Property and Equipment

3 Months Ended

Mar. 31, 2013

NOTE 4 - PROPERTY AND EQUIPMENT

At March 31, 2013 and December 31, 2012, property and equipment consisted of the following:

	Useful Life	March 31, 2013			December 31, 2012
Office equipment and furniture	5 Years	$	225,233		$	222,853
Manufacturing equipment	5 – 10 Years		59,938,834			56,916,700
Vehicles	5 Years		125,854			125,167
Construction in progress	-		49,638			28,785
Building and building improvements	20 Years		20,899,756			20,785,597
			81,239,315			78,079,102
Less: accumulated depreciation			(20,315,999	)		(18,643,002	)
		$	60,923,316		$	59,436,100

For the three months ended March 31, 2013 and 2012, depreciation expense amounted to $1,569,551 and $1,547,345, respectively, of which $1,462,337 and $1,172,733, respectively, is included in cost of revenues and the remainder is included in operating expenses. Depreciation is not taken during the period of construction or equipment installation. Upon completion of the installation of manufacturing equipment or any construction in progress, construction in progress balances will be classified to their respective property and equipment category.

In 2011, the Company entered into a non-cancelable capital lease agreement with expiration date of June 3, 2014. Accordingly, the asset related to the capital lease in the amount of $795,976 and $791,628, respectively, is included in the accompanying consolidated balance sheets in property and equipment as of March 31, 2013 and December 31, 2012. For the three months ended March 31, 2013 and 2012, the depreciation expense related to the capital lease in the amount of $17,897 and $0, respectively, was included in cost of revenues.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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