COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2012

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 12 – COMMITMENTS AND CONTINGENCIES

Economic environment - Substantially all of the Company's operations are conducted in the PRC, and therefore the Company is subject to special considerations and significant risks not typically associated with companies operating in the United States of America. These risks include, among others, the political, economic and legal environments and fluctuations in the foreign currency exchange rate. The Company's results from operations may be adversely affected by changes in the political and social conditions in the PRC, and 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. The unfavorable changes in global macroeconomic factors may also adversely affect the Company’s operations.

In addition, all of the Company's revenue is denominated in the PRC's currency of Renminbi (RMB), which must be converted into other currencies before remittance out of the PRC. Both the conversion of RMB into foreign currencies and the remittance of foreign currencies abroad require approval of the PRC government.

Contractual Commitments – The Company entered into purchase and construction agreements during the year ended December 31, 2012 in connection with the construction of a new facility and required manufacturing improvements.  Under these agreements, the Company made payments in the amount of $3,110,319 during the year ended December 31, 2012. These payments are classified as construction in progress on the accompanying balance sheet at December 31, 2012. Future minimum commitments under the agreements are as follows:

For the Years Ending December 31:
2013	$ 13,133,498
2014	968,860
Total	$ 14,102,358