PROPERTY, PLANT AND EQUIPMENT, NET

3 Months Ended

Jun. 30, 2011

PropertyPlantAndEquipmentDisclosureTextBlock

5. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consisted of the following:

	June 30,, 2011		December 31, 2010
	(unaudited)

Building and improvements	$	37,065,203	$	36,067,404
Machinery and equipment		26,508,789		15,724,614
Motor Vehicles		998,355		919,471
		64,572,347		52,711,489
less: Accumulated Depreciation		(10,632,129)		(8,411,355)	)
Construction in Progress		53,567,972		13,152,109
Total property, plant and equipment, net	$	107,508,191	$	57,452,243

Depreciation expense for the three and six months ended June 30, 2011 was $1,035,742 and $2,019,970, respectively. Depreciation expense for the three and six months ended June 30, 2010 was $844,818 and $1,790,193, respectively. Depreciation expense included in cost of goods sold for the three and six months ended June 30, 2011 was $834,785 and $1,620,233, respectively. Depreciation expense included in cost of goods sold for the three and six months ended June 30, 2010 was $401,440 and $956,929, respectively.

Construction in progress represents direct costs of construction and design fees incurred for the Company’s new plant and equipment. Capitalization of these costs ceases and the construction in progress is transferred to plant and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided until it is completed and ready for its intended use. No interest has been capitalized in construction in process as of June 30, 2011 as the amount is insignificant.

In 2010 the Company entered into various agreements to purchase equipment and machinery in an effort to expand its production. In addition, in January 2011 the Company purchased a group of factories and the related land use right in Dongguan City for approximately $26 million, all of which except for approximate $2,723,000 was paid at that time. The Company expects to pay the remainder amount by the end of 2011. As of June 30, 2011, the entire purchase price was included in construction in progress because it is in the process of obtaining the title and related legal documents. The Company has not allocated the purchase price between buildings, machinery and the land use right because the fair value analysis necessary to determine the appropriate allocation has not been completed.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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