CAPITAL LEASE OBLIGATIONS

9 Months Ended

Sep. 30, 2015

CAPITAL LEASE OBLIGATIONS [Text Block]

22. CAPITAL LEASE OBLIGATIONS

The Company leases certain machinery and equipment under leases classified as capital leases. During the period ended September 30, 2015, the Company entered into the following capital leases:

(a.) On July 1, 2015, the Company entered into a capital lease agreement in the amount of RMB1,057,571, which was approximately USD166,447, with Lessor A leasing: five production machines, two packaging machine, one assembly line, and ten vending machines with an interest rate of 7% for a period of 36 months with an expiration date of June 30, 2018 with an option to buy the leased assets following the lease expiration for RMB 1.

(b.)	On July 1, 2015, the Company entered into a capital lease agreement in the amount of RMB2,805,493, which was approximately USD441,546, with Lessor A leasing one hundred vending machines with an interest rate of 7% for a period of 36 months with an expiration date of June 30, 2018 with an option to buy the leased assets following the lease expiration for RMB 1.
(c.)	On August 25, 2015, the Company entered into a capital lease agreement in the amount of RMB2,163,845, which was approximately USD340,539, with Lessor B leasing eight production machines with an interest rate of 7% for a period of 30 months with an expiration date of February 25, 2018 with an option to buy the leased assets following the lease expiration for RMB 100.
(d.)	On August 25, 2015, the Company entered into a capital lease agreement in the amount of RMB530,439, which was approximately USD83,484, with Lessor B leasing four production machines with an interest rate of 7% for a period of 30 months with an expiration date of February 25, 2018 with an option to buy the leased assets following the lease expiration for RMB 100.
(e.)	On August 25, 2015, the Company entered into a capital lease agreement in the amount of RMB777,228, which was approximately USD122,325, with Lessor B leasing one assembly line with an interest rate of 7% for a period of 30 months with an expiration date of February 25, 2018 with an option to buy the leased assets following the lease expiration for RMB 100.
(f.)	On August 25, 2015, the Company entered into a capital lease agreement in the amount of RMB1,647,563, which was approximately USD259,304, with Lessor B leasing one freezing unit with an interest rate of 7% for a period of 30 months with an expiration date of February 25, 2018 with an option to buy the leased assets following the lease expiration for RMB 100.

The following is a schedule showing the future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of September 30, 2015:

Year 1	561,345
Year 2	601,782
Year 3	400,129
Total minimum lease payments	1,563,256
Less: Amount representing estimated executory costs (such as taxes, maintenance, and insurance), including profit thereon, included in total minimum lease payments	(107,385)
Net minimum lease payments	1,455,871
Less: Amount representing interest	(158,360)
Present value of net minimum lease payments	1,297,511

Reflected in the balance sheet as current and noncurrent obligations under capital leases of $465,916 and $831,595, respectively.

As of September 30, 2015, the present value of minimum lease payments due within one year is $465,916.