x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|
Nevada
|
75-1564807
|
(State or other jurisdiction of
|
(IRS Employer
|
incorporation or organization)
|
Identification No.)
|
Large accelerated filer o
|
Accelerated filer o
|
Non-accelerated filer o
(Do not check if a smaller reporting company)
|
Smaller reporting company x
|
1.
|
The Company had not properly evaluated whether collectability of revenue was reasonably assured for sales to customers with significantly aged receivable balances and, therefore, whether the revenue had been appropriately recognized. As a result of the process review of revenue recognition, the Company determined that collectability of revenue was not reasonably assured for certain sales transactions and consequently it deferred revenue on these transactions. Additionally, the Company previously had not properly evaluated the reasonableness of the allowance for doubtful accounts. As a result of the process review of calculating the allowance for doubtful accounts, the Company has changed its estimate of allowance for doubtful accounts. Consequently, the Balance Sheet as of September 30, 2015 and the Statement of Operations and Comprehensive Loss, Statement of Cash Flows and Statement of Stockholders Equity for the nine months ended September 30, 2015 have been restated.
|
2.
|
To amend the reportable figures affected by the restatements discussed above and add the words “as restated”, as applicable, to column headings of certain financial tables contained in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
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3.
|
To amend and restate, in its entirety, Item 4. “Controls and Procedures,” due to the errors in accounting that led to the restatement, the management concluded that the Company's disclosure controls and procedures were not effective at September 30, 2015.
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Item 1.
|
Financial Statements
|
5 |
Condensed Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014 (Unaudited)
|
6 | |
Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months
Ended September 30, 2015 and 2014 (Unaudited)
|
7 | |
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2015 and 2014 (Unaudited)
|
8 | |
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
9 | |
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
16 |
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
22 |
Item 4.
|
Controls and Procedures
|
22 |
PART II OTHER INFORMATION
|
||
Item 6.
|
Exhibits
|
23 |
CHINA PHARMA HOLDINGS, INC.
|
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||
(Unaudited)
|
||||||||
September 30,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
(As Restated -
Note 1)
|
|
|||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 5,741,709 | $ | 5,295,790 | ||||
Banker's acceptances
|
312,801 | 458,233 | ||||||
Trade accounts receivable, less allowance for doubtful
|
||||||||
accounts of $48,680,260 and $44,347,351, respectively
|
8,019,872 | 13,853,744 | ||||||
Other receivables, less allowance for doubtful
|
||||||||
accounts of $84,280 and $60,325, respectively
|
419,022 | 272,199 | ||||||
Advances to suppliers
|
9,314,711 | 7,889,009 | ||||||
Inventory, less allowance for obsolescence
|
||||||||
of $7,355,699 and $6,934,044, respectively
|
12,290,243 | 15,321,856 | ||||||
Prepaid expenses
|
- | 404,370 | ||||||
Total Current Assets
|
36,098,358 | 43,495,201 | ||||||
Advances for purchases of intangible assets
|
41,337,205 | 42,390,186 | ||||||
Property and equipment, net of accumulated depreciation of
|
||||||||
$8,862,709 and $6,640,718, respectively
|
30,453,919 | 33,881,878 | ||||||
Intangible assets, net of accumulated amortization of
|
||||||||
$4,389,602 and $4,186,273, respectively
|
1,034,058 | 1,317,221 | ||||||
TOTAL ASSETS
|
$ | 108,923,540 | $ | 121,084,486 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Trade accounts payable
|
$ | 4,329,918 | $ | 2,550,816 | ||||
Accrued expenses
|
221,856 | 269,870 | ||||||
Other payables
|
1,436,124 | 1,401,470 | ||||||
Advances from customers
|
914,276 | 2,078,866 | ||||||
Other payables - related parties
|
1,354,567 | 1,354,567 | ||||||
Current portion of construction loan facility
|
3,147,723 | 1,629,062 | ||||||
Short-term notes payable
|
4,721,584 | 4,887,187 | ||||||
Total Current Liabilities
|
16,126,048 | 14,171,838 | ||||||
Non-current Liabilities:
|
||||||||
Construction loan facility
|
9,443,167 | 11,403,438 | ||||||
Deferred revenue
|
2,431,114 | 2,516,383 | ||||||
Long-term deferred tax liability
|
300,010 | 252,707 | ||||||
Total Liabilities
|
28,300,339 | 28,344,366 | ||||||
Stockholders' Equity:
|
||||||||
Preferred stock, $0.001 par value; 5,000,000 shares authorized;
|
||||||||
no shares issued or outstanding
|
- | - | ||||||
Common stock, $0.001 par value; 95,000,000 shares authorized;
|
||||||||
43,579,557 shares and 43,579,557 shares outstanding, respectively
|
43,580 | 43,580 | ||||||
Additional paid-in capital
|
23,590,204 | 23,590,204 | ||||||
Retained earnings
|
40,187,945 | 49,345,516 | ||||||
Accumulated other comprehensive income
|
16,801,472 | 19,760,820 | ||||||
Total Stockholders' Equity
|
80,623,201 | 92,740,120 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 108,923,540 | $ | 121,084,486 |
CHINA PHARMA HOLDINGS, INC.
|
||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||
AND COMPREHENSIVE LOSS
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
For the Three Months
|
For the Nine Months
|
|||||||||||||||
Ended September 30,
|
Ended September 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
(As Restated -
Note 1)
|
|
(As Restated -
Note 1)
|
|
|||||||||||||
Revenue
|
$ | 4,479,113 | $ | 5,566,543 | $ | 15,848,218 | $ | 18,802,602 | ||||||||
Cost of revenue
|
3,720,447 | 4,057,480 | 12,667,104 | 12,215,756 | ||||||||||||
Inventory obsolescence
|
436,666 | - | 1,855,814 | - | ||||||||||||
Gross profit
|
322,000 | 1,509,063 | 1,325,300 | 6,586,846 | ||||||||||||
Operating expenses:
|
||||||||||||||||
Selling expenses
|
1,155,137 | 745,976 | 3,156,553 | 2,193,823 | ||||||||||||
General and administrative expenses
|
384,412 | 422,729 | 1,315,867 | 1,229,488 | ||||||||||||
Research and development expenses
|
405,438 | 181,796 | 741,116 | 2,528,230 | ||||||||||||
Bad debt expense
|
(3,160,862 | ) | 3,940,144 | 6,045,352 | 15,280,588 | |||||||||||
Losses from natural disaster
|
- | 2,275,593 | - | 2,275,593 | ||||||||||||
Total operating expenses
|
(1,215,875 | ) | 7,566,238 | 11,258,888 | 23,507,722 | |||||||||||
Subsidy income
|
1,655,683 | 65,086 | 1,655,683 | 65,086 | ||||||||||||
Income (loss) from operations
|
3,193,558 | (5,992,089 | ) | (8,277,905 | ) | (16,855,790 | ) | |||||||||
Other income (expense):
|
||||||||||||||||
Interest income
|
36,185 | 8,824 | 93,262 | 47,435 | ||||||||||||
Interest expense
|
(279,113 | ) | (325,244 | ) | (915,310 | ) | (495,054 | ) | ||||||||
Net other expense
|
(242,928 | ) | (316,420 | ) | (822,048 | ) | (447,619 | ) | ||||||||
Loss before income taxes
|
2,950,630 | (6,308,509 | ) | (9,099,953 | ) | (17,303,409 | ) | |||||||||
Income tax expense
|
(18,906 | ) | (19,215 | ) | (57,618 | ) | (57,758 | ) | ||||||||
Net income (loss)
|
2,931,724 | (6,327,724 | ) | (9,157,571 | ) | (17,361,167 | ) | |||||||||
Other comprehensive income (loss) - foreign currency
|
||||||||||||||||
translation adjustment
|
(3,794,761 | ) | 33,366 | (2,959,348 | ) | (927,954 | ) | |||||||||
Comprehensive loss
|
$ | (863,037 | ) | $ | (6,294,358 | ) | $ | (12,116,919 | ) | $ | (18,289,121 | ) | ||||
Income (loss) per share:
|
||||||||||||||||
Basic
|
$ | 0.07 | $ | (0.15 | ) | $ | (0.21 | ) | $ | (0.40 | ) | |||||
Diluted
|
$ | 0.07 | $ | (0.15 | ) | $ | (0.21 | ) | $ | (0.40 | ) |
CHINA PHARMA HOLDINGS, INC.
