LONG-TERM RECEIVABLES

3 Months Ended

Mar. 31, 2017

NOTE 5. LONG-TERM RECEIVABLES

In February 2010, Mao Ren took on debt from the creditors of a Taiwanese based company in exchange for the creditors' rights to the proceeds from the sale of collateralized land pledged by this Taiwanese company. Pursuant to the assumption agreements, the creditors agreed with Mao Ren to enforce and execute the auction by the court or itself against the debtor's remaining assets which are the collateralized land.

The above mentioned creditors of the Taiwanese company are segregated into three groups. In response to the three groups of creditors, three private companies were incorporated by Chen, Kuan Yu, our Chairman, and Yu, Chien Yang, our former Director to facilitate further development. Prior to the acquisition date of March 31, 2015, these three private companies assumed the debt which Mao Ren owed to the three groups of creditors respectively and in turn accepted promissory notes from Mao Ren as consideration. On June 12, 2015, the first group of creditors, represented by the first of the three private companies, agreed to take common stock of the Company as settlement for cancellation of the promissory notes from Mao Ren. The common stock issued was recorded at the par value of $1/common share. The difference between the carrying amount(that being the cost of the seller) and the par value was recorded in deficit. The Company issued those shares to our Chairman in trust for those individual creditors. The second group of creditors, who wish to collect cash proceeds from the sale of collateralized land, settled with the second private company (owned by our former Director) whereby the former director would be personally liable to settle the amounts with the creditors. The Company could not locate the remaining third group creditors and could not settle any of their debts.

The Company has hired an independent appraiser to appraise the collateralized land and recorded the long-term receivable based on the potentially realizable value NT$913,401,823 of the collaterals at initial recognition. The realizable value constitutes the carrying amount of the seller because the agreements with the creditors stipulated that the maximum amount the creditors could recover is limited to the proceeds received from the sale of the collateralized land relative to their proportionate investment. Further to realization of some of the liquidation rights to the debtor's remaining assets during fiscal 2016, the Company has re-assessed our remaining rights to the debtor's remaining assets as follow:

Land Fair Value

	Mar. 31, 2017 (USD)	Dec. 31, 2016 (USD)
Fair Value (NT$)	263,018,668	263,018,668
Land Area (square meter)	532,228	532,228

As of March 31, 2017 and December 31,2016, the Company's receivable amounts are shown below.

Receivables

	Mar. 31, 2017 (USD)	Dec. 31, 2016 (USD)
Loan receivable	8,692,243	8,148,290

During fiscal 2016, three parcels of the debtor's land were sold for the following amounts:

Land Sales Proceeds

	Year Ended Dec. 31, 2016
Yilan	258,999,970
Tainan	15,681,799
Pingtung	30,110,734
Total	304,792,503

No gain or loss was recognized upon sale of the debtor's land because the initial carrying value was adjusted to its fair value as agreements with the first group of the creditors stipulated that the cost of the seller to equal to the estimated expected proceeds from the sales.

San Lotus Holding Inc 10-Q