Statutory Reserves

12 Months Ended

Dec. 31, 2013

NOTE 12– STATUTORY RESERVES

The Company is required to make appropriations to reserve funds, comprising the statutory surplus reserve, statutory public welfare fund and discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (the “PRC GAAP”). Appropriation to the statutory surplus reserve should be at least 10% of the after tax net income determined in accordance with the PRC GAAP until the reserve is equal to 50% of the entities’ registered capital or members’ equity. As of December 31, 2012, the Company appropriated the required maximum 50% of its registered capital to statutory reserves for Dyeing and Electric, accordingly, no additional statutory reserve is required for the year ended December 31, 2013. As of December 31, 2013, the Company had not appropriated the required maximum 50% of its registered capital to statutory reserve for Fulland Wind Energy.

For the years ended December 31, 2013 and 2012, statutory reserve activities were as follows:

	Dyeing		Electrical		Fulland Wind Energy		Total
Balance – December 31, 2011	$	72,407	$	1,168,796	$	823,348	$	2,064,551
Addition to statutory reserves		300,641		-		114,546		415,187
Balance– December 31, 2012		373,048		1,168,796		937,894		2,479,738
Addition to statutory reserves		-		-		264,982		264,982
Balance – December 31, 2013	$	373,048	$	1,168,796	$	1,202,876	$	2,744,720