CONCENTRATIONS AND CREDIT RISK

6 Months Ended

Jun. 30, 2017

13. CONCENTRATIONS AND CREDIT RISK

(a)

Concentrations

The Company has earned no revenue during the three and six months ended June 30, 2016. In the three months ended June 30, 2017, 3 customers accounted for 51%, 13% and 11% of the Company’s revenues, respectively. In the six months ended June 30, 2017, 4 customers who accounted for 46%, 12%, 11% and 10% of its revenues, respectively. As of June 30, 2017 and December 31, 2016, a customer accounted for 83% and 97% of its accounts receivable, respectively.

(b)

Credit risk

Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents. As of June 30, 2017 and December 31, 2016, substantially all of the Company’s cash and cash equivalents were held by major financial institutions located in the PRC, which management believes are of high credit quality.

For the credit risk related to trade accounts receivable, the Company performs ongoing credit evaluations of its customers and, if necessary, maintains reserves for potential credit losses. Historically, such losses have been within management’s expectations.