Quarterly report pursuant to Section 13 or 15(d)

Related Party Transactions

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Related Party Transactions
9 Months Ended
Dec. 31, 2018
Related Party Transactions [Abstract]  
Related Party Transactions

NOTE 12 - Related Party Transactions

 

A. Name of related parties and relationships with the Company:

 

 

Related Party

  Relationship
  Daniel Shih*   Co-founder and former stockholder; Aircom’s CEO and Director between February 13, 2017 and April 26, 2017; Aircom’s CFO between February 13, 2017 and May 5, 2017
  Dmedia Holding LP (“Dmedia”)   23.99% stockholder
  Bummy Wu   Shareholder
  Jeffrey Wun   Shareholder and CEO of Aerkomm and Aircom
  Yih Lieh (Giretsu) Shih   President of Aircom Japan
  Hao Wei Peng   Employee of Aircom Taiwan
  Louis Giordimanina   Employee of Aircom
  Klingon Aerospace, Inc. (“Klingon”)   Daniel Shih was the Chairman from February 2015 to February 2016
  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  

 

* Daniel Shih has relinquished “beneficial ownership” of substantially all of his equity interests in the Company (whether held directly or indirectly) in a manner acceptable to the Company. This means that Daniel Shih no longer, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares (i) voting power, which includes the power to vote, or to direct the voting of, securities, and/or (ii) investment power, which includes the power to dispose, or to direct the disposition of, shares of the Company’s common stock, except for a de minimus number of shares of the common stock which will continue to be beneficially owned by him by way of his being a control person in another entity that owns shares of the common stock. Daniel Shih will, however, retain a pecuniary interest in some of the shares of the common stock over which he has relinquished voting and investment power.  Daniel Shih has also removed himself from any and all activities relating to the Company’s business, including, but not limited to managerial, directional, advisory, promotional, developmental and fund-raising activities, effective upon the effectiveness of the registration statement on Form S-1 originally filed with the SEC on December 20, 2017 and declared effective on April 13, 2018, as amended and supplemented to date. Additionally, Barbie Shih (Barbie), Daniel Shih’s wife, was not re-elected to the Company’s board of directors on December 29, 2017. As a result of these events, neither Daniel nor Barbie will maintain any active affiliation with, or material beneficial ownership interest in, the Company.

 

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 December 31, 2018 and March 31, 2018:

 

      December 31,
2018
    March 31,
2018
 
  Rental deposit to Daniel Shih   $ 2,462     $ 2,542  
  Temporary deposit to Bummy Wu1   $ 100,067     $ -  
  Loan from Dmedia2   $ -     $ 325,040  
                   
  Other payable to:                
  Klingon3   $ 762,000     $ 762,000  
  Jeffrey Wun5     46,236       -  
  Louis Giordimanina     6,071       135,973  
  Daniel Shih4     13,444       132,305  
  Yih Lieh (Giretsu) Shih5     15,497       81,752  
  WWI6     39,224       38,241  
  Others5     66,826       149,307  
  Total   $ 949,298     $ 1,299,578  

 

  1. 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.

 

2. Represents short-term loan from Dmedia.  This short-term loan has an expiration date of January 30, 2019 and an annual interest rate of 3%. The Company repaid the short-term loan in full on June 14, 2018.

 

3. On March 9, 2015, the Company entered into a 10-year purchase agreement with Klingon. In accordance with the terms of this agreement, Klingon agreed to purchase from the Company an initial order of onboard equipment comprising an onboard system for a purchase price of $909,000, with payments to be made in accordance with a specific milestones schedule. As of December 31, 2018, the Company received $762,000 from Klingon in milestone payments towards the equipment purchase price. Since the project might not be successful, the Company reclassified the balance from customer prepayment to other payable due to uncertainty.

 

4. The amount as of March 31, 2018 represents payable to employees as a result of regular operating activities, while the amount as of December 31, 2018 represents rental payable.

 

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

 

6. Represents rent for a warehouse in Hong Kong to store the Company’s hardware.

b. For the three-month and nine-month periods ended December 31, 2018 and 2017:

 

      Three Months Ended
December 31,
    Nine Months Ended
December 31,
 
      2018     2017     2018     2017  
  Consulting expense paid to Louis Giordimanina   $ -     $ -     $ 87,275     $ -  
  Legal expense paid to WISD     -       -       10,779       -  
  Rental expense charged by Daniel Shih     3,881       3,864       11,811       20,232  
  Rental expense charged by WWI     11,446       1,350       27,486       3,150  
  Interest expense charged by Dmedia     -       -       1,915       -  

 

On May 25, 2018, Mr. Louis Giordimanina 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 December 31, 2018 in the amount of $87,275 represents the consulting services provided prior to the conversion.

 

Aircom Japan entered into a lease agreement with Daniel Shih, between August 1, 2014 and July 31, 2016, which was renewed on July 31, 2018. Pursuant to the terms of this lease agreement, Aircom Japan pays Daniel Shih a rental fee of approximately $1,200 per month.

 

Aircom engaged WISD to handle its filing of patent and trademark applications.

 

The Company has a lease agreement with WWI with monthly rental cost of $450. The lease term was from June 1, 2017 to May 31, 2018 and the lease was not renewed.