0001493152-17-009199.txt : 20170814 0001493152-17-009199.hdr.sgml : 20170814 20170814154729 ACCESSION NUMBER: 0001493152-17-009199 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 85 CONFORMED PERIOD OF REPORT: 20170630 FILED AS OF DATE: 20170814 DATE AS OF CHANGE: 20170814 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: 171029869 BUSINESS ADDRESS: STREET 1: 3200 GUASTI ROAD, STREET 2: SUITE 100 CITY: ONTARIO STATE: CA ZIP: 91761 BUSINESS PHONE: 626-715-5855 MAIL ADDRESS: STREET 1: 3200 GUASTI ROAD, STREET 2: SUITE 100 CITY: ONTARIO STATE: CA ZIP: 91761 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 June 30, 2017

 

[  ] 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)

 

Nevada   77-0632186

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

     

3200 Guasti Road, Suite #100,

Ontario, California

  91761
(Address of principal executive offices)   (Zip Code)

 

(909) 456-8828

(Registrant’s telephone number, including area code)

 

 

310 N. Indian Hill Blvd., #702

Claremont, California 91711

 
  (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]

 

As of August 14, 2017, the Company had 10,459,217 shares of common stock, $0.001 par value, issued and outstanding.

 

 

 

   

 

 

Table of contents

 

PART I. FINANCIAL INFORMATION  
   
Item 1. CONDENSED UNAUDITED CONSOLIDATED Financial Statements 3
   
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 23
   
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 28
   
Item 4. Controls and Procedures 28
   
PART II. OTHER INFORMATION  
   
Item 1. Legal Proceedings 29
   
ITEM 1A. RISK FACTORS 29
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 29
   
Item 3. Defaults Upon Senior Securities 29
   
Item 4. Mine safety disclosures 29
   
Item 5. Other Information 29
   
Item 6. Exhibits 30
   
SIGNATURES 31

 

 2 

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

KIWA BIO-TECH PRODUCTS GROUP CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

    June 30, 2017     December 31, 2016  
    (Unaudited)        
ASSETS                
Current assets                
Cash and cash equivalents   $ 71,554     $ 13,469  
Accounts receivable, net     9,425,359       1,122,754  
Prepaid expenses     66,769       92,504  
Other receivable     1,471,291       1,561,331  
Rent Deposit-current     39,301       -  
Advance to suppliers     1,255,218       1,805,044  
Total current assets     12,329,492       4,595,102  
OTHER ASSETS                
Property, plant and equipment, net     43,312       59,778  
Rent Deposit-non current     33,907       34,519  
Deposit for Long-Term Investment     147,423       -  
Goodwill and Intangible Assets     35,114       34,112  
Total non-current assets     259,756       128,409  
Total assets   $ 12,589,248     $ 4,723,511  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY(DEFICIENCY)                
Current liabilities                
Accounts payable   $ 4,697,764     $ 1,318,802  
Accrued expenses     17,183       35,715  
Advances from customers     -       12,883  
Construction costs payable     -       255,539  
Due to related parties - trade     -       1,122,754  
R&D expense payable     233,598       160,461  
Due to related parties - non-trade     83,798       100,798  
Convertible notes payable     1,106,205       150,250  
Notes payable     360,000       360,000  
Unsecured loans payable     -       1,655,343  
Salary payable     1,225,869       1,688,353  
Taxes payable     616,908       919,255  
Penalty payable     523,140       482,327  
Interest payable     1,124,638       1,042,661  
Other payables     865,793       1,019,583  
Total current liabilities     10,854,896       10,324,724  
                 
SHAREHOLDER’S EQUITY(DEFICIENCY)                
Preferred stock - $0.001 par value, Authorized 20,000,000 shares. Issued and outstanding 500,000 and 500,000 shares at June 30, 2017 and December 31, 2016, respectively.     500       500  
Common stock - $0.001 per value. Authorized 100,000,000 shares. Issued and outstanding $10,028,219 and 8,728,981 shares at June 30, 2017 and December 31, 2016, respectively     10,028       8,729  
Additional paid-in capital     15,741,427       13,789,990  
Statutory Reserve     307,350       127,884  
Accumulated deficit     (14,343,604)       (19,489,400)  
Accumulated other comprehensive gain (loss)     18,651       (38,916)  
Total stockholders’ equity (deficiency)     1,734,352       (5,601,213)  
Total liabilities and shareholder’s equity   $ 12,589,248     $ 4,723,511  

 

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

 

 3 

 

 

KIWA BIO-TECH PRODUCTS GROUP CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

    Three Months Ended June 30,     Six Months Ended June 30,  
    2017     2016     2017     2016  
                         
Revenue   $ 5,682,108     $ -     $ 8,827,897     $ -  
                                 
Cost of goods sold     (3,970,915 )     -       (6,034,924 )     -  
                                 
Gross Profit     1,711,193       -       2,792,973       -  
                                 
Operating expenses                                
Selling expense     54,232       -       90,485       -  
Research and development     36,433       74,776       72,724       151,769  
General and administrative     664,019       138,786       1,095,396       225,670  
Total operating expenses     754,685       213,562       1,258,606       377,439  
                                 
Operating income (loss)     956,508       (213,562 )     1,534,367       (377,439 )
                                 
Other Income                                
License revenue     -       443,085       -       710,095  
                                 
Other expense                                
Penalty expense     (20,575 )     (19,223 )     (40,814 )     (38,108 )
Interest expense     (52,346 )     (28,325 )     (83,430 )     (56,443 )
Total other expense     (72,921 )     (47,548 )     (124,244 )     (94,551 )
                                 
Income from continuing operations
before income taxes
    883,587       181,975       1,410,123       238,105  
Income taxes     (379,973 )     -       (599,022 )     -  
Income from continuing operations     503,614       181,975       811,101       238,105  
                                 
Discontinued operations                                
Gain from discontinued operations, net of taxes     4,513,363       -       4,514,161       -  
                                 
Net Income     5,016,977       181,975       5,325,262       238,105  
                                 
Other comprehensive income                                
Foreign currency translation adjustment     89,910       129,199       57,567       94,105  
Total comprehensive income   $ 5,106,887     $ 311,174     $ 5,382,830     $ 332,210  
                                 
Earnings per share – Basis:                                
Income from continuing operations     0.05       0.07       0.09       0.06  
Discontinued operations     0.46       -       0.47       -  
Net Income     0.51       0.07       0.56       0.06  
                                 
Earnings per share – Diluted:                                
Income from continuing operations     0.05       0.05       0.08       0.04  
Discontinued operations     0.40       -       0.41       -  
Net Income     0.45       0.05       0.49       0.04  
                                 
Weighted average number of common shares outstanding - basic     9,865,031       2,617,584       9,564,506       3,766,705  
Weighted average number of common shares outstanding - diluted     11,360,700       3,550,696       11,033,303       5,623,035  

 

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

 

 4 

 

 

KIWA BIO-TECH PRODUCTS GROUP CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

    Six Months Ended June, 30  
    2017     2016  
Cash flows from operating activities:                
Net income   $ 5,325,262     $ 238,105  
Adjustments to reconcile net income to net cash used in operating activities:                
Depreciation     17,787       3,073  
Amortization     58       -  
Provision for penalty payable     40,813       38,108  
Accrued interest on convertible notes     83,430       56,443  
Employee benefits     102,743       -  
Consulting fee     372,465       -  
Changes in operating assets and liabilities:                
Accounts receivable     (8,164,649 )     (54,940 )
Other receivables     126,080       (1,210,111 )
Advance to supplier     585,523       -  
Rent & Utility Deposit     (37,412 )     -  
Prepaid expenses     26,626       -  
Accounts payable     3,302,256       49,999  
Advance from customers     (13,018 )     -  
Accrued expenses     (19,089 )     -  
Salary payable     (468,631 )     78,080  
Taxes payable     (320,211 )     29,982  
Due to related parties - trade     (1,061,367 )     153,033  
Other payable     (166,874 )     469,297  
Loan payable     (1,672,666 )     -  
Construction cost payable     (258,213 )     -  
Net cash used in operating activities     (2,199,087 )     (148,931 )
                 
Cash flows from investing activities:                
Purchase of intangible assets     (1,047 )        
Investment in subsidiary     (145,449 )     -  
Purchase of property plant and equipment     (1,286 )     (78,775 )
Net cash used by investing activities     (147,782 )     (78,775 )
                 
Cash flows from financing activities:                
Proceeds from related parties, net of payments to related parties     17,000       40,500  
Proceeds from sales of common stock     1,481,508       176,000  
Proceeds from convertible note     955,955       -  
Net cash provided by financing activities     2,454,463       216,500  
                 
Effect of exchange rate change     (49,509 )     22,852  
                 
Cash and cash equivalents:                
Net increase     58,085       11,646  
Balance at beginning of period     13,469       721  
Balance at end of period   $ 71,554     $ 12,367  
                 
Non-cash financing activities:                
Issuance of common stock for debts settlement   $ -     $ 3,141,000  
Issuance of common stock for consulting service   $ 179,897     $ -  
Supplemental Disclosures of Cash flow Information:                
Cash paid for interest   $ -     $ -  
Cash paid for income taxes   $ 411,846     $ -  

 

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

 

 5 

 

 

KIWA BIO-TECH PRODUCTS GROUP CORPORATION AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

1. Description of Business and Organization

 

Organization

 

Kiwa Bio-Tech Products Group Corporation (“the Company”) is the result of a share exchange transaction accomplished on March 12, 2004 between the 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. The share exchange resulted in a change of control of Tintic, with former Kiwa BVI stockholders owning approximately 89% of Tintic on a fully diluted basis and Kiwa BVI surviving as a wholly-owned subsidiary of Tintic. Subsequent to the share exchange transaction, Tintic changed its name to Kiwa Bio-Tech Products Group Corporation. On July 21, 2004, the Company completed its reincorporation in the State of Delaware. On March 8, 2017, we completed our reincorporation in the State of Nevada.

 

The Company operates through a series of subsidiaries in the Peoples Republic of China as detailed in the following Organizational Chart. The Company had previously operated its business through its subsidiaries Kiwa Bio-Tech Products (Shandong) Co., Ltd. (“Kiwa Shandong”) and Tianjin Kiwa Feed Co., Ltd. (“Kiwa Tianjin “). Kiwa Tianjin has been dissolved since July 11, 2012. On February 11, 2017, the Company entered an Equity Transfer Agreement with Dian Shi Cheng Jing (Beijing) Technology Co. (“Transferee”) to transfer all of shareholders’ right, title and interest in Kiwa Shandong to the Transferee for USD $1.00. On April 12, 2017, the government processing of transfer has been completed.

 

 

 6 

 

 

Business

 

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

 

2. Summaries of Significant Accounting Policies

 

Principle of Consolidation

 

These consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries, Kiwa BVI, Hong Kong Baina Group Holding Company, Kiwa Baiao Bio-Tech (Beijing) Co., Ltd, Kiwa Baiao Bio-Tech (Shandong) Co., Ltd (“Kiwa Shandong”), Kiwa Bio-Tech Products (Shenzhen) Co., Ltd and Kiwa Bio-Tech Products (Hebei) Co., Ltd. All significant inter-company balances or transactions are eliminated on consolidation.

 

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 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.

 

 7 

 

 

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 valuation of securities issued, deferred tax assets and related valuation allowance.

 

Certain of our estimates, including evaluating the collectability of accounts receivable and the fair market value of long-lived assets, could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could have an effect on our estimates that could cause actual results to differ from our estimates. We re-evaluate all of our accounting estimates annually based on these conditions and record adjustments when necessary.

 

Cash and Cash Equivalents

 

Cash and cash equivalents consist of all cash balances and highly liquid investments with an original maturity of three months or less. Because of the short maturity of these investments, the carring amounts approximate their fair value. Restricted cash is excluded from cash and cash equivalents.

 

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.

 

Allowance for doubtful accounts

 

The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company’s estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change. There was no allowance for doubtful accounts at June 30, 2017 and December 31, 2016.

 

Property, plant and equipment

 

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Gains or losses on disposals are reflected as gain or loss in the year of disposal. The cost of improvements that extend the life of property, plant and equipment are capitalized. These capitalized costs may include structural improvements, equipment and fixtures. All ordinary repair and maintenance costs are expensed as incurred. Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets as follows:

 

   Useful Life 
   (In years) 
Buildings   30 - 35 
Machinery and equipment   5 - 10 
Automobiles   8 
Office equipment   2 - 5 
Computer software   3 

 

 8 

 

 

Impairment of Long-Lived Assets

 

The Company’s long-lived assets consist of property, equipment and intangible assets. The Company evaluates its 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. 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, the Company makes assumptions regarding the estimated future cash flows and other factors to determine the fair value of the respective assets.

 

Goodwill and Other Intangibles

 

In accordance with Accounting Standards Update (ASU) No. 2014-02, management evaluates goodwill on an annual basis in the fourth quarter of more frequently if management believes indicators of impairment exist. Such indicators could, but are not limited to (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, or (3) an adverse action or assessment by a regulator. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If management concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, management conducts a two-step quantitative goodwill impairment test. The first step of the impairment test involves comparing the fair value of the applicable reporting unit with its carrying value. The Company estimates the fair value of its reporting units using a combination of the income, or discounted cash flows, approach and the market approach, with utilizes comparable companies’ data. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, management performs the second step of the goodwill impairment test. The second step of the goodwill impairment test involves comparing the implied fair value of the affected reporting unit’s goodwill with the carrying value of that goodwill. The amount, by which the carrying value of the goodwill exceeds its implied fair value, if any, is recognized as an impairment loss. The Company’s evaluation of goodwill completed during the three and six months ended June 30, 2017 resulted in no impairment losses.

 

Fair Value of Financial Instruments

 

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820- 10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value with U.S. GAAP, and expands disclosures about fair value measurements.

 

To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

  Level 1: quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
     
  Level 2: pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
     
  Level 3: Pricing inputs that are generally observable inputs and not corroborated by market data.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

 

 9 

 

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

 

The carrying amount of the Company’s financial assets and liabilities, such as cash and cash equivalent, prepaid expenses, accounts payable and accrued expenses, approximate their fair value because of the short maturity of those instruments.

 

Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

 

It is not however practical to determine the fair value of advances from stockholders, if any, due to their related party nature.

 

Revenue Recognition

 

The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

 

The Company derives its revenues from sales contracts with its customers with revenues being recognized upon delivery of products. Persuasive evidence of an arrangement is demonstrated via invoice; and the sales price to the customer is fixed upon acceptance of the purchase order and there is no separate sales rebate, discount, or volume incentive.

 

Advertising Costs

 

The Company charges all advertising costs to expense as incurred. The total amounts of advertising costs charged to selling, general and administrative expense were $58,419 and nil for the six months ended June 30, 2017 and 2016, and were $935 and nil for the three months ended June 30, 2017 and 2016, respectively.

 

Research and Development Costs

 

Research and development costs are charged to expense as incurred. During the six months ended June 30, 2017 and 2016, research and development costs were $72,724 and $151,769, respectively. During the three months ended June 30, 2017 and 2016, research and development costs were $36,433 and $74,776, respectively.

 

Shipping and Handling Costs

 

Substantially all costs of shipping and handling of products to customers are included in selling expense. Shipping and handling costs for the three and six months ended June 30, 2017 and 2016 were nil, respectively.

 

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.

 

 10 

 

 

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.

 

Stock Based Compensation

 

The Company accounts for share-based compensation awards to employees in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”, which requires that share-based payment transactions with employees be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period.

 

The Company accounts for share-based compensation awards to non-employees in accordance with FASB ASC Topic 718 and FASB ASC Subtopic 505-50, “Equity-Based Payments to Non-employees”. Under FASB ASC Topic 718 and FASB ASC Subtopic 505-50, stock compensation granted to non-employees has been determined as the fair value of the consideration received or the fair value of equity instrument issued, whichever is more reliably measured and is recognized as an expense as the goods or services are received.

 

Foreign Currency Translation and Other Comprehensive Income

 

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 functional 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 comprehensive loss and the statement of cash flow are 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.

 

Other comprehensive income for the six months ended June 30, 2017 and 2016 represented foreign currency translation adjustments and were included in the consolidated statements of comprehensive loss.

 

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

 

   As of
June 30, 2017
   As of
December 31, 2016
 
Balance sheet items, except for equity accounts   6.7832    6.9472 

 

   Six months ended June 30 
   2017   2016 
Items in the statements of comprehensive loss   6.8753    6.5345 

 

Earnings Per Common Share

 

Net income per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period.

 

Diluted net income per common share is computed by dividing net income by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.

 

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Related Parties

 

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20 the related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly Influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

 

The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the consolidated financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

 

Commitments and Contingencies

 

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

 

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

 

Cash Flows Reporting

 

The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.

 

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Subsequent Events

 

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.

 

Recent Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. ASU 2014-09 also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. Based on the FASB’s Exposure Draft Update issued on April 29, 2015, and approved in July 2015, Revenue from Contracts With Customers (Topic 606): Deferral of the Effective Date, ASU 2014-09 is now effective for reporting periods beginning after December 15, 2017, with early adoption permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The adoption of ASU 2014-09 is not expected to have any impact on the Company’s financial statement presentation or disclosures.

 

In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842). ASU 2016-02 requires a lessee to record a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, on the balance sheet for all leases with terms longer than 12 months, as well as the disclosure of key information about leasing arrangements. ASU 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term. ASU 2016-02 requires classification of all cash payments within operating activities in the statement of cash flows. Disclosures are required to provide the amount, timing and uncertainty of cash flows arising from leases. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. ASU 2016-02 is effective for fiscal years beginning after December IS, 2018, including interim periods within those fiscal years. Early application is permitted. The Company has not yet evaluated the impact of the adoption of ASU 2016-02 on the Company’s financial statement presentation or disclosures.

 

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” The amendments in this guidance are clarifying the definition of a business to assist entities when determining whether an integrated set of assets and activities meets the definition of a business. The update provides that when substantially all the fair value of the assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this new guidance is not expected to have a material impact on our consolidated financial statements.

 

In January 2017, the FASB issued ASU 2017-04—Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendments in this guidance to eliminate the requirement to calculate the implied fair value of goodwill to measure goodwill impairment charge (Step 2). As a result, an impairment charge will equal the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the amount of goodwill allocated to the reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendment should be applied on a prospective basis. The guidance is effective for goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for goodwill impairment tests performed after January 1, 2017. The impact of this guidance for the Company will depend on the outcomes of future goodwill impairment tests.

 

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In May 2017, the FASB issued Accounting Standards Update No. 2017-09 (ASU 2017-09), Compensation — Stock Compensation (Topic 718) Scope of Modification Accounting. The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The adoption of ASU 2017-09 which will become effective for annual periods beginning after December 15, 2017 and for interim periods within those annual periods, is not expected to have any impact on the Company’s financial statement presentation or disclosures.

 

Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures.

 

3. Accounts Receivable, net

 

Accounts receivable consisted of the following:

 

   June 30, 2017   December 31, 2016 
Accounts receivable  $9,425,359   $1,122,754 
Less: Allowance for doubtful debts   -    - 
Accounts receivable, net  $9,425,359   $1,122,754 

 

As of June 30, 2017 and December 31, 2016, the management has determined that no allowance for doubtful debts was necessary.

 

4. Prepaid Expense

 

Prepaid expenses consisted of the following:

 

    June 30, 2017     December 31, 2016  
Prepaid office rent   $ 28,021     $ 12,504  
Prepaid government filing expense     33,588       5,000  
Prepaid packaging expense     -       75,000  
Prepayment for purchasing furniture     5,160       -  
    $ 66,769     $ 92,504  

 

5. Other Receivable

 

Other receivable consisted of the following:

 

   June 30, 2017   December 31, 2016 

Due from customer-Kangtan Gerui (Beijing) Bio-Tech Co., Ltd.

