Pingtan gets another Nasdaq warning for late financial reporting
Chinese distant-water fishing firm Pingtan Marine Enterprise has been sanctioned by the Nasdaq Stock Exchange for late publication of its first-quarter results.
Pingtan received a warning from the Nasdaq exchange on 15 April after it failed to file Form 10-K for the fiscal year ended 31 December. On 25 May, Pingtan received an additional delinquency notification letter as a result of its non-compliance with the trading board’s requirements to file a quarterly report (known as a Form 10-Q) with the U.S. Securities and Exchange Commission for the quarter ended 31 March.
The company told investors it would file an update by 14 June detailing how it intended to “regain compliance with respect to these delinquent reports.” The company “will continue to work diligently to complete and file the Form 10-K and the Q1 Form 10-Q as soon as practicable,” the note said. However, as of 14 June, the company had still not filed its 10-K or 10-Q reports. According to Nasdaq rules, companies that fail to file a Form 10-K or Form 10-Q are subject to delisting and potential deregistration by the SEC.
In a 31 May SEC filing, the company has acknowledged a “material weakness” in its internal controls over financial reporting, “involving a failure to maintain a sufficient complement of personnel with an appropriate level of experience and training in the application of U.S. generally accepted accounting principles commensurate with its financial reporting requirements.”
“The material weakness has not resulted in any material misstatements or omissions in previously reported financial statements and management is taking steps to remediate the material weakness,” it said.
On the same date, Pingtan Marine announced it had replaced its registered public accounting firm, BDO China Shu Lun Pan Certified Public Accountants, with Wei, Wei & Co., and announced the firm will audit its 2020 financial statements.
In a statement, BDO said it was in the process of evaluating the Pingtan Marine’s ability to continue as a going concern, assessing the company’s prepayment to Huanghai Shipbuilding Co., Ltd. for the ongoing construction of a krill-fishing vessel, and evaluating the Company’s conclusion that the Global Deep Ocean is an equity method investee.
“At the time of our resignation, the above-mentioned procedures have not been completed,” it said. ”We are not in a position to agree or disagree with other statements of Pingtan Marine Enterprise Ltd contained therein.”
On 18 May, Pingtan reported unaudited results for the first quarter of 2021, with its revenue hitting USD 28.3 million (EUR 23.3 million), up from USD 17.3 million (EUR 14.2 million) in Q1 2020, but a net loss of USD 8 million (EUR 6.6 million), down from a net gain of USD 7.7 (EUR 6.3 million) in Q1 2020.
“The increase in revenues is primarily attributable to the increase in the volume of species sold as more fishing vessels were put into operation in the first quarter of 2021,” it said in a statement. “The decrease in net income attributable to ordinary shareholders is primarily attributable to an increase in the cost of revenue.”
In January, Pingtan Marine told investors it expected a major increase in revenue.
“The company expects the revenue for the full fiscal year 2021 to increase by 100 percent or higher,” because it had “discovered new seasonal fishery stock in international waters early this year and have arranged a group of harvesting vessels to the waters for fishing operations.”
Pingtan Marine’s vessel operating subsidiary Fujian Provincial Pingtan County Ocean Fishing Group Co., also known as Pingtan Fishing, hasn’t explained which species or which international waters it’s referring to.
On 7 December, 2021, the U.S. State Department issued a notice that it had “revoked more than 15 visas for those complicit in IUU fishing who also have links to human trafficking, including associates of Pingtan Marine Enterprise Ltd.” The company has made no announcement to investors about the sanction and didn’t respond to SeafoodSource requests for comment.
Pingtan Marine primarily operates in the Indian Ocean’s Bay of Bengal, as well as in the South Atlantic and off Indonesia. It recently announced plans to enter Antarctic waters to fish krill. In the recent statement to investors announcing 2020 revenue projections, Pingtan CEO Xinrong Zhuo, he was optimistic about his company’s future.
“The demand in China is increasingly great for our catches," he said.
Photo courtesy of valeriy eydlin/Shutterstock