Quarterly report pursuant to Section 13 or 15(d)

Related Party Transactions

v3.19.3
Related Party Transactions
9 Months Ended
Sep. 30, 2019
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

 NOTE 10 – RELATED PARTY TRANSACTIONS

 

Medical Related Consulting Services Revenue from Related Parties and Accounts Receivable – Related Party

 

During the three and nine months ended September 30, 2019 and 2018, medical related consulting services revenue from related parties was as follows:

 

    Three Months Ended
September 30,
    Nine Months Ended
September 30
 
    2019     2018     2019     2018  
Medical related consulting services provided to:                        
Beijing Daopei (1)   $ -     $ 71,398     $ 55,908     $ 213,394  
Shanghai Daopei (2)     -       -       14,180       -  
Hebei Daopei (3)     108,520       -       164,126       -  
    $ 108,520     $ 71,398     $ 234,214     $ 213,394  

 

(1) Beijing Daopei is a subsidiary of an entity whose chairman is Wenzhao Lu, the major shareholder of the Company.
(2) Shanghai Daopei is a subsidiary of an entity whose chairman is Wenzhao Lu, the major shareholder of the Company.
(3) Hebei Daopei is a subsidiary of an entity whose chairman is Wenzhao Lu, the major shareholder of the Company.

 

Accounts receivable – related party, net of allowance for doubtful accounts, at September 30, 2019 and December 31, 2018 amounted to $167,870 and $0, respectively, and no allowance for doubtful accounts is deemed to be required on accounts receivable – related party at September 30, 2019 and December 31, 2018.

  

Prepaid Expenses – Related Parties

 

As of September 30, 2019 and December 31, 2018, the Company made a prepayment of $0 and $1,897, respectively, to David Jin, its shareholder, chief executive officer, president and board member, for business travel reimbursement, which has been included in prepaid expenses – related parties on the accompanying condensed consolidated balance sheets.

 

As of September 30, 2019 and December 31, 2018, the Company made a prepayment of $0 and $32,293, respectively, to Meng Li, its shareholder and chief operating officer, for business travel reimbursement, which has been included in prepaid expenses – related parties on the accompanying condensed consolidated balance sheets.

 

Accrued Liabilities and Other Payables – Related Parties

 

As of September 30, 2019 and December 31, 2018, the advance from customer – related party amounted to $0 and $14,829, respectively, which represents a prepayment received from our related party, Beijing Daopei, for medical related consulting services. When the services are performed, the amount recorded as an advance from customer – related party is recognized as revenue.

 

As of September 30, 2019 and December 31, 2018, the Company owed David Jin, its shareholder, chief executive officer, president and board member, $31,267 and $0, respectively, for travel and other miscellaneous reimbursements, which have been included in accrued liabilities and other payables – related parties on the accompanying condensed consolidated balance sheets.

  

In connection with the acquisition discussed elsewhere in this report, the Company acquired Beijing Genexosome for a cash payment of $450,000. As of September 30, 2019 and December 31, 2018, the unpaid acquisition consideration of $100,000, was payable to Dr. Yu Zhou, a director and former co-chief executive officer and 40% owner of Genexosome, and has been included in accrued liabilities and other payables – related parties on the accompanying condensed consolidated balance sheets.

 

As of September 30, 2019 and December 31, 2018, the accrued and unpaid interest related to note payable – related party amounted to $23,425 and $0, respectively, and have been included in accrued liabilities and other payables – related parties on the accompanying condensed consolidated balance sheets.

 

Real Property Management Agreement

 

The Company pays a company, which is controlled by Wenzhao Lu, the Company's largest shareholder and chairman of the Board of Directors, for the management of its commercial real property located in New Jersey. The property management agreement commenced on May 5, 2017 and expired in March 2019. For the three months ended September 30, 2019 and 2018, the management fee related to the property management agreement amounted to $0 and $16,251, respectively. For the nine months ended September 30, 2019 and 2018, the management fee related to the property management agreement amounted to $23,334 and $48,753, respectively.

 

Note Payable – Related Party

 

On March 18, 2019, the Company issued Wenzhao Lu, the Company's largest shareholder and Chairman of the Board of Directors, a Promissory Note in the principal amount of $1,000,000 ("Promissory Note") in consideration of cash in the amount of $1,000,000. The Promissory Note accrues interest at the rate of 5% per annum and matures March 19, 2022.

 

The Company repaid principal of $410,000 in the third quarter of 2019. For the three and nine months ended September 30, 2019, the interest expense related to this note amounted to $8,842 and $23,425, respectively. As of September 30, 2019, the outstanding principal balance of the note and related accrued and unpaid interest for the note was $590,000 and $23,425, respectively.

 

Office Space from Related Party

 

Beijing Genexosome uses office space of a related party, free of rent, which is considered immaterial.