10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly Report Pursuant to Section 13 Or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended September 30, 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: 000-50155

NF Energy Saving Corporation

(Exact name of registrant as specified in its charter)

Delaware	02-0563302
(State or Other Jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Room 3106 Block C, 390 Qingnian Avenue, Heping District

Shenyang, P. R. China 110002

(Address of Principal Executive Offices)

(8624) 25609775

(Registrant’s Telephone Number, including area code)

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.

x Yes          ¨ 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). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.

Large accelerated filer	¨	Non-accelerated filer	¨
Accelerated filer	¨	Smaller reporting company	x
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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

As of October 31, 2017, the registrant had 7,073,289 shares of common stock, $0.001 par value, issued and outstanding.

STATEMENT REGARDING FORWARD LOOKING INFORMATION

The discussion contained in this 10-Q under the Securities Exchange Act of 1934, as amended, contains forward-looking statements that involve risks and uncertainties. The issuer's actual results could differ significantly from those discussed herein. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "the Company believes," "management believes" and similar language, including those set forth in the discussions under "Notes to Financial Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations " as well as those discussed elsewhere in this Form 10-Q. We base our forward-looking statements on information currently available to us, and we assume no obligation to update them. Statements contained in this Form 10-Q that are not historical facts are forward-looking statements that are subject to the "safe harbor" created by the Private Securities Litigation Reform Act of 1995.

1

TABLE OF CONTENTS

			Page
PART I - FINANCIAL INFORMATION
	ITEM 1 – FINANCIAL STATEMENTS		F-1
	ITEM 2 – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		3
	ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		14
	ITEM 4 – CONTROLS AND PROCEDURE		14
PART II - OTHER INFORMATION
	ITEM 1 – LEGAL PROCEEDINGS		15
	ITEM 1A – RISK FACTORS		15
	ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		15
	ITEM 3 – DEFAULTS UPON SENIOR SECURITIES		15
	ITEM 4 – MINE SAFTEY DISCLOSURES		15
	ITEM 5 – OTHER INFORMATION		15
	ITEM 6 - EXHIBITS		15
		SIGNATURES	16

2

NF ENERGY SAVING CORPORATION

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	Page
Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016 (Audited)	F-2
Condensed Consolidated Statements of Operations And Comprehensive Income for the Three and Nine Months ended September 30, 2017 and 2016	F-3
Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2017 and 2016	F-4
Condensed Consolidated Statement of Stockholders’ Equity for the Nine Months ended September 30, 2017	F-5
Notes to Condensed Consolidated Financial Statements	F-6 to F-17

F-1

NF ENERGY SAVING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2017 AND DECEMBER 31, 2016

(Currency expressed in United States Dollars (“US$”), except for number of shares)

	September 30, 2017			December 31, 2016
	(Unaudited)			(Audited)
ASSETS
Current assets:
Cash and cash equivalents	$	20,828		$	124,637
Accounts receivable, net		7,366,416			6,644,994
Retention receivable, current		572,475			629,680
Inventories		5,148,940			4,606,564
Prepayments and other receivables		4,516,417			3,109,069
Total current assets		176,25,076			15,114,944
Non-current assets:
Property, plant and equipment, net		17,291,384			17,128,235
Land use rights, net		2,620,260			2,555,704
Construction in progress		2,625,765			2,520,234
TOTAL ASSETS	$	40,162,485		$	37,319,117
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable, trade	$	4,704,682		$	3,404,760
Short-term bank borrowings		6,010,970			5,760,618
Amount due to a related party		431,682			431,682
Other payables and accrued liabilities		1,897,579			1,014,999
Total current liabilities		13,044,913			10,612,059
TOTAL LIABILITIES		13,044,913			10,612,059
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value; 50,000,000 shares authorized; 7,073,289 and 7,073,289 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively		7,073			7,073
Additional paid-in capital		12,055,825			12,055,825
Deferred compensation		(64,500	)		(355,200	)
Statutory reserve		2,227,634			2,227,634
Accumulated other comprehensive income		2,034,302			858,502
Retained earnings		10,808,693			11,913,224
Total stockholders’ equity		27,069,027			26,707,058
Non-controlling interest		48,545			-
TOTAL EQUITY		27,117,572			26,707,058
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	40,162,485		$	37,319,117

See accompanying notes to condensed consolidated financial statements.

F-2

NF ENERGY SAVING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF

OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2017			2016			2017			2016
REVENUE, NET:
Product	$	1,103,952		$	1,366,905		$	3,678,341		$	3,603,738
Services		37,968			33,447			177,024			41,028
Total operating revenues, net		1,141,920			1,400,352			3,855,365			3,644,766
COST OF REVENUES:
Cost of products		1,082,652			1,462,330			3,207,838			3,593,519
Cost of services		17,319			80,686			185,966			284,418
Total cost of revenues		1,099,971			1,543,016			3,393,804			3,877,937
GROSS PROFIT (LOSS)		41,949			(142,664	)		461,561			(233,171	)
OPERATING EXPENSES:
Sales and marketing		4,181			1,357			82,257			15,016
General and administrative		378,107			154,245			1,224,637			698,488
Total operating expenses		382,288			155,602			1,306,894			713,504
LOSS FROM OPERATIONS		(340,339	)		(298,266	)		(845,333	)		(946,675	)
Other (expense) income:
Other income		-			2,739			-			2,788
Interest income		2,689			-			2,809			14,325
Interest expense		(89,214	)		(85,923	)		(267,240	)		(271,508	)
Total other expense		(86,525	)		(83,184	)		(264,431	)		(254,395	)
LOSS BEFORE INCOME TAXES		(426,864	)		(381,450	)		(1,109,764	)		(1,201,070	)
Income tax expense		(51	)		(182	)		(2,723	)		(248	)
NET LOSS	$	(426,915	)	$	(381,632	)	$	(1,112,487	)	$	(1,201,318	)
Less: Net loss attributable to non-controlling interest		(7,956	)		-			(7,956	)		-
NET LOSS ATTRIBUTABLE TO THE COMPANY	$	(418,959	)	$	(381,632	)	$	(1,104,531	)	$	(1,201,318	)
Other comprehensive income (loss):
– Foreign currency translation gain (loss)		489,771			(115,838	)		1,175,800			(815,224	)
COMPREHENSIVE INCOME (LOSS)	$	70,812		$	(497,470	)	$	71,269		$	(2,016,542	)
Net loss per share
– Basic	$	(0.06	)	$	(0.06	)	$	(0.16	)	$	(0.18	)
– Diluted	$	(0.06	)	$	(0.06	)	$	(0.16	)	$	(0.18	)
Weighted average common shares outstanding
– Basic		7,073,289			6,577,831			7,073,289			6,577,831
– Diluted		7,073,289			6,577,831			7,073,289			6,577,831

See accompanying notes to condensed consolidated financial statements.

F-3

NF ENERGY SAVING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

	Nine months ended September 30,
	2017			2016
Cash flows from operating activities:
Net loss	$	(1,112,487	)	$	(1,201,318	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		613,797			577,270
Stock based compensation		290,700			38,400
Change in operating assets and liabilities:
Accounts and retention receivable		(340,330	)		(400,802	)
Inventories		(334,574	)		1,591,606
Prepayments and other receivables		(1,205,686	)		(77,877	)
Accounts payable		1,126,355			(927,553	)
Other payables and accrued liabilities		829,762			244,712
Net cash used in operating activities		(132,463	)		(155,562	)
Cash flows from investing activities:
Payments on construction in progress		3,908			(1,814	)
Net cash used in investing activities		3,908			(1,814	)
Cash flows from financing activities:
Decrease in restricted cash		-			1,823,919
Repayment on bank demand notes		-			(1,816,319	)
Advance from non-controlling interest		16,385			-
Proceeds from short-term bank borrowings		5,877,397			6,079,730
Repayment on short-term bank borrowings		(5,877,397	)		(6,079,730	)
Net cash provided by financing activities		16,385			7,600
Effect on exchange rate change on cash and cash equivalents		8,361			(11,397	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(103,809	)		(161,173	)
BEGINNING OF PERIOD		124,637			434,571
END OF PERIOD	$	20,828		$	273,398
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for tax	$	2,723		$	248
Cash paid for interest	$	267,240		$	271,508
NON-CASH FINANCING AND INVESTING TRANSACTIONS:
Transfer from construction in progress to plant and equipment	$	-		$	6,014,313

See accompanying notes to condensed consolidated financial statements.

F-4

NF ENERGY SAVING CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

	Common stock				Additional		Deferred			Statutory		Accumulated other comprehensive		Retained			Total NFEC stockholders’			Non- controlling			Total
	No. of shares		Amount		paid-in capital		compensation			reserve		income		earnings			equity			interest			equity
Balance as of January 1, 2017		7,073,289	$	7,073	$	12,055,825	$	(355,200	)	$	2,227,634	$	858,502	$	11,913,224		$	26,707,058		$	-		$	26,707,058
Contribution from non-controlling interest		-		-		-		-			-		-		-			-			56,204			56,204
Amortization of deferred compensation		-		-		-		290,700			-		-		-			290,700			-			290,700
Foreign currency translation adjustment		-		-		-		-			-		1,175,800		-			1,175,800			297			1,176,097
Net loss for the period		-		-		-		-			-		-		(1,104,531	)		(1,104,531	)		(7,956	)		(1,112,487	)
Balance as of September 30, 2017		7,073,289	$	7,073	$	12,055,825	$	(64,500	)	$	2,227,634	$	2,034,302	$	10,808,693		$	27,069,027		$	48,545		$	27,117,572

See accompanying notes to condensed consolidated financial statements.

F-5

NF ENERGY SAVING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

NOTE–1 BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States (“GAAP”), and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.

In the opinion of management, the consolidated balance sheet as of December 31, 2016 which has been derived from audited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the period ended September 30, 2017 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2017 or for any future period.

These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2016.

NOTE–2 ORGANIZATION AND BUSINESS BACKGROUND

NF Energy Saving Corporation (the “Company” or “NFEC”) was incorporated in the State of Delaware in the name of Galli Process, Inc. on October 31, 2000. On February 7, 2002, the Company changed its name to “Global Broadcast Group, Inc.” On November 12, 2004, the Company changed its name to “Diagnostic Corporation of America.” On March 15, 2007, the Company changed its name to “NF Energy Saving Corporation of America.” On August 24, 2009, the Company further changed its name to “NF Energy Saving Corporation.”

The Company, through its subsidiaries, mainly engages in the production of heavy industrial components and products such as valves and the provision of technical service and re-engineering projects in the energy saving related industry in the People’s Republic of China (the “PRC”). All the customers are located in the PRC.

Description of subsidiaries

Name	Place of incorporation and kind of legal entity	Principal activities and place of operation	Particulars of issued/ registered share capital	Effective interest held
Liaoning Nengfa Weiye Energy Technology Co. Ltd (“Nengfa Energy”)	The PRC, a limited liability company	Production of a variety of industrial valve components which are widely used in water supply and sewage system, coal and gas fields, power generation stations, petroleum and chemical industries in the PRC	US$5,000,000	100%
Liaoning Nengfa Tiefa Import & Export Co. Ltd (“Nengfa Tiefa Import & Export”)	The PRC, a limited liability company	Development and production of hi-tech and automatic-intelligence valve products	RMB877,192	57%

NFEC and its subsidiaries are hereinafter referred to as (the “Company”).

F-6

NF ENERGY SAVING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

NOTE–3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying condensed consolidated financial statements and notes.

l Use of estimates

In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses during the periods reported. Actual results may differ from these estimates.

l Basis of consolidation

The condensed consolidated financial statements include the financial statements of NFEC and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.

l Non-controlling interests

Non-controlling interests represent the equity interest in the capital contributions, income and loss of less than wholly-owned and consolidated entities that is not attributable to the Company.

l Cash and cash equivalents

Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.

l Accounts receivable

Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from shipment. Credit is extended based on evaluation of a customer's financial condition, the customer credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of each period, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers.

F-7

NF ENERGY SAVING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

l Retention receivable

Retention receivable is the amount withheld by a customer based upon 5-10% of the contract value, until a product warranty is expired.

l Inventories

Inventories are stated at the lower of cost or market value (net realizable value), cost being determined on a weighted average method. Costs include material, labor and manufacturing overhead costs. The Company quarterly reviews historical sales activity to determine excess, slow moving items and potentially obsolete items and also evaluates the impact of any anticipated changes in future demand. The Company provides inventory allowances based on excess and obsolete inventories determined principally by customer demand. As of September 30, 2017, the Company did not record an allowance for obsolete inventories, nor have there been any write-offs.

l Land use rights

All land in the PRC is owned by the PRC government. The government in the PRC, according to the relevant PRC law, may sell the right to use the land for a specified period of time. Thus, the Company’s land purchase in the PRC is considered to be leasehold land and is stated at cost less accumulated amortization and any recognized impairment loss. Amortization is provided over the term of the land use right agreement on a straight-line basis, which is 50 years and will expire in 2059.

Amortization expense for the three months ended September 30, 2017 and 2016 was $15,463 and $15,515, respectively.

Amortization expense for the nine months ended September 30, 2017 and 2016 was $45,480 and $47,046, respectively.

The estimated amortization expense on the land use right in the next five years and thereafter is as follows:

Period ending September 30:
2018	$	62,018
2019		62,018
2020		62,018
2021		62,018
2022		62,018
Thereafter		2,310,170
Total:	$	2,620,260

F-8

NF ENERGY SAVING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

l Property, plant and equipment

Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:

	Expected useful life	Residual value
Building	30 years	5%
Plant and machinery	10 – 20 years	5%
Furniture, fixture and equipment	5 – 8 years	5%

Expenditure for repairs and maintenance is expensed as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.

