13. COMMITMENT AND CONTINGENCIES The Company has entered into the following material lease agreements. On December 30, 2008, and December 31, 2009, the Company entered into lease agreements with the local government. Pursuant to these agreements, total area of 3.335 million square meters (5,000 mu) and 2 million square meters (3,000 mu) of land are leased from January 1, 2009 to December 31, 2023 and January 1, 2010 to December 31, 2025, with total annual lease payments of $473,112 (RMB3,000,000) and $283,867 (RMB 1,800,000), respectively. On July 1, 2009, the Company entered into a lease agreement with a third party. Pursuant to the agreement, the Company leased the office building and plant from July 1, 2009 to June 30, 2014. The first year s rent was waived and the annual lease payment of $141,933 (RMB900,000) began in the second year. The Company recognizes the aggregate benefit of rent incentives as a reduction of rental expense over the lease term, on a straight-line basis. On March 31, 2011, the Company entered into a land lease agreement with the local government pursuant to which the Company agreed to lease approximately 2.4 million square meters (3,620 mu) of farmland. The term of the lease is six years, from January 1, 2011 through December 31, 2016 with an annual lease of approximately $548,052 (RMB3,475,200). On October 2 and 3, 2011, the Company entered into several lease agreements with a local village for inventory (ginger) storage. Pursuant to these agreements, the annual lease payment will be calculated based on the weight of inventory storage (RMB180 per ton). Future aggregated annual lease payments are as follows: Year Ending June 30, 2013 $ 1,085,223 2014 1,446,964 2015 1,305,031 2016 1,305,031 2017 1,031,005 Thereafter 5,488,093 TOTAL $ 11,661,347