PROPERTY, PLANT AND EQUIPMENT UNDER CAPITAL LEASES, NET

6 Months Ended

Jun. 30, 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:

	June 30, 2012			December 31, 2011
At cost:
Buildings	$	130,111		$	130,605
Plant and machinery		2,467,099			2,476,460
Total		2,597,210			2,607,065
Less: Accumulated depreciation and amortization		(441,139	)		(270,145	)
Net book value	$	2,156,071		$	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 periods ended June 30, 2012 and 2011, depreciation and amortization expense totaled $86,247 and $92,954, respectively, which was recorded as cost of net revenue. During the six-month periods ended June 30, 2012 and 2011, depreciation and amortization expense totaled $172,489 and $92,954, respectively, which was recorded as cost of net revenue.