies. The Company’s cash flow forecast indicates it will have sufficient cash to fund its operations for the next 12 months from the date of issuance of these CFS. Use of Estimates In preparing these CFS in accordance with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets as well as revenues and expenses during the period reported. Actual results may differ from these estimates. On an on-going basis, management evaluates its estimates, including those allowances for bad debt and inventory obsolescence, impairment loss on fixed assets and construction in progress, income taxes, and contingencies and litigation. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other resources. Revenue Recognition A) Sales-type Leasing and Related Revenue Recognition The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 842. The Company’s sales type lease contracts for revenue recognition fall under ASC 842. During the nine and three months ended September 30, 2022 and 2021, the Company did not sell any new power generating projects. The Company constructs and leases waste energy recycling power generating projects to its customers. The Company typically transfers legal ownership of the waste energy recycling power generating projects to its customers at the end of the lease. The Company finances construction of waste energy recycling power generating projects. The sales and cost of sales are recognized at the inception of the lease, which is when control is transferred to the lessee. The Company accounts for the transfer of control as a sales type lease in accordance with ASC 842-10-25-2. The underlying asset is derecognized, and revenue is recorded when collection of payments is probable. This is in accordance with the revenue recognition principle in ASC 606 - Revenue from contracts with customers. The investment in sales-type leases consists of the sum of the minimum lease payments receivable less unearned interest income and estimated executory cost. Minimum lease payments are part of the lease agreement between the Company (as the lessor) and the customer (as the lessee). The discount rate implicit in the lease is used to calculate the present value of minimum lease payments. The minimum lease payments consist of the gross lease payments net of executory costs and contingent rentals, if any. Unearned interest is amortized to income over the lease term to produce a constant periodic rate of return on net investment in the lease. While revenue is recognized at the inception of the lease, the cash flow from the sales-type lease occurs over the course of the lease, which results in interest income and reduction of receivables. Revenue is recognized net of value-added tax. B) Contingent Rental Income The Company records income from actual electricity generated of each project in the period the income is earned, which is when the electricity is generated. Contingent rent is not part of minimum lease payments. Operating Leases The Company determines if an arrangement is a lease or contains a lease at inception. Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. As the rate implicit in the lease is not readily determinable for an operating lease, the Company generally uses an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. Operating lease right-of-use (“ROU assets”) assets represent the Company’s right to control the use of an identified asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are generally recognized based on the amount of the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the lease term. ROU assets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject to the impairment guidance in ASC 360, Property, Plant, and Equipment, as ROU assets are long-lived nonfinancial assets. ROU assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. The Company recognized no impairment of ROU assets as of September 30, 2022. Operating leases are included in operating lease ROU and operating lease liabilities (current and non-current), on the consolidated balance sheets. Cash Cash includes cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date. Accounts Receivable The Company’s policy is to maintain an allowance for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. As of September 30, 2022 and December 31, 2021, the Company had no accounts receivable. Concentration of Credit Risk Cash includes cash on hand and demand deposits in accounts maintained within China. Balances at financial institutions and state-owned banks within the PRC are covered by insurance up to RMB 500,000 ($70,425) per bank. Any balance over RMB 500,000 ($70,425) per bank in PRC will not be covered. At September 30, 2022, cash held in PRC banks of $136,117,059 was not covered by such insurance. The Company has not experienced any losses in such accounts. Certain other financial instruments, which subject the Company to concentration of credit risk, consist of accounts and other receivables. The Company does not require collateral or other security to support these receivables. The Company conducts periodic reviews of its customers’ financial condition and customer payment practices to minimize collection risk on accounts receivable. The operations of the Company are in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation. Expenditures for maintenance and repairs are expensed as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method over the estimated lives as follows: Vehicles 2 - 5 years Office and Other Equipment 2 - 5 years Software 2 - 3 years Impairment of Long-lived Assets In accordance with FASB ASC Topic 360, “Property, Plant, and Equipment Cost of Sales Cost of sales consists primarily of the direct material of the power generating system and expenses incurred directly for project construction for sales-type leasing and sales tax and additions for contingent rental income. Income Taxes Income taxes are accounted for using an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company follows FASB ASC Topic 740, which prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. Under FASB ASC Topic 740, when tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statement of income. At September 30, 2022 and December 31, 2021, the Company did not take any uncertain positions that would necessitate recording a tax related liability. Statement of Cash Flows In accordance with FASB ASC Topic 230, “Statement of Cash Flows,” Fair Value of Financial Instruments For certain of the Company’s financial instruments, including cash and equivalents, restricted cash, accounts receivable, other receivables, accounts payable, accrued liabilities and short-term debts, the carrying amounts approximate their FVs due to their short maturities. Receivables on sales-type leases are based on interest rates implicit in the lease. FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” “Financial Instruments,” ● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 inputs to the valuation methodology are unobservable and significant to FV measurement. The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC 480, “Distinguishing Liabilities from Equity,” “Derivatives and Hedging.” As of September 30, 2022 and December 31, 2021, the Company did not have any long-term debt; and the Company did not identify any assets or liabilities that are required to be presented on the balance sheet at FV. Stock-Based Compensation The Company accounts for share-based compensation awards to employees in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”, which requires that share-based payment transactions with employees be measured based on the grant-date FV of the equity instrument issued and recognized as compensation expense over the requisite service period. The Company accounts for share-based compensation awards to non-employees in accordance with FASB ASC Topic 718 and FASB ASC Subtopic 505-50, “Equity-Based Payments to Non-employees”. Share-based compensation associated with the issuance of equity instruments to non-employees is measured at the FV of the equity instrument issued or committed to be issued, as this is more reliable than the FV of the services received. The FV is measured at the date that the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete. The Company follows ASU 2018-07, “Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting,” which expands the scope of ASC 718 to include share-based payment transactions for acquiring goods and services from non-employees. An entity should apply the requirements of ASC 718 to non-employee awards except for specific guidance on inputs to an option pricing model and the attribution of cost. ASC 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. Basic and Diluted Earnings per Share The Company presents net income (loss) per share (“EPS”) in accordance with FASB ASC Topic 260, “Earning Per Share.” For the nine and three months ended September 30, 2022 and 2021, the basic and diluted income (loss) per share were the same due to the anti-dilutive features of the warrants and options. For the nine and three months ended September 30, 2022 and 2021, of 30,911 shares purchasable under warrants and options were excluded from the EPS calculation as these were not dilutive due to the exercise price was more than the stock market price. Foreign Currency Translation and Comprehensive Income (Loss) The Company’s functional currency is the Renminbi (“RMB”). For financial reporting purposes, RMB were translated into U.S. Dollars (“USD” or “$”) as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity as “Accumulated other comprehensive income.” Gains and losses resulting from foreign currency transactions are included in income. The Company follows FASB ASC Topic 220, “Comprehensive Income.” Segment Reporting FASB ASC Topic 280, “Segment Reporting,” New Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact that the standard will have on its CFS. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance should be adopted on a prospective basis. As a smaller reporting company, the standard will be effective for the Company for interim and annual reporting periods beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of adopting this standard on its CFS. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future CFS. |
Other Receivables
Other Receivables | 9 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
OTHER RECEIVABLES | 3. OTHER RECEIVABLES As of September 30, 2022, other receivables mainly consisted of (i) advances to third parties of $7,042, bearing no interest, payable upon demand, ii) advance to employees of $4,499, iii) advance to suppliers of $3,449 and (iv) others of $861,997 including social insurance receivable of $4,497, prepayment of $850,000 (see below) and others of $7,500. On August 2, 2021, the Company entered a Research and Development Cooperation Agreement with a software development company to design, establish, upgrade and maintenance of Smart Energy Management Cloud Platform for energy storage and remote-site monitoring; upon completion, the Company will provide such platform to its customers at a fee. Total contracted research and development cost is $1,000,000, as of September 30, 2022, the Company prepaid $200,000, and was committed to pay remaining $800,000 after trial operation. On August 23, 2021, the Company entered a Market Research and Project Development Service Agreement with a consulting company in Xi’an for a service period of 12 months. The consulting company will perform market research for new energy industry including photovoltaic and energy storage, develop potential new customers and due diligence check, assisting the Company for business cooperation negotiation and relevant agreements preparation. Total contract amount is $1,150,000, and the Company prepaid $650,000 at commencement of the service; the Company will pay $200,000 upon issuance of the research report, and pay the remaining of $300,000 upon completion all the services. As of September 30, 2022, due to the impact of the epidemic, it is difficult to conduct field research and collect effective information, the market research work is making slow progress and can only be proceed after PRC overall epidemic improves. As of December 31, 2021, other receivables mainly consisted of (i) advances to third parties of $7,842, bearing no interest, payable upon demand, ii) advance to employees of $7,618, iii) advance to suppliers of $2,821 and (iv) others of $862,331 including social insurance receivable of $4,831, prepayment of $850,000, and others of $7,500. |
Asset Subject to Buyback
Asset Subject to Buyback | 9 Months Ended |
Sep. 30, 2022 | |
Asset Subject to Buyback [Abstract] | |
ASSET SUBJECT TO BUYBACK | 4. ASSET SUBJECT TO BUYBACK The Chengli project finished construction, and was transferred to the Company’s fixed assets at a cost of $35.24 million (without impairment loss) and was ready to be put into operation as of December 31, 2018. On January 22, 2019, Xi’an Zhonghong completed the transfer of Chengli CDQ WHPG project as partial repayment for the loan and accrued interest of RMB 188,639,400 ($27.54 million) to HYREF (see Note 8). On April 9, 2021, Xi’an TCH, Xi’an Zhonghong, Guohua Ku, Chonggong Bai and HYREF entered a Termination of Fulfillment Agreement (termination agreement). Under the termination agreement, the original buyback agreement entered on December 19, 2019 was terminated upon signing of the termination agreement. HYREF will not execute the buy-back option and will not ask for any additional payment from the buyers other than keeping the CDQ WHPG station. As a result of the termination of the buy-back agreement, the Company recorded a gain of approximately $3.1 million from transferring the CDP WHPG station to HYREF as partial repayment of the entrusted loan, which is the difference between the carrying value of the assets and loan and interest payable on the loan. |
