these forward-looking statements include statements of management 's plans and objectives for our future operations and statements of future economic performance , information regarding our expansion and possible results from expansion , our expected growth , our capital budget and future capital requirements , the availability of funds and our ability to meet future capital needs , the realization of our deferred tax assets , and the assumptions described in this report underlying such forward-looking statements . actual results and developments could differ materially from those expressed in or implied by such statements due to a number of factors , including , without limitation , those described in the context of such forward-looking statements , our expansion and acquisition strategy , our ability to achieve operating efficiencies , industry pricing and technology trends , evolving industry standards , regulatory matters , general economic and business conditions , the strength and financial resources of our competitors , our ability to find and retain skilled personnel , the political and economic climate in which we conduct operations and the risk factors described from time to time in our other documents and reports filed with the securities and exchange commission ( the `` commission `` ) . additional factors that could cause actual results to differ materially from the forward-looking statements include , but are not limited to : 1 ) our ability to successfully develop , manufacture and deliver our products on a timely basis and in the prescribed condition ; 2 ) our ability to compete effectively with other companies in the same industry ; 3 ) our ability to raise sufficient capital in order to effectuate our business plan ; and 4 ) our ability to retain our key executives . critical accounting policies our discussion and analysis of our financial condition and results of operations are based on our financial statements , which have been prepared in accordance with u.s. generally accepted accounting principles . the preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods . on an on-going basis , we evaluate our estimates and judgments , including those related to revenue , receivable , inventory , and accrued expenses . we base our estimates on historical experience , known trends and events and various other factors that we believe to be reasonable under the circumstances , the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources . actual results may differ from these estimates under different assumptions or conditions . changes in estimates are recorded in the period in which they become known . we believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements . revenue recognition in accordance with the asc topic 605 , “ revenue recognition ” , the company recognizes revenue when persuasive evidence of an arrangement exists , transfer of title has occurred or services have been rendered , the selling price is fixed or determinable and collectability is reasonably assured . the company 's revenue is principally derived from three primary sources : sales of energy saving flow control equipment , provision of energy project management and sub-contracting services , and provision of energy-saving reconstruction projects . 35 ( a ) sale of products the company derives a majority of its revenues from the sale of energy saving flow control equipment . generally , the energy saving flow control equipment is manufactured and configured to customer requirements . the company typically produces the energy saving flow control equipment for customers during a period from one to six months . when the company completes the production in accordance with the customer 's specification , the customer is required to inspect the finished products for quality and suitability , to its full satisfaction , then the company makes delivery to the customer the company recognizes revenue from the sale of such finished products upon delivery to the customers , when the title and risk of loss are fully transferred to the customers . the company records its revenues , net of value added taxes ( “ vat ” ) . the company is subject to vat which is levied on the majority of the products at the rate of 17 % on the invoiced value of sales . as of december 31 , 2012 and 2011 , there were no refunds regarding our products . ( b ) service revenue service revenue is derived from energy-saving technical services , project management or sub-contracting services that are not an element of the arrangement for the sale of products . these services are generally billed on a time-cost plus basis , for the period of service which is generally from two to three months . revenue is recognized , net of business taxes when the service is rendered and accepted by the customers . ( c ) interest income interest income is