Quarterly report pursuant to Section 13 or 15(d)

RESTATEMENT OF INTERIM FINANCIAL RESULTS

v2.4.0.8
RESTATEMENT OF INTERIM FINANCIAL RESULTS
9 Months Ended
Sep. 30, 2014
Accounting Changes and Error Corrections [Abstract]  
Accounting Changes and Error Corrections [Text Block]
NOTE 18 – RESTATEMENT OF INTERIM FINANCIAL RESULTS
 
The Company’s consolidated financial statements have been restated for the three and nine months ended September 30, 2013.  The Company incorrectly reflected certain balances of China Growth Equity Investments Ltd. in its consolidated financial statements that should have been reflected as part of the recapitalization of the Company on the effective date of the share exchange agreement dated February 25, 2013. Accordingly, the Company amended its consolidated financial statements to reflect the historical consolidated financial statements of China Dredging Group Co., Ltd (“CDGC”) and Merchant Supreme as the accounting acquirer prior to February 25, 2013 and the consolidated financial statements of PME, CDGC and Merchant Supreme and related subsidiaries for all periods subsequent to the effective date.
 
Additionally, the Company restated the following in its unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2013:
 
a)
The Company incorrectly accounted for prepaid operating license rights for 20 vessels in its appraised fair value in Original Report. The management concluded that prepaid operating license rights should be considered as a capital lease and recorded the historical cost of the related party which is under common control as a common control transaction in accordance with ASC 805-50. The Company restated prepaid operating license rights, property, plant and equipment, related depreciation and amortization expense.
 
b)
The Company recorded other miscellaneous adjustments such as the reclassification of certain balance sheets items and accrued wages and social insurance for some employee.
 
Accordingly, the Company’s unaudited interim consolidated balance sheets, statements of income and comprehensive income, and statements of cash flows at September 30, 2013 have been restated herein. The effect of correcting these errors in the Company’s (a) unaudited consolidated balance sheets at September 30, 2013; (b) unaudited consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2013; and (c) unaudited consolidated statements of cash flows for the nine months ended September 30, 2013 are shown in the tables as follows:
 
Consolidated balance sheets data:
 
 
 
September 30, 2013
 
 
 
As Previously
 
Adjustments to
 
As
 
 
 
Filed
 
Restate
 
Restated
 
Total current assets
 
$
281,665,140
 
$
-
 
$
281,665,140
 
Long-term investment
 
 
3,431,373
 
 
-
 
 
3,431,373
 
Prepayment for long-term assets
 
 
 
 
 
3,294,118
 
 
3,294,118
 
Property, plant and equipment, net
 
 
66,979,281
 
 
(1,518,105)
 
 
65,461,176
 
Other receivable
 
 
3,283,333
 
 
(1,200,294)
 
 
2,083,039
 
Total assets
 
$
355,359,127
 
$
575,719
 
$
355,934,846
 
 
 
 
 
 
 
 
 
 
 
 
Accrued liabilities and other payable
 
$
3,684,872
 
$
1,250,591
 
$
4,935,463
 
Deferred grant income
 
 
1,714,706
 
 
(1,200,294)
 
 
514,412
 
Liabilities of discontinued operations
 
 
181,463,364
 
 
-
 
 
181,463,364
 
Total current liabilities
 
 
221,546,326
 
 
50,297
 
 
221,596,623
 
Total liabilities
 
 
279,977,699
 
 
50,297
 
 
280,027,996
 
 
 
 
 
 
 
 
 
 
 
 
Retained earning
 
 
-
 
 
522,198
 
 
522,198
 
Accumulated other comprehensive income
 
 
28,779,372
 
 
3,224
 
 
28,782,596
 
Total shareholders' equity
 
 
75,381,428
 
 
525,422
 
 
75,906,850
 
Total liabilities and shareholders' equity
 
$
355,359,127
 
$
575,719
 
$
355,934,846
 
   
Consolidated statements of income and comprehensive income data:
 
 
 
Three Months Ended September 30, 2013
 
Nine Months Ended September 30, 2013
 
 
 
As
 
 
 
 
 
As
 
 
 
 
 
 
 
Previously
 
Adjustments to
 
As
 
Previously
 
Adjustments to
 
As
 
 
 
Filed
 
Restate
 
Restated
 
Filed
 
Restate
 
Restated
 
Cost of revenue
 
$
12,446,879
 
$
530,012
 
$
12,976,891
 
$
38,974,488
 
$
405,120
 
$
39,379,608
 
Interest expense
 
 
1,049,040
 
 
364,975
 
 
1,414,015
 
 
2,444,782
 
 
(320,982)
 
 
2,123,800
 
Net income from continuing operations
 
$
5,939,018
 
$
(894,987)
 
$
5,044,031
 
$
17,400,058
 
$
(84,138)
 
$
17,315,920
 
 
Consolidated statements of cash flows data:
 
 
Nine Months Ended September 30, 2013
 
 
 
As Previously
 
Adjustments to
 
As
 
 
 
Filed
 
Restate
 
Restated
 
Net income from continuing operations
 
$
17,400,058
 
$
(84,138)
 
$
17,315,920
 
Adjustments to reconcile net income to net cash provided by  operating activities:
 
 
 
 
 
 
 
 
 
 
Depreciation
 
 
2,268,063
 
 
(1,107,460)
 
 
1,160,603
 
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
 
 
Accrued liabilities and other payable
 
 
2,602,770
 
 
3,010,617
 
 
5,613,387
 
Net cash provided by operating activities from continuing operations
 
 
2,250,418
 
 
1,819,019
 
 
4,069,437
 
 
 
 
 
 
 
 
 
 
 
 
Payment for fishing vessels deposit
 
 
-
 
 
(3,271,878)
 
 
(3,271,878)
 
Purchase of property, plant and equipment
 
 
(216,850,307)
 
 
3,036,380
 
 
(213,813,927)
 
Decrease in cash related to sale of subsidiary
 
 
-
 
 
(76,987,656)
 
 
(76,987,656)
 
Net cash used in investing activities for continuing operations
 
 
(214,670,787)
 
 
(77,223,154)
 
 
(291,893,941)
 
 
 
 
 
 
 
 
 
 
 
 
Cash acquired in recapitalization
 
 
-
 
 
3,565,355
 
 
3,565,355
 
Net cash provided by financing activities from continuing operations
 
 
44,288,892
 
 
3,565,355
 
 
47,854,247
 
 
 
 
 
 
 
 
 
 
 
 
Net cash provided by operating activities from discontinued operations
 
$
71,420,962
 
$
(1,768,470)
 
$
69,652,492