Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 13, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | SHARING ECONOMY INTERNATIONAL INC. | |
Entity Central Index Key | 819,926 | |
Trading Symbol | SEII | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 7,537,925 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 707,101 | $ 1,019,437 |
Restricted cash | 91,089 | 272,991 |
Notes receivable | 73,624 | 461,292 |
Accounts receivable, net of allowance for doubtful accounts | 4,828,813 | 9,092,709 |
Inventories, net of reserve for obsolete inventories | 5,264,334 | 4,553,559 |
Advances to suppliers | 1,231,022 | 2,023,779 |
Receivable from sale of subsidiary | 2,790,008 | 2,950,442 |
Prepaid license fee - related party, net | 829,787 | |
Prepaid expenses and other | 10,798,533 | 2,144,624 |
Assets of discontinued operations | 211,722 | 407,510 |
Total current assets | 26,826,033 | 22,926,343 |
OTHER ASSETS: | ||
Equity method investment | 9,053,859 | |
Property and equipment, net | 28,541,122 | 33,181,119 |
Intangible assets, net | 4,440,383 | 5,394,296 |
Total other assets | 32,981,505 | 47,629,274 |
Total assets | 59,807,538 | 70,555,617 |
CURRENT LIABILITIES: | ||
Short-term bank loans | 2,202,246 | 2,074,529 |
Bank acceptance notes payable | 145,313 | 422,589 |
Convertible note payable | 668,328 | 670,000 |
Accounts payable | 2,244,629 | 2,798,590 |
Accrued expenses | 305,425 | 165,749 |
Advances from customers | 1,159,530 | 2,454,375 |
Due to related parties | 2,158,404 | 347,589 |
Income taxes payable | 60,031 | 63,483 |
Liabilities of discontinued operations | 242,542 | 389,633 |
Total current liabilities | 9,186,448 | 9,386,537 |
Long-term loan | 282,605 | |
Total liabilities | 9,469,053 | 9,386,537 |
Commitments and contingencies (see Note 17) | ||
EQUITY: | ||
Preferred stock value | ||
Common stock ($0.001 par value; 12,500,000 shares authorized; 7,501,304 and 2,527,720 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively) | 7,501 | 2,528 |
Additional paid-in capital | 60,839,352 | 40,241,172 |
Retained earnings | (15,154,922) | 13,624,729 |
Statutory reserve | 2,352,592 | 2,352,592 |
Accumulated other comprehensive income - foreign currency translation adjustment | 2,549,644 | 4,923,829 |
Total Sharing Economy International Inc. stockholder's equity | 50,594,167 | 61,144,850 |
Non-controlling interest | (255,682) | 24,230 |
Total equity | 50,338,485 | 61,169,080 |
Total liabilities and equity | 59,807,538 | 70,555,617 |
Series A Preferred Stock | ||
EQUITY: | ||
Preferred stock value |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 12,500,000 | 12,500,000 |
Common stock, shares issued | 7,501,304 | 2,527,720 |
Common stock, shares outstanding | 7,501,304 | 2,527,720 |
Series A Preferred Stock | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 0 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
REVENUES | $ 2,517,201 | $ 2,629,217 | $ 7,655,321 | $ 10,998,438 |
COST OF REVENUES | 4,244,853 | 3,075,290 | 10,462,225 | 10,415,813 |
GROSS (LOSS) PROFIT | (1,727,652) | (446,073) | (2,806,904) | 582,625 |
OPERATING EXPENSES: | ||||
Depreciation | 273,555 | 276,940 | 862,303 | 814,654 |
Selling, general and administrative | 5,441,960 | 883,809 | 12,863,537 | 1,751,669 |
Research and development | 165,183 | 107,568 | 403,611 | 324,698 |
Bad debt expense | (30,000) | 2,395,983 | 1,285,990 | 2,395,983 |
Impairment loss | 1,922,674 | 1,922,674 | ||
Total operating expenses | 7,773,372 | 3,664,300 | 17,338,115 | 5,287,004 |
LOSS FROM OPERATIONS | (9,501,024) | (4,110,373) | (20,145,019) | (4,704,379) |
OTHER INCOME (EXPENSE): | ||||
Interest income | 6,324 | 3,205 | 15,402 | 10,925 |
Interest expense | (118,894) | (33,125) | (241,708) | (107,991) |
Loss on equity method investment | (8,892,458) | (39,060) | (9,038,303) | (81,871) |
Foreign currency transaction gain (loss) | 247 | (1,666) | ||
Other (loss) income | (67,529) | 478 | (68,254) | 47,618 |
Total other expense, net | (9,072,310) | (68,502) | (9,334,529) | (131,319) |
LOSS FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES | (18,573,334) | (4,178,875) | (29,479,548) | (4,835,698) |
PROVISIONS FOR INCOME TAXES: | ||||
Current | 113 | 11,196 | ||
Deferred | ||||
Total Income taxes provision | 113 | 11,196 | ||
LOSS FROM CONTINUING OPERATIONS | (18,573,334) | (4,178,988) | (29,479,548) | (4,846,894) |
DISCONTINUTED OPERATIONS: | ||||
Gain (loss) from discontinued operations, net of income taxes | (385) | (71,339) | 16,486 | (71,339) |
(LOSS) GAIN FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES | (385) | (71,339) | 16,486 | (71,339) |
NET LOSS | (18,573,719) | (4,250,327) | (29,463,062) | (4,918,233) |
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST | (377,258) | (683,411) | ||
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | (18,196,461) | (4,250,327) | (28,779,651) | (4,918,233) |
COMPREHENSIVE (LOSS) GAIN: | ||||
Net loss | (18,573,719) | (4,250,327) | (29,463,062) | (4,918,233) |
Unrealized foreign currency translation gain | (1,471,792) | 1,224,249 | (2,374,185) | 2,807,841 |
Comprehensive loss | (20,045,511) | (3,026,078) | (31,837,247) | (2,110,392) |
Net loss attributable to non-controlling interest | (377,258) | (683,411) | ||
Unrealized foreign currency translation gain (loss) from non-controlling interest | ||||
Comprehensive loss attributable to common stockholders | $ (19,668,253) | $ (3,026,078) | $ (31,153,836) | $ (2,110,392) |
NET (LOSS) GAIN PER COMMON SHARE: | ||||
Continuing operations - basic and diluted | $ (2.56) | $ (2.1) | $ (8) | $ (2.96) |
Discontinued operations - basic and diluted | 0 | (0.04) | 0.01 | (0.04) |
Net loss per common share - basic and diluted | $ (2.56) | $ (2.14) | $ (7.99) | $ (3) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||
Basic and diluted | 7,100,416 | 1,988,794 | 3,598,265 | 1,635,223 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (29,463,062) | $ (4,918,233) |
Adjustments to reconcile net loss from operations to net cash provided by operating activities: | ||
Depreciation | 3,080,857 | 2,937,696 |
Amortization of intangible assets | 299,373 | 241,464 |
Bad debt allowance | 1,285,990 | 1,892,821 |
Bad debt recovery - discontinued operations | (16,899) | |
Impairment loss of intangible asset | 1,922,674 | |
Loss on equity method investment | 9,038,303 | 81,871 |
Stock-based employment compensation | 879,258 | 482,243 |
Stock-based professional fees | 9,132,385 | |
Stock-based donation | 241,860 | |
Amortization of debt discount | 115,836 | |
Amortization of license fee | 210,213 | |
Changes in operating assets and liabilities: | ||
Notes receivable | 382,776 | (111,669) |
Accounts receivable | 2,449,872 | (415,467) |
Inventories | (1,011,749) | (1,499,147) |
Prepaid and other current assets | (1,021,180) | 929,997 |
Advances to suppliers | 720,730 | (1,363,517) |
Assets of discontinued operations | 200,197 | 116,061 |
Accounts payable | (434,324) | 1,506,286 |
Accrued expenses | 142,124 | (166,965) |
VAT and service taxes payable | (41,153) | |
Income taxes payable | (20,390) | |
Advances from customers | (1,226,059) | 552,352 |
Liabilities of discontinued operations | (132,916) | (221,741) |
Net cash used in operating activities | (3,203,741) | (17,491) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Proceed received from acquisition | 2,341 | |
Proceed received from sale of subsidiary, in cash | 2,115,842 | |
Purchase of property and equipment | (74,466) | (86,402) |
Net cash (used in) provided by investing activities | (72,125) | 2,029,440 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceed from convertible note | 900,000 | |
Offering costs paid | (195,018) | |
Proceeds from bank loan | 1,856,198 | 1,248,932 |
Repayments of bank loan | (1,303,941) | (1,469,332) |
Decrease in bank acceptance notes payable | (268,458) | (191,014) |
Advance from related party | 1,810,815 | 351,430 |
Proceeds from sale of common stock, net | 256,410 | 860,000 |
Net cash provided by financing activities | 3,056,006 | 800,016 |
Effect of exchange rate changes | (274,378) | 159,686 |
Net increase in cash, cash equivalents and restricted cash | (494,238) | 2,971,651 |
Cash, cash equivalents and restricted cash - beginning of period | 1,292,428 | 2,032,545 |
Cash, cash equivalents and restricted cash - end of period | 798,190 | 5,004,196 |
Cash paid in continuing operations for: | ||
Interest | 88,372 | 107,991 |
Income taxes | 12,808 | |
Cash paid in discontinued operations for: | ||
Interest | ||
Income taxes | ||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Stock issued for future services to consultants and vendors | 6,335,098 | 1,083,967 |
Stock issued for accrued liabilities | 28,400 | |
Stock issued for future services to employees and directors | 496,654 | |
Stock issued for repayment of convertible note | 670,335 | |
Stock issued for acquisition of subsidiaries | 976,984 | |
Stock issued for prepayment of license fee - related party | 829,787 | |
Stock issued for prepayment of rental & management fee | 1,048,659 | |
Increase in prepaid expenses and other from sale of equipment | $ 1,306,677 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) (Additional Information) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Including Disposal Group and Discontinued Operations [Abstract] | |||
Cash and cash equivalents at beginning of period | $ 1,019,437 | $ 4,774,697 | $ 1,481,498 |
Restricted cash at beginning of period | 272,991 | 229,499 | 551,047 |
Restricted cash included in discontinued operations at beginning of period | |||
Cash, cash equivalents and restricted cash - beginning of period | 1,292,428 | 5,004,196 | 2,032,545 |
Cash and cash equivalents at end of period | 707,101 | 1,019,437 | 4,774,697 |
Restricted cash at end of period | 91,089 | 272,991 | 229,499 |
Restricted cash included in discontinued operations at end of period | |||
Cash, cash equivalents and restricted cash - end of period | $ 798,190 | $ 1,292,428 | $ 5,004,196 |
Description of Business and Org
Description of Business and Organization | 9 Months Ended |
Sep. 30, 2018 | |
Description of Business and Organization [Abstract] | |
DESCRIPTION OF BUSINESS AND ORGANIZATION | NOTE 1 – DESCRIPTION OF BUSINESS AND ORGANIZATION Sharing Economy International Inc. (the “Company”) was incorporated in Delaware on June 24, 1987 under the name of Malex, Inc. On December 18, 2007, the Company’s corporate name was changed to China Wind Systems, Inc. and on June 13, 2011, the Company changed its corporate name to Cleantech Solutions International, Inc. On August 7, 2012, the Company was converted into a Nevada corporation. On January 8, 2018, the Company changed its corporate name to Sharing Economy International Inc. Through its affiliated companies, the Company manufactures and sells textile dyeing and finishing machines. The Company is the sole owner of Fulland Limited (“Fulland”), a Cayman Island limited liability company, which was organized on May 9, 2007. Fulland owns 100% of the capital stock of Green Power Environment Technology (Shanghai) Co., Ltd. (“Green Power”) and, until December 30, 2016, Fulland owned 100% of Wuxi Fulland Wind Energy Equipment Co., Ltd. (“Fulland Wind”). Green Power is and Fulland Wind was a wholly foreign-owned enterprise (“WFOE”) organized under the laws of the People’s Republic of China (“PRC” or “China”). Green Power is a party to a series of contractual arrangements, as fully described below, dated October 12, 2007 with Wuxi Huayang Heavy Industries, Co., Ltd. (“Heavy Industries”), formerly known as Wuxi Huayang Electrical Power Equipment Co., Ltd., and Wuxi Huayang Dyeing Machinery Co., Ltd. (“Dyeing”), both of which are limited liability companies organized under the laws of, and based in, the PRC. Heavy Industries and Dyeing are sometimes collectively referred to as the “Huayang Companies.” Fulland was organized by the owners of the Huayang Companies as a special purpose vehicle for purposes of raising capital in accordance with requirements of the PRC State Administration of Foreign Exchange (“SAFE”). On May 31, 2007, SAFE issued an official notice known as Hui Zong Fa [2007] No. 106 (“Circular 106”), which requires the owners of any Chinese company to obtain SAFE’s approval before establishing any offshore holding company structure for foreign financing as well as subsequent acquisition matters in China. Accordingly, the owners of the Huayang Companies, Mr. Jianhua Wu and his wife, Ms. Lihua Tang, submitted their application to SAFE in early September 2007. On October 11, 2007, SAFE approved their application, permitting these Chinese citizens to establish Fulland as a special purpose vehicle for any foreign ownership and capital raising activities by the Huayang Companies. Dyeing, which was formed on August 17, 1995, produces and sells a variety of high and low temperature dyeing and finishing machinery for the textile industry. The Company refers to this segment as the dyeing and finishing equipment segment. On December 26, 2016, Dyeing and an unrelated individual formed Wuxi Shengxin New Energy Engineering Co., Ltd. (“Shengxin”), a limited liability company organized under the laws of the PRC in which Dyeing has a 30% equity interest and the unrelated third party holds a 70% interest, pursuant to an agreement dated December 23, 2016. Shengxin intends to develop, construct and maintain photovoltaic power generation projects, known as solar farms, in China, mainly in the provinces of GuiZhou and YunNan. . In April 2018, Shengxin secured and invested in a large solar PV project in GuiZhou province. Shengxin paid RMB40.0 million for the project rights and also engaged a local contractor to proceed with building the project. However, on June 1, 2018, the Chinese government halted installation of new solar farms for the remainder of the year and reduced subsidies for projects already under construction. In September 2018, due to significance doubt about the status of this project and recoverability of the Company’s investment, the Company fully impaired the value of its investment in Shengxin (See Note 6). Fulland Wind was formed on August 27, 2008. In 2009, the Company began to produce and sell forged products through Fulland Wind. Through Fulland Wind, the Company manufactured and sold forged products, including wind products such as shafts, rolled rings, gear rims, gearboxes, bearings and other components and finished products and assemblies for the wind power and other industries, including large-scale equipment used in the manufacturing process for the various industries. The Company referred to this segment of its business as the forged rolled rings and related components segment. On December 30, 2016, Fulland sold the stock of Fulland Wind and accordingly, the forged rolled rings and related components business is reflected as a discontinued operation for all periods presented (See Note 3). Beginning in February 2015, Heavy Industries began to produce equipment for the petroleum and chemical industries. The Company referred to this segment of its business as the petroleum and chemical equipment segment. Because of a significant decline in revenues from this segment, the Company determined it would not continue to operate in this segment and accordingly, the petroleum and chemical equipment segment is reflected as discontinued operations for all periods presented (See Note 3). As a result of the discontinuation of the forged rolled rings and the petroleum and chemical equipment business, the Company’s business primarily consists of the dyeing and finishing equipment business as its primary continuing operations since December 31, 2016. The Company’s latest business initiatives are focused on targeting the technology and global sharing economy markets, by developing online platforms and rental business partnerships that will drive the global development of sharing through economical rental business models. In connection with the new business initiatives, the Company formed or acquired the following subsidiaries: ● Vantage Ultimate Limited (“Vantage”), a company incorporated under the laws of British Virgin Islands on February 1, 2017 and is wholly-owned by the Company. ● Sharing Economy Investment Limited (“Sharing Economy”), a company incorporated under the laws of British Virgin Islands on May 18, 2017 and is wholly-owned by Vantage. ● EC Advertising Limited (“EC Advertising”), a company incorporated under the laws of Hong Kong on March 17, 2017 and is a wholly-owned by Sharing Economy. ● EC Rental Limited (“EC Rental”), a company incorporated under the laws of British Virgin Islands on May 22, 2017 and is wholly-owned by Vantage. ● EC Assets Management Limited (“EC Assets”), a company incorporated under the laws of British Virgin Islands on May 22, 2017 and is wholly-owned by Vantage. ● EC (Fly Car) Limited, a company incorporated under the laws of British Virgin Islands on May 22, 2017 and is a wholly-owned by Sharing Economy. ● Global Bike Share (Mobile App) Limited, a company incorporated under the laws of British Virgin Islands on May 23, 2017 and is a wholly-owned by Sharing Economy. ● EC Power (Global) Technology Limited (“EC Power”), a company incorporated under the laws of British Virgin Islands on May 26, 2017 and is wholly-owned by EC Rental. ● ECPower (HK) Company Limited, a company incorporated under the laws of Hong Kong on June 23, 2017 and is wholly-owned by EC Power. ● EC Manpower Limited, a company incorporated under the laws of Hong Kong on July 3, 2017 and is wholly-owned by Vantage. ● EC Technology & Innovations Limited (“EC Technology”), a company incorporated under the laws of British Virgin Islands on September 1, 2017 and is wholly-owned by Vantage. ● Inspirit Studio Limited (“Inspirit Studios”), a company incorporated under the laws of Hong Kong on August 24, 2015, and 51% of its shareholding was acquired by EC Technology on December 8, 2017. ● EC Creative Limited (“EC Creative”), a company incorporated under the laws of British Virgin Islands on January 9, 2018 and is wholly-owned by Vantage. ● 3D Discovery Co. Limited (“3D Discovery”), a company incorporated under the laws of Hong Kong on February 24, 2015, and 60% of its shareholdings was acquired by EC Technology on January 19, 2018. ● Sharing Film International Limited, a company incorporated under the laws of Hong Kong on January 22, 2018 and is a wholly-owned by EC Creative. ● AnyWorkspace Limited (“AnyWorkspace”), a company incorporated under the laws of Hong Kong on November 12, 2015, and 80% of its shareholding was acquired by Sharing Economy on January 30, 2018. ● Xiamen Great Media Company Limited (“Xiamen Great Media”), a company incorporated under the laws of the PRC on September 5, 2018 and is a wholly-owned by EC Advertising. Reverse split; change in authorized common stock On February 24, 2017, the Company filed a certificate of change which effected a one-for-four reverse split, which became effective in the marketplace on March 20, 2017, and a reduction in the Company’s authorized common stock from 50,000,000 shares to 12,500,000 shares. These consolidated financial statements have been retroactively restated to reflect this reverse split. Going concern These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, the Company had a net loss of approximately $18,574,000 and $29,463,000 for the three and nine months ended September 30, 2018. The net cash used in operations was approximately $3,204,000 for the nine months ended September 30, 2018. During the three and nine months ended September 30, 2018, revenues, substantially all of which are derived from the manufacture and sales of textile dyeing and finishing equipment, decreased by 4.3% and 30.4% as compared to the three and nine months ended September 30, 2017, respectively. Additionally, the Company recorded an impairment loss of approximately $1,923,000 related to the write off of its patent use rights and in September 2018. Due to significance doubt about the status and recoverability of the Company’s equity method investment in Shengxin, the Company fully impaired the value of its investment in Shengxin (See Note 6). Management believes that these matters raise substantial doubt about the Company’s ability to continue as a going concern. