Quarterly report pursuant to Section 13 or 15(d)

Significant Related Party Transactions (Tables)

v3.21.2
Significant Related Party Transactions (Tables)
6 Months Ended
Jun. 30, 2021
Related Party Transactions [Abstract]  
Schedule of name of related parties and relationships with the Company
Related Party   Relationship
Well Thrive Limited (“WTL”)   Major stockholder
Yuanjiu Inc. (“Yuanjiu”)   Stockholder; Albert Hsu, a Director of Aerkomm, is the Chairman
AA Twin Associates Ltd. (“AATWIN”)   Georges Caldironi, COO of Aerkomm, is the sole owner
EESquare Japan (“EESquare JP”)   Yih Lieh (Giretsu) Shih, President Aircom Japan, is the Director
Wealth Wide Int’l Ltd. (“WWI”)   Bummy Wu, a stockholder, is the Chairman
dMobile System Co. Ltd. (dMobile)   Sheng-Chun Chang, major stockholder, is the Chairman

 

Schedule of significant related party transactions
    June 30,
2021
    December 31,
2020
 
    (Unaudited)        
Inventory prepayment to:            
dMobile1   $ 331,400     $
-
 
Yuanjiu2    
-
      542,130  
Total   $ 331,400     $ 542,130  
                 
Loan from WTL3   $
-
    $ 527,066  
Other payable to:                
AATWIN4   $ 255,741     $ 146,673  
Interest payable to WTL3     44,825       7,623  
Others5     404,005       296,890  
Total   $ 704,571     $ 451,186  
Lease liability to WWI6   $ 54,236     $ 68,661  

 

  1.

In June 2021, the Company ordered antenna equipment of $331,400 (NT $9,500,000) (unaudited) from dMobile. As of June 30, 2021, the Company had prepaid $331,400 (NT$9,500,000) (unaudited) to dMobile as prepayment on the equipment purchase.

 

  2. Represents inventory prepayment paid to Yuanjiu. On May 11, 2020, the Company entered into a product purchase agreement (PO1) with Yuanjiu to purchase 100 sets of the AirCinema Cube to be installed on aircraft of commercial airline customers. The total purchase amount under this agreement was $1,807,100 (unaudited) and the Company paid 20% of the total amount, or $361,420 (unaudited), as an initial deposit. On July 15, 2020, the Company signed a second product purchase agreement (PO2) of $1,807,100 (unaudited) with Yuanjiu for an additional 100 sets of the AirCinema Cube for the same purchase amount and paid a 10% initial deposit of $180,710 (unaudited) on this agreement as well. In February 2021, the Company paid the remaining balance of the PO1 and received the inventory with aggregate value of $1,807,100 (unaudited). The deposit on PO2 was refunded by Yuanjiu on June 1, 2021.

 

  3. The Company borrowed funds to meet operational needs from WTL under the Loans (discussed in Note 1). The original loan amount was approximately $2.64 million (NT$80,000,000). The loan agreement, which allows the Company to borrow additional funds and which carries an interest rate of 5% per annum, will terminate on December 31, 2021. The Company had fully repaid the outstanding loan amount as of June 30, 2021.

  4. Represents payable to AATWIN due to a consulting agreement dated January 1, 2019. The monthly consulting fee is EUR 15,120 (approximately $17,000). This agreement will expire on December 31, 2021.

 

  5. Represents payables to employees as a result of regular operating activities.

  

  6.

Aircom Hong Kong has a lease agreement with WWI for warehouse space with a monthly rental cost of $450. The lease term on this property is from July 1, 2020 to June 30, 2022. Aircom Hong Kong has another lease agreement with WWI for its office space in Hong Kong. The original lease term was from June 28, 2018 to June 27, 2020 with a monthly rental cost of HKD 29,897 (approximately $3,847). The Company renewed this lease on June 27, 2020 and the current lease term is from June 28, 2020 to June 27, 2022 with a monthly rental cost of HKD 30,000 (approximately $3,829).

 

Schedule of expenses paid to and income charged from related parties
    Three Months Ended
June 30,
    Six Months Ended
June 30,
 
    2021     2020     2021     2020  
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  
Purchase from Yuanjiu1   $
-
    $
-
    $ 1,807,100     $
-
 
Consulting expense charged by AATWIN2     54,388       50,110       109,068       100,221  
Interest expense charged by WTL3     17,951       9,067       38,778       9,067  
Rental expense charged by WWI4     11,988      
-
      2,396      
-
 
Sales to YuanJiu5     72,000      
-
      72,000      
-
 
Rental income from EESqaure JP6     2,826      
-
      5,563      
-
 

  1.

Represents inventory prepayment paid to Yuanjiu. On May 11, 2020, the Company entered into a product purchase agreement (PO1) with Yuanjiu to purchase 100 sets of the AirCinema Cube to be installed on aircraft of commercial airline customers. The total purchase amount under this agreement was $1,807,100 (unaudited) and the Company paid 20% of the total amount, or $361,420 (unaudited), as an initial deposit. On July 15, 2020, the Company signed a second product purchase agreement (PO2) of $1,807,100 (unaudited) with Yuanjiu for an additional 100 sets of the AirCinema Cube for the same purchase amount and paid a 10% initial deposit of $180,710 (unaudited) on this agreement as well. In February 2021, the Company paid the remaining balance of PO1 and received the inventory with aggregate value of $1,807,100 (unaudited).

 

  2.

Represents payable to AATWIN due to a consulting agreement dated January 1, 2019. The monthly consulting fee is EUR 15,120 (approximately $17,000). This agreement will expire on December 31, 2021.

 

  3.

The Company borrowed funds to meet operational needs from WTL under the Loans (discussed in Note 1). The original loan amount was approximately $2.64 million (NT$80,000,000). The loan agreement, which allows the Company to borrow additional funds and which carries an interest rate of 5% per annum, will terminate on December 31, 2021. The Company had fully repaid the outstanding loan amount as of June 30, 2021.

 

  4.

Aircom Hong Kong has a lease agreement with WWI for warehouse space with a monthly rental cost of $450. The lease term on this property is from July 1, 2020 to June 30, 2022. Aircom Hong Kong has another lease agreement with WWI for its office space in Hong Kong. The original lease term was from June 28, 2018 to June 27, 2020 with a monthly rental cost of HKD 29,897 (approximately $3,847). The Company renewed this lease on June 27, 2020 and the current lease term is from June 28, 2020 to June 27, 2022 with a monthly rental cost of HKD 30,000 (approximately $3,829).

 

  5.

On April 18, 2021, the Company entered into a memorandum of understanding with YuanJiu pursuant to which YuanJiu will serve as the exclusive service provider to the Company in Asia with respect to the installation and service of the Company’s Aerkomm AirCinema Cube (“ACC”) product and the related software platform (“Rayfin”) on which AAC will operate. In 2021, the Company sold ground antenna equipment to YuanJiu for the cooperation purpose.

 

  6. Aircom Japan entered into a sublease agreement with EESquare JP for the period between March 5, 2019 and March 4, 2021. Pursuant to the terms of this lease agreement, EESquare JP pays Aircom Japan a rental fee of approximately $920 per month.