PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
(IN U.S. DOLLARS)
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE (LOSS) INCOME
(IN U.S. DOLLARS)
|
|
For the Three Months Ended
June 30,
|
|
|
For the Six Months Ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
|
$
|
36,865,155
|
|
|
$
|
23,463,133
|
|
|
$
|
65,172,293
|
|
|
$
|
40,770,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUE
|
|
|
31,811,671
|
|
|
|
21,299,920
|
|
|
|
66,365,166
|
|
|
|
32,854,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT (LOSS)
|
|
|
5,053,484
|
|
|
|
2,163,213
|
|
|
|
(1,192,873
|
)
|
|
|
7,915,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
|
|
|
1,592,906
|
|
|
|
1,046,519
|
|
|
|
3,136,795
|
|
|
|
1,948,170
|
|
General and administrative
|
|
|
1,963,909
|
|
|
|
795,332
|
|
|
|
3,732,007
|
|
|
|
2,065,475
|
|
General and administrative - depreciation
|
|
|
72,568
|
|
|
|
789,334
|
|
|
|
144,854
|
|
|
|
1,500,767
|
|
Subsidy
|
|
|
(1,573,977
|
)
|
|
|
(564,095
|
)
|
|
|
(3,603,797
|
)
|
|
|
(8,338,088
|
)
|
Impairment loss
|
|
|
491,320
|
|
|
|
-
|
|
|
|
975,366
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Expenses
|
|
|
2,546,726
|
|
|
|
2,067,090
|
|
|
|
4,385,225
|
|
|
|
(2,823,676
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) FROM OPERATIONS
|
|
|
2,506,758
|
|
|
|
96,123
|
|
|
|
(5,578,098
|
)
|
|
|
10,739,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
21,322
|
|
|
|
1,162,486
|
|
|
|
49,453
|
|
|
|
2,362,612
|
|
Interest expense
|
|
|
(3,864,778
|
)
|
|
|
(2,936,529
|
)
|
|
|
(7,664,914
|
)
|
|
|
(5,835,425
|
)
|
Foreign currency transaction gain (loss)
|
|
|
1,099,954
|
|
|
|
21,718
|
|
|
|
549,661
|
|
|
|
(344,691
|
)
|
Gain from cost method investment
|
|
|
605,178
|
|
|
|
132,753
|
|
|
|
605,178
|
|
|
|
132,753
|
|
Loss on equity method investment
|
|
|
(244,313
|
)
|
|
|
(143,015
|
)
|
|
|
(456,180
|
)
|
|
|
(268,543
|
)
|
Other income (expense)
|
|
|
(76,958
|
)
|
|
|
5,084
|
|
|
|
(76,856
|
)
|
|
|
(30,456
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Expense, net
|
|
|
(2,459,595
|
)
|
|
|
(1,757,503
|
)
|
|
|
(6,993,658
|
)
|
|
|
(3,983,750
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAXES
|
|
|
47,163
|
|
|
|
(1,661,380
|
)
|
|
|
(12,571,756
|
)
|
|
|
6,755,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAXES
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
$
|
47,163
|
|
|
$
|
(1,661,380
|
)
|
|
$
|
(12,571,756
|
)
|
|
$
|
6,755,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST
|
|
|
140,979
|
|
|
|
(85,370
|
)
|
|
|
(831,491
|
)
|
|
|
667,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS) INCOME ATTRIBUTABLE TO ORDINARY SHAREHOLDERS OF THE COMPANY BEFORE PREFERRED DIVIDENDS
|
|
|
(93,816
|
)
|
|
|
(1,576,010
|
)
|
|
|
(11,740,265
|
)
|
|
|
6,088,680
|
|
LESS: PREFERRED SHARE DIVIDENDS
|
|
|
(40,000
|
)
|
|
|
-
|
|
|
|
(300,000
|
)
|
|
|
-
|
|
NET (LOSS) INCOME ATTRIBUTABLE TO ORDINARY SHAREHOLDERS OF THE COMPANY
|
|
$
|
(133,816
|
)
|
|
$
|
(1,576,010
|
)
|
|
$
|
(12,040,265
|
)
|
|
$
|
6,088,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
|
47,163
|
|
|
|
(1,661,380
|
)
|
|
|
(12,571,756
|
)
|
|
|
6,755,696
|
|
OTHER COMPREHENSIVE (LOSS) INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized foreign currency translation gain (loss)
|
|
|
437,211
|
|
|
|
(166,176
|
)
|
|
|
(1,028,656
|
)
|
|
|
(1,854,615
|
)
|
COMPREHENSIVE (LOSS) INCOME
|
|
|
484,374
|
|
|
|
(1,827,556
|
)
|
|
|
(13,600,412
|
)
|
|
|
|
|
LESS: COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST
|
|
|
183,687
|
|
|
|
(98,734
|
)
|
|
|
(896,307
|
)
|
|
|
518,480
|
|
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ORDINARY SHAREHOLDERS OF THE COMPANY
|
|
$
|
300,687
|
|
|
$
|
(1,728,822
|
)
|
|
$
|
(12,704,105
|
)
|
|
$
|
4,382,601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS) INCOME PER ORDINARY SHARE ATTRIBUTABLE TO ORDINARY SHAREHOLDERS OF THE COMPANY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.00
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
0.08
|
|
Diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
86,389,548
|
|
|
|
79,055,053
|
|
|
|
83,854,623
|
|
|
|
79,055,053
|
|
Diluted
|
|
|
86,797,148
|
|
|
|
79,055,053
|
|
|
|
83,854,623
|
|
|
|
79,055,053
|
|
See condensed notes to unaudited consolidated
financial statements
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020
(IN U.S. DOLLARS)
|
|
Equity Attributable To Owners of The Company
|
|
|
|
|
|
|
|
|
|
Preferred shares
|
|
|
Ordinary Shares
|
|
|
Additional
|
|
|
|
|
|
|
|
|
Accumulated Other
|
|
|
Non-
|
|
|
Total
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Paid-in
|
|
|
Retained
|
|
|
Statutory
|
|
|
Comprehensive
|
|
|
controlling
|
|
|
Shareholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Earnings
|
|
|
Reserve
|
|
|
Loss
|
|
|
Interest
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2021 (Unaudited)
|
|
|
1,045,466
|
|
|
$
|
1,045
|
|
|
|
86,153,061
|
|
|
$
|
86,153
|
|
|
$
|
90,087,612
|
|
|
$
|
(30,241,204
|
)
|
|
$
|
15,751,712
|
|
|
$
|
(10,927,216
|
)
|
|
$
|
14,186,317
|
|
|
$
|
78,944,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(93,816
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
140,979
|
|
|
|
47,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of preferred shares into ordinary shares
|
|
|
(454,544
|
)
|
|
|
(454
|
)
|
|
|
538,052
|
|
|
|
538
|
|
|
|
(84
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of dividend payable for preferred shares into ordinary shares
|
|
|
|
|
|
|
|
|
|
|
43,044
|
|
|
|
43
|
|
|
|
39,957
|
|
|
|
(40,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of preferred shares
|
|
|
(590,922
|
)
|
|
|
(591
|
)
|
|
|
(793,192
|
)
|
|
|
(793
|
)
|
|
|
(1,448,616
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,450,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
394,503
|
|
|
|
42,708
|
|
|
|
437,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2021 (Unaudited)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
85,940,965
|
|
|
$
|
85,941
|
|
|
$
|
88,678,870
|
|
|
$
|
(30,375,020
|
)
|
|
$
|
15,751,712
|
|
|
$
|
(10,532,713
|
)
|
|
$
|
14,370,004
|
|
|
$
|
77,978,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2020 (Unaudited)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
79,055,053
|
|
|
$
|
79,055
|
|
|
$
|
81,682,599
|
|
|
$
|
61,951,144
|
|
|
$
|
15,748,751
|
|
|
$
|
(17,634,175
|
)
|
|
$
|
19,979,119
|
|
|
$
|
161,806,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,576,010
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(85,370
|
)
|
|
|
(1,661,380
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(152,812
|
)
|
|
|
(13,364
|
)
|
|
|
(166,176
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2020 (Unaudited)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
79,055,053
|
|
|
$
|
79,055
|
|
|
$
|
81,682,599
|
|
|
$
|
60,375,134
|
|
|
$
|
15,748,751
|
|
|
$
|
(17,786,987
|
)
|
|
$
|
19,880,385
|
|
|
$
|
159,978,937
|
|
See condensed notes to unaudited consolidated
financial statements
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020
(IN U.S. DOLLARS)
|
|
Equity Attributable To Owners of The Company
|
|
|
|
|
|
|
|
|
|
Preferred shares
|
|
|
Ordinary Shares
|
|
|
Additional
|
|
|
|
|
|
|
|
|
Accumulated Other
|
|
|
Non-
|
|
|
Total
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Paid-in
|
|
|
Retained
|
|
|
Statutory
|
|
|
Comprehensive
|
|
|
controlling
|
|
|
Shareholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Earnings
|
|
|
Reserve
|
|
|
Loss
|
|
|
Interest
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
79,302,428
|
|
|
$
|
79,302
|
|
|
$
|
82,045,993
|
|
|
$
|
(18,594,755
|
)
|
|
$
|
15,751,712
|
|
|
$
|
(9,568,873
|
)
|
|
$
|
15,266,311
|
|
|
$
|
84,979,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(11,740,265
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(831,491
|
)
|
|
|
(12,571,756
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue of series A preferred shares
|
|
|
4,000,000
|
|
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
|
3,694,273
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,698,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue of ordinary shares
|
|
|
|
|
|
|
|
|
|
|
3,625,954
|
|
|
|
3,626
|
|
|
|
4,347,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,351,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend payments for preferred shares
|
|
|
|
|
|
|
|
|
|
|
295,218
|
|
|
|
295
|
|
|
|
299,705
|
|
|
|
(300,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Converted Series A Preferred Shares into ordinary shares
|
|
|
(3,409,078
|
)
|
|
|
(3,409
|
)
|
|
|
3,510,557
|
|
|
|
3,511
|
|
|
|
(102
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of Preferred Shares
|
|
|
(590,922
|
)
|
|
|
(591
|
)
|
|
|
(793,192
|
)
|
|
|
(793
|
)
|
|
|
(1,448,616
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,450,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(963,840
|
)
|
|
|
(64,816
|
)
|
|
|
(1,028,656
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2021 (Unaudited)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
85,940,965
|
|
|
$
|
85,941
|
|
|
$
|
88,638,870
|
|
|
$
|
(30,335,020
|
)
|
|
$
|
15,751,712
|
|
|
$
|
(10,532,713
|
)
|
|
$
|
14,370,004
|
|
|
$
|
77,978,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2019
|
|
|
-
|
|