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive or raise additional debt and/or equity capital. Management believes that its capital resources are not currently adequate to continue operating and maintaining its business strategy for twelve months from the date of this report. The Company may seek to raise capital through additional debt and/or equity financings to fund its operations in the future. Although the Company has historically raised capital from sales of equity, from convertible debt and from bank loans, there is no assurance that it will be able to continue to do so. If the Company is unable to raise additional capital or secure additional lending in the near future, management expects that the Company will need to curtail or cease operations. The accompanying consolidated financial statements do not include any adjustments related to the recoverability and or classification of recorded asset amounts and or classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Nasdaq Listing On October 8, 2018, the Company received a staff deficiency notice from The Nasdaq Stock Market (“Nasdaq”) informing the Company that it has failed to comply with Nasdaq’s shareholder approval requirements set forth in Listing Rule 5635(c) (the “Rule”). During the period from May 11, 2017 to date, the Company entered into approximately one hundred arrangements resulting in the issuance or potential issuance of more than three million shares to officers, directors, employees, and consultants (“Equity Compensation Grants”). The Company did not receive shareholder approval for the Equity Compensation Grants, and the shares were not issued from a shareholder approval equity compensation plan. The Company submitted its plan to regain compliance (“Plan of Compliance”) on October 26, 2018. If the Plan of Compliance is accepted, Nasdaq can grant an extension of up to one hundred eighty calendar days from October 8, 2018 to evidence compliance. The Company believes that it has otherwise been compliant with its filing obligations pursuant to the Securities Exchange Act of 1934, as amended, including making all appropriate disclosures to the marketplace. The Company is currently doing everything possible to cure its deficiencies regarding the Rule. Basis of presentation In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2017 and footnotes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on April 11, 2018. The consolidated balance sheet as of December 31, 2017 contained herein has been derived from the audited consolidated financial statements as of December 31, 2017, but does not include all disclosures required by the generally accepted accounting principles in the U.S. (“U.S. GAAP”). Principles of Consolidation The Company’s unaudited condensed consolidated financial statements include the financial statements of its wholly-owned and majority owned subsidiaries, as well as the financial statements of the Huayang Companies, including Dyeing, which conducts the Company’s continuing operations, and Heavy Industries, which operated discontinued operations. All significant intercompany accounts and transactions have been eliminated in consolidation. On December 30, 2016, the Company sold and transferred its 100% interest in Fulland Wind to an unrelated party and discontinued the Company’s forged rolled rings and related components business. Additionally, the Company’s management decided to discontinue its petroleum and chemical equipment segment due to significant declines in revenues and the loss of its major customer. As such, forged rolled rings and related components segment’s and petroleum and chemical segment’s assets and liabilities have been classified on the consolidated balance sheets as assets and liabilities of discontinued operations as of September 30, 2018 and December 31, 2017. The operating results of the forged rolled rings and related components and petroleum and chemical segments have been classified as discontinued operations in our consolidated statements of operations for all years presented. Unless otherwise indicated, all disclosures and amounts in the notes to the consolidated financial statements are related to the Company’s continuing operations. Pursuant to Accounting Standards Codification (“ASC”) Topic 810, the Huayang Companies are considered variable interest entities (“VIE”), and the Company is the primary beneficiary. The Company’s relationships with the Huayang Companies and their shareholders are governed by a series of contractual arrangements between Green Power, the Company’s wholly foreign-owned enterprise in the PRC, and each of the Huayang Companies, which are the operating companies of the Company in the PRC. Under PRC laws, each of Green Power, Dyeing and Heavy Industries is an independent legal entity and none of them is exposed to liabilities incurred by the other parties. The contractual arrangements constitute valid and binding obligations of the parties of such agreements. Each of the contractual arrangements and the rights and obligations of the parties thereto are enforceable and valid in accordance with the laws of the PRC. On October 12, 2007, the Company entered into the following contractual arrangements with each of Dyeing and Heavy Industries: Consulting Services Agreement. Operating Agreement. Equity Pledge Agreement. Option Agreement. Pursuant to ASC Topic 810 and related subtopics related to the consolidation of variable interest entities, the accounts of the Huayang Companies are consolidated in the accompanying financial statements. As VIEs, the Huayang Companies’ sales are included in the Company’s total sales, its income from operations is consolidated with the Company’s, and the Company’s net income includes all of the Huayang Companies net income. The Company does not record non-controlling interest on these VIE’s and, accordingly, did not subtract any net income in calculating the net income of the VIEs that is attributable to the Company. Because of the contractual arrangements, the Company has a pecuniary interest in the Huayang Companies that requires consolidation of the Company’s and the Huayang Companies’ financial statements. There are substantial uncertainties regarding the interpretation, application and enforcement of PRC laws and regulations, including but not limited to the laws and regulations governing the Company’s business or the enforcement and performance of its contractual arrangements. These contractual arrangements may not be as effective in providing the Company with control over the VIEs as direct ownership. Due to its VIE structure, the Company has to rely on contractual rights to effect control and management of the VIEs, which exposes it to the risk of potential breach of contract by the shareholders of the VIEs for a number of reasons. For example, their interests as shareholders of the VIEs and the interests of the Company may have conflict and the Company may fail to resolve such conflicts; the shareholders may believe that breaching the contracts will lead to greater economic benefit for them; or the shareholders may otherwise act in bad faith. If any of the foregoing were to happen, the Company may have to rely on legal or arbitral proceedings to enforce its contractual rights, including specific performance or injunctive relief, and claiming damages. Such arbitral and legal proceedings may cost substantial financial and other resources, and result in a disruption of its business, and the Company cannot assure that the outcome will be in its favor. In addition, as all of these contractual arrangements are governed by PRC law and provide for the resolution of disputes through either arbitration or litigation in the PRC, they would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal environment in the PRC is not as developed as in other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could further limit the Company’s ability to enforce these contractual arrangements. Furthermore, these contracts may not be enforceable in China if PRC government authorities or courts take a view that such contracts contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. In the events that the Company is unable to enforce any of these agreements, the Company would not be able to exert effective control over the affected VIEs and consequently, the results of operations, assets and liabilities of the affected VIEs and their subsidiaries would not be included in the Company’s consolidated financial statements. If such were the case, the Company’s cash flows, financial position and operating performance would be materially adversely affected. The Company’s agreements with respect to its consolidated VIEs are approved and in place. The Company’s management believes that such agreements are enforceable and considers it a remote possibility that PRC regulatory authorities with jurisdiction over the Company’s operations and contractual relationships would find the agreements to be unenforceable under existing laws. The carrying amount of the VIE’s assets and liabilities are included in the accompanying consolidated financial statements of the Company and are summarized as follows: September 30, December 31, Current assets Cash $ 477,767 $ 806,672 Accounts receivable, net 4,778,324 9,059,015 Inventory, net 5,264,334 4,553,559 Other current assets 4,799,613 5,901,119 Total current assets 15,320,038 20,320,365 Equity method investment - 9,053,859 Property and equipment, net 28,479,902 33,115,975 Intangible assets, net 2,953,687 5,302,047 Total assets 46,753,627 67,792,246 Liabilities Current liabilities 5,788,136 7,629,783 Intercompany payables * 13,327,345 13,855,768 Other liabilities, non-current 282,605 - Total liabilities 19,398,086 21,485,551 Net assets $ 27,355,541 $ 46,306,695 * Intercompany payables are eliminated in consolidation. Use of estimates The preparation of the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates. Significant estimates in the three and nine months ended September 30, 2018 and 2017 include the allowance for doubtful accounts on accounts and other receivables, the allowance for obsolete inventory, the useful life of property and equipment and intangible assets, assumptions used in assessing impairment of long-term assets and valuation of deferred tax assets, the fair value of equity method investment, the fair value of assets held for sale, accruals for taxes due, and the value of stock-based compensation. Cash and cash equivalents For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents. The Company maintains with various financial institutions mainly in the PRC, Hong Kong and the U.S. At September 30, 2018 and December 31, 2017, cash balances held in PRC and Hong Kong banks of $695,214 and $952,663, respectively, are uninsured. Fair value of financial instruments The Company adopted the guidance of ASC Topic 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2 - Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3 - Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The Company did not measure these assets at fair value at September 30, 2018 and December 31, 2017. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, restricted cash, notes receivable, accounts receivable, inventories, advances to suppliers, deferred tax assets, receivable from sale of subsidiary, prepaid expenses and other, short-term bank loans, bank acceptance notes payable, note payable, accounts payable, accrued liabilities, advances from customers, amount due to a related party, VAT and service taxes payable and income taxes payable approximate their fair market value based on the short-term maturity of these instruments . ASC Topic 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments. Concentrations of credit risk The Company’s operations are carried out in the PRC and Hong Kong. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC and Hong Kong, and by the general state of the economies in the PRC and Hong Kong. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America. 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. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. Substantially all of the Company’s cash is maintained with state-owned banks within the PRC and Hong Kong, and none of these deposits are covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts. A significant portion of the Company’s sales are credit sales which are primarily to customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables is limited due to generally short payment terms. The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk. At September 30, 2018 and December 31, 2017, the Company’s cash balances by geographic area were as follows: Country: September 30, December 31, United States $ 11,887 1.68 % $ 66,774 6.55 % Hong Kong 214,565 30.34 % 142,944 14.02 % China 480,649 67.98 % 809,719 79.43 % Total cash and cash equivalents $ 707,101 100.00 % $ 1,019,437 100.00 % Restricted cash Restricted cash mainly consists of cash deposits held by various banks in the PRC to secure bank acceptance notes payable. The Company’s restricted cash totaled $91,089 and $272,991 at September 30, 2018 and December 31, 2017, respectively. Notes receivable Notes receivable represents trade accounts receivable due from customers where the customers’ bank has guaranteed the payment of the receivable. This amount is non-interest bearing and is normally paid within three and nine months. Historically, the Company has experienced no losses on notes receivable. The Company’s notes receivable totaled $73,624 and $461,292 at September 30, 2018 and December 31, 2017, respectively. Accounts receivable Accounts receivable are presented net of an allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collection. At September 30, 2018 and December 31, 2017, the Company has established, based on a review of its outstanding balances, an allowance for doubtful accounts in the amounts of $8,892,723 and $8,115,876, respectively. Inventories Inventories, consisting of raw materials, work in process and finished goods related to the Company’s products are stated at the lower of cost or market utilizing the weighted average method. A reserve is established when management determines that certain inventories may not be saleable. If inventory costs exceed expected market value due to obsolescence or quantities in excess of expected demand, the Company will record reserves for the difference between the cost and the market value. These reserves are recorded based on estimates. The Company recorded an inventory reserve of $303,424 and $313,930 at September 30, 2018 and December 31, 2017, respectively. Advances to suppliers Advances to suppliers represent the cash paid in advance for the purchase of raw material from suppliers. The advance payments are intended to ensure preferential pricing and delivery. The amounts advanced under such arrangements totaled $1,231,022 and $2,023,779 at September 30, 2018 and December 31, 2017, respectively. Property and equipment Property and equipment are carried at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in the statements of operations in the year of disposition. The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. Equity method investment Investments in which the Company has the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in the long-term assets on the consolidated balance sheets. Under this method of accounting, the Company’s share of the net earnings or losses of the investee is presented below the income tax line on the consolidated statements of operations. The Company evaluates its equity method investment whenever events or changes in circumstance indicate that the carrying amounts of such investment may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in the current period. In September 2018, the Company impaired the value of its equity method investment (See Note 6). Impairment of long-lived assets and intangible asset In accordance with ASC Topic 360, the Company reviews long-lived assets and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. During the nine months ended September 30, 2018 and 2017, the Company did not record any impairment charges on long-lived assets. During the nine months ended September 30, 2018 and 2017, the Company recorded impairment loss on intangible asset of $1,922,674 and $0, respectively. Advances from customers Advances from customers at September 30, 2018 and December 31, 2017 amounted to $1,159,530 and $2,454,375, respectively, and consist of prepayments from customers for merchandise that had not yet been shipped. The Company will recognize the deposits as revenue when customers take delivery of the goods and title to the assets is transferred to customers in accordance with the Company’s revenue recognition policy. Revenue recognition In May 2014, FASB issued an update Accounting Standards Update (“ASU”) (“ASU 2014-09”) establishing Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers The Company recognizes revenues from the sale of equipment upon shipment and transfer of title. The other elements may include installation and, generally, a one-year warranty. Equipment installation revenue is valued based on estimated service person hours to complete installation and is recognized when the labor has been completed and the equipment has been accepted by the customer, which is generally within a couple days of the delivery of the equipment. Warranty revenue is valued based on esti |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2018 | |
Acquisitions [Abstract] | |
ACQUISITIONS | NOTE 2 – ACQUISITIONS On January 19, 2018 (the “Closing Date”), the Company completed the acquisition of 60% of the issued and outstanding capital stock of 3D Discovery Co. Limited (“3D Discovery”), a company incorporation in Hong Kong, from its shareholders pursuant to the terms and conditions of a Sale and Purchase Agreement entered into among the Company and the 3D Discovery Stockholders on the Closing Date (the “Acquisition Agreement”). 3D Discovery is a digital marketing services provider which provides various solution such as 3D scanning and modeling, website and mobile app development, video production, and graphic design to its clients. Apart from its existing business, 3D Discovery plans to develop a mobile app which allows users to create an interactive virtual tour of a physical space by using a mobile phone camera. In connection with the acquisition, the Company issued 68,610 unregistered shares of its common stock valued at $442,535, based on the acquisition-date fair value of our common stock of $6.45 per share based on the quoted market price of the Company’s common stock on the Closing date. On January 30, 2018 (the “Closing Date”), the Company completed the acquisition of 80% of the issued and outstanding capital stock of AnyWorkspace Limited (“AnyWorkspace”), a company incorporation in Hong Kong, from its shareholders pursuant to the terms and conditions of a Sale and Purchase Agreement entered into among the Company and the AnyWorkspace Stockholders on the Closing Date (the “Acquisition Agreement”). AnyWorkspace develops an online, real-time marketplace that connects workspace providers with clients who need temporary office and meeting spaces. In connection with the acquisition, the Company issued 106,464 unregistered shares of its common stock valued at $534,449, based on the acquisition-date fair value of our common stock of $5.02 per share based on the quoted market price of the Company’s common stock on the Closing date. The fair value of the assets acquired and liabilities assumed were based on management estimates of the fair values on closing date of each respective acquisition. Based upon the purchase price allocations, the following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of each acquisition: Cash $ 2,374 Account receivable and prepayment 21,663 Property and equipment 9,222 Goodwill 53,201 Other intangible assets 1,300,805 Total assets acquired at fair value 1,387,265 Accounts payable and accrued expenses (6,294 ) Non-controlling interest assumed (403,987 ) Total liabilities and non-controlling interest assumed (410,281 ) Total purchase consideration $ 976,984 The assets acquired and liabilities assumed are recorded at their estimated fair value on the acquisition date with subsequent changes recognized in earnings or loss. These estimates are inherently uncertain and are subject to refinement. Management develops estimates based on assumptions as a part of the purchase price allocation process to value the assets acquired and liabilities assumed as of the business combination date. As a result, during the purchase price measurement period, which may be up to one year from the business acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. After the purchase price measurement period, the Company will record adjustments to assets acquired or liabilities assumed in operating expenses in the period in which the adjustments were determined. The purchase price exceeded the fair value of the net assets acquired by approximately $53,201, which was initially recorded as goodwill. Goodwill assigned represents the amount of consideration transferred in excess of the fair value assigned to identifiable assets acquired and liabilities assumed. ASC 350-30-35-4 requires that goodwill be tested for impairment on an annual basis and between annual tests when circumstances indicate that the recoverability of the carrying amount of goodwill may be in doubt. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Significant judgments required to estimate the fair value of reporting units include estimating future cash flows, determining appropriate discount rates and other assumptions. |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2018 | |
Discontinued Operations [Abstract] | |
DISCONTINUED OPERATIONS | NOTE 3 – DISCONTINUED OPERATIONS Pursuant to an agreement dated December 23, 2016, the Company, through its wholly-owned subsidiary Fulland, sold the stock of Fulland Wind to a third party for a sales price of RMB 48 million (approximately $6.9 million). The Company’s forging and related components business was conducted through Fulland Wind. The purchase price is payable in three installments. The Company received the first installment of RMB 14,400,000 (approximately $2.1 million) on December 28, 2016, and received the second installment of RMB14,400,000 (approximately $2.1 million) on April 10, 2017. The Company delivered Fulland Wind’s business license, seals, books and records, business contracts and personnel roster to the third party buyer on December 30, 2016, effectively the sale date. If the equity transfer registration formalities are completed within one year without any third party claims on the equity transfer, a final payment of RMB 19,200,000 (approximately $2.7 million) was due 25 working days after the expiration of such period. Pursuant to extension agreement dated December 31, 2017, the Company agreed the above third party buyer could paid off the final payment of RMB 19,200,000 (approximately $2.7 million) by December 31, 2018. As a result of the sale, the forged rolled rings and related components business is treated as a discontinued operation. Additionally, in December 2016, the Company’s management decided to discontinue its petroleum and chemical equipment segment due to significant decline in revenues and the loss of its major customers. Accordingly, the petroleum and chemical equipment segment business is treated as a discontinued operation. Pursuant to ASC Topic 205-20, Presentation of Financial Statements - Discontinued Operations, the business of the forging and related components segment and petroleum and chemical equipment segment are considered discontinued operations because: (a) the operations and cash flows of the forging and related components segment and petroleum and chemical equipment segment were eliminated from the Company’s operations; and (b) the Company has no interest in the divested operations. The results of operations from Fulland Wind and petroleum and chemical equipment segment for the three and nine months ended September 30, 2018 and 2017 have been classified to the loss from discontinued operations line on the accompanying unaudited condensed consolidated statements of operations and comprehensive loss presented herein. Contemporaneously with the sale of the Fulland Wind stock, pursuant to an agreement dated December 23, 2016, Heavy Industry entered into a lease with Wang Jiahong for a factory building owned by Heavy Industry at an annual rental of RMB680,566 (approximately $98,000). The lease had a ten-year term, commencing January 1, 2017. During 2017, the Company received RMB324,078 (approximately $49,800) in lease payments from the tenant. During the fourth quarter of 2017, Wang Jiahong orally terminated the above lease agreement and the Company is no longer received rental income. The assets and liabilities classified as discontinued operations in the Company’s consolidated financial statements as of September 30, 2018 and December 31, 2017, and for the three and nine months ended September 30, 2018 and 2017 is set forth below. September 30, December 31, Assets: Current assets: Accounts receivable, net $ 12,785 $ 33,646 Advances to suppliers - 144,583 Prepaid expenses and other 198,937 229,281 Total current assets 211,722 407,510 Total assets $ 211,722 $ 407,510 Liabilities: Current liabilities: Accounts payable $ 242,542 $ 387,887 Accrued expenses and other liabilities - 1,746 Total current liabilities 242,542 389,633 Total liabilities $ 242,542 $ 389,633 The summarized operating result of discontinued operations included in the Company’s unaudited condensed consolidated statements of operations is as follows: Three months ended Nine months ended 2018 2017 2018 2017 Revenues $ - $ - $ - $ - Cost of revenues 31,652 31,652 Gross loss (31,652 ) (31,652 ) Operating (expenses) income (385 ) (39,687 ) 16,486 (39,687 ) (Loss) income from operations (385 ) (71,339 ) 16,486 (71,339 ) Other income, net - - - - (Loss) gain from discontinued operations, net of income taxes $ (385 ) $ (71,339 ) $ 16,486 $ (71,339 ) |
