x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Cayman Islands
|
001-35192
|
N/A
|
|
(State or Other Jurisdiction
|
(Commission
|
(I.R.S. Employer
|
|
of Incorporation or Organization)
|
File Number)
|
Identification No.)
|
Title of each class
|
|
Name of each exchange on which registered
|
Ordinary Shares, $0.001 par value
|
|
The NASDAQ Capital Market
|
Large accelerated filer
|
¨
|
|
|
Accelerated filer
|
x
|
|
|
|
|
|
|
Non-accelerated filer
|
¨
|
|
|
Smaller reporting company
|
¨
|
|
|
Page
|
|
PART I
|
|
|
|
|
Item 1.
|
Business
|
4
|
Item 1A.
|
Risk Factors
|
12
|
Item 1B.
|
Unresolved Staff Comments
|
26
|
Item 2.
|
Properties
|
26
|
Item 3.
|
Legal Proceedings
|
27
|
Item 4.
|
Mine Safety Disclosure
|
27
|
|
|
|
|
PART II
|
|
|
|
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
28
|
Item 6.
|
Selected Financial Data
|
29
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
31
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
43
|
Item 8.
|
Financial Statements and Supplementary Data
|
44
|
Item 9.
|
Changes in and Disagreements With Accountants on Accounting and Financial Disclosures
|
44
|
Item 9A.
|
Controls and Procedures
|
44
|
Item 9B
|
Other Information
|
49
|
|
|
|
|
PART III
|
|
|
|
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
50
|
Item 11.
|
Executive Compensation
|
50
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
50
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
51
|
Item 14.
|
Principal Accounting Fees and Services
|
51
|
|
|
|
|
PART IV
|
|
|
|
|
Item 15.
|
Exhibits, Financial Statement Schedules
|
52
|
SIGNATURES
|
|
54
|
2 | ||
|
|
•
|
anticipated growth and growth strategies;
|
• | need for additional capital and the availability of financing; |
• | our ability to successfully manage relationships with customers, distributors and other important relationships;; |
• | technological changes; |
• | competition; |
• | demand for our products and services; |
• | the deterioration of general economic conditions, whether internationally, nationally or in the local markets in which we operate; |
• | legislative or regulatory changes that may adversely affect our business; and |
|
•
|
other risks, including those described in the “Risk Factors” discussion of this annual report.
|
3 | ||
|
4 | ||
|
5 | ||
|
|
|
Storage Capacity
|
|
|
|
Cold Storage
|
|
(sq. meters)
|
|
Monthly rent
|
|
#301
|
|
1,045
|
|
13,613
|
|
#302
|
|
717
|
|
9,340
|
|
#602
|
|
717
|
|
9,340
|
|
#103
|
|
776
|
|
10,109
|
|
#303
|
|
1,045
|
|
13,613
|
|
#401
|
|
1,045
|
|
13,613
|
|
#402
|
|
717
|
|
9,340
|
|
#403
|
|
1,045
|
|
13,613
|
|
Total
|
|
7,107
|
|
92,581
|
|
6 | ||
|
7 | ||
|
8 | ||
|
|
|
Number of Employees
|
|
% of Total
|
|
|
Management and administrative staff
|
|
|
45
|
|
2.9
|
%
|
Crew members
|
|
|
1,490
|
|
97.1
|
%
|
Total
|
|
|
1,535
|
|
100.0
|
%
|
9 | ||
|
10 | ||
|
11 | ||
|
12 | ||
|
13 | ||
|
14 | ||
|
15 | ||
|
17 | ||
|
18 | ||
|
19 | ||
|
20 | ||
|
21 | ||
|
22 | ||
|
23 | ||
|
24 | ||
|
¨ |
a limited availability of market quotations for our ordinary shares;
|
¨ |
a determination that our ordinary shares is a “penny stock” would require brokers trading in our ordinary shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our ordinary shares;
|
¨ |
a limited amount of analyst coverage; and
|
25 | ||
|
¨ |
a decreased ability to issue additional securities or obtain additional financing in the future.
|
26 | ||
|
|
|
Storage Capacity
|
|
|
|
Cold Storage
|
|
(sq. meters)
|
|
Monthly rent
|
|
#301
|
|
1,045
|
|
13,613
|
|
#302
|
|
717
|
|
9,340
|
|
#602
|
|
717
|
|
9,340
|
|
#103
|
|
776
|
|
10,109
|
|
#303
|
|
1,045
|
|
13,613
|
|
#401
|
|
1,045
|
|
13,613
|
|
#402
|
|
717
|
|
9,340
|
|
#403
|
|
1,045
|
|
13,613
|
|
Total
|
|
7,107
|
|
92,581
|
|
From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We are not currently a party to any litigation the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our business, operating results, cash flows or financial condition.
|
27 | ||
|
|
|
Ordinary Shares
|
|
|
Warrants
|
|
|||||||
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
12.49
|
|
$
|
9.00
|
|
$
|
0.49
|
|
$
|
0.23
|
|
Second Quarter
|
|
$
|
10.12
|
|
$
|
3.49
|
|
$
|
0.35
|
|
$
|
0.25
|
|
Third Quarter
|
|
$
|
3.89
|
|
$
|
1.44
|
|
$
|
0.25
|
|
$
|
0.05
|
|
Fourth Quarter
|
|
$
|
3.97
|
|
$
|
1.81
|
|
$
|
0.15
|
|
$
|
0.10
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
9.82
|
|
$
|
9.54
|
|
$
|
0.55
|
|
$
|
0.49
|
|
Second Quarter
|
|
$
|
9.80
|
|
$
|
9.60
|
|
$
|
0.55
|
|
$
|
0.51
|
|
Third Quarter
|
|
$
|
10.36
|
|
$
|
9.36
|
|
$
|
0.51
|
|
$
|
0.24
|
|
Fourth Quarter
|
|
$
|
10.36
|
|
$
|
9.82
|
|
$
|
0.25
|
|
$
|
0.20
|
|
28 | ||
|
|
|
Year Ended December 31,
|
|
||||||||||||||||||
|
|
|
2013
|
|
|
|
|
|
|
2012
|
|
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
US$
|
|
|
% of Revenue
|
|
|
|
US$
|
|
|
% of Revenue
|
|
|
|
US$
|
|
|
% of Revenue
|
|
|
|
( in thousands, except for percentages, per share and operating data)
|
|
||||||||||||||||||
Consolidated Statement of Income Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ribbon fish
|
|
$
|
47,169
|
|
|
38.5
|
%
|
|
$
|
29,163
|
|
|
43.2
|
%
|
|
$
|
12,800
|
|
|
50.0
|
%
|
Indian white shrimp
|
|
|
20,859
|
|
|
17.0
|
%
|
|
|
9,659
|
|
|
14.3
|
%
|
|
|
9
|
|
|
-
|
|
Croaker fish
|
|
|
15,242
|
|
|
12.4
|
%
|
|
|
8,306
|
|
|
12.3
|
%
|
|
|
3,014
|
|
|
11.8
|
%
|
Pomfret
|
|
|
10,022
|
|
|
8.2
|
%
|
|
|
2,283
|
|
|
3.4
|
%
|
|
|
417
|
|
|
1.6
|
%
|
Red fish
|
|
|
3,575
|
|
|
2.9
|
%
|
|
|
726
|
|
|
1.1
|
%
|
|
|
-
|
|
|
-
|
|
Threadfin
|
|
|
3,379
|
|
|
2.8
|
%
|
|
|
596
|
|
|
0.9
|
%
|
|
|
-
|
|
|
-
|
|
Others
|
|
|
22,422
|
|
|
18.2
|
%
|
|
|
16,728
|
|
|
24.8
|
%
|
|
|
7,976
|
|
|
31.2
|
%
|
Rental
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
1,385
|
|
|
5.4
|
%
|
Total Revenue
|
|
|
122,668
|
|
|
100.0
|
%
|
|
|
67,461
|
|
|
100.0
|
%
|
|
|
25,601
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel cost
|
|
|
46,562
|
|
|
38.0
|
%
|
|
|
28,113
|
|
|
41.7
|
%
|
|
|
8,564
|
|
|
33.4
|
%
|
Freight
|
|
|
9,055
|
|
|
7.4
|
%
|
|
|
4,893
|
|
|
7.2
|
%
|
|
|
2,017
|
|
|
7.9
|
%
|
Labor cost
|
|
|
6,475
|
|
|
5.3
|
%
|
|
|
3,072
|
|
|
4.6
|
%
|
|
|
1,008
|
|
|
3.9
|
%
|
Maintenance fee
|
|
|
3,761
|
|
|
3.0
|
%
|
|
|
2,675
|
|
|
4.0
|
%
|
|
|
1,604
|
|
|
6.3
|
%
|
Spare parts
|
|
|
3,759
|
|
|
3.0
|
%
|
|
|
1,189
|
|
|
1.8
|
%
|
|
|
770
|
|
|
3.0
|
%
|
Depreciation and amortization
|
|
|
3,649
|
|
|
3.0
|
%
|
|
|
441
|
|
|
0.6
|
%
|
|
|
438
|
|
|
0.5
|
%
|
License fee
|
|
|
1,565
|
|
|
1.3
|
%
|
|
|
1,059
|
|
|
1.6
|
%
|
|
|
122
|
|
|
0.3
|
%
|
Service fee
|
|
|
934
|
|
|
0.8
|
%
|
|
|
434
|
|
|
0.6
|
%
|
|
|
78
|
|
|
1.7
|
%
|
Total cost of Revenue
|
|
|
75,760
|
|
|
61.8
|
%
|
|
|
41,876
|
|
|
62.1
|
%
|
|
|
14,601
|
|
|
57.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
46,908
|
|
|
38.2
|
%
|
|
|
25,585
|
|
|
37.9
|
%
|
|
|
11,000
|
|
|
43.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses
|
|
|
(1,618)
|
|
|
(1.3)
|
%
|
|
|
(648)
|
|
|
(1.0)
|
%
|
|
|
(384)
|
|
|
(1.5)
|
%
|
Admin expenses
|
|
|
(3,192)
|
|
|
(2.6)
|
%
|
|
|
(2,840)
|
|
|
(4.2)
|
%
|
|
|
(251)
|
|
|
(1.0)
|
%
|
Operating income from continuing operations
|
|
|
42,098
|
|
|
34.3
|
%
|
|
|
22,097
|
|
|
32.7
|
%
|
|
|
10,365
|
|
|
40.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
45,489
|
|
|
37.1
|
%
|
|
|
21,298
|
|
|
31.6
|
%
|
|
|
10,440
|
|
|
40.8
|
%
|
Income tax
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
Net income from continuing operations
|
|
|
45,489
|
|
|
37.1
|
%
|
|
|
21,298
|
|
|
31.6
|
%
|
|
|
10,440
|
|
|
40.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from discontinued operations, net of taxes
|
|
|
51,910
|
|
|
|
|
|
|
84,494
|
|
|
|
|
|
|
90,258
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income
|
|
$
|
97,399
|
|
|
|
|
|
$
|
105,792
|
|
|
|
|
|
$
|
100,698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From continuing operations
|
|
$
|
0.58
|
|
|
|
|
|
$
|
0.27
|
|
|
|
|
|
$
|
0.13
|
|
|
|
|
From discontinued operations
|
|
|
0.65
|
|
|
|
|
|
|
1.07
|
|
|
|
|
|
|
1.14
|
|
|
|
|
Net income
|
|
$
|
1.23
|
|
|
|
|
|
$
|
1.34
|
|
|
|
|
|
$
|
1.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Consolidated Financial Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit margin
|
|
|
38.2
|
%
|
|
|
|
|
|
37.9
|
%
|
|
|
|
|
|
43.0
|
%
|
|
|
|
Operating profit margin
|
|
|
34.3
|
%
|
|
|
|
|
|
32.7
|
%
|
|
|
|
|
|
40.5
|
%
|
|
|
|
Net profit margin
|
|
|
37.1
|
%
|
|
|
|
|
|
31.6
|
%
|
|
|
|
|
|
40.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales volume (kg)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ribbon fish
|
|
|
19,249,641
|
|
|
|
|
|
|
15,229,701
|
|
|
|
|
|
|
9,522,550
|
|
|
|
|
Indian white shrimp
|
|
|
3,041,471
|
|
|
|
|
|
|
1,275,801
|
|
|
|
|
|
|
1,400
|
|
|
|
|
Croaker fish
|
|
|
6,817,575
|
|
|
|
|
|
|
4,740,661
|
|
|
|
|
|
|
1,958,600
|
|
|
|
|
Pomfret
|
|
|
4,249,796
|
|
|
|
|
|
|
1,318,409
|
|
|
|
|
|
|
286,000
|
|
|
|
|
Red fish
|
|
|
795,835
|
|
|
|
|
|
|
221,250
|
|
|
|
|
|
|
-
|
|
|
|
|
Threadfin
|
|
|
1,025,272
|
|
|
|
|
|
|
205,560
|
|
|
|
|
|
|
-
|
|
|
|
|
Others
|
|
|
7,991,721
|
|
|
|
|
|
|
6,223,249
|
|
|
|
|
|
|
3,330,871
|
|
|
|
|
Average selling price ($ per kg)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ribbon fish
|
|
|
2.45
|
|
|
|
|
|
|
1.91
|
|
|
|
|
|
|
1.34
|
|
|
|
|
Indian white shrimp
|
|
|
6.86
|
|
|
|
|
|
|
7.57
|
|
|
|
|
|
|
6.43
|
|
|
|
|
Croaker fish
|
|
|
2.24
|
|
|
|
|
|
|
1.75
|
|
|
|
|
|
|
1.54
|
|
|
|
|
Pomfret
|
|
|
2.36
|
|
|
|
|
|
|
1.73
|
|
|
|
|
|
|
1.46
|
|
|
|
|
Red fish
|
|
|
4.49
|
|
|
|
|
|
|
3.28
|
|
|
|
|
|
|
-
|
|
|
|
|
Threadfin
|
|
|
3.30
|
|
|
|
|
|
|
2.90
|
|
|
|
|
|
|
-
|
|
|
|
|
Others
|
|
|
2.81
|
|
|
|
|
|
|
2.69
|
|
|
|
|
|
|
2.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
8,157
|
|
|
|
|
|
$
|
10,426
|
|
|
|
|
|
$
|
1,795
|
|
|
|
|
Accounts receivable
|
|
|
9,133
|
|
|
|
|
|
|
11,478
|
|
|
|
|
|
|
5,455
|
|
|
|
|
Inventories
|
|
|
9,096
|
|
|
|
|
|
|
194
|
|
|
|
|
|
|
2,572
|
|
|
|
|
Property, plant and equipment
|
|
|
107,178
|
|
|
|
|
|
|
37,142
|
|
|
|
|
|
|
6,368
|
|
|
|
|
Total assets
|
|
$
|
357,949
|
|
|
|
|
|
$
|
484,010
|
|
|
|
|
|
$
|
358,683
|
|
|
|
|
Secured short-term bank loans and current portion of long-term bank loans
|
|
$
|
29,337
|
|
|
|
|
|
$
|
33,264
|
|
|
|
|
|
$
|
21,691
|
|
|
|
|
Total liabilities and commitments
|
|
|
105,711
|
|
|
|
|
|
|
83,711
|
|
|
|
|
|
|
124,309
|
|
|
|
|
Total shareholders’ equity
|
|
|
252,237
|
|
|
|
|
|
|
400,299
|
|
|
|
|
|
|
234,374
|
|
|
|
|
Total liabilities and shareholders’ equity
|
|
$
|
357,949
|
|
|
|
|
|
$
|
484,010
|
|
|
|
|
|
$
|
358,683
|
|
|
|
|
30 | ||
|
31 | ||
|
|
|
For the Years Ended December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
Guangdong Province
|
|
46
|
%
|
55
|
%
|
45
|
%
|
Fujian Province
|
|
26
|
%
|
27
|
%
|
39
|
%
|
Zhejiang Province
|
|
17
|
%
|
11
|
%
|
9
|
%
|
Shandong Province
|
|
4
|
%
|
4
|
%
|
4
|
%
|
Liaoning Province
|
|
2
|
%
|
2
|
%
|
2
|
%
|
Other areas
|
|
5
|
%
|
1
|
%
|
1
|
%
|
Total
|
|
100
|
%
|
100
|
%
|
100
|
%
|
¨ |
Governmental Policies:
Fishing is a highly regulated industry and our operations require licenses and permits. Our ability to obtain, sustain or renew such licenses and permits on acceptable terms is subject to changes in regulations and policies and is at the discretion of the applicable governments. Our inability to obtain, or loss or denial of extensions, to any of its applicable licenses or permits could hamper our ability to generate revenues from its operations.
|
32 | ||
|
¨ |
Resource & Environmental Factors:
Our fishing expeditions are based in India and Indonesia. Any earthquake, tsunami, adverse weather or oceanic conditions or other calamities in such areas may result in disruption to our operations and could adversely affect our sales. Adverse weather conditions such as storms, cyclones and typhoons or cataclysmic events may also decrease the volume of fish catches or may even hamper our operations. Our fishing volumes may also be adversely affected by major climatic disruptions such as El Nino, which in the past has caused significant decreases in seafood catch worldwide. Besides weather patterns, other unpredictable factors, such as fish migration, may also have impact our harvest volume.
|
¨ |
Fluctuation on Fuel Prices:
Our operations may be adversely affected by fluctuations in fuel prices. Changes in fuel prices may ultimately result in increases in the selling prices of our products, and may, in turn, adversely affect our sales volume, revenue and operating profit.
