Discontinued Operations

6 Months Ended

Jun. 30, 2019

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

NOTE 5 – DISCONTINUED OPERATIONS 

Pursuant to an agreement dated December 23, 2016, the Company, through its wholly-owned subsidiary Fulland, sold the stock of Fulland Wind to a third party for a sales price of RMB 48 million (approximately $6.9 million). The Company’s forging and related components business was conducted through Fulland Wind. The purchase price is payable in three installments. The Company received the first installment of RMB 14,400,000 (approximately $2.1 million) on December 28, 2016, and received the second installment of RMB  14,400,000 (approximately $2.1 million) on April 10, 2017. The Company delivered Fulland Wind’s business license, seals, books and records, business contracts and personnel roster to the third party buyer on December 30, 2016, effectively the sale date. If the equity transfer registration formalities are completed within one year without any third party claims on the equity transfer, a final payment of RMB 19,200,000 (approximately $2.7 million) was due 25 working days after the expiration of such period.  Pursuant to extension agreement dated December 31, 2018, the Company agreed the above third party buyer could paid off the final payment of RMB 19,200,000 (approximately $2.7 million) by December 31, 2019. During the six months ended June 30, 2019, the Company believed that the final payment of RMB 19,200,000 (approximately $2.7 million) is uncollectible and the write off of such receivable is included in bad debt expense.

Additionally, in December 2016, the Company’s management decided to discontinue its petroleum and chemical equipment segment under Heavy Industries due to significant decline in revenues and the loss of its major customers. Accordingly, the petroleum and chemical equipment segment business is treated as a discontinued operation.

The results of operations from petroleum and chemical  equipment segment of Heavy Industries for the three and six months ended June 30, 2019 and 2018 have been classified to the loss from discontinued operations line on the accompanying unaudited condensed consolidated statements of operations and comprehensive loss presented herein.

The assets and liabilities classified as discontinued operations in the Company’s consolidated financial statements as of June 30, 2019 and December 31, 2018, and for the three and six months ended June 30, 2019 and 2018 is set forth below.  

	June 30, 2019		December 31, 2018
	(unaudited)		(audited)
Assets:
Current assets:
Accounts receivable, net	$	9,610	$	9,593
Prepaid expenses and other		206,610		200,333
Total current assets		216,220		209,926
Total assets	$	216,220	$	209,926
Liabilities:
Current liabilities:
Accounts payable	$	243,164	$	242,555
Advances from customers		43,551		-
Accrued expenses and other liabilities		26,023		25,977
Total current liabilities		312,738		268,532
Total liabilities	$	312,738	$	268,532

The summarized operating result of discontinued operations included in the Company’s unaudited condensed consolidated statements of operations is as follows: 

	Three months ended June 30,					Six months ended June 30,
	2019		2018			2019		2018
Revenues	$	-	$	-		$	-	$	-
Operating income:
Other operating income – bad debt recovery		-		(28	)		-		16,871
Total operating income		-		(28	)		-		16,871
(Loss) gain from operations		-		(28	)		-		16,871
Other income, net		-		-			-		-
(Loss) gain from discontinued operations, net of income taxes	$	-	$	(28	)	$	-	$	16,871