Accounts Receivable
Accounts Receivable | 9 Months Ended |
Sep. 30, 2018 | |
Accounts Receivable [ Abstract] | |
ACCOUNTS RECEIVABLE | NOTE 4 – ACCOUNTS RECEIVABLE At September 30, 2018 and December 31, 2017, accounts receivable consisted of the following: September 30, December 31, Accounts receivable $ 13,721,536 $ 17,208,585 Less: allowance for doubtful accounts (8,892,723 ) (8,115,876 ) $ 4,828,813 $ 9,092,709 The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2018 | |
Inventories [Abstract] | |
INVENTORIES | NOTE 5 – INVENTORIES At September 30, 2018 and December 31, 2017, inventories consisted of the following: September 30, December 31, Raw materials $ 1,563,017 $ 998,751 Work-in-process 1,898,527 2,629,570 Finished goods 2,106,214 1,239,168 5,567,758 4,867,489 Less: reserve for obsolete inventories (303,424 ) (313,930 ) $ 5,264,334 $ 4,553,559 The Company establishes a reserve to mark down its inventories for estimated unmarketable inventories equal to the difference between the cost of inventories and the estimated net realizable value based on assumptions about the usability of the inventories, future demand and market conditions. For the nine months ended September 30, 2018 and 2017, the Company did not increase its reserve for obsolete inventory. |
Equity Method Investment
Equity Method Investment | 9 Months Ended |
Sep. 30, 2018 | |
Equity Method Investment [Abstract] | |
EQUITY METHOD INVESTMENT | NOTE 6 – EQUITY METHOD INVESTMENT On December 26, 2016, Dyeing and Xue Miao, an unrelated individual, formed Shengxin pursuant to an agreement dated December 23, 2016. The agreement sets forth general terms relating to the proposed business, but does not set forth specific funding obligations for either party. Dyeing has agreed to invest RMB 60,000,000 (approximately $9,543,000) and had invested RMB 59.8 million (approximately $9,511,000 at September 30, 2018), for which it received a 30% interest, and Mr. Xue has a commitment to invest RMB 140,000,000 (approximately $22.3 million), of which Mr. Xue has contributed RMB 60,000,000 (approximately $9.5 million), for which Mr. Xue received a 70% interest in Shengxin. Shengxin’s registered capital is RMB 200 million (approximately $31.8 million). Mr. Xue had advised Dyeing that he anticipated that he will fund the remaining RMB 80,000,000 (approximately $12.7 million) of his commitment during 2018. Since Mr. Xue did not make this payment by the end of 2017, Dyeing has the right to amend the contract, and both parties may adjust each side’s equity interest to reflect the amount of capital each side has actually invested. As of September 30, 2018, no changes have been made to such contract. Shengxin intends to develop, construct and maintain photovoltaic power generation projects, known as solar farms, in China, mainly in the provinces of GuiZhou and YunNan. The solar farm industry is China is subject to significant government regulation. In order to construct and operate solar farms in China, it is necessary to obtain a permit for a specific location, to obtain leasehold rights to a significant amount of contiguous land parcels in provinces where there is significant sunlight for most of the year to support a solar farm and to have an agreement to connect with the local grid. The development of solar farms requires significant funding, which, if financing is not available, would have to be provided by Dyeing and Mr. Xue. There are no agreements relating to the funding obligations of either Dyeing or Mr. Xue with respect to any specific project. Shengxin anticipates that to the extent that it obtains permits for solar farms, it will form a new subsidiary for the sole purpose of obtaining the permit for a specific location and constructing the solar farm at that location. The nature of the parties’ respective investments and the respective equity interest in any solar farm project will be determined on a case-by-case basis. To the extent that Mr. Xue develops the project, he may receive an equity interest in the project greater than the percentage of his equity investment, with the specific amount being subject to mutual agreement of the parties. The Company’s investment in Shengxin is subject to a high degree of risk. The Company cannot give any assurance that Shengxin will be able to obtain any permits, raise any required funding, develop and operate or sell any solar farms or operate profitably or that Dyeing will have the resources to provide any funds that may be required in order to fund any solar farm projects for which Shengxin may obtain permits. There may be a significant delay between the time funds are advanced for any project and the realization of revenue or cash flow from any project. In April 2018, Shengxin secured and invested in a large solar PV project in GuiZhou province. Shengxin paid RMB40.0 million for the project rights and also engaged a local contractor to proceed with building the project. However, on June 1, 2018, the Chinese government halted installation of new solar farms for the remainder of the year and reduced subsidies for projects already under construction. Accordingly, there is no guarantee that the Chinese government will invest in new solar farm or provide the subsidies needed to fund projects. At September 30, 2018, Shengxin’s assets consisted of cash, advances to supplier and fixed assets of approximately $48,000, $16.3 million and $14,000, respectively, and had no liabilities. At December 31, 2017, Shengxin’s assets consisted of cash, advances to supplier and fixed assets of approximately $17.3 million and $615,000 and $5,000, respectively, and had no liabilities. In September 2018, due to significance doubt about the status of this project and recoverability of the Company’s investment, the Company fully impaired the value of its investment in Shengxin in the amount of $8,835,834 which is included in the Company’s share of Shengxin losses on the accompanying consolidated statements of operations. For the three months ended September 30, 2018 and 2017, the Company’s share of Shengxin’s net loss were $56,624 and $39,060, respectively. For the nine months ended September 30, 2018 and 2017, the Company’s share of Shengxin’s net loss were $202,469 and $81,871, respectively. For the three and nine months ended September 30, 2018, the total loss on equity method investment in Shengxin were $8,892,458 and $9,038,303, respectively. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2018 | |
Property and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 7 – PROPERTY AND EQUIPMENT At September 30, 2018 and December 31, 2017, property and equipment consisted of the following: Useful life September 30, December 31, Office equipment and furniture 5 years $ 85,252 $ 71,120 Manufacturing equipment 5 - 10 years 32,617,253 34,419,653 Vehicles 5 years 243,712 253,564 Building and building improvements 5 - 20 years 21,329,517 22,556,026 Manufacturing equipment in progress - 3,458,448 3,657,936 Construction in progress - 1,563,567 1,652,859 59,297,749 62,611,158 Less: accumulated depreciation (30,756,627 ) (29,430,039 ) $ 28,541,122 $ 33,181,119 For the three months ended September 30, 2018 and 2017, depreciation expense amounted to $979,203 and $998,394, respectively, of which $705,648 and $721,042, respectively, was included in cost of revenues, and the remainder was included in operating expenses. For the nine months ended September 30, 2018 and 2017, depreciation expense amounted to $3,080,857 and $2,937,696, respectively, of which $2,218,554 and $2,123,042, respectively, was included in cost of revenues, and the remainder was included in operating expenses. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2018 | |
Intangible Assets [Abstract] | |
INTANGIBLE ASSETS | NOTE 8 – INTANGIBLE ASSETS At September 30, 2018 and December 31, 2017, intangible assets consisted of the following: Useful life September 30, December 31, Land use rights 45 - 50 years $ 3,923,565 $ 4,149,181 Patent use rights 10 years - 2,458,701 Other intangible assets 3 - 5 years 1,529,867 92,249 Goodwill - 53,143 - 5,506,575 6,700,131 Less: accumulated amortization (1,066,192 ) (1,305,835 ) $ 4,440,383 $ 5,394,296 Amortization of intangible assets attributable to future periods is as follows: Year ending September 30: Amount 2019 $ 565,996 2020 565,996 2021 529,522 2022 103,743 2023 97,795 Thereafter 2,524,187 $ 4,387,240 There is no private ownership of land in China. Land is owned by the government and the government grants land use rights for specified terms. The Company’s land use rights have terms of 45 and 50 years and expire on January 1, 2053 and October 30, 2053. The Company amortizes the land use rights over the term of the respective land use right. In August 2016, the Company purchased a patent technology use right, value at RMB16,000,000, for a ten-year term from a third party. This patent covers ozone-ultrasonic textile dyeing equipment. The Company amortizes the exclusive patent use right over a term of ten years. Given the current poor market conditions for dying machine industry, customers are either getting shut down for environmental reasons or moving to south east Asia, raw material prices are increasing rapidly, labor cost and related benefit expenses increasing a lot as well, which credit market is extremely tight. The Company believes that the ultra-ozone patent will probably not yield the expecting value. On September 30, 2018, the Company decided to impair the net book value of this patent and recorded an impairment loss of $1,922,674. In January 2018, in connection the acquisition of 3D Discovery and AnyWorkspace, the Company acquired their technologies valued at $754,495 and $682,411 respectively. The technology of 3D Discovery covers a 3D virtual tour solution for the property industry. The technology of AnyWorkspace covers management software for an online, real-time marketplace that connects workspace providers with clients who need temporary office and meeting spaces. Additionally. during the nine months ended September 30, 2018, Inspirit Studio developed its sharing economy mobile platform, namely BuddiGo, and capitalized costs amounting to $88,983. The BuddiGo application was launched in June 2018. The Company amortizes these technologies over a term of five years. For the three months ended September 30, 2018 and 2017, amortization of intangible assets amounted to $99,177 and $82,104, respectively. For the nine months ended September 30, 2018 and 2017, amortization of intangible assets amounted to $299,373 and $241,464, respectively. |
Short-Term Bank Loans
Short-Term Bank Loans | 9 Months Ended |
Sep. 30, 2018 | |
Short-Term Bank Loans / Convertible Note Payable [Abstract] | |
SHORT-TERM BANK LOANS | NOTE 9 – SHORT-TERM BANK LOANS Short-term bank loans represent amounts due to various banks that are due within one year. These loans can be renewed with these banks upon maturities. At September 30, 2018 and December 31, 2017, short-term bank loans consisted of the following: September 30, December 31, Loan from Bank of China, due on December 4, 2018 with annual interest rate of 6.09%, secured by certain assets of the Company $ 363,282 $ 384,172 Loan from Bank of China, due on December 6, 2018 with annual interest rate of 6.09%, secured by certain assets of the Company 363,282 384,172 Loan from Bank of Wuxi Nongshuang, due on April 25, 2018 with annual interest rate of 5.87%, secured by certain assets of the Company - 691,510 Loan from Bank of Wuxi Nongshuang, due on February 22, 2019 with annual interest rate of 5.87%, secured by certain assets of the Company 653,909 - Loan from Bank of Communication, due on September 20, 2019 with annual interest rate of 5.85%, secured by certain assets of the Company - 614,675 Loan from Bank of Communication, due on September 25, 2018 with annual interest rate of 5.85%, secured by certain assets of the Company 581,252 Loan from Zhongli International Finance Corporation, credit line of RMB4,500,000 (approximately $653,908), with a security deposit of RMB900,000 (approximately $130,782) which will be returned in 36 months, monthly installment of RMB210,000 (approximately $30,516) in the 1 st th th th st th 240,521 - Total short-term bank loans $ 2,202,246 $ 2,074,529 * Long-term bank loans represent amounts due to various banks that are due more than one year. Long-term portion of loan from Zhongli International Finance Corporation is $282,605 as of September 30, 2018. Minimum 36-month installments under the loan agreement are as follows: 12-month periods ending September 30, Amount 2019 $ 366,189 2020 240,638 2021 170,888 Total minimum loan payments 777,715 Less: amount representing interest (123,807 ) Less: security deposit due (130,782 ) Present value of net minimum loan payment 523,127 Less: current portion 240,521 Long-term portion $ 282,605 Interest related to the short-term bank loans, which was $26,892 and $33,125 for the three months ended September 30, 2018 and 2017, and $88,372 and $107,991 for the nine months ended September 30, 2018 and 2017, respectively, is included in interest expense on the accompanying unaudited condensed consolidated statements of operations and comprehensive loss. |
Bank Acceptance Notes Payable
Bank Acceptance Notes Payable | 9 Months Ended |
Sep. 30, 2018 | |
Bank Acceptance Notes Payable [Abstract] | |
BANK ACCEPTANCE NOTES PAYABLE | NOTE 10 – BANK ACCEPTANCE NOTES PAYABLE Bank acceptance notes payable represent amounts due to banks which are collateralized. All bank acceptance notes payable are secured by the Company’s restricted cash which are deposits with various lenders. At September 30, 2018 and December 31, 2017, the Company’s bank acceptance notes payables consisted of the following: September 30, December 31, Bank of China, non-interest bearing, due on June 25, 2018, collateralized by 100% of restricted cash deposited $ - $ 115,252 Bank of Communication, non-interest bearing, due on March 24, 2018, collateralized by 100% of restricted cash deposited - 307,337 Bank of Communication, non-interest bearing, due on December 26, 2018, collateralized by 100% of restricted cash deposited 145,313 - Total $ 145,313 $ 422,589 |
Convertible Note Payable
Convertible Note Payable | 9 Months Ended |
Sep. 30, 2018 | |
Short-Term Bank Loans / Convertible Note Payable [Abstract] | |
CONVERTIBLE NOTE PAYABLE | NOTE 11 – CONVERTIBLE NOTE PAYABLE Note Purchase Agreement On October 9, 2017, the Company entered into a Note Purchase Agreement (the “NPA”) with Chong Ou Holdings Group Company Limited, a BVI company (the “Investor”) pursuant to which the Investor purchased a note for $670,000, bearing two percent (2%) interest per annum (the “Note”). The Note automatically converts into shares of common stock of the Company at a conversion price equal to $3.35 per share on January 8, 2018. The Company shall have the option, in its sole and absolute discretion, to repay the Outstanding Amount in full on or before the Conversion Date. On January 8, 2018, the Note was converted into 200,100 shares of common stock. Securities purchase agreement and related convertible note and warrants On May 2, 2018, pursuant to a securities purchase agreement, the Company closed a private placement of securities with Iliad Research and Trading, L.P. (the “Investor”) pursuant to which the Investor purchased a Convertible Promissory Note (the “Iliad Note”) in the original principal amount of $900,000, convertible into shares of common stock of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in the Iliad Note, and a two year Warrant to purchase 134,328 shares of Common Stock at an exercise price of $7.18 per share (the “Warrant”). In connection with the Iliad Note, the Company paid an original issue discount of $150,000 and paid issuance costs of $45,018 which will be reflected as a debt discount and amortized over the Iliad Note term. The Iliad Note bears interest at 10% per annum, is unsecured, and is due on the date that is fifteen months from May 2, 2018. The warrants shall expire on the last calendar day of the month in which the second anniversary of the Issue Date occurs. If the Company exercises its right to prepay this Iliad Note, the Company shall make payment to Investor of an amount in cash equal to 125% multiplied by the then Outstanding Balance of this Iliad Note. The Investor has the right at any time after May 2, 2018 until the Outstanding Balance has been paid in full to convert (each instance of conversion is referred to herein as a (“Lender Conversion”) all or any part of the Outstanding Balance into shares (“Lender Conversion Shares”) of fully paid and non-assessable common stock, $0.001 par value per share (“Common Stock”), of the Company as per the following conversion formula: ● the number of Lender Conversion Shares equals the amount being converted (the “Conversion Amount”) divided by the Lender Conversion Price (as defined below). All Investor Conversions shall be cashless and not require further payment from the Investor. Subject to adjustment as set forth in this Iliad Note, the price at which Investor has the right to convert all or any portion of the Outstanding Balance into Common Stock is $6.70 per share of Common Stock (the “Lender Conversion Price”). Beginning on the date that is six months after May 2, 2018, (the “Redemption Start Date”), Investor shall have the right, exercisable at any time in its sole and absolute discretion, to redeem all or any portion of the Iliad Note (such amount, the “Redemption Amount”) by providing the Company with a redemption notice, and each date on which Lender delivers a redemption notice. Payments of each Redemption Amount may be made (a) in cash, or (b) by converting such Redemption Amount into shares of Common Stock (“Redemption Conversion Shares”, and together with the Lender Conversion Shares, the “Conversion Shares”) (each, a “Redemption Conversion”) per the following formula: the number of Redemption Conversion Shares equals the portion of the applicable Redemption Amount being converted divided by the Redemption Conversion Price (as defined below), or (c) by any combination of the foregoing. Notwithstanding the foregoing, Borrower will not be entitled to elect a Redemption Conversion with respect to any portion of any applicable Redemption Amount and shall be required to pay the entire amount of such Redemption Amount in cash within thirty days, if (a) on the applicable Redemption Date there is an Equity Conditions Failure as defined in the Iliad Note, and such failure is not waived in writing by the Investor; or (b) the Redemption Conversion Price is below the Conversion Price Floor and the Company does not agree to waive the Conversion Price Floor. The Investor agrees to redeem at least the Minimum Redemption Amount in each thirty-day period following the Redemption Start Date. The Investor also agrees not to redeem more than the Minimum Redemption Amount in any thirty-day period following the Redemption Start Date in which the Redemption Conversion Price is less than the Conversion Floor Price. Subject to the adjustments set forth herein, the conversion price for each Redemption Conversion (the “Redemption Conversion Price”) shall be the lesser of (a) the Lender Conversion Price, and (b) the Market Price; provided, however This debt instrument includes embedded components including a put option. The Company evaluated these embedded components to determine whether they are embedded derivatives within the scope of ASC 815 that should be separately carried at fair value. ASC 815-15-25-1 provides guidance on when an embedded component should be separated from its host instrument and accounted for separately as a derivative. Based on this analysis, the Company believes that the put option is clearly and closely related to the debt instrument and does not meet the definition of a derivative. Accordingly, in connection with this Iliad Note, the Company recorded a debt discount for (a) the original issue discount of $150,000 (b) the relative fair value of the warrants issued of $152,490 and (c) legal fees and other fees paid in connection with the Iliad Note aggregating $45,018. There is no beneficial conversion feature on this Iliad Note. The debt discount shall be accreted on a straight line basis over the term of this Iliad Note. At September 30, 2018 and December 31, 2017, convertible debt consisted of the following: September 30, December 31, Principal $ 900,000 $ 670,000 Unamortized discount (231,672 ) - Convertible debt, net $ 668,328 $ 670,000 For the three months ended September 30, 2018, amortization of debt discount and accrued interest amounted to $69,502 and $22,500, respectively. For the nine months ended September 30, 2018, amortization of debt discount and accrued interest amounted to $115,836 and $37,500, respectively. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 12 – RELATED PARTY TRANSACTIONS License Agreement with ECrent Capital Holdings Limited On June 11, 2017, the Company entered into an Exclusivity Agreement (the “Exclusivity Agreement”) with ECrent Capital Holdings Limited (“ECrent”) the terms of which became effective on the same day. Pursuant to the Exclusivity Agreement, the Company and ECrent agreed to engage in exclusive discussions regarding a potential acquisition by the Company of ECrent and/or any of its subsidiaries or otherwise all or part of ECrent’s business and potential business cooperation between the two companies (collectively, the “Potential Transactions”) for a period of three months commencing from the date of the Exclusivity Agreement (the “Exclusive Period”). Ms. Deborah Yuen, an affiliate of YSK 1860 Co., Limited, which is a major shareholder of the Company, controls ECrent. ECrent agreed that, during the Exclusive Period, neither ECrent nor its agents, representatives or advisors will contact, solicit, discuss or negotiate with any third party with respect to any transaction relating to a transfer or pledge of securities of ECrent and/or its subsidiaries, a sale of ECrent’s business, a business cooperation or any other matters that may adversely affect the Potential Transactions or the parties’ discussion related thereto. The exclusivity period has been further extended to a period of 18 months commencing from June 20, 2018 pursuant to three amendment agreements dated September 11, 2017, January 23, 2018 and June 20, 2018. On May 8, 2018, amended on May 24, 2018 and amended on August 30, 2018, Sharing Economy entered into a License Agreement (the “Agreement”) with ECrent. In accordance with the terms of the Amendment, ECrent shall grant the Company an exclusive license to utilize certain software and trademarks in order to develop, launch, operate, commercialize, and maintain an online website platform in Taiwan, Thailand, India, Indonesia, Singapore, Malaysia, Philippines, Vietnam, Cambodia, Japan, and Korea until December 31, 2019. In consideration for the license, the Company granted ECrent 250,000 shares of common stock (the “Consideration Shares”), at an issue price of $1,040,000, or $4.16 per share, (based on the quoted market price of the Company’s common stock on the amended Agreement date of May 24, 2018). Pursuant to the terms of the Agreement, ECrent shall provide a guarantee on revenue and profit of $13,000,000 and $2,522,000, respectively. The Consideration Shares shall be reduced on a pro rata basis if there is a shortfall in the guaranteed revenue and/or profit. In connection with this agreement, during the three and nine months ended September 30, 2018, the Company recorded license fee expense of $145,213 and $210,213, respectively, which is included in cost of sales, and at September 30, 2018, recorded a prepaid license fee – related party of $829,787 which will be amortized over the remaining license period. Due to related parties Provisional Agreement with EC Assets Management Limited On June 21, 2018, EC Assets and Golden Value Finance Limited, entered into a Provisional Agreement for purchase and sale of the entire issued share capital of Future Ocean Limited, the owner of House No. 74 Cedar Drive (also known as House B31) the Redhill Peninsula Site D No. 18 Pak Pat Shan Road Hong Kong (the “Property”). Pursuant to the agreement, EC Assets has agreed to purchase Future Ocean Limited for HKD96 million. The parties intend to negotiate in good faith to enter into a formal agreement for the purchase and sale of the Property and close on or before December 31, 2018.There is no guarantee that the transaction will be consummated. In connection with this procurement, Ms. Deborah Yuen lent the Company HKD9.6 million (approximately $1,230,769) with non-interest bearing and due on demand as of September 30, 2018. YSK 1860 Co., Limited From time to time, during 2017 and 2018, the Company receive advances from YSK 1860 Co., Limited, who is the major shareholder of the Company for working capital purposes. These advances are non-interest bearing and are payable on demand. At September 30, 2018 and December 31, 2017, amounts due to YSK 1860 Co., Limited amounted to $927,635 and $347,589, respectively. