PINGTAN
MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(IN
U.S. DOLLARS)
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
15,756,293
|
|
|
$
|
691,933
|
|
Restricted cash
|
|
|
13,018,350
|
|
|
|
9,912,666
|
|
Accounts receivable, net
|
|
|
21,823,247
|
|
|
|
31,946,561
|
|
Inventories, net
|
|
|
72,839,826
|
|
|
|
67,611,136
|
|
Prepaid expenses
|
|
|
1,517,569
|
|
|
|
170,706
|
|
Prepaid expenses - related party
|
|
|
-
|
|
|
|
2,015,357
|
|
Other receivables
|
|
|
606,298
|
|
|
|
1,901,094
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
125,561,583
|
|
|
|
114,249,453
|
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS:
|
|
|
|
|
|
|
|
|
Cost method investment
|
|
|
3,238,042
|
|
|
|
3,218,440
|
|
Equity method investment
|
|
|
29,107,193
|
|
|
|
29,689,813
|
|
Prepayment for long-term assets
|
|
|
98,454,667
|
|
|
|
66,083,041
|
|
Right-of-use asset
|
|
|
559,296
|
|
|
|
64,220
|
|
Property, plant and equipment, net
|
|
|
306,123,374
|
|
|
|
250,155,011
|
|
|
|
|
|
|
|
|
|
|
Total Other Assets
|
|
|
437,482,572
|
|
|
|
349,210,525
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
563,044,155
|
|
|
$
|
463,459,978
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
38,929,872
|
|
|
$
|
18,792,983
|
|
Accounts payable - related parties
|
|
|
10,427,554
|
|
|
|
9,966,708
|
|
Short-term bank loans
|
|
|
55,509,298
|
|
|
|
52,414,596
|
|
Long-term bank loans - current portion
|
|
|
70,676,635
|
|
|
|
39,987,577
|
|
Accrued liabilities and other payables
|
|
|
20,914,632
|
|
|
|
12,151,633
|
|
Lease liability- current
|
|
|
398,909
|
|
|
|
32,349
|
|
Due to related parties
|
|
|
30,973,032
|
|
|
|
18,354
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
227,829,932
|
|
|
|
133,364,200
|
|
|
|
|
|
|
|
|
|
|
OTHER LIABILITIES:
|
|
|
|
|
|
|
|
|
Lease liability
|
|
|
128,036
|
|
|
|
-
|
|
Long-term bank loans - non-current portion
|
|
|
250,126,251
|
|
|
|
245,116,088
|
|
Total Liabilities
|
|
|
478,084,219
|
|
|
|
378,480,288
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’ EQUITY:
|
|
|
|
|
|
|
|
|
Equity attributable to ordinary shareholders of the Company:
|
|
|
|
|
|
|
|
|
Preferred shares ($0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding at September 30, 2021 and December 31, 2020)
|
|
|
-
|
|
|
|
-
|
|
Ordinary shares ($0.001 par value; 125,000,000 shares authorized; 85,940,965 and 79,302,428 shares issued and outstanding at September 30, 2021 and December 31, 2020)
|
|
|
85,941
|
|
|
|
79,302
|
|
Additional paid-in capital
|
|
|
88,938,870
|
|
|
|
82,045,993
|
|
(Deficit)
|
|
|
(28,050,396
|
)
|
|
|
(18,594,755
|
)
|
Statutory reserve
|
|
|
15,751,712
|
|
|
|
15,751,712
|
|
Accumulated other comprehensive (loss)
|
|
|
(6,749,605
|
)
|
|
|
(9,568,873
|
)
|
Total equity attributable to ordinary shareholders of the Company
|
|
|
69,976,522
|
|
|
|
69,713,379
|
|
Non-controlling interest
|
|
|
14,983,414
|
|
|
|
15,266,311
|
|
Total Shareholders’ Equity
|
|
|
84,959,936
|
|
|
|
84,979,690
|
|
Total Liabilities and Shareholders’ Equity
|
|
$
|
563,044,155
|
|
|
$
|
463,459,978
|
|
See
notes to consolidated financial statements.
PINGTAN
MARINE ENTERPRISE LTD. AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(IN
U.S. DOLLARS)
|
|
For the Three Months Ended
September 30,
|
|
|
For the Nine Months Ended
September 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
|
$
|
36,103,674
|
|
|
$
|
15,448,083
|
|
|
$
|
101,275,967
|
|
|
$
|
56,218,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUE
|
|
|
40,165,352
|
|
|
|
13,787,521
|
|
|
|
106,530,518
|
|
|
|
46,641,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS (LOSS) PROFIT
|
|
|
(4,061,678
|
)
|
|
|
1,660,562
|
|
|
|
(5,254,551
|
)
|
|
|
9,576,332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES (INCOME):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
|
|
|
1,976,187
|
|
|
|
1,333,927
|
|
|
|
5,112,982
|
|
|
|
3,282,097
|
|
General and administrative
|
|
|
1,172,102
|
|
|
|
809,988
|
|
|
|
4,904,109
|
|
|
|
2,875,463
|
|
General and administrative - depreciation
|
|
|
1,001,961
|
|
|
|
773,812
|
|
|
|
1,146,815
|
|
|
|
2,274,579
|
|
Subsidy
|
|
|
(16,284,032
|
)
|
|
|
(4,440,731
|
)
|
|
|
(19,887,829
|
)
|
|
|
(12,778,819
|
)
|
Impairment loss
|
|
|
495,857
|
|
|
|
-
|
|
|
|
1,471,223
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating (INCOME)
|
|
|
(11,637,925
|
)
|
|
|
(1,523,004
|
)
|
|
|
(7,252,700
|
)
|
|
|
(4,346,680
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM OPERATIONS
|
|
|
7,576,247
|
|
|
|
3,183,566
|
|
|
|
1,998,149
|
|
|
|
13,923,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
23,276
|
|
|
|
973,265
|
|
|
|
72,729
|
|
|
|
3,335,877
|
|
Interest (expense)
|
|
|
(4,055,798
|
)
|
|
|
(4,036,524
|
)
|
|
|
(11,720,712
|
)
|
|
|
(9,871,949
|
)
|
Foreign currency transaction gain (loss)
|
|
|
(365,513
|
)
|
|
|
747,678
|
|
|
|
184,148
|
|
|
|
402,987
|
|
Gain from cost method investment
|
|
|
38
|
|
|
|
764
|
|
|
|
605,216
|
|
|
|
133,517
|
|
(Loss) on equity method investment
|
|
|
(308,921
|
)
|
|
|
(82,586
|
)
|
|
|
(765,101
|
)
|
|
|
(351,129
|
)
|
Other income (expense)
|
|
|
(5
|
)
|
|
|
(4,468
|
)
|
|
|
(76,861
|
)
|
|
|
(34,924
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other (Expense), net
