20-F 1 prime_20f-123115.htm PRIME ACQUISITION CORP.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F

☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2015

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report:

For the transition period from ________ to ________

Commission file number: 001-35105

__________

PRIME ACQUISITION CORP.
(Exact name of the Registrant as specified in its charter)

__________

Cayman Islands
(Jurisdiction of incorporation or organization)

No. 322, Zhongshan East Road
Shijiazhuang
Hebei Province, 050011
People’s Republic of China
(Address of principal executive offices)

William Tsu-Cheng Yu
No. 322, Zhongshan East Road
Shijiazhuang
Hebei Province, 050011
People’s Republic of China
Telephone: 408-621-8345
Fax No.: 650-618-2552
(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)

__________

Securities registered or to be registered pursuant to Section 12(b) of the Act: None

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Ordinary Shares
Units
Warrants

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None.

On December 31, 2015, the issuer had 2,040,451 ordinary shares issued, of which 1,954,651 shares outstanding.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

☐ Large Accelerated filer

☐ Accelerated filer

☒ Non-accelerated filer

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

☐ US GAAP

☒ International Financial Reporting Standards as issued by the International Accounting Standards Board

☐ Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

TABLE OF CONTENTS

PART I			5
ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS		5
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE		5
ITEM 3.	KEY INFORMATION		5
	A.	Selected Financial Data	5
	B.	Capitalization and Indebtedness	6
	C.	Reasons for the Offer and Use of Proceeds	6
	D.	Risk Factors	6
ITEM 4.	INFORMATION ON THE COMPANY		14
	A.	History and Development of the Company	14
	B.	Business Overview	15
	C.	Organizational Structure	17
	D.	Property, Plant and Equipment	17
ITEM 4A.	UNRESOLVED STAFF COMMENTS		19
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS		19
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES		26
	A.	Directors and Senior Management	26
	B.	Compensation	27
	C.	Board Practices	28
	D.	Employees	29
	E.	Share Ownership	29
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS		29
	A.	Major Shareholders	29
	B.	Related Party Transactions	29
	C.	Interests of Experts and Counsel	31
ITEM 8.	FINANCIAL INFORMATION		31
	A.	Consolidated Statements and Other Financial Information.	31
	B.	Significant Changes.	31
ITEM 9.	THE OFFER AND LISTING		31
	A.	Offer and Listing Details.	31
	B.	Plan of Distribution	32
	C.	Markets	32
	D.	Selling Shareholders	32
	E.	Dilution	32
	F.	Expenses of the Issue	32
ITEM 10.	ADDITIONAL INFORMATION		32
	A.	Share Capital	32
	B.	Memorandum and Articles of Association	33
	C.	Material Contracts	34
	D.	Exchange controls	34
	E.	Taxation	34
	F.	Dividends and paying agents	41
	G.	Statement by Experts	41
	H.	Documents on Display	41
	I.	Subsidiary Information	41
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		41
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES		43

PART II			43
ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES		43
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS		44
	A.	Use of Proceeds	44
ITEM 15.	CONTROLS AND PROCEDURES		44
	A.	Disclosure Controls and Procedures	44
	B.	Management’s Annual Report on Internal Control Over Financial Reporting	44
ITEM 16.	[RESERVED]		44
ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT.		44
ITEM 16B.	CODE OF ETHICS.		45
ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES.		45
ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.		45
ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.		45
ITEM 16F.	CHANGES IN THE REGISTRANT’S CERTIFYING ACCOUNTANT.		45
ITEM 16G.	CORPORATE GOVERNANCE		45
ITEM 16H.	MINE SAFETY DISCLOSURE		45

PART III			46
ITEM 17.	FINANCIAL STATEMENTS		46
ITEM 18.	FINANCIAL STATEMENTS		46
ITEM 19.	EXHIBITS		46

CERTAIN INFORMATION

Except where the context requires otherwise and for purposes of this report only:

“Prime,” “we,” “us,” “our company,” “the Company”, or “our,” refers to Prime Acquisition Corp., a company with limited liability incorporated in the Cayman Islands;

“Business Combination” refers to the acquisition by Prime of entities owning 11 commercial real estate properties in Italy on September 30, 2013.

“IPO” or “initial public offering” refer to the Company’s initial public offering pursuant to its prospectus, dated March 24, 2011, which was consummated on March 30, 2011;

“shares” or “ordinary shares” refers to our ordinary shares, par value $0.001 per share;

“Group” refers to Prime Acquisition Corp., and its subsidiaries acquired on the closing of Business Combination on September 30, 2013;

“Manager” refers to BHN LLC, our former manager; and

all discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed therein are due to rounding.

FORWARD-LOOKING STATEMENTS

The statements contained in this report that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this report may include, for example, statements about our:

·	Continued compliance with government regulations;

·	Changing legislation or regulatory environments;

·	Requirements or changes affecting the businesses in which we are engaged;

·	Industry trends, including factors affecting supply and demand;

·	Labor and personnel relations;

·	Credit risks affecting the combined business’ revenue and profitability;

·	Changes in the real estate industry;

·	Ability to effectively manage Prime’s growth, including implementing effective controls and procedures and attracting and retaining key management and personnel;

·	Changing interpretations of generally accepted accounting principles;

·	Public securities’ limited liquidity and trading;

·	General economic conditions; and

·	Other relevant risks detailed in Prime’s filings with the Securities and Exchange Commission.

The forward-looking statements contained in this report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws and/or if and when management knows or has a reasonable basis on which to conclude that previously disclosed projections are no longer reasonably attainable.

PART I

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Required.

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

Not required.

ITEM 3.

KEY INFORMATION

Selected Financial Data

Prime Acquisition Corp. Selected Financial Data

Following the Business Combination, Prime is considered to be our predecessor for accounting purposes, as further described in Item 18 of this report. The following selected consolidated financial data have been derived from our consolidated financial statements as of December 31, 2015, 2014 and 2013 and for the years ended December 31, 2015, 2014 and 2013, which are included elsewhere in this report. The consolidated financial statements for December 2015, 2014 and 2013 have been prepared and presented in accordance with IFRS and its related interpretations. The results of operations in any period may not necessarily be indicative of the results that may be expected for any future period. See “Risk Factors” included elsewhere in this report. The selected consolidated financial information as of December 31, 2015, 2014 and 2013 should be read in conjunction with those consolidated financial statements and the accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this report. Our selected consolidated financial data as of December 31, 2012 and for the year ended December 31, 2012 have been derived from our previously filed audited consolidated financial statements for that year.

Balance Sheet Data	As of December 31, 2015			As of December 31, 2014		As of December 31, 2013		As of December 31, 2012
Total assets	$	38,553,356		$	49,130,528	$	78,545,589	$	36,639,978
Total liabilities		43,564,172			47,353,887		75,951,411		32,361,189
Value of ordinary shares which may be redeemed for cash ($10.02 per share)		–			–		–		30,380,329
Shareholders' (deficit)/equity		(5,010,816	)		1,776,641		2,594,178		4,278,789
Ordinary shares, $0.001 par value (Authorized 50,000,000 shares; 2,040,451, 2,428,532 and 3,179,721 shares issued; 1,954,651, 2,428,532 and 3,179,721 shares outstanding at December 31, 2015, 2014 and 2013 respectively; with 85,800 shares as treasury shares at December 31, 2015)		2,040			2,429		3,180		1,863

Selected statement of operation data:	For the year ended December 31, 2015			For the year ended December 31, 2014*		For the year ended December 31, 2013*			For the year ended December 31, 2012
Revenues	$	3,036,198		$	4,000,935	$	990,994		$	1,120,793
Operating expenses		3,257,307			2,725,610		11,294,809			(1,120,793	)
Operating profit/(loss)		(221,109	)		1,275,325		(10,303,815	)		(1,088,874	)
Profit/(loss) for the year from continuing operations		(7,256,549	)		4,231,604		(16,150,935	)		(1,088,874	)
Net profit/(loss) for the year		(7,561,686	)		3,419,319		(15,885,478	)		(1,088,874	)

From continuing and discontinued operations
Basic earnings/(loss) per share		(3.29	)		1.11		(5.23	)		(0.22	)
Diluted earnings/(loss) per share		(3.29	)		1.04		(5.23	)		(0.22	)

From continuing operations
Basic earnings/(loss) per share		(3.16	)		1.37		(5.32	)		(0.22	)
Diluted earnings/(loss) per share		(3.16	)		1.28		(5.32	)		(0.22	)

*Restated for discontinued operations

Capitalization and Indebtedness

Not required.

Reasons for the Offer and Use of Proceeds

Not required.

Risk Factors

An investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together with the other information contained in this annual report before making a decision to invest in our securities. If any of the following events occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading price of our securities could decline and you could lose all or part of your investment.

Risk Factors Relating to Our Business

Prior to becoming members of our management team, no member of our management team had direct experience in operating businesses such as ours, which could lead to errors in the management of the business.

Prior to becoming our officers and directors, our management team had no direct experience in operating real estate assets and will rely on third party managers to operate the real estate properties. This lack of experience could lead to errors in managing our company, which could harm our results of operations.

Doubt about the Company to continue as a going concern

The Company’s consolidated financial statements have been prepared assuming the Group will continue as a going concern. The Group has incurred recurring operating losses, negative cash flows from operations, and has a working capital deficiency as of December 31, 2015. These factors raise substantial doubt about the Group’s ability to continue as a going concern.

While our real estate portfolio of ten properties in Italy does not generate positive cash flow, management believes that when the market conditions are more favorable, some of these properties may be sold. However, real estate transactions in the greater Milan area have been relatively few when compared to pre- financial crisis levels, and an actual transaction may take longer than viable for the company’s current needs.

Current economic conditions and the global tightening of credit may adversely impact the financial condition of our business.

Since the onset of the “credit crisis” in mid-2007, the number of banks advancing new loans against Southern European properties has fallen substantially and that decline, together with a tightening of lending policies, has resulted in a significant contraction in the amount of debt available to fund re-financings, acquisitions, developments and other commercial real estate investments. There can be no assurance that the continuation of current economic conditions will not affect our real estate properties. For example, such properties could experience higher levels of vacancy than anticipated, which could adversely impact the financial performance of our company.

As a foreign private issuer, we are exempt from certain rules that are applicable to U.S. companies and you may receive less information about us and our operations than you would receive if such agreements were not waived or we were a U.S. company.

As a foreign private issuer, we are exempt from the rules of the Exchange Act prescribing the furnishing and content of proxy statements to shareholders, and our executive officers, directors and principal shareholders are exempt from certain of the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. Therefore you may receive less information about us than you would receive if we were a U.S. company.

Because we are incorporated under the laws of the Cayman Islands, you may face difficulty protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited.

We are a company incorporated under the laws of the Cayman Islands, and certain of our assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States in a way that will permit a U.S. court to have jurisdiction over us.

We are incorporated as a Cayman Islands exempted company. A Cayman Islands exempted company:

is a company that conducts its business outside the Cayman Islands;

is exempted from certain requirements of the Cayman Companies Law, including the filing of an annual return of its shareholders with the Registrar of Companies;

does not have to make its register of shareholders open to inspection; and

may obtain an undertaking against the imposition of any future taxation.

Our corporate affairs are governed by our Articles of Association, the Companies Law of the Cayman Islands, as the same may be supplemented or amended from time to time, which we refer to herein as the Companies Law, and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands, as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws as compared to the United States, and some states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.

The Cayman Islands courts are also unlikely:

to recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws; and

to impose liabilities against us, in original actions brought in the Cayman Islands, based on certain civil liability provisions of U.S. securities laws that are penal in nature.

There is no statutory recognition in the Cayman Islands of judgments obtained in the United States. We have been advised by Conyers Dill & Pearman, our counsel as to Cayman Islands law, that (i) they are unaware of any proceedings that have been successfully brought in the Cayman Islands to enforce judgments of the courts in the United States or to impose liabilities based on the civil liability provisions of the securities laws of the United States or any state in the United States; (ii) a final and conclusive judgment in the federal or state courts of the United States under which a sum of money is payable, other than a sum payable in respect of taxes, fines, penalties or similar charges, may be subject to enforcement proceedings as a debt in the courts of the Cayman Islands under the common law doctrine of obligation; and (iii) because it is uncertain whether a Cayman Islands court would determine that a judgment of a U.S. court based on the civil liability provisions of the securities laws of the United States or any state in the United States is in the nature of a penalty, it is uncertain whether such a liability judgment would be enforceable in the Cayman Islands. The Grand Court of the Cayman Islands may stay proceedings if concurrent proceedings are being brought elsewhere.

Because some of our directors and officers reside, and all of our assets are held, outside of the United States, it may be difficult for you to enforce your rights against them or to enforce U.S. court judgments against them outside the United States.

Some of our directors and officers reside, and all of our assets are held, outside of the United States. As a result, it may be necessary to comply with local law in order to obtain an enforceable judgment against certain of our directors and officers and assets. It may therefore be difficult for investors in the United States to enforce their legal rights, to effect service of process upon our directors or officers outside of the United States or to enforce judgments of U.S. courts predicated upon civil liabilities and criminal penalties of our directors and officers under U.S. federal securities laws. Further, it is unclear if extradition treaties now in effect between the United States and certain countries would permit effective enforcement of criminal penalties of the U.S. federal securities laws.

Our ordinary shares may be subject to the SEC’s penny stock rules, broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities may be adversely affected.

Because we have net tangible assets of $5,000,000 or less and our ordinary shares have a market price per share of less than $5.00, transactions in our ordinary shares may be subject to the “penny stock” rules promulgated under the Securities Exchange Act of 1934. Under these rules, broker-dealers who recommend such securities to persons other than institutional accredited investors must:

make a special written suitability determination for the purchaser;

receive the purchaser’s written agreement to the transaction prior to sale;

provide the purchaser with risk disclosure documents which identify certain risks associated with investing in “penny stocks” and which describe the market for these “penny stocks” as well as a purchaser’s legal remedies; and

obtain a signed and dated acknowledgment from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before a transaction in a “penny stock” can be completed.

If our ordinary shares become subject to these rules, broker-dealers may find it difficult to effectuate customer transactions and trading activity in our securities may be adversely affected. As a result, the market price of our securities may be depressed, and you may find it more difficult to sell our securities.

Our Qualification as a passive foreign investment company, or “PFIC” could result in adverse U.S. federal income tax consequences to U.S. investors.

In general, we will be treated as a PFIC for any taxable year in which either (1) at least 75% of our gross income (looking through certain 25% or more-owned corporate subsidiaries) is passive income or (2) at least 50% of the average value of our assets (looking through certain 25% or more-owned corporate subsidiaries) is attributable to assets that produce, or are held for the production of, passive income. Passive income generally includes, without limitation, dividends, interest, rents, royalties, and gains from the disposition of passive assets. If we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder (as defined in the section of this report captioned “Taxation – United States Federal Income Taxation — General”) of our securities, the U.S. Holder may be subject to increased U.S. federal income tax liability and may be subject to additional reporting requirements. Based on the composition and estimated values of our assets and the nature of our income for our 2015 taxable year, we believe that we are a PFIC for such taxable year. We urge U.S. investors to consult their own tax advisors regarding the possible application of the PFIC rules. For a more detailed explanation of the tax consequences of PFIC classification to U.S. Holders, see the section of this report captioned “Taxation – United States Federal Income Taxation — U.S. Holders — Passive Foreign Investment Company Rules.”

Risk Factors Relating to Prime’s Business

Our current portfolio of real estate properties is geographically concentrated in Italy, and factors affecting the local economy could reduce our revenues.

Our current portfolio of real estate properties is geographically concentrated in Italy, specifically in Milan and its immediate surroundings. Therefore, any adverse effect on the local economy could impact our tenants' ability to continue to meet their rental obligations or otherwise adversely affect the average size of our tenant base, which could reduce revenues.

Any downturn in the office, commercial and industrial sectors of the real estate industry, or the industries of our tenants, could reduce our revenues and the value of our properties.

Our properties are concentrated in the office, commercial, industrial and logistics sectors and our tenants are mainly retail, office and industrial tenants. Any economic downturns in the office, commercial and industrial and logistics sectors may make us susceptible to adverse events to a greater extent than if our properties included greater diversification into other sectors of the real estate industry. Likewise, the concentration of our tenants in certain industries, and the fact that we have a couple of very large tenants (namely, Microelettrica Scientifica, producing braking systems for trucks and trains), could adversely impact us if those industries or significant tenants experience a downturn. This could result in a reduction in our revenues and the value of our properties.

Litigation against certain of our subsidiaries may result in liabilities to the combined company, which could adversely affect our results of operation and cash flows.

Certain of our subsidiaries have lawsuits pending against them (see Item 4B – Litigation for a description of the lawsuits). Such lawsuits could result in significant legal fees to us and reduce our net income and cash flows. In addition, if any of such pending litigations are resolved against us, we could be required to make significant cash payments, again reducing our cash flows and net income.

We face possible adverse changes in tax laws, which may result in an increase in our tax liability.

From time to time changes in tax laws or regulations are enacted, which may result in an increase in our tax liability. The shortfall in tax revenues of governments in recent years may lead to an increase in the frequency and size of such changes. If such changes occur, we may be required to pay additional taxes on our assets or income. These increased tax costs could adversely affect our financial condition and results of operations and the amount of cash available for payment of dividends.

We may change our policies without obtaining the approval of our shareholders.

Our operating and financial policies, including our policies with respect to acquisitions of real estate or other companies, growth, operations, indebtedness, capitalization and dividends, are exclusively determined by our Board of Directors. Accordingly, our shareholders do not control these policies.

Geopolitical conditions and global economic factors may adversely affect us.

Our operating results may be adversely affected by the uncertain geopolitical conditions and global economic factors. Adverse factors affecting economic conditions worldwide have contributed to a general inconsistency in the real estate industry and may continue to adversely impact our business. The uncertainty of the international economic situation, civil unrest, terrorist activity and military actions may continue to adversely affect global economic conditions. Economic and market conditions could deteriorate as a result of any of the foregoing reasons. We may experience material adverse effects upon our business, operating results, and financial condition as a consequence of the above factors or otherwise.

Capital markets and economic conditions can materially affect our financial condition and results of operations and the value of our securities.

There are many factors that can affect the value of our securities, including the state of the capital markets and the economy. Demand for office and retail space may decline nationwide due to bankruptcies, downsizing, layoffs and cost cutting. Government action or inaction may adversely affect the state of the capital markets. The cost and availability of credit may be adversely affected by illiquid credit markets and wider credit spreads, which may adversely affect our liquidity and financial condition, and the liquidity and financial condition of our tenants. Our inability or the inability of our tenants to timely refinance maturing liabilities and access the capital markets to meet liquidity needs may materially affect our financial condition and results of operations and the value of our securities.

Risk Factors Related to Our Real Estate Business

Real estate investments’ value and income fluctuate due to various factors.

The value of real estate fluctuates depending on conditions in the general economy and the real estate business. These conditions may also adversely impact our revenues and cash flows.

The factors that affect the value of our real estate investments include, among other things:

National, regional and local economic conditions;

Competition from other available space;

Local conditions such as an oversupply of space or a reduction in demand for real estate in the area;

How well we manage our properties;

The development and/or redevelopment of our properties;

Changes in market rental rates;

The timing and costs associated with property improvements and rentals;

Whether we are able to pass all or portions of any increases in operating costs through to tenants;

Changes in real estate taxes and other expenses;

Whether tenants and users such as customers and shoppers consider a property attractive;

The financial condition of our tenants, including the extent of tenant bankruptcies or defaults;

Availability of financing on acceptable terms or at all;

Fluctuations in interest rates;

Our ability to obtain adequate insurance;

Changes in zoning laws and taxation;

Government regulation;

Consequences of any armed conflict or terrorist attacks;

Potential liability under environmental or other laws or regulations;

Natural disasters;

General competitive factors; and

Climate changes

The rents or sales proceeds we receive and the occupancy levels at our properties may decline as a result of adverse changes in any of these factors. If rental revenues, sales proceeds and/or occupancy levels decline, we generally would expect to have less cash available to pay indebtedness and for distribution to shareholders. In addition, some of our major expenses, including mortgage payments, real estate taxes and maintenance costs generally do not decline when the related rents decline.

Real estate is a competitive business.

Our business segments operate in a highly competitive environment. We compete with a large number of property owners and developers, some of which may be willing to accept lower returns on their investments than we are. Principal factors of competition include rents charged, sales prices, attractiveness of location, the quality of the property and the breadth and quality of services provided. Our success depends upon, among other factors, trends of the national, regional and local economies, financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulation, legislation and population trends.

We depend on leasing space to tenants on economically favorable terms and collecting rent from tenants who may not be able to pay.

Our financial results depend significantly on leasing space in our properties to tenants on economically favorable terms. In addition, because a majority of our income comes from renting of real property, our income, funds available to pay indebtedness and funds available for distribution to shareholders will decrease if a significant number of our tenants cannot pay their rent or if we are not able to maintain occupancy levels on favorable terms. If a tenant does not pay its rent, we may not be able to enforce our rights as landlord without delays and may incur substantial legal costs. During periods of economic adversity, there may be an increase in the number of tenants that cannot pay their rent and an increase in vacancy rates.

Bankruptcy or insolvency of tenants may decrease our revenue, net income and available cash.

Our tenants may declare bankruptcy or become insolvent in the future. In the case of our shopping centers, the bankruptcy or insolvency of a major tenant could cause us to suffer lower revenues and operational difficulties, including leasing the remainder of the property. As a result, the bankruptcy or insolvency of a major tenant could result in decreased revenue, net income and funds available for the payment of indebtedness or for distribution to shareholders.

We may incur costs to comply with environmental laws.

Our operations and properties are subject to various federal, state and local laws and regulations concerning the protection of the environment, including air and water quality, hazardous or toxic substances and health and safety. Under some environmental laws, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances released at a property. The owner or operator may also be held liable to a governmental entity or to third parties for property damage or personal injuries and for investigation and clean-up costs incurred by those parties because of the contamination. These laws often impose liability without regard to whether the owner or operator knew of the release of the substances or caused the release. The presence of contamination or the failure to remediate contamination may impair our ability to sell or lease real estate or to borrow using the real estate as collateral. Other laws and regulations govern indoor and outdoor air quality including those that can require the abatement or removal of asbestos-containing materials in the event of damage, demolition, renovation or remodeling and also govern emissions of and exposure to asbestos fibers in the air. The maintenance and removal of lead paint and certain electrical equipment containing polychlorinated biphenyls (PCBs) and underground storage tanks are also regulated by federal and state laws. We are also subject to risks associated with human exposure to chemical or biological contaminants such as molds, pollens, viruses and bacteria which, above certain levels, can be alleged to be connected to allergic or other health effects and symptoms in susceptible individuals. Our predecessor companies may be subject to similar liabilities for activities of those companies in the past. We could incur fines for environmental compliance and be held liable for the costs of remedial action with respect to the foregoing regulated substances or tanks or related claims arising out of environmental contamination or human exposure to contamination at or from our properties.

Each of our properties has been subject to varying degrees of environmental assessment. The environmental assessments did not, as of this date, reveal any environmental condition material to our business. However, identification of new compliance concerns or undiscovered areas of contamination, changes in the extent or known scope of contamination, discovery of additional sites, human exposure to the contamination or changes in clean-up or compliance requirements could result in significant costs to us.

Inflation or deflation may adversely affect our financial condition and results of operations.

Although neither inflation nor deflation has materially impacted our operations in the recent past, increased inflation could have a pronounced negative impact on our mortgages and interest rates and general and administrative expenses, as these costs could increase at a rate higher than our rents. Inflation could also have an adverse effect on consumer spending which could impact our tenants’ sales and, in turn, our percentage rents, where applicable. Conversely, deflation could lead to downward pressure on rents and other sources of income. In addition, we own residential properties which are leased to tenants with one- year lease terms. Because these are short- term leases, declines in market rents will impact our residential properties faster than if the leases were for longer terms.

Some of our potential losses may not be covered by insurance.

We currently maintain Directors’ & Officers’ liability insurance with a limit of $1 million and all risk property and rental value insurance with limits of €10.80 million (approximately $11.72 million) for four of our subsidiaries’ properties, including coverage for terrorist acts, with sub-limits for certain perils such as floods. The property and rental value insurance for the remaining six investment properties are included in the finance lease applicable to such property. The limits of such insurance were determined by each finance lease creditor with payments of such policies included in the finance lease scheduled payments.

We will continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism. However, we cannot anticipate what coverage will be available on commercially reasonable terms in future policy years.

The debt instruments of our subsidiaries, consisting of mortgage loans secured by the subsidiary’s properties, senior unsecured notes and revolving credit agreements contain customary covenants requiring the applicable subsidiary to maintain insurance. Although we believe that our subsidiaries have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. Further, if lenders insist on greater coverage than we are able to obtain it could adversely affect our ability to finance our properties and expand our portfolio.

Compliance or failure to comply with certain governmental regulations could result in substantial costs.

Our properties are subject to various governmental regulatory requirements, such as fire and life safety requirements. If we fail to comply with these requirements, we could incur fines or private damage awards. We do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures that will affect our cash flow and results of operations.

Our business and operations would suffer in the event of system failures.

Despite system redundancy, the implementation of security measures and the existence of a disaster recovery plan for our internal information technology systems, our systems are vulnerable to damages from any number of sources, including computer viruses, unauthorized access, energy blackouts, natural disasters, terrorism, war and telecommunication failures. Any system failure or accident that causes interruptions in our operations could result in a material disruption to our business. We may also incur additional costs to remedy damages caused by such disruptions.

The occurrence of cyber incidents, or a deficiency in our cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.

A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity, or availability of our information resources. More specifically, a cyber incident is an intentional attack or an unintentional event that can include gaining unauthorized access to systems to disrupt operations, corrupt data, or steal confidential information. As our reliance on technology has increased, so have the risks posed to our systems, both internal and those we have outsourced. Our three primary risks that could directly result from the occurrence of a cyber incident include operational interruption, damage to our relationship with our tenants, and private data exposure. We have implemented processes, procedures and controls to help mitigate these risks, but these measures, as well as our increased awareness of a risk of a cyber incident, do not guarantee that our financial results will not be negatively impacted by such an incident.

Our investments are concentrated in Southern Europe. Economic circumstances affecting these areas could adversely affect our business.

All of our properties are located in Southern Europe and are affected by the economic cycles and risks inherent to those areas. Real estate markets are subject to economic downturns and we cannot predict how economic conditions will impact these markets in either the short or long term. Declines in the economy or declines in real estate markets in these areas could hurt our financial performance and the value of our properties. In addition to the factors affecting the national economic condition generally, the factors affecting economic conditions in these regions include:

Financial performance and productivity of the publishing, advertising, financial, technology, retail, insurance and real estate industries;

Business layoffs or downsizing;

Industry slowdowns;

Relocations of businesses;

Changing demographics;

Increased telecommuting and use of alternative work places;

Infrastructure quality; and

Any oversupply of, or reduced demand for, real estate.

It is impossible for us to assess the future effects of trends in the economic and investment climates of the geographic areas in which we concentrate or the real estate markets in these areas. Local, national or global economic downturns would negatively affect our businesses and profitability.

Natural disasters could have a concentrated impact on the areas where we operate and could adversely impact our results.

Natural disasters could impact our properties. Additionally, natural disasters, including earthquakes, could impact several of our properties in other areas in which we operate. Potentially adverse consequences of “global warming” could similarly have an impact on our properties. As a result, we could become subject to significant losses and/or repair costs that may or may not be fully covered by insurance and to the risk of business interruption. The incurrence of these losses, costs or business interruptions may adversely affect our operating and financial results.

We may acquire or sell assets or entities or develop properties. Our failure or inability to consummate these transactions or manage the results of these transactions could adversely affect our operations and financial results.

We may acquire or develop properties or acquire other real estate related companies when we believe that an acquisition or development is consistent with our business strategy. We may not, however, succeed in consummating desired acquisitions or in completing developments on time or within budget. In addition, we may face competition in pursuing acquisition or development opportunities that could increase our costs. When we do pursue a project or acquisition, we may not succeed in leasing or selling newly developed or acquired properties at rents or sales prices sufficient to cover costs of acquisition or development and operations. Difficulties in integrating acquisitions may prove costly or time consuming and could divert management’s attention. Acquisitions or developments in new markets or industries where we do not have the same level of market knowledge may result in weaker than anticipated performance. We may also abandon acquisition or development opportunities that we have begun pursuing and consequently fail to recover expenses already incurred, and we may devote management time to a matter not consummated. Furthermore, acquisitions of new properties or companies will expose us to the liabilities of those properties or companies, some of which we may not be aware of at the time of acquisition. Development of our existing properties presents similar risks.

We may seek to make, one or more material acquisitions in the future. The announcement of such a material acquisition may result in a rapid and significant decline in the price of our securities.

We are continuously looking at material transactions that we believe will maximize shareholder value. However, an announcement by us of one or more significant acquisitions could result in a quick and significant decline in the price of our securities.

Our decision to dispose of real estate assets would change the holding period assumption in our valuation analyses, which could result in material impairment losses and adversely affect our financial results.

We evaluate real estate assets using the discounted cash flow method conducted by an independent qualified professional valuation expert. The methods and assumptions adopted for the real estate appraisal carried out by the expert in determining the fair value of the investment property is in accordance to IAS 40, Investment Property. Depending on the result of the evaluation, we may record a gain/loss that would favorably/adversely affect our financial results due to the valuation change on these investment properties. This gain/loss could be material to our results of operations in the period that it is recognized.

It may be difficult to buy and sell real estate quickly, which may limit our flexibility.

Real estate investments are relatively difficult to buy and sell quickly. Consequently, we may have limited ability to vary our portfolio promptly in response to changes in economic or other conditions.

We may not be permitted to dispose of certain properties or pay down the debt associated with those properties when we might otherwise desire to do so without incurring additional costs. In addition, when we dispose of or sell assets, we may not be able to reinvest the sales proceeds and earn similar returns.

As part of an acquisition of a property, or a portfolio of properties, we may agree, and in the past have agreed, not to dispose of the acquired properties or reduce the mortgage indebtedness for a long- term period, unless we pay certain of the resulting tax costs of the seller. These agreements could result in us holding on to properties that we would otherwise sell and not pay down or refinance our debts. In addition, when we dispose of or sell assets, we may not be able to reinvest the sales proceeds and earn returns similar to those generated by the assets that were sold.

There are material weaknesses in our internal control.

Our internal control over financial reporting was not effective due to material weaknesses in our internal control over financial reporting as of December 31, 2015, and such weaknesses have not been remediated as of the filing date of this report. Material weaknesses in our internal controls include the lack of periodic interim review of the financial statements by the management, lack of segregation of duties, untimely reconciliation, improper checks and balances, lack of an audit committee, and the fact that the Company’s review procedures in connection with financial reporting are limited. Our current management further identified other weaknesses in entity level controls, including, but not limited to, control environment, risk assessment processes, information sharing, and monitoring processes. Such weaknesses resulted in the Company’s restatement of its 2013 financial statements. During 2015, our current management had designed and implemented certain processes and procedures to address the material weaknesses identified. The current management intends to further implement processes and procedures that will provide reasonable assurance regarding the reliability of our financial reporting and preparation of financial statements for external purposes in accordance with IFRS and its related interpretations as funding becomes available to be able to put the components in place.

ITEM 4.

INFORMATION ON THE COMPANY

History and Development of the Company

Prime Acquisition Corp. is an exempt company organized on February 4, 2010 under the laws of the Cayman Islands, formed to acquire through a merger, capital stock exchange, asset acquisition, stock purchase or similar business combination, or control through contractual arrangements, one or more operating businesses.

On March 30, 2011, the initial public offering of 3,600,000 units of the Company was consummated. Each unit issued in the IPO consisted of one ordinary share, par value $0.001 per share, and one redeemable warrant. Each redeemable warrant entitles the holder to purchase one ordinary share at a price of $7.50. On January 4, 2014, the Company’s management reduced the exercise price of the warrants from $7.50 to $5.00 and extended the expiration date from March 30, 2016 to March 30, 2018. Prior to the consummation of the IPO, the Company completed a private placement of 2,185,067 warrants to the Company’s founding shareholders, generating gross proceeds of $1,638,800. On May 10, 2011, the Company announced that the underwriters of its IPO exercised their over-allotment option in part, for a total of an additional 52,975 units (over and above the 3,600,000 units sold in the IPO). The 3,652,975 units sold in the IPO, including the 52,975 units subject to the over-allotment option, were sold at an offering price of $10.00 per unit, generating gross proceeds of $36,529,750. A total of $36,606,096, which includes a portion of the $1,638,800 of proceeds from the private placement of warrants to the founding shareholders, was placed in trust. On May 25, 2011, the ordinary shares and warrants underlying the units sold in the IPO began to trade separately on a voluntary basis. The warrants issued prior to and in connection with the IPO are exercisable provided that there is an effective registration statement or post-effective amendment covering the ordinary shares issuable upon exercise of the redeemable warrants. In addition, the Company can only call for redemption of such warrants if the last sale price of our ordinary shares on the stock exchange equals to or exceeds $15.00 per share for any 20 trading days within a 30 trading day period after the completion of business. As of December 31, 2015, the warrants are not exercisable because no such effective registration statement or post-effective amendment has been filed.

Since we could not complete an acquisition prior to March 30, 2013, the date by which we were required to complete our initial business combination by our Amended and Restated Memorandum and Articles of Association, our board of directors determined that it would be in the best interests of our shareholders for us to continue our existence for an additional six months (until September 30, 2013) rather than dissolve as required by our Articles of Association, which we refer to as the Extension. In order to effect the Extension, our shareholders approved certain amendments to our Articles of Association at a special meeting of shareholders held on Wednesday, March 27, 2013. In connection with the Extension, our board of directors determined that it was in our best interest to allow shareholders with the opportunity to redeem their ordinary shares for cash by means of a tender offer, which we refer to as the Extension Tender Offer. Following approval of the Extension, the Extension Tender Offer expired at 5:00 p.m., United States Eastern Time on the evening of Thursday, March 28, 2013. Pursuant to the terms of the Extension Tender Offer, 3,008,955 of our ordinary shares were tendered and accepted for redemption by the Company for an aggregate purchase price of $30,149,729.

On May 23, 2013, Prime and the Manager entered into a Management Agreement, in connection with the Business Combination. Pursuant to the terms of the Management Agreement, and subject to the closing of the Business Combination, Prime appointed the Manager to manage the assets of Prime following the Business Combination on an exclusive basis. On May 13, 2014, Manager and our then officers resigned from their positions with us and the Management Agreement was terminated. On June 10, 2014, Diana Liu became the sole director of our Italian subsidiaries, replacing the designee of the Manager.

