PROPERTY, PLANT AND EQUIPMENT UNDER CAPITAL LEASES, NET

3 Months Ended

Mar. 31, 2012

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:

	March 31, 2012			December 31, 2011
At cost:
Buildings	$	130,736		$	130,605
Plant and machinery		2,478,957			2,476,460
Total		2,609,693			2,607,065
Less: Accumulated depreciation and amortization		(356,838	)		(270,145	)
Net book value	$	2,252,855		$	2,336,920

The above buildings erected on parcels of land located in Shouguang, 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 period ended March 31, 2012, depreciation and amortization expense totaled $86,242, which was recorded as cost of net revenue. No depreciation and amortization expense was recorded during the three-month period ended March 31, 2011 as the reconstruction and renovation work of the above mentioned property, plant and equipment was completed in late March 2011.