|
|
|
(4,706,923
|
)
|
|
|
(2,401,871
|
)
|
|
|
(11,700,581
|
)
|
|
|
(6,385,621
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAXES
|
|
|
2,869,324
|
|
|
|
781,695
|
|
|
|
(9,702,432
|
)
|
|
|
7,537,391
|
|
INCOME TAXES
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
NET INCOME (LOSS)
|
|
$
|
2,869,324
|
|
|
$
|
781,695
|
|
|
$
|
(9,702,432
|
)
|
|
$
|
7,537,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST
|
|
|
284,700
|
|
|
|
92,511
|
|
|
|
(546,791
|
)
|
|
|
759,527
|
|
NET INCOME (LOSS) ATTRIBUTABLE TO ORDINARY SHAREHOLDERS OF THE COMPANY BEFORE PREFERRED DIVIDENDS
|
|
|
2,584,624
|
|
|
|
689,184
|
|
|
|
(9,155,641
|
)
|
|
|
6,777,864
|
|
LESS: PREFERRED SHARE DIVIDENDS
|
|
|
-
|
|
|
|
-
|
|
|
|
(300,000
|
)
|
|
|
-
|
|
NET INCOME (LOSS) ATTRIBUTABLE TO ORDINARY SHAREHOLDERS OF THE COMPANY
|
|
$
|
2,584,624
|
|
|
$
|
689,184
|
|
|
$
|
(9,455,641
|
)
|
|
$
|
6,777,864
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
|
2,869,324
|
|
|
|
781,695
|
|
|
|
(9,702,432
|
)
|
|
|
7,537,391
|
|
OTHER COMPREHENSIVE (LOSS) INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized foreign currency translation gain
|
|
|
4,111,818
|
|
|
|
5,700,836
|
|
|
|
3,083,162
|
|
|
|
3,846,221
|
|
COMPREHENSIVE INCOME (LOSS)
|
|
|
6,981,142
|
|
|
|
6,482,531
|
|
|
|
(6,619,270
|
)
|
|
|
11,383,612
|
|
LESS: COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST
|
|
|
613,410
|
|
|
|
556,889
|
|
|
|
(282,897
|
)
|
|
|
1,075,369
|
|
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO ORDINARY SHAREHOLDERS OF THE COMPANY
|
|
$
|
6,367,732
|
|
|
$
|
5,925,642
|
|
|
$
|
(6,336,373
|
)
|
|
$
|
10,308,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) PER ORDINARY SHARE ATTRIBUTABLE TO ORDINARY SHAREHOLDERS OF THE COMPANY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.03
|
|
|
$
|
0.01
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.09
|
|
Diluted
|
|
$
|
0.03
|
|
|
$
|
0.01
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
86,389,548
|
|
|
|
79,071,363
|
|
|
|
83,854,623
|
|
|
|
79,060,490
|
|
Diluted
|
|
|
86,797,148
|
|
|
|
79,071,363
|
|
|
|
83,854,623
|
|
|
|
79,060,490
|
|
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 SEPTEMBER 30, 2021 AND 2020
(IN
U.S. DOLLARS)
|
|
Equity Attributable To Ordinary Shareholders of The Company
|
|
|
|
|
|
|
|
|
|
Preferred shares
|
|
|
Ordinary Shares
|
|
|
Additional
|
|
|
Retained
|
|
|
|
|
|
Accumulated
Other
|
|
|
Non-
|
|
|
Total
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Paid-in
|
|
|
Earnings
|
|
|
Statutory
|
|
|
Comprehensive
|
|
|
controlling
|
|
|
Shareholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
(Deficit)
|
|
|
Reserve
|
|
|
(Loss)
|
|
|
Interest
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2021 (Unaudited)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
85,940,965
|
|
|
$
|
85,941
|
|
|
$
|
88,938,870
|
|
|
$
|
(30,635,020
|
)
|
|
$
|
15,751,712
|
|
|
$
|
(10,532,713
|
)
|
|
$
|
14,370,004
|
|
|
$
|
77,978,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,584,624
|
|
|
|
-
|
|
|
|
-
|
|
|
|
284,700
|
|
|
|
2,869,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,783,108
|
|
|
|
328,710
|
|
|
|
4,111,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2021 (Unaudited)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
85,940,965
|
|
|
$
|
85,941
|
|
|
$
|
88,938,870
|
|
|
$
|
(28,050,396
|
)
|
|
$
|
15,751,712
|
|
|
$
|
(6,749,605
|
)
|
|
$
|
14,983,414
|
|
|
$
|
84,959,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
689,184
|
|
|
|
-
|
|
|
|
-
|
|
|
|
92,511
|
|
|
|
781,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issuance for professional fee
|
|
|
-
|
|
|
|
-
|
|
|
|
247,375
|
|
|
|
247
|
|
|
|
363,394
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
363,641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,236,458
|
|
|
|
464,378
|
|
|
|
5,700,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2020 (Unaudited)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
79,302,428
|
|
|
$
|
79,302
|
|
|
$
|
82,045,993
|
|
|
$
|
61,064,318
|
|
|
$
|
15,748,751
|
|
|
$
|
(12,550,529
|
)
|
|
$
|
20,437,274
|
|
|
$
|
166,825,109
|
|
See
condensed notes to unaudited consolidated financial statements
PINGTAN
MARINE ENTERPRISE LTD. AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(IN
U.S. DOLLARS)
|
|
Equity Attributable To Ordinary Shareholders of The Company
|
|
|
|
|
|
|
|
|
|
Preferred shares
|
|
|
Ordinary Shares
|
|
|
Additional
|
|
|
Retained
|
|
|
|
|
|
Accumulated
Other
|
|
|
Non-
|
|
|
Total
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Paid-in
|
|
|
Earnings
|
|
|
Statutory
|
|
|
Comprehensive
|
|
|
controlling
|
|
|
Shareholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
(Deficit)
|
|
|
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)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(9,155,641
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(546,791
|
)
|
|
|
(9,702,432
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,819,268
|
|
|
|
263,894
|
|
|
|
3,083,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2021 (Unaudited)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
85,940,965
|
|
|
$
|
85,941
|
|
|
$
|
88,938,870
|
|
|
$
|
(28,050,396
