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font-size: 10pt;"><b>NOTE 1 &#8211; ORGANIZATION AND DESCRIPTION OF BUSINESS</b></font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0pt; text-align: left; text-indent: 36pt;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">&#160;</font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0pt; text-align: left;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Fuling Global Inc. 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This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. 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The statute of limitations for the Company&#8217;s U.S. federal income tax returns and certain state income tax returns subject to examination by tax authorities for three years from the date of filing. 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Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income included in statement of changes in equity. 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This loan had been repaid upon maturity.</font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0pt; text-align: justify;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">&#160;</font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0pt 0pt 0pt 0.25in; text-align: left;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">In April 2016, Great Plastics entered into a loan agreement with CITIC for $719,966 for six months, bearing a variable interest rate based on the prevailing interest rate set by the People&#8217;s Bank of China at the time of borrowing, minus 90 base points. 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The construction is expected to be completed in 2017 with a total value around $13.0 million. 2040100 2027918 7117 5065 9846288 9834218 6652 5418 261836 398802 197843 197735 197046 197046 196848 8460968 39361 161019 55131750 8300000 2003400 768129 1321990 102117 86808 88339 89898 91484 93098 473652 0.0506 0.068 0.0706 0.064 0.0558 0.0514 0.0113 0.0142 0.0156 0.0557 0.0598 0.051 0.0592 0.05 0.0544 0.0508 0.0641 0.05 0.059 0.0641 0.035 0.05 1232343 6500000 1000000 1151946 1250000 593000 1250000 719966 647970 575973 575973 647970 937600 791963 5759730 719966 503976 5759730 P12M P1Y P6M P12M P6M P6M P6M P6M P6M P1Y P4M P1Y P5M P1Y P3M P12M P6M P12M P1Y P3M P10M P5M P5M P4M P6M P5M P12M P5M P5M P12M P6M P6M P12M P12M P12M P6M P12M The loans bear a variable interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 30 basis points. The loans bear a variable interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 30 basis points. The loan bears interest rate that equals to China's one year loan prime rate, plus 29.25 base points. The loan bears a variable interest rate based on published six-month London Interbank Offered Rate ("LIBOR"), plus 60 basis points. The loans bear a variable interest rate based on the prevailing interest rate set by the People&#63;s Bank of China at the time of borrowing, plus 30 basis points. The loan bears a variable interest rate based on six-month of LIBOR, plus 60 basis points. The interest rate was equal to three-month LIBOR. fixed interest rates based on LIBOR (for loans dominated in USD) or prime loan rates issued by People's Bank of China (for loans dominated in RMB), plus certain base point. These loans bear a variable interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 30% of the prevailing interest rate. The prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 135.5 base points. The prevailing interest rate set by the People's Bank of China at the time of borrowing, minus 90 base points. The prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 161.6 base points. The prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 161.6 base points. The prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 161.6 base points. The prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 113.75 base points. These loans bear a variable interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 30% of the prevailing interest rate. The prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 70.25 base points. The loans bear a variable interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 30 basis points. The loan bears interest rate that equals to China's one year loan prime rate, plus 29.25 base points. The prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 70.25 base points. The prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 70.25 base points. 