14.	Due to new investors related to terminated security purchase agreements

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$776,000

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

and the

first

fiscal quarter of

2017.

As agreed by the parties, beginning on

January

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.

Interest expense for the unpaid amounts accrued for the

three

months ended

March

31,

2017

was approximately

US$0.03

million, which has been recorded in other payables account.