SecProbe.io

CORRESP
1
filename1.htm

TanTech
Holdings Ltd.

F11, T3, Herui Technology Center,

No. 475 Chang He Road, Bingjiang District,

Hangzhou 310052, China

+ 86 (571) 87555802

November 28 , 2016

VIA E-MAIL

Terence O’Brien

Accounting Branch Chief

Division of Corporation Finance

U.S. Securities and Exchange Commission

100 F Street, N.E.,

Washington, D.C. 20549

RE: Tantech Holding Ltd.

Form 20-F for the Fiscal Year
Ended

December 31, 2015

Filed April 29, 2016

File No. 001-36885

Dear Mr. O’Brien:

On behalf of Tantech
Holdings Ltd. (“Tantech”, the “Company”, “we”, “us”, or “our”), we
hereby submit this response in response to the comments of the staff (the “Staff”) of the Securities and Exchange Commission
(the “Commission”) set forth in the Staff’s email, dated September 30, 2016, with respect to our annual report
on Form 20-F filed with the Commission on April 29, 2016, file no. 001-36885 (the “Annual Report”). Concurrently with
the submission of this response letter, we are filing, through EDGAR, Amendment No. 2 to the Form 20-F (“Amendment No. 2”
or the “Annual Report”).

We understand and
agree that:

 Ÿ the company is responsible for the adequacy and accuracy of the disclosure in the filing;

 Ÿ staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action
with respect to the filing; and

 Ÿ the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

Form 20-F for the period ended December
31, 2015

Critical Accounting Policies, page 73

Allowance for accounts receivable, page
74

1.
We note your response to comment 3 from our letter dated September 30, 2016. It is still not apparent from your response what your
typical customer payment terms are and how you apply your policy for evaluating collectability based on an aging analysis to those
standard terms. In that regard, while we understand you have offered longer payment terms to certain large retailers and wholesale
chains who require such payment terms over six months, it is not apparent how much of the outstanding receivable balance as of
December 31, 2015, relate to those larger customers who required extended payment terms. As such, please expand your response to
tell us:

 l What
your typical standard payment terms offered to customers are;

 l What
percentage of outstanding receivables as of December 31, 2015, relate to the larger customers who require extended payment terms;

 l Whether
you have a history of offering such extended terms and how that may have impacted your revenue recognition policy. Specifically
tell us how such terms may have impacted the determination that the price you offer your customers is considered fixed and determinable.
In this regard, clarify if you have a history of collecting the original amount invoiced from your customers that have these extended
payment terms without providing any refunds or concessions; and

 l What
consideration was given as to whether your allowance for doubtful accounts balance of $1.2 million was considered adequate as
of December 31, 2015, given that as of September 30, 2016, your accounts receivable balance continued to include approximately
$4.8 million of outstanding receivables that were greater than four months old as of December 31, 2015.

Finally, as previously
requested please also expand your disclosures to provide an analysis of your day’s sales outstanding for each balance sheet
date presented.

Response:

We acknowledge the Staff’s comment.

Our typical standard
payment terms offered to our customers are 3 months. Although we typically do not grant special payment terms to many of our customers,
some of our customers, who are large retailers and wholesale chains, tend to require longer payment terms that are more than 3
months but unlikely to default. Furthermore, for some major and long-term distributors and retailers, their credit terms can be
extended up to 9 months to 12 months. The reasons behind that are followings:

 1. These retailers are well-established larger chain stores and distributors across China. Their default
risk is relatively low compared to local stores or small customers.

 2. We are a relative small supplier to these large retailers and distributors. Our bargaining power
with these lager customers is weak since we are relying on their sale chancels to end users. They are more likely to pay their
large suppliers first than small suppliers and typically require longer payment terms from small suppliers like us. In addition,
our sale contracts with them are signed on annual basis, and the credit terms are subject to change based on how well our products
sell within their stores.

