COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2014

COMMITMENTS AND CONTINGENCIES [Text Block]

NOTE 17 COMMITMENTS AND CONTINGENCIES

(a) Operating leases

The Company has entered into tenancy agreements for the leases of an exhibition hall and land with a third party and a related company, Shuaiyi Technology (see 15(b)), respectively, for the purposes of the operation of its VIEs. The Company’s commitments for minimum lease payments under these operating leases for the next five years and thereafter as of June 30, 2014 are as follows:

		Related Parties		Non-related Parties		Total
Remainder of fiscal year ending December 31, 2014	$	29,377	$	16,090	$	45,467
Fiscal year ending December 31, 2015		58,754		10,497		69,251
Fiscal year ending December 31, 2016		58,754		-		58,754
Fiscal year ending December 31, 2017		58,754		-		58,754
Fiscal year ending December 31, 2018		58,754		-		58,754
Thereafter		699,438		-		699,438
Total	$	963,831	$	26,587	$	990,418

During the six months ended June 30, 2014 and 2013, rental expenses under operating leases amounted to $49,563 and $52,991, respectively.

During the three months ended June 30, 2014 and 2013, rental expenses under operating leases amounted to $24,779 and $25,218, respectively.

(b) PRC employee costs

According to the prevailing laws and regulations of the PRC, the Company’s subsidiaries and VIEs in the PRC are required to contribute to medical, retirement and unemployment insurance programs for its employees. We have recorded accruals for the probable estimated liability for approximately the past two years. However, in the past we did not provide for contributions for our temporary employees. If the PRC regulatory authorities take the view that we were required to make contributions to the social insurance and housing accumulation funds for our temporary employees, our failure to make previous payments may be in violation of applicable PRC labor laws and PRC governmental authorities may impose penalties on us for failure to comply. In addition, in the event that any current or former employee files a complaint with the PRC government, we may be subject to making up the contributions to the social insurance and housing accumulation funds as well as paying administrative fines. As the Company does not currently believe that it is probable that these additional contributions and fines would be material and, furthermore, cannot be reasonably estimated, no additional provision has been made in this regard.

(c) Indemnification agreement

On October 5, 2010, the Company entered into an indemnification agreement with each of its newly elected independent directors, Mr. Henry Ngan, Ms. Virginia P’an and Mr. Jianbing Zhong, pursuant to which the Company agreed to indemnify the independent directors against expenses, judgments, fines, penalties or other amounts actually and reasonably incurred by the Independent directors in connection with any proceeding if the independent directors acted in good faith and in the best interests of the Company.

Also on October 5, 2010, the Company entered into an indemnification agreement with Mr. Tick pursuant to which the Company agreed to indemnify Mr. Tick against expenses, judgments, fines, penalties or other amounts actually and reasonably incurred by Mr. Tick in connection with any proceeding if Mr. Tick acted in good faith and in the best interests of the Company.

On January 24, 2011, the Company entered into an indemnification agreement with Mr. Joshua Kurtzig, its newly elected independent director, pursuant to which the Company agreed to indemnify Mr. Kurtzig against expenses, judgments, fines, penalties or other amounts actually and reasonably incurred by the independent director in connection with any proceeding if the independent director acted in good faith and in the best interests of the Company. Mr. Kurtzig resigned from the Company’s Board effective November 26, 2012.

On November 26, 2012, the Company entered into an indemnification agreement with Mr. Richard E. Fearon, Jr., its newly elected independent director, pursuant to which the Company agreed to indemnify Mr. Fearon, Jr. against expenses, judgments, fines, penalties or other amounts actually and reasonably incurred by the independent director in connection with any proceeding if the independent director acted in good faith and in the best interests of the Company.