0.0660 0.0113 0.0233 0.0616 0.0457 0.050 0.0506 0.0288 0.30 0.050 0.0506 0.0175 0.0110 0.0609 575973 1720000 1499417 4378554 5236272 9084213 3950101 0 86808 2839783 2409055 430728 2556768 283315 345584 1564479 363390 1153444 1461632 0.30 1.00 2409055 1095136 Due various dates from January 17, 2016 to June 23, 2016 Due various dates from January 28, 2016 to June 29, 2016 Due various dates from March 28, 2017 to April 28, 2017 Due April8, 2017 and April 24, 2017 Due various dates from January 12, 2017 to June 29, 2017 Due various dates from February 5, 2017 to June 27, 2017 -2352510 -2387341 11743089 12360373 1761658 1710727 1761658 1710727 -319252 319252 0.340 0.340 -0.358 -0.337 0.250 0.250 -0.108 -0.136 -0.016 -0.017 0.031 0.095 0.015 0.009 0.154 0.204 163121 231733 1486000 3554000 0.15 2035-12-31 319252 625742 1.50 0.01 0.01 3767313 160923 3606390 1931076 1931076 1675314 3606390 3767299 26163022 723206 5022500 22998 159716 179100 1243810 Subsequently leased back the machinery for 24 months. On this transaction, which will be amortized over 24 months as an income. The minimum payments for the remaining lease term of 23 months from December 31, 2016 to November 3, 2018. 176133 1223203 0 14858 534241 534589 544891 555516 506315 1123033 3798585 384728 454233 5664249 6806580 2790000 0 55484 4000000 600000 5.00 5.00 38423 4038423 20192115 18594972 15667 12000 38 15705 8000 23088 123339 2584056 22979974 3315096 43119208 In February and July 2016, Great Plastics entered into a series of short-term bank loan agreements with ABC for $647,969 and $431,980, respectively. The terms of these loans are twelve months with variable interest rates based on the prevailing interest rates. The effective rates are from 5.0% to 5.06% per annum. The loans were guaranteed by the assets of a third party guaranty company and a shareholder of the Company. In January and May 2015, Great Plastics entered into two short-term bank loan agreements with ABC for twelve and six months, respectively. The loans bear a variable interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 30 basis points. The effective rates were 5.06% and 5.58% per annum, respectively. The loans were guaranteed by the assets of Great Plastics, a third party guaranty company and a shareholder of the Company. These loans had been repaid in full upon maturity. In February and March 2016, Taizhou Fuling entered into two loan agreements with CCB for total of $1.25 million for five and four months respectively. The loans bear fixed interest rate of 4.57% and 2.88%, respectively. These loans had been repaid in full upon maturity. In July 2015, Taizhou Fuling entered into a short term bank loan agreement with CCB for $1,232,343 for twelve months. The loan bears interest rate that equals to China's one year loan prime rate, plus 29.25 base points. The effective interest rate is 5.14% per annum. This loan had been repaid in full upon maturity. These loans are guaranteed by the Company's principal shareholders and Zhejiang Special Plastics Technology Co., Ltd. ("Special Plastics"), an affiliated company owned by a shareholder of the Company. In addition, the Company has pledged land use rights, properties and machinery equipment of Taizhou Fuling as collaterals for the loans outstanding as of December 31, 2016 and 2015. During 2016, Taizhou Fuling entered into a series of seven short-term bank loan agreements with CMB for five to twelve months. The interest rates ranged from 1.10% to 6.09% per annum. These loans had been repaid in full upon maturity. In October and December 2015, Taizhou Fuling entered into two short-term bank borrowing agreements for approximately $1.0 million (RMB 6.5 million) with CMB for six months. The loan bears a variable interest rate based on published six-month London Interbank Offered Rate ("LIBOR"), plus 60 basis points. The effective rates were 1.13% and 1.42% per annum, respectively. The loans are guaranteed by Special Plastics and Taizhou Fuling's general manager and Chair. These loans had been repaid upon maturity. In February 2016, Taizhou Fuling entered into a loan agreement with ICBC for $593,000 for five months, with fixed interest rate of 3.5%. This loan had been repaid upon maturity. In April 2016, Taizhou Fuling entered into a loan agreement with ICBC for $647,970 for five months, bearing a variable interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 161.6 base points. The effective rate was 5.92% per annum. This loan had been repaid upon maturity. In July 2016, Taizhou Fuling entered into two loan agreements with ICBC for $575,973 and $575,973 respectively for twelve and five months, bearing a variable interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 161.6 base points. The effective rate was 5.00% per annum. $575,973 of them had been repaid subsequently. In August 2016, Taizhou Fuling entered into a loan agreement with ICBC for $647,970 for