Note 18 - Guarantee Payment and Prepayment from Investors

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Guarantee Payment and Prepayment from New Investors [Text Block]

18. Guarantee payment and prepayment from investors

In

May

2015,

the Company entered into securities purchase agreements with Beijing Jinrun Fangzhou Science & Technology Co, Ltd. (“Jinrun Fangzhou”) and Dongsys Innovation (Beijing) Technology Development Co., Ltd. (“Dongsys Innovation”), public companies listed on the National Equities Exchange and Quotations of the PRC (the “NEEQ”), respectively, pursuant to which these companies agreed to purchase a certain number of shares of common stock of the Company. The Company had received the

10%

guarantee payment and

15%

prepayment in an aggregate amount equal to

US$772,000

from Jinrun Fangzhou, and the

10%

guarantee payment in an amount equal to

US$112,000

from Dongsys Innovation, respectively.

Due to certain restriction stipulated in the “Measures for Overseas Investment Management” issued by the Ministry of Commerce of the PRC (the “MOFCOM”), the Company and its investors experienced difficulties in obtaining approval for the transactions from the MOFCOM. As a result, on

May

12,

2016,

the Company terminated the security purchase agreements with the

two

investors, respectively. The Company did not make any repayment to these investors afterwards during

2016.

As agreed by the parties, beginning on

January

1,

2017,

the Company will bear a

12%

annualized interest rate for the unpaid amounts and the amounts shall be refunded to the investors no later than

December

31,

2017.

The Company expects to settle the balances with the

two

investors within

2017.