On August 26, 2010, CEM entered into an exclusive agreement with Lotus TV to provide advertising services for a ten-year period commencing on September 1, 2010. In consideration for the exclusive advertising rights granted by Lotus TV, CEM will provide advertising services and issue, over the course of the agreement, $10 million in loans to Lotus TV. The amount and duration of each loan shall be negotiated by the parties, depending on Lotus’s financial needs.

Prior to December 31, 2013, CEM issued Lotus TV various non-interest bearing promissory notes of approximately $9,500,000 (HK$74,242,425). During the year ended December 31, 2014, CEM issued Lotus TV an additional loan of approximately $1,390,000 (HK$10,800,000). All the notes receivable were due on August 31, 2020 and discounted to its estimated fair value using an effective interest rate of 8%. This difference between the face value and the present value of was allocated to the intangible asset captioned Advertising Rights. This difference was deemed an asset because the interest-free note was a condition of the advertising right agreement.

On November 25, 2014, CEM amended its 2010 agreement with Lotus TV whereby Lotus TV agreed to accelerate its repayment of the loan balance in annual instalments of $2,000,000 (amended to annual minimum instalments of $1,000,000 on December 28, 2015) each starting from 2015 until the entire remaining loan balance shall have been paid in full. Additionally, CEM agreed to forego its exclusive advertising rights granted by Lotus TV, but remain as Lotus TV’s preferred advertising agent.

As a result of the November 25, 2014 amendment to accelerate repayment of the notes and to forego exclusive rights but remain as a preferred agent, the Company increased the carrying value of the notes receivable by $1,889,427 and decreased the intangible asset by $1,889,427. The adjustment was based on the calculated present value of the notes in aggregate using annual repayment installments of $2 million beginning in 2015 until paid in full and an effective interest rate of 8%.

Issuance Date		March 31, 2016		December 31, 2015
December 17, 2010	$	1,934,361	$	1,935,309
January 31, 2011		784,577		784,961
May 12, 2011		5,635,437		5,638,200
August 9, 2011		618,995		619,299
April 9, 2013		600,738		601,033
February 17, 2014		1,005,868		1,006,361
June 13, 2014		386,873		387,063
Total principal		10,966,849		10,972,226
Total repayments		(2,062,188)		(2,063,199)
Discount		(1,331,609)		(1,467,049)
Notes receivable, net	$	7,573,052	$	7,441,978

For the three months ended March 31, 2016 and 2015, the Company recorded interest income on the notes of $134,393 and $102,182, respectively.

At December 31, 2015, the Company determined that the advertising right was impaired and recorded an impairment loss of $1,295,605 (translated at average exchange rate for the year ended December 31, 2015). The net amount of the advertising right was $0 at March 31, 2016 and December 31, 2015. For the three months ended March 31, 2016 and 2015, the Company recorded amortization expense of $0 and $72,545, respectively.