Depreciation expense for the three months ended September 30, 2017 and 2016 was $193,171 and $125,419, respectively.

Depreciation expense for the nine months ended September 30, 2017 and 2016 was $568,317 and $530,224, respectively.

l Impairment of long-lived assets

In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets ”, all long-lived assets such as property, plant and equipment held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. There has been no impairment charge for the three and nine months ended September 30, 2017.

l Revenue recognition

The Company offers of the following products and service to its customers:

(a) Sales of energy saving flow control equipment; and

(b) Provision of energy project management and sub-contracting service

In accordance with the ASC Topic 605, “Revenue Recognition”, the Company recognizes revenue when persuasive evidence of an arrangement exists, transfer of title has occurred or services have been rendered, the selling price is fixed or determinable and collectability is reasonably assured.

(a) Sale of products

The Company derives a majority of its revenues from the sale of energy saving flow control equipment. Generally, these products are manufactured and configured to customer requirements. The Company typically produces and builds the energy saving flow control equipment for customers in a period from 1 to 6 months. When the Company completes the production in accordance with the customer’s specification, the customer is required to inspect the finished products for quality and product conditions, to its full satisfaction, then the Company makes delivery to the customer.

The Company recognizes revenue from the sale of such finished products upon delivery to the customer, whereas the title and risk of loss are fully transferred to the customers. The Company records its revenues, net of value added taxes (“VAT”). The Company is subject to VAT which is levied on the majority of the products at the rate of 17% on the invoiced value of sales. The Company experienced no product returns and recorded no reserve for sales returns for the three and nine months ended September 30, 2017 and 2016.

F-9

NF ENERGY SAVING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

(b) Service revenue

Service revenue is primarily derived from energy-saving technical services or project management or sub-contracting services that are not an element of an arrangement for the sale of products. These services are generally billed on a time-cost plus basis, for a period of service time from 2 to 3 months. Revenue is recognized, net of business taxes when the service is rendered and accepted by the customer.

(c) Interest income

Interest income is recognized on a time apportionment basis, taking into account the principal amounts outstanding and the interest rates applicable.

l Comprehensive income

ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying condensed consolidated statement of stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

l Income taxes

Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any 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.

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

For the three and nine months ended September 30, 2017 and 2016, the Company did not have any interest and penalties associated with tax positions. As of September 30, 2017, the Company did not have any significant unrecognized uncertain tax positions.

The Company conducts major businesses in the PRC and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the foreign tax authority.

l Product warranty

Under the terms of the contracts, the Company offers its customers with a free product warranty on a case-by-case basis, depending upon the type of customers, nature and size of the infrastructure projects. Under such arrangements, a portion of the project contract balance (usually 5% to 10% of contract value) is withheld by a customer from 12 to 24 months, until the product warranty has expired. The Company has not experienced any material returns or claims where it was under obligation to honor this standard warranty provision. As such, no reserve for product warranty has been provided in the result of operations for the three and nine months ended September 30, 2017 and 2016.

F-10

NF ENERGY SAVING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

l Net income per share

The Company calculates net income per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.

l Foreign currencies translation

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.

The reporting currency of the Company is the United States Dollar ("US$"). The Company's subsidiaries in the PRC maintain their books and records in their local currency, the Renminbi Yuan ("RMB"), which is the functional currency as being the primary currency of the economic environment in which these entities operate.

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement ”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.

Translation of amounts from RMB into US$1 has been made at the following exchange rates for the respective period:

	September 30, 2017		September 30, 2016
Period-end RMB:US$1 exchange rate		6.65450		6.66938
Average period RMB:US$1 exchange rate		6.80573		6.57924

l Related parties

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

l Segment reporting

ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. The Company operates in two reportable operating segments in the PRC.

F-11

NF ENERGY SAVING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

l Stock based compensation

The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable.

l Fair value of financial instruments

The carrying value of the Company’s financial instruments (excluding short-term bank borrowing and note payable): cash and cash equivalents, accounts and retention receivable, prepayments and other receivables, accounts payable, income tax payable, amount due to a related party, other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments.

Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of short-term bank borrowings and note payable approximate the carrying amount.

The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” ("ASC 820-10"), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

● Level 1: Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets;

● Level 2: Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs; and

● Level 3: Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models.

Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

l Recent accounting pronouncements

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

F-12

NF ENERGY SAVING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

NOTE–4 ACCOUNTS AND RETENTION RECEIVABLES

The majority of the Company’s sales are on open credit terms and in accordance with terms specified in the contracts governing the relevant transactions. The Company evaluates the need of an allowance for doubtful accounts based on specifically identified amounts that management believes to be uncollectible. If actual collections experience changes, revisions to the allowance may be required.

	September 30, 2017			December 31, 2016
	(Unaudited)			(Audited)
Accounts receivable, cost	$	8,109,659		$	7,357,282
Retention receivable, cost		572,475			629,680
		8,682,134			7,986,962
Less: allowance for doubtful accounts		(743,243	)		(712,288	)
Accounts and retention receivable, net	$	7,938,891		$	7,274,674

As of October 31, 2017, the Company has subsequently recovered from approximately 2% of accounts and retention receivable as of September 30, 2017.

NOTE–5 INVENTORY

	September 30, 2017		December 31, 2016
	(Unaudited)		(Audited)
Raw materials	$	592,998	$	519,500
Work-in-process		612,238		402,425
Finished goods		3,943,704		3,684,639
	$	5,148,940	$	4,606,564

For the three and nine months ended September 30, 2017 and 2016, no allowance for obsolete inventories was recorded by the Company.

Finished goods are expected to be delivered to the customer in the next twelve months.

NOTE–6 SHORT-TERM BANK BORROWINGS

Short-term bank borrowings consist of the following:

	September 30, 2017		December 31, 2016
Payable to financial institutions in the PRC:
Equivalent to RMB40,000,000 with interest rate at 1.28 times of the Bank of China Benchmark Lending Rate, monthly payable, due March 20, 2017, which is guaranteed by its vendor	$	-	$	5,760,618
Equivalent to RMB40,000,000 with interest rate at 1.28 times of the Bank of China Benchmark Lending Rate, monthly payable, due March 19, 2018, which is guaranteed by its vendor		6,010,970		-
Total short-term bank borrowings	$	6,010,970	$	5,760,618

F-13

NF ENERGY SAVING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

The effective Bank of China Benchmark Lending rate is 6% and 6% per annum for the three and nine months ended September 30, 2017 and 2016.

NOTE–7 AMOUNT DUE TO A RELATED PARTY

As of September 30, 2017, the amount due to a related party represented temporary advances made by the Company’s major stockholder, Pelaris International Ltd, which is controlled by Ms. Li Hua Wang (the Company’s CFO) and Mr. Gang Li (the Company’s CEO), which was unsecured, interest-free with no fixed repayment term. Imputed interest on this amount is considered insignificant.

NOTE–8 OTHER PAYABLES AND ACCRUED LIABILITIES

Other payables and accrued liabilities consisted of the following:

	September 30, 2017		December 31, 2016
	(Unaudited)		(Audited)
Customer deposits	$	608,927	$	487,175
Advance from employees		675,086		-
Value added tax payable		12,563		89,471
Accrued operating expenses		555,239		387,981
Other payable		45,764		50,372
	$	1,897,579	$	1,014,999

NOTE–9 INCOME TAXES

NFEC is incorporated in the State of Delaware and is subject to the tax laws of United States of America.

As of September 30, 2017, the operations in the United States of America incurred $3,638,325 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss carryforwards begin to expire in 2037, if unutilized. The Company has provided for a full valuation allowance against the deferred tax assets of $1,237,031 on the expected future tax benefits from the net operating loss carryforwards as management believes it is more likely than not that these assets will not be realized in the future.

The Company’s subsidiaries operating in the PRC are subject to the Corporate Income Tax Law of the People’s Republic of China at a unified income tax rate of 25%. The reconciliation of income tax rate to the effective income tax rate for the nine months ended September 30, 2017 and 2016 is as follows:

	Nine months ended September 30,
	2017			2016
Loss before income taxes from PRC operation	$	(709,663	)	$	(1,119,393	)
Statutory income tax rate		25	%		25	%
Income tax expense at statutory rate		(177,416	)		(279,848	)
Effect from non-deductible items		180,139			280,096
Income tax expense	$	2,723		$	248

F-14

NF ENERGY SAVING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

NOTE–10 STOCKHOLDERS’ EQUITY

As of September 30, 2017, the Company had a total of 7,073,289 shares of its common stock issued and outstanding.

NOTE–11 CONCENTRATIONS OF RISK

The Company is exposed to the following concentrations of risk:

(a) Major customers

For the three and nine months ended September 30, 2017 and 2016, the customers who accounted for 10% or more of the Company’s revenues and its outstanding receivable balances as at period-end dates, are presented as follows:

	Three months ended September 30, 2017						September 30, 2017
Customers	Sales		Percentage of sales				Accounts and retention receivable
Customer A	$	828,573		73	%	Total:	$	7,889,415

		Nine months ended September 30, 2017						September 30, 2017
Customers		Sales		Percentage of sales				Accounts and retention receivable
Customer A		$	2,460,866		64	%		$	7,889,415
Customer B			448,519		12	%			461,557
	Total:	$	2,909,385		76	%	Total:	$	8,350,972

	Three months ended September 30, 2016					September 30, 2016
	Sales		Percentage of sales			Accounts and retention receivable
Customer A	$	1,338,045		96	%	$	7,218,593

	Nine months ended September 30, 2016					September 30, 2016
	Sales		Percentage of sales			Accounts and retention receivable
Customer A	$	3,441,483		94	%	$	7,218,593

F-15

NF ENERGY SAVING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

All major customers are located in the PRC.

(b) Major vendors

For the three and nine months ended September 30, 2017 and 2016, the vendors who accounted for 10% or more of the Company’s purchases and its outstanding payable balances as at period-end dates, are presented as follows:

		Three months ended September 30, 2017						September 30, 2017
Vendors		Purchases		Percentage of purchases				Accounts payable
Vendor D		$	74,550		37	%		$	-
Vendor E			84,261		42	%			147,035
	Total:	$	158,811		79	%	Total:	$	147,035

		Nine months ended September 30, 2017						September 30, 2017
Vendors		Purchases		Percentage of purchases				Accounts payable
Vendor D			453,965		45	%			-
Vendor E			179,586		18	%			147,035
	Total:	$	633,551		63	%	Total:	$	147,035

	Three months ended September 30, 2016					September 30, 2016
	Purchases		Percentage of purchases			Accounts payable
Vendor C	$	88,350		33	%	$	129,011
Vendor D		155,972		59	%		705
		244,322		92	%		129,716

		Nine months ended September 30, 2016						September 30, 2016
Vendors		Purchases		Percentage of purchases				Accounts payable
Vendor A		$	117,460		20	%		$	158,947
Vendor B			85,510		15	%			-
Vendor C			562,590		23	%			129,011
Vendor D			155,972		27	%			705
	Total:	$	921,532		85	%	Total:	$	288,663

All vendors are located in the PRC.

(c) Credit risk

Financial instruments that are potentially subject to credit risk consist principally of trade receivables. The Company believes the concentration of credit risk in its trade receivables is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateral from customers. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.

F-16

NF ENERGY SAVING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

(d) Interest rate risk

As the Company has no significant interest-bearing assets, the Company’s income and operating cash flows are substantially independent of changes in market interest rates.

The Company’s interest-rate risk arises from borrowing under notes and bank borrowings. The Company manages interest rate risk by varying the issuance and maturity dates variable rate debt, limiting the amount of variable rate debt, and continually monitoring the effects of market changes in interest rates. As of September 30, 2017, borrowings under related party notes were at fixed rates and short-term bank borrowings were at variable rates.

(e) Exchange rate risk

The reporting currency of the Company is US$, to date the majority of the revenues and costs are denominated in RMB and a significant portion of the assets and liabilities are denominated in RMB. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between US$ and RMB. If RMB depreciates against US$, the value of RMB revenues and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial instruments that expose to substantial market risk.

(f) Economic and political risks

The Company's operations are conducted in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy.

The Company's operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation.

NOTE–12 SUBSEQUENT EVENTS

The Company evaluated subsequent events through the date the financial statements were issued and filed with this Form 10-Q. There were no subsequent events that required recognition or disclosure.

F-17

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

As used herein the terms “we”, “us”, “our,” “NFEC” and the “Company” means, NF Energy Saving Corporation, a Delaware corporation, formerly known as NF Energy Saving Corporation of America, Diagnostic Corporation of America, Global Broadcast Group, Inc., and Galli Process, Inc. These terms also include our subsidiaries, Liaoning Nengfa Weiye Energy Technology Company Ltd., a corporation organized and existing under the laws of the Peoples’ Republic of China (“PRC”), and Liaoning Nengfa Weiye Smart Valve Technology Co., Ltd., a limited liability corporation organized and existing under the laws of the PRC.

