NOTE 9 - CAPITAL LEASES AND COMMITMENTS

12 Months Ended

Dec. 31, 2012

Capital Leases in Financial Statements of Lessee Disclosure [Text Block]

NOTE 9 –CAPITAL LEASES AND COMMITMENTS

CAPITAL LEASES

The Company is currently leasing a factory from Zhongxi Zhengliu Dianlu Transformer Co., Ltd.  The term of the lease runs for a period of 24 years beginning January 1, 2005. The lease agreement contains ownership transfer terms at the end of the lease and calls for annual rent payments in the amount of approximately $3,164 for the year ending December 31, 2013 and annual rent payments are expected to increase every year by at least 10% until the expiration of the agreement.

As a result, approximately $150,747 (RMB 950,308) was recorded as leased assets on January 1, 2005 when the lease commenced based on the 10% discounted factor. The lease was classified as a capital lease since a majority of the useful life would be used by the Company. The net leased asset amount was $103,010 and $108,111 as of December 31, 2012 and 2011, respectively.

Future minimum lease payments as of December 31, 2012 are as follows based on the 10% discounted factor:

For the period ending December 31:
2013	$	3,164
2014		3,499
2015		3,870
2016		4,280
2017		4,734
Thereafter		100,236
Less Current Portion		(3,164	)
Long Term Portion	$	116,619

CAPITAL COMMITMENTS

As of December 31, 2012 and 2011, the Company had capital commitments to acquire land use right of $111,041 and $110,158, respectively.

OPERATING LEASE

The Company is committed to a lease for its office in Xi’an, PRC expiring on August 31, 2014. Minimum lease payments of $14,276 are required for the year ending December 31, 2013.