   1,338,111    1,522,435 
Advance to employees   105,171    31,700 
Others   28,009    7,196 
Less: Allowance for doubtful debts   -    - 
Other receivable, net  $1,471,291   $1,561,331 

 

Due from customer-Kangtan Gerui (Beijing) Bio-Tech Co.,Ltd. represents the remaining balance of advancement for production of fertilizers during the first through the third quarter of 2016. In September 2016, the Company obtained a fertilizer sales permit from Chinese government and began to sell the products by their own and gradually decrease the business cooperation with Gerui.

 

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For the six months ended June 30, 2017, the Company has collected $184,324 advancement from Gerui and management has determined that no allowance for doubtful debts was necessary.

 

6. Advance to suppliers

 

Since currently the Company does not have manufacturing facility, it has contracted with several third parties to produce fertilizer products. Pursuant to the agreements entered by the Company and those third party companies, the Company was required to make partially prepayments in advance of purchase or completion of productions. As of June 30, 2017 and December 31, 2016, such advance to suppliers was $ 1,255,218 and $1,805,044, respectively.

 

7. Property, Plant and Equipment

 

Property, plant and equipment, net consisted of the following:

 

   June 30, 2017   December 31, 2016 
Office equipment  $942   $942 
Furniture   10,260    8,276 
Leasehold improvement   72,174    70,871 
Total Property, plant and equipment  $83,376   $80,089 
Less: accumulated depreciation   (40,064)   (20,311)
Less: impairment of long-lived assets   -    - 
Property, plant and equipment - net  $43,312   $59,778 

 

Depreciation expense was $17,787 and $ 3,073 for the six months ended June 30, 2017 and 2016, and $8,318 and $3,073 for the three months ended June 30, 2017 and 2016, respectively.

 

Impairment of long-lived assets was nil for the three and six months ended June 30, 2017 and 2016, respectively.

 

All of our property, plant and equipment have been held as collateral to secure the 6% Notes (see Note 14).

 

8. Deposit for long-term investment

 

On June 8, 2017, the Company entered an equity purchase agreement with Yantai Peng Hao New Materials Technology Co. Ltd., which relates to the acquisition of a new factory for purchase price of about $2.2 million (approximately RMB 15 million). The factory to be acquired by the Company will be completed in accordance with the Company’s construction plan to facilitate the production design of combining of microbial fermentation and terminal fertilizer products.

 

Pursuant to the payment terms of purchase agreement, the Company made the first payment of $147,423 (approximately RMB 1,000,000) to Yantai Peng Hao New Materials Technology Co. Ltd. on June 30, 2017.

 

9. Goodwill and other intangibles

 

On November 30, 2015, Kiwa Bio-tech Products Group Ltd in BVI (“Kiwa BVI”) entered an acquisition agreement with shareholders of Caber Holdings Ltd. (“Acquiree”) in Hong Kong to acquire 100 percent entity interest of the acquiree, including a wholly owned subsidiary, Oriental Baina Co., Ltd. in Beijing for US$30,000. The acquisition was completed in January, 2016. On the acquisition date, there was no any asset or liability acquired, and thus no fair value was allocated to asset and liability. Including legal fee and government fees, the total payment of approximately $34,112 ($30,000 plus legal fee and government fees totaled $4,112) was recorded as goodwill. The fair value of the goodwill is tested prior to June 30, 2017 and management determined there is no impairment to the goodwill as of June 30, 2017.

 

The Company purchased the computer software in May, 2017, which cost was $ 1,061. Amortization expense for the three and six months ended June 30, 2017 was $59 and nil.

 

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10. Construction Costs Payable

 

Construction costs payable mainly represents the payables which had been carried on Kiwa Shandong’s book for a length of years. As of December 31, 2016, construction costs payable was $255,539.

 

On February 11, 2017, the Company entered an Equity Transfer Agreement with Dian Shi Cheng Jing (Beijing) Technology Co. (“Transferee”) to transfer all of shareholders’ right, title and interest, as well as all the obligations in Kiwa Shandong to the Transferee for USD $1.00. On April 12, 2017, the transaction was completed and the balance was removed.

 

11. Related Party Transactions

 

(1). Amounts due to related parties

 

Amounts due to related parties consisted of the following as of June 30, 2017 and December 31, 2016:

 

Item   Nature   Notes   June 30, 2017     December 31, 2016  
Kiwa-CAU R&D Center   Trade   (b)     -       1,122,754  
CAAS IARRP and IAED Institutes   Trade   (c)     -       160,461  
Total           $ -     $ 1,283,215  

 

(a) Yvonne Wang

 

Ms. Wang is a board member and Acting President, Acting Chief Executive Officer and Acting Chief Financial Officer. From time to time, Ms. Wang paid various expenses on behalf of the Company. As of June 30, 2017 and December 31, 2016, the amount due to Ms. Wang was $83,798 and $100,798, respectively.

 

(b) In November 2006, Kiwa and China Agricultural University (the “CAU”) agreed to jointly establish a new research and development center, named Kiwa-CAU R&D Center. Pursuant to the agreement, Kiwa committed to fund RMB 1 million (approximately $160,000) annually to the research center. Prof. Qi Wang, a director of the Company was also the director of Kiwa-CAU R&D Center. Although the agreement was expired on June 30, 2016, the payable balance remains on Kiwa Shandong’s book until April 12, 2017 when the transaction of transfer Kiwa Shandone’s all assets and liabilities to Dian ShiCheng Jing (Beijing) was completed.

 

The Company recorded nil and $36,363 research and development expenses related to this Kiwa-CAU R&D Center for the six months ended June 30, 2017 and 2016, respectively.

 

(c) 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”). The term of the Agreement was three years ends on November 4, 2017.

 

Pursuant to the agreement, Kiwa agree to invest RMB 1 million (approximately $160,000) each year to the Spatial Agriculture Planning Method & Applications Innovation Team that belongs to the Institutes. Prof. Yong Chang Wu, the authorized representative of IARRP, CAAS, was also one of the Company's directors until he resigned on March 13, 2017. Since Prof. Yong Chang Wu is no longer a board member, the balance of $233,598 at June 30, 2017 has been reclassified from part due to related party – trade to R&D expenses payable.

 

The Company recorded $36,291and $38,764 research and development expenses related to the institutes, for the six months ended June 30, 2017 and 2016, respectively.

 

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(2). Convertible Note Payables

 

(a). Geng Liu

 

Geng Liu became a shareholder of the Company and has held 500,000 shares of common stock since September, 2016

 

On January 17, 2017, the Company entered into a Convertible Loan Agreement with Geng Liu wherein the lender agreed to advance of approximately US $442,269 (RMB3,000,000) under a Convertible Promissory Note with a term of 12 months bearing interest at a rate of Fifteen Percent (15%) per annum. The Loan is convertible into Common Stock at any time at the option of the Lender at a conversion price of $ 0.90 per share within the term.

 

As of June 30, 2017, the Company received proceeds about $147,423 (RMB 1,000,000) from Geng Liu and recorded interest expense related to this note $5,442 and $8,472 for the three and six months ended June 30, 2017, respectively.

 

(b). Junwei Zheng

 

Junwei Zheng became a shareholder of the Company and has held 920,000 shares of common stock since March, 2017

 

On May 9, 2017, Company entered into a Convertible Loan Agreement with Junwei Zheng wherein the lender agreed to advance of approximately US$ 4.5 million (RMB 30,000,000) under a Convertible Promissory Note with a term of 24 months bearing interest at a rate of Fifteen Percent (15%) per annum. The Loan is convertible into Common Stock at any time at the option of the Lender at a conversion price of $3.50 per share within the term

 

As of June 30, 2017, the Company has received proceeds of about $810,827 (RMB 5,500,000) from Junwei Zheng and the interest expense related to this note was $17,328 for the three and six months ended June 30, 2017.

 

12. Unsecured Loans Payable

 

Unsecured loan payable mainly represents the payables of the subsidiary company - Kiwa Shandong, which hadn’t achieved active operation for a lengh of years. As of December 31, 2016, construction costs payable was $1,655,343.

 

On February 11, 2017, the Company entered an Equity Transfer Agreement with Dian Shi Cheng Jing (Beijing) Technology Co. (“Transferee”) to transfer all of shareholders’ right, title and interest, as well as all the obligations in Kiwa Shandong to the Transferee for USD $1.00. On April 12, 2017, the transaction was completed.

 

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13. Convertible Notes Payable

 

Convertible notes payable consists $ 150,250 of 6% secured convertible notes issued to FirsTrust Group Inc. on June 29, 2006 , $145,127 of 15% convertible note issued to Mr. Geng Liu on January 17, 2017 and $810,827 of 15% convertible note issued to Mr. Junwei Zheng on May 9, 2017.

 

6% secured convertible notes

 

In 2006, we completed a $2.45 million 6% Secured Convertible Note (“6% Convertible Note”) transaction with six institutional investors, including Nite Capital LP, which purchased a total of $300,000 of the Note in three tranches ($105,000, $90,000, $105,000 respectively). The 6% Convertible Note allows the note holder to convert into shares of our common stock. We filed a registration statement under the Securities Act covering the resale of the shares issued upon conversion of the 6% Notes in 2006 and the registration statement was declared effective on October 13, 2006.

 

On March 18, 2008, FirsTrust Group, Inc. purchased three remaining 6% Convertible Notes, totaling $168,000 ($59,100, $50,400 and $59,100 respectively), from Nite Capital for a cash payment of $100,000. As of June 30, 2017, there is no other outstanding 6% Note than those owned by FirsTrust Group. The total outstanding Convertible Note payable to FirsTrust is $150,250, and the total accumulated interest and penalty is $194,537 and $523,141, respectively.

 

15% convertible notes- Geng Liu

 

On January 17, 2017, the Company entered a Convertible Note Agreement with an individual person with principal of RMB 3 million or approximately $435,380. The note bears interest at 15% per annum and will mature on January 16, 2018. Before the maturity date, the Note holder has an option to convert partial or all of the outstanding principal and accrued interest to the Company’s common shares with a conversion price of $0.90 per share. As of June 30, 2017, the Company has received partial principal totaled $145,127 (RMB 1 million). The Company accrued $5,442 and $8,472 interest expense on this convertible notes for the three and six months ended June 30, 2017, respectively.

 

15% convertible notes- Junwei Zheng

 

On May 9, 2017, the Company entered a Convertible Note Agreement with an individual person with principal of RMB 30 million or approximately $4.5 million. The note bears interest at 15% per annum and will mature on May 8, 2019. Before the maturity date, the Note holder has an option to convert partial or all of the outstanding principal and accrued interest to the Company’s common shares with a conversion price of $3.5 per share. As of June 30, 2017, the Company has received partial principal totaled $810,827 (RMB 5.5 million). The Company accrued $17,328 interest expense on this convertible notes for both of the six months and three months ended June 30, 2017.

 

14. Note Payable

 

On May 29, 2007, the Company issued a $360,000 promissory note (the “Promissory Note”) to an unrelated individual (the “Original Note holder”). 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 (the “Pledged Shares”). The Company accrued $45,000 and $45,000 interest expense on note payable for the six months ended June 30, 2017 and 2016, and $22,500 and $22,500 interest expense on note payable for the three months ended June 30, 2017 and 2016, respectively.

 

As of December 31, 2016, the Original Note holder informed us that all right, title and interests in the Promissory Note has been assigned and transferred to FirsTrust Group, Inc. (“FirsTrust”). As of June 30, 2017, all of $360,000 of Promissory Note to FirsTrust is still outstanding, and total interest of the Promissory Note is $ 904,300. We have begun preliminary discussion with FirsTrust with regards to a potential settlement of the Note, but no agreement has been reached. As of June 30, 2017, with the Company’s acknowledgement, FirsTrust has taken possession of 30,892 Pledged Share from Investline (China) Limited according to the default clause of the Promissory Note.

 

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15. Other Payable

 

Other payable includes the payables to two unrelated potential investors and other liabilities. As of June 30, 2017, two potential investors have made the payments approximately $471,754 to the Company and the investment agreements have not been finalized. Other payable were $865,793 and $1,019,583 at June 30, 2017 and December 31, 2017, respectively,

 

16. Stockholders’ Equity

 

In March, 2016, the Company issued 3,140,000 shares of common stock to Mr. Li and Ms. Wang for debt and salary payable settlement for an aggregate amount of $3,141,000. In addition, the Company issued 101,947 common shares to Jimmy Zhou, former CEO in August 2016, to settle payable to him for $50,974. All of issuances of common shares for settlement of debts were based the stock price on the transaction dates.

 

During the year ended December 31, 2016, the Company issued 1,650,000 common shares for cash at $0.8 per share for an aggregate subscribe price equivalent to $1,320,000, of which $759,659 has received while approximately $560,341 remaining subscribe receivable at December 31, 2016. The remaining subscribe receivable was totally received in August 3, 2017.

 

On November 15, 2016, the Company completed another private offering of common stock to an accredited investor for 125,000 shares of its common stock and warrants to purchase 300,000 shares of Company common stock at an exercise price of $3.00 per share prior to November 15, 2021. The Company may adjust the exercise price for some or all of the warrants under certain terms and conditions. We have determined the issued warrants do not meet the definition of a derivative security, and thus allocated the net proceeds of the sale of the common stock to the par value of the common stock, with the remainder to additional paid in capital.

 

During the year ended December 31, 2016, the Company issued 1,710,808 common shares to four consulting companies and three individuals as compensation for their consulting service received. The agreements have the service periods from 6 months to 36 months with a total of $1,688,300 that was determined as fair value at the time of execution of the agreement. The total services fee will be recognized based straight-line amortization method over the service term. The Company recorded $331,800 as consulting service expense for the six months ended June 30, 2017 and $254,250 approximately for the year ended December 31, 2016.

 

In February, 2017, the Company issued 1,000,000 common shares to Mr. Junwei Zheng for cash at $1.00 per share for an aggregate price to $1,000,000, all of which has been received as of June 30, 2017.

 

On February 15, 2017, the Company entered a consulting agreement with Mr. Yuan Wang to assist the Company in financing projects. The agreement has one year term with a total of $85,400 that was determined as fair value at the time of execution of the agreement. The total services fee will be recognized based straight-line amortization method over the service term. On March 3, 2017, the Company issued 70,000 common shares to Mr. Yuan Wang based on market price of $1.22 per share. The Company realized $32,025 as a compensation for Mr. Wang’s consulting service for the six months ended June 30, 2017.

 

On May 25, 2017, the Company issued 19,380 common shares to an individual to assist the Company in financing projects based on market price of $2.74 per share. The agreement has one year term with a total of $53,101 that was determined as fair value at the time of execution of the agreement. The total services fee will be recognized based straight-line amortization method over the service term. The Company recorded $5,237 as consulting service expense for the six months ended June 30, 2017.

 

On June 1, 2017, the Company issued 15,108 common shares to an individual to assist the Company in technical support based on market price of $2.78 per share. The agreement has one year term with a total of $41,396 that was determined as fair value at the time of execution of the agreement. The total services fee will be recognized based straight-line amortization method over the service term. The Company recorded $3,402 as consulting service expense for the six months ended June 30, 2017.

 

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On June 13, 2017, the Company issued 96,900 common shares to Mr. Yuan Wang for cash at $3.00 per share for an aggregate price to $290,700, all of which has been received as of June 30, 2017.

 

On June 30, 2017, the Company issued 97,850 common shares to ten employees for cash at $1.95 per share for an aggregate price to $190,807, all of which has been received as of June 30, 2017. The Company determined the fair price per common stock was $3.0 per share, thus the difference of $1.05 per share between fair price per share ($3.00) and the employees purchase price per share ($1.95), totaled $102,273 was recognized as expense of employee benefits and accordingly, credited the same amount to APIC.

 

Subsequently the Company issued 98,000 shares of common stock for cash $294,000, and 88,000 shares of common stock for consulting service. Please refer to Note 22 Subsequent Events for additional information.

 

17. Stock-based Compensation

 

On March 15, 2017, the Board of Directors approved a new stock option plan with ten years’ term. As of June 30, 2017, the Company has not granted any incentive compensation under this plan.

 

18. Statutory Reserves

 

The Company is required to make appropriations to reserve funds, comprising the statutory surplus reserve, statutory public welfare fund and discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (the “PRC GAAP”). Appropriation to the statutory surplus reserve should be at least 10% of the after tax net income determined in accordance with the PRC GAAP until the reserve is equal to 50% of the entities’ registered capital or members’ equity. In accordance with the Chinese Company Law, the Company allocated 10% of income after taxes to the statutory surplus reserve for the six months ended June 30, 2017 and the year ended December 31, 2016, statutory reserve activity is as follows:

 

Balance – January 1, 2016  $- 
Addition to statutory reserve in 2016   127,884 
 Balance – December 31, 2016   127,884 
Addition to statutory reserve for the six months ended June 30, 2017   179,466 
Balance – June 30, 2017  $307,350 

 

19. Income Tax

 

In accordance with the current tax laws in China, Kiwa Shandong is subject to a corporate income tax rate of 25% on its taxable income. However, Kiwa Shandong has not provided for any corporate income taxes since it had no taxable income for the six months ended June 30, 2017 and 2016.

 

Kiwa Baiao Co., Ltd., is also subject to a corporation income tax rate of 25% on its taxable income. For the six months ended June 30, 2017, it recorded income tax provision for RMB 4,112,924 or approximately $598,222. For the three months ended June 30, 2017, it recorded income tax provision for RMB 2,601,847 or approximately $379,973.

 

Provision for taxes $800 to the minimum California state franchise tax. In accordance with the relevant tax laws in the British Virgin Islands, Kiwa BVI, as an International Business Company, is exempt from income taxes.

 

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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:

 

    Three months ended June 30,     Six months ended June 30,  
    2017     2016     2017     2016  
                         
Pre-tax income   $ 5,396,950     $ 181,975     $ 5,924,464     $ 238,105  
U.S. federal corporate income tax rate     34 %     34 %     34 %     34 %
Income tax computed at U.S. federal corporation income tax rate     1,834,963       61,872       2,014,318       80,956  
Reconciling items:                                
Rate differential for PRC earnings     (124,683 )     8,770       (202,353 )     13,668  
Change of valuation allowance     195,403       80,006       305,935       146,608  
Non-deductible expenses     (1,525,710 )     (150,648 )     (1,518,877 )     (241,232 )
Effective tax expenses   $ 379,973     $ -     $ 599,022     $ -  

 

The Company had deferred tax assets as follows:

 

    June 30, 2017     December 31, 2016  
             
Net operating losses carried forward   $ 3,458,902     $ 3,473,331  
Less: Valuation allowance     (3,458,902 )     (3,473,331 )
                 
Net deferred tax assets   $ -     $ -  

 

As of June 30, 2017 and December 31, 2016, the Company had approximately $3.4 million and $3.4 million net operating loss carryforwards available to reduce future taxable income. Net operating loss of the Company could be carried forward and taken against any taxable income for a period of not more than twenty years from the year of the initial loss pursuant to Section 172 of the Internal Revenue Code of 1986, as amended. The net operating loss of Kiwa Shandong could be carried forward for a period of not more than five years from the year of the initial loss pursuant to relevant PRC tax laws and regulations. It is more likely than not that the deferred tax assets cannot be utilized in the future because there will not be significant future earnings from the entity which generated the net operating loss. Therefore, the Company recorded a full valuation allowance on its deferred tax assets.

 

As of June 30, 2017 and December 31, 2016, the Company has no material unrecognized tax benefits which would favorably affect the effective income tax rate in future periods and does not believe that there will be any significant increases or decreases of unrecognized tax benefits within the next twelve months. No interest or penalties relating to income tax matters have been imposed on the Company during six months ended June 30, 2017 and December 31, 2016, and no provision for interest and penalties is deemed necessary as of June 30, 2017 and December 31, 2016.

 

According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or its withholding agent. The statute of limitations extends to five years under special circumstances, which are not clearly defined. In the case of a related party transaction, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion.