|
)
|
|
$
|
15,751,712
|
|
|
$
|
(6,749,605
|
)
|
|
$
|
14,983,414
|
|
|
$
|
84,959,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,777,864
|
|
|
|
-
|
|
|
|
-
|
|
|
|
759,527
|
|
|
|
7,537,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issuance for professional fee
|
|
|
-
|
|
|
|
-
|
|
|
|
247,375
|
|
|
|
247
|
|
|
|
363,394
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
363,641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,530,379
|
|
|
|
315,842
|
|
|
|
3,846,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2020 (Unaudited)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
79,302,428
|
|
|
$
|
79,302
|
|
|
$
|
82,045,993
|
|
|
$
|
61,064,318
|
|
|
$
|
15,748,751
|
|
|
$
|
(12,550,529
|
)
|
|
$
|
20,437,274
|
|
|
$
|
166,825,109
|
|
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 Nine Months
Ended
September 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(9,702,432
|
)
|
|
$
|
7,537,391
|
|
Adjustments to reconcile net income
from operations to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
12,510,131
|
|
|
|
10,616,935
|
|
Bad debt expense
|
|
|
756,463
|
|
|
|
245,498
|
|
(Decrease) increase in inventory allowance
|
|
|
740,084
|
|
|
|
1,711,666
|
|
Loss on equity method investment
|
|
|
765,101
|
|
|
|
351,129
|
|
Common stock issuance for professional fee
|
|
|
-
|
|
|
|
25,974
|
|
Impairment loss for fishing vessels
|
|
|
1,471,223
|
|
|
|
-
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
9,583,745
|
|
|
|
(5,191,192
|
)
|
Inventories
|
|
|
(5,567,403
|
)
|
|
|
(35,027,650
|
)
|
Prepaid expenses
|
|
|
(1,350,006
|
)
|
|
|
(432,033
|
)
|
Prepaid expenses - related party
|
|
|
2,032,018
|
|
|
|
-
|
|
Other receivables
|
|
|
1,309,201
|
|
|
|
(328,396
|
)
|
Accounts payable
|
|
|
20,065,745
|
|
|
|
(4,641,514
|
)
|
Accounts payable - related parties
|
|
|
401,008
|
|
|
|
218,739
|
|
Accrued liabilities and other payables
|
|
|
8,070,980
|
|
|
|
1,553,556
|
|
Accrued liabilities and other payables - related
party
|
|
|
29,568,507
|
|
|
|
-
|
|
Advance from customers
|
|
|
636,865
|
|
|
|
(619,235
|
)
|
Due to related parties
|
|
|
77,476
|
|
|
|
140,210
|
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
|
|
71,368,706
|
|
|
|
(23,838,922
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment
|
|
|
(32,038,302
|
)
|
|
|
(93,357,444
|
)
|
Prepayment made for long-term assets
|
|
|
(68,553,308
|
)
|
|
|
-
|
|
Proceeds from government grants
for fishing vessel construction
|
|
|
-
|
|
|
|
28,962,913
|
|
|
|
|
|
|
|
|
|
|
NET CASH USED IN INVESTING ACTIVITIES
|
|
|
(100,591,610
|
)
|
|
|
(64,394,531
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds of short-term bank loans
|
|
|
44,812,560
|
|
|
|
81,811,291
|
|
Repayments of short-term bank loans
|
|
|
(42,031,091
|
)
|
|
|
(42,908,020
|
)
|
Proceeds from long-term bank loans
|
|
|
78,720,177
|
|
|
|
104,640,414
|
|
Repayments of long-term bank loans
|
|
|
(44,683,935
|
)
|
|
|
(46,325,253
|
)
|
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
|
)
|
|
|
|
|
Loans issued to related parties
|
|
|
|
|
|
|
(160,070,480
|
)
|
Repayments of loans issued to
related parties
|
|
|
-
|
|
|
|
157,692,576
|
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
|
|
44,867,227
|
|
|
|
94,840,528
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE ON CASH, CASH EQUIVALENTS
AND RESTRICTED CASH
|
|
|
2,525,721
|
|
|
|
935,670
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED
CASH
|
|
|
18,170,044
|
|
|
|
7,542,745
|
|
|
|
|
|
|
|
|
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - beginning
of period
|
|
|
10,604,599
|
|
|
|
10,092,205
|
|
|
|
|
|
|
|
|
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED - end of period
|
|
$
|
28,774,643
|
|
|
$
|
17,634,950
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
13,191,936
|
|
|
$
|
11,012,593
|
|
Income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION TO AMOUNTS ON CONSOLIDATED BALANCE SHEETS:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
15,756,293
|
|
|
|
3,397,018
|
|
Restricted cash
|
|
|
13,018,350
|
|
|
|
14,237,932
|
|
TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
|
$
|
28,774,643
|
|
|
$
|
17,634,950
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Acquisition of property and equipment paid by related
party on behalf
|
|
$
|
(32,038,302
|
)
|
|
|
-
|
|
Acquisition of property and equipment
by decreasing prepayment for long-term assets
|
|
$
|
-
|
|
|
$
|
(20,594,592
|
)
|
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)
SEPTEMBER 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)
SEPTEMBER 30, 2021
NOTE
1 – DESCRIPTION OF BUSINESS AND ORGANIZATION (continued)
Details of the Company’s subsidiaries that are included in these
consolidated financial statements as of September 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
|
|
Seafood trading
|
|
|
|
|
|
|
|
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)
SEPTEMBER 30, 2021
NOTE 1 – DESCRIPTION OF BUSINESS AND
ORGANIZATION (continued)
Fujian Heyue is in the business of shrimp trading, and through its
PRC subsidiary, Pingtan Fishing, engages in ocean fishing with its owned and controlled vessels within the Indian Exclusive Economic Zone
and the international waters.