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(Unaudited)
|
||||||||
For the Nine Months
|
||||||||
Ended September 30,
|
||||||||
2015
|
2014
|
|||||||
(As Restated -
Note 1)
|
|
|||||||
Cash Flows from Operating Activities:
|
||||||||
Net loss
|
$ | (9,157,571 | ) | $ | (17,361,167 | ) | ||
Depreciation and amortization
|
2,769,761 | 1,014,221 | ||||||
Bad debt expense
|
6,045,352 | 15,280,588 | ||||||
Inventory obsolencence reserve
|
677,209 | - | ||||||
Deferred income taxes
|
460,537 | 57,758 | ||||||
Changes in assets and liabilities:
|
||||||||
Trade accounts and other receivables
|
(2,642,445 | ) | (3,371,398 | ) | ||||
Advances to suppliers
|
(1,746,117 | ) | (1,468,882 | ) | ||||
Inventory
|
3,314,458 | 7,671,072 | ||||||
Trade accounts payable
|
2,061,895 | 1,338,724 | ||||||
Accrued taxes payable
|
16,307 | (34,638 | ) | |||||
Other payables and accrued expenses
|
(18,951 | ) | (90,108 | ) | ||||
Advances from customers
|
(1,128,459 | ) | (439,740 | ) | ||||
Net Cash Provided by Operating Activities
|
651,976 | 2,596,430 | ||||||
Cash Flows from Investing Activities:
|
||||||||
Purchases of property and equipment and
|
- | - | ||||||
construction in process
|
(310,247 | ) | (4,638,265 | ) | ||||
Advances for purchases of intangible assets
|
- | (244,073 | ) | |||||
Bankers acceptances redeemed for cash
|
306,904 | - | ||||||
Net Cash Used in Investing Activities
|
(3,343 | ) | (4,882,338 | ) | ||||
Cash Flows from Financing Activity:
|
||||||||
Proceeds from construction term loan
|
- | 604,756 | ||||||
Net Cash Provided by Financing Activity
|
- | 604,756 | ||||||
Effect of Exchange Rate Changes on Cash
|
(226,914 | ) | (42,950 | ) | ||||
Net (Decrease) Increase in Cash and Cash Equivalents
|
421,719 | (1,724,102 | ) | |||||
Cash and Cash Equivalents at Beginning of Period
|
5,319,990 | 5,993,139 | ||||||
Cash and Cash Equivalents at End of Period
|
$ | 5,741,709 | $ | 4,269,037 | ||||
Supplemental Cash Flow Information:
|
||||||||
Cash paid for interest
|
$ | 905,151 | $ | 943,251 | ||||
Cash paid for income taxes
|
- | - | ||||||
Supplemental Noncash Investing and Financing Activities:
|
||||||||
Accounts payable for purchases of property and equipment
|
$ | 137,854 | $ | 69,378 | ||||
Accounts receivable collected with banker's acceptances
|
1,968,818 | 1,955,808 | ||||||
Inventory purchased with banker's acceptances
|
1,400,447 | 2,173,689 | ||||||
Advances for intangible assets purchased with banker's acceptances
|
395,445 | - |
As Previously
|
As
|
|||||||||||
Balance Sheet Amounts
|
Reported
|
Restatement
|
restated
|
|||||||||
September 30, 2015
|
||||||||||||
Accounts receivable, net of allowance
|
$ | 11,779,405 | $ | (3,759,533 | ) | $ | 8,019,872 | |||||
Total current assets
|
39,857,891 | (3,759,533 | ) | 36,098,358 | ||||||||
Total assets
|
112,683,073 | 8,401,413 | 121,084,486 | |||||||||
Deferred revenue
|
- | 2,431,114 | 2,431,114 | |||||||||
Total liabilities
|
25,869,225 | (2,431,114 | ) | 28,300,339 | ||||||||
Retained earnings
|
46,610,873 | 6,422,928 | 40,187,945 | |||||||||
Accumulated other comprehensive income - foreign
|
||||||||||||
currency translation adjustment
|
16,569,191 | (232,281 | ) | 16,801,472 | ||||||||
Total stockholders' equity
|
86,813,848 | 6,190,647 | 80,623,201 | |||||||||
Total liabilities and stockholders' equity
|
$ | 112,683,073 | $ | 3,759,533 | $ | 108,923,540 | ||||||
Statement of Operations and
|
As Previously
|
As
|
||||||||||
Comprehensive Income Amounts
|
Reported
|
Restatement
|
restated
|
|||||||||
For the nine months ended September 30, 2015
|
||||||||||||
Bad debt expense
|
$ | 13,125,809 | $ | (7,080,457 | ) | $ | 6,045,352 | |||||
Total operating expenses
|
18,339,345 | (7,080,457 | ) | 11,258,888 | ||||||||
Loss from operations
|
(15,358,362 | ) | 7,080,457 | (8,277,905 | ) | |||||||
Loss before income taxes
|
(16,180,410 | ) | 7,080,457 | (9,099,953 | ) | |||||||
Net loss
|
(16,238,028 | ) | 7,080,457 | (9,157,571 | ) | |||||||
Other comprehensive income - foreign
|
||||||||||||
currency translation adjustment
|
(3,201,969 | ) | 242,621 | (2,959,348 | ) | |||||||
Basic and diluted loss per share
|
$ | (0.37 | ) | 0.16 | $ | (0.21 | ) | |||||
As Previously
|
As
|
|||||||||||
Statement of Cash Flows Amounts
|
Reported
|
Restatement
|
restated
|
|||||||||
For the nine months ended September 30, 2015
|
||||||||||||
Net loss
|
$ | (16,238,028 | ) | 7,080,457 | $ | (9,157,571 | ) | |||||
Bad debt expense
|
13,125,809 | (7,080,457 | ) | 6,045,352 |
For the Three Months
|
For the Nine Months
|
|||||||||||||||
Ended September 30,
|
Ended September 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
(As restated)
|
(As restated)
|
|||||||||||||||
Net income (loss)
|
$ | 2,931,724 | $ | (6,327,724 | ) | $ | (9,157,571 | ) | $ | (17,361,167 | ) | |||||
Basic weighted-average common shares outstanding
|
43,579,557 | 43,579,557 | 43,579,557 | 43,579,557 | ||||||||||||
Effect of dilutive securities:
|
||||||||||||||||
Warrants
|
- | - | - | - | ||||||||||||
Options
|