|
$
|
-
|
|
|
|
79,055,053
|
|
|
$
|
79,055
|
|
|
$
|
81,682,599
|
|
|
$
|
54,286,454
|
|
|
$
|
15,748,751
|
|
|
$
|
(16,080,908
|
)
|
|
$
|
19,361,905
|
|
|
$
|
155,077,856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,088,680
|
|
|
|
-
|
|
|
|
-
|
|
|
|
667,016
|
|
|
|
6,755,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,706,079
|
)
|
|
|
(148,536
|
)
|
|
|
(1,854,615
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2020 (Unaudited)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
79,055,053
|
|
|
$
|
79,055
|
|
|
$
|
81,682,599
|
|
|
$
|
60,375,134
|
|
|
$
|
15,748,751
|
|
|
$
|
(17,786,987
|
)
|
|
$
|
19,880,385
|
|
|
$
|
159,978,937
|
|
See condensed notes to unaudited consolidated
financial statements
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN U.S. DOLLARS)
|
|
For the Six Months Ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(12,571,756
|
)
|
|
$
|
6,755,696
|
|
Adjustments to reconcile net income from operations to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
7,192,857
|
|
|
|
6,672,732
|
|
Bad debt expense
|
|
|
510,358
|
|
|
|
57,205
|
|
(Decrease) increase in inventory allowance
|
|
|
(5,682,073
|
)
|
|
|
2,000,619
|
|
Loss on equity method investment
|
|
|
143,015
|
|
|
|
268,543
|
|
Impairment loss of fishing vessels
|
|
|
975,366
|
|
|
|
-
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
3,005,729
|
|
|
|
(3,567,172
|
)
|
Inventories
|
|
|
(3,149,808
|
)
|
|
|
(28,703,844
|
)
|
Prepaid expenses
|
|
|
(499,082
|
)
|
|
|
587,974
|
|
Prepaid expenses - related party
|
|
|
2,024,445
|
|
|
|
|
|
Other receivables
|
|
|
1,038,544
|
|
|
|
387,716
|
|
Accounts payable
|
|
|
21,802,289
|
|
|
|
9,592,030
|
|
Accounts payable - related parties
|
|
|
(3,361,279
|
)
|
|
|
688,894
|
|
Accrued liabilities and other payables
|
|
|
6,794,010
|
|
|
|
320,455
|
|
Due to related parties
|
|
|
127,597
|
|
|
|
(323,577
|
)
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
|
|
18,350,212
|
|
|
|
(5,262,729
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment
|
|
|
(22,687,255
|
)
|
|
|
(85,240,006
|
)
|
Prepayment made for long-term assets
|
|
|
(46,191,388
|
)
|
|
|
-
|
|
Proceeds from government grants for fishing vessel construction
|
|
|
-
|
|
|
|
20,893,357
|
|
|
|
|
|
|
|
|
|
|
NET CASH USED IN INVESTING ACTIVITIES
|
|
|
(68,878,643
|
)
|
|
|
(64,346,649
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds of short-term bank loans
|
|
|
44,809,790
|
|
|
|
81,343,591
|
|
Repayments of short-term bank loans
|
|
|
(42,028,493
|
)
|
|
|
-
|
|
Proceeds from long-term bank loans
|
|
|
68,956,984
|
|
|
|
76,076,167
|
|
Repayments of long-term bank loans
|
|
|
(23,063,682
|
)
|
|
|
(14,611,982
|
)
|
Proceeds from issuance of ordinary shares
|
|
|
4,351,243
|
|
|
|
|
|
Proceeds from issuance of series A preferred shares
|
|
|
3,698,273
|
|
|
|
-
|
|
Proceeds from related party
|
|
|
1,450,000
|
|
|
|
|
|
Repurchase of preferred shares
|
|
|
(1,450,000
|
)
|
|
|
|
|
Advance to related party-HL
|
|
|
-
|
|
|
|
(69,423,710
|
)
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
|
|
56,724,115
|
|
|
|
73,384,066
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
|
|
(1,553,231
|
)
|
|
|
309,238
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
|
|
4,642,453
|
|
|
|
4,083,926
|
|
|
|
|
|
|
|
|
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - beginning of period
|
|
|
10,604,599
|
|
|
|
10,092,205
|
|
|
|
|
|
|
|
|
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED - end of period
|
|
$
|
15,247,052
|
|
|
$
|
14,176,131
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
8,640,280
|
|
|
$
|
6,750,422
|
|
Income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION TO AMOUNTS ON CONSOLIDATED BALANCE SHEETS:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
2,197,774
|
|
|
|
3,405,523
|
|
Restricted cash
|
|
|
13,049,278
|
|
|
|
10,770,608
|
|
TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
|
$
|
15,247,052
|
|
|
$
|
14,176,131
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Acquisition of property and equipment by decreasing prepayment for long-term assets
|
|
$
|
(46,191,388
|
)
|
|
$
|
(15,731,909
|
)
|
See condensed notes to unaudited consolidated
financial statements
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 1 – DESCRIPTION OF BUSINESS AND
ORGANIZATION
Pingtan Marine Enterprise Ltd. (the “Company”
or “PME”), formerly China Growth Equity Investment Limited (“CGEI”), incorporated in the Cayman Islands as an
exempted limited liability company, was incorporated as a blank check company on January 18, 2010 with the purpose of directly or indirectly
acquiring, through a merger, share exchange, asset acquisition, plan of arrangement, recapitalization, reorganization or similar business
combination, an operating business, or control of such operating business through contractual arrangements, that has its principal business
and/or material operations located in the People’s Republic of China (“PRC”). In connection with its initial business
combination, in February 2013, CGEI changed its name to Pingtan Marine Enterprise Ltd.
On October 24, 2012, CGEI and China Dredging
Group Co., Ltd (“CDGC” or “China Dredging”) entered into a Merger Agreement providing for the combination of
CGEI and CDGC and on October 24, 2012, CGEI also acquired all of the outstanding capital shares and other equity interests of Merchant
Supreme Co., Ltd. (“Merchant Supreme”), a company incorporated on June 25, 2012, in the British Virgin Islands (“BVI”),
as per a Share Purchase Agreement. On February 25, 2013, the merger between the Company, CDGC and Merchant Supreme became effective and
has been accounted for as a “reverse merger” and recapitalization since the common shareholders of CDGC and Merchant Supreme
(i) owned a majority of the outstanding ordinary shares of the Company immediately following the completion of the transaction, and (ii)
have significant influence and the ability to elect or appoint or to remove a majority of the members of the governing body of the combined
entity. In accordance with the provision of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) 805-40, CDGC and Merchant Supreme are deemed the accounting acquirers and the Company is the legal acquirer in the
transaction and, consequently, the transaction is treated as a recapitalization of the Company. Accordingly, the assets and liabilities
and the historical operations that are reflected in the consolidated financial statements are those of CDGC, Merchant Supreme and their
subsidiaries and are recorded at the historical cost basis. The Company’s assets, liabilities and results of operations were consolidated
with the assets, liabilities, and results of operations of CDGC, Merchant Supreme and their subsidiaries after the acquisition date of
February 25, 2013. Following the completion of the business combination which became effective on February 25, 2013, CDGC and Merchant
Supreme became the wholly-owned subsidiaries of the Company. The Company’s ordinary shares, par value $0.001 per share, are listed
on The NASDAQ Capital Market under the symbol “PME”.
In order to place increased focus on the fishing
business and pursue more effective growth opportunities, the Company decided to exit and sell the specialized dredging services operated
by China Dredging. The Company completed the sale of CDGC and its subsidiaries on December 4, 2013.
On February 9, 2015, the Company terminated its
existing Variable Interest Entity (“VIE”) agreements, pursuant to an Agreement of Termination dated February 9, 2015, entered
into by and among Ms. Honghong Zhuo, Mr. Zhiyan Lin (each a shareholder of Fujian Provincial Pingtan County Ocean Fishing Group Co.,
Ltd (“Pingtan Fishing”), and together the “Pingtan Fishing’s Shareholders”), Pingtan Fishing and Pingtan
Guansheng Ocean Fishing Co., Ltd. (“Pingtan Guansheng”). On February 9, 2015, the Pingtan Fishing’s Shareholders transferred
100% of their equity interest in Pingtan Fishing to Fujian Heyue Marine Fishing Development Co., Ltd. (“Fujian Heyue”), pursuant
to an Equity Transfer Agreement dated February 9, 2015, entered into by and among the Pingtan Fishing’s Shareholders, Pingtan Fishing
and Fujian Heyue. On February 15, 2015, China Agriculture Industry Development Fund Co., Ltd. (“China Agriculture”) invested
RMB 400 million (approximately $65 million) into Pingtan Fishing for an 8% equity interest in Pingtan Fishing. After the restructuring
transactions described above, Pingtan Fishing and its entities became the 92% equity-owned subsidiaries of the Company and was no longer
a VIE.
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 1 – DESCRIPTION OF BUSINESS AND
ORGANIZATION (continued)
Details of the Company’s subsidiaries which
are included in these consolidated financial statements as of June 30, 2021, are as follows:
Name
of subsidiaries
|
|
Place
and date
of incorporation
|
|
Percentage
of
ownership
|
|
Principal
activities
|
Merchant Supreme Co., Ltd.
(“Merchant Supreme”)
|
|
BVI,
June 25, 2012
|
|
100% held by PME
|
|
Intermediate holding company
|
|
|
|
|
|
|
|
Prime Cheer Corporation Ltd.
(“Prime Cheer”)
|
|
Hong Kong,
May 3, 2012
|
|
100% held by Merchant Supreme
|
|
Intermediate holding company
|
|
|
|
|
|
|
|
Pingtan Guansheng Ocean Fishing Co., Ltd.
