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Related Party Transactions
 9 Months Ended
Sep. 30, 2023
Related Party Transactions [Abstract]  
Related Party Transactions
Note 12 - Related Party Transactions

The Company makes regular purchases from and sales to various related parties. Related party affiliations were attributed to transactions conducted between the Company and those business entities partially or wholly owned by the Company, the Company's officers and/or shareholders who owned no less than 10% shareholdings of the Company.

Mr. Xiao Mou Zhang (“Mr. Zhang”) became the sole Chief Executive Officer on February 23, 2021. Mr. Zhang and certain of his immediate family also have ownership interests in various related parties involved in (i) the distribution of food and related products to restaurants and other retailers and (ii) the supply of fresh food, frozen food, and packaging supplies to distributors.

The Company believes that Mr. Zhou Min Ni (“Mr. Ni”), the Company’s former Co-Chief Executive Officer, together with various trusts for the benefit of Mr. Ni's four children, are collectively beneficial owners of the Company’s outstanding shares of common stock, and he and certain of his immediate family members have ownership interests in related parties involved in (i) the distribution of food and related products to restaurants and other retailers and (ii) the supply of fresh food, frozen food, and packaging supplies to distributors.

For the year ended December 31, 2022, North Carolina Good Taste Noodle, Inc. (“NC Noodle”) was a related party due to Mr. Jian Ming Ni's, a former Chief Financial Officer of the Company, continued ownership interest in NC Noodle. As of January 1, 2023, NC Noodle is no longer considered a related party since it has been three years since Mr. Jian Ming Ni resigned.
The related party transactions as of September 30, 2023 and December 31, 2022 and for the three and nine months ended September 30, 2023 and 2022 are identified as follows:

Related Party Sales, Purchases, and Lease Agreements

Purchases

Below is a summary of purchases of goods and services from related parties recorded for the three and nine months ended September 30, 2023 and 2022, respectively:
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)Nature2023202220232022
(a)Conexus Food Solutions (formerly as Best Food Services, LLC)Trade$2,045 $2,246 $6,858 $8,738 
(b)Eastern Fresh NJ, LLCTrade— — — 1,093 
(b)Enson Seafood GA, Inc. (formerly “GA-GW Seafood, Inc.”)Trade— — 37 — 
(c)First Choice Seafood, Inc.Trade— 25 — 134 
(c)Fujian RongFeng Plastic Co., LtdTrade— — — 398 
(d)North Carolina Good Taste Noodle, Inc.Trade— 1,798 — 5,226 
(b)Ocean Pacific Seafood Group, Inc.Trade73 107 315 385 
OtherTrade93 115 168 199 
Total$2,211 $4,291 $7,378 $16,173 
_______________
(a)Mr. Zhang previously owned an equity interest in this entity indirectly through its parent company as of October 31, 2020. This equity interest was transferred to three Irrevocable Trusts for the benefit of Mr. Zhang's children effective November 1, 2020.
(b)Mr. Ni owns an equity interest in this entity.
(c)Mr. Ni owns an equity interest in this entity indirectly through its parent company.
(d)Mr. Jian Ming Ni, former Chief Financial Officer owns an equity interest in this entity. Mr. Zhou Min Ni previously owned an equity in this entity as of December 31, 2019. The Company has been informed by Mr. Zhou Min Ni that his equity interest was disposed of on January 1, 2020. No longer considered a related party as of January 1, 2023 since it has been three years since Mr. Jian Ming Ni resigned.

Sales

Below is a summary of sales to related parties recorded for the three and nine months ended September 30, 2023 and 2022, respectively:
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2023202220232022
(a)ABC Food Trading, LLC$367 $815 $1,682 $3,077 
(b)Asahi Food, Inc.275 126 661 495 
(c)Conexus Food Solutions (formerly as Best Food Services, LLC)149 189 675 1,058 
(d)Eagle Food Service, LLC— 576 1,942 576 
(e)First Choice Seafood, Inc.8 9 24 27 
(e)Fortune One Foods, Inc.19 67 42 81 
(f)N&F Logistics, Inc.— — 6 36 
(g)Union Food LLC— — 27 — 
Total$818 $1,782 $5,059 $5,350 
_______________
(a)Mr. Zhang previously owned an equity interest in this entity indirectly through its parent company as of October 31, 2020. This equity interest was transferred to three Irrevocable Trusts for the benefit of Mr. Zhang's children effective November 1, 2020.
(b)The Company, through its subsidiary MF, owns an equity interest in this entity.
(c)Mr. Zhang previously owned an equity interest in this entity indirectly through its parent company as of October 31, 2020. This equity interest was transferred to three Irrevocable Trusts for the benefit of Mr. Zhang's children effective November 1, 2020.
(d)Tina Ni, one of Mr. Ni’s family members, owns an equity interest in this entity indirectly through its parent company.
(e)Mr. Ni owns an equity interest in this entity indirectly through its parent company.
(f)Mr. Ni owns an equity interest in this entity.
(g)Tina Ni, one of Mr. Ni’s family members, owns an equity interest in this entity.
Lease Agreements

The Company leases various facilities to related parties.