On June 22, 2013, June 24, 2013 and July 9, 2013, Prime entered into a series of definitive agreements to acquire certain real estate assets in Italy, as more fully described below.

In addition, on September 27, 2013, Prime completed the Business Combination Tender Offer and redeemed the one share validly tendered and not withdrawn, and on September 30, 2013, it consummated its initial Business Combination by acquiring 100% of Seba S.r.l. (“Seba”), Nova S.r.l. (“Nova”), Delfin S.r.l. (“Delfin”), SIM S.r.l. (“SIM”), Dieci Real Estate S.r.l. (“Dieci”), Ellegi S.r.l. (“Ellegi”), G.S.I. S.r.l. (“GSI”), Magfin S.r.l. (“Magfin”), all of which are Italian limited liability companies (Delfin, SIM, Dieci, Ellegi, GSI and Magfin, collectively the “Bell Group”; Bell Group, Seba and Nova, collectively the “Subsidiaries”), which collectively owned 11 commercial real estate properties based in Italy, for an aggregate of 1,719,317 ordinary shares. As a result, immediately following consummation of the Business Combination, Prime had a total of 3,635,344 ordinary shares outstanding.

On December 18, 2014, Prime entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Prime Luxembourg S.a.r.l., the Company’s wholly owned subsidiary (“LuxCo”), Seba, at the time LuxCo’s wholly owned subsidiary, Francesco Rotondi and Luca Failla. Pursuant to the Purchase Agreement, on December 18, 2014, Messrs. Rotondi and Failla acquired all of the outstanding equity interests in Seba in exchange for the return of 497,308 of the Company’s shares. Seba’s sole asset consists of four floors of Corso Europa 22, an office building in central Milan.

In connection with the Purchase Agreement, the Company, LuxCo, Nova, and Mr. Rotondi entered into an option agreement (the “Option Agreement”) pursuant to which Mr. Rotondi would have the right to purchase all of the equity interests in Nova owned by LuxCo in the event that (i) the mortgage payments that Mr. Rotondi has personally guaranteed are not made, or (ii) a certain power of attorney that would facilitate the transfer of Nova’s equity interests to Mr. Rotondi is not renewed. The Option Agreement will terminate on the repayment of the mortgages or the termination of Mr. Rotondi’s personal guaranties. The consideration for the exercise of the option would be the return of 50,000 shares of the Company’s ordinary shares. Nova’s sole asset consists of two floors of Corso Europa 22, an office building in central Milan.

On June 26, 2015, the Company entered into a Stock Purchase Agreement (the “SIM Purchase Agreement”) with Prime Luxembourg S.a.r.l., the Company’s wholly-owned subsidiary (“LuxCo”), GSI S.r.l, LuxCo’s wholly-owned subsidiary (“GSI”), SIM S.r.l., at the time owned by LuxCo and GSI (“SIM”), Bell Real Estate S.r.l. (“Bell”), Cesare Lanati and Stefano Lanati (Bell, Cesare Lanati and Stefano Lanati are collectively referred to as the “SIM Buyers”). On July 7, 2015, the SIM Buyers acquired all of the outstanding equity interests in SIM in exchange for the return of 220,000 of the Company’s shares (the “SIM Consideration Shares”). 134,200 shares (61%) were returned to the Company for immediate cancellation, 85,800 shares (39%) were returned to GSI and remained as the Company’s treasury shares. SIM’s sole asset consists of the property located at Via Newton 9, Milan, Italy. In addition, in connection with the transactions contemplated by the SIM Purchase Agreement, the Company extinguished certain trade liabilities associated with its portfolio of properties and the SIM Buyers.

During 2015, the Company has established a new subsidiary in Italy, Imperatrice S.r.l. (“Imperatrice”), through LuxCo. The Company owns 100% of Imperatrice. This new subsidiary was established for potential future acquisitions of real estate investment properties in Italy.

Business Overview

We currently own real estate assets that consist of office, commercial and industrial properties in Italy.

We plan to acquire additional properties to create a diverse portfolio of commercial real estate assets, including, primarily, well located office buildings and industrial/warehouse buildings. We may also acquire retail properties, including regional malls, shopping centers and single-tenant retail locations, that are leased to national, regional and local tenants. We plan to target properties strategically situated in densely populated, middle and upper income markets in Southern Europe, primarily in Italy, Spain and Portugal.

On September 15, 2015, the Company has entered into a binding letter of intent to purchase 100% of S.I.C.R.I., S.r.l., (“seller”), an Italian limited liability company. S.I.C.I.R.I., S.r.l. beneficially owns the land and real estate complex located in the town of Pozzuolo Martesana (MI), Italy. The transaction was not completed by October 31, 2015 in accordance to the terms of the binding letter of intent, rendering the letter non-binding. As of the date of this report, the Company is still in active negotiation with the seller. The anticipated closing date of this transaction is the second quarter of 2016. However, there can be no assurance the Company can successfully complete this transaction.

We believe that the current market environment in Southern Europe presents an opportunity to acquire performing properties at compelling yields and at values substantially below their replacement cost, offering us the potential to achieve attractive returns for our shareholders over time. The Southern European real estate market is currently experiencing significant weakness driven by economic uncertainty and sharply reduced capital availability. Despite the challenging economic environment in Europe, we believe that our properties have high quality lessees who are not credit impaired, long term leases, low vacancy rates and stable rents. These will also be characteristics that we will seek out for additional properties we may acquire in the future.

In addition, since the onset of the “credit crisis” in mid-2007, the number of banks advancing new loans against Southern European properties has fallen substantially and that decline, together with a tightening of lending policies, has resulted in a significant contraction in the amount of debt available to fund re-financings, acquisitions, developments and other commercial real estate investments. Our view is that, in the current capital constrained environment, many property owners have limited options to sell and the prospects for negotiating attractive acquisitions at compelling prices should be significant. There can be no assurance, however, that the continuation of current economic conditions will not impact certain of the properties we may acquire and such properties could experience higher levels of vacancy than anticipated at the time of our acquisition of such properties.

We believe we will have a competitive advantage relative to other potential acquirers of such properties because we have the ability to issue publicly traded ordinary shares for a portion of the acquisition consideration and because we are not burdened by a legacy portfolio of under-performing assets or assets that may have significant debt obligations. However, no assurance can be given at this time that these plans can be carried out successfully and that the risks associated with investing in real estate assets in the region can be properly mitigated.

Competition

The leasing of real estate is highly competitive. We compete for tenants with landlords and developers of similar properties located in our markets primarily on the basis of location, rent charged, services provided, balance sheet strength and liquidity, and the design and condition of our properties. We face competition from other real estate companies, including REITs, that currently invest in markets other than or in addition to Southern Europe, private real estate funds, domestic and foreign financial institutions, life insurance companies, pension trusts, partnerships, individual investors, and others that may have greater financial resources or access to capital than we do or that are willing to acquire properties in transactions which are more highly leveraged or with different financial attributes than we are willing to pursue.

Litigation

From time to time in the normal course of conducting business the Group is subject to legal disputes of varying nature such as but not limited to expenses on building maintenance, moving expenses and others. Management believes that any liability that may ultimately result from the resolution of these matters will not have a material adverse effect on the financial condition or results of operations of the Company.

The following summarizes litigation that is outside of the normal course of the Group’s business.

Auchan S.p.A.

On March 14, 2013, the tenant Auchan filed a lawsuit with the Court of Milan against Ellegi and GSI in connection with a lease agreement entered into with Ellegi on July 15, 2010 and a contract entered into with GSI on August 5, 2010 for certain repairs to be performed. Auchan was not satisfied with the repairs performed and claimed that they suffered a loss of potential income from new business opportunities, together with certain damages which totaled to €4.5 million. We disagree with the allegations and are defending against this claim, although no assurance can be made that we will be successful. The actual amount in dispute is approximately €200,000 related to the actual repair work paid by Auchan. The management deemed the difference of €4.3 million Auchan is claiming and the actual amount in dispute to be without merit. The Group has accrued a provision of approximately two-thirds in the amount of €131,240 (which translates to $142,514, $158,814 and $180,837 at December 31, 2015, 2014 and 2013 respectively) for the risk associated with this litigation at December 31, 2015, 2014 and 2013 respectively (the US dollar amounts differ due to exchange differences). In the first quarter of 2016, the court issued a judgement to reject all claims made by Auchan. Auchan has the right to appeal until the end of April 2016. On April 22, 2016, Auchan has filed the appeal.

Morgan Joseph and BHN LLC

In July 2014, Morgan Joseph filed a complaint against Prime and BHN LLC (“BHN”) for breach of contract, seeking at least approximately $1.3 million plus damages from Prime. On October 20, 2014, Prime moved to dismiss the complaint on the basis there were no contracts between Morgan Joseph and Prime. On November 14, 2014, BHN moved to add additional cross-claims, among other things.

On March 19, 2015, the court dismissed Morgan Joseph's complaint against Prime as well as BHN LLC's cross-claim for indemnification from the Company but gave Morgan Joseph until May 1, 2015 to file an amended complaint.

On April 8, 2015, BHN brought an amended complaint against Prime for breach of contract, seeking approximately $9 million in damages. BHN did not serve Prime or Prime’s legal counsel with this complaint. Separately, on April 27, 2015, Morgan Joseph filed an amended complaint against Prime and BHN, asserting claims of breach of contract and seeking approximately $2.5 million plus damages.

The Company filed an answer to Morgan Joseph’s amended complaint on June 1, 2015. Management estimated the probability of damages in these cases is low due to (1) there being no formal contracts between the Company and Morgan Joseph, and (2) the court dismissing earlier complaints and there being no new evidence brought forward in the amended complaints. Due to these factors, Management deemed no potential loss from this complaint and hence no provision has been accrued in relation to this case. However, there is no assurance the court will dismiss this amended complaint.

In addition, on June 26, 2015, the Company has filed a cross-claim against BHN LLC and certain individuals connected with BHN LLC for damages and certain costs caused the Company. The amount of damages and costs are to be determined at trial. As of the date of this report, there is no new development on this case and the Management has not yet determined the potential damages and costs.

Organizational Structure

LuxCo is a Luxembourg company and the only wholly owned subsidiary of Prime. LuxCo holds all of the equity interest in each of the Italian limited liability companies (collectively the “Subsidiaries”) Nova S.r.l. (“Nova”), Delfin S.r.l. (“Delfin”), Dieci Real Estate S.r.l. (“Dieci”), Ellegi S.r.l. (“Ellegi”), G.S.I. S.r.l. (“GSI”), Magfin S.r.l. (“Magfin”), Imperatrice S.r.l. (“Imperatrice”).

Property, Plant and Equipment

We currently maintain our executive offices in an approximately 500 sq. foot suite at No. 322, Zhongshan East Road; Shijiazhuang; Hebei Province, 050011; China. Prior to the Business Combination the cost for this space was included in the $7,500 per month fee payable to Kaiyuan Real Estate Development. This monthly fee arrangement terminated upon completion of the Business Combination. After the Business Combination, there is no arrangement in place for the cost of this space. Kaiyuan Real Estate Development is an affiliate of Mr. Yong Hui Li, our former Chairman.

Description of Investment Properties

We own the following properties, which are office, logistics, commercial and industrial real estate assets located in Milan, Italy.

	Property Name & Location	Type	Tenant	Average Lease Duration (Years)		Approx. Gross Leasable Area (sq. meters)		Purchase Price on September 30, 2013 ($ in millions)
1	Corso Europa 22, Milano	Office	Italian firms		10		560		8.57
2	Milanofiori, Building A5	Office	Various int’l and Italian firms		10		865	$	3.13
3	Milanofiori, Building Q7	Office	Various int’l and Italian firms		10		586	$	1.27
4	Milanofiori, Building N	Office	Various int’l and Italian firms		10		1,750	$	4.48
5	Viale Lucania, Buccinasco	Office, Industrial	Microelettrica Scientifica		18		16,230	$	22.27
6	Via Buozzi 22, Buccinasco	Office	Various int’l and Italian firms		10		545	$	1.85
7	Via Lazio 95, Buccinasco	Office, Warehouse	Italian cos.		10		4,320	$	5.01
8	Via Emilia, Buccinasco	Commercial	Italian commercial co.		10		200	$	0.35
9	Via Mulino, Buccinasco	Commercial	Merkur		8		360	$	1.37
10	Milanofiori, Building Q5	Office	Italian firms		10		400	$	1.26
	Total:						25,816	$	49.56

Property 1 is part of an office building located at Corso Europa 22 in a central area of Milan, near San Babila’s Square, close to the fashion district called “quadrilatero della moda” and 500 meters from the Milan Cathedral at the center of the city (the “Duomo”). The building’s 560 square meters (“sqm”) includes two floors and a basement. The structure was designed in 1957 by Architect Vico Magistretti, a leading figure in the Italian cultural and architectural space after WWII, and was completely renovated in 2012.

Property 2 is part of a large office complex, Assago Milanofiori, in the southern part of Milan. Milanofiori is a real estate business district built in the late 1970s with the aim to provide prime location to Italian and multinational firms in the service and high-tech service industries. The buildings in the area are connected by tree-lined roads and large parking lots. The property is Building A5 of the complex. The complex has a direct subway connection to the center of the Milan and is located near major freeways and highways. The building’s 865 sqm are rented to Italian and multinational firms.

Property 3 is part of a large office complex, Assago Milanofiori, in the southern part of Milan. The property is Building Q7 of the complex. The complex has a direct subway connection to the center of the city and is located near major freeways and highways. The building’s 586 sqm are rented to Italian and multinational companies.

Property 4 is part of a large office complex, Assago Milanofiori, in the southern part of Milan. The property is Building N of the complex. The complex has a direct subway connection to the center of the city and is located near major freeways and highways. The building’s 1,750 sqm are rented to Italian and multinational companies.

Property 5 is an industrial and office building located on viale Lucania in Buccinasco, a large commercial and industrial area in the southern part of Milan. The property is located about 3 km from Milan, is very well connected with the major adjacent cities such as Assago, Corsico, Trezzano sul Naviglio and is near major freeways and the highway towards Genova. The facility encompasses a 16,230 sqm industrial plant, of which 10,230 sqm warehouse, and 6,000 sqm office. It is a flexible use structure that was recently renovated in 2011. The building is rented to Microelettrica Scientifica, a subsidiary of the large multi-national Knorr-Bremse group, a leading global producer of braking systems for trucks and trains.

Property 6 is an office building located at via Buozzi 22 in Buccinasco, a large commercial and industrial area in the southern part of Milan. The property is located near major freeways and the highway towards Genova. The building includes offices and warehouse. Its 545 sqm are rented to multiple international and Italian firms.

Property 7 is an office and warehouse building. The property is located at via Lazio 95 in Buccinasco, a large commercial and industrial area in the southern part of Milan. The building is located near major freeways and the highway towards Genova. The building’s 4,320 sqm is rented to Italian companies.

Property 8 is a commercial building located on via Emilia in Buccinasco, a large commercial and industrial area in the southern part of Milan. The building is located near major freeways and the highway towards Genova. The facility’s 200 sqm are rented to an Italian commercial company.

Property 9 is a commercial building is located on via Mulino in Buccinasco, a large commercial and industrial area in the southern part of Milan. The building is located near major freeways and the highway towards Genova. The facility’s 360 sqm are rented to a gaming company.

10.

Property 10 is part of a large office complex, Assago Milanofiori, in the southern part of Milan. The property is Building Q5 of the complex. The complex has a direct subway connection to the center of the city and is located near major freeways and highways. The building’s 400 sqm are rented to Italian and multinational companies.

Current occupancy rates and approximate rent per square meter for each of the properties is as follows:

	Property	Current occupancy		Rent per square meter ($)
1	Corso Europa 22, Milan (1)		79%		179
2	Milanofiori, building A5 (3)		95%		181
3	Milanofiori, building Q7		100%		140
4	Milanofiori, building N		100%		121
5	Viale Lucania, Buccinasco		100%		87
6	Via Buozzi 22, Buccinasco (2)		65%		112
7	Via Lazio, Buccinasco		100%		71
8	Via Emilia, Buccinasco		100%		65
9	Via Mulino, Buccinasco		100%		232
10	Milanofiori, building Q5		100%		152

(1)	The occupancy rate of the property located in Corso Europa, Milan, is at 79% due to the termination of certain leases in 2015. The managers of the property have successfully leased some of the spaces to new tenants in 2015 and are seeking new tenants for the remaining vacant spaces.

(2)	The occupancy rate of the property located at Via Buozzi 22, Buccinasco, is at 69% due to the recent termination of certain leases. The managers of the property are seeking new tenants for the vacant spaces.

(3)	The occupancy rate of the property located at Milanofifiori, building A5, is at 95% due to the recent termination of certain leases. The managers of the property are seeking new tenants for the vacant spaces.

ITEM 4A.

UNRESOLVED STAFF COMMENTS

None.

ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Prime Acquisition Corporation, a Cayman Island company, was incorporated on February 4, 2010 in order to serve as a vehicle for the acquisition of an operating business (through a merger, capital stock exchange, asset acquisition or other similar business combination). Prime did not engage in any substantive commercial business until the Business Combination.

On September 30, 2013, we consummated the Business Combination by purchasing all of the issued and outstanding stock of the Subsidiaries (Seba, Nova, Delfin, Dieci, Ellegi, SIM, Magfin, and GSI), for a total consideration of $18,843,714, as represented by the issuance of 1,719,317 of Prime’s shares from the treasury. As part of the Business Combination, the Group assumed all the current and non-current loans and borrowings associated with the investment properties which amounted to approximately $50.9 million.

On December 18, 2014, Prime exchanged Seba with Francesco Rotondi and Luca Failla whereby Rotondi and Failla returned 497,308 of the Company’s shares (“Seba Unwinding”) for 100% of the ownership of Seba. Seba’s sole asset consisted of four floors of Corso Europa 22, an office building in central Milan.

On July 7, 2015, Prime exchanged SIM with its former owners Bell Real Estate S.r.l. (“Bell”), Cesare Lanati and Stefano Lanati whereby Bell returned 220,000 of the Company’s shares for 100% of the ownership of SIM. SIM’s sole asset consisted of the investment property on Via Newton, 9, an office building in Assago.

In addition, see Item 10C Material Contracts for certain details of contingent consideration.

Our Business Subsequent to the Acquisition of the Real Estate Portfolio

The entirety of our revenues is derived from rental income from our tenants in the ten properties.

Results of Operations

This section discusses our 2015, 2014 and 2013 financial results prepared under IFRS.

Years Ended December 31, 2015, 2014 and 2013

The information below is from the audited financial statements for the years ended December 31, 2015, 2014 and 2013.

		2015			2014*			2013*

Continuing operations
Rental income	$	2,829,417		$	3,869,880		$	920,656
Other revenues		206,781			131,055			70,338
Total Revenues		3,036,198			4,000,935			990,994

Depreciation, amortization and bad debt provision		(13,458	)		(107,400	)		(59,295	)
Impairment of goodwill		–			–			(6,914,458	)
Other expenses		(3,243,849	)		(2,618,210	)		(4,321,056	)
Total operating expenses		(3,257,307	)		(2,725,610	)		(11,294,809	)
Operating profit/(loss)		(221,109	)		1,275,325			(10,303,815	)

Finance income		34,890			75,880			–
Finance costs		(4,172,915	)		(1,843,414	)		(708,575	)
Loss on revaluation of derivatives related to convertible promissory notes		(539,716	)		–			–
Loss on disposal of property & equipment		(133,782	)		–			–
Loss on sale of subsidiary		(32,340	)		–			–
Contingent consideration in connection with business combination		–			5,157,951			(5,157,951	)
Interest earned from investment held in trust		–			–			3,868
Realized value on real estate investment		(240,206	)		–			–
Less: previously recognized unrealized loss on real estate investment		40,478			–			–
Net fair value (loss)/gain on revaluation of investment property		(2,321,283	)		425,504			–
Profit/(loss) before tax		(7,585,983	)		5,091,246			(16,166,473	)

Tax expense, current		41,769			(208,603	)		–
Deferred tax expense		287,665			(651,039	)		15,538
Profit/(loss) for the year from continuing operations	$	(7,256,549	)	$	4,231,604		$	(16,150,935	)

Profit/(loss) from discontinued operations
Net loss from discontinued operations		(305,137	)		(812,285	)		265,457
Profit/(loss) for the year	$	(7,561,686	)	$	3,419,319		$	(15,885,478	)

Other comprehensive income, net of income tax
Foreign currency translation reserve		(449,358	)		(999,519	)		131,878
Total comprehensive income/(loss) for the year	$	(8,011,044	)	$	2,419,800		$	(15,753,600	)

*Restated for discontinued operations

Year Ended December 31, 2015 Compared to Year Ended December 31, 2014

Revenues: Revenues decreased by 24% to $3,036,198 for the year ended December 31, 2015 from $4,000,935 for the year ended December 31, 2014. The decrease was largely attributable to (1) the Euro to US dollar average exchange rate for the year decreased by approximately 16.55% from 2014 to 2015, (2) one of our properties being vacant for about 6 months during 2015.

Expenses:

For the year ended December 31, 2015, bad debt provision on certain aged trade receivables accounted for majority of depreciation and bad debt provision ($9,814 out of a total of $13,458), followed by depreciation of tangible assets of $3,644.

In comparison, for the year ended December 31, 2014, depreciation of tangible assets accounted for the majority of the depreciation and bad debt provision ($75,245 out of a total of $107,400), followed by bad debt provision on certain aged trade receivables of $32,155. The decrease in bad debt provision from 2014 to 2015 is due to management effort to (1) collect certain aged trade receivables, and (2) improve our cash collection strategy on trade receivables.

Approximately 26.45%, or about $0.86 million, of the Other Expenses (which totaled approximately $2.60 million) in 2015 were professional and legal expenses, compared to 52.77%, or about $1.38 million, in 2014. The decrease of professional and legal expenses in 2015 is primarily related to the management change in 2014, as our current management team took over by majority shareholder consent on May 5, 2014. Day-to-day operating costs such as administrative, rent, staff, maintenance, insurance and travel costs account for about 64.37% (or about $2.09 million) of Other Expenses in 2015, as compared to $1.29 million, or about 49.37% of the total expenses in 2014. The increase of day-to-day operating costs in 2015 was largely attributed to the accrual of executive officers’ and directors’ compensation in 2015. We incurred $260,819 of stock option expenses in 2015 versus $5,044 in 2014.

Balance Sheet

In connection with the acquisition of the Subsidiaries, we had approximately $37.42 and $47.79 million of non-current assets, at December 31, 2015 and 2014, respectively. Investment properties, calculated using discounted cash flow method by an independent qualified professional valuation expert, were valued at $37,407,083 in 2015, as compared to $47,629,537 in 2014. The significant decrease of value is due to (1) the sale of SIM to its former owner, and (2) a decrease of 10.26% in the 2015 year-end Euro currency exchange rate as compared to the US Dollar from the prior year.

Trade and other receivables at the end of 2015 and 2014 was $842,879 and $1,005,261, respectively, net of allowance for bad debts. The decrease was primarily due to various agreements between Prime and Lanati [is Lanati defined? Yes] to offset certain receivables (due from Lanati) and payables (due to Lanati) and the sale of SIM. Lanati was one of the sellers of the investment properties and a current shareholder of the Group.

There was $134,574 and $165,091 of cash at December 31, 2015 and 2014, respectively.

In 2015, the Company had non-current loans and borrowings from various institutions of $21.72 million and current loans and borrowings of approximately $5.09 million. Total current and non-current borrowings amounted to approximately $26.81 million. Loans and borrowings consist of bank loans, revolving lines of credit, finance leases, and other loans. Bank loans include both secured and unsecured bank loans. Secured bank loans are secured by the investment properties. In addition, some of the secured loans are further personally guaranteed by the former owners of the properties. The revolving line of credit is unsecured and personally guaranteed by the former owners of the properties. Non-current other loans consist of one loan from the current tenant of the property located on Via Lucania in Buccinasco. Current other loans consist of an interest bearing convertible promissory note with the underwriter from our initial public offering.

In 2014, the Company had non-current loans and borrowings from various financial institutions of $9.12 million and current loans and borrowings of approximately $23.15 million. Total current and non-current borrowings amounted to approximately $32.27 million. Loans and borrowings consist of bank loans, revolving lines of credit, finances leases, and other loans. Similar to 2015, bank loans include both secured and unsecured bank loans. Secured bank loans are secured by the investment properties. Some of the secured loans are further personally guaranteed by the former owners of the properties. The revolving line of credit is unsecured and personally guaranteed by the former owners of the properties. Other loans consist of an interest bearing convertible promissory note with the underwriters. The significant decrease of total current and non-current loans and borrowings is primarily due to sale of SIM and the decrease in the 2015 year-end Euro currency exchange rate as compared to the US dollar from the prior year.

In 2015, there was approximately $2.76 million in deferred tax liabilities, which is calculated in full on temporary differences using a tax rate of 27.5%, if the temporary difference is subject only to IRES (an Italian corporate income tax) rules, or 31.4% if the temporary difference is subject both to IRES and IRAP (an Italian regional production tax) rules. In comparison, there was approximately $3.74 million in deferred taxes liabilities in 2014, which is calculated in full on temporary differences using a tax rate of 27.5%, if the temporary difference is subject only to IRES rules, or 31.4% if the temporary difference is subject both to IRES and IRAP rules. The decrease of deferred tax liabilities from 2014 to 2015 is primarily due to sale of SIM and the general decrease in fair value of the remaining investment properties.

In 2015, the $5,372,684 of trade and other payables consisted largely of $2.86 million of accrued expenses incurred by Prime with its service providers, and trade account payables of $1.83 million were incurred by the Subsidiaries. In 2014, the $5,311,130 of trade and other payables consisted largely of $2.74 million of accrued expenses incurred by Prime with its service providers, and trade accounts payables of $2.18 million were incurred by the Subsidiaries. The decrease of trade accounts payables incurred by the Subsidiaries is primarily due to the sale of SIM.

In 2015 and 2014, the $170,342 and $179,885, respectively in provisions post-employment benefits, tax liabilities, and other provisions were largely attributed to a legal dispute underway from one of the Subsidiaries. The provision was estimated based on management evaluation of the amount at risk and legal considerations.

Year Ended December 31, 2014 Compared to Year Ended December 31, 2013

Revenues: We did not engage in any substantive commercial business until the acquisition of the Subsidiaries on September 30, 2013. The revenues for 2013 were for the period from the date of the acquisition to December 31, 2013. Revenues increased by 304% to $4,000,935 for the year ended December 31, 2014 from $990,994 for the year ended December 31, 2013. The increase was largely attributable to 2014 consisted of a full year of operations whereas 2013 consisting of only three months of operations.

Expenses:

For the year ended December 31, 2013, bad debt provision on certain aged trade receivables accounted for the majority of the depreciation and bad debt provision ($41,176 out of a total of $59,295), followed by depreciation of tangible assets of $18,119.

Goodwill of $6,914,458 arising from the Business Combination was fully impaired at December 31, 2013. Approximately 52.77%, or about $1.38 million, of the Other Expenses (which totaled approximately $2.62 million) in 2014 were professional and legal expenses compared to 62.52%, or about $2.70 million, in 2013. The decrease of professional and legal expenses in 2014 is primarily due to the additional services required related to the Business Combination in 2013. These additional expenses are non-recurring in nature. Day-to-day operating costs such as administrative, rent, staff, maintenance, insurance and travel costs account for about 49.37% (or about $1.29 million) of Other Expenses in 2014, as compared to $0.93 million, or about 21.60% of the total expenses in 2013. The increase of day-to-day operating costs in 2014 was largely attributed to 2014 consisting of a full year of operations whereas 2013 consisted of only three months of operations. We incurred $5,044 of stock option expenses in 2014 versus $154,343 in 2013.

Contingent consideration in connection with the Business Combination of $5,157,951 arising from certain transaction value agreements Prime has entered into with the sellers of Subsidiaries in connection with the Business Combination is recorded as an expense in the consolidated statements of income/(loss) and comprehensive income/(loss) and a current liability in the consolidated statements of financial position in 2013. During 2014, Prime has reached agreement with the appropriate parties to cancel the said transaction value agreements. As of December 31, 2014, there are no outstanding transaction value agreements. The amount was recorded as non-operating income in the consolidated statements of income/(loss) and comprehensive income/(loss), and no related liability in the consolidated statements of financial position in 2014.

Balance Sheet

In connection with the acquisition of the Subsidiaries, we had approximately $47.79 million and $73.14 million of non-current assets at December 31, 2014 and 2013, respectively. Investment properties, calculated using discounted cash flow method by an independent qualified professional valuation expert, were valued at $47,629,537 in 2014, as compared to $72,877,131 in 2013. The significant decrease of value is due to (1) the Seba Unwinding resulting in disposal of one of the investment properties, and (2) the decrease of 12.18% in the 2014 year-end Euro currency exchange rate as compared to the US Dollar from the prior year.

Trade and other receivables at the end of 2014 and 2013 was $1,005,261 and $4,757,018, respectively, net of allowance for bad debts. The significant decrease was primarily due to various agreements between Prime and Lanati to offset certain receivables (due from Lanati) and payables (due to Lanati) and the Seba Unwinding. Lanati was one of the sellers of the investment properties and a current shareholder of the Group.

There was $165,091 and $133,414 of cash at December 31, 2014 and 2013, respectively.

In 2014, the Company had non-current loans and borrowings from various institutions of $9.12 million and current loans and borrowings of approximately $23.15 million. Total current and non-current borrowings amounted to approximately $32.27 million. Loans and borrowings consist of bank loans, revolving lines of credit, finance leases, and other loans. Bank loans include both secured and unsecured bank loans. Secured bank loans are secured by the investment properties. In addition, some of the secured loans are further personally guaranteed by the former owners of the properties. The revolving line of credit is unsecured and personally guaranteed by the former owners of the properties. Non-current other loans consist of one loan from the current tenant of the property located on Via Lucania in Buccinasco. Current other loans consist of an interest bearing convertible promissory note with the underwriters from our initial public offering.

In 2013, the Company had non-current loans and borrowings from various financial institutions of $45.43 million and current loans and borrowings of approximately $5.50 million. Total current and non-current borrowings amounted to approximately $50.93 million. Loans and borrowings consist of bank loans, revolving lines of credit, finances leases, and other loans. Similar to 2014, bank loans include both secured and unsecured bank loans. Secured bank loans are secured by the investment properties. Some of the secured loans are further personally guaranteed by the former owners of the properties. The revolving line of credit was unsecured and personally guaranteed by the former owners of the properties. Other loans consist of an interest bearing convertible promissory note with the underwriters. The significant decrease of total current and non-current loans and borrowings is primarily due to Seba Unwinding and the decrease in the 2014 year-end Euro currency exchange rate as compared to the US dollar from the prior year.

In 2014, there was approximately $3.74 million in deferred tax liabilities, which is calculated in full on temporary differences using a tax rate of 27.5%, if the temporary difference is subject only to IRES (an Italian corporate income tax) rules, or 31.4% if the temporary difference is subject both to IRES and IRAP (an Italian regional production tax) rules. In comparison, there was approximately $5.40 million in deferred taxes liabilities in 2013, which is calculated in full on temporary differences using a tax rate of 27.5%, if the temporary difference is subject only to IRES rules, or 31.4% if the temporary difference is subject both to IRES and IRAP rules. The decrease of deferred tax liabilities from 2013 to 2014 is primarily due to Seba Unwinding.

In 2014, the $5,311,130 of trade and other payables consisted largely of $2.74 million of accrued expenses incurred by Prime with its service providers, and trade account payables of $2.18 million were incurred by the Subsidiaries. In 2013, the $8,699,717 of trade and other payables consisted largely of $2.27 million of accrued expenses incurred by Prime with its service providers, and trade accounts payables of $2.50 million were incurred by the Subsidiaries. The Subsidiaries also owed $3.77 million to Mr. Cesare Lanati for regular maintenance and other services. The decrease of trade account payables is primarily due to the Seba Unwinding. The decrease of amount owed to Lanati is primarily due to an agreement between Prime and Lanati to offset certain receivables (due from Lanati) and payables owed (due to Lanati).

In 2014, the $179,885 in provisions for post-employment benefits, tax liabilities, and other provisions was largely attributed to a legal dispute underway from one of the Subsidiaries. In 2013, the $493,076 in provisions for post-employment benefits, tax liabilities, and other provisions was largely attributed to certain legal disputes by certain Subsidiaries. The provision amounts were estimated based on management evaluation of the amount at risk and legal considerations.

Liquidity and Capital Resources

The Company had $134,574, $165,091 and $133,414 in cash at the end of years 2015, 2014 and 2013, respectively.

The Company did not generate enough cash flow in 2015 from its operations to fund all interest and day-to-day expenses and therefore was not cash flow positive and would require capital injections to fund current operations. Principal sources of cash may be a) issuance of treasury shares in exchange for cash, b) exercise of warrants, c) disposition of the real estate assets and d) issuance of debt instruments, or a combination of the above four possibilities.

The Company may elect to, when market conditions are favorable, engage broker dealers to sell its securities from treasury to raise funding. However, management believes without improvements to the Company’s stock performance both in terms of price and trading volume, as well as the current operating conditions, this may not be a viable solution.

The Company also has over 7 million warrants outstanding; the exercise price of the warrants is $5.00 per common share. The warrants are exercisable if there is an effective registration statement or post-effective amendment covering the ordinary shares issuable upon exercise of the redeemable warrants. In addition, the Company can only call for redemption of such warrants if the last sale price of our ordinary shares on the stock exchange equals to or exceeds $15.00 per share for any 20 trading days within a 30 trading day period after the completion of the Business Combination. As of December 31, 2015, the warrants were not exercisable because no such effective registration statement or post-effective amendment has been filed. In addition, as our share price is not within this trading price, it is unlikely we will call the warrants in the near future.

On December 18, 2014, Prime sold Seba to Francesco Rotondi and Luca Failla in exchange for the return of 497,308 of the Company’s shares. Seba’s sole asset consists of four floors of Corsa Europa 22, an office building in central Milan. As a result of this sale, the Company’s investment properties value was reduced by approximately 26%. However, Seba produced a net loss of $301,454 for 2014.

On July 7, 2015, the Company further sold SIM to Bell Real Estate S.r.l. (“Bell”), Cesare Lanati and Stefano Lanati (former owners of SIM) in exchange for the return of 220,000 of the Company’s shares. SIM’s sole asset consists of the property located at Via Newton 9, Milan, Italy.