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders' Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 13 – STOCKHOLDERS’ EQUITY Preferred stock designated On September 7, 2018, the Company filed with the State of Nevada a Certificate of Designation establishing the designations, preferences, limitations and relative rights of the Series A Preferred Stock (the “Designation”). The Designation authorized 10,000,000 shares of Series A Preferred Stock. Each share of Series A Preferred Stock shall be convertible into one (1) share of the Company’s common stock, at the option of the holder, on or after the date and subject to the conditions set forth in the Designation. Common stock issued for services During the nine months ended September 30, 2018, the Company has issued 426,870 shares as bonus to certain directors, employees and consultants for performance targets to be achieved for the year in 2018, and the Company has also issued 5,610 shares as salary and staff benefits. These shares were valued at the fair market value on the entitlement or grant date using the reported closing share price on the date of entitlement or grant. During the nine months ended September 30, 2018, the Company recorded stock-based compensation expense of $879,258 and prepaid expenses of $496,654 which will be amortized over the remaining service period. During the nine months ended September 30, 2018, pursuant to consulting and service agreements, the Company issued an aggregate of 3,422,120 shares of common stock to 94 consultants and vendors for the services rendered and to be rendered. These shares were valued at the fair market value on the grant date using the reported closing share price on the date of grant. As of September 30, 2018, in connection with the issuance of the shares to consultants and vendors, the Company recorded prepaid expenses of $7,159,087 which is being amortized over the respective service period. Additionally, the Company issued/will issue an additional 1,595,025 share of common stock to 36 consultants and vendors as follows: 1,255,588 shares between October 2018 and December 2018; 339,437 shares during year 2019, provided that these agreements are not terminated prior to the issuance of such shares and subject to the approval and execution of the Plan of Compliance currently under review by the Nasdaq. The initial fair value of these shares was valued at the fair market value on the grant or contract date using the reported closing share price on the date of contract or grant. The Company will recognize stock-based professional fees over the period during which the services are rendered by such consultant or vendor. At the end of each financial reporting period prior to issuance of these shares, the fair value of these shares is remeasured using the then-current fair value of the Company’s common stock. As of September 30, 2018, there was $2,633,897 of unvested stock-based consulting and service fees to be recognized over the remaining service periods. In October 2018, the Company mutually agreed or terminated the consulting and service agreements of 6 consultants and vendors. Both parties forgo their respective rights as stated in the agreements, the Company has no obligation to issue in aggregate of 614,929 shares in effect. For the nine months ended September 30, 2018, in connection with the above share issuances and the amortization of prepaid stock-based consulting and service fees from shares issued in 2017, the Company recorded stock-based consulting and service fees of $9,132,385 For part of the consultancy agreements, if, on the first date when the restrictive legend on the certificate of each lot of the shares issued to the consultant/vendor pursuant these agreements are removed and such lot of shares becomes freely tradeable in the NASDAQ Capital Market without restriction, the closing price of the shares drops below the issue price, the Company will compensate the consultants and vendors for the drop in value of such lot of shares, which will be calculated by multiplying the number of Shares by the difference between the closing price and the issue price (“Shortfall”). The total maximum number of shares issued for the Shortfall of these consultancy agreements shall not exceed 291,169 Shares. Additionally, pursuant to a two-year consulting agreement between the Company’s wholly-owned subsidiary, EC Advertising and an individual, the Company shall, within one month from the date of this Agreement (October 9, 2017), issue such number of ordinary shares of EC Advertising to the Consultant (or his nominee) so that he (or his nominee) will hold 15% of EC Advertising issued share capital as enlarged by the share issue pursuant to this agreement. Additionally, within one month after the Consultant achieves all the performance targets as outlined in the agreement, EC Advertising shall issue, or shall cause its major shareholder to transfer, such number of EC Advertising’s ordinary shares to the Consultant (or its nominee) so that he (and his nominee) will, together with the 15% issued share capital discussed above, hold a total of 49% of EC Advertising’s issued share capital as enlarged by the share issue or after the transfer (as the case may be). Performance targets include the achievement by the Company of total revenue of $10,000,000 and profit after tax of $4,000,000 during the term of the agreement. Common stock sold for cash In March 2018, pursuant to a stock purchase agreement, the Company sold 69,676 shares of common stock to an investor at a purchase price of $3.68 per share for net cash proceeds a total of $256,410. The Company did not engage a placement agent with respect to these sales. Common stock issued debt conversion In January 2018, the Company issued 200,100 shares of its common stock upon conversion of debt (see Note 11). Common stock issued in connection with acquisitions On January 19, 2018 (the “Closing Date”), the Company completed the acquisition of 60% of the issued and outstanding capital stock of 3D Discovery from its shareholders pursuant to the terms and conditions of a Sale and Purchase Agreement entered into among the Company and the 3D Discovery Stockholders on the Closing Date. In connection with the acquisition, the Company issued 68,610 unregistered shares of its common stock valued at $442,535, based on the acquisition-date fair value of our common stock of $6.45 per share based on the quoted market price of the Company’s common stock on the Closing date (See Note 2). On January 30, 2018 (the “Closing Date”), the Company completed the acquisition of 80% of the issued and outstanding capital stock of AnyWorkspace from its shareholders pursuant to the terms and conditions of a Sale and Purchase Agreement entered into among the Company and the AnyWorkspace Stockholders on the Closing Date. In connection with the acquisition, the Company issued 106,464 unregistered shares of its common stock valued at $534,449, based on the acquisition-date fair value of our common stock of $5.02 per share based on the quoted market price of the Company’s common stock on the Closing date (See Note 2). On June 26, 2018, pursuant to the sub-licensing agreement entered between the Company and a related party, Ecrent Capital Holdings Limited, the Company issued 250,000 unregistered shares of its common stock valued at $1,040,000, or $4.16 per share, based on the quoted market price of the Company’s common stock on the amended Agreement date of May 24, 2018. In connection with this agreement, during the three and nine months ended September 30, 2018, the Company recorded license fee expense of $145,213 and $210,213, respectively, which is included in cost of sales, and at September 30, 2018, recorded a prepaid license fee – related party of $829,787 which will be amortized over the remaining license period (see Note 12). Shares issued for donation On July 10, 2018, the Company issued 58,000 shares as donation to Ng Hong Man Educational Foundation Limited. The Foundation would use the funds raised from the donation to support and promote the delivery of education and the operation of the Foundation, to set up a co-working facility and community for training the low skill people, and to coordinate with schools and education institutes to support and promote the education of sharing economy to the teenage groups. These shares were valued at $241,860, or $4.17 per share, based on the quoted market price of the Company’s common stock on the donation date. In connection with this donation, during the three and nine months ended September 30, 2018, the Company recorded donation expense of $241,860 and $241,860, respectively, which is included in operating expenses. Shares issued in connection with Tenancy Agreement for office complex of Shaw Movie City Sharing Film International Limited (“Sharing Film”), a wholly owned subsidiary of the Company, entered into a tenancy agreement with Shaw Movie City Hong Kong Limited (“Landlord”). The Landlord let and Sharing Film took one level of office complex of Shaw Movie City for one year commencing from 1 November 2018 renewable on a yearly basis. On July 24, 2018, the Company issued 311,357 shares as the payment for the annual rental and part of the management fee for the one year tenure and 54,777 shares as the payment of part of the tenancy deposit. During the nine months ended September 30, 2018, the Company recorded stock-based rental and management fee of $26,773 and prepaid expenses of $1,048,659 which will be amortized over the remaining service period. The fair value of the tenancy deposit was valued at $189,185. |
Statutory Reserve
Statutory Reserve | 9 Months Ended |
Sep. 30, 2018 | |
Statutory Reserve [Abstract] | |
STATUTORY RESERVE | NOTE 14 – STATUTORY RESERVE The Company is required to make appropriations to statutory reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (the “PRC GAAP”). Appropriation to the statutory reserve should be at least 10% of the after tax net income determined in accordance with the PRC GAAP until the reserve is equal to 50% of the entities’ registered capital or members’ equity. The profit arrived at must be set off against any accumulated losses sustained by the Company in prior years, before allocation is made to the statutory reserve. Appropriation to the statutory reserve must be made before distribution of dividends to shareholders. The appropriation is required until the statutory reserve reaches 50% of the registered capital. This statutory reserve is not distributable in the form of cash dividends. As of September 30, 2018 and December 31, 2017, the Company appropriated the required 50% of its registered capital to statutory reserve for Dyeing and Heavy Industries. Accordingly, no additional statutory reserve for Dyeing and Heavy Industries are required for the period ended September 30, 2018. Green Power had loss since its establishment. No appropriation to statutory reserves for it was required as it incurred recurring net loss. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2018 | |
Segment Information [Abstract] | |
SEGMENT INFORMATION | NOTE 15 – SEGMENT INFORMATION During the three and nine months ended September 30, 2017, the Company operated in one reportable business segments, the manufacture of textile dyeing and finishing equipment segment. During the three and nine months ended September 30, 2018, the Company operated in two reportable business segments - (1) the manufacture of textile dyeing and finishing equipment segment, and (2) the Sharing Economy Segment which targets the technology and global sharing economy markets, by developing online platforms and rental business partnerships that will drive the global development of sharing through economical rental business models. The Company’s reportable segments were strategic business units that offered different products. They were managed separately based on the fundamental differences in their operations and locations. During the 2017 period, all of the Company’s operations were conducted in the PRC. The Sharing Economy Segment is based in Hong Kong. Information with respect to these reportable business segments for the three and nine months ended September 30, 2018 and 2017 was as follows: For the Three Months ended For the Nine Months ended 2018 2017 2018 2017 Revenues: Dyeing and finishing equipment $ 2,444,437 $ 2,629,217 $ 7,499,362 $ 10,998,438 Sharing economy 72,764 - 155,959 - 2,517,201 2,629,217 7,655,321 10,998,438 Depreciation: Dyeing and finishing equipment 974,745 955,944 3,067,647 2,895,246 Sharing economy 4,458 - 13,210 - 979,203 955,944 3,080,857 2,895,246 Interest expense Dyeing and finishing equipment 26,892 33,125 88,372 107,991 Sharing economy 92,002 - 153,336 - 118,894 33,125 241,708 107,991 Net loss Dyeing and finishing equipment (13,293,023 ) (4,158,877 ) (17,364,755 ) (4,826,783 ) Sharing economy (4,319,404 ) (20,111 ) (8,049,373 ) (20,111 ) Discontinued segments (385 ) (71,339 ) 16,486 (71,339 ) Other (a) (960,907 ) - (4,065,420 ) - $ (18,573,719 ) $ (4,250,327 ) $ (29,463,062 ) $ (4,918,233 ) September 30, December 31, Identifiable long-lived tangible assets at September 30, 2018 and December 31, 2017 by segment Dyeing and finishing equipment $ 23,457,887 $ 27,805,180 Sharing economy 61,220 65,144 Other (b) 5,022,015 5,310,795 $ 28,541,122 $ 33,181,119 September 30, December 31, Identifiable long-lived tangible assets at September 30, 2018 and December 31, 2017 by geographical location China $ 28,479,902 $ 33,115,975 Hong Kong 61,220 65,144 United States - - $ 28,541,122 $ 33,181,119 (a) The Company does not allocate any general and administrative expense of its U.S. activities to its reportable segments, because these activities are managed at a corporate level. (b) Represents amount of net tangible assets not in use and to be used by for new segment being developed. |
Concentrations
Concentrations | 9 Months Ended |
Sep. 30, 2018 | |
Concentrations [Abstract] | |
CONCENTRATIONS | NOTE 16 – CONCENTRATIONS Customers Three customers accounted for approximately 45% (18%, 16% and 11%) of the Company’s revenues for the nine months ended September 30, 2018 and one customer accounted for approximately 10% of the Company’s revenues for the nine months ended September 30, 2017. No customer accounted for 10% of the Company’s total outstanding accounts receivable at September 30, 2018 and December 31, 2017. Suppliers The following table sets forth information as to each supplier that accounted for 10% or more of the Company’s inventories purchases for the nine months ended September 30, 2018 and 2017. Nine Months Ended Supplier 2018 2017 A - 22 % B 14 % 12 % C 29 % * D 18 % * E 15 % * * Less than 10%. No supplier accounted for approximately 10% of the Company’s total outstanding accounts payable at September 30, 2018. One supplier accounted for approximately 13% of the Company’s total outstanding accounts payable at December 31, 2017. |
Commitment and Contingencies
Commitment and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitment and Contingencies [Abstract] | |
COMMITMENT AND CONTINGENCIES | NOTE 17 – COMMITMENT AND CONTINGENCIES Equity investment commitment On December 26, 2016, Dyeing made an equity investment with one unrelated company in Shengxin, a newly-formed entity which plans to develop, construct and maintain photovoltaic power generation projects in China. Shengxin’s total registered capital is RMB 200 million (approximately $31.8 million). Dyeing has agreed to invest RMB 60,000,000 (approximately $9,543,000) for a 30% equity interest and had invested RMB 59,800,000 (approximately $9,511,000) as of September 30, 2018. Mr. Xue has a commitment to invest RMB 140,000,000 (approximately $22.3 million) for a 70% interest. Mr. Xue contributed RMB 60,000,000 (approximately $9.5 million), and he advised Dyeing that he anticipates that he will fund the balance of his commitment during 2018. Since Mr. Xue did not make this payment by the end of 2017, Dyeing has the right to amend the contract, and both parties may adjust each sides’ equity interest to reflect the amount of capital each side has actually invested. As of the date of this report, the contract had not been amended. In April 2018, Shengxin secured and invested in a large solar PV project in GuiZhou province. Shengxin paid RMB40.0 million for the project rights and also engaged a local contractor to proceed with building the project. However, on June 1, 2018, the Chinese government halted installation of new solar farms for the remainder of the year and reduced subsidies for projects already under construction. Accordingly, there is no guarantee that the Chinese government will invest in new solar farm or provide the subsidies needed to fund projects. In September 2018, due to significance doubt about the status of this project and recoverability of the Company’s investment, the Company fully impaired the value of its investment in Shengxin in the amount of $8,835,834. Additionally, for the three months ended September 30, 2018 and 2017, the Company’s share of Shengxin’s net loss were $56,624 and $39,060, respectively. For the nine months ended September 30, 2018 and 2017, the Company’s share of Shengxin’s net loss were $202,469 and $81,871, respectively. Litigation On or about November 14, 2017, a complaint was filed in the United States District Court for the Eastern District of New York, captioned “ Morris Ackerman v. Cleantech Solutions International, Inc.” On February 2, 2018, the law firm of Ellenoff Grossman & Schole LLP (“EGS”) filed a complaint against the Company along with a number of companies and individuals in an effort to recover their legal fees in connection with services provided to the other defendants. The lawsuit contends that the Company is the alter ego or successor in interest of those other defendants. Pursuant to the stipulation of discontinuance dated April 30, 2018, the EGS claim is discontinued without prejudices and without costs as to the Company only. From time to time the Company may become a party to litigation in the normal course of business. Management believes that there are no current legal matters that would have a material effect on the Company’s financial position or results of operations. Transfer agreement On August 4, 2017, the Company’s wholly-owned subsidiary, EC Power (Global) Technology Limited (“EC Power”), entered into a Transfer Agreement (the “Transfer Agreement”) with ECoin Global Limited (“ECoin”), to purchase ECoin Redemption Codes (the “Codes”) produced by ECoin for total future consideration of $20,000,000 (the “Transfer Consideration”). In accordance with the Agreement, EC Power will market the Codes, which contain a value that enables subscribers to upload certain number of items onto ECrent’s website for rental. The Codes have a validity period of four years, and will not expire until August 3, 2021 (the “Expiry Date”). The Transfer Consideration will be paid by EC Power to ECoin in installments, with each installment payable not later than thirty days after the end of December 31 in each calendar year. Each installment will represent an amount equal to 50% of the net sale proceeds of the Codes sold during each calendar year. The aggregate of installments shall not exceed the Transfer Consideration. Any balance outstanding of the Transfer Consideration at the Expiry Date will be paid and discharged by the issuance and delivery to ECoin of common stock of the Company in accordance with the terms of the Agreement. The number of shares to be issued or delivered shall be an amount equal to (i) the balance due; divided by (ii) the VWAP of the shares for the period of twenty trading days immediately preceding the Expiry Date, provided always that in no circumstances shall shares be issued or delivered hereunder to the ECoin in excess of 19% of the issued and outstanding ordinary Shares of the Company. As of the date of this report, EC Power has not taken possession of any redemption codes and as of September 30, 2018, EC Power has not sold any redemption codes. Lease agreement On June 29, 2018, the Company’s wholly-owned subsidiary, Sharing Film International Limited, entered into a tenancy agreement for approximately 24,000 square feet in Shaw Studios, which is owned by Shaw Movie City Hong Kong Limited (“Shaw Movie City”). The initial lease term will be for one year, commencing November 1, 2018. The Company will issue new shares to Shaw Movie City to pay the up-front amounts due for rent, management fee and deposit on the spaces. The Company plans to utilize these spaces to explore and develop its film and media production and post-production business and to develop a sharing environment for the film and media production industry. The rent of the Premises is HK$591,664 (approximately $76,000) per month, that is HK$7,099,970 per annum (approximately $910,000) for the Term. The entire sum of HK$7,099,970 (approximately $910,000) shall be payable in advance on the Handover Date without any deduction or set-off by such means and in such manner. Additionally, the Company shall pay a management fee as follows: (i) HK$47,207 (approximately $6,000) per month by cash in Hong Kong currency, payable in advance of each calendar month (commencing from the month of August 2018) for the Management Fee of office A; (ii) HK$2,994 (approximately $384) per month by cash in Hong Kong currency, payable in advance of each calendar month (commencing from the month of August 2018) for the Management Fee of flat roof; (iii) HK$571,061 (approximately $73,000) being 6 months’ Management Fee for office B (and balcony B) and office C (and balcony C) payable in advance by way of Allotted Shares for Payment, as defined below, in the manner pursuant to the agreement ; (iv) HK$95,177 (approximately $12,000) per month by cash in Hong Kong currency, payable in advance of each calendar month (commencing from the month of February 2019) for the Management Fee of office B (and balcony B) and office C (and balcony C). Additionally, the Company is required to pay a security deposit in the amount of HK$3,137,502 (approximately $402,000) payable as follows: 1) HK$1,637,502 (approximately $210,000) by check and 2) HK$1,500,000 (approximately $192,000) by means of delivering to the Landlord the Company’s the SEII new common shares issued and allotted to and in the name of the Landlord’s nominee, at the Issue Price Per Allotted Share for Deposit, as defined below, provided that in no event shall the number of the Company’s common shares to be issued to the Landlord’s Nominee pursuant to this Agreement will exceed 19.9% of the issued and outstanding shares of the Company’s common stock based on the total issued and outstanding shares of the Company’s common stock on the date of this Agreement. The issue price per Allotted Share for Payment is to be set and determined based on a 5-days closing average of the Company before the Shares Issued Date less 10% thereof (“Issue Price Per Allotted Share for Payment”). The issue price per Allotted Share for Deposit is to be set and determined based on a 5-days closing average of the Company before the Shares Issued Date (hereinafter called “Issue Price Per Allotted Share for Deposit”). |
