NOTE

– RELATED PARTY TRANSACTIONS

The Company records transactions with various related parties. The related party transactions as of

December 31, 2019

and

2018

and for the years ended

December 31, 2019

and

2018

are identified as follows:

Related party balances:

a.	Accounts receivable - related parties, net

Below is a summary of accounts receivable with related parties as of

December 31, 2019

and

2018,

respectively:

		As of December 31		As of December 31,
Name of Related Party		2019		2018
(a)	Allstate Trading Company Inc.	$	11,322	$	1,000
(b)	Enson Seafood GA Inc. (formerly “GA-GW Seafood, Inc.”)		348,833		255,412
(c)	Eagle Food Service LLC		979,591		817,275
(d)	Fortune One Foods Inc.		53,862		130,314
(e)	Eastern Fresh LLC		1,511,075		784,836
(f)	Enson Trading LLC		341,200		170,633
(g)	Hengfeng Food Service Inc.		477,541		83,654
(h)	N&F Logistic, Inc.		119,241		-
(i)	ABC Trading, LLC		238,513		-
	Others		121,692		49,027

Total		$	4,202,870	$	2,292,151

(a)	Mr. Zhou Min Ni, the Chairman and Co-Chief Executive Officer of the Company, owns a 40% equity interest in this entity;
(b)	Mr. Zhou Min Ni owns a 50% equity interest in this entity.
(c)	Tina Ni, one of Mr. Zhou Min Ni’s family members, owns a 50% equity interest in this entity.
(d)	Mr. Zhou Min Ni owns a 17.5% equity interest in this entity.
(e)	Mr. Zhou Min Ni owns a 30% equity interest in this entity.
(f)	Mr. Zhou Min Ni owns a 25% equity interest in this entity.
(g)	Mr. Zhou Min Ni owns a 45% equity interest in this entity.
(h)	Mr. Zhou Min Ni owns a 25% equity interest in this entity.
(i)	Mr. Peter Zhang, Co-Chief Executive Officer and Chief Financial Officer of the Company, owns 10.38% equity interest in this entity.

All accounts receivable from these related parties are current and considered fully collectible.

allowance is deemed necessary.

b.	Advances to suppliers - related parties, net

The Company periodically provides purchase advances to various vendors, including the related party suppliers. These advances are made in the normal course of business and are considered fully realizable.

Below is a summary of advances to related party suppliers as of

December 31, 2019

and

December 31, 2018,

respectively:

	As of		As of
Name of Related Party	December 31, 2019		December 31, 2018
(1) Ocean Pacific Seafood Group	$	223,303	$	208,960
(2) Revolution Industry, LLC		521,832		329,394
(3) First Choice Seafood Inc.		-		988,128

Total	$	745,135	$	1,526,482

( 1 )	Mr. Zhou Min Ni owns a 25% equity interest in this entity.
( 2 )	The son of Mr. Zhou Min N, Raymond Ni, owns 100% of Revolution Industry, LLC.
( 3 )	First Choice Seafood is owned by Enson Seafood GA Inc., of which Mr. Zhou Min Ni owns a 50% equity interest.

c.	Notes receivable - related parties

The Company had previously made advances or loans to certain entities that are either owned by the controlling shareholders of the Company or family members of the controlling shareholders.

As of

December 30, 2019,

and

December 31, 2018,

the outstanding loans to various related parties consist of the following:

Name of Related Party	As of December 31, 2019		As of December 31, 2018
Enson Seafood GA Inc. (formerly “GA-GW Seafood, Inc.”)	$	-	$	1,987,241
Han Feng Global Inc., t/a NSG International Inc. (“NSG”) (1)		-		6,092,397
Revolution Automotive, LLC (“Revolution Automotive”) (2)		-		461,311
Total	$	-	$	8,540,949
Less: Current portion	$	-	$	8,117,686
Total	$	-	$	423,263

( 1 )	Mr. Zhou Min Ni owns a 30% equity interest in this entity.
( 2 )	The son of Mr. Zhou Min Ni, Raymond Ni, owns 100% of Revolution Automotive LLC.

January 1, 2018,

the Company entered into a promissory note agreement with Enson Seafood. Pursuant to the promissory note agreement, the outstanding balances of

$550,000

due from Enson Seafood as of

December 31, 2017

were converted into promissory notes bearing annual interest of

commencing

January 1, 2018.

The principal plus interest was due

later than

December 31, 2019.

Interest was computed on the outstanding balance on the basis of the actual number of days elapsed in a year of

360

days.

September 30, 2018,

the Company signed a promissory note agreement with Enson Seafood in the principal amount of

$2,000,000.

The note accrued interest at the rate of

per annum on the unpaid balance, compounded monthly. The principal plus all accrued and unpaid interest was initially due

later than

September 30, 2019,

with an option to renew, and required Enson Seafood to make monthly payments of

$171,215

for

twelve

months. On

March 1, 2019,

the Company and Enson Seafood extended the expiration date of the note until

February

29,

2024

and Mr. Zhou Min Ni agreed to personally guarantee the note.

