Related Parties Transactions
|6 Months Ended|
Jun. 30, 2015
|Related Parties Transactions [Abstract]|
|RELATED PARTIES TRANSACTIONS||
NOTE 11 – RELATED PARTIES TRANSACTIONS
Prepaid expenses – related parties
At June 30, 2015 and December 31, 2014, prepaid expenses – related parties consisted of the following:
Deferred expenses – related parties
At June 30, 2015 and December 31, 2014, deferred expenses – related parties consisted of the following:
PT. Avona Mina Lestari and Hong Long act as agents to apply for 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 June 30, 2015 and December 31, 2014, other receivable – related parties consisted of the following:
In connection with the termination of VIE structure and to comply with PRC regulation, the Company paid RMB 83 million (approximately $13.6 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 will be returned to the Company within one year after the termination of VIE structure.
Accounts payable - related parties
At June 30, 2015 and December 31, 2014, accounts payable - related parties consisted of the following:
These accounts payable – related parties amounts are short-term in nature, non-interest bearing, unsecured and payable on demand.
Due to related parties
At June 30, 2015 and December 31, 2014, due to related parties consisted of the following:
These advances are short-term in nature, non-interest bearing, unsecured and payable on demand.
Purchases from related parties
During the three and six months ended June 30, 2015 and 2014, purchases from related parties were as follows:
On June 26, 2015, the Company entered into a master agreement with each of Fuzhou Honglong Ocean Fishery Co., Ltd, (“Hong Long”) and Fuzhou Yishun Deep-Sea Fishing Co., Ltd. (“Yishun”), which are owned by the Company’s Chairman and CEO, Mr. Xinrong Zhuo, for the acquisition of 6 fishing vessels with total consideration of approximately $56.2 million representing the fair market value on the date of acquisition. The transaction between the Company and these two related companies was accounted as common control transaction. Based on Accounting Standards Codification (“ASC”) 805-50, the Company recorded the value of $0 as the cost of the vessels since the 6 vessels had been fully depreciated in Hong Long and Yishun’s books at the date of transfer. The balance of approximately $56.2 million above cost was treated as a return of capital in the equity accounts and was recorded as a reduction in additional paid-in capital.
These vessels are currently licensed and sanctioned by the Chinese Fisheries Management Bureau under the Ministry of Agriculture of China, which allows these vessels to operate and fish in the Western and Central Pacific Ocean of the international waters. These vessels are primarily focused on the catch of tuna and squid. These 6 vessels will be dismantled and replaced by 6 newly-built vessels to continue fishing in the international waters. We expect that the expansions of our fleet will greatly increase our fish harvest volume and revenue.
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 June 30, 2015 and 2014, rent expense related to the Office Lease amounted $3,448 and $3,366, respectively. For the six months ended June 30, 2015 and 2014, rent expense related to the Office Lease amounted $6,871 and $6,786, respectively.
Future minimum rental payments required under the Office Lease is as follows:
Rental and related administrative service agreement
On July 1, 2013, the Company entered into a service agreement with Hai Yi Shipping Limited that provided the Company a portion of use of premises located in Hong Kong as office and provided related administrative service (the “Service Agreement”). Pursuant to the Service Agreement, monthly payments of Hong Kong Dollar (“HK$”) 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 June 30, 2015 and 2014, rent expense and corresponding administrative service charge related to the Service Agreement amounted to $115,651 and $115,521, respectively. For the six months ended June 30, 2015 and 2014, rent expense and corresponding administrative service charge related to the Service Agreement amounted to $231,253 and $230,912, respectively.
Future minimum rental and related administrative service charge payment required under the Service Agreement is as follows:
The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.
Reference 1: http://www.xbrl.org/2003/role/presentationRef