10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

Amendment No. 1

(Mark One)

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: 001-34591

CLEANTECH SOLUTIONS INTERNATIONAL, INC.

 (Name of Registrant as specified in its charter)

NEVADA	90-0648920
(State or other jurisdiction of incorporation of organization)	(I.R.S. Employer Identification No.)

No. 9 Yanyu Middle Road

Qianzhou Township, Huishan District, Wuxi City

Jiangsu Province, China 150090

 (Address of principal executive office)

(86) 51083397559

 (Registrant’s telephone number)

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). Yes x No o

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer (Do not check if smaller reporting company)	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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.  2,667,017 shares of common stock are issued and outstanding as of August 14, 2012.

EXPLANATORY NOTE

Cleantech Solutions International, Inc. (the “Company”) is filing this Amendment No. 1 (the “Amendment No. 1”) to its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2012, which was originally filed on August 14, 2012 (the “Form 10-Q”), for the sole purpose of furnishing Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T. Exhibit 101 to this report provides the consolidated financial statements and related notes from the Form 10-Q formatted in XBRL (eXtensible Business Reporting Language).

This Amendment No. 1 speaks as of the filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the Form 10-Q filing date, and does not modify or update in any way disclosures made in the Form 10-Q. No other changes have been made to the Form 10-Q.

Pursuant to Rule 406T of Regulation S-T, the interactive data files attached as Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

ITEM 6. EXHIBITS

31.1*	Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer
31.2*	Rule 13a-14(a)/15d-14(a) certification of Principal Financial Officer
32.1*	Section 1350 certification of Chief Executive Officer and Chief Financial Officer
101.INS**	XBRL Instance Document
101.SCH**	RL 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

*            These exhibits were previously included in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012, filed with the Securities and Exchange Commission on August 14, 2012.

**          Furnished herewith. 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.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CLEANTECH SOLUTIONS INTERNATIONAL, INC.
Date: August 23, 2012	By:	/s/ Jianhua Wu
		Jianhua Wu, Chief Executive Officer and Principal Executive Officer
Date: August 23, 2012	By:	/s/ Wanfen Xu
		Wanfen Xu, Chief Financial Officer and Principal Accounting Officer

3

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Inventories (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Components of inventories
Raw materials	$ 1,450,875	$ 1,514,928
Work in process	2,276,087	1,441,231
Finished goods	2,358,334	1,492,488
Inventory, Gross, Total	6,085,296	4,448,647
Less: reserve for obsolete inventory	(173,785)	(172,557)
Inventory net, Total	$ 5,911,511	$ 4,276,090

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Statutory Reserves (Details) (USD $)	6 Months Ended
	Jun. 30, 2012
Statutory Accounting Practices [Line Items]
Balance – December 31, 2011	$ 2,064,551
Addition to statutory reserves	99,773
Balance – June 30, 2012	2,164,324
Dyeing [Member]
Statutory Accounting Practices [Line Items]
Balance – December 31, 2011	72,407
Addition to statutory reserves
Balance – June 30, 2012	72,407
Electric [Member]
Statutory Accounting Practices [Line Items]
Balance – December 31, 2011	1,168,796
Addition to statutory reserves
Balance – June 30, 2012	1,168,796
Wuxi Fulland [Member]
Statutory Accounting Practices [Line Items]
Balance – December 31, 2011	823,348
Addition to statutory reserves	99,773
Balance – June 30, 2012	$ 923,121

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Bank Acceptance Notes Payable (Details Textual)	6 Months Ended
	Jun. 30, 2012
Agricultural and Commercial Bank Notes due and paid on January 15, 2012 [Member]
Bank acceptance notes payables (Textual)
Percentage of assets collateralized for non-interest bearing notes payables	100.00%
Bank of China Notes due on July 13, 2012 [Member]
Bank acceptance notes payables (Textual)
Percentage of assets collateralized for non-interest bearing notes payables	100.00%
Bank of China Notes due on August 23, 2012 [Member]
Bank acceptance notes payables (Textual)
Percentage of assets collateralized for non-interest bearing notes payables	100.00%

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Statutory Reserves (Details Textual)	6 Months Ended
	Jun. 30, 2012
Statutory Reserves (Textual)
Appropriation to the statutory surplus reserve	Should be at least 10% of the after tax net income determined in accordance with the PRC GAAP until the reserve is equal to 50% of the entities'' registered capital or members'' equity.
Appropriations to the statutory public welfare fund	Minimum of 5% of the after tax net income determined in accordance with PRC GAAP.
Appropriations of registered capital to statutory reserves	Maximum 50% of its registered capital to statutory reserves for Dyeing and Electric.

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Short-Term Bank Loans (Details Textual)	Jun. 30, 2012	Dec. 31, 2011
Agricultural and Commercial Bank, Loan due on March 30, 2012 [Member]
Short-term bank loans (Textual)
Short-term loan, interest rate, stated percentage		7.88%
China Merchants Bank, Loan due on May 20, 2012 [Member]
Short-term bank loans (Textual)
Short-term loan, interest rate, stated percentage	6.73%	6.73%
China Merchants Bank, Loan due on November 17, 2012 [Member]
Short-term bank loans (Textual)
Short-term loan, interest rate, stated percentage	130.00%
Agricultural and Commercial Bank, Loan due on October 10, 2012 [Member]
Short-term bank loans (Textual)
Short-term loan, interest rate, stated percentage	5.75%	5.75%
Bank of Communications, Loan due on May 14, 2012 [Member]
Short-term bank loans (Textual)
Short-term loan, interest rate, stated percentage	120.00%
Bank of Communications, Loan due on November 14, 2012 [Member]
Short-term bank loans (Textual)
Short-term loan, interest rate, stated percentage	7.32%
Bank of Communications, Loan due on May 23, 2012 [Member]
Short-term bank loans (Textual)
Short-term loan, interest rate, stated percentage	120.00%
Bank of Communications, Loan due on November 21, 2012 [Member]
Short-term bank loans (Textual)
Short-term loan, interest rate, stated percentage	7.32%
Bank of China, Loan due on January 16, 2013 [Member]
Short-term bank loans (Textual)
Short-term loan, interest rate, stated percentage	7.35%

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Concentrations (Tables)

6 Months Ended

Jun. 30, 2012

Risks and Uncertainties [Abstract]

Concentration of purchase from suppliers

	Six Months Ended June 30,
Supplier	2012	2011
A	22%	*
B	20%	*
C	*	17%
D	18%	14%
E	*	12%
F	*	11%

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Segment Information (Details Textual)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Segment Information (Textual)
Number of reportable business segments	2	2	2	2

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Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2012

Property, Plant and Equipment [Abstract]

Components pf property and equipment

	Useful Life		June 30, 2012			December 31, 2011
Office equipment and furniture	5 Years		$	217,350		$	215,145
Manufacturing equipment	5 – 10 Years			61,354,490			57,347,726
Vehicles	5 Years			125,095			124,211
Construction in progress		-		-			330,730
Building and building improvements	20 Years			20,770,774			20,623,919
				82,467,709			78,641,731
Less: accumulated depreciation				(17,798,960	)		(14,599,652	)
			$	64,668,749		$	64,042,079

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Capital Lease Obligations (Details Textual)	6 Months Ended
	Jun. 30, 2012
Capital lease obligation (Textual)
Non-cancelable capital lease expiration date	Jun. 03, 2014

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Land Use Rights (Details) (USD $)			6 Months Ended
	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2012 Minimum [Member]	Jun. 30, 2012 Maximum [Member]
Finite-Lived Intangible Assets, Net
Land use rights, Useful Life			45 years	50 years
Land use rights	$ 4,272,480	$ 4,242,273
Finite-Lived Intangible Assets, Accumulated Amortization	(471,510)	(421,737)
Land use rights, net	$ 3,800,970	$ 3,820,536

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Organization and Summary of Significant Accounting Policies (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Organization and Summary of Significant Accounting Policies (Additional Textual)
Maturity period of cash cash equivalent			Three months or less
Less: allowance for doubtful accounts	$ 2,590,581		$ 2,590,581		$ 2,618,608
Inventory reserves	173,785		173,785		172,557
Notes receivable	47,471		47,471		53,420
Advances from customers	2,394,167		2,394,167		1,166,942
Shipping costs	275,829	312,096	492,676	670,718
Impairment charges
Product warranty, period			1 year
Percentage contibution in employee benefits plan			25.00%
Advances to suppliers	1,601,450		1,601,450		219,347
Cumulative translation adjustment and effect of exchange rate changes on cash			$ 6,551	$ 29,087
Reverse stock split			One-for-ten
Average translation rates (RMB to USD)	6.3255	6.54818	6.3255	6.54818
Asset and liability translation rate (RMB to USD)	6.3197		6.3197		6.3647
Operating agreement [Member]
Organization and Summary Of Significant Accounting Policies (Textual)
Term of agreement from October 12, 2007			20 years
Equity Pledge Agreement [Member]
Organization and Summary Of Significant Accounting Policies (Textual)
Condition for the term of agreement			The equity pledge agreement will expire two years after the Huayang Companies' obligations under the consulting services agreements have been fulfilled.
Option Agreement [Member]
Organization and Summary Of Significant Accounting Policies (Textual)
Term of agreement from October 12, 2007			20 years
Green Power Environment Technology (Shanghai) Co [Member]
Organization and Summary Of Significant Accounting Policies (Textual)
Pecentage of capital stock owned by Fulland	100.00%		100.00%

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Stockholders' Equity (Details) (Warrant [Member], USD $)	6 Months Ended
	Jun. 30, 2012
Warrant [Member]
Summery of warrant activity
Balance, outstanding	220,158
Options, granted	73,386
Options, Exercised	(73,386)
Options, cancelled	(220,158)
Balance, ending
Options exercisable, ending
Weighted average pxercise price, Balance	$ 15.73
Weighted average pxercise price, granted	$ 2.70
Weighted average pxercise price, exercised	$ (2.70)
Weighted average pxercise price, cancelled	$ (15.73)
Weighted average pxercise price, Balance ending
Weighted average pxercise price, Exercisable ending balance

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Bank Acceptance Notes Payable (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Summary of bank acceptance notes payables
Total	$ 284,824	$ 314,233
Agricultural and Commercial Bank Notes due and paid on January 15, 2012 [Member]
Summary of bank acceptance notes payables
Total		314,233
Bank of China Notes due on July 13, 2012 [Member]
Summary of bank acceptance notes payables
Total	158,235
Bank of China Notes due on August 23, 2012 [Member]
Summary of bank acceptance notes payables
Total	$ 126,589

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Property and Equipment

6 Months Ended

Jun. 30, 2012

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 4 - PROPERTY AND EQUIPMENT

At June 30, 2012 and December 31, 2011, property and equipment consisted of the following:

	Useful Life		June 30, 2012			December 31, 2011
Office equipment and furniture	5 Years		$	217,350		$	215,145
Manufacturing equipment	5 – 10 Years			61,354,490			57,347,726
Vehicles	5 Years			125,095			124,211
Construction in progress		-		-			330,730
Building and building improvements	20 Years			20,770,774			20,623,919
				82,467,709			78,641,731
Less: accumulated depreciation				(17,798,960	)		(14,599,652	)
			$	64,668,749		$	64,042,079

For the six months ended June 30, 2012 and 2011, depreciation expense amounted to $3,092,511 and $2,503,759, respectively, of which $2,343,975 and $2,082,964, respectively, is included in inventory and cost of revenues and the remainder is included in general and administrative expenses. For the three months ended June 30, 2012 and 2011, depreciation expense amounted to $1,545,166 and $1,326,757, respectively, of which $1,171,242 and $986,549, respectively, is included in inventory and cost of revenues and the remainder is included in general and administrative expenses. Depreciation is not taken during the period of construction or equipment installation. Upon completion of the installation of manufacturing equipment or any construction in progress, construction in progress balances will be classified to their respective property and equipment category.