 

20. Commitments and Contingencies

 

The Company has the following material contractual obligations:

 

(1) Investment in manufacturing facilities in Penglai City, Shandong Province in China

 

On June 8, 2017, the Company entered an equity purchase agreement with Yantai Peng Hao New Materials Technology Co. Ltd. (“Acquirer”), which relates to the acquisition of a new factory for purchase price of about $2.2 million (approximately RMB 15 million). The factory to be acquired by the Company will be completed in accordance with the Company’s construction plan to facilitate the production design of combining of microbial fermentation and terminal fertilizer products.

 

Pursuant to the payment terms of purchase agreement, the Company made the first payment of $147,423 (approximately RMB 1,000,000) to the Acquirer on June, 2017 and will make the second payment of RMB 10,000,000 as long as the Company obtains the land use right certificate and will make the final payment of RMB 4,000,000 after the government processing has been completed.

 

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(2) Strategic cooperation with the institutes in China

 

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 and will expire on November 19, 2018.

 

(3) Distribution agreement with Kangtan Gerui Bio-Tech in China

 

On December 17, 2015, Kiwa Bio-Tech Products Group Corporation (the “Company”) entered into a distribution agreement (the “Agreement”) with Kangtan Gerui (Beijing) Bio-Tech Co., Ltd. (“Gerui”) and formally awarded Gerui a right to sell and distribute the Company’s fertilizer products in 3 major agricultural regions of China— Hainan Province, Hunan Province and Xinjiang Autonomous Region. The Company’s Research and Development department has been conducting application experiments in Hainan and Hunan Provinces since August 2015, in accordance with the market requirements. The experiment data indicates that the Company’s fertilizer products have fulfilled the requirements of reduction of content of heavy metals in soil and improve crop yield. Gerui was founded in Beijing in April 2015 and relies on the sales network of China’s Supply and Marketing Cooperatives system. Currently, the Company and Gerui do not hold any interest in each other; however, a collaboration and integration may take place in the future. The term of the Agreement is for a period of three years commencing December 17, 2015. In September 2016, Kiwa Baiao Bio-Tech (Beijing) Co., Ltd obtained a fertilizer sales permit from the Chinese government and began to sale the products directly to customers in those 3 major agricultural regions.

 

(4) Lease payments

 

(1) On April 29, 2016, Kiwa Baiao Bio-Tech (Beijing) Co., Ltd. entered an office lease agreement with two-year term. Monthly lease payment and building management fee totaled RMB 77,867 or approximately USD $11,303.

 

(2) In June 20, 2017, Kiwa Bio-Tech (Shenzhen) Co., Ltd, a newly established subsidiary entered an office lease agreement with two-year term. Monthly lease payment is RMB 115,000 or approximately of USD $16,954. And the previous lease agreement terminated automatically since the landloard is the same one.

 

(3) On May 5, 2017, Kiwa Bio-Tech Products Group Corporation entered an office lease agreement with 13 months term. Monthly lease payment totaled USD $680.

 

(4) On July 1, 2017, Kiwa Bio-Tech Products Group Corporation entered an office lease agreement with one-year term. Monthly lease payment totaled USD $1,087.

 

The future lease payments at June 30, 2017 are summarized below.

 

    Beijing Office     Shenzhen Office     USA Office     Total  
2017   $ 68,876     $ 101,722     $ 10,605     $ 181,203  
2018   $ 45,917       203,444     $ 9,925     $ 259,286  
2019   $ -     $ 101,722     $ -     $ 101,722  
Thereafter   $ -     $ -     $ -     $ -  

 

21. Discontinued Operation

 

On February 11, 2017, the Company executed an Equity Transfer Agreement with Dian Shi Cheng Jing (Beijing) Technology Co. (“Transferee”) whereby the Company transferred all of its right, title and interest in Kiwa Bio-Tech Products (Shandong) Co., Ltd. (“Shandong”) to the Transferee for the RMB equivalent of US$1.00. The government processing of the transaction has been completed on April 12, 2017. This transaction was completed and effective on April 12, 2017. The Company recorded a net gain of approximately $4,514,161 during the six months ended June 30, 2017 and approximately $4,513,363 during the three months ended June 30, 2017 based on the discharge of the excess liabilities over the assets of the Kiwa Shandong.

 

 22 

 

 

22. Subsequent Events

 

On July 1, 2017, Kiwa Bio-Tech Products Group Corporation entered an office lease agreement with two-year term. Monthly lease payment totaled USD $1,087.

 

On July 19, 2017, the Company entered into Common Stock Purchase Agreement with Junwei Zheng. Pursuant to the Agreement, the Company will issue total 245,000 shares of restricted common stock at $3.00 per share price for an aggregate amount of $735,000. As of August 14, 2017, the Company has not received the amount yet.

 

On July 19, 2017, the Company entered into Common Stock Purchase Agreement with Quanzhen Shen. Pursuant to the Agreement, the Company will issue total 98,000 shares of restricted common stock at $3.00 per share price for an aggregate amount of $294,000. The Company has received the full amount.

 

On July 19, 2017, the Company issued 49,000 common shares to Quanzhen Shen for her consulting service to assist the Company in financing projects. The number of shares was determined based on the fair value of the service. The agreement has one year term.

 

On July 18, 2017, the Company issued 39,000 common shares to Yuan Wang in assistance with the Company financing projects. The number of shares was determined based on the fair value of the service. The agreement has one year term.

 

On August 3, 2017, the Company fully collected $487,627 (RMB 3,360,000) of the entire subscribe receivable balance at December 31, 2016.

 

The Company has evaluated the existence of significant events subsequent to the balance sheet date through the date these financial statements were issued and has determined that, other than as stated above, there were no subsequent events or transactions which would require recognition or disclosure in the financial statements, other than noted herein.

 

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

 

This Quarterly Report on Form 10-Q for the three and six months ended June 30, 2017 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 and six months ended June 30, 2017 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. On March 8, 2017, we completed our reincorporation in the State of Nevada.

 

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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. Kiwa Tianjin has been dissolved since July 11, 2012. On February 11, 2017, the Company entered an Equity Transfer Agreement with Dian Shi Cheng Jing (Beijing) Technology Co. (“Transferee”) to transfer all of shareholders’ right, title and interest in Kiwa Shandong to the Transferee for USD $1.00. On April 12, 2017, the government processing of transfer has been completed.

 

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 corporation registration in Hong Kong and In China. The total payment of approximately $34,000 was recorded as intangible assets.

 

We started to generate revenues from selling Bio Organic fertilizers in the third quarter of 2016 and through June 30, 2017. Comparing with six months ended June 30, 2017 and 2016, there was no sales revenues in the six months ended June 30, 2016 while we recorded approximately $8.83 million revenue for the six months ended June 30, 2017. On the other hand, we generated no license revenue in the six months ended June 30, 2017, compared approximately $710,095 license revenues recorded in the six months ended June 30, 2016. We recognized a net income of $5,325,262 and $238,105 for the six months ended June 30, 2017 and 2016, respectively, of which includes $4,514,161 and nil gain from discontinued operations.

 

As of June 30, 2017, the Company had cash of $71,554. The Company expects to generate additional revenue while seeking additional equity and debt financing. Management of the Company already raised additional equity for approximately $1,481,508 and approximately $955,955 from issuance of convertible note during the six months ended June 30, 2017.

 

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.

 

Results of Operations

 

Results of Operations for Three Months Ended June 30, 2017 and 2016

 

Revenue

 

Revenue was $5,682,108 and nil for the three months ended June 30, 2017 and 2016, respectively. Revenue was generated from sales of products.

 

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Cost of Revenue and Gross Profit

 

Cost of revenue for the three months ended June 30, 2017 was $3,970,915, reflecting an increase of 100% from the same period last year. Consequently, gross margin as a percentage of total sales is 30.12% compared with nil for the same period last year, principally due to the increase of sales of products.

 

Selling Expense

 

Selling expenses for the three months ended June 30, 2017 and 2016 were $54,232 and nil, respectively, representing a 100% increase from the same period last year. Selling expenses include salaries of sales personnel, sales commission, travel and entertainment etc.

 

General and Administration

 

General and administration expenses for the three months ended June 30, 2017 and 2016 were $664,019 and $138,786, respectively, representing a $525,233 or 378% increase. 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 June 30, 2017 reflected a decrease of $38,343 or 51.28% from $74,776 in the three months ended June 30, 2016 to $36,433 for the same period of 2017. 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. The agreement expired on June, 2016.

 

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 since November 20, 2015 until March 13, 2017.

 

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 $20,575 and $19,223 for three months ended June 30, 2017 and 2016, respectively. The increase of penalty expense was mainly due to accrued and unpaid interest on the notes.

 

Interest Expenses

 

Net interest expense was $52,346 for the three months ended June 30, 2017 and $28,325 for the same period of 2016. Interest expense included accrued interest on convertible note and other note payable for the three months ended June 30, 2017 and 2016.

 

Other Income (License revenue)

 

Other income was nil and $443,085 for the three months ended June 30, 2017 and 2016, respectively. Revenue was generated from licensing our trademark to Gerui. We signed the license agreement with Gerui to allow Gerui to sell fertilizer using our trademark in December 2015.

 

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Gain from discontinued opereation

 

Gain from discontinued operation was 4,513,363 and nil for the three months ended June 30, 2017 and 2016, respectively. The Company entered an Equity Transfer Agreement with Dian Shi Cheng Jing (Beijing) Technology Co. (“Transferee”) to transfer all of shareholders’ right, title and interest, as well as all the obligations in Kiwa Shandong to the Transferee for USD $1.00 on April 12, 2017, which results in 100% increase of gain from discontinued operation for the three months ended June 30, 2017 compared with the same period of 2016.

 

Net Income

 

During the three months ended June 30, 2017, net income was $5,016,977 and for the same period of 2016 net income was $181,975, representing a change of $4,835,002 or 2,656.9%. The change was due to the reasons discussed above.

 

Comprehensive Income

 

Comprehensive income for the three months ended June 30, 2017 was $5,106,888. Comparably, during the same period of 2016, comprehensive income was $311,174. The change was due to the reasons discussed above.

 

Results of Operations for Six Months Ended June 30, 2017 and 2016

 

Revenue

 

Revenue was $8,827,897 and nil for the six months ended June 30, 2017 and 2016, respectively. Revenue was generated from sales of products.

 

Cost of Revenue and Gross Profit

 

Cost of revenue for the six months ended June 30, 2017 was $6,034,924, reflecting an increase of 100% from the same period last year. Consequently, gross margin as a percentage of total sales is 31.64% compared with nil for the same period last year, principally due to the increase of sales of products.

 

Selling Expense

 

Selling expenses for the six months ended June 30, 2017 and 2016 were $90,485 and nil, respectively, representing a 100% increase from the same period last year. Selling expenses include salaries of sales personnel, sales commission, travel and entertainment etc.

 

General and Administration

 

General and administration expenses for six months ended June 30, 2017 and 2016 were $1,095,396 and $225,670, respectively, representing a $869,726 or 385% increase. General and administrative expenses include salaries, travel and entertainment, rent, office expense, telephone expense and insurance costs etc.

 

Research and Development

 

Research and development expense for the six months ended June 30, 2017 reflected an decrease of $79,045 or 52.08% from $151,769 in the six months ended June 30, 2016 to $72,724 for the same period of 2017. 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.

 

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.

 

 26 

 

 

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 $40,814 and $38,108 for the six months ended June 30, 2017 and 2016, respectively. The increase of penalty expense was mainly due to accrued and unpaid interest on the notes.

 

Interest Expenses

 

Net interest expense was $83,430 for the six months ended June 30, 2017 and $56,443 for the same period of 2016. Interest expense included accrued interest on convertible note and other note payable for the six months ended June 30, 2017 and 2016.

 

Other Income (License revenue)

 

Other income was nil and $710,095 for the six months ended June 30, 2017 and 2016, respectively. Revenue was generated from licensing our trademark to Gerui. We signed the license agreement with Gerui to allow Gerui to sell fertilizer using our trademark in December 2015.

 

Gain from discontinued opereation

 

Gain from discontinued operation was 4,514,161 and nil for the three months ended June 30, 2017 and 2016, respectively. The Company entered an Equity Transfer Agreement with Dian Shi Cheng Jing (Beijing) Technology Co. (“Transferee”) to transfer all of shareholders’ right, title and interest, as well as all the obligations in Kiwa Shandong to the Transferee for USD $1.00 on April 12, 2017, which results in 100% increase of gain from discontinued operation for the six months ended June 30, 2017 compared with the same period of 2016.

 

Net Income

 

During the six months ended June 30, 2017, net income was $5,325,262, and for the same period of 2016 net income was $238,105, representing a change of $5,087,157 or 2136%. The change was due to the reasons discussed above.

 

Comprehensive Income

 

Comprehensive income for the six months ended June 30, 2017 was $5,382,830. Comparably, during the same period of 2016, comprehensive loss was $332,210. 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 six months ended June 30, 2017, the advances from related parties, net of repayment by the Company to related parties, was $83,798. As of June 30, 2017, our current assets exceeded current liabilities by $1,474,595, representing a current ratio of 1.13. Comparably, as of December 31, 2016, our current liabilities exceeded current assets by $5,729,622, denoting a current ratio of 0.445.

 

As of June 30, 2017 and December 31, 2016, we had cash of $71,554 and $13,469, respectively. Changes in cash balances are outlined as follows:

 

During the six months ended June 30, 2017, our operations used cash of $2,199,087 as compared with $148,931 used in the same period of 2016. Cash was mainly used for working capital for public company operation.

 

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During the six months ended June 30, 2017 and 2016, we used $147,782 and $78,775 for investing activities.

 

During the six months ended June 30, 2017, our financing activities incurred net cash inflow of $2,454,463, $17,000 of which are generated from advances from related parties, $1,481,508 of which are generated from sales of common stock and $955,955 of which are generated from convertible note. During the six months ended June 30, 2016, we generated $216,500 from financing activities by borrowing from related party and sales of common stock.

 

Commitments and Contingencies

 

See Note 20 to the Consolidated Financial Statements under Item 1 in Part I.

 

Off-Balance Sheet Arrangements

 

At June 30, 2017, 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 current quarter ended June 30, 2017, to have materially affected the Company’s internal control over financial reporting.

 

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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.

 

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

 

The following is a list of securities issued for cash or converted with debentures or as stock compensation to consultants during the period from January 1, 2017 through August 14, 2017, which were not registered under the Securities Act:

 

Name of Purchaser  Issue Date  Security  Shares   Consideration
Junwei Zheng  3/3/17  Common   920,000   Stock Purchase
Yuan Wang  3/3/17  Common   80,000   Stock Purchase
Yuan Wang  3/3/17  Common   70,000   Consultant Fees
Haiping Liu  6/13/17  Common   19,380   Consultant Fees
Yang Yang  6/13/17  Common   96,900   Stock Purchase
Yuan Zeng  6/30/17  Common   21,100   Stock Purchase
Baoyu Ouyang  6/30/17  Common   17,000   Stock Purchase
Honghua Zhang  6/30/17  Common   15,000   Stock Purchase
Weiqiang Xu  6/30/17  Common   10,000   Stock Purchase
Jialin Xiong  6/30/17  Common   3,750   Stock Purchase
Kun Wei  6/30/17  Common   3,000   Stock Purchase
Yanyu Guo  6/30/17  Common   2,000   Stock Purchase
Yanjiao Guo  6/30/17  Common   1,000   Stock Purchase
Mengsha Yuan  6/30/17  Common   10,000   Stock Purchase
Mo Han  6/30/17  Common   15,000   Stock Purchase
Hebe Han  6/30/17  Common   15,108   Stock Purchase
Quanzhen Shen  8/1/17  Common   98,000   Stock Purchase
Quanzhen Shen  8/1/17  Common   49,000   Consultant Fees
Yuan Wang  8/1/17  Common   39,000   Consultant Fees
Junwei Zheng  8/1/17  Common   245,000   Stock Purchase

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine safety disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

 

 29 

 

 

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

 

 30 

 

 

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
 
August 14, 2017 By: /s/ Yvonne Wang
    Yvonne Wang, Interim Chief Executive Officer and
    Interim Chief Financial Officer

 

 31 

 

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 June 30, 2017 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: August 14, 2017  
   
/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 June 30, 2017 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: August 14, 2017  
   
/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 June 30, 2017 (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: August 14, 2017  
   
  /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 June 30, 2017 (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: August 14, 2017  
   
