Annual report pursuant to Section 13 and 15(d)

Commitments and Contingencies

v3.3.1.900
Commitments and Contingencies
12 Months Ended
Dec. 31, 2015
Commitments and Contingencies [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 17 – 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 December 31, 2015 and 2014, which have not been reflected in its consolidated financial statements.

 

Class action

 

On January 14, 2015, a purported class action was filed by Paul Fila, individually and on behalf of all others similarly situated, against the Company and certain of its executive officers and directors in the U.S. District Court for the Southern District of New York. As with any litigation proceeding, the Company cannot predict with certainty the eventual outcome of any outstanding legal actions. The Company expects to incur expenses in connection with the defense of this lawsuit, and it may have to pay damages or settlement costs in connection with any resolution thereof.

 

Operating lease

 

See note 12 for related party operating lease commitment.

 

Rental payment and related administrative service charge

 

See note 12 for related party rental and related administrative service agreement commitment.

 

Equity investment commitment

 

On June 12, 2014, Pingtan Fishing incorporated an equity investment with two companies for the fishery processing purpose. Total registered capital of the equity investment is approximately $154.1 million (RMB 1 billion) and Pingtan Fishing accounted for 35% of the total ownership. Accordingly, Pingtan Fishing has the obligation to contribute approximately $53.9 million (RMB 350 million) as the equity investment’s registered capital. In the fourth quarter of 2015, Pingtan fishing transferred 15% of the total ownership to a third party. Therefore, Pingtan Fishing has the obligation to contribute approximately $30.8 million (RMB 200 million) as the equity investment’s registered capital. As of December 31, 2015, the Pingtan Fishing has contributed approximately $30.5 million (RMB 198 million) as registered capital that was recorded as equity method investment on the accompanying consolidated balance sheets. Pingtan Fishing intends to use its present working capital together with bank loans to fund the project cost.