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Land Use Rights (Details 1) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Amortization of land use rights attributable to future periods
2013	$ 93,539
2014	93,539
2015	93,539
2016	93,539
2017	93,539
Thereafter	3,333,275
Land use rights, net	$ 3,800,970	$ 3,820,536

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Capital Lease Obligations (Tables)

6 Months Ended

Jun. 30, 2012

Leases [Abstract]

Schedule of future minimum lease payments for capital leases

Twelve-month periods ending June 30,	Amount
2013	$	394,698
2014		350,491
Total minimum lease payments		745,189
Less: amount representing interest		(114,926	)
Less: security deposit due		(127,417	)
Present value of net minimum lease payment		502,846
Less: current portion		(248,046	)
Long-term portion	$	254,800

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Bank Acceptance Notes Payable (Tables)

6 Months Ended

Jun. 30, 2012

Bank Acceptance Notes Payables [Abstract]

Schedule of bank acceptance notes payables

	June 30, 2012		December 31, 2011
Agricultural and Commercial Bank, non-interest bearing, due and paid on January 15, 2012, collateralized by 100% of restricted cash deposited.	$	-	$	314,233
Bank of China, non-interest bearing, due and paid on July 13, 2012, collateralized by 100% of restricted cash deposited.		158,235		-
Bank of China, non-interest bearing, due on August 23, 2012, collateralized by 100% of restricted cash deposited.		126,589		-
Total	$	284,824	$	314,233

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Segment Information (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Revenues:
Revenues	$ 12,832,863	$ 12,608,181	$ 22,242,092	$ 30,174,561
Depreciation:
Depreciation	1,545,166	1,326,757	3,092,511	2,503,759
Interest expense:
Interest expense	70,363	32,826	160,396	62,528
Net income (loss):
NET INCOME	1,071,370	1,169,959	1,374,165	3,835,119
Identifiable long-lived tangible assets at June 30, 2012 and December 31, 2011 by segment:
Identifiable long-lived tangible assets	64,668,749		64,668,749		64,042,079
Identifiable long-lived tangible assets at June 30, 2012 and December 31, 2011 by geographical location:
Identifiable long-lived tangible assets	64,668,749		64,668,749		64,042,079
Forged Rolled Rings and Related Components [Member]
Revenues:
Revenues	8,208,210	8,706,888	13,793,665	22,124,245
Depreciation:
Depreciation	1,215,536	1,092,426	2,432,705	2,106,172
Interest expense:
Interest expense	52,563	32,826	130,196	62,528
Net income (loss):
NET INCOME	750,036	1,048,738	1,076,705	3,490,411
Identifiable long-lived tangible assets at June 30, 2012 and December 31, 2011 by segment:
Identifiable long-lived tangible assets	51,621,902		51,621,902		51,930,395
Dyeing and Finishing Equipment [Member]
Revenues:
Revenues	4,624,653	3,901,293	8,448,427	8,050,316
Depreciation:
Depreciation	329,630	234,331	659,806	397,587
Interest expense:
Interest expense	17,800		30,200
Net income (loss):
NET INCOME	506,797	406,206	916,140	829,648
Identifiable long-lived tangible assets at June 30, 2012 and December 31, 2011 by segment:
Identifiable long-lived tangible assets	13,046,847		13,046,847		12,111,684
Other Segment [Member]
Net income (loss):
NET INCOME	(185,463)	(284,985)	(618,680)	(484,940)
China
Identifiable long-lived tangible assets at June 30, 2012 and December 31, 2011 by geographical location:
Identifiable long-lived tangible assets	64,668,749		64,668,749		64,042,079
UNITED STATES
Identifiable long-lived tangible assets at June 30, 2012 and December 31, 2011 by geographical location:
Identifiable long-lived tangible assets

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Land Use Rights (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Land Use Rights (Textual)
Amortization of land use rights	$ 23,344	$ 22,710	$ 46,727	$ 45,138
Minimum [Member]
Land Use Rights (Textual)
Land use rights, Useful Life			45 years
Maximum [Member]
Land Use Rights (Textual)
Land use rights, Useful Life			50 years
Land use rights [Member] | Minimum [Member]
Land Use Rights (Textual)
Land use rights, Useful Life			45 years
Land use rights [Member] | Maximum [Member]
Land Use Rights (Textual)
Land use rights, Useful Life			50 years

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Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2012

Equity [Abstract]

Summary of Warrant activity

	Six Months Ended June 30, 2012
	Number of Warrants			Weighted Average Exercise Price
Balance at December 31, 2011		220,158		$	15.73
Granted		73,386			2.70
Exercised		(73,386	)		(2.70	)
Cancelled		(220,158	)		(15.73	)
Balance at June 30, 2012		-		$	-
Warrants exercisable at June 30, 2012		-		$	-

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Statutory Reserves (Tables)

6 Months Ended

Jun. 30, 2012

Statutory Reserves [Abstract]

Statutory Reserves

	Dyeing		Electric		Wuxi Fulland		Total
Balance – December 31, 2011	$	72,407	$	1,168,796	$	823,348	$	2,064,551
Addition to statutory reserves		-		-		99,773		99,773
Balance – June 30, 2012	$	72,407	$	1,168,796	$	923,121	$	2,164,324

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Inventories

6 Months Ended

Jun. 30, 2012

Inventory Disclosure [Abstract]

INVENTORIES

NOTE 3 - INVENTORIES

At June 30, 2012 and December 31, 2011, inventories consisted of the following:

	June 30, 2012			December 31, 2011
Raw materials	$	1,450,875		$	1,514,928
Work in process		2,276,087			1,441,231
Finished goods		2,358,334			1,492,488
		6,085,296			4,448,647
Less: reserve for obsolete inventory		(173,785	)		(172,557	)
	$	5,911,511		$	4,276,090

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2012

Segment Reporting [Abstract]

Segment Information

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Revenues:
Forged rolled rings and related components	$	8,208,210		$	8,706,888		$	13,793,665		$	22,124,245
Dyeing and finishing equipment		4,624,653			3,901,293			8,448,427			8,050,316
		12,832,863			12,608,181			22,242,092			30,174,561
Depreciation:
Forged rolled rings and related components		1,215,536			1,092,426			2,432,705			2,106,172
Dyeing and finishing equipment		329,630			234,331			659,806			397,587
		1,545,166			1,326,757			3,092,511			2,503,759
Interest expense:
Forged rolled rings and related components		52,563			32,826			130,196			62,528
Dyeing and finishing equipment		17,800			-			30,200			-
		70,363			32,826			160,396			62,528
Net income (loss):
Forged rolled rings and related components		750,036			1,048,738			1,076,705			3,490,411
Dyeing and finishing equipment		506,797			406,206			916,140			829,648
Other (a)		(185,463	)		(284,985	)		(618,680	)		(484,940	)
	$	1,071,370		$	1,169,959		$	1,374,165		$	3,835,119

Identifiable long-lived tangible assets at June 30, 2012 and December 31, 2011 by segment:
	June 30, 2012		December 31, 2011
Forged rolled rings and related components	$	51,621,902	$	51,930,395
Dyeing and finishing equipment		13,046,847		12,111,684
	$	64,668,749	$	64,042,079

Identifiable long-lived tangible assets at June 30, 2012 and December 31, 2011 by geographical location:
	June 30, 2012		December 31, 2011
China	$	64,668,749	$	64,042,079
United States		-		-
	$	64,668,749	$	64,042,079

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Property and Equipment (Details) (USD $)	6 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Components of property and equipment
Property and equipment, gross	$ 82,467,709	$ 78,641,731
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	(17,798,960)	(14,599,652)
Property and equipment, net	64,668,749	64,042,079
Office equipment and furniture [Member]
Components of property and equipment
Property and equipment, useful life	5 years
Property and equipment, gross	217,350	215,145
Manufacturing equipment [Member]
Components of property and equipment
Property and equipment, gross	61,354,490	57,347,726
Manufacturing equipment [Member] | Minimum [Member]
Components of property and equipment
Property and equipment, useful life	5 years
Manufacturing equipment [Member] | Maximum [Member]
Components of property and equipment
Property and equipment, useful life	10 years
Vehicles [Member]
Components of property and equipment
Property and equipment, useful life	5 years
Property and equipment, gross	125,095	124,211
Construction in Progress [Member]
Components of property and equipment
Property and equipment, useful life	0 years
Property and equipment, gross		330,730
Building and building improvements [Member]
Components of property and equipment
Property and equipment, useful life	20 years
Property and equipment, gross	$ 20,770,774	$ 20,623,919

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Stockholders' Equity (Details Textual) (USD $)	1 Months Ended	3 Months Ended		6 Months Ended
	Feb. 29, 2012	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Stockholders' Equity (Textual)
Exercise of warrants, number of shares issuable at purchase price one				55,158
Exercise of warrants, Share purchase price one				$ 12.00
Exercise of warrants, number of shares issuable at purchase price two				165,000
Exercise of warrants, Share purchase price two				$ 16.98
Fair market value of original warrants		$ 52,896		$ 52,896
Fair market value of newly issued exchanged warrants		90,621		90,621
Purchase price of common stock	$ 2.70			$ 2.70
Warrants modification expense	37,725			235,133
Stock-based compensation expense				101,590	214,807
Common stock issued for future service				54,880	113,317
Director [Member]
Stockholders' Equity (Textual)
Stock issued pursuant to long-term incentive plan				250
Chief Executive Officer [Member]
Stockholders' Equity (Textual)
Stock issued pursuant to long-term incentive plan				10,000
Other Employees and Consultants [Member]
Stockholders' Equity (Textual)
Stock issued pursuant to long-term incentive plan				41,200
Warrant [Member]
Stockholders' Equity (Textual)
Warrants pricing weighted-average assumptions, stock price	$ 2.70
Warrants pricing weighted-average assumptions, expected dividend yield	0.00%
Warrants pricing weighted-average assumptions, risk-free interest rate	0.15%
Warrants pricing weighted-average assumptions, volatility	139.58%
Warrants pricing weighted-average assumptions, weighted average expected term	9 months 7 days
Series A Preferred Stock [Member]
Stockholders' Equity (Textual)
Conversion of stock, shares converted	2,201,582			13,197,389
Conversion of stock, shares issued	197,408
Common Stock [Member]
Stockholders' Equity (Textual)
Conversion of stock, shares issued	73,386			439,912
Stock issued pursuant to long-term incentive plan	51,450
Total stock issued	$ 198,142