  /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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Schedule Of Accounts Receivable Details Accounts receivable Less: Allowance for doubtful debts Accounts receivable, net Prepaid office rent Prepaid government filing expense Prepaid packaging expense Prepayment for purchasing furniture Prepaid expenses Advance from related party Other receivable, gross Less: Allowance for doubtful debts Other receivable, net Depreciation expense Impairment on long-lived assets Percentage of property plant and equipment held as collateral to secure Property, plant and equipment - total Less: accumulated depreciation Less: impairment on long-lived assets Property, plant and equipment - net Payments to acquire new factory Acquisition entity interest Acquisition of goodwill Goodwill Legal fee Government fees Impairment of goodwill Purchase of computer software Amortization expense Construction costs payable Equity interest transfer, description Schedule of Related Party Transactions, by Related Party [Table] Related Party Transaction [Line Items] Due to related parties Related party transaction amount Common stock, shares subscribed Advance from lender Debt interest rate Conversion price Proceeds from Convertible Debt Interest Expense, Debt Total Unsecured Loans Payable [Table] Unsecured Loans Payable [Line Items] Geographical [Axis] Percentage of secured convertible notes issued Notes beard interest Debt instruments maturity date Secured debt Payment acquire debt Cash payment Accumulated interest Accumulated penalty Debt instruments face amount Debt conversion price Partial principal Accrued interest expense Promissory note Note interest rate Note maturity date Note default rate Note is secured by pledge shares of common stock Post-reverse split shares Accrued interest expense Pledging of shares Payments from investors Number of common stock shares issued for debt and salary payable settlement Number of common stock value issued for debt and salary payable settlement Stock issued during period, cash, shares Share issued price per share Stock issued during period cash Common stock subscription received Common stock subscription receivable Stock issued during period Warrant to purchase shares of common stock Exercise price of warrants Warrant term Stock issued for services Stock issued for services, value Fair value of consulting agreement Compensation realized for consulting service Agreement term Common stock price per share Stock option plan term Statutory Reserves Details Narrative Statutory reserves description Income tax statutory surplus percentage Statutory Reserves - Schedule Of Statutory Reserve Activity Details Balance beginning Addition to statutory reserve Balance ending Effective income tax rate Income tax provision Operating loss carry forwards Unrecognized tax benefits Interest or penalties Provision for interest and penalties Pre-tax income (loss) U.S. federal corporate income tax rate Income tax computed at U.S. federal corporate income tax rate Rate differential for PRC earnings Change of valuation allowance Non-deductible expenses Effective tax expense Net operating losses carried forward Less: Valuation allowance Net deferred tax assets Acquisition of purchase price Payment of purchase agreement Related party transaction, amounts of transaction Description of related party transaction Payments for Rent Lease term 2017 2018 2019 Thereafter Foreign currency translation Discontinued operation net gain Monthly lease payment Subscription receivable Shares issued during period restricted shares Shares issued price per share Shares issued during period restricted, value Shares issued during period, shares Information by each relevant line item on the financial statements. CAAS IARRP and IAED Institutes [Member] Carrying amount as of the balance sheet date of obligations due all non trade related parties. For classified balance sheets, represents the current portion of such liabilities (due within one year or within the normal operating cycle if longer). Carrying amount as of the balance sheet date of obligations due all trade related parties. For classified balance sheets, represents the current portion of such liabilities (due within one year or within the normal operating cycle if longer). Fair value of warrants and options [Policy Text Block] Firs Trust Group Inc [Member] Impairment On Long Lived Assets Property Plant and Equipment. Investlink (China) Limited [Member] Jimmy Zhou [Member] Kiwa Bio-Tech Products (Shandong) Co., Ltd. [Member] Refers to legal entity. Information about non trade transaction. Note Payable [Text Block] 6% Notes [Member] Penalty expenses. Penalty Payable Current. Percentage of property plant and equipment held as collateral to secure. Percentage of secured convertible notes issued. Amount of provision for penalty charged to the earnings during the period which is adjusted in calculating cash flows from operating activities. Reverse Split [Policy Text Block] Schedule of Estimated Useful Lives of Assets [Table Text Block] Refers to legal entity. Shandong Province China [Member]. Information about trade transaction. Two Institutes In China [Member] Unrelated Individual [Member] Unsecured Loans Payable Line Items. Unsecured Loans Payable Table. Reflects the disclosure of unsecured loans payable by the entity. Ms. Wang [Member] Zoucheng Municipal Government [Member]. Zoucheng Science Technology Bureau [Member]. Refers to legal entity. Advance to suppliers. Increase decrease in advance to supplier. Construction Costs Payable [Text Block] Related Parties [Policy Text Block] Cash Flows Reporting [Policy Text Block] Items In The Statements of Comprehensive Loss [Member] Kiwa Baiao Bio-Tech (Beijing) Co., Ltd [Member] Kiwa Baiao Bio-Tech (Shenzhen) Co., Ltd [Member] Office Lease Agreement [Member] Junwei Zheng [Member] Equity Transfer Agreement [Member] Dian Shi Cheng Jing (Beijing) Technology Co. (“Transferee”) [Member] Lease Term. Issuance of common stock for debts settlement. Investment term. First Quarter Of 2017 [Member] Furniture [Member] Leasehold Improvement [Member] Acquisition Agreement [Member] Government fees. Agreement term. Mr. Li And Ms. Wang [Member] Common stock subscription received. Apartment Lease [Member] Beijing Office [Member] Beijing Apartment [Member] Shenzhen Office [Member] 2004 Stock Incentive Plan [Member] Private Offering [Member] Accredited Investor [Member] Warrant term. Consulting Fee Schedule of Other Receivable [Table Text Block] Advance to Employees [Member] Computer Software [Member] Equity interest transfer, description. Ms. Wang [Member] Mr. Geng Liu [Member] Convertible Note Agreement [Member] 15% Convertible Notes [Member] RMB [Member] Two Unrelated Potential Investors [Member] Mr. Junwei Zheng [Member] Consulting Agreement [Member] Mr. Yuan Wang [Member] Board of Directors [Member] Convertible Loan Agreement [Member] Fair value of consulting agreement. Weifang Deluke [Member] Weifang Druek Fertilizer Co.,Ltd. [Member] Deposit for long term Investment. Research and development expense payable. Loan payable. Prepaid Expense [Text Block] Statutory Reserves [Text Block] Schedule of Statutory Reserve Activity [Table Text Block] Advance to Suppliers [Text Block] Schedule of Prepaid Expense [Table Text Block] Gerui [Member] Prepaid government filing expense. Prepaid packaging expense. Prepayment for purchasing furnitures. Others [Member] Yantai Peng Hao New Materials Technology Co. Ltd [Member] Equity Purchase Agreement [Member] Geng Liu [Member] FirsTrust [Member] Pledging of shares. Investline (China) Limited [Member] 6% Secured Convertible Note [Member] Six Institutional Investors [Member] Nite Capital LP [Member] Payment Acquire debt. 6% Convertible Note [Member] Accumulated interest. Accumulated penalty. Financing Projects [Member] Technical Support [Member] Ten Employees [Member] Consultant [Member] Statutory reserves description. Income tax statutory surplus percentage. Addition to statutory reserve. California State Franchise Tax [Member] First Payment [Member] Second Payment [Member] Final Payment [Member] Kiwa Baiao Bio-Tech Product Group [Member] Payment of purchase agreement. USA Office [Member] Quanzhen Shen [Member] Common Stock Purchase Agreement [Member] Yuan Wang [Member] Due from customer-Kangtan Gerui [Member] Common stock price per share. RMBMember Computer Software, Intangible Asset [Member] Assets, Current Assets, Noncurrent Assets Liabilities, Current Common Stock, Share Subscribed but Unissued, Subscriptions Receivable Stockholders' Equity Attributable to Parent Liabilities and Equity Cost of Goods Sold Gross Profit Operating Expenses Operating Income (Loss) License Costs PenaltyExpenseOther Interest Expense, Other Nonoperating Income (Expense) Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest Income (Loss) from Continuing Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax Comprehensive Income (Loss), Net of Tax, Attributable to Parent Income (Loss) from Discontinued Operations and Disposal of Discontinued Operations, Net of Tax, Per Basic Share Income (Loss) from Continuing Operations, Per Diluted Share Earnings Per Share, Diluted ProvisionForPenaltyPayable Debt Instrument, Increase, Accrued Interest ConsultingFee Increase (Decrease) in Accounts Receivable Increase (Decrease) in Other Receivables IncreaseDecreaseInAdvanceToSupplier Increase (Decrease) in Prepaid Rent Increase (Decrease) in Prepaid Expense Increase (Decrease) in Accounts Payable Increase (Decrease) in Accrued Liabilities Increase (Decrease) in Accrued Salaries Increase (Decrease) in Income Taxes Payable Increase (Decrease) in Due to Related Parties, Current Net Cash Provided by (Used in) Operating Activities Payments to Acquire Intangible Assets Payments to Acquire Investments Payments to Acquire Property, Plant, and Equipment Net Cash Provided by (Used in) Investing Activities Net Cash Provided by (Used in) Financing Activities, Continuing Operations Investment [Text Block] ConstructionCostsPayableTextBlock Property, Plant and Equipment, Policy [Policy Text Block] Goodwill and Intangible Assets, Policy [Policy Text Block] Commitments and Contingencies, Policy [Policy Text Block] Subsequent Events, Policy [Policy Text Block] Accounts Receivable, Net [Default Label] Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment ImpairmentOnlongLivedAssetsPropertyPlantAndEquipment Construction Payable Statutory Accounting Practices, Statutory to GAAP, Amount of Reconciling Item Deferred Tax Assets, Valuation Allowance Deferred Tax Assets, Net of Valuation Allowance EX-101.PRE 12 kwbt-20170630_pre.xml XBRL PRESENTATION FILE XML 13 R1.htm IDEA: XBRL DOCUMENT v3.7.0.1
Document and Entity Information - shares
6 Months Ended
Jun. 30, 2017
Aug. 14, 2017
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 Jun. 30, 2017  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   10,459,217
Trading Symbol KWBT  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2017  
XML 14 R2.htm IDEA: XBRL DOCUMENT v3.7.0.1
Condensed Consolidated Balance Sheets - USD ($)
Jun. 30, 2017
Dec. 31, 2016
Current assets    
Cash and cash equivalents $ 71,554 $ 13,469
Accounts receivable, net 9,425,359 1,122,754
Prepaid expenses 66,769 92,504
Other receivable 1,471,291 1,561,331
Rent Deposit-current 39,301
Advance to suppliers 1,255,218 1,805,044
Total current assets 12,329,492 4,595,102
OTHER ASSETS    
Property, plant and equipment, net 43,312 59,778
Rent Deposit-non current 33,907 34,519
Deposit for Long-Term Investment 147,423
Goodwill and Intangible Assets 35,114 34,112
Total non-current assets 259,756 128,409
Total assets 12,589,248 4,723,511
Current liabilities    
Accounts payable 4,697,764 1,318,802
Accrued expenses 17,183 35,715
Advances from customers 12,883
Construction costs payable 255,539
Due to related parties - trade 1,122,754
R&D expense payable 233,598 160,461
Due to related parties - non-trade 83,798 100,798
Convertible notes payable 1,106,205 150,250
Notes payable 360,000 360,000
Unsecured loans payable 1,655,343
Salary payable 1,225,869 1,688,353
Taxes payable 616,908 919,255
Penalty payable 523,140 482,327
Interest payable 1,124,638 1,042,661
Other payables 865,793 1,019,583
Total current liabilities 10,854,896 10,324,724
SHAREHOLDER'S EQUITY (DEFICIENCY)    
Preferred stock - $0.001 par value, Authorized 20,000,000 shares. Issued and outstanding 500,000 and 500,000 shares at June 30, 2017 and December 31, 2016, respectively. 500 500
Common stock - $0.001 per value. Authorized 100,000,000 shares. Issued and outstanding $10,028,219 and 8,728,981 shares at June 30, 2017 and December 31, 2016, respectively 10,028 8,729
Additional paid-in capital 15,741,427 13,789,990
Statutory Reserve 307,350 127,884
Accumulated deficit (14,343,604) (19,489,400)
Accumulated other comprehensive gain (loss) 18,651 (38,916)
Total stockholders' equity (deficiency) 1,734,352 (5,601,213)
Total liabilities and shareholder's equity $ 12,589,248 $ 4,723,511
XML 15 R3.htm IDEA: XBRL DOCUMENT v3.7.0.1
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Jun. 30, 2017
Dec. 31, 2016
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 10,028,219 8,728,981
Common Stock, shares outstanding 10,028,219 8,728,981
XML 16 R4.htm IDEA: XBRL DOCUMENT v3.7.0.1
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Income Statement [Abstract]        
Revenue $ 5,682,108 $ 8,827,897
Cost of goods sold (3,970,915) (6,034,924)
Gross Profit 1,711,193 2,792,973
Operating expenses        
Selling expense 54,232 90,485
Research and development 36,433 74,776 72,724 151,769
General and administrative 664,019 138,786 1,095,396 225,670
Total operating expenses 754,685 213,562 1,258,606 377,439
Operating income (loss) 956,508 (213,562) 1,534,367 (377,439)
Other Income        
License revenue 443,085 710,095
Other expense        
Penalty expense (20,575) (19,223) (40,814) (38,108)
Interest expense (52,346) (28,325) (83,430) (56,443)
Total other expense (72,921) (47,548) (124,244) (94,551)
Income from continuing operations before income taxes 883,587 181,975 1,410,123 238,105
Income taxes (379,973) (599,022)
Income from continuing operations 503,614 181,975 811,101 238,105
Discontinued operations        
Gain from discontinued operations, net of taxes 4,513,363 4,514,161
Net Income 5,016,977 181,975 5,325,262 238,105
Other comprehensive income        
Foreign currency translation adjustment 89,910 129,199 57,567 94,105
Total comprehensive income $ 5,106,887 $ 311,174 $ 5,382,830 $ 332,210
Earnings per share – Basis:        
Income from continuing operations $ 0.05 $ 0.07 $ 0.09 $ 0.06
Discontinued operations 0.46 0.47
Net Income 0.51 0.07 0.56 0.06
Earnings per share – Diluted:        
Income from continuing operations 0.05 0.05 0.08 0.04
Discontinues operations 0.40 0.41
Net Income $ 0.45 $ 0.05 $ 0.49 $ 0.04
Weighted average number of common shares outstanding - basic 9,865,031 2,617,584 9,564,506 3,766,705
Weighted average number of common shares outstanding - diluted 11,360,700 3,550,696 11,033,303 5,623,035
XML 17 R5.htm IDEA: XBRL DOCUMENT v3.7.0.1
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Cash flows from operating activities:    
Net income $ 5,325,262 $ 238,105
Adjustments to reconcile net income to net cash used in operating activities:    
Depreciation 17,787 3,073
Amortization 58
Provision for penalty payable 40,813 38,108
Accrued interest on convertible notes 83,430 56,443
Employee benefits 102,743
Consulting fee 372,465
Changes in operating assets and liabilities:    
Accounts receivable (8,164,649) (54,940)
Other receivables 126,080 (1,210,111)
Advance to supplier 585,523
Rent & Utility Deposit (37,412)
Prepaid expenses 26,626
Accounts payable 3,302,256 49,999
Advance from customers (13,018)
Accrued expenses (19,089)
Salary payable (468,631) 78,080
Taxes payable (320,211) 29,982
Due to related parties - trade (1,061,367) 153,033
Other payable (166,874) 469,297
Loan payable (1,672,666)
Construction cost payable (258,213)
Net cash used in operating activities (2,199,087) (148,931)
Cash flows from investing activities:    
Purchase of intangible assets (1,047)
Investment in subsidiary (145,449)
Purchase of property plant and equipment (1,286) (78,775)
Net cash used by investing activities (147,782) (78,775)
Cash flows from financing activities:    
Proceeds from related parties, net of payments to related parties 17,000 40,500
Proceeds from sales of common stock 1,481,508 176,000
Proceeds from convertible note 955,955
Net cash provided by financing activities 2,454,463 216,500
Effect of exchange rate change (49,509) 22,852
Cash and cash equivalents:    
Net increase 58,085 11,646
Balance at beginning of period 13,469 721
Balance at end of period 71,554 12,367
Non-cash financing activities:    
Issuance of common stock for debts settlement 3,141,000
Issuance of common stock for consulting service 179,897
Supplemental Disclosures of Cash flow Information:    
Cash paid for interest
Cash paid for income taxes $ 411,846
XML 18 R6.htm IDEA: XBRL DOCUMENT v3.7.0.1
Description of Business and Organization
6 Months Ended
Jun. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Description of Business and Organization

1. Description of Business and Organization

 

Organization

 

Kiwa Bio-Tech Products Group Corporation (“the Company”) is the result of a share exchange transaction accomplished on March 12, 2004 between the 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. The share exchange resulted in a change of control of Tintic, with former Kiwa BVI stockholders owning approximately 89% of Tintic on a fully diluted basis and Kiwa BVI surviving as a wholly-owned subsidiary of Tintic. Subsequent to the share exchange transaction, Tintic changed its name to Kiwa Bio-Tech Products Group Corporation. On July 21, 2004, the Company completed its reincorporation in the State of Delaware. On March 8, 2017, we completed our reincorporation in the State of Nevada.

 

The Company operates through a series of subsidiaries in the Peoples Republic of China as detailed in the following Organizational Chart. The Company had previously operated its business through its subsidiaries Kiwa Bio-Tech Products (Shandong) Co., Ltd. (“Kiwa Shandong”) and Tianjin Kiwa Feed Co., Ltd. (“Kiwa Tianjin “). Kiwa Tianjin has been dissolved since July 11, 2012. On February 11, 2017, the Company entered an Equity Transfer Agreement with Dian Shi Cheng Jing (Beijing) Technology Co. (“Transferee”) to transfer all of shareholders’ right, title and interest in Kiwa Shandong to the Transferee for USD $1.00. On April 12, 2017, the government processing of transfer has been completed.

 

 

 

Business

 

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

XML 19 R7.htm IDEA: XBRL DOCUMENT v3.7.0.1
Summaries of Significant Accounting Policies
6 Months Ended
Jun. 30, 2017
Accounting Policies [Abstract]  
Summaries of Significant Accounting Policies

2. Summaries of Significant Accounting Policies

 

Principle of Consolidation

 

These consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries, Kiwa BVI, Hong Kong Baina Group Holding Company, Kiwa Baiao Bio-Tech (Beijing) Co., Ltd, Kiwa Baiao Bio-Tech (Shandong) Co., Ltd (“Kiwa Shandong”), Kiwa Bio-Tech Products (Shenzhen) Co., Ltd and Kiwa Bio-Tech Products (Hebei) Co., Ltd. All significant inter-company balances or transactions are eliminated on consolidation.

 

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 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 valuation of securities issued, deferred tax assets and related valuation allowance.

 

Certain of our estimates, including evaluating the collectability of accounts receivable and the fair market value of long-lived assets, could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could have an effect on our estimates that could cause actual results to differ from our estimates. We re-evaluate all of our accounting estimates annually based on these conditions and record adjustments when necessary.

 

Cash and Cash Equivalents

 

Cash and cash equivalents consist of all cash balances and highly liquid investments with an original maturity of three months or less. Because of the short maturity of these investments, the carring amounts approximate their fair value. Restricted cash is excluded from cash and cash equivalents.

 

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.

 

Allowance for doubtful accounts

 

The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company’s estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change. There was no allowance for doubtful accounts at June 30, 2017 and December 31, 2016.

 

Property, plant and equipment

 

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Gains or losses on disposals are reflected as gain or loss in the year of disposal. The cost of improvements that extend the life of property, plant and equipment are capitalized. These capitalized costs may include structural improvements, equipment and fixtures. All ordinary repair and maintenance costs are expensed as incurred. Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets as follows:

 

    Useful Life  
    (In years)  
Buildings     30 - 35  
Machinery and equipment     5 - 10  
Automobiles     8  
Office equipment     2 - 5  
Computer software     3  

 

 

Impairment of Long-Lived Assets

 

The Company’s long-lived assets consist of property, equipment and intangible assets. The Company evaluates its 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. 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, the Company makes assumptions regarding the estimated future cash flows and other factors to determine the fair value of the respective assets.

 

Goodwill and Other Intangibles

 

In accordance with Accounting Standards Update (ASU) No. 2014-02, management evaluates goodwill on an annual basis in the fourth quarter of more frequently if management believes indicators of impairment exist. Such indicators could, but are not limited to (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, or (3) an adverse action or assessment by a regulator. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If management concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, management conducts a two-step quantitative goodwill impairment test. The first step of the impairment test involves comparing the fair value of the applicable reporting unit with its carrying value. The Company estimates the fair value of its reporting units using a combination of the income, or discounted cash flows, approach and the market approach, with utilizes comparable companies’ data. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, management performs the second step of the goodwill impairment test. The second step of the goodwill impairment test involves comparing the implied fair value of the affected reporting unit’s goodwill with the carrying value of that goodwill. The amount, by which the carrying value of the goodwill exceeds its implied fair value, if any, is recognized as an impairment loss. The Company’s evaluation of goodwill completed during the three and six months ended June 30, 2017 resulted in no impairment losses.

 

Fair Value of Financial Instruments

 

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820- 10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value with U.S. GAAP, and expands disclosures about fair value measurements.

 

To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

  Level 1: quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
     
  Level 2: pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
     
  Level 3: Pricing inputs that are generally observable inputs and not corroborated by market data.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

  

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

 

The carrying amount of the Company’s financial assets and liabilities, such as cash and cash equivalent, prepaid expenses, accounts payable and accrued expenses, approximate their fair value because of the short maturity of those instruments.

 

Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

 

It is not however practical to determine the fair value of advances from stockholders, if any, due to their related party nature.

 

Revenue Recognition

 

The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

 

The Company derives its revenues from sales contracts with its customers with revenues being recognized upon delivery of products. Persuasive evidence of an arrangement is demonstrated via invoice; and the sales price to the customer is fixed upon acceptance of the purchase order and there is no separate sales rebate, discount, or volume incentive.

 

Advertising Costs

 

The Company charges all advertising costs to expense as incurred. The total amounts of advertising costs charged to selling, general and administrative expense were $58,419 and nil for the six months ended June 30, 2017 and 2016, and were $935 and nil for the three months ended June 30, 2017 and 2016, respectively.

 

Research and Development Costs

 

Research and development costs are charged to expense as incurred. During the six months ended June 30, 2017 and 2016, research and development costs were $72,724 and $151,769, respectively. During the three months ended June 30, 2017 and 2016, research and development costs were $36,433 and $74,776, respectively.

 

Shipping and Handling Costs

 

Substantially all costs of shipping and handling of products to customers are included in selling expense. Shipping and handling costs for the three and six months ended June 30, 2017 and 2016 were nil, respectively.

 

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.

  

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.

 

Stock Based Compensation

 

The Company accounts for share-based compensation awards to employees in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”, which requires that share-based payment transactions with employees be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period.

 

The Company accounts for share-based compensation awards to non-employees in accordance with FASB ASC Topic 718 and FASB ASC Subtopic 505-50, “Equity-Based Payments to Non-employees”. Under FASB ASC Topic 718 and FASB ASC Subtopic 505-50, stock compensation granted to non-employees has been determined as the fair value of the consideration received or the fair value of equity instrument issued, whichever is more reliably measured and is recognized as an expense as the goods or services are received.

 

Foreign Currency Translation and Other Comprehensive Income

 

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 functional 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 comprehensive loss and the statement of cash flow are 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.

