Transactions with Affiliates
On November 29, 2016, the Board of Directors of Jerash Garments declared and approved a cash dividend of $6,000,000 to its parent company, Global Trend. On November 30, 2016, the Board of Directors of Global Trend declared and approved a cash dividend of $5,307,500 to its stockholders. Jerash Garments paid the dividend of $6,000,000 directly to Global Trend’s stockholders on December 14, 2016. The overpaid amount was treated as due from stockholders and was fully collected from stockholders on May 8, 2017. The amount due from stockholders was interest-free. As of March 31, 2019, there is no outstanding balance with respect to this overpaid dividend.
Until August 2016, substantially all of our sales were to Ford Glory, which Ford Glory then sold to the end customers. Ford Glory is 49% owned by Mr. Choi Lin Hung, our Chairman, Chief Executive Officer, President, Treasurer and a significant stockholder, through his wholly-owned entity, Merlotte. Thereafter, we began conducting business directly with our customers and no longer through our affiliate, Ford Glory. For fiscal 2018, $43,997,617, or approximately 63.5% of our net sales were made directly to our customers with the support of Ford Glory. For fiscal 2019, all sales were made directly to our customers, without Ford Glory’s support.
Pursuant to an agreement dated October 3, 2016 and until October 3, 2018, Treasure Success, our wholly-owned subsidiary, leased its office space in Hong Kong from Ford Glory at a rate of HK$21,600 (approximately $2,760) per month, with a one-year term and an option to extend the term for an additional year at the same rent. Beginning on October 3, 2018, Treasure Success and Ford Glory entered into a new lease agreement providing for rent in the amount of HK$119,540 (approximately $15,326) per month, with a one-year term and an option to extend the term for an additional year at the same rent. Entry into the 2018 lease agreement was approved by our disinterested directors.
Our wholly-owned subsidiary, Treasure Success, entered into an invoice discounting/factoring facility for $12,000,000 with HSBC on August 21, 2017, as amended on June 14, 2018, that is guaranteed by us, Jerash Garments, Treasure Success, Mr. Choi and Mr. Ng. The interests of Mr. Choi and Mr. Ng may differ from other stockholders of the Company as a result of their personal guarantees. The personal guarantees of Mr. Choi and Mr. Ng are expected to be released during calendar year 2019.
Private Placement
Timothy Murphy, our president, treasurer, secretary and director until May 2017, is the chief financial officer of Maxim Group LLC (“Maxim”). We engaged Maxim as the placement agent for a private placement of our securities in 2017 (the “Private Placement”). Pursuant to the terms of an engagement letter between Maxim and us, Maxim received commissions on the proceeds raised in the Private Placement in the aggregate amount of $355,500 and warrants (the “Maxim Warrants”). Pursuant to the terms of the engagement letter, Maxim was entitled to, and did elect to, have the Maxim Warrants issued into the names of its affiliates. In connection with the Private Placement, we issued Maxim Warrants to purchase 71,100 units, with each unit consisting of one share of our common stock and one warrant (with each such warrant being immediately exercisable for one-tenth of one share of common stock at an exercise price of $6.25 per share for a period of five years from the issuance date), at an exercise price of $5.50 per unit. In addition to its service as our placement agent, Maxim also provided merger advisory services to us in connection with the merger in which Jerash Garments became our wholly-owned subsidiary, for which we paid Maxim aggregate fees of $100,000.
In connection with the Private Placement, Karl Brenza, our current Head of US Operations, invested $250,000 in the Private Placement on a personal basis on the same terms as the other Private Placement investors. At the time of the Private Placement, Mr. Brenza was not an affiliate of the Company.
Agreements Relating to Contributions of Consultants
Eric Tang, who is the husband of our Vice President, Secretary and director, Ms. Yang, has provided us with consulting services since 2013 primarily in sales and marketing, including playing a critical role providing consulting services in connection with our transition from receiving purchase orders from Ford Glory to receiving purchase orders directly from VF Corporation, one of our major customers. On December 1, 2016, Mr. Tang entered into an employment agreement with our wholly-owned subsidiary,