The Company leased a warehouse to Enson Seafood GA Inc. (formerly GA-GW Seafood, Inc.) under an operating lease agreement expiring on September 21, 2027. On May 18, 2022, the Company sold the warehouse to Enson Seafood GA Inc., a related party, for approximately $7.2 million, recognized a gain of $1.5 million and used a portion of the proceeds to pay the outstanding balance of the Company's $4.5 million loan with First Horizon Bank. No rental income was received for the three months ended September 30, 2023 and 2022. Rental income for the nine months ended September 30, 2023 and 2022 was nil and $0.2 million, respectively, which is included in other income in the unaudited condensed consolidated statements of operations and comprehensive income (loss).

In 2020, the Company renewed a warehouse lease from Yoan Chang Trading Inc. under an operating lease agreement which expired on December 31, 2020. In February 2021, the Company executed a new five-year operating lease agreement with Yoan Chang Trading Inc., effective January 1, 2021 and expiring on December 31, 2025. Rent incurred was $0.1 million and $0.1 million for the three months ended September 30, 2023 and 2022, respectively, which is included in distribution, selling and administrative expenses in the unaudited condensed consolidated statements of operations and comprehensive income (loss). Rent incurred to the related party was $0.3 million and $0.2 million for the nine months ended September 30, 2023 and 2022, respectively, which is included in distribution, selling and administrative expenses in the unaudited condensed consolidated statements of operations and comprehensive income (loss).

Beginning 2014, the Company leased a warehouse to Asahi Food, Inc. under a commercial lease agreement which was rescinded March 1, 2020. A new commercial lease agreement for a period of one year was entered into, expiring February 28, 2021, with a total of four renewal periods with each term being one year. Rental income was $0.04 million and $0.04 million for the three months ended September 30, 2023 and 2022, respectively, which is included in other income in the unaudited condensed consolidated statements of operations and comprehensive income (loss). Rental income was $0.1 million and $0.1 million for the nine months ended September 30, 2023 and 2022, respectively, which is included in other income in the unaudited condensed consolidated statements of operations and comprehensive income (loss).

Related Party Balances

Accounts Receivable - Related Parties, Net

Below is a summary of accounts receivable with related parties recorded as of September 30, 2023 and December 31, 2022, respectively:

(In thousands)September 30, 2023December 31, 2022
(a)ABC Food Trading, LLC$96 $— 
(b)Asahi Food, Inc.168 81 
(c)Conexus Food Solutions (formerly as Best Food Services, LLC) — — 
(d)Eagle Food Service, LLC— 69 
(e)Enson Seafood GA, Inc. (formerly as GA-GW Seafood, Inc.)59 59 
(f)Fortune One Foods, Inc.3 4 
(g)Union Food LLC2 — 
Total$328 $213 
_______________
(a)Mr. Zhang previously owned an equity interest in this entity indirectly through its parent company as of October 31, 2020. This equity interest was transferred to three Irrevocable Trusts for the benefit of Mr. Zhang's children effective November 1, 2020.
(b)The Company, through its subsidiary MF, owns an equity interest in this entity.
(c)Mr. Zhang previously owned an equity interest in this entity indirectly through its parent company as of October 31, 2020. This equity interest was transferred to three Irrevocable Trusts for the benefit of Mr. Zhang's children effective November 1, 2020.
(d)Tina Ni, one of Mr. Ni’s family members, owns an equity interest in this entity indirectly through its parent company.
(e)Mr. Ni owns an equity interest in this entity.
(f)Mr. Ni owns an equity interest in this entity indirectly through its parent company.
(g)Tina Ni, one of Mr. Ni’s family members, owns an equity interest in this entity.
The Company has reserved for 90% of the accounts receivable for Enson Seafood GA, Inc. as of September 30, 2023. This outstanding balance was reserved for 80% as of December 31, 2022. All other accounts receivable from these related parties are current and considered fully collectible. No additional allowance is deemed necessary as of September 30, 2023 and December 31, 2022.

Accounts Payable - Related Parties

All the accounts payable to related parties are payable upon demand without interest. Below is a summary of accounts payable with related parties recorded as of September 30, 2023 and December 31, 2022, respectively:

(In thousands)September 30, 2023December 31, 2022
(a)Conexus Food Solutions (formerly as Best Food Services, LLC)$451 $729 
(b)North Carolina Good Taste Noodle, Inc.— 731 
Others39 69 
Total$490 $1,529 
_______________
(a)Mr. Zhang previously owned an equity interest in this entity indirectly through its parent company as of October 31, 2020. This equity interest was transferred to three Irrevocable Trusts for the benefits of Mr. Zhang's children effective November 1, 2020.
(b)Mr. Jian Ming Ni, former Chief Financial Officer owns an equity interest in this entity. Mr. Zhou Min Ni previously owned an equity in this entity as of December 31, 2019. The Company has been informed by Mr. Zhou Min Ni that his equity interest was disposed of on January 1, 2020. No longer considered a related party as of January 1, 2023 since it has been three years since Mr. Jian Ming Ni resigned.

Promissory Note Payable - Related Party

The Company issued a $7.0 million unsecured subordinated promissory note to B&R Group Realty Holding, LLC in January 2020. During the nine months ended September 30, 2022, the Company paid the remaining $4.5 million principal balance of this related party promissory note payable. Interest payments paid were $0.1 million for the three and nine months ended September 30, 2022.