Accrued Liabilities and Other P
Accrued Liabilities and Other Payables | 9 Months Ended |
Sep. 30, 2022 | |
Payables and Accruals [Abstract] | |
ACCRUED LIABILITIES AND OTHER PAYABLES | 5. ACCRUED LIABILITIES AND OTHER PAYABLES Accrued liabilities and other payables consisted of the following as of September 30, 2022 and December 31, 2021: 2022 2021 Education and union fund and social insurance payable $ 257,753 $ 272,352 Consulting and legal expenses 31,090 31,924 Accrued payroll and welfare 236,007 287,026 Other 42,340 41,506 Total $ 567,190 $ 632,808 |
Taxes Payable
Taxes Payable | 9 Months Ended |
Sep. 30, 2022 | |
Tax Payable [Abstract] | |
TAXES PAYABLE | 6. TAXES PAYABLE Taxes payable consisted of the following as of September 30, 2022 and December 31, 2021: 2022 2021 Income tax $ 7,619,664 $ 7,641,787 Other 141 71 Total 7,619,805 7,641,858 Current 3,053,180 3,075,233 Noncurrent $ 4,566,625 $ 4,566,625 As of September 30, 2022, income tax payable included $7.61 million ($3.05 million included in current tax payable and $4.57 million noncurrent) from recording the estimated one-time transition tax on post-1986 foreign unremitted earnings under the Tax Cut and Jobs Act signed on December 22, 2017. An election was available for the U.S. shareholders of a foreign company to pay the tax liability in installments over a period of eight years with 8% of net tax liability in each of the first five years, 15% in the sixth year, 20% in the seventh year, and 25% in the eighth year. The Company made such an election. |
Deferred Tax, Net
Deferred Tax, Net | 9 Months Ended |
Sep. 30, 2022 | |
Deferred Tax, Net Disclosure [Abstract] | |
DEFERRED TAX, NET | 7. DEFERRED TAX, NET Deferred tax assets resulted from asset impairment loss which was temporarily non-tax deductible for tax purposes but expensed in accordance with US GAAP; interest income in sales-type leases which was recognized as income for tax purposes but not for book purpose as it did not meet revenue recognition in accordance with US GAAP; accrued employee social insurance that can be deducted for tax purposes in the future, and the difference between tax and accounting basis of cost of fixed assets which was capitalized for tax purposes and expensed as part of cost of systems in accordance with US GAAP. Deferred tax liability arose from the difference between tax and accounting basis of net investment in sales-type leases. As of September 30, 2022 and December 31 2021, deferred tax assets consisted of the following: 2022 2021 Accrued expenses $ 55,049 $ 61,301 Write-off Erdos TCH net investment in sales-type leases * 5,656,880 6,299,343 Impairment loss of Xi’an TCH’s investment into the HYREF fund 2,640,919 2,940,854 US NOL 540,455 463,508 PRC NOL 9,150,325 10,189,545 Total deferred tax assets 18,043,628 19,954,551 Less: valuation allowance for deferred tax assets (18,043,628 ) (19,954,551 ) Deferred tax assets, net $ - $ - * This represents the tax basis of Erdos TCH investment in sales type leases, which was written off under US GAAP upon modification of lease terms, which made the lease payments contingent upon generation of electricity. |
Loan Payable
Loan Payable | 9 Months Ended |
Sep. 30, 2022 | |
Loan Payable [Abstract] | |
LOAN PAYABLE | 8. LOAN PAYABLE Entrusted Loan Payable (HYREF Loan) The HYREF Fund was established in July 2013 with a total fund of RMB 460 million ($77 million) invested in Xi’an Zhonghong for Zhonghong’s three new CDQ WHPG projects. The HYREF Fund invested RMB 3 million ($0.5 million) as an equity investment and RMB 457 million ($74.5 million) as a debt investment in Xi’an Zhonghong; in return for such investments, the HYREF Fund was to receive interest from Zhonghong for the HYREF Fund’s debt investment. The loan was collateralized by the accounts receivable and the fixed assets of Shenqiu Phase I and II power generation systems; the accounts receivable and fixed assets of Zhonghong’s three CDQ WHPG systems; and a 27 million RMB ($4.39 million) capital contribution made by Xi’an TCH in Zhonghong. Repayment of the loan (principal and interest) was also jointly and severally guaranteed by Xi’an TCH and the Chairman and CEO of the Company. In the fourth quarter of 2015, three power stations of Erdos TCH were pledged to Industrial Bank as an additional guarantee for the loan to Zhonghong’s three CDQ WHPG systems. In 2016, two additional power stations of Erdos TCH and Pucheng Phase I and II systems were pledged to Industrial Bank as an additional guarantee along with Xi’an TCH’s equity in Zhonghong. The term of this loan was for 60 months from July 31, 2013 to July 30, 2018, with interest of 12.5%. The Company had paid RMB 50 million ($7.54 million) of the RMB 280 million ($42.22 million), and on August 5, 2016, the Company entered into a supplemental agreement with the lender to extend the due date of the remaining RMB 230 million ($34.68 million) of the original RMB 280 million ($45.54 million) to August 6, 2017. During the year ended December 31, 2017, the Company negotiated with the lender again to further extend the remaining loan balance of RMB 230 million ($34.68 million), RMB 100 million ($16.27 million), and RMB 77 million ($12.08 million) The lender had tentatively agreed to extend the remaining loan balance until August 2019 with an adjusted annual interest rate of 9%, subject to the final approval from its headquarters. The headquarters did not approve the extension proposal with an adjusted interest of 9%; however, on December 29, 2018, the Company and the lender agreed to an alternative repayment proposal as described below. Repayment of HYREF loan 1. Transfer of Chengli project as partial repayment On December 29, 2018, Xi’an Zhonghong, Xi’an TCH, HYREF, Guohua Ku, and Chonggong Bai entered into a CDQ WHPG Station Fixed Assets Transfer Agreement, pursuant to which Xi’an Zhonghong transferred Chengli CDQ WHPG station as the repayment for the loan of RMB 188,639,400 ($27.54 million) to HYREF, the transfer of which was completed on January 22, 2019. Xi’an TCH is a secondary limited partner of HYREF. The FV of the CDQ WHPG station applied in the transfer was determined by the parties based upon the appraisal report issued by Zhonglian Assets Appraisal Group (Shaanxi) Co., Ltd. as of August 15, 2018. However, per the discussion below, Xi’an Zhonghong, Xi’an TCH, Guohua Ku and Chonggong Bai (the “Buyers”) entered into a Buy Back Agreement, also agreed to buy back the Station when conditions under the Buy Back Agreement are met. Due to the Buy Back agreement, the loan was not deemed repaid, and therefore the Company recognized Chengli project as assets subject to buyback and kept the loan payable remained recognized under ASC 405-20-40-1 as of December 31, 2020. The Buy Back agreement was terminated in April 2021 (see 2 below for detail). 2. Buy Back Agreement On December 29, 2018, Xi’an TCH, Xi’an Zhonghong, HYREF, Guohua Ku, Chonggong Bai and Xi’an Hanneng Enterprises Management Consulting Co. Ltd. (“Xi’an Hanneng”) entered into a Buy Back Agreement. Pursuant to the Buy Back Agreement, the Buyers jointly and severally agreed to buy back all outstanding capital equity of Xi’an Hanneng which was transferred to HYREF by Chonggong Bai (see 3 below), and a CDQ WHPG station in Boxing County which was transferred to HYREF by Xi’an Zhonghong. The buy-back price for the Xi’an Hanneng’s equity was based on the higher of (i) the market price of the equity shares at the time of buy-back; or (ii) the original transfer price of the equity shares plus bank interest. The buy-back price for the Station was based on the higher of (i) the FV of the Station on the date transferred; or (ii) the loan balance at the date of the transfer plus interest accrued through that date. HYREF could request that the Buyers buy back the equity shares of Xi’an Hanneng and/or the CDQ WHPG station if one of the following conditions is met: (i) HYREF holds the equity shares of Xi’an Hanneng until December 31, 2021; (ii) Xi’an Huaxin New Energy Co., Ltd., is delisted from The National Equities Exchange And Quotations Co., Ltd., a Chinese over-the-counter trading system (the “NEEQ”); (iii) Xi’an Huaxin New Energy, or any of the Buyers or its affiliates has a credit problem, including not being able to issue an auditor report or standard auditor report or any control person or executive of the Buyers is involved in crimes and is under prosecution or has other material credit problems, to HYREF’s reasonable belief; (iv) if Xi’an Zhonghong fails to timely make repayment on principal or interest of the loan agreement, its supplemental agreement or extension agreement; (v) the Buyers or any party to the Debt Repayment Agreement materially breaches the Debt Repayment Agreement or its related transaction documents, including but not limited to the Share Transfer Agreement, the Pledged Assets Transfer Agreement, the Entrusted Loan Agreement and their guarantee agreements and supplemental agreements. Due to halted trading of Huaxin stock by NEEQ for not filing its 2018 annual report, on December 19, 2019, Xi’an TCH, Xi’an Zhonghong, Guohua Ku and Chonggong Bai jointly and severally agreed to buy back all outstanding capital equity of Xi’an Hanneng which was transferred to HYREF by Chonggong Bai earlier. The total buy back price was RMB 261,727,506 ($37.52 million) including accrued interest of RMB 14,661,506 ($2.10 million), and was paid in full by Xi’an TCH on December 20, 2019. On April 9, 2021, Xi’an TCH, Xi’an Zhonghong, Guohua Ku, Chonggong Bai and HYREF entered a Termination of Fulfillment Agreement (termination agreement). Under the termination agreement, the original buyback agreement entered on December 19, 2019 was terminated upon signing of the termination agreement. HYREF will not execute the buy-back option and will not ask for any additional payment from the buyers other than keeping the CDQ WHPG station. The Company recorded a gain of approximately $3.1 million from transferring the CDP WHPG station to HYREF as partial repayment of the entrusted loan resulting from the termination of the buy-back agreement. 3. Transfer of Xuzhou Huayu Project and Shenqiu Phase I & II project to Mr. Bai for partial repayment of HYREF loan On January 4, 2019, Xi’an Zhonghong, Xi’an TCH, and Mr. Chonggong Bai entered into a Projects Transfer Agreement, pursuant to which Xi’an Zhonghong transferred a CDQ WHPG station (under construction) located in Xuzhou City for Xuzhou Huayu Coking Co., Ltd. (“Xuzhou Huayu Project”) to Mr. Bai for RMB 120,000,000 ($17.52 million) and Xi’an TCH transferred two Biomass Power Generation Projects in Shenqiu (“Shenqiu Phase I and II Projects”) to Mr. Bai for RMB 127,066,000 ($18.55 million). Mr. Bai agreed to transfer all the equity shares of his wholly owned company, Xi’an Hanneng, to HYREF as repayment for the RMB 247,066,000 ($36.07 million) loan made by Xi’an Zhonghong to HYREF as consideration for the transfer of the Xuzhou Huayu Project and Shenqiu Phase I and II Projects. On February 15, 2019, Xi’an Zhonghong completed the transfer of the Xuzhou Huayu Project and Xi’an TCH completed the transfer of Shenqiu Phase I and II Projects to Mr. Bai, and on January 10, 2019, Mr. Bai transferred all the equity shares of his wholly owned company, Xi’an Hanneng, to HYREF as repayment of Xi’an Zhonghong’s loan to HYREF as consideration for the transfer of the Xuzhou Huayu Project and Shenqiu Phase I and II Projects. Xi’an Hanneng is a holding company and was supposed to own 47,150,000 shares of Xi’an Huaxin New Energy Co., Ltd. (“Huaxin”), so that HYREF will indirectly receive and own such shares of Xi’an Huaxin as the repayment for the loan of Zhonghong. Xi’an Hanneng already owned 29,948,000 shares of Huaxin; however, Xi’an Hanneng was not able to obtain the remaining 17,202,000 shares due to halted trading of Huaxin stock by NEEQ for not filing its 2018 annual report. On December 19, 2019, Xi’an TCH, Xi’an Zhonghong, Guohua Ku and Chonggong Bai jointly and severally agreed to buy back all outstanding capital equity of Xi’an Hanneng which was transferred to HYREF by Chonggong Bai earlier. The total buy back price was RMB 261,727,506 ($37.52 million) including accrued interest of RMB 14,661,506 ($2.10 million), and was paid in full by Xi’an TCH on December 20, 2019. On December 20, 2019, Mr. Bai, Xi’an TCH and Xi’an Zhonghong agreed to have Mr. Bai repay the Company in cash for the transfer price of Xuzhou Huayu and Shenqiu in five installment payments. The 1 st nd rd th On April 9, 2021, Xi’an TCH, Xi’an Zhonghong, Guohua Ku, Chonggong Bai and HYREF entered a Termination of Fulfillment Agreement (termination agreement). Under the termination agreement, the original buyback agreement entered on December 19, 2019 was terminated upon signing of the termination agreement. HYREF will not execute the buy-back option and will not ask for any additional payment from the buyers other than keeping the CDQ WHPG station. The Company recorded a gain of approximately $3.1 million from transferring the CDP WHPG station to HYREF as partial repayment of the entrusted loan resulting from the termination of the buy-back agreement. 4. The lender agreed to extend the repayment of RMB 77.00 million ($12.13 million) to July 8, 2023. However, per court’s judgement on June 28, 2021, the Company should repay principal $12.13 million and accrued interest of $0.38 million within 10 days from the judgment date. The Company has not paid it yet as of this report date, but will pay it in full by the end of 2022. Xi’an TCH had investment RMB 75.00 million ($11.63 million) into the HYREF fund as a secondary limited partner, and the Company recorded an impairment loss of $11.63 million for such investment during the year ended December 31, 2021 due to uncertainty of the collection of the investment. This was impaired as Hongyuan does not have the ability to pay back (see Note 15 – Litigation). |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 9. RELATED PARTY TRANSACTIONS As of September 30, 2022 and December 31, 2021, the Company had $24,743 and $27,357, respectively, in advances from the Company’s management, which bears no interest, is unsecured, and payable upon demand. On February 23, 2021, the Company entered into certain securities purchase agreements with several non-U.S. investors (the “Purchasers”), pursuant to which the Company agreed to sell to the Purchasers, up to 3,320,000 shares of common stock of the Company, at $11.522 per share. One of the purchasers is the Company’s CEO (who is also the Company’s Chairman), who purchased 1,000,000 common shares of the Company. In April 2021, the Company’s CEO amended the number of shares that he would purchase from 1,000,000 to 940,000. In April 2021 the Company returned to the Company’s CEO the $691,320 in extra proceeds that had been received earlier. |
