NOTE 11– STATUTORY RESERVE

The Company is required to make appropriations to statutory 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 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, 2014, the Company appropriated the required maximum 50% of its registered capital to statutory reserve for Heavy Industries; accordingly, no additional statutory reserve is required for the nine months ended September 30, 2015. As of December 31, 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 nine months ended September 30, 2015, statutory reserve activities were as follows:

	Dyeing		Heavy Industries		Fulland Wind Energy		Total
Balance - December 31, 2014	$	922,527	$	1,168,796	$	1,202,876	$	3,294,199
Addition to statutory reserve		263,682		-		28,651		292,333
Balance – September 30, 2015	$	1,186,209	$	1,168,796	$	1,231,527	$	3,586,532