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CAPITAL COMMITMENT AND OPERATING LEASE COMMITMENTS
 6 Months Ended
Jun. 30, 2011
CAPITAL COMMITMENT AND OPERATING LEASE COMMITMENTS
NOTE 19 – CAPITAL COMMITMENT AND OPERATING LEASE COMMITMENTS

The Company has leased a real property adjacent to Factory No. 1, with the related production facility, channels and ducts, other production equipment and the buildings located on the property, under capital lease.  The future minimum lease payments required under capital lease, together with the present value of such payments, are included in the table show below.


The Company has leased five pieces of land under non-cancelable operating leases, which are fixed in rentals and expired through December 2030, December 2040, February 2059, August 2059 and June 2060, respectively. The Company accounts for the leases as operating leases.

The Company has committed (i) approximately $105,460 for conversion of the new wastewater treatment additives production to the production of pharmaceutical and agricultural chemical intermediates, (ii) approximately $1,680,405 for relocation and construction of new Factory No. 4 and (iii) approximately $3,115,123 for the drilling of exploratory wells and its associated facilities in Sichuan province as of June 30, 2011.

The following table sets forth the Company’s contractual obligations as of June 30, 2011:

  
  
Capital
Lease
Obligations
  
  
Operating
Lease
Obligations
  
  
Purchase
Obligations
  
  
Contract for
R&D
expenses
  
                         
Less than 1 year
  
$
290,034
    
$
317,624
    
$
4,900,988
    
$
-
  
1 - 3 years
    
580,068
      
1,247,879
      
-
      
-
  
3 - 5 years
    
580,068
      
1,265,104
      
-
      
-
  
More than 5 years
    
4,205,494
      
17,852,586
      
-
      
-
  
Total
  
$
5,655,664
    
$
20,683,193
    
$
4,900,988
    
$
-
  
Less: Amount representing interest
    
(2,616,426
)
                        
Present value of net minimum lease payments
  
$
3,039,238
                          

Rental expenses related to operating leases of the Company amounted to $157,480 and $24,322 were charged to the income statements for the three-month ended June 30, 2011 and 2010, respectively. Rental expenses related to operating leases of the Company amounted to $261,488 and $46,379 were charged to the income statements for the six-month ended June 30, 2011 and 2010, respectively.