Quarterly report pursuant to Section 13 or 15(d)

Commitments and Contingency

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Commitments and Contingency
9 Months Ended
Sep. 30, 2017
Commitments and Contingency [Abstract]  
Commitments and Contingency
NOTE 13 – Commitments and Contingency

 

As of September 30, 2017, the Company’s significant commitments and contingency are summarized as follows:

 

Commitments

 

1) The Company has one lease for its Fremont, California office expired in May 2017 and renewed to expire in May 2020. Rental expense for the three-month and nine-month periods ended September 30, 2017 and 2016 were $19,338 and $51,814, $15,618 and $46,854, respectively. As of September 30, 2017, future minimum lease payment is $77,352 for the next twelve-month period ending September 30, 2018.

 

2) The company has another lease for its Japan office expiring July 2018. Rental expenses were approximately $8,658 and $25,974 for the three-month and nine-month period ended September 30, 2017, respectively. As of September 30, 2017, future minimum lease payment obligation is $37,400, including the 8% Japan consumption tax, for the next twelve-month ending September 30, 2018.

 

3) In March 2017, the Company entered into a satellites service agreement with a Japanese company (Company J). The agreement is effective on March 15, 2017 and will be expired on September 30, 2018. According to the agreement, the Company prepaid a total amount of $285,300 and the deposit of $95,100 in April 2017. The prepayment of $285,300 shall be applied to monthly service charge by Company J based on the term defined in the agreement.

 

Contingency

 

The Company entered into a 3-year digital transmission service agreement with Asia Satellite Telecommunication Company Limited (“Asia Sat”) on July 25, 2015. As of March 31, 2017, Asia Sat stipulates that the Company is in debt of $8,013,495 to Asia Sat, which includes unpaid service fees, a default payment in the form of liquidated sum and interest. The default payment includes total future payments of $7,411,616 due through March 31, 2018, subtracting the deposit of $775,000 made to Asia Sat. The Company disagreed with the payable balance of $8,013,495 and had recorded $1,376,879 payable to Asia Sat as of March 31, 2017. On July 25, 2016, Asia Sat commenced arbitration against the Company. On November 21, 2016, the Hong Kong International Arbitration Centre appointed a sole arbitrator to hear the dispute. On January 12, 2017, the Company introduced a counterclaim for misrepresentations made to induce entry into the Agreement. Aircom and AsiaSat reached a settlement with respect to the Agreement as of July 25, 2017, with an effective date of July 20, 2017. As of September 30, 2017, the Company has accrued the settlement liability and accounted for the net impact of the settlement.