Note Payable, Net
Note Payable, Net | 9 Months Ended |
Sep. 30, 2022 | |
Convertible Note Payable Net [Abstract] | |
NOTE PAYABLE, NET | 10. NOTE PAYABLE, NET Promissory Notes in December 2020 On December 4, 2020, the Company entered into a Note Purchase Agreement with an institutional investor, pursuant to which the Company issued the Purchaser a Promissory Note of $3,150,000. The Purchaser purchased the Note with an original issue discount (“OID”) of $150,000, which was recognized as debt discount is amortized using the interest method over the life of the note. The Note bears interest at 8% and has a term of 24 months. All outstanding principal and accrued interest on the Note is due and payable December 3, 2022. The Company’s obligations under the Note may be prepaid at any time, provided that in such circumstance the Company would pay 125% of any amounts outstanding under the Note and being prepaid. Beginning on the date that is six months from the issue date of the Note, Purchaser shall have the right to redeem any amount of this Note up to $500,000 per calendar month by providing written notice to the Company. Upon receipt of the redemption notice from the lender, the Company shall pay the applicable redemption amount in cash to lender within three trading days of receipt of such redemption notice; if the Company fails to pay, then the outstanding balance will automatically be increased by 25%. During the nine months ended September 30, 2022, the Company amortized OID of $69,355 and recorded $835 interest expense on this Note. During the three months ended September 30, 2022, the Company amortized OID of $0 and recorded $0 interest expense on this Note. During the year ended December 31, 2021, the Company entered into several Exchange Agreements with the lender, pursuant to the Agreements, the Company and Lender partitioned new Promissory Notes of $3,850,000 from the original Promissory Note, including adjustment of $818,914 to increase the principal of the notes during the second quarter of 2021 as a result of the Company’s failure to pay the redemption amount in cash to lender within three trading days from receipt of the redemption notice, the Company recorded $818,914 principal adjustment as interest expense. The Company and Lender exchanged these Partitioned Notes for the delivery of 576,108 shares of the Company’s common stock. The Company recorded $151,275 loss on conversion of these notes in 2021. On January 10, 2022, the Company and Lender exchanged a Partitioned Notes of $346,986 for the delivery of 58,258 shares of the Company’s common stock. The Company recorded $26,193 loss on conversion of this note in 2022. This Promissory Notes was paid in full on January 10, 2022. Promissory Notes in April 2021 On April 2, 2021, the Company entered into a Note Purchase Agreement with an institutional investor, pursuant to which the Company issued to the Purchaser a Promissory Note of $5,250,000. The Purchaser purchased the Note with an OID of $250,000, which was recognized as a debt discount is amortized using the interest method over the life of the note. The Note bears interest at 8% and has a term of 24 months. All outstanding principal and accrued interest on the Note is due and payable on April 1, 2023. The Company’s obligations under the Note may be prepaid at any time, provided that in such circumstance the Company would pay 125% of any amounts outstanding under the Note and being prepaid. Beginning on the date that is six months from the issue date of the Note, Purchaser shall have the right to redeem any amount of this Note up to $825,000 per calendar month by providing written notice to the Company. Upon receipt of the redemption notice from the lender, the Company shall pay the applicable redemption amount in cash to lender within three trading days of receipt of such redemption notice; if the Company fails to pay, then the outstanding balance will automatically be increased by 25%. On October 28, 2021, the lender made an adjustment of $1,370,897 to increase the outstanding principal of the notes as a result of the Company’s failure to pay the redemption amount in cash to lender on time, the Company recorded $1,370,897 principal adjustment as interest expense in 2021. The lender made an adjustment of $229,015 to increase the outstanding principal of the notes based on a forbearance agreement entered on September 14, 2022 resulting from the Company’s default event of being delinquent on SEC filings, the Company recorded the $229,015 principal adjustment as interest expense. During the nine months ended September 30, 2022, the Company amortized OID of $93,750 and recorded $341,134 interest expense on this Note; and the Company and Lender exchanged these Partitioned Notes of $1,550,000 for the delivery of 255,386 shares of the Company’s common stock. During the three months ended September 30, 2022, the Company amortized OID of $31,250 and recorded $111,706 interest on this Note. The Company recorded $94,928 loss on conversion of these notes in 2022. As of September 30, 2022, the outstanding principal balance of this note was $5,666,477 (net of unamortized OID of $62,500) with accrued interest of $245,514. The Note was classified as a current liability in accordance with ASC 470-10-45 Other Presentation Matters – General Due on Demand Loan Arrangements. |
Shares Issued for Equity Financ
Shares Issued for Equity Financing and Stock Compensation | 9 Months Ended |
Sep. 30, 2022 | |
Stockholders' Equity Note [Abstract] | |
SHARES ISSUED FOR EQUITY FINANCING AND STOCK COMPENSATION | 11. SHARES ISSUED FOR EQUITY FINANCING AND STOCK COMPENSATION Shares Issued for Equity Financing in 2021 On February 23, 2021, the Company entered into securities purchase agreements with several non-U.S. investors (the “Purchasers”), pursuant to which the Company agreed to sell to the Purchasers, up to 3,320,000 shares of common stock of the Company, at $11.522 per share, which was the five-day average closing price immediately prior to signing the Purchase Agreements. One of the purchasers is the Company’s CEO (also is the Company’s Chairman), he purchased 1,000,000 common shares of the Company. On March 11, 2021, the Company received approximately $38.25 million proceeds from the issuance of 3,320,000 shares under the securities purchase agreements, there were no fees paid in connection with this financing. In April 2021, the Company’s CEO amended the number of shares he would purchase from 1,000,000 shares to 940,000; accordingly, total number of shares sold in this offering became 3,260,000. The Company returned $691,320 extra proceeds that were received earlier to the Company’s CEO in April 2021. The stock certificates for these shares were issued in April 2021. Warrants Following is a summary of the activities of warrants that were issued from equity financing for the nine months ended September 30, 2022: Number of Average Weighted Outstanding at January 1, 2022 30,411 $ 14.0 2.21 Exercisable at January 1, 2022 30,411 $ 14.0 2.21 Granted - - - Exchanged - - - Forfeited - - - Expired - - - Outstanding at September 30, 2022 30,411 $ 14.0 1.46 Exercisable at September 30, 2022 30,411 $ 14.0 1.46 |
Stock-Based Compensation Plan
Stock-Based Compensation Plan | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION PLAN | 12. STOCK-BASED COMPENSATION PLAN Options to Employees and Directors On June 19, 2015, the stockholders of the Company approved the China Recycling Energy Corporation Omnibus Equity Plan (the “Plan”) at its annual meeting. The total shares of Common Stock authorized for issuance during the term of the Plan is 124,626 . The Plan was effective immediately upon its adoption by the Board of Directors on April 24, 2015, subject to stockholder approval, and will terminate on the earliest to occur of (i) the 10th anniversary of the Plan’s effective date, or (ii) the date on which all shares available for issuance under the Plan shall have been issued as fully-vested shares. The stockholders approved the Plan at their annual meeting on June 19, 2015. The following table summarizes option activity with respect to employees and independent directors for the nine months ended September 30, 2022: Number of Average Weighted Outstanding at January 1, 2022 500 $ 16.1 5.32 Exercisable at January 1, 2022 500 $ 16.1 5.32 Granted - - - Exercised - - - Forfeited - - - Outstanding at September 30, 2022 500 $ 16.1 4.57 Exercisable at September 30, 2022 500 $ 16.1 4.57 |
Income Tax
Income Tax | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX | 13. INCOME TAX The Company’s Chinese subsidiaries are governed by the Income Tax Law of the PRC concerning privately-run enterprises, which are generally subject to tax at 25% on income reported in the statutory financial statements after appropriate tax adjustments. Under Chinese tax law, the tax treatment of finance and sales-type leases is similar to US GAAP. However, the local tax bureau continues to treat the Company’s sales-type leases as operating leases. Accordingly, the Company recorded deferred income taxes. The Company’s subsidiaries generate all of their income from their PRC operations. All of the Company’s Chinese subsidiaries’ effective income tax rate for 2022 and 2021 was 25%. Yinghua, Shanghai TCH, Xi’an TCH, Huahong, Zhonghong and Erdos TCH file separate income tax returns. There is no income tax for companies domiciled in the Cayman Islands. Accordingly, the Company’s CFS do not present any income tax provisions related to Cayman Islands tax jurisdiction, where Sifang Holding is domiciled. The US parent company, SPC is taxed in the US and, as of September 30, 2022, had net operating loss (“NOL”) carry forwards for income taxes of $2.57 million; for federal income tax purposes, the NOL arising in tax years beginning after 2017 may only reduce 80% of a taxpayer’s taxable income, and may be carried forward indefinitely. However, the coronavirus Aid, Relief and Economic Security Act (“the CARES Act”) issued in March 2020, provides tax relief to both corporate and noncorporate taxpayers by adding a five-year carryback period and temporarily repealing the 80% limitation for NOLs arising in 2018, 2019 and 2020. Management believes the realization of benefits from these losses uncertain due to the US parent company’s continuing operating losses. Accordingly, a 100% deferred tax asset valuation allowance was provided. As of September 30, 2022, the Company’s PRC subsidiaries had $36.60 million NOL that can be carried forward to offset future taxable income for five years from the year the loss is incurred. The NOL was mostly from Erdos TCH and Zhonghong. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets due to the recurring losses from operations of these entities, accordingly, the Company recorded a 100% deferred tax valuation allowance for the PRC NOL. The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the nine months ended September 30, 2022 and 2021: 2022 2021 U.S. statutory rates expense (benefit) (21.0 )% 21.0 % Tax rate difference – current provision 0.5 % 10.1 % Prior year income tax adjustment in current year (8.8 )% Permanent differences 10.0 % 16.1 % Change in valuation allowance 13.9 % (45.1 )% Tax expense (benefit) per financial statements 3.4 % (6.7 )% The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the three months ended September 30, 2022 and 2021: 2022 2021 U.S. statutory rates expense (benefit) (21.0 )% (21.0 )% Tax rate difference – current provision 0.5 % 0.3 % Permanent differences 12.6 % 35.7 % Change in valuation allowance 10.9 % (13.0 )% Tax expense (benefit) per financial statements 3.0 % 2.0 % The provision for income tax expense (benefit) for the nine months ended September 30, 2022 and 2021 consisted of the following: 2022 2021 Income tax expense (benefit) – current $ 36,511 $ (87,051 ) Income tax expense – deferred - - Total income tax expense (benefit) $ 36,511 $ (87,051 ) The provision for income tax expense (benefit) for the three months ended September 30, 2022 and 2021 consisted of the following: 2022 2021 Income tax expense– current $ 12,954 $ 10,902 Income tax expense – deferred - - Total income tax expense $ 12,954 $ 10,092 |
