Well, at least they're getting their books right (and taking all the pain) this quarter, so that going forward they'll be in better shape...
For the year ended December 31, 2010, a one-time loss on impairment of property and equipment amounted to $6,762,659 (ouch!) as compared to $1,719,884 for the year ended December 31, 2009, an increase of $5,042,775 or 293.2%. We purchased 1,000 MU (approximately 667,000 square meters) of land in Inner Mongolia in 2008. We had originally intended to build a pharmaceutical manufacturing and storage facility on a portion of the property. The construction began in August 2008 and stopped because priority of capital expenditure was given to the need to build the new building complex in Beijing as the relevant land was upgraded to industrial use in 2009. In March 2010, we began construction on a facility in Beijing after receiving permission from the Beijing Chaoyang District Planning Bureau. The new building will house our Research and Development center, manufacturing operations, storage facilities, sales and administrative offices and employee apartments. The building will become our new corporate headquarters following its completion and management expects to move into the building by the end of fiscal 2011. Our management currently believes it is probable that we will not move forward with the construction of our planned facility in Inner Mongolia in order to focus our efforts and resources on expanding our core business in Beijing. Therefore, we recorded an impairment loss on the entire construction-in-progress which is located in Inner Mongolia of $6,762,659 in fiscal 2010. We recorded an impairment loss on property and equipment of $1,719,884 to recognize the portion of a Beijing En Ze Jia Shi building that was demolished in order to construct our new building in fiscal 2009.
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