PROPERTY, PLANT AND EQUIPMENT UNDER CAPITAL LEASES, NET

6 Months Ended

Jun. 30, 2011

PROPERTY, PLANT AND EQUIPMENT UNDER CAPITAL LEASES, NET

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT UNDER CAPITAL LEASES, NET

Property, plant and equipment under capital leases, net consist of the following:

	June 30, 2011			December 31, 2010
At cost:
Buildings	$	127,157		$	-
Plant and machinery		3,094,127			-
Total		3,221,284			-

Less: Impairment		(683,046	)
Less: Accumulated depreciation and amortization		(93,371	)		-
Net book value	$	2,444,867		$	-

The above buildings erecting on parcels of land located in Shouguang, the PRC are collectively owned by local townships. The Company has not been able to obtain property ownership certificates over these buildings as the Company could not obtain land use rights certificates on the underlying parcels of land.

During the three-month and six-month periods ended June 30, 2011, depreciation and amortization expense totaled $92,954, which was recorded as cost of net revenue.

An impairment of $683,046 was made as of June 30, 2011 and included in write-off / impairment on property, plant and equipment.