Statutory Reserves
Statutory Reserves | 9 Months Ended |
Sep. 30, 2022 | |
Statutory Reserves [Abstract] | |
STATUTORY RESERVES | 14. STATUTORY RESERVES Pursuant to the corporate law of the PRC effective January 1, 2006, the Company is only required to maintain one statutory reserve by appropriating from its after-tax profit before declaration or payment of dividends. The statutory reserve represents restricted retained earnings. Surplus Reserve Fund The Company’s Chinese subsidiaries are required to transfer 10% of their net income, as determined under PRC accounting rules and regulations, to a statutory surplus reserve fund until such reserve balance reaches 50% of the Company’s registered capital. The surplus reserve fund is non-distributable other than during liquidation and can be used to fund previous years’ losses, if any, and may be utilized for business expansion or converted into share capital by issuing new shares to existing shareholders in proportion to their shareholding or by increasing the par value of the shares currently held by them, provided that the remaining reserve balance after such issue is not less than 25% of the registered capital. The maximum statutory reserve amount has not been reached for any subsidiary. The table below discloses the statutory reserve amount in the currency type registered for each Chinese subsidiary as of September 30, 2022 and December 31, 2021: Name of Chinese Subsidiaries Registered Maximum Statutory Statutory Shanghai TCH $ 29,800,000 $ 14,900,000 ¥6,564,303 ($1,003,859) ¥6,564,303 ($1,003,859) Xi’an TCH ¥ 202,000,000 ¥ 101,000,000 ¥73,746,526 ($11,247,856) ¥73,862,151 ($11,261,339) Erdos TCH ¥ 120,000,000 ¥ 60,000,000 ¥19,035,814 ($2,914,869) ¥19,035,814 ($2,914,869) Xi’an Zhonghong ¥ 30,000,000 ¥ 15,000,000 Did not accrue yet due to accumulated deficit Did not accrue yet due to accumulated deficit Shaanxi Huahong $ 2,500,300 $ 1,250,150 Did not accrue yet due to accumulated deficit Did not accrue yet due to accumulated deficit Zhongxun ¥ 35,000,000 ¥ 17,500,000 Did not accrue yet due to accumulated deficit Did not accrue yet due to accumulated deficit Common Welfare Fund The common welfare fund is a voluntary fund to which the Company can transfer 5% to 10% of its net income. This fund can only be utilized for capital items for the collective benefit of the Company’s employees, such as construction of dormitories, cafeteria facilities, and other staff welfare facilities. This fund is non-distributable other than upon liquidation. The Company does not participate in this fund. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Contingencies [Abstract] | |
CONTINGENCIES | 15. CONTINGENCIES China maintains a “closed” capital account, meaning companies, banks, and individuals cannot move money in or out of the country except in accordance with strict rules. The People’s Bank of China (PBOC) and State Administration of Foreign Exchange (SAFE) regulate the flow of foreign exchange in and out of the country. For inward or outward foreign currency transactions, the Company needs to make a timely declaration to the bank with sufficient supporting documents to declare the nature of the business transaction. The Company’s sales, purchases and expense transactions are denominated in RMB and all of the Company’s assets and liabilities are also denominated in RMB. The RMB is not freely convertible into foreign currencies under the current law. Remittances in currencies other than RMB may require certain supporting documentation in order to make the remittance. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things. Litigation In November 2019, Beijing Hongyuan Recycling Energy Investment Center, or Hongyuan, filed a lawsuit with the Beijing Intermediate People’s Court against Xi’an TCH to compel Xi’an TCH to repurchase certain stock pursuant to a stock repurchase option agreement. On April 9, 2021, the court rendered a judgment in favor of Hongyuan. Xi ‘an TCH filed a motion for retrial to High People’s Court of Beijing on April 13, 2022, because Xi’an TCH paid RMB 267 million ($39.8 million) to Hongyuan as an out-of-court settlement. On April 11, 2022, Xi ‘an Zhonghong New Energy Technology Co. Ltd., filed an application for retrial and provided relevant evidence to the Beijing High People’s Court on the Civil Judgment No. 264., awaiting trial. On August 10, 2022, Beijing No. 1 Intermediate People’s Court of Beijing issued a Certificate of Active Performance, proving that Xi ‘an Zhonghong New Energy Technology Co., Ltd. had fulfilled its buyback obligations. On April 9, 2021, Xi’an TCH, Xi’an Zhonghong, Guohua Ku, Chonggong Bai and HYREF entered a Termination of Fulfillment Agreement (termination agreement). Under the termination agreement, the original buyback agreement entered on December 19, 2019 was terminated upon signing of the termination agreement. HYREF will not execute the buy-back option and will not ask for any additional payment from the buyers other than keeping the CDQ WHPG station. In February 2016, Xuzhou Intermediate People’s Court of Jiangsu Province, or the Xuzhou Court, accepted an execution proceeding request from Zhongrong International Trust Co. Ltd., or Zhongrong, against Mr. Guohua Ku, Xi’an TCH, Xuzhou Taifate Steel Co., Ltd., or Xuzhou Taifate, to satisfy the obligation arising out of a loan agreement and guarantee agreement among the parties. On March 21, 2018 and March 20, 2019, the Xuzhou Court ordered a deduction from the bank accounts of Mr. Ku of RMB 371,470 ($55,349) and RMB 254,824 ($37,969), respectively. On August 21, 2020, the Xuzhou Court reopened the case in response to Zhongrong’s request against Xuzhou Taifa for the resolution of an additional loan of RMB 145,356,100 ($21,658,089), which was paid in full in settlement. The Xuzhou Court concluded the case on December 21, 2020. |
Commitments
Commitments | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS | 16. COMMITMENTS Lease Commitment On November 20, 2017, Xi’an TCH entered into a lease for its office from December 1, 2017 through November 30, 2020. The monthly rent was RMB 36,536 ($5,600) with quarterly payment in advance. This lease expired in November 2020. The Company entered a new lease contract for the same location from January 1, 2021 through December 31, 2023 with monthly rent of RMB 36,536 ($5,600), to be paid every half year in advance. The components of lease costs, lease term and discount rate with respect of the office lease with an initial term of more than 12 months are as follows: Nine Months September 30, Operating lease cost – amortization of ROU $ 46,593 Operating lease cost – interest expense on lease liability $ 3,178 Weighted Average Remaining Lease Term - Operating leases 1.25 years Weighted Average Discount Rate - Operating leases 5 % Nine Months September 30, Operating lease cost– amortization of ROU $ 45,299 Operating lease cost – interest expense on lease liability $ 5,513 Three Months Operating lease cost – amortization of ROU $ 15,194 Operating lease cost – interest expense on lease liability $ 765 Three Months Operating lease cost – amortization of ROU $ 15,329 Operating lease cost – interest expense on lease liability $ 1,610 The following is a schedule, by years, of maturities of the office lease liabilities as of September 30, 2022: For the year ended September 30, 2023, $ 61,753 Total undiscounted cash flows 61,753 Less: imputed interest (1,519 ) Present value of lease liabilities $ 60,234 Employment Agreement On May 8, 2020, the Company entered an employment agreement with Yongjiang Shi, the Company’s CFO for 24 months. The monthly salary was RMB 16,000 ($2,200). The Company will grant the CFO no less than 5,000 shares of the Company’s common stock annually; however, as of this report date, the Board of Directors and Compensation Committee have not approved the number of shares to be given to the CFO, nor any stock reward agreement has been signed. On May 6, 2022, the Company entered another employment agreement with Mr. Shi for 24 months with monthly salary of RMB 18,000 ($2,500). The Company will grant the CFO no less than 5,000 shares of the Company’s common stock annually; however, as of this report date, the Board of Directors and Compensation Committee have not approved the number of shares to be given to the CFO, nor any stock reward agreement has been signed. Investment Banking Engagement Agreement On October 10, 2019, the Company entered an investment banking agreement with an investment banking firm to engage it as the exclusive lead underwriter for a registered securities offering of up to $20 million. The Company shall pay the investment banker an equity retainer fee of 15,000 shares of the restricted Common Stock of the Company (10,000 shares was issued within 10 business days of signing the agreement, and remaining 5,000 shares will be paid upon completion of the offering). The agreement expired in March 2021. On May 2, 2021, the Company entered an agreement with an investment banker (which will serve as the exclusive placement agent or exclusive lead underwriter of the Company) with the intension to raise approximately $10,000,000 from either a public offering or a private placement. Under the agreement, upon the closing of the financing, the Company will pay Univest Securities, LLC (the “Underwriter” or “Univest”) a discount equal to 8% of the gross proceeds raised in the offering, a non-accountable expense allowance equal to one percent (1%) of the gross proceeds of the offering, as well as underwriter warrants to purchase that number of shares of common stock and accompanying Warrants equal to 5% of the shares of common stock and Warrants sold in the offering, including upon exercise by the Underwriter of its over-allotment option (“Underwriter Warrants”). The Underwriter Warrants shall be exercisable at any time, and from time to time, in whole or in part, during the period commencing 180 days from the date of commencement of sales of the offering, which period shall not extend further than five years from the date of commencement of sales of the offering in compliance with FINRA Rule 5110(g)(8)(A). After an initial period of six months from the agreement entering date, this engagement may be terminated at any time by either party upon 10 days written notice to the other party, effective upon receipt of written notice to that effect by the other party. The Company filed an S-1 with the SEC on July 28, 2021. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 17. SUBSEQUENT EVENTS The Company follows the guidance in FASB ASC 855-10 for the disclosure of subsequent events. The Company evaluated subsequent events through the date the unaudited financial statements were issued and determined the Company had no major subsequent event need to be disclosed. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited financial information as of and for the nine and three months ended September 30, 2022 was prepared in accordance with accounting principles generally accepted in the U.S.(“US GAAP”) for interim financial information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments, unless otherwise indicated) considered necessary for a fair presentation of our financial position at such date and the operating results and cash flows for such periods. Operating results for the nine and three months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period. The interim consolidated financial information should be read in conjunction with the Financial Statements and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, previously filed with the SEC on September 13, 2022. |
Basis of Consolidation | Basis of Consolidation The CFS include the accounts of SPC and its subsidiaries, Shanghai Yinghua Financial Leasing Co., Ltd. (“Yinghua”) and Sifang Holdings; Sifang Holdings’ wholly owned subsidiaries, Huahong New Energy Technology Co., Ltd. (“Huahong”) and Shanghai TCH Energy Tech Co., Ltd. (“Shanghai TCH”); Shanghai TCH’s wholly-owned subsidiary, Xi’an TCH Energy Tech Co., Ltd. (“Xi’an TCH”); and Xi’an TCH’s subsidiaries, 1) Erdos TCH Energy Saving Development Co., Ltd (“Erdos TCH”), 100% owned by Xi’an TCH, 2) Zhonghong, 90% owned by Xi’an TCH and 10% owned by Shanghai TCH, and 3) Zhongxun, 100% owned by Xi’an TCH. Substantially all the Company’s revenues are derived from the operations of Shanghai TCH and its subsidiaries, which represent substantially all the Company’s consolidated assets and liabilities as of September 30, 2022. However, there was no revenue for the Company for the nine and three months ended September 30, 2022 and 2021. All significant inter-company accounts and transactions were eliminated in consolidation. |