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, as amended, for the year ended December 31, 2020 filed with the Securities
and Exchange Commission on October 13, 2021.
Going concern
The Company had a working capital deficit of $102,268,349
as of September 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 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 68 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.
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 nine months ended September
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)
SEPTEMBER 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 China's mainland and Hong Kong. At September 30, 2021 and December 31,
2020, cash balances in China's mainland were $15,716,960 and $468,273, respectively, and cash balances in Hong Kong were $39,333 and $223,660,
respectively, and are not fully insured. According to the "Deposit Protection Scheme Regulations" implemented in Hong Kong in
September 2006 and the "Deposit Insurance Regulations" implemented in China's mainland in February 2015, if a bank fails, companies
can receive up to HK$500,000 and RMB500,000 in compensation, respectively. 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 September 30, 2021 and December
31, 2020, restricted cash amounted to $13,018,350 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.
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)
SEPTEMBER 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 September 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 $1,168,466
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 September 30, 2021 and December 31, 2020, the Company has a reserve for inventories in the
amount of $16,962,451 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: 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.
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 the fishing vessels’ operations.
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 7 for discussion of the equity investment.
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
SEPTEMBER 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 operation 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 nil and $183,747 for the three months ended September 30, 2021 and 2020, respectively,
in the fishing vessels under construction. The Company capitalized interest of nil and $1,192,672 for the nine months ended September
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 $495,857 and nil for
the three months ended September 30, 2021 and 2020, respectively. The Company recognized impairment loss of $1,471,223 and nil for the
nine months ended September 30, 2021 and 2020, respectively. During the nine months ended September 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.
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 the vessel construction contract termination on the
basis that the construction progress 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. As of September 30, 2021, the Company was in negotiations with the shipbuilding company regarding the details
of the return of the prepaid shipbuilding payments.
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)
SEPTEMBER 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 September 30, 2021 and 2020, our revenue by species of fish was as follows
(dollars in thousands, except for average price):
|
|
Three Months Ended September 30, 2021
|
|
|
|
Revenue
|
|
|
Volume
(KG)
|
|
|
Average
price
|
|
|
Percentage
of revenue
|
|
Argentina squid
|
|
$
|
9,587
|
|
|
|
2,960,703
|
|
|
$
|
3.24
|
|
|
|
26.6
|
%
|
Indian Ocean squid
|
|
|
7,872
|
|
|
|
8,108,747
|
|
|
|
0.97
|
|
|
|
21.8
|
%
|
Sardine
|
|
|
4,262
|
|
|
|
10,240,299
|
|
|
|
0.42
|
|
|
|
11.8
|
%
|
South American white shrimp (whole)
|
|
|
3,584
|
|
|
|
688,152
|
|
|
|
5.21
|
|
|
|
9.9
|
%
|
Chub mackerel
|
|
|
2,915
|
|
|
|
3,935,434
|
|
|
|
0.74
|
|
|
|
8.1
|
%
|
Other
|
|
|
7,884
|
|
|
|
4,942,466
|
|
|
|
8.35
|
|
|
|
21.8
|
%
|
Total
|
|
$
|
36,104
|
|
|
|
30,875,800
|
|
|
$
|
1.17
|
|
|
|
100.0
|
%
|
|
|
Three Months Ended September 30, 2020
|
|
|
|
Revenue
|
|
|
Volume
(KG)
|
|
|
Average
price
|
|
|
Percentage
of revenue
|
|
Indian Ocean squid
|
|
$
|
6,071
|
|
|
|
7,285,134
|
|
|
$
|
0.83
|
|
|
|
39.3
|
%
|
Peru squid
|
|
|
4,685
|
|
|
|
3,382,517
|
|
|
|
1.39
|
|
|
|
30.3
|
%
|
Chub mackerel
|
|
|
981
|
|
|
|
1,030,773
|
|
|
|
0.95
|
|
|
|
6.4
|
%
|
Tuna
|
|
|
662
|
|
|
|
184,867
|
|
|
|
3.58
|
|
|
|
4.3
|
%
|
Sardine
|
|
|
649
|
|
|
|
1,743,914
|
|
|
|
0.37
|
|
|
|
4.2
|
%
|
Others
|
|
|
2,400
|
|
|
|
1,070,101
|
|
|
|
2.24
|
|
|
|
15.5
|
%
|
Total
|
|
$
|
15,448
|
|
|
|
14,697,306
|
|
|
$
|
1.05
|
|
|
|
100.0
|
%
|
The following tables disaggregate revenues under
ASC Topic 606 by species of fish. For the nine months ended September 30, 2021 and 2020, our revenue by species of fish was as follows
(dollars in thousands, except for average price):
|
|
Nine Months Ended September 30, 2021
|
|
|
|
Revenue
|
|
|
Volume
(KG)
|
|
|
Average
price
|
|
|
Percentage
of revenue
|
|
Argentina squid
|
|
$
|
22,176
|
|
|
|
6,872,403
|
|
|
$
|
3.23
|
|
|
|
21.9
|
%
|
Indian Ocean squid
|
|
|
18,574
|
|
|
|
18,968,099
|
|
|
|
0.98
|
|
|
|
18.3
|
%
|
South American white shrimp (whole)
|
|
|
16,449
|
|
|
|
3,251,646
|
|
|
|
5.06
|
|
|
|
16.2
|
%
|
Peru squid
|
|
|
13,984
|
|
|
|
10,519,823
|
|
|
|
1.33
|
|
|
|
13.8
|
%
|
Chub mackerel
|
|
|
7,934
|
|
|
|
8,145,864
|
|
|
|
0.97
|
|
|
|
7.8
|
%
|
Others
|
|
|
22,159
|
|
|
|
24,086,521
|
|
|
|
0.92
|
|
|
|
22.0
|
%
|
Total
|
|
$
|
101,276
|
|
|
|
71,844,356
|
|
|
$
|
1.41
|
|
|
|
100.0
|
%
|
|
|
Nine Months Ended September 30, 2020
|
|
|
|
Revenue
|
|
|
Volume
(KG)
|
|
|
Average
price
|
|
|
Percentage
of revenue
|
|
Indian Ocean squid
|
|
$
|
25,892
|
|
|
|
30,557,785
|
|
|
$
|
0.85
|
|
|
|
46.1
|
%
|
Peru squid
|
|
|
9,523
|
|
|
|
6,436,282
|
|
|
|
1.48
|
|
|
|
16.9
|
%
|
Chub mackerel
|
|
|
4,996
|
|
|
|
5,585,977
|
|
|
|
0.89
|
|
|
|
8.9
|
%
|
Cuttle fish
|
|
|
4,554
|
|
|
|
1,024,960
|
|
|
|
4.44
|
|
|
|
8.1
|
%
|
Croaker fish
|
|
|
3,367
|
|
|
|
1,861,511
|
|
|
|
1.81
|
|
|
|
6.0
|
%
|
Others
|
|
|
7,886
|
|
|
|
4,524,509
|
|
|
|
1.74
|
|
|
|
14.0
|
%
|
Total
|
|
$
|
56,218
|
|
|
|
49,991,024
|
|
|
$
|
1.12
|
|
|
|
100.0
|
%
|
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
SEPTEMBER 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)
SEPTEMBER 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 September 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 $213,891 and $35,397 for the three months ended September 30, 2021 and 2020, respectively. Shipping and handling costs amounted to
$258,311 and $356,490 for the nine months ended September 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 $1,340,598 and $606,825 for the three months ended September 30, 2021 and 2020, respectively.