(“Pingtan Guansheng”)
|
|
PRC,
October 12, 2012
|
|
100% held by Prime Cheer
|
|
Intermediate holding company
|
|
|
|
|
|
|
|
Fujian Heyue Marine Fishing Development Co., Ltd.
(“Fujian Heyue”)
|
|
PRC,
January 27, 2015
|
|
100% held by Pingtan Guansheng
|
|
Intermediate holding company
|
|
|
|
|
|
|
|
Fujian Provincial Pingtan County Fishing Group Co.,
Ltd.
(“Pingtan Fishing”)
|
|
PRC,
February 27, 1998
|
|
92% held by Fujian Heyue
|
|
Oceanic fishing
|
|
|
|
|
|
|
|
Pingtan Dingxin Fishing Information Consulting Co.,
Ltd.
(“Pingtan Dingxin”)
|
|
PRC,
October 23, 2012
|
|
100% held by Pingtan Fishing
|
|
Dormant
|
|
|
|
|
|
|
|
Pingtan Yikang Global Fishery Co., Ltd.
(“Yikang Fishery”)
|
|
PRC,
September 14, 2017
|
|
100% held by Pingtan Fishing
|
|
Dormant
|
|
|
|
|
|
|
|
Pingtan Shinsilkroad Fishery Co., Ltd.
(“Shinsilkroad Fishery”)
|
|
PRC,
September 14, 2017
|
|
100% held by Pingtan Fishing
|
|
Dormant
|
|
|
|
|
|
|
|
Fuzhou Howcious Investment Co., Ltd
(“Howcious Investment”)
|
|
PRC,
September 5, 2017
|
|
100% held by Pingtan Fishing
|
|
Dormant
|
|
|
|
|
|
|
|
Pingtan Ocean Fishery Co., Ltd
(“Ocean Fishery”)
|
|
PRC,
July 21, 2017
|
|
100% held by Pingtan Fishing
|
|
Dormant
|
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 1 – DESCRIPTION OF BUSINESS AND
ORGANIZATION (continued)
Fujian Heyue, through its PRC subsidiary, Pingtan
Fishing, engages in ocean fishing with its owned and controlled vessels within the Indian Exclusive Economic Zone, the international
waters and Arafura Sea of Indonesia.
The Company had a working capital deficit of $52,182,973
as of June 30, 2021. In order to mitigate its liquidity risk, the Company plans to rely on the proceeds from loans from banks and/or financial
institutions to increase working capital in order to meet capital demands, and the government subsidies for modification and rebuilding
project and reimbursement of certain operating expenses. In addition, Mr. Zhuo, the Chief Executive Officer and Chairman of the Board,
will continue to provide financial support to the Company when necessary.
The Company meets its day-to-day working capital
requirements through cash flow provided by operations, bank loans and related parties’ advances. The Indonesian government’s
moratorium on fishing licenses renewals creates uncertainty over fishing operations in Indonesian waters. The Company’s forecasts
and projections show that the Company has adequate resources to continue in operational existence to meet its obligations in the twelve
months following the date of this filing, considering operations in Indian waters and international waters and consideration of opportunities
in new fishing territories. Also, in the recent years, the Company has upgraded 57 fishing vessels and 3 transport vessels, the deployment
of these vessels into operation will generate more revenue and cash inflows to the Company. In addition, the Company receives subsidies
for modification and rebuilding projects and is reimbursed for certain operating expenses from government entities, as an encouragement
of the development of ocean fishing industry.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
These interim consolidated financial statements
of the Company and its subsidiaries are unaudited. In the opinion of management, all adjustments (consisting of normal recurring accruals)
and disclosures necessary for a fair presentation of these interim consolidated financial statements have been included. The results
reported in the unaudited consolidated financial statements for any interim periods are not necessarily indicative of the results that
may be reported for the entire year. The accompanying unaudited consolidated financial statements have been prepared in accordance with
the rules and regulations of the Securities and Exchange Commission and do not include all information and footnotes necessary for a
complete presentation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S.
GAAP”).
The Company’s unaudited consolidated financial
statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been
eliminated in consolidation.
Certain information and footnote disclosures
normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.
These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial
statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with
the Securities and Exchange Commission on October 13, 2021.
Use of estimates
The preparation of the unaudited consolidated
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting
period. Actual results could materially differ from these estimates. Significant estimates in the three and six months ended June 30,
2021 and 2020 include allowance for doubtful accounts, reserve for inventories, the useful life of property, plant and equipment, assumptions
used in assessing impairment of long-term assets and valuation of deferred tax assets and accruals for taxes due.
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Cash
Cash consists of cash on hand and cash in banks.
The Company maintains cash with various financial institutions in the PRC and Hong Kong. At June 30, 2021 and December 31, 2020, cash
balances in the PRC were $2,080,745 and $468,273, respectively, and cash balances in Hong Kong were $117,029 and $223,660, respectively,
and are uninsured. The Company has not experienced any losses in bank accounts and believes it is not exposed to any risks on its cash
in bank accounts.
Restricted cash
Restricted cash consists of cash deposits held
by the Export Import Bank of China to secure its bank loans and Hong Long’s short-term bank loans. At June 30, 2021 and December
31, 2020, restricted cash amounted to $13,049,278 and $9,912,666, respectively.
Fair value of financial instruments
The Company utilizes the guidance of the Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820 for fair value measurements
which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify
the inputs used in measuring fair value as follows:
Level 1-Inputs are unadjusted quoted prices in
active markets for identical assets or liabilities available at the measurement date.
Level 2-Inputs are unadjusted quoted prices for
similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not
active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3-Inputs are unobservable inputs which
reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability
based on the best available information.
The carrying amounts reported in the consolidated
balance sheets for cash, restricted cash, accounts receivable, inventories, advances to suppliers, prepaid expenses, prepaid expenses
– related party, other receivables, other receivables – related party, accounts payable, accounts payable – related
parties, short-term bank loans, accrued liabilities and other payables, accrued liabilities and other payables – related party,
and due to related parties approximate their fair market value based on the short-term maturity of these instruments. The fair value
of the Company’s long-term bank loans under its agreements approximates its carrying value at June 30, 2021. The fair value of
the Company’s long-term bank loans under its agreements were estimated using Level 2 inputs based on market data. As of June 30,
2021, the Company does not have any assets or liabilities that are measured on a recurring basis at fair value.
ASC Topic 825-10 “Financial Instruments”
allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair
value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value
option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent
reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Accounts receivable
Accounts receivable are presented net of an allowance
for doubtful accounts. The Company maintains an allowance for doubtful accounts for estimated losses. The Company reviews the accounts
receivable on a periodic basis and makes general and specific allowance when there is doubt as to the collectability of individual balances.
In evaluating the collectability of individual receivable balance, the Company considers many factors, including the age of the balance,
a customer’s historical payment history, its current creditworthiness and current economic trends. Accounts are written off after
exhaustive efforts at collection. The Company only grants credit terms to established customers who are deemed to be financially responsible.
Credit periods to customers are within 180 days after customers received the purchased goods. At June 30, 2021 and December 31, 2020,
the Company had established, based on a review of its outstanding balances, an allowance for doubtful accounts in the amounts of $926,537
and $411,131, respectively.
Inventories
Inventories, consisting of frozen fish and marine
catches, are stated at the lower of cost or net realizable value utilizing the weighted average method. The cost of inventories is primarily
comprised of fuel, freight, depreciation, direct labor, consumables, government levied charges and taxes. Consumables include fishing
nets and metal containers used by fishing vessels. The Company’s fishing fleets in Indian waters and the international waters operate
throughout the year, although the May to July period demonstrates lower catch quantities compared to the October to January period, which
is the peak season.
A reserve is established when management determines
that certain inventories may not be saleable. If inventory costs exceed net realizable value due to obsolescence or quantities in excess
of expected demand or price decreases, the Company will record a reserve for the difference between the cost and the market value. These
reserves are recorded based on estimates. At June 30, 2021 and December 31, 2020, the Company has a reserve for inventories in the amount
of $10,595,138 and $16,125,749, respectively.
Inventory reserves are intended to reduce the
carrying value of inventories to their net realizable value. The Company regularly evaluates its ability to realize the value of inventories
based on a combination of factors including the following: forecasted sales and estimated current and future market value.
Fishing licenses
Each of the Company’s fishing vessels requires
an approval from the Ministry of Agriculture and Rural Affairs of the PRC to carry out ocean fishing projects in international waters
and foreign territories, and to the extent required, a fishing license in local fishing territory where the vessel operates. These approvals
are valid for a period from 3 to 12 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. Since no fishing and using in other areas after making
required changes.
Investment in unconsolidated company –
Global Deep Ocean
The Company uses the equity method of accounting
for its investment in, and earning or loss of, companies that it does not control but usually owns 20% to 50% over which it does exert
significant influence. The Company considers whether the fair value of its equity method investment has declined below its carrying value
whenever adverse events or changes in circumstances indicate that recorded value may not be recoverable. The Company reviews its investments
for other-than-temporary impairment whenever events or changes in business circumstances indicate that the carrying value of the investment
may not be fully recoverable. Investments identified as having an indication of impairment are subject to further analysis to determine
if the impairment is other-than-temporary and this analysis requires estimating the fair value of the investment. The determination of
fair value of the investment involves considering factors such as current economic and market conditions, the operating performance of
the entities including current earnings trends and forecasted cash flows, and other company and industry specific information. If the
Company considers any decline to be other than temporary (based on various factors, including historical financial results and the overall
health of the investee), then a write-down would be recorded to estimated fair value. See Note 6 for discussion of the equity investment.
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Property, plant and equipment
Property, plant and equipment are carried at
cost and are depreciated on a straight-line basis over the estimated useful lives of the assets. The cost of repairs and maintenance
is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated
depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The
Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that
their recorded value may not be recoverable.
The estimated useful lives of the assets are
as follows:
|
|
Estimated
useful life
|
Fishing vessels
|
|
10 - 20 Years
|
Vehicles
|
|
5 Years
|
Office and other equipment
|
|
3 - 5 Years
|
Expenditures for repairs and maintenance, which
do not extend the useful life of the assets, are expensed as incurred.