recognized on a time apportionment basis , taking into account the principal amounts outstanding and the interest rates applicable . accounts receivable and allowance for doubtful accounts accounts receivable are recorded at the invoiced amount , do not bear interest and are due within the contractual payment terms , generally 30 to 90 days from shipment . credit is extended based on evaluation of a customer 's financial condition , the customer 's credit-worthiness and their payment history . accounts receivable outstanding longer than the contractual payment terms are considered past due . story_separator_special_tag sales and marketing expenses the total sales and marketing expenses were $ 196,033 and $ 101,586 , or 2.1 % and 0.68 % of total revenues , for the years ended december 31 , 2012 and 2011 , respectively . the increase in sales and marketing is due to the increase in exploring more business opportunities for the company . general and administrative expenses general and administrative expenses were $ 1,082,702 and $ 1,352,565 , or 11.68 % and 9.06 % of total revenue , for the year ended december 31 , 2012 and 2011 , respectively . the general and administrative expenses decreased by $ 269,863 or 19,95 % . the decrease in general and administrative expenses was primarily due to a decrease in legal and professional fees and investor relations fees . income from operations as a result of the foregoing , our income from operations was $ 2,717,928 or 18.21 % of total revenues , for the year ended december 31 , 2011 , as compared to $ 566,335 or 6.11 % of total revenues , for the year ended december 31 , 2012 , a decrease of $ 2,151,593 or 79.16 % . other income ( expenses ) for the year ended december 31 , 2012 , interest income was $ 33,002 as compared to $ 5,838 for the year ended december 31 , 2011 , an increase of $ 27,164 as compared to last year . in 2012 , interest expense was $ 468,031 , an increase of $ 92,258 as compared to $ 375,773 for the year ended december 31 , 2011. the increase of interest was due to the increase of financings derived from the commercial banks in china . i ncome tax expenses for the years ended december 31 , 2012 and 2011 , income tax expenses were $ 43,272 and $ 301,533 respectively . the decrease of income tax expenses was due to the decrease in taxable income . the new income tax rate was 25 % from 2012 onwards . as of december 31 , 2012 , the company 's operations in the united states of america incurred $ 2,662,958 of cumulative net operating losses , which can be carried forward to offset future taxable income . the net operating loss carry forwards begin to expire in 2032 , if unutilized . the company has provided for a full valuation allowance against the deferred tax assets of $ 905,046 on the expected future tax benefits from the net operating loss carried forwards as the management believes it is more likely than not that these assets will not be realized in the future . 42 net income as a result of the foregoing , we recorded net income of $ 88,034 , a 0.95 % profit margin on revenue for the year ended december 31 , 2012 , as compared to net income of $ 2,046,460 , a 13.71 % profit margin on revenues , for the year ended december 31 , 2011. the net income for the year ended december 31 , 2012 decreased by $ 1,958,426 , a decrease of 95.70 % , compared to the year ended december 31 , 2011. the decrease in net income was mainly due to the decrease in revenues . story_separator_special_tag serif ; margin : 0pt 0 ; text-align : justify `` > in march , 2012 , the company obtained a short-term bank borrowing of $ 1,562,061 ( equivalent to rmb10 , 000,000 ) from a commercial bank in china , with interest rate at 1.3 times of the bank of china benchmark lending rate , due 26 march 2013 , payable monthly , which is guaranteed by its vendor . this bank borrowing was repaid by $ 390,516 ( equivalent to rmb 2,500,000 ) in december , 2012. in december 2012 , the company obtained another short-term bank borrowing of $ 315,814 ( equivalent to rmb 2,500,000 ) , from a commercial bank in china , bank of jilin , due 30 june 2013 , with interest rate at 1.2 times of the bank of china benchmark lending rate , which is guaranteed by a guarantee company in shenyang city , the prc . in december , 2011 , the company obtained a bank note of $ 3,148,466 ( equivalent to rmb 20,000,000 ) from a commercial bank in china , bank of jilin , due 15 december 2012. only $ 2,533,156 ( equivalent to rmb 16,350,000 ) was drawn down in 2011 , payable quarterly , with interest rate at 1.4 times of the bank of china benchmark lending rate . the remaining $ 565,505 ( equivalent to rmb 3,650,000 ) was drawn down in 2012. this is guaranteed by mr. gang li and a guarantee company in shenyang city , the prc . this bank borrowing was repaid fully in 15 december , 2012. in november 2011 , the company obtained a bank note of $ 3,148,466 ( equivalent to rmb 20,000,000 ) from a commercial bank in china , bank of liaoyang , due may 2012. this was collateralized by restricted cash of $ 1,574,233 ( equivalent to rmb 10,000,000 ) and guaranteed by a third party . the bank note was issued to settle the accounts payable and there was no cash proceeds for the bank note . this bank borrowing was repaid in may 2012 . 