The accompanying consolidated financial statements have been prepared assuming the Group will continue as a going concern. The Group has incurred recurring operating losses, negative cash flows from operations, and has a working capital deficiency as of December 31, 2015. These factors raise substantial doubt about the Group’s ability to continue as a going concern.

The Company has been seeking lenders who will finance the Company with market rates, and has been financing current operations using loans from Diana Liu, one of its directors. These loans carry interest rate of 10% per annum, compounding annually. The loans mature on the earlier of (i) the date on which the Company liquidates and winds-up its affairs, or (ii) one year from the date of the loans. During 2015, some of these loans reached maturity. The Company rolled-over these matured loans with an additional 10% to the principal for one year, with the same interest rate and terms as the original loans. As of April 30, 2016, a total of $2,957,500 in such loans have been issued to Ms. Liu since the inception of Prime. There is no assurance the Company will be successful in finding lenders to finance the Company at market rates or that such practice of funding the Company’s operations by Ms. Liu will continue.

Management is currently in discussions with several funding sources for a combination of debt and equity financing. However, there can be no assurance the Group will be able to obtain funding from these sources.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Contractual Obligations

Our contractual obligations consist mainly of bank loans, revolving line of credit and finance leases, and will be paid off with our cash flow from operations.

Bank loans

The table below shows the detail of bank loans by expiry date and rate (floating or fixed) as of December 31, 2015; all bank loans contracts provide for floating rates.

2015	Floating rate		Total
Expiry within 1 year	$	1,660,946	$	1,660,946
Expiry within 1 and 3 years		859,038		859,038
Expiry within 3 and 5 years		648,795		648,795
Expiry in more than 5 years		2,793,292		2,793,292
Total	$	5,962,071	$	5,962,071

As at December 31, 2015, the effective interest rate varies from EURIBOR+1.125% to EURIBOR+2.554%.

During 2014, one of the Subsidiaries missed certain scheduled repayments on a bank loan totaling $193,011 in principal and $22,680 in interest. Except for these missed scheduled repayments, the Group has been current on all scheduled repayments since the beginning of 2014. According to the applicable mortgage agreement, missing scheduled payments can cause the bank to request immediate repayment of the residual debt, totaling approximately $1,515,720 as of December 31, 2014. Management initiated negotiation with the bank to postpone repayment for 12 months in 2014. Separately, during 2014, one of our other Subsidiaries missed certain scheduled finance lease payments to the leasing department of the same bank. As of the date of this report, the bank official from the mortgage department, on the Group’s behalf, is in negotiation with their leasing department on the issuance of a final moratorium. As the negotiation is in the final stages, management believes the risk of the bank demanding immediate repayment of the full residual debt is very low. However, there can be no assurance the bank will not decide to refuse granting the postponement to the Group and request for immediate repayment of the residual debt. As a result of this possibility, we have classified the residual debt as current loans and borrowings as of December 31, 2014 and 2015.

Revolving line of credit

The Group has committed borrowing facilities available at December 31, 2015 as follows:

2015	Floating rate		Fixed rate		Total

Expiry within 1 year (current)	$	318,063	$	362,012	$	680,075
Total	$	318,063	$	362,012	$	680,075

The facilities expiring within 1 year are annual facilities subject to renewal at various dates. As at December 31, 2015, the effective interest rate varies from 4.86% to 15.50%.

The revolving line of credit is unsecured, but personally guaranteed by the former owners of the properties. The total revolving line of credit approved by the bank as of December 31, 2015 was $575,527. As at December 31, 2015, the Group had overdrawn the revolving line of credit. The total balance of the revolving line of credit as at December 31, 2015 was $680,075.

Finance leases

Future lease payments are due as follows:

2015	Minimum lease payments		Interest		Present value

Not more than one year	$	3,514,879	$	1,658,525	$	1,856,354
Later than one year and not later than three years		2,934,337		1,894,558		1,039,779
Later than three year and not later than five years		3,018,450		1,532,009		1,486,441
Later than five years		18,934,300		4,942,163		13,992,137
Total	$	28,401,966	$	10,027,255	$	18,374,711

As at December 31, 2015, the effective interest rate varies from EURIBOR + 1.4% to EURIBOR+2.762%.

During 2015, two of the three affected finance lease creditors have granted the Group modification repayment plans. The Management is still undergoing negotiation with the one remaining affected finance lease creditor. The communications between the Group and this finance creditor is ongoing and positive. Therefore, Management believes there is very low risk of this finance lease creditor declaring the borrower in default and demanding immediate full principal payment during the approval process. However, there can be no assurance this finance lease creditor will not decide to refuse granting the requested modification repayment plans to the Group. As a result of this possibility, we have classified this one residual finance lease as current loans and borrowings as of December 31, 2015.

Other loans

Non-current other loans consist of one loan from the current tenant of the property located on Via Lucania in Buccinasco. The loan proceeds were used for the modification of the property to the tenant’s specifications. The repayment of this loan will start in the year 2021 for a period of three years, and will offset the rent to be collected from the tenant. The effective interest rate is fixed at EURIBOR+1.90%.

Current other loans consist of an interest bearing convertible promissory note with the underwriters.

Immediately following the closing of the Business Combination on September 30, 2013, the Company entered into an interest-bearing promissory note with its underwriter, Chardan Capital Markets, LLC for the total remaining amount of $889,833 due to the underwriter, at the rate of 5% per annum, maturing on December 31, 2013. If the note was not repaid by December 31, 2013, Chardan had the right to convert the note and accrued interest into ordinary shares at a price of $9.10 per share. In connection with the convertible right, $184,584 was allocated to the value of the beneficial conversion feature. As of December 31, 2013, full amount of the beneficial conversion feature has been recorded as interest expense. As of the date of this report, the convertible right had not been exercised. On December 31, 2013 (the note’s maturity date), the Company was not able to repay the note. As a result of the payment default, an additional default interest rate of 10% per annum is added to the original 5% per annum interest rate starting December 31, 2013. As of April 30, 2016, $327,339 of interest expense has been recorded in connection with this note. George Kaufman, one of our directors, is an employee of Chardan Capital Markets.

ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Directors and Senior Management

Our current directors and executive officers are as follows:

Name	Age	Position
William Tsu-Cheng Yu	55	Interim Chief Executive Officer and Director
Amy Lau	42	Interim Chief Financial Officer
Diana Chia-Huei Liu	52	Chairman, Director
George Kaufman	40	Independent Director

William Tsu-Cheng Yu has been a director since inception and our Chief Financial Officer from inception until September 30, 2013 and has been our Interim Chief Executive Officer since May 8, 2014. Mr. Yu was our President from April 2010 until September 30, 2013 and Since May 5, 2014. Since July 2000, Mr. Yu has served as the Managing Partner of Cansbridge Capital. From October 2009 until January 2010, Mr. Yu served as Chief Financial Officer and Chief Operating Officer of Optoplex Corporation, a communication networks company. Mr. Yu served as a director of Optoplex Corporation from April 2004 until January 2010. From July 2006 through October 2008, Mr. Yu served as a special advisor to the Chief Executive Officer of Optoplex Corporation. Mr. Yu served as a director of Abebooks, Inc., the world’s largest on-line used book seller, from 2001 to 2008, prior to its acquisition by Amazon.com (NASDAQ:AMZN). From February 2002 to August 2003, Mr. Yu served as the Chief Financial Officer to Telos Technology Corp., a supplier of wireless solutions for voice and data communication networks (acquired by UT Starcom (NASDAQ: UTSI) in 2004). Mr. Yu co-founded Intrinsyc Software Inc. (TSE: ICS), a TSE-listed embedded software company, and served in various capacities including director, Chief Financial Officer, Executive Vice President and Chief Operating Officer from July 1996 to November 2002. From August 1994 to May 1996, Mr. Yu was an associate in the Asia Pacific corporate finance group of Marleau, Lemire Securities, Inc., an investment banking firm headquartered in Montreal, Canada. From July 1991 to August 1994, Mr. Yu was an investment portfolio manager at Discovery Enterprises Inc., a provincial-government sponsored venture capital fund. Mr. Yu also previously worked with China-Canada Investment and Development and the Lawson Mardon Group. He has also served in various Board-level capacities with the Monte Jade Science and Technology Association, a non-profit organization supporting entrepreneurship and investment in technology companies in North America and Asia. Mr. Yu served as Chief Financial Officer and as a director of AutoChina International Limited (OTCBB: AUTCF) from October 2007 through April 2009 (during which time it was known as Spring Creek Acquisition Corp., a blank check company formed to acquire and operating business). Mr. Yu earned a BS in Mechanical Engineering with Honors and an MBA with Honors from Queen’s University in Canada. Mr. Yu is married to Ms. Diana Liu, our Chairman and a director.

Amy Lau has been our Interim Chief Financial Officer since May 8, 2014. Ms. Lau is a Certified Management Accountant and previously served as a financial consultant to the Company from its inception in 2010 until September 2013. From 2007 to 2010, she served as controller at Optoplex Corp., an optic fiber component company based in Silicon Valley, CA. From 2008 to 2009, she served as a financial consultant to Spring Creek Acquisition Corp., a blank check company. In addition, Ms. Lau has been serving as the Director of Outsourced Services at Morling & Company, a financial services firm based in San Francisco, since April 2014.

Diana Chia-Huei Liu was our Chief Executive Officer and a director from our inception until September 30, 2013 and has been a director since May 5, 2014. Ms. Liu was also our President from inception until April 2010. Ms. Liu served as President of AutoChina International Limited (OTCBB: AUTCF) from its inception to April 9, 2009 (during which time it was known as Spring Creek Acquisition Corp., a blank check company formed to acquire an operating business), and currently serves as a director. Ms. Liu has served as the President of Cansbridge Capital Corp., a private investment firm specializing in early stage investments along the west coast of North America (namely U.S. and Canada) and Asia, since August 1998. Prior to Cansbridge, Ms. Liu served as the Executive Vice-President at Polaris Securities Group (TW: 6011), an investment firm in Taiwan, where she founded and managed its North American operations from April 1994 to August 1998. From August 1991 to April 1994, Ms. Liu was an account portfolio manager in global private banking at the Royal Bank of Canada (NYSE:RY), a full service banking firm. From October 1988 to August 1991, Ms. Liu served as the regional sales manager for the province of British Columbia, Canada, at CIBC Securities, a subsidiary of CIBC (NYSE:CM), a full service banking firm, where she founded and managed the mutual funds promotion division. Ms. Liu has served since June 2006 as a member of the Executive Committee and the Chair of the Investment Committee at the Asia Pacific Foundation, a Canadian federal government created think tank and policy advisory board where she works closely with the co-CEOs on operational issues and investment of its endowment funds. In addition, she also served as a director of the Vancouver Goh Ballet Society and BaySpec, Inc., a supplier of optical components based in Fremont, California. Ms. Liu graduated with a BA in economics from the University of British Columbia in Canada. Ms. Liu is married to Mr. William Yu, our Interim Chief Executive Officer and a director.

George Kaufman was a director from March 2012 until September 30, 2013 and has been a director since May 5, 2014. Mr. Kaufman has served as the Managing Director of Investment Banking for Chardan Capital Markets, LLC, a New York based broker/dealer, since January 2006 and served as an Investment Banking Associate for Chardan from November 2004, when he joined the firm, to December 2005. As one of the seven original members of Chardan, Mr. Kaufman established the investment banking, brokerage and marketing protocols and standards. He has extensive experience with operating and development stage companies, having lead and/or managed over 30 public and private transactions. In addition, Mr. Kaufman founded Detroit Coffee Company, LLC, a national roaster, wholesaler and retail distributor of high-end specialty coffees in January 2002 and currently serves as its chief executive officer. Since June 2009, Mr. Kaufman has also served as a director of China Networks International Holdings Ltd. (OTCBB: CNWHF), a broadcast television advertising company based in China. Mr. Kaufman received a Bachelor of Arts degree in Economics from the University of Vermont in 1999.

Compensation

Director and Executive Compensation

Director Compensation

The Board of Directors did not receive compensation in 2014. However, the Company’s board of directors granted 100,000 stock options to George Kaufman in September, 2015 at an exercise price of $0.01 per share. 50% (50,000 shares) of the stock options are vested immediately at grant date, with the remaining stock options vesting at a rate of 6.25% every three months. The vesting will stop when this director ceases his engagement with the Company. The fair value of the options granted using the Black-Scholes option-pricing model was $309,100.

On April 15, 2016, the Company accrued $50,000 and $248,000 for 2015 compensation for George Kaufman and Diana Liu, respectively. The compensation for the director classified as non-related party was accrued as trade and other payables, with the compensation for the director classified as related party was accrued as due to related parties as at December 31, 2015. In addition, the Company granted 50,000 and 100,000 stock options to the two directors for their services in 2015. Mr. Kaufman’s stock options are to vest over 18 months, and Ms. Liu’s stock options vested 60% immediately on the grant date with the remaining to vest over 14 months following the grant date. The options were valued using the Black-Scholes option-pricing model and the aggregate value for the options was $26,100.

Executive Compensation

Overview of our Executive Compensation

William Yu, our Interim Chief Executive Officer received no compensation in 2014. Mr. Yu was paid compensation of $248,000 in 2015. The Company accrued this amount as due to related parties as at December 31, 2015. In addition, the Company granted 100,000 stock options at an exercise price of $2.94 per share on April 15, 2016 for Mr. Yu’s services in 2015. 60% of this stock option vested immediately, with remaining portion to be vested over 14 months following the grant date. The option was valued using the Black-Scholes option-pricing model and the value for the option was $17,400.

Amy Lau, our Interim Chief Financial Officer is paid a monthly fee of $2,000 and was granted stock options to purchase 12,000 and 18,000 ordinary shares at an exercise price of 2.00 and 2.60 per share in May 2014 and May 2015, respectively, vesting on a monthly basis over 12 months from the grant date. In January, 2016, an additional 10,000 ordinary shares at an exercise price of $0.01 per share was granted, which vested immediately. The options will cease vesting when the optionee is no longer the Interim Chief Financial Officer of the Company. The options were valued using the Black-Scholes option-pricing model and the aggregate value for the options granted in May 2014 and May 2015 was $792 and $21,690, respectively. The January 2016 options were valued using the Black-Scholes option-pricing model and the value for the option was $35,407. In 2015, the Company accrued $93,000 of compensation for Ms. Lau as due to related parties as at December 31, 2015. In addition, the Company granted 30,000 stock options at an exercise price of $2.94 per share on April 15, 2016 for Ms. Lau’s services provided in 2015. These stock options granted are to vest monthly for 18 months from the grant date. The option was valued using the Black-Scholes option-pricing model and the value for the option was $5,220.

Share Options

Our board of directors has approved the grant of options to purchase up to 220,000 of our ordinary shares to our directors, employees, and consultants from time to time, with such terms and conditions as our officers may establish. Such option grants are governed by individual grant agreements and stock restriction agreements as determined by our board of directors, and may be subject to either time-based or performance-based vesting provisions. Our board of directors has the authority to amend, alter, suspend or terminate our right to grant such share options without the consent of our shareholders within the 220,000 options limit. Accordingly, such options may dilute the equity interest of our shareholders. In September 2015 and April 2016, our board of directors approved the grant of up to an additional 280,000 and 200,000 options, respectively, bringing the total number of options that may be granted to 700,000. As of the date hereof 565,000 options have been granted since inception and 135,000 options are currently outstanding and available for granting.

Employment Agreements

We do not currently have employment agreements with any of our officers.

Pension Benefits

None of our named executives participates in or have account balances in qualified or nonqualified defined benefit plans sponsored by us.

Nonqualified Deferred Compensation

None of our named executives participates in or have account balances in nonqualified defined contribution plans or other deferred compensation plans maintained by us.

Potential Payments upon Termination or Change in Control

None of our named executives is entitled to any payments upon termination or change in control of our company.

Board Practices

Board Committees

Given its small size, our board of directors no longer has committees.

Director Independence

Our board of directors has determined that George Kaufman qualifies as an independent director under the Nasdaq Marketplace Rules because he is not currently employed by us, and does not fall into any of the enumerated categories of people who cannot be considered independent in the Nasdaq Marketplace Rules.

Employees

We currently have two employees in two of our subsidiaries in Italy who perform certain administrative services for us.

Share Ownership

See Item 7, below.

ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Major Shareholders

The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of our ordinary shares, as of April 30, 2016:

each person known to us to own beneficially more than 5% of our ordinary shares;

each of our directors and executive officers; and

all of our directors and executive officers as a group.

Beneficial ownership includes voting or investment power with respect to the securities and takes into consideration options exercisable by a person within 60 days after the date of this report. Except as indicated below, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all ordinary shares shown as beneficially owned by them.

Name and Address ⁽¹⁾	Number of Shares Beneficially Owned			Percentage of Ownership ⁽²⁾
Diana Chia-Huei Liu	2,715,989		(3)	52.92%
William Tsu-Cheng Yu		2,715,989	(3)		52.92%
Amy Lau		44,000			*
George Kaufman		61,250			1.19
All directors and executive officers as a group (4 individuals)		2,941,239			57.31 %
Yong Hui Li		980,331	(4)		19.10%
Bell Real Estate S.r.l.		582,499			11.35%

*	Less than 1%

(1)

Unless otherwise noted, the business address for each of our beneficial owners is No. 322, Zhongshan East Road; Shijiazhuang; Hebei Province; 050011; China.

(2)

Based on 2,040,451 ordinary shares outstanding as of December 31, 2015. Beneficial ownership includes voting or investment power with respect to the securities and takes into consideration options exercisable by a person within 60 days after the date of this report.

(3)

Consists of (i) 220,275 ordinary shares held by Diana Liu, (ii) 225,000 ordinary shares held by Brudders Capital, of which Diana Liu is the sole owner and director, (iii) 127,266 ordinary shares held by William Yu, (iv) 63,632 ordinary shares held by Conrad Yu and Byron Yu, (v) 1,039,270 shares issuable upon exercise of warrants owned by Ms. Liu, (vi) 812,906 shares issuable upon exercise of warrants owned by Mr. Yu, and (vii) 107,640 shares issuable upon exercise of warrants owned by Conrad Yu and Byron Yu. Diana Liu and William Yu are married, and Conrad Yu and Byron Yu are the sons of Diana Liu and William Yu, (viii) 60,000 stock options exercisable by William Yu and 60,000 stock options exercisable by Diana Liu.

(4)

Consists of (i) 183,562 ordinary shares, and (ii) 796,769 shares issuable upon exercise of warrants owned by Mr. Li.

As of April 30, 2016, 4.51% of our outstanding ordinary shares are held by record holders in the United States.

Related Party Transactions

Concurrently with the Company’s IPO in 2010, the Company issued to Chardan Capital Markets, LLC, the representative of the underwriters of the Company’s IPO as additional compensation, for a purchase price of $100, a unit purchase option to purchase 215,000 units for $12.00 per unit. The units issuable upon exercise of this option are identical to those sold in the IPO, except for some differences in redemption rights. The unit purchase option will be exercisable at any time, in whole or in part, commencing on the consummation of the Company’s initial business combination, including the Business Combination, and expired on March 24, 2016. George Kaufman, our director, is an employee of Chardan Capital Markets.

The holders of the founders’ units (including the founders’ shares and founders’ warrants, and the ordinary shares underlying the founders’ warrants), as well as the holders of the placement warrants (and underlying securities), are entitled to registration rights pursuant to an agreement signed at the time of the Company’s IPO. The holders of the majority of these securities are entitled to make up to two demands that the Company register such securities. The holders of the founders’ units can elect to exercise these registration rights at any time commencing three months prior to the date on which these ordinary shares are to be released from escrow. The holders of a majority of the placement warrants (or underlying securities) can elect to exercise these registration rights at any time after the Business Combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the Company’s consummation of a business combination, including the Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements, except that in no event will Chardan Capital Markets, LLC have more than one demand registration right at the Company’s expense. As of December 31, 2015, no such effective registration statement or post-effective amendment has been filed.

The Company agreed to pay to Kaiyuan Real Estate Development a total of $7,500 per month for office space, administrative services and secretarial support for a period commencing on March 24, 2011 and ending on the earlier of the Company’s consummation of a business combination, including the Business Combination, or the Company’s liquidation. Kaiyuan Real Estate Development is an affiliate of Mr. Yong Hui Li, the Company’s Chairman. This arrangement was agreed to by Kaiyuan Real Estate Development for the Company’s benefit and is not intended to provide Mr. Li compensation. From February 1, 2012 until January 31, 2013, the Company secured approximately 150 sq. foot of additional office space, administrative services and secretarial support in Taipei, Taiwan. Fees for the additional office space, administrative services and secretarial support were included in the $7,500 monthly fee paid to Kaiyuan. This arrangement terminated upon completion of the Business Combination. As of December 31, 2013, the Company owed Kaiyuan an aggregate of $203,312 under this arrangement. This amount is still outstanding as of December 31, 2015.

Prior to completion of the Company’s IPO, Diana Liu, and William Yu loaned us an aggregate of $150,000 to cover expenses related to the Company’s IPO. The loans were repaid in full on the consummation of the Company’s IPO. Diana Liu, and William Yu loaned us an aggregate of $2,765,000 to fund the Company’s working capital requirements since the initial public offering as well as certain reimbursable expenses incurred on behalf of the Company. Such loans did not bear interest prior to the Business Combination, but currently bear interest at a rate of 10% per annum with convertible features and are repayable on demand or at maturity. During 2015, certain such loans reached their maturity. Diana Liu and William Yu have renewed these matured loans along with the accrued and unpaid interest to a future date. These new notes bear same 10% per annum interest rate with convertible features. As of April 30, 2016, the Company owed Ms. Liu an aggregate of $3,402,633 including $445,133 of interest and $192,500 of Rollover related to these loans.

Mr. Cesare Lanati (one of the sellers of the subsdiaries and a current shareholder of the Group) performed maintenance and other services for the Group’s investment properties. The Group leases office and parking spaces to Lanati and pays certain expenses on Lanati’s behalf. The amount due from Lanati represents the amount due at December 31, 2014 and 2013. The amount due to Lanati was $0 and $3,773,041 at December 31, 2014 and 2013 respectively (see note 27 — Trade and Other Payables). In October, 2014 and July, 2015, the Group has reached various offsetting agreements with Lanati on offsetting of certain receivables (due from Lanati) and payables (due to Lanati). The total amount offset in October, 2014 and July, 2015 were $1,926,217 and $1,544,265 respectively (see Consolidated Financial Statements Note 20 — Trade and Other Receivables, and Note 27 — Trade and Other Payables).

All ongoing and future transactions between the Company and any of the Company’s executive officers and directors or their respective affiliates, including loans by the Company’s directors or any forgiveness of loans, will require prior approval in each instance by a majority of the Company’s disinterested directors, who had access, at the Company’s expense, to the Company’s attorneys or independent legal counsel.

Interests of Experts and Counsel

Not required.

ITEM 8.

FINANCIAL INFORMATION

Consolidated Statements and Other Financial Information.

See Item 18.

Significant Changes.

None.

ITEM 9.

THE OFFER AND LISTING

Offer and Listing Details.

Prime’s ordinary shares, warrants and units have been traded on the OTC market since October 11, 2013, under the symbols “PACQF,” “PAQWF” and “PAQUF,” respectively. Each of Prime’s units consists of one ordinary share and one warrant, each to purchase an additional share of Prime’s ordinary shares. Prime’s units commenced to trade on Nasdaq Stock Market on March 24, 2011. Prime’s ordinary shares and warrants commenced to trade separately from its units on March 25, 2011. Prime’s securities were delisted from the Nasdaq Stock Market on October 10, 2013 due to failure to meet the minimum requirement of 300 shareholders.

The following tables set forth, for the periods indicated, the high and low sale prices for our shares, warrants and units, respectively.

	Units				Ordinary Shares				Warrants
	High		Low		High		Low		High		Low
Annual Highs and Lows
2011 (from March 24)	$	10.10	$	9.55	$	9.90	$	9.39	$	1.00	$	0.25
2012		10.33		9.57		11.38		9.50		0.75		0.11
2013		17.95		1.03		17.50		2.00		0.93		0.10
2014		2.06		1.03		8.50		1.25		0.51		0.01
2015		3.25		1.40		4.00		1.75		0.10		0.01
2016 (through April 30, 2016)		2.70		2.70		3.55		2.94		0.36		0.03


Fiscal Quarterly Highs and Lows 2014
First Quarter		1.03		1.03		8.00		8.00		0.51		0.26
Second Quarter		1.03		1.03		8.50		1.50		0.25		0.16
Third Quarter		2.06		1.01		2.36		1.60		0.18		0.16
Fourth Quarter		1.55		1.22		1.75		1.25		0.18		0.01

Fiscal Quarterly Highs and Lows 2015
First Quarter		1.90		1.40		2.35		1.75		0.1		0.09
Second Quarter		3.25		1.75		4.00		2.10		0.09		0.08
Third Quarter		3.00		2.70		4.00		2.05		0.08		0.03
Fourth Quarter		3.25		2.70		4.00		3.03		0.05		0.01

Fiscal Quarterly Highs and Lows 2016
First Quarter		2.70		2.70		3.55		3.55		0.36		0.03

Monthly Highs and Lows
November 2015		2.70		2.70		4.00		3.03		0.03		0.02
December 2015		3.25		2.70		4.00		3.55		0.05		0.03
January 2016		2.70		2.70		3.55		3.55		0.36		0.03
February 2016		2.70		2.70		3.55		2.94		0.05		0.04
March 2016		2.70		2.70		2.94		2.94		0.06		0.05
April 2016		2.70		2.70		2.94		2.94		0.05		0.05

Plan of Distribution

Not Required.

Markets

Selling Shareholders

Not Required.

Dilution

Not Required.

Expenses of the Issue

Not Required.

ITEM 10.

ADDITIONAL INFORMATION

Share Capital

As of December 31, 2015, we had a total of 50,000,000 were authorized ordinary shares at $0.001 par value, of which 2,040,451 ordinary shares were issued, 1,954,651 shares outstanding (with 85,800 shares as treasury shares). The difference of 388,081 shares between balance at December 31, 2014 and December 31, 2015 is due to (i) 134,200 ordinary shares being cancelled in connection with the closing of the SIM Purchase Agreement transaction described above, and (ii) 253,881 of the founders’ ordinary shares being forfeited as a result of pre-determined stock target not being reached pursuant to the terms of certain agreements entered into by the Company’s founders at the time of the Company’s IPO in 2011.

The detail of the movement of the number of shares issued and outstanding at the beginning and end of the year is as follow:

	Number of ordinary shares issued and outstanding

Balance at December 31, 2014		2,428,532
Forfeiture of founders shares		(253,881	)
Sale of subsidiary		(134,200	)
Number of shares issued at December 31, 2015		2,040,451
Less: Treasury shares		(85,800	)
Number of shares outstanding at December 31, 2015		1,954,651

We have issued warrants to purchase 7,241,054 ordinary shares, options to purchase 215,000 units consisting of one ordinary share and one warrant to purchase an ordinary share, and options to purchase 195,000 ordinary shares as of December 31, 2015.

Memorandum and Articles of Association

Amended and Restated Memorandum and Articles of Association

Registered Office. Under our Amended and Restated Memorandum of Association, our Registered Office is located at the offices of Codan Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands.

Objects and Purposes. Under Article 3 of our Amended and Restated Memorandum of Association, the objects for which we are established are unrestricted.

Directors. Under Article 94 of our Articles of Association, no contract or transaction between us and one or more of our Directors (an “Interested Director”) or officers, or between us and any of their affiliates (an “Interested Transaction”), will be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of our board or committee which authorizes the contract or transaction, or solely because any such director’s or officer’s votes are counted for such purpose, if:

(a)

The material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the our board of directors or the committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or

(b)

The material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to our shareholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of our shareholders; or

(c)

The contract or transaction is fair as to us as of the time it is authorized, approved or ratified, by the board, a committee or the shareholders.

A majority of independent directors must vote in favor of any Interested Transaction and determine that the terms of the Interested Transaction are no less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties.

Our board shall review and approve all payments made to the founders, officers, directors, and their respective affiliates.

Rights, Preferences and Restrictions Attaching to our ordinary shares. We are authorized to issue 50,000,000 ordinary shares, par value $0.001. As of the date of this report, 2,040,451 ordinary shares are issued, 1,954,651 shares outstanding (with 85,800 shares as treasury shares). Each share has the right to one vote at a meeting of shareholders or on any resolution of shareholders, the right to an equal share in any dividend paid by us, and the right to an equal share in the distribution of surplus assets. We may by a resolution of the board of directors redeem our ordinary shares for such consideration as the board of directors determines.

Alteration of Rights. If, at any time, our share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not we are being wound-up, be varied with the consent in writing of the holders of three-fourths of the issued shares of that class or with the sanction of a resolution passed by a majority of the votes cast at a separate general meeting of the holders of the shares of the class at which meeting the necessary quorum shall be two persons at least holding or representing by proxy one-third of the issued shares of the class.

Meetings. Our annual meeting may be held at such time and place as their chairman or any two directors or any director and the secretary or the board of directors shall appoint. The chairman or any two directors or any director and the secretary or the board of directors may convene an extraordinary general meeting whenever in their judgment such a meeting is necessary. At least 10 clear days notice of an annual meeting shall be given to each shareholder entitled to attend and vote thereat, stating the date, place, and time at which the meeting is to be held, and if different, the record date for determining shareholders entitled to attend and vote at the annual meeting, and, if practicable, the other business to be conducted at the meeting. At least 10 clear days notice of an extraordinary general meeting shall be given to each shareholder entitled to attend and vote thereat, stating the date, place, and time at which the meeting is to be held, and the general nature of the business to be considered at the meeting. A meeting shall, notwithstanding the fact that it is called on shorter notice than otherwise required, be deemed to have been properly called if it is so agreed by (i) all of the shareholders entitled to attend and vote thereat in the case of an annual meeting, and (ii) 75% of the shareholders entitled to attend and vote thereat in the case of an extraordinary general meeting. The accidental omission to give notice of a meeting to, or the non-receipt of a notice of a meeting by, any person entitled to receive notice shall not invalidate the proceedings at that meeting.

Limitations on the Right to Own Securities. There are no limitations on the rights to own our securities, or limitations on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our securities, contained in our Amended and Restated Memorandum and Articles of Association (or under Cayman Islands law).

Material Contracts

None.

Exchange controls

Under Cayman Islands law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest or other payments to nonresident holders of our shares.

Taxation

The following summary of the material Cayman Islands and U.S. federal income tax consequences of an investment in our units, ordinary shares and redeemable warrants to acquire our ordinary shares, sometimes referred to individually or collectively in this summary as our “securities,” is based upon laws and relevant interpretations thereof in effect as of the date of this report, all of which are subject to change. This summary does not deal with all possible tax consequences relating to an investment in our securities, such as the tax consequences under state, local and other tax laws.

Cayman Islands Taxation

The Government of the Cayman Islands will not, under existing legislation, impose any income, corporate or capital gains tax, estate duty, inheritance tax, gift tax or withholding tax upon us or our security holders. The Cayman Islands are not party to any double taxation treaties.

No Cayman Islands stamp duty will be payable by our security holders in respect of the issue or transfer of our securities. However, an instrument transferring title to our securities, if brought to or executed in the Cayman Islands, would be subject to Cayman Islands stamp duty.

We have received an undertaking from the Governor-in-Cabinet of the Cayman Islands that, in accordance with section 6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, for a period of 20 years from the date of the undertaking, no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations shall apply to us or our operations and, in addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable (i) on our securities, debentures or other obligations or (ii) by way of the withholding in whole or in part in connection with the payment of a dividend or other distribution of income or capital by us to our security holders or a payment by us of principal or interest or other sums due under a debenture or other obligation.

United States Federal Income Taxation

General

The following is a summary of the material U.S. federal income tax consequences to an investor of the acquisition, ownership and disposition of our securities.

Because the components of a unit are separable at the option of the holder, the holder of a unit generally should be treated, for U.S. federal income tax purposes, as the owner of the underlying ordinary share and one redeemable warrant components of the unit, as the case may be. As a result, the discussion below of the U.S. federal income tax consequences with respect to actual holders of ordinary shares and redeemable warrants should also apply to holders of units (as the deemed owners of the underlying ordinary shares and redeemable warrants which comprise the units).

The discussion below of the U.S. federal income tax consequences to “U.S. Holders” will apply to a beneficial owner of our securities that is for U.S. federal income tax purposes:

an individual citizen or resident of the United States;

a corporation (or other entity treated as a corporation) that is created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia;

an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or

a trust if (i) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (ii) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

If a beneficial owner of our securities is not described as a U.S. Holder and is not an entity treated as a partnership or other pass-through entity for U.S. federal income tax purposes, such owner will be considered a “Non-U.S. Holder.” The material U.S. federal income tax consequences of the acquisition, ownership and disposition of our securities applicable specifically to Non-U.S. Holders are described below under the heading “Non-U.S. Holders.”

This summary is based on the Internal Revenue Code of 1986, as amended, or the “Code,” its legislative history, Treasury regulations promulgated thereunder, published rulings and court decisions, all as currently in effect. These authorities are subject to change or differing interpretations, possibly on a retroactive basis.

This discussion does not address all aspects of U.S. federal income taxation that may be relevant to any particular holder based on such holder’s individual circumstances. In particular, this discussion considers only holders that own and hold our securities as capital assets within the meaning of Section 1221 of the Code, and does not address the alternative minimum tax. In addition, this discussion does not address the U.S. federal income tax consequences to holders that are subject to special rules, including:

financial institutions or financial services entities;

broker-dealers;

persons that are subject to the mark-to-market accounting rules under Section 475 of the Code;

tax-exempt entities;

governments or agencies or instrumentalities thereof;

insurance companies;

regulated investment companies;

real estate investment trusts;

certain expatriates or former long-term residents of the United States;

persons that actually or constructively own 5 percent or more of our voting shares;

persons that acquired our securities pursuant to the exercise of employee share options, in connection with employee share incentive plans or otherwise as compensation;

persons that hold our securities as part of a straddle, constructive sale, hedging, conversion or other integrated transaction;

persons whose functional currency is not the U.S. dollar;

controlled foreign corporations; or

passive foreign investment companies.

This discussion does not address any aspect of U.S. federal non-income tax laws, such as gift or estate tax laws, or state, local or non-U.S. tax laws or, except as discussed herein, any tax reporting obligations applicable to a holder of our securities. Additionally, this discussion does not consider the tax treatment of partnerships or other pass-through entities or persons who hold our securities through such entities. If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our securities, the U.S. federal income tax treatment of a partner in the partnership generally will depend on the status of the partner and the activities of the partnership. This discussion also assumes that any distributions made (or deemed made) by us on our ordinary shares and any consideration received (or deemed received) by a holder in consideration for the sale or other disposition of our securities will be in U.S. dollars.