 

Other comprehensive income for the six months ended June 30, 2017 and 2016 represented foreign currency translation adjustments and were included in the consolidated statements of comprehensive loss.

 

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

 

    As of
June 30, 2017
    As of
December 31, 2016
 
Balance sheet items, except for equity accounts     6.7832       6.9472  
                 

 

    Six months ended June 30  
    2017     2016  
Items in the statements of comprehensive loss     6.8753       6.5345  
                 

 

Earnings Per Common Share

 

Net income per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period.

 

Diluted net income per common share is computed by dividing net income by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.

  

Related Parties

 

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20 the related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly Influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

 

The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the consolidated financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

 

Commitments and Contingencies

 

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

 

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

 

Cash Flows Reporting

 

The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.

  

Subsequent Events

 

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.

 

Recent Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. ASU 2014-09 also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. Based on the FASB’s Exposure Draft Update issued on April 29, 2015, and approved in July 2015, Revenue from Contracts With Customers (Topic 606): Deferral of the Effective Date, ASU 2014-09 is now effective for reporting periods beginning after December 15, 2017, with early adoption permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The adoption of ASU 2014-09 is not expected to have any impact on the Company’s financial statement presentation or disclosures.

 

In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842). ASU 2016-02 requires a lessee to record a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, on the balance sheet for all leases with terms longer than 12 months, as well as the disclosure of key information about leasing arrangements. ASU 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term. ASU 2016-02 requires classification of all cash payments within operating activities in the statement of cash flows. Disclosures are required to provide the amount, timing and uncertainty of cash flows arising from leases. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. ASU 2016-02 is effective for fiscal years beginning after December IS, 2018, including interim periods within those fiscal years. Early application is permitted. The Company has not yet evaluated the impact of the adoption of ASU 2016-02 on the Company’s financial statement presentation or disclosures.

 

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” The amendments in this guidance are clarifying the definition of a business to assist entities when determining whether an integrated set of assets and activities meets the definition of a business. The update provides that when substantially all the fair value of the assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this new guidance is not expected to have a material impact on our consolidated financial statements.

 

In January 2017, the FASB issued ASU 2017-04—Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendments in this guidance to eliminate the requirement to calculate the implied fair value of goodwill to measure goodwill impairment charge (Step 2). As a result, an impairment charge will equal the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the amount of goodwill allocated to the reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendment should be applied on a prospective basis. The guidance is effective for goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for goodwill impairment tests performed after January 1, 2017. The impact of this guidance for the Company will depend on the outcomes of future goodwill impairment tests.

  

In May 2017, the FASB issued Accounting Standards Update No. 2017-09 (ASU 2017-09), Compensation — Stock Compensation (Topic 718) Scope of Modification Accounting. The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The adoption of ASU 2017-09 which will become effective for annual periods beginning after December 15, 2017 and for interim periods within those annual periods, is not expected to have any impact on the Company’s financial statement presentation or disclosures.

 

Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures.

XML 20 R8.htm IDEA: XBRL DOCUMENT v3.7.0.1
Accounts Receivable, Net
6 Months Ended
Jun. 30, 2017
Accounts Receivable, Net [Abstract]  
Accounts Receivable, Net

3. Accounts Receivable, net

 

Accounts receivable consisted of the following:

 

    June 30, 2017     December 31, 2016  
Accounts receivable   $ 9,425,359     $ 1,122,754  
Less: Allowance for doubtful debts     -       -  
Accounts receivable, net   $ 9,425,359     $ 1,122,754  

 

As of June 30, 2017 and December 31, 2016, the management has determined that no allowance for doubtful debts was necessary.

XML 21 R9.htm IDEA: XBRL DOCUMENT v3.7.0.1
Prepaid Expense
6 Months Ended
Jun. 30, 2017
Notes to Financial Statements  
Prepaid Expense

4. Prepaid Expense

 

Prepaid expenses consisted of the following:

 

    June 30, 2017     December 31, 2016  
Prepaid office rent   $ 28,021     $ 12,504  
Prepaid government filing expense     33,588       5,000  
Prepaid packaging expense     -       75,000  
Prepayment for purchasing furniture     5,160       -  
    $ 66,769     $ 92,504  

XML 22 R10.htm IDEA: XBRL DOCUMENT v3.7.0.1
Other Receivable
6 Months Ended
Jun. 30, 2017
Receivables [Abstract]  
Other Receivable

5. Other Receivable

 

Other receivable consisted of the following:

 

    June 30, 2017     December 31, 2016  
Due from customer-Kangtan Gerui (Beijing) Bio-Tech Co., Ltd.     1,338,111       1,522,435  
Advance to employees     105,171       31,700  
Others     28,009       7,196  
Less: Allowance for doubtful debts     -       -  
Other receivable, net   $ 1,471,291     $ 1,561,331  

 

Due from customer-Kangtan Gerui (Beijing) Bio-Tech Co.,Ltd. represents the remaining balance of advancement for production of fertilizers during the first through the third quarter of 2016. In September 2016, the Company obtained a fertilizer sales permit from Chinese government and began to sell the products by their own and gradually decrease the business cooperation with Gerui.

 

For the six months ended June 30, 2017, the Company has collected $184,324 advancement from Gerui and management has determined that no allowance for doubtful debts was necessary.

XML 23 R11.htm IDEA: XBRL DOCUMENT v3.7.0.1
Advance to Suppliers
6 Months Ended
Jun. 30, 2017
Notes to Financial Statements  
Advance to Suppliers

6. Advance to suppliers

 

Since currently the Company does not have manufacturing facility, it has contracted with several third parties to produce fertilizer products. Pursuant to the agreements entered by the Company and those third party companies, the Company was required to make partially prepayments in advance of purchase or completion of productions. As of June 30, 2017 and December 31, 2016, such advance to suppliers was $ 1,255,218 and $1,805,044, respectively.

XML 24 R12.htm IDEA: XBRL DOCUMENT v3.7.0.1
Property, Plant and Equipment
6 Months Ended
Jun. 30, 2017
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment

7. Property, Plant and Equipment

 

Property, plant and equipment, net consisted of the following:

 

    June 30, 2017     December 31, 2016  
Office equipment   $ 942     $ 942  
Furniture     10,260       8,276  
Leasehold improvement     72,174       70,871  
Total Property, plant and equipment   $ 83,376     $ 80,089  
Less: accumulated depreciation     (40,064 )     (20,311 )
Less: impairment of long-lived assets     -       -  
Property, plant and equipment - net   $ 43,312     $ 59,778  

 

Depreciation expense was $17,787 and $ 3,073 for the six months ended June 30, 2017 and 2016, and $8,318 and $3,073 for the three months ended June 30, 2017 and 2016, respectively.

 

Impairment of long-lived assets was nil for the three and six months ended June 30, 2017 and 2016, respectively.

 

All of our property, plant and equipment have been held as collateral to secure the 6% Notes (see Note 14).

XML 25 R13.htm IDEA: XBRL DOCUMENT v3.7.0.1
Deposit for Long-Term Investment
6 Months Ended
Jun. 30, 2017
Investments Schedule [Abstract]  
Deposit for Long-Term Investment

8. Deposit for long-term investment

 

On June 8, 2017, the Company entered an equity purchase agreement with Yantai Peng Hao New Materials Technology Co. Ltd., which relates to the acquisition of a new factory for purchase price of about $2.2 million (approximately RMB 15 million). The factory to be acquired by the Company will be completed in accordance with the Company’s construction plan to facilitate the production design of combining of microbial fermentation and terminal fertilizer products.

 

Pursuant to the payment terms of purchase agreement, the Company made the first payment of $147,423 (approximately RMB 1,000,000) to Yantai Peng Hao New Materials Technology Co. Ltd. on June 30, 2017.

XML 26 R14.htm IDEA: XBRL DOCUMENT v3.7.0.1
Goodwill and Other Intangibles
6 Months Ended
Jun. 30, 2017
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangibles

9. Goodwill and other intangibles

 

On November 30, 2015, Kiwa Bio-tech Products Group Ltd in BVI (“Kiwa BVI”) entered an acquisition agreement with shareholders of Caber Holdings Ltd. (“Acquiree”) in Hong Kong to acquire 100 percent entity interest of the acquiree, including a wholly owned subsidiary, Oriental Baina Co., Ltd. in Beijing for US$30,000. The acquisition was completed in January, 2016. On the acquisition date, there was no any asset or liability acquired, and thus no fair value was allocated to asset and liability. Including legal fee and government fees, the total payment of approximately $34,112 ($30,000 plus legal fee and government fees totaled $4,112) was recorded as goodwill. The fair value of the goodwill is tested prior to June 30, 2017 and management determined there is no impairment to the goodwill as of June 30, 2017.

 

The Company purchased the computer software in May, 2017, which cost was $ 1,061. Amortization expense for the three and six months ended June 30, 2017 was $59 and nil.

XML 27 R15.htm IDEA: XBRL DOCUMENT v3.7.0.1
Construction Costs Payable
6 Months Ended
Jun. 30, 2017
Construction Costs Payable  
Construction Costs Payable

10. Construction Costs Payable

 

Construction costs payable mainly represents the payables which had been carried on Kiwa Shandong’s book for a length of years. As of December 31, 2016, construction costs payable was $255,539.

 

On February 11, 2017, the Company entered an Equity Transfer Agreement with Dian Shi Cheng Jing (Beijing) Technology Co. (“Transferee”) to transfer all of shareholders’ right, title and interest, as well as all the obligations in Kiwa Shandong to the Transferee for USD $1.00. On April 12, 2017, the transaction was completed and the balance was removed.

XML 28 R16.htm IDEA: XBRL DOCUMENT v3.7.0.1
Related Party Transactions
6 Months Ended
Jun. 30, 2017
Related Party Transactions [Abstract]  
Related Party Transactions

11. Related Party Transactions

 

(1). Amounts due to related parties

 

Amounts due to related parties consisted of the following as of June 30, 2017 and December 31, 2016:

 

Item   Nature   Notes   June 30, 2017     December 31, 2016  
Kiwa-CAU R&D Center   Trade   (b)     -       1,122,754  
CAAS IARRP and IAED Institutes   Trade   (c)     -       160,461  
Total           $ -     $ 1,283,215  

 

(a) Yvonne Wang

 

Ms. Wang is a board member and Acting President, Acting Chief Executive Officer and Acting Chief Financial Officer. From time to time, Ms. Wang paid various expenses on behalf of the Company. As of June 30, 2017 and December 31, 2016, the amount due to Ms. Wang was $83,798 and $100,798, respectively.

 

(b) In November 2006, Kiwa and China Agricultural University (the “CAU”) agreed to jointly establish a new research and development center, named Kiwa-CAU R&D Center. Pursuant to the agreement, Kiwa committed to fund RMB 1 million (approximately $160,000) annually to the research center. Prof. Qi Wang, a director of the Company was also the director of Kiwa-CAU R&D Center. Although the agreement was expired on June 30, 2016, the payable balance remains on Kiwa Shandong’s book until April 12, 2017 when the transaction of transfer Kiwa Shandone’s all assets and liabilities to Dian ShiCheng Jing (Beijing) was completed.

 

The Company recorded nil and $36,363 research and development expenses related to this Kiwa-CAU R&D Center for the six months ended June 30, 2017 and 2016, respectively.

 

(c) 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”). The term of the Agreement was three years ends on November 4, 2017.

 

Pursuant to the agreement, Kiwa agree to invest RMB 1 million (approximately $160,000) each year to the Spatial Agriculture Planning Method & Applications Innovation Team that belongs to the Institutes. Prof. Yong Chang Wu, the authorized representative of IARRP, CAAS, was also one of the Company's directors until he resigned on March 13, 2017. Since Prof. Yong Chang Wu is no longer a board member, the balance of $233,598 at June 30, 2017 has been reclassified from part due to related party – trade to R&D expenses payable.

 

The Company recorded $36,291and $38,764 research and development expenses related to the institutes, for the six months ended June 30, 2017 and 2016, respectively. 

 

(2). Convertible Note Payables

 

(a). Geng Liu

 

Geng Liu became a shareholder of the Company and has held 500,000 shares of common stock since September, 2016

 

On January 17, 2017, the Company entered into a Convertible Loan Agreement with Geng Liu wherein the lender agreed to advance of approximately US $442,269 (RMB3,000,000) under a Convertible Promissory Note with a term of 12 months bearing interest at a rate of Fifteen Percent (15%) per annum. The Loan is convertible into Common Stock at any time at the option of the Lender at a conversion price of $ 0.90 per share within the term.

 

As of June 30, 2017, the Company received proceeds about $147,423 (RMB 1,000,000) from Geng Liu and recorded interest expense related to this note $5,442 and $8,472 for the three and six months ended June 30, 2017, respectively.

 

(b). Junwei Zheng

 

Junwei Zheng became a shareholder of the Company and has held 920,000 shares of common stock since March, 2017

 

On May 9, 2017, Company entered into a Convertible Loan Agreement with Junwei Zheng wherein the lender agreed to advance of approximately US$ 4.5 million (RMB 30,000,000) under a Convertible Promissory Note with a term of 24 months bearing interest at a rate of Fifteen Percent (15%) per annum. The Loan is convertible into Common Stock at any time at the option of the Lender at a conversion price of $3.50 per share within the term

 

As of June 30, 2017, the Company has received proceeds of about $810,827 (RMB 5,500,000) from Junwei Zheng and the interest expense related to this note was $17,328 for the three and six months ended June 30, 2017.

XML 29 R17.htm IDEA: XBRL DOCUMENT v3.7.0.1
Unsecured Loans Payable
6 Months Ended
Jun. 30, 2017
Debt Disclosure [Abstract]  
Unsecured Loans Payable

12. Unsecured Loans Payable

 

Unsecured loan payable mainly represents the payables of the subsidiary company - Kiwa Shandong, which hadn’t achieved active operation for a lengh of years. As of December 31, 2016, construction costs payable was $1,655,343.

 

On February 11, 2017, the Company entered an Equity Transfer Agreement with Dian Shi Cheng Jing (Beijing) Technology Co. (“Transferee”) to transfer all of shareholders’ right, title and interest, as well as all the obligations in Kiwa Shandong to the Transferee for USD $1.00. On April 12, 2017, the transaction was completed.

XML 30 R18.htm IDEA: XBRL DOCUMENT v3.7.0.1
Convertible Notes Payable
6 Months Ended
Jun. 30, 2017
Debt Disclosure [Abstract]  
Convertible Notes Payable

13. Convertible Notes Payable

 

Convertible notes payable consists $ 150,250 of 6% secured convertible notes issued to FirsTrust Group Inc. on June 29, 2006 , $145,127 of 15% convertible note issued to Mr. Geng Liu on January 17, 2017 and $810,827 of 15% convertible note issued to Mr. Junwei Zheng on May 9, 2017.

 

6% secured convertible notes

 

In 2006, we completed a $2.45 million 6% Secured Convertible Note (“6% Convertible Note”) transaction with six institutional investors, including Nite Capital LP, which purchased a total of $300,000 of the Note in three tranches ($105,000, $90,000, $105,000 respectively). The 6% Convertible Note allows the note holder to convert into shares of our common stock. We filed a registration statement under the Securities Act covering the resale of the shares issued upon conversion of the 6% Notes in 2006 and the registration statement was declared effective on October 13, 2006.

 

On March 18, 2008, FirsTrust Group, Inc. purchased three remaining 6% Convertible Notes, totaling $168,000 ($59,100, $50,400 and $59,100 respectively), from Nite Capital for a cash payment of $100,000. As of June 30, 2017, there is no other outstanding 6% Note than those owned by FirsTrust Group. The total outstanding Convertible Note payable to FirsTrust is $150,250, and the total accumulated interest and penalty is $194,537 and $523,141, respectively.

 

15% convertible notes- Geng Liu

 

On January 17, 2017, the Company entered a Convertible Note Agreement with an individual person with principal of RMB 3 million or approximately $435,380. The note bears interest at 15% per annum and will mature on January 16, 2018. Before the maturity date, the Note holder has an option to convert partial or all of the outstanding principal and accrued interest to the Company’s common shares with a conversion price of $0.90 per share. As of June 30, 2017, the Company has received partial principal totaled $145,127 (RMB 1 million). The Company accrued $5,442 and $8,472 interest expense on this convertible notes for the three and six months ended June 30, 2017, respectively.

 

15% convertible notes- Junwei Zheng

 

On May 9, 2017, the Company entered a Convertible Note Agreement with an individual person with principal of RMB 30 million or approximately $4.5 million. The note bears interest at 15% per annum and will mature on May 8, 2019. Before the maturity date, the Note holder has an option to convert partial or all of the outstanding principal and accrued interest to the Company’s common shares with a conversion price of $3.5 per share. As of June 30, 2017, the Company has received partial principal totaled $810,827 (RMB 5.5 million). The Company accrued $17,328 interest expense on this convertible notes for both of the six months and three months ended June 30, 2017.

XML 31 R19.htm IDEA: XBRL DOCUMENT v3.7.0.1
Note Payable
6 Months Ended
Jun. 30, 2017
Debt Disclosure [Abstract]  
Note Payable

14. Note Payable

 

On May 29, 2007, the Company issued a $360,000 promissory note (the “Promissory Note”) to an unrelated individual (the “Original Note holder”). 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 (the “Pledged Shares”). The Company accrued $45,000 and $45,000 interest expense on note payable for the six months ended June 30, 2017 and 2016, and $22,500 and $22,500 interest expense on note payable for the three months ended June 30, 2017 and 2016, respectively.

 

As of December 31, 2016, the Original Note holder informed us that all right, title and interests in the Promissory Note has been assigned and transferred to FirsTrust Group, Inc. (“FirsTrust”). As of June 30, 2017, all of $360,000 of Promissory Note to FirsTrust is still outstanding, and total interest of the Promissory Note is $ 904,300. We have begun preliminary discussion with FirsTrust with regards to a potential settlement of the Note, but no agreement has been reached. As of June 30, 2017, with the Company’s acknowledgement, FirsTrust has taken possession of 30,892 Pledged Share from Investline (China) Limited according to the default clause of the Promissory Note.

XML 32 R20.htm IDEA: XBRL DOCUMENT v3.7.0.1
Other Payable
6 Months Ended
Jun. 30, 2017
Other Liabilities Disclosure [Abstract]  
Other Payable

15. Other Payable

 

Other payable includes the payables to two unrelated potential investors and other liabilities. As of June 30, 2017, two potential investors have made the payments approximately $471,754 to the Company and the investment agreements have not been finalized. Other payable were $865,793 and $1,019,583 at June 30, 2017 and December 31, 2017, respectively,

XML 33 R21.htm IDEA: XBRL DOCUMENT v3.7.0.1
Stockholders' Deficiency
6 Months Ended
Jun. 30, 2017
Equity [Abstract]  
Stockholders' Deficiency

16. Stockholders’ Equity

 

In March, 2016, the Company issued 3,140,000 shares of common stock to Mr. Li and Ms. Wang for debt and salary payable settlement for an aggregate amount of $3,141,000. In addition, the Company issued 101,947 common shares to Jimmy Zhou, former CEO in August 2016, to settle payable to him for $50,974. All of issuances of common shares for settlement of debts were based the stock price on the transaction dates.

 

During the year ended December 31, 2016, the Company issued 1,650,000 common shares for cash at $0.8 per share for an aggregate subscribe price equivalent to $1,320,000, of which $759,659 has received while approximately $560,341 remaining subscribe receivable at December 31, 2016. The remaining subscribe receivable was totally received in August 3, 2017.

 

On November 15, 2016, the Company completed another private offering of common stock to an accredited investor for 125,000 shares of its common stock and warrants to purchase 300,000 shares of Company common stock at an exercise price of $3.00 per share prior to November 15, 2021. The Company may adjust the exercise price for some or all of the warrants under certain terms and conditions. We have determined the issued warrants do not meet the definition of a derivative security, and thus allocated the net proceeds of the sale of the common stock to the par value of the common stock, with the remainder to additional paid in capital.

