Property and Equipment

6 Months Ended

Jun. 30, 2013

NOTE 4 - PROPERTY AND EQUIPMENT

At June 30, 2013 and December 31, 2012, property and equipment consisted of the following:

	Useful Life		June 30, 2013			December 31, 2012
Office equipment and furniture	5 Years		$	250,743		$	222,853
Manufacturing equipment	5 – 10 Years			64,775,587			56,916,700
Vehicles	5 Years			127,754			125,167
Construction in progress		-		52,302			28,785
Building and building improvements	20 Years			21,215,201			20,785,597
				86,421,587			78,079,102
Less: accumulated depreciation				(22,280,578	)		(18,643,002	)
			$	64,141,009		$	59,436,100

For the three months ended June 30, 2013 and 2012, depreciation expense amounted to $1,651,608 and $1,545,166, respectively, of which $1,406,935 and $1,171,242, respectively, is included in cost of revenues and the remainder is included in operating expenses. For the six months ended June 30, 2013 and 2012, depreciation expense amounted to $3,221,159 and $3,092,511, respectively, of which $2,869,272 and $2,343,975, 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 $807,989 and $791,628, respectively, is included in the accompanying consolidated balance sheets in property and equipment as of June 30, 2013 and December 31, 2012. For the three months ended June 30, 2013 and 2012, the depreciation expense related to the capital lease in the amount of $18,114 and $0, respectively, was included in cost of revenues. For the six months ended June 30, 2013 and 2012, the depreciation expense related to the capital lease in the amount of $36,011 and $0, respectively, was included in cost of revenues (See Note 9).

- Definition

The entire disclosure for long-lived, physical assets used in the normal conduct of business and not intended for resale. Includes, but is not limited to, accounting policies and methodology, roll forwards, depreciation, depletion and amortization expense, including composite depreciation, accumulated depreciation, depletion and amortization expense, useful lives and method used, income statement disclosures, assets held for sale and public utility disclosures.

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