XML

Consolidated Balance Sheets (USD $)	Jun. 30, 2012	Dec. 31, 2011
CURRENT ASSETS:
Cash and cash equivalents	$ 1,307,312	$ 1,152,607
Restricted cash	284,824	314,233
Notes receivable	47,471	53,420
Accounts receivable, net of allowance for doubtful accounts	8,011,584	7,087,958
Inventories, net of reserve for obsolete inventory	5,911,511	4,276,090
Advances to suppliers	1,601,450	219,347
Prepaid VAT on purchases	608,960	1,512,213
Prepaid expenses and other	199,190	110,670
Total Current Assets	17,972,302	14,726,538
PROPERTY AND EQUIPMENT - net	64,668,749	64,042,079
OTHER ASSETS:
Land use rights, net	3,800,970	3,820,536
Total Assets	86,442,021	82,589,153
CURRENT LIABILITIES:
Short-term bank loans	2,690,001	2,356,749
Bank acceptance notes payable	284,824	314,233
Accounts payable	4,843,331	4,997,109
Accrued expenses	948,011	771,597
Capital lease obligations- current portion	248,046	244,747
Advances from customers	2,394,167	1,166,942
VAT and service taxes payable	54,736
Income taxes payable	484,216	592,202
Total Current Liabilities	11,947,332	10,443,579
OTHER LIABILITIES:
Capital lease obligations - net of current portion	254,800	381,235
Total Liabilities	12,202,132	10,824,814
STOCKHOLDERS' EQUITY:
Preferred stock $0.001 par value (30,000,000 shares authorized, all of which were designated as series A convertible preferred, 0 and 10,995,807 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively		10,996
Common stock ($0.001 par value; 50,000,000 shares authorized; 2,667,017 and 2,101,849 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively	2,667	2,102
Additional paid-in capital	28,089,776	27,489,600
Retained earnings	35,892,733	34,618,341
Statutory reserve	2,164,324	2,064,551
Accumulated other comprehensive gain - foreign currency translation adjustment	8,090,389	7,578,749
Total Stockholders' Equity	74,239,889	71,764,339
Total Liabilities and Stockholders' Equity	$ 86,442,021	$ 82,589,153

XML

Short-Term Bank Loans (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Summary of short-term bank loans
Short-term bank loans	$ 2,690,001	$ 2,356,749
Agricultural and Commercial Bank, Loan due on March 30, 2012 [Member]
Summary of short-term bank loans
Short-term bank loans		628,466
China Merchants Bank, Loan due on May 20, 2012 [Member]
Summary of short-term bank loans
Short-term bank loans		471,350
China Merchants Bank, Loan due on November 17, 2012 [Member]
Summary of short-term bank loans
Short-term bank loans	474,706
Agricultural and Commercial Bank, Loan due on October 10, 2012 [Member]
Summary of short-term bank loans
Short-term bank loans	474,706	471,350
Bank of Communications, Loan due on May 14, 2012 [Member]
Summary of short-term bank loans
Short-term bank loans		471,350
Bank of Communications, Loan due on November 14, 2012 [Member]
Summary of short-term bank loans
Short-term bank loans	474,706
Bank of Communications, Loan due on May 23, 2012 [Member]
Summary of short-term bank loans
Short-term bank loans		314,233
Bank of Communications, Loan due on November 21, 2012 [Member]
Summary of short-term bank loans
Short-term bank loans	316,471
Bank of China, Loan due on January 16, 2013 [Member]
Summary of short-term bank loans
Short-term bank loans	$ 949,412

XML

Organization and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2012

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Cleantech Solutions International, Inc. (the “Company”) was incorporated in Delaware on June 24, 1987 under the name of Malex, Inc.  On December 18, 2007, the Company’s corporate name was changed to China Wind Systems, Inc., and on June 13, 2011, the Company’s corporate name was changed to Cleantech Solutions International, Inc.   On August 7, 2012, the Company was converted into a Nevada corporation. (See Note 15)  Through its affiliated companies and subsidiaries, the Company manufactures and sells forged products and fabricated products to a range of clean technology customers including high precision forged rolled rings and related products for the wind power industry and other industries and equipment to the solar industry.  The Company also makes textile dyeing and finishing machines. The Company is the sole owner of Fulland Limited (“Fulland”), a Cayman Island limited liability company, which was organized on May 9, 2007.  Fulland owns 100% of the capital stock of Green Power Environment Technology (Shanghai) Co., Ltd. (“Green Power”) and Wuxi Fulland Wind Energy Equipment Co., Ltd. (“Fulland Wind Energy”), which are wholly foreign-owned enterprises (“WFOE”) organized under the laws of the People’s Republic of China (“PRC” or “China”).  Green Power is a party to a series of contractual arrangements, as fully described below, dated October 12, 2007 with Wuxi Huayang Electrical Power Equipment Co., Ltd. (“Electrical”) and Wuxi Huayang Dyeing Machinery Co., Ltd. (“Dyeing”), both of which are limited liability companies organized under the laws of, and based in, the PRC.   Electrical and Dyeing are sometimes collectively referred to as the “Huayang Companies.”

Fulland was organized by the owners of the Huayang Companies as a special purpose vehicle for purposes of raising capital, in accordance with requirements of the PRC State Administration of Foreign Exchange (“SAFE”). On May 31, 2007, SAFE issued an official notice known as Hui Zong Fa [2007] No. 106 (“Circular 106”), which requires the owners of any Chinese company to obtain SAFE’s approval before establishing any offshore holding company structure for foreign financing as well as subsequent acquisition matters in China. Accordingly, the owners of the Huayang Companies, Mr. Jianhua Wu and Ms. Lihua Tang, submitted their application to SAFE in early September 2007. On October 11, 2007, SAFE approved their application, permitting these Chinese citizens to establish Fulland as a special purpose vehicle for any foreign ownership and capital raising activities by the Huayang Companies.

Electrical was formed on May 21, 2004, and Fulland Wind Energy was formed on August 27, 2008.  Beginning in April 2007, Electrical began to produce large-scaled forged rolled rings that are up to three meters in diameter for the wind-power and other industries.  In 2009, the Company began to produce and sell forged products through Fulland Wind Energy. Through Fulland Wind Energy, the Company manufactures and machines all forged products, including wind products such as shafts, rolled rings, gear rims, gearboxes, bearings and other components and finished products and assemblies for the wind power industry, and solar products, including large-scale equipment used in the manufacturing process for the solar industry. The Company refers to this segment of its business as the forged rolled rings and related components division.

Dyeing, which was formed on August 17, 1995, produces and sells a variety of high and low temperature dyeing and finishing machinery for the textile industry. The Company refers to this segment as the dyeing division.

Basis of presentation; management’s responsibility for preparation of financial statements

Management acknowledges its responsibility for the preparation of the accompanying interim consolidated financial statements which reflect all adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its consolidated financial position and the results of its operations for the interim period presented.

These consolidated financial statements should be read in conjunction with the summary of significant accounting policies and notes to consolidated financial statements included in the Company’s Form 10-K annual report for the year ended December 31, 2011.

The accompanying unaudited consolidated financial statements for Cleantech Solutions International, Inc., its subsidiaries and variable interest entities, have been prepared in accordance with accounting principles generally accepted in the United States of America (the “U.S.”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole.

The Company’s consolidated financial statements include the financial statements of its wholly-owned subsidiaries, Fulland, Green Power and Fulland Wind Energy, as well as the financial statements of Huayang Companies, Dyeing and Electric.  All significant intercompany accounts and transactions have been eliminated in consolidation.

Pursuant to Accounting Standards Codification (“ASC”) Topic 810, the Huayang Companies are considered variable interest entities (“VIE”), and the Company is the primary beneficiary.  The Company’s relationships with the Huayang Companies and their shareholders are governed by a series of contractual arrangements between Green Power, the Company’s wholly foreign-owned enterprise in the PRC, and each of the Huayang Companies, which are the operating companies of the Company in the PRC. Under PRC laws, each of Green Power, Dyeing and Electrical is an independent legal entity and none of them is exposed to liabilities incurred by the other parties. The contractual arrangements constitute valid and binding obligations of the parties of such agreements. Each of the contractual arrangements and the rights and obligations of the parties thereto are enforceable and valid in accordance with the laws of the PRC. On October 12, 2007, the Company entered into the following contractual arrangements with each of Dyeing and Electrical:

Consulting Services Agreement. Pursuant to the exclusive consulting services agreements between Green Power and the Huayang Companies, Green Power has the exclusive right to provide to the Huayang Companies general business operation services, including advice and strategic planning, as well as consulting services related to the technological research and development of dyeing and finishing machines, electrical equipment and related products (the “ Services ”). Under this agreement, Green Power owns the intellectual property rights developed or discovered through research and development, in the course of providing the Services, or derived from the provision of the Services. The Huayang Companies shall pay a quarterly consulting service fees in Renminbi (“RMB”) to Fulland that is equal to all of the Huayang Companies’ profits for such quarter.

Operating Agreement. Pursuant to the operating agreement among Green Power, the Huayang Companies and all shareholders of the Huayang Companies, Green Power provides guidance and instructions on the Huayang Companies’ daily operations, financial management and employment issues. The Huayang Companies shareholders must designate the candidates recommended by Green Power as their representatives on the boards of directors of each of the Huayang Companies. Green Power has the right to appoint senior executives of the Huayang Companies. In addition, Green Power agrees to guarantee the Huayang Companies’ performance under any agreements or arrangements relating to the Huayang Companies’ business arrangements with any third party. The Huayang Companies, in return, agree to pledge their accounts receivable and all of their assets to Green Power. Moreover, each of the Huayang Companies agrees that, without the prior consent of Green Power, it will not engage in any transactions that could materially affect its assets, liabilities, rights or operations, including, without limitation, incurrence or assumption of any indebtedness, sale or purchase of any assets or rights, incurrence of any encumbrance on any of their assets or intellectual property rights in favor of a third party or transfer of any agreements relating to their business operation to any third party. The term of this agreement, as amended on November 1, 2008, is 20 years from October 12, 2007 and may be extended only upon Green Power’s written confirmation prior to the expiration of the this agreement, with the extended term to be mutually agreed upon by the parties.

Equity Pledge Agreement. Under the equity pledge agreement between the Huayang Companies’ shareholders and Green Power, the Huayang Companies’ shareholders pledged all of their equity interests in the Huayang Companies to Green Power to guarantee the Huayang Companies’ performance of their respective obligations under the consulting services agreement. If the Huayang Companies or the Huayang Companies’ shareholders breach their respective contractual obligations, Green Power, as pledgee, will be entitled to certain rights, including the right to sell the pledged equity interests. The Huayang Companies’ shareholders also agreed that, upon occurrence of any event of default, Green Power shall be granted an exclusive, irrevocable power of attorney to take actions in the place and stead of the Huayang Companies’ shareholders to carry out the security provisions of the equity pledge agreement and take any action and execute any instrument that Green Power may deem necessary or advisable to accomplish the purposes of the equity pledge agreement. The Huayang Companies’ shareholders agreed not to dispose of the pledged equity interests or take any actions that would prejudice Green Power’s interest. The equity pledge agreement will expire two years after the Huayang Companies’ obligations under the consulting services agreements have been fulfilled.

Option Agreement.Under the option agreement between the Huayang Companies’ shareholders and Green Power, the Huayang Companies’ shareholders irrevocably granted Green Power or its designated person an exclusive option to purchase, to the extent permitted under PRC law, all or part of the equity interests in the Huayang Companies for the cost of the initial contributions to the registered capital or the minimum amount of consideration permitted by applicable PRC law. Green Power or its designated person has sole discretion to decide when to exercise the option, whether in part or in full. The term of this agreement, as amended on November 1, 2008, is 20 years from October 12, 2007 and may be extended prior to its expiration by written agreement of the parties.

