RELATED PARTY BALANCES AND TRANSACTIONS

9 Months Ended

Sep. 30, 2021

11. RELATED PARTY BALANCES AND TRANSACTIONS

The following is a list of director and related parties to which the Company has transactions with:

(a)

Jianping Mao (“Mao”), Human Resources Management Director of Hong Kong Takung;

(b)

Jing Wang (“Wang”), former Chief Financial Officer of the Company from June 1, 2020 through June 1, 2021 and former legal representative of Tianjin Takung during period from May 28, 2020 to September 24, 2020. On June 1, 2021, the term of the employment of Wang expired;

(c)

Sze Chan (“Chan”), Vice President of Hong Kong Takung since November 17, 2020.

Amount due from related parties, net

Amount due from related parties consisted of the following as of the years indicated:


	September 30,		December 31,
	2021		2020
		(Unaudited)
Chan (c)(i)	$	6,303,970	$	—
Wang(b)(i)		—		6,225,134
Mao(a)(ii)		—		111,099
Less: allowance for doubtful accounts (ii)		—		(111,099)
Total current amount due from a related party	$	6,303,970	$	6,225,134

Amount due to related parties

Amount due to related parties consisted of the following as of the years indicated:


	September 30,		December 31,
	2021		2020
		(Unaudited)
Chan (c)(i)	$	6,422,608	$	—
Wang (b)(i)		—		6,448,784
Total current amount due to a related party	$	6,422,608	$	6,448,784

(i) Amount due to and due from Wang and Chan

On May 29, 2020, Hong Kong Takung entered into an interest-free loan agreement (the “HK Dollar Working Capital Loan”) with Wang for the loan of $6,422,608 (HK$50,000,000) to Hong Kong Takung. The purpose of the loan is to provide Hong Kong Takung with sufficient Hong Kong Dollar-denominated currency to meet its working capital requirements with the maturity date of the loan as May 15, 2021. Hong Kong Takung extended the loan with Wang with the maturity date on May 15, 2022. On May 29, 2021, the loan agreement was transferred to Chan with the identical maturity date.

In a meantime, Tianjin Takung entered into an interest-free loan agreement (the “RMB Working Capital Loan”) with Wang for the loan of $6,303,970 (RMB40,619,000) with the maturity date of the loan as May 15, 2021. Tianjin Takung is currently negotiating an extension of the loan with Wang. Tianjin Takung extended the loan arrangement with Wang with the maturity date on May 15, 2022. On May 29, 2021, the loan agreement was transferred to Chan with the identical maturity date.

Through an understanding between Chan and the Company, the HK Dollar Working Capital Loan is “secured” by the RMB Working Capital Loan. It is the understanding between the parties that the HK Dollar Working Capital Loan and the RMB Working Capital Loan will be repaid simultaneously.

(ii) Amount due to and due from Mao

The amount due from Mao is primarily related to the lease deposit from Mao. On May 13, 2019, the Company entered into a non-cancellable lease agreement with a related party, Mao for its office location in Tianjin, PRC. The leased office location is approximately 2,090.61 square meters. The lease was set to expire on May 12, 2021. The Company is charged rent at a rate of $0.55 per square meter per day. The agreement requires a lump sum payment of $224,083 (RMB1,449,838) every six months and a deposit of $111,099 (RMB724,919). On May 12, 2020, the Company terminated the lease and recognized bad debt expense of $111,099 related to the deposit paid to Mao due to the remote likelihood of collecting the rent deposit. No related lease liability was recognized as of December 31, 2020 and September 30,2021.

(iii) Rent prepayment to Mao

On March 1, 2021, Tianjin Takung entered into two lease agreements with a related party, Mao for its office location in Tianjin, PRC and employee accommodation in Hong Kong. The leases will expire on February 28, 2022. Monthly rental payments for the office location and employee accommodation are $25,115 (RMB 162,500) and $7,148 (RMB46,250), respectively. The agreements require lump sum payments of $302,635 (RMB1,950,000) and $86,135 (RMB555,000), respectively. As of September 30, 2021, total rent amount paid to Mao with respect to these agreements included in prepayment was $161,987 (RMB1,043,750).