Annual report pursuant to Section 13 and 15(d)

Long-term investment

v3.7.0.1
Long-term investment
12 Months Ended
Dec. 31, 2016
Equity Method Investments and Joint Ventures [Abstract]  
Long Term Investment [Text Block]
10.
Long-term investment
 
On April 1, 2016, the Company entered into an investment agreement with Huizhou Yipeng Energy Technology Co. Ltd. ("Yipeng"), whereby the Company acquired 5% equity interest of Yipeng for RMB5,000,000 ($719,445). On June 30, 2016, the Company entered into an Agreement for Equity Transfer and Capital Increase and Supplementary Agreements with Yipeng and its shareholders (collectively, the “Equity Purchase Agreement”).
 
Pursuant to the terms of the Equity Purchase Agreement, the Company will purchase up to 50% of Yipeng’s equity on two closings: (1) on August 10, 2016, in addition to the existing 5% shares of Yipeng, the Company agreed to pay approximately $2.2 million in cash and transfer equipment worth approximately $6.5 million in exchange for the purchase of 30.4% of the shares of Yipeng, and (2) prior to November 5, 2016, provided that Yipeng has been approved to be listed in the catalogue of Industrial Standards of Auto Mobile Power Battery Cell (the “Catalogue”) prior to October 31, 2016, the Company will pay approximately $2.8 million in cash and transfer equipment worth approximately $5.0 million in exchange for an additional 14.6% of the shares of Yipeng. The Company also has the right to purchase in the future an additional 1% of the shares from Yipeng’s founding shareholders at a price of approximately $0.4 million which would result in an aggregate ownership of 51% of Yipeng. 
 
On August 10, 2016, the Company consummated the first closing pursuant to the terms of the Equity Purchase Agreement. As of December 31, 2016, the Company has invested an aggregate of $9.4 million in exchange for 35.4% of the equity interest of Yipeng, which was recorded under equity method.
 
Yipeng failed to be listed in the Catalogue prior to October 31, 2016 because the PRC government did not assess any new xEV cell and system manufacturers as originally expected in September 2016. As a result, the Company postponed the second closing until Yipeng is listed in the Catalogue.
 
The equity in earnings of investee was $351,755 for the year ended December 31, 2016.