Employee benefit costs amounted to $2,970,449 and $1,795,348 for the nine months ended September 30, 2021 and 2020, respectively.
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
SEPTEMBER 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 nine months ended September 30, 2021 and 2020 was $2,622,688 and $935,670, 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 September 30,
2021 and December 31, 2020 were translated at 6.4854 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 nine months ended September 30, 2021 and 2020 were 6.4714 RMB and 6.9917 RMB to $1.00, respectively. The average
translation rates applied to the statements of operations for three months ended September 30, 2021 and 2020 were 6.4707 RMB and 6.9205
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 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 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
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Net income (loss) attributable to ordinary shareholders of the Company
|
|
|
2,584,624
|
|
|
|
689,184
|
|
|
|
(9,155,641
|
)
|
|
|
6,777,864
|
|
Preferred Share Dividends
|
|
|
-
|
|
|
|
-
|
|
|
|
(300,000
|
)
|
|
|
-
|
|
Net income (loss) available to ordinary shareholders of the company for basic and diluted net income per share of ordinary shares
|
|
$
|
2,584,624
|
|
|
$
|
689,184
|
|
|
$
|
(9,455,641
|
)
|
|
$
|
6,777,864
|
|
Weighted average ordinary shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
86,389,548
|
|
|
|
79,071,363
|
|
|
|
83,854,623
|
|
|
|
79,060,490
|
|
Diluted
|
|
|
86,797,148
|
|
|
|
79,071,363
|
|
|
|
83,854,623
|
|
|
|
79,060,490
|
|
Net income per ordinary share attributable to ordinary shareholders of the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.03
|
|
|
$
|
0.01
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.09
|
|
Diluted
|
|
$
|
0.03
|
|
|
$
|
0.01
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.09
|
|
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
SEPTEMBER 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 September
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 ordinary shareholders of the Company, its management, members of the immediate families
of principal ordinary shareholders 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 nine months ended
September 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 September 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
are 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 receivable 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)
SEPTEMBER 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. 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 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 was 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 was 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.
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 was 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 December 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)
SEPTEMBER 30, 2021
NOTE 3 – ACCOUNTS RECEIVABLE
At September 30, 2021 and December 31, 2020, accounts receivable consisted
of the following:
|
|
September 30,
2021
|
|
|
December 31,
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
Accounts receivable
|
|
$
|
22,991,713
|
|
|
$
|
32,357,692
|
|
Less: allowance for doubtful accounts
|
|
|
(1,168,466
|
)
|
|
|
(411,131
|
)
|
|
|
$
|
21,823,247
|
|
|
$
|
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 $246,105 and $188,293 for the three months ended September 30, 2021 and 2020, respectively. Bad debt expense was $756,463
and $245,498 for the nine months ended September 30, 2021 and 2020, respectively.
NOTE 4 – INVENTORIES
At September 30, 2021 and December 31, 2020, inventories consisted
of the following:
|
|
September 30,
2021
|
|
|
December 31,
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
Frozen fish and marine catches in warehouse
|
|
$
|
56,458,862
|
|
|
$
|
44,272,021
|
|
Frozen fish and marine catches work in progress
|
|
|
28,015,835
|
|
|
|
20,702,914
|
|
Frozen fish and marine catches in transit
|
|
|
5,327,580
|
|
|
|
18,761,950
|
|
|
|
|
89,802,277
|
|
|
|
83,736,885
|
|
Less: reserve for inventories
|
|
|
(16,962,451
|
)
|
|
|
(16,125,749
|
)
|
|
|
$
|
72,839,826
|
|
|
$
|
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 $6,422,157 and a recovery of $(288,953) for the three months ended September 30, 2021 and 2020, respectively. The
Company recorded a provision for inventory of $740,084 and $1,711,666 for the nine months ended September 30, 2021 and 2020,
respectively.
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
SEPTEMBER 30, 2021
NOTE 5 – OTHER
RECEIVABLES
At September 30, 2021
and December 31, 2020, other receivables consisted of the following:
|
|
September 30,
2021
|
|
|
December 31,
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
VAT recoverable (1)
|
|
$
|
211,457
|
|
|
$
|
1,520,501
|
|
Other
|
|
|
394,841
|
|
|
|
380,593
|
|
|
|
$
|
606,298
|
|
|
$
|
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 September 30, 2021 and December 31, 2020, the
cost method investment amounted to $3,238,042 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 which accounts for a 4.8% investment in the total equity investment of the bank as of September 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 September 30, 2021 and December 31, 2020.
