FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2012

FAIR VALUE MEASUREMENTS [Text Block]

NOTE 12– FAIR VALUE MEASUREMENTS

Management used the following methods and assumptions to estimate the fair value of financial instruments at the relevant balance sheet dates:

• Short-term financial instruments (including cash, short-term investment, accounts receivables, other receivables, short-term bank loans, accounts payable, other payables and accrued expenses, and amount due to related parties) – The carrying amounts of the short-term financial instruments approximate their fair values because of the short maturity of these instruments.

• Long-term other payable – The fair value of the Company’s long-term other payable is estimated by discounting future cash flows using current market interest rates offered to the Company and its subsidiaries for debts with substantially the same characteristics and maturities. The carrying amounts of long-term payable approximate their fair values.

• Derivative liabilities (the warrants) – The estimated fair values were determined by using Binominal Option Pricing Model with Level 2 inputs. The following table sets forth, by level within the fair value hierarchy, the Company’s financial instruments that were measured at fair value on a recurring basis as of December 31, 2011.

				Fair Value Measurements Using:
				Quoted Prices
				in Active Markets		Significant
				for Identical		Other		Significant
				Financial Assets		Observable		Unobservable
				and Liabilities		Inputs		Inputs
December 31, 2011		Total		Level 1		Level 2		Level 3
Liabilities at fair value:
Derivative liabilities—Warrants	$	5,410,419	$	-	$	5,410,419	$	-