Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 16, 2015 | Jun. 30, 2014 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Orient Paper Inc. | ||
Entity Central Index Key | 1358190 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 20,316,400 | ||
Entity Public Float | $28,406,284 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current Assets | ||
Cash and cash equivalents | $3,891,473 | $3,131,163 |
Restricted cash | 8,873,999 | 2,454,108 |
Accounts receivable (net of allowance for doubtful accounts of $76,125 and $67,592 as of December 31, 2014 and 2013, respectively) | 3,730,123 | 3,327,494 |
Inventories | 7,139,599 | 11,428,405 |
Prepayments and other current assets | 2,919,668 | 1,068,031 |
Assets held for sale | 4,130,590 | |
Deferred tax assets - current | 413,537 | |
Total current assets | 26,554,862 | 25,953,328 |
Prepayment on property, plant and equipment | 1,490,440 | 1,492,098 |
Property, plant, and equipment, net | 208,213,198 | 178,535,259 |
Recoverable VAT | 3,228,075 | 3,277,188 |
Deferred tax asset - non-current | 281,010 | 268,329 |
Total Assets | 239,767,585 | 4,325,023 |
Current Liabilities | ||
Short-term bank loans | 9,805,524 | 6,544,288 |
Current portion of long-term loan from credit union | 147,083 | 1,660,613 |
Current portion of long-term loan from a related party | 2,386,978 | |
Current obligations under capital lease | 12,258,488 | 8,264,795 |
Accounts payable | 926,571 | |
Notes payable | 16,113,744 | 4,908,216 |
Security deposit from a related party | 1,636,072 | |
Due to a related party | 227,900 | 64,546 |
Accrued payroll and employee benefits | 492,765 | 498,010 |
Other payables and accrued liabilities | 2,400,523 | 2,651,472 |
Income taxes payable | 637,143 | 1,218,140 |
Total current liabilities | 44,470,148 | 28,372,723 |
Loan from credit union | 5,760,745 | 4,253,788 |
Loan from a related party | 9,805,524 | 2,389,633 |
Deferred gain on sale-leaseback | 695,389 | 1,160,271 |
Long-term obligations under capital lease | 4,090,413 | 12,296,639 |
Total liabilities | 64,822,219 | 48,473,054 |
Commitments and Contingencies | ||
Stockholders' Equity | ||
Common stock, 500,000,000 shares authorized, $0.001 par value per share, 20,316,400 and 18,753,900 shares issued and outstanding as of December 31, 2014 and 2013, respectively | 20,316 | 18,754 |
Additional paid-in capital | 49,218,982 | 46,909,543 |
Statutory earnings reserve | 6,080,574 | 6,038,406 |
Accumulated other comprehensive income | 17,021,165 | 17,146,308 |
Retained earnings | 102,604,329 | 90,940,137 |
Total stockholders' equity | 174,945,366 | 161,053,148 |
Total Liabilities and Stockholders' Equity | $239,767,585 | $209,526,202 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Balance Sheets [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $76,125 | $67,592 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares issued | 20,316,400 | 18,753,900 |
Common stock, shares outstanding | 20,316,400 | 18,753,900 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income and Comprehensive Income (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Statements Of Income and Comprehensive Income [Abstract] | |||
Revenues | $137,041,447 | $125,717,630 | $151,116,806 |
Cost of Sales | -114,263,299 | -102,392,031 | -124,060,559 |
Gross Profit | 22,778,148 | 23,325,599 | 27,056,247 |
Selling, general and administrative expenses | -4,859,215 | -4,567,079 | -3,360,520 |
Loss on impairment of assets | -2,762,349 | ||
Gain from disposal of assets held for sale | 203,620 | ||
(Loss) Gain from disposal of property, plant and equipment | -709,647 | 84,972 | 45,288 |
Income from Operations | 17,412,906 | 18,843,492 | 20,978,666 |
Other Income (Expense): | |||
Interest income | 149,783 | 90,260 | 30,674 |
Subsidy income | 22,614 | 171,125 | |
Interest expense | -1,446,439 | -995,694 | -871,834 |
Income before Income Taxes | 16,138,864 | 18,109,183 | 20,137,506 |
Provision for Income Taxes | -4,432,504 | -5,094,535 | -5,464,843 |
Net income | 11,706,360 | 13,014,648 | 14,672,663 |
Other Comprehensive Income: | |||
Foreign currency translation adjustment | -125,143 | 4,818,869 | 884,872 |
Total Comprehensive Income | $11,581,217 | $17,833,517 | $15,557,535 |
Earnings Per Share: | |||
Basic and Fully Diluted Earnings per Share | $0.61 | $0.71 | $0.79 |
Weighted Average Number of Shares Outstanding - Basic and Fully Diluted | 19,270,394 | 18,458,446 | 18,456,781 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Stockholders' Equity (USD $) | Total | Common Stock | Additional Paid-in Capital | Statutory Earnings Reserve | Accumulated Other Comprehensive Income | Retained Earnings |
Beginning balance at Dec. 31, 2011 | $127,525,443 | $18,350 | $45,758,020 | $5,863,442 | $11,442,567 | $64,443,064 |
Beginning balance, Shares at Dec. 31, 2011 | 18,350,191 | |||||
Issuance of shares to officer and directors | 378,065 | 110 | 377,955 | |||
Issuance of shares to officer and directors, Shares | 109,584 | |||||
Foreign currency translation adjustment | 884,872 | 884,872 | ||||
Transfer to statutory earnings reserve | 100,518 | -100,518 | ||||
Cash dividend paid | -692,242 | -692,242 | ||||
Net Income | 14,672,663 | 14,672,663 | ||||
Balance at Dec. 31, 2012 | 142,768,801 | 18,460 | 46,135,975 | 5,963,960 | 12,327,439 | 78,322,967 |
Balance, Shares at Dec. 31, 2012 | 18,459,775 | |||||
Issuance of shares to officer and directors | 790,020 | 297 | 789,723 | |||
Issuance of shares to officer and directors, Shares | 297,000 | |||||
Foreign currency translation adjustment | 4,818,869 | 4,818,869 | ||||
Transfer to statutory earnings reserve | 74,446 | -74,446 | ||||
Cancellation of certain director compensation shares | -16,158 | -3 | -16,155 | |||
Cancellation of certain director compensation shares, Shares | -2,875 | |||||
Cash dividend paid | -323,032 | -323,032 | ||||
Net Income | 13,014,648 | 13,014,648 | ||||
Balance at Dec. 31, 2013 | 161,053,148 | 18,754 | 46,909,543 | 6,038,406 | 17,146,308 | 90,940,137 |
Balance, Shares at Dec. 31, 2013 | 18,753,900 | |||||
Issuance of shares | 1,495,810 | 1,562 | 1,494,248 | |||
Issuance of shares, shares | 1,562,500 | |||||
Issuance of warrants | 815,191 | 815,191 | ||||
Foreign currency translation adjustment | -125,143 | -125,143 | ||||
Transfer to statutory earnings reserve | 42,168 | -42,168 | ||||
Net Income | 11,706,360 | 11,706,360 | ||||
Balance at Dec. 31, 2014 | $174,945,366 | $20,316 | $49,218,982 | $6,080,574 | $17,021,165 | $102,604,329 |
Balance, Shares at Dec. 31, 2014 | 20,316,400 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Cash Flows from Operating Activities: | |||
Net Income | $11,706,360 | $13,014,648 | $14,672,663 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 8,289,320 | 7,794,743 | 8,382,859 |
Loss (Gain) from impairment and disposal of property, plant and equipment | 709,647 | -84,972 | -45,288 |
Gain from disposal of assets held for sale | -203,620 | ||
Allowance for (Recovery from) bad debts | 8,571 | 7,990 | -19,631 |
Stock-based expense for service received | 773,862 | 378,065 | |
Deferred tax | 398,385 | 409,665 | -941,207 |
Changes in operating assets and liabilities: | |||
Accounts receivable | -413,159 | -402,709 | 1,029,978 |
Prepayments and other current assets | -1,799,514 | 1,211,679 | -295,763 |
Inventories | 4,257,805 | 4,105,876 | -5,024,459 |
Accounts payable | -921,580 | -117,308 | -1,771,968 |
Notes payable | 11,163,003 | 1,614,387 | 3,168,769 |
Accrued payroll and employee benefits | -4,950 | 194,795 | -17,306 |
Other payables and accrued liabilities | -299,932 | 1,599,375 | 453,546 |
Income taxes payable | -577,163 | -200,090 | -500,641 |
Net Cash Provided by Operating Activities | 32,313,173 | 29,921,941 | 22,231,966 |
Cash Flows from Investing Activities: | |||
Purchases of property, plant and equipment | -39,207,768 | -64,566,785 | -16,278,952 |
Refund of prepayment for purchase of property, plant and equipment | 3,112,571 | ||
Proceeds from sale of assets held for sale | 2,684,703 | 1,614,387 | 1,075,095 |
Proceeds from disposal of property, plant and equipment | 241,714 | 2,589,919 | 175,593 |
Net Cash Used in Investing Activities | -36,281,351 | -60,362,479 | -11,915,693 |
Cash Flows from Financing Activities: | |||
Proceeds from issuing of common stock | 2,311,002 | ||
Proceeds from related party loans | 10,557,060 | 1,390,802 | 1,030,097 |
Repayment of related party loans | -793,500 | -1,390,802 | -1,230,097 |
Proceeds from bank loans | 11,366,410 | 10,703,389 | 5,941,441 |
Proceeds from sale-leaseback financing | 24,215,811 | ||
Repayments of bank loans | -8,111,890 | -8,281,807 | -4,832,372 |
Payment of capital lease obligation | -4,199,689 | -5,406,481 | |
Restricted cash | -6,395,131 | -807,194 | -1,584,384 |
Dividend Paid | -323,032 | -692,242 | |
Net Cash Provided by (Used in) Financing Activities | 4,734,262 | 20,100,686 | -1,367,557 |
Effect of Exchange Rate Changes on Cash and Cash Equivalents | -5,774 | 330,727 | 26,126 |
Net Increase (Decrease) in Cash and Cash Equivalents | 760,310 | -10,009,125 | 8,974,842 |
Cash and Cash Equivalents - Beginning of Period | 3,131,163 | 13,140,288 | 4,165,446 |
Cash and Cash Equivalents - End of Period | 3,891,473 | 3,131,163 | 13,140,288 |
Supplemental Disclosure of Cash Flow Information: | |||
Cash paid for interest, net of capitalized interest cost | 1,826,460 | 708,089 | 486,278 |
Cash paid for income taxes | $4,611,282 | $4,884,961 | $6,909,690 |
Organization_and_Business_Back
Organization and Business Background | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Organization and Business Background [Abstract] | |||||||||
Organization and Business Background | (1) Organization and Business Background | ||||||||
Orient Paper, Inc. was incorporated in the State of Nevada on December 9, 2005, under the name “Carlateral, Inc.” Through the steps described immediately below, we became the holding company for Hebei Baoding Orient Paper Milling Company Limited (“Orient Paper HB”), a producer and distributor of paper products in China, on October 29, 2007, and effective December 21, 2007, we changed our name to “Orient Paper, Inc.” to more accurately describe our business. | |||||||||
On October 29, 2007, pursuant to an agreement and plan of merger (the “Merger Agreement”), the Company acquired Dongfang Zhiye Holding Limited (“Dongfang Holding”), a corporation formed on November 13, 2006 under the laws of the British Virgin Islands, and issued the shareholders of Dongfang Holding an aggregate of 7,450,497 (as adjusted for a four-for-one reverse stock split effected in November 2009) shares of our common stock, which shares were distributed pro-rata to the shareholders of Dongfang Holding in accordance with their respective ownership interests in Dongfang Holding. At the time of the Merger Agreement, Dongfang Holding owned all of the issued and outstanding stock and ownership of Orient Paper HB and such shares of Orient Paper HB were held in trust with Zhenyong Liu, Xiaodong Liu and Shuangxi Zhao, for Mr. Liu, Mr. Liu and Mr. Zhao (the original shareholders of Orient Paper HB) to exercise control over the disposition of Dongfang Holding’s shares in Orient Paper HB on Dongfang Holding’s behalf until Dongfang Holding successfully completed the change in registration of Orient Paper HB’s capital with the relevant PRC Administration of Industry and Commerce as the 100% owner of Orient Paper HB’s shares. As a result of the merger transaction, Dongfang Holding became a wholly owned subsidiary of the Company, and Dongfang Holding’s wholly owned subsidiary, Orient Paper HB, became an indirectly owned subsidiary of the Company. | |||||||||
Dongfang Holding, as the 100% owner of Orient Paper HB, was unable to complete the registration of Orient Paper HB’s capital under its name within the proper time limits set forth under PRC law. In connection with the consummation of the restructuring transactions described below, Dongfang Holding directed the trustees to return the shares of Orient Paper HB to their original shareholders, and the original Orient Paper HB shareholders entered into certain agreements with Baoding Shengde Paper Co., Ltd. (“Orient Paper Shengde”) to transfer the control of Orient Paper HB over to Orient Paper Shengde. | |||||||||
On June 24, 2009, the Company consummated a number of restructuring transactions pursuant to which it acquired all of the issued and outstanding shares of Shengde Holdings Inc, a Nevada corporation. Shengde Holdings Inc was incorporated in the State of Nevada on February 25, 2009. On June 1, 2009, Shengde Holdings Inc incorporated Orient Paper Shengde, a limited liability company organized under the laws of the PRC. Because Orient Paper Shengde is a wholly-owned subsidiary of Shengde Holdings Inc, it is regarded as a wholly foreign-owned entity under PRC law. | |||||||||
To ensure proper compliance of the Company’s control over the ownership and operations of Orient Paper HB with certain PRC regulations, on June 24, 2009, the Company entered into a series of contractual agreements (the “Contractual Agreements”) with Orient Paper HB and Orient Paper HB Equity Owners via the Company’s wholly owned subsidiary Shengde Holdings Inc (“Shengde Holdings”) a Nevada corporation and Baoding Shengde Paper Co., Ltd. (“Orient Paper Shengde”), a wholly foreign-owned enterprise in the PRC with an original registered capital of $10,000,000 (subsequently increased to $60,000,000 in June 2010). Orient Paper Shengde is mainly engaged in production and distribution of digital photo paper and is 100% owned by Shengde Holdings. Prior to February 10, 2010, the Contractual Agreements included (i) Exclusive Technical Service and Business Consulting Agreement, which generally provides that Orient Paper Shengde shall provide exclusive technical, business and management consulting services to Orient Paper HB, in exchange for service fees including a fee equivalent to 80% of Orient Paper HB’s total annual net profits; (ii) Loan Agreement, which provides that Orient Paper Shengde will make a loan in the aggregate principal amount of $10,000,000 to Orient Paper HB Equity Owners in exchange for each such shareholder agreeing to contribute all of its proceeds from the loan to the registered capital of Orient Paper HB; (iii) Call Option Agreement, which generally provides, among other things, that Orient Paper HB Equity Owners irrevocably grant to Orient Paper Shengde an option to purchase all or part of each owner’s equity interest in Orient Paper HB. The exercise price for the options shall be RMB1 which Orient Paper Shengde should pay to each of Orient Paper HB Equity Owner for all their equity interests in Orient Paper HB; (iv) Share Pledge Agreement, which provides that Orient Paper HB Equity Owners will pledge all of their equity interests in Orient Paper HB to Orient Paper Shengde as security for their obligations under the other agreements described in this section. Specifically, Orient Paper Shengde is entitled to dispose of the pledged equity interests in the event that Orient Paper HB Equity Owners breach their obligations under the Loan Agreement or Orient Paper HB fails to pay the service fees to Orient Paper Shengde pursuant to the Exclusive Technical Service and Business Consulting Agreement; and (v) Proxy Agreement, which provides that Orient Paper HB Equity Owners shall irrevocably entrust a designee of Orient Paper Shengde with such shareholder’s voting rights and the right to represent such shareholder to exercise such owner’s rights at any equity owners’ meeting of Orient Paper HB or with respect to any equity owner action to be taken in accordance with the laws and Orient Paper HB’s Articles of Association. The terms of the agreement are binding on the parties for as long as Orient Paper HB Equity Owners continue to hold any equity interest in Orient Paper HB. An Orient Paper HB Equity Owner will cease to be a party to the agreement once it transfers its equity interests with the prior approval of Orient Paper Shengde. As the Company had controlled Orient Paper HB since July 16, 2007 through Dongfang Holding and the trust until June 24, 2009, and continues to control Orient Paper HB through Orient Paper Shengde and the Contractual Agreements, the execution of the Contractual Agreements is considered as a business combination under common control. | |||||||||
On February 10, 2010, Orient Paper Shengde and the Orient Paper HB Equity Owners entered into a Termination of Loan Agreement to terminate the above $10,000,000 Loan Agreement. Because of the Company’s decision to fund future business expansions through Orient Paper Shengde instead of Orient Paper HB, the $10,000,000 loan contemplated was never made prior to the point of termination. The parties believe the termination of the Loan Agreement does not in itself compromise the effective control of the Company over Orient Paper HB and its businesses in the PRC. | |||||||||
An agreement was also entered into among Orient Paper Shengde, Orient Paper HB and the Orient Paper HB Equity Owners on December 31, 2010, reiterating that Orient Paper Shengde is entitled to 100% of the distributable profit of Orient Paper HB, pursuant to the above mentioned Contractual Agreements. In addition, Orient Paper HB and the Orient Paper HB Equity Owners shall not declare any of Orient Paper HB’s unappropriated earnings as dividend, including the unappropriated earnings of Orient Paper HB from its establishment to 2010 and thereafter. | |||||||||
Orient Paper has no direct equity interest in Orient Paper HB. However, through the Contractual Agreements described above Orient Paper is found to be the primary beneficiary of Orient Paper HB and is deemed to have the effective control over Orient Paper HB’s activities that most significantly affect its economic performance, resulting in Orient Paper HB being treated as a controlled variable interest entity of Orient Paper in accordance with Topic 810 - Consolidation of the Accounting Standards Codification (the “ASC”) issued by the Financial Accounting Standard Board (the “FASB”). The revenue of the Company generated from Orient Paper HB for the years ended December 31, 2014, 2013 and 2012 were 96.48%, 96.05% and 95.91%, respectively. Orient Paper HB also accounted for 83.73% and 80.25% of the total assets of the Company as at December 31, 2014 and 2013 respectively. | |||||||||
As of December 31, 2014 and 2013, details of the Company’s subsidiaries and variable interest entities are as follows: | |||||||||
Place of | |||||||||
Date of Incorporation | Incorporation or | Percentage of | |||||||
Name | or Establishment | Establishment | Ownership | Principal Activity | |||||
Subsidiary: | |||||||||
Dongfang Holding | 13-Nov-06 | BVI | 100% | Inactive investment holding | |||||
Shengde Holdings | 25-Feb-09 | State of Nevada | 100% | Investment holding | |||||
Orient Paper Shengde | 1-Jun-09 | PRC | 100% | Paper Production and distribution | |||||
Variable interest entity: | |||||||||
Orient Paper HB | 10-Mar-96 | PRC | Control* | Paper Production and distribution | |||||
* Orient Paper HB is treated as a 100% controlled variable interest entity of the Company |
Basis_of_Presentation_and_Sign
Basis of Presentation and Significant Accounting Policies | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Significant Accounting Policies [Abstract] | |||||||||
Significant Accounting Policies | (2) Basis of Presentation and Significant Accounting Policies | ||||||||
Basis of Consolidation | |||||||||
The consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and include the assets, liabilities, revenues, expenses and cash flows of all subsidiaries and variable interest entity. All significant inter-company balances, transactions and cash flows are eliminated on consolidation. | |||||||||
Liquidity and Going Concern | |||||||||
As of December 31, 2014, the Company had current assets of $26,554,862 and current liabilities of $44,470,148 (including amounts due to related parties of $3,376,120), resulting in a working capital deficit of approximately $17,915,286; while as of December 31, 2013, the Company had current assets of $25,953,328 and current liabilities of $28,372,723 (including amounts due to related parties of $2,266,961), resulting in a working capital deficit of approximately $2,419,395. We are currently seeking to restructure the term of our liabilities by raising funds through long-term loans to pay off liabilities with shorter terms. Our ability to continue as a going concern is dependent upon obtaining the necessary financing or negotiating the terms of the existing short-term liabilities to meet our current and future liquidity needs. | |||||||||
On January 20, 2014, our Chairman and Chief Executive Officer (“CEO”) Mr. Zhenyong Liu agreed in writing to permit the Company to continue to postpone the repayment of the accrued interest on his loan to Orient Paper HB until the Company is able to pay its other creditors in its normal course of business. The accrued interest owned to Mr. Liu was approximately $761,242, which was recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated financial statement as of December 31, 2014 (see Note (12) below). | |||||||||
On March 9, 2015, Mr. Zhenyong Liu agreed in writing to permit the Company to postpone the repayment of the related party loan of $2,386,978 which will expire at December 31, 2015. (see Note (10) below). | |||||||||
On January 21, 2015, Hebei Fangsheng agreed in writing to permit the Company to continue to postpone the repayment of the accrued rental charged to Orient Paper HB until the earliest date on which the Company's quarterly or annual financial statements filed with the SEC show a satisfactory working capital level. The accrued rental owned to Hebei Fangsheng was approximately $227,900 and $64,546, which was recorded in other payables and accrued liabilities as part of the current liabilities as of December 31, 2014 and 2013, respectively. | |||||||||
On March 1, 2015, the Company entered an agreement with the CEO which allows Orient Paper HB to borrow from the CEO with an amount up to $19,611,048 (RMB120,000,000) for working capital purposes. The advances or funding under the agreement are due in three years from the date each amount is funded. The loan will be unsecured and carry an annual interest rate set on the basis of the primary lending rate of the People’s Bank of China at the time of the borrowing. | |||||||||
Although management believes it can secure financial resources to satisfy the Company's current liabilities and the capital expenditure needs in the next 12 months, there are no guarantees that these financial resources will be secured. Therefore, there is a substantial doubt about the ability of the Company to continue as a going concern that it may be unable to realize its assets and discharge its liabilities in the normal course of business. Our consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. | |||||||||
Foreign Currency Translation | |||||||||
The Company accounts for foreign currency translation pursuant to ASC Topic 830, Foreign Currency Matters. The functional currency of Orient Paper HB and Orient Paper Shengde is the Chinese Yuan Renminbi (“RMB”). Monetary assets and liabilities denominated in currencies other than RMB are translated into RMB at the rates of exchange ruling at the balance sheet date. Transactions in currencies other than RMB are converted into RMB at the applicable rates of exchange prevailing the transactions occurred. Transaction gains and losses are recognized in the consolidated statements of income. The functional currency of Orient Paper and Shengde Holdings is United States dollars. Monetary assets and liabilities denominated in currencies other than United States dollars are translated into United States dollars at the rates of exchange ruling at the balance sheet date. Translation in currencies other than United States dollars are converted into United States dollars at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains or losses are recognized in the consolidated statement of income. | |||||||||
Under ASC Topic 830-30, all assets and liabilities are translated into United States dollars using the current exchange rate at the end of each fiscal period. The current exchange rates used by the Company as of December 31, 2014 and 2013 to translate the Chinese RMB to the U.S. Dollars are 6.11900:1, and 6.11220:1, respectively. Revenues and expenses are translated using the average exchange rates prevailing throughout the respective years at 6.14530:1, 6.19430:1 and 6.31160:1 for the years ended December 31, 2014, 2013 and 2012, respectively. Translation adjustments are included in other comprehensive income (loss). | |||||||||
Use of Estimates | |||||||||