Capitalized interest
Interest associated with the construction
of fishing vessels 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 the 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 $0 and $765,066 for the three months ended June 30, 2021
and 2020, respectively, in the fishing vessels under construction. The Company capitalized interest of $0 and $1,008,925 for the six
months ended June 30, 2021 and 2020, respectively, in the fishing vessels under construction.
Impairment of long-lived assets
In accordance with ASC Topic 360, the Company
reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets
may not be fully recoverable. The Company evaluates the impairment by comparing the carrying amount of the assets to an estimate of future
undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected
future undiscounted cash flows is less than the carrying amount of the assets, the Company recognizes an impairment loss based on the
excess of the carrying amount of the long-lived assets over their fair value. Impairment loss represents the impairment loss on the vessels
whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recovered. The Company recognized
impairment loss of $491,320 and nil for the three months ended June 30, 2021 and 2020, respectively. The Company recognized impairment
loss of $975,366 and nil for the six months ended June 30, 2021 and 2020, respectively. During the six months ended June 30, 2021, the
Company assessed the recoverability of 1 new krill fishing vessel that was in the building stage based on the undiscounted future cash
flow that the fishing vessel is expected to generate as less than the carrying amount, and recognized an impairment loss.
Revenue recognition
The Company recognizes revenue from product sales
in accordance with ASC Topic 606, “Revenue from Contracts with Customers.” Revenue is recognized when control of the promised
goods or services, through performance obligations by the Company, is transferred to the customer in an amount that reflects the consideration
it expects to be entitled to in exchange for the performance obligations.
The revenue is generated from the sale of frozen
fish and other marine catches. We recognize revenue at the amount we expect to be entitled to be paid, determined when control of the
products is transferred to our customers, which occurs upon delivery of and acceptance of the frozen fish by the customer and we have
a right to payment.
We have identified one performance obligation
being when the frozen fish and other marine catches identified in the contract are picked up by the customers at our cold storage warehouse,
with revenue being recognized at a point in time. We initially recognize revenue in an amount which is estimated based on contractual
prices. The receivables under contracts, whereby pricing is based on contractual prices, are primarily collected within 180 days. 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.
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue recognition (continued)
Disaggregation of revenue
The following tables disaggregate revenues under
ASC Topic 606 by species of fish. For the three months ended June 30, 2021 and 2020, our revenue by species of fish was as follows (dollars
in thousands, except for average price):
|
|
Three Months Ended June 30, 2021
|
|
|
|
Revenue
|
|
|
Volume
(KG)
|
|
|
Average
price
|
|
|
Percentage
of revenue
|
|
South American white shrimp (whole)
|
|
$
|
9,786
|
|
|
|
1,958,934
|
|
|
$
|
5.00
|
|
|
|
26.5
|
%
|
Indian Ocean squid
|
|
|
7,395
|
|
|
|
7,391,773
|
|
|
|
1.00
|
|
|
|
20.1
|
%
|
Peru squid
|
|
|
6,909
|
|
|
|
5,267,616
|
|
|
|
1.31
|
|
|
|
18.7
|
%
|
Argentina squid
|
|
|
5,037
|
|
|
|
1,617,650
|
|
|
|
3.11
|
|
|
|
13.7
|
%
|
Chub mackerel
|
|
|
3,910
|
|
|
|
3,997,198
|
|
|
|
0.98
|
|
|
|
10.6
|
%
|
Other
|
|
|
3,828
|
|
|
|
3,804,615
|
|
|
|
1.01
|
|
|
|
10.4
|
%
|
Total
|
|
$
|
36,865
|
|
|
|
24,037,786
|
|
|
$
|
1.53
|
|
|
|
100.0
|
%
|
|
|
Three Months Ended June 30, 2020
|
|
|
|
Revenue
|
|
|
Volume
(KG)
|
|
|
Average
price
|
|
|
Percentage
of revenue
|
|
Indian Ocean squid
|
|
$
|
12,108
|
|
|
|
14,970,511
|
|
|
$
|
0.81
|
|
|
|
51.6
|
%
|
Peru squid
|
|
|
2,855
|
|
|
|
1,949,315
|
|
|
|
1.46
|
|
|
|
12.2
|
%
|
Chub mackerel
|
|
|
2,064
|
|
|
|
2,285,335
|
|
|
|
0.90
|
|
|
|
8.8
|
%
|
Croaker fish
|
|
|
1,839
|
|
|
|
1,015,030
|
|
|
|
1.81
|
|
|
|
7.8
|
%
|
Cuttle fish
|
|
|
1,666
|
|
|
|
398,240
|
|
|
|
4.18
|
|
|
|
7.1
|
%
|
Others
|
|
|
2,931
|
|
|
|
1,136,003
|
|
|
|
2.58
|
|
|
|
12.5
|
%
|
Total
|
|
$
|
23,463
|
|
|
|
21,754,434
|
|
|
$
|
1.08
|
|
|
|
100.0
|
%
|
The following tables disaggregate revenues under
ASC Topic 606 by species of fish. For the six months ended June 30, 2021 and 2020, our revenue by species of fish was as follows (dollars
in thousands, except for average price):
|
|
Six Months Ended June 30, 2021
|
|
|
|
Revenue
|
|
|
Volume
(KG)
|
|
|
Average
price
|
|
|
Percentage
of revenue
|
|
South American white shrimp (whole)
|
|
$
|
12,865
|
|
|
|
2,563,494
|
|
|
$
|
5.02
|
|
|
|
19.7
|
%
|
Argentina squid
|
|
|
12,591
|
|
|
|
3,911,700
|
|
|
|
3.22
|
|
|
|
19.3
|
%
|
Peru squid
|
|
|
11,454
|
|
|
|
8,661,894
|
|
|
|
1.32
|
|
|
|
17.6
|
%
|
Indian Ocean squid
|
|
|
10,702
|
|
|
|
10,859,352
|
|
|
|
0.99
|
|
|
|
16.4
|
%
|
Chub mackerel
|
|
|
5,574
|
|
|
|
5,726,630
|
|
|
|
0.97
|
|
|
|
8.6
|
%
|
Others
|
|
|
11,986
|
|
|
|
9,245,487
|
|
|
|
1.3
|
|
|
|
18.4
|
%
|
Total
|
|
$
|
65,172
|
|
|
|
40,968,557
|
|
|
$
|
1.59
|
|
|
|
100.0
|
%
|
|
|
Six Months Ended June 30, 2020
|
|
|
|
Revenue
|
|
|
Volume
(KG)
|
|
|
Average
price
|
|
|
Percentage
of revenue
|
|
Indian Ocean squid
|
|
$
|
19,821
|
|
|
|
23,272,651
|
|
|
$
|
0.85
|
|
|
|
48.6
|
%
|
Peru squid
|
|
|
4,838
|
|
|
|
3,053,765
|
|
|
|
1.58
|
|
|
|
11.9
|
%
|
Cuttle fish
|
|
|
4,116
|
|
|
|
925,140
|
|
|
|
4.45
|
|
|
|
10.1
|
%
|
Chub mackerel
|
|
|
4,015
|
|
|
|
4,555,204
|
|
|
|
0.88
|
|
|
|
9.8
|
%
|
Croaker fish
|
|
|
3,096
|
|
|
|
1,707,819
|
|
|
|
1.81
|
|
|
|
7.6
|
%
|
Others
|
|
|
4,884
|
|
|
|
1,779,139
|
|
|
|
2.75
|
|
|
|
12.0
|
%
|
Total
|
|
$
|
40,770
|
|
|
|
35,293,718
|
|
|
$
|
1.16
|
|
|
|
100.0
|
%
|
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Government subsidies
Government subsidies are recognized when there
is reasonable assurance that the subsidy will be received and all attaching conditions will be satisfied. When the subsidy relates to
an expense item, it is recognized as income over the periods necessary to match the subsidy on a systematic basis to the costs that it
is intended to compensate. Where the subsidy relates to an asset, it 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.
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 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 accompanying unaudited consolidated statements of operations and comprehensive income (loss).
The Company’s subsidiary, Pingtan Fishing,
is a qualified ocean fishing enterprise certified by the Ministry of Agriculture and Rural Affairs of the PRC (“MARA”). The
qualification renews on April 1 of 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 MARA.
The China’s Enterprise Income Tax Law (“EIT
Law”), which went into effect on January 1, 2018, also provides that an enterprise established under the laws of foreign countries
or regions but whose “de facto management body” is located in the PRC be treated as a resident enterprise for PRC tax purposes
and consequently be subject to the PRC income tax at the rate of 25% for its worldwide income. The Implementing Rules of the new EIT Law
merely define the location of the “de facto management body” as “the place where the exercising, in substance, of the
overall management and control of the production and business operation, personnel, accounting, properties, etc., of a non-PRC company
is located.” On April 22, 2009, the PRC State Administration of Taxation further issued a notice entitled “Notice Regarding
Recognizing Offshore-Established Enterprises Controlled by PRC Shareholders as Resident Enterprises Based on Their Place of Effective
Management.” Under this notice, a foreign company controlled by a PRC company or a group of PRC companies shall be deemed as a PRC
resident enterprise if (i) the senior management and the core management departments in charge of its daily operations mainly function
in the PRC; (ii) its financial decisions and human resource decisions are subject to decisions or approvals of persons or institutions
in the PRC; (iii) its major assets, accounting books, company seals, minutes and files of board meetings and shareholders’ meetings
are located or kept in the PRC; and (iv) more than half of the directors or senior management personnel with voting rights reside in the
PRC. Based on a review of surrounding facts and circumstances, the Company does not believe that it is likely that its operations outside
of the PRC should be considered a resident enterprise for PRC tax purposes. However, due to limited guidance and implementation history
of the EIT Law, should the Company be treated as a resident enterprise for PRC tax purposes, the Company will be subject to PRC tax on
worldwide income at a uniform tax rate of 25% retroactive to May 3, 2012.
In addition, Pingtan Fishing is not subject to
foreign income taxes for its operations in either India or the Western and Central Pacific Fisheries Commission areas.
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.
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income taxes (continued)
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 operations and comprehensive income (loss) in the period that includes the enactment date.
