RESERVE FUNDS

12 Months Ended

Dec. 31, 2012

RESERVE FUNDS [Text Block]

14. RESERVE FUNDS

The Company’s subsidiary in PRC is required to maintain certain statutory reserves by appropriating from the profit after taxation in accordance with the relevant laws and regulations in the PRC and articles of association of the subsidiary before declaration or payment of dividends. The reserves form part of the equity of the Company.

The appropriation to the statutory surplus reserve and statutory common welfare fund reserve represent 10 percent and 5 percent of the profits after taxation, respectively. In accordance with the laws and regulations in the PRC, the appropriation to statutory reserve ceased when the balances of the reserve reach 50 percent of the registered capital of the Company.

In the years ended December 31 2012 and 2011, the Company’s PRC subsidiaries either incurred net loss or accumulated net loss after offset with prior year losses. Accordingly, they were not required to reserve additional statutory surplus and common welfare fund for the years ended December 31, 2012 and 2011. The reserve funds balance consisted of the following:

		As of December 31,
		2012		2011
Statutory Surplus Reserve	$	224,590	$	224,590
Statutory Common Welfare Fund Reserve		112,295		112,295
Total	$	336,885	$	336,885