XML 27 R16.htm IDEA: XBRL DOCUMENT v3.8.0.1
Related Party Transactions
6 Months Ended
Sep. 30, 2017
Related Party Transactions [Abstract]  
Related Party Transactions

NOTE 11 – RELATED PARTY TRANSACTIONS

 

DUE TO/FROM RELATED PARTIES

 

On September 30, 2017 and March 31, 2017, in the aggregate the Company had $1,170,088 and $0, respectively, due from related parties for goods and services sold to these companies.

 

On September 30, 2017 and March 31, 2017, the Company had amounts due to other related party companies in the amounts of $157,579 and $0 for goods, repair services, engineering fees, storage and administrative services provided to the Company by these related parties.

 

SUBORDINATED DEBT

 

In connection with the Revolving Credit Facility the Company was required to subordinate related party debt to Starlight Marketing Development, Ltd. (“subordinated debt”) in the amount of $1,924,431. The Revolving Credit Facility renewal agreement includes a Term Note in the amount of $1,000,000, the proceeds of which were used to pay down a portion of the subordinated debt. The remaining subordinated debt of $924,431 bears interest at 6% and is scheduled to be paid in quarterly installments of $123,000 which include interest and commenced September 30, 2017. With the current renewal agreement expiring on July 15, 2020 the subordinated debt has been classified as a current portion of $452,948 and a long-term portion of $362,419 as of September 30, 2017 on the condensed consolidated balance sheets. Since the original agreement expired on July 14, 2017 the subordinated related party debt was classified as a current liability as of March 31, 2017 on the condensed consolidated balance sheets. During the three and nine months ended September 30, 2017 and 2016 the Company incurred interest expense of $13,959 and $0, respectively, related to the subordinated debt.

 

TRADE

 

During the three months ended September 30, 2017 and September 30, 2016 the Company sold approximately $1,151,000 and $1,001,000, respectively to Winglight Pacific, Ltd. (“Winglight”), a related party, at a discounted price, similar to prices granted to major direct import customers shipped internationally with freight prepaid. The average gross profit margin on sales to Winglight for the three months ended September 30, 2017 and September 30, 2016 was 21.9% and 22.9%, respectively. During the six months ended September 30, 2017 and September 30, 2016 the Company sold approximately $1,462,000 and $1,194,000, respectively to Winglight at a discounted price, similar to prices granted to major direct import customers shipped internationally with freight prepaid. The average gross profit margin on sales to Winglight for the six months ended September 30, 2017 and September 30, 2016 was 21.8% and 21.7%, respectively. The product was shipped to Cosmo Communications of Canada (“Cosmo”), another related company and the Company’s primary distributor of its products to Canada. These amounts were included as a component of net sales in the accompanying condensed consolidated statements of income.

 

During the three months ended September 30, 2017 and September 30, 2016 the Company sold approximately $53,000 and $195,000, respectively of product to Cosmo from its California warehouse facility. During the six months ended September 30, 2017 and September 30, 2016 the Company sold approximately $323,000 and $318,000, respectively of product to Cosmo from its California warehouse facility. These amounts were included as a component of net sales in the accompanying condensed consolidated statements of income.

 

The Company purchased services from Starlight R&D, Ltd, (“SLRD”) a related party. The purchases from SLRD for the three months ended September 30, 2017 and 2016 were approximately $0 and $10,000, respectively. The purchases from SLRD for the six months ended September 30, 2017 and 2016 were approximately $10,000 and $23,000, respectively. These amounts were included as a component of general and administrative expenses in the accompanying condensed consolidated statements of income.

 

The Company purchased products from Starlight Electronics Co. Ltd (“SLE”). The purchases from SLE for the three month periods ended September 30, 2017 and 2016 were approximately $96,000 and $287,000, respectively. The purchases from SLE for the six month periods ended September 30, 2017 and 2016 were approximately $129,000 and $998,000, respectively. These amounts were included as a component of cost of goods sold in the accompanying condensed consolidated statements of income.

 

The Company purchased services from Starlight Consumer Electronics USA, Inc., (“SCE”) a related party. The purchases from SCE for the three month periods ended September 30, 2017 and 2016 were approximately $0 and $46,000, respectively. The purchases from SCE for the six month periods ended September 30, 2017 and 2016 were approximately $79,000 and $98,000, respectively. These amounts were included as a component of general and administrative expenses in the accompanying condensed consolidated statements of income.

 

The Company purchased services from Merrygain Holding Co. Ltd, (“Merrygain”) a related party. The purchases from Merrygain for the three month periods ended September 30, 2017 and 2016 were approximately $38,000 and $38,000, respectively. The purchases from Merrygain for the nine month periods ended September 30, 2017 and 2016 were approximately $76,000 and $76,000, respectively. These amounts were included as a component of general and administrative expenses in the accompanying condensed consolidated statements of income.

 

The Company has annually renewable service and logistics agreements with affiliates of China Sinostar Group Co. Ltd. (“Sinostar”) The affiliates pay the Company for services based on actual warehouse space occupied. For the three month periods ended September 30, 2017 and 2016, the Company received approximately $13,000 and $23,000 respectively, in service fees from affiliates. For the six month periods ended September 30, 2017 and 2016, the Company received approximately $18,000 and $41,000, respectively, in service fees from affiliates. These amounts were included as a component of general and administrative expenses in the accompanying condensed consolidated statements of income.