|
¨ |
Competition:
We engage in fishing business in the Arafura Sea in Indonesia and the Bay of Bengal in India. Competition within our dedicated fishing areas is not significant as the region is not overfished and regulated by the government, which limits the number of vessels that are allowed to fish in the territories. Competition in the market in China is high, as fish compete with other sources of protein. We compete with other fishing companies which offer similar and varied products. There is significant demand for fish in the Chinese market. Our catch appeals to a wide segment of consumers because of the low price points of our products. We have been able to sell our catch at market prices and such market prices were quite stable during 2010 and 2011, but increased significantly during 2012 and 2013.
|
¨ |
Fishing Licenses
: Each of our fishing vessels requires an approval from the Ministry of Agriculture of the People’s Republic of China to carry out ocean fishing projects in foreign territories. These approvals are valid for a period of three to twelve months, and are awarded to us at no cost. We apply for the renewal of the approval prior to expiration to avoid interruptions of our fishing vessels’ operations. Each of our fishing vessels operating in Indonesian waters requires a fishing license granted by the authority in Indonesia. Indonesian fishing licenses remain effective for a period of twelve months and we apply for renewal upon expiration. We record cost of Indonesian fishing licenses in prepaid expenses and amortize the cost over the effective period of the licenses.
|
33 | ||
|
34 | ||
|
|
|
For the Years Ended December 31,
|
|
|||||||||||||||||
|
|
2013
|
|
|
2012
|
|
||||||||||||||
|
|
|
|
|
|
|
Average
|
|
% of
|
|
|
|
|
|
|
|
Average
|
|
% of
|
|
|
|
Revenue
|
|
Volume(KG)
|
|
price
|
|
Revenue
|
|
|
Revenue
|
|
Volume(KG)
|
|
price
|
|
Revenue
|
|
||
Ribbon fish
|
|
$
|
47,169
|
|
19,249,641
|
|
2.45
|
|
38.5
|
%
|
|
$
|
29,163
|
|
15,229,701
|
|
1.91
|
|
43.2
|
%
|
Indian white shrimp
|
|
|
20,859
|
|
3,041,471
|
|
6.86
|
|
17.0
|
%
|
|
|
9,659
|
|
1,275,801
|
|
7.57
|
|
14.3
|
%
|
Croaker fish
|
|
|
15,242
|
|
6,817,575
|
|
2.24
|
|
12.4
|
%
|
|
|
8,306
|
|
4,740,661
|
|
1.75
|
|
12.3
|
%
|
Pomfret
|
|
|
10,022
|
|
4,249,796
|
|
2.36
|
|
8.2
|
%
|
|
|
2,283
|
|
1,318,409
|
|
1.73
|
|
3.4
|
%
|
Red fish
|
|
|
3,575
|
|
795,835
|
|
4.49
|
|
2.9
|
%
|
|
|
726
|
|
221,250
|
|
3.28
|
|
1.1
|
%
|
Threadfin
|
|
|
3,379
|
|
1,025,272
|
|
3.30
|
|
2.8
|
%
|
|
|
596
|
|
205,560
|
|
2.90
|
|
0.9
|
%
|
Others
|
|
|
22,422
|
|
7,991,721
|
|
2.81
|
|
18.2
|
%
|
|
|
16,728
|
|
6,223,249
|
|
2.69
|
|
24.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
122,668
|
|
43,171,311
|
|
2.84
|
|
100.0
|
%
|
|
$
|
67,461
|
|
29,214,631
|
|
2.31
|
|
100.0
|
%
|
|
|
For the Years Ended December 31
|
|
Prencentage
|
|
|
||||||||
|
|
2013
|
|
2012
|
|
Change
|
|
|
||||||
|
|
|
|
|
% of
|
|
|
|
|
% of
|
|
|
|
|
|
|
|
US$
|
|
Revenue
|
|
|
US$
|
|
Revenue
|
|
%
|
|
|
Revenue
|
|
$
|
122,668
|
|
100.0
|
%
|
$
|
67,461
|
|
100.0
|
%
|
81.8
|
|
%
|
Cost of sales
|
|
|
75,760
|
|
61.8
|
%
|
|
41,876
|
|
62.1
|
%
|
80.9
|
|
%
|
Gross profit
|
|
$
|
46,908
|
|
38.2
|
%
|
$
|
25,585
|
|
37.9
|
%
|
83.3
|
|
%
|
|
|
For the Years Ended December 31,
|
|
|||||||||||||||
|
|
2013
|
|
|
2012
|
|
||||||||||||
|
|
US$
|
|
% of COS
|
|
|
% of Revenue
|
|
|
US$
|
|
% of COS
|
|
|
% of Revenue
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel cost
|
|
$
|
46,562
|
|
61.4
|
%
|
|
38.0
|
%
|
|
$
|
28,113
|
|
67.1
|
%
|
|
41.7
|
%
|
Freight
|
|
|
9,055
|
|
12.0
|
%
|
|
7.4
|
%
|
|
|
4,893
|
|
11.7
|
%
|
|
7.2
|
%
|
Labor cost
|
|
|
6,475
|
|
8.5
|
%
|
|
5.3
|
%
|
|
|
3,072
|
|
7.3
|
%
|
|
4.6
|
%
|
Maintenance fee
|
|
|
3,761
|
|
5.0
|
%
|
|
3.0
|
%
|
|
|
2,675
|
|
6.4
|
%
|
|
4.0
|
%
|
Spare parts
|
|
|
3,759
|
|
5.0
|
%
|
|
3.0
|
%
|
|
|
1,189
|
|
2.8
|
%
|
|
1.8
|
%
|
Depreciation and amortization
|
|
|
3,649
|
|
4.8
|
%
|
|
3.0
|
%
|
|
|
441
|
|
1.1
|
%
|
|
0.6
|
%
|
License fee
|
|
|
1,565
|
|
2.1
|
%
|
|
1.3
|
%
|
|
|
1,059
|
|
2.5
|
%
|
|
1.6
|
%
|
Service fee
|
|
|
934
|
|
1.2
|
%
|
|
0.8
|
%
|
|
|
434
|
|
1.1
|
%
|
|
0.6
|
%
|
Total cost of sales
|
|
$
|
75,760
|
|
100.0
|
%
|
|
61.8
|
%
|
|
$
|
41,876
|
|
100.0
|
%
|
|
62.1
|
%
|
35 | ||
|
|
|
For the Years Ended December 31,
|
|
|
Percentage
|
|
|||||||||
|
|
2013
|
|
|
2012
|
|
|
Change
|
|
||||||
|
|
|
|
|
% of
|
|
|
|
|
|
% of
|
|
|
|
|
|
|
|
US$
|
|
Revenue
|
|
|
|
US$
|
|
Revenue
|
|
|
%
|
|
Gross profit
|
|
$
|
46,908
|
|
38.2
|
%
|
|
$
|
25,585
|
|
37.9
|
%
|
|
83.3
|
%
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses
|
|
|
(1,618)
|
|
(1.3)
|
%
|
|
|
(648)
|
|
(1.0)
|
%
|
|
149.8
|
%
|
General & administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legal and professional fees
|
|
|
(1,541)
|
|
(1.3)
|
%
|
|
|
(2,741)
|
|
(4.0)
|
%
|
|
(43.8)
|
%
|
Salaries and staff welfare
|
|
|
(637)
|
|
(0.5)
|
%
|
|
|
(179)
|
|
(0.3)
|
%
|
|
255.4
|
%
|
Service fee
|
|
|
(231)
|
|
(0.2)
|
%
|
|
|
-
|
|
-
|
|
|
-
|
|
Others
|
|
|
(783)
|
|
(0.6)
|
%
|
|
|
80
|
|
0.1
|
%
|
|
(1079.6)
|
%
|
Total G&A expenses
|
|
|
(3,192)
|
|
(2.6)
|
%
|
|
|
(2,840)
|
|
(4.2)
|
%
|
|
12.4
|
%
|
Total SG&A expenses
|
|
|
(4,810)
|
|
(3.9)
|
%
|
|
|
(3,488)
|
|
(5.2)
|
%
|
|
37.9
|
%
|
Income from operations
|
|
$
|
42,098
|
|
34.3
|
%
|
|
$
|
22,097
|
|
32.7
|
%
|
|
90.5
|
%
|
For the Years Ended December 31,
|
|
||||||||||||||||
2013
|
|
2012
|
|
||||||||||||||
Revenue
|
|
Net income
|
Net margin
|
|
Revenue
|
|
Net income
|
Net margin
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
122,668
|
|
$
|
45,489
|
|
|
37.1
|
%
|
$
|
67,461
|
|
$
|
21,298
|
|
|
31.6
|
%
|
|
|
For the Years Ended December 31,
|
|
|
|
|||||||||||||||
|
|
2012
|
|
|
2011
|
|
||||||||||||||
|
|
|
|
|
|
|
Average
|
|
% of
|
|
|
|
|
|
|
|
Average
|
|
% of
|
|
|
|
Revenue
|
|
Volume(KG)
|
|
price
|
|
Revenue
|
|
|
Revenue
|
|
Volume(KG)
|
|
price
|
|
Revenue
|
|
||
Ribbon fish
|
|
$
|
29,163
|
|
15,229,701
|
|
1.91
|
|
43.2
|
%
|
|
$
|
12,800
|
|
9,522,550
|
|
1.34
|
|
50
|
%
|
Indian white shrimp
|
|
|
9,659
|
|
1,275,801
|
|
7.57
|
|
14.3
|
%
|
|
|
9
|
|
1,400
|
|
6.43
|
|
-
|
|
Croaker fish
|
|
|
8,306
|
|
4,740,661
|
|
1.75
|
|
12.3
|
%
|
|
|
3,014
|
|
1,958,600
|
|
1.54
|
|
11.8
|
%
|
Squid
|
|
|
3,436
|
|
1,192,555
|
|
2.88
|
|
5.1
|
%
|
|
|
1,532
|
|
558,000
|
|
2.75
|
|
6.0
|
%
|
Conger eel
|
|
|
2,928
|
|
830,115
|
|
3.53
|
|
4.3
|
%
|
|
|
1,287
|
|
493,500
|
|
2.61
|
|
5.0
|
%
|
Pomfret
|
|
|
2,283
|
|
1,318,409
|
|
1.73
|
|
3.4
|
%
|
|
|
417
|
|
286,000
|
|
1.46
|
|
1.6
|
%
|
Others
|
|
|
11,686
|
|
4,627,389
|
|
2.53
|
|
17.4
|
%
|
|
|
5,157
|
|
2,279,371
|
|
2.26
|
|
20.2
|
%
|
Total
|
|
$
|
67,461
|
|
29,214,631
|
|
2.31
|
|
100.0
|
%
|
|
$
|
24,216
|
|
15,099,421
|
|
1.60
|
|
94.6
|
%
|
|
|
For the Years Ended December 31,
|
|
|
Percentage
|
|
|||||||||
|
|
2012
|
|
|
2011
|
|
|
Change
|
|
||||||
|
|
|
|
|
% of
|
|
|
|
|
|
% of
|
|
|
|
|
|
|
|
US$
|
|
Revenue
|
|
|
|
US$
|
|
Revenue
|
|
|
%
|
|
Revenue
|
|
$
|
67,461
|
|
100.0
|
%
|
|
$
|
25,601
|
|
100.0
|
%
|
|
163.5
|
%
|
Cost of sales
|
|
|
41,876
|
|
62.1
|
%
|
|
|
14,601
|
|
57.0
|
%
|
|
186.8
|
%
|
Gross profit
|
|
$
|
25,585
|
|
37.9
|
%
|
|
$
|
11,000
|
|
43.0
|
%
|
|
132.6
|
%
|
|
|
For the Years Ended December 31,
|
|
||||||||||||||
|
|
2012
|
|
|
2011
|
|
|||||||||||
|
|
US$
|
|
% of COS
|
|
|
% of Revenue
|
|
|
|
US$
|
|
% of COS
|
|
% of Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel cost
|
|
$
|
28,113
|
|
67.1
|
%
|
|
41.7
|
%
|
|
$
|
8,564
|
|
58.7
|
%
|
33.4
|
%
|
Freight
|
|
|
4,893
|
|
11.7
|
%
|
|
7.2
|
%
|
|
|
2,017
|
|
13.8
|
%
|
7.9
|
%
|
Labor cost
|
|
|
3,072
|
|
7.3
|
%
|
|
4.6
|
%
|
|
|
1,008
|
|
6.9
|
%
|
3.9
|
%
|
Maintenance fee
|
|
|
2,675
|
|
6.4
|
%
|
|
4.0
|
%
|
|
|
1,604
|
|
11.0
|
%
|
6.3
|
%
|
Spare parts
|
|
|
1,189
|
|
2.8
|
%
|
|
1.8
|
%
|
|
|
770
|
|
5.3
|
%
|
3.0
|
%
|
License fee
|
|
|
1,059
|
|
2.5
|
%
|
|
1.6
|
%
|
|
|
122
|
|
0.8
|
%
|
0.5
|
%
|
Depreciation
|
|
|
441
|
|
1.1
|
%
|
|
0.6
|
%
|
|
|
438
|
|
3.0
|
%
|
1.7
|
%
|
Service fee
|
|
|
434
|
|
1.1
|
%
|
|
0.6
|
%
|
|
|
78
|
|
0.5
|
%
|
0.3
|
%
|
Total cost of sales
|
|
$
|
41,876
|
|
100.0
|
%
|
|
62.1
|
%
|
|
$
|
14,601
|
|
100.0
|
%
|
57.0
|
%
|
|
|
For the Years Ended December 31,
|
|
Percentage
|
|
|||||||||||||
|
|
2012
|
|
|
2011
|
|
Change
|
|
||||||||||
|
|
|
|
|
% of
|
|
|
|
|
|
% of
|
|
|
|
|
|
||
|
|
US$
|
|
Revenue
|
|
|
US$
|
|
Revenue
|
|
%
|
|
||||||
Gross profit
|
|
$
|
25,585
|
|
|
37.9
|
|
%
|
$
|
11,000
|
|
|
43.0
|
%
|
|
|
132.6
|
%
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses
|
|
|
(648)
|
|
|
(1.0)
|
|
%
|
|
(384)
|
|
|
(1.5)
|
%
|
|
|
68.9
|
%
|
General & administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legal and professional fees
|
|
|
(2,741)
|
|
|
(4.0)
|
|
%
|
|
(6)
|
|
|
-
|
|
|
|
49181.0
|
%
|
Salaries and staff welfare
|
|
|
(179)
|
|
|
(0.3)
|
|
%
|
|
(23)
|
|
|
(0.1)
|
%
|
|
|
696.2
|
%
|
Others
|
|
|
80
|
|
|
0.1
|
|
%
|
|
(222)
|
|
|
(0.9)
|
%
|
|
|
(135.8)
|
%
|
Total G&A expenses
|
|
|
(2,840)
|
|
|
(4.2)
|
|
%
|
|
(251)
|
|
|
(1.0)
|
%
|
|
|
1029.9
|
%
|
Total SG&A expenses
|
|
|
(3,488)
|
|
|
(5.2)
|
|
%
|
|
(635)
|
|
|
(2.5)
|
%
|
|
|
449.4
|
%
|
Income from operations
|
|
$
|
22,097
|
|
|
32.7
|
|
%
|
$
|
10,365
|
|
|
(40.5)
|
%
|
|
|
113.2
|
%
|
38 | ||
|
For the Years Ended December 31,
|
|
|||||||||||||||||
2012
|
|
|
2011
|
|
||||||||||||||
Revenue
|
|
Net income
|
|
Net margin
|
|
|
Revenue
|
|
Net income
|
|
Net margin
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
67,461
|
|
$
|
21,298
|
|
|
31.6
|
%
|
|
$
|
25,601
|
|
$
|
10,440
|
|
|
40.8
|
%
|
39 | ||
|
|
|
For the Years Ended
|
|
||||
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
Net cash provided by operating activities
|
|
$
|
47,651
|
|
$
|
42,558
|
|
Net cash used in investing activities
|
|
|
(335,642)
|
|
|
(77,051)
|
|
Net cash provided by financing activities
|
|
|
31,327
|
|
|
43,108
|
|
Net cash provided by discontinued operations
|
|
|
86,299
|
|
|
50,943
|
|
Effect of exchange rate on cash and cash equivalents
|
|
|
3,033
|
|
|
1,727
|
|
Cash and cash equivalents at beginning of year
(1)
|
|
|
175,489
|
|
|
114,204
|
|
Cash and cash equivalents at end of year
(2)
|
|
$
|
8,157
|
|
$
|
175,489
|
|
(1) |
Includes cash and cash equivalents of discontinued operations of $165.1 million and $112.4 million at the beginning of the year in 2013 and 2012, respectively.
|
(2) |
Includes cash and cash equivalents of discontinued operations of $nil and $165.1 million as of December 31, 2013 and 2012, respectively.
