| ADVANCES TO SUPPLIERS |
Note 4. ADVANCES TO SUPPLIERS
| | |
June 30, | | |
June 30, | |
| The Company’s advances to suppliers – third parties are as follows: | |
2018 | | |
2017 | |
| | |
| | |
| |
| Deposit for ERP (1) | |
$ | 437,357 | | |
$ | - | |
| Deposit for IT infrastructure (2) | |
| 1,002,750 | | |
| - | |
| Freight fees (3) | |
| 564,365 | | |
| 29,960 | |
| Other | |
| 140,513 | | |
| 24,930 | |
| Total advances to suppliers-third parties | |
$ | 2,144,985 | | |
$ | 54,890 | |
| (1) | On December 27, 2017, with the approval of the Board, the Company signed a contract with Tianjin Anboweiye
Technology Ltd Co. (“Tianjin Anboweiye”), to develop a more complete ERP system based on the Company’s current
operations and projected future growth. In March 2018, the Company paid a deposit to start phase one of the development which includes
upgraded accounting and human resources modules, new order processing and customer relationship management system. The Company
paid a $437,357 deposit to Tianjin Anboweiye as of June 30, 2018. The total contract price for phase one amounted to RMB 4,000,000,
approximately USD 615,000. The project is currently in the planning and design stage. The Company expects the planning stage will
be completed in and will start development in October 2018. The remaining balance will be settled upon completion of services in
fiscal year 2021. |
| (2) | On June 22, 2018, the Company entered into contract to improve its IT infrastructure. The total
contract for the services is $1.2 million and the Company paid a deposit of $1.0 million. The contract includes four parts: $420,000
for hardware leasing of twelve months; $480,000 for onsite services and IT consulting for a two year period; $60,000 for operating
system set up and $240,000 for continuing integration and with the ERP system and data management for two years. The system is
expected to be installed in October 2018. |
| (3) | The prepaid freight fee is the Company’s advances made for various shipping cost for shipments in
July 2018. |
| | |
June 30, | | |
June 30, | |
| The Company’s advances to suppliers – related party are as follows: | |
2018 | | |
2017 | |
| | |
| | |
| |
| Freight fees | |
$ | 3,414,619 | | |
$ | 3,333,038 | |
| Total advances to suppliers-related party | |
$ | 3,414,619 | | |
$ | 3,333,038 | |
On February 18, 2017,
the Company entered into a cooperative transportation agreement with a related party, Zhiyuan International Investment & Holding
Group (Hong Kong) Co., Ltd. (the “Buyer” or “Zhiyuan Hong Kong”). Zhiyuan Hong Kong, which is jointly owned
by the Company’s largest shareholder along with China Minmetals Corporation and China Metallurgical Group Corporation, acts
as the general designer, general equipment provider and general service contractor in the upgrade and renovation project of Perwaja
Steel, located in Malaysia (the “Project”). The Company agreed to provide high-quality services, including the design
of a detailed transportation plan as well as execution and necessary supervision of the plan at Zhiyuan Hong Kong’s demand,
for which the Company will receive a 1% to 1.25% transportation fee incurred in the Project as a commission for its services rendered.
On July 7, 2017, the Company signed a supplemental agreement with the Buyer, to which the Company will cooperate with Zhiyuan Hong
Kong exclusively on the entire Project’s transportation needs with respect to transporting construction materials from manufacturers
to the port of Malaysia and to the factory site. Pursuant to the supplemental agreement, the Company agrees to make prepayments
to Zhiyuan Hong Kong for its share of packaging and transporting costs related to the Project; in return, the Company will receive
15% of the cost incurred in the Project from Zhiyuan Hong Kong as a service fee. As of June 2018, the Company has completed its
services pursuant to the supplemental agreement and received a $ 575,115 service fee in June 2018. The Company also expects that
the entire advance will be reimbursed by October 2018.
|