10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

Amendment No. 1

x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the transition period from ____________ to ____________

Commission file number:  0-28806

Ever-Glory International Group Inc.

(Exact name of registrant as specified in its charter)

Florida	65-0420146
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Ever-Glory Commercial Center,

509 Chengxin Road, Jiangning Development Zone,

Nanjing, Jiangsu Province,

People’s Republic of China

(Address of principal executive offices)

(8625) 5209-6875

 (Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x    No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   x Yes  o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. o

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o   No x

As of August 7, 2012, 14,765,942  shares of the Company’s common stock, $0.001 par value, were issued and outstanding.

EVER-GLORY INTERNATIONAL GROUP, INC.

FORM 10-Q

INDEX

		Page Number
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		4
PART I.  FINANCIAL INFORMATION		5
Item 1.	Financial Statements	5
	Condensed Consolidated Balance Sheets as of June 30, 2012 (unaudited) and December 31, 2011	5
	Condensed Consolidated Statements of Comprehensive Income for the Six Months Ended June 30, 2012 and 2011 (unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2012 and 2011 (unaudited)	7
	Notes to the Condensed Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30
PART II.  OTHER INFORMATION		31
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	32
SIGNATURES		33

2

EVER-GLORY INTERNATIONAL GROUP, INC.

FORM 10-Q/A

EXPLANATORY NOTE

As disclosed in our Current Report on Form 8-K filed with the Securities and Exchange Commission (the “Commission”) on April 18, 2013, the purpose of this Amendment No. 1 (“Amendment No. 1”) to our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012 (the “Original 10-Q”), which we filed with the Commission on August 8, 2012, is to restate our company’s unaudited financial statements and related disclosures (including, without limitation, those contained under Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations) contained in the Original 10-Q to correct the accounting treatment of a counter-guarantee we provided to Jiangsu Ever-Glory International Enterprise Group Company (“Jiangsu Ever-Glory”), an entity majority owned and controlled by Edward Yihua Kang, our Chief Executive Officer, President and Chairman of the board of directors.  On April 13, 2013, our management concluded, and the Audit Committee approved the conclusion, that we previously incorrectly reported the amount we provided to Jiangsu Ever-Glory under the counter-guarantee as a current receivable from Jiangsu Ever-Glory and that such amount should be recorded as contra equity.  We are therefore filing this Amendment No. 1 to correct the balances of both accounts receivable and stockholders’ equity for the interim period covered by the Original 10-Q, as well as to reflect changes in our statements of cash flows and footnote disclosures on this topic and to revise our evaluation of the disclosure controls and procedures.

As several parts of the Original 10-Q are amended and/or restated by this Amendment No. 1, for convenience, we have repeated the entire text of the Original 10-Q, as amended and/or restated by this Amendment No. 1. Readers should therefore read and rely on this Amendment No. 1 in lieu of the Original 10-Q.

This Amendment No. 1 also contains currently dated officer certifications as Exhibits 31.1, 31.2, 32.1 and 32.2.

Except as amended and/or restated by this Amendment No. 1, no other changes have been made to the Original 10-Q.  This Amendment No. 1 speaks as of the original filing date of the Original 10-Q and does not reflect events that may have occurred subsequent to such original filing date.

3

Cautionary Note Regarding Forward-Looking Statements

Statements contained in this Quarterly Report on Form 10-Q, which are not historical facts, are forward-looking statements, as the term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, whether expressed or implied, are subject to risks and uncertainties which can cause actual results to differ materially from those currently anticipated, due to a number of factors, which include, but are not limited to:

● Competition within our industry;

● Seasonality of our sales;

● Success of our investments in new product development

● Our plans and ability to open new retail stores;

● Success of our acquired businesses;

● Our relationships with our major customers;

● The popularity of our products;

● Relationships with suppliers and cost of supplies;

● Financial and economic conditions in Asia, Japan, Europe and the U.S.;

● Anticipated effective tax rates in future years;

● Regulatory requirements affecting our business;

● Currency exchange rate fluctuations;

● Our future financing needs; and

● Our ability to attract additional investment capital on attractive terms.

Forward-looking statements also include the assumptions underlying or relating to any of the foregoing or other such statements. When used in this report, the words “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “continue,” and similar expressions are generally intended to identify forward-looking statements.

Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Readers should carefully review the factors described in the Section entitled “Risk Factors” on Form 10-K and other documents we file from time to time with the Securities and Exchange Commission (‘SEC’).

4

PART I.  FINANCIAL INFORMATION

ITEM 1. Financial Statements

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2012 (UNAUDITED) AND DECEMBER 31, 2011

ASSETS
	June 30, 2012			December 31, 2011
	(As restated, Note 1)
CURRENT ASSETS
Cash and cash equivalents	$	7,184,037		$	8,822,581
Accounts receivable		36,638,369			50,634,388
Inventories		38,870,698			36,874,804
Value added tax receivable		3,514,667			1,908,436
Other receivables and prepaid expenses		1,424,516			1,122,570
Advances on inventory purchases		2,749,725			2,177,544
Amounts due from related party		6,307,049			17,623,712
Total Current Assets		96,689,061			119,164,035
LAND USE RIGHT, NET		3,082,466			2,845,552
PROPERTY AND EQUIPMENT, NET		12,934,685			13,210,628
TOTAL ASSETS	$	112,706,212		$	135,220,215
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Bank loans	$	22,473,539		$	29,185,381
Accounts payable		33,066,119			41,466,844
Accounts payable and other payables - related parties		2,660,262			2,759,003
Other payables and accrued liabilities		6,191,050			5,996,434
Value added and other taxes payable		2,252,625			2,268,872
Income tax payable		280,852			368,714
Deferred tax liabilities		3,041,151			2,460,377
Derivative liability		100,000			-
Total Current Liabilities		70,065,598			84,505,625
LONG-TERM LIABILITIES
Derivative liability		-			390,800
Total Long-term Liabilities		-			390,800
TOTAL LIABILITIES		70,065,598			84,896,425
COMMITMENTS AND CONTINGENCIES
EQUITY
Stockholders' equity of the Company:
Preferred stock ($.001 par value, authorized 5,000,000 shares,
no shares issued and outstanding)		-			-
Common stock ($.001 par value, authorized 50,000,000 shares,
14,765,942 and 14,760,873 shares issued and outstanding
as of June 30, 2012 and December 31, 2011, respectively)		14,766			14,761
Additional paid-in capital		3,542,200			3,532,369
Retained earnings		39,449,211			34,976,853
Statutory reserve		5,311,921			5,311,921
Accumulated other comprehensive income		6,687,887			6,487,886
Amounts due from related party		(12,365,371	)		-
Total Stockholders' Equity		42,640,614			50,323,790
TOTAL LIABILITIES AND EQUITY	$	112,706,212		$	135,220,215

See the accompanying notes to the condensed consolidated financial statements.

5

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 AND 2011 (UNAUDITED)

		Three months ended						Six months ended
		June 30,						June 30,
		2012			2011			2012			2011
NET SALES	$	47,195,031		$	42,923,640		$	100,421,204		$	96,131,877
COST OF SALES		33,608,450			32,566,893			75,231,635			76,663,118
GROSS PROFIT		13,586,581			10,356,747			25,189,569			19,468,759
OPERATING EXPENSES
Selling expenses		6,966,335			3,766,770			12,800,527			7,355,875
General and administrative expenses		4,198,130			4,117,313			7,203,406			6,329,155
Total Operating Expenses		11,164,465			7,884,083			20,003,933			13,685,030
INCOME FROM OPERATIONS		2,422,116			2,472,664			5,185,636			5,783,729
OTHER INCOME (EXPENSES)
Interest income		328,736			124,401			610,220			146,874
Interest expense		(458,703	)		(258,924	)		(1,004,744	)		(521,175	)
Change in fair value of derivative liability		180,000			134,500			290,800			330,300
Other income		200,010			204			236,313			24,134
Total Other Income (Expenses)		250,043			181			132,589			(19,867	)
INCOME BEFORE INCOME TAX EXPENSE		2,672,159			2,472,845			5,318,225			5,763,862
INCOME TAX EXPENSE		(321,010	)		(213,976	)		(845,866	)		(892,997	)
NET INCOME		2,351,149			2,258,869			4,472,359			4,870,865
OTHER COMPERHENSIVE (LOSS) INCOME
Foreign currency translation (loss) gain		(196,365	)		479,660			200,001			716,495
COMPREHENSIVE INCOME	$	2,154,784		$	2,738,529		$	4,672,360		$	5,587,360
EARNINGS PER SHARE
Basic and diluted	$	0.16		$	0.15		$	0.30		$	0.33
Weighted average number of shares outstanding
Basic and diluted		14,765,942			14,755,494			14,763,815			14,754,687

See the accompanying notes to the condensed consolidated financial statements.

6

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011 (UNAUDITED)

	2012			2011
	(As restated, Note 1)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	4,472,359		$	4,870,865
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation and amortization		2,296,910			1,666,901
Provision (recovery) for obsolete inventories		459,213			(13,666	)
Change in fair value of derivative liability		(290,800	)		(330,300	)
Deferred income tax		563,191			(85,708	)
Interest on loans from related party		-			909
Stock-based compensation		9,836			10,077
Accounts receivable		14,295,016			9,413,419
Inventories		(2,219,405	)		(37,484	)
Value added tax receivable		(1,591,861	)		(1,708,832	)
Other receivables and prepaid expenses		(295,199	)		8,208
Advances on inventory purchases		(555,284	)		537,544
Amounts due from related parties		10,848,191			(6,019,433	)
Accounts payable		(8,594,380	)		(3,242,434	)
Accounts payable and other payables- related parties		(80,515	)		(138,168	)
Other payables and accrued liabilities		36,570			975,521
Value added and other taxes payable		(32,117	)		447,390
Income tax payable		(90,383	)		559,150
Net cash provided by operating activities		19,241,223			6,913,959
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(2,147,918	)		(1,535,053	)
Net cash used in investing activities		(2,147,918	)		(1,535,053	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans		24,576,457			28,557,182
Repayment of bank loans		(31,488,282	)		(26,167,763	)
Repayment of loans from related party		-			(1,000,720	)
Advances to related party		(11,794,260	)		-
Net cash (used in) provided by financing activities		(18,706,085	)		1,388,699
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(25,764	)		253,305
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(1,638,544	)		7,020,910
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		8,822,581			3,691,653
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	7,184,037		$	10,712,563
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	1,004,744		$	520,195
Income taxes	$	373,221		$	423,577

See the accompanying notes to the condensed consolidated financial statements.

7

 EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011

(UNAUDITED)

NOTE 1   BASIS OF PRESENTATION

Ever-Glory International Group, Inc. (the “Company”), together with its subsidiaries, is an apparel manufacturer, supplier and retailer in The People's Republic of China ("China or "PRC"), with a wholesale segment and a retail segment. The Company’s wholesale business consists of recognized brands for department and specialty stores located in China, Europe, Japan and the United States. The Company’s retail business consists of flagship stores and store-in-stores for the Company’s own-brand products.

The Company’s wholesale operations are provided primarily through the Company’s wholly-owned PRC subsidiaries, Goldenway Nanjing Garments Co. Ltd. (“Goldenway”), Nanjing Catch-Luck Garments Co. Ltd. (“Catch-Luck”), Nanjing New-Tailun Garments Co. Ltd (“New-Tailun”), Ever-Glory International Group Apparel Inc.(“Ever-Glory Apparel”) and Nanjing Tai Xin Garments Trading Company Limited (“Tai Xin”) (formed on March 19, 2012), and the Company’s wholly-owned Samoa subsidiary, Ever-Glory International Group (HK) Ltd. (“Ever-Glory HK”).  The Company’s retail operations are provided through its wholly- owned subsidiary, Shanghai LA GO GO Fashion Company Limited (“LA GO GO”).

In the opinion of management, the accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the condensed consolidated balance sheet as of June 30, 2012, the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2012 and 2011, and the condensed consolidated statements of cash flows for the six months ended June 30, 2012 and 2011. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, they have been condensed and do not include all of the information and footnotes required by GAAP for complete financial statements. Wholesale revenues are generally higher in the third and fourth fiscal quarters, while retail revenues are generally higher in the first and fourth fiscal quarters. The results of operations for the six months ended June 30, 2012 are not necessarily indicative of the results of operations to be expected for the full fiscal year. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. 

Subsequent to the issuance of the Company’s June 30, 2012 consolidated interim financial statements, the Company determined that it had incorrectly reported the amount the Company provided to Jiangsu Ever-Glory under the counter-guarantee as a current receivable from Jiangsu Ever-Glory on its quarterly reports on Form 10-Q for the quarters ended March 31, 2012, June 30, 2012, and September 30, 2012.  Because certain of the receivables from Jiangsu Ever-Glory at the aforementioned quarters arose as a result of financing transactions, rather than from trading transactions, the advances under the counter-guarantee are analogous to unpaid subscriptions or unpaid capital contributions and accordingly should be recorded as contra equity in accordance with SEC SAB Topics 4E and 4G (see Note 8).  Accordingly the Company’s June 30, 2012 interim financial statements have been restated resulting in a decrease in both amounts due from related parties and stockholders’ equity of $12,365,371.  The reclassification does not affect previously reported amounts for revenue, income from operations, net income or earnings per share. 

NOTE 2   SIGNIFICANT ACCOUNTING POLICIES

Financial Instruments

Management has estimated that the carrying amounts of non-related party financial instruments approximate their fair values due to their short-term maturities. The fair value of amounts due from (to) related parties is not practicable to estimate due to the related party nature of the underlying transactions.

8

Fair Value Accounting

Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures”, establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described below:

Level 1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2	Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;
Level 3	Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

At June 30, 2012, the Company’s financial assets (all Level 1) consist of cash placed with financial institutions that management considers to be of a high quality.

As of June 30, 2012 and December 31, 2011, the Company has a derivative liability subject to recurring fair value measurement ( Level 3) with the change in fair value recognized in earnings (Note 5).

Foreign Currency Translation and Other Comprehensive Income

The reporting currency of the Company is the U.S. dollar. The functional currency of the Company, Ever-Glory HK and Perfect Dream Limited, a British Virgin Islands incorporated subsidiary of the Company (“Perfect Dream”), is the U.S. dollar. The functional currency of Goldenway, New Tailun, Catch-luck, Ever-Glory Apparel, Tai Xin and LA GO GO is the Chinese RMB.

For subsidiaries whose functional currency is the RMB, all assets and liabilities were translated at the exchange rate at the balance sheet date; equity was translated at historical rates and items in the statement of comprehensive income were translated at the average rate for the period. Translation adjustments resulting from this process are included in accumulated other comprehensive income. The resulting translation gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Items in the cash flow statement are translated at the average exchange rate for the period. 

Reclassification

Certain amounts reported in the June 30, 2011 financial statements have been reclassified to confirm to the June 30, 2012 financial statements presentation.

NOTE 3   INVENTORIES

Inventories at June 30, 2012 and December 31, 2011 consisted of the following:

	June 30, 2012			December 31, 2011
Raw materials	$	7,974,309		$	5,606,073
Work-in-progress		8,996,610			7,919,403
Finished goods		22,930,130			23,916,206
		39,901,049			37,441,682
Less: allowance for obsolete inventories		(1,030,351	)		(566,878	)
Total inventories	$	38,870,698		$	36,874,804

9

NOTE 4   BANK LOANS

Bank loans represent amounts due to various banks and are generally due on demand or within one year. These loans can be renewed with the banks. Bank loans consisted of the following at June 30, 2012 and December 31, 2011:

Bank	June 30, 2012		December 31, 2011
Nanjing Bank	$	5,599,399	$	11,731,223
Shanghai Pudong Development Bank		6,328,000		8,966,382
Industrial and Commercial Bank of China		-		5,294,270
Bank of Communications		7,432,103		2,660,562
The Hong Kong and Shanghai Bank	1,215,637			532,944
Bank of China		1,898,400		-
	$	22,473,539	$	29,185,381

On August 2, 2010, Goldenway entered into a two-year revolving line of credit agreement with Nanjing Bank, which allows the Company to borrow up to approximately $7.91 million (RMB50 million). These loans are guaranteed by Jiangsu Ever-Glory International Group Corp. (“Jiangsu Ever-Glory”), an entity controlled by Mr. Kang, the Company’s Chairman and Chief Executive Officer. These loans are also collateralized by the Company’s property and equipment. As of June 30, 2012, no amounts were outstanding  under this agreement.

On March 11, 2010, Ever-Glory Apparel entered into an one-year line of credit agreement for approximately $7.91 million (RMB50 million) with Nanjing Bank. The agreement has been extended until April 6, 2013. As of June 30, 2012, Ever-Glory Apparel had borrowed $2.37 million from Nanjing Bank with an annual interest rate from 6.73% to 6.89% due on various dates from November 2012 to May 2013. The loan is guaranteed by Jiangsu Ever-Glory and the Company's chairman and CEO, Mr. Kang. In addition, Ever-Glory Apparel had borrowed $1.64 million from Nanjing Bank with an annual interest rate from 4.4% to 4.9% due on various dates from August 2012 to September 2012, and collateralized by approximately $2.2 million of accounts receivable from wholesale customers. These bank loans are to be repaid upon receipt of payments from customers. At June 30, 2012, approximately $3.9 million was unused and available.

As of June 30, 2012, LA GO GO had borrowed $1.58 million (RMB10.0 million) from Nanjing Bank with an annual interest rate of 6.29% and due on various dates from April 2013 to May 2013. This loan is guaranteed by Jiangsu Ever-Glory and Mr. Kang.

On January 4, 2011, Goldenway entered into a new one-year line of credit agreement for approximately $6.33 million (RMB40 million) with Shanghai Pudong Development Bank. As of June 30, 2012, Goldenway had borrowed the maximum amount available under the line of $6.33 million (RMB40 million), with an annual interest rate of 7.55%. These loans are collateralized by certain properties and land use rights of Goldenway, and are due in November 2012.

As of June 30, 2012, Ever-Glory Apparel had borrowed $5.06 million from the Bank of Communications with an annual interest rate of 7.08%, and due in February 2013. The loan is guaranteed by Jiangsu Ever-Glory and the Company's chairman and CEO, Mr. Kang.  This loan is also collateralized by assets of Jiangsu Ever-Glory’s equity investee, Nanjing Knitting, under a collateral agreement executed between the Company, Jiangsu Ever-Glory, Nanjing Knitting and the bank. In addition, Ever-Glory Apparel had borrowed $1.58 million from the Bank of Communications with annual interest rate of 5.27%, due on various dates from July 2012 to September 2012, guaranteed by Jiangsu Ever-Glory and Mr. Kang, and collateralized by approximately $1.98 million of accounts receivable from wholesale customers. Approximately $0.23 million was repaid in July 2012.

As of June 30, 2012, LA GO GO had borrowed $0.79 million (RMB5.0 million) from the Bank of Communications with an annual interest rate of 6.37% and due in June 2013. This loan is guaranteed by Jiangsu Ever-Glory and Mr. Kang.

As of June 30, 2012, Ever-Glory Apparel had borrowed $1.90 million from the Bank of China with an annual interest rate from 5.9% to 6.1% due on various dates from July 2012 to August 2012. The loan is guaranteed by Goldenway, and collateralized by approximately $2.6 million of accounts receivable from wholesale customers. Approximately $0.98 million was repaid in July 2012.