|
40 | ||
|
|
|
Payments due by period
|
|
|||||||||||||
Contractual Obligations
|
|
Total
|
|
< 1 year
|
|
1 3 years
|
|
3 5 years
|
|
> 5 years
|
|
|||||
Operating lease obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- related party transactions
|
|
$
|
483,931
|
|
$
|
475,837
|
|
$
|
8,094
|
|
$
|
-
|
|
$
|
-
|
|
- non-related party transactions
|
|
|
244,637
|
|
|
244,637
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Term Loan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- related party transactions
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
- non-related party transactions
|
|
|
83,837,157
|
|
|
29,337,430
|
|
|
48,965,922
|
|
|
3,055,982
|
|
|
2,477,823
|
|
Total
|
|
$
|
84,565,725
|
|
$
|
30,057,904
|
|
$
|
48,974,016
|
|
$
|
3,055,982
|
|
$
|
2,477,823
|
|
|
|
For the Period from
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
January 1 to December 4,
|
|
|
For the Year Ended
|
|
|
Percentage
|
|
||||||
|
|
2013 (Disposal)
|
|
|
December 31, 2012
|
|
|
Change
|
|
||||||
|
|
|
|
|
% of
|
|
|
|
|
|
% of
|
|
|
|
|
|
|
US$
|
|
Revenue
|
|
|
US$
|
|
Revenue
|
|
|
%
|
|
||
Revenues
|
|
$
|
161,497
|
|
100.0
|
%
|
|
$
|
209,619
|
|
100.0
|
%
|
|
(23.0)
|
%
|
Cost of revenue
|
|
|
90,352
|
|
55.9
|
%
|
|
|
97,248
|
|
46.4
|
%
|
|
(7.1)
|
%
|
Gross profit
|
|
$
|
71,145
|
|
44.1
|
%
|
|
$
|
112,371
|
|
53.6
|
%
|
|
(36.7)
|
%
|
41 | ||
|
|
|
For the Period from January 1 to
|
|
|
For the Year Ended December
|
|
Percentage
|
|
||||||
|
|
December 4, 2013 (Disposal)
|
|
|
31, 2012
|
|
Change
|
|
||||||
|
|
US$
|
|
% of Revenue
|
|
|
US$
|
|
% of Revenue
|
|
%
|
|
||
Gross profit
|
|
|
71,145
|
|
44.1
|
%
|
|
|
112,371
|
|
53.6
|
%
|
(36.7)
|
%
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total G&A expenses
|
|
|
(6,839)
|
|
(4.2)
|
%
|
|
|
(8,761)
|
|
(4.2)
|
%
|
(21.9)
|
%
|
Operating income
|
|
|
64,306
|
|
39.8
|
%
|
|
|
103,610
|
|
49.4
|
%
|
(37.9)
|
%
|
Income before income taxes
|
|
|
67,252
|
|
41.6
|
%
|
|
|
110,805
|
|
52.9
|
%
|
(39.3)
|
%
|
Income taxes
|
|
|
(15,341)
|
|
(9.5)
|
%
|
|
|
(26,311)
|
|
(12.6)
|
%
|
(41.7)
|
%
|
Net income
|
|
|
51,911
|
|
32.1
|
%
|
|
|
84,494
|
|
40.3
|
%
|
(38.6)
|
%
|
|
|
For the Year Ended
|
|
|
For the Year Ended
|
|
|
Percentage
|
|
||||||
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
Change
|
|
||||||
|
|
|
|
|
% of
|
|
|
|
|
|
% of
|
|
|
|
|
|
|
US$
|
|
Revenue
|
|
|
US$
|
|
Revenue
|
|
|
%
|
|
||
Revenues
|
|
$
|
209,619
|
|
100.0
|
%
|
|
$
|
226,953
|
|
100.0
|
%
|
|
(7.6)
|
%
|
Cost of sales
|
|
|
97,248
|
|
46.4
|
%
|
|
|
98,907
|
|
43.6
|
%
|
|
(1.7)
|
%
|
Gross profit
|
|
$
|
112,371
|
|
53.6
|
%
|
|
$
|
128,046
|
|
56.4
|
%
|
|
(12.2)
|
%
|
42 | ||
|
|
|
For the Year Ended December 31,
|
|
|
For the Year Ended December
|
|
Percentage
|
|
||||||
|
|
2012
|
|
|
31, 2011
|
|
Change
|
|
||||||
|
|
US$
|
|
% of Revenue
|
|
|
US$
|
|
% of Revenue
|
|
%
|
|
||
Gross profit
|
|
|
112,371
|
|
53.6
|
%
|
|
|
128,046
|
|
56.4
|
%
|
(12.2)
|
%
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total G&A expenses
|
|
|
(8,761)
|
|
(4.2)
|
%
|
|
|
(9,445)
|
|
(4.2)
|
%
|
(7.2)
|
%
|
Operating income
|
|
|
103,610
|
|
49.4
|
%
|
|
|
118,601
|
|
52.3
|
%
|
(12.6)
|
%
|
Income before income taxes
|
|
|
110,805
|
|
52.9
|
%
|
|
|
126,499
|
|
55.7
|
%
|
(12.4)
|
%
|
Income taxes
|
|
|
(26,311)
|
|
(12.6)
|
%
|
|
|
(30,107)
|
|
(13.3)
|
%
|
(12.6)
|
%
|
Accretion of discount on Class A Preferred Shares
|
|
|
-
|
|
-
|
|
|
|
(6,135)
|
|
(2.7)
|
%
|
-
|
|
Net income
|
|
|
84,494
|
|
40.3
|
%
|
|
|
90,257
|
|
39.8
|
%
|
(6.4)
|
%
|
43 | ||
|
|
Page
|
|
|
Report of Independent Registered Public Accounting Firm
|
F1
|
Consolidated Balance Sheets at December 31, 2013 and 2012
|
F2 - F3
|
Consolidated Statements of Income for the years ended December 31, 2013,
2012 and 2011
|
F4
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2013, 2012 and 2011
|
F5
|
Consolidated Statements of
Changes in Shareholders’
Equity for the years ended December 3
1,
2013, 2012 and 2011
|
F6
|
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011
|
F7 - F8
|
Notes to Consolidated Financial Statements
|
F9 - F41
|
44 | ||
|
45 | ||
|
46 | ||
|
47 | ||
|
48 | ||
|
49 | ||
|
|
a)
|
Directors of the Registrant.
|
b) | Executive Officers of the Registrant. |
c) | Section 16(a) Compliance. |
d) | Identification of the Audit Committee. |
e) | Audit Committee Financial Expert. |
f) | Corporate Governance/Nominating Committee. |
g) | Code of Ethics for Chief Executive Officer and Senior Financial Officers. |
50 | ||
|
51 | ||
|
|
Exhibit
|
|
|
|
No.
|
|
Description
|
|
2.1
|
|
Agreement and Plan of Merger, dated as of October 24, 2012, by and between China Growth Equity Investment Ltd., China Dredging Group Co., Ltd., China Growth Dredging Sub Ltd., and Xinrong Zhuo (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K (File No. 001-35192) filed with the Securities and Exchange Commission on October 30, 2012)
|
|
2.2
|
|
Share Purchase Agreement, dated as of October 24, 2012, by and among China Growth Equity Investment Ltd, Merchant Supreme Co., Ltd., Prime Cheer Corporation Limited, Xinrong Zhuo, Fujian Provincial Pingtan County Ocean Fishing Group Co., Heroic Treasure Limited and Fuzhou Honglong Ocean Fishery Co., Ltd. (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K (File No. 001-35192) filed with the Securities and Exchange Commission on October 30, 2012)
|
|
3.1
|
|
Amended and Restated Memorandum and Articles of Association of Pingtan Marine Enterprise Ltd. filed with the Cayman Islands Registrar of on February 26, 2013 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35192) filed with the Securities and Exchange Commission on March 1, 2013)
|
|
3.2
|
|
Articles and Plan of Merger, filed with the Registry of Corporate Affairs of the British Virgin Islands on February 25, 2013 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 001-35192) filed with the Securities and Exchange Commission on March 1, 2013))
|
|
3.3
|
|
Certificate of Merger, filed with the Registry of Corporate Affairs of the British Virgin Islands on February 25, 2013 (incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K (File No. 001-35192) filed with the Securities and Exchange Commission on March 1, 2013)
|
|
3.4
|
|
Amended and Restated Memorandum of Association of China Dredging Group Co., Ltd. (incorporated by reference to Exhibit 1.1 to China Dredging Group Co., Ltd.’s Annual Report on Form 20-F (File No. 000-53465) filed with the Securities and Exchange Commission on November 2, 2010)
|
|
3.5
|
|
Articles of Association of China Dredging Group Co., Ltd. (incorporated by reference to Exhibit 1.2 to China Dredging Group Co., Ltd.’s Annual Report on Form 20-F (File No. 000-53465) filed with the Securities and Exchange Commission on November 2, 2010)
|
|
4.1
|
|
Specimen Ordinary Share (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 001-35192) filed with the Securities and Exchange Commission on March 1, 2013)
|
|
4.2
|
|
Specimen Warrant Certificate (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (File No. 001-35192) filed with the Securities and Exchange Commission on March 1, 2013)
|
|
4.3
|
|
Warrant Agreement and between American Stock Transfer & Trust Company and China Growth Equity Investment Ltd. dated May 26, 2011. (incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-1 (File No. 333-173323) filed with the Securities and Exchange Commission on May 20, 2011)
|
|
10.1
|
|
Master Agreement by and between Pingtan Marine Enterprise Ltd. and Fuzhou Honglong Ocean Fishery Co., Ltd., dated June 19, 2013 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-35192) filed with the Securities and Exchange Commission on June 25, 2013)
|
52 | ||
|
* | Filed Herein |
** |
Indicates a management contract or compensatory plan or arrangement
|
53 | ||
|
|
Pingtan Marine Enterprise Ltd.
|
|
|
|
|
|
By:
|
/s/ Xinrong Zhuo
|
|
|
Xinrong Zhuo
|
|
|
Chairman of the Board and Chief Executive Officer
|
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Xinrong Zhuo
|
|
Chairman of the Board and Chief Executive Officer (Principal Executive Officer)
|
|
March 10, 2014
|
Xinrong Zhuo
|
|
|
|
|
|
|
|
|
|
/s/ Roy Yu
|
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
March 10, 2014
|
Roy Yu
|
|
|
|
|
|
|
|
|
|
/s/ Lin Bao
|
|
Director
|
|
March 10, 2014
|
Lin Bao
|
|
|
|
|
|
|
|
|
|
/s/ Yeliang Zhou
|
|
Director
|
|
March 10, 2014
|
Yeliang Zhou
|
|
|
|
|
|
|
|
|
|
/s/ Zengbiao Zhu
|
|
Director
|
|
March 10, 2014
|
Zengbiao Zhu
|
|
|
|
|
|
|
|
|
|
/s/ Xuesong Song
|
|
Director
|
|
March 10, 2014
|
Xuesong Song
|
|
|
|
|
|
|
|
|
|
/s/ Jin Shi
|
|
Director
|
|
March 10, 2014
|
Jin Shi
|
|
|
|
|
54 | ||
|
CONTENTS
|
|
Pages
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
F1
|
|
|
|
Consolidated Balance Sheets as of December 31, 2013 and 2012
|
|
F2 - F3
|
|
|
|
Consolidated Statements of Income for the years ended December 31, 2013, 2012 and 2011
|
|
F4
|
|
|
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2013, 2012 and 2011
|
|
F5
|
|
|
|
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2013, 2012 and 2011
|
|
F6
|
|
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011
|
|
F7 - F8
|
|
|
|
Notes to the Consolidated Financial Statements
|
|
F9 - F41
|
F1 | ||
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
(A)
|
|
|
Assets
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash
|
|
$
|
8,156,599
|
|
$
|
10,426,140
|
|
Notes receivable (banker's acceptances)
transferred from related parties |
|
|
-
|
|
|
3,645,817
|
|
Accounts receivable
|
|
|
9,133,130
|
|
|
11,478,436
|
|
Inventories
|
|
|
9,095,736
|
|
|
194,331
|
|
Prepaid expenses
|
|
|
2,380,874
|
|
|
410,966
|
|
Other receivables
|
|
|
11,665
|
|
|
29,885
|
|
Advances to related parties
|
|
|
-
|
|
|
49,802,821
|
|
Assets of discontinued operations
|
|
|
-
|
|
|
361,460,444
|
|
Total current assets
|
|
|
28,778,004
|
|
|
437,448,840
|
|
|
|
|
|
|
|
|
|
Other assets
|
|
|
|
|
|
|
|
Other receivables
|
|
|
1,213,440
|
|
|
-
|
|
Long-term investment
|
|
|
3,468,953
|
|
|
3,328,789
|
|
Deposit on potential Joint Venture
|
|
|
-
|
|
|
6,090,302
|
|
Prepaid fixed asset deposits
|
|
|
1,928,700
|
|
|
-
|
|
Prepaid operating license rights
|
|
|
215,381,356
|
|
|
-
|
|
Property, plant and equipment, net
|
|
|
107,178,269
|
|
|
37,141,906
|
|
Total other assets
|
|
|
329,170,718
|
|
|
46,560,997
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
357,948,722
|
|
$
|
484,009,837
|
|
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Accounts payable - third parties
|
|
$
|
2,184,964
|
|
$
|
70,732
|
|
- related parties
|
|
|
13,807,605
|
|
|
5,765,632
|
|
Receipt in advance - third parties
|
|
|
297,034
|
|
|
-
|
|
- related parties
|
|
|
-
|
|
|
12,681,102
|
|
Short-term loans
|
|
|
9,085,353
|
|
|
25,169,260
|
|
Long-term loans - current portion
|
|
|
20,252,077
|
|
|
8,094,308
|
|
Accrued liabilities and other payables
|
|
|
3,851,047
|
|
|
1,033,784
|
|
Advances from related parties
|
|
|
-
|
|
|
153,961
|
|
Deferred income
|
|
|
1,733,485
|
|
|
-
|
|
Liabilities of discontinued operations
|
|
|
-
|
|
|
14,052,751
|
|
Total current liabilities
|
|
|
51,211,565
|
|
|
67,021,530
|
|
|
|
|
|
|
|
|
|
Other liabilities
|
|
|
|
|
|
|
|
Long-term loans, net of current portion
|
|
|
54,499,727
|
|
|
16,689,321
|
|
Total other liabilities
|
|
|
54,499,727
|
|
|
16,689,321
|
|
Total liabilities
|
|
$
|
105,711,292
|
|
$
|
83,710,851
|
|
F2 | ||
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
(A)
|
|
|
Shareholders' equity
|
|
|
|
|
|
|
|
Ordinary shares, 225,000,000 shares authorized
with $0.001 per share; 79,055,053 shares issued and outstanding as of December 31, 2013 and 2012 |
|
|
79,055
|
|
|
79,055
|
|
Additional paid-in capital
|
|
|
-
|
|
|
141,381,098
|
|
Statutory reserves
|
|
|
22,410,773
|
|
|
19,386,642
|
|
Retained earnings
|
|
|
199,341,512
|
|
|
217,224,220
|
|
Accumulated other comprehensive income
|
|
|
30,406,090
|
|
|
22,227,971
|
|
Total shareholders' equity
|
|
|
252,237,430
|
|
|
400,298,986
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
357,948,722
|
|
$
|
484,009,837
|
|
|
(A)
|
Represents the consolidation retrospectively restated as if Pingtan Marine Enterprise Ltd. (formerly known as China Growth Equity Investment Limited) completed its merger with China Dredging Group Co., Ltd. and the share purchase of Merchant Supreme Co., Ltd. on January 1, 2011 rather than on February 25, 2013. Assets and liabilities of discontinued operations are retrospectively reclassified as of December 31, 2012 after taking into account of the Company’s plan to sell China Dredging Group Co., Ltd. and its subsidiaries to an affiliate of the Company’s Chairman, CEO and major shareholder, Mr. Xinrong Zhuo.
