Statutory Reserves

6 Months Ended

Jun. 30, 2014

NOTE 11 – 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 Electric; accordingly, no additional statutory reserve is required for the six months ended June 30, 2014. As of June 30, 2014, the Company had not appropriated the required maximum 50% of its registered capital to statutory reserve for Dyeing and Fulland Wind Energy.

For the six months ended June 30, 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		267,360		-		214,236		481,596
Balance – June 30, 2014	$	640,408	$	1,168,796	$	1,417,112	$	3,226,316