10

On July 29, 2011, Ever-Glory Apparel and Perfect Dream collectively entered into a secured banking facility agreement for a combined revolving import facility, letter of credit, invoice financing facilities and a credit line for treasury products of up to $7.0 million with the Nanjing Branch of HSBC (China) Company Limited (“HSBC”). This agreement is guaranteed by the Company and Mr. Kang. As of June 30, 2012, Ever-Glory Apparel had borrowed $1.22 million from HSBC with an annual interest rate from 5.85% to 7.02% due on various dates from July 2012 to September 2012, and collateralized by approximately $1.63 million of accounts receivable from wholesale customers. These bank loans are to be repaid upon receipt of payments from customers. At June 30, 2012, approximately $5.78 million was unused and available. Approximately $0.27 million was repaid in July 2012.

Total interest expense on bank loans amounted to $458,703, $1,004,744, $258,924 and $521,175 for the three and six months ended June 30, 2012 and 2011, respectively.

NOTE 5   DERIVATIVE WARRANT LIABILITY

The Company has warrants outstanding to purchase an aggregate of 840,454 shares of Company common stock, which warrants require liability classification because of certain provisions that may result in an adjustment to their exercise price. The liability has been adjusted to fair value as of June 30, 2012 and 2011, resulting in a decrease in the liability and increase in other income of $180,000, $290,800, $134,500 and $330,300 for the three and six months ended June 30, 2012 and 2011, respectively.

The warrants will expire in June 2013. For the three and six months ended June 30, 2012 and 2011, the Company excluded these warrants from diluted earnings per share as they were antidilutive.

NOTE 6   INCOME TAX

PRC pre-tax income for the three and six months ended June 30, 2012 and 2011, was taxable in the following jurisdictions.

	Three months ended				Six months ended
	June 30,				June 30,
	2012		2011		2012		2011
PRC	$	1,582,335	$	712,029	$	3,350,278	$	3,691,090
Others		1,089,824		1,760,816		1,967,947		2,072,772
	$	2,672,159	$	2,472,845	$	5,318,225	$	5,763,862

The Company’s operating subsidiaries are governed by the Income Tax Law of the PRC concerning Foreign Investment Enterprises and Foreign Enterprises and various local income tax laws (“the Income Tax Laws”). 

All PRC subsidiaries are subject to income tax at 25% statutory rate.

Perfect Dream was incorporated in the British Virgin Islands (BVI), and under the current laws of the BVI dividends and capital gains arising from the Company’s investments in the BVI are not subject to income taxes.

Ever-Glory HK was incorporated in Samoa on September 15, 2009, and under the current laws of Samoa has no liabilities for income tax.

The following table reconciles the PRC statutory rates to the Company’s effective tax rate for the three and six months ended June 30, 2012 and 2011, respectively:

	Three months ended						Six months ended
	June 30,						June 30,
	2012			2011			2012			2011
PRC statutory rate		25.0	%		25.0	%		25.0	%		25.0	%
Non-taxable or non-deductible items		(2.3	)		(1.8	)		(1.9	)		(1.9	)
Effect of foreign income tax rates		(8.5	)		(16.5	)		(7.9	)		(7.6	)
Income tax exemption		-			(0.1	)		0.1			(0.1	)
Other		(2.2	)		2.1			0.6			0.1
Effective income tax rate		12.0	%		8.7	%		15.9	%		15.5	%

11

Income tax expense for the three and six months ended June 30, 2012 and 2011 is as follows:

	Three months ended					Six months ended
	June 30,					June 30,
	2012		2011			2012		2011
Current	$	121,988	$	474,871		$	265,092	$	978,705
Deferred		199,022		(260,895	)		580,774		(85,708	)
Income tax expense	$	321,010	$	213,976		$	845,866	$	892,997

NOTE 7   STOCKHOLDERS’ EQUITY

On March 14, 2012, the Company issued an aggregate of 3,346 shares of its common stock to the Company’s three independent directors as compensation for their services in the third and fourth quarters of 2011. The shares were valued at $1.94 per share, which was the average market price of the common stock for the five days before the grant date.

On March 21, 2012, the Company issued an aggregate of 1,723 shares of its common stock to one of the Company’s independent director as compensation for her services in the third and fourth quarters of 2011. The shares were valued at $1.94 per share, which was the average market price of the common stock for the five days before the grant date.

NOTE 8   RELATED PARTY TRANSACTIONS

Mr. Kang is the Company’s Chairman and Chief Executive Officer.  Ever-Glory Enterprises (H.K.) Ltd. (“Ever-Glory Enterprises”) is the Company’s major shareholder.  Mr. Xiaodong Yan is Ever-Glory Enterprises’ sole shareholder. All transactions associated with the following companies controlled by Mr. Kang or Mr. Yan are considered to be related party transactions, and it is possible that the terms of these transactions may not be the same as those that would result from transactions between unrelated parties. All related party outstanding balances are short-tem in nature and are expected to be settled in cash.

Other income from Related Parties

Included in other income for the three and six months ended June 30, 2012 and 2011 is rent revenue from entities controlled by Mr. Kang under operating lease agreements with various terms though 2015 as follows:

	Three months ended				Six months ended
	June 30,				June 30,
	2012		2011		2012		2011
EsCeLav	$	2,969	$	2,872	$	5,933	$	5,726
Nanjing Eight-One-Five Hi-Tech (M&E) Co.,Ltd.	$	3,952	$	3,830	$	7,905	$	7,635
Jiangsu Heng-Rui	$	-	$	5,400	$	-	$	10,765
Total	$	6,921	$	12,102	$	13,838	$	24,126

12

Purchases from, and Sub-contracts with Related Parties

In connection with the Company’s tax planning strategies relating to value-added taxes, raw materials are sourced by the Company in the PRC and shipped to related party contract manufacturers in Vietnam and Cambodia. The raw materials were originally purchased by the Company, and, through a series of transactions, were sold at cost to, and repurchased at cost from, Jiangsu Ever-Glory. These transactions amounted to approximately $1.1 million (RMB7.5 million) during the six months ended June 30, 2011, and have been netted against each other for financial reporting purposes.  There were no such transactions in 2012.

For the three and six months ended June 30 2012 and 2011, the Company purchased raw materials of $79,413, $714,022, $948,146, $1,059,091, respectively, from Nanjing Knitting.

In addition, the Company sub-contracted certain manufacturing work to related parties totaling $2,597,793, $5,423,363, $2,458,327, $3,988,745 for the three and six months ended June 30, 2012 and 2011, respectively. The Company provided raw materials to the sub-contractors and was charged a fixed fee for labor provided by the sub-contractors.

Sub-contracts with related parties included in cost of sales for the three and six months ended June 30, 2012 and 2011 are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Nanjing Knitting	$	119,159	$	11,855	$	753,768	$	35,565
Nanjing Ever-Kyowa		246,417		297,973		411,634		535,613
Ever-Glory Vietnam		625,667		1,494,180		1,455,136		2,392,433
Ever-Glory Cambodia		1,594,778		653,436		2,781,291		1,023,255
EsC'Lav		6,616		883		12,564		11,879
Jiangsu Ever-Glory		5,156		-		8,970		-
	$	2,597,793	$	2,458,327	$	5,423,363	$	3,998,745

Accounts Payable – Related Parties

The Company purchases raw materials from and subcontracts some of its production to related parties. Accounts payable to related parties at June 30, 2012 and December 31, 2011 are as follows:

	June 30, 2012		December 31, 2011
Nanjing Knitting	$	1,105,915	$	661,139
Nanjing Ever-Kyowa		288,720		436,030
Ever-Glory Vietnam		632,342		1,305,696
Ever-Glory Cambodia		633,285		330,047
Kunshan Enjin		-		26,091
Total	$	2,660,262	$	2,759,003

Amounts Due From Related Party

The amounts due from related parties at June 30, 2012 and December 31, 2011 are as follows:

	June 30, 2012		December 31, 2011
EsC'eLav	$	5,932	$	23,565
Nanjing Eight-One-Five Hi-tech (M&E) Co.,Ltd.		7,910		-
Jiangsu Ever-Glory		18,658,578		17,600,147
Total	$	18,724,420	$	17,623,712

13

Jiangsu Ever-Glory is an entity engaged in importing/exporting, apparel-manufacture, real-estate development, car sales and other activities. Jiangsu Ever-Glory is controlled by Mr. Kang. In 2011, because of restrictions on its ability to directly import and export products, the Company utilized Jiangsu Ever-Glory as its agent to assist the Company with its import and export transactions and its international transportation projects. Import transactions primarily consist of purchases of raw materials and accessories designated by the Company’s customers for use in garment manufacture. Export transactions consist of the Company’s sales to foreign markets such as Japan, Europe and the United States. As the Company’s agent, Jiangsu Ever-Glory’s responsibilities included managing customs, inspection, transportation, insurance and collections on behalf of the Company. Jiangsu Ever-Glory also managed transactions denominated in currencies other than the Chinese RMB at rates of exchange agreed between the Company and Jiangsu Ever-Glory and based upon rates of exchange quoted by the People’s Bank of China. In return for these services, Jiangsu Ever-Glory charged the Company a fee of approximately 3% of export sales manufactured in China and 1% of export sales manufactured overseas. For import transactions, the Company may make advance payments, through Jiangsu Ever-Glory, for the raw material purchases, or Jiangsu Ever-Glory may make advance payments on the Company’s behalf. For export transactions, accounts receivable for export sales are remitted by the Company’s customers through Jiangsu Ever-Glory, which forwards the payments to the Company. The Company and Jiangsu Ever-Glory agreed that balances from import and export transactions may be offset. Amounts due to (from) Jiangsu Ever-Glory are typically settled within 60-90 days.

In March 2012, in consideration of the guarantees and collateral provided by Jiangsu Ever-Glory and Nanjing Knitting, the Company agreed to provide Jiangsu Ever-Glory a counter-guarantee in the form of cash of not less than 70% of the maximum aggregate lines of credit obtained by the Company. Jiangsu Ever-Glory is obligated to return the full amount of the counter-guarantee funds provided upon expiration or termination of the underlying lines of credit and is to pay annual interest at the rate of 6.0% of amounts provided. As of June 30, 2012, Jiangsu Ever-Glory has provided guarantees for approximately US$ 27.21 million (RMB 172 million) of lines of credit obtained by the Company. Jiangsu Ever-Glory and its 20.31% owned equity investee, Nanjing Knitting, have also provided their assets as collateral for certain of these lines of credit. The value of the collateral, as per appraisals obtained by the banks in connection with these lines of credit is approximately US$11.94 million (RMB 75 million).  Mr. Kang has also provided a personal guarantee for US$21.99 million (RMB 139 million). During the six months ended June 30, 2012, US$11.80 million (RMB 74.6 million) was provided to Jiangsu Ever-Glory under the counter-guarantee, all of which was outstanding at June 30, 2012

Interest of 0.5% is charged on net amounts due at each month end.  Interest of 0.5% is charged on net amounts due at each month end. Interest income for the three and six months ended June 30, 2012 and 2011 was $290,559, $563,295, $120,379 and $139,495, respectively.

Following is a summary of transactions for the nine months ended June 30, 2012:

Related Party	Type of transaction	June 30, 2012 (As restated, Note 1)			December 31 2011
Jiangsu Ever-glory	Accounts receivable	$	8,199,597		$	19,999,373
Jiangsu Ever-glory	Accounts payable		(1,906,390	)		(2,399,226	)
Jiangsu Ever-glory	Interest income		563,651			-
Jiangsu Ever-glory	Counter guarantee deposit	$	11,801,720			-
Total		$	18,658,578		$	17,600,147

At June 30, 2012, amounts due from Jiangsu Ever-Glory have been classified as a reduction of equity, consistent with the guidance in SEC Staff Accounting Bulletins 4E and 4G.

Loan from Related Party

As of January 1, 2010 the Company owed $1.0 million to Blue Power Holdings Limited, a company controlled by the Company’s Chief Executive Officer. Interest was charged at 6% per annum on the amounts due. The loans were paid in full in April 2011.

NOTE 9   CONCENTRATIONS AND RISKS

The Company extends unsecured credit to its customers in the normal course of business and generally does not require collateral. As a result, management performs ongoing credit evaluations, and the Company maintains an allowance for potential credit losses based upon its loss history and its aging analysis. Based on management’s assessment of the amount of probable credit losses, if any, in existing accounts receivable, management has concluded that no allowance for doubtful accounts is necessary at June 30, 2012 and December 31, 2011. Management reviews the allowance for doubtful accounts each reporting period based on a detailed analysis of accounts receivable. In the analysis, management primarily considers the age of the customer’s receivable and also considers the credit worthiness of the customer, the economic conditions in the customer’s industry, and general economic conditions and trends, among other factors. If any of these factors change, the Company may also change its original estimates, which could impact the level of the Company’s future allowance for doubtful accounts.  If judgments regarding the collectability of accounts receivables are incorrect, adjustments to the allowance may be required, which would reduce profitability. 

14

For the six-month period ended June 30, 2012, the Company had two wholesale customers that represented approximately 13% and 12% of the Company’s revenues. For the three-month period ended June 30, 2012, the Company had two wholesale customers that each represented approximately 11% of the Company’s revenues. For the six-month period ended June 30, 2011, the Company had two wholesale customers that each represented approximately 23% and 17% of the Company’s revenues. For the three-month period ended June 30, 2011, the Company had one wholesale customer that represented approximately 26% of the Company’s revenues.

For the Company’s wholesale business during the three and six months ended June 30, 2012 and 2011, no supplier represented more than 10% of the total raw materials purchased.

For the Company’s retail business, the Company had one supplier that represented approximately 14% of raw materials purchases during the six months ended June 30, 2012. The Company purchased 11% and 14% of its raw materials from two suppliers during the three months ended June 30, 2012. The Company had one supplier that represented approximately 16% of raw materials purchases during the six months ended June 30, 2011. The Company purchased 22% of its raw materials from one supplier during the three months ended June 30, 2011.

For the wholesale business, during the six months ended June 30, 2012, the Company relied on two manufacturers for 17% and 13% of purchased finished goods. During the six months ended June 30, 2011, the Company relied on one manufacturer for 10% of purchased finished goods. During the three months ended June 30, 2012, the Company relied on two manufacturers for 19% and 16% of purchased finished goods. During the three months ended June 30, 2011, the Company relied on two manufacturers for 15% and 11% of purchased finished goods. 

For the retail business, during the three and six months ended June 30, 2012 , no supplier represented more than 10% of the total purchased finished goods. During the six months ended June 30, 2011 , no supplier represented more than 10% of the total purchased finished goods. During the three months ended June 30, 2011 , the Company relied on one manufacturer for 10% of purchased finished goods.

The Company’s revenues for the three and six months ended June 30, 2012 and 2011 were earned in the following geographic areas:

	Three months ended June 30,				Six months ended June 30,
	2012		2011		2012		2011
The People’s Republic of China	$	29,320,073	$	15,420,664	$	59,828,555	$	41,694,449
Germany		3,393,413		8,670,146		8,858,106		17,410,721
United Kingdom		4,588,231		5,403,112		7,953,390		7,741,270
Europe-Other		3,189,555		2,826,082		7,753,988		7,618,743
Japan		2,416,434		5,060,331		8,523,582		11,012,419
United States		4,287,325		5,543,305		7,503,583		10,654,275
Total	$	47,195,031	$	42,923,640	$	100,421,204	$	96,131,877

NOTE 10   SEGMENTS

The Company reports financial and operating information in the following two segments:

(a)  Wholesale segment

(b)  Retail segment

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	Wholesale segment		Retail segment		Total
Six months ended June 30, 2012
Segment profit or loss:
Net revenue from external customers	$	59,468,451	$	40,952,753	$	100,421,204
Income from operations	$	4,494,836	$	690,800	$	5,185,636
Interest income	$	603,785	$	6,435	$	610,220
Interest expense	$	938,754	$	65,990	$	1,004,744
Depreciation and amortization	$	498,899	$	1,798,011	$	2,296,910
Income tax expense	$	687,462	$	158,404	$	845,866
Six months ended June 30, 2011
Segment profit or loss:
Net revenue from external customers	$	74,272,509	$	21,859,368	$	96,131,877
Income (loss) from operations	$	5,226,517	$	557,212	$	5,783,729
Interest income	$	145,319	$	1,555	$	146,874
Interest expense	$	505,243	$	15,932	$	521,175
Depreciation and amortization	$	797,969	$	868,932	$	1,666,901
Income tax expense	$	756,939	$	136,058	$	892,997

	Wholesale segment		Retail segment		Total
Three months ended June 30, 2012
Segment profit or loss:
Net revenue from external customers	$	28,807,928	$	18,387,103	$	47,195,031
Income from operations	$	1,967,832	$	454,284	$	2,422,116
Interest income	$	325,486	$	3,250	$	328,736
Interest expense	$	424,193	$	34,510	$	458,703
Depreciation and amortization	$	248,435	$	887,840	$	1,136,275
Income tax expense	$	215,057	$	105,953	$	321,010
Three months ended June 30, 2011
Segment profit or loss:
Net revenue from external customers	$	33,663,153	$	9,260,487	$	42,923,640
Income (loss) from operations	$	2,227,029	$	245,635	$	2,472,664
Interest income	$	123,430	$	971	$	124,401
Interest expense	$	246,082	$	12,842	$	258,924
Depreciation and amortization	$	556,621	$	319,683	$	876,304
Income tax expense	$	155,371	$	58,605	$	213,976

16

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2012 AND 2011

(UNAUDITED)

ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations for the three and six months  ended June 30, 2012 should be read in conjunction with the Financial Statements and corresponding notes included in this Quarterly Report on Form 10-Q. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors and Special Note Regarding Forward-Looking Statements in this report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” “target”, “forecast” and similar expressions to identify forward-looking statements.

Overview

Our Business

We are a leading apparel supply-chain manager and retailer in China. We are listed on NYSE MKT (previously NYSE Amex) under the symbol of “EVK”.

We classify our businesses into two segments: Wholesale and Retail. Our wholesale business consists of wholesale-channel sales made principally to famous brands, and department stores located throughout Europe, the U.S., Japan and the People’s Republic of China (“PRC”). We focus on well-known, middle-to-high grade casual wear, sportswear, and outerwear brands. Our retail business consists of retail-channel sales directly to consumers through retail stores located throughout the PRC.

Although we have our own manufacturing facilities, we currently outsource most of the manufacturing to our long-term contractors as part of our overall business strategy. We believe outsourcing allows us to maximize our production capacity and maintain flexibility while reducing capital expenditures and the costs of keeping skilled workers on production lines during low seasons. We oversee our long-term contractors with our advanced management solutions and inspect products manufactured by them to ensure that they meet our high quality control standards and timely delivery. 

