CAPITAL COMMITMENT AND OPERATING LEASE COMMITMENTS

9 Months Ended

Sep. 30, 2012

CAPITAL COMMITMENT AND OPERATING LEASE COMMITMENTS

NOTE 19 - CAPITAL COMMITMENT AND OPERATING LEASE COMMITMENTS

As of September 30, 2012, 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 seven pieces of land under non-cancelable operating leases, which are fixed in rentals and expire through December 2021, December 2030, December 2031, December 2040, February 2059, August 2059 and June 2060, respectively. The Company accounts for the leases as operating leases.

The Company has no purchase commitment as of September 30, 2012.

The following table sets forth the Company's contractual obligations as of September 30, 2012:

	Capital Lease Obligations			Operating Lease Obligations		Purchase Obligations
Payable within:
the next 12 months	$	296,003		$	769,291	$	-
the next 13 to 24 months		296,003			778,839		-
the next 25 to 36 months		296,003			791,555		-
the next 37 to 48 months		296,003			802,002		-
the next 49 to 60 months		296,003			815,795		-
thereafter		3,848,037			18,216,173		-
Total	$	5,328,052		$	22,173,655	$	-
Less: Amount representing interest		(2,260,244	)
Present value of net minimum lease payments	$	3,067,808

Rental expenses related to operating leases of the Company amounted to $193,859 and $159,735, which were charged to the income statements for the three-month ended September 30, 2012 and 2011, respectively. Rental expenses related to operating leases of the Company amounted to $582,625 and $421,223, which were charged to the income statements for the nine-month ended September 30, 2012 and 2011, respectively.

- Definition

The entire disclosure for significant arrangements with third parties, which includes operating lease arrangements and arrangements in which the entity has agreed to expend funds to procure goods or services, or has agreed to commit resources to supply goods or services, and operating lease arrangements. Descriptions may include identification of the specific goods and services, period of time covered, minimum quantities and amounts, and cancellation rights.

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