Concentrations and Risks

6 Months Ended

Jun. 30, 2013

NOTE 11 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, 2013 and December 31, 2012. 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, 2013, the Company had two wholesale customers that each represented approximately 11% of the Company’s revenues. For the three-month period ended June 30, 2013, the Company had two wholesale customers that represented approximately 14% and 10% of the Company’s revenues respectively, 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, respectively. 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 Company’s wholesale business during the three and six months ended June 30, 2013 and 2012, no supplier represented more than 10% of the total raw materials purchased.

For the Company’s retail business, the Company had no supplier that represented more than 10% of raw materials purchases during the six months ended June 30, 2013. The Company purchased 10% of its raw materials from one supplier during the three months ended June 30, 2013. 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 respectively, during the three months ended June 30, 2012.

For the wholesale business, during the six months ended June 30, 2013, the Company relied on two manufacturers for 15% and 13% of purchased finished goods, respectively. During the six months ended June 30, 2012, the Company relied on two manufacturers for 17% and 13% of purchased finished goods, respectively. During the three months ended June 30, 2013, the Company relied on two manufacturers for 17% and 16% of purchased finished goods, respectively. During the three months ended June 30, 2012, the Company relied on two manufacturers for 19% and 16% of purchased finished goods, respectively.

For the retail business, during the three and six months ended June 30, 2013 and 2012, no supplier represented more than 10% of the total purchased finished goods.

The Company’s revenues for the three and six months ended June 30, 2013 and 2012 were earned in the following geographic areas:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
The People’s Republic of China	$	40,694,314	$	29,320,073	$	100,376,413	$	59,828,555
Germany		3,305,231		3,393,413		7,676,564		8,858,106
United Kingdom		4,961,895		4,588,231		7,826,529		7,953,390
Europe-Other		3,134,666		3,189,555		7,102,281		7,753,988
Japan		5,306,554		2,416,434		9,005,388		8,523,582
United States		1,726,825		4,287,325		5,453,800		7,503,583
Total	$	59,129,485	$	47,195,031	$	137,440,975	$	100,421,204

- Definition

The entire disclosure for any concentrations existing at the date of the financial statements that make an entity vulnerable to a reasonably possible, near-term, severe impact. This disclosure informs financial statement users about the general nature of the risk associated with the concentration, and may indicate the percentage of concentration risk as of the balance sheet date.

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