COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

NOTE 11: COMMITMENTS AND CONTINGENCIES

(1) Lease commitments

Capital Lease

From April, 2015, NOWnews Network entered into various capital lease agreements with Nextlink Technology Co., Ltd. (“Nextlink”), pursuant to which NOWNews Network agreed to lease multiple servers from Nextlink for the period ranges from sixteen months to two years. At the end of each contract and upon fulfillment of the lease obligations, the title of these servers and ownership shall be transferred to NOWnews Network. Because NOWnews Network takes ownership of the equipment at the completion of the lease contract, NOWnews Network determined that the arrangement represents a capital lease for the equipment. The Company recorded $171,417 as a capital lease for the equipment and began depreciating the equipment on a straight line basis over five years.

On June 21, 2017, NOWnews Network entered into another capital lease agreement with High Performance Information Co., Ltd. (“HPI”), pursuant to which NOWNews Network agreed to lease the Network Attached Storage (“NAS”) servers from HPI for three years with maturity date on May 31, 2020. At the end of this contract and upon fulfillment of the lease obligations, the title of these servers and ownership shall be transferred to NOWnews Network. Because NOWnews Network takes ownership of the equipment at the completion of the lease contract, NOWnews Network determined that the arrangement represents a capital lease for the equipment. The Company recorded $6,917 as a capital lease for the equipment and began depreciating the equipment on a straight line basis over three years.

Depreciation expense of those equipment under capital lease was $45,051 and $35,833 for the years ended December 31, 2017 and 2016, respectively. Interest expense resulted from capital leases amounted to $248 and $870 for the years ended December 31, 2017 and 2016, respectively.

Operating Lease

Operating lease commitments consist of leases for office space and copy machines under various operating lease agreements which expire in June, 2021. Operating lease agreements generally contain renewal options that may be exercised at the Company’s discretion after the completion of the terms.

The Company's obligations under capital and operating leases are as follows:

As of December 31,	Capital Leases Amount		Operating Leases Amount
2018	$	2,238	$	293,409
2019		2,395		297,709
2020		1,047		310,824
2021				318,215
2022		-		208,472
Total minimum payments	$	5,680	$	1,428,629

The Company incurred rent expenses of $207,937 and $84,932 for the years ended December 31, 2017 and 2016, respectively.

(2) Litigation

Defamation and General Matters

From time to time, the Company is subject to legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of copyrights and other intellectual property rights and other claims alleging defamation, invasion of privacy, or similar claims arising in connection with the news articles, pictures, and other contents published on the Company’s website.

Lai Matter

On July 11, 2014, Ms. Xiu-qing Lai filed a claim against NOWnews Network and five other companies (the “Five Companies”) who are unrelated to the Company, in the Taiwan Tainan District Court (the “Tainan District Court”) in connection to a news article edited by NOWnews Network and published on July 19, 2012 on the website of NOWnews Network and five other websites owned by the Five Companies, respectively. Ms. Lai claims that the news article contained a false statement that harms the reputation of Ms. Lai. Ms. Lai seeks approximately $18,556 (NT$550,000) in compensatory damages from NOWnews Network, $59,042 (NT$1,750,000) in aggregate from the Five Companies, and newspaper apologies from NOWnews Network and the Five Companies. Based on the agreements entered by NOWnews Network and the Five Companies, if any news content provided by NOWnews Network violates any regulations or infringes on any copyrights, NOWnews Network shall be responsible for any losses that may occur.

On January 6, 2015, the plaintiff agreed to settle this legal matter with NOWnews Network outside of court. NOWnews Network agreed to pay the plaintiff $13,495 (NT$400,000) in compensatory damages, and the plaintiff agreed to revoke the claim against NOWnews Network and the Five Companies. NOWnews Network has accrued $13,495 (NT$400,000) of contingent loss in connection to this lawsuit settlement during the year ended December 31, 2014. As of December 31, 2016, NOWnews Network has made payment of approximately $13,495 (NT$400,000) and this action is closed.

(3) Shares to be issued

On August 5, 2015, NOWnews Network, Sky Media, Mr. Alan Chen and Ms. Tu entered a Stock Purchase Agreement with Gamania Digital, and Ta Ya, in which NOWnews Network is committed to sell to Gamania Digital, and Ta Ya of its outstanding shares through two Phases (see Note 9). As of December 31, 2017, the sale of Phase I has been completed. As of the date of this report, NOWnews Network has issued in an aggregate of 4,914,100 common stock shares to Gamania Digital in exchange for approximately $1,621,960 (or NT$49,141,000) in the sale of Phase II, which shall terminate on September 21, 2018 pursuant to the Stock Purchase Agreement and addendums.

NowNews Digital Media Technology Co. Ltd. 10-K/A