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NONCONTROLLING INTEREST | 9 Months Ended
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Sep. 30, 2012
NONCONTROLLING INTEREST [Abstract] |
NONCONTROLLING INTEREST | 10. NONCONTROLLING INTEREST "Non-controlling interest" was a 7% equity interest of Erdos TCH owned by Erdos Metallurgy Co., Ltd. According to Xi'an TCH and Erdos' agreement on profit distribution, Xi'an TCH and Erdos will receive 80% and 20% of the profit from the JV, respectively, until Xi'an TCH has received the complete return of its investment. Xi'an TCH and Erdos will then receive 60% and 40% of the profit from the JV, respectively. As of September 30, 2012, the total registered capital of Erdos TCH is $17.55 million (RMB 120,000,000), of which, $16.37 million (RMB 112 million) was contributed by Xi'an TCH, and $1.18 million (RMB 8 million) was from Erdos. Erdos TCH engages in a business similar to that of Xi'an TCH. Erdos TCH allocates its income to Xi'an TCH and Erdos at a proportion of 80% and 20% based on net income calculated under Chinese GAAP. The main difference between US GAAP and Chinese GAAP with respect to Erdos TCH is that the Erdos agreement is treated as a sales-type lease under US GAAP and as an operating lease under Chinese GAAP. The following is an unaudited profit and loss statement of Erdos TCH, prepared under Chinese GAAP for the nine months ended September 30, 2012 and 2011 (note: Erdos TCH's US GAAP basis financial statements are part of the Company's consolidated financial statements discussed in Note 2 - Basis for Consolidation):
|  | 2012 |  |  | 2011 |
Net Revenue |  | $ | 11,342,830 |  |  | $ | 9,978,008 |
Cost of Revenue |  |  | (6,318,199 | ) |  |  | (5,726,613 | )
Gross Profit |  |  | 5,024,631 |  |  |  | 4,251,395 |
Operating expenses |  |  | 47,323 |  |  |  | 15,859 |
Income from operations |  |  | 4,977,308 |  |  |  | 4,235,536 |
Non-operating income (expense) |  |  | (10,102,762 | ) |  |  | 6,612 |
Income tax expense |  |  | (226,051 | ) |  |  | (1,060,537 | )
Net Income (loss) |  | $ | (5,351,505 | ) |  | $ | 3,181,611 |
The following is a reconciliation of net income per Chinese GAAP to net income per US GAAP for the nine months ended September 30, 2012 and 2011:
|  | 2012 |  |  | 2011 |
Net income (loss) per Chinese GAAP |  | $ | (5,351,505 | ) |  | $ | 3,181,611 |
Adjustments under US GAAP: |  |  |  |  |  |  |  |
Revenue per sales-type lease |  |  | (10,685,452 | ) |  |  | 1,684,857 |
Cost of revenue |  |  | 6,276,043 |  |  |  | (3,072,599 | )
Loss from operations |  |  | (4,409,409 | ) |  |  | (1,387,742 | )
Non-operating income |  |  | 5,569,320 |  |  |  | - |
Interest income |  |  | 3,550,695 |  |  |  | 2,758,928 |
Income before income tax |  |  | 4,710,606 |  |  |  | 1,371,187 |
Deferred income tax expense |  |  | (1,297,224 | ) |  |  | (696,444 | )
Net adjustments |  |  | 3,413,383 |  |  |  | 674,743 |
Net income per US GAAP |  | $ | (1,938,122 | ) |  | $ | 3,856,354 |
The following is an unaudited balance sheet of Erdos TCH, prepared under Chinese GAAP as of September 30, 2012 and December 31, 2011:
|  | 2012 |  |  | 2011 |
Assets |  |  |  |  |  |  |  |
Cash and equivalents |  | $ | 13,542 |  |  | $ | 78,243 |
Other current assets |  |  | 18,903,441 |  |  |  | - |
Property and equipment |  |  | 46,802,729 |  |  |  | 49,069,745 |
Construction in process |  |  | - |  |  |  | 23,481,662 |
Total Assets |  | $ | 65,719,712 |  |  | $ | 72,629,650 |
Liabilities |  |  |  |  |  |  |  |
Accounts payable |  | $ | 451,427 |  |  | $ | 442,080 |
Other current liabilities |  |  | 3,846,686 |  |  |  | 5,009,894 |
Long term loan |  |  | 41,752,090 |  |  |  | 42,017,808 |
Total liabilities |  |  | 46,050,203 |  |  |  | 47,469,782 |
Equity |  |  |  |  |  |  |  |
Paid in capital |  |  | 17,573,578 |  |  |  | 17,573,578 |
Statutory reserve |  |  | 570,094 |  |  |  | 570,094 |
Other comprehensive income |  |  | 1,575,160 |  |  |  | 1,714,014 |
Retained earnings |  |  | (49,323 | ) |  |  | 5,302,182 |
Total stockholders' equity |  |  | 19,669,509 |  |  |  | 25,159,868 |
Total liabilities and stockholders' equity |  | $ | 65,719,712 |  |  | $ | 72,629,650 |

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- Definition The entire disclosure for noncontrolling interest in consolidated subsidiaries, which could include the name of the subsidiary, the ownership percentage held by the parent, the ownership percentage held by the noncontrolling owners, the amount of the noncontrolling interest, the location of this amount on the balance sheet (when not reported separately), an explanation of the increase or decrease in the amount of the noncontrolling interest, the noncontrolling interest share of the net Income or Loss of the subsidiary, the location of this amount on the income statement (when not reported separately), the nature of the noncontrolling interest such as background information and terms, the amount of the noncontrolling interest represented by preferred stock, a description of the preferred stock, and the dividend requirements of the preferred stock. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.31) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=18733093&loc=SL4573702-111684 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 51 -Paragraph 38 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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