Quarterly report pursuant to Section 13 or 15(d)

Related Parties Transactions

v2.4.1.9
Related Parties Transactions
3 Months Ended
Mar. 31, 2015
Related Parties Transactions [Abstract]  
RELATED PARTIES TRANSACTIONS

NOTE 10 – RELATED PARTIES TRANSACTIONS

 

Prepaid expenses – related parties

 

At March 31, 2015 and December 31, 2014, prepaid expenses – related parties consisted of the following:

 

    March 31, 2015     December 31, 2014  
Prepaid fuel cost to PT. Avona Mina Lestari (1)   $ 2,359,569     $ 1,632,352  
Prepaid fuel cost to Hai Yi Shipping Limited (2)     5,385,643       2,070,023  
Prepaid fuel cost to Haifeng Dafu Enterprise Company Limited (3)     872,984       399,735  
Prepaid fuel cost to Hong Fa Shipping Limited (4)     7,546,106       1,854,131  
Prepaid fuel cost to PT. Dwikarya Reksa Abadi (5)     1,375,492       1,363,734  
    $ 17,539,794     $ 7,319,975  

 

(1) PT. Avona Mina Lestari is an affiliate company controlled by Xinrong Zhuo family.
(2) Hai Yi Shipping Limited is an affiliate company ultimately controlled by Xinrong Zhuo, CEO of the Company.
(3) Haifeng Dafu Enterprise Company Limited is an affiliate company ultimately controlled by Xinrong Zhuo, CEO of the Company.
(4) Hong Fa Shipping Limited is an affiliate company owned by Xinrong Zhuo, CEO of the Company.
(5) PT Dwikarya Reksa Abadi is an affiliated company controlled by Xinrong Zhuo family.

 

Deferred expenses – related parties

 

At March 31, 2015 and December 31, 2014, deferred expenses – related parties consisted of the following:

 

    March 31, 2015     December 31, 2014  
Prepaid fishing licenses application fees to PT. Avona Mina Lestari   $ 442,788     $ 764,787  
Prepaid fishing licenses application fees to Hong Long (1)     116,827       264,327  
    $ 559,615     $ 1,029,114  

 

(1) Hong Long is an affiliate company majority owned and controlled by Ping Lin, spouse of the Company’s CEO.

 

PT. Avona Mina Lestari and Hong Long act as agents to apply fishing licenses for the Company and pay the related fishing licenses application fees on behalf of the Company. Therefore, the Company either prepays or reimburses them for fishing licenses application fees paid on behalf of the Company.

 

Other receivable – related parties

 

At March 31, 2015 and December 31, 2014, other receivable – related parties consisted of the following:

 

    March 31, 2015     December 31, 2014  
Advance to Zhiyan Lin   $ 4,075,887     $ -  
Advance to Honghong Zhuo     9,510,402       -  
    $ 13,586,289     $ -  

 

In connection with the termination of VIE structure and to comply with PRC regulation, the Company paid USD 13,586,289 (RMB 83 million) in total, which is Pingtan Fishing’s registered capital, to Pingtan Fishing’s Shareholders to transfer their 100% of equity interest of Pingtan Fishing to Fujian Heyue, the Company’s subsidiary pursuant to the Equity Transfer Agreement dated February 9, 2015. Those payments are deemed to be short term advances in nature with no interest bearing and receivable upon demand in a year.

 

Accounts payable - related parties

 

At March 31, 2015 and December 31, 2014, accounts payable - related parties consisted of the following:

 

Name of related parties   March 31, 2015     December 31, 2014  
PT. Avona Mina Lestari   $ 157,147     $ -  
Hong Long     138,955       2,601,314  
    $ 296,102     $ 2,601,314  

 

These accounts payable – related parties amounts are short-term in nature, non-interest bearing, unsecured and payable on demand.

Due to related parties

 

At March 31, 2015 and December 31, 2014, the due to related parties consisted of the following:

 

    March 31, 2015     December 31, 2014  
Advance from Hong Fa Shipping Limited   $ 1,000,000     $ 1,000,000  
Advance from Xinrong Zhuo, Chief Executive Officer     2,450,000       1,350,000  
Accrued compensation for Xinrong Zhuo     3,355       3,352  
Accrued compensation for Roy Yu, Chief Financial Officer     20,000       20,000  
    $ 3,473,355     $ 2,373,352  

 

These advances are short-term in nature, non-interest bearing, unsecured and payable on demand.

 

Purchases from related parties

 

During the three months ended March 31, 2015 and 2014, purchases from related parties were as follows:

 

    Three Months Ended March 31,  
    2015     2014  
Purchase of fuel, fishing nets and other on board consumables            
 from Hong Fa Shipping Limited   $ 3,055,897     $

16,239,640

 
 
Purchase of vessel maintenance service
               
 from PT. Avona Mina Lestari     -       1,087,289  
 from PT. Dwikarya Reksa Adadi     -       1,210,408  
      -       2,297,697  
Purchase of transportation service                
 From Fuzhou Honglong Ocean Fishery Co., Ltd.     168,520       889,692  
 from Haifeng Dafu Enterprise Company Limited     -       1,377,052  
 from Hai Yi Shipping Limited     -       590,223  
 from Hong Fa Shipping Limited     -       965,698  
      168,520       3,822,665  
Purchase of Indonesia vessel agent service                
 from PT. Avona Mina Lestari (1)     -       373,032  
 from PT. Dwikarya Reksa Abadi (1)     -       328,262  
    $ -     $ 701,294  

 

(1) PT. Avona Mina Lestari and PT. Dwikarya Reksa Abadi act as Pingtan Fishing’s agents to apply and renew Indonesia fishing licenses and Pingtan Fishing pays the agent service fees to them. 

   

Operating lease

 

On July 31, 2012, Pingtan Fishing entered into a lease for office space with Ping Lin, spouse of the Company’s CEO, (the “Office Lease”). Pursuant to the Office Lease, annual payments of RMB 84,000 (approximately $14,000) are due for each year of the term. The term of the Office Lease is 3 years and expires on August 1, 2015. For the three months ended March 31, 2015 and 2014, rent expense related to the Office Lease amounted $3,423 and $3,420, respectively.

 

Future minimum rental payments required under the Office Lease is as follows:

 

Twelve-month period Ending March 31:   Amount  
2016   $ 4,563  

 

Rental and related administrative service agreement

 

On July 1, 2013, the Company entered into a service agreement with Hai Yi Shipping Limited that provided the Company a portion of use of premises located in Hong Kong as office and provided related administrative service (the “Service Agreement”). Pursuant to the Service Agreement, monthly payments of HK$298,500 (approximately $38,000) were due for each month of the term. The term of the Service Agreement was 1.5 years and expired on December 31, 2014. In December 2014, the Company renewed the Service Agreement. Pursuant to the renewed Service Agreement, the monthly payments are HK$298,500 (approximately $38,000). The term of the renewed Service Agreement is 1 years and expires on December 31, 2015. For the three months ended March 31, 2015 and 2014, rent expense and corresponding administrative service charge related to the Service Agreement amounted to $115,602 and $115,391, respectively.

 

Future minimum rental and related administrative service charge payment required under the Service Agreement is as follows:

 

Twelve-month period Ending March 31:   Amount  
2016   $ 346,457