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Loans

9 Months Ended

Sep. 30, 2017

Loans [Text Block]

12.

Loans

Bank loans:

Bank borrowings as of December 31, 2016 and September 30, 2017 consisted of the followings

			December 31,			September 30,
			2016			2017
	Short-term bank borrowings	$	1,439,947		$	-
	Long-term bank borrowings		18,258,528			19,053,630
		$	19,698,475		$	19,053,630

On June 10 and 15, 2016, the Company repaid Bank of Dandong the one-year short term loans of RMB30 million and RMB50 million, respectively, obtained under its banking facilities in June 2015. On June 14, 2016, the Company renewed its banking facilities from Bank of Dandong to provide a maximum amount of RMB130 million (approximately $19.5 million), including three-year long-term loans and three-year revolving bank acceptance and letters of credit bills for the period from June 13, 2016 to June 12, 2019. Under the banking facilities, from June to September 2016, the Company borrowed various three-year bank loans that totaled RMB126.8 million (approximately $19.1 million), bearing fixed interest at 7.2% per annum. The banking facilities were guaranteed by Mr. Xianqian Li, our former CEO, Ms. Xiaoqiu Yu, the wife of the Company’s former CEO, Shenzhen BAK, Mr. Yunfei Li, the Company’s CEO, and Ms. Qinghui Yuan, Mr. Yunfei Li’s wife.

On July 6, 2016, the Company obtained new banking facilities from Bank of Dalian to provide a maximum loan amount of RMB10 million (approximately $1.5 million) and bank acceptance of RMB40 million (approximately $6.0 million) to July 2017. The banking facilities were guaranteed by Shenzhen BAK, Mr. Yunfei Li, our CEO, and Ms. Qinghui Yuan, Mr. Yunfei Li’s wife. On July 6, 2016, the Company borrowed a one-year term bank loan of RMB10 million (approximately $1.5 million), bearing fixed interest at 6.525% per annum. On July 5, 2017, the Company repaid the loan of RMB10 million (approximately $1.5 million) and the Company was still in progress to renew the bank facilities.

The bank loans were also secured by the Company’s assets with the following carrying amounts:

			December 31,			September 30,
			2016			2017
	Pledged deposits (note 2)	$	3,064,155		$	692,419
	Prepaid land use rights (note 9)		7,698,523			7,907,143
	Buildings		11,729,172			18,252,861
	Machinery and equipment		2,598,882			2,754,734
	Construction in progress		6,156,488			94,231
		$	31,247,220		$	29,701,388

As of September 30, 2017, the Company had unutilized committed banking facilities of $10.3 million (Note 1).

During the three months ended September 30, 2016 and 2017, interest of $314,220 and $346,962, respectively, was incurred on the Company's bank borrowings.

During the nine months ended September 30, 2016 and 2017, interest of $798,210 and $1,050,474, respectively, was incurred on the Company's bank borrowings.

Other Short-term Loans

Other short-term loans as of December 31, 2016 and September 30, 2017 consisted of the following:

						December 31,			September 30,
			Note			2016			2017
	Advance from related parties
	– Tianjin BAK New Energy Research Institute Co., Ltd (“Tianjin New Energy”)		(a)		$	9,252,127		$	10,228,290
	– Mr. Xiangqian Li, the Company’s Former CEO		(b)			100,000			100,000
	–Shareholders		(c)			-			2,103,714
						9,352,127			12,432,004
	Advances from unrelated third party
	– Mr. Guozhu Liang		(d)		$	14,399			-
	– Mr. Wenwu Yu		(d)			145,410			151,742
	– Mr. Mingzhe Li		(d)			796,850			43,278
	– Ms. Longqian Peng		(d)			215,992			676,193
						1,172,651			871,213

					$	10,524,778		$	13,303,217

	(a)	The Company received advances from Tianjin New Energy, a related company under the control of Mr. Xiangqian Li, the Company’s former CEO, which was unsecured, non-interest bearing and repayable on demand. On November 1, 2016, Mr. Xiangqian Li ceased to be a shareholder but remained as a general manager of Tianjin New Energy. As of December 31, 2016 and September 30, 2017, the payable to Tianjin New Energy of $20,384 and nil, respectively, was included in trade accounts and bills payable.

	(b)	Advances from Mr. Xiangqian Li, the Company’s former CEO, was unsecured, non-interest bearing and repayable on demand.

	(c)	The refundable deposits paid by certain shareholders in relation to share purchase (note 1) were unsecured, non-interest bearing and repayable on demand.

	(d)	Advances from unrelated third parties were unsecured, non-interest bearing and repayable on demand.