0001493152-16-015332.txt : 20161121 0001493152-16-015332.hdr.sgml : 20161121 20161121160606 ACCESSION NUMBER: 0001493152-16-015332 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 61 CONFORMED PERIOD OF REPORT: 20160930 FILED AS OF DATE: 20161121 DATE AS OF CHANGE: 20161121 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KIWA BIO-TECH PRODUCTS GROUP CORP CENTRAL INDEX KEY: 0001159275 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE CHEMICALS [2870] IRS NUMBER: 870448400 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-33167 FILM NUMBER: 162010398 BUSINESS ADDRESS: STREET 1: 310 N. INDIAN HILL BOULEVARD STREET 2: SUITE 702 CITY: CLAREMONT STATE: CA ZIP: 91711 BUSINESS PHONE: 626-715-5855 MAIL ADDRESS: STREET 1: 310 N. INDIAN HILL BOULEVARD STREET 2: SUITE 702 CITY: CLAREMONT STATE: CA ZIP: 91711 FORMER COMPANY: FORMER CONFORMED NAME: TINTIC GOLD MINING CO DATE OF NAME CHANGE: 20010918 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended September 30, 2016

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Transition Period from ____________ to ____________

 

Commission File Number: 000-33167

 

KIWA BIO-TECH PRODUCTS GROUP CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware   77-0632186

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

     
310 N. Indian Hill Blvd., #702
Claremont, California
  91711
(Address of principal executive offices)   (Zip Code)

 

(626) 715-5855

(Registrant’s telephone number, including area code)

 

     
  (Former address)  

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ]   Accelerated filer [  ]
Non-accelerated filer [  ]   Smaller reporting company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

 

There were 8,603,981 shares of the issuer’s common stock outstanding as of November 18, 2016.

 

 

 

 
 

 

 

Table of contents

 

PART I. FINANCIAL INFORMATION  
   
Item 1. Financial Statements 3
   
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 14
   
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 18
   
Item 4. Controls and Procedures 18
   
PART II. OTHER INFORMATION 18
   
Item 1. Legal Proceedings 18
   
ITEM 1A. RISK FACTORS 18
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 19
   
Item 3. Defaults Upon Senior Securities 19
   
Item 4. Mine safety disclosures 19
   
Item 5. Other Information 19
   
Item 6. Exhibits 19
   
SIGNATURES 20

 

2 
 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

KIWA BIO-TECH PRODUCTS GROUP CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

   September 30, 2016   December 31, 2015 
         
ASSETS          
Current assets          
Cash and cash equivalents  $545   $721 
Accounts receivable   1,224,410    - 
Prepaid expenses   1,639,583    - 
Advance to customer - Gerui   1,677,459    - 
Other current assets   58,432    47,453 
Total current assets   4,600,429    48,174 
Property, plant and equipment - net   69,652    2,807 
Rent and utility deposits   37,295    - 
Intangible assets   34,112    - 
Total assets  $4,741,488   $50,981 
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY          
Current liabilities          
Accounts payable  $1,076,266   $300,247 
Advances from customers   13,415    13,800 
Construction costs payable   266,103    273,722 
Due to related parties - trade   1,337,489    1,143,978 
Due to related parties - non-trade   107,710    3,166,198 
Convertible notes payable   150,250    150,250 
Notes payable   360,000    360,000 
Salary payable   1,675,900    1,632,881 
Taxes payable   586,958    478,209 
Penalty payable   462,423    404,752 
Interest payable   1,014,480    930,062 
Other payable   479,659    - 
Accrued expenses and other current liabilities   512,003    524,205 
Total current liabilities   8,042,656    9,378,304 
           
Unsecured loans payable   1,723,776    1,773,131 
Total long-term liabilities   1,723,776    1,773,131 
Total liabilities   9,766,432    11,151,435 
           
Stockholders’ deficiency          
Preferred stock - $0.001 par value. Authorized 20,000,000 shares. Issued outstanding 500,000 shares at September 30, 2016 and December 31, 2015, respectively   500    500 
Common stock - $0.001 par value. Authorized 100,000,000 shares. Issued and outstanding 8,603,981 and 2,000,000 shares at September 30, 2016 and December 31, 2015, respectively.   8,604    2,000 
Additional paid-in capital   15,684,507    9,490,837 
Stock subscription receivable   (560,341)   - 
Accumulated deficit   (19,993,105)   (20,324,812)
Accumulated other comprehensive loss   (165,109)   (268,979)
Total stockholders’ deficiency   (5,024,944)   (11,100,454)
Total liabilities and stockholders' deficiency  $4,741,488   $50,981 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

3 
 

 

KIWA BIO-TECH PRODUCTS GROUP CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

   Three Months Ended September 30,   Nine Months Ended September 30,
   2016   2015   2016   2015 
       <Restated>       <Restated> 
Revenue  $1,261,544   $-   $1,971,639   $- 
Cost of revenue   (770,451)   -    (770,451)   - 
Gross profit   491,093    -    1,201,188    - 
                     
Operating expenses                    
General and administrative   196,019    72,968    421,688    220,510 
Research and development   74,783    39,860    

226,552 

    121,487 
Total operating expenses   270,802    112,828    648,240    341,997 
Operating income (loss)   220,291    (112,828)   552,948    (341,997)
                     
Other expense                    
Penalty expense   19,564    18,208    57,672    53,605 
Interest expense   28,181    28,189    84,624    84,449 
Total other expense   47,745    46,397    142,296    138,054 
Income (loss) before income tax provision   172,546    (159,225)   410,652    (480,051)
Income tax provision   78,945    -    78,945    - 
Net income (loss)   93,601    (159,225)   331,707    (480,051)
                     
Other comprehensive income                    
Foreign currency translation adjustment   9,765    327,472    103,870    278,566 
Comprehensive income (loss)  $103,366   $168,247   $435,577   $(201,485)
                     
Net income(loss) per common share - basic  $0.01   $(0.08)  $0.07   $(0.24)
Net income(loss) per common share - diluted  $0.01   $(0.08)  $0.04   $(0.24)
Weighted average number of common shares outstanding - basic   6,300,700    2,000,000    4,617,535    2,000,000 
Weighted average number of common shares outstanding - diluted   7,064,969    2,000,000    7,769,954    2,000,000 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

4 
 

 

KIWA BIO-TECH PRODUCTS GROUP CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 Nine Months Ended September 30,
  2016   2015 
       <Restated> 
Cash flows from operating activities:          
Net income (loss)  $331,707   $(480,051)
Adjustments to reconcile net income (loss) to net cash used in operating activities:          
Depreciation and amortization   13,039    3,293 
Provision for penalty payable   57,672    53,605 
Accrued interest on convertible notes   84,418    84,357 
Issuance of common shares for service   57,717    - 
Changes in operating assets and liabilities:          
Accounts receivable   (1,240,550)   - 
Prepaid expenses   (7,500)   - 
Advance to customer - Gerui   (1,700,605)   - 
Other current assets   (11,988)   - 
Rent and utility deposits   (37,809)   - 
Salary payable   93,993    110,604 
Taxes payable   123,604    47,604 
Due to related parties - trade   226,392    121,487 
Accounts payable   794,868    - 
Other payable   477,284    (18,752)
Net cash used in operating activities   (737,758)   (77,853)
           
Cash flows from investing activities:          
Purchase of property, plant and equipment   (79,604)   - 
Net cash used in investing activities   (79,604)   - 
           
Cash flows from financing activities:          
Proceeds from related parties, net of payments to related parties   51,500    77,988 
Proceeds from sale of common stock   766,281    - 
Net cash provided by financing activities   817,781    77,988 
Effect of exchange rate change   (595)   (18)
           
Cash and cash equivalents:          
Net increase (decrease)   (176)   117 
Balance at beginning of period   721    2,963 
Balance at end of period  $545   $3,080 
           
Non-cash financing activities:          
Issuance of 3,141,000 shares of common stock for  repayment of related party loans  $3,141,000   $- 
Issuance of 101,947 shares of common stock for payment
of accrued salaries
  $50,974   $- 
Issuance of 1,710,808 shares of common stock for prepaid
consulting services
  $1,630,583   $- 
Advances from related parties to pay for acquisition of
intangible assets
  $34,112   $- 
           
Supplemental Disclosures of Cash flow Information:          
Cash paid for interest  $-   $- 
Cash paid for income taxes  $-   $- 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

5 
 

 

KIWA BIO-TECH PRODUCTS GROUP CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

1. Description of Business and Organization

 

References herein to “Kiwa” or the “Company” refer to Kiwa Bio-Tech Products Group Corporation and its wholly-owned subsidiaries unless the context specifically states or implies otherwise.

 

Business –The Company’s business is to develop, manufacture, distribute and market innovative, cost-effective and environmentally safe bio-technological products for agriculture markets located primarily in China. The Company has acquired technologies to produce and market bio-fertilizer.

 

Acquisition of Caber Holdings Ltd - On November 30, 2015, we entered into an acquisition agreement (the “Agreement”) with the shareholders of Caber Holdings LTD, whose Chinese name is Hong Kong Baina Group Co., Ltd, located in Hong Kong (“Baina Hong Kong”), and Oriental Baina Co. Ltd. (hereinafter referred to as “Baina Beijing”), Baina Hong Kong’s wholly-owned subsidiary in Beijing, China. Kiwa will rename Baina Beijing to Kiwa Baiao Co. Ltd. Kiwa Baiao Co. Ltd will replace Kiwa’s current subsidiary in China - Kiwa Bio-Tech (Shandong) Co., Ltd (“Kiwa Shandong”) - to operate Kiwa’s bio-fertilizer market expansion and become Kiwa’s platform for future acquisitions of new agricultural-related projects in China. In accordance with the terms of the Agreement, Kiwa agreed to pay US$30,000 to the Baina Hong Kong Shareholders for the acquisition of 100% of the equity of Baina Hong Kong. The acquisition was completed on January 7, 2016. Both Baina Hong Kong and Baina Beijing had no activities before the acquisition date and had no assets and liabilities. The purpose of this acquisition was to acquire Baina Hong Kong’s corporate registration in Hong Kong and in China. The total payment of approximately $34,000 was recorded as intangible assets.

 

Restatement - Based on the previously restated consolidated financial statements for the year ended December 31, 2014 which were filed with company’s annual report Form 10K for the year ended December 31, 2015, the management of the Company has concluded that consolidated statement of comprehensive income (loss) for the three and nine months ended September 30, 2015 should be restated to record accrued interest expense of $22,500 and $67,500 respectively. (see Note 9)

 

2. Going Concern

 

The consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the consolidated financial statements do not purport to represent the realizable or settlement values.

 

As of September 30, 2016, the Company had cash of $545. The Company had working capital deficit of $3,442,227 and an accumulated deficit of $ 19,993,105 and a stockholders’ deficiency of $5,024,944 as of September 30, 2016. This trend is expected to continue. These factors, among others, create substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

The Company plans to (1) raise finance from related-parties, local banks, other financial institutions and other stock market to meet cash demand of daily demand; and (2) raise capital to resume operations. However, there can be no assurance that we will be successful in obtaining this financing (3) The Company’s business plan is to develop, manufacture, distribute and market innovative, cost-effective and environmentally safe biotechnological products for agriculture markets located primarily in China. The Company has acquired technologies to produce and market bio-fertilizer.

 

3. Summaries of Significant Accounting Policies

 

Principle of consolidation - These consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries. All significant inter-company balances or transactions are eliminated on consolidation.

 

Basis of preparation - These interim consolidated financial statements are unaudited. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) and disclosures necessary for a fair presentation of these interim condensed consolidated financial statements have been included. The results reported in the consolidated financial statements for any interim periods are not necessarily indicative of the results that may be reported for the entire year or any other periods. The (a) consolidated balance sheet as of December 31, 2015, which was derived from audited financial statements, and (b) the unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

 

6 
 

 

KIWA BIO-TECH PRODUCTS GROUP CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

Reverse Split - On January 14, 2016, the Company filed a Certificate of Amendment of its Certificate of Incorporation with the State of Delaware with reference to a 1-for-200 reverse stock split with respect to its Common Stock with effective date of January 28, 2016. In connection with the reverse split, the Company’s authorized capital stock was amended to be 120,000,000 shares, comprising 100,000,000 shares of Common Stock par value $0.001 and 20,000,000 shares of Preferred Stock par value $0.001. All relevant information relating to numbers of shares, options and per share information have been retrospectively adjusted to reflect the reverse stock split for all periods presented.

 

Use of Estimates - The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant accounting estimates include the bad debt provision, impairment of long-lived assets, depreciation and amortization, valuation allowance of deferred tax assets and fair value of warrants and options.

 

Foreign Currency Translation - The Company uses United States dollars (“US Dollar” or “US$” or “$”) for financial reporting purposes. However, the Company maintains the books and records in its functional currency, Chinese Renminbi (“RMB”), being the primary currency of the economic environment in which its operations are conducted. In general, the Company translates its assets and liabilities into U.S. dollars using the applicable exchange rates prevailing at the balance sheet date, and the statement of income is translated at average exchange rates during the reporting period. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the Company’s financial statements are recorded as accumulated other comprehensive income.

