Quarterly report pursuant to Section 13 or 15(d)

Related Parties Transactions

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Related Parties Transactions
6 Months Ended
Jun. 30, 2018
Related Parties Transactions [Abstract]  
RELATED PARTIES TRANSACTIONS

NOTE 10 – RELATED PARTIES TRANSACTIONS

 

Accounts payable - related parties

 

At June 30, 2018 and December 31, 2017, accounts payable - related parties consisted of the following:

 

Name of related party   June 30,
2018
    December 31, 2017  
Hong Fa Shipping Limited (1)   $ 1,231,692     $ 1,231,692  
Hong Long (2)     16,727       572,006  
    $ 1,248,419     $ 1,803,698  

 

(1) An entity controlled by the Company’s CEO.

 

(2) Hong Long is an affiliate company majority owned by an immediate family member of 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 June 30, 2018 and December 31, 2017, the due to related parties amount consisted of the following:

 

    June 30,
2018
    December 31,
2017
 
Accrued compensation for Roy Yu, Chief Financial Officer   $ 20,000     $ 20,000  
Accrued compensation for Xinrong Zhuo     3,312       3,328  
Advance from Xinrong Zhuo, Chief Executive Officer     7,633,553       4,325,365  
Due to related party-Hai Yi     -       38,208  
Due to related party-Honglong     3,808,603       -  
    $ 11,465,468     $ 4,386,901  

 

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.

 

Due to related party- Hai Yi is rent due to Hai Yi Shipping Limited.

 

Due to related party - Hong Long is 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”). The Company renewed the Office Lease. Pursuant to the renewed Office Lease, the annual rent is RMB 84,000 (approximately $13,200) and the renewed Office Lease expires on July 31, 2018.

 

For the three months ended June 30, 2018 and 2017, rent expense related to the Office Lease amounted $3,292 and $3,064, respectively. For the six months ended June 30, 2018 and 2017, rent expense related to the Office Lease amounted $6,592 and $6,114, respectively. Future minimum rental payment required under the Office Lease is as follows:

 

Twelve-month period Ending June 30:   Amount  
2019   $ 1,100  

  

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”). 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 expired on December 31, 2017. On January 1, 2018, the Services Agreement was renewed to February 28, 2018 under the same conditions. On March 1, 2018, the Company entered into a lease agreement with the landlord directly under the same conditions.

 

For the three months ended June 30, 2018 and 2017, rent expense and corresponding administrative service charge related to the Service Agreement amounted to $114,265 and $114,625, respectively. For the six months ended June 30, 2018 and 2017, rent expense and corresponding administrative service charge related to the Service Agreement amounted to $228,591 and $230,144, respectively.

 

Twelve-month period Ending June 30:   Amount  
2019   $ 457,000  

 

Purchases from related parties

 

During the three and six months ended June 30, 2018 and 2017 purchases from related parties were as follows:

 

    Three Months Ended 
June 30,
    Six Months Ended 
June 30,
 
    2018     2017     2018     2017  
Purchase of fuel, fishing nets and other on board consumables                        
from Hong Fa Shipping Limited   $ 63,507     $ 3,907,925     $ 63,507     $ 8,067,193  
from Hai Yi Shipping Ltd.     -       5,258       -       2,207,700  
From Zhiyan Lin     770               1,973          
from Fuzhou Honglong Ocean Fishery Co., Ltd.     -       5,892,378       577,649       5,892,378  
      64,277       9,805,561       643,129       16,167,271  
Purchase of vessel maintenance service                                
from PT. Dwikarya Reksa Abadi     -       20,519       -       34,737  
      -       20,519       -       34,737  
Purchase of transportation service                                
from Fuzhou Honglong Ocean Fishery Co., Ltd.     -       421,820       -       421,820  
from Hong Fa Shipping Limited     -       275,359       -       275,359  
    $ -     $ 697,179     $ -     $ 697,179