|
F3 | ||
|
|
|
Year Ended December 31,
|
|
|||||||
|
|
2013
|
|
2012
|
|
2011(A)
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
122,667,769
|
|
$
|
67,461,468
|
|
$
|
25,600,636
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
(75,760,033)
|
|
|
(41,876,140)
|
|
|
(14,600,579)
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
46,907,736
|
|
|
25,585,328
|
|
|
11,000,057
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing expenses
|
|
|
(1,618,278)
|
|
|
(647,850)
|
|
|
(383,472)
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
(3,191,637)
|
|
|
(2,839,848)
|
|
|
(251,343)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
42,097,821
|
|
|
22,097,630
|
|
|
10,365,242
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income/(expense)
|
|
|
|
|
|
|
|
|
|
|
Investment income
|
|
|
69,519
|
|
|
15,138
|
|
|
-
|
|
Interest income
|
|
|
8,250
|
|
|
3,276
|
|
|
2,349
|
|
Interest expenses
|
|
|
(4,171,989)
|
|
|
(3,176,920)
|
|
|
(844,650)
|
|
Subsidy income
|
|
|
7,338,273
|
|
|
2,363,575
|
|
|
830,446
|
|
Sundry income
|
|
|
2,144
|
|
|
-
|
|
|
-
|
|
Gain/(Loss) on foreign exchange, net
|
|
|
144,740
|
|
|
(5,113)
|
|
|
86,950
|
|
Total other income/(expense)
|
|
|
3,390,937
|
|
|
(800,044)
|
|
|
75,095
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
45,488,758
|
|
|
21,297,586
|
|
|
10,440,337
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations
|
|
|
45,488,758
|
|
|
21,297,586
|
|
|
10,440,337
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from discontinued operations, net of income tax expense
|
|
|
51,910,662
|
|
|
84,494,428
|
|
|
90,257,249
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income
|
|
$
|
97,399,420
|
|
$
|
105,792,014
|
|
$
|
100,697,586
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share
|
|
|
|
|
|
|
|
|
|
|
- From continuing operations
|
|
$
|
0.58
|
|
$
|
0.27
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
- From discontinued operations
|
|
|
0.65
|
|
|
1.07
|
|
|
1.14
|
|
- Net income
|
|
$
|
1.23
|
|
$
|
1.34
|
|
$
|
1.27
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares outstanding
|
|
|
|
|
|
|
|
|
|
|
- Basic and diluted
|
|
|
79,055,053
|
|
|
79,055,053
|
|
|
79,055,053
|
|
(A) | Represents the consolidation retrospectively restated as if Pingtan Marine Enterprise Ltd. (formerly known as China Growth Equity Investment Ltd.) completed its merger with China Dredging Group Co., Ltd. and the share purchase of Merchant Supreme Co., Ltd. on January 1, 2011 rather than on February 25, 2013. |
F4 | ||
|
|
|
Year Ended December 31,
|
|
|||||||
|
|
2013
|
|
2012
|
|
2011 (A)
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
97,399,420
|
|
$
|
105,792,014
|
|
$
|
100,697,586
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation gain
|
|
|
8,178,119
|
|
|
4,113,599
|
|
|
11,654,835
|
|
Unrealized change in fair value of available-for-sale
investment |
|
|
-
|
|
|
(717)
|
|
|
-
|
|
Total comprehensive income
|
|
$
|
105,577,539
|
|
$
|
109,904,896
|
|
$
|
112,352,421
|
|
(A) | Represents the consolidation retrospectively restated as if Pingtan Marine Enterprise Ltd. (formerly known as China Growth Equity Investment Ltd.) completed its merger with China Dredging Group Co., Ltd. and the share purchase of Merchant Supreme Co., Ltd. on January 1, 2011 rather than on February 25, 2013. |
F5 | ||
|
|
|
Ordinary Shares, with
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|||||
|
|
Par Value of 0.001 per share
|
|
Additional
|
|
|
|
|
|
|
other
|
|
Total
|
|
|||||||
|
|
Number of
|
|
|
|
|
paid-in
|
|
Statutory
|
|
Retained
|
|
comprehensive
|
|
shareholders'
|
|
|||||
|
|
Shares
|
|
Amount
|
|
capital
|
|
reserves
|
|
earnings
|
|
income
|
|
equity
|
|
||||||
Balance as of January 1, 2011 (A)
|
|
6,250,000
|
|
$
|
2,358
|
|
$
|
5,153,278
|
|
$
|
-
|
|
$
|
(155,635)
|
|
$
|
-
|
|
$
|
5,000,001
|
|
Increase of 122,875 shares subject to
possible conversion at December 31, 2012 |
|
-
|
|
|
(125)
|
|
|
(1,234,770)
|
|
|
-
|
|
|
1,234,895
|
|
|
-
|
|
|
-
|
|
Redemption of shares
|
|
(4,409,947)
|
|
|
(393)
|
|
|
393
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Business combination between China
Dredging Group Co., Ltd. and Merchant Supreme Co., Ltd. |
|
77,215,000
|
|
|
77,215
|
|
|
137,462,197
|
|
|
16,863,090
|
|
|
117,970,926
|
|
|
18,115,089
|
|
|
290,488,517
|
|
Balance as of January 1, 2012
|
|
79,055,053
|
|
$
|
79,055
|
|
$
|
141,381,098
|
|
$
|
16,863,090
|
|
$
|
119,050,186
|
|
$
|
18,115,089
|
|
$
|
295,488,518
|
|
Net income
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
100,697,586
|
|
|
-
|
|
|
100,697,586
|
|
Appropriation to statutory reserves
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,523,552
|
|
|
(2,523,552)
|
|
|
-
|
|
|
-
|
|
Foreign currency translation gain
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4,112,882
|
|
|
4,112,882
|
|
Balance as of January 1, 2013
|
|
79,055,053
|
|
$
|
79,055
|
|
$
|
141,381,098
|
|
$
|
19,386,642
|
|
$
|
217,224,220
|
|
$
|
22,227,971
|
|
$
|
400,298,986
|
|
Net income
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
97,399,420
|
|
|
-
|
|
|
97,399,420
|
|
Appropriation to statutory reserves
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,024,131
|
|
|
(3,024,131)
|
|
|
-
|
|
|
-
|
|
Foreign currency translation gain
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
8,178,119
|
|
|
8,178,119
|
|
Disposal of China Dredging Group Co., Ltd.
|
|
-
|
|
|
-
|
|
|
134,691,699
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
134,691,699
|
|
Acquisition of fishing vessels from
related party |
|
-
|
|
|
-
|
|
|
(276,072,797)
|
|
|
-
|
|
|
(112,257,997)
|
|
|
-
|
|
|
(388,330,794)
|
|
Balance as of December 31, 2013
|
|
79,055,053
|
|
$
|
79,055
|
|
|
-
|
|
$
|
22,410,773
|
|
$
|
199,341,512
|
|
$
|
30,406,090
|
|
$
|
252,237,430
|
|
|
(A)
|
Represents the consolidation retrospectively restated as if Pingtan Marine Enterprise Ltd. (formerly known as China Growth Equity Investment Ltd.) completed its merger with China Dredging Group Co., Ltd. and the share purchase of Merchant Supreme Co., Ltd. on January 1, 2011 rather than on February 25, 2013.
|
F6 | ||
|
|
|
Year Ended December 31,
|
|
|||||||
|
|
2013
|
|
2012
|
|
2011 (A)
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
Net income
(3)
|
|
$
|
97,399,420
|
|
$
|
105,792,014
|
|
$
|
100,697,586
|
|
Discontinued operations, net of tax
(3)
|
|
|
(51,910,662)
|
|
|
(84,494,428)
|
|
|
(90,257,249)
|
|
Income from continuing operations
|
|
|
45,488,758
|
|
|
21,297,586
|
|
|
10,440,337
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net income to net
|
|
|
|
|
|
|
|
|
|
|
cash provided by operating activities
|
|
|
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment
|
|
|
3,297,751
|
|
|
2,983,086
|
|
|
1,917,747
|
|
Available-for-sales financial instrument fair value adjustment
|
|
|
-
|
|
|
-
|
|
|
705
|
|
Short term investment income
|
|
|
-
|
|
|
(15,860)
|
|
|
-
|
|
Amortization of operating license rights
|
|
|
720,339
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable - third parties
|
|
|
2,788,320
|
|
|
(10,562,176)
|
|
|
1,627,853
|
|
- related parties
|
|
|
-
|
|
|
4,584,509
|
|
|
(3,426,607)
|
|
Other receivables
|
|
|
19,201
|
|
|
6,797,156
|
|
|
(323,246)
|
|
Prepaid expenses
|
|
|
(1,925,477)
|
|
|
(218,759)
|
|
|
(157,077)
|
|
Inventories
|
|
|
(8,766,511)
|
|
|
2,397,340
|
|
|
(1,848,587)
|
|
Accounts payable - third parties
|
|
|
2,081,172
|
|
|
(43,377)
|
|
|
(73,055)
|
|
- related parties
|
|
|
13,944,394
|
|
|
3,060,668
|
|
|
(1,423,494)
|
|
Receipt in advance - third parties
|
|
|
292,802
|
|
|
(1,160,618)
|
|
|
771,142
|
|
- related parties
|
|
|
(13,026,770)
|
|
|
12,675,074
|
|
|
-
|
|
Accrued liabilities and other payables
|
|
|
2,737,334
|
|
|
763,533
|
|
|
204,254
|
|
Net cash provided by operating activities from continuing operations
|
|
|
47,651,313
|
|
|
42,558,162
|
|
|
7,709,972
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Payment for long term investment
|
|
|
-
|
|
|
(2,661,766)
|
|
|
(649,752)
|
|
Proceeds from disposition of / (payment for) short-term investment
|
|
|
-
|
|
|
808,052
|
|
|
(774,220)
|
|
Proceeds from deferred income
|
|
|
8,320,882
|
|
|
-
|
|
|
-
|
|
Payment for fixed asset deposits
|
|
|
(1,901,220)
|
|
|
-
|
|
|
-
|
|
Purchase of property, plant and equipment
|
|
|
(256,831,561)
|
|
|
(33,692,090)
|
|
|
(7,086,080)
|
|
Advance to related parties
|
|
|
(312,569)
|
|
|
(41,505,027)
|
|
|
(21,574,926)
|
|
Disposal of subsidiaries, net of cash
|
|
|
(84,917,899)
|
|
|
-
|
|
|
-
|
|
Net cash used in investing activities from continuing operations
|
|
|
(335,642,367)
|
|
|
(77,050,831)
|
|
|
(30,084,978)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Proceeds from short-term loans
|
|
|
43,713,708
|
|
|
51,384,055
|
|
|
21,337,156
|
|
Repayment of short-term loans
|
|
|
(60,613,140)
|
|
|
(48,079,121)
|
|
|
(10,055,693)
|
|
Proceeds from long-term loans
|
|
|
55,811,568
|
|
|
26,617,656
|
|
|
-
|
|
Repayment of long-term loans
|
|
|
(7,584,023)
|
|
|
(1,845,808)
|
|
|
-
|
|
Proceeds from capital injection
|
|
|
-
|
|
|
5,955,756
|
|
|
-
|
|
Advance from related parties, net of reception in form of note
|
|
|
|
|
|
|
|
|
|
|
receivable
|
|
|
(777)
|
|
|
9,075,004
|
|
|
12,361,389
|
|
Net cash provided by financing activities from
|
|
|
|
|
|
|
|
|
|
|
continuing operations
|
|
|
31,327,336
|
|
|
43,107,542
|
|
|
23,642,852
|
|
F7 | ||
|
|
|
Year Ended December 31,
|
|
|||||||
|
|
2013
|
|
2012
|
|
2011 (A)
|
|
|||
Cash flow from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities from discontinued
operations |
|
|
79,605,841
|
|
|
92,587,488
|
|
|
67,151,092
|
|
Net cash provided by/(used in) investing activities from discontinued
operations |
|
|
7,099,979
|
|
|
(42,204,987)
|
|
|
(47,811,882)
|
|
Net cash (used in)/provided by financing activities from discontinued
operations |
|
|
(407,030)
|
|
|
560,216
|
|
|
12,408
|
|
Net cash provided by discontinued operations
|
|
|
86,298,790
|
|
|
50,942,717
|
|
|
19,351,618
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
|
|
|
3,032,812
|
|
|
1,726,785
|
|
|
4,565,872
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease)/increase in cash
|
|
|
(167,332,116)
|
|
|
61,284,375
|
|
|
25,185,336
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at the beginning of year
(1)
|
|
|
175,488,715
|
|
|
114,204,340
|
|
|
89,019,004
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at the end of year
(2)
|
|
$
|
8,156,599
|
|
$
|
175,488,715
|
|
$
|
114,204,340
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid:
|
|
|
|
|
|
|
|
|
|
|
From discontinued operations
|
|
|
|
|
|
|
|
|
|
|
Income tax paid
|
|
$
|
17,278,643
|
|
$
|
29,324,336
|
|
$
|
26,956,670
|
|
|
|
|
|
|
|
|
|
|
|
|
From continuing operations
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
4,060,069
|
|
$
|
3,428,193
|
|
$
|
952,200
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash transaction eliminated in above:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banker's acceptance notes received from related parties
|
|
$
|
3,745,196
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of prepaid operating license rights
|
|
$
|
216,101,695
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment by setting off
|
|
|
|
|
|
|
|
|
|
|
advances to related parties
|
|
$
|
55,064,953
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposit on setting up Joint Venture netted of accounts payable -
|
|
|
|
|
|
|
|
|
|
|
related party
|
|
$
|
6,090,302
|
|
$
|
-
|
|
$
|
-
|
|
|
(1)
|
Includes cash and cash equivalents of discontinued operations of $165,062,575, $112,409,544 and $88,532,472 at the beginning of the year in 2013, 2012 and 2011, respectively.
|
|
(2)
|
Includes cash and cash equivalents of discontinued operations of $nil, $165,062,575 and $112,409,544 as of December 31, 2013, 2012 and 2011, respectively.
|
|
(3)
|
Total net income and net income from discontinued operations, net of tax included accretion of discount on Class A Preferred Shares in amount of $6,135,012.
|
|
(A)
|
Represents the consolidation retrospectively restated as if Pingtan Marine Enterprise Ltd. (formerly known as China Growth Equity Investment Limited) completed its merger with China Dredging Group Co., Ltd. and the share purchase of Merchant Supreme Co., Ltd. on January 1, 2011 rather than on February 25, 2013.
|
F8 | ||
|
|
1.
|
DESCRIPTION OF BUSINESS AND ORGANIZATION
|
F9 | ||
|
|
1.
|
DESCRIPTION OF BUSINESS AND ORGANIZATION (…/Cont’d)
|
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
|
Name of VIEs
|
|
|
|
Fujian Provincial Pingtan County Fishing Group Co., Ltd. (“Pingtan Fishing”)
|
|
Pingtan Dingxin Fishing Information Consulting Co., Ltd. (“Pingtan Dingxin”)
|
|
Pingtan Duoying Fishing Information Consulting Co., Ltd. (“Pingtan Duoying”)
|
|
Pingtan Ruiying Fishing Information Consulting Co., Ltd. (“Pingtan Ruiying”)
|
|
2.
|
DISCONTINUED OPERATIONS
|
F10 | ||
|
|
2.
|
DISCONTINUED OPERATIONS (…/Cont’d)
|
|
(a)
|
offset the Company's current $
155.2
million promissory note which matures on
June 19, 2015
and bears an interest rate of
4
%;
|
|
(b)
|
the transfer to the Company of the 25-year license operating rights for 20 new fishing vessels, with such rights appraised at $216.1 million
at the fair market value; and
|
|
(c)
|
offset of current accounts of $
172.5
million made between the Company and CDGC.
|
|
|
January 1 to
|
|
January 1 to
|
|
January 1 to
|
|
|||
|
|
December 4 ,
|
|
December 31,
|
|
December 31,
|
|
|||
|
|
2013
|
|
2012
|
|
2011
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
161,497,136
|
|
$
|
209,619,489
|
|
$
|
226,953,070
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations before income tax
|
|
$
|
67,251,697
|
|
$
|
110,805,122
|
|
$
|
126,499,331
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
|
|
$
|
(15,341,035)
|
|
$
|
(26,310,694)
|
|
$
|
(30,107,070)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from discontinued operations
|
|
$
|
51,910,662
|
|
$
|
84,494,428
|
|
$
|
90,257,249
|
|
|
|
December 4,
|
|
December 31,
|
|
||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Cash
|
|
$
|
84,917,899
|
|
$
|
165,062,575
|
|
Other current assets
|
|
|
28,821,788
|
|
|
36,613,112
|
|
Non - current assets
|
|
|
148,710,213
|
|
|
159,784,757
|
|
Total assets of discontinued operations
|
|
$
|
262,449,900
|
|
$
|
361,460,444
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
25,873,709
|
|
$
|
14,052,751
|
|
|
|
|
|
|
|
|
|
Net asset disposed
|
|
$
|
236,576,191
|
|
|
|
|
F11 | ||
|
3.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
(a)
|
Basis of presentation
|
|
|
|
|
|
The accompanying audited consolidated financial statements and related notes have been prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP).
|
|
|
|
|
|
The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and VIEs in which the Company is the primary beneficiary. All significant intercompany balances and transactions have been eliminated. The consolidated financial statements of the Company have been prepared as if the existing corporate structure had been in existence throughout the periods presented and as if the reorganization had occurred as of the beginning of the earliest period presented.
|
|
|
|
|
|
On December 4, 2013, the Company sold its
100
% interest in CDGC and its subsidiaries to Hong Long. As such, CDGC’s assets and liabilities have been classified on the balance sheet as assets and liabilities of discontinued operations as of December 31, 2012. The operating results of CDGC have been classified as discontinued operations in our statements of operations for all years presented. Unless otherwise indicated, all disclosures and amounts in the notes to the consolidated financial statements relate to the Company’s continuing operations.
|
|
|
|
|
|
Reclassifications
|
|
|
|
|
|
Certain prior year information has been reclassified to be comparable with the current period presentation. This reclassification has no effect on previously reported net income.
|
|
(b)
|
Consolidation of VIE
|
|
|
|
|
|
The Company has no direct or indirect legal or equity ownership interest in Pingtan Fishing. Moreover, another set of VIE agreements have been entered between Pingtan Guansheng and the shareholders of Pingtan Fishing. The shareholders of Pingtan Fishing also have assigned all their rights as shareholders, including voting rights and disposition rights of their equity interest in Pingtan Fishing to Pingtan Guansheng, our direct, wholly-owned subsidiary. Accordingly, by virtue of the VIE Agreements, Pingtan Guansheng is the primary beneficiary of Pingtan Fishing as defined by ASC 810 “Consolidation of Variable Interest Entities”. Therefore, Pingtan Fishing is consolidated as VIE.
|
|
|
|
|
|
In accordance with ASC 810-10-15-14, Pingtan Fishing and its subsidiaries; namely Pingtan Dingxin, Pingtan Duoying and Pingtan Ruiying are deemed VIEs for two reasons. First, the equity stockholders of Pingtan Fishing do not significantly enjoy the benefits of income or suffer the consequences of losses. Second, the equity stockholders of Pingtan Fishing do not possess the direct or indirect ability through voting or similar rights to make decisions regarding their activities that have a significant effect on the success of Pingtan Fishing. Therefore, in accordance with ASC 810-10-25-38A, the Company is deemed to be the primary beneficiary of Pingtan Fishing and the financial statements of Pingtan Fishing are consolidated in the Company’s consolidated financial statements.
|
3.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (…/Cont’d)
|
|
(b)
|
Consolidation of VIE (…/Cont’d)
|
|
|
The following tables show the assets and liabilities of the Company’s VIEs after eliminating the intercompany balances as of December 31, 2013 and 2012. The VIEs include Pingtan Fishing Group which comprises of Pingtan Fishing itself and its three subsidiaries; namely Pingtan Dingxin, Pingtan Duoying and Pingtan Ruiying. The creditors of Pingtan Fishing Group do not have recourse against the general creditors of their primary beneficiaries or other Group members.