 

During the year ended December 31, 2016, the Company issued 1,710,808 common shares to four consulting companies and three individuals as compensation for their consulting service received. The agreements have the service periods from 6 months to 36 months with a total of $1,688,300 that was determined as fair value at the time of execution of the agreement. The total services fee will be recognized based straight-line amortization method over the service term. The Company recorded $331,800 as consulting service expense for the six months ended June 30, 2017 and $254,250 approximately for the year ended December 31, 2016.

 

In February, 2017, the Company issued 1,000,000 common shares to Mr. Junwei Zheng for cash at $1.00 per share for an aggregate price to $1,000,000, all of which has been received as of June 30, 2017.

 

On February 15, 2017, the Company entered a consulting agreement with Mr. Yuan Wang to assist the Company in financing projects. The agreement has one year term with a total of $85,400 that was determined as fair value at the time of execution of the agreement. The total services fee will be recognized based straight-line amortization method over the service term. On March 3, 2017, the Company issued 70,000 common shares to Mr. Yuan Wang based on market price of $1.22 per share. The Company realized $32,025 as a compensation for Mr. Wang’s consulting service for the six months ended June 30, 2017.

 

On May 25, 2017, the Company issued 19,380 common shares to an individual to assist the Company in financing projects based on market price of $2.74 per share. The agreement has one year term with a total of $53,101 that was determined as fair value at the time of execution of the agreement. The total services fee will be recognized based straight-line amortization method over the service term. The Company recorded $5,237 as consulting service expense for the six months ended June 30, 2017.

 

On June 1, 2017, the Company issued 15,108 common shares to an individual to assist the Company in technical support based on market price of $2.78 per share. The agreement has one year term with a total of $41,396 that was determined as fair value at the time of execution of the agreement. The total services fee will be recognized based straight-line amortization method over the service term. The Company recorded $3,402 as consulting service expense for the six months ended June 30, 2017.

  

On June 13, 2017, the Company issued 96,900 common shares to Mr. Yuan Wang for cash at $3.00 per share for an aggregate price to $290,700, all of which has been received as of June 30, 2017.

 

On June 30, 2017, the Company issued 97,850 common shares to ten employees for cash at $1.95 per share for an aggregate price to $190,807, all of which has been received as of June 30, 2017. The Company determined the fair price per common stock was $3.0 per share, thus the difference of $1.05 per share between fair price per share ($3.00) and the employees purchase price per share ($1.95), totaled $102,273 was recognized as expense of employee benefits and accordingly, credited the same amount to APIC.

 

Subsequently the Company issued 98,000 shares of common stock for cash $294,000, and 88,000 shares of common stock for consulting service. Please refer to Note 22 Subsequent Events for additional information.

XML 34 R22.htm IDEA: XBRL DOCUMENT v3.7.0.1
Stock-based Compensation
6 Months Ended
Jun. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-based Compensation

17. Stock-based Compensation

 

On March 15, 2017, the Board of Directors approved a new stock option plan with ten years’ term. As of June 30, 2017, the Company has not granted any incentive compensation under this plan.

XML 35 R23.htm IDEA: XBRL DOCUMENT v3.7.0.1
Statutory Reserves
6 Months Ended
Jun. 30, 2017
Notes to Financial Statements  
Statutory Reserves

18. Statutory Reserves

 

The Company is required to make appropriations to reserve funds, comprising the statutory surplus reserve, statutory public welfare fund and discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (the “PRC GAAP”). Appropriation to the statutory surplus reserve should be at least 10% of the after tax net income determined in accordance with the PRC GAAP until the reserve is equal to 50% of the entities’ registered capital or members’ equity. In accordance with the Chinese Company Law, the Company allocated 10% of income after taxes to the statutory surplus reserve for the six months ended June 30, 2017 and the year ended December 31, 2016, statutory reserve activity is as follows:

 

Balance – January 1, 2016   $ -  
Addition to statutory reserve in 2016     127,884  
 Balance – December 31, 2016     127,884  
Addition to statutory reserve for the six months ended June 30, 2017     179,466  
Balance – June 30, 2017   $ 307,350  

XML 36 R24.htm IDEA: XBRL DOCUMENT v3.7.0.1
Income Tax
6 Months Ended
Jun. 30, 2017
Income Tax Disclosure [Abstract]  
Income Tax

19. Income Tax

 

In accordance with the current tax laws in China, Kiwa Shandong is subject to a corporate income tax rate of 25% on its taxable income. However, Kiwa Shandong has not provided for any corporate income taxes since it had no taxable income for the six months ended June 30, 2017 and 2016.

 

Kiwa Baiao Co., Ltd., is also subject to a corporation income tax rate of 25% on its taxable income. For the six months ended June 30, 2017, it recorded income tax provision for RMB 4,112,924 or approximately $598,222. For the three months ended June 30, 2017, it recorded income tax provision for RMB 2,601,847 or approximately $379,973.

 

Provision for taxes $800 to the minimum California state franchise tax. 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:

 

    Three months ended June 30,     Six months ended June 30,  
    2017     2016     2017     2016  
                         
Pre-tax income   $ 5,396,950     $ 181,975     $ 5,924,464     $ 238,105  
U.S. federal corporate income tax rate     34 %     34 %     34 %     34 %
Income tax computed at U.S. federal corporation income tax rate     1,834,963       61,872       2,014,318       80,956  
Reconciling items:                                
Rate differential for PRC earnings     (124,683 )     8,770       (202,353 )     13,668  
Change of valuation allowance     195,403       80,006       305,935       146,608  
Non-deductible expenses     (1,525,710 )     (150,648 )     (1,518,877 )     (241,232 )
Effective tax expenses   $ 379,973     $ -     $ 599,022     $ -  

 

The Company had deferred tax assets as follows:

 

    June 30, 2017     December 31, 2016  
             
Net operating losses carried forward   $ 3,458,902     $ 3,473,331  
Less: Valuation allowance     (3,458,902 )     (3,473,331 )
                 
Net deferred tax assets   $ -     $ -  

 

As of June 30, 2017 and December 31, 2016, the Company had approximately $3.4 million and $3.4 million net operating loss carryforwards available to reduce future taxable income. Net operating loss of the Company could be carried forward and taken against any taxable income for a period of not more than twenty years from the year of the initial loss pursuant to Section 172 of the Internal Revenue Code of 1986, as amended. The net operating loss of Kiwa Shandong could be carried forward for a period of not more than five years from the year of the initial loss pursuant to relevant PRC tax laws and regulations. It is more likely than not that the deferred tax assets cannot be utilized in the future because there will not be significant future earnings from the entity which generated the net operating loss. Therefore, the Company recorded a full valuation allowance on its deferred tax assets.

 

As of June 30, 2017 and December 31, 2016, the Company has no material unrecognized tax benefits which would favorably affect the effective income tax rate in future periods and does not believe that there will be any significant increases or decreases of unrecognized tax benefits within the next twelve months. No interest or penalties relating to income tax matters have been imposed on the Company during six months ended June 30, 2017 and December 31, 2016, and no provision for interest and penalties is deemed necessary as of June 30, 2017 and December 31, 2016.

 

According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or its withholding agent. The statute of limitations extends to five years under special circumstances, which are not clearly defined. In the case of a related party transaction, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion.

XML 37 R25.htm IDEA: XBRL DOCUMENT v3.7.0.1
Commitments and Contingencies
6 Months Ended
Jun. 30, 2017
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

20. Commitments and Contingencies

 

The Company has the following material contractual obligations:

 

(1) Investment in manufacturing facilities in Penglai City, Shandong Province in China

 

On June 8, 2017, the Company entered an equity purchase agreement with Yantai Peng Hao New Materials Technology Co. Ltd. (“Acquirer”), which relates to the acquisition of a new factory for purchase price of about $2.2 million (approximately RMB 15 million). The factory to be acquired by the Company will be completed in accordance with the Company’s construction plan to facilitate the production design of combining of microbial fermentation and terminal fertilizer products.

 

Pursuant to the payment terms of purchase agreement, the Company made the first payment of $147,423 (approximately RMB 1,000,000) to the Acquirer on June, 2017 and will make the second payment of RMB 10,000,000 as long as the Company obtains the land use right certificate and will make the final payment of RMB 4,000,000 after the government processing has been completed.

 

(2) Strategic cooperation with the institutes in China

 

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 and will expire on November 19, 2018.

 

(3) Distribution agreement with Kangtan Gerui Bio-Tech in China

 

On December 17, 2015, Kiwa Bio-Tech Products Group Corporation (the “Company”) entered into a distribution agreement (the “Agreement”) with Kangtan Gerui (Beijing) Bio-Tech Co., Ltd. (“Gerui”) and formally awarded Gerui a right to sell and distribute the Company’s fertilizer products in 3 major agricultural regions of China— Hainan Province, Hunan Province and Xinjiang Autonomous Region. The Company’s Research and Development department has been conducting application experiments in Hainan and Hunan Provinces since August 2015, in accordance with the market requirements. The experiment data indicates that the Company’s fertilizer products have fulfilled the requirements of reduction of content of heavy metals in soil and improve crop yield. Gerui was founded in Beijing in April 2015 and relies on the sales network of China’s Supply and Marketing Cooperatives system. Currently, the Company and Gerui do not hold any interest in each other; however, a collaboration and integration may take place in the future. The term of the Agreement is for a period of three years commencing December 17, 2015. In September 2016, Kiwa Baiao Bio-Tech (Beijing) Co., Ltd obtained a fertilizer sales permit from the Chinese government and began to sale the products directly to customers in those 3 major agricultural regions.

 

(4) Lease payments

 

(1) On April 29, 2016, Kiwa Baiao Bio-Tech (Beijing) Co., Ltd. entered an office lease agreement with two-year term. Monthly lease payment and building management fee totaled RMB 77,867 or approximately USD $11,303.

 

(2) In June 20, 2017, Kiwa Bio-Tech (Shenzhen) Co., Ltd, a newly established subsidiary entered an office lease agreement with two-year term. Monthly lease payment is RMB 115,000 or approximately of USD $16,954. And the previous lease agreement terminated automatically since the landloard is the same one.

 

(3) On May 5, 2017, Kiwa Bio-Tech Products Group Corporation entered an office lease agreement with 13 months term. Monthly lease payment totaled USD $680.

 

(4) On July 1, 2017, Kiwa Bio-Tech Products Group Corporation entered an office lease agreement with one-year term. Monthly lease payment totaled USD $1,087.

 

The future lease payments at June 30, 2017 are summarized below.

 

    Beijing Office     Shenzhen Office     USA Office     Total  
2017   $ 68,876     $ 101,722     $ 10,605     $ 181,203  
2018   $ 45,917       203,444     $ 9,925     $ 259,286  
2019   $ -     $ 101,722     $ -     $ 101,722  
Thereafter   $ -     $ -     $ -     $ -  

XML 38 R26.htm IDEA: XBRL DOCUMENT v3.7.0.1
Discontinued Operation
6 Months Ended
Jun. 30, 2017
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operation

21. Discontinued Operation

 

On February 11, 2017, the Company executed an Equity Transfer Agreement with Dian Shi Cheng Jing (Beijing) Technology Co. (“Transferee”) whereby the Company transferred all of its right, title and interest in Kiwa Bio-Tech Products (Shandong) Co., Ltd. (“Shandong”) to the Transferee for the RMB equivalent of US$1.00. The government processing of the transaction has been completed on April 12, 2017. This transaction was completed and effective on April 12, 2017. The Company recorded a net gain of approximately $4,514,161 during the six months ended June 30, 2017 and approximately $4,513,363 during the three months ended June 30, 2017 based on the discharge of the excess liabilities over the assets of the Kiwa Shandong.

XML 39 R27.htm IDEA: XBRL DOCUMENT v3.7.0.1
Subsequent Events
6 Months Ended
Jun. 30, 2017
Subsequent Events [Abstract]  
Subsequent Events

22. Subsequent Events

 

On July 1, 2017, Kiwa Bio-Tech Products Group Corporation entered an office lease agreement with two-year term. Monthly lease payment totaled USD $1,087.

 

On July 19, 2017, the Company entered into Common Stock Purchase Agreement with Junwei Zheng. Pursuant to the Agreement, the Company will issue total 245,000 shares of restricted common stock at $3.00 per share price for an aggregate amount of $735,000. As of August 14, 2017, the Company has not received the amount yet.

 

On July 19, 2017, the Company entered into Common Stock Purchase Agreement with Quanzhen Shen. Pursuant to the Agreement, the Company will issue total 98,000 shares of restricted common stock at $3.00 per share price for an aggregate amount of $294,000. The Company has received the full amount.

 

On July 19, 2017, the Company issued 49,000 common shares to Quanzhen Shen for her consulting service to assist the Company in financing projects. The number of shares was determined based on the fair value of the service. The agreement has one year term.

 

On July 18, 2017, the Company issued 39,000 common shares to Yuan Wang in assistance with the Company financing projects. The number of shares was determined based on the fair value of the service. The agreement has one year term.

 

On August 3, 2017, the Company fully collected $487,627 (RMB 3,360,000) of the entire subscribe receivable balance at December 31, 2016.

 

The Company has evaluated the existence of significant events subsequent to the balance sheet date through the date these financial statements were issued and has determined that, other than as stated above, there were no subsequent events or transactions which would require recognition or disclosure in the financial statements, other than noted herein.

XML 40 R28.htm IDEA: XBRL DOCUMENT v3.7.0.1
Summaries of Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2017
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, Kiwa BVI, Hong Kong Baina Group Holding Company, Kiwa Baiao Bio-Tech (Beijing) Co., Ltd, Kiwa Baiao Bio-Tech (Shandong) Co., Ltd (“Kiwa Shandong”), Kiwa Bio-Tech Products (Shenzhen) Co., Ltd and Kiwa Bio-Tech Products (Hebei) Co., Ltd. All significant inter-company balances or transactions are eliminated on consolidation.

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 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 valuation of securities issued, deferred tax assets and related valuation allowance.

 

Certain of our estimates, including evaluating the collectability of accounts receivable and the fair market value of long-lived assets, could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could have an effect on our estimates that could cause actual results to differ from our estimates. We re-evaluate all of our accounting estimates annually based on these conditions and record adjustments when necessary.

Cash and Cash Equivalents

Cash and Cash Equivalents

 

Cash and cash equivalents consist of all cash balances and highly liquid investments with an original maturity of three months or less. Because of the short maturity of these investments, the carring amounts approximate their fair value. Restricted cash is excluded from cash and cash equivalents.

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.

Allowance for Doubtful Accounts

Allowance for doubtful accounts

 

The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company’s estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change. There was no allowance for doubtful accounts at June 30, 2017 and December 31, 2016.

Property, Plant and Equipment

Property, plant and equipment

 

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Gains or losses on disposals are reflected as gain or loss in the year of disposal. The cost of improvements that extend the life of property, plant and equipment are capitalized. These capitalized costs may include structural improvements, equipment and fixtures. All ordinary repair and maintenance costs are expensed as incurred. Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets as follows:

 

    Useful Life  
    (In years)  
Buildings     30 - 35  
Machinery and equipment     5 - 10  
Automobiles     8  
Office equipment     2 - 5  
Computer software     3  

Impairment of Long-lived Assets

Impairment of Long-Lived Assets

 

The Company’s long-lived assets consist of property, equipment and intangible assets. The Company evaluates its 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. 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, the Company makes assumptions regarding the estimated future cash flows and other factors to determine the fair value of the respective assets.

Goodwill and Other Intangibles

Goodwill and Other Intangibles

 

In accordance with Accounting Standards Update (ASU) No. 2014-02, management evaluates goodwill on an annual basis in the fourth quarter of more frequently if management believes indicators of impairment exist. Such indicators could, but are not limited to (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, or (3) an adverse action or assessment by a regulator. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If management concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, management conducts a two-step quantitative goodwill impairment test. The first step of the impairment test involves comparing the fair value of the applicable reporting unit with its carrying value. The Company estimates the fair value of its reporting units using a combination of the income, or discounted cash flows, approach and the market approach, with utilizes comparable companies’ data. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, management performs the second step of the goodwill impairment test. The second step of the goodwill impairment test involves comparing the implied fair value of the affected reporting unit’s goodwill with the carrying value of that goodwill. The amount, by which the carrying value of the goodwill exceeds its implied fair value, if any, is recognized as an impairment loss. The Company’s evaluation of goodwill completed during the three and six months ended June 30, 2017 resulted in no impairment losses.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

 

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820- 10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value with U.S. GAAP, and expands disclosures about fair value measurements.

 

To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

  Level 1: quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
     
  Level 2: pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
     
  Level 3: Pricing inputs that are generally observable inputs and not corroborated by market data.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

  

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

 

The carrying amount of the Company’s financial assets and liabilities, such as cash and cash equivalent, prepaid expenses, accounts payable and accrued expenses, approximate their fair value because of the short maturity of those instruments.

 

Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

 

It is not however practical to determine the fair value of advances from stockholders, if any, due to their related party nature.

Revenue Recognition

Revenue Recognition

 

The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

 

The Company derives its revenues from sales contracts with its customers with revenues being recognized upon delivery of products. Persuasive evidence of an arrangement is demonstrated via invoice; and the sales price to the customer is fixed upon acceptance of the purchase order and there is no separate sales rebate, discount, or volume incentive.

Advertising Costs

Advertising Costs

 

The Company charges all advertising costs to expense as incurred. The total amounts of advertising costs charged to selling, general and administrative expense were $58,419 and nil for the six months ended June 30, 2017 and 2016, and were $935 and nil for the three months ended June 30, 2017 and 2016, respectively.

Research and Development Costs

Research and Development Costs

 

Research and development costs are charged to expense as incurred. During the six months ended June 30, 2017 and 2016, research and development costs were $72,724 and $151,769, respectively. During the three months ended June 30, 2017 and 2016, research and development costs were $36,433 and $74,776, respectively.

Shipping and Handling Costs

Shipping and Handling Costs

 

Substantially all costs of shipping and handling of products to customers are included in selling expense. Shipping and handling costs for the three and six months ended June 30, 2017 and 2016 were nil, respectively.

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.

  

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.

Stock Based Compensation

Stock Based Compensation

 

The Company accounts for share-based compensation awards to employees in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”, which requires that share-based payment transactions with employees be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period.

 

The Company accounts for share-based compensation awards to non-employees in accordance with FASB ASC Topic 718 and FASB ASC Subtopic 505-50, “Equity-Based Payments to Non-employees”. Under FASB ASC Topic 718 and FASB ASC Subtopic 505-50, stock compensation granted to non-employees has been determined as the fair value of the consideration received or the fair value of equity instrument issued, whichever is more reliably measured and is recognized as an expense as the goods or services are received.

Foreign Currency Translation and Other Comprehensive Income

Foreign Currency Translation and Other Comprehensive Income

 

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 functional 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 comprehensive loss and the statement of cash flow are 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.

 

Other comprehensive income for the six months ended June 30, 2017 and 2016 represented foreign currency translation adjustments and were included in the consolidated statements of comprehensive loss.

 

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

 

    As of
June 30, 2017
    As of
December 31, 2016
 
Balance sheet items, except for equity accounts     6.7832       6.9472  
                 

 

    Six months ended June 30  
    2017     2016  
Items in the statements of comprehensive loss     6.8753       6.5345  

Earnings Per Common Share

Earnings Per Common Share

 

Net income per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period.

 

Diluted net income per common share is computed by dividing net income by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.

Related Parties

Related Parties

 

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20 the related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly Influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

 

The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the consolidated financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

Commitments and Contingencies

Commitments and Contingencies

 

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

 

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Cash Flows Reporting

Cash Flows Reporting

 

The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.

Subsequent Events

Subsequent Events

 

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. ASU 2014-09 also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. Based on the FASB’s Exposure Draft Update issued on April 29, 2015, and approved in July 2015, Revenue from Contracts With Customers (Topic 606): Deferral of the Effective Date, ASU 2014-09 is now effective for reporting periods beginning after December 15, 2017, with early adoption permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The adoption of ASU 2014-09 is not expected to have any impact on the Company’s financial statement presentation or disclosures.