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 June 30, 2021 and December 31, 2020, there were no amounts that had been accrued with respect to uncertain tax positions.
Shipping and handling costs
Shipping and handling costs are included in selling
expense and amounted to $318,978 and $44,952 for the three months ended June 30, 2021 and 2020, respectively. Shipping and handling costs
amounted to $656,273 and $321,093 for the six months ended June 30, 2021 and 2020, respectively.
Employee benefits
The Company makes mandatory contributions to the
PRC government’s health, retirement benefit and unemployment funds in accordance with the relevant Chinese social security laws.
The costs of these payments are charged to the same accounts as the related salary costs in the same period as the related salary costs
incurred. Employee benefit costs amounted to $894,667 and $1,242,254 for the three months ended June 30, 2021 and 2020, respectively.
Employee benefit costs amounted to $1,629,851 and $2,511,059 for the six months ended June 30, 2021 and 2020, respectively.
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Foreign currency translation
The reporting currency of the Company is the U.S.
dollar. The functional currency of the Company and Merchant Supreme and Prime Cheer, the Company’s subsidiaries, is the U.S. dollar.
The functional currency of Pingtan Guansheng, Fujian Heyue and Pingtan Fishing, the Company’s subsidiaries, is the Chinese Renminbi
(“RMB”). For the Company’s subsidiaries Pingtan Guansheng, Fujian Heyue and Pingtan Fishing, whose functional currencies
are the RMB, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are
translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. As a result,
amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the
corresponding balances on the balance sheets. Translation adjustments resulting from the process of translating the local currency financial
statements into U.S. dollars are included in determining comprehensive income. The cumulative translation adjustment and effect of exchange
rate changes on cash for the six months ended June 30, 2021 and 2020 was $1,553,231 and $195,545, respectively. Transactions denominated
in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and
liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance
sheet date and any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other
than the functional currency are included in the results of operations as incurred.
All the Company’s revenue transactions are
transacted in the functional currency of the operating subsidiaries. The Company does not enter into any material transactions in foreign
currencies. Transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of
the Company.
Asset and liability accounts at June 30, 2021
and December 31, 2020 were translated at 6.4601 RMB to $1.00 and at 6.5249 RMB to $1.00, respectively, which were the exchange rates on
the balance sheet dates. Equity accounts were stated at their historical rate. The average translation rates applied to the statements
of operations for the six months ended June 30, 2021 and 2020 were 6.4718 RMB and 7.0319 RMB to $1.00, respectively. Cash flows from the
Company’s operations are calculated based upon the local currencies using the average translation rate.
Earnings (loss) per share
ASC Topic 260 “Earnings per Share,”
requires presentation of both basic and diluted earnings per share (“EPS”) with a reconciliation of the numerator and denominator
of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilutive securities.
Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.
Basic net income (loss) per share is computed by dividing net income
(loss) available to ordinary shareholders adjusted for preferred stock dividends accumulated by the weighted average number of ordinary
shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income adjusted for preferred stock
dividends accumulated by the weighted average number of ordinary shares, ordinary share equivalents and potentially dilutive securities
outstanding during each period. Potentially dilutive ordinary shares consist of the ordinary shares issuable upon the exercise of ordinary
share warrants (using the treasury stock method). Ordinary share equivalents are not included in the calculation of diluted earnings per
share if their effect would be anti-dilutive. In a period in which the Company has a net loss, all potentially dilutive securities are
excluded from the computation of diluted shares outstanding as they would have had an anti-dilutive impact. The following table presents
a reconciliation of basic and diluted net income per share:
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Net (loss) income attributable to ordinary shareholders of the Company
|
|
|
(93,816
|
)
|
|
|
(1,576,010
|
)
|
|
|
(11,740,265
|
)
|
|
|
6,088,680
|
|
Preferred Share Dividends
|
|
|
(40,000
|
)
|
|
|
-
|
|
|
|
(300,000
|
)
|
|
|
-
|
|
Net (loss) income available to ordinary shareholders of the company for basic and diluted net income per share of ordinary shares
|
|
$
|
(133,816
|
)
|
|
$
|
(1,576,010
|
)
|
|
$
|
(12,040,265
|
)
|
|
$
|
6,088,680
|
|
Weighted average ordinary shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
86,389,548
|
|
|
|
79,055,053
|
|
|
|
83,854,623
|
|
|
|
79,055,053
|
|
Diluted
|
|
|
86,389,548
|
|
|
|
79,055,053
|
|
|
|
83,854,623
|
|
|
|
79,055,053
|
|
Net (loss) income per ordinary share attributable to ordinary shareholders of the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.00
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
0.08
|
|
Diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
0.08
|
|
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Non-controlling interest
On February 15, 2015, China Agriculture invested
RMB 400 million (approximately $65 million) into Pingtan Fishing and acquired an 8% equity interest in Pingtan Fishing. As of June 30,
2021, China Agriculture owned 8% of the equity interest of Pingtan Fishing, which was not under the Company’s control.
Related parties
Parties are considered to be related to the Company
if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with
the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal
owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly
influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully
pursuing its own separate interests. The Company discloses all significant related party transactions.
Comprehensive income (loss)
Comprehensive income (loss) is comprised of net
income (loss) and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes
in paid-in capital and distributions to stockholders. For the Company, comprehensive income (loss) for the three and six months ended
June 30, 2021 and 2020 included net income (loss) and unrealized gain from foreign currency translation adjustments.
Segment information
ASC Topic 280 “Segment reporting”
establishes standards for reporting information on operating segments in interim and annual financial statements. All of the Company’s
operations are considered by the chief operating decision maker to be aggregated in one reportable operating segment. All of the Company’s
customers are in the PRC and all income is derived from ocean fishery.
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, liability for breaches of contracts. 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 historical operations, scientific evidence and the specifics of each
matter.
The Company’s management has evaluated all
such proceedings and claims that existed as of June 30, 2021. 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.
Concentrations of credit, economic and political risks
The Company’s operations are carried out
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’s 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.
Financial instruments which potentially subject
the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. All of the Company’s cash
is maintained with state-owned banks within the PRC and Hong Kong. The Company has not experienced any losses in such accounts. A portion
of the Company’s sales are credit sales which are primarily to customers whose abilities to pay are dependent upon the industry
economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables is limited due
to generally short payment terms. The Company also performs ongoing credit evaluations of its customers to help further reduce credit
risk.
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Concentrations of credit, economic and political risks (continued)
According to the sale agreement signed on December
4, 2013, the Company does not own 20 fishing vessels but has the operating rights to operate these vessels which are owned by a related
company, Fuzhou Hong Long Ocean Fishery Co., Ltd (“Hong Long”) and the Company is entitled to 100% of the 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 operating rights but the Company may need to bear the operation risks and credit risks as aforementioned.
Recent Adopted Accounting Standards
Codification Improvements to Topic 842, Leases
(“ASU 2018-10”) and ASU 2018-11, Leases (Topic 842), Targeted Improvements (“ASU 2018-11”). The amendments in
ASU 2018-10 affect only narrow aspects of the guidance issued in the amendments in ASU 2016-02, including but not limited to lease residual
value guarantee, rate implicit in the lease and lease term and purchase option. The amendments in ASU 2018-11 provide an optional transition
method for adoption of the new standard, which will allow entities to continue to apply the legacy guidance in ASC Topic 840, including
its disclosure requirements, in the comparative periods presented in the year of adoption.
In August 2018, the FASB issued ASU 2018-13, “Changes
to the Disclosure Requirements for Fair Value Measurement.” This standard eliminates the current requirement to disclose the amount
or reason for transfers between level 1 and level 2 of the fair value hierarchy and the requirement to disclose the valuation methodology
for level 3 fair value measurements. The standard includes additional disclosure requirements for level 3 fair value measurements, including
the requirement to disclose the changes in unrealized gains and losses in other comprehensive income during the period and permits the
disclosure of other relevant quantitative information for certain unobservable inputs. The new guidance is effective for interim and annual
periods beginning after December 15, 2019. We applied the new standard beginning January 1, 2020. The adoption did not have a material
impact on the Company’s consolidated financial statements.
In January 2020, the FASB issued ASU 2020-01,
Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic
815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (“ASU 2020-01”) to clarify the interaction in
accounting for equity securities under Topic 321, investments accounted for under the equity method of accounting in Topic 323 and the
accounting for certain forward contracts and purchased options accounted for under Topic 815. ASU 2020-01 is effective for fiscal years,
and for interim periods within those fiscal years, beginning after December 15, 2020. We applied the new standard beginning January 1,
2021. The adoption did not have a material impact on the Company’s consolicated financial statements.
In December 2019, the FASB issued ASU 2019-12,
Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which eliminates certain exceptions
to the existing guidance for income taxes related to the approach for intra-period tax allocations, the methodology for calculating income
taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This ASU also simplifies the
accounting for income taxes by clarifying and amending existing guidance related to the effects of enacted changes in tax laws or rates
in the effective tax rate computation, the recognition of franchise tax and the evaluation of a step-up in the tax basis of goodwill,
among other clarifications. ASU 2019-12 is effective for fiscal years, and for interim periods within those fiscal years, beginning after
December 15, 2020. We applied the new standard beginning January 1, 2021. The adoption did not have a material impact on the Company’s
consolidated financial statements.
Recent accounting pronouncements
In June 2016, the FASB
issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments”,
which will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The guidance
replaces the incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance based
on the estimate of expected credit loss. In November 2019, the FASB issued ASU 2019-10. Financial Instruments — Credit Losses (Topic
326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, finalizes effective date delays for private companies,
not-for-profit organizations, and certain smaller reporting companies applying the credit losses, leases, and hedging standards. The effective
date for SEC filers, excluding smaller reporting companies as defined by the SEC, remains as fiscal years beginning after Dec. 15, 2019.
The new effective date for all other entities is fiscal years beginning after December 15, 2022. The Company is currently evaluating the
impact of adopting this standard on its consolidated financial statements.
