NOTE I - RELATED PARTY TRANSACTIONS
The Company had been financing its operations from loans from individuals, principally residents of China, who are deemed to be related parties because of their ownership interest in the Company (shareholders). The individuals have loaned the Company funds which are interest free, have no specific repayment date, and are unsecured. The funds received are evidenced by receipt of cash acknowledgments. As of March 31, 2012 and June 30 2011, funds borrowed to fund the current operations of the Company were $1,457,103 and $830,570, respectively. In accordance with FASB ASC 835-30, the Company has imputed an interest charge of $115,676 and $72,632 which has been recorded in the financial statements for the nine months ended March 31, 2012 and 2011, respectively.
As of March 31, 2012, and June 30, 2011, the Company had receivables from related parties aggregating $84,107 and $176,897, respectively. In 2011, the advances to company executives include approximately $137,000 to purchase machinery, equipments and raw materials. These balances were settled in July 2011 and excess funds were returned to the Company. In 2012, the advances were primarily for unsettled travel expenses.