 

In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842). ASU 2016-02 requires a lessee to record a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, on the balance sheet for all leases with terms longer than 12 months, as well as the disclosure of key information about leasing arrangements. ASU 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term. ASU 2016-02 requires classification of all cash payments within operating activities in the statement of cash flows. Disclosures are required to provide the amount, timing and uncertainty of cash flows arising from leases. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. ASU 2016-02 is effective for fiscal years beginning after December IS, 2018, including interim periods within those fiscal years. Early application is permitted. The Company has not yet evaluated the impact of the adoption of ASU 2016-02 on the Company’s financial statement presentation or disclosures.

 

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” The amendments in this guidance are clarifying the definition of a business to assist entities when determining whether an integrated set of assets and activities meets the definition of a business. The update provides that when substantially all the fair value of the assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this new guidance is not expected to have a material impact on our consolidated financial statements.

 

In January 2017, the FASB issued ASU 2017-04—Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendments in this guidance to eliminate the requirement to calculate the implied fair value of goodwill to measure goodwill impairment charge (Step 2). As a result, an impairment charge will equal the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the amount of goodwill allocated to the reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendment should be applied on a prospective basis. The guidance is effective for goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for goodwill impairment tests performed after January 1, 2017. The impact of this guidance for the Company will depend on the outcomes of future goodwill impairment tests.

  

In May 2017, the FASB issued Accounting Standards Update No. 2017-09 (ASU 2017-09), Compensation — Stock Compensation (Topic 718) Scope of Modification Accounting. The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The adoption of ASU 2017-09 which will become effective for annual periods beginning after December 15, 2017 and for interim periods within those annual periods, is not expected to have any impact on the Company’s financial statement presentation or disclosures.

 

Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures.

XML 41 R29.htm IDEA: XBRL DOCUMENT v3.7.0.1
Summaries of Significant Accounting Policies (Tables)
6 Months Ended
Jun. 30, 2017
Accounting Policies [Abstract]  
Schedule of Estimated Useful Lives of Assets

Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets as follows:

 

    Useful Life  
    (In years)  
Buildings     30 - 35  
Machinery and equipment     5 - 10  
Automobiles     8  
Office equipment     2 - 5  
Computer software     3  

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 consolidated financial statements were as follows:

 

    As of
June 30, 2017
    As of
December 31, 2016
 
Balance sheet items, except for equity accounts     6.7832       6.9472  
                 

 

    Six months ended June 30  
    2017     2016  
Items in the statements of comprehensive loss     6.8753       6.5345  

XML 42 R30.htm IDEA: XBRL DOCUMENT v3.7.0.1
Accounts Receivable, Net (Tables)
6 Months Ended
Jun. 30, 2017
Accounts Receivable, Net [Abstract]  
Schedule of Accounts Receivable

Accounts receivable consisted of the following:

 

    June 30, 2017     December 31, 2016  
Accounts receivable   $ 9,425,359     $ 1,122,754  
Less: Allowance for doubtful debts     -       -  
Accounts receivable, net   $ 9,425,359     $ 1,122,754  

XML 43 R31.htm IDEA: XBRL DOCUMENT v3.7.0.1
Prepaid Expense (Tables)
6 Months Ended
Jun. 30, 2017
Notes to Financial Statements  
Schedule of Prepaid Expense

Prepaid expenses consisted of the following:

 

    June 30, 2017     December 31, 2016  
Prepaid office rent   $ 28,021     $ 12,504  
Prepaid government filing expense     33,588       5,000  
Prepaid packaging expense     -       75,000  
Prepayment for purchasing furniture     5,160       -  
    $ 66,769     $ 92,504  

XML 44 R32.htm IDEA: XBRL DOCUMENT v3.7.0.1
Other Receivable (Tables)
6 Months Ended
Jun. 30, 2017
Other Liabilities Disclosure [Abstract]  
Schedule of Other Receivable

Other receivable consisted of the following:

 

    June 30, 2017     December 31, 2016  
Due from customer-Kangtan Gerui (Beijing) Bio-Tech Co., Ltd.     1,338,111       1,522,435  
Advance to employees     105,171       31,700  
Others     28,009       7,196  
Less: Allowance for doubtful debts     -       -  
Other receivable, net   $ 1,471,291     $ 1,561,331  

XML 45 R33.htm IDEA: XBRL DOCUMENT v3.7.0.1
Property, Plant and Equipment (Tables)
6 Months Ended
Jun. 30, 2017
Property, Plant and Equipment [Abstract]  
Schedule of Property Plant and Equipment

Property, plant and equipment, net consisted of the following:

 

    June 30, 2017     December 31, 2016  
Office equipment   $ 942     $ 942  
Furniture     10,260       8,276  
Leasehold improvement     72,174       70,871  
Total Property, plant and equipment   $ 83,376     $ 80,089  
Less: accumulated depreciation     (40,064 )     (20,311 )
Less: impairment of long-lived assets     -       -  
Property, plant and equipment - net   $ 43,312     $ 59,778  

XML 46 R34.htm IDEA: XBRL DOCUMENT v3.7.0.1
Related Party Transactions (Tables)
6 Months Ended
Jun. 30, 2017
Related Party Transactions [Abstract]  
Schedule of Related Party Transactions

Item   Nature   Notes   June 30, 2017     December 31, 2016  
Kiwa-CAU R&D Center   Trade   (b)     -       1,122,754  
CAAS IARRP and IAED Institutes   Trade   (c)     -       160,461  
Total           $ -     $ 1,283,215  

 

(a) Yvonne Wang

 

Ms. Wang is a board member and Acting President, Acting Chief Executive Officer and Acting Chief Financial Officer. From time to time, Ms. Wang paid various expenses on behalf of the Company. As of June 30, 2017 and December 31, 2016, the amount due to Ms. Wang was $83,798 and $100,798, respectively.

 

(b) In November 2006, Kiwa and China Agricultural University (the “CAU”) agreed to jointly establish a new research and development center, named Kiwa-CAU R&D Center. Pursuant to the agreement, Kiwa committed to fund RMB 1 million (approximately $160,000) annually to the research center. Prof. Qi Wang, a director of the Company was also the director of Kiwa-CAU R&D Center. Although the agreement was expired on June 30, 2016, the payable balance remains on Kiwa Shandong’s book until April 12, 2017 when the transaction of transfer Kiwa Shandone’s all assets and liabilities to Dian ShiCheng Jing (Beijing) was completed.

 

The Company recorded nil and $36,363 research and development expenses related to this Kiwa-CAU R&D Center for the six months ended June 30, 2017 and 2016, respectively.

 

(c) 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”). The term of the Agreement was three years ends on November 4, 2017.

 

Pursuant to the agreement, Kiwa agree to invest RMB 1 million (approximately $160,000) each year to the Spatial Agriculture Planning Method & Applications Innovation Team that belongs to the Institutes. Prof. Yong Chang Wu, the authorized representative of IARRP, CAAS, was also one of the Company's directors until he resigned on March 13, 2017. Since Prof. Yong Chang Wu is no longer a board member, the balance of $233,598 at June 30, 2017 has been reclassified from part due to related party – trade to R&D expenses payable.

 

The Company recorded $36,291and $38,764 research and development expenses related to the institutes, for the six months ended June 30, 2017 and 2016, respectively. 

 

(2). Convertible Note Payables

 

(a). Geng Liu

 

Geng Liu became a shareholder of the Company and has held 500,000 shares of common stock since September, 2016

 

On January 17, 2017, the Company entered into a Convertible Loan Agreement with Geng Liu wherein the lender agreed to advance of approximately US $442,269 (RMB3,000,000) under a Convertible Promissory Note with a term of 12 months bearing interest at a rate of Fifteen Percent (15%) per annum. The Loan is convertible into Common Stock at any time at the option of the Lender at a conversion price of $ 0.90 per share within the term.

 

As of June 30, 2017, the Company received proceeds about $147,423 (RMB 1,000,000) from Geng Liu and recorded interest expense related to this note $5,442 and $8,472 for the three and six months ended June 30, 2017, respectively.

 

(b). Junwei Zheng

 

Junwei Zheng became a shareholder of the Company and has held 920,000 shares of common stock since March, 2017

 

On May 9, 2017, Company entered into a Convertible Loan Agreement with Junwei Zheng wherein the lender agreed to advance of approximately US$ 4.5 million (RMB 30,000,000) under a Convertible Promissory Note with a term of 24 months bearing interest at a rate of Fifteen Percent (15%) per annum. The Loan is convertible into Common Stock at any time at the option of the Lender at a conversion price of $3.50 per share within the term

 

As of June 30, 2017, the Company has received proceeds of about $810,827 (RMB 5,500,000) from Junwei Zheng and the interest expense related to this note was $17,328 for the three and six months ended June 30, 2017.

XML 47 R35.htm IDEA: XBRL DOCUMENT v3.7.0.1
Statutory Reserves (Tables)
6 Months Ended
Jun. 30, 2017
Notes to Financial Statements  
Schedule of Statutory Reserve Activity

the year ended December 31, 2016, statutory reserve activity is as follows:

 

Balance – January 1, 2016   $ -  
Addition to statutory reserve in 2016     127,884  
 Balance – December 31, 2016     127,884  
Addition to statutory reserve for the six months ended June 30, 2017     179,466  
Balance – June 30, 2017   $ 307,350  

XML 48 R36.htm IDEA: XBRL DOCUMENT v3.7.0.1
Income Tax (Tables)
6 Months Ended
Jun. 30, 2017
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:

 

    Three months ended June 30,     Six months ended June 30,  
    2017     2016     2017     2016  
                         
Pre-tax income   $ 5,396,950     $ 181,975     $ 5,924,464     $ 238,105  
U.S. federal corporate income tax rate     34 %     34 %     34 %     34 %
Income tax computed at U.S. federal corporation income tax rate     1,834,963       61,872       2,014,318       80,956  
Reconciling items:                                
Rate differential for PRC earnings     (124,683 )     8,770       (202,353 )     13,668  
Change of valuation allowance     195,403       80,006       305,935       146,608  
Non-deductible expenses     (1,525,710 )     (150,648 )     (1,518,877 )     (241,232 )
Effective tax expenses   $ 379,973     $ -     $ 599,022     $ -  

Schedule of Deferred Tax Assets

The Company had deferred tax assets as follows:

 

    June 30, 2017     December 31, 2016  
             
Net operating losses carried forward   $ 3,458,902     $ 3,473,331  
Less: Valuation allowance     (3,458,902 )     (3,473,331 )
                 
Net deferred tax assets   $ -     $ -  

XML 49 R37.htm IDEA: XBRL DOCUMENT v3.7.0.1
Commitments and Contingencies (Tables)
6 Months Ended
Jun. 30, 2017
Commitments and Contingencies Disclosure [Abstract]  
Schedule of Future Lease Payments

The future lease payments at June 30, 2017 are summarized below.

 

    Beijing Office     Shenzhen Office     USA Office     Total  
2017   $ 68,876     $ 101,722     $ 10,605     $ 181,203  
2018   $ 45,917       203,444     $ 9,925     $ 259,286  
2019   $ -     $ 101,722     $ -     $ 101,722  
Thereafter   $ -     $ -     $ -     $ -  