 

The exchange rates used to translate amounts in RMB into U.S. Dollars for the purposes of preparing the condensed consolidated financial statements were as follows:

 

      As of
September 30, 2016
      As of
December 31, 2015
 
Balance sheet items, except for equity accounts     US$1 = RMB 6.6714       US$1 = RMB 6.4857  

 

      Nine months ended September 30,  
      2016       2015  
Items in the statements of income and cash flows     US$1 = RMB 6.5806       US$1 = RMB 6.1735  

 

Impairment of Long-Lived Assets - We periodically evaluate our investment in long-lived assets, including property and equipment, for recoverability whenever events or changes in circumstances indicate the net carrying amount may not be recoverable. Our judgments regarding potential impairment are based on legal factors, market conditions and operational performance indicators, among others. In assessing the impairment of property and equipment, we make assumptions regarding the estimated future cash flows and other factors to determine the fair value of the respective assets. Based on our analysis, no further impairment of long-lived assets was charged during the nine months ended September 30, 2016.

 

Revenue Recognition - The Company’s revenue includes two parts: Part I represents fees per licensing agreement. The Company entered into an agreement with a company, Kangtan Gerui (Beijing) Bio-Tech Co., Ltd. (“Gerui”), to allow Gerui sell products with the Company’s trademark. Gerui will pay 10% of total sales amount to the Company as license fee.

 

Part II represents the revenues from sales of products purchased. The Company recognized license fees and revenue from sales of products when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, and no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as advances from customers.

 

Accounts Receivables - Accounts receivables represent customer accounts receivables. The allowance for doubtful accounts is based on a combination of current sales, historical charge offs and specific accounts identified as high risk. Uncollectible accounts receivable are charged against the allowance for doubtful accounts when all reasonable efforts to collect the amounts due have been exhausted. Such allowances, if any, would be recorded in the period the impairment is identified.

 

7 
 

 

KIWA BIO-TECH PRODUCTS GROUP CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

Income Taxes - The Company accounts for income taxes under the provisions of FASB ASC Topic 740, “Income Tax,” which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are recognized for the future tax consequence attributable to the difference between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are measured using the enacted tax rate expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company establishes a valuation when it is more likely than not that the assets will not be recovered.

 

Fair value measurements - ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value 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. This topic also establishes a fair value hierarchy which requires classification based on observable and unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

 

Level 1 - Quoted prices in active markets for identical assets or liabilities.

 

Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

The carrying values of cash and cash equivalents, trade receivables and payables, and short-term debts approximate their fair values due to their short maturities.

 

There were no assets and liabilities measured at fair value on a nonrecurring basis as of September 30, 2016 and December 31, 2015.

 

4. Prepaid expenses

 

The Company issued 1,710,808 shares of common stock to three consulting companies for the investor relation consulting service and four individuals for the growth and development strategy consulting service in China, which represents the amount of $1,688,300 based on quoted price at issuance. The Company amortized the consulting fee over the service periods per agreements. For the nine months ended September 30, 2016, the amortization of consulting expense was $57,717.

 

5. Advance to customer - Gerui

 

As of September 30, 2016, Advance to customer-Gerui was $1,677,459, which represents the prepayment to Gerui, the main customer, to subcontract the manufacturing of products to an unrelated company, Shandong Deluke Company.

 

8 
 

 

KIWA BIO-TECH PRODUCTS GROUP CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

6. Related Party Transactions and Balances

 

Amounts due to related parties consisted of the following:

 

Item   Nature     Notes     September 30, 2016     December 31, 2015  
Mr. Wei Li (“Mr. Li”)     Non-trade       (1)     $ -      $ 2,879,307  
Kangtai Xinnong Agriculture Tech (Beijing) Co., Ltd. (“Kangtai”)     Non-trade       (2)       -       (12,173 )
Ms. Yvonne Wang (“Ms. Wang”)     Non-trade       (3)       107,710       299,064  
Subtotal                     107,710       3,166,198  
Kiwa-CAU R&D Center     Trade       (4)       1,206,644       1,125,553  
CAAS IARRP and IAED Institutes     Trade       (5)       130,845       18,425  
Subtotal                     1,337,489       1,143,978  
Total                   $ 1,445,199     $ 4,310,176  

 

(1)       Mr. Li

 

Mr. Li was the Chairman of the Board until November 20, 2015 and was the Chief Executive Officer of the Company until July 1, 2015.

 

Advances and Loans

 

As of December 31, 2015, the remaining balance due Mr. Li was 2,879,307. During the nine months ended September 30, 2016, Mr. Li received 2,900,000 shares of common stock in lieu of the cancellation and repayment of an aggregate of $2,879,307 and salary payable.

 

Guarantees for the Company

 

Mr. Li has pledged without any compensation from the Company, all of his common stock of the Company as collateral security for the Company’s obligations under the 6% Notes. (See Note 8 below).

 

(2)       Kangtai

 

Kangtai, formerly named Kangtai International Logistics (Beijing) Co., Ltd., Kangtai Xinnong Agriculture Tech (Beijing) Co., Ltd., is a private company, 28% owned by Mr. Li. Mr. Li is the Chairman of Kangtai.

 

On December 31, 2015, the amount due from Kangtai was $12,173. The balance due from Kangtai on September 30, 2016 was nil.

 

(3)       Ms. Wang

 

Ms. Wang is the Secretary of the Company until November 20, 2015. Effective as of November 20, 2015, the Company appointed Ms. Wang as the Chairman of the Board. Effective as of December 15, 2015, the Company appointed Ms. Wang as the Company’s Chief Operating Officer.

 

On December 31, 2015, the amount due to Ms. Wang was $299,064. On March 24, 2016, the Company issued 240,000 shares of common stock to Ms. Wang to pay off the loan balance of $240,000. During the nine months ended September 30, 2016, Ms. Wang paid various expenses on behalf of the Company. As of September 30, 2016, the amount due to Ms. Wang was $107,710.

 

9 
 

 

KIWA BIO-TECH PRODUCTS GROUP CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

(4) Kiwa-CAU R&D Center

 

Pursuant to the agreement with China Agricultural University (“CAU”), the Company agree to invest RMB 1 million (approximately $160,000) each year to fund research at Kiwa-CAU R&D Center. Prof. Qi Wang, one of the Company’s directors, is also the director of Kiwa-CAU R&D Center.

 

On December 31, 2015, the amount due to Kiwa-CAU R&D Center was $1,125,553. As of September 30, 2016, the outstanding balance due to Kiwa-CAU R&D Center was $1,206,644.

 

(5) CAAS IARRP and IAED Institutes

 

On November 5, 2015, the Company signed a strategic cooperation agreement (the “Agreement”) with China Academy of Agricultural Science (“CAAS”)’s Institute of Agricultural Resources & Regional Planning (“IARRP”) and Institute of Agricultural Economy & Development (“IAED”). Pursuant to the Agreement, the Company will form a strategic partnership with the two institutes and establish an “International Cooperation Platform for Internet and Safe Agricultural Products”. To fund the cooperation platform’s R&D activities, the Company will provide RMB 1 million (approximately $160,000) per year to the Spatial Agriculture Planning Method & Applications Innovation Team that belongs to the Institutes. The term of the Agreement is for three years beginning November 20, 2015. Prof. Yong Chang Wu, the authorized representative of IARRP, CAAS, is also one of the Company’s directors effective since November 20, 2015.

 

On December 31, 2015, the amount due to Kiwa- CAAS IARRP and IAED Institutes R&D Center was $18,425. As of September 30, 2016, the outstanding balance due to Kiwa-CAAS IARRP and IAED Institutes R&D center was $130,845.

 

7. Other Payable

 

Other payable includes the payables to two potential investors and subscription received in advance. As of September 30, 2016, those two potential investors made the first payments of $479,659 to the Company and the investment agreements haven’t been reached yet. Those two potential investors are non-related parties.

 

8. Convertible Notes Payable

 

Convertible notes payable consists of 6% secured convertible notes issued to FirsTrust Group Inc. on June 29, 2006. The notes beard interest at 6% and were due on June 29, 2009. Once the note is pass due, the interest rate increased to 15% per annum. The Company accrued $16,919 and $16,857 interest expense on convertible notes for the nine months ended September 30, 2016 and 2015, respectively.

 

The conversion price of the 6% Notes is based on a 40% discount to the average of the trading price of the Company’s common stock on the OTC Bulletin Board over a 20-day trading period. The conversion price is also adjusted for certain subsequent issuances of equity securities of the Company at prices below the conversion price then in effect. The 6% Notes contain a volume limitation that prohibits the holder from further converting the 6% Notes if doing so would cause the holder and its affiliates to hold more than 4.99% of the Company’s outstanding common stock. In addition, the holder of the 6% Notes agrees that they may not convert more than their pro-rata share (based on original principal amount) of the greater of $120,000 principal amount of the 6% Notes per calendar month or the average daily dollar volume calculated during the 10 business days prior to a conversion, per conversion. This conversion limit has since been eliminated pursuant to an agreement by the Company and the Purchasers.

 

The Company incurs a financial penalty in cash or shares at the option of the Company (equal to 2% of the outstanding amount of the Notes per month plus accrued and unpaid interest on the Notes, prorated for partial months) if it breaches this or other affirmative covenants in the Purchase Agreement, including a covenant to maintain a sufficient number of authorized shares under its Certificate of Incorporation to cover at least 110% of the stock issuable upon full conversion of the Notes. Pursuant to the relevant provisions for liquidated damages in the Purchase Agreement, the Company has accrued the penalty of $57,672 and $53,605 for the nine months ended September 30, 2016 and 2015, respectively.

 

The 6% Notes require the Company to procure the Purchaser’s consent prior to taking certain actions including the payment of dividends, repurchasing stock, incurring debt, guaranteeing obligations, merging or restructuring the Company, or selling significant assets.

 

10 
 

 

KIWA BIO-TECH PRODUCTS GROUP CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

The Company’s obligations under the 6% Notes are secured by a first priority security interest in the Company’s intellectual property pursuant to an Intellectual Property Security Agreement with the Purchasers, and by a first priority security interest in all of the Company’s other assets pursuant to a Security Agreement with the Purchasers. In addition, Mr. Li, the Company’s Chief Executive Officer until July 1, 2015, has pledged all of his common stock of the Company as collateral for the Company’s obligations under the 6% Notes. The intellectual property pledged had a cost of $592,901 which carrying value of $179,897 was fully impaired during the year ended December 31, 2009.

 

9. Note payable

 

On May 29, 2007, the Company issued a $360,000 promissory note to an unrelated individual. This note bears interest at 18% per annum and was due on July 27, 2007. This note is currently in default and bears interest of 25% per annum (the “Default rate”) until paid in full. This note is secured by a pledge of 6,178,336 (post-reverse split 30,892) shares of the Company’s common stock owned by Investlink (China) Limited, a British Virgin Island corporation. The Company accrued $67,500 and $67,500 interest expense on note payable for the nine months ended September 30, 2016 and 2015, respectively.

 

10. Stockholders’ Equity

 

During the nine months ended September 30, 2016, the Company issued 3,140,000 shares of common stock to Mr. Li and Ms. Wang for debt repayment and salary payment for an aggregate amount of $3,141,000 (See Note 6).

 

The Company issued 1,650,000 shares of common stock to sixteen individual shareholders at $0.8 per share for an aggregate amount of $1,320,000 during the nine months ended September 30, 2016, $560,341 of which has not been received by the Company as of September 30, 2016 and has been recorded in the account of stock subscription receivable.

 

During the nine months ended September 30, 2016, the Company issued 1,710,808 shares of common stock to three consulting companies for the investor relation consulting service and four individuals for the growth and development strategy consulting service in China, which represents the amount of $1,688,300 based on quoted price at issuance. The Company amortized the consulting fee over the service periods per agreements. For the nine months ended September 30, 2016, the amortization of consulting expense was $57,717.

 

The Company also issued 101,947 shares of common stock to Jimmy Zhou, prior CEO of the Company, to settle the partial salary payable of $50,974 owed to Jimmy Zhou in August, 2016.

 

11. Stock-based Compensation

 

On December 12, 2006, the Company granted options for 2,000,000 shares of its common stock under its 2004 Stock Incentive Plan. Summary of options issued and outstanding at September 30, 2016 and the movements during the nine months then ended are as follows:

 

    Number of
underlying
shares
    Weighted-
Average
Exercise
Price
Per Share
    Aggregate
Intrinsic
Value (1)
    Weighted- Average
Contractual Life
Remaining in Years
 
Outstanding at December 31, 2015     6,163     $ 35     $ -       1  
Exercised     -       -                  
Expired     -       -       -          
Forfeited     -       -       -          
Outstanding at September 30, 2016     6,163     $ 35     $ -       0.25  
                                 
Exercisable at September 30, 2016     6,163     $ 35     $ -       0.25  

 

(1) The market value of the Company’s common stock at September 30, 2016 was $1.43 per share. The outstanding options had no intrinsic value at September 30, 2016.

 

11 
 

 

KIWA BIO-TECH PRODUCTS GROUP CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

12. Commitments and Contingencies

 

The Company has the following material contractual obligations:

 

Operation of Kiwa-CAU R&D Center

 

Pursuant to the agreement on joint incorporation of the research and development center between CAU and Kiwa Shandong dated November 14, 2006, Kiwa Shandong agrees to invest RMB1 million (approximately $160,000) each year to fund research at the R&D Center. The term of this Agreement is ten years starting from July 1, 2006. Qi Wang, one of our directors commencing in July 2007 has acted as Director of Kiwa-CAU R&D Center since July 2006.

