CERTAIN RISKS AND CONCENTRATION

9 Months Ended

Sep. 30, 2012

Certain Risks and Concentration [Abstract]

CERTAIN RISKS AND CONCENTRATION

NOTE 20 CERTAIN RISKS AND CONCENTRATION

Credit risk and major customers

As of September 30, 2012 and December 31, 2011, substantially all of the Company’s cash including cash on hand and deposits in accounts were maintained within the PRC where there is currently no rule or regulation in place for obligatory insurance to cover bank deposits in the event of a bank’s failure. However, the Company has not experienced any such losses and believes it is not exposed to any significant risks on its cash in bank accounts.

For the nine months ended September 30, 2012 and 2011, all of the Company’s sales were generated in the PRC.  In addition, all accounts receivable as of September 30, 2012 and December 31, 2011 were due from customers located in the PRC.

Two customers accounted for 29.4% and 12.5% of the Company’s revenue for the nine months ended September 30, 2012, respectively, and three customers accounted for 24.9%, 12.2% and 10.4% of the Company’s revenue for the nine months ended September 30, 2011, respectively. There was no other single customer who accounted for more than 10% of the Company’s revenue for the nine months ended September 30, 2012 or 2011.

Two customers accounted for 34.7% and 14.7% of the Company’s revenue for the three months ended September 30, 2012, respectively, and one customer accounted for 34.1% of the Company’s revenue for the three months ended September 30, 2011. There was no other single customer who accounted for more than 10% of the Company’s revenue for the three months ended September 30, 2012 or 2011.

Two customers accounted for 45.3% and 11.6% of total accounts receivable of the Company as of September 30, 2012, respectively, and one customer accounted for 33.6% of total accounts receivable of the Company as of December 31, 2011. There was no other single customer who accounted for 10% or more of the Company’s accounts receivable as of September 30, 2012 and December 31, 2011.

Risk arising from operations in foreign countries

Substantially all of the Company’s operations are conducted in China. The Company’s operations are subject to various political, economic, and other risks and uncertainties inherent in China. Among other risks, the Company’s operations are subject to the risks of restrictions on transfer of funds; export duties, quotas, and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; and political conditions and governmental regulations.