20. COMMITMENTS

Lease Commitment

On March 5, 2010, Xi’an TCH leased its office that expired on March 4, 2014, Xi’an TCH renewed the lease for another 3 years with a 8% increase on rent. Currently, the monthly rental payment is $18,000 (before March 4, 2014). In March 2013 Xi’an TCH leased an office in Jinan for three years until March 22, 2016, with a monthly payment of $3,800. The rent will be increased by 5% each year. For the years ended December 31, 2013 and 2012, the rental expense of Xi’an TCH was $275,500 and $213,000, respectively.

In November 2012, Sifang Holding renewed its office in Beijing for monthly rent of $1,900 expired on December 18, 2013. Sifang was required to pay in advance for the first six months rent for $11,450 at the beginning of the lease. Sifang Holding terminated the lease at expiration.

Future minimum annual rental payments required under operating leases as of December 31, 2013 were as below (by year):

2014	$	278,000
2015		281,000
2016		246,000
2017		39,000
Total	$	844,000

Refer to Note 1 for additional details related to lease commitments with Shanxi Datong, Chengli, and Tianyu (and its subsidiaries Xuzhou Tian’an and Xuzhou Huayu) and Note 6 for commitment on construction in progress.