Annual report pursuant to Section 13 and 15(d)

Related Parties Transactions

v2.4.1.9
Related Parties Transactions
12 Months Ended
Dec. 31, 2014
Related Parties Transactions [Abstract]  
RELATED PARTIES TRANSACTIONS

NOTE 11 – RELATED PARTIES TRANSACTIONS

 

Prepaid expenses – related parties

 

At December 31, 2014 and 2013, prepaid expenses – related parties consisted of the following:

 

    December 31, 2014     December 31,
2013
 
Prepaid fuel cost to PT. Avona Mina Lestari (1)   $ 1,632,352     $ -  
Prepaid fuel cost to Hai Yi Shipping Limited (2)     2,070,023       -  
Prepaid fuel cost to Haifeng Dafu Enterprise Company Limited (3)     399,735       -  
Prepaid fuel cost to Hong Fa Shipping Limited (4)     1,854,131       -  
Prepaid fuel cost to PT. Dwikarya Reksa Abadi (5)     1,363,734       -  
    $ 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 December 31, 2014 and 2013, deferred expenses – related parties amount consisted of the following:

 

    December 31, 2014     December 31,
2013
 
Prepaid fishing licenses application fee to PT. Avona Mina Lestari   $ 764,787     $ -  
Prepaid fishing licenses application fee to Hong Long 1     264,327       -  
    $ 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 fee on behalf of the Company. Therefore, the Company either prepays or reimburses them for fishing licenses application fee paid on behalf of the Company.

 

Accounts payable - related parties

 

At December 31, 2014 and 2013, accounts payable - related parties amount consisted of the following:

 

Name of related parties   December 31, 2014     December 31, 2013  
PT. Avona Mina Lestari   $ -     $ 1,967,151  
Hong Long     2,601,314       6,214,491  
Hai Yi Shipping Limited     -       251,341  
Haifeng Dafu Enterprise Company Limited     -       377,216  
Hong Fa Shipping Limited     -       4,996,031  
Zhiyan Lin (1)     -       1,375  
    $ 2,601,314     $ 13,807,605  


 

(1) Zhiyan Lin is a shareholder and legal representative of Pingtan Fishing.

 

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

  

Due to related parties

 

At December 31, 2014 and 2013, the due to related parties amount consisted of the following:

 

    December 31, 2014     December 31,
2013
 
Advance from Hong Fa Shipping Limited   $ 1,000,000     $ -  
Advance from Xinrong Zhuo, Chief Executive Officer     1,350,000       -  
Accrued compensation for Xinrong Zhuo     3,352       -  
Accrued compensation for Roy Yu, Chief Financial Officer     20,000       -  
    $ 2,373,352     $ -  

  

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

 

Sales to related parties

 

During the years ended December 31, 2014, 2013 and 2012, sales to related parties were as follows:

 

    Years Ended December 31,  
    2014     2013     2012  
Sale of frozen fish and other marine catches to                  
Shenzhen Western Coast Fisherman Pier Co., Ltd. (1)   $ -     $ 10,372,611     $ -  
Fuzhou Haifeng Dafu Ocean Fishing Co., Ltd. (2)     -       -       4,574,118  
Fujian Xinnong Ocean Fisheries Development Co., Ltd. (3)     -       -       8,948,761  
Cheng Chen (4)     -       -       185,839  
Longhua Zhuo (5)     -       -       78,902  
    $ -     $ 10,372,611     $ 13,787,620  

 

(1) Shenzhen Western Coast Fisherman Pier Co., Ltd. is an affiliate company owned by Xinrong Zhuo, the Company’s CEO.

(2) Fuzhou Haifeng Dafu Ocean Fishing Co., Ltd. is an affiliate company owned by Xinrong Zhuo and Longfei zhuo who is a cousin of Xinrong Zhuo.

(3) Fujian Xinnong Ocean Fisheries Development Co., Ltd. is ultimately owned by Xinrong Zhuo and is an affiliate company to which the Company acts as a trustee equity owner.

(4) Cheng Chen is a cousin of Xinrong Zhuo and a shareholder of Hong Long.

(5) Longhua Zhuo is a sister of Xinrong Zhuo.

 

Purchases from related parties

 

During the years ended December 31, 2014, 2013 and 2012, purchases from related parties were as follows:

 

    Years Ended December 31,  
    2014     2013     2012  
Purchase of fuel, fishing nets and other on-board consumables                  
from PT. Avona Mina Lestari   $ -     $ 14,746,582     $ 10,709,195  
from Hong Fa Shipping Limited     30,996,630       -       -  
from Haifeng Dafu Enterprise Co., Ltd.     4,877,460       -       -  
from Hai Yi Shipping Ltd.     4,678,520       -       -  
from PT. Dwikarya Reksa Abadi     -       757,557       -  
from Zhiyan Lin     34,230       1,126       -  
from Fuzhou Honglong Ocean Fishery Co., Ltd.     45,409,020       -       -  
    $ 85,995,860     $ 15,505,265     $ 10,709,195  
                         
Purchase of vessel maintenance service                        
from PT. Avona Mina Lestari   $ 3,543,925     $ 2,981,043     $ 1,901,250  
from PT. Dwikarya Reksa Adadi     3,385,466       -       -  
    $ 6,929,391     $ 2,981,043     $ 1,901,250  
                         
Purchase of transportation service                        
from Fuzhou Honglong Ocean Fishery Co., Ltd.   $ 9,925,585     $ -     $ -  
from Haifeng Dafu Enterprise Company Limited     3,331,554       4,122,861       2,118,321  
from Hai Yi Shipping Limited     1,695,132       1,653,682       505,154  
from Hong Fa Shipping Limited     2,550,872       3,345,589       1,016,098  
from PT. Avona Mina Lestari     -       35,149       573,545  
    $ 17,503,143     $ 9,157,281     $ 4,213,118  
                         
Purchase of Indonesia vessel agent service                        
from PT. Avona Mina Lestari (1)   $ 1,225,000     $ 1,042,738     $ 410,000  
from PT. Dwikarya Reksa Abadi (1)     1,298,329       -       -  
    $ 2,523,329     $ 1,042,738     $ 410,000  

 

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 fee 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 years ended December 31, 2014, 2013 and 2012, rent expense related to the Office Lease amounted approximately $13,674, $13,678 and $5,545, respectively.

 

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

 

Year Ending December 31:   Amount  
2015   $ 7,982  

 

Rental and related administrative service agreement

 

On July 1, 2013, the Company entered into a service agreement with Hai Yi Shipping Limited that provides the Company a portion of use of premises located in Hong Kong as office and provides related administrative service (the “Service Agreement”). Pursuant to the Service Agreement, monthly payments of HK$298,500 (approximately $38,000) are due for each month of the term. The term of the Service Agreement is 1.5 years and expires 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 years ended December 31, 2014 and 2013, rent expense and corresponding administrative service charge related to the Service Agreement amounted to approximately $461,934 and $230,903, respectively.

 

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

 

Year ending December 31:   Amount  
2015   $ 461,934