Wholesale Business

We conduct our original design manufacturing (“ODM”) operations through six wholly-owned subsidiaries which are located in the Nanjing Jiangning Economic and Technological Development Zone and Shang Fang Town in the Jiangning District in Nanjing, China: Ever-Glory International Group Apparel Inc. (“Ever-Glory Apparel”), Goldenway Nanjing Garments Company Limited (“Goldenway”), Nanjing New-Tailun Garments Company Limited (“New Tailun”), Nanjing Catch-Luck Garments Co., Ltd. (“Catch-Luck”), Ever-Glory International Group (HK) Ltd. (“Ever-Glory HK”), and Nanjing Tai Xin Garments Trading Company Limited (“Tai Xin”).

Retail Business

We conduct our retail operations through Shanghai LA GO GO Fashion Company Limited (“LA GO GO”), a wholly-owned subsidiary of Ever-Glory Apparel.

Business Objectives

Wholesale Business

We believe the enduring strength of our wholesale business is mainly due to our consistent emphasis on innovative and distinctive product designs that stand for exceptional styling and quality.

17

The primary business objective for our wholesale segment is to expand our portfolio into higher-class brands, expand our customer base and improve our profit. We believe that our growth opportunities and continued investment initiatives include:

● Expand our global sourcing network

● Expand our overseas low-cost manufacturing base (outside of mainland China);

● Focus on high value-added products and continue our strategy to produce mid to high end apparel

● Continue to emphasize product design and technology utilization.

● Seek strategic acquisitions of international distributors that could enhance global sales and our distribution network; and

● Maintain stable revenue increases in the markets while shifting focus to higher margin wholesale markets such as mainland China.

Retail Business

The business objective for our retail segment is to establish a leading brand of women’s apparel and to build a nationwide retail network in China. As of June 30, 2012, we have 562 stores (including store-in-stores) which included 121 stores that were opened and  26 stores that were closed in first half of 2012.

We believe that our growth opportunities and continued investment initiatives include:

● Build the LA GO GO brand to be recognized as a major player in the mid-end women's apparel market in China;

● Expand the LA GO GO retail network throughout China;

● Improve the LA GO GO retail stores’ efficiency and increase same-store sales

● Continue to launch LA GO GO flagship stores in Tier-1 Cities and increase penetration and coverage in Tier-2 and Tier-3 Cities

● Become a multi-brand operator by seeking opportunities for long-term cooperation with reputable international brands and by facilitating international brands entry into the Chinese market.

Seasonality of Business

Our business is affected by seasonal trends, with higher levels of wholesale sales in our third and fourth quarters and higher retail sales in our first and fourth quarters. These trends primarily result from the timing of seasonal wholesale shipments and holiday periods in the retail segment.

Collection Policy

Wholesale business

For our new customers, we generally require orders placed to be backed by letters of credit. For our long-term and established customers with a good payment track record, we generally provide payment terms between 30 to 120 days following delivery of finished goods.

Retail business

For store-in-store shops, we generally receive payments from the stores between 60 and 90 days following the date of the register receipt. For our own flagship stores, we receive payments at the time of the register receipt.

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Global Economic Uncertainty

Our business is dependent on consumer demand for our products. We believe that the significant uncertainty in the global economy and a slowdown in the United States and European economies have increased our clients’ sensitivity to the cost of our products. We have experienced continued pricing pressure. If the global economic environment continues to be weak or should it weaken, these economic conditions could have a negative impact on our sales growth and operating margins in our wholesale segment in 2012.

In addition, economic conditions in the United States and other foreign markets in which we operate could substantially affect our sales, and profitability, and our cash position and collection of accounts receivable. Global credit and capital markets have experienced unprecedented volatility and disruption. Business credit and liquidity have tightened in much of the world. Some of our suppliers and customers may face credit issues and could experience cash flow problems and other financial hardships. These factors currently have not had an impact on the timeliness of receivable collections from our customers. We cannot predict at this time how this situation will develop and whether reserve for bad accounts receivable may need to be taken or such receivable written off in the coming quarters.

Despite the various risks and uncertainties associated with the current global economy, we believe our core strengths will continue to allow us to execute our strategy for long-term sustainable growth in revenue, net income and operating cash flow.

Summary of Critical Accounting Policies

We have identified critical accounting policies that, as a result of judgments, uncertainties, uniqueness and complexities of the underlying accounting standards and operation involved could result in material changes to our financial position or results of operations under different conditions or using different assumptions.

Revenue Recognition

We recognize wholesale revenue from product sales, net of value-added taxes, upon delivery for local sales and upon shipment of the products for export sales, at such time title passes to the customer provided however that (i) there are no uncertainties regarding customer acceptance (ii) persuasive evidence of an arrangement exists (iii) the sales price is fixed and determinable, and (iv) collectability is deemed probable. We recognize wholesale revenue from manufacturing fees charged to buyers for the assembly of garments from materials provided by the buyers upon completion of the manufacturing process and shipment of the products for export sales, provided that (i)there are no uncertainties regarding customer acceptance (ii) persuasive evidence of an arrangement exists (iii) the sales price is fixed and determinable, and (iv)  collectability is deemed probable. Retail sales are recorded at the time of register receipt.

Estimates and Assumptions

In preparing our consolidated financial statements, we use estimates and assumptions that affect the reported amounts and disclosures. Our estimates are often based on complex judgments, probabilities and assumptions that we believe to be reasonable, but that are inherently uncertain and unpredictable. We are also subject to other risks and uncertainties that may cause actual results to differ from estimated amounts. Significant estimates in 2012 and 2011 include the assumptions used to value warrants and the estimates of the allowance for deferred tax assets.

19

Results of Operations for the three months ended June 30, 2012 and 2011

The following table summarizes our results of operations for the three months ended June 30, 2012 and 2011. The table and the discussion below should be read in conjunction with our condensed consolidated financial statements and the notes thereto appearing elsewhere in this report.

		Three Months Ended June 30,
		2012				2011
		(in U.S. Dollars, except for percentages)
Sales	$	47,195,031	100.0	%	$	42,923,640	100.0	%
Gross Profit	$	13,586,581	28.8	%	$	10,356,747	24.1	%
Operating Expense	$	11,164,465	23.7	%	$	7,884,083	18.4	%
Income From Operations	$	2,422,116	5.1	%	$	2,472,664	5.8	%
Other Income	$	250,043	0.1	%	$	181	0.1	%
Income tax expense	$	321,010	0.7	%	$	213,976	0.5	%
Net Income	$	2,351,149	5.0	%	$	2,258,869	5.3	%

Revenue

The following table sets forth a breakdown of our total sales, by region, for the three months ended June 30, 2012 and 2011.

	2012		% of total sales			2011		% of total sales			Growth in 2012 Compared with 2011
Wholesale business
The People’s Republic of China	$	10,932,970		23.2	%	$	6,160,177		14.4	%		77.5	%
Germany		3,393,413		7.2			8,670,146		20.2			(60.9	)
United States		4,287,325		9.1			5,543,305		12.9			(22.7	)
United Kingdom		4,588,231		9.7			5,403,112		12.6			(15.1	)
Japan		2,416,434		5.1			5,060,331		11.8			(52.2	)
Europe-Other		3,189,555		6.8			2,826,082		6.6			12.9
Total wholesale business		28,807,928		61.0			33,663,153		78.4			(14.4	)
Retail business		18,387,103		39.0			9,260,487		21.6			98.6
Total	$	47,195,031		100.0	%	$	42,923,640		100.0	%		10.0	%

Sales for the three months ended June 30, 2012 were $47.2 million, an increase of 10.0% from the three months ended June 30,  2011. This increase was primarily attributable to increased sales in our retail business.

Sales generated from our wholesale business contributed 61.0% or $28.8 million of our total sales for the three months ended June 30, 2012, a decrease of 14.4% compared to $33.7 million in the three months ended June 30, 2011. This decrease was primarily attributable to decreased sales in Germany, the United States, the United Kingdom and Japan. The reduced sales in the wholesale segment was primarily due to global economic uncertainty and instability, the advanced economies represented by Europe and the US are recovering slowly, which seriously impacted China's apparel exports; therefore, our overseas wholesale business also faced declining orders.

Sales generated from our retail business contributed 39.0% or $18.4 million of our total sales for the three months ended June 30, 2012, an increase of 98.6% compared to 21.6% or $9.3 million in the three months ended June 30, 2011. This increase was primarily due to the increase in same store sales and new stores opened. We had 562 LA GO GO stores as of June 30, 2012, compared to 368 LA GO GO stores at June 30, 2011.

Costs and Expenses

Cost of Sales and Gross Margin

Cost of goods sold includes the direct raw material cost, direct labor cost, and manufacturing overhead including depreciation of production equipment and rent, consistent with the revenue earned. Cost of goods sold excludes warehousing costs, which historically have not been significant.

20

The following table sets forth the components of our cost of sales and gross profit both in amounts and as a percentage of total sales for the three months ended June 30, 2012 and 2011.

									Growth
									(Decrease) in
	Three months ended June 30,								2012 Compared
	2012				2011				with 2011
	(in U.S. dollars, except for percentages)
Net Sales for Wholesale Sales	$	28,807,928	100.0	%	$	33,663,153	100.0	%		(14.4	)%
Raw Materials		13,097,205	45.5			16,395,407	48.7			(20.1	)
Labor		1,137,557	3.9			1,073,988	3.2			5.9
Outsourced Production Costs		7,979,797	27.7			9,543,021	28.3			(16.4	)
Other and Overhead		22,662	0.1			66,428	0.2			(65.9	)
Total Cost of Sales for Wholesale		22,237,221	77.2			27,078,844	80.4			(17.9	)
Gross Profit for Wholesale		6,570,707	22.8			6,584,309	19.6			(0.2	)
Net Sales for Retail		18,387,103	100.0			9,260,487	100.0			98.6
Production Costs		5,212,762	28.4			2,758,990	29.8			88.9
Rent		6,158,467	33.5			2,729,059	29.5			125.7
Total Cost of Sales for Retail		11,371,229	61.8			5,488,049	59.3			107.2
Gross Profit for Retail		7,015,874	38.2			3,772,438	40.7			86.0
Total Cost of Sales		33,608,450	71.2			32,566,893	75.9			3.2
Gross Profit	$	13,586,581	28.8	%	$	10,356,747	24.1	%		31.2	%

Raw material costs for our wholesale business were 45.5% of our total wholesale business sales in the three months ended June 30, 2012, compared to 48.7% in the three months ended June 30, 2011.  The decrease was mainly due to decreased raw materials prices.

Labor costs for our wholesale business were 3.9% of our total wholesale business sales in the three months ended June 30, 2012, compared to 3.2% in the three months ended June 30, 2011. The increase was mainly due to decreased  outsourced production.

Outsourced manufacturing costs for our wholesale business were 27.7% of our total wholesale business sales in the three months ended June 30, 2012, compared to 28.3% in the three months ended June 30, 2011. This decrease was primarily attributable to the decreased outsourced manufacturing costs in the PRC, because we had available domestic capacity in the three months ended June 30, 2012, compared with limited capacity in the three months ended June 30, 2011, and our Chinese suppliers were willing to lower their prices due to their excess production capacity .

Overhead and other expenses for our wholesale business accounted for 0.1% of our total wholesale business sales for the three months ended June 30, 2012, compared to 0.2% of total sales for the three months ended June 30, 2011.

Wholesale business gross profit for the three months ended June 30, 2012 and 2011 was both $6.6 million. As a percentage of wholesale sales, gross profit accounted for 22.8% of our total wholesale sales for the three months ended June 30, 2012, an increase of 3.2% compared to 19.6% for the three months ended June 30, 2011. The increase was mainly due to decreased raw materials prices and outsourced manufacturing costs.

Production costs for our retail business were $5.2 million during the three months ended June 30, 2012 compared to $2.8 million during the three months ended June 30, 2011. As a percentage of retail sales, retail production costs accounted for 28.4% of our total  retail sales in the three months ended June 30, 2012, compared to 29.8% of total retail sales in the three months ended June 30, 2011. This decrease was primarily due to reduced retail prices in various promotions in exchange for increased sales volume during the three months ended June 30, 2011.      .

Rent costs for our retail business were $6.2 million for the three months ended June 30, 2012 compared to $2.7 million for the three months ended June 30, 2011. As a percentage of sales, rent costs accounted for 33.5% of our total retail sales for the three months ended June 30, 2012, compared to 29.5% of total retail sales for the three months ended June 30, 2011. Total rent costs increased as a result of the increase in the number of our stores. The increase in rent costs as a percentage of total retail sales was due to the increase in the number of new stores opened in the second quarter of 2012; there were 95 and 77 new stores opened in the three months ended June 30, 2012 and 2011, respectively.

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Gross profit in our retail business for the three months ended June 30, 2012 was $7.0 million and gross margin was 38.2%. Gross profit in our retail business for the three months ended June 30, 2011 was $3.8 million and gross margin was 40.7%.

Total cost of sales for the three months ended June 30, 2012 was $33.6 million, compared to $32.6 million for the three months ended June 30, 2011, an increase of 3.2%. As a percentage of total sales, cost of sales decreased to 71.2% of total sales for the three months ended June 30, 2012, compared to 75.9% of total sales for the three months ended June 30, 2011. Consequently, gross margin increased to 28.8% for the three months ended June 30, 2012 from 24.1% for the three months ended June 30, 2011.

Selling, General and Administrative Expenses

Our selling expenses consist primarily of local transportation, unloading charges, product inspection charges, salaries for retail staff and decoration and marketing expenses associated with our retail business.

Our general and administrative expenses include administrative salaries, office expense, certain depreciation and amortization charges, repairs and maintenance, legal and professional fees, warehousing costs and other expenses that are not directly attributable to our revenues.

Costs of our distribution network that are excluded from cost of sales consist of local transportation and unloading charges, and product inspection charges. Accordingly our gross profit amounts may not be comparable to those of other companies who include these amounts in cost of sales.

	Three Months Ended June 30,									Increase/
	2012				2011					(Decrease)
	(in U.S. Dollars, except for percentages)
Gross Profit	$	13,586,581	28.8	%	$	10,356,747		24.1	%		31.2	%
Operating Expenses:
Selling Expenses		6,966,335	14.8	%		3,766,770		8.8			84.9
General and Administrative Expenses		4,198,130	8.9	%		4,117,313		9.6			2.0
Total		11,164,465	23.7	%		7,884,083		18.4			41.6
Income from Operations	$	2,422,116	5.1	%	$	2,472,664		5.8	%		(2.0	)%

Selling expenses increased 84.9% to $7.0 million for the three months ended June 30, 2012 from $3.8 million for the three months ended June 30, 2011. The increase was attributable to the increased number of retail employees and increased average salaries, as well as increased store decoration and marketing expenses associated with the promotion of the LA GO GO brand.

General and administrative expenses increased 2.0% to $4.2 million the three months ended June 30, 2012 from $4.1 million for the three months ended June 30, 2011. As a percentage of total sales, general and administrative expenses decreased to 8.9% of total sales for the three months ended June 30, 2012, compared to 9.6% of total sales for the three months ended June 30, 2011. The percentage decrease was attributable to the increase in our sales.

Income from Operations

Income from operations decreased 2.0% to $2.4 million for the three months ended June 30, 2012 from $2.5 million for the three months ended June 30, 2011.  As a percentage of sales, income from operations accounted for 5.1% of our total sales  for the three months ended June 30, 2012, a decrease of 0.7% compared to the three months ended June 30, 2011 as a result of increasing selling expenses.

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Interest Expense

Interest expense was $0.5 million for the three months ended June 30, 2012, an increase of  77.2% compared to the same period in 2011. This increase was attributable to the increased  interest rates.

Change in fair value of derivative liability

Change in fair value of derivative liability was a gain of $0.2 million and $0.1 million, based on the Binnomial Lattice model, for the three months ended June  30, 2012 and 2011, respectively.

Income Tax Expenses

Income tax expense for the three months ended June 30, 2012 was $0.3 million, an increase of 50% compared to the same period of 2011. The increase was primarily due to increased profits of  LA GO GO and Ever-Glory Apparel.

Our PRC subsidiaries are governed by the Income Tax Law of the PRC concerning Foreign Investment Enterprises and Foreign Enterprises and various local income tax laws. Each of our consolidated entities files its own separate income tax return.

All PRC subsidiaries are subject to 25% income tax rate.

Perfect Dream Limited was incorporated in the British Virgin Islands on July 1, 2004, and has no income tax.

Ever-Glory International Group (HK) Ltd was incorporated in Samoa on September 15, 2009, and has no liabilities for income tax.

Ever-Glory International Group Inc. was incorporated in the United States and has incurred net operating losses for income tax purposes through 2010. The net operating loss carry forwards for United States income taxes may be available to reduce future years’ taxable income. These carry forwards will expire, if not utilized, through 2031. Management believes that the realization of the benefits from these losses is uncertain due to our limited operating history and continuing losses for United States income tax purposes. Accordingly, we provided a 100% valuation allowance on the deferred tax asset to reduce the asset to zero.

Net Income

Net income for the three months ended June 30, 2012 was $2.4 million, an increase of  4.1% compared to the same period in 2011. Our basic and diluted earnings per share were $0.16 and $0.15 for the three months ended June 30, 2012 and 2011, respectively.

Results of Operations for the six months ended June 30, 2012 and 2011

The following table summarizes our results of operations for the six months ended June 30, 2012 and 2011. The table and the discussion below should be read in conjunction with the consolidated financial statements and the notes thereto appearing elsewhere in this report.

		Six Months Ended June 30,
		2012				2011
		(in U.S. Dollars, except for percentages)
Sales	$	100,421,204	100.0	%	$	96,131,877		100.0	%
Gross Profit	$	25,189,569	25.1	%	$	19,468,759		20.3	%
Operating Expense	$	20,003,933	19.9	%	$	13,685,030		14.2	%
Income From Operations	$	5,185,636	5.2	%	$	5,783,729		6.0	%
Other Income (Expenses)	$	132,589	0.5	%	$	(19,867	)	0	%
Income tax expense	$	845,866	0.8	%	$	892,997		0.9	%
Net Income	$	4,472,359	4.5	%	$	4,870,865		5.1	%

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Revenue

The following table sets forth a breakdown of our total sales, by region, for the six months ended June 30, 2012 and 2011.

	2012		% of totalsales		2011		% of totalsales			Growth in 2012 compared with 2011
Wholesales business
The People’s Republic of China	$	18,875,802		18.8	$	19,835,081		20.6	%		(4.8	)%
Germany		8,858,106		8.8		17,410,721		18.1			(49.1	)
United Kingdom		7,503,583		7.5		7,741,270		8.1			(3.1	)
Europe-Other		7,953,390		7.9		7,618,743		7.9			4.4
Japan		8,523,582		8.5		11,012,419		11.5			(22.6	)
United States		7,753,988		7.7		10,654,275		11.1			(27.2	)
Total wholesale business		59,468,451		59.2		74,272,509		77.3			(19.9	)
Retail business		40,952,753		40.8		21,859,368		22.7			87.3
Total	$	100,421,204		100.0	$	96,131,877		100.0	%		4.5	%

Sales for the six months ended June 30, 2012 were $100.4 million, an increase of 4.5% from the six months ended June 30,  2011. This increase was primarily attributable to increased sales in our retail business.