45 in august 2012 , the company obtained a bank note of $ 1,578,205 ( equivalent to rmb 10,000,000 ) from a commercial bank in china , bank of liaoyang , due february 2012. this was collateralized by restricted cash of $ 789,102 ( equivalent to rmb 5,000,000 ) and guaranteed by a third party . the bank note was issued to settle the accounts payable and there was no cash proceeds for the bank note . as of december 31 , 2011 , the amount due to a related party of $ 431,682 represented a temporary advance made by

liquidity and capital resources operating activities for the year ended december 31 , 2012 , net cash provided by operating activities was $ 4,559,248. this was primarily attributable to our net income of $ 88,034 , adjusted by non-cash items of depreciation and amortization of $ 842,050 , reversal of allowance for doubtful account of $ 28,956 , and non-cash interest expenses of $ 19,728. the increase in cash flow in 2012 were due primarily to the decrease in accounts receivable by $ 3,844,641 , the increase in inventories by $ 620,685 , decrease in prepayments and other receivables by $ 494,695 , increase in accounts payable by $ 268,686 , decrease in income tax payable by $ 131,671 and decrease in other payables and accrued liabilities by $ 275,186. the decrease in accounts and retention receivable of $ 3,844,641 for the year ended december 31 , 2012 are mainly due to the active monitoring of accounts receivable with aging above 1 year and those accounting for about 15 % of the total accounts receivable . thus there is no significant credit risk . the company will consider an allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments . the company 's accounts receivable aging was as follows : replace_table_token_3_th 43 most of our customers make payments in accordance with the agreed payment terms in a timely manner . in rare cases , we may offer extended payment terms to certain customers for equipment sales . these customers are usually large state-owned corporations with good credit ratings . at the end of each period , we evaluate the structure and collectability of accounts receivable and for those receivables that are past due or not being paid according to the payment terms . we take appropriate actions to exhaust all means of collection , including seeking legal resolution in a court of law , for our collection efforts .


 Write a concise suspicious activity report of the following text delimited by triple backquotes. Return your response as a formal report which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.
     ```liquidity and capital resources operating activities for the year ended december 31 , 2012 , net cash provided by operating activities was $ 4,559,248. this was primarily attributable to our net income of $ 88,034 , adjusted by non-cash items of depreciation and amortization of $ 842,050 , reversal of allowance for doubtful account of $ 28,956 , and non-cash interest expenses of $ 19,728. the increase in cash flow in 2012 were due primarily to the decrease in accounts receivable by $ 3,844,641 , the increase in inventories by $ 620,685 , decrease in prepayments and other receivables by $ 494,695 , increase in accounts payable by $ 268,686 , decrease in income tax payable by $ 131,671 and decrease in other payables and accrued liabilities by $ 275,186. the decrease in accounts and retention receivable of $ 3,844,641 for the year ended december 31 , 2012 are mainly due to the active monitoring of accounts receivable with aging above 1 year and those accounting for about 15 % of the total accounts receivable . thus there is no significant credit risk . the company will consider an allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments . the company 's accounts receivable aging was as follows : replace_table_token_3_th 43 most of our customers make payments in accordance with the agreed payment terms in a timely manner . in rare cases , we may offer extended payment terms to certain customers for equipment sales . these customers are usually large state-owned corporations with good credit ratings . at the end of each period , we evaluate the structure and collectability of accounts receivable and for those receivables that are past due or not being paid according to the payment terms . we take appropriate actions to exhaust all means of collection , including seeking legal resolution in a court of law , for our collection efforts .
