Note 18. Commitment and Contingencies

12 Months Ended

Dec. 31, 2013

Notes

Note 18. Commitment and Contingencies

NOTE 18.  COMMITMENT AND CONTINGENCIES

Employment Agreement

Effective November 8, 2010, Dr. Jingong Pan, the Company’s former Vice President, was appointed as Chairman of the Board of Directors and Chief Executive Officer of the Company. As Chief Executive Officer, Dr. Pan will receive an annual salary of RMB 660,000.  Dr. Pan was also granted stock options to acquire up to 1,000,000 shares of the Company’s common stock, which vested in equal yearly installments over a three year period.  The options have an exercise price of $3.50 per share.  The agreement was for a three year term that expired on November 8, 2013.  Dr. Pan has remained as Chairman of the Board of Directors and Chief Executive Officer of the Company. 

Dispute with Renyi Hou

Between 2007 and 2010, a period during which Renyi Hou was CEO of the Company, Sichuan Xinju Mineral Resources Development Co. Ltd. (“Xinju”) borrowed a total of RMB28,665,844 from Sichuan Apollo Solar Science & Technology Co. Ltd and Sichuan Xinlong Tellurium Industry & Technique Co. Ltd.  Xinju is a private company, of which Mr. Hou owned 40%.  On March 10, 2011 the Company’s Board of Directors agreed that Mr. Hou could satisfy the loans by surrendering 2,418,923 shares of the Company’s common stock.  Those shares, when delivered by Mr. Hou, were held as treasury shares by the Company.  In July 2013 counsel for Sichuan Apollo issued a legal opinion that the cancellation of the Sichuan Apollo receivables in exchange for shares of its parent corporation was illegal under Chinese law, and so voidable in court. Accordingly, Sichuan Apollo initiated a legal complaint with the local bureau of economic investigation. On November 19, 2013 the local bureau dismissed the complaint.    Sichuan Apollo appealed the dismissal in December 2013.  In addition, the Company tendered a certificate for 1,418,923 shares to Renyi Hou in order to reverse the 2011 transaction (1,000,000 shares otherwise due from Mr. Hou to the Company being withheld from the tender).  However, as no consideration has been given for those shares, they are not considered outstanding, and remain treasury shares.