Sales generated from our wholesale business contributed 59.2% or $59.5 million of our total sales for the six months ended June 30, 2012, a decrease of 19.9% compared to $74.3 million in the six months ended June 30, 2011. This decrease was primarily attributable to decreased sales in Germany, the United Kingdom and Japan. The reduced sales in the wholesale segment was primarily due to global economic uncertainty and instability, the advanced economies represented by Europe and the US are recovering slowly, which seriously impacted China's apparel exports, so, our overseas wholesale business also faced declining orders.

Sales generated from our retail business contributed 40.8% or $41.0 million of our total sales for the six months ended June 30, 2012, an increase of 87.3% compared to 22.7% or $21.9 million in the six months ended June 30, 2011. This increase was primarily due to the increase in same store sales and new stores opened. We had 562 LA GO GO stores as of June 30, 2012, compared to 368 LA GO GO stores at June 30, 2011.

Costs and Expenses

Cost of Sales and Gross Margin

Cost of goods sold includes the direct raw material cost, direct labor cost, and manufacturing overhead including depreciation of production equipment and rent, consistent with the revenue earned. Cost of goods sold excludes warehousing costs, which historically have not been significant.

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The following table sets forth the components of our cost of sales and gross profit both in amounts and as a percentage of total sales for the six months ended June 30, 2012 and 2011.

									Growth
									(Decrease)in
	Six months ended June 30,								2012 compared
	2012				2011				with 2011
	(in U.S. dollars, except for percentages)
Net Sales for Wholesale Sales	$	59,468,451	100.0	%	$	74,272,509	100.0	%		(19.9	)%
Raw Materials		27,333,840	46.0			36,725,638	49.4			(25.6	)
Labor		2,046,295	3.4			1,920,498	2.6			6.6
Outsourced Production Costs		17,620,323	29.6			22,993,329	31.0			(23.4	)
Other and Overhead		253,413	0.4			264,046	0.4			(4.0	)
Total Cost of Sales for Wholesale		47,253,871	79.5			61,903,511	83.3			(23.7	)
Gross Profit for Wholesale		12,214,580	20.5			12,368,998	16.7			(1.2)
Net Sales for Retail		40,952,753	100.0			21,859,368	100.0			87.3
Production Costs		13,081,846	31.9			7,085,307	32.4			84.6
Rent		14,895,918	36.4			7,674,300	35.1			94.1
Total Cost of Sales for Retail		27,977,764	68.3			14,759,607	67.5			89.6
Gross Profit for Retail		12,974,989	31.7			7,099,761	32.5			82.8
Total Cost of Sales		75,231,635	74.9			76,663,118	79.7			(1.9	)
Gross Profit	$	25,189,569	25.1	%	$	19,468,759	20.3	%		29.4	%

Raw material costs for our wholesale business were 46.0% of our total wholesale business sales in the six months ended June 30, 2012, compared to 49.4% in the six months ended June 30, 2011.  The decrease was mainly due to decreased raw materials prices.

Labor costs for our wholesale business were 3.4% of our total wholesale business sales in the six months ended June 30, 2012, compared to 2.6% in the six months ended June 30, 2011. The increase was mainly due to decreased outsourced production.

Outsourced manufacturing costs for our wholesale business were 29.6% of our total sales in the six months ended June 30, 2012, compared to 31.0% in the six months ended June 30, 2011. This decrease was primarily attributable to the decreased outsourced manufacturing costs in the PRC, because we had available domestic capacity in the six months ended June 30, 2012, compared with limited capacity in the six months ended June 30, 2011, and our Chinese suppliers were willing to lower their prices due to their excess production capacity

Overhead and other expenses for our wholesale business accounted for 0.4% of our total sales for the six months ended June 30, 2012 and 2011.

Gross profit in our wholesale business for the six months ended June 30, 2012 was $12.2 million, a slight decrease of 1.2% compared to the six months ended June 30, 2011. As a percentage of wholesal sales, gross profit accounted for 20.5% of our total  wholesale sales for the six months ended June 30, 2012, an increase of 3.8% compared to 16.7% for the six months ended June 30, 2011. The increase was mainly due to decreased raw materials prices and outsourced manufacturing costs.

Production costs for our retail business were $13.1 million during the six months ended June 30, 2012 versus $7.1 million during the six months ended June 30, 2011. As a percentage of total retail sales, Production costs for our retail business were 31.9% of our total retail sales during the six months ended June 30, 2012, a slight decreased compared to 32.4% during the six months ended June 30, 2011.

Rent costs for our retail business were $14.9 million or 36.4% of our total retail sales during the six months ended June 30, 2012 versus $7.7 million or 35.1% during the six months ended June 30, 2011. Total rent costs increased as a result of the increase in the number of our stores. The increase in rent costs as a percentage of total retail sales was due to the increase in the number of new stores opened in the half year of 2012; there were 121 and 93 new stores opened in the half year of 2012 and 2011, respectively.

Gross profit in our retail business for the six months ended June 30, 2012 was $13.0 million and gross margin was 31.7%. Gross profit in our retail business for the six months ended June 30, 2011 was $7.1 million and gross margin was 32.5%.

Total cost of sales for the six months ended June 30, 2012 was $75.2 million, a decrease of 1.9% compared to the six months ended June 30, 2011. As a percentage of total sales, our cost of sales decreased  to 74.9% for the six months ended June 30, 2012, compared to 79.7% for the six months ended June 30, 2011. Consequently, gross margin increased to 25.1% for the six months ended June 30, 2012 from 20.3% for the six months ended June 30, 2011.

We purchase the majority of our raw materials directly from numerous local fabric and accessories suppliers. For our wholesale business, purchases from our five largest suppliers represented approximately 19.0% and 18.3% of raw material purchases for the six months ended June 30, 2012 and 2011, respectively. No one supplier provided more than 10.0% of our raw material purchases for the six months ended June 30, 2012 and 2011. For our retail business, purchases from our five largest suppliers represented approximately 43.9% and 39.6% of raw material purchases for the six months ended June 30, 2012 and 2011. One supplier provided 13.8% of our total purchases for the six months ended June 30, 2012. One supplier provided 16.1% of our total purchases for the six months ended June 30, 2011. We have not experienced difficulty in obtaining raw materials essential to our business, and we believe we maintain good relationships with our suppliers.

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Wealso purchase finished goods from contract manufacturers. For our wholesale business, purchases from our five largest contract manufacturers represented approximately 46.6% and 38.3% of finished goods purchases for the six months ended June 30, 2012 and 2011, respectively. Two contract manufacturers provided approximately 16.6% and 13.2% of our finished goods purchases for the six months ended June 30, 2012. One contract manufacturer provided approximately 10.4% of our finished goods purchases for the six months ended June 30, 2011. For our retail business, our five largest contract manufacturers represented approximately 18.5% and 31.0% of finished goods purchases for the six months ended June 30, 2012 and 2011, respectively. No manufacturer provided more than 10% of our finished goods purchases for the six months ended June 30, 2012 and 2011. We have not experienced difficulty in obtaining finished products from our contract manufacturers and we believe we maintain good relationships with our contract manufacturers.

Selling, General and Administrative Expenses

Our selling expenses consist primarily of local transportation, unloading charges, product inspection charges, salaries for retail staff and decoration and marketing expenses associated with our retail business.

Our general and administrative expenses include administrative salaries, office expense, certain depreciation and amortization charges, repairs and maintenance, legal and professional fees, warehousing costs and other expenses that are not directly attributable to our revenues.

Costs of our distribution network that are excluded from cost of sales consist of local transportation and unloading charges, and product inspection charges. Accordingly our gross profit amounts may not be comparable to those of other companies who include these amounts in costs of sales.

	Six months ended June 30,								Increase
	2012				2011				(Decrease) %
	(in U.S. Dollars, exceptfor percentages)
Gross Profit	$	25,189,569	25.1	%	$	19,468,759	20.3	%		29.4	%
Operating Expenses:
Selling Expenses		12,800,527	12.7			7,355,875	7.7			74	%
General and Administrative Expenses		7,203,406	7.2			6,329,155	6.6			13.8	%
Total		20,003,933	19.9			13,685,030	14.2			46.2	%
Income from Operations	$	5,185,636	5.2	%	$	5,783,729	6.0	%		(10.3	)%

Selling expenses were $12.8 million in the six months ended June 30, 2012, an increase of 74% or $5.4 million compared to the six months ended June 30, 2011. The increase was attributable to an increase in salaries and the number of retail staff, as well as increased decoration and marketing expenses associated with the promotion of LA GO GO.

General and administrative expenses were $7.2 million in the six months ended June 30, 2012, an increase of 13.8% compared to the six months ended June 30, 2011. As a percentage of total sales, general and administrative expenses slight increased to 7.2% of total sales for the six months ended June 30, 2012, compared to 6.6% of total sales for the six months ended June 30, 2011.

Income from Operations

Income from operations decreased 10.3% to $5.2 million for the six months ended June 30, 2012 from $5.8 million for the six months ended June 30, 2011. This decrease was due to our increased selling expenses.

Income from operations for our retail business was $0.7 million in the six months ended June 30, 2012 compared to $0.6 million in the six months ended June 30, 2011. As a percentage of total retail sales, income from operations decreased to 1.7% of total retail sales for the six months ended June 30, 2012, compared to 2.5% of total retail sales for the six months ended June 30, 2011. The decrease was due to increased average salaries and the increased number of employees in the retail segment that resulted from expansion of LA GO GO, as well as increased store decoration and marketing expenses associated with the promotion of LA GO GO. There were 121 new stores opened in the six months ended June 30, 2012, compared to 93 new stores opened in the six months ended June 30, 2011.

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Income from operations for our wholesale business was $4.5 million in the six months ended June 30, 2012 compared to $5.2 million in the six months ended June 30, 2011. As a percentage of total wholesale sales, income from operations increased to 7.6% of total wholesale sales for the six months ended June 30, 2012, compared to 7.0% of total wholesale sales for the six months ended June 30, 2011. The increase was due to the decreased cost of sales for our wholesale business.

Interest Expense

Interest expense was $1.0 million for the six months ended June 30, 2012, an increase of 92.8% compared to the same period in 2011. This increase was attributable to the increased  interest rates.

Change in fair value of derivative liability

Change in fair value of derivative liability was a gain of $0.29 million and $0.33 million, based on the Binnomial Lattice model, for the six months ended June 30, 2012 and 2011, respectively.

Income Tax Expenses

Income tax expense for the six months ended June 30, 2012 was $0.8 million, a decrease of 5.3% compared to the same period of 2011.

Net Income

Net income for the six months ended June 30, 2012 was $4.5 million, a decrease of 8.2% compared to the same period in 2011. Our diluted earnings per share were $0.30 and $0.33 for the six months ended June 30, 2012 and 2011, respectively.

Summary of Cash Flows

Net cash provided by operating activities was $19.2 million for the six months ended June 30, 2012, compared with $6.9 million during the six months ended June 30, 2011. The increase was primarily due to a decrease in amounts due from related parties.

Net cash used in investing activities was $2.1 million for the six months ended June 30, 2012, compared with $1.5 million during the  six months ended June 30, 2012. The increase was mainly due to increased equipment purchases.

Net cash used in financing activities was $18.7 million for the six months ended June 30, 2012, compared with net cash provided by financing activities of $1.4 million during the six months ended June 30, 2011. During the six months ended June 30, 2012, we repaid $31.5 million of bank loans and received bank loan proceeds of $24.6 million. We also advanced $12.3 million to a related party under the counter-guarantee agreement.

Liquidity and Capital Resources

As of June 30, 2012, we had cash and cash equivalents of $7.2 million, other current assets of $89.5 million and current liabilities of $70.0 million. We presently finance our operations primarily from cash flows from operations and bank loans and we anticipate that these will continue to be our primary sources of funds to finance our short-term cash needs.

Bank Loans

On August 2, 2010, Goldenway entered into a two-year revolving line of credit agreement with Nanjing Bank, which allows the Company to borrow up to approximately $7.91 million (RMB50 million). These loans are guaranteed by Jiangsu Ever-Glory International Group Corp. (“Jiangsu Ever-Glory”), an entity controlled by Mr. Kang, the Company’s Chairman and Chief Executive Officer. These loans are also collateralized by the Company’s property and equipment. As of June 30, 2012, no amounts were outstanding  under this agreement.

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On March 11, 2010, Ever-Glory Apparel entered into an one-year line of credit agreement for approximately $7.91 million (RMB50 million) with Nanjing Bank. The agreement has been extended until April 6, 2013. As of June 30, 2012, Ever-Glory Apparel had borrowed $2.37 million from Nanjing Bank with an annual interest rate from 6.73% to 6.89% due on various dates from November 2012 to May 2013. The loan is guaranteed by Jiangsu Ever-Glory and the Company's chairman and CEO, Mr. Kang. In addition, Ever-Glory Apparel had borrowed $1.64 million from Nanjing Bank with an annual interest rate from 4.4% to 4.9% due on various dates from August 2012 to September 2012, and collateralized by approximately $2.2 million of accounts receivable from wholesale customers. These bank loans are to be repaid upon receipt of payments from customers. At June 30, 2012, approximately $3.9 million was unused and available.

As of June 30, 2012, LA GO GO had borrowed $1.58 million (RMB10.0 million) from Nanjing Bank with an annual interest rate of 6.29% and due on various dates from April 2013 to May 2013. This loan is guaranteed by Jiangsu Ever-Glory and Mr. Kang.

On January 4, 2011, Goldenway entered into a new one-year line of credit agreement for approximately $6.33 million (RMB40 million) with Shanghai Pudong Development Bank. As of June 30, 2012, Goldenway had borrowed the maximum amount available under the line of $6.33 million (RMB40 million), with an annual interest rate of 7.55%. These loans are collateralized by certain properties and land use rights of Goldenway, and are due in November 2012.

As of June 30, 2012, Ever-Glory Apparel had borrowed $5.06 million from the Bank of Communications with an annual interest rate of 7.08%, and due in February 2013. The loan is guaranteed by Jiangsu Ever-Glory and the Company's chairman and CEO, Mr. Kang. This loan is also collateralized by assets of Jiangsu Ever-Glory’s equity investee, Nanjing Knitting, under a collateral agreement executed between the Company, Jiangsu Ever-Glory, Nanjing Knitting and the bank. In addition, Ever-Glory Apparel had borrowed $1.58 million from the Bank of Communications with annual interest rate  of 5.27%, due on various dates from July 2012 to September 2012, guaranteed by Jiangsu Ever-Glory and Mr. Kang, and collateralized by approximately $1.98 million of accounts receivable from wholesale customers. Approximately $0.23 million was repaid in July 2012.

As of June 30, 2012, LA GO GO had borrowed $0.79 million (RMB5.0 million) from the Bank of Communications with an annual interest rate of 6.37% and due in June 2013. This loan is guaranteed by Jiangsu Ever-Glory and Mr. Kang.

As of June 30, 2012, Ever-Glory Apparel had borrowed $1.90 million from the Bank of China with an annual interest rate rom 5.9% to 6.1% due on various dates from July 2012 to August 2012. The loan is guaranteed by Goldenway, and collateralized by approximately $2.6 million of accounts receivable from wholesale customers. Approximately $0.98 million was repaid in July 2012.

On July 29, 2011, Ever-Glory Apparel and Perfect Dream collectively entered into a secured banking facility agreement for a combined revolving import facility, letter of credit, invoice financing facilities and a credit line for treasury products of up to $7.0 million with the Nanjing Branch of HSBC (China) Company Limited (“HSBC”). This agreement is guaranteed by the Company and Mr. Kang. As of June 30, 2012, Ever-Glory Apparel had borrowed $1.22 million from HSBC with an annual interest rate from 5.85% to 7.02% due on various dates from July 2012 to September 2012, and collateralized by approximately $1.63 million of accounts receivable from wholesale customers. These bank loans are to be repaid upon receipt of payments from customers. At June 30, 2012, approximately $5.78 million was unused and available. Approximately $0.27 million was repaid in July 2012.

All bank loans are used to fund our daily operations.

Amounts due from related party

We have historically relied on debt financing from Chinese banks to satisfy our financing needs.  Due to Chinese banks’ stringent underwriting policies to non-state-owned businesses, borrowers generally have to provide land use rights as collateral or obtain third party guarantees from either high-net-worth individuals or businesses with strong credit histories with the banks.   Although we have certain land use rights available to be used as collateral, the value of these rights are inadequate for us to obtain sufficient bank loans to support our projected growth. As of June 30, 2012, Jiangsu Ever-Glory provided guarantees for approximately US$ 27.21 million (RMB 172 million) of lines of credit we obtained from Chinese banks. Jiangsu Ever-Glory and its 20.31% owned equity investee also provided certain of their assets as collateral. The value of the collateral provided, as per appraisals obtained by the banks in connection with the lines of credit, is approximately US$11.94 million (RMB 75 million). In March 2012, in consideration of the guarantees and collateral provided by Jiangsu Ever-Glory, we orally agreed to provide Jiangsu Ever-Glory a counter-guarantee in the form of cash of not less than 70% of the maximum aggregate lines of credit obtained by us. Jiangsu Ever-Glory is obligated to return the full amount of the counter-guarantee funds provided upon expiration or termination of the underlying lines of credit and is to pay interest at an annual rate of 6.0% of amounts provided. The oral agreements between us and Jiangsu Ever-Glory have been documented in a written Counter-Guarantee Agreement dated April 15, 2013, that was filed as an exhibit to our Annual Report on Form 10-K filed on April 16, 2013. During the six months ended June 30, 2012, the Company provided an amount of US$11.80 million (RMB 74.6 million) from its bank borrowings to Jiangsu Ever-Glory under the counter-guarantee, all of which was outstanding as of June 30, 2012.

Loans from related party

As of March 31, 2011 the Company owed $0.9 million to Blue Power Holdings Limited, a company controlled by the Company’s Chief Executive Officer. Interest was charged at 6% per annum on the amounts due. The loans were paid in full in April 2011. For the three months ended March 31, 2011, the Company incurred interest expense of $909.

28

Capital Commitments

We have a continuing program for the purpose of improving our manufacturing facilities and extending our LA GO GO stores. We anticipate that cash flows from operations and borrowings from banks will be used to pay for these capital commitments.

Uses of Liquidity

Our cash requirements for the next twelve months will be primarily to fund daily operations and the growth of our business, some of this being used to fund new stores.

Sources of Liquidity

Our primary sources of liquidity for our short-term cash needs are expected to be from cash flows generated from operations, and cash equivalents currently on hand. We believe that we will be able to borrow additional funds if necessary.

We believe our cash flows from operations together with our cash and cash equivalents currently on hand will be sufficient to meet our needs for working capital, capital expenditure and other commitments for the next twelve months. No assurance can be made that additional financing will be available to us if required, and adequate funds may not be available on terms acceptable to us. If funding is insufficient at any time in the future, we will develop or enhance our products or services and expand our business through our own cash flows from operations.

As of June 30, 2012, we had access to $29.2 million in lines of credit, of which $17.6 million was unused and is currently available. These credit facilities do not include any covenants.