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Cash
|
|
$
|
7,736,308
|
|
$
|
6,710,472
|
|
Notes receivable (banker's acceptances) transferred from
related parties |
|
|
-
|
|
|
3,645,817
|
|
Accounts receivable
|
|
|
9,133,130
|
|
|
11,478,436
|
|
Other receivables
|
|
|
1,225,073
|
|
|
29,885
|
|
Advances to related parties
|
|
|
-
|
|
|
49,802,897
|
|
Inventories
|
|
|
9,095,736
|
|
|
194,331
|
|
Prepaid expenses
|
|
|
2,378,054
|
|
|
386,966
|
|
Long-term investment
|
|
|
3,468,953
|
|
|
3,328,789
|
|
Deposit on potential Joint Venture
|
|
|
-
|
|
|
6,092,302
|
|
Prepaid fixed asset deposits
|
|
|
1,928,700
|
|
|
-
|
|
Property, plant and equipment, net
|
|
|
107,178,269
|
|
|
37,141,906
|
|
|
|
$
|
142,144,223
|
|
$
|
118,811,801
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
Accounts payable - third parties
|
|
$
|
2,184,964
|
|
$
|
70,732
|
|
- related parties
|
|
|
13,807,605
|
|
|
5,765,632
|
|
Receipt in advance - third parties
|
|
|
297,034
|
|
|
-
|
|
- related parties
|
|
|
-
|
|
|
12,681,102
|
|
Short-term loans
|
|
|
9,085,353
|
|
|
25,169,260
|
|
Accrued liabilities and other payables
|
|
|
3,631,622
|
|
|
1,033,640
|
|
Long-term loans
|
|
|
74,751,804
|
|
|
24,783,629
|
|
Deferred income
|
|
|
1,733,485
|
|
|
-
|
|
|
|
$
|
105,491,867
|
|
$
|
69,503,995
|
|
F13 | ||
|
3.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (…/Cont’d)
|
|
(b)
|
Consolidation of VIE (…/Cont’d)
|
|
|
Year Ended December 31,
|
|
|||||||
|
|
2013
|
|
2012
|
|
2011
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
122,667,769
|
|
$
|
67,461,468
|
|
$
|
25,600,636
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
$
|
(75,039,694)
|
|
$
|
(41,876,140)
|
|
$
|
(14,600,579)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to the Company
|
|
$
|
48,524,935
|
|
$
|
23,667,802
|
|
$
|
10,440,337
|
|
|
(c)
|
Use of estimates
|
|
|
|
|
|
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management of the Company to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the years. Significant items subject to such estimates and assumptions include the recoverability of the carrying amount and the estimated useful lives of long-lived assets; valuation allowances for receivables, and realizable values for inventories. Accordingly, actual results could differ from those estimates.
|
|
(d)
|
Foreign currency translation
|
|
|
|
|
|
The Company uses United States dollars (“U.S. Dollar” or “US$” or “$”) for financial reporting purposes. The subsidiaries within the Company maintain their books and records in their respective functional currency, Chinese Renminbi (“RMB”) and Hong Kong dollars (“HKD”), being the lawful currency in the PRC and Hong Kong, respectively. Assets and liabilities of foreign subsidiaries are translated at the rate of exchange in effect on the balance sheet date; income and expenses are translated at the average rate of exchange prevailing during the period. The related transaction adjustments are reflected in “Accumulated other comprehensive income’’ in the equity section of the Company’s consolidated balance sheet. A summary of exchange rate is as follows:
|
|
|
|
December 31,
|
|
|||
|
|
|
2013
|
|
|
2012
|
|
Balance sheet items, except for equity accounts
|
|
|
RMB6.0537=$1
|
|
|
RMB6.3086=$1
|
|
|
|
|
HKD7.7539=$1
|
|
|
HKD7.7507=$1
|
|
|
|
|
Year Ended December 31,
|
|
||||||
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Items in statements of income
and cash flows |
|
|
RMB6.1412=$1
|
|
|
RMB6.3116=$1
|
|
|
RMB6.4640=$1
|
|
|
|
|
HKD7.7565=$1
|
|
|
HKD7.7556=$1
|
|
|
HKD7.7793=$1
|
|
F14 | ||
|
3.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (…/Cont’d)
|
|
(e)
|
Cash
|
|
|
|
|
|
Cash consists of cash on hand and at banks.
|
|
(f)
|
Accounts receivable
|
|
|
|
|
|
The Company only grants credit terms to established customers who are deemed to be financially responsible. Credit periods to independent customers are within
180
days after customers received the purchased goods.
|
|
|
|
|
|
The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews customer credit worthiness, past transaction history, and changes in payment terms when determining the adequacy of these allowances. Accounts are written off against the allowance when it becomes evident collection will not occur.
|
|
|
|
|
|
No allowance for doubtful accounts has been provided for accounts receivable from third party customers for the years ended December 31, 2013 and 2012, respectively. The company collected a majority of receivable balances from third party customers as of December 31, 2013 and 2012 within
60
days subsequent to respective balance sheet dates, and historically has not experienced uncollectible accounts from customers granted with credit sales.
|
|
(g)
|
Revenue recognition
|
|
|
|
|
|
The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the price to the customer is fixed or determinable, and collection of the resulting receivable is reasonably assured.
|
|
|
|
|
|
With respects to the sale of frozen fish and other marine catches to third party customers, most of which are sole proprietor regional wholesalers in China, the Company recognizes revenue when customers pick up purchased goods at the Company’s cold storage warehouse, after payment is received by the Company or credit sale is approved by the Company for recurring customers who have history of financial responsibility. The Company does not offer promotional payments, customer coupons, rebates or other cash redemption offers to its customers. The Company does not accept returns from customers. Deposits or advance payments from customers prior to delivery of goods are recorded as receipt in advance.
|
|
(h)
|
Government grant
|
|
|
|
|
|
Government grants are recognized at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognized as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate. Where the grant relates to an asset, the fair value is credited to the cost of the asset and is released to the income statement over the expected useful life in a consistent manner with the depreciation method for the relevant asset.
|
F15 | ||
|
3.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (…/Cont’d)
|
|
(i)
|
Deferred income
|
|
|
|
|
|
Deferred income represents income collected but not earned as of the report date. This is primarily composed of receipts of the government grants to construct new fishing vessels. Upon the completion of the construction of the fishing vessels, the grant is deducted from the cost of the fishing vessels.
|
|
(j)
|
Fishing licenses
|
|
|
|
|
|
Each of the Company’s fishing vessels requires an approval from Ministry of Agriculture of the People's Republic of China to carry out ocean fishing projects in foreign territories. These approvals are valid for a period from three to twelve months, and are awarded to the Company at no cost. The Company applies for the renewal of the approval prior to expiration to avoid interruptions of fishing vessels’ operations.
|
|
|
|
|
|
Each of the Company’s fishing vessels operated in Indonesia water requires a fishing license granted by the authority in Indonesia. Indonesia fishing licenses remain effective for a period of twelve months and the Company applies for renewal prior to expiration. The Company records cost of Indonesia fishing licenses in prepaid expenses and amortizes over the effective period of the licenses.
|
|
(k)
|
Inventories
|
|
|
|
|
|
Inventories are stated at the lower of cost or market. Cost comprises of fuel, depreciation, amortization, direct labor, shipping, consumables, and government levied charges and taxes. Consumables include fishing nets and metal containers used by fishing vessels. The Company’s fishing fleets in India and Indonesia waters operate around the year, although the May to July period demonstrates lower catch quantities compared to the October to January peak season. Cost of frozen fish and other marine catches at period-ends is calculated using the weighted average method. There was no inventory valuation reserve provided as at December 31, 2013 and 2012.
|
|
(l)
|
Prepaid operating license rights
|
|
|
|
|
|
Prepaid operating license rights is recorded at the lower of the net present value of the minimum license payments or the fair value of the licenses at the inception of the agreement. No interest element of the finance cost is charged to the comprehensive income over the license period as the license payment is fully satisfied. Amortization expense is computed using the straight-line method over the term of the license.
|
F16 | ||
|
3.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (…/Cont’d)
|
|
(m)
|
Property, plant and equipment
|
|
|
|
|
|
Property, plant and equipment are recorded at cost less accumulated depreciation. Expenditures for major additions and betterments are capitalized. Depreciation of property, plant and equipment is computed by the straight-line method over the assets estimated useful lives.
|
|
|
|
|
|
Upon sale or retirement of property, plant and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in operations.
|
|
|
|
|
|
The estimated useful lives of the assets are as follows:
|
|
|
Estimated lives
|
|
Fishing vessel
|
|
10-20
|
|
Major improvement on fishing vessel
|
|
4-20
|
|
Motor vehicle
|
|
3-5
|
|
Ship and office equipments
|
|
3-5
|
|
|
|
Expenditures for repairs and maintenance, which do not extend the useful life of the assets, are expensed as incurred.
|
|
(n)
|
Capitalized interest
|
|
|
|
|
|
Interest associated with the construction of a fishing vessel is capitalized and included in the cost of the fishing vessels. When no debt is incurred specifically for the construction of a fishing vessel, interest is capitalized on amounts expended on the construction using weighted-average cost of the Company’s outstanding borrowings. Capitalization of interest ceases when the construction is substantially complete or the construction activity is suspended for more than a brief period. The Company capitalized interest of $
224,296
, $
244,619
and $
109,899
for the years ended December 31, 2013, 2012 and 2011, respectively in the fishing vessels under construction.
|
|
(o)
|
Impairment of long-lived assets
|
|
|
|
|
|
In accordance with FASB ASC Topic 360, “Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. If long-lived assets are to be disposed, depreciation is discontinued, if applicable, and the assets are reclassified as held for sale at the lower of their carrying amounts or fair values less costs to sell.
|
F17 | ||
|
3.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (…/Cont’d)
|
|
(p)
|
Income taxes
|
|
|
|
|
|
Under the current laws of the Cayman Islands and British Virgin Islands, the Company and Merchant Supreme are not subject to any income or capital gains tax, and dividend payments that the Company may make are not subject to any withholding tax in the Cayman Islands or British Virgin Islands. Under the current laws of Hong Kong, Prime Cheer is not subject to any capital gains tax and dividend payments and are not subject to any withholding tax in Hong Kong.
|
|
|
|
|
|
The Company is not incorporated nor does it engage in any trade or business in the United States and is not subject to United States federal income taxes. The Company did not derive any significant amount of income subject to such taxes after completion of the Share Exchange and accordingly, no relevant tax provision is made in the consolidated statements of operations.
|
|
|
|
|
|
Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be effective when the differences are expected to reverse.
|
|
|
|
|
|
Deferred tax assets are reduced by a valuation allowance to the extent that management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of income in the period that includes the enactment date.
|
|
|
|
|
|
The Company has not recorded deferred income taxes applicable to undistributed earnings of the subsidiary and VIEs located in the PRC because it is the present intention of management to reinvest the undistributed earnings indefinitely in PRC. Undistributed earnings amounted to approximately $
82.7
million and $
36.5
million as of December 31, 2013 and 2012, respectively. If the earnings of such foreign subsidiaries were not definitely reinvested, a deferred tax liability of approximately $
4.1
million and $
1.8
million would have been required at December 31, 2013 and 2012, respectively. Generally, such earnings become subject to the PRC tax upon the remittance of dividends and under certain other circumstances. It is not practicable to estimate the amount of deferred tax liability on such undistributed earnings.
|
|
|
|
|
|
The Company prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken in the tax return. This interpretation also provides guidance on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods and income tax disclosures. As of December 31, 2013 and 2012, there were no amounts that had been accrued with respect to uncertain tax positions.
|
F18 | ||
|
3.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (…/Cont’d)
|
|
(p)
|
Income taxes (…/Cont’d)
|
|
|
|
|
|
The Company's VIE, Pingtan Fishing, is a qualified ocean fishing enterprise certified by the Ministry of Agriculture of the PRC. The qualification is renewed on April 1 each year. Pingtan Fishing is exempt from income tax derived from its ocean fishing operations in the periods it processes a valid Ocean Fishing Enterprise Qualification Certificate issued by the Ministry of Agriculture of the PRC.
|
|
|
|
|
|
In addition, Pingtan Fishing is not subject to foreign income taxes for its operations in India and Indonesia Exclusive Economic Zones.
|
|
(q)
|
Fair value measurements
|
|
|
|
|
|
In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update “ASU 2010-06” “Fair Value Measurements and Disclosures”. The new guidance clarifies two existing disclosure requirements and requires two new disclosures as follows: (1) a “gross” presentation of activities (purchases, sales, and settlements) within the Level 3 rollforward reconciliation, which will replace the “net” presentation format; and (2) detailed disclosures about the transfers in and out of Level 1 and 2 measurements. This guidance is effective for the first interim or annual reporting period beginning after December 15, 2009, except for the gross presentation of the Level 3 rollforward information, which is required for annual reporting periods beginning after December 15, 2010, and for interim reporting periods thereafter. The Company adopted the amended fair value disclosures guidance on January 1, 2012.
|
|
|
|
|
|
As of December 31, 2013 and 2012, none of the Company’s financial assets or liabilities were measured at fair value on a recurring basis. As of December 31, 2013 and 2012, none of the Company’s non-financial assets or liabilities was measured at fair value on a nonrecurring basis.
|
|
|
|
|
|
The carrying values of the Company’s financial assets and liabilities, including accounts receivable, other receivables, other current assets, short-term loans, accounts payable, and accrued liabilities and other payables, are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and if applicable, their stated interest rate approximates current rates available. It is not practicable to estimate the fair values of advance to and advance from related parties because of the related party nature of such advances.
|
|
(r)
|
Commitments and contingencies
|
|
|
|
|
|
In the normal course of business, the Company is subject to contingencies, including legal proceedings and environmental claims arising out of the normal course of businesses that relate to a wide range of matters, including among others, contracts breach liability. The Company records accruals for such contingencies based upon the assessment of the probability of occurrence and, where determinable, an estimate of the liability. Management may consider many factors in making these assessments including past history, scientific evidence and the specifics of each matter.
|
|
|
|
|
|
The Company’s management has evaluated all such proceedings and claims that existed as of December 31, 2013 and 2012. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, liquidity or results of operations.
|
F19 | ||
|
3.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (…/Cont’d)
|
|
(s)
|
Economic and political risks
|
|
|
|
|
|
The Company’s operations are conducted in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy.
|
|
|
|
|
|
The Company’s operation in the PRC is subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances aboard, and rates and methods of taxation, among other things.
|
|
|
|
|
|
According the sale agreement signed on December 4, 2014, the Company does not own 20 fishing vessels but has the license operating rights to operate these vessels which are owned by Hong Long and entitled to 100% of net profit (loss) of the vessels. The Company has latitude in establishing price and discretion in supplier selection. There were no economic risks associated with the license operating rights but the Company may need to bear the operation risks and credit risks as aforementioned.
|
|
(t)
|
Pension and employee benefits
|
|
|
|
|
|
Cost for pension and employee benefits was $
24,502
, $nil and $nil for the years ended December 31, 2013, 2012 and 2011, respectively.
|
|
(u)
|
Segment information
|
|
|
|
|
|
ASC 280 “Segment reporting” establishes standards for reporting information on operating segments in interim and annual financial statements. The Company currently has only one segment, all of the Company’s continuing operations and customers are in the PRC and all income is derived from ocean fishery.
|
|
(v)
|
Earnings per ordinary share
|
|
|
|
|
|
Earnings per ordinary share (basic and diluted) is based on the net income attributable to ordinary shareholders divided by the weighted average number of ordinary shares outstanding during each period. Ordinary share equivalents are not included in the calculation of diluted earnings per ordinary share if their effect would be anti-dilutive. Retroactive treatment as required by FASB ASC paragraph 260-10-55-12 has been applied in computing earnings per share to reflect the business combination held on February 25, 2013.
|
F20 | ||
|
3.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (…/Cont’d)
|
|
(v)
|
Earnings per ordinary share (…/Cont’d)
|
|
|
Year Ended December 31,
|
|
|||||||
|
|
2013
|
|
2012
|
|
2011
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
45,488,758
|
|
$
|
21,297,586
|
|
$
|
10,440,337
|
|
- From continuing operations
|
|
|
51,910,662
|
|
|
84,494,428
|
|
|
90,257,249
|
|
- From discontinued operations
|
|
$
|
97,399,420
|
|
$
|
105,792,014
|
|
$
|
100,697,586
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary
shares outstanding (Basic and diluted) |
|
|
79,055,053
|
|
|
79,055,053
|
|
|
79,055,053
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per ordinary share (Basic and diluted)
|
|
|
|
|
|
|
|
|
|
|
- From continuing operations
|
|
$
|
0.58
|
|
$
|
0.27
|
|
$
|
0.13
|
|
- From discontinued operations
|
|
|
0.65
|
|
|
1.07
|
|
|
1.14
|
|
- Net income
|
|
$
|
1.23
|
|
$
|
1.34
|
|
$
|
1.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31, 2013, 2012 and 2011, the number of securities convertible into ordinary shares not included in diluted EPS because the effect would have been anti-dilutive consists of the following:
|
|
Year Ended December 31,
|
|
|||||
|
2013
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
Warrants to purchase ordinary share
|
8,966,667
|
|
8,966,667
|
|
8,966,667
|
|
|
(w)
|
Recently issued accounting standards
|
|
|
|
|
|
In February 2013, the FASB issued new authoritative accounting guidance related to the recognition and measurement of obligations arising from joint and several liability arrangements. This authoritative accounting guidance is effective for interim and annual periods beginning after December 15, 2013 and is to be applied retrospectively. Based on its evaluation, the Company determined this guidance does not currently impact the Company’s financial statements and disclosures.