 

CAAS IARRP and IAED Institutes

 

On November 5, 2015, the Company signed a strategic cooperation agreement (the “Agreement”) with China Academy of Agricultural Science (“CAAS”)’s Institute of Agricultural Resources & Regional Planning (“IARRP”) and Institute of Agricultural Economy & Development (“IAED”). Pursuant to the Agreement, the Company will form a strategic partnership with the two institutes and establish an “International Cooperation Platform for Internet and Safe Agricultural Products”. To fund the cooperation platform’s R&D activities, the Company will provide RMB 1 Million (approximately $160,000) per year to the Spatial Agriculture Planning Method & Applications Innovation Team that belongs to the Institutes. The term of the Agreement is for three years beginning November 20, 2015. Prof Yong Chang Wu, the authorized representative of IARRP, CAAS, is also one of the Company’s directors effective since November 20, 2015.

 

Investment in manufacturing and research facilities in Zoucheng, Shandong Province in China

 

According to the Project Agreement with Zoucheng Municipal Government in 2002, the Company has committed to investing approximately $18 million to $24 million for developing the manufacturing and research facilities in Zoucheng, Shandong Province. The Company had invested approximately $2 million for the project during the period from 2004 to 2010 and no additional investments were made since then.

 

13. Income Tax

 

In accordance with the current tax laws in China, the company’s subsidiaries in china are subject to a corporate income tax rate of 25% on its taxable income.

 

No provision for U.S. income taxes is made as the Company has no taxable income in the U.S. In accordance with the relevant tax laws in the British Virgin Islands, Kiwa BVI, as an International Business Company, is exempt from income taxes.

 

12 
 

 

KIWA BIO-TECH PRODUCTS GROUP CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

A reconciliation of the provision for income taxes determined at the local income tax rate to the Company’s effective income tax rate is as follows:

 

   

Nine months ended

September 30,

 
    2016     2015  
Pre-tax income (loss)   $ 410,652     $ (480,051 )
                 
U.S. federal corporate income tax rate     34 %     34 %
Income tax computed at U.S. federal corporate income tax rate     139,622       (163,217 )
Reconciling items:                
Rate differential for PRC earnings     (14,043)       17,465  
Change of valuation allowance     220,518       115,152  
Non-deductible expenses (Non-taxable income)     (267,152 )     30,600  
Effective tax expense   $ 78,945     $ -  

 

The provisions for income taxes are summarized as follows:    

 

   Nine months ended September 30, 
   2016   2015 
Current  $78,945   $- 
Deferred   -    - 
Total  $78,945   $- 

 

The Company had deferred tax assets as follows:

 

    September 30, 2016     December 31, 2015  
Net operating losses carried forward   $ 3,511,402     $ 3,398,402  
Less: Valuation allowance     (3,511,402 )     (3,398,402 )
Net deferred tax assets   $ -     $ -  

 

The net operating losses carried forward were approximately $8.66 million at September 30, 2016, which will expire between 2016 and 2026. Full valuation allowance has been made because it is considered more likely than not that the deferred tax assets will not be realized through sufficient future earnings of the entity to which the operating losses relate.

 

14. Subsequent Event

 

The Company has evaluated subsequent events through the date that these financial statements were issued and determined that there were no subsequent events to disclose in these financial statements.

 

13 
 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

This Quarterly Report on Form 10-Q for the three months ended September 30, 2016 contains “forward-looking statements” within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, including statements that include the words “believes,” “expects,” “anticipates,” or similar expressions. These forward-looking statements include, among others, statements concerning our expectations regarding our working capital requirements, financing requirements, business, growth prospects, competition and results of operations, and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. The forward-looking statements in this Quarterly Report on Form 10-Q for the three months ended September 30, 2016 involve known and unknown risks, uncertainties and other factors that could cause our actual results, performance or achievements to differ materially from those expressed in or implied by the forward-looking statements contained herein.

 

Overview

 

The Company took its present corporate form in March 2004 when shareholders of Kiwa Bio-Tech Products Group Ltd. (“Kiwa BVI”), a company originally organized under the laws of the British Virgin Islands on June 5, 2002 and Tintic Gold Mining Company (“Tintic”), a corporation originally incorporated in the state of Utah on June 14, 1933 to perform mining operations in Utah, entered into a share exchange transaction. The share exchange transaction left the shareholders of Kiwa BVI owning a majority of Tintic and Kiwa BVI a wholly-owned subsidiary of Tintic. For accounting purposes this transaction was treated as an acquisition of Tintic by Kiwa BVI in the form of a reverse triangular merger and a recapitalization of Kiwa BVI and its wholly owned subsidiary, Kiwa Bio-Tech Products (Shandong) Co., Ltd. (“Kiwa Shandong”). On July 21, 2004, we completed our reincorporation in the State of Delaware.

 

We have established a subsidiary in China, Kiwa Shandong in 2002, a wholly-owned subsidiary, engaging in the bio-fertilizer business. Formerly, our subsidiary Tianjin Kiwa Feed Co., Ltd. (“Kiwa Tianjin”), was engaged in the bio-enhanced feed business. At the end of 2009, Kiwa Tianjin could no longer use its assets including machinery and inventory in the normal course of operations. The Company has classified the bio-enhanced feed business as discontinued operations. Effective on July 11, 2012, the Company formally dissolved Kiwa Tianjin and Kiwa Shandong is inactive as of September 30, 2016.

 

On November 30, 2015, we entered into an acquisition agreement (the “Agreement”) with the shareholders of Caber Holdings LTD, whose Chinese name is Hong Kong Baina Group Co., Ltd, located in Hong Kong (“Baina Hong Kong”), and Oriental Baina Co. Ltd. (hereinafter referred to as “Baina Beijing”), Baina Hong Kong’s wholly-owned subsidiary in Beijing, China. Kiwa will rename Baina Beijing to Kiwa Baiao Co. Ltd. Kiwa Baiao Co. Ltd will replace Kiwa’s current subsidiary in China - Kiwa Bio-Tech (Shandong) Co., Ltd (“Kiwa Shandong”) - to operate Kiwa’s bio-fertilizer market expansion and become Kiwa’s platform for future acquisitions of new agricultural-related projects in China. In accordance with the terms of the Agreement, Kiwa agreed to pay US$30,000 to the Baina Hong Kong Shareholders for the acquisition of 100% of the equity of Baina Hong Kong. The acquisition was completed on January 7, 2016. Both Baina Hong Kong and Baina Beijing had no activities before the acquisition date and had no assets and liabilities. The purpose of this acquisition was to acquire Baina Hong Kong’s corporate registration in Hong Kong and in China. The total payment of approximately $34,000 was recorded as intangible assets.

 

We started to generate some revenues in the nine months ended September 30, 2016 compare with no revenues in the nine months ended September 30, 2015. We incurred a net income of $331,707 and a net loss $480,051 for the nine months ended September 30, 2016 and 2015, respectively.

 

The Company entered into an agreement with a company, Kangtan Gerui (Beijing) Bio-Tech Co., Ltd. (“Gerui”), to allow Gerui sell products with the Company’s trademark. Gerui will pay 10% of total sales amount to the Company as license fee. The Company recognized license fees when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, and no other significant obligations of the Company exist and collectability is reasonably assured.

 

The Company also entered into agreement with a company, Qingzhou Agricultural Supply Company (“Qingzhou”), on August 1, 2016, to sell 6500 tons of products before December 31, 2016. As of September 28, 2016, the Company has shipped out all the products and recognized revenue of $1,185,309 during the third quarter of this year.

 

As of September 30, 2016, the Company had cash of $545. Due to shortage of working capital, we have relied on the proceeds from advances from related parties to provide the necessary to fund the development of our business plan and operations. During the nine months ended September 30, 2016, net amount advanced by related parties was $51,500. These funds are insufficient to execute our business plan as currently contemplated. Management is currently looking for alternative sources of capital to fund our operations.

 

Going Concern

 

Our consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the consolidated financial statements do not purport to represent the realizable or settlement values.

 

As of September 30, 2016 we had an accumulated deficit of $19,993,105 and a stockholders’ deficiency of $5,024,944. We currently have negative working capital. We will require additional capital to fund our operations.

 

As of September 30, 2016, our current liabilities were $8,042,656 which exceeded current assets by $3,442,227, representing a current ratio of 0.572; comparably, as of December 31, 2015, we had total current assets of $48,174 and current liabilities of $9,378,304, denoting a current ratio of 0.0051. If we can achieve the necessary financing to increase our working capital, we believe the Company will be well-positioned to generate sales of our products and to generate more revenues in the future. There can be no assurances that we will be successful in obtaining this financing or in increasing our sales revenue if we do obtain the enough financing.

 

14 
 

 

Our independent auditors have added an explanatory paragraph to their audit opinion issued in connection with our financial statements for the latest eight years, which states that the financial statements raise substantial doubt as to our ability to continue as a going concern. Our ability to make operations profitable or obtain additional funding will determine our ability to continue as a going concern.

 

Trends and Uncertainties in Regulation and Government Policy in China

 

Foreign Investment Policy Change in China

 

On March 16, 2007, China’s parliament, the National People’s Congress, adopted the Enterprise Income Tax Law, which took effect on January 1, 2008. The new income tax law sets a unified income tax rate for domestic and foreign companies at 25% and abolishes the favorable policy for foreign invested enterprises. As a result subsidiaries established in China in the future will not enjoy the original favorable policy unless they are certified as qualified high and new technology enterprises.

 

According to the enterprise income tax law previously in effect, our PRC subsidiaries, Kiwa Shandong and Kiwa Tianjin, were exempt from corporate income taxes for their first two profitable years and were entitled to a 50% tax reduction for the succeeding three years. Now that the new income tax law is in effect, fiscal year 2008 is regarded as the first profitable year even if Kiwa Shandong or Kiwa Tianjin were not profitable that year; thereby narrowing the time period when the favorable tax treatment may be available to us.

 

Results of Operations

 

Results of Operations for Three Months Ended September 30, 2016 and 2015

 

Revenue

 

Revenue was $1,261,544 and nil for the three months ended September 30, 2016 and 2015, respectively. Revenue was generated from licensing our trademark to Gerui of $76,235 and sales of products of $1,185,309. We signed the license agreement with Gerui to allow Gerui to sell fertilizer using our trademark in December 2015 and the sales agreement with Qingzhou to sell fertilizer products in August 2016.

 

Cost of Revenue and Gross Profit

 

Cost of revenue for the three months ended September 30, 2016 was $770,451, reflecting an increase of 100% from the same period last year. Consequently, gross profit margin as a percentage of total sales is 38.93% compared with nil for the same period last year, principally due to the increase of sales to Qingzhou.

 

General and Administration

 

General and administration expenses for the three months ended September 30, 2016 and 2015 were $196,019 and $72,968, respectively, representing a $123,051 or 168.64% increase due to the operations started in 2016. General and administrative expenses include salaries, travel and entertainment, rent, office expense, telephone expense, consulting expense and insurance costs etc.

 

Research and Development

 

Research and development expense for the three months ended September 30, 2016 reflected an increase of $34,923 or 87.61% from $39,860 in the three months ended September 30, 2015 to $74,783 for the same period of 2016. In July 2006, the Company opened a new research center with CAU through our subsidiary, Kiwa Shandong, which goes under the name, KiwaCAU BioTech Research & Development Center. Pursuant to an agreement reached between CAU and Kiwa Shandong on November 14, 2006, Kiwa Shandong agreed to contribute RMB 1 million (approximately $160,000) each year to fund research at the R&D Center. The term of the agreement is ten years.

 

15 
 

 

The Company signed a strategic cooperation agreement (the “Agreement”) with China Academy of Agricultural Science (“CAAS”)’s Institute of Agricultural Resources & Regional Planning (“IARRP”) and Institute of Agricultural Economy & Development (“IAED”) on November 5, 2015. Pursuant to the Agreement, the Company will form a strategic partnership with the two institutes and establish an “International Cooperation Platform for Internet and Safe Agricultural Products”. To fund the cooperation platform’s R&D activities, the Company will provide RMB 1 million (approximately $160,000) per year to the Spatial Agriculture Planning Method & Applications Innovation Team that belongs to the Institutes. The term of the Agreement is for three years beginning November 20, 2015. Prof. Yong Chang Wu, the authorized representative of IARRP, CAAS, is also one of the Company’s directors effective since November 20, 2015.

 

Penalty Expense

 

The Company incurred liquidated damages resulting from the default of 6% Notes. The penalty charge, which is calculated monthly at 2% of the outstanding amounts of convertible notes and unpaid interest on the notes, was $19,564 and $18,208 for three months ended September 30, 2016 and 2015, respectively. The increase of penalty expense was mainly due to accrued and unpaid interest on the notes.

 

Interest Expenses

 

Net interest expense was $28,181 for the three months ended September 30, 2016 and $28,189 for the same period of 2015.

 

Net Income / Loss

 

During the three months ended September 30, 2016, net income was $93,601 and for the same period of 2015 net loss was $159,225, representing a change of $252,826 or 158.79%. The change was due to the reasons discussed above.

 

Comprehensive Income/Loss

 

Comprehensive income for the three months ended September 30, 2016 was $103,366. Comparably, during the same period of 2015, comprehensive income was $168,247. The change was due to the reasons discussed above.

 

Results of Operations for Nine Months Ended September 30, 2016 and 2015

 

Revenue

 

Revenue was $1,971,639 and nil for the nine months ended September 30, 2016 and 2015, respectively. Revenue was generated from licensing our trademark to Gerui of $786,330 and sales of products of $1,185,309. We signed the license agreement with Gerui to allow Gerui to sell fertilizer using our trademark in December 2015 and the sales agreement with Qingzhou to sell fertilizer products in August 2016.