January 1, 2018,

the Company signed a promissory note agreement with NSG. Pursuant to the promissory note agreement, the outstanding balances of

$5,993,552

due from NSG as of

December 31, 2017

were converted into promissory notes bearing annual interest of

commencing

January 1, 2018.

The principal plus interest was required to be paid off

later than

December 31, 2019.

Interest was computed on the outstanding balance on the basis of the actual number of days elapsed in a year of

360

days.

March 1, 2019,

the Company entered into a new

five

year-term promissory note agreement with NSG that comprised a restatement and novation and superseded the note dated

January 1, 2018.

Pursuant to the new promissory note agreement, the outstanding balance of

$5,941,031

together with interest at the rate of

per annum became payable in monthly installments until principal and accrued interest was paid in full on or before

March 1, 2024.

March 1, 2018,

the Company entered into a promissory note agreement by which Revolution Automotive was loaned

$483,628.

Pursuant to this promissory note agreement, Revolution Automotive was required to make monthly payments of

$5,000

for

months, including interest, with final payment of

$284,453.

The loan bore interest of

per annum. Interest was computed on the outstanding balance on the basis of the actual number of days elapsed in a year of

360

days. The principal plus interest was to be paid off

later than

April 30, 2023.

March 1, 2019,

the Company and each of Enson Seafood and NSG agreed to extend the expiration date of their notes payable until

February

29,

2024,

and Mr. Zhou Min Ni agreed to personally guarantee these notes.

September 30, 2019,

the entire outstanding balance of all the above notes of

$8,415,525

was sold to Mr. Zhou Min Ni in exchange for

632,746

shares of common stock of the Company, which shares were received and recorded in treasury stock by the Company as of

September 30, 2019.

In connection with the sale of the above notes, the Company also required

208,806

additional shares of common stock of the Company owned by Mr. Ni to be placed in an escrow account for a period of

one

year (the “Escrow Period”), which will be delivered to the Company in part or in full, if the volume weighted average closing price of the Company’s common stock for the

250

-trading-day period immediately preceding the expiration of the Escrow Period is less than

$13.30.

Accounts payable - related parties

As of

December 31, 2019,

and

December 31, 2018,

the Company had a total accounts payable balance of

$4,521,356

and

$3,923,120

due to various related parties, respectively. All these accounts payable to related parties occurred in the ordinary course of business and are payable upon demand without interest.

Advances from customers - related parties

The Company also periodically receives advances from its related parties for business purposes. These advances are interest free and due upon demand. There were

advances from customers involving related parties at

December 31, 2019

and

$166,490

as of

December 31, 2018.

Security deposit - related parties

The Company made deposits to its related parties for warehouse rental purposes. These deposits are expected to be returned upon termination of the respective leases. Total deposits to related parties amounted to

$591,380

as of

December 31, 2019

and there were

deposits as of

December 31, 2018.

Term Loan guaranty - related parties

B&R Global Group Realty and its subsidiaries have a mortgage-secured Term Loan in the amount of

$55.4

million as of

December 31, 2019.

The term loan is collateralized by all assets of the Company.

Lease Agreements with Related Parties:

A subsidiary of the Company, R&N Holding, leases a facility to a related party under an operating lease agreement expiring in

2024.

The cost of the leased building is

$400,000

December 31, 2019

and

2018,

and the accumulated depreciation of the leased building is

$78,282

and

$100,000

December 31, 2019

and

December 31, 2018,

respectively. Rental income for the year ended

December 31, 2019

and

December 31, 2018

was

$45,600

and

$45,600,

respectively.

2017,

a subsidiary of the Company, HG Realty, leased a warehouse to a related party under an operating lease agreement expiring on

September 21, 2027.

The cost of the leased building is

$3,223,745

December 31, 2019

and

December 31, 2018,

and the accumulated depreciation of the leased building is

$516,626

and

$433,966

as of

December 31, 2019

and

December 31, 2018,

respectively. Rental income for the year ended

December 31, 2019

and

December 31, 2018

was

$480,000

and

$480,000,

respectively.

B&R Global leased warehouses from related parties owned by the majority shareholder of B&R Global. Rent incurred to the related parties was

$751,000

for the year ended on

December 31, 2019.

2019,

a subsidiary of the Company, Kirnland, leased a warehouse from a related party under an operating lease agreement expiring on

December 31, 2019.

Rent incurred to the related party was

$120,000

for the year ended

December 31, 2019.

Related party sales and purchases transactions:

The Company makes regular sales to and purchases from various related parties during the normal course of business. The total sales to related parties were

$19,352,408

and

$18,147,003

for the years ended

2019

and

2018,

respectively. The total purchases made from related parties were

$40,388,000

and

$31,676,828

for the year ended

December 31, 2019

and

2018,

respectively.