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Related Party Transactions | 9 Months Ended
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Sep. 30, 2017
Related Party Transactions |
Related Party Transactions | Note 6. Related Party Transactions In August 2011, our consolidated joint venture, Beijing JiYa Semiconductor Material Co., Ltd. (“JiYa”), entered into a non-interest bearing note agreement in the amount of $1.6 million for a loan to one of its equity investment entities. The original term of the loan was for two years and ten months with three periodic principal payments required. After various amendments to the terms of the note, in December 2013, the parties agreed to delay all principal repayment until December 2017. In December 2016, we determined that this receivable was in substance an investment and began re-classifying this long term loan from “Related party notes receivable – long-term” to “Other assets” in our consolidated balance sheets. As of September 30, 2017 and December 31, 2016, we included $1.2 million and $1.4 million in “Other assets” in our condensed consolidated balance sheets, respectively. JiYa also purchases raw materials from one of its equity investment entities for production in the ordinary course of business. As of September 30, 2017 and December 31, 2016, amounts payable of $1.8 million and $1.8 million, respectively, were included in “Accounts payable” in our condensed consolidated balance sheets. JiYa also sold raw materials to one of its equity investment entities for production in the ordinary course of business. As of September 30, 2017 and December 31, 2016, amounts receivable of $326,000 and $313,000, respectively, were included in “Accounts receivable” in our condensed consolidated balance sheets. During the three months ended December 31, 2016, we deemed the collection of the outstanding amount to be improbable and established an allowance in full. There have since been no additional sales made on credit to the customer and as of September 30, 2017 the existing outstanding amount continues to be fully reserved. Beginning in 2012, our consolidated joint venture, Nanjing JinMei Gallium Co., Ltd. (“JinMei”), is contractually obligated under an agency sales agreement to sell raw material on behalf of its equity investment entity. JinMei bills the customers and remits the receipts, net of its portions of sales commission, to this equity investment entity. For the three months ended September 30, 2017 and 2016, JinMei has recorded $2,000 and $0, respectively, income from agency sales. For the nine months ended September 30, 2017 and 2016, Jin Mei has recorded $3,000 and $1,000 income from agency sales, respectively, which were included in “Other (expense) income, net” in the condensed consolidated statements of operations. In March 2012, our wholly-owned subsidiary, Beijing Tongmei Xtal Technology Co., Ltd. (“Tongmei”), entered into an operating lease for the land it owns with our consolidated joint venture, Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd. (“BoYu”). The lease agreement for the land of approximately 22,081 square feet commenced on January 1, 2012 for a term of 10 years with annual lease payments of $24,000 subject to a 5% increase at each third year anniversary. The annual lease payment is due by January 31 st of each year. Tongmei has paid certain amounts on behalf of Donghai County Dongfang High Purity Electronic Materials Co., Ltd. (“Dongfang”), its equity investment entity, to purchase materials. The original agreement was signed between Tongmei and Dongfang in 2014 and the date of repayment was set as December 31, 2015. In 2015, both parties agreed to delay the date of repayment to December 31, 2017. During the three months ended September 30, 2017, the repayment of principle and interest totaling $55,000 was received by our wholly-owned subsidiary. As of September 30, 2017, the balance of $57,000 was included in “Related party notes receivable – current”. As of December 31, 2016, the balance of $107,000 was included in “Related party notes receivable – long-term” in our condensed consolidated balance sheets. In April 2014, Tongmei loaned an additional $44,000 to Dongfang. The loan bears interest at 6.15% per annum and comes due on December 31, 2017. During the three months ended June 30, 2017, the repayment of the principal and interest totaling $53,000 was received by our wholly-owned subsidiary. As of September 30, 2017 and December 31, 2016, this balance, including both principal and accrued interest, was $0 and $50,000, respectively, and was included in “Related party notes receivable – long-term” in our condensed consolidated balance sheets. Tongmei also purchases raw materials from Dongfang for production in the ordinary course of business. As of September 30, 2017 and December 31, 2016, amounts payable of $0 and $210,000, respectively, were included in “Accounts payable” in our condensed consolidated balance sheets. Tongmei purchases raw materials from one of our equity investment entities, Emei Shan Jiamei Materials Co. Ltd. (“Jiamei”), for production in the ordinary course of business. As of September 30, 2017 and December 31, 2016, amounts payable of $0 and $377,000, respectively, were included in “Accounts payable” in our condensed consolidated balance sheets. Tongmei also purchases raw materials from one of our equity investment entities, Xilingol Tongli Germanium Refine Co. Ltd. (“Tongli”), for production in the ordinary course of business. As of September 30, 2017 and December 31, 2016, amounts payable of $433,000 and $246,000, respectively, were included in “Accounts payable” in our condensed consolidated balance sheets. In July 2017, Tongmei, provided an inter-company loan to JinMei in the amount of $751,000 in preparation for the acquisition of the land use rights and the construction of a new building. The inter-company loan carries an interest rate of 4.9% per annum and is due in three installments between December 2021 and December 2023. JinMei is in the process of relocating its headquarters and manufacturing operations to an alternative location. Currently, JinMei has identified a site as a possible candidate and the estimated costs for the land use rights acquisition and facility construction is expected to be approximately $6 million. In April 2016, our consolidated joint venture, BoYu, provided a personal loan of $177,000 to one of its executive employees. This loan is secured by the executive employee’s shares in BoYu. The loan bears interest at 2.75% per annum. Principal and accrued interest are due on March 31, 2019. During the three months ended June 30, 2017, the repayment of the principal and interest totaling $180,000 were received by our consolidated joint venture. As of September 30, 2017 and December 31, 2016, these balances, including both principal and accrued interest, were $0 and $179,000, respectively, and included in “Prepaid expenses and other current assets” in our condensed consolidated balance sheets. Tongmei also purchases raw materials from one of JiYa’s equity investment entities for production in the ordinary course of business. As of September 30, 2017 and December 31, 2016, amounts payable of $0 and $146,000, respectively, were included in “Accounts payable” in our condensed consolidated balance sheets. Beijing Kaide Quartz Co. Ltd. (“Kaide”) has been a supplier of customized quartz tubes to the Company since 2004. Beijing XiangHeMing Trade Co. Ltd. (“XiangHeMing”) is a significant shareholder of Kaide. XiangHeMing was previously owned by, among others, certain immediate family members of Davis Zhang, our former President, China Operations, until at least sometime in 2004, at which time the official Chinese government records indicate that Mr. Zhang’s immediate family members transferred their ownership of XiangHeMing to a third party. However, we are currently unable to conclusively determine whether Mr. Zhang’s immediate family members retained any economic interest in XiangHeMing after the transfer. As of September 30, 2017 and December 31, 2016, amounts payable to Kaide of $579,000 and $323,000, respectively, were included in “Accounts payable” in our condensed consolidated balance sheets. Our Related Party Transactions Policy seeks to prohibit all conflicts of interest in transactions between related parties and us, unless they have been approved by our Board of Directors. This policy applies to all of our employees, directors, and our consolidated subsidiaries. Our executive officers retain board seats on the board of directors of the companies in which we have invested in our China joint ventures. See Note 7 for further details.

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- Definition The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(k)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39603-107864 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39622-107864 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39678-107864 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39691-107864 + Details
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