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 3 – ACCOUNTS RECEIVABLE
At June 30, 2021 and December 31, 2020, accounts receivable consisted
of the following:
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
Accounts receivable
|
|
$
|
29,671,094
|
|
|
$
|
32,357,692
|
|
Less: allowance for doubtful accounts
|
|
|
(926,537
|
)
|
|
|
(411,131
|
)
|
|
|
$
|
28,744,557
|
|
|
$
|
31,946,561
|
|
The Company reviews the accounts receivable
on a periodic basis and makes general and specific allowance when there is doubt as to the collectability of an individual balance. Bad debt expense was $605,589 and $(50,336) for the three months ended June 30, 2021 and 2020, respectively.
Bad debt expense was $510,358 and $57,205 for the six months ended June 30, 2021 and 2020, respectively.
NOTE 4 – INVENTORIES
At June 30, 2021 and December 31, 2020, inventories consisted of the
following:
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
Frozen fish and marine catches in warehouse
|
|
$
|
40,344,572
|
|
|
$
|
44,272,021
|
|
Frozen fish and marine catches work in progress
|
|
|
26,958,530
|
|
|
|
20,702,914
|
|
Frozen fish and marine catches in transit
|
|
|
20,429,243
|
|
|
|
18,761,950
|
|
|
|
|
87,732,345
|
|
|
|
83,736,885
|
|
Less: reserve for inventories
|
|
|
(10,595,138
|
)
|
|
|
(16,125,749
|
)
|
|
|
$
|
77,137,207
|
|
|
$
|
67,611,136
|
|
Frozen fish and marine catches in warehouse represent
fish inventory in cold storage warehouses located in China.
Frozen fish and marine catches work in progress
represents fish inventory in vessels’ refrigerators, which has not been delivered to ports in China, nor applied for duty-exemption
import into China.
Frozen fish and marine catches in transit represents fish inventory
that obtained duty-exemption import permission and is in the process of being shipped to China.
An allowance is established when management determines that certain
inventories may not be saleable. If inventory costs exceed expected market value due to obsolescence or quantities in excess of expected
demand, the Company will record reserve for the difference between the cost and the market value. These reserves are recorded based on
estimates.
The Company recorded a provision for inventory
of $(8,502,163) and $2,266,917 for the three months ended June 30, 2021 and 2020, respectively. The Company recorded a provision for inventory
of $(5,682,073) and $2,000,619 for the six months ended June 30, 2021 and 2020, respectively.
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 5 – OTHER
RECEIVABLES
At June 30, 2021 and
December 31, 2020, other receivables consisted of the following:
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
VAT recoverable (1)
|
|
$
|
492,455
|
|
|
$
|
1,520,501
|
|
Other
|
|
|
387,285
|
|
|
|
380,593
|
|
|
|
$
|
879,740
|
|
|
$
|
1,901,094
|
|
(1)
|
The
balance of advanced VAT represents input VAT available for deducting the amount of VAT paid in the future.
|
NOTE 6 – COST METHOD INVESTMENT
At June 30, 2021 and December 31, 2020, cost method
investment amounted to $3,250,724 and $3,218,440, respectively. The investment represents Pingtan Fishing’s, the Company’s
subsidiary, minority interest in Fujian Pingtan Rural-Commercial Bank Joint-Stock Co., Ltd. (“Pingtan Rural-Commercial Bank”),
a private financial institution. Pingtan Fishing completed its registration as a shareholder on October 17, 2012 and paid RMB 21 million
(approximately US$3.0 million) to purchase 5% of the common stock of Pingtan Rural-Commercial Bank. Pingtan Fishing held 15,113,250 shares
and accounted for 4.8% investment in the total equity investment of the bank as of June 30, 2021 and December 31, 2020.
In accordance with ASC Topic 321, the Company
elected to use the measurement alternative to measure such investments at cost, less any impairment, plus or minus changes resulting from
observable price changes in orderly transactions for identical or similar investments of the same issuer, if any. The Company monitors
its investment in the non-marketable security and will recognize, if ever existing, a loss in value which is deemed to be other than temporary.
The Company determined that there was no impairment on this investment as of June 30, 2021 and December 31, 2020.
NOTE 7 – EQUITY METHOD INVESTMENT
At June 30, 2021 and December 31, 2020, the equity
investment amounted to $29,530,620 and $29,689,813, respectively. The investment represents the Company’s subsidiary, Pingtan Fishing’s
interest in Global Deep Ocean. On June 12, 2014, Pingtan Fishing incorporated Global Deep Ocean with two unrelated companies in the PRC.
In April 2017, these two companies sold their shares to another unrelated party, Zhen Lin. As of June 30, 2020 and 2021, Pingtan Fishing
and Zhen Lin accounted for 20% and 80% of the total ownership, respectively.
Global Deep Ocean processes, stores, and transports
Deep Ocean fishing products. Total registered capital of Global Deep Ocean is RMB 1 billion (approximately US $154.8 million) and as of
June 30, 2021, Pingtan Fishing had contributed its share of registered capital of RMB 200 million (approximately US$31.0 million).
The Company measures this equity investment in the consolidated financial
statements utilizing the equity method. Under the equity method, the investment is initially recorded at cost, adjusted for any excess
of the Company’s share of the incorporated-date fair values of the investee’s identifiable net assets over the cost of the
investment (if any). Thereafter, the investment is adjusted for the changes in the Company’s share of the investee’s net assets
and any impairment loss relating to the investment. For the three months ended June 30, 2021 and 2020, the Company’s share of Global
Deep Ocean’s net loss was $244,313 and $143,015, respectively, which was included in loss on equity method investment in the accompanying
consolidated statements of operations and comprehensive income. For the six months ended June 30, 2021 and 2020, the Company’s share
of Global Deep Ocean’s net loss was $456,180 and $268,543, respectively, which was included in loss on equity method investment
in the accompanying consolidated statements of operations and comprehensive income.
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 8 – PREPAYMENT
FOR LONG-TERM ASSETS
At June 30, 2021
and December 31, 2020, prepayment for long-term assets consisted of prepayment for fishing
vessels’ construction. The Company reclassifies the prepayment for fishing vessels’ construction to construction-in-progress
using the percentage of completion method.
For the six months
ended June 30, 2021, a summary of activities in prepayment for long-term assets was as follows:
|
|
Prepayment
for fishing
vessels’
construction
|
|
Balance - December 31, 2020
|
|
$
|
66,083,041
|
|
Prepayments made for fishing vessels’ construction
|
|
|
46,191,388
|
|
Reclassification to construction-in-progress
|
|
|
-
|
|
Foreign currency fluctuation
|
|
|
746,524
|
|
Balance – June 30, 2021
|
|
$
|
113,020,953
|
|
NOTE 9 – PROPERTY, PLANT AND EQUIPMENT
At June 30, 2021 and December 31, 2020, property,
plant and equipment consisted of the following:
|
|
Useful life
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
Fishing vessels
|
|
10 - 20 Years
|
|
$
|
329,534,396
|
|
|
$
|
304,764,105
|
|
Vehicles
|
|
5 Years
|
|
|
41,372
|
|
|
|
23,336
|
|
Office and other equipment
|
|
3 – 5 Years
|
|
|
492,980
|
|
|
|
488,084
|
|
|
|
|
|
|
330,068,748
|
|
|
|
305,275,525
|
|
Less: accumulated depreciation
|
|
|
|
|
(62,874,605
|
)
|
|
|
(55,120,514
|
)
|
|
|
|
|
$
|
267,194,143
|
|
|
$
|
250,155,011
|
|
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 9 – PROPERTY, PLANT AND EQUIPMENT
(continued)
During the six months ended June 30, 2021, the
Company received a government subsidy for a batch of fishing vessels amounted to RMB 23.3 million (approximately US$3.6 million). The
subsidy is related to assets which requires deducting it from the carrying amount of the asset.
For the three months ended June 30, 2021 and 2020,
depreciation expense amounted to $3,384,414 and $3,294,304, respectively, of which $3,311,846 and $2,504,970, respectively, was included
in cost of revenue and inventories, and the remainder was included in general and administrative expense. For the six months ended June
30, 2021 and 2020, depreciation expense amounted to $7,192,857 and $6,672,732, of which $7,048,003 and $5,171,965, respectively, was included
in cost of revenue and inventories, and the remainder was included in general and administrative expense, respectively.
The Company had 128 and 82 fishing vessels at June 30, 2021 and December
31, 2020, with net carrying amount of approximately $243.4 million and $227.3 million, respectively, pledged as collateral for its bank
loans.
The Company recognized an impairment loss of $491,320
and nil for the three months ended June 30, 2021 and 2020, respectively. The Company recognized impairment loss of $975,366 and nil for
the six months ended June 30, 2021 and 2020, respectively. During the six months ended June 30, 2021, the Company assessed the recoverability
of 1 krill fishing vessel that was in the building stage based on the undiscounted future cash flow that the fishing vessel is expected
to generate as less than the carrying amount, and recognized an impairment loss.
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 10 – RELATED PARTIES TRANSACTIONS
Accounts payable -
related parties
At June 30, 2021 and December 31, 2020, accounts
payable - related parties consisted of the following:
Name of related party
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
Hong Long (1)
|
|
$
|
4,438,232
|
|
|
$
|
781,225
|
|
Global Deep Ocean
|
|
|
41,290
|
|
|
|
7,602,944
|
|
Fujian Jingfu Ocean Fishery Development Co., Ltd. (2)
|
|
|
268,974
|
|
|
|
1,327
|
|
Huna Lin
|
|
|
1,950,820
|
|
|
|
1,581,212
|
|
|
|
$
|
6,699,316
|
|
|
$
|
9,966,708
|
|
(1)
|
Hong
Long is an affiliate company majority owned by a family member of the Company’s CEO.
|
(2)
|
Fujian
Jingfu Ocean Fishery Development Co., Ltd. is a subsidiary of Hong Long
|
These accounts payable - related parties’
amounts are short-term in nature, non-interest bearing, unsecured and payable on demand.
Due to related parties
At June 30, 2021 and
December 31, 2020, the due to related parties amount consisted of the following:
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
Accrued compensation for LiMing Yung, Chief Financial Officer
|
|
$
|
15,000
|
|
|
$
|
15,000
|
|
Accrued compensation for Xinrong Zhuo, Chief Executive Officer
|
|
|
3,354
|
|
|
|
3,354
|
|
Advance from Xinrong Zhuo, Chief Executive Officer
|
|
|
1,450,000
|
|
|
|
-
|
|
|
|
$
|
1,468,354
|
|
|
$
|
18,354
|
|
The balance of accrued
compensation represents accrued compensation for CEO and CFO.
