Quarterly report pursuant to Section 13 or 15(d)

Related Parties Transactions

v3.19.3
Related Parties Transactions
9 Months Ended
Sep. 30, 2019
Related Party Transactions [Abstract]  
RELATED PARTIES TRANSACTIONS

NOTE 8 – RELATED PARTIES TRANSACTIONS

 

Due from related party

 

At September 30, 2019 and December 31, 2018, the due from related party amount consisted of the following:

 

    September 30,
2019
    December 31,
2018
 
Due from related party-Honglong   $ 40,038,786     $ -  

  

Accounts payable - related parties

 

At September 30, 2019 and December 31, 2018, accounts payable - related parties consisted of the following:

 

Name of related party   September 30,
2019
    December 31,
2018
 
Hong Long (1)   $ -     $ 2,007,768  
Huna Lin     319,056       -  
Hong Fa Shipping Limited (2)     -       1,231,692  
Zhiyan Lin     -       4,363  
Ping Lin     -       1,020  
    $ 319,056     $ 3,244,843  

 

(1) Hong Long is an affiliate company majority owned by an immediate family member of the Company's CEO.

 

(2) An entity controlled by the Company's CEO.

 

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

 

Due to related parties

 

At September 30, 2019 and December 31, 2018, the due to related parties amount consisted of the following:

 

    September 30,
2019
    December 31,
2018
 
Accrued compensation for Roy Yu, Chief Financial Officer   $ 20,000     $ 20,000  
Accrued compensation for Xinrong Zhuo     3,328       3,320  
Advance from Xinrong Zhuo, Chief Executive Officer     -       9,432,987  
Due to related party-Honglong     -       10,098,970  
    $ 23,328     $ 19,555,277  

 

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.

 

Operating lease

 

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, the annual rent is RMB 84,000 (approximately $12,300) and the renewed Office Lease expires on July 31, 2021.

 

For the three months ended September 30, 2019 and 2018, rent expense related to the Office Lease amounted to $3,063 and $3,071, respectively. For the nine months ended September 30, 2019 and 2018, rent expense related to the Office Lease amounted to $9,192 and $9,663, respectively. Future minimum rental payment required under the Office Lease is as follows:

 

Twelve-month period Ending September 30:   Amount  
2020   $ 10,210  

  

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 to use a portion of the premises located in Hong Kong as office space and provided related administrative services (the "Service Agreement"). Pursuant to the Service Agreement, the monthly payments are HK$298,500 (approximately $38,000) and the Service Agreement expired on December 31, 2017. On January 1, 2018, the Service Agreement was renewed to February 28, 2018 under the same conditions. On March 1, 2018, the Company entered into a lease agreement directly with the landlord under the same conditions that expires on February 28, 2021.

 

For the three months ended September 30, 2019 and 2018, rent expense and corresponding administrative service charge related to the Service Agreement amounted to $114,672 and $114,177, respectively. For the nine months ended September 30, 2019 and 2018, rent expense and corresponding administrative service charge related to the Service Agreement amounted to $343,031 and $342,768, respectively.

 

As of September 30, 2019, future minimum lease payments on operating leases were as follows:

 

    September 30,
2019
 
Maturity of lease liabilities      
2019   $ 114,781  
2020     461,466  
2021     127,119  
Total minimum lease payments   $ 703,366  
Imputed interest     (68,564 )
Present value of minimum lease payments   $ 634,802  

 

The remaining lease terms (in years) and discount rates consisted of the following:

 

    September 30,
2019
 
Lease term and discount rate      
Remaining operating lease term     1.58  
Discount rate     5.13 %

 

Purchases from related parties

 

During the three and nine months ended September 30, 2019 and 2018 purchases from related parties were as follows:

 

    Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
    2019     2018     2019     2018  
Purchase of fuel, fishing nets and other on board consumables                        
From Zhiyan Lin   $ 1,033     $ 33,524     $ 1,577     $ 35,497  
from Fuzhou Honglong Ocean Fishery Co., Ltd.     953,274       733,327       3,622,460       1,310,976  
      954,307       766,851       3,624,037       1,346,473  
Purchase of leasing                                
From Ping Lin     2,998       3,071       9,192       9,663  
      2,998       3,071       9,192       9,663  
Purchase of vessel maintenance service                                
From Huna Lin     2,388,862       49,114       2,795,429       49,114  
      2,388,862       49,114       2,795,429       49,114  
Purchase of transportation service                                
from Fuzhou Honglong Ocean Fishery Co., Ltd.     -       365,878       -       365,878  
    $ -     $ 365,878     $ -     $ 365,878