Uses and Sources of Liquidity | Uses and Sources of Liquidity For the nine months ended September 30, 2022 and 2021, the Company had a net loss of $1.11 million and net income of $1.39 million, respectively. For the three months ended September 30, 2022 and 2021, the Company had net losses of $0.45 million and $0.56 million. The Company had an accumulated deficit of $56.38 million as of September 30, 2022. The Company disposed all of its systems and currently holds five power generating systems through Erdos TCH, the five power generating systems are currently not producing any electricity. The Company is in the process of transforming and expanding into an energy storage integrated solution provider. The Company plans to pursue disciplined and targeted expansion strategies for market areas the Company currently does not serve. The Company actively seeks and explores opportunities to apply energy storage technologies to new industries or segments with high growth potential, including industrial and commercial complexes, large scale photovoltaic (PV) and wind power stations, remote islands without electricity, and smart energy cities with multi-energy supplies. The Company’s cash flow forecast indicates it will have sufficient cash to fund its operations for the next 12 months from the date of issuance of these CFS. |
Use of Estimates | Use of Estimates In preparing these CFS in accordance with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets as well as revenues and expenses during the period reported. Actual results may differ from these estimates. On an on-going basis, management evaluates its estimates, including those allowances for bad debt and inventory obsolescence, impairment loss on fixed assets and construction in progress, income taxes, and contingencies and litigation. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other resources. |
Revenue Recognition | Revenue Recognition A) Sales-type Leasing and Related Revenue Recognition The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 842. The Company’s sales type lease contracts for revenue recognition fall under ASC 842. During the nine and three months ended September 30, 2022 and 2021, the Company did not sell any new power generating projects. The Company constructs and leases waste energy recycling power generating projects to its customers. The Company typically transfers legal ownership of the waste energy recycling power generating projects to its customers at the end of the lease. The Company finances construction of waste energy recycling power generating projects. The sales and cost of sales are recognized at the inception of the lease, which is when control is transferred to the lessee. The Company accounts for the transfer of control as a sales type lease in accordance with ASC 842-10-25-2. The underlying asset is derecognized, and revenue is recorded when collection of payments is probable. This is in accordance with the revenue recognition principle in ASC 606 - Revenue from contracts with customers. The investment in sales-type leases consists of the sum of the minimum lease payments receivable less unearned interest income and estimated executory cost. Minimum lease payments are part of the lease agreement between the Company (as the lessor) and the customer (as the lessee). The discount rate implicit in the lease is used to calculate the present value of minimum lease payments. The minimum lease payments consist of the gross lease payments net of executory costs and contingent rentals, if any. Unearned interest is amortized to income over the lease term to produce a constant periodic rate of return on net investment in the lease. While revenue is recognized at the inception of the lease, the cash flow from the sales-type lease occurs over the course of the lease, which results in interest income and reduction of receivables. Revenue is recognized net of value-added tax. B) Contingent Rental Income The Company records income from actual electricity generated of each project in the period the income is earned, which is when the electricity is generated. Contingent rent is not part of minimum lease payments. |
Operating Leases | Operating Leases The Company determines if an arrangement is a lease or contains a lease at inception. Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. As the rate implicit in the lease is not readily determinable for an operating lease, the Company generally uses an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. Operating lease right-of-use (“ROU assets”) assets represent the Company’s right to control the use of an identified asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are generally recognized based on the amount of the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the lease term. ROU assets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject to the impairment guidance in ASC 360, Property, Plant, and Equipment, as ROU assets are long-lived nonfinancial assets. ROU assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. The Company recognized no impairment of ROU assets as of September 30, 2022. Operating leases are included in operating lease ROU and operating lease liabilities (current and non-current), on the consolidated balance sheets. |
Cash | Cash Cash includes cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date. |
Accounts Receivable | Accounts Receivable The Company’s policy is to maintain an allowance for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. As of September 30, 2022 and December 31, 2021, the Company had no accounts receivable. |
Concentration of Credit Risk | Concentration of Credit Risk Cash includes cash on hand and demand deposits in accounts maintained within China. Balances at financial institutions and state-owned banks within the PRC are covered by insurance up to RMB 500,000 ($70,425) per bank. Any balance over RMB 500,000 ($70,425) per bank in PRC will not be covered. At September 30, 2022, cash held in PRC banks of $136,117,059 was not covered by such insurance. The Company has not experienced any losses in such accounts. Certain other financial instruments, which subject the Company to concentration of credit risk, consist of accounts and other receivables. The Company does not require collateral or other security to support these receivables. The Company conducts periodic reviews of its customers’ financial condition and customer payment practices to minimize collection risk on accounts receivable. The operations of the Company are in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation. Expenditures for maintenance and repairs are expensed as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method over the estimated lives as follows: Vehicles 2 - 5 years Office and Other Equipment 2 - 5 years Software 2 - 3 years |
Impairment of Long-lived Assets | Impairment of Long-lived Assets In accordance with FASB ASC Topic 360, “Property, Plant, and Equipment |
Cost of Sales | Cost of Sales Cost of sales consists primarily of the direct material of the power generating system and expenses incurred directly for project construction for sales-type leasing and sales tax and additions for contingent rental income. |
Income Taxes | Income Taxes Income taxes are accounted for using an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company follows FASB ASC Topic 740, which prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. Under FASB ASC Topic 740, when tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statement of income. At September 30, 2022 and December 31, 2021, the Company did not take any uncertain positions that would necessitate recording a tax related liability. |
Statement of Cash Flows | Statement of Cash Flows In accordance with FASB ASC Topic 230, “Statement of Cash Flows,” |
Fair Value of Financial Instruments | Fair Value of Financial Instruments For certain of the Company’s financial instruments, including cash and equivalents, restricted cash, accounts receivable, other receivables, accounts payable, accrued liabilities and short-term debts, the carrying amounts approximate their FVs due to their short maturities. Receivables on sales-type leases are based on interest rates implicit in the lease. FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” “Financial Instruments,” ● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 inputs to the valuation methodology are unobservable and significant to FV measurement. The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC 480, “Distinguishing Liabilities from Equity,” “Derivatives and Hedging.” As of September 30, 2022 and December 31, 2021, the Company did not have any long-term debt; and the Company did not identify any assets or liabilities that are required to be presented on the balance sheet at FV. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for share-based compensation awards to employees in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”, which requires that share-based payment transactions with employees be measured based on the grant-date FV of the equity instrument issued and recognized as compensation expense over the requisite service period. The Company accounts for share-based compensation awards to non-employees in accordance with FASB ASC Topic 718 and FASB ASC Subtopic 505-50, “Equity-Based Payments to Non-employees”. Share-based compensation associated with the issuance of equity instruments to non-employees is measured at the FV of the equity instrument issued or committed to be issued, as this is more reliable than the FV of the services received. The FV is measured at the date that the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete. The Company follows ASU 2018-07, “Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting,” which expands the scope of ASC 718 to include share-based payment transactions for acquiring goods and services from non-employees. An entity should apply the requirements of ASC 718 to non-employee awards except for specific guidance on inputs to an option pricing model and the attribution of cost. ASC 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. |
Basic and Diluted Earnings per Share | Basic and Diluted Earnings per Share The Company presents net income (loss) per share (“EPS”) in accordance with FASB ASC Topic 260, “Earning Per Share.” For the nine and three months ended September 30, 2022 and 2021, the basic and diluted income (loss) per share were the same due to the anti-dilutive features of the warrants and options. For the nine and three months ended September 30, 2022 and 2021, of 30,911 shares purchasable under warrants and options were excluded from the EPS calculation as these were not dilutive due to the exercise price was more than the stock market price. |
Foreign Currency Translation and Comprehensive Income (Loss) | Foreign Currency Translation and Comprehensive Income (Loss) The Company’s functional currency is the Renminbi (“RMB”). For financial reporting purposes, RMB were translated into U.S. Dollars (“USD” or “$”) as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity as “Accumulated other comprehensive income.” Gains and losses resulting from foreign currency transactions are included in income. The Company follows FASB ASC Topic 220, “Comprehensive Income.” |
Segment Reporting | Segment Reporting FASB ASC Topic 280, “Segment Reporting,” |
New Accounting Pronouncements | New Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact that the standard will have on its CFS. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance should be adopted on a prospective basis. As a smaller reporting company, the standard will be effective for the Company for interim and annual reporting periods beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of adopting this standard on its CFS. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future CFS. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedule of property and equipment estimated lives | Vehicles 2 - 5 years Office and Other Equipment 2 - 5 years Software 2 - 3 years |
Accrued Liabilities and Other_2
Accrued Liabilities and Other Payables (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of accrued liabilities and other payables | 2022 2021 Education and union fund and social insurance payable $ 257,753 $ 272,352 Consulting and legal expenses 31,090 31,924 Accrued payroll and welfare 236,007 287,026 Other 42,340 41,506 Total $ 567,190 $ 632,808 |
Taxes Payable (Tables)
Taxes Payable (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Schedule of Taxes Payable [Abstract] | |
Schedule of taxes payable | 2022 2021 Income tax $ 7,619,664 $ 7,641,787 Other 141 71 Total 7,619,805 7,641,858 Current 3,053,180 3,075,233 Noncurrent $ 4,566,625 $ 4,566,625 |
Deferred Tax, Net (Tables)
Deferred Tax, Net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Deferred Tax, Net [Abstract] | |
Schedule of deferred tax assets | 2022 2021 Accrued expenses $ 55,049 $ 61,301 Write-off Erdos TCH net investment in sales-type leases * 5,656,880 6,299,343 Impairment loss of Xi’an TCH’s investment into the HYREF fund 2,640,919 2,940,854 US NOL 540,455 463,508 PRC NOL 9,150,325 10,189,545 Total deferred tax assets 18,043,628 19,954,551 Less: valuation allowance for deferred tax assets (18,043,628 ) (19,954,551 ) Deferred tax assets, net $ - $ - * This represents the tax basis of Erdos TCH investment in sales type leases, which was written off under US GAAP upon modification of lease terms, which made the lease payments contingent upon generation of electricity. |
Shares Issued for Equity Fina_2
Shares Issued for Equity Financing and Stock Compensation (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Stockholders' Equity Note [Abstract] | |
Schedule of activities of warrants | Number of Average Weighted Outstanding at January 1, 2022 30,411 $ 14.0 2.21 Exercisable at January 1, 2022 30,411 $ 14.0 2.21 Granted - - - Exchanged - - - Forfeited - - - Expired - - - Outstanding at September 30, 2022 30,411 $ 14.0 1.46 Exercisable at September 30, 2022 30,411 $ 14.0 1.46 |
Stock-Based Compensation Plan (