- | - | - | - | ||||||||||||
Diluted weighted-average common shares outstanding
|
43,579,557 | 43,579,557 | 43,579,557 | 43,579,557 | ||||||||||||
Basic income (loss) per share
|
$ | 0.07 | $ | (0.15 | ) | $ | (0.21 | ) | $ | (0.40 | ) | |||||
Diluted income (loss) per share
|
$ | 0.07 | $ | (0.15 | ) | $ | (0.21 | ) | $ | (0.40 | ) |
September 30,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Raw materials
|
$
|
15,737,802
|
$
|
18,819,570
|
||||
Finished goods
|
3,908,140
|
3,436,330
|
||||||
19,645,942
|
22,255,900
|
|||||||
Obsolescence reserve
|
(7,355,699
|
)
|
(6,934,044
|
)
|
||||
Total Inventory
|
$
|
12,290,243
|
$
|
15,321,856
|
September 30,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Permit of land use
|
$
|
443,306
|
$
|
458,853
|
||||
Building
|
10,897,489
|
11,279,704
|
||||||
Plant, machinery and equipment
|
27,446,047
|
28,358,694
|
||||||
Motor vehicle
|
248,092
|
150,976
|
||||||
Office equipment
|
261,947
|
268,521
|
||||||
Construction in progress
|
19,747
|
5,848
|
||||||
Total
|
39,316,628
|
40,522,596
|
||||||
Less: accumulated depreciation
|
(8,862,709
|
)
|
(6,640,718
|
)
|
||||
Property and Equipment, net
|
$
|
30,453,919
|
$
|
33,881,878
|
For the Three Months
|
For the Nine Months
|
|||||||||||||||
Ended September 30,
|
Ended September 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Total interest cost incurred
|
$
|
279,113
|
$
|
330,995
|
$
|
915,310
|
$
|
952,836
|
||||||||
Interest cost capitalized
|
-
|
5,751
|
-
|
457,782
|
||||||||||||
Interest expense
|
$
|
279,113
|
$
|
325,244
|
$
|
915,310
|
$
|
495,054
|
Asset
|
Life - years
|
|
Permit of land use
|
40 - 70
|
|
Building
|
20 - 49
|
|
Plant, machinery and equipment
|
5 - 10
|
|
Motor vehicle
|
5 - 10
|
|
Office equipment
|
3-5
|
September 30,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Gross carrying amount
|
$
|
5,313,142
|
$
|
5,499,494
|
||||
Accumulated amortization
|
(4,279,084
|
)
|
(4,182,273
|
)
|
||||
Net carrying amount
|
$
|
1,034,058
|
$
|
1,317,221
|
Year
|
Amount
|
|||
2015
|
1,573,861
|
|||
2016
|
1,573,861
|
|||
2017
|
2,360,792
|
|||
2018
|
2,360,792
|
|||
2019
|
2,360,792
|
|||
Thereafter
|
2,360,792
|
|||
$
|
12,590,890
|
Enterprise Income
|
||
Year
|
Tax Rate
|
|
2015
|
15%
|
|
2016
|
15%
|
|
2017
|
25%
|
|
Thereafter
|
25%
|
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Current
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Deferred
|
(18,906
|
)
|
(19,215
|
)
|
(57,618
|
)
|
(57,758
|
)
|
||||||||
Total income tax (benefit) expense
|
$
|
(18,906
|
)
|
$
|
(19,215
|
)
|
$
|
(57,618
|
)
|
$
|
(57,758
|
)
|
Fair Value Measurements at
|
||||||||||||||||
Reporting Date Using
|
||||||||||||||||
Description
|
September 30, 2015
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Banker's acceptance notes
|
$
|
312,801
|
$
|
-
|
$
|
312,801
|
$
|
-
|
||||||||
Total
|
$
|
312,801
|
$
|
-
|
$
|
312,801
|
$
|
-
|
||||||||
Fair Value Measurements at
|
||||||||||||||||
Reporting Date Using
|
||||||||||||||||
Description
|
December 31, 2014
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Banker's acceptance notes
|
$
|
458,233
|
$
|
-
|
$
|
458,233
|
$
|
-
|
||||||||
Total
|
$
|
458,233
|
$
|
-
|
$
|
458,233
|
$
|
-
|
Product Category
|
Three Months Ended September 30,
|
Net Change
|
% Change
|
|
2015
|
2014
|
|||
CNS Cerebral & Cardio Vascular
|
0.60
|
1.17
|
(0.57)
|
-49%
|
Anti-Viro/ Infection & Respiratory
|
2.84
|
3.60
|
(0.76)
|
-21%
|
Digestive Diseases
|
0.19
|
0.29
|
(0.10)
|
-36%
|
Other
|
0.85
|
0.51
|
0.34
|
67%
|
September 30,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
1 - 90 Days
|
3.0
|
%
|
5.2
|
%
|
||||
90 - 180 Days
|
2.3
|
%
|
4.5
|
%
|
||||
180 - 360 Days
|
7.2
|
%
|
6.9
|
%
|
||||
360 - 720 Days
|
9.7
|
%
|
29.7
|
%
|
||||
> 720 Days
|
77.8
|
%
|
53.7
|
%
|
||||
Total
|
100.0
|
%
|
100.0
|
%
|
Product Category
|
Nine Months Sep. 30,
|
Net Change
|
% Change
|
|
2015
|
2014
|
|||
CNS Cerebral & Cardio Vascular
|
2.21
|
3.07
|
(0.86)
|
-28%
|
Anti-Viro/Injection & Respiratory
|
10.63
|
12.75
|
(2.12)
|
-17%
|
Digestive Diseases
|
0.54
|
1.06
|
(0.52)
|
-49%
|
Other
|
2.46
|
1.92
|
0.54
|
28%
|
For the Nine Months Ended
|
||||||||
September 30,
|
||||||||
2015
|
2014
|
|||||||
Balance, Beginning of Period
|
$
|
44,347,451
|
13,301,622
|
|||||
Bad debt expense (benefit)
|
6,045,352
|
15,280,588
|
||||||
Charged to reserve – collection discount
|
-
|
-531,382
|
||||||
Foreign currency translation adjustment
|
-1,712,543
|
-138,649
|
||||||
Balance, End of Period
|
$
|
48,680,260
|
27,912,179
|
CHINA PHARMA HOLDINGS, INC.
|
|
Date: December 24, 2015
|
By: /s/ Zhilin Li
Name: Zhilin Li
Title: President and Chief Executive Officer
(principal executive officer)
|
Date: December 24, 2015
|
By: /s/ Zhilin Li
Name: Zhilin Li
Title: Interim Chief Financial Officer
(principal financial officer and principal
accounting officer)
|
1.
|
I have reviewed this report on Form 10-Q/A of China Pharma Holdings, Inc.;
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
|
Exhibit 31.2
|
1.