NF Energy Saving Corporation was incorporated under the laws of the State of Delaware in the name of Galli Process, Inc. on October 31, 2000 for the purpose of seeking and consummating a merger or acquisition with a business entity organized as a private corporation, partnership, or sole proprietorship. On December 31, 2001, Galli Process, Inc. became a majority owned subsidiary of City View TV, Inc., a Florida corporation (“City View”). On February 7, 2002, Galli Process, Inc. changed its name to Global Broadcast Group, Inc. On March 1, 2002, City View merged into Global Broadcast Group, Inc., which was the surviving entity. On November 12, 2004, the Company changed its name to Diagnostic Corporation of America. On March 15, 2007, we changed our name to NF Energy Saving Corporation of America, and on August 24, 2009, the Company further changed its name to NF Energy Saving Corporation, in both instances to more accurately reflect our business after a stock exchange transaction with Neng Fa. Our principal place of business is Room 3106, Tower C, 390 Qingnian Avenue, Heping District, Shenyang, P. R. China 110015. Our telephone number is (8624) 2560-9775.

On November 15, 2006, we executed a Plan of Exchange ("Plan of Exchange"), among the Company, Neng Fa, the shareholders of Neng Fa (the "Neng Fa Shareholders") and Gang Li, our Chairman and Chief Executive Officer ("Mr. Li"). Pursuant to and at the closing of the Plan of Exchange, which occurred on November 30, 2006, we issued to the Neng Fa Shareholders 12,000,000 shares of our common stock, or 89.4% of our then outstanding common stock, in exchange for all of the shares of capital stock of Neng Fa owned by the Neng Fa Shareholders. Immediately upon the closing, Neng Fa became our 100% owned subsidiary, and the Company ceased all of its other operations and adopted and implemented the business plan of Neng Fa.

Nengfa Energy’s area of business includes research and development, processing, manufacturing, marketing and distribution of energy saving flow control equipment; manufacturing, marketing and distribution of energy equipment and fittings; energy saving technical reconstruction; and energy saving technology consulting services, providing comprehensive solutions for energy-saving emission reduction.

On August 26, 2009, the Company completed a 3 for 1 reverse stock split. The total number of then outstanding shares of common stock changed from 39,872,704 pre-split to 13,291,387 post-split.

On September 15, 2010, the Company completed a 2.5 for 1 reverse share split of its common stock, the total number of outstanding shares of common stock changed from 13,315,486 pre-split to 5,326,501 post-split.

On October 4, 2010, our common stock commenced trading on the Nasdaq Global Market. On March 7, 2012, upon approval by Nasdaq, our common stock transferred from the Nasdaq Global Market to the Nasdaq Capital Market, Our common stock trades on the Nasdaq Stock Market under the ticker symbol “NFEC”.

On November 26, 2015, a new company devoting to intelligent products was set up which is named “Liaoning Nengfa Weiye Smart Valve Technology Co. Ltd”. (“Nengfa Smart Valve”). “Liaoning Nengfa Weiye Energy Technology Co. Ltd” owns approximately 40% of the shares in this new company. On March 8, 2017, “Liaoning Nengfa Weiye Smart Valve Technology Co. Ltd was renamed by “Liaoning Nengfa Tiefa Import and Export Sales Company” in order to make further business activities.

3

NFEC is dedicated to energy efficiency enhancement in two fields: (1) manufacturing large diameter energy efficient intelligent flow control systems for thermal and nuclear power generation plants, major national and regional water supply projects and municipal water, gas and heat supply pipeline networks; and (2) energy saving technology consulting, optimization design services, energy saving reconstruction of pipeline networks and contractual energy management services for China’s electric power, petrochemical, coal, metallurgy, construction, and municipal infrastructure industries.

NFEC has received many awards and honors from China's regulators, professional associations and renowned international organizations, including the ISO 9001:2008 certification from Det Norske Veritas Management System, the Liaoning Provincial Government's Award of Innovative Enterprise with Best Investment Return Potentials, the Special Industrial Contribution Award of the ESCO Committee of China Energy Conservation Association, and the “Contract-abiding and credit enterprise” Award by the Liaoning State Local administrative bureau for industry and commerce. NFEC was awarded of “Hi-tech enterprise” by Liaoning Technology bureau in 2013.

NFEC enjoys a reputation as a leader and dedicated energy saving company in China for over 15 years. Its professional capacity as a provider of energy services is officially certified by China’s National Development and Reform Commission (NDRC). It has been a corporate member on the Board of the ESCO Committee of China Energy Conservation Association and a founding member of China Standardization and Technical Consortium for Energy Conservation and Emission.

As a certified energy service provider, NFEC is entitled to various tax breaks and energy saving awards created by Chinese governments at national, provincial and local levels. The major tax incentives by the central government include a two-year corporate income tax exemption plus a three-year reduction of corporation income tax for all energy performance based, profit sharing energy service projects. The government policy also incentivizes NFEC's clients with tax refunds on goods and properties of the energy saving projects when NFEC transfers to them at the end of the energy service contracts.

The current principal development focus of NFEC is to improve the product, such as large intelligent flow control facility and to provide our Company with more advanced technology to supply high grade energy efficient and safety reliant products for high end markets.

Our corporate goal is to maintain our established position as a leading provider of energy efficiency flow control systems, a cutting edge innovator with clean energy and energy efficiency technologies, and a total energy efficiency solution and service provider dedicated to maximum returns to our investors, partners, clients and environment.

Our products and services include the manufacturing and sales of energy-saving flow control equipment, energy saving technology consulting, optimization design services, energy saving reconstruction of pipeline networks and contractual energy management services for China’s electric power, water power, petrochemical, coal, metallurgy, construction, and municipal infrastructure development industries.

Examples of contracts entered into by the Company or its subsidiaries are:

· In 2007, Nengfa Energy received contracts for our products and services to be used in three sections of the Middle Section-Jingshi Section of the national project to redirect the water from China’s southern rivers to the north of the country. This phase of the project was completed and passed inspection in 2008.

· In 2008, the Company received flow control equipment contracts from seven cities in Liaoning Province for their water supply systems.

· In 2009, the Company was awarded several flow control equipment supply contracts, including one for the Xijiang diversion project of Guandong Province, and one for Phase 1 of Guangdong Yuedian Huilai Power Plant.

4

· In 2012, the Company received contracts from Beijing South to North Water Diversion Operation and Management Center, Shanxi Kegong Longsheng technology Ltd, Huaihu Coal Ltd, Chongqing Water-Turbine Ltd, Shenergy Company Limited, Shanghai Qingcaosha City-Environment Project (South Branch Project), Luanhe Power station of China Guodian Corporation, Qiangui power Ltd, Guizhou Province, Guihang Nenghuan refrigeration engineering Ltd, Shanghai City, Electric power construction corporation (Zambia’s project), Shandong Province; Lu Electric International Trading corporation, and Shandong Province ( Philippines project).

· In 2013, the Company received contracts from Zheneng Zhenhai gas thermal power Ltd; Chongqing water turbine factory Ltd; Chongqing Wanliu power Ltd ; Dalian Petrochemical Company of Petro of China ; China National Electric Power Engineering Ltd ; Xinyu iron and steel Ltd; Shandong Electric Power Corporation; Jiajie gas-fired cogeneration branch of Shanxi new energy industry group; and the Amedyan Power Ltd of State Grid; Chuangshi Energy Ltd, Beijing; Peiling Water-resource Development Ltd, Chongqing; Iron and Steel Ltd, Maanshan; Oilfield Construction Group Ltd, Daqing ; Harbin Air-condition Ltd; China resources power (haifeng) Ltd.

· In 2014, the Company received contracts from LXB Water Supply Co., Ltd. Shandong Luneng Huaneng Power International Trade Company of Taiyuan Dongshan Gas Turbine Thermal Power Co., Ltd., Beijing Sea of Inner Mongolia Coal Gangue Power Co., Ltd. and other companies. At the same time, the Company has also completed the installation of desulfurization, denitration and dust removal systems at the 660T/h boiler room of the Chinese Aviation Company.

· In 2015, the Company received contracts from Gansu Coal Group Co. Ltd, Nanning Tiefa Valve Co., Ltd, Weinan Dongnan Bureau, Shanxi Ruiguang power Co., Ltd and Harbin Binhe Technology Co., Ltd, Chifeng Jianxi Shangrao water diversion project, Inner Mongolia Caisen hydropower station, Chifeng Xincheng thermal power co., Ltd, Sinkiangr conservancy hub project and Italian Tecnedil International SRL, etc.

· In 2016, the Company received contracts from the 2*660MW project of a subsidiary of State Grid, Shanxin, a 2*660MW low calorific coal power generation project and the Hubei Huanggang cogeneration project, Jiangsu Guohua Chenjia Gang power co.,Ltd, Shandong electric power construction co., Ltd, 2*350 MW cogeneration project of Shandong Junan Liyuan Thermal Power Co., Ltd., 2*1000 MW circulating water system project of Guangdong Datang International Leizhou Power Plant, 2*1000 MW of coal-fired power generating project of Shanxin Shentou Power Co. Ltd, 2*660 MW generator project of North China Power Engineering (Beijing) Co., Ltd and Liaoning Dahufang reservoir water diversion project etc.

· In 2017, the Company received contracts from JATIGATE hydroelectric station, Indonesia, Sinkiang Production and Construction Group and Siehuan Dongfa Electric Co. Ltd,China Nuclear Qiqihar environmental protection technology Co. Ltd., for the first phase of an oxidation pond deep processing project; Chongqing water turbine Co., Ltd., for the huangshan dragon hydropower station renovation project in Vietnam; and Chongqing new century electrical Co. Ltd., for the NHESANJEN hydropower station renovation project in Nepal,Zhejiang Zhenhai power plant coal-fired units move renovation project, Wanhua chemical (Ningbo) electric co., Ltd. Valve supply water system project, Chongqing New Century electrical co., Ltd power projects in Pakistan.

FORWARD LOOKING STATEMENTS

Certain statements in this report, including statements of our expectations, intentions, plans and beliefs, including those contained in or implied by "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Notes to Consolidated Financial Statements, are "forward-looking statements", within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are subject to certain events, risks and uncertainties that may be outside our control. The words “believe”, “expect”, “anticipate”, “optimistic”, “intend”, “will”, and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update or revise any forward-looking statements. These forward-looking statements include statements of management's plans and objectives for our future operations and statements of future economic performance, information regarding our expansion and possible results from expansion, our expected growth, our capital budget and future capital requirements, the availability of funds and our ability to meet future capital needs, the realization of our deferred tax assets, and the assumptions described in this report underlying such forward-looking statements. Actual results and developments could differ materially from those expressed in or implied by such statements due to a number of factors, including, without limitation, those described in the context of such forward-looking statements, our expansion and acquisition strategy, our ability to achieve operating efficiencies, industry pricing and technology trends, evolving industry standards, general economic and business conditions, the strength and financial resources of our competitors, our ability to find and retain skilled personnel, the political and economic climate in which we conduct operations and the risk factors described from time to time in our other documents and reports filed with the Securities and Exchange Commission (the "Commission"). Additional factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to: 1) our ability to successfully develop, manufacture and deliver our products on a timely basis and in compliance with our contract terms; 2) our ability to compete effectively with other companies in our industry segments; 3) our ability to raise capital or generate sufficient working capital in order to effectuate our business plan; 4) our ability to retain our key executives; and 5) our ability to win and perform significant construction and infrastructure projects.

5

CRITICAL ACCOUNTING POLICIES

An appreciation of our critical accounting policies is necessary to understand our financial results. These policies may require management to make difficult and subjective judgments regarding uncertainties, and as a result, such estimates may significantly impact our financial results. The precision of these estimates and the likelihood of future changes depend on a number of underlying variables and a range of possible outcomes. We applied our critical accounting policies and estimation methods consistently in all periods presented.

Revenue Recognition

In accordance with the ASC Topic 605, “Revenue Recognition”, the Company recognizes revenue when persuasive evidence of an arrangement exists, transfer of title has occurred or services have been rendered, the selling price is fixed or determinable and collectability is reasonably assured.

The Company’s revenue is principally derived from three primary sources: Sales of energy saving flow control equipment and provision of energy project management and sub-contracting services.

(a) Sale of products

The Company derives a majority of its revenues from the sale of energy saving flow control equipment. Generally, the energy saving flow control equipment is manufactured and configured to customer requirements. The Company typically produces the energy saving flow control equipment for customers over a period from one to nine months. When the Company completes production in accordance with the customer’s specification, the customer is required to inspect the finished products at the Company’s plant to approve quality and conformity and make final acceptance. Once the product is accepted by the customer, the Company undertakes delivery to the customer, usually within a month.

The Company recognizes revenue from the sale of such finished products upon delivery to the customers, when the title and risk of loss are fully transferred to the customers. The Company records its revenues, net of value added taxes (“VAT”). The VAT rate is 17%.

6

(b) Service revenue

Service revenue is derived from energy-saving technical services, project management or sub-contracting services. These services are generally billed on a time-cost plus basis, for the period of service provided, which is generally from two to nine months. Revenue is recognized when the service is rendered and accepted by the customer.

(c) Interest income

Interest income is recognized on a time apportionment basis, taking into account the principal amounts outstanding and the interest rates applicable.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount, do not bear interest and are due within the contractual payment terms, generally 30 to 90 days from shipment. Credit is extended based on evaluation of a customer's financial condition, the customer’s credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of each period, the Company specifically evaluates each individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivable. The Company will consider an allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection has been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers.

For most of our contracts, our customers are generally large or stated-owned construction contractors or developers mainly engaged in government-sponsored infrastructure projects such as large hydraulic/aqua-engineering projects, power plants and urban sewage network projects in the PRC. Usually, these infrastructure projects are undertaken in a number of phases over a certain period of time. Our flow control equipment components are generally considered as major or significant components in the development phase of these infrastructure projects. As is standard in our industry practice, we are paid by these contractors and/or developers when they have been paid by the local government or state-owned enterprises after the full inspection of each milestone during each construction phase. Given that the construction of these infrastructure projects are very large, complex, and requires a high of quality level at completion, the inspection process may take a considerable amount of time. Therefore, we may not collect the accounts receivable in a timely manner or only after a period longer than our agreed payment terms.