 

Cost of Revenue and Gross Profit

 

Cost of revenue for the nine months ended September 30, 2016 was $770,451, reflecting an increase of 100% from the same period last year. Consequently, gross profit margin as a percentage of total sales is 60.92% compared with nil for the same period last year, principally due to the increase of sales to Qingzhou.

 

General and Administration

 

General and administration expenses for nine months ended September 30, 2016 and 2015 were $421,688 and $220,510, respectively, representing a $201,178 or 91.2% increase due to the operations started in 2016. General and administrative expenses include salaries, travel and entertainment, rent, office expense, telephone expense, consulting expense and insurance costs etc.

 

Research and Development

 

Research and development expense for the nine months ended September 30, 2016 reflected an increase of $105,065 or 86.5% from $121,487 in the nine months ended September 30, 2015 to $226,552 for the same period of 2016. In July 2006, the Company opened a new research center with CAU through our subsidiary, Kiwa Shandong, which goes under the name, Kiwa-CAU Bio-Tech Research & Development Center. Pursuant to an agreement reached between CAU and Kiwa Shandong on November 14, 2006, Kiwa Shandong agreed to contribute RMB 1 million (approximately $160,000) each year to fund research at the R&D Center. The term of the agreement is ten years.

 

16 
 

 

The Company signed a strategic cooperation agreement (the “Agreement”) with China Academy of Agricultural Science (“CAAS”)’s Institute of Agricultural Resources & Regional Planning (“IARRP”) and Institute of Agricultural Economy & Development (“IAED”) on November 5, 2015. Pursuant to the Agreement, the Company will form a strategic partnership with the two institutes and establish an “International Cooperation Platform for Internet and Safe Agricultural Products”. To fund the cooperation platform’s R&D activities, the Company will provide RMB 1 million (approximately $160,000) per year to the Spatial Agriculture Planning Method & Applications Innovation Team that belongs to the Institutes. The term of the Agreement is for three years beginning November 20, 2015. Prof. Yong Chang Wu, the authorized representative of IARRP, CAAS, is also one of the Company’s directors effective since November 20, 2015.

 

Penalty Expense

 

The Company incurred liquidated damages resulting from the default of 6% Notes. The penalty charge, which is calculated monthly at 2% of the outstanding amounts of convertible notes and unpaid interest on the notes, was $57,672 and $53,605 for the nine months ended September 30, 2016 and 2015, respectively. The increase of penalty expense was mainly due to accrued and unpaid interest on the notes.

 

Interest Expenses

 

Net interest expense was $84,624 for the nine months ended September 30, 2016 and $84,449 for the same period of 2015.

 

Net Income / Loss

 

During the nine months ended September 30, 2016, net income was $331,707, and for the same period of 2015 net loss was $480,051, representing a change of $811,758 or 169.1%. The change was due to the reasons discussed above.

 

Comprehensive Income/Loss

 

Comprehensive income for the nine months ended September 30, 2016 was $435,577. Comparably, during the same period of 2015, comprehensive loss was $201,485. The change was due to the reasons discussed above.

 

Liquidity and Capital Resources

 

Since inception of our ag-biotech business in 2002, we have relied on the proceeds from the sale of our equity securities and loans from both unrelated and related parties to provide the resources necessary to fund our operations and the execution of our business plan. During the nine months ended September 30, 2016, the advances from related parties, net of repayment by the Company to related parties, was $51,500. As of September 30, 2016, our current liabilities exceeded current assets by $3,442,227, representing a current ratio of 0.572. Comparably, as of December 31, 2015, our current liabilities exceeded current assets by $9,330,130, denoting a current ratio of 0.005.

 

As of September 30, 2016 and December 31, 2015, we had cash of $545 and $721, respectively. Changes in cash balances are outlined as follows:

 

During the nine months ended September 30, 2016, our operations used cash of $737,758 as compared with $77,853 used in the same period of 2015. Cash was mainly used for working capital for public company operation.

 

During the nine months ended September 30, 2016 and 2015, we used $79,604 and nil cash for investing activities.

 

17 
 

 

During the first three quarters of 2016, our financing activities incurred net cash inflow of $817,781, $51,500 of which are generated from advances from related parties, net of repayment to related parties and $766,281 of which are generated from sales of common stock to stockholders. During the nine months ended September 30, 2015, we generated $77,988 from financing activities due to proceeds received from related party loans.

 

Given the facts that:

 

Outstanding note payable of $360,000 as of September 30, 2016. This note has been in default since July 2007.

 

To the extent that we are unable to successfully raise capital necessary to fund our future cash requirements on a timely basis and under acceptable terms and conditions, we will not have sufficient cash resources to maintain operations, and may have to curtail operations and consider a formal or informal restructuring or reorganization.

 

Commitments and Contingencies

 

See Note 12 to the Consolidated Financial Statements under Item 1 in Part I.

 

Off-Balance Sheet Arrangements

 

At September 30, 2016, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

ITEM 4. CONTROLS AND PROCEDURES

 

 (a)        Evaluation of Disclosure Controls and Procedures

 

Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Securities Exchange Act Rule 13a-15(e)) as of the end of the quarterly period covered by this report, have concluded that our disclosure controls and procedures are not effective to reasonably ensure that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s Rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The principal basis for this conclusion is the lack of segregation of duties within our financial function and the lack of an operating Audit Committee.

 

(b)       Changes in Internal Control over Financial Reporting

 

There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act) during the fiscal period to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

None.

 

ITEM 1A. RISK FACTORS

 

Smaller reporting companies are not required to provide the information required by this item.

 

18 
 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

On March 24, 2016, (1) the Company issued 2,900,000 shares of common stock to Mr. Wei Li in exchange for the cancellation of approximately $2,900,000 of debt: (2) the Company issued 240,000 shares of common stock to Yvonne Wang in exchange for the cancellation of $240,000 of debt; (3) on March 24, 2016, the Company issued 1,000 shares of common stock to Mark E. Crone in payment of amounts due to Mr. Crone for legal services; (4) On April 17, 2016, the Company issued 125,000 shares of common stock to Minqing Zeng in lieu of an investment of $100,000 ($0.80 per share); (5) On May 9, 2016, the Company issued 50,000 shares of common stock to Tzu-Yun Cheng in lieu of an investment of $40,000 ($0.80 per share); (6) On May 9, 2016, the Company issued 45,000 shares of common stock to Zhiming Zhu in lieu of an investment of $36,000 ($0.80 per share); (7) On July 20, 2016, the Company issued 20,000 shares of common stock to Hang Zhao in lieu of an investment of $16,000 ($0.80 per share); (8) On July 20, 2016, the Company issued 10,000 shares of common stock to Shiwei Xie in lieu of an investment of $8,000 ($0.80 per share); (9) On July 20, 2016, the Company issued 30,000 shares of common stock to Xiaoqiang Yu in lieu of an investment of $24,000 ($0.80 per share); (10) On July 21, 2016, the Company issued 20,000 shares of common stock to Hang Zhao in lieu of an investment of $16,000 ($0.80 per share); (11) On July 22, 2016, the Company issued 10,000 shares of common stock to Xiaoqiang Yu in lieu of an investment of $8,000 ($0.80 per share); (12) On July 29, 2016, the Company issued 40,000 shares of common stock to Xiangrong Chen in lieu of an investment of $32,000 ($0.80 per share); (13) On August 11, 2016, the Company issued 101,947 shares of common stock to Jimmy Zhou in lieu of salary payable settlement of $50,974 ($0.50 per share); (14) On August 23, 2016, the Company issued 150,000 shares of common stock to Bing Zhang in lieu of an investment of $120,000 ($0.80 per share); (15) On September 12, 2016, the Company issued 750,000 shares of common stock to Lifeng Liu, Zhenping Li and Qi Jiang in lieu of an investment of $600,000 ($0.80 per share); (16) On September 21, 2016, the Company issued 150,000 shares of common stock to Demei Yang in lieu of an investment of $120,000 ($0.80 per share); (17) On September 22, 2016, the Company issued 150,000 shares of common stock to Weihong Shan in lieu of an investment of $120,000 ($0.80 per share); (18) On September 28, 2016, the Company issued 100,000 shares of common stock to Lei Hou in lieu of an investment of $80,000 ($0.80 per share); (19) On August 29, 2016, the Company issued 60,000 shares of common stock to Qingke Xing in lieu of M&A and financing in China consulting service of $51,000 ($0.85 per share); (20) On August 31, 2016, the Company issued 1,530,808 shares of common stock to Equities.com Inc., Geng Liu, Lixin Tian and Xu Liu in lieu of Investor Relation and growth and development strategy consulting service of $1,515,500 ($0.99 per share); (21) On September 6, 2016, the Company issued 20,000 shares of common stock to Growth Circle Inc. in lieu of investor relation consulting service of $19,800 ($0.99 per share); (22) On September 15, 2016, the Company issued 100,000 shares of common stock to WSMG Advisor Inc. in lieu of investor relation consulting service of $102,000 ($1.02 per share).

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine safety disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

Exhibit No.   Description
     
31.1/31.2   Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) and Rule15d-14(a) of the Securities Exchange Act of 1934, as amended
     
32.1/32.2   Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
101.INS   XBRL Instance Document
     
101.SCH   XBRL Taxonomy Extension Schema Document
     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document
     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
     
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
     
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document

 

19 
 

 

SIGNATURES

 

In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  KIWA BIO-TECH PRODUCTS GROUP CORPORATION
     
November 21, 2016 By:  /s/ Yvonne Wang
    Yvonne Wang, Interim Chief Executive Officer and Interim Chief Financial Officer

 

20 
 

 

EX-31.1 2 ex31-1.htm

 

EXHIBIT 31.1

 

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

 

I, Yvonne Wang, certify that:

 

  1. I have reviewed this Form 10-Q for the period ended September 30, 2016 of Kiwa Bio-Tech Products Group Corporation;
     
  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 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:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

  5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 21, 2016  
   
/s/ Yvonne Wang  
Yvonne Wang  
Principal Executive Officer  

 

 
 

 

EX-31.2 3 ex31-2.htm

 

EXHIBIT 31.2

 

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

 

I, Yvonne Wang, certify that:

 

  1. I have reviewed this Form 10-Q for the period ended September 30, 2016 of Kiwa Bio-Tech Products Group Corporation;
     
  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 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:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

  5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 21, 2016  
   
/s/ Yvonne Wang  
Yvonne Wang  
Principal Financial Officer  

 

 
 

 

EX-32.1 4 ex32-1.htm

 

EXHIBIT 32.1

 

CERTIFICATIONS PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

 

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Kiwa Bio-Tech Products Group Corporation, a Nevada corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

 

The quarterly report on Form 10-Q for the period ended September 30, 2016 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: November 21, 2016  
   
  /s/ Yvonne Wang
  Yvonne Wang
  Principal Executive Officer

 

A signed original of this written statement required by Section 906 has been provided to KIWA BIO-TECH PRODUCTS GROUP CORPORATION and will be retained by KIWA BIO-TECH PRODUCTS GROUP CORPORATION and furnished to the Securities and Exchange Commission or its staff upon request.

 

 
 

 

EX-32.2 5 ex32-2.htm

 

EXHIBIT 32.2

 

CERTIFICATIONS PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

 

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Kiwa Bio-Tech Products Group Corporation, a Nevada corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

 

The quarterly report on Form 10-Q for the period ended September 30, 2016 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: November 21, 2016  
   
  /s/ Yvonne Wang
  Yvonne Wang
  Principal Financial and Accounting Officer

 

A signed original of this written statement required by Section 906 has been provided to KIWA BIO-TECH PRODUCTS GROUP CORPORATION and will be retained by KIWA BIO-TECH PRODUCTS GROUP CORPORATION and furnished to the Securities and Exchange Commission or its staff upon request.