Restricted Net Assets
Restricted Net Assets | 9 Months Ended |
Sep. 30, 2018 | |
Restricted Net Assets [Abstract] | |
RESTRICTED NET ASSETS | NOTE 18 – RESTRICTED NET ASSETS Regulations in the PRC permit payments of dividends by the Company’s PRC subsidiary and VIEs only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Subject to certain cumulative limit, a statutory reserve fund requires annual appropriations of at least 10% of after-tax profit, if any, of the relevant PRC VIEs and subsidiary. Heavy Industries and Dyeing had reached the cumulative limit as of December 31, 2017. The statutory reserve funds are not distributable as cash dividends. As a result of these PRC laws and regulations, the Company’s PRC VIEs and its PRC subsidiary are restricted in their abilities to transfer a portion of their net assets to the Company. Foreign exchange and other regulations in PRC may further restrict the Company’s PRC VIEs and its subsidiary from transferring funds to the Company in the form of loans and/or advances. As of September 30, 2018 and December 31, 2017 and 2016, substantially all of the Company’s net assets are attributable to the PRC VIEs and its subsidiary located in the PRC. Accordingly, the Company’s restricted net assets at September 30, 2018 and December 31, 2017 were approximately $30,843,000 and $50,873,000, respectively. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 19 – SUBSEQUENT EVENTS Acquisition of 60% interest in Gagfare Limited On August 17, 2018, SEIL has entered into a Sale and Purchase Agreement (the “Agreement”) with the shareholder of Gagfare Limited (“Gagfare”), to acquire 60% ownership of Gagfare. SEIL will acquire 60% of Gagfare for US$3.6 million, which shall be satisfied by the allotment and issuance of 1,176,087 preferred shares of the Company at a price of $3.061 per share. Gagfare is an online platform enabling travelers to search flights directly with over 500 airlines globally, allowing them to get the best-value airfare for their desired flight and secure a confirmed, impartial best airfare on their desired flight instantly. The acquisition has not yet been completed subject to certain conditions as stipulated in the Agreement, and the expiration date has been extended from October 18, 2018 to January 18, 2019 by mutual agreement of both parties. Redemption of common shares of the Iliad Note On November 8, 2018, the Company converted an aggregate of $27,811 and $47,189 outstanding principal and interest of the Iliad Note, respectively, into 36,621 shares of its common stock (see Note 11). |
Description of Business and O_2
Description of Business and Organization (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Description of Business and Organization [Abstract] | |
Going concern | Going concern These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, the Company had a net loss of approximately $18,574,000 and $29,463,000 for the three and nine months ended September 30, 2018. The net cash used in operations was approximately $3,204,000 for the nine months ended September 30, 2018. During the three and nine months ended September 30, 2018, revenues, substantially all of which are derived from the manufacture and sales of textile dyeing and finishing equipment, decreased by 4.3% and 30.4% as compared to the three and nine months ended September 30, 2017, respectively. Additionally, the Company recorded an impairment loss of approximately $1,923,000 related to the write off of its patent use rights and in September 2018. Due to significance doubt about the status and recoverability of the Company’s equity method investment in Shengxin, the Company fully impaired the value of its investment in Shengxin (See Note 6). Management believes that these matters raise substantial doubt about the Company’s ability to continue as a going concern. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive or raise additional debt and/or equity capital. Management believes that its capital resources are not currently adequate to continue operating and maintaining its business strategy for twelve months from the date of this report. The Company may seek to raise capital through additional debt and/or equity financings to fund its operations in the future. Although the Company has historically raised capital from sales of equity, from convertible debt and from bank loans, there is no assurance that it will be able to continue to do so. If the Company is unable to raise additional capital or secure additional lending in the near future, management expects that the Company will need to curtail or cease operations. The accompanying consolidated financial statements do not include any adjustments related to the recoverability and or classification of recorded asset amounts and or classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
Nasdaq Listing | Nasdaq Listing On October 8, 2018, the Company received a staff deficiency notice from The Nasdaq Stock Market (“Nasdaq”) informing the Company that it has failed to comply with Nasdaq’s shareholder approval requirements set forth in Listing Rule 5635(c) (the “Rule”). During the period from May 11, 2017 to date, the Company entered into approximately one hundred arrangements resulting in the issuance or potential issuance of more than three million shares to officers, directors, employees, and consultants (“Equity Compensation Grants”). The Company did not receive shareholder approval for the Equity Compensation Grants, and the shares were not issued from a shareholder approval equity compensation plan. The Company submitted its plan to regain compliance (“Plan of Compliance”) on October 26, 2018. If the Plan of Compliance is accepted, Nasdaq can grant an extension of up to one hundred eighty calendar days from October 8, 2018 to evidence compliance. The Company believes that it has otherwise been compliant with its filing obligations pursuant to the Securities Exchange Act of 1934, as amended, including making all appropriate disclosures to the marketplace. The Company is currently doing everything possible to cure its deficiencies regarding the Rule. |
Basis of presentation | Basis of presentation In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2017 and footnotes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on April 11, 2018. The consolidated balance sheet as of December 31, 2017 contained herein has been derived from the audited consolidated financial statements as of December 31, 2017, but does not include all disclosures required by the generally accepted accounting principles in the U.S. (“U.S. GAAP”). |
Principles of Consolidation | Principles of Consolidation The Company’s unaudited condensed consolidated financial statements include the financial statements of its wholly-owned and majority owned subsidiaries, as well as the financial statements of the Huayang Companies, including Dyeing, which conducts the Company’s continuing operations, and Heavy Industries, which operated discontinued operations. All significant intercompany accounts and transactions have been eliminated in consolidation. On December 30, 2016, the Company sold and transferred its 100% interest in Fulland Wind to an unrelated party and discontinued the Company’s forged rolled rings and related components business. Additionally, the Company’s management decided to discontinue its petroleum and chemical equipment segment due to significant declines in revenues and the loss of its major customer. As such, forged rolled rings and related components segment’s and petroleum and chemical segment’s assets and liabilities have been classified on the consolidated balance sheets as assets and liabilities of discontinued operations as of September 30, 2018 and December 31, 2017. The operating results of the forged rolled rings and related components and petroleum and chemical segments have been classified as discontinued operations in our consolidated statements of operations for all years presented. Unless otherwise indicated, all disclosures and amounts in the notes to the consolidated financial statements are related to the Company’s continuing operations. Pursuant to Accounting Standards Codification (“ASC”) Topic 810, the Huayang Companies are considered variable interest entities (“VIE”), and the Company is the primary beneficiary. The Company’s relationships with the Huayang Companies and their shareholders are governed by a series of contractual arrangements between Green Power, the Company’s wholly foreign-owned enterprise in the PRC, and each of the Huayang Companies, which are the operating companies of the Company in the PRC. Under PRC laws, each of Green Power, Dyeing and Heavy Industries is an independent legal entity and none of them is exposed to liabilities incurred by the other parties. The contractual arrangements constitute valid and binding obligations of the parties of such agreements. Each of the contractual arrangements and the rights and obligations of the parties thereto are enforceable and valid in accordance with the laws of the PRC. On October 12, 2007, the Company entered into the following contractual arrangements with each of Dyeing and Heavy Industries: Consulting Services Agreement. Operating Agreement. Equity Pledge Agreement. Option Agreement. Pursuant to ASC Topic 810 and related subtopics related to the consolidation of variable interest entities, the accounts of the Huayang Companies are consolidated in the accompanying financial statements. As VIEs, the Huayang Companies’ sales are included in the Company’s total sales, its income from operations is consolidated with the Company’s, and the Company’s net income includes all of the Huayang Companies net income. The Company does not record non-controlling interest on these VIE’s and, accordingly, did not subtract any net income in calculating the net income of the VIEs that is attributable to the Company. Because of the contractual arrangements, the Company has a pecuniary interest in the Huayang Companies that requires consolidation of the Company’s and the Huayang Companies’ financial statements. There are substantial uncertainties regarding the interpretation, application and enforcement of PRC laws and regulations, including but not limited to the laws and regulations governing the Company’s business or the enforcement and performance of its contractual arrangements. These contractual arrangements may not be as effective in providing the Company with control over the VIEs as direct ownership. Due to its VIE structure, the Company has to rely on contractual rights to effect control and management of the VIEs, which exposes it to the risk of potential breach of contract by the shareholders of the VIEs for a number of reasons. For example, their interests as shareholders of the VIEs and the interests of the Company may have conflict and the Company may fail to resolve such conflicts; the shareholders may believe that breaching the contracts will lead to greater economic benefit for them; or the shareholders may otherwise act in bad faith. If any of the foregoing were to happen, the Company may have to rely on legal or arbitral proceedings to enforce its contractual rights, including specific performance or injunctive relief, and claiming damages. Such arbitral and legal proceedings may cost substantial financial and other resources, and result in a disruption of its business, and the Company cannot assure that the outcome will be in its favor. In addition, as all of these contractual arrangements are governed by PRC law and provide for the resolution of disputes through either arbitration or litigation in the PRC, they would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal environment in the PRC is not as developed as in other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could further limit the Company’s ability to enforce these contractual arrangements. Furthermore, these contracts may not be enforceable in China if PRC government authorities or courts take a view that such contracts contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. In the events that the Company is unable to enforce any of these agreements, the Company would not be able to exert effective control over the affected VIEs and consequently, the results of operations, assets and liabilities of the affected VIEs and their subsidiaries would not be included in the Company’s consolidated financial statements. If such were the case, the Company’s cash flows, financial position and operating performance would be materially adversely affected. The Company’s agreements with respect to its consolidated VIEs are approved and in place. The Company’s management believes that such agreements are enforceable and considers it a remote possibility that PRC regulatory authorities with jurisdiction over the Company’s operations and contractual relationships would find the agreements to be unenforceable under existing laws. The carrying amount of the VIE’s assets and liabilities are included in the accompanying consolidated financial statements of the Company and are summarized as follows: September 30, December 31, Current assets Cash $ 477,767 $ 806,672 Accounts receivable, net 4,778,324 9,059,015 Inventory, net 5,264,334 4,553,559 Other current assets 4,799,613 5,901,119 Total current assets 15,320,038 20,320,365 Equity method investment - 9,053,859 Property and equipment, net 28,479,902 33,115,975 Intangible assets, net 2,953,687 5,302,047 Total assets 46,753,627 67,792,246 Liabilities Current liabilities 5,788,136 7,629,783 Intercompany payables * 13,327,345 13,855,768 Other liabilities, non-current 282,605 - Total liabilities 19,398,086 21,485,551 Net assets $ 27,355,541 $ 46,306,695 * Intercompany payables are eliminated in consolidation. |
Use of estimates | Use of estimates The preparation of the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates. Significant estimates in the three and nine months ended September 30, 2018 and 2017 include the allowance for doubtful accounts on accounts and other receivables, the allowance for obsolete inventory, the useful life of property and equipment and intangible assets, assumptions used in assessing impairment of long-term assets and valuation of deferred tax assets, the fair value of equity method investment, the fair value of assets held for sale, accruals for taxes due, and the value of stock-based compensation. |
Cash and cash equivalents | Cash and cash equivalents For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents. The Company maintains with various financial institutions mainly in the PRC, Hong Kong and the U.S. At September 30, 2018 and December 31, 2017, cash balances held in PRC and Hong Kong banks of $695,214 and $952,663, respectively, are uninsured. |
Fair value of financial instruments | Fair value of financial instruments The Company adopted the guidance of ASC Topic 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2 - Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3 - Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The Company did not measure these assets at fair value at September 30, 2018 and December 31, 2017. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, restricted cash, notes receivable, accounts receivable, inventories, advances to suppliers, deferred tax assets, receivable from sale of subsidiary, prepaid expenses and other, short-term bank loans, bank acceptance notes payable, note payable, accounts payable, accrued liabilities, advances from customers, amount due to a related party, VAT and service taxes payable and income taxes payable approximate their fair market value based on the short-term maturity of these instruments . ASC Topic 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments. |
Concentrations of credit risk | Concentrations of credit risk The Company’s operations are carried out in the PRC and Hong Kong. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC and Hong Kong, and by the general state of the economies in the PRC and Hong Kong. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America. 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. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. Substantially all of the Company’s cash is maintained with state-owned banks within the PRC and Hong Kong, and none of these deposits are covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts. A significant portion of the Company’s sales are credit sales which are primarily to customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables is limited due to generally short payment terms. The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk. At September 30, 2018 and December 31, 2017, the Company’s cash balances by geographic area were as follows: Country: September 30, December 31, United States $ 11,887 1.68 % $ 66,774 6.55 % Hong Kong 214,565 30.34 % 142,944 14.02 % China 480,649 67.98 % 809,719 79.43 % Total cash and cash equivalents $ 707,101 100.00 % $ 1,019,437 100.00 % |
Restricted cash | Restricted cash Restricted cash mainly consists of cash deposits held by various banks in the PRC to secure bank acceptance notes payable. The Company’s restricted cash totaled $91,089 and $272,991 at September 30, 2018 and December 31, 2017, respectively. |
Notes receivable | Notes receivable Notes receivable represents trade accounts receivable due from customers where the customers’ bank has guaranteed the payment of the receivable. This amount is non-interest bearing and is normally paid within three and nine months. Historically, the Company has experienced no losses on notes receivable. The Company’s notes receivable totaled $73,624 and $461,292 at September 30, 2018 and December 31, 2017, respectively. |
Accounts receivable | Accounts receivable Accounts receivable are presented net of an allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collection. At September 30, 2018 and December 31, 2017, the Company has established, based on a review of its outstanding balances, an allowance for doubtful accounts in the amounts of $8,892,723 and $8,115,876, respectively. |
Inventories | Inventories Inventories, consisting of raw materials, work in process and finished goods related to the Company’s products are stated at the lower of cost or market utilizing the weighted average method. A reserve is established when management determines that certain inventories may not be saleable. If inventory costs exceed expected market value due to obsolescence or quantities in excess of expected demand, the Company will record reserves for the difference between the cost and the market value. These reserves are recorded based on estimates. The Company recorded an inventory reserve of $303,424 and $313,930 at September 30, 2018 and December 31, 2017, respectively. |
Advances to suppliers | Advances to suppliers Advances to suppliers represent the cash paid in advance for the purchase of raw material from suppliers. The advance payments are intended to ensure preferential pricing and delivery. The amounts advanced under such arrangements totaled $1,231,022 and $2,023,779 at September 30, 2018 and December 31, 2017, respectively. |
Property and equipment | Property and equipment Property and equipment are carried at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in the statements of operations in the year of disposition. The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. |
Equity method investment | Equity method investment Investments in which the Company has the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in the long-term assets on the consolidated balance sheets. Under this method of accounting, the Company’s share of the net earnings or losses of the investee is presented below the income tax line on the consolidated statements of operations. The Company evaluates its equity method investment whenever events or changes in circumstance indicate that the carrying amounts of such investment may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in the current period. In September 2018, the Company impaired the value of its equity method investment (See Note 6). |
Impairment of long-lived assets and intangible asset | Impairment of long-lived assets and intangible asset In accordance with ASC Topic 360, the Company reviews long-lived assets and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. During the nine months ended September 30, 2018 and 2017, the Company did not record any impairment charges on long-lived assets. During the nine months ended September 30, 2018 and 2017, the Company recorded impairment loss on intangible asset of $1,922,674 and $0, respectively. |
Advances from customers | Advances from customers Advances from customers at September 30, 2018 and December 31, 2017 amounted to $1,159,530 and $2,454,375, respectively, and consist of prepayments from customers for merchandise that had not yet been shipped. The Company will recognize the deposits as revenue when customers take delivery of the goods and title to the assets is transferred to customers in accordance with the Company’s revenue recognition policy. |