We have a high level of assurance on the recoverability of these accounts receivable, based on our ongoing assessment of customers’ credit-worthiness and their payment history. These customers are usually large state-owned corporations with good credit ratings. At the end of each period, we specifically evaluate the structure and collectability of accounts receivable and for receivables that are past due or not being paid according to the payment terms, we take appropriate action to exhaust all means of collection, including seeking legal resolution in a court of law. For customers with large amounts of accounts receivable, we may take other steps, such as limiting sales and changing payment terms and requesting forms of security. We will consider an adjustment to the allowance for doubtful accounts for any estimated losses resulting from the inability of our customers to make required payments.

Account balances are charged off against the allowance for doubtful accounts after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure related to its customers.

7

Product Warranties

Under the terms of its contracts, the Company offers a free 12 to 24 months of product warranty on a case-by–case basis, depending upon the type of customer, and the nature and size of the infrastructure project. Under such arrangements, a portion of the project contract balance (usually 5-10% of contract value) is withheld by a customer from 12 to 24 months, until the product warranty has expired. The Company has not experienced any material returns under this warranty provision.

Inventories

Inventories are stated at the lower of cost or market (net realizable value), with the cost being determined on a weighted average method. Costs include material, labor and manufacturing overhead costs. Quarterly, the Company reviews historical sales activity to determine excess, slow moving items and potentially obsolete items and also evaluates the impact of any anticipated changes in future demand. The Company provides inventory allowances based on excess and obsolete inventories determined principally by customer demand.

Plant and Equipment

Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:

	Expected useful life	Residual value
Building	30–50 years	5%
Plant and machinery	10–20 years	5%
Furniture, fixture and equipment	5–8 years	5%

Expenditure for repairs and maintenance is expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.

Land Use Rights

All land in the PRC is owned by the PRC government. The government in the PRC, according to the relevant PRC law, may sell the right to use the land for a specified period of time. Thus, the Company’s land purchase in the PRC is considered to be leasehold land and is stated at cost less accumulated amortization and any recognized impairment loss. Amortization is provided over the term of the land use right agreement on a straight-line basis, which is 50 years and will expire in 2059.

Income Taxes

Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes ” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any 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.

8

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

Foreign Currencies Translation

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the condensed consolidated statement of operations.

The reporting currency of the Company is the United States dollar ("US$"). The Company's subsidiaries in the PRC, Nengfa Energy and Nengfa Smart Valve maintain their books and records in the local currency of the PRC, the Renminbi ("RMB"), which is the primary currency of the economic environment in which these entities operate.

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.

Translation of amounts from RMB into US$ has been made at the following exchange rates for the respective period:

	September 30, 2017		September 30, 2016
Period-end RMB:US$1 exchange rate		6.65450		6.66938
Average period RMB:US$1 exchange rate		6.80573		6.57924

RESULTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

REVENUES

Total revenues were $1,141,920 and $3,855,365 for the three and nine months ended September 30, 2017 respectively, as compared to $1,400,352 and $3,644,766 for the corresponding period in 2016. Total revenues decreased by $258,432 and increased by $210,599, or 18.45% and 5.78% for the three and nine months ended September 30, 2017, respectively, as compared to total revenues for the three and nine months ended September 30, 2016. The increase in total revenue for the nine months was primarily due to the increase in service revenue.

Product Revenues

Product revenues are derived principally from the sale of self-manufactured products relating to energy- saving flow control equipment. Product revenues were $1,103,952 and $3,678,341 or 96.67% and 95.40% of total revenues for the three and nine months ended September 30, 2017, respectively, as compared to 1,366,905and $3,603,738, or 97.61% and 98.87% of total revenues, for the corresponding period in 2016. Product revenues decreased by $262,953 and increased by $74,603, or 19.23% and 2.07%for the three and nine months ended September 30, 2017, respectively, as compared to the same period in 2016. The increase in product revenue over the prior nine-month period was primarily due to the increase in total orders.

9

Service Revenues

Service revenues are derived principally from energy-saving technical services and product collaboration processing services. The energy-saving technical services include providing energy saving auditing, conservation plans, and/or related service reports. Service revenues were $37,968 and $177,024, or 3.32% and 4.59% of total revenues for the three and nine months ended September 30, 2017 respectively, as compared to $33,447and $41,028, or 2.38% and 1.12% of total revenues for the corresponding period in 2016. Service revenues increased by $4,521 and $135,996, or 13.52% and 331.47% for the three and nine months ended September 30, 2017, respectively, compared to the corresponding period in 2016. The increase in service revenue was primarily due to the increased in orders relating to product collaboration processing services.

COSTS AND EXPENSES

Cost of Revenues

Cost of revenues consists primarily of material costs, direct labor, depreciation and manufacturing overhead, which are directly attributable to the manufacturing of products and the rendering of services. Total cost of revenues was $1,099,971 and $3,393,804 for the three and nine months ended September 30, 2017 respectively, as compared to $1,543,016 and $3,877,937 for the corresponding three and nine months in 2016, a decrease of $443,045 and $484,133 or 28.71% and 12.48%. The decrease in cost of revenues for the nine-month period was primarily due to the completion of production relating to the LXB Water Supply Project which lead to an increase in product revenue and a decrease in cost of product.

The overall gross profit for the Company was $41,949 and 461,561 (3.67% and 11.97% margin) for the three and nine months ended September 30, 2017, respectively, as compared to -$142,664 and -$233,171 (-10.18% and -6.39% margin) for the corresponding three and nine months in 2016, respectively, an increase of $184,613 and $694,732, or 129.40% and 297.95% as compared to the corresponding period in 2016. The increase in gross profit margin was primarily due to the increase in product revenues derived from higher margined products.

Cost of Products

Total cost of products was $1,082,652 and $3,207,838 for the three and nine months ended September 30, 2017, respectively, as compared to $1,462,330 and $3,593,519 for the corresponding period in 2016, a decrease of $379,678 and $385,681, or 25.96% and 10.73%. This decrease for the nine-month period is primarily due to the decreased in cost of product relating to the LXB Water Supply Project.

The gross profit for products was $21,300 and $470,503(1.93% and 12.79% margin) for the three and nine months ended September 30, 2017, respectively, as compared to -$95,425 and $10,219 (-6.98% and 0.28% margin) for the corresponding three and nine months in 2016, an increase of $116,725 and $460,284 or 122.32% and 4504.20%. This increase is primarily due to the increase in product revenues derived from higher margined products.

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Cost of Services

The cost of services was $17,319 and $185,966 for the three and nine months ended September 30, 2017, respectively, as compared to $80,686 and $284,418 for the corresponding period in 2016, a decrease of $63,367 and 98,452 or 78.53% and 34.61%,respectively. This decrease for the nine-month period is primarily due to the increase in service revenues this year and the decrease in amortization of fix costs from last year.

The gross profit for services was 20,649 and -$8,942 for the three and nine months ended September 30, 2017 respectively (54.38% and -5.05% margin), as compared to -$47,239 and -$243,390 (-141.23% and --593.22% margin) for the corresponding period in 2016. This increase is primarily due to the decrease in amortization of fix costs relating to service revenue from last year.

Operating Expenses

Total operating expenses were $382,288 and $1,306,894 for the three and nine months ended September 30, 2017 respectively, as compared to $155,602 and $713,504 for the corresponding period in 2016, an increase of $226,686 and $593,390, respectively. The increase of operating expenses is primarily due to the increase in property taxes and the operating expenses in subsidiaries.

Selling and Marketing Expenses

The selling and marketing expenses were $4,181 and $82,257 for the three and nine months ended September 30, 2017, respectively, as compared to $1,357 and $15,016 for the corresponding period in 2016, an increase of $2,824 and $67,241, respectively. This increase is primarily due to the increase of operating expenses in subsidiaries.

General and Administrative Expenses

General and administrative expenses were $378,107 and $1,224,637 for the three and nine months ended September 30, 2017, respectively as compared to $154,245 and $698,488 for the corresponding period in 2016, an increase of $223,862 and $526,149, respectively. The increase of general and administrative expenses is primarily due to the increase in property taxes and the operating expenses in subsidiaries. The property taxes increased by $41,608 ( or 64%) as compared to last year.

Loss from operations

As a result of the factors mentioned above, loss from operations was $340,339 and $845,333 for the three and nine months ended September 30, 2017, respectively, as compared to loss from operations of $298,266 and $946,675 for the corresponding three and nine months period in 2016, an increase of $42,073 with respect to the three-month period and a decrease of $101,342 with respect to the nine-month period. This increase for the three-month period is primarily due to the increase in operating expenses and the decrease for the nine-month period is primarily due to the increase in gross profit.

Other (Expenses) Income

Other expense were $86,525 and $264,431 for the three and nine months ended September 30, 2017 respectively, as compared to $83,184 and $254,395 for the corresponding period in 2016, an increase of $3,341 and $10,036, respectively. This increase is primarily due to the increase in interest expense with respect to the three-month period and the decrease in interest income with respect to the nine-month period. As a result, the loss before income taxes was $426,864 and $1,109,764 for the three and nine months ended September 30, 2017, respectively, as compared to the loss before income taxes of $381,450 and $1,201,070 for the corresponding three and nine months period in 2016, an increase of $45,414 and a decrease of $91,306, respectively.

Income Tax Expense

For the three and nine months ended September 30, 2017, income tax expense was $51 and $2,723 respectively, as compared to $182 and $248 for the same period in 2016, a decrease of $131 and an increase of $2,475, or decrease of 71.97% and increase of 997.98%. This increase is primarily due to the increase in the revenues before income taxes coming from the subsidiaries.

As of September 30, 2017, the Company’s operations in the United States of America have resulted in $3,638,325 of cumulative net operating losses, which can be carried forward to offset future taxable income. The net operating loss carry forward will begin to expire in 2037, if not utilized. The Company has provided for a valuation allowance against the deferred tax assets of $1,237,031 on the expected future tax benefits from the net operating loss carry forward as management believes it is more likely than not that these assets will not be realized in the future.

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The Company’s effective income tax rate for the three months and nine month ended September 30, 2017 was 15%.

Net loss

As a result of the factors mentioned above, net loss was $426,915 and $1,112,487 for the three and nine months ended September 30, 2017, respectively, as compared to net loss of $381,632 and $1,201,318 for the corresponding period in 2016, an increase of $45,283 with respect to the three-month period and a decrease of $88,831 with respect to the nine-month period. This increase in net loss for three months ended September 30, 2017 is primarily due to the increase in operating expenses and the decrease in operating revenues and the decrease in net loss for nine months ended September 30, 2017 is primarily due to the increase in gross profit.

LIQUIDITY AND CAPITAL RESOURCES

Operating activities

For the nine months ended September 30, 2017, net cash used in operating activities was -$132,463. This was attributable primarily to net loss of $1,112,487, adjusted by non-cash items of depreciation and amortization of $613,797, an increase in accounts and retention receivable by $340,330, an increase in inventories by $334,574, an increase in prepayment and other receivable by $1,205,686, an increase in the accounts payable by $1,126,355and an increase in other payable and accrued liabilities by $829,762.

We have followed ASC 230-10-45-28 and choose to provide information about major classes of cash flow items by the indirect method. In the statement of cash flows, we have reported the same amount for net cash flow from operating activities indirectly by adjusting net income to reconcile it to net cash flow from operating activities. The reconciliation has separately reported all major classes of reconciling items, for example, changes during the period in accounts receivables pertaining to operating activities, in inventory, and in payables pertaining to operating activities.

As of September 30, 2017, the increase of inventories was primarily due to a delayed project resulting in the failure to delivery these inventories to our clients. It is anticipated that the inventories will be delivered by the end of 2017.

As of September 30, 2017, accounts and retention receivable was $8,674,188 and $7,946, 99.90% and 0.10% of the product revenue and service revenue, respectively.

The Company is highly aware the risk of default, and as a result, we actively monitor accounts receivable with aging above 1 year and those that account for about 17% of the total accounts receivable, thus there is no significant credit risk. The Company will consider an allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. The Company’s accounts and retention receivable aging was as follows:

Items	Total		0-90 days		91-180 days		181-365 days		Above 365 days
Product		8,674,188		613,083		2,066,841		2,074,794		3,919,470
Service		7,946		6,443		-		-		1,503
Total		8,682,134		619,526		2,066,841		2,074,794		3,920,973
Less: retention		572,475		41,816		67,414		114,449		348,796
Less: allowance for doubtful		743,243		-		-		-		743,243
Accounts receivable, net		7,366,416		577,710		1,999,427		1,960,345		2,828,934

12

Most of our customers make payments in accordance with the agreed payment terms in a timely manner. In rare cases, we may offer extended payment terms to certain customers for equipment sales. These customers are usually large state-owned corporations with good credit ratings. At the end of each period, we evaluate the structure and collectability of accounts receivable and for those receivables that are past due or not being paid according to the payment terms. The Company takes appropriate actions to exhaust all means of collection, including seeking legal resolution in a court of law, for our collection efforts. Meanwhile, the Company also adopted strict sales polices according to the signed contracts. The Company evaluated the existing customers and potential customers; as well as reducing their credit in the sales and raising the quality of contracts and controls on the doubtful accounts. This year, we have strengthened the team of accounts receivable settlement, and we have organized nearly 30 professional people to track the accounts receivable and the customer until the accounts receivable have been recovered. We anticipate that these measures will improve the collection of the accounts receivable.