|
I have reviewed this report on Form 10-Q/A of China Pharma Holdings, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
|
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2015 |
Nov. 11, 2015 |
|
Document and Entity Information | ||
Entity Registrant Name | CHINA PHARMA HOLDINGS, INC. | |
Entity Trading Symbol | cphi | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | true | |
Entity Central Index Key | 0001106644 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 43,579,557 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q3 | |
Amendment Description | Amendment No. 1 |
CONSOLIDATED BALANCE SHEETS PARENTHETICALS - USD ($) |
Sep. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
Parentheticals | ||
Allowance for doubtful accounts on trade accounts receivables | $ 48,680,260 | $ 44,347,351 |
Allowance for doubtful accounts on other receivables | 84,280 | 60,325 |
Allowance for obsolescence of inventory | 7,355,699 | 6,934,044 |
Accumulated depreciation on property and equipment | 8,862,709 | 6,640,718 |
Accumulated amortization on intangible assets | $ 4,389,602 | $ 4,186,273 |
Preferred Stock, par or stated value | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Common Stock, par or stated value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 95,000,000 | 95,000,000 |
Common Stock, shares issued | 43,579,557 | 43,579,557 |
Common Stock, shares outstanding | 43,579,557 | 43,579,557 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
REVENUES | ||||
Revenue | $ 4,479,113 | $ 5,566,543 | $ 15,848,218 | $ 18,802,602 |
Cost of revenue | 3,720,447 | 4,057,480 | 12,667,104 | 12,215,756 |
Inventory obsolescence | 436,666 | 0 | 1,855,814 | 0 |
Gross profit | 322,000 | 1,509,063 | 1,325,300 | 6,586,846 |
Operating expenses: | ||||
Selling expenses | 1,155,137 | 745,976 | 3,156,553 | 2,193,823 |
General and administrative expenses | 384,412 | 422,729 | 1,315,867 | 1,229,488 |
Research and development expenses | 405,438 | 181,796 | 741,116 | 2,528,230 |
Bad debt expense | (3,160,862) | 3,940,144 | 6,045,352 | 15,280,588 |
Losses from natural disaster | 0 | 2,275,593 | 0 | 2,275,593 |
Total operating expenses | (1,215,875) | 7,566,238 | 11,258,888 | 23,507,722 |
Subsidy income | 1,655,683 | 65,086 | 1,655,683 | 65,086 |
Loss from operations | 3,193,558 | (5,992,089) | (8,277,905) | (16,855,790) |
Other income (expense): | ||||
Interest income | 36,185 | 8,824 | 93,262 | 47,435 |
Interest expense | (279,113) | (325,244) | (915,310) | (495,054) |
Net other expense | (242,928) | (316,420) | (822,048) | (447,619) |
Loss before income taxes | 2,950,630 | (6,308,509) | (9,099,953) | (17,303,409) |
Income tax expense | (18,906) | (19,215) | (57,618) | (57,758) |
Net Income( loss) | 2,931,724 | (6,327,724) | (9,157,571) | (17,361,167) |
Other comprehensive income (loss) - foreign currency translation adjustment | (3,794,761) | 33,366 | (2,959,348) | (927,954) |
Comprehensive loss | $ (863,037) | $ (6,294,358) | $ (12,116,919) | $ (18,289,121) |
Loss per share: | ||||
Basic | $ 0.07 | $ (0.15) | $ (0.21) | $ (0.40) |
Diluted | $ 0.07 | $ (0.15) | $ (0.21) | $ (0.40) |
RESTATEMENT OF SEP30,2015 |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTATEMENTOF SEP 30,2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTATEMENT of september 30, 2015 | NOTE 1 RESTATEMENT
Restatement of September 30, 2015 Consolidated Financial Statements The Company had not properly evaluated whether collectability of revenue was reasonably assured for sales to customers with significantly aged receivable balances and, therefore, whether the revenue had been appropriately recognized. As a result of the process review of revenue recognition, the Company determined that collectability of revenue was not reasonably assured for certain sales transactions and consequently it deferred revenue on these transactions.
Additionally, the Company previously had not properly evaluated the reasonableness of the allowance for doubtful accounts. As a result of the process review of estimating the allowance for doubtful accounts, the Company has changed its estimate of allowance for doubtful accounts.
As a result of revisions to the Companys reporting processes related to the above referenced items, the Company has adjusted its consolidated financial statements as of September 30, 2015 and for the nine months then ended. The adjustments were as follows:
|
BASIS OF PRESENTATION |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION | NOTE 2 - BASIS OF PRESENTATION
Organization and Nature of Operations China Pharma Holdings, Inc., a Nevada corporation, owns 100% of Onny Investment Limited (Onny), a British Virgin Islands corporation, which owns 100% of Hainan Helpson Medical & Biotechnology Co., Ltd (Helpson), a company organized under the laws of the People's Republic of China (the PRC). China Pharma Holdings, Inc. and its subsidiaries are referred to herein as the Company.
On December 31, 2012, China Pharma Holdings, Inc consummated a reincorporation merger for the purpose of changing its state of incorporation from Delaware to Nevada pursuant to the terms and conditions of an Agreement and Plan of Merger dated December 27, 2012. The reincorporation merger was approved by stockholders holding the majority of the Companys outstanding shares of common stock on December 21, 2012.
The Foreign Investment Industrial Catalogue (the Catalogue) jointly issued by Chinas Ministry of Commerce and the National Development and Reform Commission (the latest version is the 2015 version, effective April 10, 2015) classified various industries/businesses into three different categories: (i) encouraged for foreign investment; (ii) restricted to foreign investment; and (iii) prohibited from foreign investment. For any industry/business not covered by any of these three categories, they will be deemed industries/businesses permitted for foreign investment. A typical foreign investment ownership restriction in the pharmaceutical industry is that a foreign investment enterprise (the FIE) shall not have the whole or majority of its equity interests owned by a foreign owner if the FIE establishes more than 30 branch stores and distributes a variety of brands in those franchise stores, which is not the case for the Companys business.
Helpson manufactures and markets generic and branded pharmaceutical products as well as biochemical products primarily to hospitals and private retailers located throughout the PRC. The Company believes Helpsons business is not subject to any ownership restrictions prescribed under the Catalogue. Onny acquired 100% of the ownership in Helpson on May 25, 2005 by entering into an Equity Transfer Agreement with Helpsons three former shareholders. The transaction was approved by the Commercial Bureau of Hainan Province on June 12, 2005 and Helpson received the Certificate of Approval for Establishing of Enterprises with Foreign Investment in the PRC on the same day and its business license evidencing its WFOE (Wholly Foreign Owned Enterprise) status on June 21, 2005.
The Company has acquired and continues to acquire well-accepted medical formulas to add to its diverse portfolio of Western and Chinese medicines.
Consolidation and Basis of Presentation The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and are expressed in United States dollars. The accompanying consolidated financial statements include the accounts and operations of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Helpsons functional currency is the Chinese Renminbi. Helpsons revenue and expenses are translated into United States dollars at the average exchange rate for the period. Assets and liabilities are translated at the exchange rate as of the end of the reporting period. Gains or losses from translating Helpsons financial statements are included in accumulated other comprehensive income, which is a component of stockholders equity. Gains and losses arising from transactions denominated in a currency other than the functional currency of the entity that is a party to the transaction are included in the results of operations.
Condensed Financial Statements The accompanying unaudited condensed consolidated financial statements were prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the Commission). Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Management of the Company (Management) believes the following disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 filed with the Commission on March 30, 2015.
These unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) that, in the opinion of Management, are necessary to present fairly the consolidated financial position and results of operations of the Company for the periods presented. Operating results for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.
Accounting Estimates - The preparation of financial statements in conformity with U.S. GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Basic and Diluted Loss per Common Share - Basic loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is calculated to give effect to any potentially issuable dilutive common shares. There were no potentially dilutive common shares outstanding for all periods presented.
The following table is a presentation of the numerators and denominators used in the calculation of basic and diluted loss per share:
|
INVENTORY. |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORY | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORY |
NOTE 3 INVENTORY
Inventory consisted of the following:
|
PROPERTY AND EQUIPMENT |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT | NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
A reconciliation of total interest cost incurred to interest expense as recognized in the consolidated statement of operations is as follows:
Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:
For the three and nine months ended September 30, 2015 and 2014, depreciation expense was $911,515, $321,020, $2,523,752 and $724,509, respectively.
|
INTANGIBLE ASSETS |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS | ||||||||||||||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS | NOTE 5 - INTANGIBLE ASSETS
Intangible assets represent the cost of medical formulas approved for production by the China Food and Drug Administration (CFDA). During the nine months ended September 30, 2015, the Company did not obtain CFDA production approval for any medical formula and therefore there were no costs reclassified from advances to medical formulas.
Approved medical formulas are amortized from the date CFDA approval is obtained over their individually identifiable estimated useful life, which ranges from ten to thirteen years. It is at least reasonably possible that a change in the estimated useful lives of the medical formulas could occur in the near term due to changes in the demand for the drugs and medicines produced from these medical formulas. For the three and nine months ended September 30, 2015 and 2014, amortization expense relating to intangible assets was $73,498 and $96,382, $246,009 and $289,712, respectively. Medical formulas typically do not have a residual value at the end of their amortization period.
