Bank Loans

9 Months Ended

Sep. 30, 2012

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. Short term bank loans consisted of the following as of September 30, 2012 and December 31, 2011

Bank	September 30, 2012		December 31, 2011
Nanjing Bank	$	16,357,623	$	11,731,223
Shanghai Pudong Development Bank		6,316,000		8,966,382
Industrial and Commercial Bank of China		-		5,294,270
Bank of Communications		8,109,071		2,660,562
Everbright Bank		3,158,000		-
HSBC		2,729,131		532,944
Bank of China		1,894,800		-
	$	38,564,625	$	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 $7.90 million (RMB50 million). The agreement has been extended until August 2, 2013. 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 September 30, 2012, Goldenway had borrowed $6.32 million under this line of credit from Nanjing Bank with an annual interest rate from 5.88% to 6.14% and due on various dates from December 2012 to February 2013. At September 30, 2012, approximately $1.58 million was unused and available under this line of credit.

On March 11, 2010, Ever-Glory Apparel entered into an one-year line of credit agreement for approximately $7.90 million (RMB50 million) with Nanjing Bank. The agreement has been extended until April 6, 2013. As of September 30, 2012, Ever-Glory Apparel had borrowed $3.16 million from Nanjing Bank with an annual interest rate from 6.3% to 6.89% and due on various dates from May 2013 to July 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 $4.51 million from Nanjing Bank with an annual interest rate from 3.37% to 4.4%, due on various dates from October 2012 to December 2012, and collateralized by approximately $5.65 million of accounts receivable from wholesale customers. These bank loans are to be repaid upon receipt of payments from customers. At September 30, 2012, approximately $0.23 million was unused and available. Approximately $1.91 million was repaid in October 2012.

As of September 30, 2012, LA GO GO had borrowed $2.37 million (RMB15.0 million) from Nanjing Bank with an annual interest rate from 6.29% to 6.9% and due on various dates from April 2013 to September 2013. This loan is guaranteed by Jiangsu Ever-Glory and Mr. Kang.

On January 4, 2011, Goldenway entered into a one-year line of credit agreement for approximately $6.32 million (RMB40 million) with Shanghai Pudong Development Bank. In January 2012, the agreement was extended until January 4, 2013. As of September 30, 2012, Goldenway had borrowed the maximum amount available under the line of $6.32 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 September 30, 2012, Ever-Glory Apparel had borrowed $5.05 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 $1.48 million from the Bank of Communications with an annual interest rate of 5.26%, due on various dates from October 2012 to December 2012, guaranteed by Jiangsu Ever-Glory and Mr. Kang, and collateralized by approximately $2.02 million of accounts receivable from wholesale customers. Approximately $0.22 million was repaid in October 2012.

As of September 30, 2012, LA GO GO had borrowed $1.58 million (RMB10.0 million) from the Bank of Communications with an annual interest rate from 6.06% to 6.37% and due on various dates from June to July 2013. This loan is guaranteed by Jiangsu Ever-Glory and Mr. Kang.

On August 21, 2012, Ever-Glory Apparel entered into a one-year line of credit agreement for approximately $13.11 million (RMB83 million) with Everbright Bank guaranteed by Jiangsu Ever-Glory and Mr. Kang. The line of credit is also collateralized by assets of Jiangsu Ever-Glory under a collateral agreement executed between the Company, Jiangsu Ever-Glory and the bank. As of September 30, 2012, Ever-Glory Apparel had borrowed $3.16 million (RMB20.0 million) from Everbright Bank, with an annual interest rate of 6.3% and due in September 2013.

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. The agreement has been extended until July 29, 2013. As of September 30, 2012, Ever-Glory Apparel had borrowed $2.73 million from HSBC with an annual interest rate of 5.9%, due on various dates from October to December 2012, and collateralized by approximately $3.4 million of accounts receivable from wholesale customers. These bank loans are to be repaid upon receipt of payments from customers. As of September 30, 2012, approximately $4.27 million was unused and available. Approximately $0.2 million was repaid in October 2012.

As of September 30, 2012, Ever-Glory Apparel had borrowed $1.89 million from the Bank of China with an annual interest rate of 5.9%, and due on October 2012. The loan is guaranteed by Goldenway, and collateralized by approximately $2.6 million of accounts receivable from wholesale customers. The loan was repaid in full in October 2012.

Total interest expense on bank loans amounted to $449,413 and $411,206 for the three months ended September 30, 2012 and 2011, and $1,454,157 and $932,381 for the nine months ended September 30, 2012 and 2011, respectively.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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