Stock-Based Compensation Plan (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of summarizes option activity with respect to employees and independent directors | Number of Average Weighted Outstanding at January 1, 2022 500 $ 16.1 5.32 Exercisable at January 1, 2022 500 $ 16.1 5.32 Granted - - - Exercised - - - Forfeited - - - Outstanding at September 30, 2022 500 $ 16.1 4.57 Exercisable at September 30, 2022 500 $ 16.1 4.57 |
Income Tax (Tables)
Income Tax (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of reconciles U.S. statutory rates to effective tax rate | 2022 2021 U.S. statutory rates expense (benefit) (21.0 )% 21.0 % Tax rate difference – current provision 0.5 % 10.1 % Prior year income tax adjustment in current year (8.8 )% Permanent differences 10.0 % 16.1 % Change in valuation allowance 13.9 % (45.1 )% Tax expense (benefit) per financial statements 3.4 % (6.7 )% 2022 2021 U.S. statutory rates expense (benefit) (21.0 )% (21.0 )% Tax rate difference – current provision 0.5 % 0.3 % Permanent differences 12.6 % 35.7 % Change in valuation allowance 10.9 % (13.0 )% Tax expense (benefit) per financial statements 3.0 % 2.0 % |
Schedule of provision for income tax expense | 2022 2021 Income tax expense (benefit) – current $ 36,511 $ (87,051 ) Income tax expense – deferred - - Total income tax expense (benefit) $ 36,511 $ (87,051 ) 2022 2021 Income tax expense– current $ 12,954 $ 10,902 Income tax expense – deferred - - Total income tax expense $ 12,954 $ 10,092 |
Statutory Reserves (Tables)
Statutory Reserves (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Statutory Reserves [Abstract] | |
Schedule of maximum statutory reserve amount | Name of Chinese Subsidiaries Registered Maximum Statutory Statutory Shanghai TCH $ 29,800,000 $ 14,900,000 ¥6,564,303 ($1,003,859) ¥6,564,303 ($1,003,859) Xi’an TCH ¥ 202,000,000 ¥ 101,000,000 ¥73,746,526 ($11,247,856) ¥73,862,151 ($11,261,339) Erdos TCH ¥ 120,000,000 ¥ 60,000,000 ¥19,035,814 ($2,914,869) ¥19,035,814 ($2,914,869) Xi’an Zhonghong ¥ 30,000,000 ¥ 15,000,000 Did not accrue yet due to accumulated deficit Did not accrue yet due to accumulated deficit Shaanxi Huahong $ 2,500,300 $ 1,250,150 Did not accrue yet due to accumulated deficit Did not accrue yet due to accumulated deficit Zhongxun ¥ 35,000,000 ¥ 17,500,000 Did not accrue yet due to accumulated deficit Did not accrue yet due to accumulated deficit |
Commitments (Tables)
Commitments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of lease costs, lease term and discount rate | Nine Months September 30, Operating lease cost – amortization of ROU $ 46,593 Operating lease cost – interest expense on lease liability $ 3,178 Weighted Average Remaining Lease Term - Operating leases 1.25 years Weighted Average Discount Rate - Operating leases 5 % Nine Months September 30, Operating lease cost– amortization of ROU $ 45,299 Operating lease cost – interest expense on lease liability $ 5,513 Three Months Operating lease cost – amortization of ROU $ 15,194 Operating lease cost – interest expense on lease liability $ 765 Three Months Operating lease cost – amortization of ROU $ 15,329 Operating lease cost – interest expense on lease liability $ 1,610 |
Schedule of maturities of the office lease liabilities | For the year ended September 30, 2023, $ 61,753 Total undiscounted cash flows 61,753 Less: imputed interest (1,519 ) Present value of lease liabilities $ 60,234 |
Organization and Description _2
Organization and Description of Business (Details) | 1 Months Ended | 9 Months Ended | ||||||||||||||
Jan. 22, 2019 USD ($) | Dec. 29, 2018 USD ($) | Dec. 29, 2018 CNY (¥) | Feb. 11, 2015 | Mar. 24, 2014 | Apr. 14, 2009 | Jul. 31, 2013 USD ($) | Jun. 15, 2013 USD ($) | Jun. 15, 2013 CNY (¥) | Sep. 30, 2022 CNY (¥) | Sep. 30, 2022 $ / shares | Dec. 31, 2021 $ / shares | Jul. 27, 2021 $ / shares shares | May 01, 2016 CNY (¥) | Jun. 19, 2015 shares | Jul. 19, 2013 | |
Organization and Description of Business (Details) [Line Items] | ||||||||||||||||
Maturity term | 20 years | |||||||||||||||
Amount of ownership interest | $ | $ 1,290,000 | |||||||||||||||
Sale of stockholder paid (in Dollars) | $ | $ 1,290,000 | |||||||||||||||
Electricity sold (in Yuan Renminbi) | ¥ | ¥ 0.3 | |||||||||||||||
Percentage of owns | 100% | 10% | ||||||||||||||
Ownership paid | $ 3,000,000 | ¥ 440,000 | ||||||||||||||
Repayment loan | $ 27,540,000 | ¥ 188,639,400 | ||||||||||||||
Loss paid (in Dollars) | $ | $ 624,133 | |||||||||||||||
Description of formation of zhongxun | On March 24, 2014, Xi’an TCH incorporated a subsidiary, Zhongxun Energy Investment (Beijing) Co., Ltd. (“Zhongxun”) with registered capital of $5,695,502 (RMB 35,000,000), which must be contributed before October 1, 2028. Zhongxun is 100% owned by Xi’an TCH and will be mainly engaged in project investment, investment management, economic information consulting, and technical services. Zhongxun has not commenced operations nor has any capital contribution been made as of the date of this report. | |||||||||||||||
Description of formation of yinghua | On February 11, 2015, the Company incorporated a subsidiary, Shanghai Yinghua Financial Leasing Co., Ltd. (“Yinghua”) with registered capital of $30,000,000, to be paid within 10 years from the date the business license is issued. Yinghua is 100% owned by the Company and will be mainly engaged in financial leasing, purchase of financial leasing assets, disposal and repair of financial leasing assets, consulting and ensuring of financial leasing transactions, and related factoring business. Yinghua has not commenced operations nor has any capital contribution been made as of the date of this report. | |||||||||||||||
Authorized shares of common stock (in Shares) | shares | 124,626 | |||||||||||||||
Common stock, par value (in Dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||||||||||||||
Minimum [Member] | ||||||||||||||||
Organization and Description of Business (Details) [Line Items] | ||||||||||||||||
Authorized shares of common stock (in Shares) | shares | 10,000,000 | |||||||||||||||
Maximum [Member] | ||||||||||||||||
Organization and Description of Business (Details) [Line Items] | ||||||||||||||||
Authorized shares of common stock (in Shares) | shares | 100,000,000 | |||||||||||||||
Erdos Metallurgy Co., Ltd. [Member] | ||||||||||||||||
Organization and Description of Business (Details) [Line Items] | ||||||||||||||||
Total investment percentage | 7% | 7% | 7% | |||||||||||||
Energy Technology Co., Ltd. [Member] | ||||||||||||||||
Organization and Description of Business (Details) [Line Items] | ||||||||||||||||
Total investment percentage | 93% | |||||||||||||||
Xi’an TCH [Member] | ||||||||||||||||
Organization and Description of Business (Details) [Line Items] | ||||||||||||||||
Amount of ownership interest | ¥ | ¥ 8,000,000 | |||||||||||||||
Erdos TCH [Member] | ||||||||||||||||
Organization and Description of Business (Details) [Line Items] | ||||||||||||||||
Until operation resume (in Yuan Renminbi) | ¥ | ¥ (154,238) | |||||||||||||||
DaTangShiDai (BinZhou) Energy Savings Technology Co., Ltd. [Member] | ||||||||||||||||
Organization and Description of Business (Details) [Line Items] | ||||||||||||||||
Total investment percentage | 30% | |||||||||||||||
DaTong Recycling Energy Technology Co., Ltd. [Member] | ||||||||||||||||
Organization and Description of Business (Details) [Line Items] | ||||||||||||||||
Total investment percentage | 30% | |||||||||||||||
TianYu XuZhou Recycling Energy Technology Co, Ltd. [Member] | ||||||||||||||||
Organization and Description of Business (Details) [Line Items] | ||||||||||||||||
Total investment percentage | 40% | |||||||||||||||
Zhonghong [Member] | ||||||||||||||||
Organization and Description of Business (Details) [Line Items] | ||||||||||||||||
Percentage of owns | 90% | |||||||||||||||
Articles of Incorporation[Member] | ||||||||||||||||
Organization and Description of Business (Details) [Line Items] | ||||||||||||||||
Common stock, par value (in Dollars per share) | $ / shares | $ 0.001 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Net loss amount | $ 1,110,000 | ||||
Net income amount | $ 1,390,000 | ||||
Accumulated deficit | $ 56,380,000 | $ 56,380,000 | |||
Description of insurance | the PRC are covered by insurance up to RMB 500,000 ($70,425) per bank. Any balance over RMB 500,000 ($70,425) per bank in PRC will not be covered. At September 30, 2022, cash held in PRC banks of $136,117,059 was not covered by such insurance. The Company has not experienced any losses in such accounts. | ||||
Tax benefit percentage | 50% | 50% | |||
Shares purchasable (in Shares) | 30,911 | 30,911 | 30,911 | 30,911 | |
Erdos TCH [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Net loss amount | $ 560,000 | ||||
Net income amount | $ 450,000 | ||||
Gross accounts receivable | $ 0 | ||||
Business Acquisition [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Business acquisition, description | (“Yinghua”) and Sifang Holdings; Sifang Holdings’ wholly owned subsidiaries, Huahong New Energy Technology Co., Ltd. (“Huahong”) and Shanghai TCH Energy Tech Co., Ltd. (“Shanghai TCH”); Shanghai TCH’s wholly-owned subsidiary, Xi’an TCH Energy Tech Co., Ltd. (“Xi’an TCH”); and Xi’an TCH’s subsidiaries, 1) Erdos TCH Energy Saving Development Co., Ltd (“Erdos TCH”), 100% owned by Xi’an TCH, 2) Zhonghong, 90% owned by Xi’an TCH and 10% owned by Shanghai TCH, and 3) Zhongxun, 100% owned by Xi’an TCH. Substantially all the Company’s revenues are derived from the operations of Shanghai TCH and its subsidiaries, which represent substantially all the Company’s consolidated assets and liabilities as of September 30, 2022. However, there was no revenue for the Company for the nine and three months ended September 30, 2022 and 2021. All significant inter-company accounts and transactions were eliminated in consolidation. |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of property and equipment estimated lives | 9 Months Ended |
Sep. 30, 2022 | |
Vehicles [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 2 years |
Vehicles [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 5 years |
Office and Other Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 2 years |
Office and Other Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 5 years |
Software [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 2 years |
Software [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 3 years |
Other Receivables (Details)
Other Receivables (Details) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended |
Aug. 23, 2021 | Sep. 30, 2022 | Dec. 31, 2021 | |
Receivables [Abstract] | |||
Advance to third party | $ 7,042 | $ 7,842 | |
Advance to employees | 4,499 | 7,618 | |
Advance to suppliers | 3,449 | 2,821 | |
Other receivables | 861,997 | 862,331 | |
Social insurance receivable | 4,497 | 4,831 | |
Social insurance prepayment | 850,000 | 850,000 | |
Other assets | 7,500 | $ 7,500 | |
Research and development cost | 1,000,000 | ||
Company prepaid | 200,000 | ||
Payment of prepaid | $ 800,000 | ||
Market research and project development, description | On August 23, 2021, the Company entered a Market Research and Project Development Service Agreement with a consulting company in Xi’an for a service period of 12 months. The consulting company will perform market research for new energy industry including photovoltaic and energy storage, develop potential new customers and due diligence check, assisting the Company for business cooperation negotiation and relevant agreements preparation. Total contract amount is $1,150,000, and the Company prepaid $650,000 at commencement of the service; the Company will pay $200,000 upon issuance of the research report, and pay the remaining of $300,000 upon completion all the services. |
Asset Subject to Buyback (Detai
Asset Subject to Buyback (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | |
Jan. 22, 2019 | Sep. 30, 2022 | Dec. 31, 2018 | |
Asset Subject to Buyback (Details) [Line Items] | |||
Transfer amount, description | On January 22, 2019, Xi’an Zhonghong completed the transfer of Chengli CDQ WHPG project as partial repayment for the loan and accrued interest of RMB 188,639,400 ($27.54 million) to HYREF (see Note 8). | ||
Gain on partial repayment of entrusted loan | $ 3,100 | ||
Chengli Project [Member] | |||
Asset Subject to Buyback (Details) [Line Items] | |||
Fixed assets cost | $ 35,240 |
Accrued Liabilities and Other_3
Accrued Liabilities and Other Payables (Details) - Schedule of accrued liabilities and other payables - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Accrued Liabilities and Other Payables (Details) - Schedule of accrued liabilities and other payables [Line Items] | ||
Accrued liabilities and other payables | $ 567,190 | $ 632,808 |
Education and union fund and social insurance payable [Member] | ||
Accrued Liabilities and Other Payables (Details) - Schedule of accrued liabilities and other payables [Line Items] | ||
Accrued liabilities and other payables | 257,753 | 272,352 |
Consulting and legal expenses [Member] | ||
Accrued Liabilities and Other Payables (Details) - Schedule of accrued liabilities and other payables [Line Items] | ||
Accrued liabilities and other payables | 31,090 | 31,924 |
Accrued payroll and welfare [Member] | ||
Accrued Liabilities and Other Payables (Details) - Schedule of accrued liabilities and other payables [Line Items] | ||
Accrued liabilities and other payables | 236,007 | 287,026 |
Other [Member] | ||
Accrued Liabilities and Other Payables (Details) - Schedule of accrued liabilities and other payables [Line Items] | ||
