Related party transactions and balances | 8. Related party transactions and balances a) Related party transactions The year ended December 31, 2018 2017 Loan from a shareholder $ 114,980 $ 163,504 Interest expense to a shareholder 14,996 - Fair value of warrants issued to a shareholder 4,540,000 - Fee for professional services provided by related parties 95,000 114,402 License fee expense to a related party 50,000 37,500 Subscription received by a related party on behalf of the Company 2,196,500 - Inventories purchased from a related party 292,500 - Advance received from a related party $ 292,500 $ b) Related party payables December 31, December 31, Long-term loan from a shareholder $ 283,720 $ - Payable to a shareholder - 170,716 Interest payable to a shareholder 14,996 - Payable to a related party for license fee 87,500 37,500 Professional fee payable to related parties 95,000 - Due from a related party 2,196,500 - Advance from a related party $ 292,500 $ - On May 1, 2018, PBG Water Solutions and Yakun International (subsequently renamed “QHY Group”), entered into a Credit Loan Agreement with a 20.8% shareholder of QHY Group (the “Lender”). The Lender had provided operating capital to PBG Water Solutions since its inception, and to the Company since the consummation of PBG SEA. Pursuant to the Credit Loan Agreement, the Lender will provide a loan of $500,000 to the Company for 2 years with 10% annual interest which shall be applied from the date of the Credit Loan Agreement. In compensation for the loan credit, the Company issued to the Lender a 3-year cashless warrant, which entitles the Lender to purchase 50 million (50,000,000) shares of the Company’s common stock at an exercise price of $0.01. The warrant cannot be exercised before April 1, 2019, and shall be void and non-exercisable if the Company (i) raises more than $20 million in equity or (ii) has revenue in excess of $100 million in any fiscal year. As of December 31, 2018 and 2017, the Lender has provided $283,720 to the Company and $170,716 to PBG Water Solutions. During the year ended December 31, 2018 the Lender provided $114,980 to the Company and PBG Water Solutions. During the year ended December 31, 2017 the Lender provided $163,504 to the Company and PBG Water Solutions. During the year ended December 31, 2018, the Company recorded $14,996 interest expenses incurred from the loan, and recorded $4,540,000 cost for issuing the warrant to the shareholder. PBG Water Solutions’ sole director from inception to December 31, 2017 is an attorney and provided legal services to PBG Water Solutions during the year ended December 31, 2017 with a service fee of $114,402. The directorship was terminated upon the consummation of PBG SEA. During the year ended December 31, 2018, service of $105,391 was provided by the attorney. In February 2018, PBG Water Solutions entered into a financial advisory agreement with Rebus Capital Group (the “Rebus”), an entity affiliated with a shareholder of the Company, pursuant to which PBG Water Solutions will pay Rebus $30,000 per quarter. The agreement has a term of five years from March 2018 but is cancellable by either party on sixty days’ notice. The service fee for the first 3 months was waived by Rebus. Professional service expense related to this agreement was $95,000 for the year ended December 31, 2018. In April 2017, PBG Water Solutions entered into a License and Supply Agreement with an individual shareholder who owned 50% of PBG Water Solutions’ common stock and the shareholder’s majority owned company Beijing QHY Environment S & T Co., Ltd. (Beijing QHY). Pursuant to the License and Supply Agreement and its Amendment entered into in June 2017, the individual shareholder and Beijing QHY (the “Licensor”) granted PBG the exclusive use of 21 patents in any area outside the People’s Republic of China (the “PRC”) for 20 years. A one-time fee of $1 million shall be paid before December 31, 2021, and royalties of 1% of the net revenue received by PBG from the sale, license or other distribution of the licensed products shall be paid annually. In addition, the Licensor shall supply PBG Water Solutions licensed products at prices agreed upon from time to time by the Licensor and PBG Water Solutions. During the year ended December 31, 2018, QHY Water Solutions purchased an integrated wastewater treatment equipment from Beijing QHY for $292,500. The Company, QHY Water Solutions and PBG Water Solutions didn’t generate any net revenue from the licensed equipment or products yet during the year ended December 31, 2018. The Company recorded a $50,000 license fee expense for the year ended December 31, 2018 and made no payment of license fees as of December 31, 2018. The shareholder/licensor owned 41.6% of the Company’s common stocks after giving effect to the PBG SEA and owns 47.15% of the Company’s common stocks as of December 31, 2018. QHY Oceania which was 51% owned by QHY Water Solutions from its inception until QHY Water Solutions sold all of the outstanding shares it owned to a non-affiliate party in October 2018. During the year ended December 31, 2018, QHY Oceania issued a purchase order to QHY Water Solutions for an integrated wastewater treatment module and paid $292,500 in advance, a portion of the purchase price. The equipment had not been transferred to QHY Oceania as of December 31, 2018. In December 2018, the Company issued 6,655,750 shares of the Company’s common stock for aggregate consideration of $2,196,500. Beijing QHY collected the subscription on behalf of the Company in RMB. The monies are considered held by Beijing QHY for the benefit of the Company. |