Business Context and Reporting Period
This Form 6-K filing by Tantech Holdings Ltd. covers the month of December 2017. The company, a clean energy firm based in China, announced a strategic divestiture of its Electric Double-Layer Capacitor (EDLC) carbon business to refocus its core operations on electric vehicle product development.
Key Financial Metrics and Transaction Details
The filing details a specific asset sale rather than providing full-period financial statements. Key transaction metrics include:
- Total Purchase Price: RMB 16 million.
- Payment Structure: Spread over 10 years.
- 2017 Payment: RMB 4.48 million (28% of total), comprising RMB 3.2 million in cash advancement and RMB 1.28 million for IP rights.
- 2018 Payment: RMB 1.28 million plus cash interest on the remaining receivable.
- Lease Concession: Tantech will lease office and production facilities to the buyer with a free leasehold for the first two years.
The filing text does not provide clear values for overall revenue, profit, cash flow, margins, debt, or liquidity for the reporting period.
Material Changes
The primary material change is the divestiture of the EDLC carbon business, including all related intellectual property and R&D/production equipment. This decision was driven by:
- Dependence on a very limited number of customers.
- Challenging market conditions and an unfavorable political climate.
- A strategic transition to the electric vehicle sector.
Additionally, Dr. Zaihua Chen, the Registrant's Chief Technology Officer (CTO) and controller of the buyer (Zhejiang Apeikesi Energy Co., Ltd.), will resign from his position on or before December 31, 2017.
Outlook, Risks, and Management Commentary
Management intends to focus exclusively on the development of electric vehicle products following the transaction. The sale was approved by the Board of Directors based on a valuation report, with full knowledge of the CTO's relationship to the buyer. Risks associated with the transaction include the extended payment timeline (10 years) and the loss of the CTO, though the company views the divestiture as necessary due to the unfavorable environment for the EDLC carbon segment.
Investor Verification Checklist
- Verify the financial stability and ability of Zhejiang Apeikesi Energy Co., Ltd. to meet the 10-year payment schedule.
- Confirm the valuation methodology used to determine the RMB 16 million purchase price.
- Assess the impact of Dr. Zaihua Chen's resignation on ongoing R&D and operations.
- Review the terms of the lease agreement for the facilities to ensure no hidden liabilities.
- Monitor the company's progress in transitioning to the electric vehicle business post-divestiture.