Pursuant to ASC Topic 810 and related subtopics related to the consolidation of variable interest entities, the accounts of the Huayang Companies are consolidated in the accompanying financial statements.  As VIEs, the Huayang Companies’ sales are included in the Company’s total sales, its income from operations is consolidated with the Company’s, and the Company’s net income includes all of the Huayang Companies net income. The Company does not have any non-controlling interest and, accordingly, did not subtract any net income in calculating the net income of the VIEs that is attributable to the Company. Because of the contractual arrangements, the Company has a pecuniary interest in the Huayang Companies that requires consolidation of the Company’s and the Huayang Companies’ financial statements.

Use of estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates. Significant estimates in the six months ended June 30, 2012 and 2011 include the allowance for doubtful accounts, the allowance for obsolete inventory, the useful life of property and equipment and intangible assets, assumptions used in assessing impairment of long-term assets and valuation of deferred tax assets, accruals for taxes due, and the value of stock-based compensation.

Cash and cash equivalents

For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents. The Company maintains cash and cash equivalents with various financial institutions mainly in the PRC and the U.S.  Balances in banks in the PRC are uninsured.

Fair value of financial instruments

The Company adopted the guidance of ASC Topic 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The carrying amounts reported in the balance sheets for cash and cash equivalents, restricted cash, notes receivable, accounts receivable, inventories, advances to suppliers, prepaid VAT on purchases, prepaid expenses and other, short-term bank loans, bank acceptance notes payable, accounts payable, accrued expenses, capital lease obligations, advances from customers, VAT and service taxes payable and income taxes payable approximate their fair market value based on the short-term maturity of these instruments. The Company did not identify any assets or liabilities that are required to be presented on the consolidated balance sheets at fair value in accordance with the accounting guidance.

ASC Topic 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.

Concentrations of credit risk

The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC’s economy. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. Substantially all of the Company’s cash is maintained with state-owned banks within the PRC, and none of these deposits are covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts. A significant portion of the Company’s sales are credit sales which are primarily to customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables is limited due to generally short payment terms.  The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk.

Concentrations of credit risk (continued)

At June 30, 2012 and December 31, 2011, the Company’s cash balances by geographic area were as follows:

	June 30, 2012				December 31, 2011
Country:
United States	$	75,187	5.8	%	$	288,090	25.0	%
China		1,232,125	94.2	%		864,517	75.0	%
Total cash and cash equivalents	$	1,307,312	100.0	%	$	1,152,607	100.0	%

Restricted cash

Restricted cash consists of cash deposits held by a bank to secure bank acceptance notes payable.

Notes receivable

Notes receivable represents trade accounts receivable due from various customers where the customers’ bank has guaranteed the payment of the receivable. This amount is non-interest bearing and is normally paid within six months. Historically, the Company has experienced no losses on notes receivable. The Company’s notes receivable totaled $47,471 and $53,420 at June 30, 2012 and December 31, 2011, respectively.

Accounts receivable

Accounts receivable are presented net of an allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collection. At June 30, 2012 and December 31, 2011, the Company has established, based on a review of its outstanding balances, an allowance for doubtful accounts in the amounts of $2,590,581 and $2,618,608, respectively.

Inventories

Inventories, consisting of raw materials, work in process and finished goods related to the Company’s products are stated at the lower of cost or market utilizing the weighted average method. An allowance is established when management determines that certain inventories may not be saleable. If inventory costs exceed expected market value due to obsolescence or quantities in excess of expected demand, the Company will record reserves for the difference between the cost and the market value. These reserves are recorded based on estimates. The Company recorded an inventory reserve of $173,785 and $172,557 at June 30, 2012 and December 31, 2011, respectively.

Advances to suppliers

Advances to suppliers represent the cash paid in advance for the purchase of raw material from suppliers. The advance payments are intended to ensure preferential pricing and delivery. The amounts advanced under such arrangements totaled $1,601,450 and $219,347 as of June 30, 2012 and December 31, 2011, respectively.

Property and equipment

Property and equipment are carried at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized.  When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.

Included in property and equipment is construction-in-progress which consisted of factory improvements and machinery pending installation and includes the costs of construction, machinery and equipment, and any interest charges arising from borrowings used to finance these assets during the period of construction or installation of the assets. No provision for depreciation is made on construction-in-progress until such time as the relevant assets are completed and ready for their intended use. Property purchased from a related party is recorded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as a distribution to a related party.

Impairment of long-lived assets

In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not record any impairment charges for the six months ended June 30, 2012 and 2011.

Advances from customers

Advances from customers at June 30, 2012 and December 31, 2011 amounted to $2,394,167 and $1,166,942, respectively, and consist of prepayments from customers for merchandise that had not yet been shipped. The Company will recognize the deposits as revenue as customers take delivery of the goods in accordance with its revenue recognition policy.

Revenue recognition

Pursuant to the guidance of ASC Topic 605 and ASC Topic 360, the Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable and collectability is reasonably assured. The Company accounts for the product sale as a multiple element arrangement. Revenue from multiple element arrangements is allocated among the separate accounting units based on the residual method. Under the residual method, the revenue is allocated to undelivered elements based on fair value of such undelivered elements and the residual amounts of revenue allocated to delivered elements. The Company recognizes revenues from the sale of dyeing and finishing equipment, forged rolled rings and other components upon shipment and transfer of title. The other elements may include installation and, generally, a one-year warranty. Equipment installation revenue is valued based on estimated service person hours to complete installation and is recognized when the labor has been completed and the equipment has been accepted by the customer, which is generally within a couple days of the delivery of the equipment. Grant income is recognized when funds have been received and all significant terms of the grant have been fulfilled by the Company. Warranty revenue is valued based on estimated service person hours to complete a service and generally is recognized over the contract period.  For the six months ended June 30, 2012 and 2011, amounts allocated to warranty revenues were not material. Based on historical experience, warranty service calls and any related labor costs have been minimal. All other product sales with customer specific acceptance provisions, including the forged rolled rings, are recognized upon customer acceptance and the delivery of the parts or service. Revenues related to spare part sales are recognized upon shipment or delivery based on the trade terms.

Income taxes

The Company is governed by the Income Tax Law of the PRC and the U.S. Internal Revenue Code of 1986, as amended.  The Company accounts for income taxes using the liability method prescribed by ASC Topic 740, “Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.

The Company applied the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accounting for uncertain tax positions recognized in our financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of June 30, 2012 and December 31, 2011, the Company had no uncertain tax positions, and will continue to evaluate for uncertain positions in the future.

Stock-based compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment topic of ASC Topic 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The Financial Accounting Standards Board (“FASB”) ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company records compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other third-parties are then revalued, or the total compensation is recalculated, based on the then current fair value, at each subsequent reporting date.

Shipping costs

Shipping costs are included in selling expenses and totaled $492,676 and $670,718 for the six months ended June 30, 2012 and 2011, respectively. Shipping costs totaled $275,829 and $312,096 for the three months ended June 30, 2012 and 2011, respectively.

Employee benefits

The Company’s operations and employees are all located in the PRC.  The Company makes mandatory contributions to the PRC government’s health, retirement benefit and unemployment funds in accordance with the relevant Chinese social security laws, equal to approximately 25% of salaries. The costs of these payments are charged to income in the same period as the related salary costs and are not material.

Advertising

Advertising is expensed as incurred and is included in selling, general and administrative expenses on the accompanying consolidated statements of income and comprehensive income and was not material.

Research and development

Research and development costs are expensed as incurred. For the six months ended June 30, 2012 and 2011, research and development costs were not material.

Foreign currency translation

The reporting currency of the Company is the U.S. dollar. The functional currency of the parent company is the U.S. dollar and the functional currency of the Company’s operating subsidiaries is the Chinese Renminbi (“RMB”). For the subsidiaries and affiliates whose functional currencies are the RMB, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the balance sheets.  Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income. The cumulative translation adjustment and effect of exchange rate changes on cash for the six months ended June 30, 2012 and 2011 was $6,551 and $29,087, respectively. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date with any transaction 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.

All of the Company’s revenue transactions are transacted in the functional currency of the operating subsidiaries and affiliates. Other than for the purchase of equipment from non-Chinese suppliers, the Company does not enter into any material transaction in foreign currencies. Transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company.

Asset and liability accounts at June 30, 2012 and December 31, 2011 were translated at 6.3197 RMB to $1.00 and at 6.3647 RMB to $1.00, respectively, which were the exchange rates on the balance sheet dates. Equity accounts were stated at their historical rate. The average translation rates applied to the statements of income for the six months ended June 30, 2012 and 2011 were 6.3255 RMB and 6.54818 RMB to $1.00, respectively.  Cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rate. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.

Reverse stock split

The Company effected a one-for-ten reverse stock split on March 6, 2012.  All share and per share information has been retroactively adjusted to reflect this reverse stock split.

Income per share of common stock

ASC Topic 260 “Earnings per Share,” requires presentation of both basic and diluted earnings per share (“EPS”) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

Basic net income per share is computed by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted income per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. Potentially dilutive common stock consist of common stock issuable upon the conversion of series A convertible preferred stock (using the if-converted method) and common stock purchase warrants (using the treasury stock method). 

The following table presents a reconciliation of basic and diluted net income per share:

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Net income available to common stockholders for basic and diluted net income per share of common stock	$	1,071,370	$	1,169,959	$	1,374,165	$	3,835,119
Weighted average common stock outstanding - basic		2,572,753		1,919,660		2,370,138		1,906,203
Effect of dilutive securities:
Series A convertible preferred stock		58,974		532,403		207,431		531,410
Warrants		29,256		57,694		15,295		100,148
Weighted average common stock outstanding - diluted		2,660,983		2,509,757		2,592,864		2,537,761
Net income per common share - basic	$	0.42	$	0.61	$	0.58	$	2.01
Net income per common share - diluted	$	0.40	$	0.47	$	0.53	$	1.51

The Company’s aggregate common stock equivalents at June 30, 2012 and December 31, 2011 include the following:

	June 30, 2012		December 31, 2011
Warrants		-		220,158
Series A convertible preferred stock		-		366,527
Total		-		586,685

Deemed preferred stock dividend

When we issue shares of convertible preferred stock at a price that is, on an “as if converted” basis, less than the market price of the underlying shares of common stock, the difference between the value of the underlying shares of common stock and the purchase price of the convertible preferred stock is treated as a deemed preferred stock dividend.  In connection with the issuance of shares of preferred stock upon exercise of warrants, as a result of board approval of the issuance of series A preferred stock instead of common stock, the Company does not record a deemed preferred stock dividend since the Company issues the equivalent number of preferred shares which are convertible into the number of common shares that would have been issued upon exercise.

Accumulated other comprehensive income

Comprehensive income is comprised of net income and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. For the Company, comprehensive income for the six months ended June 30, 2012 and 2011 included net income and unrealized gains from foreign currency translation adjustments.

Related parties

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions shall be recorded at fair value of the goods or services exchanged. Property purchased from a related party is recorded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as a distribution to related party.