Revenue recognition | Revenue recognition In May 2014, FASB issued an update Accounting Standards Update (“ASU”) (“ASU 2014-09”) establishing Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers The Company recognizes revenues from the sale of equipment upon shipment and transfer of title. The other elements may include installation and, generally, a one-year warranty. Equipment installation revenue is valued based on estimated service person hours to complete installation and is recognized when the labor has been completed and the equipment has been accepted by the customer, which is generally within a couple days of the delivery of the equipment. Warranty revenue is valued based on estimated service person hours to complete a service and generally is recognized over the contract period. All other product sales with customer specific acceptance provisions are recognized upon customer acceptance and the delivery of the parts or service. Revenues related to spare part sales are recognized upon shipment or delivery based on the trade terms. The Company recognizes revenue from the rental of batteries when earned. |
Income taxes | Income taxes The Company is governed by the Income Tax Law of the PRC, Inland Revenue Ordinance of Hong Kong and the U.S. Internal Revenue Code of 1986, as amended. The Company accounts for income taxes using the asset/liability method prescribed by ASC 740, “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. On December 22, 2017, The United States signed into law the Tax Cuts and Jobs Act (the “Act”), a tax reform bill which, among other items, reduces the current federal income tax rate in the United States to 21% from 34%. The rate reduction is effective January 1, 2018, and is permanent. The Act has caused the Company’s deferred income taxes to be revalued. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through income tax expense. Pursuant to the guidance within SEC Staff Accounting Bulletin No. 118 (“SAB 118”), as of December 31, 2017, the Company recognized the provisional effects of the enactment of the Act for which measurement could be reasonably estimated. Since the Company has provided a full valuation allowance against its deferred tax assets, the revaluation of the deferred tax assets did not have a material impact on any period presented. The ultimate impact of the Act may differ from these estimates due to the Company’s continued analysis or further regulatory guidance that may be issued as a result of the Act. The Company applied the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accounting for uncertain tax positions recognized in the Company’s financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of September 30, 2018 and 2017, the Company had no uncertain tax positions, and will continue to evaluate for uncertain positions in the future. |
Stock-based compensation | Stock-based compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment topic of ASC Topic 718, which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the vesting period or immediately if fully vested and non-forfeitable. The Financial Accounting Standards Board (“FASB”) also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award or on issuance if fully-vested and non-forfeitable. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company records compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other third-parties are then revalued, or the total compensation is recalculated, based on the then current fair value, at each subsequent reporting date. |
Shipping costs | Shipping costs Shipping costs are included in selling expenses, general and administrative and totaled $21,619 and $29,259 for the three months ended September 30, 2018 and 2017, respectively. Shipping costs totaled $44,188 and $88,491 for the nine months ended September 30, 2018 and 2017, respectively. |
Employee benefits | Employee benefits The Company’s operations and employees are all located in the PRC and Hong Kong. The Company makes mandatory contributions to the PRC and Hong Kong governments’ health, retirement benefit and unemployment funds in accordance with the relevant Chinese social security laws and law of Mandatory Provident Fund in Hong Kong. The costs of these payments are charged to the same accounts as the related salary costs in the same period as the related salary costs incurred. Employee benefit costs totaled $71,249 and $31,412 for the three months ended September 30, 2018 and 2017, respectively. Employee benefit costs totaled $196,299 and $106,118 for the nine months ended September 30, 2018 and 2017, respectively. |
Research and development | Research and development Research and development costs are expensed as incurred. The costs primarily consist of raw materials and salaries incurred for the development and improvement of the Company’s dyeing and finishing machine product line. Research and development costs totaled $165,183 and $107,568 for the three months ended September 30, 2018 and 2017, respectively. Research and development costs totaled $403,611 and $324,698 for the nine months ended September 30, 2018 and 2017, respectively. |
Foreign currency translation | Foreign currency translation The reporting currency of the Company is the U.S. dollar. The functional currency of the parent company is the U.S. dollar and the functional currency of the Company’s operating subsidiaries is the Chinese Renminbi (“RMB”) or Hong Kong dollars (“HKD”). For the subsidiaries and affiliates, whose functional currencies are the RMB or HKD, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the balance sheets. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive loss. The cumulative translation adjustment and effect of exchange rate changes on cash for the nine months ended September 30, 2018 and 2017 was $(274,378) and $159,686, respectively. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. All of the Company’s revenue transactions are transacted in the functional currency of the operating subsidiaries and affiliates. The Company did not enter into any material transaction in foreign currencies. Transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company. For operating subsidiaries and VIE’s located in the People’s Republic of China (“PRC”), asset and liability accounts at September 30, 2018 and December 31, 2017 were translated at 6.8817 RMB to $1.00 and at 6.5075 to $1.00, respectively, which were the exchange rates on the balance sheet dates. For operating subsidiaries in Hong Kong, asset and liability accounts at September 30, 2018 and December 31, 2017 were translated at 7.8259 HKD and 7.8128 HKD to $1.00, respectively, which were the exchange rates on the balance sheet date. For operating subsidiaries and VIE’s located in the PRC, the average translation rates applied to the statements of operations for the nine months ended September 30, 2018 and 2017 were 6.5187 RMB and 6.8058 RMB to $1.00, respectively. For operating subsidiaries located in Hong Kong, the average translation rates applied to the statements of operations for the nine months ended September 30, 2018 and 2017 was 7.8 HKD to $1.00. Cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rate. |
Loss per share of common stock | Loss per share of common stock ASC Topic 260 “Earnings per Share,” requires presentation of both basic and diluted earnings per share (“EPS”) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. The Company did not have any common stock equivalents or potentially dilutive common stock outstanding during the three and nine months ended September 30, 2018 and 2017. In a period in which the Company has a net loss, all potentially dilutive securities are excluded from the computation of diluted shares outstanding as they would have had an anti-dilutive impact. The following table presents a reconciliation of basic and diluted net loss per share: Three Months Ended Nine Months Ended 2018 2017 2018 2017 Net (loss) income for basic and diluted attributable to common shareholders $ (18,196,461 ) $ (4,250,327 ) $ (28,779,651 ) $ (4,918,233 ) From continuing operations (18,196,076 ) (4,178,988 ) (28,796,137 ) (4,846,894 ) From discontinued operations (385 ) (71,339 ) 16,486 (71,339 ) Weighted average common stock outstanding – basic and diluted 7,100,416 1,988,794 3,598,265 1,635,223 Net (loss) income per share of common stock From continuing operations – basic and diluted $ (2.56 ) $ (2.10 ) $ (8.00 ) $ (2.96 ) From discontinued operations – basic and diluted (0.00 ) (0.04 ) 0.01 (0.04 ) Net loss per common share – basic and diluted $ (2.56 ) $ (2.14 ) $ (7.99 ) $ (3.00 ) |
Noncontrolling interest | Noncontrolling interest The Company accounts for noncontrolling interest in accordance with ASC Topic 810-10-45, which requires the Company to present noncontrolling interests as a separate component of total shareholders’ equity on the consolidated balance sheets and the consolidated net income/(loss) attributable to the its noncontrolling interest be clearly identified and presented on the face of the consolidated statements of operations and comprehensive (loss). |
Comprehensive (loss) income | Comprehensive (loss) income Comprehensive loss (income) is comprised of net loss and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. For the Company, comprehensive (loss) income for the three and nine months ended September 30, 2018 and 2017 included net loss and unrealized (loss) gain from foreign currency translation adjustments. |
Reclassification | Reclassification Certain reclassifications have been made in prior year’s consolidated financial statements to conform to the current year’s financial presentation. The reclassifications have no effect on previously reported net income (loss) and related to the reclassification of discontinued operations. |
Reverse stock split | Reverse stock split The Company effected a one-for-four reverse stock split of its common stock on March 20, 2017. All share and per share information has been retroactively adjusted to reflect this reverse stock split. |
Recent accounting pronouncements | Recent accounting pronouncements In July 2017, the FASB issued ASU 2017-11, Accounting for Certain Financial Instruments with Down Round Features On December 22, 2017 the SEC staff issued Staff Accounting Bulletin 118 (SAB 118), which provides guidance on accounting for the tax effects of the Tax Cuts and Jobs Act (the TCJA). SAB 118 provides a measurement period that should not extend beyond one year from the enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the TCJA for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the TCJA is incomplete but for which they are able to determine a reasonable estimate, it must record a provisional amount in the financial statements. Provisional treatment is proper in light of anticipated additional guidance from various taxing authorities, the SEC, the FASB, and even the Joint Committee on Taxation. If a company cannot determine a provisional amount to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the TCJA. The Company has applied this guidance to its financial statements. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures. |
Description of Business and O_3
Description of Business and Organization (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Description of Business and Organization [Abstract] | |
Schedule of carrying amount of the VIE's assets and liabilities included in the accompanying consolidated financial statements | September 30, December 31, Current assets Cash $ 477,767 $ 806,672 Accounts receivable, net 4,778,324 9,059,015 Inventory, net 5,264,334 4,553,559 Other current assets 4,799,613 5,901,119 Total current assets 15,320,038 20,320,365 Equity method investment - 9,053,859 Property and equipment, net 28,479,902 33,115,975 Intangible assets, net 2,953,687 5,302,047 Total assets 46,753,627 67,792,246 Liabilities Current liabilities 5,788,136 7,629,783 Intercompany payables * 13,327,345 13,855,768 Other liabilities, non-current 282,605 - Total liabilities 19,398,086 21,485,551 Net assets $ 27,355,541 $ 46,306,695 * Intercompany payables are eliminated in consolidation. |
Schedule of cash balances by geographic area | Country: September 30, December 31, United States $ 11,887 1.68 % $ 66,774 6.55 % Hong Kong 214,565 30.34 % 142,944 14.02 % China 480,649 67.98 % 809,719 79.43 % Total cash and cash equivalents $ 707,101 100.00 % $ 1,019,437 100.00 % |
Schedule of reconciliation of basic and diluted net loss per share | Three Months Ended Nine Months Ended 2018 2017 2018 2017 Net (loss) income for basic and diluted attributable to common shareholders $ (18,196,461 ) $ (4,250,327 ) $ (28,779,651 ) $ (4,918,233 ) From continuing operations (18,196,076 ) (4,178,988 ) (28,796,137 ) (4,846,894 ) From discontinued operations (385 ) (71,339 ) 16,486 (71,339 ) Weighted average common stock outstanding – basic and diluted 7,100,416 1,988,794 3,598,265 1,635,223 Net (loss) income per share of common stock From continuing operations – basic and diluted $ (2.56 ) $ (2.10 ) $ (8.00 ) $ (2.96 ) From discontinued operations – basic and diluted (0.00 ) (0.04 ) 0.01 (0.04 ) Net loss per common share – basic and diluted $ (2.56 ) $ (2.14 ) $ (7.99 ) $ (3.00 ) |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Acquisitions [Abstract] | |
Schedule of estimated fair value of the assets acquired and liabilities assumed | Cash $ 2,374 Account receivable and prepayment 21,663 Property and equipment 9,222 Goodwill 53,201 Other intangible assets 1,300,805 Total assets acquired at fair value 1,387,265 Accounts payable and accrued expenses (6,294 ) Non-controlling interest assumed (403,987 ) Total liabilities and non-controlling interest assumed (410,281 ) Total purchase consideration $ 976,984 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Discontinued Operations [Abstract] | |
Schedule of discontinued operations in the Company's consolidated financial statements | September 30, December 31, Assets: Current assets: Accounts receivable, net $ 12,785 $ 33,646 Advances to suppliers - 144,583 Prepaid expenses and other 198,937 229,281 Total current assets 211,722 407,510 Total assets $ 211,722 $ 407,510 Liabilities: Current liabilities: Accounts payable $ 242,542 $ 387,887 Accrued expenses and other liabilities - 1,746 Total current liabilities 242,542 389,633 Total liabilities $ 242,542 $ 389,633 |
Schedule of discontinued operations included in the Company's consolidated statements of operations | Three months ended Nine months ended 2018 2017 2018 2017 Revenues $ - $ - $ - $ - Cost of revenues 31,652 31,652 Gross loss (31,652 ) (31,652 ) Operating (expenses) income (385 ) (39,687 ) 16,486 (39,687 ) (Loss) income from operations (385 ) (71,339 ) 16,486 (71,339 ) Other income, net - - - - (Loss) gain from discontinued operations, net of income taxes $ (385 ) $ (71,339 ) $ 16,486 $ (71,339 ) |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounts Receivable [ Abstract] | |
Schedule of accounts receivable | September 30, December 31, Accounts receivable $ 13,721,536 $ 17,208,585 Less: allowance for doubtful accounts (8,892,723 ) (8,115,876 ) $ 4,828,813 $ 9,092,709 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Inventories [Abstract] | |
Schedule of inventories | September 30, December 31, Raw materials $ 1,563,017 $ 998,751 Work-in-process 1,898,527 2,629,570 Finished goods 2,106,214 1,239,168 5,567,758 4,867,489 Less: reserve for obsolete inventories (303,424 ) (313,930 ) $ 5,264,334 $ 4,553,559 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Property and Equipment [Abstract] | |
Schedule of property and equipment | Useful life September 30, December 31, Office equipment and furniture 5 years $ 85,252 $ 71,120 Manufacturing equipment 5 - 10 years 32,617,253 34,419,653 Vehicles 5 years 243,712 253,564 Building and building improvements 5 - 20 years 21,329,517 22,556,026 Manufacturing equipment in progress - 3,458,448 3,657,936 Construction in progress - 1,563,567 1,652,859 59,297,749 62,611,158 Less: accumulated depreciation (30,756,627 ) (29,430,039 ) $ 28,541,122 $ 33,181,119 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Intangible Assets [Abstract] | |
Schedule of intangible assets | Useful life September 30, December 31, Land use rights 45 - 50 years $ 3,923,565 $ 4,149,181 Patent use rights 10 years - 2,458,701 Other intangible assets 3 - 5 years 1,529,867 92,249 Goodwill - 53,143 - 5,506,575 6,700,131 Less: accumulated amortization (1,066,192 ) (1,305,835 ) $ 4,440,383 $ 5,394,296 |
Schedule of amortization of intangible assets attributable to future periods | Year ending September 30: Amount 2019 $ 565,996 2020 565,996 2021 529,522 2022 103,743 2023 97,795 Thereafter 2,524,187 $ 4,387,240 |
Short-Term Bank Loans (Tables)
Short-Term Bank Loans (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Short-Term Bank Loans / Convertible Note Payable [Abstract] | |
Schedule of short-term bank loans | September 30, December 31, Loan from Bank of China, due on December 4, 2018 with annual interest rate of 6.09%, secured by certain assets of the Company $ 363,282 $ 384,172 Loan from Bank of China, due on December 6, 2018 with annual interest rate of 6.09%, secured by certain assets of the Company 363,282 384,172 Loan from Bank of Wuxi Nongshuang, due on April 25, 2018 with annual interest rate of 5.87%, secured by certain assets of the Company - 691,510 Loan from Bank of Wuxi Nongshuang, due on February 22, 2019 with annual interest rate of 5.87%, secured by certain assets of the Company 653,909 - Loan from Bank of Communication, due on September 20, 2019 with annual interest rate of 5.85%, secured by certain assets of the Company - 614,675 Loan from Bank of Communication, due on September 25, 2018 with annual interest rate of 5.85%, secured by certain assets of the Company 581,252 Loan from Zhongli International Finance Corporation, credit line of RMB4,500,000 (approximately $653,908), with a security deposit of RMB900,000 (approximately $130,782) which will be returned in 36 months, monthly installment of RMB210,000 (approximately $30,516) in the 1 st th th th st th 240,521 - Total short-term bank loans $ 2,202,246 $ 2,074,529 * Long-term bank loans represent amounts due to various banks that are due more than one year. Long-term portion of loan from Zhongli International Finance Corporation is $282,605 as of September 30, 2018. |
Schedule of minimum installments under loan agreement | 12-month periods ending September 30, Amount 2019 $ 366,189 2020 240,638 2021 170,888 Total minimum loan payments 777,715 Less: amount representing interest (123,807 ) Less: security deposit due (130,782 ) Present value of net minimum loan payment 523,127 Less: current portion 240,521 Long-term portion $ 282,605 |
Bank Acceptance Notes Payable (
Bank Acceptance Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Bank Acceptance Notes Payable [Abstract] | |
Schedule of bank acceptance notes payable | September 30, December 31, Bank of China, non-interest bearing, due on June 25, 2018, collateralized by 100% of restricted cash deposited $ - $ 115,252 Bank of Communication, non-interest bearing, due on March 24, 2018, collateralized by 100% of restricted cash deposited - 307,337 Bank of Communication, non-interest bearing, due on December 26, 2018, collateralized by 100% of restricted cash deposited 145,313 - Total $ 145,313 $ 422,589 |
Convertible Note Payable (Table
Convertible Note Payable (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Short-Term Bank Loans / Convertible Note Payable [Abstract] | |
Schedule of convertible debt | September 30, December 31, Principal $ 900,000 $ 670,000 Unamortized discount (231,672 ) - Convertible debt, net $ 668,328 $ 670,000 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Information [Abstract] | |
Schedule of segment information | For the Three Months ended For the Nine Months ended 2018 2017 2018 2017 Revenues: Dyeing and finishing equipment $ 2,444,437 $ 2,629,217 $ 7,499,362 $ 10,998,438 Sharing economy 72,764 - 155,959 - 2,517,201 2,629,217 7,655,321 10,998,438 Depreciation: Dyeing and finishing equipment 974,745 955,944 3,067,647 2,895,246 Sharing economy 4,458 - 13,210 - 979,203 955,944 3,080,857 2,895,246 Interest expense Dyeing and finishing equipment 26,892 33,125 88,372 107,991 Sharing economy 92,002 - 153,336 - 118,894 33,125 241,708 107,991 Net loss Dyeing and finishing equipment (13,293,023 ) (4,158,877 ) (17,364,755 ) (4,826,783 ) Sharing economy (4,319,404 ) (20,111 ) (8,049,373 ) (20,111 ) Discontinued segments (385 ) (71,339 ) 16,486 (71,339 ) Other (a) (960,907 ) - (4,065,420 ) - $ (18,573,719 ) $ (4,250,327 ) $ (29,463,062 ) $ (4,918,233 ) |
Concentrations (Tables)
Concentrations (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Concentrations [Abstract] | |
Schedule of concentrations of purchase from suppliers | Nine Months Ended Supplier 2018 2017 A - 22 % B 14 % 12 % C 29 % * D 18 % * E 15 % * * Less than 10%. |
Description of Business and O_4
Description of Business and Organization (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | |
Current assets | |||
Accounts receivable, net | $ 4,828,813 | $ 9,092,709 | |
Inventory, net | 5,264,334 | 4,553,559 | |
Total current assets | 26,826,033 | 22,926,343 | |
Equity method investment | 9,053,859 | ||
Property and equipment, net | 28,541,122 | 33,181,119 | |
Intangible assets, net | 4,440,383 | 5,394,296 | |
Total assets | 59,807,538 | 70,555,617 | |
Liabilities | |||
Current liabilities | 9,186,448 | 9,386,537 | |
Total liabilities | 9,469,053 | 9,386,537 | |
Variable Interest Entity, Primary Beneficiary [Member] | |||
Current assets | |||
Cash | 477,767 | 806,672 | |
Accounts receivable, net | 4,778,324 | 9,059,015 | |
Inventory, net | 5,264,334 | 4,553,559 | |
Other current assets | 4,799,613 | 5,901,119 | |
Total current assets | 15,320,038 | 20,320,365 | |
Equity method investment | 9,053,859 | ||
Property and equipment, net | 28,479,902 | 33,115,975 | |
Intangible assets, net | 2,953,687 | 5,302,047 | |
Total assets | 46,753,627 | 67,792,246 | |
Liabilities | |||
Current liabilities | 5,788,136 | 7,629,783 | |
Intercompany payables | [1] | 13,327,345 | 13,855,768 |
Other liabilities, non-current | 282,605 | ||
Total liabilities | 19,398,086 | 21,485,551 | |
Net assets | $ 27,355,541 | $ 46,306,695 | |
[1] | Intercompany payables are eliminated in consolidation. |
Description of Business and O_5
Description of Business and Organization (Details 1) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Cash balances by geographic area | ||||
Total cash and cash equivalents | $ 707,101 | $ 1,019,437 | $ 4,774,697 | $ 1,481,498 |
Total cash and cash equivalents, percentage | 100.00% | 100.00% | ||
United States [Member] | ||||
Cash balances by geographic area | ||||
Total cash and cash equivalents | $ 11,887 | $ 66,774 | ||
Total cash and cash equivalents, percentage | 1.68% | 6.55% | ||
Hong Kong [Member] | ||||
Cash balances by geographic area | ||||
Total cash and cash equivalents | $ 214,565 | $ 142,944 | ||
Total cash and cash equivalents, percentage | 30.34% | 14.02% | ||
China [Member] | ||||
Cash balances by geographic area | ||||