We have not sought, and will not seek, a ruling from the Internal Revenue Service, or “IRS,” or an opinion of counsel as to any U.S. federal income tax consequence described herein. The IRS may disagree with the description herein, and its determination may be upheld by a court. Moreover, there can be no assurance that future legislation, regulations, administrative rulings or court decisions will not adversely affect the accuracy of the statements in this discussion.

THIS DISCUSSION IS ONLY A SUMMARY OF THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR SECURITIES. EACH PROSPECTIVE INVESTOR IN OUR SECURITIES IS URGED TO CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO SUCH INVESTOR OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR SECURITIES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, AND NON-U.S. TAX LAWS, AS WELL AS U.S. FEDERAL TAX LAWS AND ANY APPLICABLE TAX TREATIES.

Allocation of Purchase Price and Characterization of a Unit

While not free from doubt, each unit should be treated for U.S. federal income tax purposes as an investment unit consisting of one ordinary share and one redeemable warrant to acquire one ordinary share. For U.S. federal income tax purposes, each holder of a unit must allocate the purchase price of a unit between the ordinary share and the redeemable warrant that comprise the unit based on the relative fair market value of each at the time of acquisition. The price allocated to the ordinary share or to the redeemable warrant will be the holder’s tax basis in such share or redeemable warrant, as the case may be.

Each holder is advised to consult its own tax advisor with respect to the risks associated with an investment in a unit (including alternative characterizations of a unit or the components thereof) and regarding the risks associated with an allocation of the purchase price between the ordinary share and the redeemable warrant that comprise a unit. The balance of this discussion assumes that our characterization of the units (and the components thereof) and any allocation of the purchase price as described above are respected for U.S. federal income tax purposes.

U.S. Holders

Taxation of Cash Distributions Paid on Ordinary Shares

Subject to the passive foreign investment company (“PFIC”) rules discussed below, a U.S. Holder generally will be required to include in gross income as ordinary income the amount of any cash dividend paid on our ordinary shares. A cash distribution on our shares generally will be treated as a dividend for U.S. federal income tax purposes to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Such dividend generally will not be eligible for the dividends-received deduction generally allowed to domestic corporations in respect of dividends received from other domestic corporations. The portion of such distribution, if any, in excess of such earnings and profits generally will constitute a return of capital that will be applied against and reduce (but not below zero) the U.S. Holder’s adjusted tax basis in such ordinary shares. Any remaining excess generally will be treated as gain from the sale or other taxable disposition of such ordinary shares and will be treated as described under “Taxation on the Disposition of Ordinary Shares and Redeemable Warrants” below.

With respect to non-corporate U.S. Holders, such dividends may be subject to U.S. federal income tax at the lower applicable long-term capital gains tax rate (see “ Taxation on the Disposition of Ordinary Shares and Redeemable Warrants” below) provided that (1) such shares are readily tradable on an established securities market in the United States, (2) we are not a PFIC, as discussed below, for either the taxable year in which the dividend was paid or the preceding taxable year, and (3) certain holding period requirements are met. Under published IRS authority, shares are considered for purposes of clause (1) above to be readily tradable on an established securities market in the United States only if they are listed on certain exchanges, which presently do not include the OTC market. Because our ordinary shares are currently listed and traded only on the OTC market, any dividends paid on such shares are not expected to qualify for the lower rate. U.S. Holders should consult their own tax advisors regarding the availability of the lower rate for any cash dividends paid with respect to our ordinary shares.

Possible Constructive Distributions

The terms of each redeemable warrant provide for an adjustment to the number of shares for which the redeemable warrant may be exercised or to the exercise price of the redeemable warrant in certain events. An adjustment which has the effect of preventing dilution generally is not taxable. However, the U.S. Holders of the redeemable warrants would be treated as receiving a constructive distribution from us if, for example, the adjustment increases the redeemable warrant holders’ proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of ordinary shares that would be obtained upon exercise) as a result of a distribution of cash to the holders of our ordinary shares which is taxable to the U.S. Holders of such ordinary shares as described under “— Taxation of Cash Distributions Paid on Ordinary Shares” above. Such constructive distribution would be subject to tax as described under that section in the same manner as if the U.S. Holders of the redeemable warrants received a cash distribution from us equal to the fair market value of such increased interest.

Taxation on the Disposition of Ordinary Shares and Redeemable Warrants

Upon a sale or other taxable disposition of our ordinary shares or redeemable warrants (which, in general, would include a distribution in connection with our liquidation or a redemption of ordinary shares, as described in “Taxation on the Redemption of Ordinary Shares” below, or a redemption of redeemable warrants), and subject to the PFIC rules discussed below, a U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference between the amount realized and the U.S. Holder’s adjusted tax basis in the ordinary shares or redeemable warrants. See “Exercise or Lapse of Redeemable Warrants” below for a discussion regarding a U.S. Holder’s basis in the ordinary shares acquired pursuant to the exercise of redeemable warrants.

The regular U.S. federal income tax rate on capital gains recognized by U.S. Holders generally is the same as the regular U.S. federal income tax rate on ordinary income, except that long-term capital gains recognized by non-corporate U.S. Holders are generally subject to U.S. federal income tax at a maximum regular rate of 20%. Capital gain or loss will constitute long-term capital gain or loss if the U.S. Holder’s holding period for the ordinary shares or redeemable warrants exceeds one year. The deductibility of capital losses is subject to various limitations.

Taxation on the Redemption of Ordinary Shares

In the event that a U.S. Holder receives cash pursuant to a redemption of its ordinary shares, the redemption generally will be treated as a sale of our ordinary shares, rather than as a distribution. The redemption, however, will be treated as a distribution and taxed as described in “— Taxation of Cash Distributions Paid on Ordinary Shares,” above, if (i) the redemption is “essentially equivalent to a dividend” (meaning that the U.S. Holder’s percentage ownership in us (including shares the U.S. Holder is deemed to own under certain constructive ownership rules, which provide, among other things, that the U.S. Holder is deemed to own any shares that it holds a warrant to acquire) after the redemption is not meaningfully reduced from what its percentage ownership in us (including constructive ownership) was prior to the redemption), (ii) the redemption is not “substantially disproportionate” as to that U.S. Holder (“substantially disproportionate” meaning, among other requirements, that the percentage of our outstanding voting shares owned (including constructive ownership) by such holder immediately following the redemption is less than 80% of that percentage owned (including constructive ownership) by such holder immediately before the redemption), and (iii) the redemption does not result in a “complete termination” of the U.S. Holder’s interest in us (taking into account certain constructive ownership rules). If the U.S. Holder had a relatively minimal interest in our ordinary shares and, taking into account the effect of redemptions by other shareholders, its percentage ownership (including constructive ownership) in us is reduced as a result of the redemption, such holder generally should be regarded as having a meaningful reduction in interest. For example, the IRS has indicated in a published ruling that even a small reduction in the proportionate interest of a small minority shareholder in a publicly held corporation who exercises no control over corporate affairs may constitute such a “meaningful reduction.” A U.S. Holder should consult with its own tax advisors as to the U.S. federal income tax consequences to it of any redemption of its ordinary shares.

Additional Taxes

U.S. Holders that are individuals, estates or trusts and whose income exceeds certain thresholds generally will be subject to a 3.8% Medicare contribution tax on unearned income, including, without limitation, dividends on, and gains from the sale or other taxable disposition of, our securities, subject to certain limitations and exceptions. Under applicable regulations, in the absence of a special election, such unearned income generally would not include income inclusions under the qualified electing fund, or “QEF,” rules discussed below under “ Passive Foreign Investment Company Rules,” but would include distributions of earnings and profits from a QEF. U.S. Holders should consult their own tax advisors regarding the effect, if any, of such tax on their ownership and disposition of our securities.

Exercise or Lapse of Redeemable Warrants

Subject to the PFIC rules discussed below, a U.S. Holder will not recognize gain or loss upon the acquisition of ordinary shares on the exercise of redeemable warrants for cash. Ordinary shares acquired pursuant to the exercise of redeemable warrants for cash will have a tax basis equal to the U.S. Holder’s tax basis in the redeemable warrants, increased by the amount paid to exercise the redeemable warrants. The holding period of such ordinary shares should begin on the day after the date of exercise of the redeemable warrants. If a redeemable warrant is allowed to lapse unexercised, a U.S. Holder will generally recognize a capital loss equal to such holder’s adjusted tax basis in the redeemable warrant.

Passive Foreign Investment Company Rules

A foreign (i.e., non-U.S.) corporation will be a PFIC if at least 75% of its gross income in a taxable year of the foreign corporation, including its pro rata share of the gross income of any corporation in which it is considered to own at least 25% of the shares by value, is passive income. Alternatively, a foreign corporation will be a PFIC if at least 50% of its assets in a taxable year of the foreign corporation, ordinarily determined based on fair market value and averaged quarterly over the year, including its pro rata share of the assets of any corporation in which it is considered to own at least 25% of the shares by value, are held for the production of, or produce, passive income. Passive income generally includes dividends, interest, rents and royalties (other than certain rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets.

Based on the composition and estimated values of our assets and the nature of our income for our 2015 taxable year, we believe that we are a PFIC for such taxable year.

If we are a PFIC, as we believe we were in 2015, for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder of our ordinary shares or redeemable warrants and, in the case of our ordinary shares, the U.S. Holder did not make either a timely QEF election for our first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) ordinary shares, a QEF election along with a purging election, or a mark-to-market election, each as described below, such holder generally will be subject to special rules for regular U.S. federal income tax purposes with respect to:

any gain recognized by the U.S. Holder on the sale or other disposition of its ordinary shares or redeemable warrants; and

any “excess distribution” made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of the ordinary shares during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder’s holding period for the ordinary shares).

Under these rules,

the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for the ordinary shares or redeemable warrants;

the amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess distribution, or to the period in the U.S. Holder’s holding period before the first day of our first taxable year in which we are a PFIC, will be taxed as ordinary income;

the amount allocated to other taxable years (or portions thereof) of the U.S. Holder and included in its holding period will be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and

the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such other taxable year of the U.S. Holder.

In general, if we are a PFIC, as we believe we were in 2015, a U.S. Holder may avoid the PFIC tax consequences described above in respect to our ordinary shares by making a timely QEF election (or a QEF election along with a purging election). Pursuant to the QEF election, a U.S. Holder generally will be required to include in income its pro rata share of our net capital gains (as long-term capital gain) and other earnings and profits (as ordinary income), on a current basis, in each case whether or not distributed, in the taxable year of the U.S. Holder in which or with which our taxable year ends if we are treated as a PFIC for that taxable year. A U.S. Holder may make a separate election to defer the payment of taxes on undistributed income inclusions under the QEF rules, but if deferred, any such taxes will be subject to an interest charge.

A U.S. Holder may not make a QEF election with respect to its redeemable warrants. As a result, if a U.S. Holder sells or otherwise disposes of a redeemable warrant (other than upon exercise of the redeemable warrant), any gain recognized will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above, if we were a PFIC at any time during the period the U.S. Holder held the redeemable warrants. If a U.S. Holder that exercises such redeemable warrants properly makes a QEF election with respect to the newly acquired ordinary shares (or has previously made a QEF election with respect to our ordinary shares), the QEF election will apply to the newly acquired ordinary shares, but the adverse tax consequences relating to PFIC shares, adjusted to take into account the current income inclusions resulting from the QEF election, will continue to apply with respect to such newly acquired ordinary shares (which generally will be deemed to have a holding period for purposes of the PFIC rules that includes the period the U.S. Holder held the redeemable warrants), unless the U.S. Holder makes a purging election. The purging election creates a deemed sale of such shares at their fair market value. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, the U.S. Holder will increase the adjusted tax basis in its ordinary shares acquired upon the exercise of the redeemable warrants by the gain recognized and also will have a new holding period in such shares for purposes of the PFIC rules.

The QEF election is made on a shareholder-by-shareholder basis and, once made, can be revoked only with the consent of the IRS. A U.S. Holder generally makes a QEF election by attaching a completed IRS Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund), including the information provided in a PFIC annual information statement, to a timely filed U.S. federal income tax return for the taxable year to which the election relates. Retroactive QEF elections generally may be made only by filing a protective statement with such return and if certain other conditions are met or with the consent of the IRS.

In order to comply with the requirements of a QEF election, a U.S. Holder must receive certain information from us. Upon request from a U.S. Holder, we will endeavor to provide to the U.S. Holder no later than 90 days after the request such information as the IRS may require, including a PFIC annual information statement, in order to enable the U.S. Holder to make and maintain a QEF election. However, there is no assurance that we will have timely knowledge of our status as a PFIC in the future or of the required information to be provided. Therefore, a U.S. Holder’s QEF election may not be effective. Any U.S. Holder wishing to make a QEF election should consult with its own tax advisor.

If a U.S. Holder has made a QEF election with respect to our ordinary shares, and the special tax and interest charge rules do not apply to such shares (because of a timely QEF election for our first taxable year as a PFIC in which the U.S. Holder holds (or is deemed to hold) such shares or a QEF election, along with a purge of the PFIC taint pursuant to a purging election, as described below), any gain recognized on the sale or other taxable disposition of our ordinary shares generally will be taxable as capital gain and no interest charge will be imposed. As discussed above, for regular U.S. federal income tax purposes, U.S. Holders of a QEF generally are currently taxed on their pro rata shares of the QEF’s earnings and profits, whether or not distributed. In such case, a subsequent distribution of such earnings and profits that were previously included in income should not be taxable as a dividend to such U.S. Holders. The adjusted tax basis of a U.S. Holder’s shares in a QEF will be increased by amounts that are included in income, and decreased by amounts distributed but not taxed as dividends, under the above rules. Similar basis adjustments apply to property if by reason of holding such property the U.S. Holder is treated under the applicable attribution rules as owning shares in a QEF.

Although a determination as to our PFIC status will be made annually, the initial determination that we are a PFIC generally will apply for subsequent years to a U.S. Holder who held ordinary shares or redeemable warrants while we were a PFIC, whether or not we meet the test for PFIC status in those subsequent years. A U.S. Holder who makes the QEF election discussed above for our first taxable year as a PFIC in which the U.S. Holder holds (or is deemed to hold) our ordinary shares, however, will not be subject to the PFIC tax and interest charge rules discussed above in respect to such shares. In addition, such U.S. Holder will not be subject to the QEF inclusion regime with respect to such shares for any of our taxable years that end within or with a taxable year of the U.S. Holder and in which we are not a PFIC. On the other hand, if the QEF election is not effective for each of our taxable years in which we are a PFIC and during which the U.S. Holder holds (or is deemed to hold) our ordinary shares, the PFIC rules discussed above will continue to apply to such shares unless the holder files on a timely filed U.S. income tax return (including extensions) a QEF election and a purging election to recognize under the rules of Section 1291 of the Code any gain that the U.S. Holder would otherwise recognize if the U.S. Holder sold the ordinary shares for their fair market value on the “qualification date.” The qualification date is the first day of our tax year in which we qualify as a QEF with respect to such U.S. Holder. The purging election can only be made if such U.S. Holder held our ordinary shares on the qualification date. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, the U.S. Holder will increase the adjusted tax basis in its ordinary shares by the amount of the gain recognized and will also have a new holding period in the ordinary shares for purposes of the PFIC rules.

Alternatively, if a U.S. Holder, at the close of its taxable year, owns shares in a PFIC that are treated as marketable stock, the U.S. Holder may make a mark-to-market election with respect to such shares for such taxable year. If the U.S. Holder makes a valid mark-to-market election for the first taxable year of the U.S. Holder in which the U.S. Holder holds (or is deemed to hold) our ordinary shares and for which we are determined to be a PFIC, such holder generally will not be subject to the PFIC rules described above in respect to its ordinary shares, as long as such shares continue to be treated as marketable stock. Instead, in general, the U.S. Holder will include as ordinary income for each year that we are treated as a PFIC the excess, if any, of the fair market value of its ordinary shares at the end of its taxable year over the adjusted tax basis in its ordinary shares. The U.S. Holder also will be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted tax basis of its ordinary shares over the fair market value of its ordinary shares at the end of its taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). The U.S. Holder’s adjusted tax basis in its ordinary shares will be adjusted to reflect any such income or loss amounts, and any further gain recognized on a sale or other taxable disposition of the ordinary shares in a taxable year in which we are treated as a PFIC will be treated as ordinary income. Currently, a mark-to-market election may not be made with respect to warrants. Special tax rules may also apply if a U.S. Holder makes a mark-to-market election for a taxable year after the first taxable year in which the U.S. Holder holds (or is deemed to hold) its ordinary and for which we are determined to be a PFIC.

The mark-to-market election is available only for stock that is regularly traded on a national securities exchange that is registered with the Securities and Exchange Commission, which does not include the OTC market, or on a foreign exchange or market that the IRS determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. Because our ordinary shares are currently listed and traded only on the OTC market, such shares are not expected to be treated as marketable stock for purposes of the election. U.S. Holders should consult their own tax advisors regarding the availability and tax consequences of a mark-to-market election in respect to our ordinary shares under their particular circumstances.

If we are a PFIC, as we believe we were for 2015, and, at any time, have a foreign subsidiary that is classified as a PFIC, a U.S. Holder of our ordinary shares should be deemed to own a portion of the shares of such lower-tier PFIC, and could incur liability for the deferred tax and interest charge described above if we receive a distribution from, or dispose of all or part of our interest in, or the U.S. Holder were otherwise deemed to have disposed of an interest in, the lower-tier PFIC. Upon request, we will endeavor to cause any lower-tier PFIC to provide to a U.S. Holder no later than 90 days after the request the information that may be required to make or maintain a QEF election with respect to the lower- tier PFIC. However, we do not plan to make annual determinations or otherwise notify U.S. Holders of the status of any such lower-tier PFIC. There is also no assurance that we will be able to cause the lower-tier PFIC to provide the required information. A mark-to-market election generally would not be available with respect to such a lower-tier PFIC. U.S. Holders are urged to consult their own tax advisors regarding the tax issues raised by lower-tier PFICs.

A U.S. Holder that owns (or is deemed to own) shares in a PFIC during any taxable year of the U.S. Holder may have to file an IRS Form 8621 (whether or not a QEF election or mark-to-market election is or has been made) with such U.S. Holder’s U.S. federal income tax return and provide such other information as may be required by the U.S. Treasury Department.

The rules dealing with PFICs and with the QEF and mark-to-market elections are very complex and are affected by various factors in addition to those described above. Accordingly, U.S. Holders of our ordinary shares and redeemable warrants should consult their own tax advisors concerning the application of the PFIC rules to our ordinary shares and redeemable warrants under their particular circumstances.

Non-U.S. Holders

Dividends (including constructive dividends) paid or deemed paid to a Non-U.S. Holder in respect to our securities generally will not be subject to U.S. federal income tax, unless such dividends are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base that such holder maintains or maintained in the United States).

In addition, a Non-U.S. Holder generally will not be subject to U.S. federal income tax on any gain attributable to a sale or other taxable disposition of our securities unless such gain is effectively connected with its conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base that such holder maintains or maintained in the United States) or the Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of sale or other disposition and certain other conditions are met (in which case, such gain from U.S. sources generally is subject to U.S. federal income tax at a 30% rate or a lower applicable tax treaty rate).

Dividends and gains that are effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base that such holder maintains or maintained in the United States) generally will be subject to regular U.S. federal income tax at the same regular U.S. federal income tax rates applicable to a comparable U.S. Holder and, in the case of a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes, may also be subject to an additional branch profits tax at a 30% rate or a lower applicable tax treaty rate.

The U.S. federal income tax treatment of a Non-U.S. Holder’s exercise of a redeemable warrant, or the lapse of a redeemable warrant held by a Non-U.S. Holder, generally will correspond to the U.S. federal income tax treatment of the exercise or lapse of a redeemable warrant by a U.S. Holder, as described under “U.S. Holders — Exercise or Lapse of Redeemable Warrants,” above.

Backup Withholding and Information Reporting

In general, information reporting for U.S. federal income tax purposes should apply to distributions made on our securities within the United States to a U.S. Holder (other than an exempt recipient) and to the proceeds from sales and other dispositions of our securities by a U.S. Holder (other than an exempt recipient) to or through a U.S. office of a broker. Payments made (and sales and other dispositions effected at an office) outside the United States will be subject to information reporting in limited circumstances. In addition, certain information concerning a U.S. Holder’s adjusted tax basis in its securities and adjustments to that tax basis and whether any gain or loss with respect to such securities is long-term or short-term also may be required to be reported to the IRS, and certain holders may be required to file an IRS Form 8938 (Statement of Specified Foreign Financial Assets) to report their interest in our securities.

Moreover, backup withholding of U.S. federal income tax at a rate of 28% generally will apply to dividends paid on our securities to a U.S. Holder (other than an exempt recipient) and the proceeds from sales and other dispositions of our securities by a U.S. Holder (other than an exempt recipient), in each case who (a) fails to provide an accurate taxpayer identification number; (b) is notified by the IRS that backup withholding is required; or (c) in certain circumstances, fails to comply with applicable certification requirements.

A Non-U.S. Holder generally may eliminate the requirement for information reporting and backup withholding by providing certification of its foreign status, under penalties of perjury, on a duly executed applicable IRS Form W-8 or by otherwise establishing an exemption.

Backup withholding is not an additional tax. Rather, the amount of any backup withholding will be allowed as a credit against a U.S. Holder’s or a Non-U.S. Holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that certain required information is timely furnished to the IRS. Holders are urged to consult their own tax advisors regarding the application of backup withholding and the availability of and procedures for obtaining an exemption from backup withholding in their particular circumstances.

Dividends and paying agents

Prime paid a dividend to its public shareholders of one warrant for every four shares that were not redeemed in connection with the Business Combination on October 24, 2013. Except for the foregoing, the Company does not have future dividend plans and any future dividend policy will be determined by the Company’s Board of Directors.

Statement by Experts

Not applicable.

Documents on Display

Documents concerning us that are referred to in this document may be inspected at our principal executive offices at No. 322, Zhongshan East Road, Shijiazhuang, Hebei Province, 050011 People’s Republic of China.

In addition, we will file annual reports and other information with the Securities and Exchange Commission. We will file annual reports on Form 20-F and submit other information under cover of Form 6-K. As a foreign private issuer, we are exempt from the proxy requirements of Section 14 of the Exchange Act and our officers, directors and principal shareholders will be exempt from the insider short-swing disclosure and profit recovery rules of Section 16 of the Exchange Act. Annual reports and other information we file with the Commission may be inspected at the public reference facilities maintained by the Commission at Room 1580, 100 F. Street, N.E., Washington, D.C. 20549, and copies of all or any part thereof may be obtained from such office upon payment of the prescribed fees. You may call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference room and you can request copies of the documents upon payment of a duplicating fee, by writing to the Commission. In addition, the Commission maintains a web site that contains reports and other information regarding registrants (including us) that file electronically with the Commission which can be assessed at http://www.sec.gov.

Subsidiary Information

Not required.

ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Interest Rate Risk

The Group’s exposure to interest rate risk primarily relates to its outstanding debts, which is mostly in the form of a variable interest rate mortgage. The current weighted average interest rate on such debts is 3.5%.

According to the Group’s lease agreements with its tenants, there is a clause allowing the Group to increase the lease payment at the end of each year term in connection with the official inflation rate published by the Italian government. A 1% inflation rate would yield a 1% increase in rental income. Although there is no direct correlation between the increase of the inflation rate and the increase in interest rate published by the Italian Central Bank, the increase of interest rate has been historically significantly less than the inflation rate. This clause in the lease agreements aims to increase the level of cash inflow for covering the variable interest rate mortgage.

The current weighted average interest rate on the variable interest rate mortgage is 3.5%. The following sensitivity analysis demonstrates different scenarios that may occur in the future. Based on the following sensitivity analysis, a 1% increase in inflation with a 0.25% increase in interest rate would yield a 1% increase in the rental income and 16% increase in the gross profit before operating expenses. If the interest rate increases in a significant lower rate than the inflation rate, the effect on net profit would be favorable.

	Current at 3.5% weighted average interest rate		Assuming 1% inflation and 0.25% interest rate increase		Assuming 1% inflation and 0.5% interest rate increase		Assuming 2% inflation and 0.5% interest rate increase		Assuming 2% inflation and 1% interest rate increase		Assuming 3% inflation and 1% interest rate increase		Assuming 3% inflation and 1.5% interest rate increase

Current annual rental based on existing lease agreements	$	2,616,214

Adjusted annual rental income according to the inflation rate			$	2,642,377	$	2,642,377	$	2,668,539	$	2,668,539	$	2,694,701	$	2,694,701

$ Increase in rental income			$	26,163	$	26,163	$	52,325	$	52,325	$	78,487	$	78,487
% increase in rental income with inflation rate adjustment				1%		1%		2%		2%		3%		3%

Annual finance expense		1,203,287		957,498		1,021,332		1,021,332		1,148,998		1,148,998		1,276,665

Effect of interest expense on the gross profit before operating expenses				271,952		208,118		234,280		106,614		132,776		5,109
% increase (decrease) on effect of interest expense on the gross profit before operating expenses				10%		8%		9%		4%		5%		0%

One Subsidiary has stipulated Interest Rate Swap agreements linked to floating rate medium-term leasing contracts with the aim of ensuring itself a fixed rate on their operations. The notional value as at December 31, 2015 is equal to $1,432,225. The fair value as at December 31, 2015 was $165,648, whilst the change in fair value during 2014 amounted to $33,558.

Impact of Inflation

Each of the Subsidiaries are exposed to the impact of inflation primarily relating to its operating expenses, and the variable interest rate mortgages it carries. There is no direct correlation between the increase of the inflation rate and the increase in interest rate published by the Italian Central Bank; however, the increase of interest rate has been historically significantly less than the inflation rate. The clause allowing the Group to increase the lease payment each year in connection with inflation rate (see note “Interest Rate Risk”) is aimed at facilitating an increased level of cash inflow for covering the inflation affecting operating expenses and the increase in the variable interest rate mortgage.

Foreign Currency Risk

The Euro is the functional and reporting currency for the Group’s operation in Italy. All transactions in currencies other than the functional currency during the year are recorded at the exchange rates on the date of such transactions. The Subsidiaries have not entered into transactions denominated in a currency other than their functional currency and hence the exposure to foreign currency risk within the Subsidiaries is limited. However, Prime’s functional and reporting currency is the U.S. dollar. During consolidation of Subsidiaries’ and Prime’s financial statements, monetary assets and liabilities of the Subsidiaries are translated from Euro into U.S. dollars at the exchange rates on the reporting date. The historical amounts in the statements of income/(loss) and comprehensive income/(loss) are translated at an appropriate weighted average rate for the period presented. The exchange differences are recorded in our consolidated statements of income/(loss) and comprehensive income/(loss). The amounts in the statements of financial position are translated at the historical exchange rate as of the date of the report. Therefore, fluctuations in exchange rates may affect our consolidated statements of financial position.

According to the historical exchange rate published by U.S. Federal Reserve Bank, the exchange rate between Euro and U.S. dollar has moderate fluctuation over the past 10 years. However, these fluctuations are moderate in nature and not considered a currency of a hyperinflationary economy.

ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

The description of securities other than equity securities included under the heading “Description of Securities” in the company’s registration statement on Form F-1 (File No. 333-171777), initially filed with the Securities & Exchange Commission on January 20, 2011, as amended, is hereby incorporated by reference.

PART II

ITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Immediately following the closing of the Business Combination on September 30, 2013, the Company entered into an interest-bearing promissory note with its underwriter, Chardan Capital Markets, LLC for the total remaining amount of $889,833 due to the underwriter at the rate of 5% per annum, maturing on December 31, 2013. If the note was not repaid by December 31, 2013, Chardan had the right to convert the note and accrued interest into ordinary shares at a price of $9.10 per share. In connection with the convertible right, $184,584 was allocated to the value of the beneficial conversion feature. As of December 31, 2013, the full amount of the beneficial conversion feature has been recorded as interest expense. As of the date of this report, the convertible right had not been exercised. On December 31, 2013 (the note’s maturity date), the Company was not able to repay the note. As a result of the payment default, an additional default interest rate of 10% per annum is added to the original 5% per annum interest rate starting December 31, 2013. As of April 30, 2016, $327,339 of interest expense has been recorded in connection with this note.

During 2014, one of the Subsidiaries missed certain scheduled repayments on a bank loan totaling $193,011 in principal and $22,680 in interest. Except for these missed scheduled repayments, the Group has been current on all scheduled repayments since the beginning of 2014. According to the applicable mortgage agreement, missing scheduled payments can cause the bank to request immediate repayment of the residual debt totaling approximately $1,515,720 as of December 31, 2014. Management initiated negotiation with the bank to postpone repayment for 12 months in 2014. Separately during 2014, one of our other Subsidiaries missed certain scheduled finance lease payments to the leasing department of the same bank. As of the date of this report, the bank official from the mortgage department, on the Group’s behalf, is in negotiation with their leasing department on the issuance of a final moratorium. As the negotiation is in the final stage, management believes the risk of the bank demanding immediate repayment of the full residual debt is very low. However, there can be no assurance the bank will not decide to refuse granting the postponement to the Group and request for immediate repayment of the residual debt. As a result of this possibility, we have classified such residual debts as current loans and borrowings as of December 31, 2014 and 2015.

During 2014, four of the Subsidiaries missed certain scheduled payment to four finance lease creditors, totaling approximately $244,234 in principal and $241,328 in interest as at December 31, 2014. Except for these missed scheduled payments, the Group has been current with all the scheduled payments since beginning of 2014. Pursuant to the leasing agreement, the finance lease creditors have the right to declare the borrower in default in case of missing scheduled payments via official written notice and demand full payment of outstanding principal balance at the time of such default declaration. Management initiated negotiation with all the affected finance lease creditors for modification repayment plans on these missed payments in 2014. The Group remitted full missed payments to one of the finance lease creditors in the second quarter of 2015 and thus corrected the default. During 2015, two of the three affected finance lease creditors have granted the Group modification repayment plans. The Management is still undergoing negotiation with the remaining affected finance lease creditor. The communications between the Group and this finance creditor is ongoing and positive. Therefore, Management believes there is very low risk of this finance lease creditor declaring the borrower in default and demanding immediate full principal payment during the approval process. However, there can be no assurance this finance lease creditor will not decide to refuse granting the requested modification repayment plans to the Group. As a result of this possibility, we have classified this one residual finance lease as current loans and borrowings as of December 31, 2015.

ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable.

ITEM 15.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

An evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2015 was made under the supervision and with the participation of our management, including our Interim Chief Executive Officer and Interim Chief Financial Officer. Based on that evaluation, our Interim Chief Executive Officer and Interim Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report due to our internal control over financial reporting not being effective, as described further below.

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Management’s Annual Report on Internal Control Over Financial Reporting

Our internal control over financial reporting is a process designed by, or under the supervision of, our Interim Chief Executive Officer and Interim Chief Financial Officer and effected by our board of directors to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external reporting purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with IFRS and its related interpretations, and that our receipts and expenditures are being made only in accordance with the authorization of our board of directors and management; and provide reasonable assurance regarding prevention or timely detection of the unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Under the supervision and with the participation of our current management, including our Interim Chief Executive Officer and Interim Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission as issued in 2013. Based on this evaluation under the criteria established in Internal Control – Integrated Framework, our management concluded that our internal control over financial reporting was not effective due to material weaknesses in our internal control over financial reporting as of December 31, 2015, and such weaknesses continue to apply to date. Material weaknesses in our internal controls include the lack of periodic interim review of the financial statements by the management, lack of segregation of duties, untimely reconciliation, improper checks and balances, lack of an audit committee, and the fact that the Company’s review procedures in connection with financial reporting are limited. Our management further identified other weaknesses in entity level controls, including, but not limited to, control environment, risk assessment processes, information sharing, and monitoring processes. Such weaknesses resulted in the Company’s restatement of its 2013 financial statements. During 2015, our current management had started to design and implement certain processes and procedures to address the material weaknesses identified. The current management intends to implement further material processes and procedures that will provide reasonable assurance regarding the reliability of our financial reporting and preparation of financial statements for external purposes in accordance with IFRS and its related interpretations as funding becomes available to be able to put the components in place.

ITEM 16.

[RESERVED]

ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT.

We do not currently have an audit committee. Our board of directors believes that Mr. Kaufman qualifies as “audit committee financial expert”, as such term is defined in the rules of the Securities and Exchange Commission, and qualifies as an independent director under the Nasdaq Marketplace Rules.

ITEM 16B.

CODE OF ETHICS.

In November 2010, our board of directors adopted a code of ethics that applies, and following the Business Combination will continue to apply, to our directors, officers and employees.

ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by Marcum LLP (“Marcum”), our independent registered public accounting firm for the years ended December 31, 2015 and 2014, and WeiserMazars LLP (“WM”), our principal external independent registered public accounting firm, for the year ended December 31, 2013.

	2015		2014		2013

Audit fees(1)	$	120,000	$	296,196	$	145,000
Audit related fees(2)		8,500		52,500		41,500
Tax fees		–		–		–
Total fees		128,500	$	348,696	$	186,500

(1)

“Audit fees” means the aggregate fees billed for an audit of our consolidated financial statements.

(2)

“Audited related fees” means the aggregate fees billed for time incurred other than audit of our consolidated financial statements, such as fees in connection with 2013 consolidated financial statements restatement with and related 6-K or 20-F amendment by prior or current auditors, and review of 2014 and 2015 20-F filing by prior auditors.

Our board of directors is to pre-approve all auditing services and permitted non- audit services to be performed for us by our independent auditor, including the fees and terms thereof (subject to the de minimums exceptions for non-audit services described in section 10A(i)(1)(B) of the Exchange Act which are approved by the audit committee or our board of directors prior to the completion of the audit).

ITEM 16D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.

None.

ITEM 16E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.

Not applicable.

ITEM 16F.

CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT.

None.

ITEM 16G.

CORPORATE GOVERNANCE

Not applicable.

ITEM 16H.

MINE SAFETY DISCLOSURE

Not applicable.

PART III

ITEM 17.

FINANCIAL STATEMENTS

We have elected to provide financial statements pursuant to Item 18.

ITEM 18.

FINANCIAL STATEMENTS

The financial statements are filed as part of this annual report beginning on page F-1.

ITEM 19.