Foreign Currency Translation Risk

Our operations are, for the most part, located in the PRC, which may give rise to significant foreign currency risks from fluctuations and the degree of volatility of foreign exchange rates between the United States dollar and the Chinese RMB. Most of our sales are in United States (U.S.) dollars. During 2003 and 2004 the exchange rate of RMB to the U.S. dollar remained constant at 8.26 RMB to the dollar. On July 21, 2005, the Chinese government adjusted the exchange rate from 8.26 to 8.09 RMB to the U.S. dollar. From that time, the RMB continued to appreciate against the U.S. dollar. As of June 30, 2012, the foreign exchange rate had increased to 6.33 RMB to one U.S. dollar. We are continuously negotiating price adjustments with most of our customers based on the daily market foreign exchange rates, which we believe will reduce our exposure to exchange rate fluctuations in the future, and we will pass some of the increased cost to our customers.

In addition, the financial statements of Goldenway, New-Tailun, Catch-Luck, Ever-Glory Apparel, Tai Xin and LA GO GO (whose functional currency is the RMB) are translated into US dollars using the current rate method. The balance sheet items are translated into US dollars using the exchange rates at the respective balance sheet dates. The capital and various reserves are translated at historical exchange rates prevailing at the time of the transactions while income and expense items are translated at the average exchange rate for the period. All exchange differences are recorded within equity. The foreign currency translation  gain (loss) for the three and six months ended June 30, 2012 and 2011 was $(196,365), $200,001, $479,660 and $716,495, respectively.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not use derivative financial instruments in our investment portfolio and have no foreign exchange contracts. Our financial instruments consist of cash and cash equivalents, trade accounts receivable, accounts payable, bank loans and long-term obligations. We consider investments in highly-liquid instruments purchased with a remaining maturity of 90 days or less from the date of purchase to be cash equivalents.

29

Interest Rates: Our exposure to market risk for changes in interest rates relates primarily to our short-term investments and short-term obligations; thus, fluctuations in interest rates would not have a material impact on the fair value of these securities. On June 30, 2012, we had $7.2 million in cash and cash equivalents. A hypothetical 5% increase or decrease in either the short term or long term interest rates would not have any material impact on our earnings or loss, or the fair market value or cash flows of these instruments.

Foreign Exchange Rates: We pay our suppliers and employees in Chinese RMB, however, most of our wholesales customers are located in the U.S., Japan and Europe and we generate sales from them in U.S. Dollars, Euros and British Pounds. Accordingly, our business has substantial exposure to changes in exchange rates between and among the Chinese RMB, the U.S. Dollar, the Euro and the British Pound. In the last decade, the RMB has been pegged at 8.26 RMB to one U.S. Dollar. On July 21, 2005 it was revalued to 8.09 per U.S. Dollar. Following the removal of the peg to the U.S. Dollar and pressure from the United States, the People’s Bank of China also announced that the RMB would be pegged to a basket of foreign currencies, rather than being strictly tied to the U.S. Dollar, and would be allowed to float trade within a narrow 0.3% daily band against this basket of currencies. The PRC government has stated that the basket is dominated by the U.S. Dollar, Euro, Japanese Yen and South Korean Won, with a smaller proportion made up of the British Pound, Thai Baht, Russian Ruble, Australian Dollar, Canadian Dollar and Singapore Dollar. There can be no assurance that the relationship between the RMB and these currencies will remain stable over time, especially in light of the significant political pressure on the Chinese government to permit the free flotation of the RMB, which could result in greater and more frequent fluctuations in the exchange rate between the RMB, the U.S. Dollar and the Euro. On June 30, 2012, the exchange rate between the RMB and U.S. Dollar was 6.32 RMB to one U.S. Dollar. For additional discussion regarding our foreign currency risk, see the section titled Risk Factors in the Annual Report on Form 10-K for fiscal year ended on December 31, 2011. Fluctuation in the value of Chinese RMB relative to other currencies may have a material adverse effect on our business and/or an investment in our shares.

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Exchange Act. Based on that evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting

Our management has worked, and will continue to work to improve our internal controls over financial reporting. During the three months ended June 30, 2012, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

30

PART II.  OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

We know of no pending legal proceedings to which we are a party which are material or potentially material, either individually or in the aggregate. We are from time to time, during the normal course of our business operations, subject to various litigation claims and legal disputes. We do not believe that the ultimate disposition of any of these matters will have a material adverse effect on our financial position, results of operations or liquidity.

ITEM 1A. RISK FACTORS

The following risk factors were included in our Form 10-K for fiscal year ended December 31, 2012 as a result of the counter-guarantee.

There maybe conflicts of interest between Mr. Kang’s role as the Chairman of the Board and CEO of our Company and his role as the majority owner of other entities that we do business with.

We had certain transactions with Jiangsu Ever-Glory International Enterprise Group Company (“Jiangsu Ever-Glory”), an entity majority owned and controlled by Mr. Kang. Jiangsu Ever-Glory is engaged in importing/exporting, apparel-manufacture, real-estate development, car sales and other businesses We utilized Jiangsu Ever-Glory as our agent to agent to assist with our import and export transactions and our international transportation projects. Import transactions primarily consist of purchases of raw materials and accessories designated by the Company’s customers for use in garment manufacture. Export transactions consist of our sales to markets outside of China. In return for these services, Jiangsu Ever-Glory charged us a fee of approximately 3% of export sales manufactured in China and 1% of export sales manufactured overseas. For import transactions, we may make advance payments, through Jiangsu Ever-Glory, for the raw material purchases, or Jiangsu Ever-Glory may make advance payments on our behalf. For export transactions, accounts receivable for export sales are remitted by our customers through Jiangsu Ever-Glory, who forwards the payments to us. We and Jiangsu Ever-Glory have agreed that balances from import and export transactions may be offset. Amounts due to (from) Jiangsu Ever-Glory are typically settled within 60-90 days. Accounts receivable for the six months ended June 30, 2012 and the year ended December 31, 2011 was US$8.2 million and US$20 million respectively. Accounts payable for the nine months ended June 30, 2012 and the year ended December 31, 2011 was US$1.9 million and US$2.4 million respectively.  We charge an interest of 0.5% (an annual interest of 6%) on net amounts due at each month end. Interest of 0.5% is charged on net amounts due at each month end. Interest income for the three and six months ended June 30, 2012 and 2011 was US$0.29, US$0.56, US$0.12 and US$0.14, respectively.

In March 2012, in consideration of the guarantees and collateral provided by Jiangsu Ever-Glory and Nanjing Knitting, the Company has agreed to provide Jiangsu Ever-Glory a counter-guarantee in the form of cash of not less than 70% of the maximum aggregate lines of credit obtained by the Company. Jiangsu Ever-Glory is obligated to return the full amount of the counter-guarantee funds provided upon expiration or termination of the underlying lines of credit and is to pay annual interest at the rate of 6.0% of amounts provided. As of June 30, 2012, Jiangsu Ever-Glory have provided guarantees for approximately US$ 27.21 million (RMB 172 million) of lines of credit obtained by the Company Jiangsu Ever-Glory, and its 20.31% owned equity investee, Nanjing Knitting, has also provided their assets as collateral for certain of these lines of credit. The value of the collateral, as per appraisals obtained by the banks in connection with these lines of credit is approximately US$11.94 million (RMB 75 million).  Mr. Kang has also provided a personal guarantee for US$21.95 million (RMB 139 million).  As of June 30, 2012, US$11.80 million (RMB 74.6 million) was provided to Jiangsu Ever-Glory under the counter-guarantee, all of which was outstanding at June30, 2012.

It is possible that the terms of the export and import agency transactions and the counter-guarantee may not be the same as those that would result from transactions between unrelated parties.  Despite Mr. Kang’s fiduciary duty to us as the CEO and a director, in the event of any conflicts of interest between us and Jiangsu Ever-Glory, he may not act in our best interests and such conflicts of interest may not be resolved in our favor. These conflicts may result in management decisions that could negatively affect our operations.

For a further discussion of these related party transactions, see Notes 13 Related party transactions in the footnotes to the consolidated financial statements and Item 13. Certain Relationships and Related Transactions, and Director Independence in our Form 10-K for fiscal year ended December 31, 2012 filed with the SEC on April 16, 2013.

In case Jiangsu Ever-Glory fails to repay the funds we provided to it under the Counter-Guarantee Agreement according to its terms, we would suffer significant financial losses.

Despite management’s belief that Jiangsu Ever-Glory is financially capable of repaying all amounts we provided under the counter-guarantee and Jiangsu Ever-Glory’s oral agreement to repay a certain portion of the funds by the end of second the quarter of 2013, it is possible that we will not be able to collect all amounts from Jiangsu Ever-Glory due to factors beyond our control.  There is no restriction on how Jiangsu Ever-Glory can use the funds except that it is not allowed to invest in high risk investments.  We were told that Jiangsu Ever-Glory has used the entire amount of the funds we provided under the counter-guarantee for its own operations. It is possible that we will not be able to collect the entire amount from Jiangsu Ever-Glory due to reasons beyond its control such as its operational failure or deterioration of overall economic conditions.  In such event, we, as the primary obligor under the lines of credit, would be obligated to repay the entire outstanding borrowings after the banks seek collection from the assets collateralized by Jiangsu Ever-Glory. As a result, we may suffer financial losses which could have material negative effects on our financial condition and results of operations.

31

Expansion of both our wholesale and retail business depends on our ability to obtain continuous financing at acceptable terms.  Failure to do so will result in negative impact on our results of operations.

We have historically relied on debt financing from Chinese banks to satisfy our financing needs.  Due to Chinese banks’ stringent underwriting policy to non-state-owned businesses, borrowers generally have to provide land use rights as collaterals or obtain third party guarantees from either high-net-worth individuals or businesses with strong credits with the banks.   Although we have certain land use rights to be used as collateral, the value of those properties are not high enough for us to obtain sufficient bank loans to support our projected growth.  Therefore, Mr. Kang previously provided personal guarantees and Jiangsu Ever-Glory provided personal guarantees and assets collateral as security interests for the bank loans.  In the event Mr. Kang or Jiangsu Ever-Glory refuses to provide sufficient security interests in the future or continue the guarantee and collateral provided in the past, we may not be able to obtain the bank loans on acceptable terms as required by our business plan. As a result, we may have to delay or reduce our retail expansion and limit our wholesale development which may materially harm our business, financial condition and results of operations.

 ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.   MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.   OTHER INFORMATION

None.

ITEM 6.   EXHIBITS

The following exhibits are filed herewith:

Exhibit No.	Description
10.1	Counter-Guarantee Agreement entered on April 15, 2013 between the Company and Jiangsu Ever-Glory (incorporated by reference to Exhibit No. 10. 16 filed in our annual report on Form 10-K for fiscal year ended December 31, 2012).
31.1	Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

101.INS   **	XBRL Instance Document
101.SCH **	XBRL Taxonomy Extension Schema Document
101.CAL **	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF **	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB **	XBRL Taxonomy Extension Label Linkbase Document
101.PRE **	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herein

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

32

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

May 15, 2013	EVER-GLORY INTERNATIONAL GROUP, INC.
	By:	/s/ Edward Yihua Kang
		Edward Yihua Kang
		Chief Executive Officer
		(Principal Executive Officer)
	By:	/s/ Jiansong Wang
		Jiansong Wang
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

33

EX-31.1

EXHIBIT 31.1

 I, Edward Yihua Kang, certify that:

1. I have reviewed this Amendment No. 1 to the quarterly report on Form 10-Q for the period ended June 30, 2012 of Ever-Glory International Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:           May 15, 2013	/s/ Edward Yihua Kang
	Edward Yihua Kang
	Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

I, Jiansong Wang, certify that:

1. I have reviewed this Amendment No. 1 to the quarterly report on Form 10-Q for the period ended June 30, 2012 of Ever-Glory International Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 15, 2013	/s/ Jiansong Wang
	Jiansong Wang
	Chief Finance Officer (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

Certification Pursuant To

Section 906 of Sarbanes-Oxley Act of 2002

I, Edward Yihua Kang, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1. The Amendment No. 1 to the quarterly report on Form 10-Q of the Company for the quarter ended June 30, 2012 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (U.S.C. 78m or 78o(d)); and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 15, 2013	/s/ Edward Yihua Kang
	Edward Yihua Kang
	Chief Executive Officer (Principal Executive Officer)

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of a separate disclosure document.

EX-32.2

EXHIBIT 32.2

Certification Pursuant To

Section 906 of Sarbanes-Oxley Act of 2002

I, Jiansong Wang, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1. The Amendment No. 1 to the quarterly report on Form 10-Q of the Company for the quarter ended June 30, 2012 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (U.S.C. 78m or 78o(d)); and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 15, 2013	/s/ Jiansong Wang
	Jiansong Wang
	Chief Finance Officer (Principal Financial Officer)

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of a separate disclosure document.

XML

Related Party Transactions (Details Textual)	1 Months Ended		3 Months Ended		6 Months Ended
	Mar. 31, 2012 USD ($)	Mar. 31, 2012 CNY	Jun. 30, 2012 USD ($)	Jun. 30, 2011 USD ($)	Jun. 30, 2012 USD ($)	Jun. 30, 2012 CNY	Jun. 30, 2011 USD ($)	Jun. 30, 2011 CNY	Dec. 31, 2009 USD ($)
Related Party Transactions (Textual)
Transaction cost related to sale and repurchase of raw material							$ 1,100,000	7,500,000
Purchase of raw materials from Related Party			79,413	948,146	714,022		1,059,091
Sub-contracts with related parties			2,597,793	2,458,327	5,423,363		3,998,745
Service fee in percentage of export sales manufactured overseas					3.00%	3.00%
Service fee in percentage of export sales manufactured in China					1.00%	1.00%
Related party, account settlement period, minimum					60 days	60 days
Related party, account settlement period, maximum					90 days	90 days
Description of counter agreement to Jiangsu Ever-glory	Company agreed to provide Jiangsu Ever-Glory a counter-guarantee in the form of cash of not less than 70% of the maximum aggregate lines of credit obtained by the Company.	Company agreed to provide Jiangsu Ever-Glory a counter-guarantee in the form of cash of not less than 70% of the maximum aggregate lines of credit obtained by the Company.
Interest rate charged on amount due under counter guarantee	6.00%	6.00%
Counter guarantee provided by guarantors			27,210,000		27,210,000	172,000,000
Ownership percentage of Nanjing Knitting in Jiangsu Ever-Glory			20.31%		20.31%	20.31%
Value of collateral as per bank valuations	11,940,000	75,000,000
Personal guarantee provided by chairman (Mr. Kang)	21,990,000	139,000,000
Counter guarantee provided by company					11,800,000	74,600,000
Interest charged on net amounts due					0.50%	0.50%
Interest income, Related Party			290,559	120,379	563,295		139,495
Loan from related party									$ 1,000,000
Loan from Related Party, Interest rate					6.00%	6.00%

XML

Stockholders' Equity (Details) (USD $)	1 Months Ended		1 Months Ended
	Mar. 31, 2012 Three Independent Directors [Member]	Mar. 14, 2012 Three Independent Directors [Member]	Mar. 31, 2012 One Independent Director [Member]	Mar. 21, 2012 One Independent Director [Member]
Stockholders' Equity (Textual)
Common stock issued at five days average market price		$ 1.94		$ 1.94
Number of shares of common stock issued to independent directors		3,346		1,723
Number of days used to calculation average market price of common stock	Five days before the grant date.		Five days before the grant date.

XML

Inventories (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Components of inventory
Raw materials	$ 7,974,309	$ 5,606,073
Work-in-progress	8,996,610	7,919,403
Finished goods	22,930,130	23,916,206
Inventory gross	39,901,049	37,441,682
Less: allowance for obsolete inventories	(1,030,351)	(566,878)
Total inventories	$ 38,870,698	$ 36,874,804

XML

Segments (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Segment profit or loss:
Net revenue from external customers	$ 47,195,031	$ 42,923,640	$ 100,421,204	$ 96,131,877
Income (loss) from operations	2,422,116	2,472,664	5,185,636	5,783,729
Interest income	328,736	124,401	610,220	146,874
Interest expense	458,703	258,924	1,004,744	521,175
Depreciation and amortization	1,136,275	876,304	2,296,910	1,666,901
Income tax expense	321,010	213,976	845,866	892,997
Wholesale Segment [Member]
Segment profit or loss:
Net revenue from external customers	28,807,928	33,663,153	59,468,451	74,272,509
Income (loss) from operations	1,967,832	2,227,029	4,494,836	5,226,517
Interest income	325,486	123,430	603,785	145,319
Interest expense	424,193	246,082	938,754	505,243
Depreciation and amortization	248,435	556,621	498,899	797,969
Income tax expense	215,057	155,371	687,462	756,939
Retail Segment [Member]
Segment profit or loss:
Net revenue from external customers	18,387,103	9,260,487	40,952,753	21,859,368
Income (loss) from operations	454,284	245,635	690,800	557,212
Interest income	3,250	971	6,435	1,555
Interest expense	34,510	12,842	65,990	15,932
Depreciation and amortization	887,840	319,683	1,798,011	868,932
Income tax expense	$ 105,953	$ 58,605	$ 158,404	$ 136,058

XML

Related Party Transactions (Details 3) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Amounts due from related parties
Amounts due from related party	$ 6,307,049	$ 17,623,712
EsCeLav [Member]
Amounts due from related parties
Amounts due from related party	5,932	23,565
Nanjing Eight-One-Five Hi-tech (M&E) Co.,Ltd. [Member]
Amounts due from related parties
Amounts due from related party	7,910
Jiangsu Ever Glory [Member]
Amounts due from related parties
Amounts due from related party	$ 18,658,578	$ 17,600,147

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Bank Loans

6 Months Ended

Jun. 30, 2012

Loans Payable [Abstract]

Bank Loans

NOTE 4   BANK LOANS

Bank loans represent amounts due to various banks and are generally due on demand or within one year. These loans can be renewed with the banks. Bank loans consisted of the following at June 30, 2012 and December 31, 2011:

Bank	June 30, 2012		December 31, 2011
Nanjing Bank	$	5,599,399	$	11,731,223
Shanghai Pudong Development Bank		6,328,000		8,966,382
Industrial and Commercial Bank of China		-		5,294,270
Bank of Communications		7,432,103		2,660,562
The Hong Kong and Shanghai Bank	1,215,637			532,944
Bank of China		1,898,400		-
	$	22,473,539	$	29,185,381

On August 2, 2010, Goldenway entered into a two-year revolving line of credit agreement with Nanjing Bank, which allows the Company to borrow up to approximately $7.91 million (RMB50 million). These loans are guaranteed by Jiangsu Ever-Glory International Group Corp. (“Jiangsu Ever-Glory”), an entity controlled by Mr. Kang, the Company’s Chairman and Chief Executive Officer. These loans are also collateralized by the Company’s property and equipment. As of June 30, 2012, no amounts were outstanding  under this agreement.

On March 11, 2010, Ever-Glory Apparel entered into an one-year line of credit agreement for approximately $7.91 million (RMB50 million) with Nanjing Bank. The agreement has been extended until April 6, 2013. As of June 30, 2012, Ever-Glory Apparel had borrowed $2.37 million from Nanjing Bank with an annual interest rate from 6.73% to 6.89% due on various dates from November 2012 to May 2013. The loan is guaranteed by Jiangsu Ever-Glory and the Company's chairman and CEO, Mr. Kang. In addition, Ever-Glory Apparel had borrowed $1.64 million from Nanjing Bank with an annual interest rate from 4.4% to 4.9% due on various dates from August 2012 to September 2012, and collateralized by approximately $2.2 million of accounts receivable from wholesale customers. These bank loans are to be repaid upon receipt of payments from customers. At June 30, 2012, approximately $3.9 million was unused and available.

