NOTE 11 - COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company shares its principal office with four other affiliated companies in Chaoyang, Beijing. On October 21, 2015, the Company entered into a six-year lease (“Chaoyang Lease”) and the lease was subsequently transferred to Jiuxiang on August 12, 2016. The Chaoyang Lease started on October 21, 2015 and expires on October 20, 2021. Pursuant to the terms of the lease, Jiuxiang has agreed to pay a monthly rent of RMB 491,168 (approximately $74,000) for the first three years and RMB 540,534 (approximately $81,000) for the remaining three years. The Company recognizes rent expense on a straight-line basis over the terms of the leases. The rent expense allocated to the Company each month is in accordance to the number of employees occupied in the office space.

The Company operates its business in an office located at Xizhimen, Beijing, China. The Company entered into a lease agreement (“Xizhimen Lease”) on January 1, 2015 pursuant to which the Company agreed to pay $24,000 per month and the lease expired on May 31, 2017.

On May 22, 2017, the Company entered into another operating lease agreement in Beijing as the successor of the Xizhimen Lease. Pursuant to the terms of the agreement, the lease started from May 22, 2017 and expires on May 21, 2019 and the Company agreed to pay monthly rent of RMB 142,241 (approximately $20,000) from June 22, 2017 to May 21, 2019 with the first month rent free and monthly maintenance fee of RMB 15,318 (approximately $2,200) from May 21, 2017 to May 21, 2019. The Company recognizes rent expense and maintenance fee on a straight-line basis over the terms of the lease.

As of March 31, 2018, the Company was obligated under operating leases minimum rentals as follows:

	Allocated Lease *		Non-Cancellable Lease **		Total
2018	$	4,393	$	289,371	$	293,764
2019		4,393		112,792		117,185
2020		4,393		-		4,393
2021		3,661		-		3,661
2022		-		-		-
Total minimum lease payments	$	16,840	$	402,163	$	419,003

These are the Company’s portion of minimum lease payments allocated by the Company’s affiliated company, Jiuxiang, the leasee.

These are the minimum lease payments under the non-cancellable lease entered with a third party.