EXHIBITS

Exhibit No.	Description
1.1	Amended and Restated Articles of Association⁽¹⁾
1.2	Amendment to Amended and Restated Articles of Association⁽²⁾
2.1	Specimen Unit Certificate⁽¹⁾
2.2	Specimen Ordinary Share Certificate⁽¹⁾
2.3	Specimen Public Redeemable Warrant Certificate⁽¹⁾
2.4	Specimen Founder Warrant Certificate⁽¹⁾
2.5	Specimen Placement Warrant Certificate⁽¹⁾
2.6	Form of Warrant Agreement⁽¹⁾
2.7	Form of Unit Purchase Option⁽¹⁾
4.1	Form of Underwriting Agreement⁽¹⁾
4.2	Form of Letter Agreement by and among the Registrant, Chardan Capital Markets, LLC and the founders⁽¹⁾
4.3	Promissory Note dated March 25, 2010 by the Registrant to Diana Chia-Huei Liu⁽¹⁾
4.4	Promissory Note dated March 25, 2010 by the Registrant to William Tsu-Cheng Yu⁽¹⁾
4.5	Promissory Note dated November 10, 2010 by the Registrant to Diana Chia-Huei Liu⁽¹⁾
4.6	Promissory Note dated November 10, 2010 by the Registrant to William Tsu-Cheng Yu⁽¹⁾
4.7	Promissory Note, dated as of February 10, 2010, issued to Diana Liu⁽¹⁾
4.8	Promissory Note, dated as of February 10, 2010, issued to William Yu⁽¹⁾
4.9	Amendment dated as of February 3, 2011 to that certain Promissory Note dated February 10, 2010 issued to Diana Liu⁽¹⁾
4.10	Amendment dated as of February 3, 2011 to that certain Promissory Note dated February 10, 2010 issued to William Yu⁽¹⁾
4.11	Amendment dated as of February 3, 2011 to that certain Promissory Note dated as of March 25, 2010 issued to Diana Liu⁽¹⁾
4.12	Amendment dated as of February 3, 2011 to that certain Promissory Note dated as of March 25, 2010 issued to William Yu⁽¹⁾
4.13	Promissory Note, dated as of May 3, 2012, issued to William Yu⁽²⁾
4.14	Promissory Note, dated as of November 1, 2012, issued to William Yu⁽²⁾
4.15	Promissory Note, dated as of February 12, 2013, issued to William Yu⁽²⁾
4.16	Promissory Note, dated as of March 4, 2013, issued to William Yu⁽²⁾
4.17	Form of Securities Escrow Agreement between the Registrant, American Stock Transfer & Trust Company and the Founders⁽¹⁾
4.18	Form of Registration Rights Agreement among the Registrant and the Founders⁽¹⁾
4.19	Stock Option Agreement, dated as of February 25, 2010, between the Registrant and Amy Lau⁽¹⁾
4.20	Stock Option Agreement, dated as of February 25, 2010, between the Registrant and Carolyne Yu⁽¹⁾
4.21	Stock Option Agreement, dated as of February 25, 2010, between the Registrant and Dane Chauvel⁽¹⁾
4.22	Stock Option Agreement, dated as of February 25, 2010, between the Registrant and Dave Sagar⁽¹⁾
4.23	Stock Option Agreement, dated as of February 25, 2010, between the Registrant and Elizabeth Pulchny⁽¹⁾
4.24	Stock Option Agreement, dated as of February 25, 2010, between the Registrant and John Chase⁽¹⁾
4.25	Stock Option Agreement, dated as of February 25, 2010, between the Registrant and Lance Wei⁽¹⁾
4.26	Stock Option Agreement, dated as of February 25, 2010, between the Registrant and Rebecca Poon⁽¹⁾
4.27	Stock Option Agreement, dated as of December 3, 2010, between the Registrant and Dane Chauvel⁽¹⁾
4.28	Stock Option Agreement, dated as of December 3, 2010, between the Registrant and Jason Wang⁽¹⁾
4.29	Stock Option Agreement, dated as of December 3, 2010, between the Registrant and HuiKai Yan⁽¹⁾
4.30	Stock Option Agreement, dated as of March 21, 2012, between the Registrant and George Kaufman⁽³⁾
4.31	Put Agreement, dated February 25, 2013, by and among Prime Acquisition Corp. and Advanced Series Trust – AST Academic Strategies Asset Allocation Portfolio⁽²⁾
4.32	Put Agreement, dated February 25, 2013, by and among Prime Acquisition Corp. and CNH Diversified Opportunities Master Account, L.P.⁽²⁾
4.33	Put Agreement, dated February 25, 2013, by and among Prime Acquisition Corp. and AQR Opportunistic Premium Offshore Fund, L.P.⁽²⁾
4.34	Put Agreement, dated February 25, 2013, by and among Prime Acquisition Corp. and AQR Diversified Arbitrage Fund⁽²⁾
4.35	Management Agreement, dated May 22, 2013, by and among bhn LLC, Prime Acquisition Corp., and certain subsidiaries⁽⁴⁾

Exhibit No.	Description
4.36	Stock Purchase Agreement, dated June 22, 2013, by and among Prime Acquisition Corp., Prime BHN Luxembourg S.àr.l., BHN LLC, Seba S.r.l., Francesco Rotondi and Giuseppe Pantaleo⁽⁵⁾
4.37	Stock Purchase Agreement, dated June 22, 2013, by and among Prime Acquisition Corp., Prime BHN Luxembourg S.àr.l., BHN LLC, Nova S.r.l., Francesco Rotondi and Luca Massimo Failla⁽⁵⁾
4.38	Stock Purchase Agreement, dated July 9, 2013, by and among Prime Acquisition Corp., Prime BHN Luxembourg S.àr.l., BHN LLC, Delfin S.r.l., Davide Rigamonti, Cesare Lanati and G.S.I. S.r.l.⁽⁶⁾
4.39	Stock Purchase Agreement, dated July 9, 2013, by and among Prime Acquisition Corp., Prime BHN Luxembourg S.àr.l., BHN LLC, SIM S.r.l., G.S.I. S.r.l. and Bell Real Estate S.r.l. ⁽⁶⁾
4.40	Stock Purchase Agreement, dated July 9, 2013, by and among Prime Acquisition Corp., Prime BHN Luxembourg S.àr.l., BHN LLC, Dieci Real Estate S.r.l., ELLEGI S.r.l. and G.S.I. S.r.l. ⁽⁶⁾
4.41	Stock Purchase Agreement, dated July 9, 2013, by and among Prime Acquisition Corp., Prime BHN Luxembourg S.àr.l., BHN LLC, ELLEGI S.r.l., Bell Real Estate S.r.l. and Stefano Lanati⁽⁶⁾
4.42	Stock Purchase Agreement, dated July 9, 2013, by and among Prime Acquisition Corp., Prime BHN Luxembourg S.àr.l., BHN LLC, G.S.I. S.r.l., Bell Real Estate S.r.l. and IGS S.r.l. ⁽⁶⁾
4.43	Stock Purchase Agreement, dated July 9, 2013, by and among Prime Acquisition Corp., Prime BHN Luxembourg S.àr.l., BHN LLC, Magfin S.r.l., Bell Real Estate S.r.l., G.S.I. S.r.l. ⁽⁶⁾
4.44	Letter of Intent, dated July 3, 2013, by and among Prime Acquisition Corp., Union European Concept Futurum Geie, Radiomarelli SA⁽⁶⁾
4.45	Purchase Agreement, dated August 30, 2013, by and among Prime Acquisition Corp., Prime BHN Luxembourg S.àr.l., BHN LLC and Futurum Enegry S.A.⁽⁷⁾
4.46	Purchase Agreement, dated August 30, 2013, by and among Prime Acquisition Corp., Prime BHN Luxembourg S.àr.l., BHN LLC and Radiomarelli S.A.⁽⁷⁾
4.47	Transaction Value Agreement, dated as of September 30, 2013 by and among Prime Acquisition Corp., Prime BHN Luxembourg S.àr.l. and the Bell Group holders named therein.⁽⁸⁾
4.48	[Reserved]
4.49	Transaction Value Agreement, dated as of September 30, 2013 by and among Prime Acquisition Corp., Prime BHN Luxembourg S.àr.l. and the Nova holders named therein.⁽⁸⁾
4.50	Voting Agreement, dated as of September 27, 3013, by and among Prime Acquisition Corp., BHN LLC, and the voting parties named therein (Seba)⁽⁸⁾
4.51	Voting Agreement, dated as of September 27, 3013, by and among Prime Acquisition Corp., BHN LLC, and the voting parties named therein (Nova)⁽⁸⁾
4.52	Voting Agreement, dated as of September 27, 3013, by and among Prime Acquisition Corp., BHN LLC, and the voting parties named therein (Delfin)⁽⁸⁾
4.53	Voting Agreement, dated as of September 27, 3013, by and among Prime Acquisition Corp., BHN LLC, and the voting parties named therein (SIM)⁽⁸⁾
4.54	[Reserved]
4.55	Voting Agreement, dated as of September 27, 3013, by and among Prime Acquisition Corp., BHN LLC, and the voting parties named therein (ELLEGI)⁽⁸⁾
4.56	Voting Agreement, dated as of September 27, 3013, by and among Prime Acquisition Corp., BHN LLC, and the voting parties named therein (G.S.I.)⁽⁸⁾
4.57	Voting Agreement, dated as of September 27, 3013, by and among Prime Acquisition Corp., BHN LLC, and the voting parties named therein (Magfin)⁽⁸⁾
4.58	Registration Rights Agreement, dated September 27, 2013, by and among Prime Acquisition Corp., BHN LLC, and the investors named therein⁽⁸⁾
4.59	Amendment, dated September 11 ,2013, to Stock Purchase Agreement, dated June 22, 2013, by and among Prime Acquisition Corp., Prime BHN Luxembourg S.àr.l., BHN LLC, Seba S.r.l., Francesco Rotondi and Giuseppe Pantaleo⁽⁸⁾
4.60	Amendment, dated September 11, 2013, to Stock Purchase Agreement, dated June 22, 2013, by and among Prime Acquisition Corp., Prime BHN Luxembourg S.àr.l., BHN LLC, Nova S.r.l., Francesco Rotondi and Luca Massimo Failla⁽⁸⁾
4.61	Amendment, dated September 27, 2013, to Bell Group Stock Purchase Agreements⁽⁸⁾
4.62	Amendment, dated September 27, 2013, to Management Agreement, dated May 22, 2013, by and among bhn LLC, Prime Acquisition Corp., and certain subsidiaries⁽⁸⁾
4.63	Promissory Note, dated as of September 30, 2013, issued to Chardan Capital Markets⁽⁸⁾
4.64	Promissory Note, dated as of May 27, 2014, issued to Diana Liu*
4.65	Promissory Note, dated as of July 1, 2014, issued to Diana Liu*
4.66	Promissory Note, dated as of July 31, 2014, issued to Diana Liu*
4.67	Promissory Note, dated as of August 15, 2014, issued to Diana Liu*
4.68	Stock Option Agreement, dated as of May 10, 2014, between the Registrant and Andrea Crespi Bel’skij*
4.69	Stock Option Agreement, dated as of May 10, 2014, between the Registrant and Amy Lau*

Exhibit No.	Description
4.70	Stock Purchase Agreement, dated as of December 18, 2014, between the Registrant and LuxCo, Seba, Francesco Rotondi and Luca Failla ⁽¹⁰⁾
4.71	Option Agreement, dated as of December 18, 2014, between the Registrant and LuxCo, Nova, Francesco Rotondi ⁽¹⁰⁾
4.72	Stock Option Agreement, dated as of September 11, 2014, between the Registrant and Michela Del Molino
4.73	Stock Option Agreement, dated as of September 11, 2014, between the Registrant and Monica Sironi
4.74	Stock Option Agreement, dated as of September 11, 2014, between the Registrant and Rosaria Racco
4.75	Termination of Transaction Value Agreement, dated as of December 17, 2014 by and among Prime Acquisition Corp., Prime Luxembourg S.àr.l., Francesco Rotondi, Luca Massimo Failla and Giuseppe Pantaleo
4.76	Termination of Transaction Value Agreement, dated as of December 15, 2014 by and among Prime Acquisition Corp., Prime Luxembourg S.àr.l., Cesare Lanati, Stefano Lanati, Davide Rigamonti, Bell Real Estate S.r.l., IGS S.r.l.
4.77	Promissory Note, dated as of August 25, 2014, issued to Diana Liu
4.78	Promissory Note, dated as of October 1, 2014, issued to Diana Liu
4.79	Promissory Note, dated as of October 2, 2014, issued to Diana Liu
4.80	Promissory Note, dated as of October 30, 2014, issued to Diana Liu
4.81	Promissory Note, dated as of November 21, 2014, issued to Diana Liu
4.82	Promissory Note, dated as of December 6, 2014, issued to Diana Liu
4.83	Promissory Note, dated as of December 17, 2014, issued to Diana Liu
4.84	Promissory Note, dated as of December 17, 2014, issued to Amy Lau
4.85	Promissory Note, dated as of February 1, 2015, issued to Diana Liu
4.86	Promissory Note, dated as of March 1, 2015, issued to Diana Liu
4.87	Promissory Note, dated as of April 1, 2015, issued to Diana Liu
4.88	Promissory Note, dated as of May 1, 2015, issued to Diana Liu
4.89	Promissory Note, dated as of May 27, 2015, issued to Diana Liu
4.90	Promissory Note, dated as of June 1, 2015, issued to Diana Liu
4.91	Promissory Note, dated as of July 1, 2015, issued to Diana Liu
4.92	Promissory Note, dated as of July 1, 2015, issued to Diana Liu
4.93	Promissory Note, dated as of August 1, 2015, issued to Diana Liu
4.94	Promissory Note, dated as of August 14, 2015, issued to Diana Liu
4.95	Promissory Note, dated as of August 25, 2015, issued to Diana Liu
4.96	Promissory Note, dated as of August 25, 2015, issued to Diana Liu
4.97	Promissory Note, dated as of September 30, 2015, issued to Diana Liu
4.98	Promissory Note, dated as of October 1, 2015, issued to Diana Liu
4.99	Promissory Note, dated as of October 1, 2015, issued to Diana Liu
4.100	Promissory Note, dated as of October 2, 2015, issued to Diana Liu
4.101	Promissory Note, dated as of October 8, 2015, issued to Diana Liu
4.102	Promissory Note, dated as of November 5, 2015, issued to Diana Liu
4.103	Promissory Note, dated as of November 16, 2015, issued to Diana Liu
4.104	Promissory Note, dated as of November 21, 2015, issued to Diana Liu
4.105	Stock Option Agreement, dated as of May 10, 2015, between the Registrant and Amy Lau
4.106	Stock Purchase Agreement, dated as of June 26, 2014, between the Registrant and LuxCo, GSI, SIM, Bell Real Estate S.r,l., Cesare Lanati and Stefano Lanati
4.107	Stock Option Agreement, dated as of September 1, 2015, between the Registrant and George Kaufman
4.108	Stock Option Agreement, dated as of September 1, 2015, between the Registrant and Michela Del Molino
4.109	Stock Option Agreement, dated as of September 1, 2015, between the Registrant and Mattia Nigro
4.110	Stock Option Agreement, dated as of September 1, 2015, between the Registrant and Rosaria Racco
4.111	Promissory Note, dated as of December 6, 2015, issued to Diana Liu
4.112	Promissory Note, dated as of December 10, 2015, issued to Diana Liu
4.113	Promissory Note, dated as of December 14, 2015, issued to Diana Liu

Exhibit No.	Description
4.114	Promissory Note, dated as of December 17, 2015, issued to Amy Lau
4.115	Promissory Note, dated as of December 17, 2015, issued to Diana Liu
4.116	Promissory Note, dated as of February 1, 2016, issued to Diana Liu
4.117	Promissory Note, dated as of February 15, 2016, issued to Diana Liu
4.118	Promissory Note, dated as of March 1, 2016, issued to Diana Liu
4.119	Promissory Note, dated as of March 1, 2016, issued to Diana Liu
4.120	Promissory Note, dated as of March 14, 2016, issued to Diana Liu
4.121	Promissory Note, dated as of April 1, 2016, issued to Diana Liu
4.122	Promissory Note, dated as of April 6, 2016, issued to Diana Liu
4.123	Promissory Note, dated as of April 18, 2016, issued to Diana Liu
4.124	Promissory Note, dated as of April 26, 2016, issued to Diana Liu
4.125	Stock Option Agreement, dated as of January 18, 2016 between the Registrant and Amy Lau
4.126	Stock Option Agreement, dated as of January 18, 2016 between the Registrant and Vito Elia
4.127	Promissory Note, dated as of March 31, 2016, issued to Diana Liu
8.1	List of Subsidiaries⁽⁸⁾
11.1	Code of Ethics⁽¹⁾
12.1	Certification of the Chief Executive Officer (Principal Financial Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act, as amended.
12.2	Certification of the Chief Financial Officer (Principal Financial Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act, as amended
13.1	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
16.1	Letter from Marcum Bernstein & Pinchuk LLP, dated March 20, 2014 (9)

*	Previously Filed

(1)	Incorporated by reference to the registration statement on Form F-1 of the registrant (File No. 333-171777).

(2)	Incorporated by reference to the Annual Report on Form 20-F of the registrant, filed on April 30, 2013.

(3)	Incorporated by reference to the Annual Report on Form 20-F of the registrant, filed on April 30, 2012.

(4)	Incorporated by reference to the Report of Foreign Private Issuer on Form 6-K of the registrant, filed on May 24, 2013.

(5)	Incorporated by reference to the Report of Foreign Private Issuer on Form 6-K of the registrant, filed on June 27, 2013.

(6)	Incorporated by reference to the Report of Foreign Private Issuer on Form 6-K of the registrant, filed on July 16, 2013.

(7)	Incorporated by reference to Amendment No. 1 the Schedule TO/A of the registrant, filed on September 6, 2013.

(8)	Incorporated by reference to the Shell Company Report on Form 20-F of the registrant, filed on September 30, 2013.

(9)	Incorporated by reference to the Report of Foreign Private Issuer on Form 6-K of the registrant, filed on March 20, 2014.

(10)	Incorporated by reference to the Report of Foreign Private Issuer on Form 6-K of the registrant, filed on December 23, 2014.

SIGNATURES

The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

	Prime Acquisition Corp.
Date: May 2, 2016
	By:	/s/ William Tsu-Cheng Yu
		William Tsu-Cheng Yu
		Interim Chief Executive Officer and Chairman
		(Principal Executive Officer)

Date: May 2, 2016
	By:	/s/ Amy Lau
		Amy Lau
		Interim Chief Financial Officer
		(Principal Financial and Accounting Officer)

CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

Report of independent registered accounting firm	F-2

Report of independent registered accounting firm	F-3

Consolidated statements of income/(loss) and comprehensive income/(loss)	F-4

Consolidated statements of financial position	F-5

Consolidated statements of changes in (deficit)/equity	F-6

Consolidated statements of cash flow	F-7

Notes to the consolidated financial statements	F-9

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Audit Committee of the

Board of Directors and Shareholders

of Prime Acquisition Corp.

We have audited the accompanying consolidated statements of financial position of Prime Acquisition Corp. (the “Company”) as of December 31, 2015 and 2014, and the related consolidated statements of income and comprehensive income, changes in equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Prime Acquisition Corp., as of December 31, 2015 and 2014, and the consolidated results of its operations and its cash flows for the years then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred significant recurring operating losses, negative cash flows from operations and has a working capital deficiency. The Company is also dependent on the completion of additional equity and or/debt financing in order to continue its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans concerning these matters are also discussed in Note 1 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Marcum LLP

Marcum LLP

May 2, 2016

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Prime Acquisition Corp.

We have audited the accompanying consolidated statement of financial position of Prime Acquisition Corp. and its subsidiaries (collectively, the “Company”) as of December 31, 2013, and the related consolidated statements of loss and comprehensive loss, changes in equity, and cash flows for the year ended December 31, 2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2013, and the consolidated results of their operations and their cash flows for the year ended December 31, 2013 in conformity with International Financial Reporting Standards (IFRS) and its related interpretations as issued by the International Accounting Standards Board.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred significant recurring operating losses, negative cash flows from operations and has a working capital deficiency. The Company is also dependent on the completion of additional equity and/or debt financing in order to continue its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ WeiserMazars LLP

New York, New York

September 8, 2014, except for Note 5 (paragraphs 3, 6 and 9), Note 6, Note 10, Note 16 (paragraph 7), Note 20 and Note 27, as to which the date is May 21, 2015)

F-3

Prime Acquisition Corp.
Consolidated statements of income/(loss) and comprehensive income/(loss)
For the years ended December 31,

	Notes		2015			2014*			2013*

Continuing operations
Rental income		$	2,829,417		$	3,869,880		$	920,656
Other revenues			206,781			131,055			70,338
Total Revenues			3,036,198			4,000,935			990,994

Depreciation and bad debt provision	6		(13,458	)		(107,400	)		(59,295	)
Impairment of goodwill	10		–			–			(6,914,458	)
Other expenses	7		(3,243,849	)		(2,618,210	)		(4,321,056	)
Total operating expenses			(3,257,307	)		(2,725,610	)		(11,294,809	)
Operating profit/(loss)			(221,109	)		1,275,325			(10,303,815	)

Finance income	8		34,890			75,880			–
Finance costs	8		(4,172,915	)		(1,843,414	)		(708,575	)
Loss on revaluation of derivatives related to convertible promissory notes			(539,716	)		–			–
Loss on disposal of property & equipment			(133,782	)		–			–
Loss on sale of subsidiary	13		(32,340	)		–			–
Contingent consideration in connection with business combination	9		–			5,157,951			(5,157,951	)
Interest earned from investment held in trust			–			–			3,868
Realized loss on sale of real estate investment			(240,206	)		–			–
Less: previously recognized unrealized loss on real estate investment			40,478			–			–
Net fair value (loss)/gain on revaluation of investment property			(2,321,283	)		425,504			–
Profit/(loss) before tax			(7,585,983	)		5,091,246			(16,166,473	)

Tax benefit/(expense), current	11		41,769			(208,603	)		–
Deferred tax benefit/(expense)	11,12		287,665			(651,039	)		15,538
Profit/(loss) for the year from continuing operations		$	(7,256,549	)	$	4,231,604		$	(16,150,935	)

Profit/(loss) from discontinued operations
Net profit/(loss) from discontinued operations	13		(305,137	)		(812,285	)		265,457
Profit/(loss) for the year		$	(7,561,686	)	$	3,419,319		$	(15,885,478	)

Other comprehensive income, net of income tax
Foreign currency translation reserve			(449,358	)		(999,519	)		131,878
Total comprehensive income/(loss) for the year		$	(8,011,044	)	$	2,419,800		$	(15,753,600	)

Earnings/(loss) per share
From continuing and discontinued operations
Weighted average number of ordinary shares outstanding - basic			2,299,462			3,098,017			3,037,806
Basic earnings/(loss) per share		$	(3.29	)	$	1.11		$	(5.23	)
Weighted average number of ordinary shares outstanding - diluted			2,299,462			3,452,271			3,037,806
Diluted earnings/(loss) per share		$	(3.29	)	$	1.04		$	(5.23	)

From continuing operations
Weighted average number of ordinary shares outstanding - basic			2,299,462			3,098,017			3,037,806
Basic earnings/(loss) per share		$	(3.16	)	$	1.37		$	(5.32	)
Weighted average number of ordinary shares outstanding - diluted			2,299,462			3,452,271			3,037,806
Diluted earnings/(loss) per share		$	(3.16	)	$	1.28		$	(5.32	)

*Restated for discontinued operations (see note 13 — Discontinued Operations)

The accompanying notes are an integral part of these consolidated financial statements

F-4

Prime Acquisition Corp.
Consolidated statements of financial position
As at December 31,

	Notes	2015			2014			2013

ASSETS

Non-current assets
Property and equipment, net	17	$	13,564		$	156,944		$	265,757
Investment properties	18		37,407,083			47,629,537			72,877,131
Total non-currents assets			37,420,647			47,786,481			73,142,888

Current assets
Prepaid expenses and other current assets	19		155,256			173,695			512,269
Trade and other receivables, net	20		842,879			1,005,261			4,757,018
Cash and cash equivalents	21		134,574			165,091			133,414
Total current assets			1,132,709			1,344,047			5,402,701
TOTAL ASSETS		$	38,553,356		$	49,130,528		$	78,545,589

EQUITY AND LIABILITIES

(Deficit)/Equity
Ordinary shares, $.001 par value (Authorized 50,000,000 shares; 2,040,451, 2,428,532 and 3,179,721 shares issued; 1,954,651, 2,428,532 and 3,179,721 shares outstanding at December 31, 2015, 2014 and 2013 respectively; with 85,800 shares as treasury shares at December 31, 2015)	22	$	2,040		$	2,429		$	3,180
Share premium	22		18,289,096			16,722,007			19,958,593
Less: cost of 85,800 treasury shares			(343,113	)		–			–
Retained deficit			(21,641,840	)		(14,080,154	)		(17,499,473	)
Foreign currency translation reserve			(1,316,999	)		(867,641	)		131,878
Total (deficit)/equity			(5,010,816	)		1,776,641			2,594,178

Liabilities
Non-current liabilities
Loans and borrowings, less current portion	23,24		21,720,779			9,121,409			45,428,789
Deferred tax liabilities	12		2,764,734			3,738,082			5,399,745
Corporate tax liabilities, less current portion			714,771			419,388			550,792
Tenant security deposits			820,367			896,289			1,273,452
Total non-current liabilities			26,020,651			14,175,168			52,652,778

Current liabilities
Notes payable to stockholders, net of unamortized discount of $1,363,000	25		1,328,263			1,677,538			420,000
Due to related party	25		1,089,549			379,330			426,959
Loans and borrowings	23,24,26		5,087,208			23,146,771			5,503,242
Trade and other payables	27		5,372,684			5,311,130			8,699,717
Accrued expenses and other deferred income	28		358,634			437,203			546,010
Corporate tax liabilities			1,403,005			1,825,671			910,364
Derivative financial liabilities	29		2,733,836			221,191			1,141,314
Contingent consideration in connection with business combination	9		–			–			5,157,951
Provisions	30		170,342			179,885			493,076
Total current liabilities			17,543,521			33,178,719			23,298,633
Total liabilities			43,564,172			47,353,887			75,951,411

TOTAL EQUITY AND LIABILITIES		$	38,553,356		$	49,130,528		$	78,545,589

The accompanying notes are an integral part of these consolidated financial statements

F-5

Prime Acquisition Corp.

Consolidated statements of changes in (deficit)/equity

For the period from January 1, 2013 to December 31, 2015

	Ordinary Shares						Treasury shares					Share			Retained			Foreign Currency Translation			Total (Deficit)/
	Shares			Amount			Shares		Amount			Premium			Deficit			Reserve			Equity
Balance at January 1, 2013		4,894,983		$	1,863			–	$	–		$	5,890,921		$	(1,613,995	)	$	–		$	4,278,789
IPO shares redeemed in connection with tender offer		(3,008,955	)		–			–		–			–			–			–			–
Shares issued for non-employee services rendered		30,000			30			–		–			299,970			–			–			300,000
IPO shares redeemed in connection with tender offer		(1	)		–			–		–			–			–			–			–
Proceeds from 23,013 IPO shares not redeemed in connection with final tender offer		–			23			–		–			230,577			–			–			230,600
Ordinary shares issued in connection with the business combination		1,719,317			1,719			–		–			18,841,995			–			–			18,843,714
Exercise of put option		(508,123	)		(508	)		–		–			(5,643,744	)		–			–			(5,644,252	)
Beneficial conversion feature on convertible promissory notes		–			–			–		–			184,584			–			–			184,584
Foreign currency translation reserve		–			–			–		–			–			–			131,878			131,878
Non-employee stock options exercised		52,500			53			–		–			(53	)		–			–			–
Non-employee stock based compensation		–			–			–		–			154,343			–			–			154,343
Loss for the year		–			–			–		–			–			(15,885,478	)		–			(15,885,478	)

Balance at December 31, 2013		3,179,721			3,180			–		–			19,958,593			(17,499,473	)		131,878			2,594,178
Non-employee stock based compensation		–			–			–		–			5,044			–			–			5,044
Forfeiture of founders shares		(253,881	)		(253	)		–		–			253			–			–			–
Derecognition of subsidiary		(497,308	)		(498	)		–		–			(3,243,040	)		–			–			(3,243,538	)
Beneficial conversion feature on convertible promissory notes		–			–			–		–			1,157			–			–			1,157
Profit for the year		–			–			–		–			–			3,419,319			–			3,419,319
Foreign currency translation reserve		–			–			–		–			–			–			(999,519	)		(999,519	)

Balance at December 31, 2014		2,428,532		$	2,429			–		–		$	16,722,007		$	(14,080,154	)	$	(867,641	)	$	1,776,641
Non-employee stock based compensation		–			–			–		–			260,819			–			–			260,819
Forfeiture of founders shares		(253,881	)		(255	)		–		–			255			–			–			–
Sale of subsidiary		(220,000	)		(134	)		85,800		(343,113	)		(536,666	)		–			–			(879,913	)
Beneficial conversion feature on convertible promissory notes		–			–			–		–			1,842,681			–			–			1,842,681
Loss for the year		–			–			–		–			–			(7,561,686	)		–			(7,561,686	)
Foreign currency translation reserve		–			–			–		–			–			–			(449,358	)		(449,358	)

Balance at December 31, 2015		1,954,651		$	2,040			85,800	$	(343,113	)	$	18,289,096		$	(21,641,840	)	$	(1,316,999	)	$	(5,010,816	)

The accompanying notes are an integral part of these consolidated financial statements

F-6

Prime Acquisition Corp.

Consolidated statements of cash flows

For the years ended December 31,

	2015			2014			2013
Cash flows from operating activities
Profit/(loss) for the year	$	(7,561,686	)	$	3,419,319		$	(15,885,478	)
Adjustments to profit/(loss) for non-cash items
Shared-based payments		260,819			5,044			454,343
Derivatives fair value adjustment		506,158			(75,622	)		(50,649	)
Net fair value loss/(gain) on revaluation of investment property		2,321,283			(332,425	)		–
Loss on disposal of property and equipment		134,448			16,080			–
Goodwill impairment		–			–			6,914,458
Depreciation		3,644			75,245			18,119
Provision for bad debt		9,814			32,155			41,176
Provision/(release of provision) relating to litigation		–			(300,000	)		300,000
Other provisions		26,032			11,342			–
Loss on sale of subsidiary		32,340			–			–
Loss on sale of real estate investment		199,728			–			–
Loss on foreign currency exchange on discontinued operation		248,359			426,410			–
Contingent consideration in connection with business combination		–			(5,157,951	)		5,157,951
Revenues normalization		90,994			148,926			–
Deferred tax liabilities		(287,665	)		562,730			(44,719	)
Finance costs		4,172,915			1,891,493			601,039
		157,183			722,746			(2,493,760	)
Working capital adjustments
(Increase)/decrease in prepaid expenses and other current assets		(6,550	)		298,617			420,424
(Increase)/decrease in trade and other receivables		(397,465	)		388,658			(3,569,837	)
(Decrease)/increase in trade and other payables		325,182			98,874			5,001,811
(Decrease)/increase in accrued expenses and other deferred income		–			–			546,010
Increase/(decrease) in tenant security deposits		16,421			232,061			(69,623	)
Increase/(decrease) in corporate tax liabilities		391,492			821,296			(18,692	)
Cash generated from/(used in) operations		486,263			2,562,252			(183,667	)
Corporate taxes paid		(284,241	)		(140,114	)		–
Finance costs paid		(959,851	)		(1,363,673	)		(400,540	)
Net cash (used in)/ generated by operating activities		(757,829	)		1,058,465			(584,207	)

Cash flows from investing activities
Transfer from trust to operating account		–			–			36,624,800
Interest received on trust account		–			–			(3,867	)
Cash acquired on acquisition/(given on disposition)		(110	)		(17,361	)		181,461
Proceeds from sale of real estate investment		217,180			–			–
Acquisition of property and equipment		(7,706	)		(6,401	)		(4,820	)
Net cash generated by/(used in) investing activities		209,364			(23,762	)		36,797,574

Cash flows from financing activities
Advances from/(payment to) related party		710,219			(47,629	)		151,188
Payment to underwriters		–			–			(240,000	)
Proceeds from notes payable to stockholders		845,000			1,257,537			360,000
Proceeds from line of credit, net		85,961			33,520			565,359
Repayment on finance leases and loans		(1,136,863	)		(2,308,190	)		(1,128,680	)
Redemption of ordinary shares		–			–			(30,149,729	)
Payment of put option		–			–			(5,644,252	)
Net cash used in financing activities		(504,317	)		(1,064,762	)		(36,086,114	)

Effect of exchange rates on cash and cash equivalents		13,631			61,736			(1,250	)

Net (decrease)/increase in cash and cash equivalents		(30,517	)		31,677			126,003

Cash and cash equivalents at beginning of year		165,091			133,414			7,411
Cash and cash equivalents at end of year	$	134,574		$	165,091		$	133,414

F-7

2015 Non cash transactions

On July 7, 2015, the Company returned of one of the Subsidiaries (SIM S.r.l.) acquired through the closing of the SIM Purchase Agreement to the original seller in exchange for the return of 220,000 of the Company’s shares. No additional cash was exchanged in addition to the Company’s share returned (see note 13 — Discontinued Operations).

During 2015, the convertible promissory notes issued to one of the directors in 2014 reached maturity. The Company was not in a position to repay the notes or the accrued interest. As a result, the Company issued new unsecured convertible promissory notes to the director (see note 25 — Related Party Transactions and Balances). The beneficial convertible feature of these notes for the year ended December 31, 2015 amounted to $1,842,681.

2014 Non cash transactions

In 2014, the Group has reached various offsetting agreements with one of the former owners of the investment properties (and a current shareholder of the Group) on offsetting certain receivables and payables of $3,470,482 in total (see note 20 — Trade and Other Receivables).

On December 18, 2014, the Company returned one of the subsidiaries (Seba S.r.l.) acquired through the closing of the Seba Purchase Agreement to the original seller in exchange for the return of 497,308 of the Company’s shares. No additional cash was exchanged in addition to the Company’s share returned (see note 13 — Discontinued Operations).