As of September 30, 2017, the accounts receivable of a major customer with aging above 365 days are expected to be collected by the end of 2017. The collecting time indicated below:

Customer	AR with aging above 365 days		Expected to be collected amount by the end of  2017
Customer “A”		3,694,064		1,108,219
Customer “C”		142,001		42,600

We offer a free 12 to 24 months of product warranty on a case-by-case basis, depending upon the type of customers, nature and size of the infrastructure projects. Under such arrangements, a portion of the project contract balance (usually 5-10% of contract value) is withheld by a customer from 12 to 24 months, until the product warranty has expired.

Investing activities

For the nine months ended September 30, 2017, net cash used in investing activities was $3,908.

Financing activities

For the nine months ended September 30, 2017, the net financing cash inflow was $16,385.

13

INFLATION

We believe that the relatively moderate rate of inflation over the past few years has not had a significant impact on our results of operations.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any material off-balance sheet arrangements.

IMPACT OF RECENTLY ISSUED NEW ACCOUNTING STANDARDS

We do not expect adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not Applicable.

Item 4. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), under the supervision of and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer.  Based on that evaluation and the identification of a material weakness in internal control over financial reporting described below, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures, as of September 30, 2017, and during the period prior were not effective.

Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, the company’s principal executive officer and principal financial officer and effected by the Company’s Board of Directors, management and other personnel, 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 and includes those policies and procedures that:

· Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

· Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with management authorization; and

· Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Due to the Company’s limited resources, the Company does not have accounting personnel with extensive experience in maintaining books and records and preparing financial statements in accordance with US GAAP which could lead to untimely identification and resolution of accounting matters inherent in the Company’s financial transactions in accordance with US GAAP. This material weakness was identified by our Chief Executive Officer and Chief Financial Officer and our plans for remediation are described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which was filed with the SEC on March 31, 2017.

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Changes in Internal Control over Financial Reporting

Subject to the foregoing disclosure, there were no changes in our internal control over financial reporting during the nine months ended September 30, 2017 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

None

Item 1A. Risk Factors

Not Applicable

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

None

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

The list of Exhibits, required by Item 601 of Regulation S-K to be filed as a part of this Form 10-Q are set forth on the Exhibit Index immediately preceding such Exhibits and is incorporated herein by this reference.

15

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

	NF Energy Saving Corporation
	(Registrant)
Date: November 14, 2017	By:	/s/ Gang Li
		Gang Li
		Chairman, Chief Executive Officer and President

Date: November 14, 2017	By:	/s/ Lihua Wang
		Lihua Wang
		Chief Financial Officer (Principal Financial and Accounting Officer)

16

INDEX TO EXHIBITS

Exhibit No. Description

31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

101 The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 formatted in Extensible Business Reporting Language (XBRL): (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statements of Stockholders’ Equity (iv) the Statements of Cash Flows, and (v) the Notes to Financial Statements

17

EX-31.1

EXHIBIT 31.1

Certifications

I, Gang, Li, certify that:

1. I have reviewed this quarterly report on Form 10-Q of NF Energy Saving 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 quarterly 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 officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-(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 consolidates 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 cause 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. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 14, 2017

/S/ Gang Li
Gang Li

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

Certifications

I, Lihua Wang, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of NF Energy Saving 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 quarterly 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 officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-(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 consolidates 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 cause 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. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 14, 2017

/S/ Lihua Wang

Lihua Wang

(Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of NF Energy Saving Corporation (the "Company") for the period ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Gang Li, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:

(1)       The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)       The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the period ended September 30, 2017.

	NF Energy Saving Corporation
Date: November 14, 2017	By:	/S/ Gang Li
		Gang Li
		(Principal Executive Officer)

A singed original of this written statement required by Section 906 of the Sarbanes- Oxley Act of 2002 has been provided to NF Energy Saving Corp. (the “Company”) and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. This written statement accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission, and will not be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, irrespective of any general incorporation language contained in such filing.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of NF Energy Saving Corporation (the "Company") for the period ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Lihua Wang, certifies, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:

(1)       The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)       The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the period ended September30, 2017.

	NF Energy Saving Corporation
Date: November 14, 2017	By:	/S/ Lihua Wang
		Lihua, Wang
		(Principal Financial and Accounting Officer)

A singed original of this written statement required by Section 906 of the Sarbanes- Oxley Act of 2002 has been provided to NF Energy Saving Corp. (the “Company”) and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. This written statement accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission, and will not be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, irrespective of any general incorporation language contained in such filing.

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Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Oct. 31, 2017
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Entity Registrant Name	NF Energy Saving Corp
Entity Central Index Key	0001213660
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	NFEC
Entity Common Stock, Shares Outstanding		7,073,289

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 20,828	$ 124,637
Accounts receivable, net	7,366,416	6,644,994
Retention receivable, current	572,475	629,680
Inventories	5,148,940	4,606,564
Prepayments and other receivables	4,516,417	3,109,069
Total current assets	17,625,076	15,114,944
Non-current assets:
Property, plant and equipment, net	17,291,384	17,128,235
Land use rights, net	2,620,260	2,555,704
Construction in progress	2,625,765	2,520,234
TOTAL ASSETS	40,162,485	37,319,117
Current liabilities:
Accounts payable, trade	4,704,682	3,404,760
Short-term bank borrowings	6,010,970	5,760,618
Amount due to a related party	431,682	431,682
Other payables and accrued liabilities	1,897,579	1,014,999
Total current liabilities	13,044,913	10,612,059
TOTAL LIABILITIES	13,044,913	10,612,059
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value; 50,000,000 shares authorized; 7,073,289 and 7,073,289 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively	7,073	7,073
Additional paid-in capital	12,055,825	12,055,825
Deferred compensation	(64,500)	(355,200)
Statutory reserve	2,227,634	2,227,634
Accumulated other comprehensive income	2,034,302	858,502
Retained earnings	10,808,693	11,913,224
Total stockholders’ equity	27,069,027	26,707,058
Non-controlling interest	48,545	0
TOTAL EQUITY	27,117,572	26,707,058
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 40,162,485	$ 37,319,117

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	7,073,289	7,073,289
Common stock, shares outstanding	7,073,289	7,073,289

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
REVENUE, NET:
Product	$ 1,103,952	$ 1,366,905	$ 3,678,341	$ 3,603,738
Services	37,968	33,447	177,024	41,028
Total operating revenues, net	1,141,920	1,400,352	3,855,365	3,644,766
COST OF REVENUES:
Cost of products	1,082,652	1,462,330	3,207,838	3,593,519
Cost of services	17,319	80,686	185,966	284,418
Total cost of revenues	1,099,971	1,543,016	3,393,804	3,877,937
GROSS PROFIT (LOSS)	41,949	(142,664)	461,561	(233,171)
OPERATING EXPENSES:
Sales and marketing	4,181	1,357	82,257	15,016
General and administrative	378,107	154,245	1,224,637	698,488
Total operating expenses	382,288	155,602	1,306,894	713,504
LOSS FROM OPERATIONS	(340,339)	(298,266)	(845,333)	(946,675)
Other (expense) income:
Other income	0	2,739	0	2,788
Interest income	2,689	0	2,809	14,325
Interest expense	(89,214)	(85,923)	(267,240)	(271,508)
Total other expense	(86,525)	(83,184)	(264,431)	(254,395)
LOSS BEFORE INCOME TAXES	(426,864)	(381,450)	(1,109,764)	(1,201,070)
Income tax expense	(51)	(182)	(2,723)	(248)
NET LOSS	(426,915)	(381,632)	(1,112,487)	(1,201,318)
Less: Net loss attributable to non-controlling interest	(7,956)	0	(7,956)	0
NET LOSS ATTRIBUTABLE TO THE COMPANY	(418,959)	(381,632)	(1,104,531)	(1,201,318)
Other comprehensive income (loss):
- Foreign currency translation gain (loss)	489,771	(115,838)	1,175,800	(815,224)
COMPREHENSIVE INCOME (LOSS)	$ 70,812	$ (497,470)	$ 71,269	$ (2,016,542)
Net loss per share
- Basic	$ (0.06)	$ (0.06)	$ (0.16)	$ (0.18)
- Diluted	$ (0.06)	$ (0.06)	$ (0.16)	$ (0.18)
Weighted average common shares outstanding
- Basic	7,073,289	6,577,831	7,073,289	6,577,831
- Diluted	7,073,289	6,577,831	7,073,289	6,577,831

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities:
Net loss	$ (1,112,487)	$ (1,201,318)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	613,797	577,270
Stock based compensation	290,700	38,400
Change in operating assets and liabilities:
Accounts and retention receivable	(340,330)	(400,802)
Inventories	(334,574)	1,591,606
Prepayments and other receivables	(1,205,686)	(77,877)
Accounts payable	1,126,355	(927,553)
Other payables and accrued liabilities	829,762	244,712
Net cash used in operating activities	(132,463)	(155,562)
Cash flows from investing activities:
Payments on construction in progress	3,908	(1,814)
Net cash used in investing activities	3,908	(1,814)
Cash flows from financing activities:
Decrease in restricted cash	0	1,823,919
Repayment on bank demand notes	0	(1,816,319)
Advance from non-controlling interest	16,385	0
Proceeds from short-term bank borrowings	5,877,397	6,079,730
Repayment on short-term bank borrowings	(5,877,397)	(6,079,730)
Net cash provided by financing activities	16,385	7,600
Effect on exchange rate change on cash and cash equivalents	8,361	(11,397)
NET CHANGE IN CASH AND CASH EQUIVALENTS	(103,809)	(161,173)
BEGINNING OF PERIOD	124,637	434,571
END OF PERIOD	20,828	273,398
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for tax	2,723	248
Cash paid for interest	267,240	271,508
NON-CASH FINANCING AND INVESTING TRANSACTIONS:
Transfer from construction in progress to plant and equipment	$ 0	$ 6,014,313

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CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY - 9 months ended Sep. 30, 2017 - USD ($)	Total	Common stock	Additional paid-in capital	Deferred Compensation	Statutory reserve	Accumulated other comprehensive income	Retained earnings	Total NFEC stockholders' equity	Non-controlling Interest
Balance at Dec. 31, 2016	$ 26,707,058	$ 7,073	$ 12,055,825	$ (355,200)	$ 2,227,634	$ 858,502	$ 11,913,224	$ 26,707,058	$ 0
Balance (in shares) at Dec. 31, 2016		7,073,289
Contribution from non-controlling interest	56,204	$ 0	0	0	0	0	0	0	56,204
Amortization of deferred compensation	290,700	0	0	290,700	0	0	0	290,700	0
Foreign currency translation adjustment	1,176,097	0	0	0	0	1,175,800	0	1,175,800	297
Net loss for the period	(1,112,487)	0	0	0	0	0	(1,104,531)	(1,104,531)	(7,956)
Balance at Sep. 30, 2017	$ 27,117,572	$ 7,073	$ 12,055,825	$ (64,500)	$ 2,227,634	$ 2,034,302	$ 10,808,693	$ 27,069,027	$ 48,545
Balance (in shares) at Sep. 30, 2017		7,073,289

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BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2017

Basis Of Presentation [Abstract]

BASIS OF PRESENTATION

NOTE–1 BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States (“GAAP”), and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.

In the opinion of management, the consolidated balance sheet as of December 31, 2016 which has been derived from audited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the period ended September 30, 2017 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2017 or for any future period.

These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2016.

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ORGANIZATION AND BUSINESS BACKGROUND

9 Months Ended

Sep. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION AND BUSINESS BACKGROUND

NOTE–2 ORGANIZATION AND BUSINESS BACKGROUND

NF Energy Saving Corporation (the “Company” or “NFEC”) was incorporated in the State of Delaware in the name of Galli Process, Inc. on October 31, 2000. On February 7, 2002, the Company changed its name to “Global Broadcast Group, Inc.” On November 12, 2004, the Company changed its name to “Diagnostic Corporation of America.” On March 15, 2007, the Company changed its name to “NF Energy Saving Corporation of America.” On August 24, 2009, the Company further changed its name to “NF Energy Saving Corporation.”

The Company, through its subsidiaries, mainly engages in the production of heavy industrial components and products such as valves and the provision of technical service and re-engineering projects in the energy saving related industry in the People’s Republic of China (the “PRC”). All the customers are located in the PRC.

Description of subsidiaries

Name	Place of incorporation and kind of legal entity	Principal activities and place of operation	Particulars of issued/ registered share capital	Effective interest held
Liaoning Nengfa Weiye Energy Technology Co. Ltd (“Nengfa Energy”)	The PRC, a limited liability company	Production of a variety of industrial valve components which are widely used in water supply and sewage system, coal and gas fields, power generation stations, petroleum and chemical industries in the PRC	US$5,000,000	100%
Liaoning Nengfa Tiefa Import & Export Co. Ltd (“Nengfa Tiefa Import & Export”)	The PRC, a limited liability company	Development and production of hi-tech and automatic-intelligence valve products	RMB877,192	57%

NFEC and its subsidiaries are hereinafter referred to as (the “Company”).

