Statutory Reserves

3 Months Ended

Mar. 31, 2014

NOTE 10 – 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, 2013, 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 three months ended March 31, 2014. As of March 31, 2014, the Company had not appropriated the required maximum 50% of its registered capital to statutory reserve for Fulland Wind Energy.

For the three months ended March 31, 2014, statutory reserve activities were as follows

	Dyeing		Electrical		Fulland Wind Energy		Total
Balance – December 31, 2013	$	373,048	$	1,168,796	$	1,202,876	$	2,744,720
Addition to statutory reserves		-		-		117,015		117,015
Balance – March 31, 2014	$	373,048	$	1,168,796	$	1,319,891	$	2,861,735