Recent accounting pronouncement

Accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

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Concentrations (Details Textual)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Concentrations (Textual)
Customers accounted for 10% or more of the revenue from forged rolled rings and related components segment

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Organization and Summary of Significant Accounting Policies (Details 1) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Reconciliation of basic and diluted net income per share
Net income available to common stockholders for basic and diluted net income per share of common stock	$ 1,071,370	$ 1,169,959	$ 1,374,165	$ 3,835,119
Weighted average common stock outstanding - basic	2,572,753	1,919,660	2,370,138	1,906,203
Effect of dilutive securities:
Series A convertible preferred stock	58,974	532,403	207,431	531,410
Warrants	29,256	57,694	15,295	100,148
Weighted average common stock outstanding – diluted	2,660,983	2,509,757	2,592,864	2,537,761
Net income per common share - basic	$ 0.42	$ 0.61	$ 0.58	$ 2.01
Net income per common share - diluted	$ 0.40	$ 0.47	$ 0.53	$ 1.51

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Organization and Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2012

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Cash balances by geographic area

	June 30, 2012				December 31, 2011
Country:
United States	$	75,187	5.8	%	$	288,090	25.0	%
China		1,232,125	94.2	%		864,517	75.0	%
Total cash and cash equivalents	$	1,307,312	100.0	%	$	1,152,607	100.0	%

Reconciliation of basic and diluted net income per share

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Net income available to common stockholders for basic and diluted net income per share of common stock	$	1,071,370	$	1,169,959	$	1,374,165	$	3,835,119
Weighted average common stock outstanding - basic		2,572,753		1,919,660		2,370,138		1,906,203
Effect of dilutive securities:
Series A convertible preferred stock		58,974		532,403		207,431		531,410
Warrants		29,256		57,694		15,295		100,148
Weighted average common stock outstanding - diluted		2,660,983		2,509,757		2,592,864		2,537,761
Net income per common share - basic	$	0.42	$	0.61	$	0.58	$	2.01
Net income per common share - diluted	$	0.40	$	0.47	$	0.53	$	1.51

Aggregate common stock equivalents

	June 30, 2012		December 31, 2011
Warrants		-		220,158
Series A convertible preferred stock		-		366,527
Total		-		586,685

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Organization and Summary of Significant Accounting Policies (Details 2)	Jun. 30, 2012	Dec. 31, 2011
Company's aggregate common stock equivalents
Aggregate common stock equivalents		586,685
Warrant [Member]
Company's aggregate common stock equivalents
Aggregate common stock equivalents		220,158
Convertible Preferred Stock [Member]
Company's aggregate common stock equivalents
Aggregate common stock equivalents		366,527

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Inventories (Tables)

6 Months Ended

Jun. 30, 2012

Inventory Disclosure [Abstract]

Components of inventories

	June 30, 2012			December 31, 2011
Raw materials	$	1,450,875		$	1,514,928
Work in process		2,276,087			1,441,231
Finished goods		2,358,334			1,492,488
		6,085,296			4,448,647
Less: reserve for obsolete inventory		(173,785	)		(172,557	)
	$	5,911,511		$	4,276,090

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Accounts Receivable

6 Months Ended

Jun. 30, 2012

Receivables [Abstract]

ACCOUNTS RECEIVABLE

NOTE 2 – ACCOUNTS RECEIVABLE

At June 30 2012 and December 31, 2011, accounts receivable consisted of the following:

	June 30, 2012			December 31, 2011
Accounts receivable	$	10,602,165		$	9,706,566
Less: allowance for doubtful accounts		(2,590,581	)		(2,618,608	)
	$	8,011,584		$	7,087,958

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Condensed 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	30,000,000	30,000,000
Preferred stock, shares issued	0	10,995,807
Preferred stock, shares outstanding	0	10,995,807
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	2,667,017	2,101,849
Common stock, shares outstanding	2,667,017	2,101,849

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Segment Information

6 Months Ended

Jun. 30, 2012

Segment Reporting [Abstract]

SEGMENT INFORMATION

NOTE 12 - SEGMENT INFORMATION

For the three and six months ended June 30, 2012 and 2011, the Company operated in two reportable business segments - (1) the manufacture of forged rolled rings and related components for the wind power and other industries segment, which also includes the manufacture of the Company’s solar industry products, and (2) the manufacture of dyeing and finishing equipment segment. The Company’s reportable segments are strategic business units that offer different products. They are managed separately based on the fundamental differences in their operations.  All of the Company’s operations are conducted in the PRC.

Information with respect to these reportable business segments for the three and six months ended June 30, 2012 and 2011 is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Revenues:
Forged rolled rings and related components	$	8,208,210		$	8,706,888		$	13,793,665		$	22,124,245
Dyeing and finishing equipment		4,624,653			3,901,293			8,448,427			8,050,316
		12,832,863			12,608,181			22,242,092			30,174,561
Depreciation:
Forged rolled rings and related components		1,215,536			1,092,426			2,432,705			2,106,172
Dyeing and finishing equipment		329,630			234,331			659,806			397,587
		1,545,166			1,326,757			3,092,511			2,503,759
Interest expense:
Forged rolled rings and related components		52,563			32,826			130,196			62,528
Dyeing and finishing equipment		17,800			-			30,200			-
		70,363			32,826			160,396			62,528
Net income (loss):
Forged rolled rings and related components		750,036			1,048,738			1,076,705			3,490,411
Dyeing and finishing equipment		506,797			406,206			916,140			829,648
Other (a)		(185,463	)		(284,985	)		(618,680	)		(484,940	)
	$	1,071,370		$	1,169,959		$	1,374,165		$	3,835,119

Identifiable long-lived tangible assets at June 30, 2012 and December 31, 2011 by segment:
	June 30, 2012		December 31, 2011
Forged rolled rings and related components	$	51,621,902	$	51,930,395
Dyeing and finishing equipment		13,046,847		12,111,684
	$	64,668,749	$	64,042,079

Identifiable long-lived tangible assets at June 30, 2012 and December 31, 2011 by geographical location:
	June 30, 2012		December 31, 2011
China	$	64,668,749	$	64,042,079
United States		-		-
	$	64,668,749	$	64,042,079

 (a)The Company does not allocate any general and administrative expenses of its U.S. activities to its reportable segments, because these activities are managed at a corporate level.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Aug. 14, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	Cleantech Solutions International, Inc.,
Entity Central Index Key	0000819926
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
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		2,667,017

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Concentrations

6 Months Ended

Jun. 30, 2012

Risks and Uncertainties [Abstract]

CONCENTRATIONS

NOTE 13 – CONCENTRATIONS

Customers

No customer accounted for 10% or more of the Company’s revenues during the six months ended June 30, 2012 and 2011.

Suppliers

The following table sets forth information as to each supplier that accounted for 10% or more of the Company’s purchases for the six months ended June 30, 2012 and 2011.

	Six Months Ended June 30,
Supplier	2012	2011
A	22%	*
B	20%	*
C	*	17%
D	18%	14%
E	*	12%
F	*	11%

*           Less than 10%.

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Consolidated Statements of Income and Comprehensive Income (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Income Statement [Abstract]
REVENUES	$ 12,832,863	$ 12,608,181	$ 22,242,092	$ 30,174,561
COST OF REVENUES	10,138,628	9,557,236	17,665,171	22,571,010
GROSS PROFIT	2,694,235	3,050,945	4,576,921	7,603,551
OPERATING EXPENSES:
Depreciation	373,924	340,208	748,536	420,795
Selling, general and administrative	751,544	1,028,695	1,417,667	1,860,496
Total Operating Expenses	1,125,468	1,368,903	2,166,203	2,281,291
INCOME FROM OPERATIONS	1,568,767	1,682,042	2,410,718	5,322,260
OTHER INCOME (EXPENSE):
Interest income	346	118	5,850	830
Interest expense	(70,363)	(32,826)	(160,396)	(62,528)
Foreign currency gain (loss)	1,115	(1,884)	5,391	(3,341)
Warrants modification expense			(235,133)
Other income	6,635	68,463	13,280	77,113
Total Other Income (Expense)	(62,267)	33,871	(371,008)	12,074
INCOME BEFORE INCOME TAXES	1,506,500	1,715,913	2,039,710	5,334,334
Income taxes	435,130	545,954	665,545	1,499,215
NET INCOME	1,071,370	1,169,959	1,374,165	3,835,119
COMPREHENSIVE INCOME:
NET INCOME	1,071,370	1,169,959	1,374,165	3,835,119
OTHER COMPREHENSIVE INCOME:
Unrealized foreign currency translation gain	59,938	1,084,955	511,640	1,490,783
COMPREHENSIVE INCOME	$ 1,131,308	$ 2,254,914	$ 1,885,805	$ 5,325,902
NET INCOME PER COMMON SHARE:
Basic	$ 0.42	$ 0.61	$ 0.58	$ 2.01
Diluted	$ 0.40	$ 0.47	$ 0.53	$ 1.51
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic	2,572,753	1,919,660	2,370,138	1,906,203
Diluted	2,660,983	2,509,757	2,592,864	2,537,761

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Bank Acceptance Notes Payable

6 Months Ended

Jun. 30, 2012

Bank Acceptance Notes Payables [Abstract]

BANK ACCEPTANCE NOTES PAYABLE

NOTE 7 – BANK ACCEPTANCE NOTES PAYABLE

Bank acceptance notes payable represents amounts due to a bank which are collateralized and typically renewed. All bank acceptance notes payable are secured by the Company’s restricted cash which is on deposit with the lender. At June 30, 2012 and December 31, 2011, the Company’s bank acceptance notes payables consisted of the following:

	June 30, 2012		December 31, 2011
Agricultural and Commercial Bank, non-interest bearing, due and paid on January 15, 2012, collateralized by 100% of restricted cash deposited.	$	-	$	314,233
Bank of China, non-interest bearing, due and paid on July 13, 2012, collateralized by 100% of restricted cash deposited.		158,235		-
Bank of China, non-interest bearing, due on August 23, 2012, collateralized by 100% of restricted cash deposited.		126,589		-
Total	$	284,824	$	314,233

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Short-Term Bank Loans

6 Months Ended

Jun. 30, 2012

Debt Disclosure [Abstract]

SHORT-TERM BANK LOANS

NOTE 6 – SHORT-TERM BANK LOANS

Short-term bank loan represents an amount due to a bank that is due within one year. This loan can be renewed with the bank upon maturity. At June 30, 2012 and December 31, 2011, short-term bank loans consisted of the following:

	June 30, 2012		December 31, 2011
Loan from Agricultural and Commercial Bank, due on March 30, 2012 with annual interest at December 31, 2011 of 7.88%, secured by certain assets of the Company and repaid on due date.	$	-	$	628,466
Loan from China Merchants Bank, due on May 20, 2012 with annual interest rate of 6.73% at March 31, 2012 and December 31, 2011, respectively, and repaid on due date.		-		471,350
Loan from China Merchants Bank, due on November 17, 2012 with annual interest rate being adjusted quarterly based on 130% of People’s Bank of China’s base rate.		474,706		-
Loan from Agricultural and Commercial Bank, due on October 10, 2012 with annual interest rate of 5.75% at June 30, 2012 and December 31, 2011, respectively, secured by certain assets of the Company.		474,706		471,350
Loan from Bank of Communications, due on May 14, 2012 with annual interest rate being adjusted quarterly based on 120% of People’s Bank of China’s base rate, and repaid on due date.		-		471,350
Loan from Bank of Communications, due on November 14, 2012 with annual interest rate of 7.32% at June 30, 2012.		474,706		-
Loan from Bank of Communications, due on May 23, 2012 with annual interest rate being adjusted quarterly based on 120% of People’s Bank of China’s base rate, and repaid on due date.		-		314,233
Loan from Bank of Communications, due on November 21, 2012 with annual interest rate of 7.32% at June 30, 2012.		316,471		-
Loan from Bank of China, due on January 16, 2013 with annual interest rate of 7.35% at June 30, 2012 and secured by certain assets of the Company.		949,412		-
Total short-term bank loans	$	2,690,001	$	2,356,749

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Accounts Receivable (Tables)

6 Months Ended

Jun. 30, 2012

Receivables [Abstract]

Components of accounts receivable

	June 30, 2012			December 31, 2011
Accounts receivable	$	10,602,165		$	9,706,566
Less: allowance for doubtful accounts		(2,590,581	)		(2,618,608	)
	$	8,011,584		$	7,087,958

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Restricted Net Assets

6 Months Ended

Jun. 30, 2012

Receivables [Abstract]

RESTRICTED NET ASSETS

NOTE 14 – RESTRICTED NET ASSETS

Regulations in the PRC permit payments of dividends by the Company’s PRC VIEs only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Subject to certain cumulative limit, a statutory reserve fund requires annual appropriations of at least 10% of after-tax profit, if any, of the relevant PRC VIE’s and subsidiary. The statutory reserve funds are not distributable as cash dividends. As a result of these PRC laws and regulations, the Company’s PRC VIE’s and its subsidiary are restricted in their abilities to transfer a portion of their net assets to the Company. Foreign exchange and other regulations in PRC may further restrict the Company’s PRC VIEs and its subsidiary from transferring funds to the Company in the form of loans and/or advances.