Accrued liabilities and other payables | $ 42,340 | $ 41,506 |
Taxes Payable (Details)
Taxes Payable (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Tax Payable [Abstract] | |
Income tax payable noncurrent | $ 4,570 |
Income Tax payable | 7,610 |
Current tax payable | $ 3,050 |
Income tax liability of installment, description | An election was available for the U.S. shareholders of a foreign company to pay the tax liability in installments over a period of eight years with 8% of net tax liability in each of the first five years, 15% in the sixth year, 20% in the seventh year, and 25% in the eighth year. |
Taxes Payable (Details) - Sched
Taxes Payable (Details) - Schedule of taxes payable - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Schedule of Taxes Payable [Abstract] | ||
Income tax | $ 7,619,664 | $ 7,641,787 |
Other | 141 | 71 |
Total | 7,619,805 | 7,641,858 |
Current | 3,053,180 | 3,075,233 |
Noncurrent | $ 4,566,625 | $ 4,566,625 |
Deferred Tax, Net (Details) - S
Deferred Tax, Net (Details) - Schedule of deferred tax assets - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | |
Schedule Of Deferred Tax Assets Abstract | |||
Accrued expenses | $ 55,049 | $ 61,301 | |
Write-off Erdos TCH net investment in sales-type leases | [1] | 5,656,880 | 6,299,343 |
Impairment loss of Xi’an TCH’s investment into the HYREF fund | 2,640,919 | 2,940,854 | |
US NOL | 540,455 | 463,508 | |
PRC NOL | 9,150,325 | 10,189,545 | |
Total deferred tax assets | 18,043,628 | 19,954,551 | |
Less: valuation allowance for deferred tax assets | (18,043,628) | (19,954,551) | |
Deferred tax assets, net | |||
[1] This represents the tax basis of Erdos TCH investment in sales type leases, which was written off under US GAAP upon modification of lease terms, which made the lease payments contingent upon generation of electricity. |
Loan Payable (Details)
Loan Payable (Details) $ in Thousands | 1 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
Dec. 20, 2019 USD ($) | Dec. 19, 2019 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | Sep. 30, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Jun. 28, 2021 USD ($) | Dec. 20, 2019 CNY (¥) | Jan. 04, 2019 USD ($) | Jan. 04, 2019 CNY (¥) | Dec. 29, 2018 USD ($) | Dec. 29, 2018 CNY (¥) | |
Loan Payable (Details) [Line Items] | ||||||||||||
Interest rate | 12.50% | 12.50% | ||||||||||
Description of remaining loan balance | The Company had paid RMB 50 million ($7.54 million) of the RMB 280 million ($42.22 million), and on August 5, 2016, the Company entered into a supplemental agreement with the lender to extend the due date of the remaining RMB 230 million ($34.68 million) of the original RMB 280 million ($45.54 million) to August 6, 2017. During the year ended December 31, 2017, the Company negotiated with the lender again to further extend the remaining loan balance of RMB 230 million ($34.68 million), RMB 100 million ($16.27 million), and RMB 77 million ($12.08 million) The lender had tentatively agreed to extend the remaining loan balance until August 2019 with an adjusted annual interest rate of 9%, subject to the final approval from its headquarters. The headquarters did not approve the extension proposal with an adjusted interest of 9%; however, on December 29, 2018, the Company and the lender agreed to an alternative repayment proposal as described below. | |||||||||||
Loan payable | $ 12,130 | ¥ 77,000,000 | ||||||||||
Total buy back price | $ 37,520 | ¥ 261,727,506 | ||||||||||
Accrued interest | $ 2,100 | $ 380 | 14,661,506 | |||||||||
Transfer price installment payments, description | On December 20, 2019, Mr. Bai, Xi’an TCH and Xi’an Zhonghong agreed to have Mr. Bai repay the Company in cash for the transfer price of Xuzhou Huayu and Shenqiu in five installment payments. The 1st payment of RMB 50 million ($7.17 million) was due on January 5, 2020, the 2nd payment of RMB 50 million ($7.17 million) was due on February 5, 2020, the 3rd payment of RMB 50 million ($7.17 million) was due on April 5, 2020, the 4th payment of RMB 50 million ($7.17 million) is due on June 30, 2020, and the final payment of RMB 47,066,000 ($6.75 million) was due on September 30, 2020. As of December 31, 2020, the Company received the full payment of RMB 247 million ($36.28 million) from Mr. Bai. | |||||||||||
Amount of realized gain on termination | $ 3,100 | |||||||||||
Repay principal amount | $ 12,130 | |||||||||||
Transfer price for Xuzhou Huayu Project [Member] | ||||||||||||
Loan Payable (Details) [Line Items] | ||||||||||||
Loan payable | $ 17,520 | ¥ 120,000,000 | ||||||||||
Transfer price for Shenqiu Phase I and II Projects [Member] | ||||||||||||
Loan Payable (Details) [Line Items] | ||||||||||||
Loan payable | 18,550 | 127,066,000 | ||||||||||
Repayment of HYREF loan [Member] | ||||||||||||
Loan Payable (Details) [Line Items] | ||||||||||||
Loan payable | $ 27,540 | ¥ 188,639,400 | ||||||||||
Repayment of HYREF loan [Member] | HYREF [Member] | ||||||||||||
Loan Payable (Details) [Line Items] | ||||||||||||
Loan payable | $ 36,070 | ¥ 247,066,000 | ||||||||||
Huaxin New Energy Co., Ltd. [Member] | ||||||||||||
Loan Payable (Details) [Line Items] | ||||||||||||
Description of remaining loan balance | Xi’an Hanneng is a holding company and was supposed to own 47,150,000 shares of Xi’an Huaxin New Energy Co., Ltd. (“Huaxin”), so that HYREF will indirectly receive and own such shares of Xi’an Huaxin as the repayment for the loan of Zhonghong. Xi’an Hanneng already owned 29,948,000 shares of Huaxin; however, Xi’an Hanneng was not able to obtain the remaining 17,202,000 shares due to halted trading of Huaxin stock by NEEQ for not filing its 2018 annual report. | |||||||||||
Entrusted Loan Payable HYREF Loan [Member] | ||||||||||||
Loan Payable (Details) [Line Items] | ||||||||||||
Total fund capital contribution | $ 77,000 | ¥ 460,000,000 | ||||||||||
Description of equity investment | The HYREF Fund invested RMB 3 million ($0.5 million) as an equity investment and RMB 457 million ($74.5 million) as a debt investment in Xi’an Zhonghong; in return for such investments, the HYREF Fund was to receive interest from Zhonghong for the HYREF Fund’s debt investment. The loan was collateralized by the accounts receivable and the fixed assets of Shenqiu Phase I and II power generation systems; the accounts receivable and fixed assets of Zhonghong’s three CDQ WHPG systems; and a 27 million RMB ($4.39 million) capital contribution made by Xi’an TCH in Zhonghong. Repayment of the loan (principal and interest) was also jointly and severally guaranteed by Xi’an TCH and the Chairman and CEO of the Company. In the fourth quarter of 2015, three power stations of Erdos TCH were pledged to Industrial Bank as an additional guarantee for the loan to Zhonghong’s three CDQ WHPG systems. In 2016, two additional power stations of Erdos TCH and Pucheng Phase I and II systems were pledged to Industrial Bank as an additional guarantee along with Xi’an TCH’s equity in Zhonghong. | |||||||||||
Xi’an TCH [Member] | ||||||||||||
Loan Payable (Details) [Line Items] | ||||||||||||
Total buy back price | $ 37,520 | 261,727,506 | ||||||||||
Accrued interest | $ 2,100 | ¥ 14,661,506 | ||||||||||
Investments | $ 11,630 | ¥ 75,000,000 | ||||||||||
Impairment loss | $ 11,630 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 1 Months Ended | ||
Feb. 23, 2021 | Sep. 30, 2022 | Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |||
Advances amount | $ 24,743 | $ 27,357 | |
Purchase agreements, description | On February 23, 2021, the Company entered into certain securities purchase agreements with several non-U.S. investors (the “Purchasers”), pursuant to which the Company agreed to sell to the Purchasers, up to 3,320,000 shares of common stock of the Company, at $11.522 per share. One of the purchasers is the Company’s CEO (who is also the Company’s Chairman), who purchased 1,000,000 common shares of the Company. In April 2021, the Company’s CEO amended the number of shares that he would purchase from 1,000,000 to 940,000. In April 2021 the Company returned to the Company’s CEO the $691,320 in extra proceeds that had been received earlier. |
Note Payable, Net (Details)
Note Payable, Net (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Sep. 14, 2022 | Jan. 10, 2022 | Apr. 02, 2021 | Dec. 04, 2020 | Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Oct. 28, 2021 | Jun. 30, 2021 | |
Note Payable, Net (Details) [Line Items] | ||||||||||
Amortization of OID | $ 31,250 | $ 163,105 | $ 118,750 | |||||||
Interest expense | 111,706 | |||||||||
Promissory notes principle amount | $ 3,850,000 | |||||||||
Promissory notes adjustment amount | $ 818,914 | |||||||||
Adjustment interest expense | $ 818,914 | |||||||||
Common stock exchange, description | The Company and Lender exchanged these Partitioned Notes for the delivery of 576,108 shares of the Company’s common stock. | |||||||||
Loss on conversion amount | 26,193 | $ 151,275 | ||||||||
Promissory Notes in December 2020 [Member] | ||||||||||
Note Payable, Net (Details) [Line Items] | ||||||||||
Convertible promissory note amount | $ 3,150,000 | |||||||||
Original issue discount | $ 150,000 | |||||||||
Interest rate | 8% | |||||||||
Debt term | 24 months | |||||||||
Increase decrease outstanding balance, percentage | 125% | |||||||||
Right to redeem amount | $ 500,000 | |||||||||
Percentage of redemption amount increased | 25% | |||||||||
Amortization of OID | 0 | 69,355 | ||||||||
Interest expense | 0 | 835 | ||||||||
Common stock exchange, description | On January 10, 2022, the Company and Lender exchanged a Partitioned Notes of $346,986 for the delivery of 58,258 shares of the Company’s common stock. | |||||||||
Promissory Notes in April 2021 [Member] | ||||||||||
Note Payable, Net (Details) [Line Items] | ||||||||||
Original issue discount | $ 250,000 | |||||||||
Interest rate | 8% | |||||||||
Debt term | 24 months | |||||||||
Increase decrease outstanding balance, percentage | 125% | |||||||||
Right to redeem amount | $ 825,000 | |||||||||
Percentage of redemption amount increased | 25% | |||||||||
Amortization of OID | 93,750 | |||||||||
Interest expense | 341,134 | |||||||||
Promissory notes adjustment amount | $ 1,370,897 | |||||||||
Adjustment interest expense | 229,015 | $ 229,015 | $ 1,370,897 | |||||||
Common stock exchange, description | During the nine months ended September 30, 2022, the Company amortized OID of $93,750 and recorded $341,134 interest expense on this Note; and the Company and Lender exchanged these Partitioned Notes of $1,550,000 for the delivery of 255,386 shares of the Company’s common stock. | |||||||||
Loss on conversion amount | $ 94,928 | |||||||||
Promissory note | $ 5,250,000 | |||||||||
Outstanding principal balance | $ 229,015 | 5,666,477 | ||||||||
Unamortized OID | $ 62,500 | 62,500 | ||||||||
Interest expense | $ 245,514 |
Shares Issued for Equity Fina_3
Shares Issued for Equity Financing and Stock Compensation (Details) | 1 Months Ended |
Feb. 23, 2021 | |
Stockholders' Equity Note [Abstract] | |
Agreement, description | On February 23, 2021, the Company entered into securities purchase agreements with several non-U.S. investors (the “Purchasers”), pursuant to which the Company agreed to sell to the Purchasers, up to 3,320,000 shares of common stock of the Company, at $11.522 per share, which was the five-day average closing price immediately prior to signing the Purchase Agreements. One of the purchasers is the Company’s CEO (also is the Company’s Chairman), he purchased 1,000,000 common shares of the Company. On March 11, 2021, the Company received approximately $38.25 million proceeds from the issuance of 3,320,000 shares under the securities purchase agreements, there were no fees paid in connection with this financing. In April 2021, the Company’s CEO amended the number of shares he would purchase from 1,000,000 shares to 940,000; accordingly, total number of shares sold in this offering became 3,260,000. The Company returned $691,320 extra proceeds that were received earlier to the Company’s CEO in April 2021. The stock certificates for these shares were issued in April 2021. |
Shares Issued for Equity Fina_4
Shares Issued for Equity Financing and Stock Compensation (Details) - Schedule of activities of warrants - Warrant [Member] | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Shares Issued for Equity Financing and Stock Compensation (Details) - Schedule of activities of warrants [Line Items] | |
Number of Warrants, Beginning balance | shares | 30,411 |
Average Exercise Price, Outstanding, Beginning balance | $ / shares | $ 14 |
Weighted Average Remaining Contractual Term in Years, Outstanding, Beginning balance | 2 years 2 months 15 days |
Number of Warrants, Beginning balance, Exercisable | shares | 30,411 |
Average Exercise Price, Beginning balance, Exercisable | $ / shares | $ 14 |
Weighted Average Remaining Contractual Term in Years, Beginning balance, Exercisable | 2 years 2 months 15 days |
Number of Warrants, Granted | shares | |
Average Exercise Price, Granted | $ / shares | |
Weighted Average Remaining Contractual Term in Years, Granted | |
Number of Warrants, Exchanged | shares | |
Average Exercise Price, Exchanged | $ / shares | |
Weighted Average Remaining Contractual Term in Years, Exchanged | |
Number of Warrants, Forfeited | shares | |
Average Exercise Price, Forfeited | $ / shares | |
Weighted Average Remaining Contractual Term in Years, Forfeited | |
Number of Warrants, Expired | shares | |
Average Exercise Price, Expired | $ / shares | |
Weighted Average Remaining Contractual Term in Years, Expired | |