The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of December 31, 2014 and 2013, and revenues and expenses for the years ended December 31, 2014, 2013 and 2012. The most significant estimates relate to allowance for uncollectible accounts receivable, inventory valuation, useful lives and impairment for property, plant and equipment, valuation allowance for deferred tax assets and contingencies. Actual results could differ from those estimates made by management. | |||||||||
Cash and Cash Equivalents | |||||||||
For purposes of reporting within the statements of cash flows, Orient Paper considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents. | |||||||||
Accounts Receivable | |||||||||
Trade accounts receivable are recorded on shipment of products to customers. The trade receivables are all without customer collateral and interest is not accrued on past due accounts. Periodically, management reviews the adequacy of its provision for doubtful accounts based on historical bad debt expense results and current economic conditions using factors based on the aging of its accounts receivable. Additionally, the Company may identify additional allowance requirements based on indications that a specific customer may be experiencing financial difficulties. Actual bad debt results could differ materially from these estimates. As of December 31, 2014 and 2013, the balance of allowance for doubtful accounts was $76,125 and $67,592, respectively; and the movement of the provision of the doubtful accounts is as below. While management uses the best information available upon which to base estimates, future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions used for the purposes of analysis. | |||||||||
December 31, | |||||||||
Allowance of doubtful accounts | 2014 | 2013 | |||||||
Opening balance | $ | 67,592 | $ | 57,643 | |||||
Provision for the year | 8,571 | 7,990 | |||||||
Exchange difference | (38 | ) | 1,959 | ||||||
Closing balance | $ | 76,125 | $ | 67,592 | |||||
Inventories | |||||||||
Inventories consist principally of raw materials and finished goods, and are stated at the lower of cost (average cost method) or market. Cost includes labor, raw materials, and allocated overhead. No provision in inventories has been provided for the fiscal years 2014, 2013 and 2012. | |||||||||
Property, Plant, and Equipment | |||||||||
Property, plant, and equipment are stated at cost less accumulated depreciation and any impairment losses. Major renewals, betterments, and improvements are capitalized to the asset accounts while replacements, maintenance, and repairs, which do not improve or extend the lives of the respective assets, are expensed to operations. At the time property, plant, and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation or amortization accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to operations. | |||||||||
Construction-in-progress is stated at cost and capitalized as expenses are incurred or as payments are made pursuant to relevant construction contracts. Contract retention is recorded as accrued liability. Construction in progress is not depreciated until project completion and the constructed property being placed in service, at which time the capitalized balance will be transferred to appropriate account of property, plant and equipment. | |||||||||
The Company depreciates property, plant, and equipment using the straight-line method as follows: | |||||||||
Land use rights | Over the lease term | ||||||||
Building and improvements | 30 years | ||||||||
Machinery and equipment | 5-15 years | ||||||||
Vehicles | 15 years | ||||||||
Valuation of long-lived asset | |||||||||
The Company reviews the carrying value of long-lived assets to be held and used when events and circumstances warrants such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset and intangible assets. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets and intangible assets to be disposed are determined in a similar manner, except that fair market values are reduced for the cost to dispose. | |||||||||
Assets held for sale | |||||||||
When assets are identified by management as held for sale, the Company discontinues depreciating the assets and estimates the sales price, net of selling costs, of such assets. If, in management's opinion, the estimated net sales price of the assets which have been identified as held for sale is less than the net book value of the assets, a valuation allowance is established. Properties identified as held for sale and/or disposed of are presented as assets held for sale for all periods presented. | |||||||||
If circumstances arise that previously were considered unlikely and, as a result, the Company decides not to sell a property previously classified as held for sale, the property is reclassified as held and used. A property that is reclassified is measured and recorded individually at the lower of (a) its carrying amount before the property was classified as held for sale, adjusted for any depreciation (amortization) expense that would have been recognized had the property been continuously classified as held and used, or (b) the fair value at the date of the subsequent decision not to sell. | |||||||||
Fair Value of Financial Instruments | |||||||||
The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts that the Company could realize in a current market exchange. As of December 31, 2014 and 2013, the carrying value of the Company’s short term financial instruments, such as cash and cash equivalents, accounts receivable, accounts and notes payable, short-term bank loans and balance due to a related party, approximate at their fair values because of the short maturity of these instruments; while long-term bank loans, loan from a related party and obligation under capital lease approximate at their fair value as the interest rates thereon are close to the market rates of interest published by the People’s Bank of China. | |||||||||
Statutory Reserves | |||||||||
According to the laws and regulations in the PRC, the Company is required to provide for certain statutory funds, namely, reserve fund by an appropriation from net profit after taxation but before dividend distribution based on the local statutory financial statements of the PRC subsidiary and variable interest entity prepared in accordance with the PRC accounting principles and relevant financial regulations. | |||||||||
The Company’s wholly owned subsidiary and variable interest entity in the PRC are required to allocate at least 10% of its net profit to the reserve fund until the balance of such fund has reached 50% of its registered capital. Appropriations of additional reserve fund are determined at the discretion of its directors. The reserve fund can only be used, upon approval by the relevant authority, to offset accumulated losses or increase capital. | |||||||||
For the years ended December 31, 2014, 2013 and 2012, Orient Paper made transfers to this reserve fund in the amounts of $42,168, $74,446, and $100,518, respectively. For the years ended December 31, 2014, 2013 and 2012, all transfers to statutory reserves were made by Orient Paper Shengde. The Company’s variable interest entity Orient Paper HB, which statutory reserve account has been fully funded for 50% of its registered capital in the amount of RMB 75,030,000 (or approximately $11,811,470) as of December 31, 2010, did not make any transfer to statutory reserves during the years ended December 31, 2014, 2013 and 2012. | |||||||||
Employee Benefit Plan | |||||||||
Full time employees of the PRC entities participate in a government mandated multi-employer defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance and other welfare benefits are provided to employees. The total provision for such employee benefits was $nil, $nil and $nil for the years ended December 31, 2014, 2013 and 2012. | |||||||||
Revenue Recognition Policy | |||||||||
The Company recognizes revenue when goods are delivered, when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist, and collectability is reasonably assured. Goods are considered delivered when customer’s truck picks up goods at our finished goods inventory warehouse. | |||||||||
Shipping Cost | |||||||||
Substantially all customers use their own trucks or hire commercial trucking companies to pick up goods from the Company. The Company usually incurs no shipping cost for delivery of goods to customers. For those rare situations where products are not shipped utilizing customer specified shipping services, the Company charges customers a shipping fee which is included in net revenues and was not material. Freight-in and handling costs incurred by the Company with respect to purchased goods are recorded as a component of inventory cost and charged to cost of sales when the inventory items are sold. | |||||||||
Advertising | |||||||||
The Company expenses all advertising and promotion costs as incurred. The Company incurred $6,457, $5,085 and $10,478 of advertising and promotion costs for the years ended December 31, 2014, 2013 and 2012, respectively. | |||||||||
Research and development costs | |||||||||
Research and development costs are expensed as incurred and included in selling, general and administrative expenses. Research and development expenses incurred $20,276, $25,125 and $21,636 for the years ended December 31, 2014, 2013 and 2012, respectively. | |||||||||
Borrowing costs | |||||||||
Borrowing costs attributable directly to the acquisition, construction or production of qualifying assets which require a substantial period of time to be ready for their intended use or sale, are capitalized as part of the cost of those assets. Income earned on temporary investments of specific borrowings pending their expenditure on those assets is deducted from borrowing costs capitalized. All other borrowing costs are recognized in interest expenses in the period in which they are incurred. | |||||||||
Government subsidies | |||||||||
A government subsidy is not recognized until there is reasonable assurance that: (a) the enterprise will comply with the conditions attached to the grant; and (b) the grant will be received. When the Company received the government subsidies but the conditions attached to the grants have not been fulfilled, such government subsidies are deferred and recorded under other payables and accrued expenses, and other long-term liability. The reclassification of short-term or long-term liabilities is depended on the management's expectation of when the conditions attached to the grant can be fulfilled. For the years ended December 31, 2014, 2013 and 2012, the Company received government subsidies of $22,614, $171,125 and $nil, which are recognized as subsidy income in the consolidated statements of income in that fiscal year. | |||||||||
Lease Obligations | |||||||||
All non-cancellable leases with an initial term greater than one year are categorized as either capital or operating leases. For the lessee, a lease is a capital lease if any of the following conditions exist: a) ownership is transferred to the lessee by the end of the lease term, b) there is a bargain purchase option, c) the lease term is at least 75% of the property’s estimated remaining economic life or d) the present value of the minimum lease payments at the beginning of the lease term is 90% or more of the fair value of the leased property to the lessor at the inception date. A capital lease is accounted for as if there was an acquisition of an asset and an incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases. Assets recorded under capital leases are amortized according to the same depreciation methods employed for property, plant and equipment or over the term of the related lease, if shorter. | |||||||||
The Company defers any profit or loss from a sale-leaseback transaction unless any of the following conditions exist: a) the seller-lessee relinquishes the right to substantially all of the remaining use of the property sold retaining only a minor portion of such use; b) the seller-lessee retains more than a minor part but less than substantially all of the use of the property through the leaseback and realizes a profit on the sale in excess of the recorded amount of the leased assets; or c) the fair value of the property at the time of the transaction is less than its undepreciated cost, in which circumstance a loss shall be recognized immediately. | |||||||||
Income Taxes | |||||||||
The Company accounts for income taxes pursuant to ASC Topic 740, Income Taxes. Income taxes are provided on an asset and liability approach for financial accounting and reporting of income taxes. Any tax paid by subsidiaries during the year is recorded. Current tax is based on the profit or loss from ordinary activities adjusted for items that are non-assessable or disallowable for income tax purpose and is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. ASC Topic 740 also requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry-forwards. ASC Topic 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Realization of deferred tax assets, including those related to the U.S. net operating loss carry-forwards, are dependent upon future earnings, if any, of which the timing and amount are uncertain. | |||||||||
The Company adopted ASC Topic 740-10-05, Income Tax, which provides guidance for recognizing and measuring uncertain tax positions, it prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized in the financial statements. It also provides accounting guidance on derecognizing, classification and disclosure of these uncertain tax positions. | |||||||||
The Company’s policy on classification of all interest and penalties related to unrecognized income tax positions, if any, is to present them as a component of income tax expense. | |||||||||
Value Added Tax | |||||||||
Both the PRC subsidiary and variable interest entity of the Company are subject to value added tax (“VAT”) imposed by the PRC government on its purchase and sales of goods. The output VAT is charged to customers who purchase goods from the Company and the input VAT is paid when it purchases goods from its vendors. VAT rate is 17% in general, depending on the types of products purchased and sold. The input VAT can be offset against the output VAT. Debit balance of VAT payable represents a credit against future collection of output VAT instead of a receivable. | |||||||||
Comprehensive Income (Loss) | |||||||||
The Company presents comprehensive income (loss) in accordance with ASC Topic 220, Comprehensive Income. ASC Topic 220 states that all items that are required to be recognized under accounting standards as components of comprehensive income (loss) be reported in the consolidated financial statements. The components of comprehensive income were the net income for the years and the foreign currency translation adjustments. | |||||||||
Earnings Per Share | |||||||||
Basic earnings per share is computed by dividing the net income attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. | |||||||||
Share-Based Compensation | |||||||||
The Company uses the fair value recognition provision of ASC Topic 718, Compensation-Stock Compensation, which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments over the vesting period. | |||||||||
The Company also applies the provisions of ASC Topic 505-50, Equity Based Payments to Non-Employees to account for stock-based compensation awards issued to non-employees for services. Such awards for services are recorded at either the fair value of the consideration received or the fair value of the instruments issued in exchange for such services, whichever is more reliably measurable. | |||||||||
Fair Value Measurements | |||||||||
The Company has adopted ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. It does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. | |||||||||
Its establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following: | |||||||||
Level 1 - Quoted prices in active markets for identical assets or liabilities. | |||||||||
Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |||||||||
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. | |||||||||
Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement. | |||||||||
Non-Recurring Fair Value Measurements | |||||||||
The Company reviews long-lived assets for impairment annually or more frequently if events or changes in circumstances indicate the possibility of impairment. For the continuing operations, long-lived assets are measured at fair value on a nonrecurring basis when there is an indicator of impairment, and they are recorded at fair value only when impairment is recognized. For discontinued operations, long-lived assets are measured at the lower of carrying amount or fair value less cost to sell. The fair value of these assets were determined using models with significant unobservable inputs which were classified as Level 3 inputs, primarily the discounted future cash flow. |
Restricted_Cash
Restricted Cash | 12 Months Ended |
Dec. 31, 2014 | |
Restricted Cash [Abstract] | |
Restricted Cash | (3) Restricted Cash |
Restricted cash of $8,873,999 as of December 31, 2014 was presented for the cash deposited at the Bank of Hebei, Shanghai Pudong Development Bank (“SPD Bank”) and the Commercial Bank of the City of Zhangjiakou for purpose of securing the bank acceptance notes from these banks (see Note (11)). The restriction will be lifted upon the maturity of the notes payable from January 7, 2015 through April 23, 2015. | |
Restricted cash of $2,454,108 as of December 31, 2013 was presented for the cash deposited at the Bank of Hebei for purpose of securing the bank acceptance notes from the bank (see Note (11)). The restriction was lifted upon the maturity of the notes payable from May 15 through June 19 during the year of 2014. | |
Inventories
Inventories | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Inventories [Abstract] | |||||||||
Inventories | (4) Inventories | ||||||||
Raw materials inventory includes mainly recycled paper and coal. Finished goods include mainly products of corrugating medium paper and offset printing paper. Inventories consisted of the following as of December 31, 2014 and 2013: | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Raw Materials | |||||||||
Recycled paper board | $ | 4,338,069 | $ | 8,004,988 | |||||
Pulp | - | 14,257 | |||||||
Recycled white scrap paper | 1,212,588 | 1,791,873 | |||||||
Coal | 497,038 | 573,799 | |||||||
Base paper and other raw materials | 95,053 | 212,984 | |||||||
6,142,748 | 10,597,901 | ||||||||
Finished Goods | 996,851 | 830,504 | |||||||
Totals | $ | 7,139,599 | $ | 11,428,405 |
Prepayments_and_other_current_
Prepayments and other current assets | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Prepayments and Other Current Assets [Abstract] | |||||||||
Prepayments and other current assets | (5) Prepayments and other current assets | ||||||||
Prepayments and other current assets consisted of the following as of December 31, 2014 and 2013: | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Prepaid NYSE MKT annual fee | $ | 7,500 | $ | 7,500 | |||||
Recoverable VAT | 250,000 | 500,000 | |||||||
Prepaid insurance | 55,000 | 61,529 | |||||||
Prepayment for purchase of materials | 1,910,643 | 8,180 | |||||||
Prepaid land lease | 490,276 | 490,822 | |||||||
Others | 206,249 | - | |||||||
Totals | $ | 2,919,668 | $ | 1,068,031 | |||||
Prepayment_on_property_plant_a
Prepayment on property, plant and equipment | 12 Months Ended |
Dec. 31, 2014 | |
Prepayment on Property, Plant and Equipment [Abstract] | |
Prepayment on property, plant and equipment | (6) Prepayment on property, plant and equipment |
As of December 31, 2014 and 2013, prepayment on property, plant and equipment consisted of $1,490,440 and $1,492,098, respectively in respect of prepaid land use right prepayment made on October 26, 2012 for the entitlement of land use right for some 65,023 square meters of land located in our Xushui County, Baoding plant. The purchase is expected to be completed in year 2015. |
Assets_held_for_sale
Assets held for sale | 12 Months Ended |
Dec. 31, 2014 | |
Assets Held for Sale [Abstract] | |
Assets held for sale | (7) Assets held for sale |
As of December 31, 2013, assets held for sale in the amount of $4,130,590 represented the three employee dormitory buildings to be sold to a related party company controlled by our CEO. The sale was consummated on August 15, 2014 and a gain on disposal of approximately $203,620 was recognized during the year ended December 31, 2014. Please refer to Note (10) for the details of the related party transaction. | |
Property_plant_and_equipment_n
Property, plant and equipment, net | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment, Net [Abstract] | |||||||||
Property, plant and equipment, net | (8) Property, plant and equipment, net | ||||||||
As of December 31, 2014 and 2013, property, plant and equipment consisted of the following: | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Property, Plant, and Equipment: | |||||||||
Land use rights | $ | 7,752,886 | $ | 7,761,511 | |||||
Building and improvements | 44,889,395 | 22,406,836 | |||||||
Machinery and equipment | 121,332,310 | 121,088,942 | |||||||
Vehicles | 706,548 | 683,051 | |||||||
Construction in progress | 78,484,066 | 65,160,213 | |||||||
Totals | 253,165,205 | 217,100,553 | |||||||
Less: accumulated depreciation and amortization | (44,952,007 | ) | (38,565,294 | ) | |||||
Property, Plant and Equipment, net | $ | 208,213,198 | $ | 178,535,259 | |||||
As of December 31, 2014 and 2013, land use rights represented a parcel of state-owned land located in Xushui County of Hebei Province in China, with lease terms of 50 years expiring in 2061. | |||||||||
The Company entered into a sale-leaseback arrangement with a leasing company in China on June 16, 2013 for a total financing proceeds in the amount of RMB 150 million (approximately US$24 million). Under the sale-leaseback arrangement, Orient Paper HB sold certain of its paper manufacturing equipment to the leasing company for an amount of RMB 150 million (approximately US$24 million). Concurrent with the sale of equipment, Orient Paper HB leases back all of the equipment (“Leased Equipment”) sold to the leasing company for a lease term of three years. At the end of the lease term, Orient Paper HB may pay a nominal purchase price of RMB 15,000 (approximately $2,400) to the leasing company and buy back all of the Leased Equipment. The sale-leaseback is treated by the Company as a mere financing and capital lease transaction, rather than a sale of assets (under which gain or loss is immediately recognized) under ASC 840-40-25-4. All of the Leased Equipment are included as part of the property, plant and equipment of the Company as of December 31, 2014 and 2013. As a result of the sale, a deferred gain on sale of Leased Equipment in the amount of $1,379,282 was created at the closing of the transaction and presented as a non-current liability. The deferred gain would be amortized by the Company during the lease term and would be used to offset the depreciation of the Leased Equipment, which are recorded at the new cost of $25,964,790 and $25,993,677 as of December 31, 2014 and 2013, respectively. See “Financing with Sale-Leaseback” under Note (9), Loans Payable, for details of the transaction and asset collaterals. The depreciation of Leased Equipment has started in July 2013 and was included with the depreciation expense of the Company’s own assets in the consolidated statement of income. During the years ended December 31, 2014 and 2013, depreciation of Leased Equipment were $1,650,649 and $818,796, respectively. The accumulated depreciation of the Leases Equipment was $2,486,615 and $829,794 as of December 31, 2014 and 2013. During the years ended December 31, 2014 and 2013, the gain realized on sale-leaseback transaction were $461,609 and $228,979, respectively. The gain realized was recorded in cost of sales as a reduction of depreciation expenses. The unamortized deferred gains on sale-leaseback are $695,389 and $1,160,271 as of December 31, 2014 and 2013, respectively. | |||||||||
Construction in progress mainly represents payments for the new 15,000 tonnes per year tissue paper manufacturing equipment PM8, the tissue paper workshops, four warehouses and general infrastructure and administrative facilities in the Wei County industrial park. The tissue paper development project at the Wei County Industrial Park is expected to be completed in the second half of 2015. Upon completion, it will bring about an addition of $99,218,460 to the Company’s machinery and equipment. For the years ended December 31, 2014 and 2013, the amount of interest capitalized is $698,714 and $448,950, respectively. | |||||||||
