Annual report pursuant to Section 13 and 15(d)

Equity Method Investment

v3.6.0.2
Equity Method Investment
12 Months Ended
Dec. 31, 2016
Equity Method Investment [Abstract]  
EQUITY METHOD INVESTMENT

NOTE 7 – EQUITY METHOD INVESTMENT

 

At December 31, 2016 and 2015, equity method investment amounted to $28,493,273 and $30,486,314, respectively. The investment represents the Company’s subsidiary, Pingtan Fishing’s interest in Global Deep Ocean. On June 12, 2014, Pingtan Fishing incorporated Global Deep Ocean with other two unrelated companies in PRC. Pingtan Fishing and the other two investing companies accounted for 35%, 29% and 36% of the total ownership, respectively. Total registered capital of Global Deep Ocean is RMB 1 billion (approximately $144.2 million) and Pingtan Fishing needs to contribute RMB 350 million (approximately $50.5 million). As of September 30, 2015, Pingtan Fishing had contributed RMB 348 million (approximately $50.2 million). No company holds 50% or more of the total shares. Global Deep Ocean will process, cold storage, and transport deep ocean fishing products.

 

The Company transferred 15% (RMB 150 million, approximately $21.6 million) of the total ownership in Global Deep Ocean to one of the other shareholders of Global Deep Ocean in December 2015. In the second half of December 2015, the Company received RMB 50 million (approximately $7.2 million) from the transferee. As of December 31, 2015, the receivable resulting from the 15% ownership transfer amounted to $15,406,659 (RMB 100 million) which is included in receivable from transferring equity method investment shares on the accompanying consolidated balance sheets. In January and February 2016, the Company received RMB 100 million (approximately $14.4 million) from the transferee. As a result of this transfer, the Company and the other two investing companies accounted for 20%, 44% and 36% of the total ownership, respectively. All of the three investing companies hold less than 50% of the total shares. The Company needs to contribute RMB 200 million (approximately $28.8 million), and as of December 31, 2016, the Company has contributed RMB 198 million (approximately $28.5 million).

 

The Company treats the equity investment in the consolidated financial statements under the equity method. Under the equity method, the investment is initially recorded at cost, adjusted for any excess of the Company’s share of the incorporated-date fair values of the investee’s identifiable net assets over the cost of the investment (if any). Thereafter, the investment is adjusted for the post incorporation change in the Company’s share of the investee’s net assets and any impairment loss relating to the investment. For the years ended December 31, 2016, 2015 and 2014, the Company’s share of Global Deep Ocean’s net loss was $33,073, $19,700 and $0, respectively, which was included in loss on equity method investment in the accompanying consolidated statements of operations and comprehensive (loss) income.

 

The tables below present the summarized financial information, as provided to the Company by the investee, for the unconsolidated company:

 

    December 31, 2016     December 31, 2015  
Current assets   $ 48,488,573     $ 52,216,844  
Noncurrent assets     4,335,801       4,404,656  
Current liabilities     18,007       14,945  
Noncurrent liabilities     -       -  
Equity     52,806,367       56,606,555  

 

    Year ended December 31,  
    2016     2015     2014  
Net revenue   $ -     $ -     $ -  
Gross profit     -       -       -  
Loss from operation     165,293       84,468       9,449  
Net loss     165,365       84,468       9,547