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Financing with Sale-Leaseback
 12 Months Ended
Dec. 31, 2020
Financing with Sale-Leaseback [Abstract]  
Financing with Sale-Leaseback

(7) Financing with Sale-Leaseback


The Company entered into a sale-leaseback arrangement (the “Lease Financing Agreement”) with TAC Leasing Co., Ltd.(“TLCL”) on August 6, 2020, for a total financing proceeds in the amount of RMB 16 million (approximately US$2.5 million). Under the sale-leaseback arrangement, Hebei Tengsheng sold the Leased Equipment to TLCL for 16 million (approximately US$2.5 million). Concurrent with the sale of equipment, Hebei Tengsheng leases back the equipment sold to TLCL for a lease term of three years. At the end of the lease term, Hebei Tengsheng may pay a nominal purchase price of RMB 100 (approximately $15) to TLCL and buy back the Leased Equipment. The Leased Equipment in amount of $2,349,452 was recorded as right of use assets and the net present value of the minimum lease payments was recorded as lease liability and calculated with TLCL’s implicit interest rate of15.6% per annum and stated at $567,099 at the inception of the lease on August 17, 2020.


Hebei Tengsheng made payments due according to the schedule. As of December 31, 2020, the balance of Leased Equipment net of amortization was $2,397,653. The lease liability was $536,959 and its current portion in the amount of $182,852 as of December 31, 2020.Amortization of the Leased Equipment was $51,574 for the year ended December 31, 2020. Total interest expense for the sale lease back arrangement was $28,083 for the year ended December 31, 2020.


As a result of the sale and leaseback, a deferred gain in the amount of $430,695 was recorded. The deferred gain is amortized over the lease term and as an offset to amortization of the Leased Equipment.


The future minimum lease payments of the capital lease as of December 31, 2020 were as follows:


December 31,  Amount 
2021   253,797 
2022   253,797 
2023   148,048 
Less: unearned discount   (118,683)
    536,959 
Less: Current portion lease liability   (182,852)
   $354,107