Total cash and cash equivalents | $ 480,649 | $ 809,719 | ||
Total cash and cash equivalents, percentage | 67.98% | 79.43% |
Description of Business and O_6
Description of Business and Organization (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Reconciliation of basic and diluted net loss per share | ||||
Net (loss) income for basic and diluted attributable to common shareholders | $ (18,196,461) | $ (4,250,327) | $ (28,779,651) | $ (4,918,233) |
From continuing operations | (18,573,334) | (4,178,988) | (29,479,548) | (4,846,894) |
From discontinued operations | $ (385) | $ (71,339) | $ 16,486 | $ (71,339) |
Weighted average common stock outstanding - basic and diluted | 7,100,416 | 1,988,794 | 3,598,265 | 1,635,223 |
Net (loss) income per share of common stock | ||||
From continuing operations - basic and diluted | $ (2.56) | $ (2.1) | $ (8) | $ (2.96) |
From discontinued operations - basic and diluted | 0 | (0.04) | 0.01 | (0.04) |
Net loss per common share - basic and diluted | $ (2.56) | $ (2.14) | $ (7.99) | $ (3) |
Description of Business and O_7
Description of Business and Organization (Details Textual) ¥ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||
Dec. 22, 2017 | Feb. 24, 2017shares | Sep. 30, 2018USD ($)shares | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)shares | Sep. 30, 2017USD ($) | Apr. 30, 2018CNY (¥) | Jan. 19, 2018 | Dec. 31, 2017USD ($)shares | Dec. 08, 2017 | Dec. 30, 2016 | Dec. 23, 2016 | |
Description of Business and Organization (Textual) | ||||||||||||
Cash and cash equivalents uninsured amount | $ 695,214 | $ 695,214 | $ 952,663 | |||||||||
Restricted cash | 91,089 | 91,089 | 272,991 | |||||||||
Notes receivable | 73,624 | 73,624 | 461,292 | |||||||||
Allowance for doubtful accounts | 8,892,723 | 8,892,723 | 8,115,876 | |||||||||
Inventory reserve | 303,424 | 303,424 | 313,930 | |||||||||
Impairment charges | 1,923,000 | |||||||||||
Advances to suppliers | 1,231,022 | 1,231,022 | 2,023,779 | |||||||||
Advances from customers | 1,159,530 | 1,159,530 | $ 2,454,375 | |||||||||
Shipping costs | 21,619 | $ 29,259 | 44,188 | $ 88,491 | ||||||||
Employee benefit costs | 71,249 | 31,412 | 196,299 | 106,118 | ||||||||
Research and development | $ 165,183 | $ 107,568 | $ 403,611 | $ 324,698 | ||||||||
Asset and liability translation rate (RMB to USD) | 6.8817 | 6.8817 | 6.5075 | |||||||||
Average translation rates (RMB to USD) | 6.5187 | 6.8058 | 6.5187 | 6.8058 | ||||||||
Reverse stock split, Description | The Company filed a certificate of change which effected a one-for-four reverse split, which became effective in the marketplace on March 20, 2017 | The Company effected a one-for-four reverse stock split of its common stock on March 20, 2017. All share and per share information has been retroactively adjusted to reflect this reverse stock split. | ||||||||||
Foreign currency translation description | Asset and liability accounts at September 30, 2018 and December 31, 2017 were translated at 6.8817 RMB to $1.00 and at 6.5075 to $1.00, respectively, which were the exchange rates on the balance sheet dates. For operating subsidiaries in Hong Kong, asset and liability accounts at September 30, 2018 and December 31, 2017 were translated at 7.8259 HKD and 7.8128 HKD to $1.00, respectively, which were the exchange rates on the balance sheet date. For operating subsidiaries and VIE's located in the PRC, the average translation rates applied to the statements of operations for the nine months ended September 30, 2018 and 2017 were 6.5187 RMB and 6.8058 RMB to $1.00, respectively. For operating subsidiaries located in Hong Kong, the average translation rates applied to the statements of operations for the nine months ended September 30, 2018 and 2017 was 7.8 HKD to $1.00. Cash flows from the Company's operations are calculated based upon the local currencies using the average translation rate. | |||||||||||
Period for non-interest bearing amount | Three and nine months | |||||||||||
Common stock, shares authorized | shares | 12,500,000 | 12,500,000 | 12,500,000 | |||||||||
Net cash used in operation | $ (3,203,741) | $ (17,491) | ||||||||||
Cumulative translation adjustment and effect of exchange rate changes on cash | $ (274,378) | 159,686 | ||||||||||
Term of agreement | 20 years | |||||||||||
Net loss | $ (18,196,461) | $ (4,250,327) | $ (28,779,651) | $ (4,918,233) | ||||||||
Sale of dyeing and finished equipment decreased | 4.30% | 30.40% | ||||||||||
Impairment loss | $ 1,922,674 | |||||||||||
Shengxin [Member] | ||||||||||||
Description of Business and Organization (Textual) | ||||||||||||
Company invested interest amount | ¥ | ¥ 40 | |||||||||||
Green Power Environment Technology (Shanghai) Co., Ltd.[Member] | ||||||||||||
Description of Business and Organization (Textual) | ||||||||||||
Percentage of shareholding or ownership | 100.00% | 100.00% | ||||||||||
Wuxi Fulland Wind Energy Equipment Co., Ltd. [Member] | ||||||||||||
Description of Business and Organization (Textual) | ||||||||||||
Percentage of shareholding or ownership | 100.00% | |||||||||||
Dyeing [Member] | ||||||||||||
Description of Business and Organization (Textual) | ||||||||||||
Percentage of shareholding or ownership | 30.00% | 30.00% | ||||||||||
Unrelated Third Party [Member] | ||||||||||||
Description of Business and Organization (Textual) | ||||||||||||
Percentage of shareholding or ownership | 70.00% | |||||||||||
Inspirit Studio Limited [Member] | EC Technology [Member] | ||||||||||||
Description of Business and Organization (Textual) | ||||||||||||
Percentage of shareholding or ownership | 51.00% | |||||||||||
3D Discovery Co. Limited | EC Technology [Member] | ||||||||||||
Description of Business and Organization (Textual) | ||||||||||||
Percentage of shareholding or ownership | 60.00% | |||||||||||
Sharing Economy [Member] | ||||||||||||
Description of Business and Organization (Textual) | ||||||||||||
Percentage of shareholding or ownership | 80.00% | |||||||||||
Minimum [Member] | ||||||||||||
Description of Business and Organization (Textual) | ||||||||||||
Common stock, shares authorized | shares | 50,000,000 | |||||||||||
Federal income tax rat | 21.00% | |||||||||||
Maximum [Member] | ||||||||||||
Description of Business and Organization (Textual) | ||||||||||||
Common stock, shares authorized | shares | 12,500,000 | |||||||||||
Federal income tax rat | 34.00% |
Acquisitions (Details)
Acquisitions (Details) | Jan. 30, 2018USD ($) |
Acquisitions [Abstract] | |
Cash | $ 2,374 |
Account receivable and prepayment | 21,663 |
Property and equipment | 9,222 |
Goodwill | 53,201 |
Other intangible assets | 1,300,805 |
Total assets acquired at fair value | 1,387,265 |
Accounts payable and accrued expenses | (6,294) |
Non-controlling interest assumed | (403,987) |
Total liabilities and non-controlling interest assumed | (410,281) |
Total purchase consideration | $ 976,984 |
Acquisitions (Details Textual)
Acquisitions (Details Textual) - USD ($) | Jan. 30, 2018 | Jan. 19, 2018 | Jun. 26, 2018 |
Acquisitions (Textual) | |||
Business acquire, percentage | 80.00% | 60.00% | |
Business acquisition, shares | 106,464 | 68,610 | |
Business acquisition, value | $ 534,449 | $ 442,535 | |
Business acquisition, per share | $ 5.02 | $ 6.45 | $ 4.16 |
Fair value of the net assets | $ 53,201 |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Accounts receivable, net | $ 12,785 | $ 33,646 |
Advances to suppliers | 144,583 | |
Prepaid expenses and other | 198,937 | 229,281 |
Total current assets | 211,722 | 407,510 |
Total assets | 211,722 | 407,510 |
Current liabilities: | ||
Accounts payable | 242,542 | 387,887 |
Accrued expenses and other liabilities | 1,746 | |
Total current liabilities | 242,542 | 389,633 |
Total liabilities | $ 242,542 | $ 389,633 |
Discontinued Operations (Deta_2
Discontinued Operations (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Discontinued Operations [Abstract] | ||||
Revenues | ||||
Cost of revenues | 31,652 | 31,652 | ||
Gross loss | (31,652) | (31,652) | ||
Operating (expenses) income | (385) | (39,687) | 16,486 | (39,687) |
(Loss) income from operations | (385) | (71,339) | 16,486 | (71,339) |
Other income, net | ||||
(Loss) gain from discontinued operations, net of income taxes | $ (385) | $ (71,339) | $ 16,486 | $ (71,339) |
Discontinued Operations (Deta_3
Discontinued Operations (Details Textual) | Apr. 10, 2017USD ($) | Apr. 10, 2017CNY (¥) | Dec. 28, 2016USD ($) | Dec. 28, 2016CNY (¥) | Dec. 23, 2016USD ($)installments | Dec. 23, 2016CNY (¥)installments | Dec. 31, 2017USD ($) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) |
Fulland Wind [Member] | ||||||||||
Discontinued Operations (Textual) | ||||||||||
Sale of stock to third party | $ 6,900,000 | ¥ 48,000,000 | ||||||||
Number of purchase price installments | 3 | 3 | ||||||||
Fulland Wind [Member] | First installment [Member] | ||||||||||
Discontinued Operations (Textual) | ||||||||||
Sale of stock to third party | $ 2,100,000 | ¥ 14,400,000 | ||||||||
Fulland Wind [Member] | Second installment [Member] | ||||||||||
Discontinued Operations (Textual) | ||||||||||
Sale of stock to third party | $ 2,100,000 | ¥ 14,400,000 | ||||||||
Fulland Wind [Member] | Third installment [Member] | ||||||||||
Discontinued Operations (Textual) | ||||||||||
Sale of stock to third party | $ 2,700,000 | ¥ 19,200,000 | $ 2,700,000 | ¥ 19,200,000 | ||||||
Heavy Industry [Member] | ||||||||||
Discontinued Operations (Textual) | ||||||||||
Annual rental lease payment | $ 98,000 | ¥ 680,566 | ||||||||
Lease term | 10 years | 10 years | ||||||||
Lease payments from tenant | $ 49,800 | ¥ 324,078 |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Components of accounts receivable | ||
Accounts receivable | $ 13,721,536 | $ 17,208,585 |
Less: allowance for doubtful accounts | (8,892,723) | (8,115,876) |
Accounts receivable, net | $ 4,828,813 | $ 9,092,709 |
Inventories (Details)
Inventories (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Components of inventories | ||
Raw materials | $ 1,563,017 | $ 998,751 |
Work-in-process | 1,898,527 | 2,629,570 |
Finished goods | 2,106,214 | 1,239,168 |
Inventory, gross | 5,567,758 | 4,867,489 |
Less: reserve for obsolete inventories | (303,424) | (313,930) |
Inventory, net | $ 5,264,334 | $ 4,553,559 |
Equity Method Investment (Detai
Equity Method Investment (Details) | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018CNY (¥) | Apr. 30, 2018CNY (¥) | Dec. 31, 2017USD ($) | Dec. 26, 2016USD ($) | Dec. 26, 2016CNY (¥) | |
Equity Method Investment (Textual) | |||||||||
Equity method investment | $ 9,053,859 | ||||||||
Net loss | 56,624 | $ 39,060 | 202,469 | $ 81,871 | |||||
Fixed assets | 32,981,505 | 32,981,505 | 47,629,274 | ||||||
Mr. Xue [Member] | |||||||||
Equity Method Investment (Textual) | |||||||||
Agreed to invest | $ 22,300,000 | ¥ 140,000,000 | |||||||
Interest received | 70.00% | 70.00% | |||||||
Contributed amount | $ 9,500,000 | ¥ 60,000,000 | |||||||
Remaining investment | 12,700,000 | 12,700,000 | ¥ 80,000,000 | ||||||
Dyeing [Member] | |||||||||
Equity Method Investment (Textual) | |||||||||
Equity method investment | $ 9,511,000 | $ 9,511,000 | ¥ 59,800,000 | ||||||
Agreed to invest | 9,543,000 | 60,000,000 | |||||||
Interest received | 30.00% | 30.00% | 30.00% | ||||||
Shengxin [Member] | |||||||||
Equity Method Investment (Textual) | |||||||||
Equity method investment | $ 8,835,834 | $ 8,835,834 | ¥ 40,000,000 | ||||||
Agreed to invest | $ 31,800,000 | ¥ 200,000,000 | |||||||
Cash | 48,000 | 48,000 | 17,300,000 | ||||||
Advances to supplier | 16,300,000 | 16,300,000 | 615,000 | ||||||
Fixed assets | 14,000 | 14,000 | $ 5,000 | ||||||
Loss on equity method investment | $ 8,892,458 | $ 9,038,303 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Components of property and equipment | ||
Property and equipment, gross | $ 59,297,749 | $ 62,611,158 |
Less: accumulated depreciation | (30,756,627) | (29,430,039) |
Property and equipment, net | $ 28,541,122 | 33,181,119 |
Office equipment and furniture [Member] | ||
Components of property and equipment | ||
Property and equipment, useful life | 5 years | |
Property and equipment, gross | $ 85,252 | 71,120 |
Manufacturing equipment [Member] | ||
Components of property and equipment | ||
Property and equipment, gross | $ 32,617,253 | 34,419,653 |
Manufacturing equipment [Member] | Minimum [Member] | ||
Components of property and equipment | ||
Property and equipment, useful life | 5 years | |
Manufacturing equipment [Member] | Maximum [Member] | ||
Components of property and equipment | ||
Property and equipment, useful life | 10 years | |
Vehicles [Member] | ||
Components of property and equipment | ||
Property and equipment, useful life | 5 years | |
Property and equipment, gross | $ 243,712 | 253,564 |
Building and building improvements [Member] | ||
Components of property and equipment | ||
Property and equipment, gross | $ 21,329,517 | 22,556,026 |
Building and building improvements [Member] | Minimum [Member] | ||
Components of property and equipment | ||
Property and equipment, useful life | 5 years | |
Building and building improvements [Member] | Maximum [Member] | ||
Components of property and equipment | ||
Property and equipment, useful life | 20 years | |
Manufacturing equipment in progress [Member] | ||
Components of property and equipment | ||
Property and equipment, gross | $ 3,458,448 | 3,657,936 |
Construction in progress [Member] | ||
Components of property and equipment | ||
Property and equipment, gross | $ 1,563,567 | $ 1,652,859 |
Property and Equipment (Detai_2
Property and Equipment (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Property and Equipment (Textual) | ||||
Depreciation expense | $ 979,203 | $ 998,394 | $ 3,080,857 | $ 2,937,696 |
Depreciation included in cost of revenues and operating expenses | $ 705,648 | $ 721,042 | $ 2,218,554 | $ 2,123,042 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Components of intangible assets | ||
Intangible assets, Gross | $ 5,506,575 | $ 6,700,131 |
Less: accumulated amortization | (1,066,192) | (1,305,835) |
Intangible assets, Net | 4,440,383 | 5,394,296 |
Land use rights [Member] | ||
Components of intangible assets | ||
Intangible assets, Gross | $ 3,923,565 | 4,149,181 |
Patent use rights [Member] | ||
Components of intangible assets | ||
Intangible assets, useful life | 10 years | |
Intangible assets, Gross | 2,458,701 | |
Other intangible assets [Member] | ||
Components of intangible assets | ||
Intangible assets, Gross | 1,529,867 | 92,249 |
Goodwill [Member] | ||
Components of intangible assets | ||
Intangible assets, Gross | $ 53,143 | |
Minimum [Member] | Land use rights [Member] | ||
Components of intangible assets | ||
Intangible assets, useful life | 45 years | |
Minimum [Member] | Other intangible assets [Member] | ||
Components of intangible assets | ||
Intangible assets, useful life | 3 years | |
Maximum [Member] | Land use rights [Member] | ||
Components of intangible assets | ||
Intangible assets, useful life | 50 years | |
Maximum [Member] | Other intangible assets [Member] | ||
Components of intangible assets | ||
Intangible assets, useful life | 5 years |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Amortization of intangible assets attributable to future periods | ||
2,019 | $ 565,996 | |
2,020 | 565,996 | |
2,021 | 529,522 | |
2,022 | 103,743 | |
2,023 | 97,795 | |
Thereafter | 2,524,187 | |
Intangible assets, Net | $ 4,440,383 | $ 5,394,296 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Aug. 17, 2018 | Aug. 31, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Intangible Assets (Textual) | ||||||
Amortization of intangible assets | $ 299,373 | $ 241,464 | ||||
Land use rights expiration date | Expire on January 1, 2053 and October 30, 2053. | |||||
Land use right, description | The Company purchased a patent technology use right, value at RMB16,000,000, for a ten-year term from a third party. | |||||
Description of acquired entity | SEIL has entered into a Sale and Purchase Agreement (the "Agreement") with the shareholder of Gagfare Limited ("Gagfare"), to acquire 60% ownership of Gagfare. SEIL will acquire 60% of Gagfare for US$3.6 million, which shall be satisfied by the allotment and issuance of 1,176,087 preferred shares of the Company at a price of $3.061 per share. Gagfare is an online platform enabling travelers to search flights directly with over 500 airlines globally, allowing them to get the best-value airfare for their desired flight and secure a confirmed, impartial best airfare on their desired flight instantly. | |||||
Capitalized costs | $ 88,983 | |||||
Impairment loss | 1,922,674 | |||||
Buddigo [Member] | ||||||
Intangible Assets (Textual) | ||||||
Amortization of intangible assets | $ 99,177 | $ 82,104 | $ 299,373 | $ 241,464 | ||
Minimum [Member] | Land use rights [Member] | ||||||
Intangible Assets (Textual) | ||||||
Intangible assets, useful life | 45 years | |||||
Maximum [Member] | Land use rights [Member] | ||||||
Intangible Assets (Textual) | ||||||
Intangible assets, useful life | 50 years |
Short-Term Bank Loans (Details)
Short-Term Bank Loans (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | |
Summary of short-term bank loans | |||
Total short-term bank loans | $ 2,202,246 | $ 2,074,529 | |
Loan from Bank of China, due on December 4, 2018 [Member] | |||
Summary of short-term bank loans | |||
Total short-term bank loans | 363,282 | 384,172 | |
Loan from Bank of China, due on December 6, 2018 [Member] | |||
Summary of short-term bank loans | |||
Total short-term bank loans | 363,282 | 384,172 | |
Loan from Bank of Wuxi Nongshuang, due on April 25, 2018 [Member] | |||
Summary of short-term bank loans | |||
Total short-term bank loans | 691,510 | ||
Loan from Bank of Wuxi Nongshuang, due on February 22, 2019 [Member] | |||
Summary of short-term bank loans | |||
Total short-term bank loans | 653,909 | ||
Loan from Bank of Communication, due on September 20, 2019 [Member] | |||
Summary of short-term bank loans | |||
Total short-term bank loans | 614,675 | ||
Loan from Bank of Communication, due on September 25, 2018 [Member] | |||
Summary of short-term bank loans | |||
Total short-term bank loans | 581,252 | ||
Loan from Zhongli International Finance Corporation [Member] | |||
Summary of short-term bank loans | |||
Total short-term bank loans | [1] | $ 240,521 | |
[1] | Long-term bank loans represent amounts due to various banks that are due more than one year. Long-term portion of loan from Zhongli International Finance Corporation is $282,605 as of September 30, 2018. |
Short-Term Bank Loans (Details
Short-Term Bank Loans (Details 1) | Sep. 30, 2018USD ($) |
Short-Term Bank Loans / Convertible Note Payable [Abstract] | |
2,019 | $ 366,189 |
2,020 | 240,638 |
2,021 | 170,888 |
Total minimum loan payments | 777,715 |
Less: amount representing interest | (123,807) |
Less: security deposit due | (130,782) |
Present value of net minimum loan payment | 523,127 |
Less: current portion | 240,521 |
Long-term portion | $ 282,605 |
Short-Term Bank Loans (Detail_2
Short-Term Bank Loans (Details Textual) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2018CNY (¥) | Sep. 30, 2017USD ($) | Sep. 30, 2018CNY (¥) | |
Short-Term Bank Loans (Textual) | ||||||
Interest related to the short-term bank loans | $ 118,894 | $ 33,125 | $ 241,708 | $ 107,991 | ||
Terms of short term bank loans | 36 months | 36 months | ||||
Long-term portion of loan | $ 282,605 | $ 282,605 | ||||
1st - 12th month [Member] | ||||||
Short-Term Bank Loans (Textual) | ||||||
Monthly installment | 30,516 | ¥ 210,000 | ||||
13th - 24th month [Member] | ||||||
Short-Term Bank Loans (Textual) | ||||||
Monthly installment | 20,053 | 138,000 | ||||
25st - 36th month [Member] | ||||||
Short-Term Bank Loans (Textual) | ||||||
Monthly installment | $ 14,241 | ¥ 98,000 | ||||
Loan from Bank of China, due on December 4, 2018 [Member] | ||||||
Short-Term Bank Loans (Textual) | ||||||
Short-term bank loans, interest rate, stated percentage | 6.09% | 6.09% | 6.09% | |||
Short-term bank loans, maturity date | Dec. 4, 2018 | Dec. 4, 2018 | ||||
Loan from Bank of China, due on December 6, 2018 [Member] | ||||||
Short-Term Bank Loans (Textual) | ||||||
Short-term bank loans, interest rate, stated percentage | 6.09% | 6.09% | 6.09% | |||
Short-term bank loans, maturity date | Dec. 6, 2018 | Dec. 6, 2018 | ||||
Loan from Bank of Wuxi Nongshuang, due on April 25, 2018 [Member] | ||||||
Short-Term Bank Loans (Textual) | ||||||
Short-term bank loans, interest rate, stated percentage | 5.87% | 5.87% | 5.87% | |||
Short-term bank loans, maturity date | Apr. 25, 2018 | Apr. 25, 2018 | ||||
Loan from Bank of Wuxi Nongshuang, due on February 22, 2019 [Member] | ||||||
Short-Term Bank Loans (Textual) | ||||||
Short-term bank loans, interest rate, stated percentage | 5.87% | 5.87% | 5.87% | |||
Short-term bank loans, maturity date | Feb. 22, 2019 | Feb. 22, 2019 | ||||
Loan from Bank of Communication, due on September 25, 2018 [Member] | ||||||
Short-Term Bank Loans (Textual) | ||||||
Short-term bank loans, interest rate, stated percentage | 5.85% | 5.85% | 5.85% | |||
Short-term bank loans, maturity date | Sep. 25, 2018 | Sep. 25, 2018 | ||||
Loan from Bank of Communication, due on September 20, 2019 [Member] | ||||||
Short-Term Bank Loans (Textual) | ||||||
Short-term bank loans, interest rate, stated percentage | 5.85% | 5.85% | 5.85% | |||
Short-term bank loans, maturity date | Sep. 20, 2019 | Sep. 20, 2019 | ||||
Loan from Zhongli International Finance Corporation [Member] | ||||||
Short-Term Bank Loans (Textual) | ||||||
Line of credit | $ 653,908 | $ 653,908 | ¥ 4,500,000 | |||
Security Deposit | $ 130,782 | $ 130,782 | ¥ 900,000 |
Bank Acceptance Notes Payable_2
Bank Acceptance Notes Payable (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Summary of bank acceptance notes payables | ||
Total | $ 145,313 | $ 422,589 |
Bank of China, non-interest bearing, due on June 25, 2018, collateralized by 100% of restricted cash deposited Member] | ||
Summary of bank acceptance notes payables | ||
Total | 115,252 | |
Bank of Communication, non-interest bearing, due on March 24, 2018, collateralized by 100% of restricted cash deposited [Member] | ||
Summary of bank acceptance notes payables | ||
Total | 307,337 | |
Bank of Communication, non-interest bearing, due on December 26, 2018, collateralized by 100% of restricted cash deposited [Member] | ||
Summary of bank acceptance notes payables | ||
Total | $ 145,313 |
Bank Acceptance Notes Payable_3
Bank Acceptance Notes Payable (Details Textual) | 9 Months Ended |
Sep. 30, 2018 | |
Bank of China, non-interest bearing, due on June 25, 2018, collateralized by 100% of restricted cash deposited Member] | |
Bank Acceptance Notes Payable (Textual) | |
Debt instrument, maturity date | Jun. 25, 2018 |
Percentage of assets collateralized for non-interest bearing notes payable | 100.00% |
Bank of Communication, non-interest bearing, due on March 24, 2018, collateralized by 100% of restricted cash deposited [Member] | |
Bank Acceptance Notes Payable (Textual) | |
Debt instrument, maturity date | Mar. 24, 2018 |
Percentage of assets collateralized for non-interest bearing notes payable | 100.00% |