 

 
 

 

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Document and Entity Information - shares
9 Months Ended
Sep. 30, 2016
Nov. 18, 2016
Document And Entity Information    
Entity Registrant Name KIWA BIO-TECH PRODUCTS GROUP CORP  
Entity Central Index Key 0001159275  
Document Type 10-Q  
Document Period End Date Sep. 30, 2016  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   8,603,981
Trading Symbol KWBT  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2016  
XML 13 R2.htm IDEA: XBRL DOCUMENT v3.5.0.2
Consolidated Balance Sheets (Unaudited) - USD ($)
Sep. 30, 2016
Dec. 31, 2015
Current assets    
Cash and cash equivalents $ 545 $ 721
Accounts receivable 1,224,410
Prepaid expenses 1,639,583
Advance to customer - Gerui 1,677,459
Other current assets 58,432 47,453
Total current assets 4,600,429 48,174
Property, plant and equipment - net 69,652 2,807
Rent and utility deposits 37,295
Intangible assets 34,112
Total assets 4,741,488 50,981
Current liabilities    
Accounts payable 1,076,266 300,247
Advances from customers 13,415 13,800
Construction costs payable 266,103 273,722
Due to related parties - trade 1,337,489 1,143,978
Due to related parties - non-trade 107,710 3,166,198
Convertible notes payable 150,250 150,250
Notes payable 360,000 360,000
Salary payable 1,675,900 1,632,881
Taxes payable 586,958 478,209
Penalty payable 462,423 404,752
Interest payable 1,014,480 930,062
Other payable 479,659
Accrued expenses and other current liabilities 512,003 524,205
Total current liabilities 8,042,656 9,378,304
Unsecured loans payable 1,723,776 1,773,131
Total long-term liabilities 1,723,776 1,773,131
Total liabilities 9,766,432 11,151,435
Stockholders' deficiency    
Preferred stock - $0.001 par value. Authorized 20,000,000 shares. Issued outstanding 500,000 shares at September 30, 2016 and December 31, 2015, respectively 500 500
Common stock - $0.001 par value. Authorized 100,000,000 shares. Issued and outstanding 8,603,981 and 2,000,000 shares at September 30, 2016 and December 31, 2015, respectively. 8,604 2,000
Additional paid-in capital 15,684,507 9,490,837
Stock subscription receivable (560,341)
Accumulated deficit (19,993,105) (20,324,812)
Accumulated other comprehensive loss (165,109) (268,979)
Total stockholders' deficiency (5,024,944) (11,100,454)
Total liabilities and stockholders' deficiency $ 4,741,488 $ 50,981
XML 14 R3.htm IDEA: XBRL DOCUMENT v3.5.0.2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares
Sep. 30, 2016
Dec. 31, 2015
Statement of Financial Position [Abstract]    
Preferred Stock, par value $ 0.001 $ 0.001
Preferred Stock, shares authorized 20,000,000 20,000,000
Preferred Stock, shares issued 500,000 500,000
Preferred Stock, shares outstanding 500,000 500,000
Common Stock, par value $ 0.001 $ 0.001
Common Stock, shares authorized 100,000,000 100,000,000
Common Stock, shares issued 8,603,981 2,000,000
Common Stock, shares outstanding 8,603,981 2,000,000
XML 15 R4.htm IDEA: XBRL DOCUMENT v3.5.0.2
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Income Statement [Abstract]        
Revenue $ 1,261,544 $ 1,971,639
Cost of revenue (770,451) (770,451)
Gross profit 491,093 1,201,188
Operating expenses        
General and administrative 196,019 72,968 421,688 220,510
Research and development 74,783 39,860 226,552 121,487
Total operating expenses 270,802 112,828 648,240 341,997
Operating income (loss) 220,291 (112,828) 552,948 (341,997)
Other expense        
Penalty expense 19,564 18,208 57,672 53,605
Interest expense 28,181 28,189 84,624 84,449
Total other expense 47,745 46,397 142,296 138,054
Income (loss) before income tax provision 172,546 (159,225) 410,652 (480,051)
Income tax provision 78,945 78,945
Net income (loss) 93,601 (159,225) 331,707 (480,051)
Other comprehensive income        
Foreign currency translation adjustment 9,765 327,472 103,870 278,566
Comprehensive income (loss) $ 103,366 $ 168,247 $ 435,577 $ (201,485)
Net income(loss) per common share - basic $ 0.01 $ (0.08) $ 0.07 $ (0.24)
Net income(loss) per common share - diluted $ 0.01 $ (0.08) $ 0.04 $ (0.24)
Weighted average number of common shares outstanding - basic 6,300,700 2,000,000 4,617,535 2,000,000
Weighted average number of common shares outstanding - diluted 7,064,969 2,000,000 7,769,954 2,000,000
XML 16 R5.htm IDEA: XBRL DOCUMENT v3.5.0.2
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Cash flows from operating activities:    
Net income (loss) $ 331,707 $ (480,051)
Adjustments to reconcile net income (loss) to net cash used in operating activities:    
Depreciation and amortization 13,039 3,293
Provision for penalty payable 57,672 53,605
Accrued interest on convertible notes 84,418 84,357
Issuance of common shares for service 57,717
Changes in operating assets and liabilities:    
Accounts receivable (1,240,550)
Prepaid expenses (7,500)
Advance to customer - Gerui (1,700,605)
Other current assets (11,988)
Rent and utility deposits (37,809)
Salary payable 93,993 110,604
Taxes payable 123,604 47,604
Due to related parties - trade 226,392 121,487
Accounts payable 794,868
Other payable 477,284 (18,752)
Net cash used in operating activities (737,758) (77,853)
Cash flows from investing activities:    
Purchase of property, plant and equipment (79,604)
Net cash used by investing activities (79,604)
Cash flows from financing activities:    
Proceeds from related parties, net of payments to related parties 51,500 77,988
Proceeds from sale of common stock 766,281
Net cash provided by financing activities 817,781 77,988
Effect of exchange rate change (595) (18)
Cash and cash equivalents:    
Net increase (decrease) (176) 117
Balance at beginning of period 721 2,963
Balance at end of period 545 3,080
Non-cash financing activities:    
Issuance of 3,141,000 shares of common stock for repayment of related party loans 3,141,000
Issuance of 101,947 shares of common stock for payment of accrued salaries 50,974
Issuance of 1,710,808 shares of common stock for prepaid consulting services 1,630,583
Advances from related parties to pay for acquisition of intangible assets 34,112
Supplemental Disclosures of Cash flow Information:    
Cash paid for interest
Cash paid for income taxes
XML 17 R6.htm IDEA: XBRL DOCUMENT v3.5.0.2
Consolidated Statements of Cash Flows (Parenthetical) - shares
9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Statement of Cash Flows [Abstract]    
Number of shares issuance of common stock 3,141,000 3,141,000
Number of shares issuance for payment of accrued salaries 101,947 101,947
Number of shares issuance for prepaid consulting services 1,710,808 1,710,808
XML 18 R7.htm IDEA: XBRL DOCUMENT v3.5.0.2
Description of Business and Organization
9 Months Ended
Sep. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Description of Business and Organization

1. Description of Business and Organization

 

References herein to “Kiwa” or the “Company” refer to Kiwa Bio-Tech Products Group Corporation and its wholly-owned subsidiaries unless the context specifically states or implies otherwise.

 

Business –The Company’s business is to develop, manufacture, distribute and market innovative, cost-effective and environmentally safe bio-technological products for agriculture markets located primarily in China. The Company has acquired technologies to produce and market bio-fertilizer.

 

Acquisition of Caber Holdings Ltd - On November 30, 2015, we entered into an acquisition agreement (the “Agreement”) with the shareholders of Caber Holdings LTD, whose Chinese name is Hong Kong Baina Group Co., Ltd, located in Hong Kong (“Baina Hong Kong”), and Oriental Baina Co. Ltd. (hereinafter referred to as “Baina Beijing”), Baina Hong Kong’s wholly-owned subsidiary in Beijing, China. Kiwa will rename Baina Beijing to Kiwa Baiao Co. Ltd. Kiwa Baiao Co. Ltd will replace Kiwa’s current subsidiary in China - Kiwa Bio-Tech (Shandong) Co., Ltd (“Kiwa Shandong”) - to operate Kiwa’s bio-fertilizer market expansion and become Kiwa’s platform for future acquisitions of new agricultural-related projects in China. In accordance with the terms of the Agreement, Kiwa agreed to pay US$30,000 to the Baina Hong Kong Shareholders for the acquisition of 100% of the equity of Baina Hong Kong. The acquisition was completed on January 7, 2016. Both Baina Hong Kong and Baina Beijing had no activities before the acquisition date and had no assets and liabilities. The purpose of this acquisition was to acquire Baina Hong Kong’s corporate registration in Hong Kong and in China. The total payment of approximately $34,000 was recorded as intangible assets.

 

Restatement - Based on the previously restated consolidated financial statements for the year ended December 31, 2014 which were filed with company’s annual report Form 10K for the year ended December 31, 2015, the management of the Company has concluded that consolidated statement of comprehensive income (loss) for the three and nine months ended September 30, 2015 should be restated to record accrued interest expense of $22,500 and $67,500 respectively. (see Note 9)

XML 19 R8.htm IDEA: XBRL DOCUMENT v3.5.0.2
Going Concern
9 Months Ended
Sep. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Going Concern

2. Going Concern

 

The consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the consolidated financial statements do not purport to represent the realizable or settlement values.

 

As of September 30, 2016, the Company had cash of $545. The Company had working capital deficit of $3,442,227 and an accumulated deficit of $ 19,993,105 and a stockholders’ deficiency of $5,024,944 as of September 30, 2016. This trend is expected to continue. These factors, among others, create substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

The Company plans to (1) raise finance from related-parties, local banks, other financial institutions and other stock market to meet cash demand of daily demand; and (2) raise capital to resume operations. However, there can be no assurance that we will be successful in obtaining this financing (3) The Company’s business plan is to develop, manufacture, distribute and market innovative, cost-effective and environmentally safe biotechnological products for agriculture markets located primarily in China. The Company has acquired technologies to produce and market bio-fertilizer.

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summaries of Significant Accounting Policies
9 Months Ended
Sep. 30, 2016
Accounting Policies [Abstract]  
Summaries of Significant Accounting Policies

3. Summaries of Significant Accounting Policies

 

Principle of consolidation - These consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries. All significant inter-company balances or transactions are eliminated on consolidation.

 

Basis of preparation - These interim consolidated financial statements are unaudited. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) and disclosures necessary for a fair presentation of these interim condensed consolidated financial statements have been included. The results reported in the consolidated financial statements for any interim periods are not necessarily indicative of the results that may be reported for the entire year or any other periods. The (a) consolidated balance sheet as of December 31, 2015, which was derived from audited financial statements, and (b) the unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. 

 

Reverse Split - On January 14, 2016, the Company filed a Certificate of Amendment of its Certificate of Incorporation with the State of Delaware with reference to a 1-for-200 reverse stock split with respect to its Common Stock with effective date of January 28, 2016. In connection with the reverse split, the Company’s authorized capital stock was amended to be 120,000,000 shares, comprising 100,000,000 shares of Common Stock par value $0.001 and 20,000,000 shares of Preferred Stock par value $0.001. All relevant information relating to numbers of shares, options and per share information have been retrospectively adjusted to reflect the reverse stock split for all periods presented.

 

Use of Estimates - The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant accounting estimates include the bad debt provision, impairment of long-lived assets, depreciation and amortization, valuation allowance of deferred tax assets and fair value of warrants and options.

 

Foreign Currency Translation - The Company uses United States dollars (“US Dollar” or “US$” or “$”) for financial reporting purposes. However, the Company maintains the books and records in its functional currency, Chinese Renminbi (“RMB”), being the primary currency of the economic environment in which its operations are conducted. In general, the Company translates its assets and liabilities into U.S. dollars using the applicable exchange rates prevailing at the balance sheet date, and the statement of income is translated at average exchange rates during the reporting period. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the Company’s financial statements are recorded as accumulated other comprehensive income.

 

The exchange rates used to translate amounts in RMB into U.S. Dollars for the purposes of preparing the condensed consolidated financial statements were as follows:

 

      As of
September 30, 2016
      As of
December 31, 2015
 
Balance sheet items, except for equity accounts     US$1 = RMB 6.6714       US$1 = RMB 6.4857  

 

      Nine months ended September 30,  
      2016       2015  
Items in the statements of income and cash flows     US$1 = RMB 6.5806       US$1 = RMB 6.1735  

 

Impairment of Long-Lived Assets - We periodically evaluate our investment in long-lived assets, including property and equipment, for recoverability whenever events or changes in circumstances indicate the net carrying amount may not be recoverable. Our judgments regarding potential impairment are based on legal factors, market conditions and operational performance indicators, among others. In assessing the impairment of property and equipment, we make assumptions regarding the estimated future cash flows and other factors to determine the fair value of the respective assets. Based on our analysis, no further impairment of long-lived assets was charged during the nine months ended September 30, 2016.

 

Revenue Recognition - The Company’s revenue includes two parts: Part I represents fees per licensing agreement. The Company entered into an agreement with a company, Kangtan Gerui (Beijing) Bio-Tech Co., Ltd. (“Gerui”), to allow Gerui sell products with the Company’s trademark. Gerui will pay 10% of total sales amount to the Company as license fee.

 

Part II represents the revenues from sales of products purchased. The Company recognized license fees and revenue from sales of products when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, and no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as advances from customers.

 

Accounts Receivables - Accounts receivables represent customer accounts receivables. The allowance for doubtful accounts is based on a combination of current sales, historical charge offs and specific accounts identified as high risk. Uncollectible accounts receivable are charged against the allowance for doubtful accounts when all reasonable efforts to collect the amounts due have been exhausted. Such allowances, if any, would be recorded in the period the impairment is identified. 

 

Income Taxes - The Company accounts for income taxes under the provisions of FASB ASC Topic 740, “Income Tax,” which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are recognized for the future tax consequence attributable to the difference between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are measured using the enacted tax rate expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company establishes a valuation when it is more likely than not that the assets will not be recovered.

 

Fair value measurements - ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value 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. This topic also establishes a fair value hierarchy which requires classification based on observable and unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

 

Level 1 - Quoted prices in active markets for identical assets or liabilities.

 

Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

The carrying values of cash and cash equivalents, trade receivables and payables, and short-term debts approximate their fair values due to their short maturities.

 

There were no assets and liabilities measured at fair value on a nonrecurring basis as of September 30, 2016 and December 31, 2015.

XML 21 R10.htm IDEA: XBRL DOCUMENT v3.5.0.2
Prepaid Expenses
9 Months Ended
Sep. 30, 2016
Prepaid Expense and Other Assets [Abstract]  
Prepaid Expenses

4. Prepaid expenses

 

The Company issued 1,710,808 shares of common stock to three consulting companies for the investor relation consulting service and four individuals for the growth and development strategy consulting service in China, which represents the amount of $1,688,300 based on quoted price at issuance. The Company amortized the consulting fee over the service periods per agreements. For the nine months ended September 30, 2016, the amortization of consulting expense was $57,717.