five months, bearing a variable interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 113.75 base points. The effective rate was 5.44% per annum. In October 2016, Taizhou Fuling entered into a loan agreement with ICBC for $791,963 for twelve months, bearing a variable interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 70.25 base points. The effective rate was 5.00% per annum. In December 2016, Taizhou Fuling entered into two loan agreements with ICBC for $719,966 and $503,976 respectively for twelve and twelve months, bearing a variable interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 70.25 base points. The effective rate was 5.00% per annum. During 2015, Taizhou Fuling entered into a series of short-term bank borrowing agreements with ICBC. The terms of the loans are five months to one year, with fixed interest rates ranging from 2.33% to 6.16% per annum. These loans are guaranteed by the shareholders of Special Plastics, its shareholders and third party individuals. In addition, the Company has pledged the land use right and properties as collateral. During the year of 2015, Taizhou Fuling and Great Plastics, entered into a series of short-term bank borrowing agreements with CITIC. The terms of the loans are four to twelve months. The interest rate was equal to three-month LIBOR. The loans were fully repaid on March 17, 2016. In January 2016, Taizhou Fuling entered into loan agreement with CITIC for $1,151,946 for ten months, bearing a variable interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 135.5 base points. The effective rates were 5.57% per annum, respectively. The loan is guaranteed by Taizhou Fuling's general manager. This loan had been repaid upon maturity. In April 2016, Great Plastics entered into a loan agreement with CITIC for $719,966 for six months, bearing a variable interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, minus 90 base points. The effective rates were 5.1% per annum, respectively. The loan is guaranteed by Special Plastics, Taizhou Fuling's general manager and Chair of the Board. This loan had been repaid upon maturity. During the year in 2016 and the year ended December 31, 2015, Taizhou Fuling and Great Plastics entered into a series of short-term bank borrowing agreements and other financing agreements with BOC. The terms of the loans are three to twelve months, with fixed interest rates based on LIBOR (for loans dominated in USD) or prime loan rates issued by People's Bank of China (for loans dominated in RMB), plus certain base points. The effective interest rates vary from 1.56% to 5.9% per annum. The loans to Taizhou Fuling are guaranteed by Great Plastics and Taizhou Fuling's general manager. The loans to Great Plastics are guaranteed by Taizhou Fuling's general manager and Chair of the Board. In March 2016, Great Plastics entered into three short-term bank borrowing agreements with PAB with a total amount of $2,159,899 for six months. These loans bear a variable interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 30% of the prevailing interest rate. The effective rate is 5.98%. The loans are guaranteed by the assets of Great Plastics. These loans had been repaid upon maturity. In September 2016, Great Plastics entered into two short-term bank borrowing agreements with PAB with a total amount of $1,439,932 for six months. These loans bear a variable interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 30% of the prevailing interest rate. The effective rate is 5.08%. The loans are guaranteed by the assets of Great Plastics. In March 2015, Great Plastics entered into three short-term bank borrowing agreements with PAB with a total amount of $2,310,643 for six months to one year. The effective rates were 6.4%, 7.06% and 6.8% per annum, respectively. The loans were also guaranteed by the assets of Great Plastics. These loans had been repaid upon maturity. In October and December in 2016, Taizhou Fuling entered into two loan agreements with MTB for $5,759,730 respectively for six and six months. The effective rates were 6.41% per annum, respectively. The loan is guaranteed by Taizhou Fuling's general manager. Payables to Taizhou Fuling and Great Plastics are eliminated upon consolidation. Intercompany financing activities are eliminated upon consolidation. A total amount of $3,591,180 machinery was related to the sale leaseback transaction (see Note 11). According to PRC tax regulation, 150% of current year R&D expense approved by local tax authority could be deducted from taxable income. It represents expenses incurred by the Company that were not deductible for PRC income tax and income (loss) generated in countries with no income tax obligations.