The Company evaluates each approved medical formula for impairment at the date of CFDA approval, when indications of impairment are present and at the date of each financial statement. The Companys evaluation is based on an estimated undiscounted net cash flow model, considering currently available market data for the related drug and the Companys estimated market share. If the carrying value of the medical formula exceeds the estimated future net cash flows, an impairment loss is recognized for the excess of the carrying value over the discounted estimated future net cash flows. As a result of the evaluation, the Company has determined that each medical formula continues to provide benefits to the Company and no impairment was recognized during the nine months ended September 30, 2015 or 2014.
As of September 30, 2015 and December 31, 2014, intangible assets consisted solely of CFDA approved medical formulas as follows:
|
ADVANCES FOR PURCHASES OF INTANGIBLE ASSETS. |
9 Months Ended |
---|---|
Sep. 30, 2015 | |
ADVANCES FOR PURCHASES OF INTANGIBLE ASSETS | |
ADVANCES FOR PURCHASES OF INTANGIBLE ASSETS. | NOTE 6 ADVANCES FOR PURCHASES OF INTANGIBLE ASSETS
In order to expand the number of medicines the Company manufactured and marketed, the Company has entered into contracts with independent laboratories for the purchase of medical formulas. Although CFDA approval had not been obtained for certain medical formulas as of the dates of the respective contracts, the objective of the contracts is for the Company to purchase CFDA-approved medical formulas once the CFDA approval process is completed. Some of the medical formulas currently under the CFDAs review also come with patents. As of September 30, 2015, the Company had received the title to two unexpired patents that relate to medical formulas currently in the CFDA approval process.
Prior to entering into contracts with the Company, laboratories typically are required to complete all research and development to determine the content of the medical formula and the method to produce the generic medicine. The application for CFDAs production approval must be made by the production facility that will produce the related product. As a result, a contract typically provides that once the Company buys the medical formula from the laboratory, the laboratory is required to assist the Company in applying for and obtaining the production approval from the CFDA.
A typical CFDA approval process for the production of a generic medical product involves a number of steps that generally require three to five years to complete. If the medical formula is purchased at the point when the generic medical product receives the CFDAs approval for a clinical study, which is very typical for the Company, the clinical study that follows will usually take from one and a half to three years to complete. After completing the clinical study, the results are submitted to the CFDA and a production approval application is filed with the CFDA. In most cases, it will take between eight to eighteen months to prepare and submit the application and finally obtain the CFDA production approval. Upon approving the generic medical product, the CFDA issues a production certificate and the Company can commence the production and sales of the generic medical product. As a result of this process, CFDA approval is expected to be received in approximately two to five years from the date the Company signs the medical formula contracts.
Under the terms of the contracts, the laboratories are required to assist the Company in obtaining production approval for the medical formulas from the CFDA. Management monitors the status of each medical formula on a regular basis in order to assess whether the laboratories are performing adequately under the contracts. If a medical product is not approved by the CFDA, as evidenced by their issuance of a denial letter, or if the laboratory breaches the contract, the laboratory is required under the contract to provide a refund to the Company of the full amount of the payments made to the laboratory for that formula, or the Company can require the application of those payments to another medical formula with the same laboratory. As a result of the refund right, the Company is ultimately purchasing an approved medical product. Accordingly, payments made prior to the issuance of production approval by the CFDA are recorded as advances for purchases of intangible assets.
To date, no formula has failed to receive CFDA production approval nor has the Company been informed or become aware of any formula that may fail to receive such approval. However, there is no assurance that the medical products will receive production approval and if the Company does not receive such approval, it will enforce its contractual rights to receive the refund from the laboratory or have the payments applied to another medical formula with the same laboratory.
As of September 30, 2015, the Company was obliged to pay laboratories and others approximately $4.2 million upon completion of various phases of contracts to provide CFDA production approval of medical formulas. |
RELATED PARTY TRANSACTIONS |
9 Months Ended |
---|---|
Sep. 30, 2015 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 7 RELATED PARTY TRANSACTIONS
Total advances owing to a board member were $1,354,567 as of September 30, 2015 and December 31, 2014, respectively, and are recorded as other payables related parties on the accompanying condensed consolidated balance sheets. The advances bear interest at a rate of 1.0% per year and is payable on December 31, 2015. Total interest expense of $3,386 and $3,386, $10,158 and $10,158 was recognized for the three and nine months ended September 30, 2015 and 2014, respectively. |
NOTES PAYABLE |
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Sep. 30, 2015 | |
NOTES PAYABLES | |
NOTES PAYABLES | NOTE 8 NOTES PAYABLE
In November 2014, the Company entered into a line of credit with a bank in the amount of RMB 30,000,000. The amounts advanced under the line of credit are due November 24, 2015. Advances on the line of credit are due one year from the date of the advance and are collateralized by certain land use rights, buildings and accounts receivable and bear interest at an annual rate of 6.16% (based upon 110% of the PRC governments current short term rate of 5.6%). In addition, the Companys Chief Executive Officer and Chair of the board of directors personally guaranteed the line of credit.
The outstanding balance due under the revolving line of credit was RMB 30,000,000 as of September 30, 2015 and December 31, 2014 ($4,721,984 as of September 30, 2015 and $4,887,187 as of December 31, 2014). The Company has no additional amounts available to it under this line of credit. This amount has been classified as short-term notes payable in the accompanying condensed consolidated balance sheets at September 30, 2015 and December 31, 2014. Subsequent to September 30, 2015 the line of credit was renewed as discussed in Note 15.
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CONSTRUCTION LOAN FACILITY. |
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CONSTRUCTION LOAN FACILITY | NOTE 9 CONSTRUCTION LOAN FACILITY
The Company obtained a construction loan facility in the amount of RMB 80,000,000 (approximately $13.0 million at September 30, 2015) from a construction loan facility dated June 21, 2013. The loan facility is for an eight-year term, which commenced on the initial draw-down date of July 11, 2013, and is from the same bank that currently provides the line of credit as discussed in Note 7. The proceeds of the loan were used for and are collateralized by the construction of the Companys new production facility and the included production line equipment and machinery. The loan bears interest at 7.205% based upon 110% of the PRC governments eight-year term rate effective on the actual draw-down date, and is subjected to annual adjustments based on 110% of the floating rate for the same type of loan on the anniversary from the draw-down date and its subsequent anniversary dates. On July 10, 2015 the interest rate was adjusted to 5.94%. The loan requires interest only payments for the first two years. Beginning July 11, 2015, the balance of the principal will be due in annual installments which are due within six month period after July 10 of 2015 and each following year over the next five years through July 11, 2021. No principal payments have been made under the facility as of the date of this report on Form 10-Q. As of September 30, 2015, the Company had no additional amounts available to it under this facility.
Principal payments required for the next five years as of September 30, 2015 are as follows:
Fair Value of Notes Payable and Construction Loan Facility Based on the borrowing rates currently available to the Company for bank loans with similar terms and maturities, the carrying amounts of notes payable and the construction loan facility outstanding as of September 30, 2015 and December 31, 2014 approximated their fair value because of either the immediate or short-term maturity of these financial instruments or because the underlying instruments bear interest rates that approximated current market rates.
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SUBSIDY INCOME |
9 Months Ended |
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Sep. 30, 2015 | |
SUBSIDY INCOME: | |
SUBSIDY INCOME | NOTE 10 SUBSIDY INCOME
During the third quarter of 2015, the Company received cash of CNY 9.6 million ($1.56 million) related to a subsidy from the government for the technological innovation it has achieved as well as the industrial upgrading related to its new GMP certified facility. In addition, the Company received CNY 600,000 ($0.1 million) subsidy from the government for the enterprises that suffered losses from the typhoon in 2014 to resume production. This has been recorded as Subsidy income in the accompanying Statement of Operations for the three and nine months ended September 30, 2015.