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE–3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying condensed consolidated financial statements and notes.

l Use of estimates

In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses during the periods reported. Actual results may differ from these estimates.

l Basis of consolidation

The condensed consolidated financial statements include the financial statements of NFEC and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.

l Non-controlling interests

Non-controlling interests represent the equity interest in the capital contributions, income and loss of less than wholly-owned and consolidated entities that is not attributable to the Company.

l Cash and cash equivalents

Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.

l Accounts receivable

Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from shipment. Credit is extended based on evaluation of a customer's financial condition, the customer credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of each period, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers.

l Retention receivable

Retention receivable is the amount withheld by a customer based upon 5-10% of the contract value, until a product warranty is expired.

l Inventories

Inventories are stated at the lower of cost or market value (net realizable value), cost being determined on a weighted average method. Costs include material, labor and manufacturing overhead costs. The Company quarterly reviews historical sales activity to determine excess, slow moving items and potentially obsolete items and also evaluates the impact of any anticipated changes in future demand. The Company provides inventory allowances based on excess and obsolete inventories determined principally by customer demand. As of September 30, 2017, the Company did not record an allowance for obsolete inventories, nor have there been any write-offs.

l Land use rights

All land in the PRC is owned by the PRC government. The government in the PRC, according to the relevant PRC law, may sell the right to use the land for a specified period of time. Thus, the Company’s land purchase in the PRC is considered to be leasehold land and is stated at cost less accumulated amortization and any recognized impairment loss. Amortization is provided over the term of the land use right agreement on a straight-line basis, which is 50 years and will expire in 2059.

Amortization expense for the three months ended September 30, 2017 and 2016 was $15,463 and $15,515, respectively.

Amortization expense for the nine months ended September 30, 2017 and 2016 was $45,480 and $47,046, respectively.

The estimated amortization expense on the land use right in the next five years and thereafter is as follows:

Period ending September 30:
2018	$	62,018
2019		62,018
2020		62,018
2021		62,018
2022		62,018
Thereafter		2,310,170
Total:	$	2,620,260

l Property, plant and equipment

Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:

	Expected useful life	Residual value
Building	30 years	5%
Plant and machinery	10 – 20 years	5%
Furniture, fixture and equipment	5 – 8 years	5%

Expenditure for repairs and maintenance is expensed as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.

Depreciation expense for the three months ended September 30, 2017 and 2016 was $193,171 and $125,419, respectively.

Depreciation expense for the nine months ended September 30, 2017 and 2016 was $568,317 and $530,224, respectively.

l Impairment of long-lived assets

In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets ”, all long-lived assets such as property, plant and equipment held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. There has been no impairment charge for the three and nine months ended September 30, 2017.

l Revenue recognition

The Company offers of the following products and service to its customers:

(a) Sales of energy saving flow control equipment; and

(b) Provision of energy project management and sub-contracting service

In accordance with the ASC Topic 605, “Revenue Recognition”, the Company recognizes revenue when persuasive evidence of an arrangement exists, transfer of title has occurred or services have been rendered, the selling price is fixed or determinable and collectability is reasonably assured.

(a) Sale of products

The Company derives a majority of its revenues from the sale of energy saving flow control equipment. Generally, these products are manufactured and configured to customer requirements. The Company typically produces and builds the energy saving flow control equipment for customers in a period from 1 to 6 months. When the Company completes the production in accordance with the customer’s specification, the customer is required to inspect the finished products for quality and product conditions, to its full satisfaction, then the Company makes delivery to the customer.

The Company recognizes revenue from the sale of such finished products upon delivery to the customer, whereas the title and risk of loss are fully transferred to the customers. The Company records its revenues, net of value added taxes (“VAT”). The Company is subject to VAT which is levied on the majority of the products at the rate of 17% on the invoiced value of sales. The Company experienced no product returns and recorded no reserve for sales returns for the three and nine months ended September 30, 2017 and 2016.

(b) Service revenue

Service revenue is primarily derived from energy-saving technical services or project management or sub-contracting services that are not an element of an arrangement for the sale of products. These services are generally billed on a time-cost plus basis, for a period of service time from 2 to 3 months. Revenue is recognized, net of business taxes when the service is rendered and accepted by the customer.

(c) Interest income

Interest income is recognized on a time apportionment basis, taking into account the principal amounts outstanding and the interest rates applicable.

l Comprehensive income

ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying condensed consolidated statement of stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

l Income taxes

Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any 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.

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

For the three and nine months ended September 30, 2017 and 2016, the Company did not have any interest and penalties associated with tax positions. As of September 30, 2017, the Company did not have any significant unrecognized uncertain tax positions.

The Company conducts major businesses in the PRC and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the foreign tax authority.

l Product warranty

Under the terms of the contracts, the Company offers its customers with a free product warranty on a case-by-case basis, depending upon the type of customers, nature and size of the infrastructure projects. Under such arrangements, a portion of the project contract balance (usually 5% to 10% of contract value) is withheld by a customer from 12 to 24 months, until the product warranty has expired. The Company has not experienced any material returns or claims where it was under obligation to honor this standard warranty provision. As such, no reserve for product warranty has been provided in the result of operations for the three and nine months ended September 30, 2017 and 2016.

l Net income per share

The Company calculates net income per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.

l Foreign currencies translation

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.

The reporting currency of the Company is the United States Dollar ("US$"). The Company's subsidiaries in the PRC maintain their books and records in their local currency, the Renminbi Yuan ("RMB"), which is the functional currency as being the primary currency of the economic environment in which these entities operate.

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement ”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.

Translation of amounts from RMB into US$1 has been made at the following exchange rates for the respective period:

	September 30, 2017		September 30, 2016
Period-end RMB:US$1 exchange rate		6.65450		6.66938
Average period RMB:US$1 exchange rate		6.80573		6.57924

l Related parties

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

l Segment reporting

ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. The Company operates in two reportable operating segments in the PRC.

l Stock based compensation

The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable.

l Fair value of financial instruments

The carrying value of the Company’s financial instruments (excluding short-term bank borrowing and note payable): cash and cash equivalents, accounts and retention receivable, prepayments and other receivables, accounts payable, income tax payable, amount due to a related party, other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments.

Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of short-term bank borrowings and note payable approximate the carrying amount.

The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” ("ASC 820-10"), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

• Level 1: Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets;

• Level 2: Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs; and

• Level 3: Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models.

Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

l Recent accounting pronouncements

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

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ACCOUNTS AND RETENTION RECEIVABLES

9 Months Ended

Sep. 30, 2017

Accounts And Retention Receivable [Abstract]

ACCOUNTS AND RETENTION RECEIVABLES

NOTE–4 ACCOUNTS AND RETENTION RECEIVABLES

The majority of the Company’s sales are on open credit terms and in accordance with terms specified in the contracts governing the relevant transactions. The Company evaluates the need of an allowance for doubtful accounts based on specifically identified amounts that management believes to be uncollectible. If actual collections experience changes, revisions to the allowance may be required.

	September 30, 2017		December 31, 2016
	(Unaudited)		(Audited)
Accounts receivable, cost	$	8,109,659	$	7,357,282
Retention receivable, cost		572,475		629,680
		8,682,134		7,986,962
Less: allowance for doubtful accounts		(743,243)		(712,288)
Accounts and retention receivable, net	$	7,938,891	$	7,274,674

As of October 31, 2017, the Company has subsequently recovered from approximately 2% of accounts and retention receivable as of September 30, 2017.

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INVENTORY

9 Months Ended

Sep. 30, 2017

Inventory, Net [Abstract]

INVENTORY

NOTE–5 INVENTORY

	September 30, 2017		December 31, 2016
	(Unaudited)		(Audited)
Raw materials	$	592,998	$	519,500
Work-in-process		612,238		402,425
Finished goods		3,943,704		3,684,639
	$	5,148,940	$	4,606,564

For the three and nine months ended September 30, 2017 and 2016, no allowance for obsolete inventories was recorded by the Company.

Finished goods are expected to be delivered to the customer in the next twelve months.

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SHORT-TERM BANK BORROWINGS

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

SHORT-TERM BANK BORROWINGS

NOTE–6 SHORT-TERM BANK BORROWINGS

Short-term bank borrowings consist of the following:

	September 30, 2017		December 31, 2016
Payable to financial institutions in the PRC:
Equivalent to RMB40,000,000 with interest rate at 1.28 times of the Bank of China Benchmark Lending Rate, monthly payable, due March 20, 2017, which is guaranteed by its vendor	$	-	$	5,760,618
Equivalent to RMB40,000,000 with interest rate at 1.28 times of the Bank of China Benchmark Lending Rate, monthly payable, due March 19, 2018, which is guaranteed by its vendor		6,010,970		-
Total short-term bank borrowings	$	6,010,970	$	5,760,618

The effective Bank of China Benchmark Lending rate is 6% and 6% per annum for the three and nine months ended September 30, 2017 and 2016.

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AMOUNT DUE TO A RELATED PARTY

9 Months Ended

Sep. 30, 2017

Related Party Transactions [Abstract]

AMOUNT DUE TO A RELATED PARTY

NOTE–7 AMOUNT DUE TO A RELATED PARTY

As of September 30, 2017, the amount due to a related party represented temporary advances made by the Company’s major stockholder, Pelaris International Ltd, which is controlled by Ms. Li Hua Wang (the Company’s CFO) and Mr. Gang Li (the Company’s CEO), which was unsecured, interest-free with no fixed repayment term. Imputed interest on this amount is considered insignificant.

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OTHER PAYABLES AND ACCRUED LIABILITIES

9 Months Ended

Sep. 30, 2017

Payables and Accruals [Abstract]

OTHER PAYABLES AND ACCRUED LIABILITIES

NOTE–8 OTHER PAYABLES AND ACCRUED LIABILITIES

Other payables and accrued liabilities consisted of the following:

	September 30, 2017		December 31, 2016
	(Unaudited)		(Audited)
Customer deposits	$	608,927	$	487,175
Advance from employees		675,086		-
Value added tax payable		12,563		89,471
Accrued operating expenses		555,239		387,981
Other payable		45,764		50,372
	$	1,897,579	$	1,014,999

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INCOME TAXES

9 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE–9 INCOME TAXES

NFEC is incorporated in the State of Delaware and is subject to the tax laws of United States of America.

As of September 30, 2017, the operations in the United States of America incurred $3,638,325 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss carryforwards begin to expire in 2037, if unutilized. The Company has provided for a full valuation allowance against the deferred tax assets of $1,237,031 on the expected future tax benefits from the net operating loss carryforwards as management believes it is more likely than not that these assets will not be realized in the future.

The Company’s subsidiaries operating in the PRC are subject to the Corporate Income Tax Law of the People’s Republic of China at a unified income tax rate of 25%. The reconciliation of income tax rate to the effective income tax rate for the nine months ended September 30, 2017 and 2016 is as follows:

	Nine months ended September 30,
	2017			2016
Loss before income taxes from PRC operation	$	(709,663)		$	(1,119,393)
Statutory income tax rate		25	%		25	%
Income tax expense at statutory rate		(177,416)			(279,848)
Effect from non-deductible items		180,139			280,096
Income tax expense	$	2,723		$	248

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STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2017

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' EQUITY

NOTE–10 STOCKHOLDERS’ EQUITY

As of September 30, 2017, the Company had a total of 7,073,289 shares of its common stock issued and outstanding.

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CONCENTRATIONS OF RISK

9 Months Ended

Sep. 30, 2017

Risks and Uncertainties [Abstract]

CONCENTRATIONS OF RISK

NOTE–11 CONCENTRATIONS OF RISK

The Company is exposed to the following concentrations of risk:

(a) Major customers

For the three and nine months ended September 30, 2017 and 2016, the customers who accounted for 10% or more of the Company’s revenues and its outstanding receivable balances as at period-end dates, are presented as follows:

	Three months ended September 30, 2017						September 30, 2017
			Percentage				Accounts
Customers	Sales		of sales				and retention receivable
Customer A	$	828,573		73	%	Total:	$	7,889,415

	Nine months ended September 30, 2017						September 30, 2017
			Percentage				Accounts
Customers	Sales		of sales				and retention receivable
Customer A	$	2,460,866		64	%		$	7,889,415
Customer B		448,519		12	%			461,557
Total:	$	2,909,385		76	%	Total:	$	8,350,972

	Three months ended September 30, 2016					September 30, 2016
			Percentage			Accounts
	Sales		of sales			and retention receivable
Customer A	$	1,338,045		96	%	$	7,218,593

	Nine months ended September 30, 2016					September 30, 2016
			Percentage			Accounts
	Sales		of sales			and retention receivable
Customer A	$	3,441,483		94	%	$	7,218,593

All major customers are located in the PRC.

(b) Major vendors

For the three and nine months ended September 30, 2017 and 2016, the vendors who accounted for 10% or more of the Company’s purchases and its outstanding payable balances as at period-end dates, are presented as follows:

	Three months ended September 30, 2017						September 30, 2017
Vendors	Purchases		Percentage of purchases				Accounts payable
Vendor D	$	74,550		37	%		$	-
Vendor E		84,261		42	%			147,035
Total:	$	158,811		79	%	Total:	$	147,035

	Nine months ended September 30, 2017						September 30, 2017
Vendors	Purchases		Percentage of purchases				Accounts payable
Vendor D		453,965		45	%			-
Vendor E		179,586		18	%			147,035
Total:	$	633,551		63	%	Total:	$	147,035

	Three months ended September 30, 2016					September 30, 2016
			Percentage			Accounts
	Purchases		of purchases			payable
Vendor C	$	88,350		33	%	$	129,011
Vendor D		155,972		59	%		705
		244,322		92	%		129,716

	Nine months ended September 30, 2016						September 30, 2016
Vendors	Purchases		Percentage of purchases				Accounts payable
Vendor A	$	117,460		20	%		$	158,947
Vendor B		85,510		15	%			-
Vendor C		562,590		23	%			129,011
Vendor D		155,972		27	%			705
Total:	$	921,532		85	%	Total:	$	288,663

All vendors are located in the PRC.