As of December 31, 2014 and 2013, certain property, plant and equipment of Orient Paper HB with net values of $19,300,765 and $21,901,456 have been pledged for the long-term loan from credit union of Orient Paper HB, respectively. As of December 31, 2014 and 2013, certain of the Company’s property, plant and equipment in the amount of $29,995 and $34,177 have been pledged for the facility obtained from Bank of Hebei. See “Notes Payable” under Note (11) for details. In addition, land use right with net values of $7,339,399 and $7,502,794 as of December 31, 2014 and 2013 was pledged for the sale-leaseback financing. See “Financing with Sale-Leaseback” under Note (9), Loans Payable, for details of the transaction and asset collaterals. | |||||||||
As of December 31, 2014 and 2013, essentially all production equipment of Orient Paper Shengde with net value of $33,287,324 and $36,134,038 has been pledged for the guarantee of Orient Paper HB’s performance under the capital lease. | |||||||||
Depreciation and amortization of property, plant and equipment was $8,289,320 and $7,794,743 for the years ended December 31, 2014 and 2013, respectively. |
Loans_Payable
Loans Payable | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Loans Payable [Abstract] | |||||||||||
Loans Payable | (9) Loans Payable | ||||||||||
Short-term bank loans | |||||||||||
December 31, | December 31, | ||||||||||
2014 | 2013 | ||||||||||
Industrial & Commercial Bank of China (“ICBC”) Loan 1 | (a) | $ | - | $ | 4,090,180 | ||||||
ICBC Loan 2 | (b) | - | 818,036 | ||||||||
ICBC Loan 3 | (c) | - | 1,636,072 | ||||||||
ICBC Loan 4 | (d) | 2,451,381 | - | ||||||||
The Commercial Bank of the City of Zhangjiakou | (e) | 3,268,508 | - | ||||||||
ICBC Loan 5 | (f) | 817,127 | - | ||||||||
ICBC Loan 6 | (g) | 3,268,508 | - | ||||||||
Total short-term bank loans | $ | 9,805,524 | $ | 6,544,288 | |||||||
(a) | On September 2, 2013, the Company entered into a working capital loan agreement with the ICBC for $4,090,180 as of December 31, 2013, for which $818,036 was paid on June 5, 2014 and $3,272,144 was paid on August 15, 2014. The loan bore an interest rate of 115% of the primary lending rate of the People’s Bank of China and was at 6.9% per annum at the time of funding. The Company paid off the principal balance and interest by August 15, 2014. | ||||||||||
Concurrent with the signing of the working capital loan agreement, the Company also entered into an agreement with the ICBC, which provided account management services to the Company during the terms of the underlying loan. The working capital loan was guaranteed by Hebei Fangsheng Real Estate Development Co. Ltd. (“Hebei Fangsheng”) with the land use right on our Headquarters Compound pledged by Hebei Fangsheng as collateral for the benefit of the bank. The land use right on our Headquarters Compound was acquired by Hebei Fangsheng from the Company on August 9, 2013 (see Note (10) for the related party transaction). Hebei Fangsheng is controlled by the Company’s CEO. | |||||||||||
(b) | On September 6, 2013, the Company obtained a new accounts receivable factoring facility from the ICBC for $818,036 as of December 31, 2013. Under the factoring agreement, the bank has recourse against the Company if the receivables, which remained in the Company’s books at all times, are not fully collected. The factoring facility expired on August 4, 2014 and bore an interest rate of 110% of the primary lending rate of the People’s Bank of China and was at 6.6% per annum at the time of funding. The Company paid off the principal balance and interest under the factoring facility on August 4, 2014. | ||||||||||
Concurrent with the signing of the new factoring agreement, the Company also entered into a financial service agreement with the ICBC, which provided accounts receivable management services to the Company during the terms of the underlying factoring facility. The factoring facility was personally guaranteed by the Company’s CEO. | |||||||||||
(c) | On December 3, 2013, the Company obtained from the ICBC an accounts receivable factoring facility with a maximum credit limit of $1,636,072 as of December 31, 2013. Under the factoring agreement, the bank has recourse against the Company if the receivables, which remain in the Company’s books at all times, are not fully collected. The term of the factoring facility expires on October 21, 2014 and carries an interest rate of 6.6% per annum, or 10% plus the prime rate for the loan set forth by the People’s Bank of China at the time of funding. The Company paid off the principal balance and interest under the factoring facility on October 21, 2014. | ||||||||||
(d) | On June 26, 2014, the Company obtained a new accounts receivable factoring facility from the ICBC for $2,451,381 as of December 31, 2014. Under the factoring agreement, the bank has recourse against the Company if the receivables, which remain in the Company’s books at all times, are not fully collected. The factoring facility will expire on June 25, 2015 and bears an interest rate of 110% of the primary lending rate of the People’s Bank of China and was at 6.6% per annum at the time of funding. | ||||||||||
Concurrent with the signing of the new factoring agreement, the Company also entered into a financial service agreement with the ICBC, which provides accounts receivable management services to the Company during the terms of the underlying factoring facility. | |||||||||||
(e) | On June 9, 2014, the Company obtained from the Commercial Bank of the City of Zhangjiakou a banking facility on bank loans and notes payable, which is guaranteed by the Company’s CEO and Shijiazhuang Baode Guarantee Service Company. In obtaining the guarantee from Shijiazhuang Baode Guarantee Service Company, Hebei Tengsheng Paper Co. Ltd (“Hebei Tengsheng”), a third party which owns the land use rights of about 330 acres (or 1.33 million square meters) of land in the Wei County and leases about one-fourth of the premises to Orient paper HB as our production bases of tissue paper and other future facilities, and an independent third party provided a guarantee with the land use rights and buildings pledged by Hebei Tengsheng as collateral. On July 18, 2014, the Company entered into a working capital loan agreement with the bank for $3,268,508 as of December 31, 2014. The loan expires on June 9, 2015 and bears a fixed interest rate of 11.88% per annum. | ||||||||||
(f) | On August 19, 2014, the Company obtained a new accounts receivable factoring facility from the ICBC for $817,127 as of December 31, 2014. Under the factoring agreement, the bank has recourse against the Company if the receivables, which remain in the Company’s books at all times, are not fully collected. The factoring facility will expire on June 11, 2015 and bears an interest rate of 110% of the primary lending rate of the People’s Bank of China and was at 6.6% per annum at the time of funding. | ||||||||||
(g) | On November 20, 2014, the Company entered into a working capital loan agreement with the ICBC for $3,268,508 as of December 31, 2014. The loan bears an interest rate of 110% over the primary lending rate of the People’s Bank of China and was at 6.16% per annum at the time of funding. The loan will expire on December 3, 2015. The working capital loan was guaranteed by Hebei Tengsheng with its land use right and real estates pledged by Hebei Tengsheng as collateral for the benefit of the bank. | ||||||||||
As of December 31, 2014, there were guaranteed short-term borrowings of $3,268,508 and secured bank loans of $6,537,016. As of December 31, 2013, all short-term borrowings are secured bank loans. The factoring facility was secured by the Company’s accounts receivable in the amount of $3,730,123 and $3,272,528 as of December 31, 2014 and 2013, respectively. | |||||||||||
The average short-term borrowing rates for the years ended December 31, 2014, 2013 and 2012 were approximately 7.71%, 6.68% and 7.82%, respectively. | |||||||||||
Long-term loans from credit union | |||||||||||
As of December 31, 2014 and 2013, loans payable to Rural Credit Union of Xushui County, amounted to $5,907,828 and $5,914,401, respectively. | |||||||||||
On March 31, 2011, the Company entered into a three-year term loan agreement with Rural Credit Union of Xushui County for an amount that is $1,611,531 as of December 31, 2013. The loan is guaranteed by an independent third party. Interest payment is due quarterly and bears the rate of 0.72% per month, which was due on March 30, 2014. The entire balance is presented as current portion of long term loan from credit union in the consolidated balance sheet as of December 31, 2013. Because of the ongoing negotiation for renewing the loan, the Company did not repay the loan upon expiry. On April 16, 2014, the Company repaid the entire amount without any penalty. On the same day, the Company entered into another agreement with the Rural Credit Union of Xushui County for an amount that is $1,609,740 as of December 31, 2014. The loan is guaranteed by an independent third party. Interest payment is due quarterly and bears the rate of 0.72% per month. The loan balance would be repayable by various installments from June 21, 2014 to November 18, 2018. As of December 31, 2014, total outstanding loan balance was $1,609,740 with $65,370 becoming due within one year and presented as current portion of long term loans from credit union in the consolidated balance sheet | |||||||||||
On July 15, 2013, the Company entered into a new agreement with the Rural Credit Union of Xushui County for a term of 5 years, which is due and payable on various scheduled repayment dates between December 21, 2013 and July 26, 2018. The loan is secured by certain of the Company’s manufacturing equipment in the amount of $19,300,765 and $21,901,456 as of December 31, 2014 and 2013, respectively. Interest payment is due quarterly and bears a fixed rate of 0.72% per month. As of December 31, 2014, the total outstanding loan balance was $4,298,088, with $81,713 becoming due within one year and presented as current portion of long term loans from credit union in the consolidated balance sheet. As of December 31, 2013, the total outstanding loan balance was $4,302,870, with $49,082 becoming due within one year and presented as current portion of long term loans from credit union in the consolidated balance sheet. | |||||||||||
Total interest expenses for the short-term bank loans and long-term loans for the years ended December 31, 2014, 2013 and 2012 were $1,031,163, $828,157 and $736,457, respectively. | |||||||||||
Financing with Sale-Leaseback | |||||||||||
The Company entered into a sale-leaseback arrangement (the “Lease Financing Agreement”) with China National Foreign Trade Financial & Leasing Co., Ltd ("CNFTFL") on June 16, 2013, for a total financing proceeds in the amount of RMB 150 million (approximately US$24 million). Under the sale-leaseback arrangement, Orient Paper HB sold the Leased Equipment to CNFTFL for RMB 150 million (approximately US$24 million). Concurrent with the sale of equipment, Orient Paper HB leases back all of the equipment sold to CNFTFL for a lease term of three years. At the end of the lease term, Orient Paper HB may pay a nominal purchase price of RMB 15,000 (approximately $2,400) to CNFTFL and buy back all of the Leased Equipment. The sale-leaseback is treated by the Company as a mere financing and capital lease transaction, rather than a sale of assets (under which gain or loss is immediately recognized) under ASC 840-40-25-4. All of the Leased Equipment are included as part of the property, plant and equipment of the Company for the periods presented; while the net present value of the minimum lease payment (including a lease service charge equal to 5.55% of the amount financed, i.e. approximately US$1.35 million) was recorded as obligations under capital lease and was calculated with CNFTFL’s implicit interest rate of 6.15% per annum and stated at $25,750,170 at the inception of the lease on June 16, 2013. The balance of the long-term obligations under capital lease were $4,090,413 and $12,296,639 as of December 31, 2014 and 2013, which is net of its current portion in the amount of $12,258,488 and $8,264,795, respectively. | |||||||||||
Total interest expenses for the sale-leaseback arrangement for years ended December 31, 2014 and 2013 were $919,298 and $471,472, respectively. | |||||||||||
As a result of the sale and leaseback of equipment on June 16, 2013, a deferred gain in the amount of $1,379,282 was recorded. The deferred gain is being amortized over the lease term of three years and as an offset to depreciation of the Leased Equipment. | |||||||||||
As part of the sale-leaseback transaction, Orient Paper HB entered into a Collateral Agreement with CNFTFL and pledged the land use right in the amount of approximately $7,339,399 on some 58,566 square meters of land as collateral for the lease. In addition to Orient Paper HB’s collateral, Orient Paper Shengde also entered into a Guarantee Contract with CNFTFL on June 16, 2013. Under the Guarantee Contract, Orient Paper Shengde agrees to guarantee Orient Paper HB’s performance under the lease and to pledge all of its production equipment as additional collateral. The net book value of Orient Paper Shengde’s asset guarantee was $33,287,324 and $36,134,038 as of December 31, 2014 and 2013, respectively. | |||||||||||
The future minimum lease payments of the capital lease as of December 31, 2014 were as follows: | |||||||||||
December 31, | Amount | ||||||||||
2015 | $ | 12,882,597 | |||||||||
2016 | 4,213,362 | ||||||||||
17,095,959 | |||||||||||
Less: unearned discount | (747,058 | ) | |||||||||
16,348,901 | |||||||||||
Less: Current portion of obligation under capital lease, net | (12,258,488 | ) | |||||||||
Long-term obligation under capital lease, net | $ | 4,090,413 |
Related_Party_Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2014 | |
Related Parties Transactions [Abstract] | |
Related Parties Transactions | (10) Related Parties Transactions |
The Company’s CEO loaned money to Orient Paper HB for working capital purposes over a period of time. On January 1, 2013, Orient Paper HB and Mr. Liu renewed the three-year term loan previously entered on January 1, 2010, and extended the maturity date further to December 31, 2015. The balance was $2,386,978 and $2,389,633 as of December 31, 2014 and 2013, respectively. The unsecured loan carries an annual interest rate based on the People’s Bank of China at the time of the renewal and was set at 6.15% per annum. The entire balance is presented as current portion of long term loan from a related party in the consolidated balance sheet as of December 31, 2014. | |
On December 10, 2014, Mr. Liu loaned $9,805,924 to Orient Paper HB for working capital purpose with an annual interest rate based on the People’s Bank of China at the time of the receipt and was set at 6% per annum. The unsecured loan will expire on December 10, 2017. As of December 31, 2014 and 2013, total amount of loans due to Mr. Liu were $12,192,502 and $2,389,633, respectively. | |
The interest expenses incurred for above related party loans are $194,692, $145,015 and $135,377 for the years ended December 31, 2014, 2013 and 2012, respectively. On January 20, 2015, our CEO agreed in writing to permit the Company to postpone the repayment of the loan and accrued interest on his loan to Orient Paper HB until the earliest date on which the Company's quarterly or annual financial statements filed with the SEC show a satisfactory working capital level. The accrued interest owned to Mr. Liu was approximately $761,242 and $672,133, which was recorded in other payables and accrued liabilities (see Note (12) below) as part of the current liabilities as of December 31, 2014 and 2013, respectively. | |
During the years ended December 31, 2014, 2013 and 2012, the Company borrowed $793,500, $1,390,802 and $1,030,097, respectively, from a shareholder to pay for various expenses incurred in the U.S. The amount was repayable on demand with interest free. The Company repaid the entire balance by the end of the period. | |
Sale of Headquarters Compound Real Properties to a Related Party | |
On August 7, 2013, the Company’s Audit Committee and the Board of Directors approved the sale of the land use right of the Headquarters Compound (the “LUR”), the office building and essentially all industrial-use buildings in the Headquarters Compound (the “Industrial Buildings”), and three employee dormitory buildings located within the Headquarters Compound (the “Dormitories”) to Hebei Fangsheng for cash of approximately $2.77 million, $1.15 million, and $4.28 million, respectively. In connection with the sale of the Industrial Buildings, Hebei Fangsheng agreed to lease the Industrial Buildings back to the Company for its original use for a term of up to three years, with an annual rental payment of approximately $163,425 (RMB1,000,000). On January 21, 2015, Hebei Fangsheng agreed in writing to permit the Company to continue to postpone the repayment of the accrued rental charged to Orient Paper HB until the earliest date on which the Company's quarterly or annual financial statements filed with the SEC show a satisfactory working capital level. The accrued rental owned to Hebei Fangsheng was approximately $227,900 and $64,546, which was recorded in other payables and accrued liabilities as part of the current liabilities as of December 31, 2014 and 2013, respectively. | |
The sale was conducted on an arms-length basis, and was reviewed by the Company’s Audit Committee and approved by the Board of Directors. The $2.77 million sale price of the industrial land use right was based on a government designated appraisal, which was 3.35% higher than a second independent appraisal commissioned by the Company. The $1.15 million sale price of the Industrial Buildings was determined by negotiation between the Company and Hebei Fangsheng and is equal to the appraised value based on the assumption that the use of the buildings would be continued until they are retired. Based on the assumption that such buildings would have to be torn down to comply with the re-zoning, a second independent appraisal obtained by the Company put the value at $0.4 million. Although the Company and Hebei Fangsheng agreed to set the sale price of the Dormitories at the Company’s original construction cost of $4.28 million, an independent appraisal shows that the value for the three buildings as employee dormitories was $4.61 million. | |
As a condition for the sale of the Dormitories, Hebei Fangsheng acted as the agent for the Company, which does not have the qualification to sell residential housing units in China, and sold all of the 132 apartment units in the Dormitories to qualified employees of the Company at its acquisition price. Hebei Fangsheng did not seek any profit from the resale of the Dormitories units and allowed the Company to inspect the books and records of the sale after the completion of the resale of the Dormitories units to ensure the objectives are achieved. | |
Sales of the LUR and the Industrial Buildings were completed in year 2013. Sales of the dormitories, which was classified as assets held for sale as of December 31, 2013, was consummated on August 15, 2014 with a gain on disposal of approximately $203,620 recognized during the year ended December 31, 2014. | |
Land Use Right Pledged by Hebei Fangsheng | |
Independent from the above related party sale transaction, on March 3, 2014, Hebei Fangsheng entered into a Collateral Agreement with SPD Bank in connection with the Company’s bank acceptance note obtained from the SPD Bank (see Note (11) below). Under the Collateral Agreement, Hebei Fangsheng pledged certain land-use-right on a parcel of land located in Wei County, Hebei for the benefit of the SPD Bank as collateral to secure the credit facility of the bank acceptance note during the period of March 3, 2014 and March 2, 2016. As explained above, Hebei Fangsheng is controlled by the Company’s CEO. |
Notes_Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2014 | |
Notes Payable [Abstract] | |
Notes payable | (11) Notes payable |
As of December 31, 2014, the Company had eleven bank acceptance notes that totaled of $1,405,458, $6,537,016 and $8,171,270, respectively, from Bank of Hebei, SPD Bank and the Commercial Bank of the City of Zhangjiakou, respectively, to one of its major suppliers for settling purchase of raw materials. These acceptances notes are used to essentially extend the payment of accounts payable and are issued under the banking facilities obtained from these three banks as well as the restricted bank deposit of $8,873,999 in these three banks as mentioned in Note (3). In particular, the banking facility obtained from Bank of Hebei was secured by certain of the Company’s property, plant and equipment in the amount of $29,995 and guaranteed by the Company’s CEO and Hebei Fangsheng and two independent third parties. The banking facility obtained from SPD Bank was secured by land use right from a related party as mentioned in Note (10). The banking facility obtained from the Commercial Bank of the City of Zhangjiakou was guaranteed by the Company’s CEO and Shijiazhuang Baode Guarantee Service Company as mentioned in Note (9). The bank acceptance notes from those three banks bear interest rate at nil% per annum and 0.05% of notes amount as handling change. They will become due and payable on various dates starting from January 7, 2015 to April 23, 2015. | |
As of December 31, 2013, the Company had three bank acceptance notes from Bank of Hebei to one of its major suppliers for a total amount of $4,908,216 for settling purchase of raw materials. An amount equal to $2,454,108 is under the banking facility obtained from Bank of Hebei in November 13, 2013, while the remaining portion, amount of $2,454,108 are secured with a restricted bank deposit as mentioned in Note (3). The banking facility obtained from Bank of Hebei was secured by certain of the Company’s property, plant and equipment in the amount of $34,177, and guaranteed by the Company’s CEO and two independent third parties. The bank acceptance notes bear interest rate at nil% per annum and 0.05% of notes amount as handling change. They will become due and payable on various dates starting from May 15 through June 19 during the year of 2014. |
Other_Payables_and_Accrued_Lia
Other Payables and Accrued Liabilities | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Other Payables and Accrued Liabilities [Abstract] | |||||||||
Other payables and accrued liabilities | (12) Other payables and accrued liabilities | ||||||||
Other payables and accrued liabilities consist of the following: | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Accrued electricity | $ | 334,212 | $ | 372,726 | |||||
Accrued professional fees | - | 58,000 | |||||||
Value-added tax payable | 841,556 | 940,400 | |||||||
Accrued interest to a related party | 761,242 | 566,343 | |||||||
Accrued bank loan interest | - | 380,022 | |||||||
Advance from customer | - | 11,453 | |||||||
Insurance premium payable | - | 62,348 | |||||||
Payable for purchase of equipment | 244,050 | - | |||||||
Others | 219,463 | 260,180 | |||||||
Totals | $ | 2,400,523 | $ | 2,651,472 | |||||
Common_Stock
Common Stock | 12 Months Ended |
Dec. 31, 2014 | |
Common Stock [Abstract] | |
Common Stock | (13) Common Stock |
Issuance of common stock to investors | |
On August 27, 2014, the Company issued 1,562,500 shares of our common stock and warrants to purchase up to 781,250 shares of our common stock (the “Offering”). Each share of common stock and accompanying warrant was sold at a price of $1.60. Please refer to Note (14), Stock Warrants, for details. | |
Dividend declared | |
On April 4, 2013, the Company declared a quarterly dividend of $0.0125 per share to shareholders of record as of April 16, 2013. The dividend was paid on April 30, 2013. | |
On November 21, 2013, the Company declared another quarterly dividend of $0.005 per share to shareholders of record as of November 29, 2013. The dividend was paid on December 10, 2013. | |
Future declaration of dividends will depend on, among other things, the Company's results of operations, capital requirements, financial condition and on such other factors as the Company's Board of Directors may in its discretion consider relevant and in the best long term interest of the shareholders. |
Stock_warrants
Stock warrants | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Stock Warrants [Abstract] | |||||||||