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INCOME TAXES |
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INCOME TAXES | NOTE 11 - INCOME TAXES
Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax laws or rates are recognized in operations in the period that includes the enactment date.
Undistributed earnings of Helpson, the Companys foreign subsidiary, since its acquisition, amounted to approximately $52.4 million at September 30, 2015. Those earnings, as well as the investment in Helpson of approximately $23.3 million, are considered to be indefinitely reinvested and, accordingly, no U.S. federal or state income taxes have been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to U.S. federal and state income taxes (net of an adjustment for foreign tax credits) and withholding taxes payable to the PRC. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable because of the complexities associated with its hypothetical calculation; however, unrecognized foreign tax credits may be available to reduce a portion of the U.S. tax liability.
Under current tax law in the PRC, the Company is and will be subject to the following enterprise income tax rates:
The provision for income taxes consisted of the following:
The Company has net operating loss carry forwards for PRC tax purposes of approximately $13.2 million at September 30, 2015, of which approximately $6.6 million, $4.2 million and $2.4 million is available to offset future taxable income through 2018, 2019 and 2020, respectively.
In assessing the realizability of deferred tax assets, Management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those differences become deductible or tax loss carry forwards are utilized. Management considers projected future taxable income and tax planning strategies in making this assessment. Based upon an assessment of the level of historical taxable income and projections for future taxable income over the periods on which the deferred tax assets are deductible or can be utilized, Management believes it is not likely the Company will realize all of the benefits of the deferred tax assets as of September 30, 2015 and December 31, 2014. Therefore, the Company has provided for a valuation allowance against its deferred tax assets of $12,046,398 and $10,968,262 as of September 30, 2015 and December 31, 2014, respectively.
The Company also incurred various other taxes, comprised primarily of business taxes, value-added taxes, urban construction taxes, education surcharges and others. Any unpaid amounts are reflected on the balance sheets as accrued taxes payable. |
FAIR VALUE MEASUREMENTS |
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FAIR VALUE MEASUREMENTS | NOTE 12 FAIR VALUE MEASUREMENTS
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. To measure fair value, a hierarchy has been established which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs. This hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows:
Level 1 Quoted prices in active markets for identical assets or liabilities; Level 2 Observable inputs other than Level 1 including quoted prices for similar assets or liabilities, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data; Level 3 Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
The Company uses fair value to measure the value of the bankers acceptance notes it holds. The bankers acceptance notes are recorded at cost which approximates fair value. The Company held the following assets recorded at fair value as of September 30, 2015 and December 31, 2014:
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STOCKHOLDERS' EQUITY |
9 Months Ended |
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Sep. 30, 2015 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE 13 - STOCKHOLDERS' EQUITY
Preferred and Common Stock The total number of authorized shares is 95,000,000 shares of common stock and 5,000,000 shares of preferred stock. The preferred stock may be issued in series with such designations, preferences, stated values, rights, qualifications or limitations as determined solely by the Companys Board of Directors.
Stock and Stock Options On November 12, 2010, the Companys Board of Directors adopted, and on December 22, 2010, its stockholders approved the Companys 2010 Incentive Plan (the Plan), which gave the Company the ability to grant stock options, restricted stock, stock appreciation rights and performance units to its employees, directors and consultants, or those who will become employees, directors and consultants of the Company and/or its subsidiaries. The Plan currently allows for equity awards of up to 4,000,000 shares of common stock. Through September 30, 2015, there were no options to purchase common stock and 175,000 shares of restricted stock granted and outstanding under the Plan.
There were no securities issued from the Plan during the nine months ended September 30, 2015 and at September 30, 2015 there was no unrecognized compensation expense related to securities granted under the Plan. |
CONTINGENCIES |
9 Months Ended |
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Sep. 30, 2015 | |
CONTINGENCIES | |
CONTINGENCIES | NOTE 14 CONTINGENCIES
Economic environment - Substantially all of the Company's operations are conducted in the PRC, and therefore the Company is subject to special considerations and significant risks not typically associated with companies operating in the United States of America. These risks include, among others, the political, economic and legal environments and fluctuations in the foreign currency exchange rate. The Company's results from operations may be adversely affected by changes in the political and social conditions in the PRC, and 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. The unfavorable changes in global macroeconomic factors may also adversely affect the Companys operations.
In addition, all of the Company's revenue is denominated in the PRC's currency of Renminbi (RMB), which must be converted into other currencies before remittance out of the PRC. Both the conversion of RMB into foreign currencies and the remittance of foreign currencies abroad require approval of the PRC government. The value of RMB against U.S. dollar and other currencies is affected by, among other things, changes in Chinas political and economic conditions. In August 2015, Chinas currency dropped by a cumulative 4.4% against the U.S. dollar on hopes of boosting the domestic economy, making Chinese exports cheaper and imports into China more expensive by that amount. The effect on trade can be substantial. Moreover, it is possible that in the future, PRC authorities may lift restrictions on fluctuations in RMB exchange rate and lessen intervention in the foreign exchange market.
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CONCENTRATIONS |
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Sep. 30, 2015 | |
CONCENTRATIONS | |
CONCENTRATIONS | NOTE 15 CONCENTRATIONS
At September 30, 2015, two customers accounted for 17.6% and 10.8% of accounts receivable. At December 31, 2014, one customer accounted for 17.7% of accounts receivable.
For the nine months ended September 30, 2015 and 2014, one customer accounted for 10.0% and 16.7% of sales, respectively.
For the nine months ended September 30, 2015 and 2014, purchases from one supplier accounted for 20.5% and 31.8% of raw material purchases, respectively.
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SUBSEQUENT EVENTS |
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Sep. 30, 2015 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS |
NOTE 16 SUBSEQUENT EVENTS
Subsequent to September 30, 2015 the Company renewed its line of credit in the amount of RMB 30,000,000 ($4.7 million) with the same bank as discussed in Note 8. The line of credit is payable in two equal installments of RMB 15,000,000 ($2.35 million) payable on September 16, 2016 and October 19, 2016. Advances on the line of credit are collateralized by certain land use rights, buildings and accounts receivable and bear interest at an annual rate of 5.06% (based upon 110% of the PRC governments current short term rate of 4.6%). In addition, the Companys Chief Executive Officer and Chair of the board of directors personally guaranteed the line of credit. |
ACCOUNTING POLICIES (POLICIES) |
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Organization and Nature of Operations | Organization and Nature of Operations China Pharma Holdings, Inc., a Nevada corporation, owns 100% of Onny Investment Limited (Onny), a British Virgin Islands corporation, which owns 100% of Hainan Helpson Medical & Biotechnology Co., Ltd (Helpson), a company organized under the laws of the People's Republic of China (the PRC). China Pharma Holdings, Inc. and its subsidiaries are referred to herein as the Company.
On December 31, 2012, China Pharma Holdings, Inc consummated a reincorporation merger for the purpose of changing its state of incorporation from Delaware to Nevada pursuant to the terms and conditions of an Agreement and Plan of Merger dated December 27, 2012. The reincorporation merger was approved by stockholders holding the majority of the Companys outstanding shares of common stock on December 21, 2012.
The Foreign Investment Industrial Catalogue (the Catalogue) jointly issued by Chinas Ministry of Commerce and the National Development and Reform Commission (the latest version is the 2015 version, effective April 10, 2015) classified various industries/businesses into three different categories: (i) encouraged for foreign investment; (ii) restricted to foreign investment; and (iii) prohibited from foreign investment. For any industry/business not covered by any of these three categories, they will be deemed industries/businesses permitted for foreign investment. A typical foreign investment ownership restriction in the pharmaceutical industry is that a foreign investment enterprise (the FIE) shall not have the whole or majority of its equity interests owned by a foreign owner if the FIE establishes more than 30 branch stores and distributes a variety of brands in those franchise stores, which is not the case for the Companys business.