XML 22 R11.htm IDEA: XBRL DOCUMENT v3.5.0.2
Advance to Customer - Gerui
9 Months Ended
Sep. 30, 2016
Receivables [Abstract]  
Advance to Customer - Gerui

5. Advance to customer - Gerui

 

As of September 30, 2016, Advance to customer-Gerui was $1,677,459, which represents the prepayment to Gerui, the main customer, to subcontract the manufacturing of products to an unrelated company, Shandong Deluke Company.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.5.0.2
Related Party Transactions and Balances
9 Months Ended
Sep. 30, 2016
Related Party Transactions [Abstract]  
Related Party Transactions and Balances

6. Related Party Transactions and Balances

 

Amounts due to related parties consisted of the following:

 

Item   Nature     Notes     September 30, 2016     December 31, 2015  
Mr. Wei Li (“Mr. Li”)     Non-trade       (1)     $ -      $ 2,879,307  
Kangtai Xinnong Agriculture Tech (Beijing) Co., Ltd. (“Kangtai”)     Non-trade       (2)       -       (12,173 )
Ms. Yvonne Wang (“Ms. Wang”)     Non-trade       (3)       107,710       299,064  
Subtotal                     107,710       3,166,198  
Kiwa-CAU R&D Center     Trade       (4)       1,206,644       1,125,553  
CAAS IARRP and IAED Institutes     Trade       (5)       130,845       18,425  
Subtotal                     1,337,489       1,143,978  
Total                   $ 1,445,199     $ 4,310,176  

 

(1)       Mr. Li

 

Mr. Li was the Chairman of the Board until November 20, 2015 and was the Chief Executive Officer of the Company until July 1, 2015.

 

Advances and Loans

 

As of December 31, 2015, the remaining balance due Mr. Li was 2,879,307. During the nine months ended September 30, 2016, Mr. Li received 2,900,000 shares of common stock in lieu of the cancellation and repayment of an aggregate of $2,879,307 and salary payable.

 

Guarantees for the Company

 

Mr. Li has pledged without any compensation from the Company, all of his common stock of the Company as collateral security for the Company’s obligations under the 6% Notes. (See Note 8 below).

 

(2)       Kangtai

 

Kangtai, formerly named Kangtai International Logistics (Beijing) Co., Ltd., Kangtai Xinnong Agriculture Tech (Beijing) Co., Ltd., is a private company, 28% owned by Mr. Li. Mr. Li is the Chairman of Kangtai.

 

On December 31, 2015, the amount due from Kangtai was $12,173. The balance due from Kangtai on September 30, 2016 was nil.

 

(3)       Ms. Wang

 

Ms. Wang is the Secretary of the Company until November 20, 2015. Effective as of November 20, 2015, the Company appointed Ms. Wang as the Chairman of the Board. Effective as of December 15, 2015, the Company appointed Ms. Wang as the Company’s Chief Operating Officer.

 

On December 31, 2015, the amount due to Ms. Wang was $299,064. On March 24, 2016, the Company issued 240,000 shares of common stock to Ms. Wang to pay off the loan balance of $240,000. During the nine months ended September 30, 2016, Ms. Wang paid various expenses on behalf of the Company. As of September 30, 2016, the amount due to Ms. Wang was $107,710.

 

(4) Kiwa-CAU R&D Center

 

Pursuant to the agreement with China Agricultural University (“CAU”), the Company agree to invest RMB 1 million (approximately $160,000) each year to fund research at Kiwa-CAU R&D Center. Prof. Qi Wang, one of the Company’s directors, is also the director of Kiwa-CAU R&D Center.

 

On December 31, 2015, the amount due to Kiwa-CAU R&D Center was $1,125,553. As of September 30, 2016, the outstanding balance due to Kiwa-CAU R&D Center was $1,206,644.

 

(5) CAAS IARRP and IAED Institutes

 

On November 5, 2015, the Company signed a strategic cooperation agreement (the “Agreement”) with China Academy of Agricultural Science (“CAAS”)’s Institute of Agricultural Resources & Regional Planning (“IARRP”) and Institute of Agricultural Economy & Development (“IAED”). Pursuant to the Agreement, the Company will form a strategic partnership with the two institutes and establish an “International Cooperation Platform for Internet and Safe Agricultural Products”. To fund the cooperation platform’s R&D activities, the Company will provide RMB 1 million (approximately $160,000) per year to the Spatial Agriculture Planning Method & Applications Innovation Team that belongs to the Institutes. The term of the Agreement is for three years beginning November 20, 2015. Prof. Yong Chang Wu, the authorized representative of IARRP, CAAS, is also one of the Company’s directors effective since November 20, 2015.

 

On December 31, 2015, the amount due to Kiwa- CAAS IARRP and IAED Institutes R&D Center was $18,425. As of September 30, 2016, the outstanding balance due to Kiwa-CAAS IARRP and IAED Institutes R&D center was $130,845.

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.5.0.2
Other Payable
9 Months Ended
Sep. 30, 2016
Other Liabilities Disclosure [Abstract]  
Other Payable

7. Other Payable

 

Other payable includes the payables to two potential investors and subscription received in advance. As of September 30, 2016, those two potential investors made the first payments of $479,659 to the Company and the investment agreements haven’t been reached yet. Those two potential investors are non-related parties.

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.5.0.2
Convertible Notes Payable
9 Months Ended
Sep. 30, 2016
Debt Disclosure [Abstract]  
Convertible Notes Payable

8. Convertible Notes Payable

 

Convertible notes payable consists of 6% secured convertible notes issued to FirsTrust Group Inc. on June 29, 2006. The notes beard interest at 6% and were due on June 29, 2009. Once the note is pass due, the interest rate increased to 15% per annum. The Company accrued $16,919 and $16,857 interest expense on convertible notes for the nine months ended September 30, 2016 and 2015, respectively.

 

The conversion price of the 6% Notes is based on a 40% discount to the average of the trading price of the Company’s common stock on the OTC Bulletin Board over a 20-day trading period. The conversion price is also adjusted for certain subsequent issuances of equity securities of the Company at prices below the conversion price then in effect. The 6% Notes contain a volume limitation that prohibits the holder from further converting the 6% Notes if doing so would cause the holder and its affiliates to hold more than 4.99% of the Company’s outstanding common stock. In addition, the holder of the 6% Notes agrees that they may not convert more than their pro-rata share (based on original principal amount) of the greater of $120,000 principal amount of the 6% Notes per calendar month or the average daily dollar volume calculated during the 10 business days prior to a conversion, per conversion. This conversion limit has since been eliminated pursuant to an agreement by the Company and the Purchasers.

 

The Company incurs a financial penalty in cash or shares at the option of the Company (equal to 2% of the outstanding amount of the Notes per month plus accrued and unpaid interest on the Notes, prorated for partial months) if it breaches this or other affirmative covenants in the Purchase Agreement, including a covenant to maintain a sufficient number of authorized shares under its Certificate of Incorporation to cover at least 110% of the stock issuable upon full conversion of the Notes. Pursuant to the relevant provisions for liquidated damages in the Purchase Agreement, the Company has accrued the penalty of $57,672 and $53,605 for the nine months ended September 30, 2016 and 2015, respectively.

 

The 6% Notes require the Company to procure the Purchaser’s consent prior to taking certain actions including the payment of dividends, repurchasing stock, incurring debt, guaranteeing obligations, merging or restructuring the Company, or selling significant assets.

  

The Company’s obligations under the 6% Notes are secured by a first priority security interest in the Company’s intellectual property pursuant to an Intellectual Property Security Agreement with the Purchasers, and by a first priority security interest in all of the Company’s other assets pursuant to a Security Agreement with the Purchasers. In addition, Mr. Li, the Company’s Chief Executive Officer until July 1, 2015, has pledged all of his common stock of the Company as collateral for the Company’s obligations under the 6% Notes. The intellectual property pledged had a cost of $592,901 which carrying value of $179,897 was fully impaired during the year ended December 31, 2009.

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.5.0.2
Note Payable
9 Months Ended
Sep. 30, 2016
Debt Disclosure [Abstract]  
Note Payable

9. Note payable

 

On May 29, 2007, the Company issued a $360,000 promissory note to an unrelated individual. This note bears interest at 18% per annum and was due on July 27, 2007. This note is currently in default and bears interest of 25% per annum (the “Default rate”) until paid in full. This note is secured by a pledge of 6,178,336 (post-reverse split 30,892) shares of the Company’s common stock owned by Investlink (China) Limited, a British Virgin Island corporation. The Company accrued $67,500 and $67,500 interest expense on note payable for the nine months ended September 30, 2016 and 2015, respectively.

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stockholders' Equity
9 Months Ended
Sep. 30, 2016
Equity [Abstract]  
Stockholders' Equity

10. Stockholders’ Equity

 

During the nine months ended September 30, 2016, the Company issued 3,140,000 shares of common stock to Mr. Li and Ms. Wang for debt repayment and salary payment for an aggregate amount of $3,141,000 (See Note 6).

 

The Company issued 1,650,000 shares of common stock to sixteen individual shareholders at $0.8 per share for an aggregate amount of $1,320,000 during the nine months ended September 30, 2016, $560,341 of which has not been received by the Company as of September 30, 2016 and has been recorded in the account of stock subscription receivable.

 

During the nine months ended September 30, 2016, the Company issued 1,710,808 shares of common stock to three consulting companies for the investor relation consulting service and four individuals for the growth and development strategy consulting service in China, which represents the amount of $1,688,300 based on quoted price at issuance. The Company amortized the consulting fee over the service periods per agreements. For the nine months ended September 30, 2016, the amortization of consulting expense was $57,717.

 

The Company also issued 101,947 shares of common stock to Jimmy Zhou, prior CEO of the Company, to settle the partial salary payable of $50,974 owed to Jimmy Zhou in August, 2016.

XML 28 R17.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stock-based Compensation
9 Months Ended
Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-based Compensation

11. Stock-based Compensation

 

On December 12, 2006, the Company granted options for 2,000,000 shares of its common stock under its 2004 Stock Incentive Plan. Summary of options issued and outstanding at September 30, 2016 and the movements during the nine months then ended are as follows:

 

    Number of
underlying
shares
    Weighted-
Average
Exercise
Price
Per Share
    Aggregate
Intrinsic
Value (1)
    Weighted- Average
Contractual Life
Remaining in Years
 
Outstanding at December 31, 2015     6,163     $ 35     $ -       1  
Exercised     -       -                  
Expired     -       -       -          
Forfeited     -       -       -          
Outstanding at September 30, 2016     6,163     $ 35     $ -       0.25  
                                 
Exercisable at September 30, 2016     6,163     $ 35     $ -       0.25  

 

(1) The market value of the Company’s common stock at September 30, 2016 was $1.43 per share. The outstanding options had no intrinsic value at September 30, 2016.
XML 29 R18.htm IDEA: XBRL DOCUMENT v3.5.0.2
Commitments and Contingencies
9 Months Ended
Sep. 30, 2016
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

12. Commitments and Contingencies

 

The Company has the following material contractual obligations:

 

Operation of Kiwa-CAU R&D Center

 

Pursuant to the agreement on joint incorporation of the research and development center between CAU and Kiwa Shandong dated November 14, 2006, Kiwa Shandong agrees to invest RMB1 million (approximately $160,000) each year to fund research at the R&D Center. The term of this Agreement is ten years starting from July 1, 2006. Qi Wang, one of our directors commencing in July 2007 has acted as Director of Kiwa-CAU R&D Center since July 2006.

 

CAAS IARRP and IAED Institutes

 

On November 5, 2015, the Company signed a strategic cooperation agreement (the “Agreement”) with China Academy of Agricultural Science (“CAAS”)’s Institute of Agricultural Resources & Regional Planning (“IARRP”) and Institute of Agricultural Economy & Development (“IAED”). Pursuant to the Agreement, the Company will form a strategic partnership with the two institutes and establish an “International Cooperation Platform for Internet and Safe Agricultural Products”. To fund the cooperation platform’s R&D activities, the Company will provide RMB 1 Million (approximately $160,000) per year to the Spatial Agriculture Planning Method & Applications Innovation Team that belongs to the Institutes. The term of the Agreement is for three years beginning November 20, 2015. Prof Yong Chang Wu, the authorized representative of IARRP, CAAS, is also one of the Company’s directors effective since November 20, 2015.

 

Investment in manufacturing and research facilities in Zoucheng, Shandong Province in China

 

According to the Project Agreement with Zoucheng Municipal Government in 2002, the Company has committed to investing approximately $18 million to $24 million for developing the manufacturing and research facilities in Zoucheng, Shandong Province. The Company had invested approximately $2 million for the project during the period from 2004 to 2010 and no additional investments were made since then.

XML 30 R19.htm IDEA: XBRL DOCUMENT v3.5.0.2
Income Tax
9 Months Ended
Sep. 30, 2016
Income Tax Disclosure [Abstract]  
Income Tax

13. Income Tax

 

In accordance with the current tax laws in China, the company’s subsidiaries in china are subject to a corporate income tax rate of 25% on its taxable income.

 

No provision for U.S. income taxes is made as the Company has no taxable income in the U.S. In accordance with the relevant tax laws in the British Virgin Islands, Kiwa BVI, as an International Business Company, is exempt from income taxes.

