COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 13 – COMMITMENTS AND CONTINGENCIES

Guarantees

Jonway Auto guaranteed certain financial obligations of outside third parties including suppliers and customers to support the Company’s business and economic growth. Guarantees will terminate on payment and/or cancellation of the obligation once it is repaid. A payment by the Company would be triggered by failure of the guaranteed party to fulfill its obligation covered by the guarantee. Maximum potential payments under guarantees total $2.2 million at June 30, 2016 (December 31, 2015 - $2.3 million). The guarantee expires at variance dates from March 31, 2016 to December 2019. The Company’s performance risk under these guarantees is reviewed regularly, and has resulted in no changes to its initial valuations.

Jonway Auto pledged a land use right and a building to Shanghai Pu Dong Development Bank to secure a bank loan of $1.0 million offered to a related company, Taizhou Jonway Jing Mao Trading Ltd., which is a subsidiary of Jonway Group. The period of guarantee is five years from 2014 to 2019. The net value of the land use right and the building pledged as at June 30, 2016 and December 31, 2015 were $0.4 million and $0.5 million, respectively.