BANK ACCEPTANCE NOTES

9 Months Ended

Sep. 30, 2015

BANK ACCEPTANCE NOTES.

BANK ACCEPTANCE NOTES

NOTE 6—BANK ACCEPTANCE NOTES

Customers in China frequently settle their amounts owed to the Company with bank acceptance notes. Bank acceptance notes are draft instruments that are guaranteed to be paid at maturity by the respective bank. Upon receipt of the bank acceptance note, the Company can elect to hold the instrument until maturity and receive full face value, discount the bank acceptance note with the bank for a fee or transfer the bank acceptance note at full face value to suppliers who will accept the bank acceptance note as settlement of the Company’s accounts payable balance with them.

Bank acceptance notes consists of the following:

	September 30, 2015			December 31, 2014
Balance as of beginning of period	$	—		$	—
Received from customers	4,485			873
Converted to cash	(1,140		)	(149		)
Paid to suppliers	(1,207		)	(724		)
Balance as of end of period	$	2,138		$	—

All of the bank acceptance notes as of September 30, 2015 mature prior to March 31, 2016. Due to the short time to maturity, the Company believes the bank acceptance notes’ carrying value approximates fair value. As of September 30, 2015, the annual effective discount rate for all of the bank acceptance notes was 5.25%.