Bank of Communication, non-interest bearing, due on December 26, 2018, collateralized by 100% of restricted cash deposited [Member] | |
Bank Acceptance Notes Payable (Textual) | |
Debt instrument, maturity date | Dec. 26, 2018 |
Percentage of assets collateralized for non-interest bearing notes payable | 100.00% |
Convertible Note Payable (Detai
Convertible Note Payable (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Short-Term Bank Loans / Convertible Note Payable [Abstract] | ||
Principal | $ 900,000 | $ 670,000 |
Unamortized discount | (231,672) | |
Convertible debt, net | $ 668,328 | $ 670,000 |
Convertible Note Payable (Det_2
Convertible Note Payable (Details Textual) - USD ($) | May 02, 2018 | Jan. 08, 2018 | Aug. 17, 2018 | May 02, 2018 | Oct. 09, 2017 | Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Nov. 08, 2018 | Dec. 31, 2017 |
Convertible Note Payable (Textual) | ||||||||||
Due date description | The expiration date has been extended from October 18, 2018 to January 18, 2019 by mutual agreement of both parties. | |||||||||
Amortization of debt discount | $ 69,502 | $ 115,836 | ||||||||
Fair value of the warrants issued | $ 152,490 | |||||||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | |||||||
Accrued interest | $ 22,500 | $ 37,500 | ||||||||
Securities purchase agreement [Member] | Convertible Debt [Member] | ||||||||||
Convertible Note Payable (Textual) | ||||||||||
Common stock conversion price | $ 6.70 | $ 6.70 | ||||||||
Aggregate of outstanding principal amount | $ 900,000 | $ 900,000 | ||||||||
Warrants to purchase common stock | 134,328 | |||||||||
Warrants exercise price | $ 7.18 | $ 7.18 | ||||||||
Original issue discount | $ 150,000 | |||||||||
Debt discount | $ 45,018 | |||||||||
Due date description | due on the date that is fifteen months from May 2, 2018. | |||||||||
Redemption conversion price description | (a) the Lender Conversion Price, and (b) the Market Price; provided, however, in no event shall the Redemption Conversion Price be less than $2.00 per share ("Conversion Price Floor"). | |||||||||
Term of warrants | 2 years | |||||||||
Short-term bank loans, interest rate, stated percentage | 10.00% | 10.00% | ||||||||
Note Purchase Agreement [Member] | ||||||||||
Convertible Note Payable (Textual) | ||||||||||
Converted into common stock share | 200,100 | |||||||||
Subsequent Events [Member] | Convertible Debt [Member] | ||||||||||
Convertible Note Payable (Textual) | ||||||||||
Aggregate of outstanding principal amount | $ 27,811 | |||||||||
Investor [Member] | Securities purchase agreement [Member] | ||||||||||
Convertible Note Payable (Textual) | ||||||||||
Aggregate of outstanding principal amount | $ 900,000 | $ 900,000 | ||||||||
Warrants to purchase common stock | 134,328 | |||||||||
Warrants exercise price | $ 7.18 | $ 7.18 | ||||||||
Original issue discount | $ 150,000 | |||||||||
Due date description | The Note bears interest at 10% per annum, is unsecured, and is due on the date that is fifteen months from May 2, 2018. | |||||||||
Redemption conversion price description | (a) the Lender Conversion Price, and (b) the Market Price; provided, however, in no event shall the Redemption Conversion Price be less than $2.00 per share ("Conversion Price Floor"). | |||||||||
Term of warrants | 2 years | |||||||||
Short-term bank loans, interest rate, stated percentage | 10.00% | 10.00% | ||||||||
Common stock, par value | $ 0.001 | $ 0.001 | ||||||||
Investor [Member] | Note Purchase Agreement [Member] | ||||||||||
Convertible Note Payable (Textual) | ||||||||||
Investor purchased note | $ 670,000 | |||||||||
Bearing interest percentage | 2.00% | |||||||||
Common stock conversion price | $ 3.35 | |||||||||
Common stock, par value | $ 0.001 | $ 0.001 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jun. 21, 2018 | Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Related Party Transactions (Textual) | |||||
Amounts due to related party | $ 2,158,404 | $ 2,158,404 | $ 347,589 | ||
License fee expense included in cost of sales | 145,213 | 210,213 | |||
Prepaid license fee - related party | 829,787 | $ 829,787 | |||
ECrent [Member] | |||||
Related Party Transactions (Textual) | |||||
Service agreements description | The Company granted ECrent 250,000 shares of common stock (the "Consideration Shares"), at an issue price of $1,040,000, or $4.16 per share, (based on the quoted market price of the Company's common stock on the amended Agreement date of May 24, 2018). Pursuant to the terms of the Agreement, ECrent shall provide a guarantee on revenue and profit of $13,000,000 and $2,522,000, respectively. | ||||
Future Ocean Limited [Member] | |||||
Related Party Transactions (Textual) | |||||
Provisional agreement for purchase and sale description | EC Assets has agreed to purchase Future Ocean Limited for HKD96 million. The parties intend to negotiate in good faith to enter into a formal agreement for the purchase and sale of the Property and close on or before December 31, 2018.There is no guarantee that the transaction will be consummated. In connection with this procurement, Ms. Deborah Yuen lent the Company HKD9.6 million (approximately $1,230,769) with non-interest bearing and due on demand as of September 30, 2018. | ||||
YSK 1860 Co., Limited [Member] | |||||
Related Party Transactions (Textual) | |||||
Amounts due to related party | $ 927,635 | $ 927,635 | $ 347,589 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) | Jul. 10, 2018USD ($)$ / sharesshares | Jan. 30, 2018USD ($)$ / sharesshares | Jan. 19, 2018USD ($)$ / sharesshares | Jan. 08, 2018shares | Oct. 31, 2018consultantsshares | Jun. 26, 2018USD ($)$ / sharesshares | Mar. 31, 2018USD ($)$ / sharesshares | Sep. 30, 2018USD ($)shares | Sep. 30, 2018USD ($)consultantsshares | Dec. 31, 2017USD ($)shares |
Stockholders' Equity (Textual) | ||||||||||
Common stock issued for services | shares | 736,806 | |||||||||
Stock-based compensation expense | $ | $ 9,132,385 | |||||||||
Additional share of common stock | shares | 69,676 | 290,000 | ||||||||
Acquisition of issued and outstanding capital stock percentage | 80.00% | 60.00% | ||||||||
Acquisition issued unregistered shares | shares | 106,464 | 68,610 | 250,000 | |||||||
Acquisition common stock value | $ | $ 534,449 | $ 442,535 | $ 1,040,000 | |||||||
Business acquisition, per share | $ / shares | $ 5.02 | $ 6.45 | $ 4.16 | |||||||
Common stock upon conversion of debt | shares | 200,100 | |||||||||
License fee expense | $ | $ 145,213 | $ 210,213 | ||||||||
Prepaid license fee - related party | $ | $ 829,787 | |||||||||
Preferred stock, shares authorized | shares | 10,000,000 | 10,000,000 | 10,000,000 | |||||||
Shares issued for donation, value | $ | ||||||||||
Series A Preferred Stock [Member] | ||||||||||
Stockholders' Equity (Textual) | ||||||||||
Preferred stock, shares authorized | shares | 10,000,000 | 10,000,000 | ||||||||
Directors employees and consultants [Member] | ||||||||||
Stockholders' Equity (Textual) | ||||||||||
Common stock issued for services | shares | 426,870 | |||||||||
Stock-based compensation expense | $ | $ 879,258 | |||||||||
Prepaid expenses | $ | $ 496,654 | $ 496,654 | ||||||||
Additional share of common stock | shares | 5,610 | |||||||||
Ng Hong Man Educational Foundation Limited [Member] | ||||||||||
Stockholders' Equity (Textual) | ||||||||||
Shares issued for donation | shares | 58,000 | |||||||||
Shared issued for donation, price per share | $ / shares | $ 4.17 | |||||||||
Shares issued for donation, value | $ | $ 241,860 | |||||||||
Donation expense | $ | 241,860 | $ 241,860 | ||||||||
Sharing Film International Limited [Member] | ||||||||||
Stockholders' Equity (Textual) | ||||||||||
Stock-based compensation expense | $ | 26,773 | |||||||||
Prepaid expenses | $ | 1,048,659 | $ 1,048,659 | ||||||||
Tenancy agreement, description | The Landlord let and Sharing Film took one level of office complex of Shaw Movie City for one year commencing from 1 November 2018 renewable on a yearly basis. On July 24, 2018, the Company issued 311,357 shares as the payment for the annual rental and part of the management fee for the one year tenure and 54,777 shares as the payment of part of the tenancy deposit. | |||||||||
Fair value of the tenancy deposit | $ | 189,185 | $ 189,185 | ||||||||
Two-year consulting agreement [Member] | ||||||||||
Stockholders' Equity (Textual) | ||||||||||
Stockholders equity, description | Pursuant to a two-year consulting agreement between the Company's wholly-owned subsidiary, EC Advertising and an individual, the Company shall, within one month from the date of this Agreement (October 9, 2017), issue such number of ordinary shares of EC Advertising to the Consultant (or his nominee) so that he (or his nominee) will hold 15% of EC Advertising issued share capital as enlarged by the share issue pursuant to this agreement. Additionally, within one month after the Consultant achieves all the performance targets as outlined in the agreement, EC Advertising shall issue, or shall cause its major shareholder to transfer, such number of EC Advertising's ordinary shares to the Consultant (or its nominee) so that he (and his nominee) will, together with the 15% issued share capital discussed above, hold a total of 49% of EC Advertising's issued share capital as enlarged by the share issue or after the transfer (as the case may be). Performance targets include the achievement by the Company of total revenue of $10,000,000 and profit after tax of $4,000,000 during the term of the agreement. | |||||||||
Stock purchase agreement [Member] | Investor [Member] | ||||||||||
Stockholders' Equity (Textual) | ||||||||||
Common stock sold for cash, shares | shares | 69,676 | |||||||||
Purchase price of per share | $ / shares | $ 3.68 | |||||||||
Net cash proceeds amount | $ | $ 256,410 | |||||||||
Consulting and service agreements [Member] | ||||||||||
Stockholders' Equity (Textual) | ||||||||||
Common stock issued for services | shares | 3,422,120 | |||||||||
Unvested stock-based consulting fees | $ | $ 2,633,897 | |||||||||
Consulting and service agreements [Member] | Subsequent Event [Member] | ||||||||||
Stockholders' Equity (Textual) | ||||||||||
Number of consultants | consultants | 6 | |||||||||
Issue in aggregate of shares in effect | shares | 614,929 | |||||||||
Consultants and vendors [Member] | ||||||||||
Stockholders' Equity (Textual) | ||||||||||
Prepaid expenses | $ | $ 7,159,087 | $ 7,159,087 | ||||||||
Additional share of common stock | shares | 1,595,025 | |||||||||
Stockholders equity, description | The total maximum number of shares issued for the Shortfall of these consultancy agreements shall not exceed 291,169 Shares. | |||||||||
Number of consultants | consultants | 94 | |||||||||
Consultants and vendors [Member] | 2019 [Member] | ||||||||||
Stockholders' Equity (Textual) | ||||||||||
Additional share of common stock | shares | 339,437 | |||||||||
Consultants and vendors [Member] | October 2018 and December 2018 [Member] | ||||||||||
Stockholders' Equity (Textual) | ||||||||||
Additional share of common stock | shares | 1,255,588 | |||||||||
Number of consultants | consultants | 36 |
Statutory Reserve (Details)
Statutory Reserve (Details) | 9 Months Ended |
Sep. 30, 2018 | |
Statutory Reserve (Textual) | |
Appropriation to the statutory surplus reserve, description | Appropriation to the statutory reserve should be at least 10% of the after tax net income determined in accordance with the PRC GAAP until the reserve is equal to 50% of the entities' registered capital or members' equity. |
Company had not appropriated required maximum of registered capital to statutory reserves, description | The appropriation is required until the statutory reserve reaches 50% of the registered capital. This statutory reserve is not distributable in the form of cash dividends. As of September 30, 2018 and December 31, 2017, the Company appropriated the required 50% of its registered capital to statutory reserve for Dyeing and Heavy Industries. |
Segment Information (Details)
Segment Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | ||
Segment reporting information | ||||||
Revenues | $ 2,517,201 | $ 2,629,217 | $ 7,655,321 | $ 10,998,438 | ||
Depreciation | 979,203 | 998,394 | 3,080,857 | 2,937,696 | ||
Interest expense | 118,894 | 33,125 | 241,708 | 107,991 | ||
Net loss | (18,573,719) | (4,250,327) | (29,463,062) | (4,918,233) | ||
Identifiable long-lived tangible assets by segment | 28,541,122 | 28,541,122 | $ 33,181,119 | |||
Identifiable long-lived tangible assets by geographical location | 28,541,122 | 28,541,122 | 33,181,119 | |||
Dyeing and Finishing Equipment [Member] | ||||||
Segment reporting information | ||||||
Revenues | 2,444,437 | 2,629,217 | 7,499,362 | 10,998,438 | ||
Depreciation | 974,745 | 955,944 | 3,067,647 | 2,895,246 | ||
Interest expense | 26,892 | 33,125 | 88,372 | 107,991 | ||
Net loss | (13,293,023) | (4,158,877) | (17,364,755) | (4,826,783) | ||
Identifiable long-lived tangible assets by segment | 23,457,887 | 23,457,887 | 27,805,180 | |||
Sharing Economy [Member] | ||||||
Segment reporting information | ||||||
Revenues | 72,764 | 155,959 | ||||
Depreciation | 4,458 | 13,210 | ||||
Interest expense | 92,002 | |||||
Net loss | (4,319,404) | (20,111) | (8,049,373) | (20,111) | ||
Identifiable long-lived tangible assets by segment | 61,220 | 61,220 | 65,144 | |||
Discontinued Segments [Member] | ||||||
Segment reporting information | ||||||
Net loss | (385) | (71,339) | 16,486 | (71,339) | ||
Other [Member] | ||||||
Segment reporting information | ||||||
Net loss | [1] | (960,907) | (4,065,420) | |||
Identifiable long-lived tangible assets by segment | [2] | 5,022,015 | 5,022,015 | 5,310,795 | ||
China [Member] | ||||||
Segment reporting information | ||||||
Identifiable long-lived tangible assets by geographical location | 28,479,902 | 28,479,902 | 33,115,975 | |||
Hong Kong [Member] | ||||||
Segment reporting information | ||||||
Identifiable long-lived tangible assets by geographical location | 61,220 | 61,220 | 65,144 | |||
United States [Member] | ||||||
Segment reporting information | ||||||
Identifiable long-lived tangible assets by geographical location | ||||||
[1] | The Company does not allocate any general and administrative expense of its U.S. activities to its reportable segments, because these activities are managed at a corporate level. | |||||
[2] | Represents amount of net tangible assets not in use and to be used by for new segment being developed. |
Segment Information (Details Te
Segment Information (Details Textual) - Segment | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Segment Information (Textual) | ||||
Number of reportable business segments | 2 | 1 | 2 | 1 |
Concentrations (Details)
Concentrations (Details) - Purchase [Member] | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | ||
Supplier A [Member] | |||
Concentration of purchase from suppliers | |||
Concentration risk supplier, percentage | 22.00% | ||
Supplier B [Member] | |||
Concentration of purchase from suppliers | |||
Concentration risk supplier, percentage | 14.00% | 12.00% | |
Supplier C [Member] | |||
Concentration of purchase from suppliers | |||
Concentration risk supplier, percentage | 29.00% | [1] | |
Supplier D [Member] | |||
Concentration of purchase from suppliers | |||
Concentration risk supplier, percentage | 18.00% | [1] | |
Suppliers E [Member] | |||
Concentration of purchase from suppliers | |||
Concentration risk supplier, percentage | 15.00% | [1] | |
[1] | Less than 10%. |
Concentrations (Details Textual
Concentrations (Details Textual) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018Customer | Sep. 30, 2017Customer | Dec. 31, 2017Supplier | |
Accounts receivable [Member] | |||
Concentrations (Textual) | |||
Concentration risk percentage | 10.00% | 10.00% | |
Accounts payable [Member] | |||
Concentrations (Textual) | |||
Concentration risk percentage | 10.00% | ||
Accounts payable [Member] | Supplier one [Member] | |||
Concentrations (Textual) | |||
Concentration risk percentage | 13.00% | ||
Number of suppliers | Supplier | 1 | ||
Revenue [Member] | |||
Concentrations (Textual) | |||
Concentration risk percentage | 45.00% | 10.00% | |
Number of customers | 3 | 1 | |
Revenue [Member] | Customer one [Member] | |||
Concentrations (Textual) | |||
Concentration risk percentage | 18.00% | ||
Number of customers | 3 | ||
Revenue [Member] | Customer two [Member] | |||
Concentrations (Textual) | |||
Concentration risk percentage | 16.00% | ||
Number of customers | 3 | ||
Revenue [Member] | Customer Three Member | |||
Concentrations (Textual) | |||
Concentration risk percentage | 11.00% | ||
Number of customers | 3 | ||
Purchase [Member] | Suppliers [Member] | |||
Concentrations (Textual) | |||
Concentration risk percentage | 10.00% | 10.00% |
Commitment and Contingencies (D
Commitment and Contingencies (Details) | Nov. 14, 2017USD ($) | Aug. 04, 2017USD ($)consultants | Jun. 29, 2018ft² | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018CNY (¥) | Apr. 30, 2018CNY (¥) | Dec. 31, 2017USD ($) | Dec. 26, 2016USD ($) | Dec. 26, 2016CNY (¥) |
Commitment and Contingencies (Textual) | ||||||||||||
Total equity investments amount | $ 9,053,859 | |||||||||||
Loss on equity method investment | $ (8,892,458) | $ (39,060) | $ (9,038,303) | $ (81,871) | ||||||||
Amount paid by company | $ 50,000 | |||||||||||
Description of lease agreement | The rent of the Premises is HK$591,664 (approximately $76,000) per month, that is HK$7,099,970 per annum (approximately $910,000) for the Term. The entire sum of HK$7,099,970 (approximately $910,000) shall be payable in advance on the Handover Date without any deduction or set-off by such means and in such manner. Additionally, the Company shall pay a management fee as follows:(i) HK$47,207 (approximately $6,000) per month by cash in Hong Kong currency, payable in advance of each calendar month (commencing from the month of August 2018) for the Management Fee of office A;(ii) HK$2,994 (approximately $384) per month by cash in Hong Kong currency, payable in advance of each calendar month (commencing from the month of August 2018) for the Management Fee of flat roof;(iii) HK$571,061 (approximately $73,000) being 6 months' Management Fee for office B (and balcony B) and office C (and balcony C) payable in advance by way of Allotted Shares for Payment, as defined below, in the manner pursuant to the agreement; and(iv) HK$95,177 (approximately $12,000) per month by cash in Hong Kong currency, payable in advance of each calendar month (commencing from the month of February 2019) for the Management Fee of office B (and balcony B) and office C (and balcony C). | |||||||||||
Description of security deposit | The Company is required to pay a security deposit in the amount of HK$3,137,502 (approximately $402,000) payable as follows: 1) HK$1,637,502 (approximately $210,000) by check and 2) HK$1,500,000 (approximately $192,000) by means of delivering to the Landlord the Company's the SEII new common shares issued and allotted to and in the name of the Landlord's nominee, at the Issue Price Per Allotted Share for Deposit, as defined below, provided that in no event shall the number of the Company's common shares to be issued to the Landlord's Nominee pursuant to this Agreement will exceed 19.9% of the issued and outstanding shares of the Company's common stock based on the total issued and outstanding shares of the Company's common stock on the date of this Agreement. The issue price per Allotted Share for Payment is to be set and determined based on a 5-days closing average of the Company before the Shares Issued Date less 10% thereof ("Issue Price Per Allotted Share for Payment"). The issue price per Allotted Share for Deposit is to be set and determined based on a 5-days closing average of the Company before the Shares Issued Date (hereinafter called "Issue Price Per Allotted Share for Deposit"). | |||||||||||
Area in Shaw Studios | ft² | 24,000 | |||||||||||
Transfer Agreement [Member] | ||||||||||||
Commitment and Contingencies (Textual) | ||||||||||||
Total consideration | $ 20,000,000 | |||||||||||
Expiry Date | Aug. 3, 2021 | |||||||||||
Validity period | 4 years | |||||||||||
Percentage of installment of sale proceeds | 50.00% | |||||||||||
Period of trading days | consultants | 20 | |||||||||||
Commitments, description | The number of shares to be issued or delivered shall be an amount equal to (i) the balance due; divided by (ii) the VWAP of the shares for the period of twenty trading days immediately preceding the Expiry Date, provided always that in no circumstances shall shares be issued or delivered hereunder to the ECoin in excess of 19% of the issued and outstanding ordinary Shares of the Company. | |||||||||||
Mr. Xue [Member] | ||||||||||||
Commitment and Contingencies (Textual) | ||||||||||||
Agreed to invest | $ 22,300,000 | ¥ 140,000,000 | ||||||||||
Percentage of capital stock owned | 70.00% | 70.00% | ||||||||||
Contributed amount | $ 9,500,000 | ¥ 60,000,000 | ||||||||||
Dyeing [Member] | ||||||||||||
Commitment and Contingencies (Textual) | ||||||||||||
Agreed to invest | 9,543,000 | 60,000,000 | ||||||||||
Percentage of capital stock owned | 30.00% | 30.00% | 30.00% | |||||||||
Total equity investments amount | $ 9,511,000 | $ 9,511,000 | ¥ 59,800,000 | |||||||||
Shengxin [Member] | ||||||||||||
Commitment and Contingencies (Textual) | ||||||||||||
Agreed to invest | $ 31,800,000 | ¥ 200,000,000 | ||||||||||
Total equity investments amount | $ 8,835,834 | $ 8,835,834 | ¥ 40,000,000 |
Restricted Net Assets (Details)
Restricted Net Assets (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Restricted Net Assets (Textual) | ||
Company's restricted net assets | $ 30,843,000 | $ 50,873,000 |
Annual appropriations required by statutory reserve fund, description | Subject to certain cumulative limit, a statutory reserve fund requires annual appropriations of at least 10% of after-tax profit, if any, of the relevant PRC VIEs and subsidiary. |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Nov. 08, 2018 | Aug. 17, 2018 |
Subsequent Events (Textual) | ||
Description of acquired entity | SEIL has entered into a Sale and Purchase Agreement (the "Agreement") with the shareholder of Gagfare Limited ("Gagfare"), to acquire 60% ownership of Gagfare. SEIL will acquire 60% of Gagfare for US$3.6 million, which shall be satisfied by the allotment and issuance of 1,176,087 preferred shares of the Company at a price of $3.061 per share. Gagfare is an online platform enabling travelers to search flights directly with over 500 airlines globally, allowing them to get the best-value airfare for their desired flight and secure a confirmed, impartial best airfare on their desired flight instantly. | |
Due date description | The expiration date has been extended from October 18, 2018 to January 18, 2019 by mutual agreement of both parties. | |
Subsequent Events [Member] | Convertible Debt [Member] | ||
Subsequent Events (Textual) | ||
Aggregate of outstanding principal amount | $ 27,811 | |
Aggregate Interest amount | $ 47,189 | |
Converted shares of common stock | 36,621 |