NOTE 7 – EQUITY METHOD INVESTMENT

 

At September 30, 2017 and December 31, 2016, equity method investment amounted to $30,054,827 and $28,493,273, 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 other two unrelated companies in PRC. In April 2017, these two companies sold their shares to another unrelated party, Zhen Lin. As of September 30, 2017, Pingtan Fishing and Zhen Lin accounted for 20% and 80% of the total ownership, respectively.

 

Global Deep Ocean will process, cold storage, and transport Deep Ocean fishing products. Total registered capital of Global Deep Ocean is RMB 1 billion (approximately $150.7 million) and as of September 30, 2017, Pingtan Fishing had contributed its share of registered capital of RMB 200 million (approximately $30.1 million).

 

The Company treats the equity investment in the consolidated financial statements under 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 post incorporation change 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, 2017 and 2016, the Company’s share of Global Deep Ocean’s net loss was $7,333 and $6,968, respectively, which was included in loss on equity method investment in the accompanying consolidated statements of operations and comprehensive income (loss). For the nine months ended September 30, 2017 and 2016, the Company’s share of Global Deep Ocean’s net loss was $27,500 and $25,095, respectively, which was included in loss on equity method investment in the accompanying consolidated statements of operations and comprehensive income (loss).

 

The tables below present the summarized financial information, as provided to the Company by the investee, for the unconsolidated company:

 

		September 30, 2017				December 31, 2016
Current assets		$	50,443,997			$	48,488,573
Noncurrent assets			4,995,203				4,335,801
Current liabilities			84,592				18,007
Noncurrent liabilities			-				-
Equity			55,354,608				52,806,367

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2017				2016				2017				2016
Net revenue		$	-			$	-			$	-			$	-
Gross profit			-				-				-				-
Loss from operation			36,666				34,811				137,398				125,404
Net loss			36,667				34,842				137,501				125,477