 

A reconciliation of the provision for income taxes determined at the local income tax rate to the Company’s effective income tax rate is as follows:

 

   

Nine months ended

September 30,

 
    2016     2015  
Pre-tax income (loss)   $ 410,652     $ (480,051 )
                 
U.S. federal corporate income tax rate     34 %     34 %
Income tax computed at U.S. federal corporate income tax rate     139,622       (163,217 )
Reconciling items:                
Rate differential for PRC earnings     (14,043)       17,465  
Change of valuation allowance     220,518       115,152  
Non-deductible expenses (Non-taxable income)     (267,152 )     30,600  
Effective tax expense   $ 78,945     $ -  

 

The provisions for income taxes are summarized as follows:    

 

    Nine months ended September 30,  
    2016     2015  
Current   $ 78,945     $ -  
Deferred     -       -  
Total   $ 78,945     $ -  

 

The Company had deferred tax assets as follows:

 

    September 30, 2016     December 31, 2015  
Net operating losses carried forward   $ 3,511,402     $ 3,398,402  
Less: Valuation allowance     (3,511,402 )     (3,398,402 )
Net deferred tax assets   $ -     $ -  

 

The net operating losses carried forward were approximately $8.66 million at September 30, 2016, which will expire between 2016 and 2026. Full valuation allowance has been made because it is considered more likely than not that the deferred tax assets will not be realized through sufficient future earnings of the entity to which the operating losses relate.

XML 31 R20.htm IDEA: XBRL DOCUMENT v3.5.0.2
Subsequent Events
9 Months Ended
Sep. 30, 2016
Subsequent Events [Abstract]  
Subsequent Events

14. Subsequent Event

 

The Company has evaluated subsequent events through the date that these financial statements were issued and determined that there were no subsequent events to disclose in these financial statements.

XML 32 R21.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summaries of Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2016
Accounting Policies [Abstract]  
Principle of Consolidation

Principle of consolidation - These consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries. All significant inter-company balances or transactions are eliminated on consolidation.

Basis of Preparation

Basis of preparation - These interim consolidated financial statements are unaudited. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) and disclosures necessary for a fair presentation of these interim condensed consolidated financial statements have been included. The results reported in the consolidated financial statements for any interim periods are not necessarily indicative of the results that may be reported for the entire year or any other periods. The (a) consolidated balance sheet as of December 31, 2015, which was derived from audited financial statements, and (b) the unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Reverse Split

Reverse Split - On January 14, 2016, the Company filed a Certificate of Amendment of its Certificate of Incorporation with the State of Delaware with reference to a 1-for-200 reverse stock split with respect to its Common Stock with effective date of January 28, 2016. In connection with the reverse split, the Company’s authorized capital stock was amended to be 120,000,000 shares, comprising 100,000,000 shares of Common Stock par value $0.001 and 20,000,000 shares of Preferred Stock par value $0.001. All relevant information relating to numbers of shares, options and per share information have been retrospectively adjusted to reflect the reverse stock split for all periods presented.

Use of Estimates

Use of Estimates - The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant accounting estimates include the bad debt provision, impairment of long-lived assets, depreciation and amortization, valuation allowance of deferred tax assets and fair value of warrants and options.

Foreign Currency Translation

Foreign Currency Translation - The Company uses United States dollars (“US Dollar” or “US$” or “$”) for financial reporting purposes. However, the Company maintains the books and records in its functional currency, Chinese Renminbi (“RMB”), being the primary currency of the economic environment in which its operations are conducted. In general, the Company translates its assets and liabilities into U.S. dollars using the applicable exchange rates prevailing at the balance sheet date, and the statement of income is translated at average exchange rates during the reporting period. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the Company’s financial statements are recorded as accumulated other comprehensive income.

 

The exchange rates used to translate amounts in RMB into U.S. Dollars for the purposes of preparing the condensed consolidated financial statements were as follows:

 

      As of
September 30, 2016
      As of
December 31, 2015
 
Balance sheet items, except for equity accounts     US$1 = RMB 6.6714       US$1 = RMB 6.4857  

 

      Nine months ended September 30,  
      2016       2015  
Items in the statements of income and cash flows     US$1 = RMB 6.5806       US$1 = RMB 6.1735  
Impairment of Long-Lived Assets

Impairment of Long-Lived Assets - We periodically evaluate our investment in long-lived assets, including property and equipment, for recoverability whenever events or changes in circumstances indicate the net carrying amount may not be recoverable. Our judgments regarding potential impairment are based on legal factors, market conditions and operational performance indicators, among others. In assessing the impairment of property and equipment, we make assumptions regarding the estimated future cash flows and other factors to determine the fair value of the respective assets. Based on our analysis, no further impairment of long-lived assets was charged during the nine months ended September 30, 2016.

Revenue Recognition

Revenue Recognition - The Company’s revenue includes two parts: Part I represents fees per licensing agreement. The Company entered into an agreement with a company, Kangtan Gerui (Beijing) Bio-Tech Co., Ltd. (“Gerui”), to allow Gerui sell products with the Company’s trademark. Gerui will pay 10% of total sales amount to the Company as license fee.

 

Part II represents the revenues from sales of products purchased. The Company recognized license fees and revenue from sales of products when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, and no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as advances from customers.

Accounts Receivables

Accounts Receivables - Accounts receivables represent customer accounts receivables. The allowance for doubtful accounts is based on a combination of current sales, historical charge offs and specific accounts identified as high risk. Uncollectible accounts receivable are charged against the allowance for doubtful accounts when all reasonable efforts to collect the amounts due have been exhausted. Such allowances, if any, would be recorded in the period the impairment is identified.

Income Taxes

Income Taxes - The Company accounts for income taxes under the provisions of FASB ASC Topic 740, “Income Tax,” which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are recognized for the future tax consequence attributable to the difference between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are measured using the enacted tax rate expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company establishes a valuation when it is more likely than not that the assets will not be recovered.

Fair Value Measurements

Fair value measurements - ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value 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. This topic also establishes a fair value hierarchy which requires classification based on observable and unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

 

Level 1 - Quoted prices in active markets for identical assets or liabilities.

 

Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

The carrying values of cash and cash equivalents, trade receivables and payables, and short-term debts approximate their fair values due to their short maturities.

 

There were no assets and liabilities measured at fair value on a nonrecurring basis as of September 30, 2016 and December 31, 2015.

XML 33 R22.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summaries of Significant Accounting Policies (Tables)
9 Months Ended
Sep. 30, 2016
Accounting Policies [Abstract]  
Schedule of Foreign Currency Exchange Rate

The exchange rates used to translate amounts in RMB into U.S. Dollars for the purposes of preparing the condensed consolidated financial statements were as follows:

 

      As of
September 30, 2016
      As of
December 31, 2015
 
Balance sheet items, except for equity accounts     US$1 = RMB 6.6714       US$1 = RMB 6.4857  

 

      Nine months ended September 30,  
      2016       2015  
Items in the statements of income and cash flows     US$1 = RMB 6.5806       US$1 = RMB 6.1735  

XML 34 R23.htm IDEA: XBRL DOCUMENT v3.5.0.2
Related Party Transactions (Tables)
9 Months Ended
Sep. 30, 2016
Related Party Transactions [Abstract]  
Schedule of Related Party Transactions

Amounts due to related parties consisted of the following:

 

Item   Nature     Notes     September 30, 2016     December 31, 2015  
Mr. Wei Li (“Mr. Li”)     Non-trade       (1)     $ -      $ 2,879,307  
Kangtai Xinnong Agriculture Tech (Beijing) Co., Ltd. (“Kangtai”)     Non-trade       (2)       -       (12,173 )
Ms. Yvonne Wang (“Ms. Wang”)     Non-trade       (3)       107,710       299,064  
Subtotal                     107,710       3,166,198  
Kiwa-CAU R&D Center     Trade       (4)       1,206,644       1,125,553  
CAAS IARRP and IAED Institutes     Trade       (5)       130,845       18,425  
Subtotal                     1,337,489       1,143,978  
Total                   $ 1,445,199     $ 4,310,176  

 

(1)       Mr. Li

 

Mr. Li was the Chairman of the Board until November 20, 2015 and was the Chief Executive Officer of the Company until July 1, 2015.

 

Advances and Loans

 

As of December 31, 2015, the remaining balance due Mr. Li was 2,879,307. During the nine months ended September 30, 2016, Mr. Li received 2,900,000 shares of common stock in lieu of the cancellation and repayment of an aggregate of $2,879,307 and salary payable.

 

Guarantees for the Company

 

Mr. Li has pledged without any compensation from the Company, all of his common stock of the Company as collateral security for the Company’s obligations under the 6% Notes. (See Note 8 below).

 

(2)       Kangtai

 

Kangtai, formerly named Kangtai International Logistics (Beijing) Co., Ltd., Kangtai Xinnong Agriculture Tech (Beijing) Co., Ltd., is a private company, 28% owned by Mr. Li. Mr. Li is the Chairman of Kangtai.

 

On December 31, 2015, the amount due from Kangtai was $12,173. The balance due from Kangtai on September 30, 2016 was nil.

 

(3)       Ms. Wang

 

Ms. Wang is the Secretary of the Company until November 20, 2015. Effective as of November 20, 2015, the Company appointed Ms. Wang as the Chairman of the Board. Effective as of December 15, 2015, the Company appointed Ms. Wang as the Company’s Chief Operating Officer.

 

On December 31, 2015, the amount due to Ms. Wang was $299,064. On March 24, 2016, the Company issued 240,000 shares of common stock to Ms. Wang to pay off the loan balance of $240,000. During the nine months ended September 30, 2016, Ms. Wang paid various expenses on behalf of the Company. As of September 30, 2016, the amount due to Ms. Wang was $107,710.

 

(4) Kiwa-CAU R&D Center

 

Pursuant to the agreement with China Agricultural University (“CAU”), the Company agree to invest RMB 1 million (approximately $160,000) each year to fund research at Kiwa-CAU R&D Center. Prof. Qi Wang, one of the Company’s directors, is also the director of Kiwa-CAU R&D Center.

 

On December 31, 2015, the amount due to Kiwa-CAU R&D Center was $1,125,553. As of September 30, 2016, the outstanding balance due to Kiwa-CAU R&D Center was $1,206,644.

 

(5) CAAS IARRP and IAED Institutes

 

On November 5, 2015, the Company signed a strategic cooperation agreement (the “Agreement”) with China Academy of Agricultural Science (“CAAS”)’s Institute of Agricultural Resources & Regional Planning (“IARRP”) and Institute of Agricultural Economy & Development (“IAED”). Pursuant to the Agreement, the Company will form a strategic partnership with the two institutes and establish an “International Cooperation Platform for Internet and Safe Agricultural Products”. To fund the cooperation platform’s R&D activities, the Company will provide RMB 1 million (approximately $160,000) per year to the Spatial Agriculture Planning Method & Applications Innovation Team that belongs to the Institutes. The term of the Agreement is for three years beginning November 20, 2015. Prof. Yong Chang Wu, the authorized representative of IARRP, CAAS, is also one of the Company’s directors effective since November 20, 2015.

XML 35 R24.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stock-based Compensation (Tables)
9 Months Ended
Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Schedule of Stock-based Compensation

Summary of options issued and outstanding at September 30, 2016 and the movements during the nine months then ended are as follows:

 

    Number of
underlying
shares
    Weighted-
Average
Exercise
Price
Per Share
    Aggregate
Intrinsic
Value (1)
    Weighted- Average
Contractual Life
Remaining in Years
 
Outstanding at December 31, 2015     6,163     $ 35     $ -       1  
Exercised     -       -                  
Expired     -       -       -          
Forfeited     -       -       -          
Outstanding at September 30, 2016     6,163     $ 35     $ -       0.25  
                                 
Exercisable at September 30, 2016     6,163     $ 35     $ -       0.25  

 

(1) The market value of the Company’s common stock at September 30, 2016 was $1.43 per share. The outstanding options had no intrinsic value at September 30, 2016.

