NOTES PAYABLE

3 Months Ended

Mar. 31, 2015

NOTES PAYABLE [Text Block]

NOTE 17 – NOTES PAYABLE

By issuing bank notes payables rather than paying cash to suppliers, the Company can defer the payments until the date the bank notes payable are due. Simultaneously, the Company may need to deposit restricted cash in banks to back up the bank notes payable. The restricted cash deposited in banks will generate interest income.

Notes payable are summarized as follows:

		March 31, 2015	December 31, 2014
Bank acceptance notes:
Due April 30, 2015	$	4,076,907	4,062,729
Due May 4, 2015		829,732	826,847
Due June 2, 2015		815,381	812,545
Due July 8, 2015		3,587,678
Due July 21, 2015		815,381
Due July 23, 2015		1,630,763
Due July 30, 2015		652,305
	$	12,408,147	5,702,121

A bank acceptance note is a promised future payment or time draft, which is accepted and guaranteed by a bank and drawn on a deposit at the bank. The banker's acceptance specifies the amount of money, the date, and the person to which the payment is due.

After acceptance, the draft becomes an unconditional liability of the bank. But the holder of the draft can sell (exchange) it for cash at a discount to a buyer who is willing to wait until the maturity date for the funds in the deposit.

All of the bank acceptance notes do not bear interest, but are subject to bank charges of 0.05% of the principal as a commission on each transaction. Bank charges for notes payable were both $3,332 and $0 for the three months ended March 31, 2015 and 2014, respectively.

No restricted cash was held as collateral for the notes payable as of March 31, 2015 and December 31, 2014.