Note 13 - Stockholders' Equity

3 Months Ended

Jun. 30, 2012

Note 13 - Stockholders' Equity:

Note 13 - Stockholders' Equity

 NOTE 13 – STOCKHOLDERS’ EQUITY

A. Share based payments

In April 2012, 51,282 shares of restricted common stock were issued at $0.16 per share, the fair value of the shares at the issuance date, to the Company’s independent director as compensation for his services from April 2011 to October 2012, which was valued at $8,205 and expensed as a part of general and administrative expenses.

In April 2012, 2,000,000 shares of restricted common stock were issued at $0.16 per share, the fair value of the shares at the issuance date, to the Company’s Chief Engineer as compensation for his role in  the development of a flame retardant agent, which is expected to make a major contribution to the Registrant’s revenues in the future. It was expensed as R&D expense in the quarter in which the stock was granted.

In November, 2011, 51,282 shares of restricted common stock were issued at $0.39 per share, the fair value of the shares at the issuance date, to the Company’s independent director as compensation for his services from October 2011 to March 2012, which was valued at $20,000 and expensed as a part of general and administrative expenses.

In November, 2011, 30,000 shares of restricted common stock were issued as part of the July 2011 settlement agreement with investors for not reaching the net income target. No fair value is used because the issuance of stock is treated as reallocation of proceeds on the common stock issued on private placement.

In November, 2011, 1,650,636 shares of restricted common stock were issued to Mr. Pu Fachun for the acquisition of all minority interests in the Company’s subsidiaries.

On September 6, 2011, the Company entered into an agreement with Pu Fachun and four other individuals who had loaned a total of $1,869,906 to the Company at various times between July 2008 and July 2011.  Pursuant to the agreement, the Company satisfied the debts in full by issuing shares of its common stock valued at $.60 per share. In November 2011, 3,116,510 shares of restricted common stock were issued to satisfy this debt.

B: Earnings Per Share

The following is a reconciliation of the basic and diluted earnings (loss) per share computations for the nine months ended June 30:

	2012			2011
Net income (loss) for basic earnings (loss) per share	$	(1,155,412	)	$	2,992,243
Weighted average shares used in basic computation		35,860,647			31,058,716
Earnings (loss) per share: Basic	$	(0.03	)	$	0.10

	2012			2011
Net income (loss) for diluted earnings (loss) per share	$	(1,155,412	)	$	2,992,243
Weighted average shares used in basic computation		35,860,647			31,058,716
Dilutive effect of warrants		-			-
Weighted average shares used in diluted computation		35,860,647			31,058,716
Earnings(loss) per share: Diluted	$	(0.03	)	$	0.10

For the three and nine months ended June 30 2012, a total of 4,000,000 warrants have not been included in the calculation of diluted earnings per share in order to avoid any anti-dilutive effect.

 C. Option exercise

In April 2012, 800,000 options were exercised at exercise price of $0.1 per share. 800,000 shares of common stock issued accordingly. As of June 30, 2012, there is no option outstanding.