Major Customers

3 Months Ended

Sep. 30, 2011

Major Customers

Major Customers

NOTE 7.   MAJOR CUSTOMERS

On September 1, 2003, the Company signed an exclusive 17-year agreement with Harbin Municipal Urban Administrative Bureau (“HMUAB”) to dispose of approximately one-third of the city’s solid waste disposal. The contract will expire on August 30, 2020. The revenue from HMUAB accounted for 44% of the Company’s gross revenue for the nine months ended September 30, 2011 and 31% of the gross revenue for the nine months ended September 30, 2010.

In January 2010, the Company signed a PET bottle processing agreement and a consignment sales agreement with Harbin Dongxin Group (“Dongxin”). In accordance with the agreements, Dongxin is responsible for processing, packaging and selling the PET bottles sorted from the landfill or purchased by the Company. The Company pays a processing fee to Dongxin in return. Dongxin sells the processed PET bottles at an agreed price.  The Company fixes a minimum resale price, which Harbin Dongxin Group must collect and remit to the Company upon sale of the recycled PET.  Harbin Dongxin Group is entitled to retain any revenue it obtains from the resale in excess of the fixed minimum price.

In March 2010, the Company signed a plastic bottle cap processing and consignment sales agreements with Harbin Bin County Welfare Plastic Products Co., Ltd (“HBC”). In accordance with the agreements, HBC is responsible for processing the plastic bottle caps sorted from the landfill. The Company pays a processing fee to HBC in return. The processed plastic granules are sold by HBC at an agreed price.  The Company fixes a minimum resale price, which HBC must collect and remit to us upon sale of the granules.  HBC is entitled to retain any revenue it obtains from the resale in excess of the fixed minimum price.

In August 2011, the Company signed supplementary agreements with Dongxin and HBC.  The agreements were identical to those initially signed, except that the minimum prices to be paid to the Company for PET were increased.  

The following table presents sales from major customers with individual sales over 10% of total net revenue.

	Three months ended September 30,
	2011					2010
			% of Total Sales					% of Total Sales
HMUAB	$	1,343,009		62	%	$	1,221,208		26	%
Dongxin		519,428		24	%		3,024,663		65	%
HBC		311,370		14	%		413,323		9	%
Total	$	2,173,807		100	%	$	4,659,194		100	%

	Nine months ended September 30,
	2011					2010
			% of Total Sales					% of Total Sales
HMUAB	$	3,840,378		44	%	$	3,530,736		31	%
Dongxin		4,083,830		47	%		6,834,700		59	%
HBC		811,942		9	%		1,125,264		10	%
	$	8,736,150		100	%	$	11,490,700		100	%

 Accounts receivable related to HMUAB, Dongxin and HBC are as follows:

		September 30, 2011				December 31, 2010
		Accounts Receivables	% of Accounts Receivables			Accounts Receivables	% of Accounts Receivables
HMUAB	$	1,350,415	62	%	$	1,246,873	23	%
Dongxin		516,892	24	%		3,930,912	72	%
HBC		315,303	14	%		267,633	5	%
Total	$	2,182,611	100	%	$	5,445,418	100	%