XML 50 R38.htm IDEA: XBRL DOCUMENT v3.7.0.1
Description of Business and Organization (Details Narrative) - $ / shares
Jun. 30, 2017
Feb. 11, 2017
Percentage of ownership 89.00%  
Equity Transfer Agreement [Member]    
Sale of stock, price per share   $ 1.00
XML 51 R39.htm IDEA: XBRL DOCUMENT v3.7.0.1
Summaries of Significant Accounting Policies (Details Narrative) - USD ($)
3 Months Ended 6 Months Ended
Jan. 14, 2016
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Dec. 31, 2016
Accounting Policies [Abstract]            
Reverse stock split 1-for-200          
Authorized capital 120,000,000          
Common stock, shares authorized 100,000,000 100,000,000   100,000,000   100,000,000
Common stock, par value $ 0.001 $ 0.001   $ 0.001   $ 0.001
Preferred stock, shares authorized 20,000,000 20,000,000   20,000,000   20,000,000
Preferred stock, par value $ 0.001 $ 0.001   $ 0.001   $ 0.001
Investment term       3 months    
Allowance for doubtful account      
Advertising costs   935 58,419  
Research and development costs   36,433 74,776 72,724 151,769  
Shipping and handling costs    
Stock based compensation issued or outstanding        
XML 52 R40.htm IDEA: XBRL DOCUMENT v3.7.0.1
Summaries of Significant Accounting Policies - Schedule of Estimated Useful Lives of Assets (Details)
6 Months Ended
Jun. 30, 2017
Buildings [Member] | Minimum [Member]  
Property, plant and equipment useful life (In years) 30 years
Buildings [Member] | Maximum [Member]  
Property, plant and equipment useful life (In years) 35 years
Machinery And Equipment [Member] | Minimum [Member]  
Property, plant and equipment useful life (In years) 5 years
Machinery And Equipment [Member] | Maximum [Member]  
Property, plant and equipment useful life (In years) 10 years
Automobiles [Member]  
Property, plant and equipment useful life (In years) 8 years
Office Equipment [Member] | Minimum [Member]  
Property, plant and equipment useful life (In years) 2 years
Office Equipment [Member] | Maximum [Member]  
Property, plant and equipment useful life (In years) 5 years
Computer Software [Member]  
Property, plant and equipment useful life (In years) 3 years
XML 53 R41.htm IDEA: XBRL DOCUMENT v3.7.0.1
Summaries of Significant Accounting Policies - Schedule of Foreign Currency Exchange Rate (Details)
Jun. 30, 2017
Feb. 11, 2017
Dec. 31, 2016
Foreign currency exchange rate, translation   1.00  
Balance Sheet Items, Except For Equity Accounts [Member]      
Foreign currency exchange rate, translation 6.7832   6.9472
Items In The Statements of Comprehensive Loss [Member]      
Foreign currency exchange rate, translation 6.8753   6.5345
XML 54 R42.htm IDEA: XBRL DOCUMENT v3.7.0.1
Accounts Receivable, Net - Schedule of Accounts Receivable (Details) - USD ($)
Jun. 30, 2017
Dec. 31, 2016
Accounts Receivable Net - Schedule Of Accounts Receivable Details    
Accounts receivable $ 9,425,359 $ 1,122,754
Less: Allowance for doubtful debts
Accounts receivable, net $ 9,425,359 $ 1,122,754
XML 55 R43.htm IDEA: XBRL DOCUMENT v3.7.0.1
Prepaid Expense - Schedule of Prepaid Expense (Details) - USD ($)
Jun. 30, 2017
Dec. 31, 2016
Notes to Financial Statements    
Prepaid office rent $ 28,021 $ 12,504
Prepaid government filing expense 33,588 5,000
Prepaid packaging expense 75,000
Prepayment for purchasing furniture 5,160
Prepaid expenses $ 66,769 $ 92,504
XML 56 R44.htm IDEA: XBRL DOCUMENT v3.7.0.1
Other Receivable (Details Narrative) - USD ($)
6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Advance from related party $ 17,000 $ 40,500
Gerui [Member]    
Advance from related party $ 184,324  
XML 57 R45.htm IDEA: XBRL DOCUMENT v3.7.0.1
Other Receivable - Schedule of Other Receivable (Details) - USD ($)
Jun. 30, 2017
Dec. 31, 2016
Less: Allowance for doubtful debts
Other receivable, net 1,471,291 1,561,331
Due from customer-Kangtan Gerui [Member]    
Other receivable, gross 1,338,111 1,522,435
Advance to Employees [Member]    
Other receivable, gross 105,171 31,700
Others [Member]    
Other receivable, gross $ 28,009 $ 7,196
XML 58 R46.htm IDEA: XBRL DOCUMENT v3.7.0.1
Advance to Suppliers (Details Narrative) - USD ($)
Jun. 30, 2017
Dec. 31, 2016
Notes to Financial Statements    
Advance to suppliers $ 1,255,218 $ 1,805,044
XML 59 R47.htm IDEA: XBRL DOCUMENT v3.7.0.1
Property, Plant and Equipment (Details Narrative) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Property, Plant and Equipment [Abstract]        
Depreciation expense $ 8,318 $ 3,073 $ 17,787 $ 3,073
Impairment on long-lived assets
Percentage of property plant and equipment held as collateral to secure     6.00%  
XML 60 R48.htm IDEA: XBRL DOCUMENT v3.7.0.1
Property, Plant and Equipment - Schedule of Property Plant and Equipment (Details) - USD ($)
Jun. 30, 2017
Dec. 31, 2016
Property, plant and equipment - total $ 83,376 $ 80,089
Less: accumulated depreciation (40,064) (20,311)
Less: impairment on long-lived assets
Property, plant and equipment - net 43,312 59,778
Office Equipment [Member]    
Property, plant and equipment - total 942 942
Furniture [Member]    
Property, plant and equipment - total 10,260 8,276
Leasehold Improvement [Member]    
Property, plant and equipment - total $ 72,174 $ 70,871
XML 61 R49.htm IDEA: XBRL DOCUMENT v3.7.0.1
Deposit for Long-Term Investment (Details Narrative) - Yantai Peng Hao New Materials Technology Co. Ltd [Member] - Equity Purchase Agreement [Member]
6 Months Ended
Jun. 08, 2017
USD ($)
Jun. 08, 2017
CNY (¥)
Jun. 30, 2017
USD ($)
Jun. 30, 2017
CNY (¥)
Payments to acquire new factory | $ $ 2,200,000   $ 147,423  
RMB [Member]        
Payments to acquire new factory | ¥   ¥ 15,000,000   ¥ 1,000,000
XML 62 R50.htm IDEA: XBRL DOCUMENT v3.7.0.1
Goodwill and Other Intangibles (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 6 Months Ended
Nov. 30, 2015
May 31, 2017
Jun. 30, 2017
Jun. 30, 2017
Jun. 30, 2016
Goodwill     $ 34,112 $ 34,112  
Legal fee       30,000  
Government fees       4,112  
Impairment of goodwill        
Amortization expense       58
Computer Software [Member]          
Purchase of computer software   $ 1,061      
Amortization expense     $ 59  
Acquisition Agreement [Member]          
Acquisition entity interest 100.00%        
Acquisition of goodwill $ 30,000        
XML 63 R51.htm IDEA: XBRL DOCUMENT v3.7.0.1
Construction Costs Payable (Details Narrative) - USD ($)
Feb. 11, 2017
Dec. 31, 2016
Construction costs payable   $ 255,539
Equity Transfer Agreement [Member] | Dian Shi Cheng Jing (Beijing) Technology Co [Member]    
Equity interest transfer, description Kiwa Shandong to the Transferee for USD $1.00.  
XML 64 R52.htm IDEA: XBRL DOCUMENT v3.7.0.1
Related Party Transactions (Details Narrative)
3 Months Ended 6 Months Ended
Nov. 05, 2015
USD ($)
Nov. 05, 2015
CNY (¥)
Jun. 30, 2017
USD ($)
shares
Jun. 30, 2016
USD ($)
Jun. 30, 2017
USD ($)
shares
Jun. 30, 2017
CNY (¥)
Jun. 30, 2016
USD ($)
May 09, 2017
USD ($)
$ / shares
Jan. 17, 2017
USD ($)
$ / shares
Dec. 31, 2016
USD ($)
Related Party Transaction [Line Items]                    
Research and development costs     $ 36,433 $ 74,776 $ 72,724   $ 151,769      
Proceeds from Convertible Debt         955,955        
Interest Expense, Debt     22,500 $ 22,500 45,000   45,000      
Yvonne Wang [Member]                    
Related Party Transaction [Line Items]                    
Due to related parties     $ 83,798   83,798         $ 100,798
Kiwa-CAU R&D Center [Member]                    
Related Party Transaction [Line Items]                    
Related party transaction amount             160,000      
Research and development costs           36,363      
Kiwa-CAU R&D Center [Member] | RMB [Member]                    
Related Party Transaction [Line Items]                    
Related party transaction amount | ¥           ¥ 1,000,000        
CAAS IARRP and IAED Institutes [Member]                    
Related Party Transaction [Line Items]                    
Related party transaction amount $ 160,000                  
Research and development costs         233,598          
CAAS IARRP and IAED Institutes [Member] | RMB [Member]                    
Related Party Transaction [Line Items]                    
Related party transaction amount | ¥   ¥ 1,000,000                
Ms. Wang [Member]                    
Related Party Transaction [Line Items]                    
Research and development costs         $ 36,291   $ 38,764      
Geng Liu [Member]                    
Related Party Transaction [Line Items]                    
Common stock, shares subscribed | shares     500,000   500,000          
Geng Liu [Member] | Convertible Loan Agreement [Member]                    
Related Party Transaction [Line Items]                    
Advance from lender                 $ 442,269  
Debt interest rate                 15.00%  
Conversion price | $ / shares                 $ 0.90  
Proceeds from Convertible Debt         $ 147,423          
Interest Expense, Debt     $ 5,442   8,472          
Geng Liu [Member] | RMB [Member] | Convertible Loan Agreement [Member]                    
Related Party Transaction [Line Items]                    
Advance from lender                 $ 3,000,000  
Proceeds from Convertible Debt         $ 1,000,000          
Junwei Zheng [Member]                    
Related Party Transaction [Line Items]                    
Common stock, shares subscribed | shares     920,000   920,000          
Junwei Zheng [Member] | Convertible Loan Agreement [Member]                    
Related Party Transaction [Line Items]                    
Advance from lender               $ 4,500,000    
Debt interest rate               15.00%    
Conversion price | $ / shares               $ 3.50    
Proceeds from Convertible Debt         $ 810,827          
Interest Expense, Debt     $ 17,328   17,328          
Junwei Zheng [Member] | RMB [Member] | Convertible Loan Agreement [Member]                    
Related Party Transaction [Line Items]                    
Advance from lender               $ 30,000,000    
Proceeds from Convertible Debt         $ 5,500,000          
XML 65 R53.htm IDEA: XBRL DOCUMENT v3.7.0.1
Related Party Transactions - Schedule of Related Party Transactions (Details) - USD ($)
Jun. 30, 2017
Dec. 31, 2016
Related Party Transaction [Line Items]    
Total $ 1,283,215
Kiwa-CAU R&D Center [Member] | Trade Transaction [Member]    
Related Party Transaction [Line Items]    
Total 1,122,754
CAAS IARRP and IAED Institutes [Member] | Trade Transaction [Member]    
Related Party Transaction [Line Items]    
Total $ 160,461
XML 66 R54.htm IDEA: XBRL DOCUMENT v3.7.0.1
Unsecured Loans Payable (Details Narrative) - USD ($)
Feb. 11, 2017
Jun. 30, 2017
Dec. 31, 2016
Unsecured Loans Payable [Line Items]      
Unsecured loans payable   $ 1,655,343
Dian Shi Cheng Jing (Beijing) Technology Co [Member] | Equity Transfer Agreement [Member]      
Unsecured Loans Payable [Line Items]      
Equity interest transfer, description Kiwa Shandong to the Transferee for USD $1.00.    
XML 67 R55.htm IDEA: XBRL DOCUMENT v3.7.0.1
Convertible Notes Payable (Details Narrative)
3 Months Ended 6 Months Ended
May 09, 2017
USD ($)
$ / shares
Jan. 17, 2017
USD ($)
$ / shares
Jan. 17, 2017
USD ($)
$ / shares
Mar. 18, 2008
USD ($)
Jun. 30, 2006
USD ($)
Jun. 29, 2006
USD ($)
Jun. 30, 2017
USD ($)
Jun. 30, 2017
USD ($)
Jun. 30, 2017
CNY (¥)
May 09, 2017
CNY (¥)
Jan. 17, 2017
CNY (¥)
Dec. 31, 2016
USD ($)
Convertible notes payable             $ 1,106,205 $ 1,106,205       $ 150,250
6% Notes [Member]                        
Percentage of secured convertible notes issued           6.00%            
Notes beard interest           6.00%            
Debt instruments maturity date           Jun. 29, 2009            
Debt instruments face amount           $ 120,000            
FirsTrust Group, Inc [Member]                        
Convertible notes payable             150,250 150,250        
Accumulated interest               194,537        
Accumulated penalty               523,141        
15% Convertible Notes [Member] | Geng Liu [Member] | Convertible Note Agreement [Member]                        
Notes beard interest   15.00% 15.00%               15.00%  
Debt instruments maturity date     Jan. 16, 2018                  
Debt instruments face amount   $ 435,380 $ 435,380                  
Debt conversion price | $ / shares   $ 0.90 $ 0.90                  
Partial principal               145,127        
Accrued interest expense             5,442 8,472        
15% Convertible Notes [Member] | Geng Liu [Member] | Convertible Note Agreement [Member] | RMB [Member]                        
Debt instruments face amount | ¥                     ¥ 3,000,000  
Partial principal | ¥                 ¥ 1,000,000      
15% Convertible Notes [Member] | Mr. Junwei Zheng [Member] | Convertible Note Agreement [Member]                        
Notes beard interest 15.00%                 15.00%    
Debt instruments maturity date May 08, 2019                      
Debt instruments face amount $ 4,500,000                      
Debt conversion price | $ / shares $ 3.5                      
Partial principal               810,827        
Accrued interest expense             $ 17,328 $ 17,328        
15% Convertible Notes [Member] | Mr. Junwei Zheng [Member] | Convertible Note Agreement [Member] | RMB [Member]                        
Debt instruments face amount | ¥                   ¥ 30,000,000    
Partial principal | ¥                 ¥ 5,500,000      
FirsTrust Group, Inc [Member]                        
Convertible notes payable           $ 150,250            
Percentage of secured convertible notes issued           6.00%            
FirsTrust Group, Inc [Member] | 6% Convertible Note [Member]                        
Percentage of secured convertible notes issued       6.00%                
Payment acquire debt       $ 168,000                
Cash payment       100,000                
FirsTrust Group, Inc [Member] | 6% Convertible Note [Member] | Share-based Compensation Award, Tranche One [Member]                        
Payment acquire debt       59,100                
FirsTrust Group, Inc [Member] | 6% Convertible Note [Member] | Share-based Compensation Award, Tranche Two [Member]                        
Payment acquire debt       50,400                
FirsTrust Group, Inc [Member] | 6% Convertible Note [Member] | Share-based Compensation Award, Tranche Three [Member]                        
Payment acquire debt       $ 59,100                
Mr. Geng Liu [Member]                        
Convertible notes payable   $ 145,127 $ 145,127                  
Percentage of secured convertible notes issued   15.00%                    
Mr. Junwei Zheng [Member]                        
Convertible notes payable $ 810,827                      
Percentage of secured convertible notes issued 15.00%                      
Nite Capital LP [Member] | 6% Secured Convertible Note [Member] | Six Institutional Investors [Member]                        
Secured debt           $ 2,450,000            
Payment acquire debt           $ 300,000            
Nite Capital LP [Member] | 6% Secured Convertible Note [Member] | Six Institutional Investors [Member] | Share-based Compensation Award, Tranche One [Member]                        
Payment acquire debt         $ 105,000              
Nite Capital LP [Member] | 6% Secured Convertible Note [Member] | Six Institutional Investors [Member] | Share-based Compensation Award, Tranche Two [Member]                        
Payment acquire debt         90,000              
Nite Capital LP [Member] | 6% Secured Convertible Note [Member] | Six Institutional Investors [Member] | Share-based Compensation Award, Tranche Three [Member]                        
Payment acquire debt         $ 105,000              
XML 68 R56.htm IDEA: XBRL DOCUMENT v3.7.0.1
Note Payable (Details Narrative) - USD ($)
3 Months Ended 6 Months Ended
May 29, 2007
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Dec. 31, 2016
Promissory note   $ 360,000   $ 360,000   $ 360,000
Accrued interest expense   22,500 $ 22,500 45,000 $ 45,000  
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          
FirsTrust [Member]            
Promissory note   $ 360,000   360,000    
Accrued interest expense       $ 904,300    
Investline (China) Limited [Member]            
Pledging of shares   30,892   30,892    
XML 69 R57.htm IDEA: XBRL DOCUMENT v3.7.0.1
Other Payable (Details Narrative) - USD ($)
6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Dec. 31, 2016
Payments from investors $ 17,000 $ 40,500  
Other payables 865,793   $ 1,019,583
Two Unrelated Potential Investors [Member]      
Payments from investors $ 471,754    
XML 70 R58.htm IDEA: XBRL DOCUMENT v3.7.0.1
Stockholders' Deficiency (Details Narrative) - USD ($)
1 Months Ended 6 Months Ended 12 Months Ended
Jun. 13, 2017
Jun. 02, 2017
May 25, 2017
Mar. 03, 2017
Feb. 15, 2017
Nov. 15, 2016
Feb. 28, 2017
Aug. 31, 2016
Mar. 31, 2016
Jun. 30, 2017
Jun. 30, 2016
Dec. 31, 2016
Stock issued during period, cash, shares                       1,650,000
Share issued price per share                       $ 0.8
Stock issued during period cash                       $ 1,320,000
Common stock subscription received                       759,659
Common stock subscription receivable                       $ 560,341
Stock issued for services                       1,710,808
Stock issued for services, value                   $ 179,897 $ 254,250
Fair value of consulting agreement                       1,688,300
Compensation realized for consulting service                       $ 331,800
Employee benefits                   102,743  
Financing Projects [Member]                        
Stock issued during period, cash, shares     19,380                  
Share issued price per share     $ 2.74                  
Fair value of consulting agreement     $ 53,101                  
Compensation realized for consulting service                   5,237    
Agreement term     1 year                  
Technical Support [Member]                        
Stock issued during period, cash, shares   15,108                    
Share issued price per share   $ 2.78                    
Fair value of consulting agreement   $ 41,396                    
Compensation realized for consulting service                   $ 3,402    
Agreement term   1 year                    
Ten Employees [Member]                        
Stock issued during period, cash, shares                   97,850    
Share issued price per share                   $ 1.95    
Stock issued during period cash                   $ 190,807    
Common stock price per share                   $ 3.00    
Consulting Agreement [Member]                        
Fair value of consulting agreement         $ 85,400              
Agreement term         1 year              
Mr. Junwei Zheng [Member]                        
Stock issued during period, cash, shares             1,000,000          
Share issued price per share             $ 1.00          
Stock issued during period cash                   $ 1,000,000    
Mr. Yuan Wang [Member]                        
Stock issued during period, cash, shares 96,900                      
Share issued price per share $ 3.00     $ 1.22                
Stock issued during period cash $ 290,700                      
Stock issued for services       70,000                
Compensation realized for consulting service                   $ 32,025    
Mr. Li And Ms. Wang [Member]                        
Number of common stock shares issued for debt and salary payable settlement                 3,140,000      
Number of common stock value issued for debt and salary payable settlement                 $ 3,141,000      
Jimmy Zhou [Member]                        
Number of common stock shares issued for debt and salary payable settlement               101,947        
Number of common stock value issued for debt and salary payable settlement               $ 50,974        
Accredited Investor [Member] | Private Offering [Member]                        
Stock issued during period           $ 125,000            
Warrant to purchase shares of common stock           300,000            
Exercise price of warrants           $ 3.00            
Warrant term           Nov. 15, 2021            
Consultant [Member]                        
Stock issued during period, cash, shares                   98,000    
Stock issued during period cash                   $ 294,000    
Stock issued for services                   88,000    
XML 71 R59.htm IDEA: XBRL DOCUMENT v3.7.0.1
Stock-based Compensation (Details Narrative)
Mar. 15, 2017
Board of Directors [Member]  
Stock option plan term 10 years
XML 72 R60.htm IDEA: XBRL DOCUMENT v3.7.0.1
Statutory Reserves (Details Narrative)
6 Months Ended
Jun. 30, 2017
Statutory Reserves Details Narrative  
Statutory reserves description Appropriation to the statutory surplus reserve should be at least 10% of the after tax net income determined in accordance with the PRC GAAP until the reserve is equal to 50% of the entities’ registered capital or members’ equity.
Income tax statutory surplus percentage 10.00%
XML 73 R61.htm IDEA: XBRL DOCUMENT v3.7.0.1
Statutory Reserves - Schedule of Statutory Reserve Activity (Details) - USD ($)
6 Months Ended 12 Months Ended
Jun. 30, 2017
Dec. 31, 2016
Statutory Reserves - Schedule Of Statutory Reserve Activity Details    
Balance beginning $ 127,884
Addition to statutory reserve 179,466 127,884
Balance ending $ 307,350 $ 127,884
XML 74 R62.htm IDEA: XBRL DOCUMENT v3.7.0.1
Income Tax (Details Narrative)
3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2017
USD ($)
Jun. 30, 2017
CNY (¥)
Jun. 30, 2016
USD ($)
Jun. 30, 2017
USD ($)
Jun. 30, 2017
CNY (¥)
Jun. 30, 2016
USD ($)
Dec. 31, 2016
USD ($)
Effective income tax rate       25.00% 25.00%    
Income tax provision $ 379,973   $ 599,022    
Operating loss carry forwards 3,400,000     3,400,000     $ 3,400,000
Unrecognized tax benefits        
Interest or penalties          
Provision for interest and penalties          
California State Franchise Tax [Member]              
Income tax provision       $ 800      
RMB [Member]              
Income tax provision | ¥   ¥ 2,601,847     ¥ 4,112,924    
XML 75 R63.htm IDEA: XBRL DOCUMENT v3.7.0.1
Income Tax - Schedule of Reconciliation of U.S. Tax Rate (Details) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Income Tax Disclosure [Abstract]        
Pre-tax income (loss) $ 5,396,950 $ 181,975 $ 5,924,464 $ 238,105
U.S. federal corporate income tax rate 34.00% 34.00% 34.00% 34.00%
Income tax computed at U.S. federal corporate income tax rate $ 1,834,963 $ 61,872 $ 2,014,318 $ 80,956
Rate differential for PRC earnings (124,683) 8,770 (202,353) 13,668
Change of valuation allowance 195,403 80,006 305,935 146,608
Non-deductible expenses (1,525,710) (150,648) (1,518,877) (241,232)
Effective tax expense $ 379,973 $ 599,022
XML 76 R64.htm IDEA: XBRL DOCUMENT v3.7.0.1
Income Tax - Schedule of Deferred Tax Assets (Details) - USD ($)
Jun. 30, 2017
Dec. 31, 2016
Income Tax Disclosure [Abstract]    
Net operating losses carried forward $ 3,458,902 $ 3,473,331
Less: Valuation allowance (3,458,902) (3,473,331)
Net deferred tax assets
XML 77 R65.htm IDEA: XBRL DOCUMENT v3.7.0.1
Commitments and Contingencies (Details Narrative)
Jul. 02, 2017
USD ($)
Jun. 20, 2017
USD ($)
Jun. 20, 2017
CNY (¥)
Jun. 08, 2017
USD ($)
Jun. 08, 2017
CNY (¥)
May 05, 2017
USD ($)
Apr. 29, 2016
USD ($)
Apr. 29, 2016
CNY (¥)
Nov. 05, 2015
USD ($)
Nov. 05, 2015
CNY (¥)
Kiwa Baiao Bio-Tech (Beijing) Co., Ltd [Member] | Office Lease Agreement [Member]                    
Payments for Rent | $             $ 11,303      
Lease term             2 years 2 years    
Kiwa Baiao Bio-Tech (Shenzhen) Co., Ltd [Member] | Apartment Lease [Member]                    
Payments for Rent | $   $ 16,954                
Lease term   2 years 2 years              
Kiwa Baiao Bio-Tech Product Group [Member] | Office Lease Agreement [Member]                    
Payments for Rent | $ $ 1,087         $ 680        
Lease term 1 year         13 months        
CAAS IARRP and IAED Institutes [Member]                    
Related party transaction, amounts of transaction | $                 $ 160,000  
Description of related party transaction                 The term of the Agreement is for three years beginning November 20, 2015 and will expire on November 19, 2018. The term of the Agreement is for three years beginning November 20, 2015 and will expire on November 19, 2018.
RMB [Member] | Kiwa Baiao Bio-Tech (Shenzhen) Co., Ltd [Member] | Apartment Lease [Member]                    
Payments for Rent     ¥ 115,000              
RMB [Member] | Kiwa Baiao Bio-Tech (Beijing) Co., Ltd [Member] | Office Lease Agreement [Member]                    
Payments for Rent               ¥ 77,867    
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
Equity Purchase Agreement [Member]                    
Acquisition of purchase price | $       $ 2,200,000            
Equity Purchase Agreement [Member] | First Payment [Member]                    
Payment of purchase agreement | $       $ 147,423            
Equity Purchase Agreement [Member] | RMB [Member]                    
Acquisition of purchase price         ¥ 15,000,000          
Equity Purchase Agreement [Member] | RMB [Member] | First Payment [Member]                    
Payment of purchase agreement         1,000,000          
Equity Purchase Agreement [Member] | RMB [Member] | Second Payment [Member]                    
Payment of purchase agreement         10,000,000          
Equity Purchase Agreement [Member] | RMB [Member] | Final Payment [Member]                    
Payment of purchase agreement         ¥ 4,000,000          
XML 78 R66.htm IDEA: XBRL DOCUMENT v3.7.0.1
Commitments and Contingencies - Schedule of Future Lease Payments (Details)
Jun. 30, 2017
USD ($)
2017 $ 181,203
2018 259,286
2019 101,722
Thereafter
Beijing Office [Member]  
2017 68,876
2018 45,212
2019
Thereafter
Shenzhen Office [Member]  
2017 101,722
2018 203,444
2019 101,722
Thereafter
USA Office [Member]  
2017 10,605
2018 9,925
2019
Thereafter
XML 79 R67.htm IDEA: XBRL DOCUMENT v3.7.0.1
Discontinued Operation (Details Narrative)
3 Months Ended 6 Months Ended
Jun. 30, 2017
USD ($)
Jun. 30, 2016
USD ($)
Jun. 30, 2017
USD ($)
Jun. 30, 2016
USD ($)
Feb. 11, 2017
Discontinued Operations and Disposal Groups [Abstract]          
Foreign currency translation         1.00
Discontinued operation net gain $ 4,513,363 $ 4,514,161  
XML 80 R68.htm IDEA: XBRL DOCUMENT v3.7.0.1
Subsequent Events (Details Narrative)
Jul. 19, 2017
USD ($)
$ / shares
shares
Jul. 18, 2017
shares
Jul. 02, 2017
USD ($)
Aug. 03, 2017
USD ($)
Aug. 03, 2017
CNY (¥)
Dec. 31, 2016
USD ($)
$ / shares
Subscription receivable           $ 560,341
Shares issued price per share | $ / shares           $ 0.8
Subsequent Event [Member]            
Agreement term     2 years      
Monthly lease payment     $ 1,087      
Subscription receivable       $ 487,627    
Subsequent Event [Member] | RMB [Member]            
Subscription receivable | ¥         ¥ 3,360,000  
Subsequent Event [Member] | Junwei Zheng [Member]            
Shares issued during period restricted shares | shares 245,000          
Shares issued price per share | $ / shares $ 3.00          
Shares issued during period restricted, value $ 735,000          
Subsequent Event [Member] | Quanzhen Shen [Member]            
Agreement term 1 year          
Shares issued during period, shares | shares 49,000          
Subsequent Event [Member] | Quanzhen Shen [Member] | Common Stock Purchase Agreement [Member]            
Shares issued during period restricted shares | shares 98,000          
Shares issued price per share | $ / shares $ 3.00          
Shares issued during period restricted, value $ 294,000          
Subsequent Event [Member] | Yuan Wang [Member]            
Agreement term   1 year        
Shares issued during period, shares | shares   39,000        
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