Property, Plant and Equipment

6 Months Ended

Nov. 30, 2011

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

8.  Property, Plant and Equipment

Plant and equipment consist of the following:

	November 30, 2011			May 31, 2011
Office trailers	$	851,479		$	798,993
Machinery and equipment		5,197,856			2,840,269
Machinery and equipment, capital lease		6,412,619			6,348,228
Motor vehicles		489,921			499,808
Motor vehicles, capital lease		285,090			279,854
Furniture and office equipment		635,576			601,619
Construction in progress		424,581			1,906,796
Total property, plant and equipment		14,297,122			13,275,567
Accumulated depreciation		(2,436,442	)		(2,685,392	)
Accumulated depreciation, capital lease		(1,966,995	)		(1,691,182	)
Net property, plant and equipment	$	9,893,685		$	8,898,993

Depreciation expense included in general and administrative expenses for the six months ended November 30, 2011 and 2010 was $169,615 and $104,983, respectively. Depreciation expense included in cost of sales for the six months ended November 30, 2011 and 2010 was $622,502 and $768,229, respectively.

Construction in progress represents direct costs of construction and design fees incurred for the Company’s new project in Tangshan. All construction costs associated with this project are accumulated and capitalized as construction in progress. The construction in progress is closed out to the appropriate asset classification when the project is substantially complete, occupied, or placed into service. No depreciation is provided until it is completed and ready for its intended use.

On February 28, 2010, we sold construction in progress in Tangshan to an unrelated third party at a price of approximately $3.8 million. The amount is due in 4 annual equal installments starting September 1, 2010. As of May 31, 2010, the book value of the construction in progress sold was approximately $3.3 million. A gain from property, plant and equipment disposal of $496,816 was recorded. Total other receivable for sales of Tangshan construction in progress was $2,928,369 and $2,874,586 as of November 30, 2011 and May 31, 2011, respectively.

After the Tangshan project was sold, construction in progress represents direct costs of construction and design fees incurred for the Company’s new location for the production facility in Beijing Daxing. Similar to the Tangshan project, all construction costs associated with this project are accumulated and capitalized as construction in progress. The construction in progress is closed out to the appropriate asset classification when the project is substantially complete, occupied, or placed into service. No depreciation is provided until it is completed and ready for its intended use.

Interest costs totaling $0 were capitalized into construction in progress for the six months ended November 30, 2011 and 2010.