|
|
|
|
|
|
In July 2013, the FASB issued new authoritative accounting guidance related to the reporting of unrecognized tax benefits when a net operating loss carryforward, similar tax loss, or tax credit carryforward exists. The guidance states an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carry-forward, a similar tax loss, or a tax credit carry-forward, with certain exceptions. This authoritative accounting guidance is effective for interim and annual periods beginning after December 15, 2013, and is to be applied prospectively to all unrecognized tax benefits that exist at the effective date. The Company determined this guidance does not significantly impact the Company’s financial statements and disclosures.
|
|
|
|
|
|
There are no new significant accounting standards applicable to the Company that have been issued but not yet adopted by the Company as of
December 31, 2013
.
|
F21 | ||
|
|
4.
|
CASH
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Hong Kong
|
|
$
|
269,299
|
|
$
|
3,566,217
|
|
The PRC
|
|
|
7,887,300
|
|
|
6,859,923
|
|
|
|
$
|
8,156,599
|
|
$
|
10,426,140
|
|
|
|
|
|
|
|
|
|
Maximum exposure to credit risk
|
|
$
|
8,156,599
|
|
$
|
10,426,140
|
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
USD
|
|
$
|
381,516
|
|
$
|
3,715,356
|
|
RMB
|
|
|
7,752,468
|
|
|
6,709,922
|
|
HKD
|
|
|
22,615
|
|
|
862
|
|
|
|
$
|
8,156,599
|
|
$
|
10,426,140
|
|
|
5.
|
ACCOUNTS RECEIVABLE
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Accounts receivable from independent third parties
|
|
$
|
9,133,130
|
|
$
|
11,478,436
|
|
F22 | ||
|
|
6.
|
INVENTORIES
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Frozen fish and marine catches in warehouse
|
|
$
|
9,095,736
|
|
$
|
161,484
|
|
Frozen fish and marine catches in transit
|
|
|
-
|
|
|
32,847
|
|
|
|
$
|
9,095,736
|
|
$
|
194,331
|
|
|
7.
|
OTHER RECEIVABLES NON CURRENT PORTION
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Grants receivable from the PRC Government
|
|
$
|
1,213,440
|
|
$
|
-
|
|
|
8.
|
LONG-TERM INVESTMENT
|
F23 | ||
|
|
9.
|
DEPOSIT ON POTENTIAL JOINT VENTURE
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Deposit for an asset interest acquisition and investment
in a proposed Indonesia joint venture |
|
$
|
-
|
|
$
|
6,090,302
|
|
|
10.
|
PREPAID OPERATING LICENSE RIGHTS
|
2014
|
|
$
|
8,644,068
|
|
2015
|
|
|
8,644,068
|
|
2016
|
|
|
8,644,068
|
|
2017
|
|
|
8,644,068
|
|
2018
|
|
|
8,644,068
|
|
Thereafter
|
|
|
172,161,016
|
|
|
|
$
|
215,381,356
|
|
F24 | ||
|
|
11.
|
PROPERTY, PLANT AND EQUIPMENT, NET
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Externally purchased fishing vessels
|
|
$
|
62,551,611
|
|
$
|
20,934,880
|
|
Office and other equipment
|
|
|
147,894
|
|
|
134,684
|
|
Fishing vessels under construction
|
|
|
49,245,794
|
|
|
17,436,515
|
|
|
|
|
111,945,299
|
|
|
38,506,079
|
|
Less: Accumulated depreciation
|
|
|
(4,767,030)
|
|
|
(1,364,173)
|
|
|
|
$
|
107,178,269
|
|
$
|
37,141,906
|
|
F25 | ||
|
|
12.
|
ACCOUNTS PAYABLE - RELATED PARTIES
|
|
|
December 31,
|
|
||||
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
PT. Avona Mina Lestari
|
|
$
|
1,967,151
|
|
$
|
5,589,681
|
|
Fuzhou Honglong Ocean Fishery Co., Ltd. (“Hong Long”)
|
|
|
6,214,491
|
|
|
175,951
|
|
Hai Yi Shipping Limited
|
|
|
251,341
|
|
|
-
|
|
Haifeng Dafu Enterprise Company Limited
|
|
|
377,216
|
|
|
-
|
|
Hong Fa Shipping Limited
|
|
|
4,996,031
|
|
|
-
|
|
Zhiyan Lin
|
|
|
1,375
|
|
|
-
|
|
|
|
$
|
13,807,605
|
|
$
|
5,765,632
|
|
|
13.
|
RECEIPT IN ADVANCE - RELATED PARTIES
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Shenzhen Western Coast Fisherman Pier Co., Ltd (See Note 16 (a))
|
|
$
|
-
|
|
$
|
12,681,102
|
|
F26 | ||
|
|
14.
|
TERM LOANS
|
|
(a)
|
Short-term loans
|
|
|
December 31,
|
|
|||||
|
|
2013
|
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
|
Classified by financial institutions:
|
|
|
|
|
|
|
|
|
Industrial and Commercial Bank of China
|
|
$
|
-
|
|
|
$
|
14,390,323
|
|
Fujian Haixia Bank
|
|
|
9,085,353
|
|
|
|
7,133,120
|
|
China Minsheng Banking Corporation Limited
|
|
|
-
|
|
|
|
3,645,817
|
|
|
|
$
|
9,085,353
|
|
|
$
|
25,169,260
|
|
|
|
|
|
|
|
|
|
|
Additional information:
|
|
|
|
|
|
|
|
|
Maximum balance outstanding during the year
|
|
$
|
25,169,260
|
|
|
$
|
25,169,260
|
|
Interest expense for the years ended December 31, 2013 and 2012
|
|
$
|
1,229,965
|
|
|
$
|
1,873,866
|
|
Weighted average interest rate
|
|
|
8.7
|
%
|
|
|
4.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
amount as of
|
|
|
|
Principal
|
|
annualized
|
|
|
|
|
|
|
December
|
|
Name of Banks
|
|
amount
|
|
interest rate
|
|
Terms of loans
|
|
Collateral
|
|
|
31,2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fujian Haixia
Bank, Fuzhou Hualin Branch |
|
RMB30,000,000
|
|
Fixed rate at
8.400% per annum |
|
Due on
March 22, 2014 |
|
Guaranteed by
Xinrong Zhuo |
|
|
4,955,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fujian Haixia
Bank, Fuzhou Hualin Branch |
|
RMB10,000,000
|
|
Fixed rate at
9.000% per annum |
|
Due on
May 9, 2014 |
|
Guaranteed by
Xinrong Zhuo |
|
|
1,651,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fujian Haixia
Bank, Fuzhou Hualin Branch |
|
RMB15,000,000
|
|
Fixed rate at
9.000% per annum |
|
Due on
April 23, 2014 |
|
Guaranteed by
Xinrong Zhuo |
|
|
2,477,823
|
|
|
|
|
|
|
|
|
|
|
|
$
|
9,085,353
|
|
F27 | ||
|
|
14.
|
TERM LOANS (…/Cont’d)
|
|
(b)
|
Long-term loans
|
|
|
December 31,
|
|
|||||
|
|
2013
|
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
|
China Minsheng Banking Corporation Limited, Fuzhou Branch
|
|
$
|
14,829,774
|
|
|
$
|
20,028,216
|
|
Fujian Haixia Bank, Fuzhou Hualin Branch
|
|
|
3,303,764
|
|
|
|
4,755,413
|
|
The Export-Import Bank of China, Fujian Branch
|
|
|
46,706,972
|
|
|
|
-
|
|
China Development Bank, Fujian Branch
|
|
|
9,911,294
|
|
|
|
-
|
|
|
|
$
|
74,751,804
|
|
|
$
|
24,783,629
|
|
Less: Current portion
|
|
|
(20,252,077)
|
|
|
|
(8,094,308)
|
|
Long-term debt
|
|
$
|
54,499,727
|
|
|
$
|
16,689,321
|
|
|
|
|
|
|
|
|
|
|
Additional information:
|
|
|
|
|
|
|
|
|
Weighted average interest rate
|
|
|
6.8
|
%
|
|
|
7.9
|
%
|
|
14.
|
TERM LOANS (…/Cont’d)
|
|
(b)
|
Long-term loans (…/Cont’d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
Principal payment due during
|
|
|
|
|
|
|
|
outstanding
|
|
||||||||
Name of bank
|
|
Collateral
|
|
Term of loans
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018-2021
|
|
loan amount
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China Minsheng
Banking Corporation Limited, Fuzhou Branch |
|
Pingtan Fishing’s
and Hong Long’s fishing vessels and guaranteed by Xinrong Zhuo |
|
May 4, 2012 to
March 16, 2015 |
|
$
|
6,095,446
|
|
$
|
3,047,723
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
9,143,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China Minsheng
Banking Corporation Limited, Fuzhou Branch |
|
Pingtan Fishing’s
and Hong Long’s fishing vessels and guaranteed by Xinrong Zhuo |
|
June 15, 2012 to
March 16, 2015 |
|
|
1,486,694
|
|
|
743,347
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,230,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China Minsheng
Banking Corporation Limited, Fuzhou Branch |
|
Pingtan Fishing’s
and Hong Long’s fishing vessels and guaranteed by Xinrong Zhuo |
|
June 29, 2012 to
March 16, 2015 |
|
|
2,304,376
|
|
|
1,152,188
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,456,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fujian Haixia Bank,
Fuzhou Hualin Branch |
|
Guaranteed by
Xinrong Zhuo |
|
April 25, 2012 to
March 22, 2015 |
|
|
1,651,882
|
|
|
1,651,882
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,303,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Export-Import
Bank of China |
|
Hong Long’s
investment in equity interest of a PRC local bank |
|
July 5, 2013 to
December 10, 2017 |
|
|
3,386,359
|
|
|
4,724,383
|
|
|
5,418,174
|
|
|
6,111,965
|
|
|
-
|
|
|
19,640,881
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Export-Import
Bank of China |
|
Hong Long’s
investment in equity interest of a PRC local bank |
|
July 5, 2013 to
December 10, 2017 |
|
|
123,891
|
|
|
181,707
|
|
|
198,226
|
|
|
214,745
|
|
|
-
|
|
|
718,569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Export-Import
Bank of China |
|
Fujian International
Trading and Transportation Company Ltd’s investment in equity interest of a PRC local bank |
|
July 5, 2013 to
December 10, 2017 |
|
|
660,753
|
|
|
925,054
|
|
|
1,024,167
|
|
|
1,172,836
|
|
|
-
|
|
|
3,782,810
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Export-Import
Bank of China |
|
Guarantee of
Hong Long |
|
July 5, 2013 to
December 10, 2017 |
|
|
3,270,727
|
|
|
4,592,233
|
|
|
5,219,948
|
|
|
2,775,162
|
|
|
-
|
|
|
15,858,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Export-Import
Bank of China |
|
Fujian International
Trading and Transportation Company Ltd’s investment in equity interest of a PRC local bank |
|
September 29,
2013 to December 10, 2017 |
|
|
82,594
|
|
|
99,113
|
|
|
132,151
|
|
|
148,669
|
|
|
-
|
|
|
462,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Export-Import
Bank of China |
|
Hong Long’s
investment in equity interest of a PRC local bank |
|
September 29,
2013 to December 10, 2017 |
|
|
214,745
|
|
|
297,339
|
|
|
363,414
|
|
|
379,933
|
|
|
-
|
|
|
1,255,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Export-Import
Bank of China |
|
Hong Long’s
investment in equity interest of a PRC local bank |
|
September 29,
2013 to December 10, 2017 |
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,659,531
|
|
|
-
|
|
|
2,659,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Export-Import
Bank of China Fujian Branch |
|
Pingtan Fishing’s
investment in equity interest of a PRC local bank |
|
September 29,
2013 to December 10, 2017 |
|
|
396,451
|
|
|
561,640
|
|
|
660,753
|
|
|
710,309
|
|
|
-
|
|
|
2,329,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China Development
Bank Fujian Branch |
|
Guaranteed by
Xinrong Zhuo, Honghong Zhuo, Mrs. and Mr. Zhiyan Lin and 14 fishing vessels under construction |
|
November 28,
2013 to November 27, 2021 |
|
|
578,159
|
|
|
1,156,318
|
|
|
1,238,912
|
|
|
1,404,100
|
|
|
5,533,805
|
|
|
9,911,294
|
|
|
|
|
|
|
|
$
|
20,252,077
|
|
$
|
19,132,927
|
|
$
|
14,255,745
|
|
$
|
15,577,250
|
|
$
|
5,533,805
|
|
$
|
74,751,804
|
|
F29 | ||
|
|
14.
|
TERM LOANS (…/Cont’d)
|
|
(c)
|
Guarantees and collaterals provided to related parties
|
|
15.
|
ACCRUED LIABILITIES AND OTHER PAYABLES
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Accrued salaries and wages
|
|
$
|
3,278,245
|
|
$
|
673,234
|
|
Accrued expenses
|
|
|
152,000
|
|
|
-
|
|
Other payables
|
|
|
420,802
|
|
|
360,550
|
|
|
|
$
|
3,851,047
|
|
$
|
1,033,784
|
|
F30 | ||
|
|
16.
|
ADVANCES TO/FROM RELATED PARTIES
|
|
(a)
|
Name and relationship of related parties
|
Name of related party
|
|
Relationship
|
Panxing Zhuo
|
|
Father of Xinrong Zhuo, a Family Member
|
Honghong Zhuo
|
|
Daughter of Xinrong Zhuo
|
Qing Lin
|
|
Brother-in-law of Xinrong Zhuo, a Family Member
|
Longfei Zhuo
|
|
Cousin of Xinrong Zhuo, a Family Member
|
Sunqiang Zhou
|
|
Brother-in-law of Xinrong Zhuo, a Family Member
|
Cheng Chen
|
|
Cousin of Xinrong Zhuo, a Family Member and
|
|
|
shareholder of Hong Long
|
Xiaojie Wu
|
|
Brother-in-law of Xinrong Zhuo, a Family Member
|
Xiaoqin Xu
|
|
An employee of an affiliate company
|
Xiaomei Yang
|
|
An employee of the Company and niece of Xinrong Zhuo
|
Xiaofang Zhuo
|
|
Cousin of Xinrong Zhuo, a Family Member
|
Longhua Zhuo
|
|
Sister of Xinrong Zhuo,a Family Member
|
Zhiyan Lin
|
|
Shareholder of Pingtan Fishing
|
Fujian Yihai Investment Co., Ltd.
|
|
An affiliate company majority owned by Longjie Zhuo, sibling of Xinrong Zhuo
|
Fuzhou Haifeng Dafu Ocean Fishing Co., Ltd.
|
|
An affiliate company owned by Longfei Zhuo and Honghong Zhuo
|
Fujian Lutong Highway Engineering
|
|
An affiliate company majority owned by Xiaojie Wu, brother-in-law of Xinrong Zhuo
|
Fujian Haiyi International Shipping Agency Co., Ltd.
|
|
An affiliate company to which the Company acted as a trustee equity owner. Haiyi International is ultimately majority owned and controlled by Sunqiang Zhou, brother-in-law of Xinrong Zhuo and a Family Member
|
Fujian Xinnong Ocean Fisheries Development Co., Ltd.
|
|
An affiliate company to which the Company acted as a trustee equity owner. Xinnong is ultimately owned and controlled by Xiaojie Wu
|
Fuzhou Haoyouli Fisheries Development Co., Ltd.
|
|
An affiliate company to which the Company acted as trustee equity owner. Haoyouli is ultimately owned and controlled by Sunqiang Zhou
|
Fuzhou Honglong Ocean Fishery Co., Ltd.
|
|
An affiliate company majority owned and controlled by Ping Lin, spouse of Xinrong Zhuo and a Family Member
|
PT. Avona Mina Lestari
|
|
An affiliate company controlled by Xinrong Zhuo family domiciled in Indonesia, engaged in fishing base management and fishing vessel service
|
PT. Dwikarya Reksa Abadi
|
|
An affiliate company controlled by Xinrong Zhuo family domiciled in Indonesia, engaged in fishing base management and fishing vessel service
|
Haifeng Dafu Enterprise Company Limited
|
|
An affiliate company ultimately owned by Xinrong Zhuo and domiciled in the Hong Kong Special Administrative Region of the PRC (“Hong Kong”)
|
F31 | ||
|
|
16.
|
ADVANCES TO/FROM RELATED PARTIES (…/Cont’d)
|
|
(a)
|
Name and relationship of related parties (.../Cont’d)
|
Name of related party
|
|
Relationship
|
Hai Yi Shipping Limited
|
|
An affiliate company ultimately owned by Xinrong Zhuo and domiciled in Hong Kong Administrative Region of the PRC (“Hong Kong”)
|
Fuzhou Wanhao Real Estate Property Investment Co., Ltd.
