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Risks & Uncertainties
6 Months Ended
Jun. 30, 2020
Risks & Uncertainties [Abstract]  
RISKS & UNCERTAINTIES

NOTE 14 – RISKS & UNCERTAINTIES

 

Current vulnerability due to certain concentrations

 

For the six months ended June 30, 2020, one customer accounted for 30.7% of sales and two customers respectively accounted for 49.8% and 10.7% of accounts receivable. Two suppliers respectively accounted for 39.0% and 18.6% of raw material purchases, and three different products respectively accounted for 30.8%, 21.4% and 13.9% of revenue.

 

For the six months ended June 30, 2019, no customer accounted for more than 10% of sales and two customers respectively accounted for 49.7% and 10.7% of accounts receivable. Two suppliers respectively accounted for 27.7% and 24.7% of the Company's raw material purchases, and three different products respectively accounted for 33.9%, 21.0% and 16.1% of revenue.

 

Nature of Operations

 

Impact from the New Coronavirus Global Pandemic ("COVID-19") - The current outbreak of COVID-19 had a material and adverse effect on the Company's business operations. These included, but are not limited to, disruptions or restrictions on its ability to travel or to distribute its products, as well as temporary closures of its facilities or the facilities of the suppliers or customers. Company reopened its facility and ramped up its operations in the first quarter 2020, there is a risk of a resurgence of the outbreak such as certain cities witnesses including Hong Kong. Any disruption or delay of the Company's suppliers or customers would likely impact its sales and operating results. In addition, COVID-19 has resulted in a widespread health crisis that could adversely affect the economies and financial markets of China and many other countries, resulting in an economic downturn that could significantly impact the Company operating results.

 

Economic environment - Substantially all of the Company's operations are conducted in the PRC, and therefore the Company is subject to special considerations and significant risks not typically associated with companies operating in the United States of America. These risks include, among others, the political, economic and legal environments and fluctuations in the foreign currency exchange rate. The Company's results from operations 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 and remittance abroad, and rates and methods of taxation, among other things. The unfavorable changes in global macroeconomic factors may also adversely affect the Company's operations.

 

In addition, all of the Company's revenue is denominated in the PRC's currency of Renminbi (RMB), which must be converted into other currencies before remittance out of the PRC. Both the conversion of RMB into foreign currencies and the remittance of foreign currencies abroad require approval of the PRC government.