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 Suspicious Activity Report : these forward-looking statements include statements of management 's plans and objectives for our future operations and statements of future economic performance , information regarding our expansion and possible results from expansion , our expected growth , our capital budget and future capital requirements , the availability of funds and our ability to meet future capital needs , the realization of our deferred tax assets , and the assumptions described in this report underlying such forward-looking statements . actual results and developments could differ materially from those expressed in or implied by such statements due to a number of factors , including , without limitation , those described in the context of such forward-looking statements , our expansion and acquisition strategy , our ability to achieve operating efficiencies , industry pricing and technology trends , evolving industry standards , regulatory matters , general economic and business conditions , the strength and financial resources of our competitors , our ability to find and retain skilled personnel , the political and economic climate in which we conduct operations and the risk factors described from time to time in our other documents and reports filed with the securities and exchange commission ( the `` commission `` ) . additional factors that could cause actual results to differ materially from the forward-looking statements include , but are not limited to : 1 ) our ability to successfully develop , manufacture and deliver our products on a timely basis and in the prescribed condition ; 2 ) our ability to compete effectively with other companies in the same industry ; 3 ) our ability to raise sufficient capital in order to effectuate our business plan ; and 4 ) our ability to retain our key executives . critical accounting policies our discussion and analysis of our financial condition and results of operations are based on our financial statements , which have been prepared in accordance with u.s. generally accepted accounting principles . the preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods . on an on-going basis , we evaluate our estimates and judgments , including those related to revenue , receivable , inventory , and accrued expenses . we base our estimates on historical experience , known trends and events and various other factors that we believe to be reasonable under the circumstances , the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources . actual results may differ from these estimates under different assumptions or conditions . changes in estimates are recorded in the period in which they become known . we believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements . revenue recognition in accordance with the asc topic 605 , “ revenue recognition ” , the company recognizes revenue when persuasive evidence of an arrangement exists , transfer of title has occurred or services have been rendered , the selling price is fixed or determinable and collectability is reasonably assured . the company 's revenue is principally derived from three primary sources : sales of energy saving flow control equipment , provision of energy project management and sub-contracting services , and provision of energy-saving reconstruction projects . 35 ( a ) sale of products the company derives a majority of its revenues from the sale of energy saving flow control equipment . generally , the energy saving flow control equipment is manufactured and configured to customer requirements . the company typically produces the energy saving flow control equipment for customers during a period from one to six months . when the company completes the production in accordance with the customer 's specification , the customer is required to inspect the finished products for quality and suitability , to its full satisfaction , then the company makes delivery to the customer the company recognizes revenue from the sale of such finished products upon delivery to the customers , when the title and risk of loss are fully transferred to the customers . the company records its revenues , net of value added taxes ( “ vat ” ) . the company is subject to vat which is levied on the majority of the products at the rate of 17 % on the invoiced value of sales . as of december 31 , 2012 and 2011 , there were no refunds regarding our products . ( b ) service revenue service revenue is derived from energy-saving technical services , project management or sub-contracting services that are not an element of the arrangement for the sale of products . these services are generally billed on a time-cost plus basis , for the period of service which is generally from two to three months . revenue is recognized , net of business taxes when the service is rendered and accepted by the customers . ( c ) interest income interest income is recognized on a time apportionment basis , taking into account the principal amounts outstanding and the interest rates applicable . accounts receivable and allowance for doubtful accounts accounts receivable are recorded at the invoiced amount , do not bear interest and are due within the contractual payment terms , generally 30 to 90 days from shipment . credit is extended based on evaluation of a customer 's financial condition , the customer 's credit-worthiness and their payment history . accounts receivable outstanding longer than the contractual payment terms are considered past due . story_separator_special_tag sales and marketing expenses the total sales and marketing expenses were $ 196,033 and $ 101,586 , or 2.1 % and 0.68 % of total revenues , for the years ended december 31 , 2012 and 2011 , respectively . the increase in sales and marketing is due to the increase in exploring more business opportunities for the company . general and administrative expenses general and administrative expenses were $ 1,082,702 and $ 1,352,565 , or 11.68 % and 9.06 % of total revenue , for the year ended december 31 , 2012 and 2011 , respectively . the general and administrative expenses decreased by $ 269,863 or 19,95 % . the decrease in general and administrative expenses was primarily due to a decrease in legal and professional fees and investor relations fees . income from operations as a result of the foregoing , our income from operations was $ 2,717,928 or 18.21 % of total revenues , for the year ended december 31 , 2011 , as compared to $ 566,335 or 6.11 % of total revenues , for the year ended december 31 , 2012 , a decrease of $ 2,151,593 or 79.16 % . other income ( expenses ) for the year ended december 31 , 2012 , interest income was $ 33,002 as compared to $ 5,838 for the year ended december 31 , 2011 , an increase of $ 27,164 as compared to last year . in 2012 , interest expense was $ 468,031 , an increase of $ 92,258 as compared to $ 375,773 for the year ended december 31 , 2011. the increase of interest was due to the increase of financings derived from the commercial banks in china . i ncome tax expenses for the years ended december 31 , 2012 and 2011 , income tax expenses were $ 43,272 and $ 301,533 respectively . the decrease of income tax expenses was due to the decrease in taxable income . the new income tax rate was 25 % from 2012 onwards . as of december 31 , 2012 , the company 's operations in the united states of america incurred $ 2,662,958 of cumulative net operating losses , which can be carried forward to offset future taxable income . the net operating loss carry forwards begin to expire in 2032 , if unutilized . the company has provided for a full valuation allowance against the deferred tax assets of $ 905,046 on the expected future tax benefits from the net operating loss carried forwards as the management believes it is more likely than not that these assets will not be realized in the future . 42 net income as a result of the foregoing , we recorded net income of $ 88,034 , a 0.95 % profit margin on revenue for the year ended december 31 , 2012 , as compared to net income of $ 2,046,460 , a 13.71 % profit margin on revenues , for the year ended december 31 , 2011. the net income for the year ended december 31 , 2012 decreased by $ 1,958,426 , a decrease of 95.70 % , compared to the year ended december 31 , 2011. the decrease in net income was mainly due to the decrease in revenues . story_separator_special_tag serif ; margin : 0pt 0 ; text-align : justify `` > in march , 2012 , the company obtained a short-term bank borrowing of $ 1,562,061 ( equivalent to rmb10 , 000,000 ) from a commercial bank in china , with interest rate at 1.3 times of the bank of china benchmark lending rate , due 26 march 2013 , payable monthly , which is guaranteed by its vendor . this bank borrowing was repaid by $ 390,516 ( equivalent to rmb 2,500,000 ) in december , 2012. in december 2012 , the company obtained another short-term bank borrowing of $ 315,814 ( equivalent to rmb 2,500,000 ) , from a commercial bank in china , bank of jilin , due 30 june 2013 , with interest rate at 1.2 times of the bank of china benchmark lending rate , which is guaranteed by a guarantee company in shenyang city , the prc . in december , 2011 , the company obtained a bank note of $ 3,148,466 ( equivalent to rmb 20,000,000 ) from a commercial bank in china , bank of jilin , due 15 december 2012. only $ 2,533,156 ( equivalent to rmb 16,350,000 ) was drawn down in 2011 , payable quarterly , with interest rate at 1.4 times of the bank of china benchmark lending rate . the remaining $ 565,505 ( equivalent to rmb 3,650,000 ) was drawn down in 2012. this is guaranteed by mr. gang li and a guarantee company in shenyang city , the prc . this bank borrowing was repaid fully in 15 december , 2012. in november 2011 , the company obtained a bank note of $ 3,148,466 ( equivalent to rmb 20,000,000 ) from a commercial bank in china , bank of liaoyang , due may 2012. this was collateralized by restricted cash of $ 1,574,233 ( equivalent to rmb 10,000,000 ) and guaranteed by a third party . the bank note was issued to settle the accounts payable and there was no cash proceeds for the bank note . this bank borrowing was repaid in may 2012 . 45 in august 2012 , the company obtained a bank note of $ 1,578,205 ( equivalent to rmb 10,000,000 ) from a commercial bank in china , bank of liaoyang , due february 2012. this was collateralized by restricted cash of $ 789,102 ( equivalent to rmb 5,000,000 ) and guaranteed by a third party . the bank note was issued to settle the accounts payable and there was no cash proceeds for the bank note . as of december 31 , 2011 , the amount due to a related party of $ 431,682 represented a temporary advance made by