As of June 30, 2012 and December 31, 2011, substantially all of the Company’s net assets are attributable to the PRC VIE’s and its subsidiary located in the PRC. Accordingly, the Company’s restricted net assets at June 30, 2012 and December 31, 2011 were approximately $85,895,601 and $71,294,000, respectively.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2012

Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 10– STOCKHOLDERS’ EQUITY

(a)Preferred stock issued for warrants modification

On February 7, 2012, in an effort to induce its warrant holder to exercise their warrants, the Company signed an agreement with Barron Partners LP (“Barron”), pursuant to which Barron, as the holder of warrants to purchase 55,158 shares of common stock at $12.00 per share and 165,000 shares of common stock at $16.98 per share, agreed to exchange or convert such warrants into (i) 2,201,582 shares of the Company’s series A preferred stock which are convertible into 73,386 shares of common stock, and (ii) warrants to purchase 73,386 shares of this Company’s common stock at $2.70 per common share, with the proceeds from the exercise of the warrants being used to pay expenses incurred by the Company in connection with its public company expenses. In connection with the warrant modification, the Company valued the 2,201,582 series A preferred shares issued at fair market value on the date of grant of $197,408 based on the 73,386 common shares issuable upon conversion of the series A preferred stock multiplied by the quoted trading price of the common stock on the grant date of $2.70 per share.  In connection with the transaction, on February 7, 2012, the Company revalued the fair market value of the original warrants by using the Black-Scholes option-pricing model.    The total fair market value of the original warrants was estimated to be $52,896 on February 7, 2012. The fair market value of the newly issued exchanged warrants was estimated to be $90,621 using the Black-Scholes option-pricing model.  In connection with the Black-Scholes option pricing calculation, the following weighted-average assumptions were used:  stock price of $2.70; expected dividend yield 0%; risk-free interest rate of 0.15%; volatility of 139.58% and an expected term of 0.77 year. We recorded the difference between the fair market value of original warrants of $52,896 and the fair market value of exchanged warrants of $90,621 which amounted to $37,725 as a warrants modification expense with a corresponding credit of additional paid-in capital.  Accordingly, for the six months ended June 30, 2012, the Company recorded an aggregate warrant modification expense of $235,133 on the accompanying consolidated statement of income. For the three months ended June 30, 2012, the Company did not record any warrant modification expense.

(b)Common stock issued for services

During the six months ended June 30, 2012, the Company issued a total of 51,450 shares of common stock pursuant to its 2010 long-term incentive plan, of which 250 shares were issued to a director, 10,000 shares were issued to the chief executive officers and 41,200 shares were issued to other employees and consultants.  The shares were valued at the fair market value on the date of grant.  During the six months ended June 30, 2012, the Company record stock-based compensation of $101,590 and prepaid expense of $54,880, which is being amortized over the balance of 2012.

(c)Common stock issued for preferred share conversions

During the six months ended June 30, 2012, the Company issued 439,912 shares of common stock upon the conversion of 13,197,389 shares of series A preferred stock. As of June 30, 2012, the Company had no series A preferred stock outstanding.

(d)Common stock issued on exercise of warrants

During the six months ended June 30, 2012, the Company issued 73,386 shares of its common stock upon the exercise of warrants, for which the Company received cash proceeds of $198,142.  At June 30, 2012, there were no warrants outstanding.

Warrant activity for the six months ended June 30, 2012 was summarized as follows:

	Six Months Ended June 30, 2012
	Number of Warrants			Weighted Average Exercise Price
Balance at December 31, 2011		220,158		$	15.73
Granted		73,386			2.70
Exercised		(73,386	)		(2.70	)
Cancelled		(220,158	)		(15.73	)
Balance at June 30, 2012		-		$	-
Warrants exercisable at June 30, 2012		-		$	-

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Restricted Net Assets (Details) (USD $)	6 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Restricted Net Assets (Textual)
Annual appropriations required by statutory reserve fund	At least 10% of after-tax profit, if any, of the relevant PRC VIE''s and subsidiary
Company’s restricted net assets	$ 85,895,601	$ 71,294,000

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Capital Lease Obligations

6 Months Ended

Jun. 30, 2012

Leases [Abstract]

CAPITAL LEASE OBLIGATION

NOTE 8 - CAPITAL LEASE OBLIGATIONS

The Company has entered into a non-cancelable capital lease agreement with expiration date of June 3, 2014. The asset and liability under the capital lease are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset. The asset and future obligations related to the capital lease included in the accompanying consolidated balance sheets in property and equipment and capital lease obligations, respectively.  Minimum future lease payments under the capital lease are as follows:

Twelve-month periods ending June 30,	Amount
2013	$	394,698
2014		350,491
Total minimum lease payments		745,189
Less: amount representing interest		(114,926	)
Less: security deposit due		(127,417	)
Present value of net minimum lease payment		502,846
Less: current portion		(248,046	)
Long-term portion	$	254,800

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Income Taxes

6 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 9 – INCOME TAXES

The Company accounts for income taxes pursuant to the accounting standards that require the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry forwards.  Additionally, the accounting standards require the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Realization of deferred tax assets, including those related to the U.S. net operating loss carry forwards, are dependent upon future earnings, if any, of which the timing and amount are uncertain.

Accordingly, the net deferred tax asset related to the U.S. net operating loss carry forward has been fully offset by a valuation allowance. The Company is governed by the Income Tax Law of the PRC and the U.S. Internal Revenue Code of 1986, as amended.  In 2012 and 2011, under the Income Tax Laws of PRC, Chinese companies are generally subject to an income tax at an effective rate of 25% on income reported in the statutory financial statements after appropriate tax adjustments. The Company’s VIEs (Dyeing and Electric) and the Company’s subsidiary, Fulland Wind Energy, are subject to these statutory rates. The Company’s wholly-owned subsidiary, Fulland Limited was incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, this entity is not subject to income taxes.

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Statutory Reserves

6 Months Ended

Jun. 30, 2012

Statutory Reserves [Abstract]

STATUTORY RESERVES

NOTE 11 – STATUTORY RESERVES

The Company is required to make appropriations to reserve funds, comprising the statutory surplus reserve, statutory public welfare fund and discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (the “PRC GAAP”). Appropriation to the statutory surplus reserve should be at least 10% of the after tax net income determined in accordance with the PRC GAAP until the reserve is equal to 50% of the entities’ registered capital or members’ equity. Appropriations to the statutory public welfare fund are at a minimum of 5% of the after tax net income determined in accordance with PRC GAAP. Commencing on January 1, 2006, the new PRC regulations waived the requirement for appropriating retained earnings to a welfare fund. Prior to December 31, 2009, the Company appropriated the required maximum 50% of its registered capital to statutory reserves for Dyeing and Electric.

For the six months ended June 30, 2012, statutory reserve activity is as follows:

	Dyeing		Electric		Wuxi Fulland		Total
Balance – December 31, 2011	$	72,407	$	1,168,796	$	823,348	$	2,064,551
Addition to statutory reserves		-		-		99,773		99,773
Balance – June 30, 2012	$	72,407	$	1,168,796	$	923,121	$	2,164,324

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Organization and Summary of Significant Accounting Policies (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2011	Dec. 31, 2010
Cash balances by geographic area
Total cash and cash equivalents	$ 1,307,312	$ 1,152,607	$ 1,624,570	$ 947,177
Total cash and cash equivalents, Percentage	100.00%	100.00%
United States
Cash balances by geographic area
Total cash and cash equivalents	75,187	288,090
Total cash and cash equivalents, Percentage	5.80%	25.00%
China
Cash balances by geographic area
Total cash and cash equivalents	$ 1,232,125	$ 864,517
Total cash and cash equivalents, Percentage	94.20%	75.00%

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Income Taxes (Details)	6 Months Ended
	Jun. 30, 2012
Income taxes (Textual)
Effective iincome tax rate	25.00%

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Organization and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2012

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Basis of presentation; management’s responsibility for preparation of financial statements

Basis of presentation; management’s responsibility for preparation of financial statements

Management acknowledges its responsibility for the preparation of the accompanying interim consolidated financial statements which reflect all adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its consolidated financial position and the results of its operations for the interim period presented.

These consolidated financial statements should be read in conjunction with the summary of significant accounting policies and notes to consolidated financial statements included in the Company’s Form 10-K annual report for the year ended December 31, 2011.

The accompanying unaudited consolidated financial statements for Cleantech Solutions International, Inc., its subsidiaries and variable interest entities, have been prepared in accordance with accounting principles generally accepted in the United States of America (the “U.S.”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole.

The Company’s consolidated financial statements include the financial statements of its wholly-owned subsidiaries, Fulland, Green Power and Fulland Wind Energy, as well as the financial statements of Huayang Companies, Dyeing and Electric.  All significant intercompany accounts and transactions have been eliminated in consolidation.

Pursuant to Accounting Standards Codification (“ASC”) Topic 810, the Huayang Companies are considered variable interest entities (“VIE”), and the Company is the primary beneficiary.  The Company’s relationships with the Huayang Companies and their shareholders are governed by a series of contractual arrangements between Green Power, the Company’s wholly foreign-owned enterprise in the PRC, and each of the Huayang Companies, which are the operating companies of the Company in the PRC. Under PRC laws, each of Green Power, Dyeing and Electrical is an independent legal entity and none of them is exposed to liabilities incurred by the other parties. The contractual arrangements constitute valid and binding obligations of the parties of such agreements. Each of the contractual arrangements and the rights and obligations of the parties thereto are enforceable and valid in accordance with the laws of the PRC. On October 12, 2007, the Company entered into the following contractual arrangements with each of Dyeing and Electrical:

Consulting Services Agreement. Pursuant to the exclusive consulting services agreements between Green Power and the Huayang Companies, Green Power has the exclusive right to provide to the Huayang Companies general business operation services, including advice and strategic planning, as well as consulting services related to the technological research and development of dyeing and finishing machines, electrical equipment and related products (the “ Services ”). Under this agreement, Green Power owns the intellectual property rights developed or discovered through research and development, in the course of providing the Services, or derived from the provision of the Services. The Huayang Companies shall pay a quarterly consulting service fees in Renminbi (“RMB”) to Fulland that is equal to all of the Huayang Companies’ profits for such quarter.