Helpson manufactures and markets generic and branded pharmaceutical products as well as biochemical products primarily to hospitals and private retailers located throughout the PRC. The Company believes Helpsons business is not subject to any ownership restrictions prescribed under the Catalogue. Onny acquired 100% of the ownership in Helpson on May 25, 2005 by entering into an Equity Transfer Agreement with Helpsons three former shareholders. The transaction was approved by the Commercial Bureau of Hainan Province on June 12, 2005 and Helpson received the Certificate of Approval for Establishing of Enterprises with Foreign Investment in the PRC on the same day and its business license evidencing its WFOE (Wholly Foreign Owned Enterprise) status on June 21, 2005.
The Company has acquired and continues to acquire well-accepted medical formulas to add to its diverse portfolio of Western and Chinese medicines. |
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Consolidation and Basis of Presentation |
Consolidation and Basis of Presentation The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and are expressed in United States dollars. The accompanying consolidated financial statements include the accounts and operations of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Helpsons functional currency is the Chinese Renminbi. Helpsons revenue and expenses are translated into United States dollars at the average exchange rate for the period. Assets and liabilities are translated at the exchange rate as of the end of the reporting period. Gains or losses from translating Helpsons financial statements are included in accumulated other comprehensive income, which is a component of stockholders equity. Gains and losses arising from transactions denominated in a currency other than the functional currency of the entity that is a party to the transaction are included in the results of operations. |
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Condensed Financial Statements | Condensed Financial Statements The accompanying unaudited condensed consolidated financial statements were prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the Commission). Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Management of the Company (Management) believes the following disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 filed with the Commission on March 30, 2015.
These unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) that, in the opinion of Management, are necessary to present fairly the consolidated financial position and results of operations of the Company for the periods presented. Operating results for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. |
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Accounting Estimates | Accounting Estimates - The preparation of financial statements in conformity with U.S. GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
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Basic and Diluted (Loss) Earnings per Common Share | Basic and Diluted Loss per Common Share - Basic loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is calculated to give effect to any potentially issuable dilutive common shares. There were no potentially dilutive common shares outstanding for all periods presented.
The following table is a presentation of the numerators and denominators used in the calculation of basic and diluted loss per share:
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RESTATEMENT FOR NINE MONTHS ENDED (TABLE) |
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RESTATEMENT FOR NINE MONTHS ENDED SEPTEMBER 30, 2015 | consolidated financial statements as of September 30, 2015 and for the nine months then ended. The adjustments were as follows:
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BASIS OF PRESENTATION (TABLES) |
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Presentation of the numerators and denominators used in the calculation of basic and diluted earnings per share | The following table is a presentation of the numerators and denominators used in the calculation of basic and diluted loss per share:
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INVENTORY (TABLES) |
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Inventory consists | Inventory consisted of the following:
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PROPERTY AND EQUIPMENT (TABLES) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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PROPERTY AND EQUIPMENT (Tables) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment consists | Property and equipment consisted of the following:
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A reconciliation of total interest cost incurred to interest expense | A reconciliation of total interest cost incurred to interest expense as recognized in the consolidated statement of operations is as follows:
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Useful lives of the assets | Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:
For the three and nine months ended September 30, 2015 and 2014, depreciation expense was $911,515, $321,020, $2,523,752 and $724,509, respectively. |
INTANGIBLE ASSETS (TABLES) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets (Tables) | ||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets Medical Formulas | As of September 30, 2015 and December 31, 2014, intangible assets consisted solely of CFDA approved medical formulas as follows:
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SCHEDULE OF LONG - TERM DEBT INSTRUMENTS (TABLES) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2015 | |||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments: | |||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | Principal payments required for the next five years as of September 30, 2015 are as follows:
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INCOME TAXES (TABLES) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES (Tables) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current Taxes | Under current tax law in the PRC, the Company is and will be subject to the following enterprise income tax rates:
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Provision For Income Taxes | The provision for income taxes consisted of the following:
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FAIR VALUE MEASUREMENTS (TABLES) |
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FAIR VALUE MEASUREMENTS (Tables) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Fair Value | The Company uses fair value to measure the value of the bankers acceptance notes it holds. The bankers acceptance notes are recorded at cost which approximates fair value. The Company held the following assets recorded at fair value as of September 30, 2015 and December 31, 2014:
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BASIS OF PRESENTATION (DETAILS) |
Sep. 30, 2015 |
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Organization and operations | |
Percentage of share owned by China Pharma Holdings Inc of Onny Investment Limited | 100.00% |
Percentage of share owned by China Pharma Holdings Inc of Helpson Medical & Biotechnology Co., Ltd. | 100.00% |
Percetage of acquired by Onny in Helpson | 100.00% |
BASIC AND DILUTED EARNINGS PER COMMON SHARE (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2015 |
Sep. 30, 2014 |
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BASIS OF PRESENTATION Basic and Diluted Earnings per Common Share | ||||
Net income(loss); | $ 2,931,724 | $ (6,327,724) | $ (9,157,571) | $ (17,361,167) |
Basic weighted-average common shares outstanding | 43,579,557 | 43,579,557 | 43,579,557 | 43,579,557 |
Effect of dilutive securities: | ||||
Warrants | $ 0 | |||
Options | $ 0 | |||
Diluted weighted-average common shares outstanding | 43,579,557 | 43,579,557 | 43,579,557 | 43,579,557 |