Stock warrants | (14) Stock warrants | ||||||||
On August 27, 2014, the Company issued 1,562,500 shares of our common stock and warrants to purchase up to 781,250 shares of our common stock. The warrants have an exercise price of $1.70 per share. These warrants are exercisable immediately upon issuance on September 3, 2014 and have a term of exercise equal to five years from the date of issuance till September 2, 2019. The fair value of these shares amounted to $780,000, is classified as equity. | |||||||||
The fair value of the warrants issued was estimated by using the Binominal pricing model with the following assumptions: | |||||||||
Terms of warrants | 5 years | ||||||||
Expected volatility | 72 | % | |||||||
Risk-free interest rate | 1.69 | % | |||||||
Expected dividend yield | 0.81 | % | |||||||
In connection with the Offering, the Company issued warrants to its placement agent of this Offering, which can purchase an aggregate of up to 2.50% of the aggregate number of shares of common stock sold in the Offering, i.e. 39,062 shares. These warrants have substantially the same terms as the warrants issued to purchaser in the Offering, except that the exercise price is $2.00 per share and the expiration date is from September 3, 2014 to June 26, 2019. The fair value of these shares amounted to $35,191, is classified in the equity to net off the proceeds from the issuance of the shares and warrants. | |||||||||
The fair value of the warrants issued was estimated by using the Binominal pricing model with the following assumptions: | |||||||||
Terms of warrants | 4.81 years | ||||||||
Expected volatility | 69.8 | % | |||||||
Risk-free interest rate | 1.62 | % | |||||||
Expected dividend yield | 0.81 | % | |||||||
The Company applied judgment in estimating key assumptions in determining the fair value of the warrants on the date of issuance. The Company used historical data to estimate stock volatilities and expected dividend yield. The risk-free rates are consistent with the terms of the warrants and are based on the United States Treasury yield curve in effect at the time of issuance. | |||||||||
A summary of stock warrant activities is as below: | |||||||||
Year ended | |||||||||
31-Dec-14 | |||||||||
Number | Weight | ||||||||
average exercise | |||||||||
price | |||||||||
Outstanding and exercisable at beginning of the period | - | - | |||||||
Issued during the period | 820,312 | $ | 1.71 | ||||||
Exercised during the period | - | - | |||||||
Cancelled or expired during the period | - | - | |||||||
Outstanding and exercisable at end of the period | 820,312 | $ | 1.71 | ||||||
Range of exercise price | $1.70 to $2.00 | ||||||||
No warrants were issued, exercised, cancelled or expired during the year ended December 31, 2013. The weighted average fair value of warrants granted for the period ended December 31, 2014 was $0.99 per share. The total intrinsic value of warrants exercised for the period ended December 31, 2014 was $nil. As of December 31, 2014, the aggregated intrinsic value of warrants outstanding and exercisable was $nil. |
Earnings_Per_Share
Earnings Per Share | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Earnings Per Share [Abstract] | |||||||||||||
Earnings Per Share | (15) Earnings Per Share | ||||||||||||
The basic and diluted net income per share are calculated as follows: | |||||||||||||
Year Ended | |||||||||||||
December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Basic income per share | |||||||||||||
Net income for the year - numerator | $ | 11,706,360 | $ | 13,014,648 | $ | 14,672,663 | |||||||
Weighted average common stock outstanding - denominator | 19,270,394 | 18,458,446 | 18,456,781 | ||||||||||
Net income per share | $ | 0.61 | $ | 0.71 | $ | 0.79 | |||||||
Diluted income per share | |||||||||||||
Net income for the year - numerator | $ | 11,706,360 | $ | 13,014,648 | $ | 14,672,663 | |||||||
Weighted average common stock outstanding - denominator | 19,270,394 | 18,458,446 | 18,456,781 | ||||||||||
Effect of dilution | |||||||||||||
Warrant | - | - | - | ||||||||||
Weighted average common stock outstanding - denominator | 19,270,394 | 18,458,446 | 18,456,781 | ||||||||||
Diluted income per share | $ | 0.61 | $ | 0.71 | $ | 0.79 | |||||||
For the years ended December 31, 2012 and 2013, there were no securities with dilutive effect issued and outstanding. For the year ended December 31, 2014, 820,312 shares related to warrants are excluded from the calculations of dilutive net income per share as their effects would have been anti-dilutive since the average share price for the year ended December 31, 2014 were lower than the warrants exercise price. |
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Income Taxes [Abstract] | |||||||||||||
Income Taxes | (16) Income Taxes | ||||||||||||
United States | |||||||||||||
Orient Paper and Shengde Holdings are incorporated in the State of Nevada and are subject to the U.S. federal tax and state statutory tax rates up to 34% and 0%, respectively. | |||||||||||||
PRC | |||||||||||||
Orient Paper HB and Orient Paper Shengde are PRC operating companies and are subject to PRC Enterprise Income Tax. Pursuant to the PRC New Enterprise Income Tax Law, Enterprise Income Tax is generally imposed at a statutory rate of 25%. | |||||||||||||
The provisions for income taxes for the years ended December 31, 2014, 2013 and 2012 were as follows: | |||||||||||||
Year Ended | |||||||||||||
December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Provision for Income Taxes | |||||||||||||
Current Tax Provision – PRC | $ | 4,034,119 | $ | 4,684,870 | $ | 6,406,050 | |||||||
Deferred Tax Provision – PRC | 398,385 | 409,665 | (941,207 | ) | |||||||||
Total Provision for Income Taxes | $ | 4,432,504 | $ | 5,094,535 | $ | 5,464,843 | |||||||
In addition to the reversible future PRC income tax benefits stemming from the timing differences of items such as recognition of asset disposal gain or loss and asset depreciation, Orient Paper, Inc. was incorporated in the United States and has incurred aggregate net operating losses of approximately $3,649,541, $3,403,740 and $3,146,156 for U.S. income tax purposes for the years ended December 31, 2014, 2013 and 2012, respectively. The net operating loss carried forward may be available to reduce future years’ taxable income. These carry forwards will expire, if not utilized, during the period of 2029 through 2034. Management believes that the realization of all the U.S. income tax benefits from these losses, which generally would generate a deferred tax asset if it can be expected to be utilized in the future, appears not more than likely due to the Company’s limited operating history and continuing losses for United States income tax purposes. Accordingly, the Company has provided a 100% valuation allowance on the U.S. deferred tax asset benefit to reduce the total deferred tax asset to the amount realizable for the PRC income tax purposes. Management will review this valuation allowance periodically and make adjustments as warranted. A summary of the otherwise deductible (or taxable) deferred tax items is as follows: | |||||||||||||
December 31, | |||||||||||||
2014 | 2013 | ||||||||||||
Deferred tax assets (liabilities) – current: | |||||||||||||
Depreciation and amortization of property, plant and equipment | $ | - | $ | 139,805 | |||||||||
Impairment of property, plant and equipment | - | 225,656 | |||||||||||
Miscellaneous | - | 48,076 | |||||||||||
Total deferred tax asset – current, net | $ | - | $ | 413,537 | |||||||||
Deferred tax assets (liabilities) – non-current | |||||||||||||
Depreciation and amortization of property, plant and equipment | $ | (1,248 | ) | $ | 31,446 | ||||||||
Impairment of property, plant and equipment | 308,175 | 261,805 | |||||||||||
Miscellaneous | (25,917 | ) | (24,922 | ) | |||||||||
Net operating loss carryover for U.S. income tax purposes | 2,000,539 | 1,445,755 | |||||||||||
Total deferred tax assets – non-current | 2,281,549 | 1,714,084 | |||||||||||
Less: Valuation allowance | (2,000,539 | ) | (1,445,755 | ) | |||||||||
Total deferred tax assets – non-current, net | $ | 281,010 | $ | 268,329 | |||||||||
The following table reconciles the statutory rates to the Company's effective tax rate as of: | |||||||||||||
Year ended | |||||||||||||
December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
PRC Statutory rate | 25 | % | 25 | % | 25 | % | |||||||
Effect of different tax jurisdiction | (0.8 | ) | (1.1 | ) | (0.6 | ) | |||||||
Effect of expenses not deductible for PRC tax purposes | - | 1.5 | - | ||||||||||
Effect of income not taxable for PRC tax purposes | 0.1 | - | 0.3 | ||||||||||
Under provision in previous year | 0.1 | - | - | ||||||||||
Change in valuation allowance | 3.1 | 2.7 | 2.4 | ||||||||||
Effective income tax rate | 27.5 | % | 28.1 | % | 27.1 | % | |||||||
For U.S. tax purposes, the Company has cumulative undistributed earnings of foreign subsidiaries of approximately $114,158,370 and $100,959,070 as of December 31, 2014 and 2013 respectively, which are included in consolidated retained earnings and will continue to be indefinitely reinvested in international operations. Accordingly, no provision has been made for U.S. deferred taxes related to future repatriation of these earnings, nor is it practicable to estimate the amount of income taxes that would have to be provided if we concluded that such earnings will be remitted to the U.S. in the future. | |||||||||||||
The Company does not believe that its future dividend policy and the available U.S. tax deductions and NOLs will cause the Company to recognize any substantial current U.S. federal or state corporate income tax liability in the near future. Nor does it believes that the amount of the repatriation of the VIE’s earnings and profits for purposes of paying dividends will change the Company’s position that its PRC subsidiary Orient Paper Shengde and the VIE, Orient Paper HB are considered or are expected to be indefinitely reinvested offshore to support our future capacity expansion. If these earnings are repatriated to the U.S. resulting in U.S. taxable income in the future, or if it is determined that such earnings are to be remitted in the foreseeable future, additional tax provisions would be required. | |||||||||||||
During the years ended December 31, 2014, 2013 and 2012, the effective income tax rate was estimated by the Company to be 27.5%, 28.1% and 27.1%, respectively. The effective tax rate is lower than the U.S. statutory rate of 35% primarily because the undistributed earnings of our PRC subsidiary Orient Paper Shengde and the VIE, Orient Paper HB are considered or are expected to be indefinitely reinvested offshore to support our future capacity expansion. | |||||||||||||
The Company has adopted ASC Topic 740-10-05, Income Taxes. To date, the adoption of this interpretation has not impacted the Company’s financial position, results of operations, or cash flows. The Company performed self-assessment and the Company’s liability for income taxes includes the liability for unrecognized tax benefits, interest and penalties which relate to tax years still subject to review by taxing authorities. Audit periods remain open for review until the statute of limitations has passed, which in the PRC is usually 5 years. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of December 31, 2014 and 2013, management considered that the Company had no uncertain tax positions affecting its consolidated financial position and results of operations or cash flows, and will continue to evaluate for any uncertain position in future. There are no estimated interest costs and penalties provided in the Company’s consolidated financial statements for the years ended December 31, 2014, 2013 and 2012, respectively. The Company’s tax positions related to open tax years are subject to examination by the relevant tax authorities and the major one is the China Tax Authority. | |||||||||||||
Stock_Incentive_Plans
Stock Incentive Plans | 12 Months Ended |
Dec. 31, 2014 | |
Stock Incentive Plans [Abstract] | |
Stock Incentive Plans | (17) Stock Incentive Plans |
Issuance of common stock pursuant to the 2011 Incentive Stock Plan and 2012 Incentive Stock Plan | |
On August 28, 2011, the Company’s Annual General Meeting approved the 2011 Incentive Stock Plan of Orient Paper, Inc. (the “2011 ISP”) as previously adopted by the Board of Directors on July 5, 2011. Under the 2011 ISP, the Company may grant an aggregate of 375,000 shares of the Company’s common stock to the Company’s directors, officers, employees or consultants. No stock or option was issued under the 2011 ISP until January 2, 2012, when the Compensation Committee granted 109,584 shares of restricted common stock to certain officers and directors of the Company when the stock was at $3.45 per share, as compensation for their services in the past years. Total fair value of the stock was calculated at $378,065 as of the date of issuance. | |
On September 10, 2012, the Company’s Annual General Meeting approved the 2012 Incentive Stock Plan of Orient Paper, Inc. (the “2012 ISP”) as previously adopted by the Board of Directors on July 4, 2012. Under the 2012 ISP, the Company may grant an aggregate of 200,000 shares of the Company’s common stock to the Company’s directors, officers, employees or consultants. Specifically, the Board and/or the Compensation Committee have authority to (a) grant, in its discretion, Incentive Stock Options or Non-statutory Options, Stock Awards or Restricted Stock Purchase Offers; (b) determine in good faith the fair market value of the stock covered by any grant; (c) determine which eligible persons shall receive grants and the number of shares, restrictions, terms and conditions to be included in such grants; and (d) make all other determinations necessary or advisable for the 2012 ISP's administration. | |
On December 31, 2013, the Compensation Committee granted restricted common shares of 297,000, out of which 265,416 shares were granted under the 2011 ISP and 31,584 shares under the 2012 ISP, to certain officers, directors and employees of the Company when the stock was at $2.66 per share, as compensation for their services in the past years. Total fair value of the stock was calculated at $790,020 as of the date of grant. No stock or option was issued under the 2012 ISP subsequently. | |
Cancellation of certain director compensation shares | |
On April 4, 2013, the Company cancelled 2,875 shares of common stock previously issued on March 31, 2011 to two of its directors. The cancellation of shares was at the request of the New York Stock Exchange following a review of the Company’s shares listing application, where the stock exchange believes the shares were issued without shareholder approval and after the Company was subject to the shareholder approval requirement for any stock compensation. The Company reversed the related capital accounts and 2011 compensation expense of $3 and $16,155, respectively, during the year ended December 31, 2013. |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies [Abstract] | |||||
Commitments and Contingencies | (18) Commitments and Contingencies | ||||
Operating Lease | |||||
Orient Paper leases 32.95 acres of land from a local government in Xushui County, Baoding City, Hebei, China through a real estate lease with a 30-year term, which expires on December 31, 2031. The lease requires an annual rental payment of approximately $19,611 (RMB 120,000). This operating lease is renewable at the end of the 30-year term. | |||||
On November 27, 2012, Orient Paper entered into a 49.4 acres land lease with an investment company in the Economic Development Zone in Wei County, Hebei Province, China. The lease term of the Wei County land lease commences on the date of the lease and lasts for 15 years. The lease requires an annual rental payment of $588,331 (RMB 3,600,000). The Company will be building two new tissue paper production lines and future production facilities in the leased Wei County land. | |||||
As mentioned in Note (10) Related Party Transactions, in connection with the sale of Industrial Buildings to Hebei Fangsheng, Hebei Fangsheng agrees to lease the Industrial Buildings back to Orient Paper at an annual rental of $163,425 (RMB 1,000,000), for a term of up to three years. The Company will continue its operations in the current location for a maximum of three years while looking for a new location to relocate its offices and the digital photo paper operations currently located in the headquarters compound. | |||||
Future minimum lease payments are as follows: | |||||
Year Ended December 31, | Amount | ||||
2015 | $ | 771,368 | |||
2016 | 703,274 | ||||
2017 | 607,942 | ||||
2018 | 607,942 | ||||
2019 | 607,942 | ||||
Thereafter | 4,353,654 | ||||
Total operating lease payments | $ | 7,652,122 | |||
Capital commitment | |||||
As of December 31, 2014, the Company has signed several contracts for construction of equipment and facilities, including a new tissue paper production line PM8. Total outstanding commitments under these contracts were $24,561,228 and $51,673,158 as of December 31, 2014 and 2013, respectively. The Company expected to pay off all the balances within 1 year. |
Segment_Reporting
Segment Reporting | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||
Segment Reporting | (19) Segment Reporting | ||||||||||||||||||||
Since March 10, 2010, Orient Paper Shengde started its operations and thereafter the Company manages its operations through two business operating segments: Orient Paper HB, which produces offset printing paper and corrugating medium paper, and Orient Paper Shengde, which produces digital photo paper. They are managed separately because each business requires different technology and marketing strategies. | |||||||||||||||||||||
The Company evaluates performance of its operating segments based on net income. Administrative functions such as finance, treasury, and information systems are centralized. However, where applicable, portions of the administrative function expenses are allocated between the operating segments based on gross revenue generated. The operating segments do share facilities in Xushui County, Baoding City, Hebei Province, China. All sales were sold to customers located in the PRC. | |||||||||||||||||||||
Summarized financial information for the two reportable segments is as follows: | |||||||||||||||||||||
Year Ended | |||||||||||||||||||||
December 31, 2014 | |||||||||||||||||||||
Orient Paper | Orient Paper | Not Attributable | Elimination of | Enterprise-wide, | |||||||||||||||||
HB | Shengde | to Segments | Inter-segment | consolidated | |||||||||||||||||
Revenues | $ | 133,967,031 | $ | 4,829,046 | $ | - | $ | (1,754,630 | ) | $ | 137,041,447 | ||||||||||
Gross Profit | 20,401,820 | 2,376,328 | - | - | 22,778,148 | ||||||||||||||||
Depreciation and amortization | 5,467,593 | 2,821,727 | - | - | 8,289,320 | ||||||||||||||||
Interest income | 145,590 | 4,193 | - | - | 149,783 | ||||||||||||||||
Interest expense | 1,446,439 | - | - | - | 1,446,439 | ||||||||||||||||
Income tax expense | 4,337,424 | 95,080 | - | - | 4,432,504 | ||||||||||||||||
Net Income (Loss) | 11,299,155 | 1,900,145 | (1,492,940 | ) | - | 11,706,360 | |||||||||||||||
Total Assets | 200,764,663 | 38,914,243 | 88,679 | - | 239,767,585 | ||||||||||||||||
Year Ended | |||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||
Orient Paper | Orient Paper | Not Attributable | Elimination of | Enterprise-wide, | |||||||||||||||||
HB | Shengde | to Segments | Inter-segment | consolidated | |||||||||||||||||
Revenues | $ | 120,747,633 | $ | 4,969,997 | $ | - | $ | - | $ | 125,717,630 | |||||||||||
Gross Profit | 22,318,739 | 1,006,860 | - | - | 23,325,599 | ||||||||||||||||
Depreciation and amortization | 6,828,970 | 965,773 | - | - | 7,794,743 | ||||||||||||||||
Interest income | 86,168 | 4,009 | 83 | - | 90,260 | ||||||||||||||||
Interest expense | 995,694 | - | - | - | 995,694 | ||||||||||||||||
Income tax expense | 4,845,970 | 248,565 | - | - | 5,094,535 | ||||||||||||||||
Net Income (Loss) | 14,604,244 | 638,031 | (2,227,627 | ) | - | 13,014,648 | |||||||||||||||
Total Assets | 168,149,877 | 41,264,704 | 111,621 | - | 209,526,202 | ||||||||||||||||
Year Ended | |||||||||||||||||||||
December 31, 2012 | |||||||||||||||||||||
Orient Paper | Orient Paper | Not Attributable | Elimination of | Enterprise-wide, | |||||||||||||||||
HB | Shengde | to Segments | Inter-segment | consolidated | |||||||||||||||||
Revenues | $ | 144,928,792 | $ | 6,188,014 | $ | - | $ | - | $ | 151,116,806 | |||||||||||
Gross Profit | 25,616,670 | 1,439,577 | - | - | 27,056,247 | ||||||||||||||||
Depreciation and amortization | 6,553,120 | 1,829,739 | - | - | 8,382,859 | ||||||||||||||||
Impairment | 2,762,349 | - | - | - | 2,762,349 | ||||||||||||||||
Interest income | 25,950 | 4,634 | 90 | - | 30,674 | ||||||||||||||||
Interest expense | 867,561 | - | 4,273 | - | 871,834 | ||||||||||||||||
Income tax expense | 5,129,304 | 335,539 | - | - | 5,464,843 | ||||||||||||||||
Net Income (Loss) | 15,109,345 | 965,444 | (1,402,126 | ) | - | 14,672,663 |
Concentration_and_Major_Custom
Concentration and Major Customers and Suppliers | 12 Months Ended |
Dec. 31, 2014 | |
Concentration of Major Customers and Suppliers of Credit Risk Under Risks and Uncertainties [Abstract] | |
Concentration and Major Customers and Suppliers | (20) Concentration and Major Customers and Suppliers |
For the years ended December 31, 2014, 2013 and 2012, the Company had no single customer contributed over 10% of total sales. For the year ended December 31, 2014, the Company had three major suppliers accounted for 62%, 14% and 9% of total purchases. For the year ended December 31, 2013, the Company had three major suppliers accounted for 75%, 10% and 7% of total purchases. For the year ended December 31, 2012, the Company had two major suppliers accounted for 77% and 8% of total purchases. | |
Concentration_of_Credit_Risk
Concentration of Credit Risk | 12 Months Ended |
Dec. 31, 2014 | |
Concentration of Major Customers and Suppliers of Credit Risk Under Risks and Uncertainties [Abstract] | |
Concentration of Credit Risk | (21) Concentration of Credit Risk |
Financial instruments for which the Company is potentially subject to concentration of credit risk consist principally of cash. The Company places its temporary cash investments in reputable financial institutions in the PRC and the United States. Although it is generally understood that the PRC central government stands behind all of the banks in China in the event of bank failure, there is no deposit insurance system in China that is similar to the protection provided by the Federal Deposit Insurance Corporation (FDIC) of the United States. The Company’s U.S. bank accounts are all fully covered by the FDIC insurance as of December 31, 2014 and 2013, respectively. | |
Risks_and_Uncertainties
Risks and Uncertainties | 12 Months Ended |
Dec. 31, 2014 | |
Concentration of Major Customers and Suppliers of Credit Risk Under Risks and Uncertainties [Abstract] | |
Risks and Uncertainties | (22) Risks and Uncertainties |
Orient Paper is subject to substantial risks from, among other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, foreign currency exchange rates, and operating in the PRC under its various laws and restrictions. | |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2014 | |
Recent Accounting Pronouncements [Abstract] | |
Recent Accounting Pronouncements | (23) Recent Accounting Pronouncements |
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which are intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. Under GAAP, financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. It lacks guidance about management’s responsibility to evaluate whether there is substantial doubt about the organization’s ability to continue as a going concern or to provide related footnote disclosures. This amendment provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. | |
The amendment is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. Currently, the Company is evaluating the impact of the pending adoption of ASU 2014-14 on the disclosure of the consolidated financial statements. | |
In January 2015, the FASB issued ASU 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. It eliminates from U.S. GAAP the concept of extraordinary items. Subtopic 225-20, Income Statement - Extraordinary and Unusual Items, required that an entity separately classify, present, and disclose extraordinary events and transactions. Presently, an event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item. If an event or transaction meets the criteria for extraordinary classification, an entity is required to segregate the extraordinary item from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from continuing operations. The entity also is required to disclose applicable income taxes and either present or disclose earnings-per-share data applicable to the extraordinary item. | |
The amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The adoption of ASU 2015-01 is not expected to have any material impact on the Company's consolidated financial statements. | |
Subsequent_Event
Subsequent Event | 12 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
Subsequent Event | (24) Subsequent Event |
On March 1, 2015, the Company entered an agreement with the CEO which allows Orient Paper HB to borrow from the CEO with an amount up to $19,611,048 (RMB120,000,000) for working capital purposes. The advances or funding under the agreement are due in three years from the date each amount is funded. The loan will be unsecured and carry an annual interest rate set on the basis of the primary lending rate of the People’s Bank of China at the time of the borrowing. |
Summarized_Quarterly_Financial
Summarized Quarterly Financial Data (Unaudited) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Summarized Quarterly Financial Data [Abstract] | |||||||||||||||||
Summarized Quarterly Financial Data (Unaudited) | (25) Summarized Quarterly Financial Data (Unaudited) | ||||||||||||||||
Quarterly financial information for 2014 and 2013 is as follows: | |||||||||||||||||
Quarter | |||||||||||||||||
2014 | First | Second | Third | Fourth | |||||||||||||
Revenues | $ | 25,753,864 | $ | 37,836,265 | $ | 40,754,205 | $ | 32,697,113 | |||||||||
Gross Profit | 4,670,836 | 6,121,007 | 6,410,848 | 5,575,457 | |||||||||||||
Income from Operations | 3,761,920 | 5,131,707 | 4,929,301 | 3,589,978 | |||||||||||||
Net income | 2,533,294 | 3,572,107 | 3,372,944 | 2,228,015 | |||||||||||||
Net income per share: | |||||||||||||||||
Basic | $ | 0.13 | $ | 0.19 | $ | 0.18 | $ | 0.11 | |||||||||
Diluted | $ | 0.13 | $ | 0.19 | $ | 0.18 | $ | 0.11 | |||||||||
Quarter | |||||||||||||||||
2013 | First | Second | Third | Fourth | |||||||||||||
Revenues | $ | 19,746,656 | $ | 33,038,512 | $ | 37,686,114 | $ | 35,246,348 | |||||||||
Gross Profit | 1,630,237 | 6,098,395 | 8,435,814 | 7,161,153 | |||||||||||||
Income from Operations | 743,071 | 5,211,839 | 7,563,522 | 5,325,060 | |||||||||||||
Net income | 303,055 | 3,656,136 | 5,534,844 | 3,520,613 | |||||||||||||
Net income per share: | |||||||||||||||||
Basic | $ | 0.02 | $ | 0.2 | $ | 0.3 | $ | 0.19 | |||||||||
Diluted | $ | 0.02 | $ | 0.2 | $ | 0.3 | $ | 0.19 | |||||||||
Condensed_Financial_Informatio
Condensed Financial Information of the Parent Company | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Condensed Financial Information of Parent Company [Abstract] | |||||||||||||
Condensed Financial Information of the Parent Company | (26) Condensed Financial Information of the Parent Company | ||||||||||||
The condensed financial statements of Orient Paper Inc. (“ONP”, the “parent company”) have been prepared in accordance with accounting principles generally accepted in the United States of America. Under the PRC laws and regulations, the Company’s PRC subsidiaries are restricted in their ability to transfer certain of their net assets to the parent company in the form of dividend payments, loans or advances. The amounts restricted include paid-in capital, capital surplus and statutory reserves, as determined pursuant to PRC generally accepted accounting principles, totaling $52,649,848 and $52,666,026 as of December 31, 2014 and 2013, respectively. | |||||||||||||
The following represents condensed unconsolidated financial information of the parent company only: | |||||||||||||
CONDENSED BALANCE SHEETS | |||||||||||||
December 31, | December 31, | ||||||||||||
2014 | 2013 | ||||||||||||
ASSETS | |||||||||||||
Current Assets | |||||||||||||
Cash and cash equivalents | $ | 26,179 | $ | 42,592 | |||||||||
Prepayments and other current assets | 62,500 | 69,029 | |||||||||||
Total current assets | 88,679 | 111,621 | |||||||||||
Investment in subsidiaries | 176,732,554 | 163,658,397 | |||||||||||
Total Assets | $ | 176,821,233 | $ | 163,770,018 | |||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||
Current Liabilities | |||||||||||||
Inter-company payable | $ | 1,875,867 | $ | 2,544,855 | |||||||||
Accrued payroll and employee benefit | - | 51,667 | |||||||||||
Accrued liabilities | - | 58,000 | |||||||||||
Insurance premium payable | - | 62,348 | |||||||||||
Total current liabilities | 1,875,867 | 2,716,870 | |||||||||||
Total liabilities | 1,875,867 | 2,716,870 | |||||||||||
Total stockholders' equity | 174,945,366 | 161,053,148 | |||||||||||
Total Liabilities and Stockholders' Equity | $ | 176,821,233 | $ | 163,770,018 | |||||||||
CONDENSED STATEMENTS OF INCOME | |||||||||||||
Year Ended | |||||||||||||
December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Operating expenses | |||||||||||||
Selling, general and administrative expenses | $ | 1,492,940 | $ | 2,227,711 | $ | 1,397,943 | |||||||
Loss from Operations | (1,492,940 | ) | (2,227,711 | ) | (1,397,943 | ) | |||||||
Equity in earnings of unconsolidated subsidiaries | 13,199,300 | 15,242,276 | 16,074,789 | ||||||||||
Other Income (Expense) | - | 83 | (4,183 | ) | |||||||||
Income before Income Taxes | 11,706,360 | 13,014,648 | 14,672,663 | ||||||||||
Provision for Income Taxes | - | - | |||||||||||
Net Income | $ | 11,706,360 | $ | 13,014,648 | $ | 14,672,663 | |||||||
CONDENSED STATEMENTS OF CASH FLOWS | |||||||||||||
Year Ended | |||||||||||||
December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Net Cash (Used in) Provided by Operating Activities | $ | (1,658,426 | ) | $ | 365,720 | $ | 546,760 | ||||||
Net Cash Used in Investing Activities | - | - | - | ||||||||||
Net Cash Provided by (Used in) Financing Activities | 1,642,013 | (323,032 | ) | (692,242 | ) | ||||||||
Net (Decrease) Increase in Cash and Cash Equivalents | (16,413 | ) | 42,688 | (145,482 | ) | ||||||||
Cash and Cash Equivalents - Beginning of Period | 42,592 | (96 | ) | 145,386 | |||||||||
Cash and Cash Equivalents - End of Period | $ | 26,179 | $ | 42,592 | $ | (96 | ) | ||||||
BASIS OF PRESENTATION | |||||||||||||
The condensed financial information has been prepared using the same accounting policies as set out in the Company’s consolidated financial statements except that the parent company has used equity method to account for its investments in the subsidiaries. | |||||||||||||
Basis_of_Presentation_and_Sign1
Basis of Presentation and Significant Accounting Policies (Policies) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Significant Accounting Policies [Abstract] | |||||||||
Basis of Consolidation | Basis of Consolidation | ||||||||
The consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and include the assets, liabilities, revenues, expenses and cash flows of all subsidiaries and variable interest entity. All significant inter-company balances, transactions and cash flows are eliminated on consolidation. | |||||||||
Liquidity and Going Concern | Liquidity and Going Concern | ||||||||
As of December 31, 2014, the Company had current assets of $26,554,862 and current liabilities of $44,470,148 (including amounts due to related parties of $3,376,120), resulting in a working capital deficit of approximately $17,915,286; while as of December 31, 2013, the Company had current assets of $25,953,328 and current liabilities of $28,372,723 (including amounts due to related parties of $2,266,961), resulting in a working capital deficit of approximately $2,419,395. We are currently seeking to restructure the term of our liabilities by raising funds through long-term loans to pay off liabilities with shorter terms. Our ability to continue as a going concern is dependent upon obtaining the necessary financing or negotiating the terms of the existing short-term liabilities to meet our current and future liquidity needs. | |||||||||
On January 20, 2014, our Chairman and Chief Executive Officer (“CEO”) Mr. Zhenyong Liu agreed in writing to permit the Company to continue to postpone the repayment of the accrued interest on his loan to Orient Paper HB until the Company is able to pay its other creditors in its normal course of business. The accrued interest owned to Mr. Liu was approximately $761,242, which was recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated financial statement as of December 31, 2014 (see Note (12) below). | |||||||||
On March 9, 2015, Mr. Zhenyong Liu agreed in writing to permit the Company to postpone the repayment of the related party loan of $2,386,978 which will expire at December 31, 2015. (see Note (10) below). | |||||||||
On January 21, 2015, Hebei Fangsheng agreed in writing to permit the Company to continue to postpone the repayment of the accrued rental charged to Orient Paper HB until the earliest date on which the Company's quarterly or annual financial statements filed with the SEC show a satisfactory working capital level. The accrued rental owned to Hebei Fangsheng was approximately $227,900 and $64,546, which was recorded in other payables and accrued liabilities as part of the current liabilities as of December 31, 2014 and 2013, respectively. | |||||||||
On March 1, 2015, the Company entered an agreement with the CEO which allows Orient Paper HB to borrow from the CEO with an amount up to $19,611,048 (RMB120,000,000) for working capital purposes. The advances or funding under the agreement are due in three years from the date each amount is funded. The loan will be unsecured and carry an annual interest rate set on the basis of the primary lending rate of the People’s Bank of China at the time of the borrowing. | |||||||||
Although management believes it can secure financial resources to satisfy the Company's current liabilities and the capital expenditure needs in the next 12 months, there are no guarantees that these financial resources will be secured. Therefore, there is a substantial doubt about the ability of the Company to continue as a going concern that it may be unable to realize its assets and discharge its liabilities in the normal course of business. Our consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. | |||||||||
Foreign Currency Translation | Foreign Currency Translation | ||||||||
The Company accounts for foreign currency translation pursuant to ASC Topic 830, Foreign Currency Matters. The functional currency of Orient Paper HB and Orient Paper Shengde is the Chinese Yuan Renminbi (“RMB”). Monetary assets and liabilities denominated in currencies other than RMB are translated into RMB at the rates of exchange ruling at the balance sheet date. Transactions in currencies other than RMB are converted into RMB at the applicable rates of exchange prevailing the transactions occurred. Transaction gains and losses are recognized in the consolidated statements of income. The functional currency of Orient Paper and Shengde Holdings is United States dollars. Monetary assets and liabilities denominated in currencies other than United States dollars are translated into United States dollars at the rates of exchange ruling at the balance sheet date. Translation in currencies other than United States dollars are converted into United States dollars at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains or losses are recognized in the consolidated statement of income. | |||||||||
Under ASC Topic 830-30, all assets and liabilities are translated into United States dollars using the current exchange rate at the end of each fiscal period. The current exchange rates used by the Company as of December 31, 2014 and 2013 to translate the Chinese RMB to the U.S. Dollars are 6.11900:1, and 6.11220:1, respectively. Revenues and expenses are translated using the average exchange rates prevailing throughout the respective years at 6.14530:1, 6.19430:1 and 6.31160:1 for the years ended December 31, 2014, 2013 and 2012, respectively. Translation adjustments are included in other comprehensive income (loss). | |||||||||
Use of Estimates | Use of Estimates | ||||||||
The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of December 31, 2014 and 2013, and revenues and expenses for the years ended December 31, 2014, 2013 and 2012. The most significant estimates relate to allowance for uncollectible accounts receivable, inventory valuation, useful lives and impairment for property, plant and equipment, valuation allowance for deferred tax assets and contingencies. Actual results could differ from those estimates made by management. | |||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents | ||||||||
For purposes of reporting within the statements of cash flows, Orient Paper considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents. | |||||||||
Accounts Receivable | Accounts Receivable | ||||||||
Trade accounts receivable are recorded on shipment of products to customers. The trade receivables are all without customer collateral and interest is not accrued on past due accounts. Periodically, management reviews the adequacy of its provision for doubtful accounts based on historical bad debt expense results and current economic conditions using factors based on the aging of its accounts receivable. Additionally, the Company may identify additional allowance requirements based on indications that a specific customer may be experiencing financial difficulties. Actual bad debt results could differ materially from these estimates. As of December 31, 2014 and 2013, the balance of allowance for doubtful accounts was $76,125 and $67,592, respectively; and the movement of the provision of the doubtful accounts is as below. While management uses the best information available upon which to base estimates, future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions used for the purposes of analysis. | |||||||||
December 31, | |||||||||
Allowance of doubtful accounts | 2014 | 2013 | |||||||
Opening balance | $ | 67,592 | $ | 57,643 | |||||
Provision for the year | 8,571 | 7,990 | |||||||
Exchange difference | (38 | ) | 1,959 | ||||||
Closing balance | $ | 76,125 | $ | 67,592 | |||||
Inventories | Inventories | ||||||||
Inventories consist principally of raw materials and finished goods, and are stated at the lower of cost (average cost method) or market. Cost includes labor, raw materials, and allocated overhead. No provision in inventories has been provided for the fiscal years 2014, 2013 and 2012. | |||||||||
Property, Plant, and Equipment | Property, Plant, and Equipment | ||||||||
Property, plant, and equipment are stated at cost less accumulated depreciation and any impairment losses. Major renewals, betterments, and improvements are capitalized to the asset accounts while replacements, maintenance, and repairs, which do not improve or extend the lives of the respective assets, are expensed to operations. At the time property, plant, and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation or amortization accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to operations. | |||||||||
Construction-in-progress is stated at cost and capitalized as expenses are incurred or as payments are made pursuant to relevant construction contracts. Contract retention is recorded as accrued liability. Construction in progress is not depreciated until project completion and the constructed property being placed in service, at which time the capitalized balance will be transferred to appropriate account of property, plant and equipment. | |||||||||
The Company depreciates property, plant, and equipment using the straight-line method as follows: | |||||||||
Land use rights | Over the lease term | ||||||||
Building and improvements | 30 years | ||||||||
Machinery and equipment | 5-15 years | ||||||||
Vehicles | 15 years | ||||||||
Valuation of long-lived asset | Valuation of long-lived asset | ||||||||
The Company reviews the carrying value of long-lived assets to be held and used when events and circumstances warrants such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset and intangible assets. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets and intangible assets to be disposed are determined in a similar manner, except that fair market values are reduced for the cost to dispose. | |||||||||
Assets held for sale | Assets held for sale | ||||||||
When assets are identified by management as held for sale, the Company discontinues depreciating the assets and estimates the sales price, net of selling costs, of such assets. If, in management's opinion, the estimated net sales price of the assets which have been identified as held for sale is less than the net book value of the assets, a valuation allowance is established. Properties identified as held for sale and/or disposed of are presented as assets held for sale for all periods presented. | |||||||||
If circumstances arise that previously were considered unlikely and, as a result, the Company decides not to sell a property previously classified as held for sale, the property is reclassified as held and used. A property that is reclassified is measured and recorded individually at the lower of (a) its carrying amount before the property was classified as held for sale, adjusted for any depreciation (amortization) expense that would have been recognized had the property been continuously classified as held and used, or (b) the fair value at the date of the subsequent decision not to sell. | |||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments | ||||||||
The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts that the Company could realize in a current market exchange. As of December 31, 2014 and 2013, the carrying value of the Company’s short term financial instruments, such as cash and cash equivalents, accounts receivable, accounts and notes payable, short-term bank loans and balance due to a related party, approximate at their fair values because of the short maturity of these instruments; while long-term bank loans, loan from a related party and obligation under capital lease approximate at their fair value as the interest rates thereon are close to the market rates of interest published by the People’s Bank of China. | |||||||||
Statutory Reserves | Statutory Reserves | ||||||||
According to the laws and regulations in the PRC, the Company is required to provide for certain statutory funds, namely, reserve fund by an appropriation from net profit after taxation but before dividend distribution based on the local statutory financial statements of the PRC subsidiary and variable interest entity prepared in accordance with the PRC accounting principles and relevant financial regulations. | |||||||||
The Company’s wholly owned subsidiary and variable interest entity in the PRC are required to allocate at least 10% of its net profit to the reserve fund until the balance of such fund has reached 50% of its registered capital. Appropriations of additional reserve fund are determined at the discretion of its directors. The reserve fund can only be used, upon approval by the relevant authority, to offset accumulated losses or increase capital. | |||||||||
For the years ended December 31, 2014, 2013 and 2012, Orient Paper made transfers to this reserve fund in the amounts of $42,168, $74,446, and $100,518, respectively. For the years ended December 31, 2014, 2013 and 2012, all transfers to statutory reserves were made by Orient Paper Shengde. The Company’s variable interest entity Orient Paper HB, which statutory reserve account has been fully funded for 50% of its registered capital in the amount of RMB 75,030,000 (or approximately $11,811,470) as of December 31, 2010, did not make any transfer to statutory reserves during the years ended December 31, 2014, 2013 and 2012. | |||||||||
Employee Benefit Plan | Employee Benefit Plan | ||||||||
Full time employees of the PRC entities participate in a government mandated multi-employer defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance and other welfare benefits are provided to employees. The total provision for such employee benefits was $nil, $nil and $nil for the years ended December 31, 2014, 2013 and 2012. | |||||||||
Revenue Recognition Policy | Revenue Recognition Policy | ||||||||
The Company recognizes revenue when goods are delivered, when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist, and collectability is reasonably assured. Goods are considered delivered when customer’s truck picks up goods at our finished goods inventory warehouse. | |||||||||
Shipping Cost | Shipping Cost | ||||||||
Substantially all customers use their own trucks or hire commercial trucking companies to pick up goods from the Company. The Company usually incurs no shipping cost for delivery of goods to customers. For those rare situations where products are not shipped utilizing customer specified shipping services, the Company charges customers a shipping fee which is included in net revenues and was not material. Freight-in and handling costs incurred by the Company with respect to purchased goods are recorded as a component of inventory cost and charged to cost of sales when the inventory items are sold. | |||||||||
Advertising | Advertising | ||||||||
The Company expenses all advertising and promotion costs as incurred. The Company incurred $6,457, $5,085 and $10,478 of advertising and promotion costs for the years ended December 31, 2014, 2013 and 2012, respectively. | |||||||||
Research and development costs | Research and development costs | ||||||||
Research and development costs are expensed as incurred and included in selling, general and administrative expenses. Research and development expenses incurred $20,276, $25,125 and $21,636 for the years ended December 31, 2014, 2013 and 2012, respectively. | |||||||||
Borrowing costs | Borrowing costs | ||||||||
Borrowing costs attributable directly to the acquisition, construction or production of qualifying assets which require a substantial period of time to be ready for their intended use or sale, are capitalized as part of the cost of those assets. Income earned on temporary investments of specific borrowings pending their expenditure on those assets is deducted from borrowing costs capitalized. All other borrowing costs are recognized in interest expenses in the period in which they are incurred. | |||||||||
Government subsidies | Government subsidies | ||||||||
A government subsidy is not recognized until there is reasonable assurance that: (a) the enterprise will comply with the conditions attached to the grant; and (b) the grant will be received. When the Company received the government subsidies but the conditions attached to the grants have not been fulfilled, such government subsidies are deferred and recorded under other payables and accrued expenses, and other long-term liability. The reclassification of short-term or long-term liabilities is depended on the management's expectation of when the conditions attached to the grant can be fulfilled. For the years ended December 31, 2014, 2013 and 2012, the Company received government subsidies of $22,614, $171,125 and $nil, which are recognized as subsidy income in the consolidated statements of income in that fiscal year. | |||||||||
Lease Obligations | Lease Obligations | ||||||||
All non-cancellable leases with an initial term greater than one year are categorized as either capital or operating leases. For the lessee, a lease is a capital lease if any of the following conditions exist: a) ownership is transferred to the lessee by the end of the lease term, b) there is a bargain purchase option, c) the lease term is at least 75% of the property’s estimated remaining economic life or d) the present value of the minimum lease payments at the beginning of the lease term is 90% or more of the fair value of the leased property to the lessor at the inception date. A capital lease is accounted for as if there was an acquisition of an asset and an incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases. Assets recorded under capital leases are amortized according to the same depreciation methods employed for property, plant and equipment or over the term of the related lease, if shorter. | |||||||||
The Company defers any profit or loss from a sale-leaseback transaction unless any of the following conditions exist: a) the seller-lessee relinquishes the right to substantially all of the remaining use of the property sold retaining only a minor portion of such use; b) the seller-lessee retains more than a minor part but less than substantially all of the use of the property through the leaseback and realizes a profit on the sale in excess of the recorded amount of the leased assets; or c) the fair value of the property at the time of the transaction is less than its undepreciated cost, in which circumstance a loss shall be recognized immediately. | |||||||||