Operating Agreement. Pursuant to the operating agreement among Green Power, the Huayang Companies and all shareholders of the Huayang Companies, Green Power provides guidance and instructions on the Huayang Companies’ daily operations, financial management and employment issues. The Huayang Companies shareholders must designate the candidates recommended by Green Power as their representatives on the boards of directors of each of the Huayang Companies. Green Power has the right to appoint senior executives of the Huayang Companies. In addition, Green Power agrees to guarantee the Huayang Companies’ performance under any agreements or arrangements relating to the Huayang Companies’ business arrangements with any third party. The Huayang Companies, in return, agree to pledge their accounts receivable and all of their assets to Green Power. Moreover, each of the Huayang Companies agrees that, without the prior consent of Green Power, it will not engage in any transactions that could materially affect its assets, liabilities, rights or operations, including, without limitation, incurrence or assumption of any indebtedness, sale or purchase of any assets or rights, incurrence of any encumbrance on any of their assets or intellectual property rights in favor of a third party or transfer of any agreements relating to their business operation to any third party. The term of this agreement, as amended on November 1, 2008, is 20 years from October 12, 2007 and may be extended only upon Green Power’s written confirmation prior to the expiration of the this agreement, with the extended term to be mutually agreed upon by the parties.

Equity Pledge Agreement. Under the equity pledge agreement between the Huayang Companies’ shareholders and Green Power, the Huayang Companies’ shareholders pledged all of their equity interests in the Huayang Companies to Green Power to guarantee the Huayang Companies’ performance of their respective obligations under the consulting services agreement. If the Huayang Companies or the Huayang Companies’ shareholders breach their respective contractual obligations, Green Power, as pledgee, will be entitled to certain rights, including the right to sell the pledged equity interests. The Huayang Companies’ shareholders also agreed that, upon occurrence of any event of default, Green Power shall be granted an exclusive, irrevocable power of attorney to take actions in the place and stead of the Huayang Companies’ shareholders to carry out the security provisions of the equity pledge agreement and take any action and execute any instrument that Green Power may deem necessary or advisable to accomplish the purposes of the equity pledge agreement. The Huayang Companies’ shareholders agreed not to dispose of the pledged equity interests or take any actions that would prejudice Green Power’s interest. The equity pledge agreement will expire two years after the Huayang Companies’ obligations under the consulting services agreements have been fulfilled.

Option Agreement.Under the option agreement between the Huayang Companies’ shareholders and Green Power, the Huayang Companies’ shareholders irrevocably granted Green Power or its designated person an exclusive option to purchase, to the extent permitted under PRC law, all or part of the equity interests in the Huayang Companies for the cost of the initial contributions to the registered capital or the minimum amount of consideration permitted by applicable PRC law. Green Power or its designated person has sole discretion to decide when to exercise the option, whether in part or in full. The term of this agreement, as amended on November 1, 2008, is 20 years from October 12, 2007 and may be extended prior to its expiration by written agreement of the parties.

Pursuant to ASC Topic 810 and related subtopics related to the consolidation of variable interest entities, the accounts of the Huayang Companies are consolidated in the accompanying financial statements.  As VIEs, the Huayang Companies’ sales are included in the Company’s total sales, its income from operations is consolidated with the Company’s, and the Company’s net income includes all of the Huayang Companies net income. The Company does not have any non-controlling interest and, accordingly, did not subtract any net income in calculating the net income of the VIEs that is attributable to the Company. Because of the contractual arrangements, the Company has a pecuniary interest in the Huayang Companies that requires consolidation of the Company’s and the Huayang Companies’ financial statements.

Use of Estimates

Use of estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates. Significant estimates in the six months ended June 30, 2012 and 2011 include the allowance for doubtful accounts, the allowance for obsolete inventory, the useful life of property and equipment and intangible assets, assumptions used in assessing impairment of long-term assets and valuation of deferred tax assets, accruals for taxes due, and the value of stock-based compensation.

Cash and cash equivalents

Cash and cash equivalents

For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents. The Company maintains cash and cash equivalents with various financial institutions mainly in the PRC and the U.S.  Balances in banks in the PRC are uninsured.

Fair value of financial instruments

Fair value of financial instruments

The Company adopted the guidance of ASC Topic 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The carrying amounts reported in the balance sheets for cash and cash equivalents, restricted cash, notes receivable, accounts receivable, inventories, advances to suppliers, prepaid VAT on purchases, prepaid expenses and other, short-term bank loans, bank acceptance notes payable, accounts payable, accrued expenses, capital lease obligations, advances from customers, VAT and service taxes payable and income taxes payable approximate their fair market value based on the short-term maturity of these instruments. The Company did not identify any assets or liabilities that are required to be presented on the consolidated balance sheets at fair value in accordance with the accounting guidance.

ASC Topic 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.

Concentrations of credit risk

Concentrations of credit risk

The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC’s economy. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. Substantially all of the Company’s cash is maintained with state-owned banks within the PRC, and none of these deposits are covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts. A significant portion of the Company’s sales are credit sales which are primarily to customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables is limited due to generally short payment terms.  The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk.

At June 30, 2012 and December 31, 2011, the Company’s cash balances by geographic area were as follows:

	June 30, 2012				December 31, 2011
Country:
United States	$	75,187	5.8	%	$	288,090	25.0	%
China		1,232,125	94.2	%		864,517	75.0	%
Total cash and cash equivalents	$	1,307,312	100.0	%	$	1,152,607	100.0

Restricted cash

Restricted cash

Restricted cash consists of cash deposits held by a bank to secure bank acceptance notes payable.

Notes receivable

Notes receivable

Notes receivable represents trade accounts receivable due from various customers where the customers’ bank has guaranteed the payment of the receivable. This amount is non-interest bearing and is normally paid within six months. Historically, the Company has experienced no losses on notes receivable. The Company’s notes receivable totaled $47,471 and $53,420 at June 30, 2012 and December 31, 2011, respectively.

Accounts receivable

Accounts receivable

Accounts receivable are presented net of an allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collection. At June 30, 2012 and December 31, 2011, the Company has established, based on a review of its outstanding balances, an allowance for doubtful accounts in the amounts of $2,590,581 and $2,618,608, respectively.

Inventory

Inventories

Inventories, consisting of raw materials, work in process and finished goods related to the Company’s products are stated at the lower of cost or market utilizing the weighted average method. An allowance is established when management determines that certain inventories may not be saleable. If inventory costs exceed expected market value due to obsolescence or quantities in excess of expected demand, the Company will record reserves for the difference between the cost and the market value. These reserves are recorded based on estimates. The Company recorded an inventory reserve of $173,785 and $172,557 at June 30, 2012 and December 31, 2011, respectively.

Advances to suppliers

Advances to suppliers

Advances to suppliers represent the cash paid in advance for the purchase of raw material from suppliers. The advance payments are intended to ensure preferential pricing and delivery. The amounts advanced under such arrangements totaled $1,601,450 and $219,347 as of June 30, 2012 and December 31, 2011, respectively.

Property and equipment

Property and equipment

Property and equipment are carried at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized.  When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.

Included in property and equipment is construction-in-progress which consisted of factory improvements and machinery pending installation and includes the costs of construction, machinery and equipment, and any interest charges arising from borrowings used to finance these assets during the period of construction or installation of the assets. No provision for depreciation is made on construction-in-progress until such time as the relevant assets are completed and ready for their intended use. Property purchased from a related party is recorded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as a distribution to a related party.

Impairment of long-lived assets

Impairment of long-lived assets

In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not record any impairment charges for the six months ended June 30, 2012 and 2011.

Advances from customers

Advances from customers

Advances from customers at June 30, 2012 and December 31, 2011 amounted to $2,394,167 and $1,166,942, respectively, and consist of prepayments from customers for merchandise that had not yet been shipped. The Company will recognize the deposits as revenue as customers take delivery of the goods in accordance with its revenue recognition policy.

Revenue recognition

Revenue recognition

Pursuant to the guidance of ASC Topic 605 and ASC Topic 360, the Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable and collectability is reasonably assured. The Company accounts for the product sale as a multiple element arrangement. Revenue from multiple element arrangements is allocated among the separate accounting units based on the residual method. Under the residual method, the revenue is allocated to undelivered elements based on fair value of such undelivered elements and the residual amounts of revenue allocated to delivered elements. The Company recognizes revenues from the sale of dyeing and finishing equipment, forged rolled rings and other components upon shipment and transfer of title. The other elements may include installation and, generally, a one-year warranty. Equipment installation revenue is valued based on estimated service person hours to complete installation and is recognized when the labor has been completed and the equipment has been accepted by the customer, which is generally within a couple days of the delivery of the equipment. Grant income is recognized when funds have been received and all significant terms of the grant have been fulfilled by the Company. Warranty revenue is valued based on estimated service person hours to complete a service and generally is recognized over the contract period.  For the six months ended June 30, 2012 and 2011, amounts allocated to warranty revenues were not material. Based on historical experience, warranty service calls and any related labor costs have been minimal. All other product sales with customer specific acceptance provisions, including the forged rolled rings, are recognized upon customer acceptance and the delivery of the parts or service. Revenues related to spare part sales are recognized upon shipment or delivery based on the trade terms.

Income Tax

Income taxes

The Company is governed by the Income Tax Law of the PRC and the U.S. Internal Revenue Code of 1986, as amended.  The Company accounts for income taxes using the liability method prescribed by ASC Topic 740, “Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.

The Company applied the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accounting for uncertain tax positions recognized in our financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of June 30, 2012 and December 31, 2011, the Company had no uncertain tax positions, and will continue to evaluate for uncertain positions in the future.

Stock-based compensation

Stock-based compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment topic of ASC Topic 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The Financial Accounting Standards Board (“FASB”) ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company records compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other third-parties are then revalued, or the total compensation is recalculated, based on the then current fair value, at each subsequent reporting date.

Shipping costs

Shipping costs

Shipping costs are included in selling expenses and totaled $492,676 and $670,718 for the six months ended June 30, 2012 and 2011, respectively. Shipping costs totaled $275,829 and $312,096 for the three months ended June 30, 2012 and 2011, respectively.

Employee benefits

Employee benefits

The Company’s operations and employees are all located in the PRC.  The Company makes mandatory contributions to the PRC government’s health, retirement benefit and unemployment funds in accordance with the relevant Chinese social security laws, equal to approximately 25% of salaries. The costs of these payments are charged to income in the same period as the related salary costs and are not material.

Advertising

Advertising

Advertising is expensed as incurred and is included in selling, general and administrative expenses on the accompanying consolidated statements of income and comprehensive income and was not material.

Research and development

Research and development

Research and development costs are expensed as incurred. For the six months ended June 30, 2012 and 2011, research and development costs were not material.

Foreign currency translation

Foreign currency translation

The reporting currency of the Company is the U.S. dollar. The functional currency of the parent company is the U.S. dollar and the functional currency of the Company’s operating subsidiaries is the Chinese Renminbi (“RMB”). For the subsidiaries and affiliates whose functional currencies are the RMB, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the balance sheets.  Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income. The cumulative translation adjustment and effect of exchange rate changes on cash for the six months ended June 30, 2012 and 2011 was $6,551 and $29,087, respectively. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date with any transaction 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.

