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Commitments | 6 Months Ended
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Jun. 30, 2012
Commitments | 19. COMMITMENTS Lease Commitment On March 5, 2010, Xi’an TCH leased its office under a two year operating lease that expired on March 4, 2012. The monthly rental payment was $16,360. For the six months ended June 30, 2012 and 2011, the rental expense was $100,507 and $99,191; for the three months ended June 30, 2012 and 2011, the rental expense was $50,250 and $50,250, respectively. As of June 30, 2012, the Company renewed the lease for one year with the monthly payment increased by 8% since March 2012. ShangHai TCH entered into a one-year renewable rental agreement to lease a virtual office effective April 1, 2011. The monthly payment is $260. For the six months ended June 30, 2012 and 2011, the rental expense was $1,609 and $780; for the three months ended June 30, 2012 and 2011, the rental expense was $809 and $780. The lease will be automatically renewed when expires. Future minimum rental payments required under operating leases as of June 30, 2012 of $215,000 for 2013. Erdos Phase III of Power Generation Projects In April 2009, Erdos TCH signed a contract with Erdos Metallurgy to recycle heat from groups of furnaces of Erdos Metallurgy’s metal refining plants to generate power and steam, to be sold back to Erdos Metallurgy. According to the contract, Erdos TCH will install a group of power generation projects with a total of 70MW power capacity, which may grow up to 120MW, and 30-ton steam per hour, with an estimated total investment in excess of $79 million (RMB 500 million). The Company split the construction of the projects into three phases, two units of power generation in Phase I with a total of 18MW power capacity, three units in Phase II with a total of 27MW power capacity and one unit in Phase III with 25MW power capacity. For each phase of the project, the lease term is 20 years starting from the date of completion of the phase. During the lease term, Erdos TCH will be responsible for operating the projects and charge Erdos Metallurgy for supply of electricity and steam. Erdos Metallurgy agreed to pay a minimum of $0.22 million (RMB 1.5 million) per month for each 9MW capacity power generation system. During the first quarter of 2010, Erdos power generation system Phase I project was completed and put into operation. During the fourth quarter of 2010 and first quarter of 2011, three 9MW power generation systems of Phase II were completed and put into operation. Erdos TCH outsourced to an independent third party the operation and maintenance of the power generation system for $922,000 (RMB 6.27 million) per year for each system. After 20 years, the systems will be transferred to Erdos without any charge. As of June 30, 2012, the projects of Erdos Phase III are under construction and the Company paid $19.72 million for Phase III of the Erdos TCH power generation system projects. As of June 30, 2012, the Company is committed to pay an additional $8.74 million for the Phase III projects, excluding quality deposits of $120,000 paid by the Company in 2011. In October 2011, the Company temporarily suspended construction of the 25 MW plant due to the technical transformation and renovation of certain equipment and machinery by the customer; the Company expects to resume the construction of Erdos Phase III in second half of 2012. The Company currently expects to complete Phase III by the end of 2012. Shannxi Datong Coal Group Power Generation Projects In February 2011, Xi’an TCH signed a contract with Shannxi Datong Coal Group Steel Ltd Co (the “Shannxi Datong”) to recycle gas and steam from groups of blast-furnaces and converter of Shannxi Datong’s metal refining plants to generate power. According to the contract, Xi’an TCH will install two 3MW TRT, one 15MW WGPG and two 1MW steam power generation systems, with a total of 23MW power capacity for an estimated total investment of $27.45 million (RMB 180 million). The lease term is 30 years. During the lease term, Shannxi Datong will be responsible for operating the projects and pay service fee to Xi’an TCH. The service fee is based on an average of 8,000 electricity-generating hours per year and $0.05 (RMB 0.33) per kilowatt hour (“Kwh”) for the first 5 years from the completion of each power generation station. For each of the leases, at the 6th year, 11th year and 21st year thereafter, the rate will be RMB 0.3 Kwh, 0.27 Kwh and 0.25 Kwh, respectively. After 30 years, the units will be transferred to Shannxi Datong without any charge. On February 28,2011, Xi’an TCH entered into an agreement with Xi’an Huaxin Energy Tech Co., Ltd (the contractor for construction) for Shannxi Datong Coal projects of two 3MW TRT and one 15 MW WGPG systems described above. The project is scheduled to complete in 12 months from construction commencement. As of June 30, 2012, the Company had paid $12.83 million for Shannxi Datong Coal Group Power Generation project. As of June 30, 2012, the Company is committed to pay an additional $15.63 million for the Shannxi Datong Coal Group Power Generation project. This project was previously halted due to business reorganization of Shannxi Datong and a renegotiation of one of the power stations with Xi’an TCH to amend certain construction plans. The Company resumed the construction in April 2012 and expects to complete this project by the end of 2012.

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- Definition The entire disclosure for significant arrangements with third parties, which includes operating lease arrangements and arrangements in which the entity has agreed to expend funds to procure goods or services, or has agreed to commit resources to supply goods or services, and operating lease arrangements. Descriptions may include identification of the specific goods and services, period of time covered, minimum quantities and amounts, and cancellation rights. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 17 -Article 9 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 210 -Section S99 -Paragraph 1 -Subparagraph (SX 210.9-03.17) -URI http://asc.fasb.org/extlink&oid=6876686&loc=d3e534808-122878 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.25) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 210 -Section S99 -Paragraph 1 -Subparagraph (SX 210.7-03.(a)(19)) -URI http://asc.fasb.org/extlink&oid=6879938&loc=d3e572229-122910 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 25 -Article 5 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 19 -Article 7 + Details
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