Related Parties Transactions
|12 Months Ended|
Dec. 31, 2016
|Related Parties Transactions [Abstract]|
|RELATED PARTIES TRANSACTIONS||
NOTE 10 – RELATED PARTIES TRANSACTIONS
Prepaid expenses – related parties
At December 31, 2016 and 2015, prepaid expenses – related parties consisted of the following:
Other receivable – related parties
At December 31, 2016 and 2015, 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 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 expected to be returned in full to the Company by December 31, 2017.
Accounts payable - related parties
At December 31, 2016 and 2015, 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.
Accrued liabilities and other payables – related party
At December 31, 2016 and 2015, the accrued liabilities and other payables – related party consisted of the following:
The significant increase in other payables – Hong Long was primarily attributable to the prepayment for long-term assets made by Hong Long on behalf of the Company of approximately $13,220,000 and other miscellaneous payments made by Hong Long on behalf of the Company to the Company’s vendors of approximately $4,927,000. The amount of other payable – Hong Long is short-term in nature, non-interest bearing, unsecured and payable on demand.
Due to related parties
At December 31, 2016 and 2015, the due to related parties amount consisted of the following:
The advance from Xinrong Zhuo, the Company’s Chief Executive Officer, is for working capital purposes and short-term in nature, non-interest bearing, unsecured and payable on demand.
On July 31, 2012, the Company 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 $13,000) were due for each year of the term. The term of the Office Lease was 3 years and expired on August 1, 2015. The Company renewed the Office Lease. Pursuant to the renewed Office Lease, the annual rent is RMB 84,000 (approximately $13,000) and the renewed Office Lease expires on July 31, 2017.
For the years ended December 31, 2016, 2015 and 2014, rent expense related to the Office Lease amounted $12,646, $13,510 and $13,674, respectively. Future minimum rental payment required under the Office Lease is as follows:
Rental and related administrative service agreement
On July 1, 2013, the Company entered into a service agreement with Hai Yi Shipping Limited that provided the Company a portion of use of premises located in Hong Kong as office and provided related administrative service (the “Service Agreement”). Pursuant to the Service Agreement, monthly payments of Hong Kong Dollar (“HK$”) 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. The Company renewed the Service Agreement. Pursuant to the renewed Service Agreement, the monthly payments are HK$298,500 (approximately $38,000) and the renewed Service Agreement expires on December 31, 2017.
For the years ended December 31, 2016, 2015 and 2014, rent expense and corresponding administrative service charge related to the Service Agreement amounted to $461,899, $462,387 and $461,934, respectively. Future minimum rental and related administrative service charge payment required under the Service Agreement is as follows:
Purchases from related parties
During the years ended December 31, 2016, 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 controlling shareholder and 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.
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