Basic loss per share | $ 0.07 | $ (0.15) | $ (0.21) | $ (0.40) |
Diluted loss per share | $ 0.07 | $ (0.15) | $ (0.21) | $ (0.40) |
INVENTORY CONSISTED OF THE FOLLOWING (DETAILS) - USD ($) |
Sep. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
INVENTORY CONSISTED OF THE FOLLOWING (DETAILS) | ||
Raw materials | $ 15,737,802 | $ 18,819,570 |
Finished goods | 3,908,140 | 3,436,330 |
Inventory Gross | 19,645,942 | 22,255,900 |
Obsolescence reserve | (7,355,699) | (6,934,044) |
Total Inventory | $ 12,290,243 | $ 15,321,856 |
PROPERTY AND EQUIPMENT CONSISTED OF THE FOLLOWING (DETAILS) - USD ($) |
Sep. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
PROPERTY AND EQUIPMENT CONSISTED OF THE FOLLOWING (DETAILS) | ||
Permit of land use | $ 443,306 | $ 458,853 |
Building | 10,897,489 | 11,279,704 |
Plant, machinery and equipment | 27,446,047 | 28,358,694 |
Motor vehicle | 248,092 | 150,976 |
Office equipment | 261,947 | 268,521 |
Construction in progress | 19,747 | 5,848 |
Total Plant, machinery and equipment | 39,316,628 | 40,522,596 |
Less: accumulated depreciation | (8,862,709) | (6,640,718) |
Property and Equipment, net | $ 30,453,919 | $ 33,881,878 |
RECONCILIATION OF TOTAL INTEREST INCURRED COST (DETAILS) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2015 |
Sep. 30, 2014 |
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RECONCILIATION OF TOTAL INTEREST INCURRED COST (DETAILS) | ||||
Total interest cost incurred | $ 279,113 | $ 330,995 | $ 915,310 | $ 952,836 |
Interest cost capitalized | 5,751 | 457,782 | ||
Interest expense, | $ 279,113 | $ 325,244 | $ 915,310 | $ 495,054 |
PROPERTY AND EQUIPMENT ASSETS LIFE (DETAILS) |
Sep. 30, 2015 |
---|---|
PROPERTY AND EQUIPMENT Assets Life | |
Permit of land use minimum life | 40 |
Permit of land use maximum life | 70 |
Building minimum life | 20 |
Building maximum life | 49 |
Plant, machinery and equipment minimum life | 5 |
Plant, machinery and equipment maximum life | 10 |
Motor vehicle minimum life | 5 |
Motor vehicle maximum life | 10 |
Office equipment minimum life | 3 |
Office equipment maximum life | 5 |
ASSETS DEPRECIATION (DETAILS) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Assets Depreciation | ||||
Depreciation Expense property and equipment | $ 911,515 | $ 321,020 | $ 2,523,752 | $ 724,509 |
INTANGIBLE ASSETS CFDA APPROVED MEDICAL FORMULAS (DETAILS) - USD ($) |
Sep. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
INTANGIBLE ASSETS CFDA APPROVED MEDICAL FORMULAS (DETAILS) | ||
Gross carrying amount | $ 5,313,142 | $ 5,499,494 |
Accumulated amortization | (4,279,084) | (4,182,273) |
Net carrying amount | $ 1,034,058 | $ 1,317,221 |
AMORTIZATION EXPENSE (DETAILS) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
AMORTIZATION EXPENSE | ||||
Amortization expenses relating to intangible assets | $ 73,498 | $ 96,382 | $ 246,009 | $ 289,712 |
ADVANCES FOR PURCHASES OF INTANGIBLE ASSETS (DETAILS) |
Sep. 30, 2015
USD ($)
|
---|---|
Advances for purchase of intangible assets details | |
Company was obligated to pay laboratories | $ 4,200,000 |
RELATED PARTY TRANSACTIONS OWINGS (DETAILS) - USD ($) |
Sep. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
RELATED PARTY TRANSACTIONS OWINGS | ||
Adavances owing to board member | $ 1,354,567 | $ 1,354,567 |
Interest rate on advances from Member of BOD | 1.00% | 1.00% |
RELATED PARTY TRANSACTIONS MEMBER OF BOD (DETAILS) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
RELATED PARTY TRANSACTIONS Member Of BOD | ||||
Total interest expense recognized for the period | $ 3,386 | $ 3,386 | $ 10,158 | $ 10,158 |
NOTES PAYABLES (DETAILS) - USD ($) |
Sep. 30, 2015 |
Dec. 31, 2014 |
Nov. 30, 2014 |
---|---|---|---|
NOTES PAYABLES: | |||
Revolving line of credit with a bank (RMB) | $ 30,000,000 | ||
Annual interest rate based upon 110% of PRC government's current short term rate of 5.6% | 6.16% | ||
Outstanding balance due under revolving line of credit (RMB 30,000,000) | $ 4,721,984 | $ 4,887,187 |
CONSTRUCTION LOAN FACILITY (DETAILS) - USD ($) |
Sep. 30, 2015 |
Jul. 10, 2015 |
---|---|---|
Construction loan facility details | ||
Total loan facility amount (RMB 80,000,000) | $ 13,000,000 | |
Loan interest for an eight-year term | 7.21% | |
Interest rate was adjusted to | 5.94% |
PRINCIPAL PAYMENTS REQUIRED FOR THE NEXT FIVE YEARS ARE AS FOLLOWS: (DETAILS) |
Sep. 30, 2015
USD ($)
|
---|---|
Principal payments required for the next five years are as follows: | |
Principal Payments 2015 | $ 1,573,861 |
Principal Payments 2016 | 1,573,861 |
Principal Payments 2017 | 2,360,792 |
Principal Payments 2018 | 2,360,792 |
Principal Payments 2019 | 2,360,792 |
Principal Payments Thereafter | 2,360,792 |
Total principal payments due | $ 12,590,890 |
SUBSIDY INCOME (Details) |
9 Months Ended |
---|---|
Sep. 30, 2015
USD ($)
| |
SUBSIDY INCOME DETAILS | |
Company received cash of CNY | $ 9,600,000 |
Company received cash | 1,560,000 |
Company received CNY | 600,000 |
Company received | $ 100,000 |
INCOME TAXES UNDISTRIBUTED EARNINGS AND INCOME TAX RATES (DETAILS) |
Sep. 30, 2015
USD ($)
|
---|---|
Income Taxes Undistributed Earnings | |
Undistributed earnings of Helpson | $ 52,400,000 |
Investment in Helpson, a foreign subsidiary for the company | $ 23,300,000 |
Enterprise Income Tax Rates for the year 2014 | 15.00% |
Enterprise Income Tax Rates for the year 2015 | 15.00% |
Enterprise Income Tax Rates for the year 2016 | 15.00% |
Enterprise Income Tax Rates for the year 2017 | 25.00% |
Enterprise Income Tax Rates There after | 25.00% |
Net operating loss carryforwards for PRC tax purposes | $ 13,200,000 |
Offset uture taxable income for the year 2018 | 6,600,000 |
Offset future taxable income for the year 2019 | 4,200,000 |
Offset future taxable income for the year 2020 | $ 2,400,000 |
INCOME TAXES PROVISION (DETAILS) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Income Taxes Provision | ||||
Current tax provision | $ 0 | $ 0 | ||
Deferred tax provision | (18,906) | $ (19,215) | (57,618) | $ (57,758) |
Total income tax (benefit) expense | $ (18,906) | $ (19,215) | $ (57,618) | $ (57,758) |
DEFERRED INCOME TAX ASSETS AND LIABILITY (DETAILS) - USD ($) |
Sep. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
Deferred Income Tax Assets And Liability | ||
Valuation allowance against deferred tax assets | $ 12,046,398 | $ 10,968,262 |
FAIR VALUE MEASUREMENTS AT REPORTING DATE USING (DETAILS) - USD ($) |
Sep. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
FAIR VALUE MEASUREMENTS AT REPORTING DATE USING | ||
Bankers acceptance notes | $ 312,801 | $ 458,233 |
Total | 312,801 | 458,233 |
Bankers acceptance notes Level 1 | 0 | 0 |
Total Level 1 | 0 | 0 |
Bankers acceptance notes Level 2 | 312,801 | 458,233 |
Total Level 2 | 312,801 | 458,233 |
Bankers acceptance notes Level 3 | 0 | 0 |
Total Level 3 | $ 0 | $ 0 |
PREFERRED COMMON STOCK (DETAILS) |
Sep. 30, 2015
shares
|
---|---|
Preferred Common Stock And Warrants | |
Common shares authorized | 95,000,000 |
Preferred shares authorized | 5,000,000 |
2010 STOCK OPTION PLAN (DETAILS) - shares |
Sep. 30, 2015 |
Nov. 12, 2010 |
---|---|---|
Stockholders Equity 2010 Stock Option Plan | ||
Number of common shares | 4,000,000 | |
Shares of restricted stock granted and outstanding under the 2010 Incentive Plan | 175,000 |
CONCENTRATIONS (DETAILS) |
9 Months Ended | |
---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Concentrations Details | ||
Customer accounted for sales | 10.00% | 16.70% |
Supplier accounted for raw material purchases | 20.50% | 31.80% |
Customer accounted accounts receivable | 17.60% | 10.80% |
SUBSEQUENT EVENTS (DETAILS) - USD ($) |
Oct. 16, 2016 |
Sep. 16, 2016 |
Sep. 30, 2015 |
---|---|---|---|
SUBSEQUENT EVENTS Details | |||
Company renewed its line of credit in the amount of RMB | $ 30,000,000 | ||
Line of credit is payable in two equal installments of RMB | $ 15,000,000 | $ 15,000,000 | |
Interest Bear at an annual rate of | 5.06% |
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