Annual report pursuant to Section 13 and 15(d)

Property, Plant and Equipment

Property, Plant and Equipment
12 Months Ended
Dec. 31, 2015
Property, Plant and Equipment [Abstract]  



At December 31, 2015 and 2014, property, plant and equipment consisted of the following:


    Useful life     December 31, 2015     December 31, 2014  
Fishing vessels     10 - 20 Years     $ 108,182,380     $ 98,395,721  
Vehicles     5 Years       129,824       137,273  
Office and other equipment     3 – 5 Years       1,215,692       1,269,089  
Fishing vessels under construction     -       -       19,356,241  
              109,527,896       119,158,324  
Less: accumulated depreciation             (14,972,782 )     (9,177,707 )
            $ 94,555,114     $ 109,980,617  


For the years ended December 31, 2015, 2014 and 2013, depreciation expense amounted to $6,353,055, $6,017,886 and $2,394,692, respectively, of which $6,120,248, $5,988,845 and $2,368,010, respectively, was included in cost of revenue and inventories, and the remainder was included in general and administrative expense, respectively.


The vessels under construction are not subject to depreciation. Upon completion of the construction, fishing vessels under construction balances will be reclassified to fishing vessels.


On June 26, 2015, the Company acquired 6 fishing vessels for the appraised fair market value of approximately $56.2 million from Fuzhou Yishun Deep-Sea Fishing Co., Ltd. (“Yishun”) and Fuzhou Honglong Ocean Fishery Co., Ltd. (“Hong Long”), two related parties under common control. Accordingly, the transaction between the Company and these two related parties was accounted as a common control transaction pursuant to ASC 805-50 and it related subsections. Based on Accounting Standards Codification (“ASC”) 805-50, the Company recorded the value of $0 as the cost of the vessels since the 6 vessels had been fully depreciated in Hong Long and Yishun’s books at the date of transfer. The balance of approximately $56.2 million above cost was treated as a return of capital in the equity accounts and was recorded as a reduction in additional paid-in capital.


At December 31, 2015 and 2014, the Company had 28 and 33 fishing vessels with net carrying amount of approximately $22.3 million and $28.6 million, respectively, pledged as collateral for its bank loans.