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Concentrations and Credit Risk

6 Months Ended

Jun. 30, 2017

Concentrations and Credit Risk [Text Block]

20.

Concentrations and Credit Risk

(a)

Concentrations

The Company had the following customers that individually comprised 10% or more of net revenue for the three months ended June 30, 2016 and 2017 as follows:

						Three months ended June 30,
			2016						2017
	Customer A	$	238,959			17.54%		$	*			*
	Customer B		236,598			17.37%			*			*
	Customer C		231,862			17.02%			*			*
	Customer D		225,754			16.57%			*			*
	Customer E		164,931			12.11%			*			*
	Customer F		137,305			10.08%			*			*
	Customer G		*			*			5,536,377			87.33%

	*	Comprised less than 10% of net revenue for the respective period.

		The Company had the following customers that individually comprised 10% or more of net revenue for the three months ended June 30, 2016 and 2017 as follows:

						Six months ended June 30,
			2016						2017
	Customer A	$	1,338,093			29.34%		$	*			*
	Customer B		1,257,359			27.57%			*			*
	Customer C		537,494			11.78%			*			*
	Customer G	$	*			*			8,647,056			85.99%

	*	Comprised less than 10% of net revenue for the respective period.

		The Company had the following customers that individually comprised 10% or more of accounts receivable As of December 31, 2016 and June 30, 2017 as follows:

			December 31, 2016						June 30, 2017
	Customer A	$	857,180			34.73%		$	*			*
	Customer G		1,286,206			52.11%			9,113,817			89.78%

	*	Comprised less than 10% of account receivable for the respective period.

		For the three months and six months ended June 30, 2016 and 2017, the Company recorded the following transactions:

			Three months ended June 30,						Six months ended June 30,
			2016			2017			2016			2017
	Purchase of inventories from
	BAK Tianjin	$	49,095		$	-		$	189,496		$	-
	Shenzhen BAK		2,677,785			1,916,928			2,689,672			4,279,372
	Zhengzhou BAK Battery Co., Ltd*		-			9,074			-			21,531

	Sales of finished goods to
	BAK Tianjin		236,598			16,154			263,605			42,700
	Shenzhen BAK		-			-			-			60,797
	Zhengzhou BAK Battery Co., Ltd*		-			-			-			13,648

	Sales of raw materials to Shenzhen BAK		(2,844	)		-			226,354			-

*Mr. Xiangqian Li, the former CEO, is a director of this company.

(b)

Credit Risk

Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents and pledged deposits. As of December 31, 2016 and June 30, 2017, substantially all of the Company’s cash and cash equivalents were held by major financial institutions located in the PRC, which management believes are of high credit quality.

For the credit risk related to trade accounts receivable, the Company performs ongoing credit evaluations of its customers and, if necessary, maintains reserves for potential credit losses. Historically, such losses have been within management’s expectations.