2013 Supplemental information

Other supplemental information consists of:

1,719,317 ordinary shares issued in connection with business combination	$	18,843,714

Conversion of deferred underwriter fees to note payable to underwriters	$	889,833

The accompanying notes are an integral part of these consolidated financial statements

F-8

PRIME ACQUISITION CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Corporate Information and Plan of Business Operations

The consolidated financial statements of Prime Acquisition Corp. and its wholly-owned subsidiaries (collectively, the “Group”) for the year ended December 31, 2015 were authorized for issue in accordance with a resolution of the directors on April 30, 2016. Prime Acquisition Corp. (the “Company”) is a Cayman Islands exempted company initially organized as a blank check company for the purpose of acquiring, through a merger, share exchange, asset acquisition, plan of arrangement, recapitalization, reorganization or similar business combination, an operating business in 2010. The registered office is located at No 322, Zhongshan East Road, Shijiazhuang, Hebei Province 05001, China.

The Group is principally engaged in the management of investment property (see note 18 — Investment Properties). On September 30, 2013, the Company consummated a business combination (the “Business Combination”), through Prime BHN Luxembourg S.a.r.l (a Luxembourg company and wholly-owned subsidiary of the Company, “LuxCo”), by acquiring 100% of Seba S.r.l. (“Seba”), Nova S.r.l. (“Nova”), Delfin S.r.l. (“Delfin”), SIM S.r.l. (“SIM”), Dieci Real Estate S.r.l. (“Dieci”), Ellegi S.r.l. (“Ellegi”), G.S.I. S.r.l. (“GSI”), Magfin S.r.l. (“Magfin”), all are Italian limited liability companies (collectively the “Subsidiaries”) for an aggregate of 1,719,317 ordinary shares. The fair value of the shares is the closing market price of the Company at the acquisition date, at $10.96 per share. The fair value of the consideration given was therefore $18,843,714. As a result of this Business Combination, eleven properties were acquired. All of the properties in the portfolio are commercial real estate assets located in Italy. The existing strategic management function and associated processes were acquired with the property and, as such, the Company’s management considers this transaction the acquisition of a business, rather than an asset acquisition. Immediately following consummation of the Business Combination, the Company had a total of 3,635,344 ordinary shares outstanding.

On December 18, 2014, the Company entered into a Stock Purchase Agreement (the “Seba Purchase Agreement”) with LuxCo, Seba, at the time LuxCo’s wholly owned subsidiary, Francesco Rotondi and Luca Failla (the former owners of Seba prior to the Business Combination). Pursuant to the Seba Purchase Agreement, on December 18, 2014, Messrs. Rotondi and Failla acquired all of the outstanding equity interests in Seba in exchange for the return of 497,308 of the Company’s shares (the “Seba Consideration Shares”, the Seba Purchase Agreement event “Unwinding”). Seba’s sole asset consists of four floors of Corso Europa 22, an office building in central Milan. As a result, immediately following the closing of this Seba Purchase Agreement, the Company had a total of 2,682,413 ordinary shares outstanding and the Company’s portfolio comprised of eleven properties (see note 18 — Investment Properties).

Additionally in connection with the Seba Purchase Agreement:

1. The Company, LuxCo, Messrs. Rotondi and Failla and Giuseppe Pantaleo entered into an agreement which terminated the Transaction Value Agreement dated September 30, 2013 among them (the “Seba-Nova TVA”). The Seba-Nova TVA required the Company to make Messrs. Rotondi, Failla and Pantaleo whole in the event that the average sales price of all of the shares that were issued to them were sold in public market transactions at less than $10 per share (see note 9 — Contingent Consideration).

2. The Company, LuxCo, Nova, and Mr. Rotondi entered into an option agreement (the “Option Agreement”) pursuant to which Mr. Rotondi would have the right to purchase all of the equity interests in Nova owned by LuxCo in the event that (i) the mortgage payments that Mr. Rotondi has personally guaranteed are not made, or (ii) a certain power of attorney that would facilitate the transfer of Nova’s equity interests to Mr. Rotondi is not renewed. The Option Agreement will terminate on the repayment of the mortgages or the termination of Mr. Rotondi’s personal guaranties. The consideration for the exercise of the option would be the return of 50,000 shares of the Company’s ordinary shares. Nova’s sole asset consists of two floors of Corso Europa 22, an office building in central Milan.

Separately, on December 15, 2014, the Company, LuxCo, Cesare Lanati, Stefano Lanati, Davide Rigamonte Bell Real Estate S.r.l. and IGS S.r.l. entered into an agreement which terminated the Transaction Value Agreement dated September 30, 2013 among them (the “Bell TVA”). The Bell TVA, similar to the aforementioned Seba-Nova TVA, required the Company to make Messrs. Lanati, Lanati and Rigamonte and Bell Real Estate S.r.l. and IGS S.r.l. whole in the event that the average sales price of all of the shares that were issued to them were sold in public market transactions at less than $10 per share. As a result of the cancellation of Bell TVA and Seba-Nova TVA, there are no Transaction Value Agreements outstanding as of December 31, 2014 (see note 9 — Contingent Consideration).

F-9

On June 26, 2015, the Company entered into a Stock Purchase Agreement (the “SIM Purchase Agreement”) with Prime Luxembourg S.a.r.l., the Company’s wholly-owned subsidiary (“LuxCo”), GSI S.r.l, LuxCo’s wholly-owned subsidiary (“GSI”), SIM S.r.l., at the time owned by LuxCo and GSI (“SIM”), Bell Real Estate S.r.l. (“Bell”), Cesare Lanati and Stefano Lanati (Bell, Cesare Lanati and Stefano Lanati are collectively referred to as the “SIM Buyers”). On July 7, 2015, the SIM Buyers acquired all of the outstanding equity interests in SIM in exchange for the return of 220,000 of the Company’s shares (the “SIM Consideration Shares”). 134,200 shares (61%) were returned to the Company for immediate cancellation, 85,800 shares (39%) were returned to GSI and remained as the Company’s treasury shares. SIM’s sole asset consists of the property located at Via Newton 9, Milan, Italy. As a result, immediately following the closing of this SIM Purchase Agreement, the Company had a total of 2,294,332 ordinary shares outstanding and the Company’s portfolio comprised of ten properties (see note 18 — Investment Properties). In addition, in connection with the transactions contemplated by the SIM Purchase Agreement, the Company extinguished certain trade liabilities associated with its portfolio of properties and the SIM Buyers.

During 2015, the Company has established a new subsidiary in Italy, Imperatrice S.r.l. (“Imperatrice”), through LuxCo. The Company owns 100% of Imperatrice. This new subsidiary was established for the potential future acquisitions of real estate investment properties in Italy.

The real estate portfolio of ten properties in Italy does not currently generate positive cash flows. Management believes that when the market conditions are more favorable, some of these properties may be liquidated to generate cash. However, real estate transactions in the greater Milan area have been relatively few when compared to the pre-financial crisis period. An actual transaction may take longer than viable for the Group’s current needs.

The Group’s ability to continue as a going concern is dependent upon management’s ability to generate profitable operations in the future and obtain the necessary financing to meet obligations and pay liabilities arising from business operations when they come due. If the Group does not generate profitable operations or obtain the necessary financing, the Group may not have enough operating funds to continue to operate as a going concern. There is no assurance that the Company will be able to secure such financing. A failure to generate profitable operations or obtain additional financing could prevent the Group from paying current obligations, allow the hiring of additional resources and continue its operating strategy. The Group is actively seeking additional capital through private placements of equity and debt.

The funding of the Group has been primarily by the Company entering into interest bearing unsecured convertible promissory notes with one of the directors (see note 25 — Related Party Transactions and Balances). However, if additional financing from a different source is not obtained, the Group may not be able to execute its business plan and may need to curtail certain of its operations.

Management is currently in discussion with several funding sources for a combination of debt and equity financing. However, there can be no assurance the Group will be able to obtain funding from these sources.

Note 2 — Basis of Presentation

(a)

Statement of compliance

The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and its related interpretations as issued by the International Accounting Standards Board (IASB).

i. Application of IFRS 1

For all periods up to and including the year ended December 31, 2012, the Company previously prepared its financial statements in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The financial statements, for the year ended December 31, 2013, are the first the Company has prepared in accordance with IFRS.

Accordingly, the Group has prepared consolidated financial statements which comply with IFRS applicable for periods ending on or after December 31, 2013, together with the comparative period data as at and for the year ended December 31, 2012, as described in the summary of significant accounting policies. In preparing these financial statements, the Company’s opening statement of financial position was prepared as at January 1, 2012, the Company’s date of transition to IFRS. Management determined that no adjustments were necessary to convert the consolidated financial statements from US GAAP to IFRS.

F-10

The Company’s financial statements for the year ended December 31, 2012, was the first annual financial statements that comply with IFRS. The Company has applied IFRS 1 in preparing these consolidated financial statements.

In preparing these consolidated financial statements in accordance with IFRS 1, the Company has applied the relevant mandatory exceptions and certain optional exemptions from full retrospective application of IFRS.

ii. Exemptions from full retrospective application – elected by the Company

There were no optional exemptions applicable to the Company.

iii. Exceptions from full retrospective application followed by the Company

The Company has applied the following mandatory exceptions from retrospective application.

(1)

Estimates exception

Estimates under IFRS at January 1, 2012, are consistent with estimates made for the same date under US GAAP.

All other mandatory exceptions in IFRS 1 were not applicable because there were no significant differences in management’s application of US GAAP in these areas.

(b)

Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis except for the following which are measured at fair value:

Derivative financial instruments; and

Investment properties

(c)

Functional and presentation currency

The consolidated financial statements are presented in US dollars, which is the Group’s functional currency. All financial information presented in US dollars have been rounded to the nearest dollar amount, except when otherwise indicated.

(d)

Use of estimates and judgments

The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent liabilities at the reporting date. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

(e)

Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its wholly-owned subsidiaries as at December 31, 2015, 2014 and 2013.

The Subsidiaries are consolidated from September 30, 2013 (the date of Business Combination), being the date on which the Company obtained control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All intra-group balances, transactions, unrealized gains and losses resulting from intra-group transactions are eliminated in consolidation.

On December 18, 2014, the Company ceased control of Seba through the closing of the Seba Purchase Agreement in exchange for the return of 497,308 of the Company’s shares. Seba’s operating result from October 1, 2013 to December 18, 2014 is reported as discontinued operations on the Group’s consolidated statements of income/(loss) and comprehensive income/(loss) for the years ended December 31, 2014 and 2013.

On July 7, 2015, the Company ceased control of SIM through the closing of the SIM Purchase Agreement in exchange for the return of 220,000 of the Company’s shares. SIM’s operating result from October 1, 2013 to July 7, 2015 is reported as discontinued operations on the Group’s consolidated statements of income/(loss) and comprehensive income/(loss) for the years ended December 31, 2015, 2014 and 2013.

F-11

Note 3 — Significant Accounting Policies

(a)

Determination of Fair Values

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs significant to the fair value measurement as a whole:

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 – Inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs)

For assets and liabilities that are recognized in the consolidated financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

(b)

Revenue

Rental income is recognized in the period on an accrual basis if the amount of revenue can be measured reliably and it is probable that the Group will receive the consideration.

i. Rental income

The Group is the lessor in operating leases. Rental income arising from operating leases on investment property is accounted for on a straight-line basis over the lease terms and is included in the consolidated statements of income/(loss) and comprehensive income/(loss) due to its operating nature, except for contingent rental income which is recognized when it arises.

Amounts received from tenants to terminate leases or to compensate for dilapidations are recognized in the consolidated statements of income/(loss) and comprehensive income/(loss) when the right to receive them arises.

(c)

Cash and Cash Equivalents

Cash and short-term deposits in the consolidated statements of financial position comprise cash at bank and short-term deposits with an original maturity of three months or less.

(d)

Loans and Borrowings

All loans and borrowings are initially recognized at fair value less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the effective interest method.

In accordance to IAS 17 — Leases, the direct costs of the leases are added to the amount recognized as an asset and amortized over the duration of the leases.

(e)

Trade and Other Receivables

Trade and other receivables are recognized at their original invoiced value. The fair values of trade and other receivables classified as loans and receivables are not materially different to their net carrying values. A provision is made when there is objective evidence that the Company will not be able to recover balances in full. Balances are written off when the probability of recovery is assessed as being remote.

F-12

(f)

Income Taxes

The Company was incorporated as a Cayman Islands exempted company and therefore the Group is not currently subject to income tax in the Cayman Islands or United States of America.

The Subsidiaries are subject to income tax in Italy and judgment is required in determining the provision for income taxes. During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. As a result, the subsidiaries recognized tax liabilities based on estimates of whether additional taxes and interest will be due. These tax liabilities are recognized when the Group’s management believes that certain positions are likely to be challenged and may not be fully sustained upon review by tax authorities. The Group management believes that its accruals for tax liabilities are adequate for all open audit years based on its assessment of many factors including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. To the extent that the final tax outcome of these matters is different than the amount recorded, such differences will impact income tax expense in the period in which such determination is made.

(g)

Deferred Taxation

Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilized.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

The same taxable group company; or

Different group entities which intend either to settle current tax assets and liabilities on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

(h)

Property and equipment

Items of property and equipment are initially recognized at cost. Depreciation is provided on all items of property and equipment so as to write off their carrying value over their expected useful economic lives. It is provided at the following rates:

Plant and machinery – 7.5% per annum straight line

Fixture and fittings – 15.0% per annum straight line

Office and office related equipment – 20% per annum straight line

(i)

Share-Based Payment

Share-based payment awards granted to employees and non-employees are recognized as stock option expense, with a corresponding increase in equity, over the period that the optionees become unconditionally entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

The Company estimates the fair value of option awards using the Black-Scholes option pricing model. Determining the fair value of awards under this model represents management’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment.

F-13

(j)

Earnings/(loss) per Share

Basic earnings/(loss) per share is computed by dividing net profit/(loss) by the weighted-average number of ordinary shares outstanding at the end of the year.

Warrants and options are excluded from the computation of fully diluted loss per share if their effect is anti-dilutive.

(k)

Provisions

Provisions for environmental restoration, restructuring costs and legal claims are recognized when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognized for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognized as interest expense.

(l)

Geographical Risk

The Subsidiaries’ operation is located in Italy. Therefore, it is subject to local government regulations and to the uncertainties of the economic and political conditions of this area.

The overall performance is affected by the increase or decrease of the gross Italian national product. During 2012 and 2013, there was a general slowdown of the economic trend in Europe and especially in Italy. This general slowdown has continued during 2014 and 2015.

(m)

Foreign currencies

The financial statements of the Subsidiaries were translated from Euro to U.S. Dollars pursuant to the provisions of IAS 21 “The Effects of Changes in Foreign Exchange Rates”, as follows:

	·	Assets and liabilities were translated using the exchange rate at the balance sheet date
	·	Amounts in the statement of operations were translated at an appropriate weighted average rate for the period presented
	·	The subsidiaries equity accounts were translated using historical exchange rates
	·	The translation adjustments resulting from translating the foreign entity’s financial statements are reported separately in Translation Reserve as a separate component of stockholders’ equity

(n)

Business Combination and Goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is the aggregate of the consideration transferred measured at the acquisition date fair value. Acquisition-related costs are expensed as incurred and included in other expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred over the net identifiable assets acquired and liabilities assumed.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Goodwill is tested for impairment annually as at December 31 and when circumstances indicate that the carrying value may be impaired.

F-14

Impairment is determined for goodwill by assessing the recoverable amount of each cash-generating unit to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than their carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods.

(o)

Operating lease contracts – the Group as lessor

The Group has entered into commercial property leases on its investment property portfolio. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, particularly the duration of the lease terms and minimum lease payments, that it retains all the significant risks and rewards of ownership of these properties and so accounts for the leases as operating leases.

(p)

Leases – Group as lessee

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date. The arrangement is assessed for whether fulfillment of the arrangement is dependent on the use of a specific asset(s) or the arrangement conveys a right to use the asset(s), even if that right is not explicitly specified in the arrangement.

Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments.

Lease payments are apportioned between the finance charges and the reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to the statements of income/(loss) and comprehensive income/(loss) as they arise.

(q)

Derivative financial instruments – Initial recognition and subsequent measurement

The Group uses interest rate swaps to hedge its risks associated with interest rates. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. They are carried in the consolidated statement of financial position at fair value with changes in fair value recognized in the consolidated statements of income/(loss) and comprehensive income/(loss).

In addition, the Group issued convertible promissory notes to certain directors to provide for temporary liquidity. These convertible promissory notes are classified as convertible notes with an embedded derivative liability in accordance to IAS 32 – Financial Instruments: Recognition and Measurement. The embedded derivative liability is calculated first and the residual value is assigned to the debt host liability component. A host loan is accounted for at amortized cost, with an embedded derivative liability being measured at fair value with changes in value being recognized in the consolidated statements of income/(loss) and comprehensive income/(loss).

(r)

Share Capital

Ordinary shares are classified as equity.

(s)

New standards and interpretations not yet adopted

Standards issued but not yet effective as of the date of issuance of the Group’s financial statements are listed below. This listing of standards and interpretations issued are those that the Group reasonably expects to have on impact on disclosures, financial position or performance when applied at a future date. The Group intends to adopt these standards when they become effective.

IFRS 9 Financial instruments: Classification and Measurement

IFRS 9, as issued in 2010, reflects the first phase of the IASB’s work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. The standard was initially effective for annual reports beginning on or after January 1, 2013. In November 2013, Chapter 6 of IFRS on hedge accounting was published. At the same time, Chapter 7 containing the effective date and transition provisions was amended to remove the mandatory effective date of IFRS 9. Entities may still choose to apply IFRS 9 immediately, but are not required to do so.

F-15

In subsequent phases, the IASB is addressing impairment of financial assets. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Group’s financial assets, but will not have an impact on classification and measurements of financial liabilities. The Group will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued.

IFRS 15 Revenue from Contracts with Customers

The IASB have issued a new revenue recognition standard, IFRS 15 in May 2014, which replaces all existing IFRS revenue requirements. The standard applies to all revenue contracts and provides a model for the recognition and measurement of sales of some non-financial assets. Application is required for all annual periods beginning on or after January 1, 2018. There are new specific requirements in respect of variable consideration such that it is only included in the transaction price if it is highly probable that the amount of revenue recognized would not be subject to significant future reversals as a result of subsequent re-estimation. The adoption of IFRS 15 may have an impact on the revenue recognition as the tenants’ credit risk will be taken into consideration when rental revenue is being recognized. The effect of this to the Group’s consolidated financial statements is undetermined at this time.

IFRS 16 Leases

IFRS 16 specifies how an IFRS reporter will recognise, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS 17.

IFRS 16 was issued in January 2016 and applies to annual reporting periods beginning on or after 1 January 2019. The effect of this to the Group’s consolidated financial statements is undetermined at this time.

Note 4 — Reclassifications to Prior Year Financial Statements

The Group revised the presentation of prepaid expenses and other current assets, trade and other receivables, corporate tax liabilities (less current portion), trade and other payables, accrued expenses and other deferred income, and corporate tax liabilities in its consolidated statements of financial position for the year ended December 31, 2013. The amounts were reclassified from one account to another account in the same section to better reflect the nature of these amounts. The reclassification did not affect the total assets, the total liabilities amounts, and the previously reported net income/(loss) in either of the years ended December 31, 2013 or 2014.

A tabular summary of the reclassifications are presented below:

	Consolidated statements of financial position
	As at December 31, 2013
	Previously reported			Revisions			Revised Reported
Prepaid expenses and other current assets	$	92,154		$	420,115		$	512,269
Trade and other receivables, net		5,177,133			(420,115	)		4,757,018

Total assets		78,545,589			–			78,545,589

Trade and other payables		9,245,727			(546,010	)		8,699,717
Accrued expenses and other deferred income		–			546,010			546,010
Corporate tax liabilities		1,461,156			(550,792	)		910,364
Corporate tax liabilities, less current portion		–			550,792			550,792

Total liabilities		75,951,411			–			75,951,411

Profit/(loss) for the year		(15,885,478	)		–			(15,885,478	)

The Company analyzed the revisions under SEC staff guidance (Staff Accounting Bulletin 108) and determined that the revisions are immaterial on a quantitative and qualitative basis and that it is probable that the judgment of a reasonable person relying upon the consolidated financial statements would not have been changed or influenced by the inclusion or reclassification of the items in the year ended December 31, 2013.

F-16

Note 5 – Business Combinations and Goodwill

On September 30, 2013, the Company consummated the Business Combination by acquiring 100% of Seba, Nova, Delfin, SIM, Dieci, Ellegi, GSI, and Magfin for an aggregate of 1,719,317 ordinary shares. The fair value of the shares is the closing market price of the Company at the acquisition date, at $10.96 per share. The fair value of the consideration given is therefore $18,843,714. As a result of this Business Combination, eleven properties were acquired. The existing strategic management function and associated processes were acquired with the property and, as such, the Company’s management considers this transaction the acquisition of a business, rather than an asset acquisition.

The business combination was accounted for as a forward acquisition under the acquisition method and management has concluded that the Company is the accounting acquirer because the Company has effective control of the entities acquired after the business combination by retaining both management control and majority shareholder control. No management of the Subsidiaries became part of the Company or BHN’s management team or board of directors following the business combination. The Subsidiaries’ results of operations were consolidated with the Company’s results of operations beginning on the date of the Business Combination.

The Subsidiaries’ assets and liabilities are measured at their acquisition-date fair value. The purchase price is allocated over the fair value of assets acquired and liabilities assumed with any excess of purchase price over the fair value of net assets acquired allocated to goodwill. All direct costs of the transaction were charged to operations in the period that such costs were incurred.

In connection with the Business Combination in 2013, the Company entered into various transaction value agreements (each, a “TVA” and collectively, “TVAs”) with the sellers of the properties (See note 9 — Contingent Consideration).

On December 18, 2014, the Company ceased control of one of the Subsidiaries acquired from this Business Combination (see note 13 — Discontinued Operations) through the closing of the Seba Purchase Agreement in exchange for the return of 497,308 of the Company’s shares.

On July 7, 2015, the Company further ceased control of one of the Subsidiaries acquired from this Business Combination (see note 13 — Discontinued Operations) through the closing of the SIM Purchase Agreement in exchange for the return of 220,000 of the Company’s shares.

Assets acquired and liabilities assumed

The fair value of the identifiable assets and liabilities of the Subsidiaries as at the date of acquisition were:

	Fair value recognized on date of acquisition
Investment properties	$	71,586,615
Machinery & other equipment		272,710
Current assets		650,207
		72,509,532
Loans and borrowings		51,141,017
Trade and other payables		4,713,958
Tenant security deposits		1,343,075
Corporate tax liabilities		1,981,326
Derivative financial liabilities		1,400,900
Total identifiable net assets at fair value		11,929,256
Goodwill arising on acquisition		6,914,458
Purchase consideration transferred	$	18,843,714

The costs incurred in connection with the acquisition of $2,420,083 have been expensed and are included in operating expenses.

From the date of acquisition through December 31, 2013, the Subsidiaries have contributed a net loss of approximately $2.5 million to the loss after tax and $1,374,728 to the revenues. If the combination has taken place at the beginning of the year, the net loss after tax through December 31, 2013 for the Company would have been $2,118,521 and revenue would have been $7,667,476.

F-17

The goodwill of $6,914,458 consists of the amount the Company considered to be in excess of the Subsidiaries’ fair value. None of the goodwill is expected to be deductible for tax purposes.

Management determined that the goodwill was fully impaired at December 31, 2013 because the fair value at December 31, 2013 was principally equal to the acquisition date fair value.

The fair value as at December 31, 2013 was determined to be principally equal to as the acquisition date due to: (1) the short time period between the acquisition date and December 31, 2013, and (2) there were no significant events that affected the real estate prices in Italy where all the investment properties are located. This was further confirmed by the professional appraiser by comparing the market data as at September 30, 2013 and December 31, 2013.

Note 6 — Depreciation and Bad Debt Provision

Details of depreciation and bad debt provision are as follows:

	2015		2014		2013
Depreciation of property and equipment	$	3,644	$	75,245	$	18,119
Bad debt provision		9,814		32,155		41,176
Total depreciation and bad debt provision	$	13,458	$	107,400	$	59,295

Note 7 — Other Expenses

Details of other expenses is shown in the table below:

		2015		2014*			2013*
Rental costs	$	7,625	$	177,271		$	35,382
Staff costs		201,423		250,881			35,136
Sundry operating expenses		312,426		9,458			105,765
Taxation on buildings		208,361		275,471			84,582
Administrative and other expenses		859,431		260,138			310,759
Maintenance expenses		312,285		299,942			171,845
Insurance costs		123,183		127,047			55,308
Provision related to legal dispute		–		(300,000	)		300,000
Legal expenses		368,814		517,265			1,438,367
Professional fees		489,276		864,255			1,263,002
Bank fees		23,537		50,100			10,842
Licenses, registration & fees		5,821		11,596			25,090
Put option fees		–		–			160,500
Rent expense		–		–			67,500
Stock option expense		260,819		5,044			154,343
Travel expense		70,848		69,742			102,635
Total other expenses	$	3,243,849	$	2,618,210		$	4,321,056

*Restated for discontinued operations (see note 13 — Discontinued Operations)

Note 8 — Finance Income and Costs

The details of finance income and costs on the statements of income/(loss) and comprehensive income/(loss) is as follow:

Finance income	2015		2014		2013
Finance income from variation of fair value on interest rate swap agreements		33,558		75,622		–
Other finance income		1,332		258		–
Total finance income	$	34,890	$	75,880	$	–

F-18

Finance costs		2015		2014*		2013*
Finance cost on note payable to underwriters and other debt	$	2,913,809	$	237,719	$	200,500
Interest expense of bank loans, revolving line of credit and finance leases		1,259,106		1,605,695		508,075
Total finance costs	$	4,172,915	$	1,843,414	$	708,575

*Restated for discontinued operations (see note 13 — Discontinued Operations)

Note 9 — Contingent Consideration

In connection with the Business Combination in 2013, the Company entered into various TVAs with the sellers of the properties. Pursuant to the TVAs, the Company had agreed to make the sellers whole in the event that the average sales price of the ordinary shares issued to the sellers in public market transaction is less than $10, by issuing additional ordinary shares of the Company to the sellers. The make-whole would be available only after the respective seller had sold all of the shares received at the Business Combination. The number of shares issuable pursuant to the make-whole provisions of the TVAs was the quotient of the total shortfall between $10 and the average price for all such shares sold in public market transactions, divided by the then current fair market value of the combined company’s ordinary shares. The terms of the TVAs did not become effective until there was an effective registration statement covering such shares. The registration rights agreement entered into with the sellers requires the Company to file a registration statement covering these shares as soon as practicable. There were no liquidating damage or penalty provisions included in the registration rights agreement. Management deemed that as soon as practicable would not be a date prior to April 30, 2014. At December 31, 2013, the market price of the Company’s ordinary shares was $7 per share. As a result, the Company recorded a liability under these TVAs for $5,157,951 at December 31, 2013.

In addition, each of the TVAs granted the sellers a call option on the equity interest in the Business Combination in the event that such sellers are unable to sell a sufficient number of shares to reach certain dollar targets in certain periods set forth in the TVAs. Notwithstanding the foregoing and provided there was any effective registration statement covering such shares, if the total value of shares traded in the public market equaled the dollar target for a given period, then the call option could not be exercised for such period. In order to exercise the call option, a seller must deliver to the Company all of the proceeds received from the sale of shares issued pursuant to the applicable purchase agreement and TVA, together with any such shares that had not been sold by the seller, but less certain franchise tax payments made by the sellers. The Management deemed that there was no accounting implication on the call option granted.

On December 15 and 18, 2014, the Company had entered into separate agreements with the sellers of the properties to terminate the TVAs. As a result of these agreements on termination of the TVAs, there are no outstanding TVAs as of December 31, 2014. The liability recorded at December 31, 2013 is therefore reversed at December 31, 2014.

Note 10 – Impairment of Goodwill

All goodwill arising on acquisition which amounted to $6,914,458 was deemed impaired during the annual impairment test at December 31, 2013. See note 5 – Business Combinations and Goodwill for detail.

Note 11 – Income Taxes

The income taxes relating to continuing operations for the years ended December 31 are as follow:

	2015			2014			2013
Current tax
In respect of the current year	$	183,005		$	208,603		$	–
In respect of the prior year		(12,685	)		–			–
Others fiscal unit **		(212,089	)		–			–
		(41,769	)		208,603			–

Deferred tax (see note 12 — Deferred Taxes)
In respect of the current year		(287,665	)		654,579			44,200
Deferred tax related to Seba (see note 13 — Discontinued Operations)		–			–			(51,384	)
Deferred tax related to SIM (see note 13 — Discontinued Operations)		–			(3,540	)		(8,354	)
		(287,665	)		651,039			(15,538	)
Total income tax expense/(benefit) recognized in the current year relating to continuing operations	$	(329,434	)	$	859,642		$	(15,538	)

F-19

The income tax expense for the years ended December 31 can be reconciled to the accounting profit as follows:

	2015			2014			2013
Profit/(loss) before tax from continuing operations	$	(7,585,983	)	$	5,091,246		$	(16,166,473	)

Income tax expense calculated at 31.4% (2014: 31.4%)	$	(2,381,999	)	$	1,573,255		$	–
Effect of (income)/expenses that are exempt from taxation		965,868			(1,873,555	)		–
Effect of expenses that are not deductible in determining taxable profit		442,287			489,814			–
Effect of unused tax losses and tax offsets not recognized as deferred tax assets		904,088			702,544			–
Effect of previously unrecognized and unused tax losses and deductible temporary differences now recognised as deferred tax assets		(34,904	)		(36,121	)		–
Effect of new tax rule in fiscal unit **		(212,089	)		–			–
Effect of prior year taxes		(12,685	)		–			–
Others		–			3,705			(15,538	)
Income tax expense recognized in profit or loss relating to continuing operations (current & deferred)	$	(329,434	)	$	859,642		$	(15,538	)

The tax rate used for the 2015, 2014 and 2013 reconciliations above is the tax rate of 31.4% on taxable profits in Italy. This tax rate consists of both IRES (an Italian corporate income tax) and IRAP (an Italian regional production tax).

** During 2016, the Italian fiscal authority issued a new tax rule for the fiscal year ended December 31, 2015 allowing utilization of fiscal unit structure in tax reporting to offset and utilize operating loss amongst subsidiaries with common ownership, resulting in tax benefits to the Group.

Note 12 — Deferred Taxes

The amount of unused tax losses for which no deferred tax assets are recognized in the consolidated statements of financial position as at December 31, 2015 and 2014 was $935,866 and $547,046 respectively with no expiration date limitation.

Deferred tax is calculated in full on temporary differences using a tax rate of 27.5%, if the temporary difference is subject only to IRES (an Italian corporate income tax) rules, or 31.4% if the temporary difference is subject both to IRES and IRAP (an Italian regional production tax) rules.

The movement on the deferred tax account is as shown below:

	2015			2014			2013
At January 1	$	(3,738,082	)	$	(5,399,745	)	$	–
At September 30								(5,355,545	)

Recognized directly in equity
Unwinding of Seba (see note 13 — Discontinued Operations)		–			1,757,921			–
Sale of SIM (see note 13 — Discontinued Operations)		315,325			–			–
Currency exchange difference		370,358			558,321			–

Recognized in profit and loss
Tax expense		287,665			(654,579	)		(44,200	)
At December 31	$	(2,764,734	)	$	(3,738,082	)	$	(5,399,745	)

F-20

Details of the deferred tax liability and amounts recognized in net income/(loss) are as follows:

	2015		2015			2015			2015
	Asset		Liabilities			(Charged) / Net			Movement
Adjustment for IFRS purposes (deductible/taxable for local tax rules in future fiscal years)
Writing off of intangibles	$	611,712	$	–		$	611,712		$	49,105
Writing off of tangibles		–		(120,387	)		(120,387	)		53,121
Accounting of lease contracts according to IAS 17		–		(1,606,270	)		(1,606,270	)		253,125
Accounting of investment properties according to fair value		–		(1,436,973	)		(1,436,973	)		(932,559	)
Mark to market on derivative instruments		52,013		–			52,013			10,537
Loss on investments (internal restructuring)		–		(268,103	)		(268,103	)		273,955
Other temporary differences
Bad debt provision		3,061		–			3,061			5,538
Others		213		–			213			(487	)
Total	$	666,999	$	(3,431,733	)	$	(2,764,734	)	$	(287,665	)

	2014		2014			2014			2014*
	Asset		Liability			(Charged) / Net			Movement
Adjustment for IFRS purposes (deductible/taxable for local tax rules in future fiscal years)
Writing off of intangibles	$	754,518	$	–		$	754,518		$	153,276
Writing off of leasing agreements entry fee		190		–			190			(133	)
Writing off of tangibles		–		(67,457	)		(67,457	)		71,421
Accounting of lease contracts according to IAS 17		–		(1,950,996	)		(1,950,996	)		230,906
Accounting of investment properties according to fair value		–		(2,553,242	)		(2,553,242	)		104,383
Mark to market on derivative instruments		69,454		–			69,454			23,747
Other temporary differences
Bad debt provision		9,451		–			9,451			–
Others		–		–			–			70,979
Total	$	833,613	$	(4,571,695	)	$	(3,738,082	)	$	654,579

		2013		2013			2013			2013*
		Asset		Liability			(Charged) / Net			Movement
Adjustment for IFRS purposes (deductible/taxable for local tax rules in future fiscal years)
Writing off of intangibles	$	1,092,908	$	–		$	1,092,908		$	22,874
Writing off of leasing agreements entry fee		310,706		–			310,706			1,799
Writing off of tangibles		–		(2,950	)		(2,950	)		19,287
Accounting of lease contracts according to IAS 17		–		(2,270,344	)		(2,270,344	)		69,699
Accounting of investment properties according to Fair Value		–		(4,908,756	)		(4,908,756	)		(119,316	)
Mark to market on derivative instruments		358,373		–			358,373			(3,561	)
Elimination property revaluation		–		(125,492	)		(125,492	)		–
Normalization income		61,766		–			61,766			(15,442	)
Other temporary differences
Bad debt provision		–		(38,499	)		(38,499	)		–
Provision for risk		49,260		–			49,260			–
Others		73,283		–			73,283			9,122
Total	$	1,946,296	$	(7,346,041	)	$	(5,399,745	)	$	(15,538	)

*Restated for discontinued operations (see note 13 — Discontinued Operations)

F-21

Note 13 — Discontinued Operations

Seba Unwinding

On December 18, 2014, the Company ceased control of Seba through the closing of the Seba Purchase Agreement in exchange for the return of 497,308 of the Company’s shares. Seba’s operating result from January 1, 2014 to December 18, 2014 and from September 30, 2013 to December 31, 2013 is reported as discontinued operations on the Group’s consolidated statements of income/(loss) and comprehensive income/(loss) for the years ended December 31, 2014, and December 31, 2013.