(c) Credit risk

Financial instruments that are potentially subject to credit risk consist principally of trade receivables. The Company believes the concentration of credit risk in its trade receivables is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateral from customers. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.

(d) Interest rate risk

As the Company has no significant interest-bearing assets, the Company’s income and operating cash flows are substantially independent of changes in market interest rates.

The Company’s interest-rate risk arises from borrowing under notes and bank borrowings. The Company manages interest rate risk by varying the issuance and maturity dates variable rate debt, limiting the amount of variable rate debt, and continually monitoring the effects of market changes in interest rates. As of September 30, 2017, borrowings under related party notes were at fixed rates and short-term bank borrowings were at variable rates.

(e) Exchange rate risk

The reporting currency of the Company is US$, to date the majority of the revenues and costs are denominated in RMB and a significant portion of the assets and liabilities are denominated in RMB. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between US$ and RMB. If RMB depreciates against US$, the value of RMB revenues and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial instruments that expose to substantial market risk.

(f) Economic and political risks

The Company's operations are conducted in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy.

The Company's operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation.

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2017

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE–12 SUBSEQUENT EVENTS

The Company evaluated subsequent events through the date the financial statements were issued and filed with this Form 10-Q. There were no subsequent events that required recognition or disclosure.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Use of estimates

l Use of estimates

In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses during the periods reported. Actual results may differ from these estimates.

Basis of consolidation

l Basis of consolidation

The condensed consolidated financial statements include the financial statements of NFEC and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.

Non-controlling interest

l Non-controlling interests

Non-controlling interests represent the equity interest in the capital contributions, income and loss of less than wholly-owned and consolidated entities that is not attributable to the Company.

Cash and cash equivalents

l Cash and cash equivalents

Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.

Accounts receivable

l Accounts receivable

Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from shipment. Credit is extended based on evaluation of a customer's financial condition, the customer credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of each period, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers.

Retention receivable

l Retention receivable

Retention receivable is the amount withheld by a customer based upon 5-10% of the contract value, until a product warranty is expired.

Inventories

l Inventories

Inventories are stated at the lower of cost or market value (net realizable value), cost being determined on a weighted average method. Costs include material, labor and manufacturing overhead costs. The Company quarterly reviews historical sales activity to determine excess, slow moving items and potentially obsolete items and also evaluates the impact of any anticipated changes in future demand. The Company provides inventory allowances based on excess and obsolete inventories determined principally by customer demand. As of September 30, 2017, the Company did not record an allowance for obsolete inventories, nor have there been any write-offs.

Land use rights

l Land use rights

All land in the PRC is owned by the PRC government. The government in the PRC, according to the relevant PRC law, may sell the right to use the land for a specified period of time. Thus, the Company’s land purchase in the PRC is considered to be leasehold land and is stated at cost less accumulated amortization and any recognized impairment loss. Amortization is provided over the term of the land use right agreement on a straight-line basis, which is 50 years and will expire in 2059.

Amortization expense for the three months ended September 30, 2017 and 2016 was $15,463 and $15,515, respectively.

Amortization expense for the nine months ended September 30, 2017 and 2016 was $45,480 and $47,046, respectively.

The estimated amortization expense on the land use right in the next five years and thereafter is as follows:

Period ending September 30:
2018	$	62,018
2019		62,018
2020		62,018
2021		62,018
2022		62,018
Thereafter		2,310,170
Total:	$	2,620,260

Property, plant and equipment

l Property, plant and equipment

Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:

	Expected useful life	Residual value
Building	30 years	5%
Plant and machinery	10 – 20 years	5%
Furniture, fixture and equipment	5 – 8 years	5%

Expenditure for repairs and maintenance is expensed as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.

Depreciation expense for the three months ended September 30, 2017 and 2016 was $193,171 and $125,419, respectively.

Depreciation expense for the nine months ended September 30, 2017 and 2016 was $568,317 and $530,224, respectively.

Impairment of long-lived assets

l Impairment of long-lived assets

In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets ”, all long-lived assets such as property, plant and equipment held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. There has been no impairment charge for the three and nine months ended September 30, 2017.

Revenue recognition

l Revenue recognition

The Company offers of the following products and service to its customers:

(a) Sales of energy saving flow control equipment; and

(b) Provision of energy project management and sub-contracting service

In accordance with the ASC Topic 605, “Revenue Recognition”, the Company recognizes revenue when persuasive evidence of an arrangement exists, transfer of title has occurred or services have been rendered, the selling price is fixed or determinable and collectability is reasonably assured.

(a) Sale of products

The Company derives a majority of its revenues from the sale of energy saving flow control equipment. Generally, these products are manufactured and configured to customer requirements. The Company typically produces and builds the energy saving flow control equipment for customers in a period from 1 to 6 months. When the Company completes the production in accordance with the customer’s specification, the customer is required to inspect the finished products for quality and product conditions, to its full satisfaction, then the Company makes delivery to the customer.

The Company recognizes revenue from the sale of such finished products upon delivery to the customer, whereas the title and risk of loss are fully transferred to the customers. The Company records its revenues, net of value added taxes (“VAT”). The Company is subject to VAT which is levied on the majority of the products at the rate of 17% on the invoiced value of sales. The Company experienced no product returns and recorded no reserve for sales returns for the three and nine months ended September 30, 2017 and 2016.

(b) Service revenue

Service revenue is primarily derived from energy-saving technical services or project management or sub-contracting services that are not an element of an arrangement for the sale of products. These services are generally billed on a time-cost plus basis, for a period of service time from 2 to 3 months. Revenue is recognized, net of business taxes when the service is rendered and accepted by the customer.

(c) Interest income

Interest income is recognized on a time apportionment basis, taking into account the principal amounts outstanding and the interest rates applicable.

Comprehensive income

l Comprehensive income

ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying condensed consolidated statement of stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

Income taxes

l Income taxes

Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any 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.

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

For the three and nine months ended September 30, 2017 and 2016, the Company did not have any interest and penalties associated with tax positions. As of September 30, 2017, the Company did not have any significant unrecognized uncertain tax positions.

The Company conducts major businesses in the PRC and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the foreign tax authority.

Product warranty

l Product warranty

Under the terms of the contracts, the Company offers its customers with a free product warranty on a case-by-case basis, depending upon the type of customers, nature and size of the infrastructure projects. Under such arrangements, a portion of the project contract balance (usually 5% to 10% of contract value) is withheld by a customer from 12 to 24 months, until the product warranty has expired. The Company has not experienced any material returns or claims where it was under obligation to honor this standard warranty provision. As such, no reserve for product warranty has been provided in the result of operations for the three and nine months ended September 30, 2017 and 2016.

Net income per share

l Net income per share

The Company calculates net income per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.

Foreign currencies translation

l Foreign currencies translation

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.

The reporting currency of the Company is the United States Dollar ("US$"). The Company's subsidiaries in the PRC maintain their books and records in their local currency, the Renminbi Yuan ("RMB"), which is the functional currency as being the primary currency of the economic environment in which these entities operate.

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement ”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.

Translation of amounts from RMB into US$1 has been made at the following exchange rates for the respective period:

	September 30, 2017		September 30, 2016
Period-end RMB:US$1 exchange rate		6.65450		6.66938
Average period RMB:US$1 exchange rate		6.80573		6.57924

Related parties

l Related parties

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

Segment reporting

l Segment reporting

ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. The Company operates in two reportable operating segments in the PRC.

Stock based compensation

l Stock based compensation

The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable.

Fair value of financial instruments

l Fair value of financial instruments

The carrying value of the Company’s financial instruments (excluding short-term bank borrowing and note payable): cash and cash equivalents, accounts and retention receivable, prepayments and other receivables, accounts payable, income tax payable, amount due to a related party, other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments.

Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of short-term bank borrowings and note payable approximate the carrying amount.

The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” ("ASC 820-10"), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

• Level 1: Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets;

• Level 2: Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs; and

• Level 3: Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models.

Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Recent accounting pronouncements

l Recent accounting pronouncements

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

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ORGANIZATION AND BUSINESS BACKGROUND (Tables)

9 Months Ended

Sep. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Subsidiaries

Description of subsidiaries

Name	Place of incorporation and kind of legal entity	Principal activities and place of operation	Particulars of issued/ registered share capital	Effective interest held
Liaoning Nengfa Weiye Energy Technology Co. Ltd (“Nengfa Energy”)	The PRC, a limited liability company	Production of a variety of industrial valve components which are widely used in water supply and sewage system, coal and gas fields, power generation stations, petroleum and chemical industries in the PRC	US$5,000,000	100%
Liaoning Nengfa Tiefa Import & Export Co. Ltd (“Nengfa Tiefa Import & Export”)	The PRC, a limited liability company	Development and production of hi-tech and automatic-intelligence valve products	RMB877,192	57%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Estimated Amortization Expense on Land Use Right

The estimated amortization expense on the land use right in the next five years and thereafter is as follows:

Period ending September 30:
2018	$	62,018
2019		62,018
2020		62,018
2021		62,018
2022		62,018
Thereafter		2,310,170
Total:	$	2,620,260

Expected Useful Lives

Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:

	Expected useful life	Residual value
Building	30 years	5%
Plant and machinery	10 – 20 years	5%
Furniture, fixture and equipment	5 – 8 years	5%

Exchange Rates

Translation of amounts from RMB into US$1 has been made at the following exchange rates for the respective period:

	September 30, 2017		September 30, 2016
Period-end RMB:US$1 exchange rate		6.65450		6.66938
Average period RMB:US$1 exchange rate		6.80573		6.57924

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ACCOUNTS AND RETENTION RECEIVABLES (Tables)

9 Months Ended

Sep. 30, 2017

Accounts And Retention Receivable [Abstract]

ACCOUNTS AND RETENTION RECEIVABLES

If actual collections experience changes, revisions to the allowance may be required.

	September 30, 2017		December 31, 2016
	(Unaudited)		(Audited)
Accounts receivable, cost	$	8,109,659	$	7,357,282
Retention receivable, cost		572,475		629,680
		8,682,134		7,986,962
Less: allowance for doubtful accounts		(743,243)		(712,288)
Accounts and retention receivable, net	$	7,938,891	$	7,274,674

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INVENTORY (Tables)

9 Months Ended

Sep. 30, 2017

Inventory, Net [Abstract]

INVENTORY

	September 30, 2017		December 31, 2016
	(Unaudited)		(Audited)
Raw materials	$	592,998	$	519,500
Work-in-process		612,238		402,425
Finished goods		3,943,704		3,684,639
	$	5,148,940	$	4,606,564

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SHORT-TERM BANK BORROWINGS (Tables)

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Short-Term Bank Borrowings

Short-term bank borrowings consist of the following:

	September 30, 2017		December 31, 2016
Payable to financial institutions in the PRC:
Equivalent to RMB40,000,000 with interest rate at 1.28 times of the Bank of China Benchmark Lending Rate, monthly payable, due March 20, 2017, which is guaranteed by its vendor	$	-	$	5,760,618
Equivalent to RMB40,000,000 with interest rate at 1.28 times of the Bank of China Benchmark Lending Rate, monthly payable, due March 19, 2018, which is guaranteed by its vendor		6,010,970		-
Total short-term bank borrowings	$	6,010,970	$	5,760,618

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OTHER PAYABLES AND ACCRUED LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2017

Payables and Accruals [Abstract]

Other Payables and Accrued Liabilities

Other payables and accrued liabilities consisted of the following:

	September 30, 2017		December 31, 2016
	(Unaudited)		(Audited)
Customer deposits	$	608,927	$	487,175
Advance from employees		675,086		-
Value added tax payable		12,563		89,471
Accrued operating expenses		555,239		387,981
Other payable		45,764		50,372
	$	1,897,579	$	1,014,999

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INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Reconciliation of Income Tax Rate to Effective Income Tax Rate

The reconciliation of income tax rate to the effective income tax rate for the nine months ended September 30, 2017 and 2016 is as follows:

	Nine months ended September 30,
	2017			2016
Loss before income taxes from PRC operation	$	(709,663)		$	(1,119,393)
Statutory income tax rate		25	%		25	%
Income tax expense at statutory rate		(177,416)			(279,848)
Effect from non-deductible items		180,139			280,096
Income tax expense	$	2,723		$	248

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CONCENTRATIONS OF RISK (Tables)

9 Months Ended

Sep. 30, 2017

Risks and Uncertainties [Abstract]

Customers Account for Ten Percent or More of Revenues and its Outstanding Accounts Receivable

For the three and nine months ended September 30, 2017 and 2016, the customers who accounted for 10% or more of the Company’s revenues and its outstanding receivable balances as at period-end dates, are presented as follows:

	Three months ended September 30, 2017						September 30, 2017
			Percentage				Accounts
Customers	Sales		of sales				and retention receivable
Customer A	$	828,573		73	%	Total:	$	7,889,415

	Nine months ended September 30, 2017						September 30, 2017
			Percentage				Accounts
Customers	Sales		of sales				and retention receivable
Customer A	$	2,460,866		64	%		$	7,889,415
Customer B		448,519		12	%			461,557
Total:	$	2,909,385		76	%	Total:	$	8,350,972

	Three months ended September 30, 2016					September 30, 2016
			Percentage			Accounts
	Sales		of sales			and retention receivable
Customer A	$	1,338,045		96	%	$	7,218,593

	Nine months ended September 30, 2016					September 30, 2016
			Percentage			Accounts
	Sales		of sales			and retention receivable
Customer A	$	3,441,483		94	%	$	7,218,593

Concentrations Risk of Company's Purchases and Outstanding Accounts Payable Balances