NOTE 7 – EQUITY METHOD INVESTMENT
At September 30, 2021 and December 31, 2020, the
equity investment amounted to $29,107,193 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 September 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 $154.2 million) and as of
September 30, 2021, Pingtan Fishing had contributed its share of registered capital of RMB 200 million (approximately US$30.8 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 September 30, 2021 and 2020, the Company’s
share of Global Deep Ocean’s net loss was $308,921 and $82,586, respectively, which was included in loss on equity method investment
in the accompanying consolidated statements of operations and comprehensive income. For the nine months ended September 30, 2021 and 2020,
the Company’s share of Global Deep Ocean’s net loss was $765,101 and $351,129, 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)
SEPTEMBER 30, 2021
NOTE 8 – PREPAYMENT
FOR LONG-TERM ASSETS
At September 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 nine months
ended September 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
|
|
|
32,038,302
|
|
Reclassification to construction-in-progress
|
|
|
-
|
|
Foreign currency fluctuation
|
|
|
333,324
|
|
Balance – September 30, 2021
|
|
$
|
98,454,667
|
|
NOTE 9 – PROPERTY, PLANT AND EQUIPMENT
At September 30, 2021 and December 31, 2020, property,
plant and equipment consisted of the following:
|
|
Useful life
|
|
September 30,
2021
|
|
|
December 31,
2020
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
Fishing vessels
|
|
10 - 20 Years
|
|
$
|
373,527,611
|
|
|
$
|
304,764,105
|
|
Vehicles
|
|
5 Years
|
|
|
41,211
|
|
|
|
23,336
|
|
Office and other equipment
|
|
3 – 5 Years
|
|
|
491,057
|
|
|
|
488,084
|
|
|
|
|
|
|
374,059,879
|
|
|
|
305,275,525
|
|
Less: accumulated depreciation
|
|
|
|
|
(67,936,505
|
)
|
|
|
(55,120,514
|
)
|
|
|
|
|
$
|
306,123,374
|
|
|
$
|
250,155,011
|
|
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
SEPTEMBER 30, 2021
NOTE 9 – PROPERTY, PLANT AND EQUIPMENT
(continued)
During the nine months ended September 30, 2021,
the 20 vessels that received approval from MARA to operate in international waters after modification and rebuilt into 20 seine vessels,
had been completed and deployed to international water for operation.
During the nine months ended September 30, 2021,
the Company received a government subsidy for a group of fishing vessels amounting to RMB 151.2 million (approximately US$23.4 million).
The subsidy is related to assets which requires deducting it from the carrying amount of the asset.
For the three months ended September 30,
2021 and 2020, depreciation expense amounted to $5,317,274 and $3,944,203, respectively, of which $4,315,313 and $3,170,392,
respectively, was included in cost of revenue and inventories, and the remainder was included in general and administrative expense.
For the nine months ended September 30, 2021 and 2020, depreciation expense amounted to $12,510,131 and $10,616,935, of which
$11,363,316 and $8,342,357, respectively, was included in cost of revenue and inventories, and the remainder was included in general
and administrative expense, respectively.
The Company had 81 and 82 fishing vessels at September
30, 2021 and December 31, 2020, with net carrying amount of approximately $219.8 million and $227.3 million, respectively, pledged as
collateral for its bank loans.
The Company recognized an impairment loss of $495,857
and nil for the three months ended September 30, 2021 and 2020, respectively. The Company recognized impairment loss of $1,471,223 and
nil for the nine months ended September 30, 2021 and 2020, respectively. During the nine months ended September 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 of 1,471,223.
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
SEPTEMBER 30, 2021
NOTE 10 – RELATED PARTIES TRANSACTIONS
Accounts payable -
related parties
At September 30, 2021 and December 31, 2020, accounts
payable - related parties consisted of the following:
Name of related party
|
|
September 30,
2021
|
|
|
December 31,
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
Hong Long (1)
|
|
$
|
6,372,582
|
|
|
$
|
781,225
|
|
Global Deep Ocean
|
|
|
65,799
|
|
|
|
7,602,944
|
|
Fujian Jingfu Ocean Fishery Development Co., Ltd. (2)
|
|
|
317,629
|
|
|
|
1,327
|
|
Huna Lin (3)
|
|
|
3,671,544
|
|
|
|
1,581,212
|
|
|
|
$
|
10,427,554
|
|
|
$
|
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
|
(3)
|
Huna Lin is an immediate
family of Zhiyan Lin, and Zhiyan Lin is a shareholder of Pingtan Fishing,
|
These accounts payable - related parties’
amounts are short-term in nature, non-interest bearing, unsecured and payable on demand.
Due to related parties
At September 30, 2021
and December 31, 2020, the due to related parties amount consisted of the following:
|
|
September 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
|
|
|
|
-
|
|
Due to Hong Long
|
|
|
29,504,678
|
|
|
|
|
|
|
|
$
|
30,973,032
|
|
|
$
|
18,354
|
|
The balance of accrued
compensation represents accrued compensation for the 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.
The majority of due to
Hong Long represents the prepayment made to shipbuilding company for the modification and rebuilding of the 20 vessels in 2021 by Hong
Long on behalf of the Company, with an annual interest rate of 4.35%.
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 expired on July 31, 2021. This lease was renewed under the same terms upon
expiry, and the Office Lease will expire on December 31, 2023.