|
|
An affiliate company majority-owned and controlled by Qing Lin
|
China Communication Materials Central and South Co., Ltd.
|
|
An affiliate company majority-owned by Lutong Highway
|
Fujian Gangjun Construction Co., Ltd.
|
|
An affiliate company ultimately controlled by Xinrong Zhuo
|
Fujian International Trading and Transportation Co., Ltd.
|
|
An affiliate company owned by Yihai Investment and Longhao Zhuo, sibling of Xinrong Zhuo and a Family Member
|
Fuzhou Dongxing Longju Real Estate Co., Ltd.
|
|
An affiliate company owned by Xinrong Zhuo
|
Shenzhen Western Coast Fisherman Pier Co., Ltd.
|
|
An affiliate company owned by Xinrong Zhuo
|
Pingtan Heshun Fuel Co., Ltd.
|
|
An affiliate company under Xinrong Zhuo’s common control
|
Fuzhou Hairong Trading Co., Ltd.
|
|
An affiliate company under Xinrong Zhuo’s common control
|
Hong Fa Shipping Limited
|
|
An affiliate company ultimately owned by Xinrong Zhuo and domiciled in Hong Kong Administrative Region of the PRC (“Hong Kong”)
|
|
(b)
|
Advances to related parties
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Honghong Zhuo
|
|
$
|
-
|
|
$
|
1,642,203
|
|
Panxing Zhuo
|
|
|
-
|
|
|
6,196,248
|
|
Qing Lin
|
|
|
-
|
|
|
100,855
|
|
Xiaofang Zhuo
|
|
|
-
|
|
|
769,251
|
|
Xiaomei Yang
|
|
|
-
|
|
|
7,598,782
|
|
China Communication Materials Central and South Co., Ltd
|
|
|
-
|
|
|
6,895,349
|
|
Fujian Haiyi International Shipping Agency Co., Ltd.
|
|
|
-
|
|
|
243,117
|
|
Fujian Lutong Highway Engineering Construction Co., Ltd.
|
|
|
-
|
|
|
2,161,177
|
|
Fujian Yihai Investment Co., Ltd
|
|
|
-
|
|
|
13,467,150
|
|
Fuzhou Haifeng Dafu Ocean Fishing Co., Ltd.
|
|
|
-
|
|
|
956,315
|
|
Fuzhou Haoyouli Fisheries Development Co., Ltd.
|
|
|
-
|
|
|
7,204,451
|
|
Fuzhou Wanhao Real Estate Property Investment Co., Ltd
|
|
|
-
|
|
|
2,567,923
|
|
|
|
$
|
-
|
|
$
|
49,802,821
|
|
F32 | ||
|
|
16.
|
ADVANCES TO/FROM RELATED PARTIES (…/Cont’d)
|
|
(c)
|
Advances from related parties
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Kit Chan
|
|
$
|
-
|
|
$
|
153,961
|
|
|
17.
|
CAPITAL
|
|
(a)
|
Share Capital
|
F33 | ||
|
|
17.
|
CAPITAL (…/Cont’d)
|
|
(a)
|
Share Capital (…/Cont’d)
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Warrants
|
|
Exercise Price
|
|
Terms
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable as of December 31, 2013
|
|
8,966,667
|
|
$
|
12
|
|
4.2 years
|
|
|
(b)
|
Retained earnings and statutory reserves
|
F34 | ||
|
|
18.
|
RELATED PARTY TRANSACTIONS
|
|
|
Year Ended December 31,
|
|
|||||||
|
|
2013
|
|
2012
|
|
2011
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Service fee
|
|
|
|
|
|
|
|
|
|
|
Hai Yi Shipping Limited (6)
|
|
$
|
230,903
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of frozen fish and other marine catches
|
|
|
|
|
|
|
|
|
|
|
Shenzhen Western Coast Fisherman Pier Co., Ltd.
|
|
$
|
10,372,611
|
|
$
|
-
|
|
$
|
-
|
|
Fuzhou Haifeng Dafu Ocean Fishing Co., Ltd.
|
|
|
-
|
|
|
4,574,118
|
|
|
4,312,036
|
|
Fujian Xinnong Ocean Fisheries Development Co., Ltd.
|
|
|
-
|
|
|
8,948,761
|
|
|
-
|
|
Cheng Chen
|
|
|
-
|
|
|
185,839
|
|
|
179,378
|
|
Longhua Zhou
|
|
|
-
|
|
|
78,902
|
|
|
-
|
|
Total sales
|
|
$
|
10,372,611
|
|
$
|
13,787,620
|
|
$
|
4,491,414
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of fuel, fishing nets and other on board consumables (1)
|
|
|
|
|
|
|
|
|
|
|
PT. Avona Mina Lestari
|
|
$
|
14,746,582
|
|
$
|
10,709,195
|
|
$
|
3,440,000
|
|
PT. Dwikarya Reksa Abadi
|
|
|
757,557
|
|
|
-
|
|
|
-
|
|
Zhiyan Lin
|
|
|
1,126
|
|
|
-
|
|
|
-
|
|
|
|
|
15,505,265
|
|
|
10,709,195
|
|
|
3,440,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of fuel, fishing nets and other on board consumables paid on behalf
|
|
|
|
|
|
|
|
|
|
|
Fuzhou Honglong Ocean Fishery Co., Ltd.
|
|
|
1,953,494
|
|
|
3,245,177
|
|
|
1,037,441
|
|
Hong Fa Shipping Limited
|
|
|
16,065,535
|
|
|
-
|
|
|
-
|
|
|
|
|
18,019,029
|
|
|
3,245,177
|
|
|
1,037,441
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of vessel maintenance service (2)
|
|
|
|
|
|
|
|
|
|
|
PT. Avona Mina Lestari
|
|
|
2,981,043
|
|
|
1,901,250
|
|
|
1,602,900
|
|
PT. Dwikarya Reksa Adadi
|
|
|
-
|
|
|
-
|
|
|
1,675,674
|
|
|
|
|
2,981,043
|
|
|
1,901,250
|
|
|
3,278,574
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of vessel maintenance service paid on behalf
|
|
|
|
|
|
|
|
|
|
|
Fuzhou Honglong Ocean Fishery Co., Ltd.
|
|
|
1,196,983
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of transportation service (2)
|
|
|
|
|
|
|
|
|
|
|
Haifeng Dafu Enterprise Company Limited
|
|
|
4,122,861
|
|
|
2,118,321
|
|
|
237,207
|
|
Hai Yi Shipping Limited
|
|
|
1,653,682
|
|
|
505,154
|
|
|
352,252
|
|
Hong Fa Shipping Limited
|
|
|
3,345,589
|
|
|
1,016,098
|
|
|
-
|
|
PT. Avona Mina Lestari
|
|
|
35,149
|
|
|
573,545
|
|
|
1,402,616
|
|
|
|
|
9,157,281
|
|
|
4,213,118
|
|
|
1,992,075
|
|
F35 | ||
|
|
18.
|
RELATED PARTY TRANSACTIONS (…/Cont’d)
|
|
|
Year Ended December 31,
|
|
|||||||
|
|
2013
|
|
2012
|
|
2011
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Cold storage warehouse and office rental
|
|
|
|
|
|
|
|
|
|
|
Ping Lin (5)
|
|
$
|
13,678
|
|
$
|
5,545
|
|
$
|
-
|
|
Fuzhou Honglong Ocean Fishery Co., Ltd. (3)
|
|
|
-
|
|
|
206,498
|
|
|
488,861
|
|
|
|
|
13,678
|
|
|
212,043
|
|
|
488,861
|
|
|
|
|
|
|
|
|
|
|
|
|
Indonesia fleet vessel agency fee payable (4)
|
|
|
|
|
|
|
|
|
|
|
PT. Avona Mina Lestari
|
|
|
1,042,738
|
|
|
410,000
|
|
|
90,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Crewmen compensation paid on behalf
|
|
|
|
|
|
|
|
|
|
|
Fuzhou Honglong Ocean Fishery Co., Ltd.
|
|
|
-
|
|
|
435,569
|
|
|
155,569
|
|
PT. Avona Mina Lestari
|
|
|
1,125,043
|
|
|
550,000
|
|
|
153,156
|
|
|
|
|
1,125,043
|
|
|
985,569
|
|
|
308,725
|
|
Indonesia fishing licenses paid on behalf
|
|
|
|
|
|
|
|
|
|
|
PT. Avona Mina Lestari
|
|
|
1,748,239
|
|
|
1,155,774
|
|
|
305,318
|
|
Total purchases and expenses
|
|
$
|
50,789,299
|
|
$
|
22,832,126
|
|
$
|
10,940,994
|
|
|
(1)
|
Fuel, fishing nets and other consumables were sold to Pingtan Fishing.
|
|
(2)
|
Vessel maintenance and transportation services were charged to Pingtan Fishing at prices mutually agreed by the related parties and Pingtan Fishing.
|
|
(3)
|
The Company sub-leased office area and cold storage warehouse cells from Hong Long. Pursuant to an Office Space Rental and Staff Dispatch Agreement entered into on January 1, 2010 with a three-year term, annual lease and facilities expenses are RMB
1,000,000
. Cold storage warehouse cell sub-lease contracts were entered into simultaneously with Hong Long’s lease contracts with the third party lessor, which are renewed every 12-to-16 months. The agreements were terminated on
July 31, 2012
.
|
|
(4)
|
Pursuant to a Fishery Cooperative Agreement dated December 31, 2012 with one-year term, entered into between Pingtan Fishing and Avona, Pingtan Fishing is payable to Avona an annual agency fee, calculated at mutually agreed amount of $
20,000
, for the period from January 1, 2013 to December 31, 2013, Avona acts as an agent for each of Pingtan Fishing’s fishing vessels. The agreement continues to be executed without disagreement from both parties.
|
|
(5)
|
Pingtan Fishing entered into a three-year term office rental lease with Ping Lin on July 31, 2012. The annual lease is $
13,678
.
|
|
(6)
|
On July 1, 2013, the Company entered into a service agreement with Hai Yi Shipping Limited that provided the Company a portion of use of premises located in Hong Kong as office, and clerical and administrative support and consultation services. The agreement will expire on December 31, 2014.
|
F36 | ||
|
|
19.
|
CERTAIN RISKS AND CONCENTRATIONS
|
|
(a)
|
Credit risk
|
|
(b)
|
Major customers
|
|
(c)
|
Major suppliers
|
|
20.
|
COMMITEMTS AND CONTINGENCIES
|
F37 | ||
|
|
21.
|
OPERATING LEASE COMMITMENT
|
|
|
|
|
|
Cold storage
|
|
|
|
|
|
|
|
|
|
|
Service fee
|
|
Warehouse
|
|
Office rental
|
|
Total
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
$
|
461,961
|
|
$
|
244,637
|
|
$
|
13,876
|
|
$
|
720,474
|
|
2015
|
|
|
-
|
|
|
-
|
|
|
8,094
|
|
|
8,094
|
|
|
|
$
|
461,961
|
|
$
|
244,637
|
|
$
|
21,970
|
|
$
|
728,568
|
|
|
|
|
|
|
Cold storage
|
|
|
|
|
|
|
|
|
|
|
Service fee
|
|
Warehouse
|
|
Office rental
|
|
Total
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related parties commitments
|
|
$
|
461,961
|
|
$
|
-
|
|
$
|
21,970
|
|
$
|
483,931
|
|
Non-related parties commitments
|
|
|
-
|
|
|
244,637
|
|
|
-
|
|
|
244,637
|
|
|
|
$
|
461,961
|
|
$
|
244,637
|
|
$
|
21,970
|
|
$
|
728,568
|
|
|
22.
|
SUBSEQUENT EVENTS
|
|
23.
|
CONDENSED PARENT COMPANY FINANCIAL INFORMATION
|
F38 | ||
|
|
23.
|
CONDENSED PARENT COMPANY FINANCIAL INFORMATION (…/Cont’d)
|
|
|
December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Cash
|
|
$
|
246,684
|
|
$
|
3,565,355
|
|
Prepaid expenses
|
|
|
2,820
|
|
|
24,000
|
|
Investments in subsidiaries
|
|
|
36,808,242
|
|
|
396,709,649
|
|
Total current assets
|
|
|
37,057,746
|
|
|
400,299,004
|
|
|
|
|
|
|
|
|
|
Other assets
|
|
|
|
|
|
|
|
Prepaid operating license rights
|
|
|
215,381,356
|
|
|
-
|
|
Total assets
|
|
$
|
252,439,102
|
|
$
|
400,299,004
|
|
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Accrued liabilities and other payables
|
|
$
|
201,672
|
|
$
|
18
|
|
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
|
|
|
Total shareholders' equity
|
|
|
252,237,430
|
|
|
400,298,986
|
|
Total liabilities and equity
|
|
$
|
252,439,102
|
|
$
|
400,299,004
|
|
|
|
Year Ended December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Cost of revenue
|
|
$
|
(720,339)
|
|
$
|
-
|
|
General and administrative expenses
|
|
|
(2,225,543)
|
|
|
(2,366,419)
|
|
Other income
|
|
|
117
|
|
|
-
|
|
Equity in income of subsidiaries
|
|
|
100,345,185
|
|
|
108,161,433
|
|
Net income
|
|
$
|
97,399,420
|
|
$
|
105,795,014
|
|
F39 | ||
|
|
23.
|
CONDENSED PARENT COMPANY FINANCIAL INFORMATION (…/Cont’d)
|
|
|
Year Ended December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
$
|
(2,002,592)
|
|
$
|
(2,390,401)
|
|
Net cash provided by investing activities
|
|
|
123,865,099
|
|
|
-
|
|
Net cash (used in)/provided by financing activities
|
|
|
(125,181,178)
|
|
|
5,955,756
|
|
Net (decrease)/increase in cash
|
|
|
(3,318,671)
|
|
|
3,565,355
|
|
Cash at the beginning of the year
|
|
|
3,565,355
|
|
|
-
|
|
Cash at the end of the year
|
|
$
|
246,684
|
|
$
|
3,565,355
|
|
F40 | ||
|
|
24.
|
QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED)
|
|
|
Three Months Ended
|
|
||||||||||
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
19,669,476
|
|
$
|
21,362,357
|
|
$
|
20,609,107
|
|
$
|
61,026,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
(14,292,134)
|
|
|
(12,235,475)
|
|
|
(12,446,879)
|
|
|
(36,785,545)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
5,377,342
|
|
|
9,126,882
|
|
|
8,162,228
|
|
|
24,241,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing expenses
|
|
|
(194,688)
|
|
|
(174,046)
|
|
|
(362,000)
|
|
|
(887,544)
|
|
General and administrative expenses
|
|
|
(301,342)
|
|
|
(866,194)
|
|
|
(1,178,033)
|
|
|
(846,068)
|
|
Total operating expenses
|
|
|
(496,030)
|
|
|
(1,040,240)
|
|
|
(1,540,033)
|
|
|
(1,733,612)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
4,881,312
|
|
|
8,086,642
|
|
|
6,622,195
|
|
|
22,507,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income
|
|
|
-
|
|
|
69,071
|
|
|
218
|
|
|
230
|
|
Interest income
|
|
|
1,096
|
|
|
1,460
|
|
|
2,305
|
|
|
3,389
|
|
Interest expenses
|
|
|
(685,377)
|
|
|
(710,365)
|
|
|
(1,049,040)
|
|
|
(1,727,207)
|
|
Subsidy income
|
|
|
35,387
|
|
|
205
|
|
|
168,900
|
|
|
7,133,781
|
|
Sundry income
|
|
|
2,003
|
|
|
11
|
|
|
7
|
|
|
123
|
|
Gain/(Loss) on foreign exchange, net
|
|
|
207,984
|
|
|
(428,389)
|
|
|
194,433
|
|
|
170,712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income
taxes |
|
|
4,442,405
|
|
|
7,018,635
|
|
|
5,939,018
|
|
|
28,088,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations
|
|
|
4,442,405
|
|
|
7,018,635
|
|
|
5,939,018
|
|
|
28,088,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from discontinued operations, net of taxes
|
|
|
9,340,136
|
|
|
17,759,118
|
|
|
12,362,523
|
|
|
12,448,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income
|
|
|
13,782,541
|
|
|
24,777,753
|
|
|
18,301,541
|
|
|
40,537,585
|
|
F41 | ||
|
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the “ agreement ”) is entered into as of October 26, 2013 by and between Pingtan Marine Enterprise Ltd., a company incorporated and existing under the laws of the Cayman Islands (the “ Company ”) and Mr. Xinrong Zhuo (Passport Number No.D00159400), an individual (the “ Executive ”).The term “Company” as used herein with respect to all obligations of the Executive hereunder shall be deemed to include the Company and all of its direct or indirect subsidiaries and affiliated.
RECITALS
A. The Company desires to employ the Executive and to assure itself of the services of the Executive during the term of Employment (as defined below).
B. The Executive desires to be employed by the Company during the term of Employment and under the terms and conditions of this Agreement.
AGREEMENT
The parties hereto agree as follows:
1. | POSITION |
The Executive hereby accepts a position of the Chief Executive Officer (the “ Employment ”) of the Company.
2. | TERM |
Subject to the terms and conditions of this Agreement, the initial term of the Employment shall be 3 years, commencing on August 26, 2013 (the “ Effective Date ”), until August 25, 2016, unless terminated earlier pursuant to the terms of this Agreement.