All of the Company’s revenue transactions are transacted in the functional currency of the operating subsidiaries and affiliates. Other than for the purchase of equipment from non-Chinese suppliers, the Company does not enter into any material transaction in foreign currencies. Transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company.

Asset and liability accounts at June 30, 2012 and December 31, 2011 were translated at 6.3197 RMB to $1.00 and at 6.3647 RMB to $1.00, respectively, which were the exchange rates on the balance sheet dates. Equity accounts were stated at their historical rate. The average translation rates applied to the statements of income for the six months ended June 30, 2012 and 2011 were 6.3255 RMB and 6.54818 RMB to $1.00, respectively.  Cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rate. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.

Reverse stock split

Reverse stock split

The Company effected a one-for-ten reverse stock split on March 6, 2012.  All share and per share information has been retroactively adjusted to reflect this reverse stock split.

Income per share of common stock

Income per share of common stock

ASC Topic 260 “Earnings per Share,” requires presentation of both basic and diluted earnings per share (“EPS”) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

Basic net income per share is computed by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted income per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. Potentially dilutive common stock consist of common stock issuable upon the conversion of series A convertible preferred stock (using the if-converted method) and common stock purchase warrants (using the treasury stock method). 

The following table presents a reconciliation of basic and diluted net income per share:

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Net income available to common stockholders for basic and diluted net income per share of common stock	$	1,071,370	$	1,169,959	$	1,374,165	$	3,835,119
Weighted average common stock outstanding - basic		2,572,753		1,919,660		2,370,138		1,906,203
Effect of dilutive securities:
Series A convertible preferred stock		58,974		532,403		207,431		531,410
Warrants		29,256		57,694		15,295		100,148
Weighted average common stock outstanding - diluted		2,660,983		2,509,757		2,592,864		2,537,761
Net income per common share - basic	$	0.42	$	0.61	$	0.58	$	2.01
Net income per common share - diluted	$	0.40	$	0.47	$	0.53	$	1.51

The Company’s aggregate common stock equivalents at June 30, 2012 and December 31, 2011 include the following:

	June 30, 2012		December 31, 2011
Warrants		-		220,158
Series A convertible preferred stock		-		366,527
Total		-		586,685

Deemed preferred stock dividend

Deemed preferred stock dividend

When we issue shares of convertible preferred stock at a price that is, on an “as if converted” basis, less than the market price of the underlying shares of common stock, the difference between the value of the underlying shares of common stock and the purchase price of the convertible preferred stock is treated as a deemed preferred stock dividend.  In connection with the issuance of shares of preferred stock upon exercise of warrants, as a result of board approval of the issuance of series A preferred stock instead of common stock, the Company does not record a deemed preferred stock dividend since the Company issues the equivalent number of preferred shares which are convertible into the number of common shares that would have been issued upon exercise.

Accumulated other comprehensive income

Accumulated other comprehensive income

Comprehensive income is comprised of net income and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. For the Company, comprehensive income for the six months ended June 30, 2012 and 2011 included net income and unrealized gains from foreign currency translation adjustments.

Related parties

Related parties

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions shall be recorded at fair value of the goods or services exchanged. Property purchased from a related party is recorded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as a distribution to related party.

Recent accounting pronouncements

Recent accounting pronouncement

Accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

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Land Use Rights (Tables)

6 Months Ended

Jun. 30, 2012

Land Use Rights [Abstract]

Components of land use rights

	Useful Life	June 30, 2012			December 31, 2011
Land use rights	45 - 50 years	$	4,272,480		$	4,242,273
Less: accumulated amortization			(471,510	)		(421,737	)
		$	3,800,970		$	3,820,536

Amortization of land use rights attributable to future period

Twelve-month periods ending June 30:
2013	$	93,539
2014		93,539
2015		93,539
2016		93,539
2017		93,539
Thereafter		3,333,275
	$	3,800,970

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Capital Lease Obligations (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Present value of net minimum future lease payments under the capital lease
2013	$ 394,698
2014	350,491
Total minimum lease payments	745,189
Less: amount representing interest	(114,926)
Less: security deposit due	(127,417)
Present value of net minimum lease payment	502,846
Capital lease obligations- current portion	248,046	244,747
Long-term portion	$ 254,800	$ 381,235

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Property and Equipment (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Property and Equipment (Textual)
Depreciation expense	$ 1,545,166	$ 1,326,757	$ 3,092,511	$ 2,503,759
Depreciation included in inventory	$ 1,171,242	$ 986,549	$ 2,343,975	$ 2,082,964

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Consolidated Satatements of Cash Flows (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME	$ 1,374,165	$ 3,835,119
Adjustments to reconcile net income from operations to net cash provided by operating activities:
Depreciation	3,092,511	2,503,759
Amortization of land use rights	46,727	45,138
(Decrease) increase in allowance for doubtful accounts	(46,631)	166,640
Warrants modification expense	235,133
Stock-based compensation expense	101,590	214,807
Changes in assets and liabilities:
Restricted cash		(152,714)
Notes receivable	6,324	(139,095)
Accounts receivable	(825,725)	1,439,402
Inventories	(1,603,500)	(705,682)
Prepaid value-added taxes on purchases	913,184	752,472
Prepaid and other current assets	(32,988)	(91,109)
Advances to suppliers	(1,379,275)	(1,610,347)
Bank acceptance notes payable		152,714
Accounts payable	(188,919)	(2,838,972)
Accrued expenses	171,338	438,205
VAT and service taxes payable	54,685	(82,407)
Income taxes payable	(112,101)	(605,803)
Advances from customers	1,217,798	1,139,208
NET CASH PROVIDED BY OPERATING ACTIVITIES	3,024,316	4,461,335
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(3,263,008)	(4,796,171)
NET CASH USED IN INVESTING ACTIVITIES	(3,263,008)	(4,796,171)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital lease	(127,477)
Proceeds from bank loans	2,213,264	1,832,570
Repayment of bank loans	(1,897,083)	(1,374,428)
Decrease in restricted cash	31,618
Decrease in bank acceptance notes payable	(31,618)
Proceeds from sale of common stock		125,000
Proceeds from exercise of warrants	198,142	400,000
NET CASH PROVIDED BY FINANCING ACTIVITIES	386,846	983,142
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS	6,551	29,087
NET INCREASE IN CASH AND CASH EQUIVALENTS	154,705	677,393
CASH AND CASH EQUIVALENTS - beginning of period	1,152,607	947,177
CASH AND CASH EQUIVALENTS - end of period	1,307,312	1,624,570
Cash paid for:
Interest	160,396	62,528
Income taxes	777,646	2,105,018
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Series A preferred converted to common shares	13,198	936
Common stock issued for future service	$ 54,880	$ 113,317

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Land Use Rights

6 Months Ended

Jun. 30, 2012

Land Use Rights [Abstract]

LAND USE RIGHTS

NOTE 5 – LAND USE RIGHTS

There is no private ownership of land in China. Land is owned by the government and the government grants land use rights for specified terms. The Company’s land use rights have terms of 45 and 50 years and expire on January 1, 2053 and October 30, 2053. The Company amortizes the land use rights over the term of the respective land use right. For the six months ended June 30, 2012 and 2011, amortization of land use rights amounted to $46,727 and $45,138, respectively. For the three months ended June 30, 2012 and 2011, amortization of land use rights amounted to $23,344 and $22,710, respectively. At June 30, 2012 and December 31, 2011, land use rights consisted of the following:

	Useful Life	June 30, 2012			December 31, 2011
Land use rights	45 - 50 years	$	4,272,480		$	4,242,273
Less: accumulated amortization			(471,510	)		(421,737	)
		$	3,800,970		$	3,820,536

Amortization of land use rights attributable to future periods is as follows:

Twelve-month periods ending June 30:
2013	$	93,539
2014		93,539
2015		93,539
2016		93,539
2017		93,539
Thereafter		3,333,275
	$	3,800,970

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Concentrations (Details) (Purchase [Member])	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Supplier A [Member]
Concentration of purchases from suppliers
Concentration risk supplier, Percentage	22.00%
Concentration risk, Supplier		Less than 10
Supplier B [Member]
Concentration of purchases from suppliers
Concentration risk supplier, Percentage	20.00%
Concentration risk, Supplier		Less than 10
Supplier C [Member]
Concentration of purchases from suppliers
Concentration risk supplier, Percentage		17.00%
Concentration risk, Supplier	Less than 10
Supplier D [Member]
Concentration of purchases from suppliers
Concentration risk supplier, Percentage	18.00%	14.00%
Supplier E [Member]
Concentration of purchases from suppliers
Concentration risk supplier, Percentage		12.00%
Concentration risk, Supplier	Less than 10
Supplier F [Member]
Concentration of purchases from suppliers
Concentration risk supplier, Percentage		11.00%
Concentration risk, Supplier	Less than 10

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Short-Term Bank Loans (Tables)

6 Months Ended

Jun. 30, 2012

Debt Disclosure [Abstract]

Schedule of short-term bank loans

	June 30, 2012		December 31, 2011
Loan from Agricultural and Commercial Bank, due on March 30, 2012 with annual interest at December 31, 2011 of 7.88%, secured by certain assets of the Company and repaid on due date.	$	-	$	628,466
Loan from China Merchants Bank, due on May 20, 2012 with annual interest rate of 6.73% at March 31, 2012 and December 31, 2011, respectively, and repaid on due date.		-		471,350
Loan from China Merchants Bank, due on November 17, 2012 with annual interest rate being adjusted quarterly based on 130% of People’s Bank of China’s base rate.		474,706		-
Loan from Agricultural and Commercial Bank, due on October 10, 2012 with annual interest rate of 5.75% at June 30, 2012 and December 31, 2011, respectively, secured by certain assets of the Company.		474,706		471,350
Loan from Bank of Communications, due on May 14, 2012 with annual interest rate being adjusted quarterly based on 120% of People’s Bank of China’s base rate, and repaid on due date.		-		471,350
Loan from Bank of Communications, due on November 14, 2012 with annual interest rate of 7.32% at June 30, 2012.		474,706		-
Loan from Bank of Communications, due on May 23, 2012 with annual interest rate being adjusted quarterly based on 120% of People’s Bank of China’s base rate, and repaid on due date.		-		314,233
Loan from Bank of Communications, due on November 21, 2012 with annual interest rate of 7.32% at June 30, 2012.		316,471		-
Loan from Bank of China, due on January 16, 2013 with annual interest rate of 7.35% at June 30, 2012 and secured by certain assets of the Company.		949,412		-
Total short-term bank loans	$	2,690,001	$	2,356,749

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Accounts Receivable (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Components of accounts receivable
Accounts receivable	$ 10,602,165	$ 9,706,566
Less: allowance for doubtful accounts	(2,590,581)	(2,618,608)
Accounts receivable, net	$ 8,011,584	$ 7,087,958

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Subsequent Events

6 Months Ended

Jun. 30, 2012

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 15 – SUBSEQUENT EVENTS

On August 7, 2012, following the approval by the Company’s stockholders on July 20, 2012, the Company was converted from a Delaware corporation to a Nevada corporation.  In connection with the conversion, the shares of preferred stock that had been designated as series A convertible preferred stock ceased to be a separate series of preferred stock and because shares of preferred stock without designation as to series.  At the time of the conversion, there were no share of series A preferred stock outstanding and the Company had no obligation to issue any such shares.