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NOTES PAYABLE | 12 Months Ended
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Dec. 31, 2012
NOTES PAYABLE |
NOTES PAYABLE | NOTE 7 – NOTES PAYABLE On September 30, 2010, the Company entered into a revolving line of credit with a bank in the amount of RMB 25,000,000 (approximately $3.97 million). Advances on the line of credit were due one year from the date of the advance, with the note payable collateralized by certain land use rights and buildings. On October 26, 2011, the Company renewed the underlying note with the same bank. The note bears interest at a base rate equal to the PRC’s floating six-month to one year rate of 6.56% plus an additional 15% of the base rate, with a resulting rate of 7.54% at December 31, 2011. Advances on the line of credit were due one year from the date of the advance and collateralized by certain land use rights and buildings. The outstanding balance due under the revolving line of credit was RMB 25,000,000 ($3,931,745) at December 31, 2011. This amount was classified as a short-term notes payable in the accompanying consolidated balance sheet at December 31, 2011. On October 18, 2012, the Company fully paid the amount due under this line of credit and on October 26, 2012, it matured and was not renewed. On October 30, 2012, the Company entered into a new revolving line of credit with another bank in the amount of RMB 30,000,000. The related note payable bears interest at an annual rate of 6.90% (based upon 115% of the PRC government’s current short term rate of 6.00%). Advances on the line of credit are due one year from the date of the advance and are collateralized by certain land use rights, buildings and accounts receivable. The outstanding balance due under the revolving line of credit was RMB30,000,000 ($4,761,073) as of December 31, 2012. The Company has no additional amounts available to it under the line of credit. This amount has been classified as short-term notes payable in the accompanying consolidated balance sheet at December 31, 2012. Fair Value of Notes Payable – Based on the borrowing rates currently available to the Company for bank loans with similar terms and maturities, the carrying amounts of notes payable outstanding at December 31, 2012 and 2011 approximated their fair value because of the immediate or short-term maturity of these financial instruments or because the underlying instruments bear interest rates that approximated current market rates.

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