For the three and nine months ended September 30, 2017 and 2016, the vendors who accounted for 10% or more of the Company’s purchases and its outstanding payable balances as at period-end dates, are presented as follows:

	Three months ended September 30, 2017						September 30, 2017
Vendors	Purchases		Percentage of purchases				Accounts payable
Vendor D	$	74,550		37	%		$	-
Vendor E		84,261		42	%			147,035
Total:	$	158,811		79	%	Total:	$	147,035

	Nine months ended September 30, 2017						September 30, 2017
Vendors	Purchases		Percentage of purchases				Accounts payable
Vendor D		453,965		45	%			-
Vendor E		179,586		18	%			147,035
Total:	$	633,551		63	%	Total:	$	147,035

	Three months ended September 30, 2016					September 30, 2016
			Percentage			Accounts
	Purchases		of purchases			payable
Vendor C	$	88,350		33	%	$	129,011
Vendor D		155,972		59	%		705
		244,322		92	%		129,716

	Nine months ended September 30, 2016						September 30, 2016
Vendors	Purchases		Percentage of purchases				Accounts payable
Vendor A	$	117,460		20	%		$	158,947
Vendor B		85,510		15	%			-
Vendor C		562,590		23	%			129,011
Vendor D		155,972		27	%			705
Total:	$	921,532		85	%	Total:	$	288,663

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Organization and Business Background (Detail) - 9 months ended Sep. 30, 2017	USD ($)	CNY (¥)
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage	100.00%	100.00%
Liaoning Nengfa Weiye Energy Technology Co Ltd [Member]
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Subsidiary of Limited Liability Company or Limited Partnership, Business Purpose	Production of a variety of industrial valve components which are widely used in water supply and sewage system, coal and gas fields, power generation stations, petroleum and chemical industries in the PRC	Production of a variety of industrial valve components which are widely used in water supply and sewage system, coal and gas fields, power generation stations, petroleum and chemical industries in the PRC
Stock Issued During Periods Value Issued For Cash | $	$ 5,000,000
Entity Incorporation, State Country Name	The PRC, a limited liability company	The PRC, a limited liability company
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage	100.00%	100.00%
Liaoning Nengfa Tiefa Import Export Co.Ltd [Member]
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Subsidiary of Limited Liability Company or Limited Partnership, Business Purpose	Development and production of hi-tech and automatic-intelligence valve products	Development and production of hi-tech and automatic-intelligence valve products
Stock Issued During Periods Value Issued For Cash | ¥		¥ 877,192
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage	57.00%	57.00%

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Summary of significant accounting policies - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Summary Of Significant Accounting Policies [Line Items]
Value added tax rate levied on majority of products			17.00%
Minimum likelihood of tax benefits being realized upon settlement	50.00%		50.00%
Depreciation expense	$ 193,171	$ 125,419	$ 568,317	$ 530,224
Accounts Receivable
Summary Of Significant Accounting Policies [Line Items]
Customers billing period			90 days
Use Rights
Summary Of Significant Accounting Policies [Line Items]
Finite lived intangible assets, useful Life			50 years
Finite lived intangible assets amortization period			2059
Land Use Rights [Member]
Summary Of Significant Accounting Policies [Line Items]
Amortization expense	$ 15,463	$ 15,515	$ 45,480	$ 47,046
Minimum
Summary Of Significant Accounting Policies [Line Items]
Retention receivable percentage	5.00%		5.00%
Portion of project contract balance withheld period			12 months
Product Control Equipment Period			1 month
Billing Period			2 months
Minimum | Accounts Receivable
Summary Of Significant Accounting Policies [Line Items]
Customers billing period			30 days
Maximum
Summary Of Significant Accounting Policies [Line Items]
Retention receivable percentage	10.00%		10.00%
Portion of project contract balance withheld period			24 months
Product Control Equipment Period			6 months
Billing Period			3 months
Maximum | Accounts Receivable
Summary Of Significant Accounting Policies [Line Items]
Customers billing period			90 days

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Estimated Amortization Expense on Land Use Right (Detail) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Land Use Right [Line Items]
2018	$ 62,018
2019	62,018
2020	62,018
2021	62,018
2022	62,018
Thereafter	2,310,170
Total:	$ 2,620,260	$ 2,555,704

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Property, Plant and Equipment Expected Useful Lives and Estimated Residual Values (Detail)	9 Months Ended
	Sep. 30, 2017
Building
Property, Plant and Equipment [Line Items]
Property plant and equipment, useful life	30 years
Property plant and equipment, residual value	5.00%
Plant and machinery
Property, Plant and Equipment [Line Items]
Property plant and equipment, residual value	5.00%
Plant and machinery | Minimum
Property, Plant and Equipment [Line Items]
Property plant and equipment, useful life	10 years
Plant and machinery | Maximum
Property, Plant and Equipment [Line Items]
Property plant and equipment, useful life	20 years
Furniture, fixture and equipment
Property, Plant and Equipment [Line Items]
Property plant and equipment, residual value	5.00%
Furniture, fixture and equipment | Minimum
Property, Plant and Equipment [Line Items]
Property plant and equipment, useful life	5 years
Furniture, fixture and equipment | Maximum
Property, Plant and Equipment [Line Items]
Property plant and equipment, useful life	8 years

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Exchange Rates (Detail)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items]
Period-end RMB:US$1 exchange rate	6.65450	6.66938
Average period RMB:US$1 exchange rate	6.80573	6.57924

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Accounts and Retention Receivables - Additional Information (Detail)	Sep. 30, 2017
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage Of Accounts Receivable Recovered	2.00%

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Accounts and Retention Receivables (Detail) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable, cost	$ 8,109,659	$ 7,357,282
Retention receivable, cost	572,475	629,680
Accounts And Retention Receivable Gross	8,682,134	7,986,962
Less: allowance for doubtful accounts	(743,243)	(712,288)
Accounts and retention receivable, net	$ 7,938,891	$ 7,274,674

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Inventory (Detail) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Inventory [Line Items]
Raw materials	$ 592,998	$ 519,500
Work-in-process	612,238	402,425
Finished goods	3,943,704	3,684,639
Total inventory	$ 5,148,940	$ 4,606,564

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Short-Term Bank Borrowings - Additional Information (Detail)	Sep. 30, 2017	Sep. 30, 2016
China Benchmark Lending Rate [Member]
Short-term Debt [Line Items]
Effective interest rate, per annum	6.00%	6.00%

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Short-Term Bank Borrowings (Detail) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Short-term Debt [Line Items]
Total short-term bank borrowings	$ 6,010,970	$ 5,760,618
Short Term Loan One
Short-term Debt [Line Items]
Total short-term bank borrowings	0	5,760,618
Short Term Loan Two
Short-term Debt [Line Items]
Total short-term bank borrowings	$ 6,010,970	$ 0

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Short-Term Bank Borrowings (Parenthetical) (Detail)	9 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2017 CNY (¥)	Dec. 31, 2016 USD ($)
Short-term Debt [Line Items]
Short-term bank borrowings	$ 6,010,970		$ 5,760,618
Short Term Loan One
Short-term Debt [Line Items]
Short-term bank borrowings	0		5,760,618
Short Term Loan Two
Short-term Debt [Line Items]
Short-term bank borrowings	$ 6,010,970		$ 0
Guarantee Type, Other | Short Term Loan One
Short-term Debt [Line Items]
Short-term bank borrowings | ¥		¥ 40,000,000
Percentage of face value as handling fee	1.28%	1.28%
Debt Instrument, Maturity Date	Mar. 20, 2017
Guarantee Type, Other | Short Term Loan Two
Short-term Debt [Line Items]
Short-term bank borrowings | ¥		¥ 40,000,000
Percentage of face value as handling fee	1.28%	1.28%
Debt Instrument, Maturity Date	Mar. 19, 2018

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Other Payables and Accrued Liabilities (Detail) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Accounts Payable and Accrued Liabilities [Line Items]
Customer deposits	$ 608,927	$ 487,175
Advance from employees	675,086	0
Value added tax payable	12,563	89,471
Accrued operating expenses	555,239	387,981
Other payable	45,764	50,372
Other payables and accrued liabilities	$ 1,897,579	$ 1,014,999

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Income Taxes - Additional Information (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Income Taxes [Line Items]
Unified income tax rate	25.00%	25.00%
United States of America
Income Taxes [Line Items]
Expiration date	2037
Operating Loss Carryforwards	$ 3,638,325
Operating Loss Carryforwards, Valuation Allowance	$ 1,237,031

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Reconciliation of Income Tax Rate to Effective Income Tax Rate (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Reconciliation of Effective Income Tax Rate [Line Items]
Loss before income taxes from PRC operation			$ (709,663)	$ (1,119,393)
Statutory income tax rate			25.00%	25.00%
Income tax expense at statutory rate			$ (177,416)	$ (279,848)
Effect from non-deductible items			180,139	280,096
Income tax expense	$ 51	$ 182	$ 2,723	$ 248

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Stockholders’ Equity - Additional Information (Detail) - shares	Sep. 30, 2017	Dec. 31, 2016
Schedule of Capitalization, Equity [Line Items]
Common stock, shares issued	7,073,289	7,073,289
Common stock, shares outstanding	7,073,289	7,073,289

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Concentrations of Risk - Additional Information (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Concentration Risk [Line Items]
Percentage of purchases	10.00%	10.00%	10.00%	10.00%

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Customers Account for Ten Percent or More of Revenues and its Outstanding Accounts Receivable Balances (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Concentration Risk [Line Items]
Revenue	$ 1,103,952	$ 1,366,905	$ 3,678,341	$ 3,603,738
Percentage of sales	10.00%	10.00%	10.00%	10.00%
Accounts and retention receivable	$ 7,938,891		$ 7,938,891		$ 7,274,674
Customer A and B
Concentration Risk [Line Items]
Accounts and retention receivable	8,350,972		8,350,972
Customer A and B | Sales
Concentration Risk [Line Items]
Revenue			$ 2,909,385
Percentage of sales			76.00%
Customer One [Member]
Concentration Risk [Line Items]
Accounts and retention receivable	7,889,415	$ 7,218,593	$ 7,889,415	$ 7,218,593
Customer One [Member] | Sales
Concentration Risk [Line Items]
Revenue	$ 828,573	$ 1,338,045	$ 2,460,866	$ 3,441,483
Percentage of sales	73.00%	96.00%	64.00%	94.00%
Customer Two [Member]
Concentration Risk [Line Items]
Accounts and retention receivable	$ 461,557		$ 461,557
Customer Two [Member] | Sales
Concentration Risk [Line Items]
Revenue			$ 448,519
Percentage of sales			12.00%

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Concentrations Risk of Company's Purchases and Outstanding Accounts Payable Balances (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Concentration Risk [Line Items]
Purchases	$ 1,082,652	$ 1,462,330	$ 3,207,838	$ 3,593,519
Percentage of purchases	10.00%	10.00%	10.00%	10.00%
Vendor C and D
Concentration Risk [Line Items]
Accounts payable		$ 129,716		$ 129,716
Major Supplier Concentration Risk | Vendor A | Accounts Payable
Concentration Risk [Line Items]
Accounts payable		158,947		158,947
Major Supplier Concentration Risk | Vendor A | Purchases
Concentration Risk [Line Items]
Purchases				$ 117,460
Percentage of purchases				20.00%
Major Supplier Concentration Risk | Vendors B | Accounts Payable
Concentration Risk [Line Items]
Accounts payable		0		$ 0
Major Supplier Concentration Risk | Vendors B | Purchases
Concentration Risk [Line Items]
Purchases				$ 85,510
Percentage of purchases				15.00%
Major Supplier Concentration Risk | Vendors C | Accounts Payable
Concentration Risk [Line Items]
Accounts payable		129,011		$ 129,011
Major Supplier Concentration Risk | Vendors C | Purchases
Concentration Risk [Line Items]
Purchases		$ 88,350		$ 562,590
Percentage of purchases		33.00%		23.00%
Major Supplier Concentration Risk | Vendors D | Accounts Payable
Concentration Risk [Line Items]
Accounts payable	$ 0	$ 705	$ 0	$ 705
Major Supplier Concentration Risk | Vendors D | Purchases
Concentration Risk [Line Items]
Purchases	$ 74,550	$ 155,972	$ 453,965	$ 155,972
Percentage of purchases	37.00%	59.00%	45.00%	27.00%
Major Supplier Concentration Risk | Vendor E | Accounts Payable
Concentration Risk [Line Items]
Accounts payable	$ 147,035		$ 147,035
Major Supplier Concentration Risk | Vendor E | Purchases
Concentration Risk [Line Items]
Purchases	$ 84,261		$ 179,586
Percentage of purchases	42.00%		18.00%
Major Supplier Concentration Risk | Vendor D and E | Accounts Payable
Concentration Risk [Line Items]
Accounts payable	$ 147,035		$ 147,035
Major Supplier Concentration Risk | Vendor D and E | Purchases
Concentration Risk [Line Items]
Purchases	$ 158,811		$ 633,551
Percentage of purchases	79.00%		63.00%
Major Supplier Concentration Risk | Vendor C and D | Purchases
Concentration Risk [Line Items]
Purchases		$ 244,322
Percentage of purchases		92.00%
Major Supplier Concentration Risk | Vendor A,B,C and D | Accounts Payable
Concentration Risk [Line Items]
Accounts payable		$ 288,663		$ 288,663
Major Supplier Concentration Risk | Vendor A,B,C and D | Purchases
Concentration Risk [Line Items]
Purchases				$ 921,532
Percentage of purchases				85.00%