Quarterly report pursuant to Section 13 or 15(d)

SHAREHOLDERS' EQUITY

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SHAREHOLDERS' EQUITY
9 Months Ended
Sep. 30, 2014
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]
NOTE 14 – SHAREHOLDERS’ EQUITY
 
Warrants
 
An aggregate of 30,329,883 ordinary shares and 3,966,667 warrants were originally issued by CGEI to Chum Capital Group Limited, in connection with a private placement prior to CGEI’s initial public offering, and that became exercisable for the Company’s ordinary shares beginning on March 27, 2013 (the “Sponsor Warrants”). The Sponsor Warrants have been registered for resale by the selling security-holders under Form S-3 filed on June 17, 2013 and declared effective on June 19, 2013. On June 2, 2011, the Company sold 5,000,000 units, at an offering price of $10.00 per unit, generating gross proceeds of $50,000,000. Each unit consists of one ordinary share, $0.001 par value, of the Company and one redeemable purchase warrant. Each warrant will entitle the holder to purchase from the Company one ordinary share at an exercise price of $12.00 commencing upon the completion of a business combination and expiring five years from the consummation of a business combination. The Company also registered an aggregate of 8,966,667 ordinary shares that are issuable by the Company upon exercise of the 3,966,667 Sponsor Warrants and 5,000,000 warrants that were issued in the CGEI’s initial public offering (the “Public Warrants”) and that became exercisable upon the consummation of the transactions contemplated by that certain Agreement and Plan of Merger, dated as of October 24, 2012, between CGEI, CDGC, China Growth Dredging Sub Ltd. and Xinrong Zhuo and by that certain Share Purchase Agreement, dated as of October 24, 2012, between CGEI and Merchant Supreme.
  
Each Public Warrants and Sponsor Warrant (the “Warrants”) entitles the registered holder thereof to purchase one of the Company’s ordinary shares upon payment of the exercise price of $12.00 per share.
 
The Sponsor Warrants are identical to the Public Warrants except that the Sponsor Warrants will be exercisable for cash or on a cashless basis, at the holder’s option, and will not be redeemable by the Company, in each case so long as they are still held by these purchases or their transferees.
 
In accordance with US GAAP, the Company accounted for the Warrants as equity instruments.
 
Warrants issued, terminated/forfeited, exercised and outstanding during the nine months ended September 30, 2014 were as follows:
 
 
Number of warrants
 
Average exercise price per share
 
Warrants outstanding, December 31, 2013
 
 
8,966,667
 
$
12.00
 
Warrants granted
 
 
-
 
 
-
 
Warrants expired/terminated/forfeited
 
 
-
 
 
-
 
Warrants exercised
 
 
-
 
 
-
 
Warrants outstanding, September 30, 2014
 
 
8,966,667
 
$
12.00
 
 
The following table summarizes the shares of the Company’s ordinary stock issuable upon exercise of warrants outstanding at September 30, 2014:
 
Warrants outstanding
 
Warrants exercisable
 
Range
 
Number
 
Weighted average
 
Weighted
 
number
 
Weighted
 
of
 
outstanding at
 
remaining
 
average
 
exercisable at
 
average
 
exercise
 
September 30,
 
contractual life
 
exercise
 
September 30,
 
exercise
 
price
 
2,014
 
(years)
 
price
 
2014
 
price
 
$
12.00
 
8,966,667
 
3.4
 
$
12.00
 
8,966,667
 
$
12.00
 
  
Statutory reserve
 
Pingtan Guansheng, Pingtan Fishing, Pingtan Dingxin, Pingtan Duoying and Pingtan Ruiying operate in the PRC, are required to reserve 10% of their net profits after income tax, as determined in accordance with the PRC accounting rules and regulations. Appropriation to the statutory reserve by the Company is based on profit arrived at under PRC accounting standards for business enterprises for each year. The statutory reserves of the Company represent the statutory reserves of the above-mentioned companies as required under the PRC law.
 
The profit arrived at must be set off against any accumulated losses sustained by the Company in prior years, before allocation is made to the statutory reserve. Appropriation to the statutory reserve must be made before distribution of dividends to shareholders. The appropriation is required until the statutory reserve reaches 50% of the registered capital. This statutory reserve is not distributable in the form of cash dividends.
 
As of December 31, 2013, the Company appropriated the required 50% of its registered capital to statutory reserves for Pingtan Fishing. Accordingly, no additional statutory reserve is required for the nine months ended September 30, 2014 for Pingtan Fishing.
 
Pingtan Guansheng, Pingtan Dingxin, Pingtan Duoying and Pingtan Ruiying had sustained losses since its establishment. Therefore, no appropriation of net profits to the statutory reserves was required.