The results of Seba for the years ended December 31 assets are presented below:

	2014			2013
Rental income	$	1,170,255		$	367,713
Other revenues		159,257			70,822
Expenses		(384,953	)		(321,498	)
Operating income		944,559			117,037
Finance income		–			53,648
Finance costs		(1,152,416	)		111,506
Profit/(loss) before tax from discontinued operations		(207,857	)		282,191
Tax expenses, current		(152,916	)		–
Deferred tax credit/(expense)		59,319			(51,384	)
Net profit/(loss) from discontinued operations		(301,454	)		230,807
Loss on foreign currency exchange on discontinued operation		(426,410	)		–
Profit/(loss) for the year from discontinued operations	$	(727,864	)	$	230,807

The net cash flows of Seba are as follows:

	2014			2013
Operating	$	2,227,623		$	(3,726	)
Investing		1,305			(214	)
Financing		(2,178,858	)		23,708
Net cash inflow/(outflow)	$	50,070		$	19,768

Earnings/(loss) per share:	2014			2013
Basic, profit/(loss) for the year from discontinued operations	$	(0.23	)	$	0.08
Diluted, profit/(loss) for the year from discontinued operations	$	(0.22	)		0.08

This Unwinding transaction in substance is returning the financial asset (Seba) to the original seller in exchange for the price the Company had paid for at the Business Combination. Based on the considerations of: (1) the transfer of control and risk of Seba acquired at Business Combination (an asset on its entirety) back to its original owner, not an unrelated third party, and (2) the Company did not in action seek any gain from this transfer of Seba, and (3) there was no additional consideration in exchange to the common stock issued to the former owners. The management deemed the Unwinding to be a derecognition of financial asset in substance. With this consideration, the management is derecognizing the acquisition of Seba in accordance to IAS 39 (IAS 39.16 – derecognition of a financial asset in its entirety).

F-22

The following is a condensed statement of financial position for Seba as at December 18, 2014 (date of disposition):

	As at December 18, 2014
Investment properties	$	16,924,707
Other current assets		354,431
Total Assets	$	17,279,138

Stockholders' equity	$	3,243,538
Loans & borrowings		12,195,383
Other Liabilities		1,840,217
Total equity and liabilities	$	17,279,138

SIM Sale

On July 7, 2015, the Company further ceased control of SIM through the closing of the SIM Purchase Agreement in exchange for the return of 220,000 of the Company’s shares. Total consideration received for the sale was $879,914. The net carrying value of SIM on July 7, 2015 was $912,254. As a result, the Group has recognized a loss of $32,340 on the sale of SIM. SIM’s operating result from January 1, 2015 to July 7, 2015, January 1, 2014 to December 31, 2014 and from September 30, 2013 to December 31, 2013 is reported as discontinued operations on the Group’s consolidated statements of income/(loss) and comprehensive income/(loss) for the years ended December 31, 2015, 2014, and 2013.

The results of SIM for the years ended December 31 assets are presented below:

	2015			2014			2013
Rental income	$	65,110		$	250,629		$	86,359
Other revenues		9,021			16,568			7,098
Expenses		(96,857	)		(206,920	)		(46,483	)
Operating income		(22,726	)		60,277			46,974
Finance costs		(18,564	)		(141,158	)		(3,970	)
Profit/(loss) before tax from discontinued operations		(41,290	)		(80,881	)		43,004
Deferred tax credit/(expense)		(15,488	)		(3,540	)		(8,354	)
Net loss from discontinued operations		(56,778	)		(84,421	)		34,650
Loss on foreign currency exchange on discontinued operation		(248,359	)		–			–
Profit/(loss) for the year from discontinued operations	$	(305,137	)	$	(84,421	)	$	34,650

Earnings/(loss) per share:	2015			2014			2013
Basic, profit/(loss) for the year from discontinued operations	$	(0.13	)	$	(0.03	)	$	0.01
Diluted, profit/(loss) for the year from discontinued operations	$	(0.13	)	$	(0.03	)	$	0.01

The net cash flows of SIM are as follows:

	2015			2014			2013
Operating	$	377,117		$	238,792		$	(13,509	)
Investing		(1,339	)		(1,488	)		244
Financing		(389,425	)		(223,100	)		(15,082	)
Net cash inflow/(outflow)	$	(13,647	)	$	14,204		$	(28,347	)

The following is a condensed statement of financial position for SIM as at July 7, 2015 (date of disposition):

	As at July 7, 2015
Investment properties	$	2,672,288
Other current assets		(255,710	)
Total assets	$	2,416,578

Stockholder's equity	$	912,255
Loans & borrowings		1,382,295
Other Liabilities		122,028
Total equity and liabilities	$	2,416,578

F-23

Note 14 – Financial Instruments – Risk Management

The Group, through its subsidiaries, is exposed to the following financial risks through its operations:

Risks related to the general economic trend

Risks related to fund requirements

Other financial risks

Credit risks

Liquidity risk

Interest rate risk

Risk relevant to the environment

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group’s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

There have been no substantive changes in the Group’s exposure to financial instruments risks, its objectives, policies and processes for managing those risks or the methods used to measure them during the period unless otherwise stated in this note.

i. Principal financial instruments

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

Trade and other receivables

Cash and cash equivalents

Trade and other payables

Revolving line of credit

Floating-rate bank loans and lease agreements

Interest rate swaps

Notes payable

A summary of the financial instruments held by category is provided below:

Financial assets

	December 31, 2015		December 31, 2014		December 31, 2013
	Cash, loans and receivables		Cash, loans and receivables		Cash, loans and receivables
Cash and cash equivalents	$	134,574	$	165,091	$	133,414
Trade and other receivables		842,879		1,005,261		4,757,018
Total financial assets	$	977,453	$	1,170,352	$	4,890,432

F-24

Financial liabilities

	December 31, 2015				December 31, 2014				December 31, 2013
	Financial liabilities at fair value through profit or loss		Financial liabilities at amortized cost		Financial liabilities at fair value through profit or loss		Financial liabilities at amortized cost		Financial liabilities at fair value through profit or loss		Financial liabilities at amortized cost
Trade and other payables	$	–	$	5,372,684	$	–	$	5,311,130	$	–	$	8,699,717
Loans and borrowings and notes payable		–		28,136,250		–		33,945,717		–		51,352,031
Derivatives financial liabilities		2,733,836	$	–		221,191	$	–		1,141,314		–
Total financial liabilities	$	2,733,836	$	33,508,934	$	221,191	$	39,256,847	$	1,141,314	$	60,051,748

Financial instruments measured at fair value

Fair value measurements at December 31, 2015 using

Level 1

Level 2

Level 3

Financial liabilities

Derivative financial liabilities – convertible promissory notes

–

2,568,188

–

Derivative financial liabilities – interest rate swap agreement

–

165,648

–

Total financial liabilities

–

2,733,836

–

Fair value measurements at December 31, 2014 using

Level 1

Level 2

Level 3

Financial liabilities

Derivative financial liabilities – interest rate swap agreements

–

221,191

–

Fair value measurements at December 31, 2013 using

Level 1

Level 2

Level 3

Financial liabilities

Derivative financial liabilities – interest rate swap agreements

–

1,141,314

–

General objectives, policies and processes

The Board has overall responsibility for the determination of the Group’s risk management objectives and policies.

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility. Further details regarding these policies are set out below:

Risk related to the general economic trend

The Group performance is affected by the increase or decrease of the gross Italian national product. During 2012 and 2013, there was a general slowdown of the economic trend in Europe and especially in Italy. This has continued during 2014 and 2015.

Related to fund requirements

Operations may not continue to generate adequate financial resources for operations. The Group may raise the necessary financial resource by obtaining new loans. If the Group attempts to obtain new loans in the future, management believes that the Group may encounter higher interest rate spreads and greater difficulties in obtaining long-term loans in comparison to the past.

Other financial risks

The Group is exposed to financial risks associated with its business operations:

Credit risk in relation to normal trade transactions with customers;

Liquidity risk, with particular reference to the raising of financial resources associated with investments and the financing of working capital;

Market risks (mainly related to interest rates).

F-25

Credit risk

The granting of credit to end customers is subject to specific preliminary and on-going assessments of each tenant. Positions amongst trade receivables (if individually significant) for which objective partial or total non-recoverability is ascertained, are subject to individual write-down.

The Group’s cash is held with the following institutions:

Description	Rating		December 31, 2015		December 31, 2014		December 31, 2013

Cassa Rurale e Artigiana di Binasco Credito Coorperativo		N/A	$	87,046	$	48,798	$	2,280
First Republic Bank		A-		22,989		20,890		–
Banca Popolare di Vicenza		B-		10,244		70,848		8,405
Banca Cassa di Risparmio di Asti		N/A		6,527		7,212		912
ING Luxembourg		A		2,831		6,113		17,981
Banca Popolare Commercio e Industria		C+		1,781		1,252		30,840
Bank of China		A		1,406		9,215		–
Banca Intensa Sanpaolo		BBB+		1,200		–		–
M&T Bank		A		427		427		41,645
Banca Popolare di Sondrio		BBB		–		231		10,941
Unicredit		BBB+		–		–		19,769
Total cash at bank			$	134,451	$	164,986	$	132,773

Accounts at the institutions in United States are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000. Accounts at the institutions in Italy are guaranteed by Interbank Deposit Protection Fund for up to €100,000. The Company performs ongoing evaluations of these institutions to limit its concentration of risk exposure.

Foreign exchange risk

The Subsidiaries transactions are denominated in Euro. Therefore, the fair value of the investment properties may decrease if the Euro to US dollar exchange rate decreases, whilst the loans & borrowings would decrease accordingly. The Management believes the foreign exchange risk the Group encounters is relatively low.

Liquidity risk

The liquidity risk may manifest with regards to the inability to raise the financial resources necessary for the anticipated investments under good economic conditions and for financing working capital.

The Group has adopted a series of policies and processes aimed at optimizing the management of the financial resources, reducing the liquidity risk, such as the maintenance of an adequate level of available liquidity, the obtaining of adequate credit facilities and the systematic monitoring of the forecast liquidity conditions.

The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities:

At December 31, 2015	Up to 1 year		Between 1 and 5 years		Over 5 years		Total

Trade and other payables	$	5,372,684	$	–	$	–	$	5,372,684
Loans and borrowings		5,087,208		4,034,053		17,686,726		26,807,987
Derivative financial liabilities		2,733,836		–		–		2,733,836
Total	$	13,193,728	$	4,034,053	$	17,686,726	$	34,914,507

F-26

At December 31, 2014	Up to 1 year		Between 1 and 5 years		Over 5 years		Total

Trade and other payables	$	5,311,130	$	–	$	–	$	5,311,130
Loans and borrowings		23,146,771		2,028,761		7,092,648		32,268,180
Derivative financial liabilities		221,191		–		–		221,191
Total	$	28,679,092	$	2,028,761	$	7,092,648	$	37,800,501

At December 31, 2013	Up to 1 year		Between 1 and 5 years		Over 5 years		Total

Trade and other payables	$	8,699,717	$	–	$	–	$	8,699,717
Loans and borrowings		5,503,242		10,116,534		35,312,255		50,932,031
Derivative financial liabilities		1,141,314		–		–		1,141,314
Total	$	15,344,273	$	10,116,534	$	35,312,255	$	60,773,062

Interest rate risk

One of the Subsidiaries has stipulated Interest Rate Swap agreement linked to floating rate medium-term leasing contracts with the aim of ensuring itself a fixed rate on said operations.

Risk relevant to the environment

The activities of the Group are not directly subject to authorization and environmental rules and regulations. The activities of some tenants may be subject to regulations on emissions in the atmosphere, waste disposal, wastewater disposal and land contamination ban.

Capital Disclosures

The Group monitors adjusted capital which comprises all components of equity (i.e. capital quotas, legal reserve, non-controlling interest and retained earnings).

The Group’s objectives when maintaining capital are:

To safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and

To provide an adequate return to shareholders by pricing services commensurate with the level of risk.

Note 15 — Operating Leases – Group as Lessor

The Group has entered into leases on its property portfolio. The commercial property leases typically have lease terms between 6 and 9 years and include clauses to enable periodic upward revision of the rental charge according to prevailing market conditions. Some leases contain options to terminate before the end of the lease term.

Future minimum rental receivable under non-cancellable operating leases as of December 31, 2015, 2014 (with and without SIM) and 2013 (without and with Seba & SIM) are as follows:

	2015		2014 (without SIM)		2014 (with SIM)		2013 (without Seba & SIM)		2013 (with Seba & SIM)
Within 1 year	$	2,286,079	$	2,989,757	$	3,124,537		3,655,373	$	5,102,496
After year 1, but not more than 5 years		7,152,466		9,994,180		10,505,324		14,081,203		19,068,156
More than 5 years		1,183,002		2,533,810		2,536,799		6,791,282		6,889,093
Total	$	10,621,547	$	15,517,747	$	16,166,660	$	24,527,858	$	31,059,745

The significant decrease from 2013 to 2014 and 2014 to 2015 is due to the Unwinding of Seba and Sale of SIM respectively, and hence the transfer of the future rental receivable to its current owners.

F-27

Note 16 — Earnings/(loss) per share

Basic and diluted earnings/(loss) per share is computed by dividing profit/(loss) for the year by the weighted-average number of ordinary shares outstanding during the period.

Potentially dilutive securities include:

	For the year ended December 31, 2015		For the year ended December 31, 2014		For the year ended December 31, 2013

Warrants to purchase common stock		7,241,054		7,241,054		7,241,054
Common stock in the unit purchase option for underwriters		215,000		215,000		215,000
Options in the unit purchase option for underwriters to purchase common stock		215,000		215,000		215,000
Convertible promissory notes issued to underwriters and other related parties subject to possible conversion		113,385		112,100		99,243
Convertible promissory notes issued to shareholder subject to possible conversion		1,392,602		945,006		–
Options to purchase common stock		107,813		14,969		7,500
Total potential dilutive securities		9,284,854		8,743,129		7,777,797

On October 24, 2013, the Company paid a dividend to its public shareholders of one warrant for every four shares that were not redeemed in connection with the Business Combination. As a result, 161,004 warrants were issued.

The exercise price of the Company’s warrants to purchase common stock is $7.50, expiring on March 30, 2016. On January 4, 2014, the Company’s management amended the exercise price from $7.50 to $5.00, and extended the expiration date from March 30, 2016 to March 30, 2018. The warrants may be called for redemption by the Company only if the last sale price of our ordinary shares on the stock exchange equals to or exceeds $15.00 per share for any 20 trading days within a 30 trading day period.

The exercise price of the 215,000 units of unit purchase option (“UPO”) issued to underwriters is $12.00. Total proceeds from the UPO exercise will be $2,580,000 (if exercised in full). The UPO is exercisable at any time, in whole or in part, commencing on the later of the consummation of our initial business combination (September 30, 2013) or September 24, 2011 and expiring March 24, 2016. As of December 31, 2015, no underwriters’ unit purchase option has been exercised.

The warrants, UPO, the options to purchase common stocks, and the convertible promissory notes subject to possible conversion are excluded from the computation of fully diluted earnings/(loss) per share for December 31, 2013 and 2015, as their effect is anti-dilutive due to the net loss at the year end. For December 31, 2014, the warrants, UPO, and the options to purchase common stocks are excluded due to the exercising price below the market price and hence their effect is anti-dilutive. However, the convertible promissory notes subject to possible conversion are included in the computation of fully diluted earnings/(loss) per share due to its dilutive effect.

The following reflects the basic and diluted earnings/(loss) per share for the year ended December 31:

Basic earnings per share		2015			2014*			2013*

From continuing operations	$	(3.16	)	$	1.37		$	(5.32	)
From discontinued operations		(0.13	)		(0.26	)		0.09
Total basic earnings/(loss) per share	$	(3.29	)	$	1.11		$	(5.23	)

Diluted earnings per share		2015			2014*			2013*

From continuing operations	$	(3.16	)	$	1.28		$	(5.32	)
From discontinued operations		(0.13	)		(0.24	)		0.09
Total diluted earnings/(loss) per share	$	(3.29	)	$	1.04		$	(5.23	)

F-28

The earnings/(loss) and weighted average number of ordinary shares used in the calculation of basic earnings/(loss) per share for the year ended December 31 are as follow:

Basic earnings per share		2015			2014*			2013*

Earnings used in the calculation of basic earnings per share	$	(7,256,549	)	$	4,231,604		$	(16,150,935	)
Loss for the year from discontinued operations used in the calculation of basic earnings per share from discontinued operations		(56,778	)		(812,285	)		265,457
Loss on foreign currency exchange on discontinued operations		(248,359	)		–			–
Earnings used in the calculation of diluted earnings per share	$	(7,561,686	)	$	3,419,319		$	(15,885,478	)

Weighted average number of ordinary shares for the purposes of basic earnings per share		2,299,462			3,098,017			3,037,806

The earnings/(loss) and weighted average number of ordinary shares used in the calculation of diluted earnings/(loss) per share for the year ended December 31 are as follow:

Diluted earnings per share		2015			2014*			2013*

Earnings used in the calculation of basic earnings per share	$	(7,256,549	)	$	4,231,604		$	(16,150,935	)
Interest on convertible promissory notes		–			185,985			–
Earnings used in the calculation of diluted earnings per share		(7,256,549	)		4,417,589			(16,150,935	)
Loss for the year from discontinued operations used in the calculation of basic earnings per share from diluted operations		(56,778	)		(812,285	)		265,457
Loss on foreign currency exchange on discontinued operations		(248,359	)		–			–
Earnings used in the calculation of diluted earnings per share	$	(7,561,686	)	$	3,605,304		$	(15,885,478	)

Weighted average number of ordinary shares used in the calculation of basic earnings per share		2,299,462			3,098,017			3,037,806
Shares deemed to be issued for no consideration in respect of:
- Convertible promissory notes		–			354,254			–
Weighted average number of ordinary shares used in the calculation of diluted earnings per share		2,299,462			3,452,271			3,037,806

*Restated for discontinued operations (see note 13 — Discontinued Operations)

Note 17 — Property and Equipment

The table below shows the detailed movements which occurred in property and equipment during the year ended December 31, 2013, 2014 and 2015 considering cost and accumulated depreciation, separately.

Cost or valuation	Plant and machinery			Industrial and commercial equipment			Office and office-related equipment			Total
Balance at January 1, 2013	$	–		$	–		$	5,005		$	5,005
Additions through acquisition		273,964			1,112			–			275,076
Additions		–			–			7,516			7,516
Disposals		–			–			–			–
Revaluations		–			–			–			–
Balance at December 31, 2013	$	273,964		$	1,112		$	12,521		$	287,597

Balance at January 1, 2014		273,964			1,112			12,521			287,597
Additions		3,926			–			2,478			6,404
Disposals		(12,457	)		–			(2,177	)		(14,634	)
Revaluations		(31,083	)		(123	)		(825	)		(32,031	)
Balance at December 31, 2014	$	234,350		$	989		$	11,997		$	247,336

Balance at January 1, 2015		234,350			989			11,997			247,336
Additions		5,271			–			5,289			10,560
Disposals		(134,448	)		–			–			(134,448	)
Revaluations		(15,307	)		(91	)		(511	)		(15,909	)
Balance at December 31, 2015	$	89,866		$	898		$	16,775		$	107,539

F-29

Accumulated depreciation	Plant and machinery		Industrial and commercial equipment		Office and office-related equipment		Total
Balance at January 1, 2013	$	–	$	–	$	1,410	$	1,410
Depreciation charge for the year		18,730		108		1,592		20,430
Balance at December 31, 2013	$	18,730	$	108	$	3,002	$	21,840

Balance at January 1, 2014		18,730		108		3,002		21,840
Depreciation charge for the year		66,449		–		2,103		68,552
Balance at December 31, 2014	$	85,179	$	108	$	5,105	$	90,392

Balance at January 1, 2015		85,179		108		5,105		90,392
Depreciation charge for the year		469		–		3,114		3,583
Balance at December 31, 2015	$	85,648	$	108	$	8,219	$	93,975

Property and equipment, net at December 31, 2013	$	255,234	$	1,004	$	9,519	$	265,757

Property and equipment, net at December 31, 2014	$	149,171	$	881	$	6,892	$	156,944

Property and equipment, net at December 31, 2015	$	4,218	$	790	$	8,556	$	13,564

Revaluations of the property and equipment arise from decrease in the 2014 and 2015 year-end Euro currency exchange rate as compared to the US Dollar from the prior year.

Note 18 — Investment Properties

Investment properties were valued on December 31, 2013, 2014 and 2015 using the discounted cash flow (DCF) method by an independent qualified professional valuation expert. The methods and assumptions adopted for the real estate appraisal carried out by the expert in determining the fair value of the investment property is in accordance with IAS 40, Investment Property.

F-30

Investment properties valuation at December 31, 2013, 2014 and 2015 are shown in the table below:

Cost or valuation	Investment Properties

Balance at January 1, 2013	$	–
Additions through acquisition		72,877,131
Disposals		–
Revaluation adjustment		–
Balance at December 31, 2013		72,877,131

Balance at January 1, 2014		72,877,131
Additions		–
Disposals		(18,973,683	)
Revaluation adjustment		290,425
Currency exchange rate adjustment		(6,564,336	)
Balance at December 31, 2014		47,629,537

Balance at January 1, 2015		47,629,537
Additions		–
Disposals		(3,412,482	)
Revaluation adjustment		(2,271,703	)
Currency exchange rate adjustment		(4,538,269	)
Balance at December 31, 2015	$	37,407,083

Details of the investment properties is as follows:

Location, address	2015 Fair Value, Level 3		2014 Fair Value, Level 3		2013 Fair Value, Level 3
Milano, Corso Europa 22	$	5,565,238	$	7,768,842	$	27,695,790
Buccinasco, Via Lucania 2-4-6		17,396,117		19,760,934		22,666,455
Buccinasco, Via Privata Mulino 24		1,096,759		1,222,201		1,391,679
Buccinasco, Via Lazio 95		3,887,522		4,525,774		5,098,230
Buccinasco, Via Bruno Buozzi 22		879,579		1,512,625		1,887,723
Buccinasco, Via Emilia 30		166,143		193,616		358,254
Assago, Via Isaac Newton 9		–		2,952,644		3,458,529
Rozzano, Milanofiori, Building A5		2,454,134		2,807,432		3,182,949
Rozzano, Milanofiori, Building N1		3,464,021		4,053,835		4,560,849
Rozzano, Milanofiori, Building Q5		1,031,605		1,173,797		1,281,447
Rozzano, Milanofiori, Building Q7		1,465,965		1,657,837		1,295,226
Total	$	37,407,083	$	47,629,537	$	72,877,131

At December 31, 2015, 2014 and 2013, all investment properties are in the commercial rental category.

The significant decrease of 2014 fair value of the commercial rental property at Corso Europa 22 in Milan is primarily due to the closing of the Seba Purchase Agreement between the former sellers of Seba and the Company. Pursuant to the Seba Purchase Agreement, the former sellers reacquired all of the outstanding equity interests in Seba in exchange for the return of 497,308 of the Company’s ordinary shares in December, 2014. As a result of the Seba Purchase Agreement, the Group owns two floors of the property at Corso Europa 22 instead of six floors. In addition, the overall reduction of the portfolio’s fair value from 2013 to 2014 reflects the 12.18% decrease in the 2014 year-end Euro currency exchange rate as compared to the US Dollar from the prior year.

F-31

The significant decrease of 2015 fair value of the total commercial rental properties from 2014 is primarily due to the sale of SIM through the closing of the SIM Purchase Agreement in July 2015. SIM’s sole asset consists of the property located at Via Newton 9, Milan, Italy. Separately in April 2015, the Group sold a small portion of the investment property on Via Buozzi in Buccinascao consisting of two warehouse spaces. The Group retains the ownership of the remaining portion of the property after the sale. The decrease of 2015 fair value of the property at Corso Europa is primarily due to certain office spaces vacant for a period of time during 2015 and the rental income from the new replacement tenants is lower than prior tenants, affecting the overall income stream assumption used in the DCF method valuation. Furthermore, the overall reduction of the portfolio’s fair value from 2013 to 2014 reflects the 10.26% decrease in the 2015 year-end Euro currency exchange rate as compared to the US Dollar from the prior year.

The portfolio of properties has low vacancy rates. The properties have an average lease expiration of approximately 6 years. The properties composing the portfolio are commercial real estate assets.

During 2015, 2014 and 2013 (continuing from 2012), the economic recession in Italy has continued to affect the real estate industry causing a general delay in rental payments and sometimes an early termination of outstanding leasing agreements. Nevertheless the amount of rental fees is essentially unchanged compared to previous years.

Under the DCF method, a property’s fair value is estimated using explicit assumptions regarding the benefits and liabilities of ownership over the asset’s life including an exit or terminal value. As an accepted method within the income approach to valuation, the DCF method involves the projection of a series of cash flows on a real property interest. To this projected cash flow series, an appropriate, market-derived discount rate is applied to establish the present value of the cash inflows associated with the real property.

The duration of the cash flow and the specific timing of inflows and outflows are determined by events such as rent reviews, lease renewal and related lease up periods, re-letting, redevelopment, or refurbishment. The appropriate duration is typically driven by market behavior that is a characteristic of the class of real property.

In the case of investment properties, periodic cash flow is typically estimated as gross income less vacancy, non-recoverable expenses, collection losses, lease incentives, maintenance cost, extraordinary maintenance cost, agent and commission costs and other operating and management expenses. The series of periodic net cash inflows, along with an estimate of the terminal value anticipated at the end of the projection period, is then discounted.

In regards to the commercial rental properties in the town of Assago, Buccinasco and Rozzano, the market data of the outskirt area of Milan was used as a basis of comparison. For the commercial rental property at Corso Europa 22 in Milan, it is considered to be in the top range category due to the location of the property and the current rental agreements in place.

The Group, following the Business Combination, has set up a policy of engaging an independent qualified professional valuation expert to value the investment properties on an annual basis at the end of each year. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. The valuation performed by the independent qualified professional valuation expert was reviewed by the Group’s CEO, CFO, and certain members of the Board of Directors.

F-32

The summary of the unobservable inputs used for the year ended December 31, 2015 are as follow:

Property		Fair Value	Valuation technique	Key unobservable inputs	Inputs used

Milano, Corso Europa 22	$	5,565,238	DCF	ERV	$ 499 per sq meter
				Rental growth p.a.	0.83% to 1.5%
				Discount rate	4.96%
				Cap rate	4.3%

Buccinasco, Via Lucania 2-4-6		17,396,117	DCF	ERV	$ 91 per sq meter
				Rental growth p.a.	0.83% to 1.5%
				Discount rate	8.46%
				Cap rate	7.4%

Buccinasco, Via Privata Mulino 24		1,096,759	DCF	ERV	$ 192 per sq meter
				Rental growth p.a.	0.83% to 1.5%
				Discount rate	7.26%
				Cap rate	6.8%

Buccinasco, Via Lazio 95		3,887,522	DCF	ERV	$ 75 - $ 106 per sq meter
				Rental growth p.a.	0.83% to 1.5%
				Discount rate	8.56%
				Cap rate	7.4%

Buccinasco, Via Bruno Buozzi 22		879,579	DCF	ERV	$ 106 per sq meter
				Rental growth p.a.	0.83% to 1.5%
				Discount rate	6.86%
				Cap rate	5.6%

Buccinasco, Via Emilia 30		166,143	DCF	ERV	$ 64 per sq meter, $ 434 per parking space
				Rental growth p.a.	0.83% to 1.5%
				Discount rate	8.66%
				Cap rate	7.5%

Rozzano, Milanofiori, Building A5		2,454,134	DCF	ERV	$ 139 per sq meter, $ 977 per parking space
				Rental growth p.a.	0.83% to 1.5%
				Discount rate	6.86%
				Cap rate	5.6%

Rozzano, Milanofiori, Building N1		3,464,021	DCF	ERV	$ 76 - $ 139 per sq meter
				Rental growth p.a.	0.83% to 1.5%
				Discount rate	6.86%
				Cap rate	5.6%

Rozzano, Milanofiori, Building Q5		1,031,605	DCF	ERV	$ 139 per sq meter, $ 977 per parking space
				Rental growth p.a.	0.83% to 1.5%
				Discount rate	6.86%
				Cap rate	5.6%

Rozzano, Milanofiori, Building Q7		1,465,965	DCF	ERV	$ 139 per sq meter, $ 977 per parking space
				Rental growth p.a.	0.83% to 1.5%
				Discount rate	6.86%
				Cap rate	5.6%
Total	$	37,407,083

F-33

The summary of the unobservable inputs used for the year ended December 31, 2014 are as follow:

Property	Fair Value		Valuation technique	Key unobservable inputs	Inputs used

Milano, Corso Europa 22	$	7,768,842	DCF	ERV	$569 per sq meter
				Rental growth p.a.	0.75% to 1.5%
				Discount rate	4.9%
				Cap rate	4.3%

Buccinasco, Via Lucania 2-4-6		19,760,934	DCF	ERV	$103 per sq meter
				Rental growth p.a.	0.75% to 1.5%
				Discount rate	8.4%
				Cap rate	7.4%

Buccinasco, Via Privata Mulino 24		1,222,201	DCF	ERV	$218 per sq meter
				Rental growth p.a.	0.75% to 1.5%
				Discount rate	7.2%
				Cap rate	6.8%

Buccinasco, Via Lazio 95		4,525,774	DCF	ERV	$85 - $121 per sq meter
				Rental growth p.a.	0.75% to 1.5%
				Discount rate	7.9%
				Cap rate	7.4%

Buccinasco, Via Bruno Buozzi 22		1,512,625	DCF	ERV	$61 - $121 per sq meter
				Rental growth p.a.	0.75% to 1.5%
				Discount rate	7.9%
				Cap rate	7.4%

Buccinasco, Via Emilia 30		193,616	DCF	ERV	$73 per sq meter, $484 per parking space
				Rental growth p.a.	0.75% to 1.5%
				Discount rate	8.2%
				Cap rate	7.5%

Assago, Via Isaac Newton 9		2,952,644	DCF	ERV	$97 - $157 per sq meter
				Rental growth p.a.	0.75% to 1.5%
				Discount rate	6.2%
				Cap rate	5.5%

Rozzano, Milanofiori, Building A5		2,807,432	DCF	ERV	$48 - $169 per sq meter
				Rental growth p.a.	0.75% to 1.5%
				Discount rate	6.4%
				Cap rate	5.5%

Rozzano, Milanofiori, Building N1		4,053,835	DCF	ERV	$85 - $157 per sq meter
				Rental growth p.a.	0.75% to 1.5%
				Discount rate	6.2%
				Cap rate	5.5%

Rozzano, Milanofiori, Building Q5		1,173,797	DCF	ERV	$157 per sq meter, $1,089 per parking space
				Rental growth p.a.	0.75% to 1.5%
				Discount rate	6.2%
				Cap rate	5.5%

Rozzano, Milanofiori, Building Q7		1,657,837	DCF	ERV	$157 per sq meter, $1,089 per parking space
				Rental growth p.a.	0.75% to 1.5%
				Discount rate	6.2%
				Cap rate	5.5%

Total	$	47,629,537

F-34

The summary of the unobservable inputs used for the year ended December 31, 2013 are as follow:

Property	Fair Value		Valuation technique	Key unobservable inputs	Inputs used

Milano, Corso Europa 22	$	27,695,790	DCF	ERV	$717 per sq meter
				Rental growth p.a.	1.5%
				Discount rate	6.0%
				Cap rate	4.6%

Buccinasco, Via Lucania 2-4-6		22,666,455	DCF	ERV	$110 per sq meter
				Rental growth p.a.	1.5%
				Discount rate	8.0%
				Cap rate	7.4%

Buccinasco, Via Privata Mulino 24		1,391,679	DCF	ERV	$248 per sq meter
				Rental growth p.a.	1.5%
				Discount rate	7.5%
				Cap rate	6.8%

Buccinasco, Via Lazio 95		5,098,230	DCF	ERV	$96 per sq meter
				Rental growth p.a.	1.5%
				Discount rate	8.0%
				Cap rate	7.4%

Buccinasco, Via Bruno Buozzi 22		1,887,723	DCF	ERV	$96 per sq meter
				Rental growth p.a.	1.5%
				Discount rate	8.0%
				Cap rate	7.4%

Buccinasco, Via Emilia 30		358,254	DCF	ERV	$110 per sq meter, $648 per parking space
				Rental growth p.a.	1.5%
				Discount rate	7.5%
				Cap rate	6.7%

Assago, Via Isaac Newton 9		3,458,529	DCF	ERV	$138 - $220 per sq meter
				Rental growth p.a.	1.5%
				Discount rate	6.5%
				Cap rate	5.6%

Rozzano, Milanofiori, Building A5		3,182,949	DCF	ERV	$96 - $193 per sq meter
				Rental growth p.a.	1.5%
				Discount rate	6.6%
				Cap rate	5.6%

Rozzano, Milanofiori, Building N1		4,560,849	DCF	ERV	$96 - $179 per sq meter
				Rental growth p.a.	1.5%
				Discount rate	6.5%
				Cap rate	5.6%

Rozzano, Milanofiori, Building Q5		1,281,447	DCF	ERV	$179 per sq meter, $1,206 per parking space
				Rental growth p.a.	1.5%
				Discount rate	6.6%
				Cap rate	5.6%

Rozzano, Milanofiori, Building Q7		1,295,226	DCF	ERV	$179 per sq meter, $1,206 per parking space
				Rental growth p.a.	1.5%
				Discount rate	6.5%
				Cap rate	5.6%

Total	$	72,877,131

F-35

Descriptions and definitions

Estimated rental value (ERV)

The rent at which space could be leased in the market conditions prevailing at the date of valuation or the actual rental income of the property, whichever is higher.

Rental growth p.a. (per annum)

The estimated average increase in rent based on both market estimations and contractual indexations.

Discount rate

Rate used to discount the net cash flows generated from rental activities during the period of analysis (estimated up to 10 years).

Gross capitalization rate (Cap rate)

Rate used to estimate the value that the property will be sold at the end of the rental period by capitalizing the final year’s gross income at an appropriate market gross capitalization rate based on the ERV of the property.

Sensitivity analysis to significant changes in unobservable inputs within Level 3 of the hierarchy

The significant unobservable inputs used in the fair value measurement categorized within Level 3 of the fair value hierarchy of the entity’s portfolios of investment property are:

	·	Estimated rental value (ERV)
	·	Rental growth p.a.
	·	Discount rate
	·	Gross capitalization rate

Significant increases (decreases) in the ERV and rental growth p.a. in isolation would result in a significantly higher (lower) fair value measurement. Significant increases (decreases) in the discount rate and gross capitalization rate in isolation would result in a significantly lower (higher) fair value measurement.

