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Prepayments and Other Receivables and Recoverable from Loan Guarantee

6 Months Ended

Mar. 31, 2013

Prepayments and Other Receivables and Recoverable from Loan Guarantee [Text Block]

5. Prepayments and Other Receivables and Recoverable from Loan Guarantee

(a) Prepayments and other receivables as of September 30, 2012 and March 31, 2013 consisted of the following:

		September 30,			March 31,
		2012			2013

Prepayments for raw materials and others	$	4,458,058		$	3,023,049
Staff advances		1,014,814			863,383
Obsolete asset disposal		1,005,409			1,018,059
Prepaid operating expenses		1,176,592			1,095,565
Advances to third parties		-			1,729,471
Advances to related parties		-			238,078
Value added taxes recoverable		1,263,544			1,093,391
Others		94,458			346,938
		9,012,875			9,407,934

Less: Allowance for doubtful accounts		(1,305,329	)		(1,317,278	)

	$	7,707,546		$	8,090,656

Advances to unrelated third parties were interest-free, unsecured and repayable on demand.

As of March 31, 2013 and September 30, 2012, the Company advances to three related companies with common shareholder of Mr Xianqian Li, the Company’s CEO. These loans to related companies were interest-free, unsecured and repayable on demand.

An analysis of the allowance for staff advances and obsolete asset disposal is as follows:

Balance at October 1, 2012	$	1,305,329
Recoveries for the period		(4,453	)
Foreign exchange adjustment		16,402

Balance at March 31, 2013	$	1,317,278

(b) Recoverable from loan guarantee

As further mentioned in Note 16 (iii), the Company has paid a defaulted payment in respect of the guarantee to Shenzhen Langjin Technology Co., Ltd (“Shenzhen Langjin”). As of March 31, 2013, the Company expected to recover at least $4.6 million from Shenzhen Langjin, of which $1,529,029 had been received. On April 28, 2013, the Company received a further indemnification amount of $3,135,685.