SEC Comment Letter for TANTECH HOLDINGS LTD (TANH) (CIK 0001588084) (TANH) — Dec 8, 2016
TANTECH HOLDINGS LTD (TANH) (CIK 0001588084)
Date: Dec. 8, 2016 · CIK: 0001588084 · Accession: 0000000000-16-104070
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-36885
Referenced dates: November 3, 2016
Letter
December 7 , 2016 Mail Stop 4631 Via E -mail Mr. Zhengyu Wang Chairman and Chief Executive Officer Tantech Holdings Ltd . No. 10 Cen Shan Road, Shuige Industrial Zone Lishui City, Zhejiang Province People’s Republic of China
Re: Tantech Holdings Ltd. Form 20 -F for Fiscal Year Ended December 31 , 2015 Filed April 29 , 2016 Response dated Novem ber 28 , 2016 File No. 001-36885
Dear Mr. Wang :
We have reviewed your response and have the following additional comments . In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.
Please respond to this letter within ten business days by providing the requested information, or by advising us when you will p rovide the requested response. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response.
After reviewing the information you provide in response to these comments, we may have additional comments.
Form 20 -F for the period ended December 31 , 2015
Critical Accounting Policies, page73 Allowance for accounts receivable, page 74
1. We note your respon se to comment 1 from our letter dated November 3, 2016. Based on your response, it appears that your standard payment terms are three months for your typical customers. Based on the amounts still outstanding as of September 30, 2016, it appears that appro ximately $3.6 million of year -end receivables related to your typical customers, who are subject to your standard payment terms as they are not considered larger retailers or wholesale chains that are unlikely to default. Please provide us with an analysi s of the specific evidence you relied on in concluding that your reserve of $1.2 million as of year -end was considered adequate. In order to better understand the adequacy of your reserve, please provide us with an aging schedule that shows the
Mr. Wang Tantech Holdings Ltd December 7 , 2016 Page 2
breakdown o f the $3.6 million of uncollected receivables as of September 30, 2016. We further remind you that to the extent any known trends in the aging of your trade receivables or uncertainties related to their collectability exists and may materially impact your future liquidity and results of operations; such impacts should be addressed in your MD&A.
2. We note your response to comment 1 from our letter dated November 3, 2016. With regard to your larger customer, Shanghai Huanguan; please tell us what specific evidence you relied on in determining that the outstanding balance $8,046,448 was considered collectible as of December 31, 2015, given that the amount was still outstanding as of September 30, 2016.
Item 15. Controls and Procedures, page 100
3. We note you r response to our comment 2 from our letter dated November 3, 2016 and the subsequent amendment filed to your Form 20 -F for which you have now concluded that your internal controls over financial reporting were not effective as of December 31, 2015. Given that internal controls over financial reporting are an integral part of disclosure controls and procedures; please tell us how you came to the conclusion that your material weakness related to internal controls over financial reporting did not impact your conclusion on the effectiveness of your disclosure controls and procedures or amend to revise your conclusion on the effectiveness of your disclosure controls and procedures.
You may contact Ameen Hamady , Staff Accountant, at (202) 551 -3891, or in his absence, me at (202) 551 -3355, if you have questions regarding comments on the financial statements and related matters. Please contact Ed Kelly at (202) 551-3728, or in his absence, Pamela Long, at (202) 551 -3765 , with any other questions.
Sincerely,
/s/ Terence O ’Brien
Show Raw Text
December 7 , 2016
Mail Stop 4631
Via E -mail
Mr. Zhengyu Wang
Chairman and Chief Executive Officer
Tantech Holdings Ltd .
No. 10 Cen Shan Road, Shuige Industrial Zone
Lishui City, Zhejiang Province
People’s Republic of China
Re: Tantech Holdings Ltd.
Form 20 -F for Fiscal Year Ended December 31 , 2015
Filed April 29 , 2016
Response dated Novem ber 28 , 2016
File No. 001-36885
Dear Mr. Wang :
We have reviewed your response and have the following additional comments . In some
of our comments, we may ask you to provide us with information so we may better understand
your disclosure.
Please respond to this letter within ten business days by providing the requested
information, or by advising us when you will p rovide the requested response. If you do not
believe our comments apply to your facts and circumstances, please tell us why in your response.
After reviewing the information you provide in response to these comments, we may
have additional comments.
Form 20 -F for the period ended December 31 , 2015
Critical Accounting Policies, page73
Allowance for accounts receivable, page 74
1. We note your respon se to comment 1 from our letter dated November 3, 2016. Based on
your response, it appears that your standard payment terms are three months for your
typical customers. Based on the amounts still outstanding as of September 30, 2016, it
appears that appro ximately $3.6 million of year -end receivables related to your typical
customers, who are subject to your standard payment terms as they are not considered
larger retailers or wholesale chains that are unlikely to default. Please provide us with an
analysi s of the specific evidence you relied on in concluding that your reserve of $1.2
million as of year -end was considered adequate. In order to better understand the
adequacy of your reserve, please provide us with an aging schedule that shows the
Mr. Wang
Tantech Holdings Ltd
December 7 , 2016
Page 2
breakdown o f the $3.6 million of uncollected receivables as of September 30, 2016. We
further remind you that to the extent any known trends in the aging of your trade
receivables or uncertainties related to their collectability exists and may materially impact
your future liquidity and results of operations; such impacts should be addressed in your
MD&A.
2. We note your response to comment 1 from our letter dated November 3, 2016. With
regard to your larger customer, Shanghai Huanguan; please tell us what specific evidence
you relied on in determining that the outstanding balance $8,046,448 was considered
collectible as of December 31, 2015, given that the amount was still outstanding as of
September 30, 2016.
Item 15. Controls and Procedures, page 100
3. We note you r response to our comment 2 from our letter dated November 3, 2016 and the
subsequent amendment filed to your Form 20 -F for which you have now concluded that
your internal controls over financial reporting were not effective as of December 31,
2015. Given that internal controls over financial reporting are an integral part of
disclosure controls and procedures; please tell us how you came to the conclusion that
your material weakness related to internal controls over financial reporting did not impact
your conclusion on the effectiveness of your disclosure controls and procedures or amend
to revise your conclusion on the effectiveness of your disclosure controls and procedures.
You may contact Ameen Hamady , Staff Accountant, at (202) 551 -3891, or in his
absence, me at (202) 551 -3355, if you have questions regarding comments on the financial
statements and related matters. Please contact Ed Kelly at (202) 551-3728, or in his absence,
Pamela Long, at (202) 551 -3765 , with any other questions.
Sincerely,
/s/ Terence O ’Brien
Terence O’Brien
Accounting Branch Chief
Office of Manufacturing and
Construction