As of June 30, 2012, LA GO GO had borrowed $1.58 million (RMB10.0 million) from Nanjing Bank with an annual interest rate of 6.29% and due on various dates from April 2013 to May 2013. This loan is guaranteed by Jiangsu Ever-Glory and Mr. Kang.

On January 4, 2011, Goldenway entered into a new one-year line of credit agreement for approximately $6.33 million (RMB40 million) with Shanghai Pudong Development Bank. As of June 30, 2012, Goldenway had borrowed the maximum amount available under the line of $6.33 million (RMB40 million), with an annual interest rate of 7.55%. These loans are collateralized by certain properties and land use rights of Goldenway, and are due in November 2012.

As of June 30, 2012, Ever-Glory Apparel had borrowed $5.06 million from the Bank of Communications with an annual interest rate of 7.08%, and due in February 2013. The loan is guaranteed by Jiangsu Ever-Glory and the Company's chairman and CEO, Mr. Kang.  This loan is also collateralized by assets of Jiangsu Ever-Glory’s equity investee, Nanjing Knitting, under a collateral agreement executed between the Company, Jiangsu Ever-Glory, Nanjing Knitting and the bank. In addition, Ever-Glory Apparel had borrowed $1.58 million from the Bank of Communications with annual interest rate of 5.27%, due on various dates from July 2012 to September 2012, guaranteed by Jiangsu Ever-Glory and Mr. Kang, and collateralized by approximately $1.98 million of accounts receivable from wholesale customers. Approximately $0.23 million was repaid in July 2012.

As of June 30, 2012, LA GO GO had borrowed $0.79 million (RMB5.0 million) from the Bank of Communications with an annual interest rate of 6.37% and due in June 2013. This loan is guaranteed by Jiangsu Ever-Glory and Mr. Kang.

As of June 30, 2012, Ever-Glory Apparel had borrowed $1.90 million from the Bank of China with an annual interest rate from 5.9% to 6.1% due on various dates from July 2012 to August 2012. The loan is guaranteed by Goldenway, and collateralized by approximately $2.6 million of accounts receivable from wholesale customers. Approximately $0.98 million was repaid in July 2012.

On July 29, 2011, Ever-Glory Apparel and Perfect Dream collectively entered into a secured banking facility agreement for a combined revolving import facility, letter of credit, invoice financing facilities and a credit line for treasury products of up to $7.0 million with the Nanjing Branch of HSBC (China) Company Limited (“HSBC”). This agreement is guaranteed by the Company and Mr. Kang. As of June 30, 2012, Ever-Glory Apparel had borrowed $1.22 million from HSBC with an annual interest rate from 5.85% to 7.02% due on various dates from July 2012 to September 2012, and collateralized by approximately $1.63 million of accounts receivable from wholesale customers. These bank loans are to be repaid upon receipt of payments from customers. At June 30, 2012, approximately $5.78 million was unused and available. Approximately $0.27 million was repaid in July 2012.

Total interest expense on bank loans amounted to $458,703, $1,004,744, $258,924 and $521,175 for the three and six months ended June 30, 2012 and 2011, respectively.

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Income Tax (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Pre-tax income in jurisdictions
Pre tax income	$ 2,672,159	$ 2,472,845	$ 5,318,225	$ 5,763,862
PRC [Member]
Pre-tax income in jurisdictions
Pre tax income	1,582,335	712,029	3,350,278	3,691,090
Others [Member]
Pre-tax income in jurisdictions
Pre tax income	$ 1,089,824	$ 1,760,816	$ 1,967,947	$ 2,072,772

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Derivative Warrant Liability (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Derivative Warrant Liability (Textual)
Number of common stock, shares purchasable by warrants outstanding	840,454		840,454
Change in fair value of derivative liability	$ 180,000	$ 134,500	$ 290,800	$ 330,300

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Income Tax (Details 1) (PRC [Member])	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
PRC [Member]
Summary of the income tax rates for PRC subsidiaries
PRC statutory rate	25.00%	25.00%	25.00%	25.00%
Non-taxable or non-deductible items	(2.30%)	(1.80%)	(1.90%)	(1.90%)
Effect of foreign income tax rates	(8.50%)	(16.50%)	(7.90%)	(7.60%)
Income tax exemption		(0.10%)	0.10%	(0.10%)
Other	(2.20%)	2.10%	0.60%	0.10%
Effective income tax rate	12.00%	8.70%	15.90%	15.50%

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Income Tax (Details 2) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Components of income tax expense
Current	$ 121,988	$ 474,871	$ 265,092	$ 978,705
Deferred	199,022	(260,895)	563,191	(85,708)
Income tax expense	$ 321,010	$ 213,976	$ 845,866	$ 892,997

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Inventories

6 Months Ended

Jun. 30, 2012

Inventory Disclosure [Abstract]

Inventories

NOTE 3   INVENTORIES

 Inventories at June 30, 2012 and December 31, 2011 consisted of the following:

	June 30, 2012			December 31, 2011
Raw materials	$	7,974,309		$	5,606,073
Work-in-progress		8,996,610			7,919,403
Finished goods		22,930,130			23,916,206
		39,901,049			37,441,682
Less: allowance for obsolete inventories		(1,030,351	)		(566,878	)
Total inventories	$	38,870,698		$	36,874,804

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Income Tax (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Income Tax (Textual)
Samoa income tax liabilities
PRC [Member]
Income Tax (Textual)
PRC statutory rate	25.00%	25.00%	25.00%	25.00%

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Concentrations and Risks (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Geographic Sales Concentration
Net revenue from external customers	$ 47,195,031	$ 42,923,640	$ 100,421,204	$ 96,131,877
The People’s Republic of China [Member]
Geographic Sales Concentration
Net revenue from external customers	29,320,073	15,420,664	59,828,555	41,694,449
Germany [Member]
Geographic Sales Concentration
Net revenue from external customers	3,393,413	8,670,146	8,858,106	17,410,721
United Kingdom [Member]
Geographic Sales Concentration
Net revenue from external customers	4,588,231	5,403,112	7,953,390	7,741,270
Europe-Other [Member]
Geographic Sales Concentration
Net revenue from external customers	3,189,555	2,826,082	7,753,988	7,618,743
Japan [Member]
Geographic Sales Concentration
Net revenue from external customers	2,416,434	5,060,331	8,523,582	11,012,419
United States [Member]
Geographic Sales Concentration
Net revenue from external customers	$ 4,287,325	$ 5,543,305	$ 7,503,583	$ 10,654,275

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Condensed Consolidated Balance Sheets (USD $)	Jun. 30, 2012	Dec. 31, 2011
CURRENT ASSETS
Cash and cash equivalents	$ 7,184,037	$ 8,822,581
Accounts receivable	36,638,369	50,634,388
Inventories	38,870,698	36,874,804
Value added tax receivable	3,514,667	1,908,436
Other receivables and prepaid expenses	1,424,516	1,122,570
Advances on inventory purchases	2,749,725	2,177,544
Amounts due from related party	6,307,049	17,623,712
Total Current Assets	96,689,061	119,164,035
LAND USE RIGHT, NET	3,082,466	2,845,552
PROPERTY AND EQUIPMENT, NET	12,934,685	13,210,628
TOTAL ASSETS	112,706,212	135,220,215
CURRENT LIABILITIES
Bank loans	22,473,539	29,185,381
Accounts payable	33,066,119	41,466,844
Accounts payable and other payables - related parties	2,660,262	2,759,003
Other payables and accrued liabilities	6,191,050	5,996,434
Value added and other taxes payable	2,252,625	2,268,872
Income tax payable	280,852	368,714
Deferred tax liabilities	3,041,151	2,460,377
Derivative liability	100,000
Total Current Liabilities	70,065,598	84,505,625
LONG-TERM LIABILITIES
Derivative liability		390,800
Total Long-term Liabilities		390,800
TOTAL LIABILITIES	70,065,598	84,896,425
Stockholders' equity of the Company:
Preferred stock ($.001 par value, authorized 5,000,000 shares, no shares issued and outstanding
Common stock ($.001 par value, authorized 50,000,000 shares, 14,765,942 and 14,760,873 shares issued and outstanding as of June 30, 2012 and December 31, 2011, respectively	14,766	14,761
Additional paid-in capital	3,542,200	3,532,369
Retained earnings	39,449,211	34,976,853
Statutory reserve	5,311,921	5,311,921
Accumulated other comprehensive income	6,687,887	6,487,886
Amounts due from related party	(12,365,371)
Total Stockholders' Equity	42,640,614	50,323,790
TOTAL LIABILITIES AND EQUITY	$ 112,706,212	$ 135,220,215

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Basis of Presentation

6 Months Ended

Jun. 30, 2012

Basis Of Presentation [Abstract]

Basis of Presentation

NOTE 1   BASIS OF PRESENTATION

Ever-Glory International Group, Inc. (the “Company”), together with its subsidiaries, is an apparel manufacturer, supplier and retailer in The People's Republic of China ("China or "PRC"), with a wholesale segment and a retail segment. The Company’s wholesale business consists of recognized brands for department and specialty stores located in China, Europe, Japan and the United States. The Company’s retail business consists of flagship stores and store-in-stores for the Company’s own-brand products.

The Company’s wholesale operations are provided primarily through the Company’s wholly-owned PRC subsidiaries, Goldenway Nanjing Garments Co. Ltd. (“Goldenway”), Nanjing Catch-Luck Garments Co. Ltd. (“Catch-Luck”), Nanjing New-Tailun Garments Co. Ltd (“New-Tailun”), Ever-Glory International Group Apparel Inc.(“Ever-Glory Apparel”) and Nanjing Tai Xin Garments Trading Company Limited (“Tai Xin”) (formed on March 19, 2012), and the Company’s wholly-owned Samoa subsidiary, Ever-Glory International Group (HK) Ltd. (“Ever-Glory HK”).  The Company’s retail operations are provided through its wholly- owned subsidiary, Shanghai LA GO GO Fashion Company Limited (“LA GO GO”).

In the opinion of management, the accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the condensed consolidated balance sheet as of June 30, 2012, the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2012 and 2011, and the condensed consolidated statements of cash flows for the six months ended June 30, 2012 and 2011. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, they have been condensed and do not include all of the information and footnotes required by GAAP for complete financial statements. Wholesale revenues are generally higher in the third and fourth fiscal quarters, while retail revenues are generally higher in the first and fourth fiscal quarters. The results of operations for the six months ended June 30, 2012 are not necessarily indicative of the results of operations to be expected for the full fiscal year. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. 

Subsequent to the issuance of the Company’s June 30, 2012 consolidated interim financial statements, the Company determined that it had incorrectly reported the amount the Company provided to Jiangsu Ever-Glory under the counter-guarantee as a current receivable from Jiangsu Ever-Glory on its quarterly reports on Form 10-Q for the quarters ended March 31, 2012, June 30, 2012, and September 30, 2012.  Because certain of the receivables from Jiangsu Ever-Glory at the aforementioned quarters arose as a result of financing transactions, rather than from trading transactions, the advances under the counter-guarantee are analogous to unpaid subscriptions or unpaid capital contributions and accordingly should be recorded as contra equity in accordance with SEC SAB Topics 4E and 4G (see Note 8).  Accordingly the Company’s June 30, 2012 interim financial statements have been restated resulting in a decrease in both amounts due from related parties and stockholders’ equity of $12,365,371.  The reclassification does not affect previously reported amounts for revenue, income from operations, net income or earnings per share. 

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Related Party Transactions (Details 1) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Summary of transaction with related parties
Sub-contracts with related parties	$ 2,597,793	$ 2,458,327	$ 5,423,363	$ 3,998,745
Nanjing Knitting [Member]
Summary of transaction with related parties
Sub-contracts with related parties	119,159	11,855	753,768	35,565
Nanjing Ever Kyowa [Member]
Summary of transaction with related parties
Sub-contracts with related parties	246,417	297,973	411,634	535,613
Ever Glory Vietnam [Member]
Summary of transaction with related parties
Sub-contracts with related parties	625,667	1,494,180	1,455,136	2,392,433
Ever Glory Cambodia [Member]
Summary of transaction with related parties
Sub-contracts with related parties	1,594,778	653,436	2,781,291	1,023,255
Escelavmember [Member]
Summary of transaction with related parties
Sub-contracts with related parties	6,616	883	12,564	11,879
Jiangsu Ever Glory [Member]
Summary of transaction with related parties
Sub-contracts with related parties	$ 5,156		$ 8,970

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Concentrations and Risks (Tables)

6 Months Ended

Jun. 30, 2012

Risks and Uncertainties [Abstract]

Company's revenues as per geographic areas

	Three months ended June 30,				Six months ended June 30,
	2012		2011		2012		2011
The People’s Republic of China	$	29,320,073	$	15,420,664	$	59,828,555	$	41,694,449
Germany		3,393,413		8,670,146		8,858,106		17,410,721
United Kingdom		4,588,231		5,403,112		7,953,390		7,741,270
Europe-Other		3,189,555		2,826,082		7,753,988		7,618,743
Japan		2,416,434		5,060,331		8,523,582		11,012,419
United States		4,287,325		5,543,305		7,503,583		10,654,275
Total	$	47,195,031	$	42,923,640	$	100,421,204	$	96,131,877

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Related Party Transactions (Details 2) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Accounts payable - related parties
Accounts payable - related parties, Total	$ 2,660,262	$ 2,759,003
Nanjing Knitting [Member]
Accounts payable - related parties
Accounts payable - related parties, Total	1,105,915	661,139
Nanjing Ever Kyowa [Member]
Accounts payable - related parties
Accounts payable - related parties, Total	288,720	436,030
Ever Glory Vietnam [Member]
Accounts payable - related parties
Accounts payable - related parties, Total	632,342	1,305,696
Ever Glory Cambodia [Member]
Accounts payable - related parties
Accounts payable - related parties, Total	633,285	330,047
Kunshan Enjin [Member]
Accounts payable - related parties
Accounts payable - related parties, Total		$ 26,091

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Basis of Presentation (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Basis Of Presentation (Textual)
Decrease in due from related parties and stockholders' equity	$ 12,365,371

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Significant Accounting Policies

6 Months Ended

Jun. 30, 2012

Accounting Policies [Abstract]

Significant Accounting Policies

NOTE 2   SIGNIFICANT ACCOUNTING POLICIES

Financial Instruments

Management has estimated that the carrying amounts of non-related party financial instruments approximate their fair values due to their short-term maturities. The fair value of amounts due from (to) related parties is not practicable to estimate due to the related party nature of the underlying transactions.

Fair Value Accounting

Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures”, establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described below:

Level 1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2	Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;
Level 3	Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

At June 30, 2012, the Company’s financial assets (all Level 1) consist of cash placed with financial institutions that management considers to be of a high quality.

As of June 30, 2012 and December 31, 2011, the Company has a derivative liability subject to recurring fair value measurement ( Level 3) with the change in fair value recognized in earnings (Note 5).

Foreign Currency Translation and Other Comprehensive Income

The reporting currency of the Company is the U.S. dollar. The functional currency of the Company, Ever-Glory HK and Perfect Dream Limited, a British Virgin Islands incorporated subsidiary of the Company (“Perfect Dream”), is the U.S. dollar. The functional currency of Goldenway, New Tailun, Catch-luck, Ever-Glory Apparel, Tai Xin and LA GO GO is the Chinese RMB.

For subsidiaries whose functional currency is the RMB, all assets and liabilities were translated at the exchange rate at the balance sheet date; equity was translated at historical rates and items in the statement of comprehensive income were translated at the average rate for the period. Translation adjustments resulting from this process are included in accumulated other comprehensive income. The resulting translation gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Items in the cash flow statement are translated at the average exchange rate for the period. 

Reclassification

Certain amounts reported in the June 30, 2011 financial statements have been reclassified to confirm to the June 30, 2012 financial statements presentation.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Statement Of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	14,765,942	14,760,873
Common stock, shares outstanding	14,765,942	14,760,873

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2012

Accounting Policies [Abstract]

Financial Instruments

Financial Instruments

Management has estimated that the carrying amounts of non-related party financial instruments approximate their fair values due to their short-term maturities. The fair value of amounts due from (to) related parties is not practicable to estimate due to the related party nature of the underlying transactions.

Fair Value Accounting

Fair Value Accounting

Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures”, establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described below:

Level 1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2	Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;
Level 3	Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

At June 30, 2012, the Company’s financial assets (all Level 1) consist of cash placed with financial institutions that management considers to be of a high quality.

As of June 30, 2012 and December 31, 2011, the Company has a derivative liability subject to recurring fair value measurement ( Level 3) with the change in fair value recognized in earnings (Note 5).

Foreign currency translation and other comprehensive income

Foreign Currency Translation and Other Comprehensive Income

The reporting currency of the Company is the U.S. dollar. The functional currency of the Company, Ever-Glory HK and Perfect Dream Limited, a British Virgin Islands incorporated subsidiary of the Company (“Perfect Dream”), is the U.S. dollar. The functional currency of Goldenway, New Tailun, Catch-luck, Ever-Glory Apparel, Tai Xin and LA GO GO is the Chinese RMB.

For subsidiaries whose functional currency is the RMB, all assets and liabilities were translated at the exchange rate at the balance sheet date; equity was translated at historical rates and items in the statement of comprehensive income were translated at the average rate for the period. Translation adjustments resulting from this process are included in accumulated other comprehensive income. The resulting translation gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Items in the cash flow statement are translated at the average exchange rate for the period.

