SHORT-TERM LOAN

12 Months Ended

Dec. 31, 2012

SHORT-TERM LOAN [Text Block]

10. SHORT-TERM LOAN

The Company has a short-term loan of $1,505,880 and $1,509,398 (equivalent to RMB9.5 million) as of December 31, 2012 and 2011 from Changle Rural Credit Union, which is a bank located in Shandong Province of the PRC. The loan had an initial maturity date of August 20, 2012. The adjustable interest rate was a rate per annum equal to the Prime Rate plus 50% of prime rate. The prime rate is based on six-month-to-one-year loan interest rate released by The People's Bank of China. On September 4, 2012, the Company renewed this short-term loan with the same principal amount with Changle Rural Credit Union. The term of the renewal loan started from September 4, 2012 with a maturity date of September 2, 2013. The interest rate for the short-term loan was 11% per annum as of December 31, 2012. This short-term loan had been secured by the Company’s land use right and construction in progress of SD Chaoying with a book value of $3.2 million (equivalent to RMB20 million) and $4.4 million (equivalent to RMB28 million) as of December 31, 2012, respectively. For the $3.2 million land use rights, $2.5 million was classified under construction in progress for the commercial property and residential unit sites under construction, and the remaining $0.7 million for partial operation of the commercial property was classified under intangible assets subject to amortization.

Additionally, there was another short-term loan of $158,515 and $158,884 (equivalent to RMB1.0 million) from Fengguo Liu, an unrelated party as of December 31, 2012 and 2011.

The differences in the balances as of December 31, 2012 and 2011 were mainly due to change in foreign exchange rate.