The advance from Xinrong
Zhuo, the Company’s Chief Executive Officer, is for working capital purposes and short-term in nature, non-interest bearing, unsecured
and payable on demand.
Operating lease
On July 31, 2012, the Company entered into a lease
for office space with Ping Lin, the spouse of the Company’s CEO (the “Office Lease”). Pursuant to the Office Lease,
the annual rent is RMB 84,000 (approximately US$13,000) and expires on July 31, 2021. This lease was renewed for one year under the same
term upon expiry, and the new lease will be expired on July 31, 2022.
For the three months ended June 30, 2021 and 2020,
rent expense related to the Office Lease amounted to $3,251 and $2,964, respectively. For the six months ended June 30, 2021 and 2020,
rent expense related to the Office Lease amounted to $6,490 and $5,973, respectively. The future minimum rental payment required under
the Office Lease is as follows:
Twelve-month period Ending June 30:
|
|
Amount
|
|
2022
|
|
$
|
1,082
|
|
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 10 – RELATED PARTIES TRANSACTIONS
(continued)
Purchases from related parties
During the three and six months ended June 30,
2021 and 2020, purchases from related parties were as follows:
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Purchase of fuel, fishing nets and other on board consumables
|
|
|
|
|
|
|
|
|
|
|
|
|
Fujian Jingfu Marine Fishery Development Co., Ltd
|
|
$
|
338,065
|
|
|
$
|
-
|
|
|
$
|
985,625
|
|
|
$
|
-
|
|
Global Deep Ocean
|
|
|
81,451
|
|
|
|
-
|
|
|
|
81,451
|
|
|
|
-
|
|
Fuzhou Honglong Ocean Fishery Co., Ltd.
|
|
|
3,782,106
|
|
|
|
636,530
|
|
|
|
4,244,019
|
|
|
|
1,064,720
|
|
|
|
|
4,201,622
|
|
|
|
636,530
|
|
|
|
5,311,095
|
|
|
|
1,064,720
|
|
Purchase of leasing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ping Lin
|
|
|
3,251
|
|
|
|
2,964
|
|
|
|
6,490
|
|
|
|
5,973
|
|
Purchase of vessel maintenance services, docking and freight
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huna Lin
|
|
|
3,361,738
|
|
|
|
210,961
|
|
|
|
6,442,420
|
|
|
|
3,411,251
|
|
|
|
$
|
3,361,738
|
|
|
$
|
210,961
|
|
|
$
|
6,442,420
|
|
|
$
|
3,411,251
|
|
Purchase of inventory for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Deep Ocean
|
|
|
6,202,532
|
|
|
|
-
|
|
|
|
6,202,532
|
|
|
|
-
|
|
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 11 – BANK LOANS
Short-term bank loans
Short-term bank loans represent the amounts due
to various banks that are due within one year. These loans can be renewed with the banks upon maturity. The Company is in compliance with
all debt covenants. At June 30, 2021 and December 31, 2020, short-term bank loans consisted of the following:
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
Loan from The Export-Import Bank of China, due on January 21, 2021 with annual interest rate of 3.88% at December 31, 2020, guaranteed by Pin Lin, Xinrong Zhuo and Hong Long, pledged deposits provided by Hong Long amounted to RMB 42 million, the Land Use Right of B2 plot in central business district on the north shore of Minjiang river.
|
|
$
|
-
|
|
|
$
|
41,686,462
|
|
Loan from Fujian Haixia Bank, due on October 29, 2021 with annual interest rate of 6.09% at March 31, 2021 and December 31, 2020, collateralized by Hong Long’s 5 fishing vessels, the Company’s 1 fishing vessel and 7 real estate properties of Ping Lin and Ying Liu, the debt ratio of borrower should not be higher than or equal to 100%.
|
|
|
10,835,746
|
|
|
|
10,728,134
|
|
Loan from Fujian Haixia Bank, due on January 19, 2022 with annual interest rate of 6.09% at March 31, 2021, guaranteed by Pin Lin, Xinrong Zhuo, Longxiong Zhuo, Longjie Zhuo, Longhao Zhuo and Hong Long, collateralized by three land use rights of old city reconstruction plots west of Baima Road, Gulou District, east of Liuhe Road, north of Daoshan Road, the debt ratio of borrower should not be higher than or equal to 80%.
|
|
|
29,411,309
|
|
|
|
-
|
|
Loan from Fujian Haixia Bank, due on January 20, 2022 with annual interest rate of 6.09% at March 31, 2021, guaranteed by Pin Lin, Xinrong Zhuo, Longxiong Zhuo, Longjie Zhuo, Longhao Zhuo and Hong Long, collateralized by three land use rights of old city reconstruction plots west of Baima Road, Gulou District, east of Liuhe Road, north of Daoshan Road, the debt ratio of borrower should not be higher than or equal to 80%.
|
|
|
15,479,637
|
|
|
|
-
|
|
|
|
$
|
55,726,692
|
|
|
$
|
52,414,596
|
|
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 11 – BANK LOANS (continued)
Long-term bank loans
Long-term bank loans represent the amounts due
to various banks lasting over one year. Usually, the long-term bank loans cannot be renewed with these banks upon maturities. The Company
is in compliance with all long-term bank loan covenants. At June 30, 2021 and December 31, 2020, long-term bank loans consisted of the
following:
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
Loan from The Export-Import Bank of China, due on various dates until January 30, 2023 with annual interest rate of 4.90% at March 31, 2021 and December 31, 2020, guaranteed by Xinrong Zhuo and Ping Lin and collateralized by 2 fishing vessels and collateralized by two related parties’ investments in equity interest of one PRC local banks.
|
|
$
|
2,321,945
|
|
|
$
|
2,298,886
|
|
Loan from China Development Bank, due on various dates until November 27, 2023 with annual interest rate of 5.15% at March 31, 2021 and December 31, 2020, guaranteed by Xinrong Zhuo, Honghong Zhuo, Mr. and Mrs. Zhiyan Lin and 17 fishing vessels, the debt ratio of borrower should not be higher than 80%.
|
|
|
3,560,316
|
|
|
|
4,291,254
|
|
Loan from The Export-Import Bank of China, due on various dates until March 28, 2025 with annual interest rate of 4.95% at March 31, 2021 and December 31, 2020, guaranteed by Hong Long, Xinrong Zhuo, Ping Lin and collateralized by 20 fishing vessels.
|
|
|
52,630,764
|
|
|
|
58,238,440
|
|
Loan from The Export-Import Bank of China, due on various dates until August 21, 2026 with annual interest rate of 4.70% at March 31, 2021 and December 31, 2020, guaranteed by Pin Lin, Xinrong Zhuo and Yaohua Zhuo, 15 fishing vessels, the Land Use Right of B2 plot in central business district on the north shore of Minjiang river.
|
|
|
53,636,941
|
|
|
|
57,931,922
|
|
Loan from The Export-Import Bank of China, due on various dates until October 21, 2025 with annual interest rate of 4.70% at March 31, 2021 and December 31, 2020, guaranteed by Pin Lin, Xinrong Zhuo, Yaohua Zhuo and Hong Long, 15 fishing vessels and 1 transport vessel, the Land Use Right of B2 plot in central business district on the north shore of Minjiang river.
|
|
|
45,277,937
|
|
|
|
49,809,192
|
|
Loan from China Development Bank, due on various dates until July 30, 2026 with annual interest rate of 5.39% at March 31, 2021 and December 31, 2020, guaranteed by Xinrong Zhuo, 11 fishing vessels and 6 Hong Long’s fishing vessels, real estate of Mingguang Wanhao Property co., LTD., totalled area 22,123.50m2, the debt ratio of borrower should not be higher than 80%.
|
|
|
9,519,976
|
|
|
|
10,383,301
|
|
Loan from The Export-Import Bank of China, due on various dates until April 21, 2028 with annual interest rate of 4.65% at March 31, 2021 and December 31, 2020, guaranteed by Pin Lin, Xinrong Zhuo, Yaohua Zhuo, Hong Long and Huanghai Shipbuilding Co., Ltd., the Land Use Right of B2 plot in central business district on the north shore of Minjiang river, 1 vessel.
|
|
|
20,123,527
|
|
|
|
19,923,677
|
|
Loan from The Export-Import Bank of China, due on various dates until December 21, 2028 with annual interest rate of 4.65% at March 31, 2021 and December 31, 2020, guaranteed by Pin Lin, Xinrong Zhuo, Yaohua Zhuo, Hong Long and Huanghai Shipbuilding Co., Ltd., the Land Use Right of B2 plot in central business district on the north shore of Minjiang river, 1 vessel.
|
|
|
21,671,491
|
|
|
|
21,456,268
|
|
Loan from The Export-Import Bank of China, due on various dates until January 15, 2023 with annual interest rate of 4.00% at March 31, 2021, guaranteed by Pin Lin, Xinrong Zhuo and Hong Long, and collateralized by two related parties’ investments in equity interest of one PRC local banks.
|
|
|
34,364,793
|
|
|
|
-
|
|
Loan from The Export-Import Bank of China, due on various dates until August 21, 2022 with annual interest rate of 2.20% at March 31, 2021 and December 31, 2020, guaranteed by Hong Long, Xinrong Zhuo and Pin Lin.
|
|
|
20,681,610
|
|
|
|
21,000,000
|
|
Loan from The Export-Import Bank of China, due on various dates until February 21, 2023 with annual interest rate of 2.20% at March 31, 2021, guaranteed by Hong Long, Xinrong Zhuo and Pin Lin and collateralized by two related parties’ investments in equity interest of one PRC local banks and the Land Use Right of B2 plot in central business district on the north shore of Minjiang river.
|
|
|
11,018,390
|
|
|
|
|
|
Loan from The Export-Import Bank of China, due on various dates until June 21, 2028 with annual interest rate of 2.20% at March 31, 2021, guaranteed by Lin Lin, Xinrong Zhuo, Yaohua Zhuo, Hong Long and Huanghai Shipbuilding Co., Ltd., the Land Use Right of B2 plot in central business district on the north shore of Minjiang river.