Income Taxes | Income Taxes | ||||||||
The Company accounts for income taxes pursuant to ASC Topic 740, Income Taxes. Income taxes are provided on an asset and liability approach for financial accounting and reporting of income taxes. Any tax paid by subsidiaries during the year is recorded. Current tax is based on the profit or loss from ordinary activities adjusted for items that are non-assessable or disallowable for income tax purpose and is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. ASC Topic 740 also requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry-forwards. ASC Topic 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Realization of deferred tax assets, including those related to the U.S. net operating loss carry-forwards, are dependent upon future earnings, if any, of which the timing and amount are uncertain. | |||||||||
The Company adopted ASC Topic 740-10-05, Income Tax, which provides guidance for recognizing and measuring uncertain tax positions, it prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized in the financial statements. It also provides accounting guidance on derecognizing, classification and disclosure of these uncertain tax positions. | |||||||||
The Company’s policy on classification of all interest and penalties related to unrecognized income tax positions, if any, is to present them as a component of income tax expense. | |||||||||
Value Added Tax | Value Added Tax | ||||||||
Both the PRC subsidiary and variable interest entity of the Company are subject to value added tax (“VAT”) imposed by the PRC government on its purchase and sales of goods. The output VAT is charged to customers who purchase goods from the Company and the input VAT is paid when it purchases goods from its vendors. VAT rate is 17% in general, depending on the types of products purchased and sold. The input VAT can be offset against the output VAT. Debit balance of VAT payable represents a credit against future collection of output VAT instead of a receivable. | |||||||||
Comprehensive Income (Loss) | Comprehensive Income (Loss) | ||||||||
The Company presents comprehensive income (loss) in accordance with ASC Topic 220, Comprehensive Income. ASC Topic 220 states that all items that are required to be recognized under accounting standards as components of comprehensive income (loss) be reported in the consolidated financial statements. The components of comprehensive income were the net income for the years and the foreign currency translation adjustments. | |||||||||
Earnings Per Share | Earnings Per Share | ||||||||
Basic earnings per share is computed by dividing the net income attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. | |||||||||
Share-Based Compensation | Share-Based Compensation | ||||||||
The Company uses the fair value recognition provision of ASC Topic 718, Compensation-Stock Compensation, which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments over the vesting period. | |||||||||
The Company also applies the provisions of ASC Topic 505-50, Equity Based Payments to Non-Employees to account for stock-based compensation awards issued to non-employees for services. Such awards for services are recorded at either the fair value of the consideration received or the fair value of the instruments issued in exchange for such services, whichever is more reliably measurable. | |||||||||
Fair Value Measurements | Fair Value Measurements | ||||||||
The Company has adopted ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. It does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. | |||||||||
Its establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following: | |||||||||
Level 1 - Quoted prices in active markets for identical assets or liabilities. | |||||||||
Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |||||||||
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. | |||||||||
Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement. | |||||||||
Non-Recurring Fair Value Measurements | Non-Recurring Fair Value Measurements | ||||||||
The Company reviews long-lived assets for impairment annually or more frequently if events or changes in circumstances indicate the possibility of impairment. For the continuing operations, long-lived assets are measured at fair value on a nonrecurring basis when there is an indicator of impairment, and they are recorded at fair value only when impairment is recognized. For discontinued operations, long-lived assets are measured at the lower of carrying amount or fair value less cost to sell. The fair value of these assets were determined using models with significant unobservable inputs which were classified as Level 3 inputs, primarily the discounted future cash flow. |
Organization_and_Business_Back1
Organization and Business Background (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Organization and Business Background [Abstract] | |||||||||
Subsidiaries and variable interest entities | Place of | ||||||||
Date of Incorporation | Incorporation or | Percentage of | |||||||
Name | or Establishment | Establishment | Ownership | Principal Activity | |||||
Subsidiary: | |||||||||
Dongfang Holding | 13-Nov-06 | BVI | 100% | Inactive investment holding | |||||
Shengde Holdings | 25-Feb-09 | State of Nevada | 100% | Investment holding | |||||
Orient Paper Shengde | 1-Jun-09 | PRC | 100% | Paper Production and distribution | |||||
Variable interest entity: | |||||||||
Orient Paper HB | 10-Mar-96 | PRC | Control* | Paper Production and distribution | |||||
* Orient Paper HB is treated as a 100% controlled variable interest entity of the Company |
Basis_of_Presentation_and_Sign2
Basis of Presentation and Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Significant Accounting Policies [Abstract] | |||||||||
Allowance for doubtful accounts | December 31, | ||||||||
Allowance of doubtful accounts | 2014 | 2013 | |||||||
Opening balance | $ | 67,592 | $ | 57,643 | |||||
Provision for the year | 8,571 | 7,990 | |||||||
Exchange difference | (38 | ) | 1,959 | ||||||
Closing balance | $ | 76,125 | $ | 67,592 | |||||
Schedule of property plant and equipment useful life | Land use rights | Over the lease term | |||||||
Building and improvements | 30 years | ||||||||
Machinery and equipment | 5-15 years | ||||||||
Vehicles | 15 years |
Inventories_Tables
Inventories (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Inventories [Abstract] | |||||||||
Schedule of inventories | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Raw Materials | |||||||||
Recycled paper board | $ | 4,338,069 | $ | 8,004,988 | |||||
Pulp | - | 14,257 | |||||||
Recycled white scrap paper | 1,212,588 | 1,791,873 | |||||||
Coal | 497,038 | 573,799 | |||||||
Base paper and other raw materials | 95,053 | 212,984 | |||||||
6,142,748 | 10,597,901 | ||||||||
Finished Goods | 996,851 | 830,504 | |||||||
Totals | $ | 7,139,599 | $ | 11,428,405 |
Recovered_Sheet1
Prepayments and Other Current Assets (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Prepayments and Other Current Assets [Abstract] | |||||||||
Summary of prepayments and other current assets | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Prepaid NYSE MKT annual fee | $ | 7,500 | $ | 7,500 | |||||
Recoverable VAT | 250,000 | 500,000 | |||||||
Prepaid insurance | 55,000 | 61,529 | |||||||
Prepayment for purchase of materials | 1,910,643 | 8,180 | |||||||
Prepaid land lease | 490,276 | 490,822 | |||||||
Others | 206,249 | - | |||||||
Totals | $ | 2,919,668 | $ | 1,068,031 |
Property_Plant_and_Equipment_T
Property, Plant and Equipment (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment, Net [Abstract] | |||||||||
Schedule of property, plant and equipment | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Property, Plant, and Equipment: | |||||||||
Land use rights | $ | 7,752,886 | $ | 7,761,511 | |||||
Building and improvements | 44,889,395 | 22,406,836 | |||||||
Machinery and equipment | 121,332,310 | 121,088,942 | |||||||
Vehicles | 706,548 | 683,051 | |||||||
Construction in progress | 78,484,066 | 65,160,213 | |||||||
Totals | 253,165,205 | 217,100,553 | |||||||
Less: accumulated depreciation and amortization | (44,952,007 | ) | (38,565,294 | ) | |||||
Property, Plant and Equipment, net | $ | 208,213,198 | $ | 178,535,259 |
Loans_Payable_Tables
Loans Payable (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Loans Payable [Abstract] | |||||||||||
Schedule of short-term bank loans | Short-term bank loans | ||||||||||
December 31, | December 31, | ||||||||||
2014 | 2013 | ||||||||||
Industrial & Commercial Bank of China (“ICBC”) Loan 1 | (a) | $ | - | $ | 4,090,180 | ||||||
ICBC Loan 2 | (b) | - | 818,036 | ||||||||
ICBC Loan 3 | (c) | - | 1,636,072 | ||||||||
ICBC Loan 4 | (d) | 2,451,381 | - | ||||||||
The Commercial Bank of the City of Zhangjiakou | (e) | 3,268,508 | - | ||||||||
ICBC Loan 5 | (f) | 817,127 | - | ||||||||
ICBC Loan 6 | (g) | 3,268,508 | - | ||||||||
Total short-term bank loans | $ | 9,805,524 | $ | 6,544,288 | |||||||
(a) | On September 2, 2013, the Company entered into a working capital loan agreement with the ICBC for $4,090,180 as of December 31, 2013, for which $818,036 was paid on June 5, 2014 and $3,272,144 was paid on August 15, 2014. The loan bore an interest rate of 115% of the primary lending rate of the People’s Bank of China and was at 6.9% per annum at the time of funding. The Company paid off the principal balance and interest by August 15, 2014. | ||||||||||
Concurrent with the signing of the working capital loan agreement, the Company also entered into an agreement with the ICBC, which provided account management services to the Company during the terms of the underlying loan. The working capital loan was guaranteed by Hebei Fangsheng Real Estate Development Co. Ltd. (“Hebei Fangsheng”) with the land use right on our Headquarters Compound pledged by Hebei Fangsheng as collateral for the benefit of the bank. The land use right on our Headquarters Compound was acquired by Hebei Fangsheng from the Company on August 9, 2013 (see Note (10) for the related party transaction). Hebei Fangsheng is controlled by the Company’s CEO. | |||||||||||
(b) | On September 6, 2013, the Company obtained a new accounts receivable factoring facility from the ICBC for $818,036 as of December 31, 2013. Under the factoring agreement, the bank has recourse against the Company if the receivables, which remained in the Company’s books at all times, are not fully collected. The factoring facility expired on August 4, 2014 and bore an interest rate of 110% of the primary lending rate of the People’s Bank of China and was at 6.6% per annum at the time of funding. The Company paid off the principal balance and interest under the factoring facility on August 4, 2014. | ||||||||||
Concurrent with the signing of the new factoring agreement, the Company also entered into a financial service agreement with the ICBC, which provided accounts receivable management services to the Company during the terms of the underlying factoring facility. The factoring facility was personally guaranteed by the Company’s CEO. | |||||||||||
(c) | On December 3, 2013, the Company obtained from the ICBC an accounts receivable factoring facility with a maximum credit limit of $1,636,072 as of December 31, 2013. Under the factoring agreement, the bank has recourse against the Company if the receivables, which remain in the Company’s books at all times, are not fully collected. The term of the factoring facility expires on October 21, 2014 and carries an interest rate of 6.6% per annum, or 10% plus the prime rate for the loan set forth by the People’s Bank of China at the time of funding. The Company paid off the principal balance and interest under the factoring facility on October 21, 2014. | ||||||||||
(d) | On June 26, 2014, the Company obtained a new accounts receivable factoring facility from the ICBC for $2,451,381 as of December 31, 2014. Under the factoring agreement, the bank has recourse against the Company if the receivables, which remain in the Company’s books at all times, are not fully collected. The factoring facility will expire on June 25, 2015 and bears an interest rate of 110% of the primary lending rate of the People’s Bank of China and was at 6.6% per annum at the time of funding. | ||||||||||
Concurrent with the signing of the new factoring agreement, the Company also entered into a financial service agreement with the ICBC, which provides accounts receivable management services to the Company during the terms of the underlying factoring facility. | |||||||||||
(e) | On June 9, 2014, the Company obtained from the Commercial Bank of the City of Zhangjiakou a banking facility on bank loans and notes payable, which is guaranteed by the Company’s CEO and Shijiazhuang Baode Guarantee Service Company. In obtaining the guarantee from Shijiazhuang Baode Guarantee Service Company, Hebei Tengsheng Paper Co. Ltd (“Hebei Tengsheng”), a third party which owns the land use rights of about 330 acres (or 1.33 million square meters) of land in the Wei County and leases about one-fourth of the premises to Orient paper HB as our production bases of tissue paper and other future facilities, and an independent third party provided a guarantee with the land use rights and buildings pledged by Hebei Tengsheng as collateral. On July 18, 2014, the Company entered into a working capital loan agreement with the bank for $3,268,508 as of December 31, 2014. The loan expires on June 9, 2015 and bears a fixed interest rate of 11.88% per annum. | ||||||||||
(f) | On August 19, 2014, the Company obtained a new accounts receivable factoring facility from the ICBC for $817,127 as of December 31, 2014. Under the factoring agreement, the bank has recourse against the Company if the receivables, which remain in the Company’s books at all times, are not fully collected. The factoring facility will expire on June 11, 2015 and bears an interest rate of 110% of the primary lending rate of the People’s Bank of China and was at 6.6% per annum at the time of funding. | ||||||||||
(g) | On November 20, 2014, the Company entered into a working capital loan agreement with the ICBC for $3,268,508 as of December 31, 2014. The loan bears an interest rate of 110% over the primary lending rate of the People’s Bank of China and was at 6.16% per annum at the time of funding. The loan will expire on December 3, 2015. The working capital loan was guaranteed by Hebei Tengsheng with its land use right and real estates pledged by Hebei Tengsheng as collateral for the benefit of the bank. | ||||||||||
Schedule of future minimum lease payments of capital lease | December 31, | Amount | |||||||||
2015 | $ | 12,882,597 | |||||||||
2016 | 4,213,362 | ||||||||||
17,095,959 | |||||||||||
Less: unearned discount | (747,058 | ) | |||||||||
16,348,901 | |||||||||||
Less: Current portion of obligation under capital lease, net | (12,258,488 | ) | |||||||||
Long-term obligation under capital lease, net | $ | 4,090,413 |
Other_Payables_and_Accrued_Lia1
Other Payables and Accrued Liabilities (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Other Payables and Accrued Liabilities [Abstract] | |||||||||
Summary of other Payables and Accrued Liabilities | December 31, | ||||||||
2014 | 2013 | ||||||||
Accrued electricity | $ | 334,212 | $ | 372,726 | |||||
Accrued professional fees | - | 58,000 | |||||||
Value-added tax payable | 841,556 | 940,400 | |||||||
Accrued interest to a related party | 761,242 | 566,343 | |||||||
Accrued bank loan interest | - | 380,022 | |||||||
Advance from customer | - | 11,453 | |||||||
Insurance premium payable | - | 62,348 | |||||||
Payable for purchase of equipment | 244,050 | - | |||||||
Others | 219,463 | 260,180 | |||||||
Totals | $ | 2,400,523 | $ | 2,651,472 |
Stock_Warrants_Tables
Stock Warrants (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Stock Warrants [Line Items] | |||||||||
Summary of stock warrant activities | Year ended | ||||||||
31-Dec-14 | |||||||||
Number | Weight | ||||||||
average exercise | |||||||||
price | |||||||||
Outstanding and exercisable at beginning of the period | - | - | |||||||
Issued during the period | 820,312 | $ | 1.71 | ||||||
Exercised during the period | - | - | |||||||
Cancelled or expired during the period | - | - | |||||||
Outstanding and exercisable at end of the period | 820,312 | $ | 1.71 | ||||||
Range of exercise price | $1.70 to $2.00 | ||||||||
Date of Issuance August 27, 2014 to September 2, 2019 [Member] | |||||||||
Stock Warrants [Line Items] | |||||||||
Fair value of warrants issued was estimated by using the Binominal pricing model | Terms of warrants | 5 years | |||||||
Expected volatility | 72 | % | |||||||
Risk-free interest rate | 1.69 | % | |||||||
Expected dividend yield | 0.81 | % | |||||||
Date of Issuance September 3, 2014 to June 26, 2019 [Member] | |||||||||
Stock Warrants [Line Items] | |||||||||
Fair value of warrants issued was estimated by using the Binominal pricing model | Terms of warrants | 4.81 years | |||||||
Expected volatility | 69.8 | % | |||||||
Risk-free interest rate | 1.62 | % | |||||||
Expected dividend yield | 0.81 | % |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Earnings Per Share [Abstract] | |||||||||||||
Summary of basic and diluted net income per share | |||||||||||||
Year Ended | |||||||||||||
December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Basic income per share | |||||||||||||
Net income for the year - numerator | $ | 11,706,360 | $ | 13,014,648 | $ | 14,672,663 | |||||||
Weighted average common stock outstanding - denominator | 19,270,394 | 18,458,446 | 18,456,781 | ||||||||||
Net income per share | $ | 0.61 | $ | 0.71 | $ | 0.79 | |||||||
Diluted income per share | |||||||||||||
Net income for the year - numerator | $ | 11,706,360 | $ | 13,014,648 | $ | 14,672,663 | |||||||
Weighted average common stock outstanding - denominator | 19,270,394 | 18,458,446 | 18,456,781 | ||||||||||
Effect of dilution | |||||||||||||
Warrant | - | - | - | ||||||||||
Weighted average common stock outstanding - denominator | 19,270,394 | 18,458,446 | 18,456,781 | ||||||||||
Diluted income per share | $ | 0.61 | $ | 0.71 | $ | 0.79 | |||||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Income Taxes [Abstract] | |||||||||||||
Summary of provisions for income taxes | Year Ended | ||||||||||||
December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Provision for Income Taxes | |||||||||||||
Current Tax Provision – PRC | $ | 4,034,119 | $ | 4,684,870 | $ | 6,406,050 | |||||||
Deferred Tax Provision – PRC | 398,385 | 409,665 | (941,207 | ) | |||||||||
Total Provision for Income Taxes | $ | 4,432,504 | $ | 5,094,535 | $ | 5,464,843 | |||||||
Summary of deferred tax assets (liabilities) | December 31, | ||||||||||||
2014 | 2013 | ||||||||||||
Deferred tax assets (liabilities) – current: | |||||||||||||
Depreciation and amortization of property, plant and equipment | $ | - | $ | 139,805 | |||||||||
Impairment of property, plant and equipment | - | 225,656 | |||||||||||
Miscellaneous | - | 48,076 | |||||||||||
Total deferred tax asset – current, net | $ | - | $ | 413,537 | |||||||||
Deferred tax assets (liabilities) – non-current | |||||||||||||
Depreciation and amortization of property, plant and equipment | $ | (1,248 | ) | $ | 31,446 | ||||||||
Impairment of property, plant and equipment | 308,175 | 261,805 | |||||||||||
Miscellaneous | (25,917 | ) | (24,922 | ) | |||||||||
Net operating loss carryover for U.S. income tax purposes | 2,000,539 | 1,445,755 | |||||||||||
Total deferred tax assets – non-current | 2,281,549 | 1,714,084 | |||||||||||
Less: Valuation allowance | (2,000,539 | ) | (1,445,755 | ) | |||||||||
Total deferred tax assets – non-current, net | $ | 281,010 | $ | 268,329 | |||||||||
Reconciliation of statutory rates to Company's effective tax rate | |||||||||||||
Year ended | |||||||||||||
December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
PRC Statutory rate | 25 | % | 25 | % | 25 | % | |||||||
Effect of different tax jurisdiction | (0.8 | ) | (1.1 | ) | (0.6 | ) | |||||||
Effect of expenses not deductible for PRC tax purposes | - | 1.5 | - | ||||||||||
Effect of income not taxable for PRC tax purposes | 0.1 | - | 0.3 | ||||||||||
Under provision in previous year | 0.1 | - | - | ||||||||||
Change in valuation allowance | 3.1 | 2.7 | 2.4 | ||||||||||
Effective income tax rate | 27.5 | % | 28.1 | % | 27.1 | % | |||||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies [Abstract] | |||||
Schedule of future minimum lease payments of capital lease | Year Ended December 31, | Amount | |||
2015 | $ | 771,368 | |||
2016 | 703,274 | ||||
2017 | 607,942 | ||||
2018 | 607,942 | ||||
2019 | 607,942 | ||||
Thereafter | 4,353,654 | ||||
Total operating lease payments | $ | 7,652,122 |
Segment_Reporting_Tables
Segment Reporting (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||
Summarized financial information for reportable segments | Year Ended | ||||||||||||||||||||
December 31, 2014 | |||||||||||||||||||||
Orient Paper | Orient Paper | Not Attributable | Elimination of | Enterprise-wide, | |||||||||||||||||
HB | Shengde | to Segments | Inter-segment | consolidated | |||||||||||||||||
Revenues | $ | 133,967,031 | $ | 4,829,046 | $ | - | $ | (1,754,630 | ) | $ | 137,041,447 | ||||||||||
Gross Profit | 20,401,820 | 2,376,328 | - | - | 22,778,148 | ||||||||||||||||
Depreciation and amortization | 5,467,593 | 2,821,727 | - | - | 8,289,320 | ||||||||||||||||
Interest income | 145,590 | 4,193 | - | - | 149,783 | ||||||||||||||||
Interest expense | 1,446,439 | - | - | - | 1,446,439 | ||||||||||||||||
Income tax expense | 4,337,424 | 95,080 | - | - | 4,432,504 | ||||||||||||||||
Net Income (Loss) | 11,299,155 | 1,900,145 | (1,492,940 | ) | - | 11,706,360 | |||||||||||||||
Total Assets | 200,764,663 | 38,914,243 | 88,679 | - | 239,767,585 | ||||||||||||||||
Year Ended | |||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||
Orient Paper | Orient Paper | Not Attributable | Elimination of | Enterprise-wide, | |||||||||||||||||
HB | Shengde | to Segments | Inter-segment | consolidated | |||||||||||||||||
Revenues | $ | 120,747,633 | $ | 4,969,997 | $ | - | $ | - | $ | 125,717,630 | |||||||||||
Gross Profit | 22,318,739 | 1,006,860 | - | - | 23,325,599 | ||||||||||||||||
Depreciation and amortization | 6,828,970 | 965,773 | - | - | 7,794,743 | ||||||||||||||||
Interest income | 86,168 | 4,009 | 83 | - | 90,260 | ||||||||||||||||
Interest expense | 995,694 | - | - | - | 995,694 | ||||||||||||||||
Income tax expense | 4,845,970 | 248,565 | - | - | 5,094,535 | ||||||||||||||||
Net Income (Loss) | 14,604,244 | 638,031 | (2,227,627 | ) | - | 13,014,648 | |||||||||||||||
Total Assets | 168,149,877 | 41,264,704 | 111,621 | - | 209,526,202 | ||||||||||||||||
Year Ended | |||||||||||||||||||||
December 31, 2012 | |||||||||||||||||||||
Orient Paper | Orient Paper | Not Attributable | Elimination of | Enterprise-wide, | |||||||||||||||||
HB | Shengde | to Segments | Inter-segment | consolidated | |||||||||||||||||
Revenues | $ | 144,928,792 | $ | 6,188,014 | $ | - | $ | - | $ | 151,116,806 | |||||||||||
Gross Profit | 25,616,670 | 1,439,577 | - | - | 27,056,247 | ||||||||||||||||
Depreciation and amortization | 6,553,120 | 1,829,739 | - | - | 8,382,859 | ||||||||||||||||
Impairment | 2,762,349 | - | - | - | 2,762,349 | ||||||||||||||||
Interest income | 25,950 | 4,634 | 90 | - | 30,674 | ||||||||||||||||
Interest expense | 867,561 | - | 4,273 | - | 871,834 | ||||||||||||||||
Income tax expense | 5,129,304 | 335,539 | - | - | 5,464,843 | ||||||||||||||||
Net Income (Loss) | 15,109,345 | 965,444 | (1,402,126 | ) | - | 14,672,663 |
Summarized_Quarterly_Financial1
Summarized Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Summarized Quarterly Financial Data [Abstract] | |||||||||||||||||
Schedule of quarterly financial information | |||||||||||||||||
Quarter | |||||||||||||||||
2014 | First | Second | Third | Fourth | |||||||||||||
Revenues | $ | 25,753,864 | $ | 37,836,265 | $ | 40,754,205 | $ | 32,697,113 | |||||||||
Gross Profit | 4,670,836 | 6,121,007 | 6,410,848 | 5,575,457 | |||||||||||||
Income from Operations | 3,761,920 | 5,131,707 | 4,929,301 | 3,589,978 | |||||||||||||
Net income | 2,533,294 | 3,572,107 | 3,372,944 | 2,228,015 | |||||||||||||
Net income per share: | |||||||||||||||||
Basic | $ | 0.13 | $ | 0.19 | $ | 0.18 | $ | 0.11 | |||||||||
Diluted | $ | 0.13 | $ | 0.19 | $ | 0.18 | $ | 0.11 | |||||||||
Quarter | |||||||||||||||||
2013 | First | Second | Third | Fourth | |||||||||||||
