Quarterly report pursuant to Section 13 or 15(d)

Commitments and Contingencies

v3.7.0.1
Commitments and Contingencies
6 Months Ended
Jun. 30, 2017
Commitments and Contingencies [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 15 – COMMITMENTS AND CONTINGENCIES

 

Severance payments

 

The Company has employment agreements with certain employees that provided severance payments upon termination of employment under certain circumstances, as defined in the applicable agreements. The Company has estimated its possible severance payments of approximately $10,000 as of June 30, 2017 and December 31, 2016, which have not been reflected in its consolidated financial statements.

 

Operating lease

 

See note 10 for related party operating lease commitment.

 

Rental payment and related administrative service charge

 

See note 10 for related party rental and related administrative service agreement commitment.

 

Fishing vessels construction agreement

 

In December 2015, Hong Long entered into an agreement with Fujian Xinchang Ship Construction Co., Ltd. (“Xinchang”) related to the construction of 4 fishing vessels (“Xinchang Construction Agreement”). The agreement expired in October 2016. In March 2016, Pingtan Fishing and Hong Long and Xinchang entered into a Three-party Agreement. According to the Three-party Agreement, Hong Long assigned all of its rights and obligations related to the Xinchang Construction Agreement to Pingtan Fishing. The project requires a total investment of RMB 140 million (approximately $20.3 million). The funds are required to be invested over the construction period of the project. As of June 30, 2017 and December 31, 2016, Pingtan Fishing has paid RMB 135.5 million (approximately $20.0 million) and RMB 133.0 million (approximately $19.2 million) of the total investment that was recorded as property, plant and equipment and prepayment for long-term assets on the accompanying consolidated balance sheets, respectively.

 

Fishing vessels purchase agreement

 

On March 28, 2017, the Company entered into an agreement with Hong Long related to the purchase of 5 vessels. The purchase price for these 5 vessels is approximately $38.5 million. As of June 30, 2017, the Company has paid approximately $36.1 million and the remaining balance of approximately $2.4 was included in accrued liabilities and other payables – related party on the accompanying consolidated balance sheets.