Reclassification

Reclassification

Certain amounts reported in the June 30, 2011 financial statements have been reclassified to confirm to the June 30, 2012 financial statements presentation.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Aug. 07, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	Ever-Glory International Group, Inc.
Entity Central Index Key	0000943184
Amendment Flag	true
Amendment Description	As disclosed in our Current Report on Form 8-K filed with the Securities and Exchange Commission (the "Commission") on April 18, 2013, the purpose of this Amendment No. 1 ("Amendment No. 1") to our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012 (the "Original 10-Q"), which we filed with the Commission on August 8, 2012, is to restate our company's unaudited financial statements and related disclosures (including, without limitation, those contained under Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations) contained in the Original 10-Q to correct the accounting treatment of a counter-guarantee we provided to Jiangsu Ever-Glory International Enterprise Group Company ("Jiangsu Ever-Glory"), an entity majority owned and controlled by Edward Yihua Kang, our Chief Executive Officer, President and Chairman of the board of directors. On April 13, 2013, our management concluded, and the Audit Committee approved the conclusion, that we previously incorrectly reported the amount we provided to Jiangsu Ever-Glory under the counter-guarantee as a current receivable from Jiangsu Ever-Glory and that such amount should be recorded as contra equity. We are therefore filing this Amendment No. 1 to correct the balances of both accounts receivable and stockholders' equity for the interim period covered by the Original 10-Q, as well as to reflect changes in our statements of cash flows and footnote disclosures on this topic and to revise our evaluation of the disclosure controls and procedures. As several parts of the Original 10-Q are amended and/or restated by this Amendment No. 1, for convenience, we have repeated the entire text of the Original 10-Q, as amended and/or restated by this Amendment No. 1. Readers should therefore read and rely on this Amendment No. 1 in lieu of the Original 10-Q. This Amendment No. 1 also contains currently dated officer certifications as Exhibits 31.1, 31.2, 32.1 and 32.2. Except as amended and/or restated by this Amendment No. 1, no other changes have been made to the Original 10-Q. This Amendment No. 1 speaks as of the original filing date of the Original 10-Q and does not reflect events that may have occurred subsequent to such original filing date.
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		14,765,942

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Inventories (Tables)

6 Months Ended

Jun. 30, 2012

Inventory Disclosure [Abstract]

Component of inventory

	June 30, 2012			December 31, 2011
Raw materials	$	7,974,309		$	5,606,073
Work-in-progress		8,996,610			7,919,403
Finished goods		22,930,130			23,916,206
		39,901,049			37,441,682
Less: allowance for obsolete inventories		(1,030,351	)		(566,878	)
Total inventories	$	38,870,698		$	36,874,804

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
NET SALES	$ 47,195,031	$ 42,923,640	$ 100,421,204	$ 96,131,877
COST OF SALES	33,608,450	32,566,893	75,231,635	76,663,118
GROSS PROFIT	13,586,581	10,356,747	25,189,569	19,468,759
OPERATING EXPENSES
Selling expenses	6,966,335	3,766,770	12,800,527	7,355,875
General and administrative expenses	4,198,130	4,117,313	7,203,406	6,329,155
Total Operating Expenses	11,164,465	7,884,083	20,003,933	13,685,030
INCOME FROM OPERATIONS	2,422,116	2,472,664	5,185,636	5,783,729
OTHER INCOME (EXPENSES)
Interest income	328,736	124,401	610,220	146,874
Interest expense	(458,703)	(258,924)	(1,004,744)	(521,175)
Change in fair value of derivative liability	180,000	134,500	290,800	330,300
Other income	200,010	204	236,313	24,134
Total Other Income (Expenses)	250,043	181	132,589	(19,867)
INCOME BEFORE INCOME TAX EXPENSE	2,672,159	2,472,845	5,318,225	5,763,862
INCOME TAX EXPENSE	(321,010)	(213,976)	(845,866)	(892,997)
NET INCOME	2,351,149	2,258,869	4,472,359	4,870,865
OTHER COMPERHENSIVE (LOSS) INCOME
Foreign currency translation (loss) gain	(196,365)	479,660	200,001	716,495
COMPREHENSIVE INCOME	$ 2,154,784	$ 2,738,529	$ 4,672,360	$ 5,587,360
EARNINGS PER SHARE
Basic and diluted	$ 0.16	$ 0.15	$ 0.30	$ 0.33
Weighted average number of shares outstanding
Basic and diluted	14,765,942	14,755,494	14,763,815	14,754,687

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Stockholders' Equity

6 Months Ended

Jun. 30, 2012

Stockholders Equity Note [Abstract]

Stockholders’ Equity

NOTE 7   STOCKHOLDERS’ EQUITY

On March 14, 2012, the Company issued an aggregate of 3,346 shares of its common stock to the Company’s three independent directors as compensation for their services in the third and fourth quarters of 2011. The shares were valued at $1.94 per share, which was the average market price of the common stock for the five days before the grant date.

On March 21, 2012, the Company issued an aggregate of 1,723 shares of its common stock to one of the Company’s independent director as compensation for her services in the third and fourth quarters of 2011. The shares were valued at $1.94 per share, which was the average market price of the common stock for the five days before the grant date.

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Income Tax

6 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Abstract]

Income Tax

NOTE 6   INCOME TAX

PRC pre-tax income for the three and six months ended June 30, 2012 and 2011, was taxable in the following jurisdictions.

	Three months ended				Six months ended
	June 30,				June 30,
	2012		2011		2012		2011
PRC	$	1,582,335	$	712,029	$	3,350,278	$	3,691,090
Others		1,089,824		1,760,816		1,967,947		2,072,772
	$	2,672,159	$	2,472,845	$	5,318,225	$	5,763,862

The Company’s operating subsidiaries are governed by the Income Tax Law of the PRC concerning Foreign Investment Enterprises and Foreign Enterprises and various local income tax laws (“the Income Tax Laws”). 

All PRC subsidiaries are subject to income tax at 25% statutory rate.

Perfect Dream was incorporated in the British Virgin Islands (BVI), and under the current laws of the BVI dividends and capital gains arising from the Company’s investments in the BVI are not subject to income taxes.

Ever-Glory HK was incorporated in Samoa on September 15, 2009, and under the current laws of Samoa has no liabilities for income tax.

The following table reconciles the PRC statutory rates to the Company’s effective tax rate for the three and six months ended June 30, 2012 and 2011, respectively:

	Three months ended						Six months ended
	June 30,						June 30,
	2012			2011			2012			2011
PRC statutory rate		25.0	%		25.0	%		25.0	%		25.0	%
Non-taxable or non-deductible items		(2.3	)		(1.8	)		(1.9	)		(1.9	)
Effect of foreign income tax rates		(8.5	)		(16.5	)		(7.9	)		(7.6	)
Income tax exemption		-			(0.1	)		0.1			(0.1	)
Other		(2.2	)		2.1			0.6			0.1
Effective income tax rate		12.0	%		8.7	%		15.9	%		15.5	%

Income tax expense for the three and six months ended June 30, 2012 and 2011 is as follows:

	Three months ended					Six months ended
	June 30,					June 30,
	2012		2011			2012		2011
Current	$	121,988	$	474,871		$	265,092	$	978,705
Deferred		199,022		(260,895	)		580,774		(85,708	)
Income tax expense	$	321,010	$	213,976		$	845,866	$	892,997

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Segments (Tables)

6 Months Ended

Jun. 30, 2012

Segment Reporting, Disclosure Of Entitys Reportable Segments [Abstract]

Company financial and operating information

	Wholesale segment		Retail segment		Total
Six months ended June 30, 2012
Segment profit or loss:
Net revenue from external customers	$	59,468,451	$	40,952,753	$	100,421,204
Income from operations	$	4,494,836	$	690,800	$	5,185,636
Interest income	$	603,785	$	6,435	$	610,220
Interest expense	$	938,754	$	65,990	$	1,004,744
Depreciation and amortization	$	498,899	$	1,798,011	$	2,296,910
Income tax expense	$	687,462	$	158,404	$	845,866
Six months ended June 30, 2011
Segment profit or loss:
Net revenue from external customers	$	74,272,509	$	21,859,368	$	96,131,877
Income (loss) from operations	$	5,226,517	$	557,212	$	5,783,729
Interest income	$	145,319	$	1,555	$	146,874
Interest expense	$	505,243	$	15,932	$	521,175
Depreciation and amortization	$	797,969	$	868,932	$	1,666,901
Income tax expense	$	756,939	$	136,058	$	892,997

	Wholesale segment		Retail segment		Total
Three months ended June 30, 2012
Segment profit or loss:
Net revenue from external customers	$	28,807,928	$	18,387,103	$	47,195,031
Income from operations	$	1,967,832	$	454,284	$	2,422,116
Interest income	$	325,486	$	3,250	$	328,736
Interest expense	$	424,193	$	34,510	$	458,703
Depreciation and amortization	$	248,435	$	887,840	$	1,136,275
Income tax expense	$	215,057	$	105,953	$	321,010
Three months ended June 30, 2011
Segment profit or loss:
Net revenue from external customers	$	33,663,153	$	9,260,487	$	42,923,640
Income (loss) from operations	$	2,227,029	$	245,635	$	2,472,664
Interest income	$	123,430	$	971	$	124,401
Interest expense	$	246,082	$	12,842	$	258,924
Depreciation and amortization	$	556,621	$	319,683	$	876,304
Income tax expense	$	155,371	$	58,605	$	213,976

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Bank Loans (Tables)

6 Months Ended

Jun. 30, 2012

Loans Payable [Abstract]

Bank loans due on demand

Bank	June 30, 2012		December 31, 2011
Nanjing Bank	$	5,599,399	$	11,731,223
Shanghai Pudong Development Bank		6,328,000		8,966,382
Industrial and Commercial Bank of China		-		5,294,270
Bank of Communications		7,432,103		2,660,562
The Hong Kong and Shanghai Bank	1,215,637			532,944
Bank of China		1,898,400		-
	$	22,473,539	$	29,185,381

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Segments

6 Months Ended

Jun. 30, 2012

Segment Reporting, Disclosure Of Entitys Reportable Segments [Abstract]

Segments

NOTE 10   SEGMENTS

 The Company reports financial and operating information in the following two segments:

 (a)  Wholesale segment

 (b)  Retail segment

	Wholesale segment		Retail segment		Total
Six months ended June 30, 2012
Segment profit or loss:
Net revenue from external customers	$	59,468,451	$	40,952,753	$	100,421,204
Income from operations	$	4,494,836	$	690,800	$	5,185,636
Interest income	$	603,785	$	6,435	$	610,220
Interest expense	$	938,754	$	65,990	$	1,004,744
Depreciation and amortization	$	498,899	$	1,798,011	$	2,296,910
Income tax expense	$	687,462	$	158,404	$	845,866
Six months ended June 30, 2011
Segment profit or loss:
Net revenue from external customers	$	74,272,509	$	21,859,368	$	96,131,877
Income (loss) from operations	$	5,226,517	$	557,212	$	5,783,729
Interest income	$	145,319	$	1,555	$	146,874
Interest expense	$	505,243	$	15,932	$	521,175
Depreciation and amortization	$	797,969	$	868,932	$	1,666,901
Income tax expense	$	756,939	$	136,058	$	892,997

	Wholesale segment		Retail segment		Total
Three months ended June 30, 2012
Segment profit or loss:
Net revenue from external customers	$	28,807,928	$	18,387,103	$	47,195,031
Income from operations	$	1,967,832	$	454,284	$	2,422,116
Interest income	$	325,486	$	3,250	$	328,736
Interest expense	$	424,193	$	34,510	$	458,703
Depreciation and amortization	$	248,435	$	887,840	$	1,136,275
Income tax expense	$	215,057	$	105,953	$	321,010
Three months ended June 30, 2011
Segment profit or loss:
Net revenue from external customers	$	33,663,153	$	9,260,487	$	42,923,640
Income (loss) from operations	$	2,227,029	$	245,635	$	2,472,664
Interest income	$	123,430	$	971	$	124,401
Interest expense	$	246,082	$	12,842	$	258,924
Depreciation and amortization	$	556,621	$	319,683	$	876,304
Income tax expense	$	155,371	$	58,605	$	213,976

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Related Party Transactions

6 Months Ended

Jun. 30, 2012

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 8   RELATED PARTY TRANSACTIONS

Mr. Kang is the Company’s Chairman and Chief Executive Officer.  Ever-Glory Enterprises (H.K.) Ltd. (“Ever-Glory Enterprises”) is the Company’s major shareholder.  Mr. Xiaodong Yan is Ever-Glory Enterprises’ sole shareholder. All transactions associated with the following companies controlled by Mr. Kang or Mr. Yan are considered to be related party transactions, and it is possible that the terms of these transactions may not be the same as those that would result from transactions between unrelated parties. All related party outstanding balances are short-tem in nature and are expected to be settled in cash.

Other income from Related Parties

Included in other income for the three and six months ended June 30, 2012 and 2011 is rent revenue from entities controlled by Mr. Kang under operating lease agreements with various terms though 2015 as follows:

	Three months ended				Six months ended
	June 30,				June 30,
	2012		2011		2012		2011
EsCeLav	$	2,969	$	2,872	$	5,933	$	5,726
Nanjing Eight-One-Five Hi-Tech (M&E) Co.,Ltd.	$	3,952	$	3,830	$	7,905	$	7,635
Jiangsu Heng-Rui	$	-	$	5,400	$	-	$	10,765
Total	$	6,921	$	12,102	$	13,838	$	24,126

Purchases from, and Sub-contracts with Related Parties

In connection with the Company’s tax planning strategies relating to value-added taxes, raw materials are sourced by the Company in the PRC and shipped to related party contract manufacturers in Vietnam and Cambodia. The raw materials were originally purchased by the Company, and, through a series of transactions, were sold at cost to, and repurchased at cost from, Jiangsu Ever-Glory. These transactions amounted to approximately $1.1 million (RMB7.5 million) during the six months ended June 30, 2011, and have been netted against each other for financial reporting purposes.  There were no such transactions in 2012.

For the three and six months ended June 30 2012 and 2011, the Company purchased raw materials of $79,413, $714,022, $948,146, $1,059,091, respectively, from Nanjing Knitting.

In addition, the Company sub-contracted certain manufacturing work to related parties totaling $2,597,793, $5,423,363, $2,458,327, $3,988,745 for the three and six months ended June 30, 2012 and 2011, respectively. The Company provided raw materials to the sub-contractors and was charged a fixed fee for labor provided by the sub-contractors.

Sub-contracts with related parties included in cost of sales for the three and six months ended June 30, 2012 and 2011 are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Nanjing Knitting	$	119,159	$	11,855	$	753,768	$	35,565
Nanjing Ever-Kyowa		246,417		297,973		411,634		535,613
Ever-Glory Vietnam		625,667		1,494,180		1,455,136		2,392,433
Ever-Glory Cambodia		1,594,778		653,436		2,781,291		1,023,255
EsC'Lav		6,616		883		12,564		11,879
Jiangsu Ever-Glory		5,156		-		8,970		-
	$	2,597,793	$	2,458,327	$	5,423,363	$	3,998,745

Accounts Payable – Related Parties

The Company purchases raw materials from and subcontracts some of its production to related parties. Accounts payable to related parties at June 30, 2012 and December 31, 2011 are as follows:

	June 30, 2012		December 31, 2011
Nanjing Knitting	$	1,105,915	$	661,139
Nanjing Ever-Kyowa		288,720		436,030
Ever-Glory Vietnam		632,342		1,305,696
Ever-Glory Cambodia		633,285		330,047
Kunshan Enjin		-		26,091
Total	$	2,660,262	$	2,759,003

Amounts Due From Related Party

The amounts due from related parties at June 30, 2012 and December 31, 2011 are as follows:

	June 30, 2012		December 31, 2011
EsC'eLav	$	5,932	$	23,565
Nanjing Eight-One-Five Hi-tech (M&E) Co.,Ltd.		7,910		-
Jiangsu Ever-Glory		18,658,578		17,600,147
Total	$	18,724,420	$	17,623,712

Jiangsu Ever-Glory is an entity engaged in importing/exporting, apparel-manufacture, real-estate development, car sales and other activities. Jiangsu Ever-Glory is controlled by Mr. Kang. In 2011, because of restrictions on its ability to directly import and export products, the Company utilized Jiangsu Ever-Glory as its agent to assist the Company with its import and export transactions and its international transportation projects. Import transactions primarily consist of purchases of raw materials and accessories designated by the Company’s customers for use in garment manufacture. Export transactions consist of the Company’s sales to foreign markets such as Japan, Europe and the United States. As the Company’s agent, Jiangsu Ever-Glory’s responsibilities included managing customs, inspection, transportation, insurance and collections on behalf of the Company. Jiangsu Ever-Glory also managed transactions denominated in currencies other than the Chinese RMB at rates of exchange agreed between the Company and Jiangsu Ever-Glory and based upon rates of exchange quoted by the People’s Bank of China. In return for these services, Jiangsu Ever-Glory charged the Company a fee of approximately 3% of export sales manufactured in China and 1% of export sales manufactured overseas. For import transactions, the Company may make advance payments, through Jiangsu Ever-Glory, for the raw material purchases, or Jiangsu Ever-Glory may make advance payments on the Company’s behalf. For export transactions, accounts receivable for export sales are remitted by the Company’s customers through Jiangsu Ever-Glory, which forwards the payments to the Company. The Company and Jiangsu Ever-Glory agreed that balances from import and export transactions may be offset. Amounts due to (from) Jiangsu Ever-Glory are typically settled within 60-90 days.

In March 2012, in consideration of the guarantees and collateral provided by Jiangsu Ever-Glory and Nanjing Knitting, the Company agreed to provide Jiangsu Ever-Glory a counter-guarantee in the form of cash of not less than 70% of the maximum aggregate lines of credit obtained by the Company. Jiangsu Ever-Glory is obligated to return the full amount of the counter-guarantee funds provided upon expiration or termination of the underlying lines of credit and is to pay annual interest at the rate of 6.0% of amounts provided. As of June 30, 2012, Jiangsu Ever-Glory has provided guarantees for approximately US$ 27.21 million (RMB 172 million) of lines of credit obtained by the Company. Jiangsu Ever-Glory and its 20.31% owned equity investee, Nanjing Knitting, have also provided their assets as collateral for certain of these lines of credit. The value of the collateral, as per appraisals obtained by the banks in connection with these lines of credit is approximately US$11.94 million (RMB 75 million).  Mr. Kang has also provided a personal guarantee for US$21.99 million (RMB 139 million). During the six months ended June 30, 2012, US$11.80 million (RMB 74.6 million) was provided to Jiangsu Ever-Glory under the counter-guarantee, all of which was outstanding at June 30, 2012

Interest of 0.5% is charged on net amounts due at each month end.  Interest of 0.5% is charged on net amounts due at each month end. Interest income for the three and six months ended June 30, 2012 and 2011 was $290,559, $563,295, $120,379 and $139,495, respectively.

Following is a summary of transactions for the nine months ended June 30, 2012:

Related Party	Type of transaction	June 30, 2012 (As restated, Note 1)			December 31 2011
Jiangsu Ever-glory	Accounts receivable	$	8,199,597		$	19,999,373
Jiangsu Ever-glory	Accounts payable		(1,906,390	)		(2,399,226	)
Jiangsu Ever-glory	Interest income		563,651			-
Jiangsu Ever-glory	Counter guarantee deposit	$	11,801,720			-
Total		$	18,658,578		$	17,600,147

At June 30, 2012, amounts due from Jiangsu Ever-Glory have been classified as a reduction of equity, consistent with the guidance in SEC Staff Accounting Bulletins 4E and 4G.

Loan from Related Party

As of January 1, 2010 the Company owed $1.0 million to Blue Power Holdings Limited, a company controlled by the Company’s Chief Executive Officer. Interest was charged at 6% per annum on the amounts due. The loans were paid in full in April 2011.

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Concentrations and Risks

6 Months Ended

Jun. 30, 2012

Risks and Uncertainties [Abstract]

Concentrations and Risks

NOTE 9   CONCENTRATIONS AND RISKS

The Company extends unsecured credit to its customers in the normal course of business and generally does not require collateral. As a result, management performs ongoing credit evaluations, and the Company maintains an allowance for potential credit losses based upon its loss history and its aging analysis. Based on management’s assessment of the amount of probable credit losses, if any, in existing accounts receivable, management has concluded that no allowance for doubtful accounts is necessary at June 30, 2012 and December 31, 2011. Management reviews the allowance for doubtful accounts each reporting period based on a detailed analysis of accounts receivable. In the analysis, management primarily considers the age of the customer’s receivable and also considers the credit worthiness of the customer, the economic conditions in the customer’s industry, and general economic conditions and trends, among other factors. If any of these factors change, the Company may also change its original estimates, which could impact the level of the Company’s future allowance for doubtful accounts.  If judgments regarding the collectability of accounts receivables are incorrect, adjustments to the allowance may be required, which would reduce profitability. 