Revenues | $ | 19,746,656 | $ | 33,038,512 | $ | 37,686,114 | $ | 35,246,348 | |||||||||
Gross Profit | 1,630,237 | 6,098,395 | 8,435,814 | 7,161,153 | |||||||||||||
Income from Operations | 743,071 | 5,211,839 | 7,563,522 | 5,325,060 | |||||||||||||
Net income | 303,055 | 3,656,136 | 5,534,844 | 3,520,613 | |||||||||||||
Net income per share: | |||||||||||||||||
Basic | $ | 0.02 | $ | 0.2 | $ | 0.3 | $ | 0.19 | |||||||||
Diluted | $ | 0.02 | $ | 0.2 | $ | 0.3 | $ | 0.19 | |||||||||
Condensed_Financial_Informatio1
Condensed Financial Information of the Parent Company (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Condensed Financial Statements, Captions [Line Items] | |||||||||||||
CONDENSED BALANCE SHEETS | December 31, | December 31, | |||||||||||
2014 | 2013 | ||||||||||||
ASSETS | |||||||||||||
Current Assets | |||||||||||||
Cash and cash equivalents | $ | 26,179 | $ | 42,592 | |||||||||
Prepayments and other current assets | 62,500 | 69,029 | |||||||||||
Total current assets | 88,679 | 111,621 | |||||||||||
Investment in subsidiaries | 176,732,554 | 163,658,397 | |||||||||||
Total Assets | $ | 176,821,233 | $ | 163,770,018 | |||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||
Current Liabilities | |||||||||||||
Inter-company payable | $ | 1,875,867 | $ | 2,544,855 | |||||||||
Accrued payroll and employee benefit | - | 51,667 | |||||||||||
Accrued liabilities | - | 58,000 | |||||||||||
Insurance premium payable | - | 62,348 | |||||||||||
Total current liabilities | 1,875,867 | 2,716,870 | |||||||||||
Total liabilities | 1,875,867 | 2,716,870 | |||||||||||
Total stockholders' equity | 174,945,366 | 161,053,148 | |||||||||||
Total Liabilities and Stockholders' Equity | $ | 176,821,233 | $ | 163,770,018 | |||||||||
CONDENSED STATEMENTS OF INCOME | |||||||||||||
Year Ended | |||||||||||||
December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Operating expenses | |||||||||||||
Selling, general and administrative expenses | $ | 1,492,940 | $ | 2,227,711 | $ | 1,397,943 | |||||||
Loss from Operations | (1,492,940 | ) | (2,227,711 | ) | (1,397,943 | ) | |||||||
Equity in earnings of unconsolidated subsidiaries | 13,199,300 | 15,242,276 | 16,074,789 | ||||||||||
Other Income (Expense) | - | 83 | (4,183 | ) | |||||||||
Income before Income Taxes | 11,706,360 | 13,014,648 | 14,672,663 | ||||||||||
Provision for Income Taxes | - | - | |||||||||||
Net Income | $ | 11,706,360 | $ | 13,014,648 | $ | 14,672,663 | |||||||
CONDENSED STATEMENTS OF CASH FLOWS | |||||||||||||
Year Ended | |||||||||||||
December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Net Cash (Used in) Provided by Operating Activities | $ | (1,658,426 | ) | $ | 365,720 | $ | 546,760 | ||||||
Net Cash Used in Investing Activities | - | - | - | ||||||||||
Net Cash Provided by (Used in) Financing Activities | 1,642,013 | (323,032 | ) | (692,242 | ) | ||||||||
Net (Decrease) Increase in Cash and Cash Equivalents | (16,413 | ) | 42,688 | (145,482 | ) | ||||||||
Cash and Cash Equivalents - Beginning of Period | 42,592 | (96 | ) | 145,386 | |||||||||
Cash and Cash Equivalents - End of Period | $ | 26,179 | $ | 42,592 | $ | (96 | ) | ||||||
Organization_and_Business_Back2
Organization and Business Background (Details) | 12 Months Ended | |
Dec. 31, 2014 | ||
Dongfang Holding [Member] | ||
Schedule of company's subsidiaries and variable interest entities | ||
Entity Incorporation, Date Of Incorporation | 13-Nov-06 | |
Entity Incorporation State Country Name | BVI | |
Percentage of Ownership | 100.00% | |
Principal Activity | Inactive investment holding | |
Shengde Holding [Member] | ||
Schedule of company's subsidiaries and variable interest entities | ||
Entity Incorporation, Date Of Incorporation | 25-Feb-09 | |
Entity Incorporation State Country Name | State of Nevada | |
Percentage of Ownership | 100.00% | |
Principal Activity | Investment holding | |
Orient Paper Shengde [Member] | ||
Schedule of company's subsidiaries and variable interest entities | ||
Entity Incorporation, Date Of Incorporation | 1-Jun-09 | |
Entity Incorporation State Country Name | PRC | |
Percentage of Ownership | 100.00% | |
Principal Activity | Paper Production and distribution | |
Orient Paper HB [Member] | ||
Schedule of company's subsidiaries and variable interest entities | ||
Entity Incorporation, Date Of Incorporation | 10-Mar-96 | |
Entity Incorporation State Country Name | PRC | |
Percentage of Ownership | [1] | |
Principal Activity | Paper Production and distribution | |
[1] | Orient Paper HB is treated as a 100% controlled variable interest entity of the Company |
Organization_and_Business_Back3
Organization and Business Background (Details Textual) | 0 Months Ended | 1 Months Ended | 12 Months Ended | ||||||||||
Feb. 10, 2010 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2010 | Jun. 30, 2009 | Oct. 29, 2007 | Jun. 30, 2010 | Feb. 10, 2010 | Jun. 24, 2009 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Feb. 10, 2010 | |
CNY | USD ($) | USD ($) | Shengde Holdings [Member] | Dongfang Holding [Member] | Orient Paper Shengde [Member] | Orient Paper Shengde [Member] | Orient Paper Shengde [Member] | Orient Paper HB [Member] | Orient Paper HB [Member] | Orient Paper HB [Member] | Orient Paper HB [Member] | ||
USD ($) | USD ($) | USD ($) | USD ($) | ||||||||||
Organization and Business Background (Textual) | |||||||||||||
Percentage of ownership | 100.00% | 100.00% | |||||||||||
Shares of common stock issued to Dongfang Holding shareholders under merger agreement | 7,450,497 | ||||||||||||
Common stock, par value | $0.00 | $0.00 | |||||||||||
Registered capital | $60,000,000 | $10,000,000 | |||||||||||
Service fees percentage of annual net profit | 80.00% | ||||||||||||
Exercise price for the options | 1 | ||||||||||||
Loans terminated | $10,000,000 | $10,000,000 | |||||||||||
Percentage of distributable profit of Orient Paper HB | 100.00% | ||||||||||||
Percentage of revenue from Orient Paper HB | 96.48% | 96.05% | 95.91% | ||||||||||
Percentage of assets accounted by Orient Paper HB | 83.73% | 80.25% |
Basis_of_Presentation_and_Sign3
Basis of Presentation and Significant Accounting Policies (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Allowance of doubtful accounts | ||
Opening balance | $67,592 | $57,643 |
Provision for the year | 8,571 | 7,990 |
Exchange difference | -38 | 1,959 |
Closing balance | $76,125 | $67,592 |
Basis_of_Presentation_and_Sign4
Basis of Presentation and Significant Accounting Policies (Details 1) | 12 Months Ended |
Dec. 31, 2014 | |
Land use rights [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant, and equipment useful life | Over the lease term |
Building and improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 30 years |
Machinery and equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 15 years |
Machinery and equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 5 years |
Vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 15 years |
Basis_of_Presentation_and_Sign5
Basis of Presentation and Significant Accounting Policies (Details Textual) | 12 Months Ended | 0 Months Ended | ||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2010 | Dec. 31, 2010 | Mar. 09, 2015 | |
USD ($) | USD ($) | USD ($) | USD ($) | CNY | Mr. Zhenyong Liu | |
Subsequent Event [Member] | ||||||
USD ($) | ||||||
Significant Accounting Policies (Textual) | ||||||
Current currency exchange rate to translate Chinese RMB to U.S. Dollars | 6.119 | 6.1122 | ||||
Currency average exchange rate to translate Chinese RMB to U.S. Dollars | 6.1453 | 6.1943 | 6.3116 | |||
Accounts receivable, allowance for doubtful accounts | $76,125 | $67,592 | $57,643 | |||
Percentage of net profit allocate to reserve fund | At least 10% of its net profit to the reserve fund until the balance of such fund has reached 50% of its registered capital. | |||||
Net profit transferred to statutory reserve fund | 42,168 | 74,446 | 100,518 | |||
Orient Paper HB statutory reserve fund account | 11,811,470 | 75,030,000 | ||||
Provision for employee benefits plan | ||||||
Advertising and promotion costs | 6,457 | 5,085 | 10,478 | |||
Research and development costs | 20,276 | 25,125 | 21,636 | |||
Subsidy income | 22,614 | 171,125 | ||||
Lease Obligations Description | c) the lease term is at least 75% of the property’s estimated remaining economic life or d) the present value of the minimum lease payments at the beginning of the lease term is 90% or more of the fair value of the leased property to the lessor at the inception date. | |||||
VAT rate | 17.00% | |||||
Current assets | 26,554,862 | 25,953,328 | ||||
Current liabilities | 44,470,148 | 28,372,723 | ||||
Due to a related party | 227,900 | 64,546 | ||||
Working capital | 17,915,286 | 2,419,395 | ||||
Accrued interest to a related party | 761,242 | 566,343 | ||||
Current liabilities including amounts due to related parties | 3,376,120 | 2,266,961 | ||||
Loans payable to related party | ($2,386,978) | $2,386,978 | ||||
Loan repayment expire date | 31-Dec-15 |
Restricted_Cash_Details
Restricted Cash (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Restricted Cash (Textual) | ||
Restricted cash | $8,873,999 | $2,454,108 |
Description of lifting of restricted cash | The restriction will be lifted upon the maturity of the notes payable from January 7, 2015 through April 23, 2015. | The restriction was lifted upon the maturity of the notes payable from May 15 through June 19 during the year of 2014. |
Inventories_Details
Inventories (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Schedule of inventories | ||
Raw materials, Gross | $6,142,748 | $10,597,901 |
Finished goods | 996,851 | 830,504 |
Totals | 7,139,599 | 11,428,405 |
Recycled paper board [Member] | ||
Schedule of inventories | ||
Raw materials, Gross | 4,338,069 | 8,004,988 |
Pulp [Member] | ||
Schedule of inventories | ||
Raw materials, Gross | 14,257 | |
Recycled white scrap paper [Member] | ||
Schedule of inventories | ||
Raw materials, Gross | 1,212,588 | 1,791,873 |
Coal [Member] | ||
Schedule of inventories | ||
Raw materials, Gross | 497,038 | 573,799 |
Base paper and other raw materials [Member] | ||
Schedule of inventories | ||
Raw materials, Gross | $95,053 | $212,984 |
Prepayments_and_Other_Current_1
Prepayments and Other Current Assets (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Summary of prepayments and other current assets | ||
Prepaid NYSE MKT annual fee | $7,500 | $7,500 |
Recoverable VAT | 250,000 | 500,000 |
Prepaid insurance | 55,000 | 61,529 |
Prepayment for purchase of materials | 1,910,643 | 8,180 |
Prepaid land lease | 490,276 | 490,822 |
Others | 206,249 | |
Totals | $2,919,668 | $1,068,031 |
Prepayment_on_property_plant_a1
Prepayment on property, plant and equipment (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Oct. 26, 2012 |
sqm | |||
Prepayment on property, plant and equipment (Textual) | |||
Prepayment on property, plant and equipment | $1,490,440 | $1,492,098 | |
Entitlement of land use rights in Xushui County, Baoding plant | 65,023 |
Assets_Held_for_Sale_Details
Assets Held for Sale (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Dormitory | |||
Assets Held for Sale [Abstract] | |||
Assets held for sale | $4,130,590 | ||
Number of employee dormitory buildings sold | 3 | ||
Gain on disposal of assets | $203,620 |
Property_Plant_and_Equipment_D
Property, Plant and Equipment (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Schedule of property, plant and equipment | ||
Totals | $253,165,205 | $217,100,553 |
Less: accumulated depreciation and amortization | -44,952,007 | -38,565,294 |
Property, Plant and Equipment, net | 208,213,198 | 178,535,259 |
Land use rights [Member] | ||
Schedule of property, plant and equipment | ||
Totals | 7,752,886 | 7,761,511 |
Building and improvements [Member] | ||
Schedule of property, plant and equipment | ||
Totals | 44,889,395 | 22,406,836 |
Machinery and equipment [Member] | ||
Schedule of property, plant and equipment | ||
Totals | 121,332,310 | 121,088,942 |
Vehicles [Member] | ||
Schedule of property, plant and equipment | ||
Totals | 706,548 | 683,051 |
Construction in progress [Member] | ||
Schedule of property, plant and equipment | ||
Totals | $78,484,066 | $65,160,213 |
Property_Plant_and_Equipment_D1
Property, Plant and Equipment (Details Textual) | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | ||||||
Jun. 16, 2013 | Jun. 16, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jun. 16, 2013 | Jun. 16, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | |
USD ($) | CNY | USD ($) | USD ($) | USD ($) | Sale-leaseback arrangement [Member] | Sale-leaseback arrangement [Member] | Sale-leaseback arrangement [Member] | Sale-leaseback arrangement [Member] | Land use rights [Member] | |
T | USD ($) | CNY | USD ($) | USD ($) | USD ($) | |||||
Dormitory | ||||||||||
Property, Plant and Equipment (Textual) | ||||||||||
Lease expiration year | 2061 | |||||||||
Property plant and equipment pledged for long term loan | $19,300,765 | $21,901,456 | ||||||||
Total financing proceeds | 24,000,000 | 150,000,000 | 24,000,000 | 150,000,000 | ||||||
Proceeds from sale of paper manufacturing equipment to leasing company | 24,215,811 | 24,000,000 | 150,000,000 | |||||||
Term of lease | 3 years | 3 years | ||||||||
Nominal purchase price | 2,400 | 15,000 | 2,400 | 15,000 | ||||||
Deferred gain on sale of leased equipment | 695,389 | 1,160,271 | 1,379,282 | |||||||
Capital lease equipment | 25,964,790 | 25,993,677 | ||||||||
Depreciation of capital lease equipment | 1,650,649 | 818,796 | ||||||||
Accumulated depreciation of lease asset | 2,486,615 | 829,794 | ||||||||
Gain on sale leaseback realized transaction | 461,609 | 228,979 | ||||||||
Amount of interest capitalized | 698,714 | 448,950 | ||||||||
Number of building sold | 3 | |||||||||
Assets pledged for the guarantee of Orient Paper HB's capital lease | 33,287,324 | 36,134,038 | ||||||||
Production capacity of manufacturing equipment PM8 (per year) | 15,000 | |||||||||
Value of land use right pledged for sale-leaseback financing | 7,339,399 | 7,502,794 | ||||||||
Depreciation and amortization | 8,289,320 | 7,794,743 | 8,382,859 | |||||||
Addition of machinery and equipment | 99,218,460 | |||||||||
Property plant and equipment loan drawn from banking facility | 29,995 | 34,177 | ||||||||
Unamortized deferred gain | $695,389 | $1,160,271 |
Loans_Payable_Details
Loans Payable (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
Schedule of short-term bank loans | ||||
Short-term bank loans | $9,805,524 | $6,544,288 | ||
Industrial & Commercial Bank of China (a) [Member] | Factoring Facility [Member] | ||||
Schedule of short-term bank loans | ||||
Short-term bank loans | [1] | 4,090,180 | [1] | |
Industrial & Commercial Bank of China (b) [Member] | Factoring Facility [Member] | ||||
Schedule of short-term bank loans | ||||
Short-term bank loans | [2] | 818,036 | [2] | |
Industrial & Commercial Bank of China (c) [Member] | Factoring Facility [Member] | ||||
Schedule of short-term bank loans | ||||
Short-term bank loans | [3] | 1,636,072 | [3] | |
Industrial & Commercial Bank of China (d) [Member] | Factoring Facility [Member] | ||||
Schedule of short-term bank loans | ||||
Short-term bank loans | 2,451,381 | [4] | [4] | |
Bank of Hebei [Member] | ||||
Schedule of short-term bank loans | ||||
Short-term bank loans | 3,268,508 | [5] | [5] | |
Industrial & Commercial Bank of China (f) [Member] | Factoring Facility [Member] | ||||
Schedule of short-term bank loans | ||||
Short-term bank loans | 817,127 | [6] | [6] | |
Industrial &Commercial Bank of China (g) [Member] | Factoring Facility [Member] | ||||
Schedule of short-term bank loans | ||||
Short-term bank loans | $3,268,508 | [7] | [7] | |
[1] | On September 2, 2013, the Company entered into a working capital loan agreement with the ICBC for $4,090,180 as of December 31, 2013, for which $818,036 was paid on June 5, 2014 and $3,272,144 was paid on August 15, 2014. The loan bore an interest rate of 115% of the primary lending rate of the People's Bank of China and was at 6.9% per annum at the time of funding. The Company paid off the principal balance and interest by August 15, 2014. Concurrent with the signing of the working capital loan agreement, the Company also entered into an agreement with the ICBC, which provided account management services to the Company during the terms of the underlying loan. The working capital loan was guaranteed by Hebei Fangsheng Real Estate Development Co. Ltd. ("Hebei Fangsheng") with the land use right on our Headquarters Compound pledged by Hebei Fangsheng as collateral for the benefit of the bank. The land use right on our Headquarters Compound was acquired by Hebei Fangsheng from the Company on August 9, 2013 (see Note (10) for the related party transaction). Hebei Fangsheng is controlled by the Company's CEO | |||
[2] | On September 6, 2013, the Company obtained a new accounts receivable factoring facility from the ICBC for $818,036 as of December 31, 2013. Under the factoring agreement, the bank has recourse against the Company if the receivables, which remained in the Company's books at all times, are not fully collected. The factoring facility expired on August 4, 2014 and bore an interest rate of 110% of the primary lending rate of the People's Bank of China and was at 6.6% per annum at the time of funding. The Company paid off the principal balance and interest under the factoring facility on August 4, 2014. Concurrent with the signing of the new factoring agreement, the Company also entered into a financial service agreement with the ICBC, which provided accounts receivable management services to the Company during the terms of the underlying factoring facility. The factoring facility was personally guaranteed by the Company's CEO. | |||
[3] | On December 3, 2013, the Company obtained from the ICBC an accounts receivable factoring facility with a maximum credit limit of $1,636,072 as of December 31, 2013. Under the factoring agreement, the bank has recourse against the Company if the receivables, which remain in the Company's books at all times, are not fully collected. The term of the factoring facility expires on October 21, 2014 and carries an interest rate of 6.6% per annum, or 10% plus the prime rate for the loan set forth by the People's Bank of China at the time of funding. The Company paid off the principal balance and interest under the factoring facility on October 21, 2014. | |||
[4] | On June 26, 2014, the Company obtained a new accounts receivable factoring facility from the ICBC for $2,451,381 as of December 31, 2014. Under the factoring agreement, the bank has recourse against the Company if the receivables, which remain in the Company's books at all times, are not fully collected. The factoring facility will expire on June 25, 2015 and bears an interest rate of 110% of the primary lending rate of the People's Bank of China and was at 6.6% per annum at the time of funding. Concurrent with the signing of the new factoring agreement, the Company also entered into a financial service agreement with the ICBC, which provides accounts receivable management services to the Company during the terms of the underlying factoring facility. | |||
[5] | On June 9, 2014, the Company obtained from the Commercial Bank of the City of Zhangjiakou a banking facility on bank loans and notes payable, which is guaranteed by the Company's CEO and Shijiazhuang Baode Guarantee Service Company. In obtaining the guarantee from Shijiazhuang Baode Guarantee Service Company, Hebei Tengsheng Paper Co. Ltd ("Hebei Tengsheng"), a third party which owns the land use rights of about 330 acres (or 1.33 million square meters) of land in the Wei County and leases about one-fourth of the premises to Orient paper HB as our production bases of tissue paper and other future facilities, and an independent third party provided a guarantee with the land use rights and buildings pledged by Hebei Tengsheng as collateral. On July 18, 2014, the Company entered into a working capital loan agreement with the bank for $3,268,508 as of December 31, 2014. The loan expires on June 9, 2015 and bears a fixed interest rate of 11.88% per annum. | |||
[6] | On August 19, 2014, the Company obtained a new accounts receivable factoring facility from the ICBC for $817,127 as of December 31, 2014. Under the factoring agreement, the bank has recourse against the Company if the receivables, which remain in the Company's books at all times, are not fully collected. The factoring facility will expire on June 11, 2015 and bears an interest rate of 110% of the primary lending rate of the People's Bank of China and was at 6.6% per annum at the time of funding. | |||
[7] | On November 20, 2014, the Company entered into a working capital loan agreement with the ICBC for $3,268,508 as of December 31, 2014. The loan bears an interest rate of 110% over the primary lending rate of the People's Bank of China and was at 6.16% per annum at the time of funding. The loan will expire on December 3, 2015. The working capital loan was guaranteed by Hebei Tengsheng Paper Co. Ltd. ("Tengsheng") with its land use right and real estates pledged by Hebei Tengsheng as collateral for the benefit of the bank. |
Loans_Payable_Details_1
Loans Payable (Details 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Schedule of future minimum capital lease payments | ||
2015 | $12,882,597 | |
2016 | 4,213,362 | |
Capital Leases, Future Payments | 17,095,959 | |
Unearned Discount On Capital Lease | -747,058 | |
Long-term debt and capital lease obligations, including current maturities | 16,348,901 | |
Less: Current portion of obligation under capital lease, net | -12,258,488 | |
Long-term obligation under capital lease, net | $4,090,413 | $12,296,639 |
Loans_Payable_Details_Textual
Loans Payable (Details Textual) | 0 Months Ended | 12 Months Ended | 12 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||
Jun. 16, 2013 | Jun. 16, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Jul. 15, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Sep. 02, 2013 | Sep. 02, 2013 | Sep. 02, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 06, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 03, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Jun. 26, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Jun. 09, 2014 | Dec. 31, 2014 | Aug. 19, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 20, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Jun. 16, 2013 | Jun. 16, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | |||||||||||||
USD ($) | CNY | USD ($) | USD ($) | USD ($) | Rural Credit Union of Xushui County [Member] | Rural Credit Union of Xushui County [Member] | Term Loan [Member] | Term Loan [Member] | New term loan agreement [Member] | New term loan agreement [Member] | New term loan agreement [Member] | Lease financing agreement [Member] | ICBC Loan 1 [Member] | ICBC Loan 1 [Member] | ICBC Loan 1 [Member] | ICBC Loan 1 [Member] | ICBC Loan 1 [Member] | ICBC Loan 1 [Member] | ICBC Loan 2 [Member] | ICBC Loan 2 [Member] | ICBC Loan 2 [Member] | ICBC Loan 3 [Member] | ICBC Loan 3 [Member] | ICBC Loan 3 [Member] | ICBC Loan 4 [Member] | ICBC Loan 4 [Member] | ICBC Loan 4 [Member] | The Commercial Bank of the City of Zhangjiakou [Member] | The Commercial Bank of the City of Zhangjiakou [Member] | ICBC Loan 5 [Member] | ICBC Loan 5 [Member] | ICBC Loan 5 [Member] | ICBC Loan 6 [Member] | ICBC Loan 6 [Member] | ICBC Loan 6 [Member] | China National Foreign Trade Financial & Leasing Co. [Member] | China National Foreign Trade Financial & Leasing Co. [Member] | China National Foreign Trade Financial & Leasing Co. [Member] | China National Foreign Trade Financial & Leasing Co. [Member] | |||||||||||||
USD ($) | USD ($) | Rural Credit Union of Xushui County [Member] | Rural Credit Union of Xushui County [Member] | Rural Credit Union of Xushui County [Member] | Rural Credit Union of Xushui County [Member] | Rural Credit Union of Xushui County [Member] | USD ($) | USD ($) | June 5, 2014 [Member] | August 15, 2014 [Member] | Factoring Facility [Member] | Factoring Facility [Member] | Factoring Facility [Member] | Factoring Facility [Member] | Factoring Facility [Member] | Factoring Facility [Member] | Factoring Facility [Member] | Factoring Facility [Member] | Factoring Facility [Member] | Factoring Facility [Member] | Factoring Facility [Member] | Factoring Facility [Member] | Factoring Facility [Member] | Factoring Facility [Member] | Factoring Facility [Member] | Factoring Facility [Member] | Factoring Facility [Member] | Factoring Facility [Member] | Factoring Facility [Member] | Factoring Facility [Member] | Lease financing agreement [Member] | Lease financing agreement [Member] | Lease financing agreement [Member] | Collateral Agreement [Member] | ||||||||||||||||||
