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Equity Method Investment
9 Months Ended
Sep. 30, 2019
Equity Method Investments and Joint Ventures [Abstract]  
EQUITY METHOD INVESTMENT

NOTE 7 – EQUITY METHOD INVESTMENT

 

On December 26, 2016, Dyeing and Xue Miao, an unrelated individual, formed Shengxin pursuant to an agreement dated December 23, 2016. The agreement sets forth general terms relating to the proposed business, but does not set forth specific funding obligations for either party. Dyeing has agreed to invest RMB 60,000,000 (approximately $8.9 million) and had invested RMB 59.8 million (approximately $8.9 million as of September 30, 2019), for which it received a 30% interest, and Mr. Xue has a commitment to invest RMB 140,000,000 (approximately $20.9 million), of which Mr. Xue has contributed RMB 60,000,000 (approximately $8.9 million), for which Mr. Xue received a 70% interest in Shengxin. Shengxin's registered capital is RMB 200 million (approximately $29.8 million). Mr. Xue had advised Dyeing that he anticipated that he will fund the remaining RMB 80,000,000 (approximately $11.9 million) of his commitment during 2018. Since Mr. Xue did not make this payment by the end of 2017, Dyeing has the right to amend the contract, and both parties may adjust each side's equity interest to reflect the amount of capital each side has actually invested.

 

In April 2018, Shengxin secured and invested in a large solar PV project in GuiZhou province. Shengxin paid RMB 40 million for the project rights and also engaged a local contractor to proceed with building the project. However, on June 1, 2018, the Chinese government halted installation of new solar farms for the remainder of the year and reduced subsidies for projects already under construction. Accordingly, there is no guarantee that the Chinese government will invest in new solar farm or provide the subsidies needed to fund projects. In September 2018, due to significant doubt about the status of this project and recoverability of our investment, the Company fully impaired the value of the investment in Shengxin.

 

For the three months ended September 30, 2019 and 2018, the Company recorded a loss on equity method investment of $0 and $8,892,458, respectively. For the nine months ended September 30, 2019 and 2018, the Company recorded a loss on equity method investment of $0 and $9,038,303, respectively.