For the six-month period ended June 30, 2012, the Company had two wholesale customers that represented approximately 13% and 12% of the Company’s revenues. For the three-month period ended June 30, 2012, the Company had two wholesale customers that each represented approximately 11% of the Company’s revenues. For the six-month period ended June 30, 2011, the Company had two wholesale customers that each represented approximately 23% and 17% of the Company’s revenues. For the three-month period ended June 30, 2011, the Company had one wholesale customer that represented approximately 26% of the Company’s revenues.

For the Company’s wholesale business during the three and six months ended June 30, 2012 and 2011, no supplier represented more than 10% of the total raw materials purchased.

For the Company’s retail business, the Company had one supplier that represented approximately 14% of raw materials purchases during the six months ended June 30, 2012. The Company purchased 11% and 14% of its raw materials from two suppliers during the three months ended June 30, 2012. The Company had one supplier that represented approximately 16% of raw materials purchases during the six months ended June 30, 2011. The Company purchased 22% of its raw materials from one supplier during the three months ended June 30, 2011.

For the wholesale business, during the six months ended June 30, 2012, the Company relied on two manufacturers for 17% and 13% of purchased finished goods. During the six months ended June 30, 2011, the Company relied on one manufacturer for 10% of purchased finished goods. During the three months ended June 30, 2012, the Company relied on two manufacturers for 19% and 16% of purchased finished goods. During the three months ended June 30, 2011, the Company relied on two manufacturers for 15% and 11% of purchased finished goods. 

For the retail business, during the three and six months ended June 30, 2012 , no supplier represented more than 10% of the total purchased finished goods.During the six months ended June 30, 2011 , no supplier represented more than 10% of the total purchased finished goods. During the three months ended June 30, 2011 , the Company relied on one manufacturer for 10% of purchased finished goods.

The Company’s revenues for the three and six months ended June 30, 2012 and 2011 were earned in the following geographic areas:

	Three months ended June 30,				Six months ended June 30,
	2012		2011		2012		2011
The People’s Republic of China	$	29,320,073	$	15,420,664	$	59,828,555	$	41,694,449
Germany		3,393,413		8,670,146		8,858,106		17,410,721
United Kingdom		4,588,231		5,403,112		7,953,390		7,741,270
Europe-Other		3,189,555		2,826,082		7,753,988		7,618,743
Japan		2,416,434		5,060,331		8,523,582		11,012,419
United States		4,287,325		5,543,305		7,503,583		10,654,275
Total	$	47,195,031	$	42,923,640	$	100,421,204	$	96,131,877

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Basis of Presentation

6 Months Ended

Jun. 30, 2012

Basis Of Presentation [Abstract]

BASIS OF PRESENTATION

NOTE 1   BASIS OF PRESENTATION

Ever-Glory International Group, Inc. (the “Company”), together with its subsidiaries, is an apparel manufacturer, supplier and retailer in The People's Republic of China ("China or "PRC"), with a wholesale segment and a retail segment. The Company’s wholesale business consists of recognized brands for department and specialty stores located in China, Europe, Japan and the United States. The Company’s retail business consists of flagship stores and store-in-stores for the Company’s own-brand products.

The Company’s wholesale operations are provided primarily through the Company’s wholly-owned PRC subsidiaries, Goldenway Nanjing Garments Co. Ltd. (“Goldenway”), Nanjing Catch-Luck Garments Co. Ltd. (“Catch-Luck”), Nanjing New-Tailun Garments Co. Ltd (“New-Tailun”), Ever-Glory International Group Apparel Inc.(“Ever-Glory Apparel”) and Nanjing Tai Xin Garments Trading Company Limited (“Tai Xin”) (formed on March 19, 2012), and the Company’s wholly-owned Samoa subsidiary, Ever-Glory International Group (HK) Ltd. (“Ever-Glory HK”).  The Company’s retail operations are provided through its wholly- owned subsidiary, Shanghai LA GO GO Fashion Company Limited (“LA GO GO”).

In the opinion of management, the accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the condensed consolidated balance sheet as of June 30, 2012, the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2012 and 2011, and the condensed consolidated statements of cash flows for the six months ended June 30, 2012 and 2011. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, they have been condensed and do not include all of the information and footnotes required by GAAP for complete financial statements. Wholesale revenues are generally higher in the third and fourth fiscal quarters, while retail revenues are generally higher in the first and fourth fiscal quarters. The results of operations for the six months ended June 30, 2012 are not necessarily indicative of the results of operations to be expected for the full fiscal year. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. 

Subsequent to the issuance of the Company’s June 30, 2012 consolidated interim financial statements, the Company determined that it had incorrectly reported the amount the Company provided to Jiangsu Ever-Glory under the counter-guarantee as a current receivable from Jiangsu Ever-Glory on its quarterly reports on Form 10-Q for the quarters ended March 31, 2012, June 30, 2012, and September 30, 2012.  Because certain of the receivables from Jiangsu Ever-Glory at the aforementioned quarters arose as a result of financing transactions, rather than from trading transactions, the advances under the counter-guarantee are analogous to unpaid subscriptions or unpaid capital contributions and accordingly should be recorded as contra equity in accordance with SEC SAB Topics 4E and 4G (see Note 8).  Accordingly the Company’s June 30, 2012 interim financial statements have been restated resulting in a decrease in both amounts due from related parties and stockholders’ equity of $12,365,371.  The reclassification does not affect previously reported amounts for revenue, income from operations, net income or earnings per share. 

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Related Party Transactions (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Other income from Related Parties
Total rent revenue	$ 6,921	$ 12,102	$ 13,838	$ 24,126
EsCeLav [Member]
Other income from Related Parties
Total rent revenue	2,969	2,872	5,933	5,726
Nanjing Eight-One-Five Hi-tech (M&E) Co.,Ltd. [Member]
Other income from Related Parties
Total rent revenue	3,952	3,830	7,905	7,635
Jiangsu Heng-rui [Member]
Other income from Related Parties
Total rent revenue		$ 5,400		$ 10,765

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Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2012

Related Party Transactions [Abstract]

Other income from related parties

	Three months ended				Six months ended
	June 30,				June 30,
	2012		2011		2012		2011
EsCeLav	$	2,969	$	2,872	$	5,933	$	5,726
Nanjing Eight-One-Five Hi-Tech (M&E) Co.,Ltd.	$	3,952	$	3,830	$	7,905	$	7,635
Jiangsu Heng-Rui	$	-	$	5,400	$	-	$	10,765
Total	$	6,921	$	12,102	$	13,838	$	24,126

Purchases from, and Sub-contracts with related parties

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Nanjing Knitting	$	119,159	$	11,855	$	753,768	$	35,565
Nanjing Ever-Kyowa		246,417		297,973		411,634		535,613
Ever-Glory Vietnam		625,667		1,494,180		1,455,136		2,392,433
Ever-Glory Cambodia		1,594,778		653,436		2,781,291		1,023,255
EsC'Lav		6,616		883		12,564		11,879
Jiangsu Ever-Glory		5,156		-		8,970		-
	$	2,597,793	$	2,458,327	$	5,423,363	$	3,998,745

Accounts payable-related parties

	June 30, 2012		December 31, 2011
Nanjing Knitting	$	1,105,915	$	661,139
Nanjing Ever-Kyowa		288,720		436,030
Ever-Glory Vietnam		632,342		1,305,696
Ever-Glory Cambodia		633,285		330,047
Kunshan Enjin		-		26,091
Total	$	2,660,262	$	2,759,003

Amounts due from related party

	June 30, 2012		December 31, 2011
EsC'eLav	$	5,932	$	23,565
Nanjing Eight-One-Five Hi-tech (M&E) Co.,Ltd.		7,910		-
Jiangsu Ever-Glory		18,658,578		17,600,147
Total	$	18,724,420	$	17,623,712

Summary of related party transactions

Related Party	Type of transaction	June 30, 2012 (As restated, Note 1)			December 31 2011
Jiangsu Ever-glory	Accounts receivable	$	8,199,597		$	19,999,373
Jiangsu Ever-glory	Accounts payable		(1,906,390	)		(2,399,226	)
Jiangsu Ever-glory	Interest income		563,651			-
Jiangsu Ever-glory	Counter guarantee deposit	$	11,801,720			-
Total		$	18,658,578		$	17,600,147

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Bank Loans (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Bank loan due on demand
Bank loans	$ 22,473,539	$ 29,185,381
Nanjing Bank [Member]
Bank loan due on demand
Bank loans	5,599,399	11,731,223
Shanghai Pudong Development Bank [Member]
Bank loan due on demand
Bank loans	6,328,000	8,966,382
Industrial and Commercial Bank Of China [Member]
Bank loan due on demand
Bank loans		5,294,270
Bank Of Communications [Member]
Bank loan due on demand
Bank loans	7,432,103	2,660,562
The Hong Kong and Shanghai Bank [Member]
Bank loan due on demand
Bank loans	1,215,637	532,944
Bank of China [Member]
Bank loan due on demand
Bank loans	$ 1,898,400

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Concentrations and Risks (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012 customer manufacturer supplier	Jun. 30, 2011 supplier customer manufacturer	Jun. 30, 2012 supplier manufacturer customer	Jun. 30, 2011 customer manufacturer supplier	Dec. 31, 2011	Dec. 31, 2009
Concentrations and Risks (Textual)
Allowance for doubtful accounts
Number of wholesale customer	2	1	2	2
Percentage of revenues hold by wholesale customer one	11.00%	26.00%	13.00%	23.00%
Percentage of revenues hold by wholesale customer two	11.00%		12.00%	17.00%
Number of major suppliers			0	0
Percentage of purchases require for supplier to be major supplier			More than 10	More than 10
Number of raw materials suppliers	2	1	1	1
Percentage of raw materials supplied by suppliers one	11.00%	22.00%	14.00%	16.00%
Percentage of raw materials supplied by suppliers two	14.00%
Number of manufacturers	2	2	2	1
Percentgae of purchased finished goods represented by manufacturer one	19.00%	15.00%	17.00%	10.00%
Percentage of purchased finished goods represented by manufacturer two	16.00%	11.00%	13.00%
Number of major supplier for retail business	0	1	0	0
Percentage of purchased finished goods represented by major supplier		10.00%

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 4,472,359	$ 4,870,865
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	2,296,910	1,666,901
Provision (recovery) for obsolete inventories	459,213	(13,666)
Change in fair value of derivative liability	(290,800)	(330,300)
Deferred income tax	563,191	(85,708)
Interest on loans from related party		909
Stock-based compensation	9,836	10,077
Accounts receivable	14,295,016	9,413,419
Inventories	(2,219,405)	(37,484)
Value added tax receivable	(1,591,861)	(1,708,832)
Other receivables and prepaid expenses	(295,199)	8,208
Advances on inventory purchases	(555,284)	537,544
Amounts due from related parties	(10,848,191)	(6,019,433)
Accounts payable	(8,594,380)	(3,242,434)
Accounts payable and other payables- related parties	(80,515)	(138,168)
Other payables and accrued liabilities	36,570	975,521
Value added and other taxes payable	(32,117)	447,390
Income tax payable	(90,383)	559,150
Net cash provided by operating activities	19,241,223	6,913,959
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	(2,147,918)	(1,535,053)
Net cash used in investing activities	(2,147,918)	(1,535,053)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans	24,576,457	28,557,182
Repayment of bank loans	(31,488,282)	(26,167,763)
Repayment of loans from related party		(1,000,720)
Advances to related party	(11,794,260)
Net cash (used in) provided by financing activities	(18,706,085)	1,388,699
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(25,764)	253,305
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(1,638,544)	7,020,910
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	8,822,581	3,691,653
CASH AND CASH EQUIVALENTS AT END OF PERIOD	7,184,037	10,712,563
Cash paid during the period for:
Interest	1,004,744	520,195
Income taxes	$ 373,221	$ 423,577

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Derivative Warrant Liability

6 Months Ended

Jun. 30, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Warrant Liability

NOTE 5   DERIVATIVE WARRANT LIABILITY

The Company has warrants outstanding to purchase an aggregate of 840,454 shares of Company common stock, which warrants require liability classification because of certain provisions that may result in an adjustment to their exercise price. The liability has been adjusted to fair value as of June 30, 2012 and 2011, resulting in a decrease in the liability and increase in other income of $180,000, $290,800, $134,500 and $330,300 for the three and six months ended June 30, 2012 and 2011, respectively.

The warrants will expire in June 2013. For the three and six months ended June 30, 2012 and 2011, the Company excluded these warrants from diluted earnings per share as they were antidilutive.

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Bank Loans (Details Textual)	3 Months Ended		6 Months Ended				6 Months Ended			6 Months Ended								6 Months Ended			1 Months Ended	6 Months Ended			1 Months Ended	6 Months Ended
	Jun. 30, 2012 USD ($)	Jun. 30, 2011 USD ($)	Jun. 30, 2012 USD ($)	Jun. 30, 2011 USD ($)	Aug. 02, 2010 Nanjing Bank [Member] Goldenway [Member] USD ($)	Aug. 02, 2010 Nanjing Bank [Member] Goldenway [Member] CNY	Jun. 30, 2012 Nanjing Bank [Member] Ever-Glory Apparel [Member] USD ($)	Mar. 11, 2010 Nanjing Bank [Member] Ever-Glory Apparel [Member] USD ($)	Mar. 11, 2010 Nanjing Bank [Member] Ever-Glory Apparel [Member] CNY	Jun. 30, 2012 Nanjing Bank [Member] Ever-Glory Apparel [Member] Minimum [Member]	Jun. 30, 2012 Nanjing Bank [Member] Ever-Glory Apparel [Member] Maximum [Member]	Jun. 30, 2012 Nanjing Bank [Member] La Go Go [Member] USD ($)	Jun. 30, 2012 Nanjing Bank [Member] La Go Go [Member] CNY	Jun. 30, 2012 Shanghai Pudong Development Bank [Member] Goldenway [Member] USD ($)	Jun. 30, 2012 Shanghai Pudong Development Bank [Member] Goldenway [Member] CNY	Jan. 04, 2011 Shanghai Pudong Development Bank [Member] Goldenway [Member] USD ($)	Jan. 04, 2011 Shanghai Pudong Development Bank [Member] Goldenway [Member] CNY	Jun. 30, 2012 Bank Of Communications [Member] Ever-Glory Apparel [Member] USD ($)	Jun. 30, 2012 Bank Of Communications [Member] La Go Go [Member] USD ($)	Jun. 30, 2012 Bank Of Communications [Member] La Go Go [Member] CNY	Jul. 31, 2012 Bank Of China [Member] Ever-Glory Apparel [Member] USD ($)	Jun. 30, 2012 Bank Of China [Member] Ever-Glory Apparel [Member] USD ($)	Jun. 30, 2012 Bank Of China [Member] Ever-Glory Apparel [Member] Minimum [Member]	Jun. 30, 2012 Bank Of China [Member] Ever-Glory Apparel [Member] Maximum [Member]	Jul. 31, 2012 Hong Kong and Shanghai Bank [Member] Ever-Glory Apparel [Member] USD ($)	Jun. 30, 2012 Hong Kong and Shanghai Bank [Member] Ever-Glory Apparel [Member] USD ($)	Jun. 30, 2012 Hong Kong and Shanghai Bank [Member] Ever-Glory Apparel [Member] Minimum [Member]	Jun. 30, 2012 Hong Kong and Shanghai Bank [Member] Ever-Glory Apparel [Member] Maximum [Member]	Jul. 29, 2011 Hong Kong and Shanghai Bank [Member] Ever-Glory Apparel and Perfect Dream [Member] USD ($)
Bank Loans (Textual)
Term of revolving line of credit agreement					2 years	2 years		1 year	1 year							1 year	1 year
Revolving line of credit agreement, maximum borrowing capacity					$ 7,910,000	50,000,000		$ 7,910,000	50,000,000							$ 6,330,000	40,000,000												$ 7,000,000
Revolving line of credit agreement, amount borrowed							2,370,000					1,580,000	10,000,000	6,330,000	40,000,000			5,060,000	790,000	5,000,000		1,900,000				1,220,000
The effective interest rate during the period										6.73%	6.89%	6.29%	6.29%	7.55%	7.55%			7.08%	6.37%	6.37%			5.90%	6.10%			5.85%	7.02%
Revolving line of credit agreement, additional borrowings							1,640,000											1,580,000
Line of credit interest rate on additional borrowing										4.40%	4.90%							5.27%
Revolving line of credit agreement, collateral amount							2,200,000											1,980,000				2,600,000				1,630,000
Revolving line of credit agreement, unused capacity							3,900,000																			5,780,000
Revolving line of credit agreement, repaid amount																		230,000			980,000				270,000
Additional Bank Loans (Textual)
Interest Paid	$ 458,703	$ 258,924	$ 1,004,744	$ 520,195

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Related Party Transactions (Details 4) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Summary of Import and Export Transactions
Amounts due from related party, Total	$ 6,307,049	$ 17,623,712
Jiangsu Ever-glory [Member]
Summary of Import and Export Transactions
Amounts due from related party, Total	18,658,578	17,600,147
Jiangsu Ever-glory [Member] | Accounts Receivable [Member]
Summary of Import and Export Transactions
Amounts due from related party, Total	8,199,597	19,999,373
Jiangsu Ever-glory [Member] | Accounts Payable [Member]
Summary of Import and Export Transactions
Amounts due from related party, Total	(1,906,390)	(2,399,226)
Jiangsu Ever-glory [Member] | Interest Income [Member]
Summary of Import and Export Transactions
Amounts due from related party, Total	563,651
Jiangsu Ever-glory [Member] | Counter guarantee deposit [Member]
Summary of Import and Export Transactions
Amounts due from related party, Total	$ 11,801,720

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Income Tax (Tables)

6 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Abstract]

Pre-tax income in jurisdictions

	Three months ended				Six months ended
	June 30,				June 30,
	2012		2011		2012		2011
PRC	$	1,582,335	$	712,029	$	3,350,278	$	3,691,090
Others		1,089,824		1,760,816		1,967,947		2,072,772
	$	2,672,159	$	2,472,845	$	5,318,225	$	5,763,862

Reconciliation of PRC statutory rates to the Company’s effective tax rate

	Three months ended						Six months ended
	June 30,						June 30,
	2012			2011			2012			2011
PRC statutory rate		25.0	%		25.0	%		25.0	%		25.0	%
Non-taxable or non-deductible items		(2.3	)		(1.8	)		(1.9	)		(1.9	)
Effect of foreign income tax rates		(8.5	)		(16.5	)		(7.9	)		(7.6	)
Income tax exemption		-			(0.1	)		0.1			(0.1	)
Other		(2.2	)		2.1			0.6			0.1
Effective income tax rate		12.0	%		8.7	%		15.9	%		15.5	%

Components of income tax expense

	Three months ended					Six months ended
	June 30,					June 30,
	2012		2011			2012		2011
Current	$	121,988	$	474,871		$	265,092	$	978,705
Deferred		199,022		(260,895	)		580,774		(85,708	)
Income tax expense	$	321,010	$	213,976		$	845,866	$	892,997