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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2018

NOTE 10 – RELATED PARTY TRANSACTIONS

The Company records transactions with various related parties. These related party transactions as of September 30, 2018 and December 31, 2017 and for the nine and three months ended September 30, 2018 and, 2017 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 September 30, 2018 and December 31, 2017, respectively:

Name of Related Party	As of September 30, 2018		As of December 31, 2017
(a) Allstate Trading Company Inc.	$	8,908	$	176,660
(b) Enson Seafood GA Inc. (formerly “GA-GW Seafood, Inc.”)		98,833		87,814
(c) Eagle Food Service LLC		344,188		656,799
(d) Fortune One Foods Inc.		144,831		154,904
(e) Eastern Fresh LLC		902,518		340,114
(f) New Marco Food Inc.		—		170,129
(g) Enson Trading LLC		72,872		340,114
Total	$	1,572,100	$	1,586,420

Mr. Zhou Min Ni, the Chairman and Chief Executive Officer of the Company, owns 40% equity interest of this entity;

Mr. Zhou Min Ni owns 45% equity interest of this entity;

Tina Ni, one of Mr. Zhou Min Ni’s family member owns 50% equity interest of this entity;

Mr. Zhou Min Ni owns 17.5% equity interest of this entity;

Mr. Zhou Min Ni owns 30% equity interest of this entity;

Mr. Zhou Min Ni owns 30% equity interest of this entity.

Mr. Zhou Min Ni owns 25% equity interest of Enson Trading LLC.

All accounts receivable from these related parties are current and considered fully collectible. No allowance is deemed necessary.

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 September 30, 2018 and December 31, 2017, respectively:

Name of Related Party	As of September 30, 2018		As of December 31, 2017
(1) Enson Seafood GA Inc. (formerly “GA-GW Seafood, Inc.”)	$	—	$	2,978,161
(2) Ocean Pacific Seafood Group		247,724		145,888
(3) Han Feng Information Tech. Jinhua Inc.		—		5,167
(4) NSG International Inc. (“NSG”)		65,092		119,093
(5) Revolution Industry LLC		362,077		—
Total	$	674,893	$	3,248,309

(1)

Mr. Zhou Min Ni owns 45% equity interest of this entity. The large advances to Enson Seafood GA Inc. (“Enson Seafood”)made in 2017 was a result of the Company’s decision to take advantage of the large refrigerated facilities owned by Enson Seafood. The Company made these advances to Enson Seafood for the purchases of large quantities of frozen foods. Enson Seafood takes possession of these frozen goods until they are shipped based on the Company’s sales orders. The Company did not include these advanced purchases in its inventory since the title and risk of these goods remained with Enson Seafood;

(2)

Mr. Zhou Min Ni owns 25% equity interest of this entity;

(3)

Mr. Zhou Min Ni owns 37% of its equity interest;

(4)

Mr. Zhou Min Ni owns 30% of its equity interest;

(5)

Mr. Zhou Min Ni owns a 51% equity interest in Revolution Industry LLC.

Long-term notes receivables - 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 September 30, 2018 and December 31, 2017, the outstanding loans to various related parties consist of the following:

Name of Related Party	As of September 30, 2018		As of December 31, 2017
Enson Seafood GA Inc. (formerly “GA-GW Seafood, Inc.”)	$	1,848,524	$	550,000
NSG International Inc. (“NSG”)		6,218,310		5,993,552
Eastern Fresh LLC (“Eastern”)		—		316,504
Revolution Automotive LLC (“Revolution Automotive”)		465,532		—
Total	$	8,532,366	$	6,860,056
Less: Current portion	$	38,049	$	—
Total	$	8,494,317	$	6,860,056

On January 1, 2018, the Company signed 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 was converted into promissory notes bearing annual interest of 5%. The interest shall be accrued starting January 1, 2018. The principal plus interest shall be paid off no later than December 31, 2019. Interest is computed on the outstanding balance on the basis of the actual number of days elapsed in a year of 360 days.

On September 30, 2018, the Company signed a promissory note agreement with Enson Seafood for $2,000,000. Pursuant to the promissory note agreement, Enson Seafood will make monthly payment of $171,214.96 for 12 months, including interest. The loan bears interested of 5% per annum on the unpaid balance, compounded monthly. The principal plus interest shall be paid off no later than September 30, 2019, with an option to renew.

On 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 was converted into promissory notes bearing annual interest of 5%. The interest shall be accrued starting January 1, 2018. The principal plus interest shall be paid off no later than December 31, 2019. Interest is computed on the outstanding balance on the basis of the actual number of days elapsed in a year of 360 days.

The promissory note with Eastern in the original amount of $1,000,000 was signed on May 31, 2017 bearing annual interest rate of 5%. This note has been repaid in full.

On March 1, 2018, the Company signed promissory note agreement with Revolution Automotive for $483,628. Pursuant to the promissory note agreement, Revolution Automotive will make monthly payment of $5,000 for 60 months, including interest, with final payment of $284,453. The loan bears interest of 5% per annum. Interest is 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 shall be paid off no later than April 30, 2023.

Accounts payable - related parties

As of September 30, 2018 and December 31, 2017, the Company had a total accounts payable balance of $3,147,470 and $ 4,075,927 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.

Advance 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. The balances for advance from customers involving related parties amounted to $349,721 and $1,350,296 as of September 30, 2018 and December 31, 2017, respectively.

Related party sales and purchases transactions:

The Company also makes regular sales to or purchases from various related parties during the normal course of business. The total sales made to related parties amounted to $13,364,070 and $14,107,311 for the nine months ended September 30, 2018 and 2017, and $4,427,639 and $3,230,646 for the three months ended September 30, 2018 and 2017 respectively. The total purchases made from related parties were $26,882,395 and $25,527,242 for the nine months ended September 30, 2018 and 2017, and $13,871,903 and $12,807,218 for the three months ended September 30, 2018 and 2017, respectively.