Number of Warrants, Outstanding, Ending balance | shares | 30,411 |
Average Exercise Price, Outstanding, Ending balance | $ / shares | $ 14 |
Weighted Average Remaining Contractual Term in Years, Outstanding, Ending balance | 1 year 5 months 15 days |
Number of Warrants, Ending balance, Exercisable | shares | 30,411 |
Average Exercise Price, Ending balance, Exercisable | $ / shares | $ 14 |
Weighted Average Remaining Contractual Term in Years, Ending balance, Exercisable | 1 year 5 months 15 days |
Stock-Based Compensation Plan_2
Stock-Based Compensation Plan (Details) | Jun. 19, 2015 shares |
Share-Based Payment Arrangement [Abstract] | |
Shares of common stock authorized for issuance | 124,626 |
Stock-Based Compensation Plan_3
Stock-Based Compensation Plan (Details) - Schedule of summarizes option activity with respect to employees and independent directors | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Schedule Of Summarizes Option Activity With Respect To Employees And Independent Directors Abstract | |
Number of Shares Outstanding , Beginning balance | shares | 500 |
Average Exercise Price per Share, Outstanding, Beginning balance | $ / shares | $ 16.1 |
Weighted Average Remaining Contractual Term in Years Outstanding , Beginning balance | 5 years 3 months 25 days |
Number of Shares, Exercisable , Beginning balance | shares | 500 |
Average Exercise Price per Share, Exercisable , Beginning balance | $ / shares | $ 16.1 |
Weighted Average Remaining Contractual Term in Years, Exercisable , Beginning balance | 5 years 3 months 25 days |
Number of Shares, Granted | shares | |
Average Exercise Price per Share, Granted | $ / shares | |
Weighted Average Remaining Contractual Term in Years, Granted | |
Number of Shares, Exercised | shares | |
Average Exercise Price per Share, Exercised | $ / shares | |
Weighted Average Remaining Contractual Term in Years, Exercised | |
Number of Shares, Forfeited | shares | |
Average Exercise Price per Share, Forfeited | $ / shares | |
Weighted Average Remaining Contractual Term in Years, Forfeited | |
Number of Shares, Outstanding , Ending balance | shares | 500 |
Average Exercise Price per Share, Outstanding, Ending balance | $ / shares | $ 16.1 |
Weighted Average Remaining Contractual Term in Years, Outstanding , Ending balance | 4 years 6 months 25 days |
Number of Shares, Exercisable , Ending balance | shares | 500 |
Average Exercise Price per Share, Exercisable, Ending balance | $ / shares | $ 16.1 |
Weighted Average Remaining Contractual Term in Years, Exercisable , Ending balance | 4 years 6 months 25 days |
Income Tax (Details)
Income Tax (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Income Tax (Details) [Line Items] | ||
Tax rate | 25% | 25% |
Income tax, description | company, SPC is taxed in the US and, as of September 30, 2022, had net operating loss (“NOL”) carry forwards for income taxes of $2.57 million; for federal income tax purposes, the NOL arising in tax years beginning after 2017 may only reduce 80% of a taxpayer’s taxable income, and may be carried forward indefinitely. However, the coronavirus Aid, Relief and Economic Security Act (“the CARES Act”) issued in March 2020, provides tax relief to both corporate and noncorporate taxpayers by adding a five-year carryback period and temporarily repealing the 80% limitation for NOLs arising in 2018, 2019 and 2020. Management believes the realization of benefits from these losses uncertain due to the US parent company’s continuing operating losses. Accordingly, a 100% deferred tax asset valuation allowance was provided. | |
Future taxable income | 5 years | |
PRC [Member] | ||
Income Tax (Details) [Line Items] | ||
Tax rate | 25% | |
Net operating loss carryforwards (in Dollars) | $ 36,600 | |
Percentage of deferred tax valuation allowance | 100% |
Income Tax (Details) - Schedule
Income Tax (Details) - Schedule of reconciles U.S. statutory rates to effective tax rate | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Schedule Of Reconciles USStatutory Rates To Effective Tax Rate Abstract | ||||
U.S. statutory rates expense (benefit) | (21.00%) | (21.00%) | (21.00%) | 21% |
Tax rate difference – current provision | 0.50% | 0.30% | 0.50% | 10.10% |
Prior year income tax adjustment in current year | (8.80%) | |||
Permanent differences | 12.60% | 35.70% | 10% | 16.10% |
Change in valuation allowance | 10.90% | (13.00%) | 13.90% | (45.10%) |
Tax expense (benefit) per financial statements | 3% | 2% | 3.40% | (6.70%) |
Income Tax (Details) - Schedu_2
Income Tax (Details) - Schedule of provision for income tax expense - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Schedule Of Provision For Income Tax Expense Abstract | ||||
Income tax expense (benefit) – current | $ 12,954 | $ 10,902 | $ 36,511 | $ (87,051) |
Income tax expense – deferred | ||||
Total income tax expense (benefit) | $ 12,954 | $ 10,092 | $ 36,511 | $ (87,051) |
Statutory Reserves (Details)
Statutory Reserves (Details) | 9 Months Ended |
Sep. 30, 2022 | |
Surplus Reserve Fund [Member] | |
Statutory Reserves (Details) [Line Items] | |
Percentage of net income | 10% |
Statutory surplus reserve of registered capital, percentage | 50% |
Surplus reserve fund, description | The surplus reserve fund is non-distributable other than during liquidation and can be used to fund previous years’ losses, if any, and may be utilized for business expansion or converted into share capital by issuing new shares to existing shareholders in proportion to their shareholding or by increasing the par value of the shares currently held by them, provided that the remaining reserve balance after such issue is not less than 25% of the registered capital. |
Common Welfare Fund [Member] | Minimum [Member] | |
Statutory Reserves (Details) [Line Items] | |
Percentage of net income | 5% |
Common Welfare Fund [Member] | Maximum [Member] | |
Statutory Reserves (Details) [Line Items] | |
Percentage of net income | 10% |
Statutory Reserves (Details) -
Statutory Reserves (Details) - Schedule of maximum statutory reserve amount - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Shanghai TCH [Member] | ||
Statutory Reserves (Details) - Schedule of maximum statutory reserve amount [Line Items] | ||
Registered capital | $ 29,800,000 | |
Maximum statutory reserve amount | $ 14,900,000 | |
Statutory reserve | ($1,003,859) | ($1,003,859) |
Shanghai TCH [Member] | RMB [Member] | ||
Statutory Reserves (Details) - Schedule of maximum statutory reserve amount [Line Items] | ||
Statutory reserve | 6,564,303 | 6,564,303 |
Xi’an TCH [Member] | ||
Statutory Reserves (Details) - Schedule of maximum statutory reserve amount [Line Items] | ||
Registered capital | $ 202,000,000 | |
Maximum statutory reserve amount | $ 101,000,000 | |
Statutory reserve | ($11,247,856) | ($11,261,339) |
Xi’an TCH [Member] | RMB [Member] | ||
Statutory Reserves (Details) - Schedule of maximum statutory reserve amount [Line Items] | ||
Statutory reserve | 73,746,526 | 73,862,151 |
Erdos TCH [Member] | ||
Statutory Reserves (Details) - Schedule of maximum statutory reserve amount [Line Items] | ||
Registered capital | $ 120,000,000 | |
Maximum statutory reserve amount | $ 60,000,000 | |
Statutory reserve | ($2,914,869) | ($2,914,869) |
Erdos TCH [Member] | RMB [Member] | ||
Statutory Reserves (Details) - Schedule of maximum statutory reserve amount [Line Items] | ||
Statutory reserve | 19,035,814 | 19,035,814 |
Xi’an Zhonghong [Member] | ||
Statutory Reserves (Details) - Schedule of maximum statutory reserve amount [Line Items] | ||
Registered capital | $ 30,000,000 | |
Maximum statutory reserve amount | $ 15,000,000 | |
Statutory reserve | Did not accrue yet due to accumulated deficit | Did not accrue yet due to accumulated deficit |
Xi’an Zhonghong [Member] | RMB [Member] | ||
Statutory Reserves (Details) - Schedule of maximum statutory reserve amount [Line Items] | ||
Statutory reserve | Did not accrue yet due to accumulated deficit | Did not accrue yet due to accumulated deficit |
Shaanxi Huahong [Member] | ||
Statutory Reserves (Details) - Schedule of maximum statutory reserve amount [Line Items] | ||
Registered capital | $ 2,500,300 | |
Maximum statutory reserve amount | $ 1,250,150 | |
Statutory reserve | Did not accrue yet due to accumulated deficit | Did not accrue yet due to accumulated deficit |
Shaanxi Huahong [Member] | RMB [Member] | ||
Statutory Reserves (Details) - Schedule of maximum statutory reserve amount [Line Items] | ||
Statutory reserve | Did not accrue yet due to accumulated deficit | Did not accrue yet due to accumulated deficit |
Zhongxun [Member] | ||
Statutory Reserves (Details) - Schedule of maximum statutory reserve amount [Line Items] | ||
Registered capital | $ 35,000,000 | |
Maximum statutory reserve amount | $ 17,500,000 | |
Statutory reserve | Did not accrue yet due to accumulated deficit | Did not accrue yet due to accumulated deficit |
Zhongxun [Member] | RMB [Member] | ||
Statutory Reserves (Details) - Schedule of maximum statutory reserve amount [Line Items] | ||
Statutory reserve | Did not accrue yet due to accumulated deficit | Did not accrue yet due to accumulated deficit |
Contingencies (Details)
Contingencies (Details) | Apr. 13, 2022 USD ($) | Apr. 13, 2022 CNY (¥) | Aug. 21, 2020 USD ($) | Aug. 21, 2020 CNY (¥) | Mar. 20, 2019 USD ($) | Mar. 20, 2019 CNY (¥) | Mar. 21, 2018 USD ($) | Mar. 21, 2018 CNY (¥) |
Contingencies (Details) [Line Items] | ||||||||
Settlement paid | $ 39,800,000 | ¥ 267,000,000 | ||||||
Additional loan | $ 21,658,089 | ¥ 145,356,100 | ||||||
Mr. Ku [Member] | ||||||||
Contingencies (Details) [Line Items] | ||||||||
Deduction from bank accounts | $ 55,349 | ¥ 371,470 | ||||||
Xi’an TCH [Member] | ||||||||
Contingencies (Details) [Line Items] | ||||||||
Deduction from bank accounts | $ 37,969 | ¥ 254,824 |
Commitments (Details)
Commitments (Details) | 1 Months Ended | |||||||
May 06, 2022 USD ($) shares | May 06, 2022 CNY (¥) shares | May 02, 2021 USD ($) | May 08, 2020 USD ($) shares | May 08, 2020 CNY (¥) shares | Oct. 10, 2019 | Nov. 20, 2017 USD ($) | Nov. 20, 2017 CNY (¥) | |
Commitments (Details) [Line Items] | ||||||||
Lease agreement, description | On November 20, 2017, Xi’an TCH entered into a lease for its office from December 1, 2017 through November 30, 2020. | On November 20, 2017, Xi’an TCH entered into a lease for its office from December 1, 2017 through November 30, 2020. | ||||||
Monthly rental payment | $ 5,600 | ¥ 36,536 | ||||||
Lease expiry date | November 2020 | November 2020 | ||||||
Monthly salary | $ (2,500) | ¥ 18,000 | ||||||
Common stock annually | shares | 5,000 | 5,000 | 5,000 | 5,000 | ||||
Description of engagement agreement | Under the agreement, upon the closing of the financing, the Company will pay Univest Securities, LLC (the “Underwriter” or “Univest”) a discount equal to 8% of the gross proceeds raised in the offering, a non-accountable expense allowance equal to one percent (1%) of the gross proceeds of the offering, as well as underwriter warrants to purchase that number of shares of common stock and accompanying Warrants equal to 5% of the shares of common stock and Warrants sold in the offering, including upon exercise by the Underwriter of its over-allotment option (“Underwriter Warrants”). | On October 10, 2019, the Company entered an investment banking agreement with an investment banking firm to engage it as the exclusive lead underwriter for a registered securities offering of up to $20 million. The Company shall pay the investment banker an equity retainer fee of 15,000 shares of the restricted Common Stock of the Company (10,000 shares was issued within 10 business days of signing the agreement, and remaining 5,000 shares will be paid upon completion of the offering). The agreement expired in March 2021. | ||||||
Proceeds from public offering | $ | $ 10,000,000 | |||||||
Commencement period | 5 years | |||||||
New Lease Contract [Member] | ||||||||
Commitments (Details) [Line Items] | ||||||||
Lease agreement, description | The Company entered a new lease contract for the same location from January 1, 2021 through December 31, 2023 with monthly rent of RMB 36,536 ($5,600), to be paid every half year in advance. | The Company entered a new lease contract for the same location from January 1, 2021 through December 31, 2023 with monthly rent of RMB 36,536 ($5,600), to be paid every half year in advance. | ||||||
Monthly rental payment | $ 5,600 | ¥ 36,536 | ||||||
Chief Financial Officer [Member] | ||||||||
Commitments (Details) [Line Items] | ||||||||
Monthly salary | $ 2,200 | ¥ 16,000 |
Commitments (Details) - Schedul
Commitments (Details) - Schedule of lease costs, lease term and discount rate - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Schedule Of Lease Costs Lease Term And Discount Rate Abstract | ||||
Operating lease cost – amortization of ROU | $ 15,194 | $ 15,329 | $ 46,593 | $ 45,299 |
Operating lease cost – interest expense on lease liability | $ 765 | $ 1,610 | $ 3,178 | $ 5,513 |
Weighted Average Remaining Lease Term - Operating leases | 1 year 3 months | 1 year 3 months | ||
Weighted Average Discount Rate - Operating leases | 5% | 5% |
Commitments (Details) - Sched_2
Commitments (Details) - Schedule of maturities of the office lease liabilities | Sep. 30, 2022 USD ($) |
Schedule Of Maturities Of The Office Lease Liabilities Abstract | |
For the year ended September 30, 2023, | $ 61,753 |
Total undiscounted cash flows | 61,753 |
Less: imputed interest | (1,519) |
Present value of lease liabilities | $ 60,234 |