INCOME TAXES (Tables)

6 Months Ended

Jun. 30, 2012

Provision for Income Tax

The Company’s provision for income taxes consisted of:

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2012		2011		2012			2011
PRC income tax:
Current	$	4,676,545	$	4,581,443	$	9,133,507		$	8,533,952
Deferred		173,064		10,004		(6,552	)		(19,351	)
	$	4,849,609	$	4,591,447	$	9,126,955		$	8,514,601

Reconciliation of Provision For Income Taxes Determined at Local Income Tax Rate to Effective Income Tax Rate

A reconciliation of the provision for income taxes determined at the local income tax rate to the Company’s effective income tax rate is as follows:

	For the Three Months						For the Six Months
	Ended June 30,						Ended June 30,
	2012			2011			2012			2011
Pre-tax income	$	18,296,275		$	18,957,523		$	34,048,633		$	35,392,663
United States federal corporate income tax rate		34	%		34	%		34	%		34	%
Income tax computed at United States statutory corporate income tax rate		6,220,733			6,445,557			11,576,535			12,033,505
Reconciling items:
Loss not recognized as deferred tax assets		257,658			196,876			600,187			425,909
Non-deductible expenses (income)		81,674			(57,581	)		74,444			-
Change in fair value of warrants		14,960			(409,933	)		136,241			(898,113	)
Rate differential for PRC earnings		(1,724,138	)		(1,645,697	)		(3,267,003	)		(3,055,799	)
Other		(1,278	)		62,225			6,551			9,099
Effective tax expense	$	4,849,609		$	4,591,447		$	9,126,955		$	8,514,601

Significant Components of Deferred Income Tax Assets

Significant components of deferred income tax assets are as follows:

	June 30,			December 31,
	2012			2011
Deferred income tax assets:
Net operating loss carry forward	$	4,231,319		$	3,631,132
Unrealized intercompany profit in inventory		19,626			13,142
Accrued R&D expenses		-			187,446
Less: Valuation allowance		(4,231,319	)		(3,631,132	)
	$	19,626		$	200,588