11. Commitments A. Operating lease commitments The Company leases a healthcare center, a clinic and an office premise in Dalian City, PRC from Mr. Shubin Wang, a related party, under several non-cancelable operating lease agreements; the Company also leases a clinic in Dalian City from Shangri-La Hotel, an outside party, under a non-cancelable operating lease agreement. Costs incurred for the healthcare center, clinics and office premise under theses operating leases are recorded as rent expenses in the amounts of $90,600 and $38,097 for the nine months ended September 30, 2011 and 2010, respectively. For the twelve months ending December 31: Fiscal Years Commitments 2011 $ 30,941 2012 123,762 2013 91,485 2014 59,207 2015 59,207 $ 364,602 B. Long-term purchase commitment In December 2006, the Company entered into a contract with a medical equipment supplier whereby the Company was obliged to purchase a minimum of approximately $76,852 of biochemical reagent for 5 years starting from 2007. For the nine months ended September 30, 2011 and 2010, the Company incurred $13,216 and $8,239, respectively. C. Statutory reserve commitment In accordance with PRC laws, statutory reserve refers to the appropriation from net income, to the account statutory reserve, to be used for future company development, recovery of losses, and increase of capital, as approved, to expand production or operations. Under the applicable PRC laws, a PRC enterprise operating at a profit must appropriate, on an annual basis, an amount equal to 10% of its profit until the reserve reaches 50% of its registered capital. September 30, 2011 December 31, 2010 PRC subsidiaries registered capital - Dalian Vitup Healthcare $ 1,180,159 $ 1,180,159 Statutory reserve ceiling based on 50% of PRC registered capital 590,079 590,079 Less: Retained earnings appropriated to statutory reserve 239,261 239,261 Impact of foreign currency translation - - Reserve commitment outstanding $ 350,819 $ 350,819