NOTE 8 – BANKER'S ACCEPTANCE NOTES PAYABLE

In April 2016 the Company entered into a "Banker's Acceptance Note Agreement" with a bank.  Pursuant to the terms of the agreement, the Company can issue banker's acceptance notes (the "Banker's Notes") to any third party as payment of amounts owing to that third party.  The Company is required to deposit with the bank an amount equal to the amounts represented by the Banker's Notes issued to the third parties. The amount of these deposited balances is shown as "Restricted cash" on the accompanying balance sheet as of June 30, 2016. The maximum amount that the Company can issue under this agreement is limited to the lesser of RMB 30,000,000 (approximately $4.5 million) or the amount of cash available to deposit against the Banker's Notes.  In addition, the Agreement calls for the payment of fees equal to 0.05% of the note amount.  During the second quarter of 2016, the Company issued Banker's Notes in the amount of $1,253,579.