For the three months ended September 30, 2021
and 2020, rent expense related to the Office Lease amounted to $3,245 and $3,038, respectively. For the nine months ended September 30,
2021 and 2020, rent expense related to the Office Lease amounted to $9,735 and $9,011, respectively. The future minimum rental payments
required under the Office Lease are as follows:
Twelve-month period Ending September 30:
|
|
Amount
|
|
2022
|
|
$
|
12,980
|
|
2023
|
|
|
12,980
|
|
2024
|
|
|
3,245
|
|
|
|
|
29,205
|
|
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
SEPTEMBER 30, 2021
NOTE 10 – RELATED PARTIES TRANSACTIONS
(continued)
Purchases from related parties
During the three and nine months ended September
30, 2021 and 2020, purchases from related parties were as follows:
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 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
|
|
$
|
732,523
|
|
|
$
|
-
|
|
|
$
|
1,718,149
|
|
|
$
|
-
|
|
From Zhiyan Lin
|
|
|
-
|
|
|
|
2,769
|
|
|
|
-
|
|
|
|
2,769
|
|
Global Deep Ocean
|
|
|
122,333
|
|
|
|
-
|
|
|
|
203,784
|
|
|
|
-
|
|
Fuzhou Honglong Ocean Fishery Co., Ltd.
|
|
|
6,066,724
|
|
|
|
255,736
|
|
|
|
13,838,055
|
|
|
|
1,320,456
|
|
|
|
|
6,921,580
|
|
|
|
258,505
|
|
|
|
15,759,988
|
|
|
|
1,323,225
|
|
Purchase of leasing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ping Lin
|
|
|
852
|
|
|
|
3,038
|
|
|
|
852
|
|
|
|
9,011
|
|
Purchase of vessel maintenance services, docking and freight
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huna Lin
|
|
|
4,734,671
|
|
|
|
3,851,681
|
|
|
|
11,177,091
|
|
|
|
7,262,932
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of inventory for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Deep Ocean
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6,202,532
|
|
|
$
|
-
|
|
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
SEPTEMBER 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 September 30, 2021 and December 31, 2020, short-term bank loans consisted of the following:
|
|
September 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 September 30, 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%.
|
|
|
10,793,475
|
|
|
|
10,728,134
|
|
Loan from Fujian Haixia Bank, due on January 19, 2022 with annual interest rate of 6.09% at September 30, 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%.
|
|
|
29,296,574
|
|
|
|
-
|
|
Loan from Fujian Haixia Bank, due on January 20, 2022 with annual interest rate of 6.09% at September 30, 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%.
|
|
|
15,419,250
|
|
|
|
-
|
|
|
|
$
|
55,509,299
|
|
|
$
|
52,414,596
|
|
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
SEPTEMBER 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 September 30, 2021 and December 31, 2020, long-term bank loans consisted of
the following:
|
|
September 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 September 30, 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.
|
|
$
|
2,312,887
|
|
|
$
|
2,298,886
|
|
Loan from China Development Bank, due on various dates until November 27, 2023 with annual interest rate of 5.15% at September 30, 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%.
|
|
|
3,546,427
|
|
|
|
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 September 30, 2021 and December 31, 2020, guaranteed by Hong Long, Xinrong Zhuo, Ping Lin and collateralized by 20 fishing vessels.
|
|
|
46,257,748
|
|
|
|
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 September 30, 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.
|
|
|
48,570,636
|
|
|
|
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 September 30, 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.
|
|
|
45,101,304
|
|
|
|
49,809,192
|
|
Loan from China Development Bank, due on various dates until July 30, 2026 with annual interest rate of 5.39% at September 30, 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%.
|
|
|
9,482,838
|
|
|
|
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 September 30, 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.
|
|
|
20,045,024
|
|
|
|
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 September 30, 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.
|
|
|
21,586,949
|
|
|
|
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 September 30, 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.
|
|
|
25,006,939
|
|
|
|
-
|
|
Loan from The Export-Import Bank of China, due on various dates until August 21, 2022 with annual interest rate of 2.20% at September 30, 2021 and December 31, 2020, guaranteed by Hong Long, Xinrong Zhuo and Pin Lin.
|
|
|
20,450,317
|
|
|
|
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 September 30, 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.
|
|
|
10,875,630
|
|
|
|
-
|
|
Loan from The Export-Import Bank of China, due on various dates until June 21, 2028 with annual interest rate of 2.20% at September 30, 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.
|
|
|
21,741,142
|
|
|
|
-
|
|
Loan from The Export-Import Bank of China, due on various dates until July 1, 2023 with annual interest rate of 2.20% at September 30, 2021, 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 and Fuzhou Honglong Marine Aquatic Products Co., Ltd. and 67 million and 16 million shares of Xiamen International Bank Co., Ltd. owned by Hong Long and Fujian International Trade and Transportation Co., Ltd., respectively.
|
|
|
9,589,808
|
|
|
|
-
|
|
Loan from Bank of Communications, due on various dates until June 27, 2025 with annual interest rate of 4.65% at September 30, 2021 and December 31, 2020, guaranteed by Xinrong Zhuo, Huanghai Shipbuilding Co., Ltd. and Fujian Jingfu Ocean Fishery Development Co., Ltd.
|
|
|
36,235,237
|
|
|
|
39,770,725
|
|
Total long-term bank loans
|
|
$
|
320,802,886
|
|
|
$
|
285,103,665
|
|
Less: current
portion
|
|
|
(70,676,635
|
)
|
|
|
(39,987,577
|
)
|
Long-term bank
loans, non-current portion
|
|
$
|
250,126,251
|
|
|
$
|
245,116,088
|
|
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
SEPTEMBER 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 September 30,
|
|
Principal
|
|
2022
|
|
$
|
70,676,635
|
|
2023
|
|
|
107,035,617
|
|
2024
|
|
|
64,491,011
|
|
2025
|
|
|
56,087,520
|
|
2026
|
|
|
16,498,597
|
|
Thereafter
|
|
|
6,013,506
|
|
|
|
$
|
320,802,886
|
|
Less: current portion
|
|
|
(70,676,635
|
)
|
Long-term liability
|
|
$
|
250,126,251
|
|
The weighted average interest rate for short-term
bank loans was approximately 6.0% and 4.0% for the nine months ended September 30, 2021 and 2020, respectively.
The weighted average interest rate for long-term
bank loans was approximately 4.3% and 4.8% for the nine months ended September 30, 2021 and 2020, respectively.
For the three months ended September 30, 2021
and 2020, interest expense related to bank loans amounted to $4,055,798 and $4,220,271, respectively, of which, nil and $183,747 was capitalized
to construction-in-progress, respectively. For the nine months ended September 30, 2021 and 2020, interest expense related to bank loans
amounted to $11,720,712 and $11,064,621, respectively, of which nil and $1,192,672 was capitalized to construction-in-progress, respectively.
