LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES

NOTE 7 – LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES

Line of credit (Credit Exposure)

In June 2015, the Company was approved for up to an aggregate of $6.9 million of a credit line from China Everbright Bank with 50% restricted cash deposited and credit exposure of $3.5 million. The Company renewed the agreement in June 2016. The renewed agreement approved for up to an aggregated of $6.0 million of a credit line with 50% restricted cash deposited and credit exposure of $3.0 million. The renewed credit line expires in June 2017.  The credit line is secured bya land use right and a building with a total carrying amount of $2.1 million. Three shareholders and the Chief Executive Officer (“CEO”) Alex Wang also personally guaranteed on this credit line.  As of June 30, 2016, $6.0 million was drawn down as notes payable from China Everbright Bank.  The amount of restricted cash deposited with the bank was $3.0 million. As of June 30, 2016, the renewed credit line has been fully utilized.

 In March 2014, the Company has obtained up to an aggregate of $15.1 million of credit line with the credit exposure of $5.6 million from CITIC Sanmen Branch through Jonway Auto.  The credit line was extended for one more year and expires on November 2016. The credit line is secured by land and building owned by Jonway Auto and guaranteed by the related party – Jonway Group.  The shareholder and CEO Alex Wang also personally guaranteed this credit line. As of June 30, 2016, the Company borrowed aggregated $5.6 million loans with various due dates in April 13, 2017 to April 26, 2017 from CITIC Sanmen Branch. The loans carried at annual interests of 6%.  The Company has also drawn down $7.0 million in the form of notes payable as of June 30, 2016.  The Company deposited $7.0 million restricted cash as collateral for these notes payable. These notes are due from July 2016 to December, 2016.  As of June 30, 2016, the line of credit has been fully utilized.

In March 2014, the Company was approved up to an aggregate of $5.0 million of a credit line from ICBC. This credit line was secured by land and buildings owned by Jonway Auto and guaranteed by related parties. The credit line expires on March 2017. As of June 30, 2016, the total outstanding loan under this credit line was $4.5 million. The annual interest rates are from 4.36% to 6.66%.  The loans are due in various dates from July 24, 2016 to June 22, 2017.  As of June 30, 2016, the unused line of credit was approximately $0.5 million. .

Short term loans as of June 30, 2016 and December 31, 2015 are presented below: 

		June 30, 2016		December 31, 2015
Loan from CITIC bank	(a)	$	5,569	$	3,081
Loan from ICBC	(b)		4,515		4,621
		$	10,084	$	7,702

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(a) In October 2015, Jonway Auto borrowed a half year short-term loan of $3.1 million at annual interest rate of 5.9%. The loan was repaid upon maturity in April 2016.  

On March 25, 2016, Jonway Auto borrowed a one year loan of $0.5 million at annual interest rate of 6.0%. The loan is due on March 25, 2017.  On April 13, 2016, Jonway Auto borrowed a one year loan of $1.5 million at annual interest rate of 6.0%. The loan is due on April 13, 2017. On April 14, 2016, Jonway Auto borrowed a one year loan of $1.4 million at annual interest rate of 6.0%. The loan is due on April 14, 2017. On April 26, 2016, Jonway Auto further borrowed a one year loan of $2.2 million at annual interest rate of 6.0%. The loan is due on April 26, 2017.

All loans are secured by a Maximum Amount Mortgage Contract between Jonway Auto and CITIC dated November 3, 2014, in which a land use right and a building with a total carrying amount of $5.0 million as of June 30, 2016 has been pledged as security for these loans. The shareholder and CEO Alex Wang also personally guaranteed these loans.

(b) In March 2015, the Company borrowed a one year short-term loan of $0.8 million from ICBC at an annual interest of 5.4% and fully repaid the loan upon maturity in March 2016.  In June 2015, the Company borrowed a one year short-term loan of $0.3 million from ICBC at an annual interest rate of 5.92% and fully repaid the loan upon maturity in June 2016.

In July 2015, the Company borrowed a one year short-term loan of $1.1 million from ICBC at an annual interest rate of 6.7%.   In October 2015, the Company borrowed a one year short-term loan of $1.4 million at an annual interest of 6.4%. In November 2015, the Company borrowed a one year short-term loan of $1.1 million at an annual interest rate of 6.1%.  On June 8, 2016, the Company borrowed a one year short-term loan of $0.3 million at an annual interest rate of 5.0%.  On June 22, 2016, the Company borrowed a one year short-term loan of $0.8 million at an annual interest rate of 4.4%.

These loans were guaranteed by related parties including Jonway Group, the shareholder Wang Huaiyi and the shareholder and CEO Alex Wang. The Company also pledged buildings and a land use right with a carrying value of $1.4 million with ICBC.

The weighted average interest rates were 6.0% and 6.9% for the six months ended June 30, 2016 and 2015, respectively.

Bank acceptance notes

 As of June 30, 2016, the Company has bank acceptance notes payable in the amount of $13.0 million. The notes are guaranteed to be paid by the banks and are usually for a short-term period of nine months. The Company is required to maintain cash deposits of 50% or 100% of the notes payable with these bank, in order to ensure future credit availability. As of June 30, 2016, the restricted cash for the notes was $10.8 million. Bank acceptance notes are presented below:

		June 30, 2016		December 31, 2015
Bank acceptance notes payable to China Everbright Bank	(a)	$	6,020	$	7,086
Bank acceptance notes payable to CITIC Bank	(b)		7,029		6,428
Bank acceptance notes payable to Shanghai Pudong Development bank	(c)		-		852
		$	13,049	$	14,366

(a) Notes payable to China Everbright bank have various maturity dates in December 2016. The notes payable are guaranteed by a land use right and a building with a total carrying value of $2.0 million. The Company is also required to maintain cash deposits at 50% of the notes payable with the bank, in order to ensure future credit availability.

(b) Notes payable to CITIC bank will be due in July to September, 2016.  The Company is required to maintain cash deposits at 100% of the notes payable with the bank, in order to ensure future credit availability.

(c) Notes payable to Shanghai Pudong Development Bank was due in January and May, 2016. The Company was required to maintain cash deposits at 100% of the notes payable with the bank. The note payable was fully repaid upon due date.