Generally, a change in the assumption made for the ERV is accompanied by a similar change in the rent growth p.a., discount rate, and gross capitalization rate.

Note 19 — Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following at December 31:

	2015		2014		2013
Prepaid expenses	$	155,256	$	149,493	$	347,935
Other current assets		–		24,202		84,424
Other accrued income		–		–		79,910
Total prepaid expenses and other current assets	$	155,256	$	173,695	$	512,269

Other current assets consist of a non-interest earning fixed deposit at a bank. This fixed deposit is a requirement by the finance lease creditor of one of the Subsidiaries in connection with the finance lease. The amount of the fixed deposit is determined by the finance lease creditor with consideration in the total value of the finance lease.

Other accrued income is comprised of a reimbursable expense from one of the tenants on the building improvement work performed by an outside service provider. The building improvement work performed was not satisfactory to the tenant. In 2014, the management deemed the possibility of recovering the amount from the tenant being remote and hence it was written off as an expense.

F-36

Note 20 — Trade and Other Receivables

Trade and other receivables consist of the following at December 31:

	2015			2014			2013
Trade receivables	$	686,745		$	890,218		$	1,907,789
Less: bad debt provision		(488,978	)		(521,111	)		(877,842	)
Trade receivables, net		197,767			369,107			1,029,947
Other receivables (unbilled revenue and maintenance charges)		645,112			549,083			517,131
Due from Lanati		–			87,071			3,209,940
Total trade and other receivables, net	$	842,879		$	1,005,261		$	4,757,018

Lanati was one of the sellers of the investment properties and a current shareholder of the Group, and performed maintenance and other services for the Group’s investment properties. The Group leases office and parking spaces to Lanati and pays certain expenses on Lanati’s behalf. The amount due from Lanati represents the amount due at December 31, 2014 and 2013. The amount due to Lanati was $0 and $3,773,041 at December 31, 2014 and 2013 respectively (see note 27 — Trade and Other Payables). In October, 2014 and July, 2015, the Group has reached various offsetting agreements with Lanati on offsetting of certain receivables (due from Lanati) and payables (due to Lanati). The total amount offset in October, 2014 and July, 2015 were approximately $1,926,217 and $1,544,265 respectively (see note 25 — Related Party Transactions and Balances).

Details of the Group’s bad debt provision at December 31 are as follows:

	2015			2014			2013
At January 1	$	521,111		$	877,842		$	1,070,890
Provided during the year		29,313			29,263			451
Receivable written off during the year as uncollectible		(19,092	)		(244,723	)		–
Unused amount reversed		(30,840	)		–			(193,499	)
Currency exchange rate and other adjustment		(11,514	)		(141,271	)		–
At December 31	$	488,978		$	521,111		$	877,842

Note 21 — Cash and Cash Equivalents

Cash and cash equivalents comprises:

	December 31, 2015		December 31, 2014		December 31, 2013
Cash at bank	$	134,451	$	164,986	$	132,773
Cash on hand		123		105		641
Total cash and cash equivalent	$	134,574	$	165,091	$	133,414

Note 22 — Shareholders’ Equity

Ordinary Shares

The Company is authorized to issue up to 50,000,000 ordinary shares, par value $0.001 per share. The holders of the ordinary shares are entitled to one vote for each ordinary share.

On December 18, 2014, the Company ceased control of Seba through the closing of the Seba Purchase Agreement in exchange for the return of 497,308 of the Company’s shares. Theses shares were canceled immediately upon their return. Separately, 253,881 shares of the founders’ shares were forfeited during 2014 as a result of pre-determined stock price target not being reached pursuant to conditions set forth during the Company’s IPO in 2011.

On July 7, 2015, the Company ceased control of SIM through the closing of the SIM Purchase Agreement in exchange for the return of 220,000 of the Company’s shares. 134,200 shares (61%) were canceled immediately upon their return, 85,800 shares (39%) remained as the Company’s treasury shares. Separately in 2015, additional 253,881 shares of the founders’ shares were forfeited as a result of pre-determined stock price target not being reached pursuant to conditions set forth during the Company’s IPO in 2011.

F-37

As of December 31, 2015, 2014 and 2013, there were 1,954,651, 2,428,532 and 3,179,721 ordinary shares outstanding, respectively. As of December 31, 2015, there were 85,800 shares as treasury shares.

Share Premium

As a result of the Company ceasing control of Seba on December 18, 2014, the Group has derecognized the carrying amounts of the net assets and liabilities of Seba at December 18, 2014 which were determined to be in aggregate of $3,243,538. All goodwill arose from the Business Combination related to Seba was fully impaired at the year end of 2013, and therefore, not considered as part of the carrying amount of Seba. Seba’s equity accounts were derecognized from the Group’s share premium to reflect this cashless transaction.

In connection to ceasing control of SIM on July 7, 2015, the Group has derecognized the assets and liabilities of SIM from the consolidated statement of financial position. The Group further recognized the loss associated with the loss of control attributable to the former controlling interest. Following the ceasing of control, the Group has no investment retained in SIM. Therefore, no retained interest remeasurement is necessary.

Note 23 — Loans and Borrowings

The book value of loans and borrowings consist of the following:

Loans and borrowings	2015		2014		2013
Non-current
Bank loans	$	4,301,125	$	4,713,816	$	8,082,859
Finance lease creditor		16,518,357		3,403,210		36,200,146
Other loans		901,297		1,004,383		1,145,784
Total non-current		21,720,779		9,121,409		45,428,789

Current
Revolving line of credit		680,075		780,669		1,877,638
Bank loans		1,660,946		2,093,671		799,474
Finance lease creditor		1,856,354		19,382,598		1,936,297
Other loans		889,833		889,833		889,833
Total current		5,087,208		23,146,771		5,503,242

Total loans and borrowings	$	26,807,987	$	32,268,180	$	50,932,031

The significant decrease in bank loans (non-current), revolving line of credit and finance lease creditor (current and non-current combined) from 2013 to 2014 was due to the Unwinding of Seba, and hence the transfer of the related loan and borrowings to its previous owner (see note 13 — Discontinued Operations). In addition, the decrease in year-end Euro exchange rate to US dollar from 2013 to 2014 further contributed to the decrease. From 2014 to 2015, the decrease in finance lease creditor (current and non-current combined) was due to the sale of SIM to its previous owner and the decrease in year-end Euro exchange rate to US dollar from prior year. As a result of the SIM unwind, the related loan and borrowing was hence transferred to its previous owner following the sale of SIM (see note 13 — Discontinued Operations).

Bank loans

Bank loans include both secured and unsecured bank loans. Certain bank loans are secured by the investment properties. In addition to using the investment properties as collateral, some of the loans are further personally guaranteed by the former owners of the properties. The total fair value of the investment properties used as collateral was $9,452,760 and $12,294,616 as at December 31, 2015 and 2014 respectively.

F-38

The tables below show the detail of bank loans by expiry date and rate; all bank loans contracts provide for floating rates.

2015	Floating rate		Total

Expiry within 1 year (current)	$	1,660,946	$	1,660,946
Expiry within 1 and 5 years (non-current)		1,507,833		1,507,833
Expiry in more than 5 years (non-current)		2,793,292		2,793,292
Total	$	5,962,071	$	5,962,071

2014	Floating rate		Total

Expiry within 1 year	$	2,093,671	$	2,093,671
Expiry within 1 and 5 years		1,247,032		1,247,032
Expiry in more than 5 years		3,466,784		3,466,784
Total	$	6,807,487	$	6,807,487

2013	Floating rate		Total

Expiry within 1 year	$	799,474	$	799,474
Expiry within 1 and 5 years		3,133,099		3,133,099
Expiry in more than 5 years		4,949,760		4,949,760
Total	$	8,882,333	$	8,882,333

As at December 31, 2015, 2014 and 2013, the effective interest rate varies from EURIBOR+1.125% to EURIBOR+2.554%. This amounted to 0.995% to 2.424% as at December 31, 2015.

During 2014, one of the Subsidiaries missed certain scheduled repayments on a bank loan totaling $193,011 in principal and $22,680 in interest. Except for these missed scheduled repayments, the Group has been current on all scheduled repayments since the beginning of 2014. According to the applicable mortgage agreement, missing scheduled payments can cause the bank to request immediate repayment of the residual debt totaling approximately $1,515,720 as of December 31, 2014. Management initiated negotiation with the bank to postpone repayment for 12 months in 2014. Separately during 2014, one of our other Subsidiaries missed certain scheduled finance lease payments to the leasing department of the same bank. As of the date of this report, the bank official from the mortgage department, on the Group’s behalf, is in negotiation with their leasing department on the issuance of a final moratorium. As the negotiation is in the final stage, management believes the risk of the bank demanding immediate repayment of the full residual debt is very low. However, there can be no assurance the bank will not decide to refuse granting the postponement to the Group and request immediate repayment of the residual debt. As a result of this possibility, the Management has classified such residual debt as current loans and borrowings as of December 31, 2014 and 2015.

Revolving line of credit

The Group has outstanding balance at December 31, 2015, 2014 and 2013 as follows:

2015	Floating rate		Fixed rate		Total

Expiry within 1 year (current)	$	318,063	$	362,012	$	680,075
Expiry within 1 and 5 years (non-current)		–		–		–
Expiry in more than 5 years (non-current)		–		–		–
Total	$	318,063	$	362,012	$	680,075

2014	Floating rate		Fixed rate		Total

Expiry within 1 year	$	377,251	$	403,418	$	780,669
Expiry within 1 and 5 years		–		–		–
Expiry in more than 5 years		–		–		–
Total	$	377,251	$	403,418	$	780,669

2013	Floating rate		Fixed rate		Total

Expiry within 1 year	$	1,418,280	$	459,358	$	1,877,638
Expiry within 1 and 5 years		–		–		–
Expiry in more than 5 years		–		–		–
Total	$	1,418,280	$	459,358	$	1,877,638

F-39

The facilities expiring within 1 year are annual facilities subject to renewal at various dates. As at December 31, 2015, 2014 and 2013, the effective interest rate varies from 4.86% to 15.50%, 5.50% to 15.50%, and 5.726% to 15.25% respectively.

The revolving line of credit is unsecured, and personally guaranteed by the former owners of the properties. The total revolving line of credit approved by the bank as at December 31, 2015, 2014 and 2013 was $575,527, $806,607 and $1,816,590 respectively. The total balance of the revolving line of credit as at December 31, 2015, 2014 and 2013 was $680,075, $780,699 and $1,877,638 respectively. The revolving line of credit was overdrawn on December 31, 2015 and 2013. These overdrawn were agreed with the lender and not considered an event of default.

Finance lease creditor

See note “Finance leases” below

Other loans

Current other loans consist of an interest bearing convertible promissory note with the underwriters (see Note 26 — Note Payable to Underwriters).

Note 24 — Finance Leases

The Group leases all of its real estate properties except for the properties located in Via Lazio 95 in Buccinasco, Via Buozzi 22 in Buccinasco, and Corso Europa 22 in Milan.

Such assets are classified as finance leases as the Group has the right to purchase the assets outright at the end of the minimum lease term by paying a nominal amount. The total fair value of the investment properties that carried finance leases was $26,908,602 and $33,628,679 as at December 31, 2015 and 2014 respectively.

Future lease payments are due as follows:

2015	Minimum lease payments		Interest		Present value

Not more than one year	$	3,514,879	$	1,658,525	$	1,856,354
Later than one year and not later than five years		5,952,787		3,426,567		2,526,220
Later than five years		18,934,300		4,942,163		13,992,137
Total	$	28,401,966	$	10,027,255	$	18,374,711

2014	Minimum lease payments		Interest		Present value

Not more than one year	$	28,431,853	$	9,049,255	$	19,382,598
Later than one year and not later than five years		1,270,379		488,650		781,729
Later than five years		3,159,958		538,477		2,621,481
Total	$	32,862,190	$	10,076,382	$	22,785,808

2013	Minimum lease payments		Interest		Present value

Not more than one year	$	3,640,541	$	1,704,244	$	1,936,297
Later than one year and not later than five years		12,984,033		6,000,598		6,983,435
Later than five years		38,442,929		9,226,218		29,216,711
Total	$	55,067,503	$	16,931,060	$	38,136,443

F-40

As at December 31, 2015, 2014 and 2013, the effective interest rate varies from EURIBOR+1.4% to EURIBOR+2.762%. This amounted to 1.27% to 2.632%, and 1.478% to 2.840% as at December 31, 2015 and 2014 respectively.

The present values of future lease payments are analyzed as:

	2015		2014		2013

Current liabilities	$	1,856,354	$	19,382,598	$	1,936,297
Non-current liabilities		16,518,357		3,403,210		36,200,146
Total	$	18,374,711	$	22,785,808	$	38,136,443

During 2014, four of the Subsidiaries missed certain scheduled payment to four finance lease creditors, totaling approximately $244,234 in principal and $241,328 in interest as at December 31, 2014. Except for these missed scheduled payments, the Group has been current with all the scheduled payments since the beginning of 2014. Pursuant to the leasing agreement, the finance lease creditors have the right to declare the borrower in default in case of missing scheduled payments via official written notice and demand full payment of outstanding principal balance at the time of such default declaration. Management initiated negotiation with all the affected finance lease creditors for modification repayment plans on these missed payments in 2014. In the second quarter of 2015, the Group remitted all missed payments to one of the finance lease creditors and thus corrected the default. During 2015, two of the three affected finance lease creditors have granted the Group modification repayment plans. The Management is still undergoing negotiation with the one remaining affected finance lease creditor. The communication between the Group and this finance creditor is ongoing and positive. Therefore, Management believes there is very low risk of this finance lease creditor declaring the borrower in default and demanding immediate full principal payment during the approval process. However, there can be no assurance this finance lease creditor will not decide to refuse granting the requested modification repayment plans to the Group. As a result of this possibility, the Management has classified this one residual finance lease as current loans and borrowings as of December 31, 2015.

Note 25 — Related Party Transactions and Balances

The Company entered into five non-interest bearing unsecured promissory notes with one director of the Company which amounted to $420,000 before the Business Combination. The notes were to be repaid on the earlier of consummation of the Business Combination or liquidation of the Company. At the closing of the Business Combination, the funds released from the Trust Account were less than the aggregate of all payables. The director agreed to extend the repayment date of the $420,000 promissory note to a later time to be determined by mutual agreement between the Company and the director.

On July 1, 2014, all the aforementioned non-interest bearing unsecured promissory notes amounted to $420,000 and $230,000 of reimbursable expenses owed to one director, and additional cash injection of $30,000 to the Company on June 26, 2014 were converted to an interest bearing unsecured convertible promissory notes of $680,000 with an interest rate of 10% per annum, compounding annually. The notes mature on the earlier of (i) the date on which the Company liquidates and winds-up its affairs, or (ii) June 30, 2015 (one year from the date of the interest bearing unsecured note). The convertible feature grants the payee the option to convert the principal sum and any unpaid interest for the lower of (1) $2.29 per share, or (2) the price per share of the Company’s next round of financing. Following the conversion of this aforementioned promissory note, the Company further entered into twenty-three additional interest bearing unsecured convertible promissory notes during 2014 and 2015 which amounted to $2,505,000 with the same interest rate and similar convertible feature as the previously converted notes. During 2015, the convertible promissory notes from 2014 reached maturity. The Company was not in a position to repay the notes or the accrued interest. As a result, the Company had issued new unsecured convertible promissory notes (“Roll-over Notes”) to the director for the principal and the accrued unpaid interest. These Roll-over Notes have the same interest rate and similar convertible feature as the original convertible notes. The total interest bearing unsecured promissory note payable to this director amounted to $2,671,000 and $1,660,000 as at December 31, 2015 and 2014, respectively. Due to the specific terms of the convertible feature on these promissory notes, these notes are classified as convertible notes with an embedded derivative liability. The host loan is accounted for at amortized cost, with an embedded derivative liability being measured at fair value with changes in value being recorded in profit and loss. The embedded derivative liability is calculated first and the residual value is assigned to the debt host liability component. The amortization expense for the year ended December 31, 2015 amounted to $1,922,943, with unamortized portion amounted to $1,363,000. The derivative liability related to these promissory notes as at December 31, 2015 was $2,568,188 (see note 29 — Derivative Financial Liabilities). As of the date of this report, the convertible right had not been exercised. The Company has an interest payable to this director in the amount of $267,464 and $51,875 as at December 31, 2015 and 2014 (see note 34 — Events After the Reporting Date).

F-41

From time to time, the Company’s executives incurred expenses on behalf of the Company for various office and travel expenses prior to the Business Combination and following the management change by way of majority shareholder consent on May 5, 2014. No interest is charged by the executives on any outstanding balance owed by the Company. For the years ended December 31, 2015, 2014 and 2013, total expenses paid by the executives on behalf of the Company totaled $141,022, $127,371 and $246,105, respectively. Of these amounts, $141,022, $120,768 and $223,397 has not been repaid to the Company’s executives as of December 31, 2015, 2014 and 2013 respectively.

Separately on December 16, 2014, the Company and one of the current officers has agreed to convert $18,000 of the outstanding balance owed by the Company to an interest bearing unsecured promissory note with the same interest rate and similar convertible feature as the ones aforementioned between the Company and the director. The outstanding balance arose from the services the officer provided to the Company after the Business Combination and before becoming the current officer of the Company. During 2015 at the maturity of this note, the Company was not in a position to repay this note or the accrued interest. The Company had issued new unsecured convertible promissory notes to this officer. Similar to the aforementioned Roll-over Notes between the Company and the director, the principal amount of this new note consisted of the original principal amount plus the accrued unpaid interest with the same interest rate and similar convertible feature. As of the date of this report, the convertible right had not been exercised.

In connection to the management change by way of majority shareholder consent on May 5, 2014, a non-employee consultant from prior to the Business Combination has become an officer of the Company. The outstanding amount of $55,000 for services provided by the consultant has not been paid by the Company as of December 31, 2014. As a result of this management change, this amount has been reclassified from trade and other payables to due to related party as at December 31, 2014 and 2015.

The Company has agreed to pay Kaiyuan Real Estate Development (“Kaiyuan”) a total of $7,500 per month for office space, administrative services and secretarial support for a period commencing March 24, 2011 and ending on the earlier of consummation of a Business Combination or liquidation of the Company. Kaiyuan is an affiliate of Mr. Yong Hui Li, the Company’s chairman prior to the Business Combination. The total expenses incurred under this agreement for the years ended December 31, 2015, 2014 and 2013, were $0, $64,833, and $70,495, respectively. Commencing on February 1, 2012, and ending January 31, 2013, the Company rented additional office space, administrative services and secretarial support in Taipei. Fees for the additional office space, administrative services and secretarial support were deducted from the $7,500 monthly fee paid to Kaiyuan by the Company. The Company has a payable to Kaiyuan of $203,312 as at December 31, 2015, 2014 and 2013.

Mr. Cesare Lanati (the former owner of certain subsidiaries and current stockholder of the Group) performed maintenance and other services for the Group’s investment properties. The Group leases office and parking spaces to Lanati and pay certain expenses on Lanati’s behalf. During 2014 and 2015, the Group has reached various offsetting agreements with Lanati on offsetting of certain receivables and payables (see Note 20 — Trade and Other Receivables, and Note 27 — Trade and Other Payables).

On April 15, 2016, one director classified as related party was granted $248,000 in 2015 as compensation for the year of 2015. In addition, the Company granted 100,000 stock options to the same director in April 2016 for the services provided in 2015. These stock options are to be vested 60% immediately with the remaining to be vested over 14 months following the grant date. The fair value of the options granted to this director using the Black-Scholes option-pricing model is $17,400 (see Note 31 — Share-Based Payment). Separately on April 15, 2016, the Company granted compensation of $248,000 to the Chief Executive Officer and 100,000 stock options at an exercise price of $2.94 per share for the services provided in 2015. 60% of this stock options granted is vested immediately on the grant date with remaining to be vested over 14 months following the grant date. The fair value of the stock options granted to the Chief Executive Officer using the Black-Scholes option-pricing model is $17,400. Further on the same date, the Company granted additional compensation of $93,000 in 2015 to the Chief Financial Officer and 30,000 stock options at an exercise price of $2.94 for the services provided in 2015. These stock options granted are to be vested for 18 months from the grant date. The fair value of the stock options granted to the Chief Financial Officer using the Black-Scholes option-pricing model is $5,220. All these 2015 compensation amounts were accrued as due to related parties as at December 31, 2015.

F-42

Note 26 — Note Payable to Underwriters

Immediately following the closing of the Business Combination on September 30, 2013, the Company entered into an interest-bearing promissory note with its underwriter, Chardan Capital Markets, LLC (“Chardan”) for the total remaining amount of $889,833 due to the underwriter at the rate of 5% per annum, maturing on December 31, 2013. If the note was not repaid by December 31, 2013, Chardan had the right to convert the note and accrued interest into ordinary shares at a price of $9.10 per share. In connection with the convertible right, $184,584 was allocated to the value of the beneficial conversion feature. As of December 31, 2013, full amount of the beneficial conversion feature has been recorded as interest expense. As of the date of this report, the convertible right had not been exercised. On December 31, 2013 (the note’s maturity date), the Company was not able to repay the note. As a result of the payment default, an additional default interest rate of 10% per annum is added to the original 5% per annum interest rate starting December 31, 2013. The Company has an interest payable to Chardan in the amount of $327,229, $134,036 and $11,336 as at December 31, 2015, 2014 and 2013 respectively. George Kaufman, one of our directors, is an employee of Chardan.

Note 27 — Trade and Other Payables

Details of the balance sheet item trade and other payables:

	2015		2014		2013
Accrued expenses	$	2,863,516	$	2,740,729	$	2,274,075
Interest payable		560,835		252,939		15,915
Trade account payables		1,834,773		2,176,742		2,495,929
Due to Lanati		–		–		3,773,041
Other payables - social security payments		113,560		140,720		140,757
Total trade and other payables	$	5,372,684	$	5,311,130	$	8,699,717

Book values approximate to fair value at December 31, 2015, 2014 and 2013.

Note 28 — Accrued Expenses and Other Deferred Income

Details of the accrued expenses and other deferred income:

	2015		2014		2013
Other deferred income	$	276,496	$	360,700	$	458,929
Accrued expenses		82,138		76,503		87,081
Total accrued expenses and other deferred income	$	358,634	$	437,203	$	546,010

Other deferred income consists of rental income and condominium expenses reimbursement invoiced to certain tenants immediately before the actual leasing period (prepayment from tenants). Accrued expenses consist of certain interest and condominium expenses of the current period with invoices expected to receive in the future period.

Note 29 — Derivative Financial Liabilities

The fair value of derivative financial liabilities from a derivative financial instrument is considered current.

The fair value of the Group’s interest rate derivatives is determined by the Management using inputs based on bank quotes. The fair value of the Group’s convertible promissory notes derivatives is determined by the Management using valuation model based on certain inputs that are observable.

	2015		2014		2013
Derivatives not designated as hedging instruments
Conversion feature on promissory notes	$	2,568,188	$	–	$	–
Interest rate swaps		165,648	$	221,191	$	1,141,314
Total derivatives not designated as hedging instruments	$	2,733,836	$	221,191	$	1,141,314

Interest rate swaps

The Group entered into interest rate swap contracts by using floating-to-fixed interest rate swaps. The interest rate swap contracts are linked to a part of a leasing contract. The notional value as at December 31, 2015, 2014 and 2013 is equal to $1,432,225, $1,668,905 and $8,326,042 respectively. The change in fair value during the years of 2015, 2014 and since the Business Combination in 2013 amounted to $33,558, $75,623 and $53,648 respectively. The significant decrease in the interest rate swaps between 2013 and 2014 is due to the Unwinding of Seba, and hence the transfer of the related interest rate swap contracts to the former seller.

F-43

The convertible promissory notes issued to a certain director were classified as convertible promissory notes with an embedded derivative liability. The host notes are accounted for at amortized cost, with an embedded derivative liability being measured at fair value with changes in value being recorded. The notional value as at December 31, 2015 was $2,568,189. The change in fair value during the year of 2015 was $539,716.

Note 30 — Provisions

Details of balance sheet item of current provisions:

	2015		2014		2013
Post employment benefits	$	22,464	$	11,987	$	1,524
Tax liabilities		5,364		9,084		10,715
Other provisions		142,514		158,814		480,837
Total provisions	$	170,342	$	179,885	$	493,076

Post employment benefits provision relates to two of the Subsidiaries that have employees in Italy. The amount is based on a certain percentage of the salary paid to the employees each pay period. The amount will be paid to the employees when employment cease pursuant to the local Italian law.

Tax liabilities provision is related to a type of tax imposed by the tax authority in Italy in 2011, applicable to three of our subsidiaries. This law allows the Group to deduct a portion of this tax paid in 2011 to be partially reversed each year over a certain number of years until the provision is fully extinguished.

The other provisions refer to probable liabilities deriving from legal disputes underway from one of the subsidiaries. This provision liability has been estimated based on management evaluation of the amounts at risk and legal considerations. There are uncertainties that relate to whether claims will be settled out by payment or if the subsidiary is successful in defending any action (see note 32 — Contingencies and Commitments). The significant reduction of other provisions is primarily due to the settlement and payment of one of the legal disputes during 2014, therefore releasing the potential liabilities of this legal dispute of $300,000 provisioned as at December 31, 2013. The payment of the settlement has been recorded in the consolidated statements of financial position as trade and other receivables from a third party. This amount has been received in 2015 from the said third party as part of an offsetting agreement with this party.

Note 31 — Share-Based Payment

On February 25, 2010, the Company’s board of directors authorized and issued 20,000 stock options, each option to purchase one ordinary share of the Company to directors and consultants of the Company. In November 2010, September 2015 and April 2016, the Company’s board of directors authorized to reserve an additional 200,000, 280,000 and 200,000 stock options for issuance to directors and consultants of the Company from time to time, bringing the total authorized to an aggregate of 700,000 stock options.

On December 3, 2010 and March 21, 2012, the Company’s board of directors granted 35,000 and 5,000 stock options, respectively, each option to purchase one ordinary share of the Company to officers or directors of the Company. This brought the total stock options granted as of December 31, 2012 to 60,000.

With respect to the 60,000 shares of stock options granted as of December 31, 2013, 9,500 shares of the options were granted to certain non-employee consultants for services to be provided over a two year period that vest quarterly and 40,000 options to certain officers or directors over a two and a half year period that vest quarterly. In addition, the Company granted certain consultants 10,500 options which vest upon such consultants meeting certain performance requirements. On September 4, 2013, the board of directors approved the accelerated vesting of the stock options granted. As a result, all stock options granted are fully vested and exercisable as at September 30, 2013. The 52,500 shares of stock options were exercised as at December 31, 2013. The weighted average fair value of the stock options exercised amounted to $527,910.

In May and September 2014, the Company’s board of directors granted 62,000 stock options to an officer and an employee, and 7,500 stock options to certain employees of the Subsidiaries. This brought the total stock options granted as of December 31, 2014 to 129,500.

In May and September 2015, the Company’s board of directors granted 125,500 stock options to a director and certain employees of the Subsidiaries, bringing the total stock options granted as of December 31, 2015 to 255,000.

F-44

In January and April 2016, the Company’s board of directors further granted 150,000 stock options to two directors, 140,000 stock options two officers, and 20,000 stock options to an external consultant.

The following table summarizes the stock option activity for the years ended December 31, 2015, 2014 and 2013:

Number of shares

Weighted average exercise price per share

Weighted average remaining contractual term (in years)

Aggregate intrinsic value

Outstanding at December 31, 2012

60,000

0.001

4.44

582,247

Granted

–

Exercised

(52,500

)

0.001

–

(367,453

)

Cancelled

–

Outstanding at December 31, 2013

7,500

0.001

3.44

214,794

Granted

69,500

–

60,847

Exercised

–

Cancelled

–

Outstanding at December 31, 2014

77,000

0.669

4.40

275,641

Granted

125,500

–

346,280

Exercised

–

Cancelled

–

Outstanding & exercisable at December 31, 2015

202,500

2.759

5.00

621,921

The following table summarizes the unvested stock option activity during the period from January 1, 2013 to December 31, 2015:

	Number of shares
Unvested January 1, 2013		16,100
Granted		–
Vested		(16,100	)
Cancelled		–
Unvested December 31, 2013		–
Granted		69,500
Vested		(7,469	)
Cancelled		–
Unvested December 31, 2014		62,031
Granted		125,500
Vested		(92,844	)
Cancelled		–
Unvested December 31, 2015		94,687

The fair value assigned to the vested increments of these awards was estimated at the grant date of the stock options using the Black-Scholes option-pricing model with the following assumptions:

	For the year ended December 31, 2015		For the year ended December 31, 2014

Stock price		$1.25 - $4.00		$1.25 - $8.50
Risk-free interest rate		1.18% - 1.81%		1.49% - 1.76%
Expected term (in years)		5.0		4.4
Weighted average expected stock price volatility		71.32%		52.76%
Expected dividend yield		0%		0%
Weighted average grant-date fair value of options granted	$	2.7592	$	0.6688

F-45

No stock option was granted during 2013. For the year ended December 31, 2015 and 2014, management used the following assumptions for the Black-Scholes inputs: On the option valuation date, the current stock price of the Company was used for determining the fair value of the Company’s stock based on the closing price of common stock on the valuation date. The expected dividend rate of 0% is based on management’s plan of operations. The risk-free interest rate is based on the U.S. Treasury 5-year Treasury Bill on the date of measurement. The Company’s historical stock price was used to determine the expected volatility. The Company expects that no options will be forfeited.

The Company issued 30,000 shares to an external consultant for public relation services in March 2013. The shares issued were valued at $300,000 using the stock’s average market price when the services were rendered.

Share-based compensation expense from stock options totaled $260,819, $5,045 and $154,343 for the years ended December 31, 2015, 2014 and 2013 respectively.

Note 32 — Contingencies and Commitments

The Group is subject to various claims and legal proceedings covering a wide range of matters that arise in the ordinary course of its business activities, including disputes on building repair and maintenance expenses, moving expenses and others. Management believes that any liability that may ultimately result from the resolution of these matters will not have a material adverse effect on the financial condition or results of operations of the Company.

The following summarizes the material litigation relating to our Group:

i. Auchan S.p.A

On March 14, 2013, the tenant Auchan filed a lawsuit with the Court of Milan against Ellegi and GSI in connection with a lease agreement entered into with Ellegi on July 15, 2010 and a contract entered into with GSI on August 5, 2010 for certain repairs to be performed. Auchan was not satisfied with the repairs performed and claimed that they suffered a loss of potential income from new business opportunities, together with certain damages which totaled to €4.5 million. We disagree with the allegations and are defending against this claim, although no assurance can be made that we will be successful. The actual amount in dispute is approximately €200,000 related to the actual repair work paid by Auchan. The management deemed the difference of €4.3 million Auchan is claiming and the actual amount in dispute to be without merit. The Group has accrued a provision of approximately two-thirds in the amount of €131,240 (which translates to $142,514, $158,814 and $180,837 as at December 31, 2015, 2014 and 2013 respectively) for the risk associated with this litigation as at December 31, 2015, 2014 and 2013 respectively (the US dollar amounts differ due to exchange differences). In first quarter of 2016, the court has issued a judgement to reject all claims made by Auchan. Auchan has the right to appeal up until the end of April 2016, the Group’s legal counsel is closely following the development of the possible appeal. On April 22, 2016, Auchan has filed the appeal.

ii. Morgan Joseph and BHN LLC

On March 19, 2015, the court dismissed Morgan Joseph's complaint against Prime, as well as BHN LLC's cross-claim for indemnification from the Company, but gave Morgan Joseph until May 1, 2015 to file an amended complaint.

The Company filed an answer to Morgan Joseph’s amended complaint on June 1, 2015. The management estimated the probability of damages in these cases is low due to (1) there being no formal contracts between the Company and Morgan Joseph, and (2) the court dismissing earlier complaints and there being no new evidence brought forward in the amended complaints.

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In addition, on June 26, 2015, the Company has filed cross-claim against BHN LLC and certain individuals connected with BHN LLC for damages and certain costs caused the Company. The amount of damages and costs are to be determined at trial.

Note 33 — Capital Management

The primary objective of the Group’s capital management is to ensure that it remains within its quantitative banking covenants and maintain a strong credit rating. No changes were made in the objectives, policies or processes during the year ended December 31, 2015, 2014 and 2013. Prior to the Business Combination on September 30, 2013, the Company was operated as a blank check company (see note 1 — Organization and plan of business operations) in the development stage.

Following the Business Combination, the Group monitors capital primarily using a loan-to-value ratio, which is calculated as the amount of outstanding debt divided by the valuation of the investment property portfolio. The Group’s policy is to keep its average loan-to-value ratio lower than 80%.

Banking covenants vary according to each loan agreement, but typically require that the loan-to-value ratio does not exceed 80% to 85%.

During 2014, certain Subsidiaries of the Group missed scheduled repayments on a bank loan and four finance leases (see note 23 — Loans and Borrowings, and note 24 — Finance Leases). During 2015, certain Subsidiaries of the Group missed scheduled repayments on three finance leases. In addition, the Group was not able to repay the note payable to underwriters on its maturity date of December 31, 2013. As a result of the payment default, an additional default interest rate is added to the original interest rate (see note 27 — Note Payable to Underwriters)

	2015		2014		2013
Carrying amount of loans and borrowings	$	26,807,987	$	32,268,180	$	50,932,031
External valuation of completed investment property		37,407,083		47,629,537		72,877,131
Loan to value ratio		72%		68%		70%

Note 34 — Events After the Reporting Date

As of April 30, 2016, the Company has entered into seven additional interest bearing unsecured convertible promissory notes with an interest rate of 10% annum, compounding annually described in note 25 — Related Party Transactions with the same director of the Company which amounted to $230,000. In addition, the Company has renewed three of the interest bearing unsecured convertible promissory note from 2015 maturing in 2016 to a future date with an additional of 10% to the original principal amounts (“Rollover”). These Rollovers have added $26,500 to the total principal amount owed to this director. As a result of the additional interest bearing unsecured convertible promissory notes and the Rollover, the Company owes this director an aggregate of $3,402,633, including $2,957,500 in principal amounts, and $445,132 of interest accrued.

On January 18, 2016, the Company’s board of directors granted 10,000 stock options to an officer and 20,000 stock options to a consultant.

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