NOTE 12 – ACCRUED LIABILITIES AND OTHER
PAYABLES
At September 30, 2021 and December 31, 2020, accrued
liabilities and other payables consisted of the following:
|
|
September 30,
2021
|
|
|
December 31,
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
Accrued salaries and related benefits
|
|
$
|
19,511,877
|
|
|
$
|
11,440,174
|
|
Accrued interest
|
|
|
478,617
|
|
|
|
462,304
|
|
Other
|
|
|
924,138
|
|
|
|
249,155
|
|
|
|
$
|
20,914,632
|
|
|
$
|
12,151,633
|
|
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
SEPTEMBER 30, 2021
NOTE 13 – SHARE
CAPITAL
Preferred shares
|
|
Number of
shares
|
|
|
Total
|
|
Balance, December 31, 2020
|
|
|
-
|
|
|
$
|
-
|
|
Issuance of preferred shares1
|
|
|
4,000,000
|
|
|
|
4,000
|
|
Conversion of preferred shares to ordinary shares
|
|
|
(3,409,078
|
)
|
|
|
(3,409
|
)
|
Redemption of preferred shares2
|
|
|
(590,922
|
)
|
|
|
(591
|
)
|
Balance, September 30, 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 May 27, 2021, the Company redeemed 590,922 Series A Preferred Shares and repurchased 793,192 ordinary shares that were converted following the failure to file the 10-K from the purchaser for aggregate consideration of $1,450,000.
|
Ordinary shares
|
|
Number of
shares
|
|
|
Total
|
|
Balance, December 31, 2020
|
|
|
79,302,428
|
|
|
$
|
79,302
|
|
Issuance of ordinary shares1
|
|
|
3,625,954
|
|
|
|
3,626
|
|
Conversion of preferred shares to ordinary shares
|
|
|
3,805,775
|
|
|
|
3,806
|
|
Repurchase of ordinary shares2
|
|
|
(793,192
|
)
|
|
|
(793
|
)
|
Balance, September 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.
|
|
2
|
On May 27, 2021, the Company redeemed 590,922 Series A Preferred Shares and repurchased 793,192 ordinary shares that were converted following the failure to file the 10-K from the purchaser for aggregate consideration of $1,450,000.
|
NOTE 14 – CERTAIN RISKS AND CONCENTRATIONS
Credit risk
At September 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 nine months ended September 30, 2021 and
2020.
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
Customer
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
A
|
|
|
23
|
%
|
|
|
*
|
|
|
|
20
|
%
|
|
|
*
|
|
B
|
|
|
17
|
%
|
|
|
*
|
|
|
|
17
|
%
|
|
|
*
|
|
C
|
|
|
*
|
|
|
|
18
|
%
|
|
|
*
|
|
|
|
14
|
%
|
D
|
|
|
*
|
|
|
|
14
|
%
|
|
|
*
|
|
|
|
11
|
%
|
E
|
|
|
*
|
|
|
|
10
|
%
|
|
|
*
|
|
|
|
14
|
%
|
F
|
|
|
*
|
|
|
|
10
|
%
|
|
|
*
|
|
|
|
11
|
%
|
Three customers accounted for 10% or more of the
Company’s total accounts receivable at September 30, 2020, for a total of 36.4% of accounts receivable. At December 31, 2020, six
customers accounted for 10% or more of the Company’s accounts receivable for a total of 87.4%.
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
(IN U.S. DOLLARS)
SEPTEMBER 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 nine months
ended September 30, 2021 and 2020.
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
Supplier
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
A
|
|
|
21
|
%
|
|
|
40
|
%
|
|
|
39
|
%
|
|
|
38
|
%
|
B
|
|
|
10
|
%
|
|
|
11
|
%
|
|
|
10
|
%
|
|
|
11
|
%
|
C
|
|
|
*
|
|
|
|
*
|
|
|
|
*
|
|
|
|
20
|
%
|
D
|
|
|
10
|
%
|
|
|
*
|
|
|
|
*
|
|
|
|
*
|
|
E
|
|
|
*
|
|
|
|
10
|
%
|
|
|
*
|
|
|
|
*
|
|
F
|
|
|
*
|
|
|
|
10
|
%
|
|
|
*
|
|
|
|
*
|
|
Two suppliers, whose accounts payable accounted for 10% or
more of the Company’s total accounts payable and accounts payable – related parties at September 30, 2021, accounted for 80.8%
of the Company’s total accounts payable and accounts payable – related parties at September 30, 2021.
Three suppliers, whose accounts payable accounted
for 10% or more of the Company’s total accounts payable and accounts payable – related parties at September 30, 2020, accounted
for 68.6% of the Company’s total accounts payable and accounts payable – related parties at September 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 September 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 October
21, 2021, the Company repaid a long-term bank loan of $5.0 million to The Export-Import Bank of China in accordance with the loan
repayment schedule.
On October
21, 2021, the Company received a subsidy of $724,462.
On October 22, 2021, the Company
repaid a long-term bank loan of $1.9 million to The Export-Import Bank of China in accordance with the loan repayment schedule.
On October
22, 2021, the Company received a loan of $1.8 million from The Export-Import Bank of China. The loan is due on July 1, 2023 with
annual interest rate of 2.20%.
On October
22, 2021, the Company received a subsidy of $309,445.
On October 28, 2021, the Company
repaid a long-term bank loan of $2.2 million to The Export-Import Bank of China in accordance with the loan repayment schedule.
On October
28, 2021, the Company received a loan of $2.1 million from The Export-Import Bank of China. The loan is due on July 1, 2023 with
annual interest rate of 2.20%.
On October 28, 2021, the
Company repaid a short-term bank loan of $10.8 million to Fujian Haixia Bank in accordance with the loan repayment schedule.
On October
28, 2021, the Company received a loan of $9.5 million from The Export-Import Bank of China. The loan is due on July 30, 2026 with
annual interest rate of 5.12%.
On October
28, 2021, the Company received a loan of $10.8 million from Fujian Haixia Bank. The loan is due on October 28, 2022 with annual interest
rate of 6.09%.
On November 10, 2021, the Company
repaid a short-term bank loan of $0.8 million to China Development Bank in accordance with the loan repayment schedule.