|
|
|
22,755,066
|
|
|
|
|
|
Loan from Bank of Communications, due on various dates until June 27, 2025 with annual interest rate of 4.65% at March 31, 2021 and December 31, 2020, guaranteed by Xinrong Zhuo, Huanghai Shipbuilding Co., Ltd. and Fujian Jingfu Ocean Fishery Development Co., Ltd.
|
|
|
36,377,147
|
|
|
|
39,770,725
|
|
Total long-term bank loans
|
|
$
|
333,939,903
|
|
|
$
|
285,103,665
|
|
Less: current portion
|
|
|
(50,703,774
|
)
|
|
|
(39,987,577
|
)
|
Long-term bank loans, non-current portion
|
|
$
|
283,236,129
|
|
|
$
|
245,116,088
|
|
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 11 – BANK LOANS (continued)
Long-term bank loans (continued)
The future maturities of long-term bank loans are as follows:
Due in twelve-month periods ending June 30,
|
|
Principal
|
|
2022
|
|
$
|
50,703,774
|
|
2023
|
|
|
127,743,180
|
|
2024
|
|
|
64,743,580
|
|
2025
|
|
|
63,273,014
|
|
2026
|
|
|
15,750,530
|
|
Thereafter
|
|
|
11,725,825
|
|
|
|
$
|
333,939,903
|
|
Less: current portion
|
|
|
(50,703,774
|
)
|
Long-term liability
|
|
$
|
283,236,129
|
|
The weighted average interest rate for short-term
bank loans was approximately 6.0% and 4.1% for the six months ended June 30, 2021 and 2020, respectively.
The weighted average interest rate for long-term
bank loans was approximately 4.2% and 4.9% for the six months ended June 30, 2021 and 2020, respectively.
For the three months ended June 30, 2021 and 2020,
interest expense related to bank loans amounted to $4,422,481 and $3,701,595, respectively, of which, $0 and $765,066 was capitalized
to construction-in-progress, respectively. For the six months ended June 30, 2021 and 2020, interest expense related to bank loans amounted
to $8,640,280 and $6,844,350, respectively, of which $0 and $1,008,925 was capitalized to construction-in-progress, respectively.
NOTE 12 – ACCRUED LIABILITIES AND OTHER PAYABLES
At June 30, 2021 and December 31, 2020, accrued liabilities and other
payables consisted of the following:
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
Accrued salaries and related benefits
|
|
$
|
16,838,072
|
|
|
$
|
11,440,174
|
|
Accrued interest
|
|
|
477,176
|
|
|
|
462,304
|
|
Other
|
|
|
1,764,496
|
|
|
|
249,155
|
|
|
|
$
|
19,079,744
|
|
|
$
|
12,151,633
|
|
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 13 – SHARE
CAPITAL
|
|
Number of
shares
|
|
|
Total
|
|
Balance, December 31, 2020
|
|
|
-
|
|
|
$
|
-
|
|
Issuance of preferred shares1
|
|
|
4,000,000
|
|
|
|
4,000
|
|
Conversion from preferred shares to ordinary shares
|
|
|
(3,409,078
|
)
|
|
|
(3,409
|
)
|
Redemption of Preferred Shares2
|
|
|
(590,922
|
)
|
|
|
(591
|
)
|
Balance, March 31, 2021
|
|
|
-
|
|
|
$
|
-
|
|
|
1
|
On January 8, 2021, the Company issued 4,000,000 of its Series A Convertible
Preferred Shares, par value $0.001 per share (“Series A Preferred Shares”), at a purchase price of $1.00 per share
and a stated value of $1.10 per share, in a registered direct offering.
|
|
2
|
On March 8, 2021, the Company sold 3,625,954 ordinary shares at
a price of $1.31 per share, and 2,719,464 five-year warrants to purchase ordinary shares at an exercise price of $1.31 per share, in
a registered direct offering.
|
|
|
Number of
shares
|
|
|
Total
|
|
Balance, December 31, 2020
|
|
|
79,302,428
|
|
|
$
|
79,302
|
|
Issuance of ordinary shares2
|
|
|
3,625,954
|
|
|
|
3,626
|
|
Conversion from preferred shares to ordinary shares
|
|
|
3,805,775
|
|
|
|
3,806
|
|
Repurchase of ordinary shares3
|
|
|
(793,192
|
)
|
|
|
(793
|
)
|
Balance, June 30, 2021
|
|
|
85,940,965
|
|
|
$
|
85,941
|
|
|
1
|
On
March 8, 2021, the Company sold 3,625,954 ordinary shares at a price of $1.31 per share, and 2,719,464 five-year warrants to purchase
ordinary shares at an exercise price of $1.31 per share, in a registered direct offering.
|
NOTE 14 – CERTAIN RISKS AND CONCENTRATIONS
Credit risk
At June 30, 2021 and December 31, 2020, the Company’s
cash included bank deposits in accounts maintained within the PRC and Hong Kong. The Company does not experience any losses in such accounts
and believes it is not exposed to any significant risks on its cash in bank accounts.
Major customers
The following table sets forth information as
to each customer that accounted for 10% or more of the Company’s sales for the three and six months ended June 30, 2021 and 2020.
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
Customer
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
A
|
|
|
23
|
%
|
|
|
13
|
%
|
|
|
18
|
%
|
|
|
*
|
|
B
|
|
|
15
|
%
|
|
|
12
|
%
|
|
|
12
|
%
|
|
|
*
|
|
C
|
|
|
15
|
%
|
|
|
*
|
|
|
|
16
|
%
|
|
|
*
|
|
D
|
|
|
*
|
|
|
|
19
|
%
|
|
|
*
|
|
|
|
15
|
%
|
E
|
|
|
*
|
|
|
|
14
|
%
|
|
|
*
|
|
|
|
12
|
%
|
F
|
|
|
*
|
|
|
|
13
|
%
|
|
|
*
|
|
|
|
*
|
|
G
|
|
|
*
|
|
|
|
11
|
%
|
|
|
*
|
|
|
|
12
|
%
|
Three customers accounted for 53.09% or more of
the Company’s total outstanding accounts receivable at June 30, 2021 and December 31, 2020, respectively.
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
JUNE 30, 2021
NOTE 14 – CERTAIN RISKS AND CONCENTRATIONS (continued)
Major suppliers
The following table sets forth information as
to each supplier that accounted for 10% or more of the Company’s purchases for the three and six months ended June 30, 2021 and
2020.
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
Supplier
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
A
|
|
|
49
|
%
|
|
|
35
|
%
|
|
|
66
|
%
|
|
|
29
|
%
|
B
|
|
|
15
|
%
|
|
|
*
|
|
|
|
*
|
|
|
|
*
|
|
C
|
|
|
12
|
%
|
|
|
25
|
%
|
|
|
*
|
|
|
|
23
|
%
|
D
|
|
|
11
|
%
|
|
|
10
|
%
|
|
|
14
|
%
|
|
|
*
|
|
Two suppliers, whose outstanding accounts
payable accounted for 86.7 of the Company’s total outstanding accounts payable and accounts payable – related parties
at June 30, 2021, accounted for 89% of the Company’s total outstanding accounts payable and accounts payable – related
parties at June 30, 2021.
One supplier, whose outstanding accounts payable
accounted for 10% or more of the Company’s total outstanding accounts payable and accounts payable – related parties at June
30, 2020, accounted for 53.2% of the Company’s total outstanding accounts payable and accounts payable – related parties at
June 30, 2020.
NOTE 15 – COMMITMENTS AND CONTINGENCIES
Severance payments
The Company has employment agreements with certain
employees that provide for severance payments to such employees upon termination of employment under certain circumstances, as defined
in the applicable agreements. The Company has estimated its possible severance payments to be approximately $10,000 as of June 30, 2021
and December 31, 2020, which have not been reflected in its consolidated financial statements due to immateriality.
Operating lease
See note 10 for related party operating lease
commitment.
NOTE 16 – SUBSEQUENT
EVENTS
On July 21, 2021, the Company repaid a long-term bank loan of $0.1
million to The Bank of Communications in accordance with the loan repayment schedule.
On August 19, 2021, the Company received a subsidy
of $232,195.
On August 21, 2021, the Company repaid a short-term
loan and a long-term bank loan of $0.4 million and $4.9 million to The Export-Import Bank of China in accordance with the loan repayment
schedule, respectively.
On September 2, 2021, the Company received a loan
of $4.1 million from The Export-Import Bank of China. The loan is due on July 1, 2023 with annual interest rate of 2.20%.
On September 10, 2021, the Company received a
loan of $1.1 million from The Export-Import Bank of China. The loan is due on July 1, 2023 with annual interest rate of 2.20%.
On September 10, 2021, the Company repaid a long-term
bank loan of $1.2 million to The Export-Import Bank of China in accordance with the loan repayment schedule.
On September 15, 2021, the Company received a
loan of $4.4 million from The Export-Import Bank of China. The loan is due on July 1, 2023 with annual interest rate of 2.20%.
On September 15, 2021, the Company repaid a long-term
bank loan of $4.5 million to The Export-Import Bank of China in accordance with the loan repayment schedule.
On September 21, 2021, the Company repaid a long-term
bank loan of $6.1 million to The Export-Import Bank of China in accordance with the loan repayment schedule.
On September 8, 2021, the Company’s Board of Directors consented
the Unanimous Written Resolutions for the suspension of the construction of a krill fishing vessel and the initiation of negotiations
with the shipbuilding company for the purpose of vessel construction contract termination on the basis that the construction progress
of the vessel continued to be behind schedule during 2021 and the shipbuilding company may not be able to deliver the vessel as agreed.
The Company recorded an impairment charge associated with the construction-in-progress of approximately $24,472,000 from this vessel in
December 2020, which was included in the total impairment of assets of approximately $66,694,000. Through September 30, 2021, the Company
has impaired approximately $1,471,000 of the construction costs related to the krill vessel. Although management believes this amount
should be adequate, based upon further negotiation with Huanghai Shipbuilding Co., Ltd, an additional impairment charge might be necessary.
On September 30, 2021, the Company received a
subsidy of $17,681,770.