Note 9 - Statutory Reserve and Development Fund

6 Months Ended

Jun. 30, 2012

Schedule of Dividend Payment Restrictions [Table Text Block]

Note 9 – Statutory Reserve and Development Fund

As stipulated by the Company Law of the PRC, net income after taxation can only be distributed as dividends after appropriation has been made for the following:

Making up cumulative prior years’ losses, if any;

ii.

Allocations to the “statutory surplus reserve” of at least 10% of income after tax, as determined under PRC accounting rules and regulations, until the fund amounts to 50% of the Company’s registered capital;

iii.

Allocations of 5-10% of income after tax, as determined under PRC accounting rules and regulations, to the Company’s “statutory common welfare fund,” which is established for the purpose of providing employee facilities and other collective benefits to the Company’s employees; and

iv.

Allocations to the discretionary surplus reserve, if approved in the stockholders’ general meeting. The Company allocates 5% of income after tax as development fund. The fund is for enlarging the Company’s business and increasing capital.

Pursuant to the new Corporate Law effective on January 1, 2006, there is now only one “statutory surplus reserve” requirement. The reserve is 10% of income after tax, not to exceed 50% of registered capital.

The Company appropriated $1,467,177 and $1,449,408 as reserve for the statutory surplus reserve, $733,588 and $724,704 as reserve for development fund, for the six months ended June 30, 2012 and 2011respectively. The Company appropriated $639,217 and $814,343 as reserve for the statutory surplus reserve, and $319,608 and $407,171 as reserve for development fund, for the three months ended June 30, 2012 and 2011.