Property and Equipment

9 Months Ended

Sep. 30, 2015

NOTE 4 – PROPERTY AND EQUIPMENT

At September 30, 2015 and December 31, 2014, property and equipment consisted of the following:

	Useful life	September 30, 2015			December 31, 2014
Office equipment and furniture	5 years	$	168,967		$	166,734
Manufacturing equipment	5 -10 years		74,269,575			76,870,025
Vehicles	5 years		198,743			205,714
Building and building improvements	5 - 20 years		25,199,774			26,083,624
			99,837,059			103,326,097
Less: accumulated depreciation			(38,535,034	)		(33,697,500	)
		$	61,302,025		$	69,628,597

For the three months ended September 30, 2015 and 2014, depreciation expense amounted to $2,022,385 and $2,160,933, respectively, of which $1,861,821 and $1,844,902, respectively, was included in cost of revenues, $0 and $167,660, respectively, which was related to the ESR equipment which was held for operating lease in 2014, was included as a reduction to rental income, and the remainder was included in operating expenses.

For the nine months ended September 30, 2015 and 2014, depreciation expense amounted to $6,166,899 and $6,245,723, respectively, of which $5,494,243 and $5,533,436, respectively, was included in cost of revenues, $0 and $335,647 which was related to the ESR equipment which was held for operating lease in 2014, respectively, was included as a reduction in rental income, and the remainder was 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.