Note 9 -related Party Transactions

9 Months Ended

Sep. 30, 2013

Notes

Note 9 -related Party Transactions

NOTE 9 –RELATED PARTY TRANSACTIONS

Due from related party

From time to time, the Company makes payment to CDII, a consultant of the Company, in connection with the prepayments for professional fees. CDII is not under the common control of Mr. Wei Chen, the Company’s Chief Executive officer, and Mr. Hui Liu, the Company’s director.

At September 30, 2013 and December 31, 2012, prepaid expense - related party consisted of the following;

	September 30, 2013	December 31, 2012
Prepayments made to CD International Enterprises, Inc.	$         72,154	$                   0
	$         72,154	$                   0

Prepaid expense - related party of $72,154 at September 30, 2013 reflects payments made to CD International Enterprises, Inc., which is the consultant of the Company, in connection with the prepayment for professional fees.  

Due to related parties

On September 30, 2013 and December 31, 2012, due to related parties consisted of the following:

	September 30, 2013	December 31, 2012
Due to Xiangfen Chen (1)	$         25,567	$         72,509
Due to Bin Liu (2)	182,627	194,949
Due to Tianjin Sincere Logistics Co., Ltd.	107,176	177,137
Due to Shunbo International Freight Ltd. (3)	37,563	2,671
Due to Lianyunbu (4)	149,298	145,982
Due to Shang Jing (5)	48,889	47,611
Due to CD International Enterprises, Inc.	0	410,078
Total Due to related parties	$      551,120	$   1,050,937

(1)           Xiangfen Chen is the general manager of Shandong Jiajia Xiamen branch.

(2)           Bin Liu is the general manager of Shandong Jiajia Tianjin branch. Mr. Liu is a 90% owner of Tianjin Sincere Logistics Co., Ltd.  

(3)           Lianyungang Shunbo International Freight Ltd. is a company owned by Shunhua Jiang, the Spouse of Shouliu Tang, the general manager of Lianyungang branch.

(4)           Langyunbu is an entity affiliated with Hui Liu, who is a member of the Company’s Board of Directors and Chief Executive Officer of Shangdong Jiajia.

 (5)          Shang Jing is the general manager of Shandong Jiajia Qingdao branch.

Due to related parties of $551,120 at September 30, 2013 reflect advances from related parties.  The advances are unsecured, non-interest bearing and repayable on demand. Shandong Jiajia used the proceeds for general working capital purpose.

The amounts due to CD International Enterprises, Inc. as of December 31, 2012 was $410,078, which included $323,000 of working capital loans and $87,078 related to professional fees, primarily legal and accounting paid by CDII on the Company’s behalf. The proceeds from these promissory notes were used for working capital purposes. The notes accrued interest at 4% annually and were due at various dates in 2012. In 2013, CD International Enterprises, Inc. assigned these loans and related accrued and unpaid interest to third parties and these notes were exchanged for convertible notes pursuant to related securities purchase agreements (see note 11).

Operating leases - related parties

On December 31, 2011, Shandong Jiajia Xiamen branch entered into a lease for office space with Xiangfen Chen (the “Xiamen Office Lease". Pursuant to the Xiamen Office Lease, Xiamen branch leases approximately 95 square meter of office space from Mr. Chen in Xiamen City. Rent under the Xiamen Office Lease is RMB 900 (approximately $150) per month. The term of the Xiamen Office Lease is a year and expires on December 31, 2012. On December 31, 2012, Shandong Jiajia Xiamen branch renewed the Xiamen Office Lease. Rent under the renewed Xiamen Office Lease is RMB 900 (approximately $150) per month. The term of the renewed Xiamen Office Lease is a year and expires on December 31, 2013. For the nine months ended September 30, 2013 and 2012, rent expense related to the Xiamen Office Lease amounted $1,304 and $1,284, respectively. At September 30, 2013 and December 31, 2012, accrued rent for the Xiamen Office Lease amounted to $1,320 and $0, respectively, which were included in accrued expense - related parties on the accompanying consolidated balance sheets

On May 31, 2011, the Company entered into a lease for office space with Mr. Wei Chen (the “Shanghai Office Lease”), its Chairman and CEO. Pursuant to the Shanghai Office Lease, the Company leases approximately 7,008 square feet of office space in Shanghai City. The office serves as the Company’s principal executive office. Rent under the Shanghai Office Lease is RMB 25,000 (approximately $4,000) per month. The Company also needs to pay a property management fee to an unrelated party of RMB 11,719 (approximately $1,900) per month in connection with the Shanghai Office Lease. The term of the Shanghai Office Lease is two years and expires on May 31, 2013. On May 31, 2013, the Company renewed the Shanghai Office Lease. Pursuant to the renewed Shanghai Office Lease, the monthly rent is RMB 25,000 (approximately $4,000). The Company also needs to pay a property management fee to an unrelated party of RMB 11,719 (approximately $1,900) per month in connection with the renewed Shanghai Office Lease. The term of the renewed Shanghai Office Lease is a year and expires on May 31, 2014. For the nine months ended September 30, 2013 and 2012, rent expense related to the Shanghai Office Lease amounted $36,213 and $35,666, respectively. At September 30, 2013 and December 31, 2012, accrued rent for the Xiamen Office Lease amounted to $20,370 and $0, respectively, which were included in accrued expense – related parties on the accompanying consolidated balance sheets.

At September 30, 2013 and December 31, 2012, the total accrued rent for the above mentioned operating leases with related parties amounted to $21,690 and $0, respectively, which amount were included in accrued expense – related parties on the accompanying consolidated balance sheets.