Quarterly report pursuant to Section 13 or 15(d)

Description of Business and Organization

v3.7.0.1
Description of Business and Organization
6 Months Ended
Jun. 30, 2017
Description of Business and Organization [Abstract]  
DESCRIPTION OF BUSINESS AND ORGANIZATION

NOTE 1 – DESCRIPTION OF BUSINESS AND ORGANIZATION

 

Pingtan Marine Enterprise Ltd. (the “Company” or “PME”), formerly China Growth Equity Investment Limited (“CGEI”), incorporated in the Cayman Islands as an exempted limited liability company, was incorporated as a blank check company on January 18, 2010 with the purpose of directly or indirectly acquiring, through a merger, share exchange, asset acquisition, plan of arrangement, recapitalization, reorganization or similar business combination, an operating business, or control of such operating business through contractual arrangements, that has its principal business and/or material operations located in the People’s Republic of China (“PRC”). In connection with its initial business combination, in February 2013, CGEI changed its name to Pingtan Marine Enterprise Ltd. 

 

On October 24, 2012, CGEI and China Dredging Group Co., Ltd (“CDGC” or “China Dredging”) entered into a Merger Agreement providing for the combination of CGEI and CDGC and on October 24, 2012, CGEI also acquired all of the outstanding capital shares and other equity interests of Merchant Supreme Co., Ltd. (“Merchant Supreme”), a company incorporated on June 25, 2012, in British Virgin Island (“BVI”), as per a Share Purchase Agreement.  On February 25, 2013, the merger between the Company, CDGC and Merchant Supreme became effective and was accounted for as a “reverse merger” and recapitalization since the common shareholders of CDGC and Merchant Supreme (i) owned a majority of the outstanding ordinary shares of the Company immediately following the completion of the transaction, and (ii) have significant influence and the ability to elect or appoint or to remove a majority of the members of the governing body of the combined entity. In accordance with the provision of Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 805-40, CDGC and Merchant Supreme are deemed the accounting acquirers and the Company is the legal acquirer in the transaction and, consequently, the transaction is treated as a recapitalization of the Company. The Company’s assets, liabilities and results of operations were consolidated with the assets, liabilities and results of operations of CDGC, Merchant Supreme and their subsidiaries subsequent to the acquisition date of February 25, 2013. Following the completion of the business combination which became effective on February 25, 2013, CDGC and Merchant Supreme became the wholly-owned subsidiaries of the Company.  The ordinary shares, par value $0.001 per share are listed on The NASDAQ Capital Market under the symbol “PME”.

 

In order to place increased focus on fishing business and pursue more effective growth opportunities, the Company decided to exit and sell the specialized dredging services operated by China Dredging; the Company completed the sale of CDGC and its subsidiaries on December 4, 2013.

 

On February 9, 2015, the Company terminated its existing Variable Interest Entity (“VIE”) agreements, pursuant to an Agreement of Termination dated February 9, 2015, entered into by and among Ms. Honghong Zhuo, Mr. Zhiyan Lin (each a shareholder of Fujian Provincial Pingtan County Ocean Fishing Group Co., Ltd (“Pingtan Fishing”), together the “Pingtan Fishing’s Shareholders”), Pingtan Fishing and Pingtan Guansheng Ocean Fishing Co., Ltd. (“Pingtan Guansheng”). On February 9, 2015, the Pingtan Fishing’s Shareholders transferred 100% of their equity interest in Pingtan Fishing to Fujian Heyue Marine Fishing Development Co., Ltd. (“Fujian Heyue”), pursuant to an Equity Transfer Agreement dated February 9, 2015, entered into by and among the Pingtan Fishing’s Shareholders, Pingtan Fishing and Fujian Heyue. On February 15, 2015, China Agriculture Industry Development Fund Co., Ltd. (“China Agriculture”) invested RMB 400 million (approximately $65 million) into Pingtan Fishing for an 8% equity interest in Pingtan Fishing. After the restructuring transactions described above, Pingtan Fishing and its entities became the 92% equity-owned subsidiaries of the Company and was no longer a VIE. 

 

Details of the Company’s subsidiaries which are included in these consolidated financial statements as of June 30, 2017 are as follows:

 

Name of subsidiaries   Place and date of incorporation   Percentage of ownership   Principal activities
Merchant Supreme Co., Ltd. 
(Merchant Supreme”)
  BVI, 
June 25, 2012
  100% held by PME   Intermediate holding 
company
             
Prime Cheer Corporation Ltd. 
(“Prime Cheer”)
  Hong Kong, 
May 3, 2012
  100% held by Merchant 
Supreme
  Intermediate holding 
company
             
Pingtan Guansheng Ocean Fishing Co., Ltd. 
(“Pingtan Guansheng”)
  PRC, 
October 12, 2012
  100% held by Prime 
Cheer
  Intermediate holding 
company
             
Fujian Heyue Marine Fishing Development Co., Ltd.
(“Fujian Heyue”)
  PRC, 
January 27, 2015
  100% held by Pingtan Guansheng   Intermediate holding company
             
 Fujian Provincial Pingtan County Fishing Group Co., Ltd.
(“Pingtan Fishing”)
  PRC, 
February 27, 1998
  92% held by Fujian Heyue   Oceanic fishing
             
 Pingtan Dingxin Fishing Information Consulting Co., Ltd.
(“Pingtan Dingxin”)
  PRC, 
October 23, 2012
  100% held by Pingtan Fishing   Dormant
             
 Pingtan Duoying Fishing Information Consulting Co., Ltd.
(“Pingtan Duoying”)
  PRC, 
October 23, 2012
  100% held by Pingtan Fishing   Dormant
             
 Pingtan Ruiying Fishing Information Consulting Co., Ltd.
(“Pingtan Ruiying”)
  PRC, 
October 23, 2012
  100% held by Pingtan Fishing   Dormant

 

Fujian Heyue, through its PRC subsidiary, Pingtan Fishing, engages in ocean fishing with its owned and licensed vessels within the Indian Exclusive Economic Zone, Indo-Pacific waters, Arafura Sea of Indonesia and the international waters of Atlantic and Pacific Oceans.

 

The Company meets its day-to-day working capital requirements through cash flow provided by operations, bank loans and related parties’ advances. The Indonesian government’s moratorium on fishing licenses renewals creates uncertainty over fishing operations in Indonesian waters. The Company’s forecasts and projections, taking account of on-going operations in Indo-pacific waters, Indian waters and international waters, consideration of opportunities in new fishing territories, shows that the Company has adequate resources to continue in operational existence for the foreseeable future.