| Related Party Transactions |
NOTE 14 - Related Party Transactions
| |
A. |
Name of related
parties and relationships with the Company: |
| Related
Party |
|
Relationship |
| Dmedia Holding LP ("Dmedia") |
|
Major stockholder |
| Bummy Wu |
|
Shareholder |
| Jeffrey Wun |
|
Shareholder and
CEO of Aerkomm and Aircom |
| Yih Lieh (Giretsu) Shih |
|
President of Aircom Japan |
| Chien Ming Tseng |
|
President of Aircom Taiwan |
| Hao Wei Peng |
|
Employee of Aircom
Taiwan and founding owner of Aircom Taiwan prior to 12/19/2017 |
| Louis Giordimaina |
|
COO - Aviation of Aircom |
| Wealth Wide Int'l Ltd. ("WWI")
|
|
Bummy Wu, a shareholder, is the Chairman |
| WISD Intellectual Property Agency, Ltd. ("WISD") |
|
Patrick Li, Director
of Aircom, is the Chairman; Chih-Ming (Albert) Hsu, Director of the Company, is a Director |
| |
B. |
Significant related
party transactions: |
The Company has extensive transactions
with its related parties. It is possible that the terms of these transactions are not the same as those which would result from
transactions among wholly unrelated parties.
| |
a. |
As of September
30, 2019 and December 31, 2018: |
| |
|
September 30,
2019 |
|
|
December 31,
2018 |
|
| |
|
(Unaudited) |
|
|
|
|
| Other
receivable from Chien Ming Tseng1 |
|
$ |
111,111 |
|
|
$ |
- |
|
| Temporary
deposit to Bummy Wu2 |
|
$ |
- |
|
|
$ |
100,067 |
|
| Operating
lease liability to WWI3 |
|
$ |
33,478 |
|
|
$ |
- |
|
| Other payable to: |
|
|
|
|
|
|
|
|
| Hao
Wei Peng4 |
|
$ |
47,201 |
|
|
$ |
- |
|
| WWI3 |
|
|
39,179 |
|
|
|
39,224 |
|
| Jeffrey
Wun4 |
|
|
12,807 |
|
|
|
46,236 |
|
| Louis
Giordimaina4 |
|
|
3,019 |
|
|
|
6,071 |
|
| Yih
Lieh (Giretsu) Shih4 |
|
|
- |
|
|
|
15,497 |
|
| Others4 |
|
|
9,986 |
|
|
|
66,826 |
|
| Total |
|
$ |
112,192 |
|
|
$ |
173,854 |
|
| |
1. |
Represents temporary advances to employees for payments of previously accrued expenses for regular operating
activities, to be offset with the Company's accrued expenses pending official receipts. |
| |
2. |
In November 2018,
Aircom HK's bank account was temporarily frozen by its local bank in Hong Kong (the "HK bank") due to Aircom
HK's failure to timely submit to the HK bank corporate documentation relating to the corporate organization and goodstanding
of Aircom HK's parent company, Aircom, and Aircom's parent company, Aerkomm. To avoid a potential cash flow issue
resulting from this temporary account freeze, Aircom HK withdrew $100,067 in cash from the HK bank and temporarily deposited
it in an existing related party's bank account at a different bank for safe keeping. The Aircom HK's bank account
with the HK bank was reactivated by the HK bank subsequently and the cash that was transferred to the related party's
account was redeposited into Aircom HK's bank account at the HK bank in February 2019. |
| |
3. |
Represents rent
for a warehouse in Hong Kong to store the Company's hardware, which ended in May 2018, and rent for another Hong Kong
office starting June 28, 2018. |
| |
4. |
Represents payable
to employees as a result of regular operating activities. |
| |
b. |
For the three-month
and nine-month periods ended September 30, 2019 and 2018: |
| |
|
Three Months Ended
September
30, |
|
|
Nine Months Ended
September
30, |
|
| |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
| |
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
| Consulting expense paid to Louis Giordimaina |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
222,246 |
|
| Legal expense paid to WISD |
|
|
- |
|
|
|
9,387 |
|
|
|
- |
|
|
|
10,779 |
|
| Amortization expense of right-of-use asset charged by WWI |
|
|
11,456 |
|
|
|
- |
|
|
|
34,328 |
|
|
|
- |
|
| Rental expense charged by WWI |
|
|
- |
|
|
|
14,706 |
|
|
|
- |
|
|
|
17,840 |
|
| Interest expense charged by Dmedia |
|
|
- |
|
|
|
- |
|
|
|
1,744 |
|
|
|
3,116 |
|
On May 25, 2018, Mr. Louis
Giordimaina was converted from a consultant to a full-time employee and was appointed as Chief Operating Officer – Aviation.
The consulting expense paid for the nine-month period ended September 30, 2018 in the amount of $222,246 represents the consulting
services provided prior to the conversion.
Aircom engaged WISD to handle
its filing of patent and trademark applications.
The Company had a lease agreement
with WWI with a monthly rental cost of $450 that expired on May 31, 2018 and was not renewed. The Company has another lease agreement
with WWI for its office space in Hong Kong with a monthly rental cost of HKD 30,000. The lease term is from June 28, 2018 to June
27, 2020. Effective January 1, 2019, the Company adopted ASU2016-02, "Leases" (Topic 842) ("ASU 2016-02"),
and accounted for these leases under amortization of the lease payment under Note 9, Lease Liabilities.
|