3. | Salary |
(a) The Executive’s annual base salary is HK$312,000 (or other equivalent currency) to be paid on the fifth day of each month during the term of the Employment. The Executive’s cash bonus shall be determined by the Board or the Compensation Committee of the Board on a discretionary basis in accordance with the terms of the Company’s Memorandum and Articles of Association.
1 |
(b) Benefits. The Executive is eligible for participation in any standard employee benefit plan of the Company that currently exists or may be adopted by the Company in the future, but not limited to, any retirement plan, and travel holiday policy.
4. | DUTIES AND RESPONSIBILITIES |
The Executive’s duties at the Company will include all jobs assigned by the Company’s Chief Executive Officer. If the Executive is the Chief Executive Officer of the Company, the Executive’s duties will include all jobs assigned by the Board of Directors of the Company (the “ Board ”).
The Executive shall devote all of his/her working time, attention and skills to the performance of his/her duties at the Company and shall faithfully and diligently serve the Company in accordance with this Agreement and the guidelines, policies and procedures of the Company approved from time to time by the Board.
The Executive shall use his/her best efforts to perform his/her duties hereunder. During the term of Employment the Executive shall not become an employee of any entity, which competes with the business carried on by the Company (any such business or entity, a “ Competitor "), other than the Company and any subsidiary or affiliate of the Company, provided that nothing in this clause shall preclude the Executive from holding less than 5% shares or other securities of any Competitor that is listed on any securities exchange or recognized securities market anywhere.
5. | NO BREACH OF CONTRACT |
The Executive hereby represents to the Company that: (i) the execution and delivery of this Agreement by the Executive and the performance by the Executive of the Executive's duties hereunder shall not constitute a breach of, or otherwise contravene, the terms of any other agreement to which the Executive is a party or otherwise bound, except for agreements that are required to be entered into by and between the Executive and any member of the Group pursuant to applicable law of the jurisdiction where the Executive is based, if any; (ii) that the Executive has no information, confidential information and trade secrets relating to any other person or entity which would prevent, or be violated by, the Executive entering into this Agreement or carrying out his/her duties hereunder.
6. | LOCATION |
The Executive will be based in Fuzhou City, China or any other location as requested by the Company during the term of this Agreement.
2 |
7. | TERMINATION OF THE AGREEMENT |
(a) | By the Company . The Company may terminate the Employment for cause, at any time, without advance notice or remuneration, if (i) the Executive is convicted or pleads guilty to a felony, (ii) the Executive has been negligent or acted dishonestly to the detriment of the Company, (iii) the Executive has engaged in actions amounting to misconduct or failed to perform his/her duties hereunder and such failure continues after the Executive is afforded a reasonable opportunity to cure such failure,(iv)the Executive has died, or (v)the Executive has a disability which shall mean a physical or mental impairment which, as reasonably determined by the Board, renders the Executive unable to perform the essential functions of his/her employment with the company, even with reasonable accommodation that does not impose an undue hardship on the Company, for more than 180 days in any 12-month period, unless a longer period is required by applicable law, in which case that longer period would apply. |
In addition, the Company may terminate the Employment without cause, at any time, upon one-month prior written notice to the Executive. Upon termination without cause, the Company shall provide the Executive with severance payment in cash in an amount equal to three months of the Executive’s base salary at the then current rate. Under such circumstance, the Executive agrees not to make any further claims for compensation for loss of office, accrued remuneration, fees, wrongful dismissal or any other claim whatsoever against the Company or its subsidiaries or the respective officers or employees of any of them.
(b) | By the Executive . If there is a material and substantial reduction in the Executive’s existing authority and responsibilities, the Executive may resign upon one-month prior written notice to the Company. In addition, the Executive may resign prior to the expiration of the Agreement upon three-month prior written notice to the Company. |
(c) | Notice of Termination. Any termination of the Executive’s employment under this Agreement shall be communicated by written notice of termination from the terminating party to the other party. The notice of termination shall indicate the specific provision(s) of this Agreement relied upon in effecting the termination. |
8. | CONFIDENTIALITY AND NONDISCLOSURE |
(a) | Confidentiality and Non-disclosure. In the course of the Executive’s services, the Executive may have access to the Company and/or the Company’s customer/supplier’s and/or prospective customer/supplier’s trade secrets and confidential information, including but not limited to those embodied in memoranda, manuals, letters or other documents, computer disks, tapes or other information storage devices, hardware, or other media or vehicles, pertaining to the Company and/or the Company’s customer/supplier’s and/or prospective customer/supplier’s business. All such trade secrets and confidential information are considered confidential. All materials containing any secrets and confidential information are the property of the Company and/or the Company’s customer/supplier and/or prospective customer/supplier, and shall be returned to the Company and/or the Company’s customer/supplier and/or prospective customer/supplier upon expiration or earlier termination of this Agreement. The Executive shall not directly or indirectly disclose or use any such trade secret or confidential information, except as required in the performance of the Executive’s duties in connection with the Employment, or pursuant to applicable law. |
3 |
(b) | Trade Secrets . During and after the Employment, the Executive shall hold the Trade Secrets in strict confidence; the Executive shall not disclose these Trade Secrets to anyone except other employees of the Company who have a need to know the Trade Secrets in connection with the Company’s business. The Executive shall not use the Trade Secrets other than for the benefits of the Company. |
"Trade Secrets" means information deemed confidential by the Company, treated by the Company or which the Executive knows or ought reasonably to have known to be confidential, and trade secrets, including without limitation designs, processes, pricing policies, methods, inventions, conceptions, technology, technical data, financial information, corporate structure and know how, relating to the business and affairs of the Company and its subsidiaries, affiliates and business associates, whether embodied in memoranda, manuals, letters or other documents, computer disks, tapes or other information storage devices, hardware, or other media or vehicles. Trade Secrets do not include information generally known or released to public domain through no fault of yours.
(c) | Former Employer Information . The Executive agrees that he or she has not and will not, during the term of his/her employment, (i) improperly use or disclose any proprietary information or trade secrets of any former employer or other person or entity with which the Executive has an agreement or duty to keep in confidence information acquired by Executive, if any, or (ii) bring into the premises of Company any document or confidential or proprietary information belonging to such former employer, person or entity unless consented to in writing by such former employer, person or entity. The Executive will indemnify the Company and hold it harmless from and against all claims, liabilities, damages and expenses, including reasonable attorneys' fees and costs of suit, arising out of or in connection with any violation of the foregoing. |
(d) | Third Party Information . The Executive recognizes that the Company may have received, and in the future may receive, from third parties their confidential or proprietary information subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for certain limited purposes. The Executive agrees that the Executive owes the Company and such third parties, during the Executive's employment by the Company and thereafter, a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person or firm and to use it in a manner consistent with, and for the limited purposes permitted by, the Company's agreement with such third party. |
4 |
This Section 8 shall survive the termination of this Agreement for any reason. In the event the Executive breaches this Section 8, the Company shall have right to seek remedies permissible under applicable law.
9. | INVENTIONS |
(a) | Inventions Retained and Licensed. The Executive doesn’t have any inventions, ideas, improvements, designs and discoveries, whether or not patentable and whether or not reduced to practice, original works of authorship and trade secrets made or conceived by or belonging to the Executive (whether made solely by the Executive or jointly with others) that (i) were developed by Executive prior to the Executive's employment by the Company (collectively, " Prior Inventions "), (ii) relate to the Company' actual or proposed business, products or research and development, and (iii) are not assigned to the Company hereunder; the Executive hereby acknowledges that, if in the course of his/her service for the Company, the Executive incorporates into a Company product, process or machine a Prior Invention owned by the Executive ,the Company is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide right and license (which may be freely transferred by the Company to any other person or entity) to make, have made, modify, use, sell, sublicense and otherwise distribute, such Prior Invention as part of or in connection with such product, process or machine. |
(b) | Disclosure and Assignment of Inventions. The Executive understands that the Company engages in research and development and other activities in connection with its business and that, as an essential part of the Employment, the Executive is expected to make new contributions to and create inventions of value for the Company. |
From and after the Effective Date, the Executive shall disclose in confidence to the Company all inventions, improvements, designs, original works of authorship, formulas, processes, compositions of matter, computer software programs, databases, mask works and trade secrets (collectively, the " Inventions '), which the Executive may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, during the period of the Executive's Employment at the Company. The Executive acknowledges that copyrightable works prepared by the Executive within the scope of and during the period of the Executive's Employment with the Company are “works for hire" and that the Company will be considered the author thereof. The Executive agrees that all the Inventions shall be the sole and exclusive property of the Company and the Executive hereby assigns all his/her right, title and interest in and to any and all of the Inventions to the Company or its successor in interest without further consideration.
5 |
(c) | Patent and Copyright Registration. The Executive agrees to assist the Company in every proper way to obtain for the Company and enforce patents, copyrights, mask work rights, trade secret rights, and other legal protection for the Inventions. The Executive will execute any documents that the Company may reasonably request for use in obtaining or enforcing such patents, copyrights, mask work rights, trade secrets and other legal protections. The Executive's obligations under this paragraph will continue beyond the termination of the Employment with the Company, provided that the Company will reasonably compensate the Executive after such termination for time or expenses actually spent by the Executive at the Company's request on such assistance, The Executive appoints the Secretary of the Company as the Executive's attorney-in-fact to execute documents on the Executive's behalf for this purpose. |
(d) | Return of Confidential Material . In the event of the Executive's termination of employment with the Company for any reason whatsoever, Executive agrees promptly to surrender and deliver to the Company all records, materials, equipment, drawings, documents and data of any nature pertaining to any confidential information or to his/her employment, and Executive will not retain or take with him or her any tangible materials or electronically stored data, containing or pertaining to any confidential information that Executive may produce, acquire or obtain access to during the course of his/her employment. |
This Section 9 shall survive the termination of this Agreement for any reason. In the event the Executive breaches this Section 9, the Company shall have right to seek remedies permissible under applicable law.
10. | NON-COMPETITION AND NON-SOLICITATION |
In consideration of the compensation provided to the Executive by the Company hereunder, the adequacy of which is hereby acknowledged by the parties hereto, the Executive agrees that during the term of the Employment and for a period of two years following the termination of the Employment for whatever reason:
(a) | the Executive will not assume employment with or provide services as a director for any Competitor, |
(b) | unless expressly consented to by the Company, the Executive will not seek directly or indirectly, by the offer of alternative employment or other inducement whatsoever, to solicit the services of any employee of the Company employed as at or after the date of such termination, or in the year preceding such termination. |
6 |
The provisions contained in Section 10 are considered reasonable by the Executive and the Company. In the event that any such provisions should be found to be void under applicable laws but would be valid if some part thereof was deleted or the period or area of application reduced, such provisions shall apply with such modification as may be necessary to make them valid and effective.
This Section 10 shall survive the termination of this Agreement for any reason. In the event the Executive breaches this Section 10, the Executive acknowledges that there will be no adequate remedy at law, and the Company shall be entitled to injunctive relief and/or a decree for specific performance, and such other relief as may be proper (including monetary damages if appropriate).In any event, the Company shall have right to seek all remedies permissible under applicable law,
11. | WITHHOLDING TAXES |
Notwithstanding anything else herein to the contrary, the Company may withhold (or cause there to be withheld, as the case may be) from any amounts otherwise due or payable under or pursuant to this Agreement such national, provincial, local or any other income, employment, or other taxes as may be required to be withheld pursuant to any applicable law or regulation.
12. | ASSIGNMENT |
This Agreement is personal in its nature and neither of the parties hereto shall, without the consent of the other, assign or transfer this Agreement or any rights or obligations hereunder; provided, however, that (i) the Company may assign or transfer this Agreement or any rights or obligations hereunder to any member of the Group without such consent, and(ii) in the event of a merger ,consolidation ,or transfer or sale of all or substantially all of the assets of the Company with or to any other individual(s) or entity, this Agreement shall, subject to the provisions hereof, be binding upon and inure to the benefit of such successor and such successor shall discharge and perform all the promises, covenants, duties, and obligations of the Company hereunder.
13. | SEVERABILITY |
If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of this Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable.
7 |
14. | ENTIRE AGREEMENT |
This Agreement constitutes the entire agreement and understanding, between the Executive and the Company regarding the terms of the Employment and supersedes all prior or contemporaneous oral or written agreements concerning such subject matter. The Executive acknowledges that he has not entered into this Agreement in reliance upon any representation, warranty or undertaking which is not set forth in this Agreement. Any amendment to this Agreement must be in writing and signed by the Executive and the Company.
15. | GOVERNING LAW |
This Agreement shall be governed by and construed in accordance with the PRC laws .
16. | AMENDMENT |
This Agreement may not be amended, modified or changed (in whole or in part), except by a formal, definitive written agreement expressly referring to this Agreement, which agreement is executed by both of the parties hereto.
17. | WAIVER |
Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof. Nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.
18. | NOTICES |
All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given and made if (i) delivered by hand, (ii) otherwise delivered against receipt therefore, (iii) sent by a recognized courier with next-day or second-day delivery to the last known address of the other party; or (iv) sent by e-mail with confirmation of receipt.
19. | COUNTERPARTS |
This Agreement may be executed in counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which together shall constitute one and the same instrument.
8 |
20. | NO INTERPRETATION AGAINST DRAFTER |
Each party recognizes that this Agreement is a legally binding contract and acknowledges that such party has had the opportunity to consult with legal counsel of choice. In any construction of the terms of this Agreement, the same shall not be construed against either party on the basis of that party being the drafter of such terms.
9 |
In WITNESS WHEREOF, this Agreement has been executed as of the date first written above.
Pingtan Marine Enterprise Ltd., | ||
Director: | ||
Signature: | ||
Name: Song, Xuesong | ||
Executive: | ||
Signature: | ||
Name: Zhuo, Xinrong |
10 |
EXHIBIT 21.1
Subsidiaries of the Registrant
1. | The Company’s wholly owned subsidiary, Merchant Supreme Co., Ltd., a British Virgin Islands company (“Merchant Supreme”); |
2. | Merchant Supreme’s wholly owned subsidiary, Prime Cheer Corporation Ltd. (“Prime Cheer”)., a Hong Kong company; |
3. | Prime Cheer’s wholly owned subsidiary, Pingtan Guansheng Ocean Fishing Co., Ltd.., a PRC company (“WFOE”); |
4. | the WFOE’s variable interest entity, Fujian Provincial Pingtan County Ocean Fishing Group Co., Ltd., a PRC company (“Pingtan Fishing”), which is the Company’s operating subsidiary; |
5. | Pingtan Fishing’s wholly owned subsidiary, Pingtan Dingxin Fishing Information Consulting Co., Ltd., a PRC company; |
6. | Pingtan Fishing’s wholly owned subsidiary, Pingtan Duoying Fishing Information Consulting Co., Ltd., a PRC company; and |
7. | Pingtan Fishing’s wholly owned subsidiary, Pingtan Ruiying Fishing Information Consulting Co., Ltd., a PRC company. |
EXHIBIT 23.1 |
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Amendment no.2 to Registration Statement Form S-3 (file No. 333-188007) and appearing on Form 8K/A (amendment #1) of our reports dated March 7, 2014, with respect to the consolidated balance sheets of Pingtan Marine Enterprise Ltd. (“The Company”) as of December 31, 2013 and 2012 and the related consolidated statements of income, comprehensive income, stockholders equity, and cash flows for each of the years in the three-year period ended December 31, 2013, and the effectiveness of internal control over financial reporting, which appear in this annual report on Form 10-K of the Company for the year ended December 31, 2013.
/s/ UHY VOCATION HK CPA LIMITED
Hong Kong, the People’s Republic of China
March 7, 2014
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
UNDER
SECTION 302 OF THE SARBANES-OXLEY ACT
I, Roy Yu, certify that:
1. | I have reviewed this Annual Report on Form 10-K of Pingtan Marine Enterprise Ltd. (the “registrant”); | ||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |||||
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |||||
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |||||
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |||||
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): | |||||
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | ||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: March 10, 2014 | ||||
/s/ Roy Yu | ||||
Roy Yu
Chief Financial Officer |
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
UNDER
SECTION 302 OF THE SARBANES-OXLEY ACT
I, Xinrong Zhuo, certify that:
1. | I have reviewed this Annual Report on Form 10-K of Pingtan Marine Enterprise Ltd. (the “registrant”); | ||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | ||||||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. | ||||||
Date: March 10, 2014 | |||||||
/s/ Xinrong Zhuo | |||||||
Xinrong Zhuo
Chief Executive Officer |
|||||||
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Pingtan Marine Enterprise Ltd. (the “Registrant”) on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chairman of the Board and Chief Executive Officer of the Registrant, certifies, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
/s/ Xinrong Zhuo | ||
Xinrong Zhuo
Chairman of the Board and Chief Executive Officer |
Date: March 10, 2014
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and is not being “filed” as part of the Form 10-K or as a separate disclosure document for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act except to the extent that this Exhibit 32.1 is expressly and specifically incorporated by reference in any such filing.
A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Pingtan Marine Enterprise Ltd. (the “Registrant”) on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Financial Officer of the Registrant, certifies, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
/s/ Roy Yu | ||
Roy Yu
Chief Financial Officer |
Date: March 10, 2014
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and is not being “filed” as part of the Form 10-K or as a separate disclosure document for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act except to the extent that this Exhibit 32.1 is expressly and specifically incorporated by reference in any such filing.
A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.