XML 36 R25.htm IDEA: XBRL DOCUMENT v3.5.0.2
Income Tax (Tables)
9 Months Ended
Sep. 30, 2016
Income Tax Disclosure [Abstract]  
Schedule of Reconciliation of U.S. Tax Rate

A reconciliation of the provision for income taxes determined at the local income tax rate to the Company’s effective income tax rate is as follows:

 

   

Nine months ended

September 30,

 
    2016     2015  
Pre-tax income (loss)   $ 410,652     $ (480,051 )
                 
U.S. federal corporate income tax rate     34 %     34 %
Income tax computed at U.S. federal corporate income tax rate     139,622       (163,217 )
Reconciling items:                
Rate differential for PRC earnings     (14,043)       17,465  
Change of valuation allowance     220,518       115,152  
Non-deductible expenses (Non-taxable income)     (267,152 )     30,600  
Effective tax expense   $ 78,945     $ -  

Schedule of Provision for Income Tax

The provisions for income taxes are summarized as follows:    

 

    Nine months ended September 30,  
    2016     2015  
Current   $ 78,945     $ -  
Deferred     -       -  
Total   $ 78,945     $ -  
Schedule of Deferred Tax Assets

The Company had deferred tax assets as follows:

 

    September 30, 2016     December 31, 2015  
Net operating losses carried forward   $ 3,511,402     $ 3,398,402  
Less: Valuation allowance     (3,511,402 )     (3,398,402 )
Net deferred tax assets   $ -     $ -  

XML 37 R26.htm IDEA: XBRL DOCUMENT v3.5.0.2
Description of Business and Organization (Details Narrative) - Baina Hong Kong Shareholders [Member]
1 Months Ended
Nov. 30, 2015
USD ($)
Payments to acquire equity $ 30,000
Percentage of equity interest rate 100.00%
Goodwill $ 34,000
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.5.0.2
Going Concern (Details Narrative) - USD ($)
Sep. 30, 2016
Dec. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Cash $ 545  
Working capital deficiency 3,442,227  
Accumulated deficit 19,993,105 $ 20,324,812
Stockholders' deficiency $ 5,024,944 $ 11,100,454
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of Significant Accounting Policies (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Jan. 14, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Dec. 31, 2015
Reverse stock split 1-for-200        
Authorized capital 120,000,000        
Common Stock, shares authorized 100,000,000   100,000,000   100,000,000
Common Stock, par value $ 0.001   $ 0.001   $ 0.001
Preferred Stock, shares authorized 20,000,000   20,000,000   20,000,000
Preferred Stock, par value $ 0.001   $ 0.001   $ 0.001
Accrued interest expense   $ 22,500   $ 67,500  
Kangtan Gerui [Member]          
Percentage pay of sales amount to license fee     10.00%    
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of Significant Accounting Policies - Schedule of Foreign Currency Exchange Rate (Details) - RMB [Member]
Sep. 30, 2016
Dec. 31, 2015
Sep. 30, 2015
Balance Sheet Items, Except For Equity Accounts [Member]      
Foreign currency exchange rate, translation 6.6714 6.4857  
Items Statements of Income and CashFlows [Member]      
Foreign currency exchange rate, translation 6.5806   6.1735
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.5.0.2
Prepaid expenses (Deatils Narrative)
9 Months Ended
Sep. 30, 2016
USD ($)
shares
Prepaid Expense and Other Assets [Abstract]  
Number of common stock shares issued for consulting service | shares 1,710,808
Issuance of common stock value $ 1,688,300
Amortization of consulting expense $ 57,717
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.5.0.2
Advance to customer - Gerui (Details Narrative) - USD ($)
Sep. 30, 2016
Dec. 31, 2015
Receivables [Abstract]    
Advance to customer-Gerui $ 1,677,459
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.5.0.2
Related Party Transactions (Details Narrative)
9 Months Ended 12 Months Ended
Mar. 24, 2016
shares
Nov. 14, 2006
CNY (¥)
Sep. 30, 2016
USD ($)
shares
Dec. 31, 2015
USD ($)
shares
Ms Yvonne Wang [Member]        
Related Party Transaction [Line Items]        
Number of common stock shares issued for repayment of debt | shares 240,000      
Repayment of aggregate debt owing to issues     $ 240,000  
Due to related parties       $ 299,064
Behalf of company payments     107,710  
Kiwa-CAU R&D Center [Member]        
Related Party Transaction [Line Items]        
Due to related parties       1,125,553
Related party transation amount     160,000  
Outstanding balance     1,206,644  
Kiwa-CAU R&D Center [Member] | RMB [Member]        
Related Party Transaction [Line Items]        
Related party transation amount   ¥ 1,000,000 1,000,000  
CAAS IARRP and IAED Institutes [Member]        
Related Party Transaction [Line Items]        
Due to related parties       $ 18,425
Related party transation amount     160,000  
Outstanding balance     130,845  
CAAS IARRP and IAED Institutes [Member] | RMB [Member]        
Related Party Transaction [Line Items]        
Related party transation amount     1,000,000  
Mr. Wei Li [Member]        
Related Party Transaction [Line Items]        
Number of common stock shares issued for repayment of debt | shares       2,879,307
Repayment of aggregate debt owing to issues     $ 2,879,307  
Stock Repurchased ,shares | shares     2,900,000  
Debt instrument, interest rate     6.00%  
Mr. Wei Li [Member] | Kangtai International Logistics (Beijing) Co Ltd [Member]        
Related Party Transaction [Line Items]        
Due from related parties      
Mr. Wei Li [Member] | Kangtai International Logistics (Beijing) Co Ltd [Member]        
Related Party Transaction [Line Items]        
Percentage of ownership       28.00%
Due from related parties       $ 12,173
XML 44 R33.htm IDEA: XBRL DOCUMENT v3.5.0.2
Related Party Transactions - Schedule of Related Party Transactions (Details) - USD ($)
Sep. 30, 2016
Dec. 31, 2015
Related Party Transaction [Line Items]    
Due to related parties - non-trade $ 107,710 $ 3,166,198
Due to related parties - trade 1,337,489 1,143,978
Total 1,445,199 4,310,176
Mr. Wei Li [Member] | Non-Trade Transaction [Member]    
Related Party Transaction [Line Items]    
Remaining advances and loans 2,879,307
Kangtai Xinnong Agriculture Tech (Beijing) Co., Ltd. [Member] | Non-Trade Transaction [Member]    
Related Party Transaction [Line Items]    
Due to other related party (12,173)
Ms. Yvonne Wang [Member] | Non-Trade Transaction [Member]    
Related Party Transaction [Line Items]    
Due to employees 10,710 299,064
Kiwa-CAU R&D Center [Member] | Trade Transaction [Member]    
Related Party Transaction [Line Items]    
Due to other related party 1,206,644 1,125,553
CAAS IARRP and IAED Institutes [Member] | Trade Transaction [Member]    
Related Party Transaction [Line Items]    
Due to other related party $ 130,845 $ 18,425
XML 45 R34.htm IDEA: XBRL DOCUMENT v3.5.0.2
Other Payable (Details Narrative)
Sep. 30, 2016
USD ($)
Non-Related-Parties [Member]  
Payments to investors $ 479,659
XML 46 R35.htm IDEA: XBRL DOCUMENT v3.5.0.2
Convertible Notes Payable (Details Narrative) - USD ($)
9 Months Ended
Jun. 29, 2006
Sep. 30, 2016
Sep. 30, 2015
6% Notes [Member] | Intellectual Property [Member]      
Pledged assets, not separately reported, other   $ 592,901  
Impairment of intangible assets, finite-lived   179,897  
Firs Trust Group Inc [Member]      
Accrued interest expense   16,919 $ 16,857
Accrued penalty   $ 57,672 $ 53,605
Firs Trust Group Inc [Member] | 6% Notes [Member]      
Percentage of secured convertible notes issued 6.00%    
Notes beard interest 6.00%    
Debt instruments maturity date Jun. 29, 2009    
Interest rate increased 15.00%    
Percentage of conversion price 6.00%    
Percentage of discount to average of trading price 40.00%    
Maximum percentage of affiliates to hold outstanding common stock 4.99%    
Debt instruments face amount $ 120,000    
Percentage of equal shares purchaser entitled to multiplied by market price for each day 2.00%    
Percentage of stock issuable upon full conversion of notes and warrants 110.00%    
XML 47 R36.htm IDEA: XBRL DOCUMENT v3.5.0.2
Note Payable (Details Narrative) - USD ($)
9 Months Ended
May 29, 2007
Sep. 30, 2016
Sep. 30, 2015
Dec. 31, 2015
Promissory note   $ 360,000   $ 360,000
Accrued interest expense   $ 67,500 $ 67,500  
Unrelated Individual [Member]        
Promissory note $ 360,000      
Note interest rate 18.00%      
Note maturity date Jul. 27, 2007      
Note default rate 25.00%      
Investlink (China) Limited [Member]        
Note is secured by pledge shares of common stock 6,178,336      
Post-reverse split shares 30,892      
XML 48 R37.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stockholders' Equity (Details Narrative) - USD ($)
1 Months Ended 9 Months Ended
Aug. 31, 2016
Sep. 30, 2016
Sep. 30, 2015
Dec. 31, 2015
Salary payment   $ 3,141,000    
Common stock issued,shares   3,141,000 3,141,000  
Stock subscription receivable   $ (560,341)  
Number of common stock shares issued for consulting service   1,710,808    
Issuance of common stock value   $ 1,688,300    
Amortization of consulting expense   $ 57,717    
Sixteen Shareholders [Member]        
Common stock issued,shares   1,650,000    
Common stock price per share   $ 0.8    
Common stock issued,values   $ 1,320,000    
Mr. Wei Li [Member]        
Number of common stock shares issued   3,140,000    
Ms. Wang [Member]        
Debt repayment for the amount   $ 3,141,000    
Jimmy Zhou [Member]        
Salary payment $ 50,974      
Common stock issued,shares 101,947      
XML 49 R38.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stock-based Compensation (Details Narrative)
Dec. 12, 2006
shares
2004 Stock Incentive Plan [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Stock based compensation, granted options shares 2,000,000
XML 50 R39.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stock-based Compensation - Schedule of Stock-based Compensation (Details)
9 Months Ended
Sep. 30, 2016
USD ($)
$ / shares
shares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Number of shares, Outstanding, beginning | shares 6,163
Number of shares, Exercised | shares
Number of shares, Expired | shares
Number of shares, Forfeited | shares
Number of shares, Outstanding, ending | shares 6,163
Number of shares, Exercisable, ending | shares 6,163
Weighted-Average Exercise Price Prer Shares, Outstanding, beginning | $ / shares $ 35
Weighted-Average Exercise Price Prer Shares, Exercised | $ / shares
Weighted-Average Exercise Price Prer Shares, Expired | $ / shares
Weighted-Average Exercise Price Prer Shares, Forfeited | $ / shares
Weighted-Average Exercise Price Prer Shares, Outstanding, ending | $ / shares 35
Weighted-Average Exercise Price Prer Shares, Exercisable, ending | $ / shares $ 35
Aggregate Intrinsic Value, outstanding, beginning | $ [1]
Aggregate Intrinsic Value, Outstanding, ending | $ [1]
Aggregate Intrinsic Value, Exercisable, ending | $ [1]
Weighted-Average Contractual Life Remaining Years, Outstanding, beginning 1 year
Weighted-Average Contractual Life Remaining Years, Outstanding, ending 3 months
Weighted-Average Contractual Life Remaining Years, Exercisable, ending 3 months
[1] The market value of the Company's common stock at September 30, 2016 was $1.43 per share. The outstanding options had no intrinsic value at September 30, 2016.
XML 51 R40.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stock-based Compensation - Schedule of Stock-based Compensation (Details) (Parenthetical)
Sep. 30, 2016
$ / shares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Common stock market value per share $ 1.43
XML 52 R41.htm IDEA: XBRL DOCUMENT v3.5.0.2
Commitments and Contingencies (Details Narrative)
9 Months Ended
Nov. 05, 2015
USD ($)
Nov. 14, 2006
CNY (¥)
Sep. 30, 2016
USD ($)
Kiwa-CAU R&D Center [Member]      
Related party transaction, amounts of transaction     $ 160,000
Description of related party transaction     The term of this Agreement is ten years starting from July 1, 2006.
CAAS IARRP and IAED Institutes [Member]      
Related party transaction, amounts of transaction     $ 160,000
RMB [Member] | Kiwa-CAU R&D Center [Member]      
Related party transaction, amounts of transaction   ¥ 1,000,000 1,000,000
RMB [Member] | Two Institutes In China [Member]      
Related party transaction, amounts of transaction $ 1,000,000    
RMB [Member] | CAAS IARRP and IAED Institutes [Member]      
Related party transaction, amounts of transaction     1,000,000
Zoucheng, Shandong Province [Member]      
Investment owned, at cost     2,000,000
Zoucheng, Shandong Province [Member] | Minimum [Member]      
Commitment to investment     18,000,000
Zoucheng, Shandong Province [Member] | Maximum [Member]      
Commitment to investment     $ 24,000,000
XML 53 R42.htm IDEA: XBRL DOCUMENT v3.5.0.2
Income Tax (Details Narrative)
9 Months Ended
Sep. 30, 2016
USD ($)
Income Tax Disclosure [Abstract]  
Effective income tax rate 25.00%
Operating loss carry forwards $ 8,660,000
Operating loss carryforwards expiration term expire between 2016 and 2026.
XML 54 R43.htm IDEA: XBRL DOCUMENT v3.5.0.2
Income Tax - Schedule of Reconciliation of U.S. Tax Rate (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Income Tax Disclosure [Abstract]        
Pre-tax income (loss) $ 93,601 $ (159,225) $ 331,707 $ (480,051)
U.S. federal corporate income tax rate     34.00% 34.00%
Income tax computed at U.S. federal corporate income tax rate     $ 139,622 $ (163,217)
Rate differential for PRC earnings     (14,043) 17,465
Change of valuation allowance     220,518 115,152
Non-deductible expenses (Non-taxable income)     (267,152) 30,600
Effective tax expense $ 78,945 $ 78,945
XML 55 R44.htm IDEA: XBRL DOCUMENT v3.5.0.2
Income Tax - Schedule of Provision for Income Tax (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Income Tax Disclosure [Abstract]        
Current     $ 78,945
Deferred    
Income tax $ 78,945 $ 78,945
XML 56 R45.htm IDEA: XBRL DOCUMENT v3.5.0.2
Income Tax - Schedule of Deferred Tax Assets (Details) - USD ($)
Sep. 30, 2016
Dec. 31, 2015
Income Tax Disclosure [Abstract]    
Net operating losses carried forward $ 3,511,402 $ 3,398,402
Less: Valuation allowance (3,511,402) (3,398,402)
Net deferred tax assets
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