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Concentrations and Credit Risk

9 Months Ended

Sep. 30, 2018

Concentrations and Credit Risk [Text Block]

21.

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 September 30, 2017 and 2018 as follows:

		Three months ended September 30,
		2017			2018
Customer A	$	9,477,104	53.39%	$	*	*
Customer B		7,368,320	41.51%		*	*
Customer C		*	*		1,672,191	29.92%
Customer D		*	*		2,081,697	37.24%
Customer E		*	*		852,331	15.25%

* 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 nine months ended September 30, 2017 and 2018 as follows:

		Nine months ended September 30,
		2017			2018
Customer A	$	18,132,366	65.21%	$	*	*
Customer B		7,504,870	26.99%		*	*
Customer C		*	*		5,374,871	35.95%
Customer D		*	*		2,081,697	13.92%

* 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 (net) as of December 31, 2017 and September 30, 2018 as follows:

		December 31, 2017			September 30, 2018
Customer B	$	23,835,201	62.08%	$	6,323,630	33.05%
Customer C		*	*		3,325,111	17.38%
Customer D		*	*		2,296,768	12.00%
Customer F		4,855,518	12.65%		3,536,795	18.48%
Customer G		4,664,285	12.15%		*	*

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

For the three and nine months ended September 30, 2017 and 2018, the Company recorded the following transactions:

		Three months ended September 30,				Nine months ended September 30,
		2017		2018		2017		2018
Purchase of inventories from
BAK Shenzhen**	$	9,248,609	$	-	$	13,527,981	$	108,718
Zhengzhou BAK Battery Co., Ltd*		-		-		-		2,062,432

Sales of finished goods to
BAK Tianjin		55,533		4,073		98,233		31,610
BAK Shenzhen**		728		-		61,525		-
Zhengzhou BAK Battery Co., Ltd*		163		-		13,811		-

Proceeds on disposal of patented proprietary technology offset against amount due to BAK Shenzhen (Note 6)**	$	-	$	13,034,583	$	-	$	13,034,583

* Mr. Xiangqian Li, the former CEO, is a director of this company. As of September 30, 2018 and December 31, 2017, payable to Zhengzhou BAK Battery Co., Ltd were $2,295,131 and nil, respectively, was included in trade accounts and bills payable.

** Mr. Xiangqian Li, our 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, 2017 and September 30, 2018, 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.