Currently, we have
extended credit terms for seven major customers. Most of them are well-established retailers and distributors in China, and we
have developed sustained business relationship with them over the year. The percentage of outstanding receivables as of December
31, 2015, relate to these seven large customers who require extended payment terms, is at 60.35%, as shown in the table below:

    Customer

    Credit Term

    Balance as of 12/30/2015

        Percentage of

        Total AR

    Subsequent Collection as of 9/30/2016

        Percentage of

        Collection

        Lotus

    9-12 months

    4,516,727.87

    10.83
    %

    3,262,193.47

    72.22
    %

        Hangzhou LianHua

    9-12 months

    3,308,546.31

    7.93
    %

    2,219,752.58

    67.09
    %

        Carrefour

    9-12 months

    4,605,706.11

    11.04
    %

    4,605,706.11

    100.00
    %

        Hangzhou Baideshengou

    9-12 months

    4,694,927.60

    11.26
    %

    4,693,691.83

    99.97
    %

        Shanghai Huanguan

    9-12 months

    8,046,447.54

    19.29
    %

    -

    0.00
    %

    Total

    25,172,355.43

    60.35
    %

    14,781,343.99

As of September 30,
2016, approximately $14.8 million or 58.72% of those seven major customers’ outstanding receivables at December 31, 2015
have been subsequently collected.

Our offering of those
extended payment terms does not impact our determination that the price is fixed and determinable. Our price is evidenced by sales
contracts with fixed amount on each product to be sold. We have not experienced significant returns or concessions after extending
their credit terms. Since no significant amount of receivable was defaulted in the past, our revenue recognition policy is not
affected by extending credit terms. However, we considered that longer collection periods would have cause negative impact on our
cash flow management. Based on our historic experience, all of those receivables with those large customers to whom we offered
extended credit terms have been collected with the original invoices amounts, and we have not offered any subsequent refunds or
concession.

In particular, as
of September 30, 2016, we noted that still approximately 34% of outstanding receivables as of December 31, 2015 have not been collected
yet. The company has made efforts in collection follow-ups and negotiated with customers to collect bills by end of 2016.

By considering the
history of our cash collection and the nature of our business, many customers who extended payment term will pay us back by the
end of 2016 when it is the busiest shopping season. We have reviewed our aged receivables on individual account basis to assess
collectability and believe the allowance for doubtful accounts balance of $1.2 million as of December 31, 2015 was adequate. We
are monitoring the collection progress rigorously and will accrue additional allowance if we believe certain aged receivables become
likely uncollectible.

As per Staff’s
request, we have expanded our disclosure on page 74 of Amendment No. 2 to provide analysis of our day’s sales outstanding
for each balance sheet date presented.

Item 15. Controls and Procedures, page
100

2.
We note your response to our comment 5 from our letter dated September 30, 2016 and the subsequent amendment filed to your Form
20-F for the period ended December 31, 2015. It is not apparent to us how you were able to conclude that your disclosure controls
and procedures and internal controls over financial reporting are considered effective as of December 31, 2015. We note that based
on your disclosures on page 24, you were still in the process of designing and implementing your internal controls over financial
reporting as of the period covered by this report. As such, please revise your conclusion on the effectiveness of both or advise.

Response:

We acknowledge the Staff’s comment.

As of December 31,
2015, we believe that our disclosure controls and procedures were effective based on the following facts:

 1. Our Chief Financial Officer at the time, Mr. Ningfang Liang, is a licensed Certified Public Accountants
in the United Stated and has adequate experience in SEC financial reporting process. Mr. Liang worked extensively with our external
auditors and SEC attorney to ensure that information required to be disclosed in our reports is properly accumulated and communicated
to management.

 2. Our treasurer/financial controller, Mr. Qingsong Dong, is working industrial accounting over 15
years in China, who has extensive accounting and industry experience to ensure all accounting data are being recorded, processed,
summarized and reported properly, and who is also working closely with our CFO to accurately convert the financial information
into US GAAP-based financial statements.

We are currently not
subject to audits of internal control over financial reporting. Historically, we have not had a formal and comprehensive design
of internal control systems as being a small company. As per our disclosures on page 24, we are still in the process of designing
and implementing our formal internal controls over financial reporting. It is the management’s conclusion that our internal
control over financial reporting was not effective as of December 31, 2015.

We have revised our
disclosures on page 100 of Amendment No. 2 to indicate that our internal control over financial report(as defined in Rules 13a-15(f)
and 15d-15(f) of the Exchange Act of 1934) was ineffective as of December 31, 2015.

If you have any further
questions or comments, please contact our outside counsel, Jiannan Zhang, Ph.D., Cadwalader, Wickersham & Taft LLP 2301 China
Central Place, Tower 2 No. 79 Jianguo Road, Beijing 100025, China. +86 (10) 6599-7270 (Direct Phone) +86 (10) 6599-7300 (Main Fax),
Jiannan.zhang@cwt.com.

    Very truly yours,

    Tantech Holdings Ltd.

    By:
     /s/ Zhengyu Wang

    Name:
     Zhengyu Wang

    Title:
     Chief Executive Officer