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | acre | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | CNY | USD ($) | ||||||||||||||||||||||||||||||
sqm | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Payable (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Unpaid balance of short term debt | $9,805,524 | $6,544,288 | [1] | $4,090,180 | [1] | [2] | $818,036 | [2] | [3] | $1,636,072 | [3] | $2,451,381 | [4] | [4] | $3,268,508 | $817,127 | [5] | [5] | $3,268,508 | [6] | [6] | |||||||||||||||||||||||||||||||
Notes payable | 16,113,744 | 4,908,216 | 3,272,144 | 818,036 | 3,272,144 | |||||||||||||||||||||||||||||||||||||||||||||||
Short-term bank loans, fixed interest rate | 7.71% | 6.68% | 7.82% | 6.90% | 6.60% | 6.60% | 6.60% | 6.60% | 6.60% | 6.60% | 11.88% | 6.60% | 6.60% | 6.16% | ||||||||||||||||||||||||||||||||||||||
Short-term bank loans interest rate as percentage of prime rate | 115.00% | 110.00% | 10.00% | 110.00% | 110.00% | 110.00% | ||||||||||||||||||||||||||||||||||||||||||||||
Loan, maturity date | 4-Aug-14 | 21-Oct-14 | 25-Jun-15 | 9-Jun-15 | 11-Jun-15 | 3-Dec-15 | ||||||||||||||||||||||||||||||||||||||||||||||
Loan paid off date | 5-Jun-14 | 15-Aug-14 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Area of land | 330 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Guaranteed short-term borrowings | 3,268,508 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Secured bank loans | 6,537,016 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts receivable | 3,730,123 | 3,327,494 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Average short-term borrowing rates | 7.71% | 6.68% | 7.82% | |||||||||||||||||||||||||||||||||||||||||||||||||
Loans from credit union | 5,907,828 | 5,914,401 | 1,609,740 | 1,611,531 | 4,298,088 | 4,302,870 | ||||||||||||||||||||||||||||||||||||||||||||||
Long-term debt, Interest rate per month | 0.72% | 0.72% | 0.72% | |||||||||||||||||||||||||||||||||||||||||||||||||
Installment repayment description | The loan balance would be repayable by various installments through June 21, 2014 to November 18, 2018. | Between December 21, 2013 and July 26, 2018. | ||||||||||||||||||||||||||||||||||||||||||||||||||
Current portion of long-term loan from credit union | 1,611,531 | 65,370 | 81,713 | 49,082 | ||||||||||||||||||||||||||||||||||||||||||||||||
Loan extension period | 5 years | |||||||||||||||||||||||||||||||||||||||||||||||||||
Security loan agreement by manufacturing equipment | 19,300,765 | 21,901,456 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense for the short-term bank loans and long-term loans | 1,031,163 | 828,157 | 736,457 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total financing proceeds | 24,000,000 | 150,000,000 | 24,000,000 | 150,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from sale of paper manufacturing equipment to leasing company | 24,215,811 | 24,000,000 | 150,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Nominal purchase price | 2,400 | 15,000 | 2,400 | 15,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Lease service charge | Equal to 5.55% of the amount financed. | |||||||||||||||||||||||||||||||||||||||||||||||||||
Implicit interest rate | 6.15% | 6.15% | ||||||||||||||||||||||||||||||||||||||||||||||||||
Stated capital lease | 25,750,170 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term obligations under capital lease | 4,090,413 | 12,296,639 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Current obligations under capital lease | 12,258,488 | 8,264,795 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total interest expenses for the sale-leaseback arrangement | 919,298 | 471,472 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred gain on sale of leased equipment | 695,389 | 1,160,271 | 1,379,282 | |||||||||||||||||||||||||||||||||||||||||||||||||
Value of land use right pledged for sale-leaseback financing | 7,339,399 | 7,502,794 | 7,339,399 | |||||||||||||||||||||||||||||||||||||||||||||||||
Land collateral for capital lease | 58,566 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Assets pledged for the guarantee of Orient Paper HB's capital lease | $33,287,324 | $36,134,038 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Sale lease back transaction lease term | The deferred gain is being amortized over the lease term of three years and as an offset to depreciation of the Leased Equipment. | |||||||||||||||||||||||||||||||||||||||||||||||||||
[1] | On September 2, 2013, the Company entered into a working capital loan agreement with the ICBC for $4,090,180 as of December 31, 2013, for which $818,036 was paid on June 5, 2014 and $3,272,144 was paid on August 15, 2014. The loan bore an interest rate of 115% of the primary lending rate of the People's Bank of China and was at 6.9% per annum at the time of funding. The Company paid off the principal balance and interest by August 15, 2014. Concurrent with the signing of the working capital loan agreement, the Company also entered into an agreement with the ICBC, which provided account management services to the Company during the terms of the underlying loan. The working capital loan was guaranteed by Hebei Fangsheng Real Estate Development Co. Ltd. ("Hebei Fangsheng") with the land use right on our Headquarters Compound pledged by Hebei Fangsheng as collateral for the benefit of the bank. The land use right on our Headquarters Compound was acquired by Hebei Fangsheng from the Company on August 9, 2013 (see Note (10) for the related party transaction). Hebei Fangsheng is controlled by the Company's CEO | |||||||||||||||||||||||||||||||||||||||||||||||||||
[2] | On September 6, 2013, the Company obtained a new accounts receivable factoring facility from the ICBC for $818,036 as of December 31, 2013. Under the factoring agreement, the bank has recourse against the Company if the receivables, which remained in the Company's books at all times, are not fully collected. The factoring facility expired on August 4, 2014 and bore an interest rate of 110% of the primary lending rate of the People's Bank of China and was at 6.6% per annum at the time of funding. The Company paid off the principal balance and interest under the factoring facility on August 4, 2014. Concurrent with the signing of the new factoring agreement, the Company also entered into a financial service agreement with the ICBC, which provided accounts receivable management services to the Company during the terms of the underlying factoring facility. The factoring facility was personally guaranteed by the Company's CEO. | |||||||||||||||||||||||||||||||||||||||||||||||||||
[3] | On December 3, 2013, the Company obtained from the ICBC an accounts receivable factoring facility with a maximum credit limit of $1,636,072 as of December 31, 2013. Under the factoring agreement, the bank has recourse against the Company if the receivables, which remain in the Company's books at all times, are not fully collected. The term of the factoring facility expires on October 21, 2014 and carries an interest rate of 6.6% per annum, or 10% plus the prime rate for the loan set forth by the People's Bank of China at the time of funding. The Company paid off the principal balance and interest under the factoring facility on October 21, 2014. | |||||||||||||||||||||||||||||||||||||||||||||||||||
[4] | On June 26, 2014, the Company obtained a new accounts receivable factoring facility from the ICBC for $2,451,381 as of December 31, 2014. Under the factoring agreement, the bank has recourse against the Company if the receivables, which remain in the Company's books at all times, are not fully collected. The factoring facility will expire on June 25, 2015 and bears an interest rate of 110% of the primary lending rate of the People's Bank of China and was at 6.6% per annum at the time of funding. Concurrent with the signing of the new factoring agreement, the Company also entered into a financial service agreement with the ICBC, which provides accounts receivable management services to the Company during the terms of the underlying factoring facility. | |||||||||||||||||||||||||||||||||||||||||||||||||||
[5] | On August 19, 2014, the Company obtained a new accounts receivable factoring facility from the ICBC for $817,127 as of December 31, 2014. Under the factoring agreement, the bank has recourse against the Company if the receivables, which remain in the Company's books at all times, are not fully collected. The factoring facility will expire on June 11, 2015 and bears an interest rate of 110% of the primary lending rate of the People's Bank of China and was at 6.6% per annum at the time of funding. | |||||||||||||||||||||||||||||||||||||||||||||||||||
[6] | On November 20, 2014, the Company entered into a working capital loan agreement with the ICBC for $3,268,508 as of December 31, 2014. The loan bears an interest rate of 110% over the primary lending rate of the People's Bank of China and was at 6.16% per annum at the time of funding. The loan will expire on December 3, 2015. The working capital loan was guaranteed by Hebei Tengsheng Paper Co. Ltd. ("Tengsheng") with its land use right and real estates pledged by Hebei Tengsheng as collateral for the benefit of the bank. |
Related_Party_Transactions_Det
Related Party Transactions (Details) | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | ||||||||
Aug. 07, 2013 | Aug. 07, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 10, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
USD ($) | CNY | USD ($) | USD ($) | USD ($) | Hebei Fangsheng [Member] | Hebei Fangsheng [Member] | Mr. Liu [Member] | Mr. Liu [Member] | Mr. Liu [Member] | Mr. Liu [Member] | Mr. Liu [Member] | |
Dormitory | USD ($) | USD ($) | USD ($) | USD ($) | Orient Paper HB [Member] | Orient Paper HB [Member] | Orient Paper HB [Member] | |||||
Apartment | USD ($) | USD ($) | USD ($) | |||||||||
Related Party Transactions (Textual) | ||||||||||||
Loans payable to related party | ($2,386,978) | $12,192,502 | $2,389,633 | $2,386,978 | $2,389,633 | |||||||
Proceeds from shareholder loan | 10,557,060 | 1,390,802 | 1,030,097 | |||||||||
Interest rate on loans | 6.00% | 6.15% | ||||||||||
Term of facility and loan payable | 3 years | |||||||||||
Unsecured loan epiration date | 10-Dec-17 | |||||||||||
Working capital | 17,915,286 | 2,419,395 | 9,805,924 | |||||||||
Extended maturity date of loans from related party | 31-Dec-15 | |||||||||||
Rental payment | 163,425 | 1,000,000 | ||||||||||
Industrial building lease term | 3 years | 3 years | ||||||||||
Gross profit from sale of assets | 203,620 | |||||||||||
Sale price of industrial land use rights | 2,770,000 | 2,770,000 | ||||||||||
Percentage of valuation of land use rights higher than previous appraisal | 3.35% | |||||||||||
Sale price of industrial building | 1,150,000 | 1,150,000 | ||||||||||
Value of building | 400,000 | |||||||||||
Number of dormitory buildings | 3 | |||||||||||
Original cost of construction of three dormitory buildings | 4,280,000 | 4,280,000 | ||||||||||
Valuation of three dormitory buildings done by valuer | 4,610,000 | |||||||||||
Loan from related parties, interest expense | 194,692 | 145,015 | 135,377 | |||||||||
Accrued interest | 761,242 | 566,343 | 761,242 | 672,133 | ||||||||
Accrued rental | $227,900 | $64,546 | ||||||||||
Number of apartments sold to qualified employees | 132 |
Notes_Payable_Details
Notes Payable (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Notes payable (Textual) | |||
Notes payable | $16,113,744 | $4,908,216 | |
Restricted cash | 8,873,999 | 2,454,108 | |
Property plant and equipment loan drawn from banking facility | 29,995 | 34,177 | |
Short-term bank loans, fixed interest rate | 7.71% | 6.68% | 7.82% |
Description of maturity of loans payable | January 7, 2015 to April 23, 2015. | May 15 through June 19 during the year of 2014. | |
Bank of Hebei [Member] | |||
Notes payable (Textual) | |||
Number of bank acceptance notes | 11 | 3 | |
Working capital loan drawn from banking facility | 2,454,108 | ||
Notes payable | 1,405,458 | 4,908,216 | |
Restricted cash | 2,454,108 | ||
Property plant and equipment loan drawn from banking facility | 29,995 | 34,177 | |
Short-term bank loans, fixed interest rate | |||
Handling charges of bank acceptance notes percentage | 0.05% | 0.05% | |
SPD Bank [Member] | |||
Notes payable (Textual) | |||
Notes payable | 6,537,016 | ||
Short-term bank loans, fixed interest rate | |||
Handling charges of bank acceptance notes percentage | 0.05% | 0.05% | |
Commercial Bank City of Zhangjiakou [Member] | |||
Notes payable (Textual) | |||
Notes payable | $8,171,270 | ||
Short-term bank loans, fixed interest rate | |||
Handling charges of bank acceptance notes percentage | 0.05% | 0.05% |
Other_Payables_and_Accrued_Lia2
Other Payables and Accrued Liabilities (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Summary of other payables and accrued liabilities | ||
Accrued electricity | $334,212 | $372,726 |
Accrued professional fees | 58,000 | |
Value-added tax payable | 841,556 | 940,400 |
Accrued interest to a related party | 761,242 | 566,343 |
Accrued bank loan interest | 380,022 | |
Advance from customer | 11,453 | |
Insurance premium payable | 62,348 | |
Payable for purchase of equipment | 244,050 | |
Others | 219,463 | 260,180 |
Totals | $2,400,523 | $2,651,472 |
Common_Stock_Details
Common Stock (Details) (USD $) | 0 Months Ended | 1 Months Ended | 0 Months Ended | ||
Apr. 04, 2013 | Nov. 21, 2013 | Aug. 27, 2014 | Dec. 31, 2013 | Aug. 28, 2011 | |
Common Stock (Textual) | |||||
Share price | 1.6 | $2.66 | $3.45 | ||
Quarterly cash dividend approved | $0.01 | $0.01 | |||
Warrant [Member] | |||||
Common Stock (Textual) | |||||
Issuance of common stock and warrants | 1,562,500 | ||||
Shares issued to purchase common stock | 781,250 |
Stock_Warrants_Details
Stock Warrants (Details) | 12 Months Ended |
Dec. 31, 2014 | |
Date of Issuance August 27, 2014 to September 2, 2019 [Member] | |
Stock Warrants [Line Items] | |
Terms of warrants | 5 years |
Expected volatility | 72.00% |
Risk-free interest rate | 1.69% |
Expected dividend yield | 0.81% |
Date of Issuance September 3, 2014 to June 26, 2019 [Member] | |
Stock Warrants [Line Items] | |
Terms of warrants | 4 years 9 months 22 days |
Expected volatility | 69.80% |
Risk-free interest rate | 1.62% |
Expected dividend yield | 0.81% |
Stock_Warrants_Details_1
Stock Warrants (Details 1) (Warrant [Member], USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Warrant [Member] | |
Number | |
Outstanding and exercisable at beginning of the period | |
Issued during the period | 820,312 |
Exercised during the period | |
Cancelled or expired during the period | |
Outstanding and exercisable at end of the period | 820,312 |
Weighted average exercise price | |
Outstanding and exercisable at beginning of the period | |
Issued during the period | $1.71 |
Exercised during the period | |
Cancelled or expired during the period | |
Outstanding and exercisable at beginning of the period | $1.71 |
Range of exercise price, Lower range limit | $1.70 |
Range of exercise price, Upper range limit | $2 |
Stock_Warrants_Details_Textual
Stock Warrants (Details Textual) (Warrant [Member], USD $) | 0 Months Ended | 12 Months Ended |
Aug. 27, 2014 | Dec. 31, 2014 | |
Warrant [Member] | ||
Stock Warrants (Textual) | ||
Issuance of common stock and warrants | 1,562,500 | |
Shares issued to purchase common stock | 781,250 | |
Exercise price | $1.70 | $2 |
Warrants expiration date | 2-Sep-19 | 26-Jun-19 |
Warrants exercisable term | 5 years | |
Aggregate percentage of common stock sold under offering | 2.50% | |
Aggregate number of shares of common stock sold | 39,062 | |
Fair value of common stock sold | $780,000 | $35,191 |
Weighted average fair value of warrants | $0.99 | |
Aggregated intrinsic value of warrants outstanding and exercisable | ||
Aggregated intrinsic value of warrants exercised |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Basic income per share | |||||||||||
Net income for the year - numerator | $2,228,015 | $3,372,944 | $3,572,107 | $2,533,294 | $3,520,613 | $5,534,844 | $3,656,136 | $303,055 | $11,706,360 | $13,014,648 | $14,672,663 |
Weighted average common stock outstanding - denominator | 19,270,394 | 18,458,446 | 18,456,781 | ||||||||
Net income per share | $0.11 | $0.18 | $0.19 | $0.13 | $0.19 | $0.30 | $0.20 | $0.02 | $0.61 | $0.71 | $0.79 |
Diluted income per share | |||||||||||
Net income for the year - numerator | $2,228,015 | $3,372,944 | $3,572,107 | $2,533,294 | $3,520,613 | $5,534,844 | $3,656,136 | $303,055 | $11,706,360 | $13,014,648 | $14,672,663 |
Weighted average common stock outstanding - denominator | 19,270,394 | 18,458,446 | 18,456,781 | ||||||||
Effect of dilution | |||||||||||
Weighted average common stock outstanding - denominator | 19,270,394 | 18,458,446 | 18,456,781 | ||||||||
Diluted income per share | $0.11 | $0.18 | $0.19 | $0.13 | $0.19 | $0.30 | $0.20 | $0.02 | $0.61 | $0.71 | $0.79 |
Earnings_Per_Share_Details_Tex
Earnings Per Share (Details Textual) | 12 Months Ended |
Dec. 31, 2014 | |
Earnings Per Share (Textual) | |
Shares excluded from calculations of dilutive net income per share | 820,312 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Provision for Income Taxes | |||
Current Tax Provision - PRC | $4,034,119 | $4,684,870 | $6,406,050 |
Deferred Tax Provision - PRC | 398,385 | 409,665 | -941,207 |
Total Provision for Income Taxes | $4,432,504 | $5,094,535 | $5,464,843 |
Income_Taxes_Details_1
Income Taxes (Details 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred tax assets (liabilities) - current: | ||
Depreciation and amortization of property, plant and equipment | $139,805 | |
Impairment of property, plant and equipment | 225,656 | |
Miscellaneous | 48,076 | |
Total deferred tax asset - current, net | 413,537 | |
Deferred tax assets (liabilities) - non-current | ||
Depreciation and amortization of property, plant and equipment | -1,248 | 31,446 |
Impairment of property, plant and equipment | 308,175 | 261,805 |
Miscellaneous | -25,917 | -24,922 |
Net Operating Loss Carryover for U.S. income tax purposes | 2,000,539 | 1,445,755 |
Total deferred tax assets - non-current | 2,281,549 | 1,714,084 |
Less: Valuation allowance | -2,000,539 | -1,445,755 |
Total deferred tax assets - non-current, net | $281,010 | $268,329 |
Income_Taxes_Details_2
Income Taxes (Details 2) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Reconciliation of statutory rates to Company's effective tax rate | |||
PRC Statutory rate | 25.00% | 25.00% | 25.00% |
Effect of different tax jurisdiction | -0.80% | -1.10% | -0.60% |
Effect of expenses not deductible for PRC tax purposes | 1.50% | ||
Effect of income not taxable for PRC tax purposes | 0.10% | 0.30% | |
Under provision in previous year | 0.10% | ||
Change in valuation allowance | 3.10% | 2.70% | 2.40% |
Effective income tax rate | 27.50% | 28.10% | 27.10% |
Income_Taxes_Details_Textual
Income Taxes (Details Textual) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Income Taxes (Textual) | |||
Statutory tax rate | 25.00% | 25.00% | 25.00% |
Income tax, statute of limitations period | 5 years | ||
Effective income tax rate | 27.50% | 28.10% | 27.10% |
United States [Member] | |||
Income Taxes (Textual) | |||
Statutory tax rate | 34.00% | ||
State tax rate | 0.00% | ||
Effective income tax rate | 35.00% | ||
PRC [Member] | |||
Income Taxes (Textual) | |||
Statutory tax rate | 25.00% | ||
Cumulative undistributed earnings of foreign subsidiaries | 114,158,370 | 100,959,070 | |
Accumulated Net Operating Losses (NOLs), for U.S. income tax purposes | 3,649,541 | 3,403,740 | 3,146,156 |
Operating loss carry forwards, Expiration date | 31-Dec-34 | ||
Percentage of valuation allowance on the U.S. deferred tax asset benefit | 100.00% |
Stock_Incentive_Plans_Details
Stock Incentive Plans (Details) (USD $) | 0 Months Ended | 1 Months Ended | 12 Months Ended | |||
Apr. 04, 2013 | Aug. 28, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Aug. 27, 2014 | Sep. 10, 2012 | |
Director | ||||||
Stock Incentive Plans (Textual) | ||||||
Shares issued under incentive stock plan | 109,584 | 297,000 | ||||
Common stock cancelled previously issued to directors | 2,875 | |||||
Number of directors | 2 | |||||
Reversal of related capital accounts | $3 | |||||
Allocated share based compensation expense | 16,155 | |||||
Total fair value of stock | $378,065 | $790,020 | $378,065 | |||
Share price | $3.45 | $2.66 | $1.60 | |||
2011 Incentive Stock Plan [Member] | ||||||
Stock Incentive Plans (Textual) | ||||||
Number of shares authorized for issuance under stock incentive plan | 375,000 | |||||
Shares issued under incentive stock plan | 265,416 | |||||
2012 incentive stock plan [Member] | ||||||
Stock Incentive Plans (Textual) | ||||||
Number of shares authorized for issuance under stock incentive plan | 200,000 | |||||
Shares issued under incentive stock plan | 31,584 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | Dec. 31, 2014 |
Schedule of future minimum lease payments | |
2015 | $771,368 |
2016 | 703,274 |
2017 | 607,942 |
2018 | 607,942 |
2019 | 607,942 |
Thereafter | 4,353,654 |
Total operating lease payments | $7,652,122 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details Textual) | 12 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | ||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Nov. 27, 2012 | Nov. 27, 2012 | Dec. 31, 2014 | Dec. 31, 2014 | |
USD ($) | USD ($) | Local government, Xushui County [Member] | Local government, Xushui County [Member] | Investment Company [Member] | Investment Company [Member] | Hebei Fangsheng [Member] | Hebei Fangsheng [Member] | |
USD ($) | CNY | USD ($) | CNY | USD ($) | CNY | |||
acre | acre | acre | acre | |||||
Commitments and Contingencies (Textual) | ||||||||
Area of land | 32.95 | 32.95 | 49.4 | 49.4 | ||||
Lease expiration period | 30 years | 30 years | 15 years | 15 years | 3 years | 3 years | ||
Lease expiration date | 31-Dec-31 | 31-Dec-31 | ||||||
Operating lease annual rental payment | $19,611 | 120,000 | $588,331 | 3,600,000 | $163,425 | 1,000,000 | ||
Operating lease renewable term | Orient Paper leases 32.95 acres of land from a local government in Xushui County, Baoding City, Hebei, China through a real estate lease with a 30-year term | Orient Paper leases 32.95 acres of land from a local government in Xushui County, Baoding City, Hebei, China through a real estate lease with a 30-year term | Orient Paper entered into a 49.4 acres land lease with an investment company in the Economic Development Zone in Wei County, Hebei Province, China. The lease term of the Wei County land lease commences on the date of the lease and lasts for 15 years. | Orient Paper entered into a 49.4 acres land lease with an investment company in the Economic Development Zone in Wei County, Hebei Province, China. The lease term of the Wei County land lease commences on the date of the lease and lasts for 15 years. | ||||
Outstanding commitments for construction of equipment and facilities | $24,561,228 | $51,673,158 | ||||||
Performance holdback on new tissue paper payment, description | The Company expected to pay off all the balances within 1 year. |
Segment_Reporting_Details
Segment Reporting (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Summarized financial information for reportable segments | |||||||||||
Revenues | $32,697,113 | $40,754,205 | $37,836,265 | $25,753,864 | $35,246,348 | $37,686,114 | $33,038,512 | $19,746,656 | $137,041,447 | $125,717,630 | $151,116,806 |
Gross Profit | 5,575,457 | 6,410,848 | 6,121,007 | 4,670,836 | 7,161,153 | 8,435,814 | 6,098,395 | 1,630,237 | 22,778,148 | 23,325,599 | 27,056,247 |
Depreciation and amortization | 8,289,320 | 7,794,743 | 8,382,859 | ||||||||
Impairment | -2,762,349 | ||||||||||
Interest income | 149,783 | 90,260 | 30,674 | ||||||||
Interest expense | 1,446,439 | 995,694 | 871,834 | ||||||||
Income tax expense | 4,432,504 | 5,094,535 | 5,464,843 | ||||||||
Net Income (Loss) | 2,228,015 | 3,372,944 | 3,572,107 | 2,533,294 | 3,520,613 | 5,534,844 | 3,656,136 | 303,055 | 11,706,360 | 13,014,648 | 14,672,663 |
Total Assets | 239,767,585 | 4,325,023 | 239,767,585 | 4,325,023 | |||||||
Orient Paper HB [Member] | |||||||||||
Summarized financial information for reportable segments | |||||||||||
Revenues | 133,967,031 | 120,747,633 | 144,928,792 | ||||||||
Gross Profit | 20,401,820 | 22,318,739 | 25,616,670 | ||||||||
Depreciation and amortization | 5,467,593 | 6,828,970 | 6,553,120 | ||||||||
Impairment | 2,762,349 | ||||||||||
Interest income | 145,590 | 86,168 | 25,950 | ||||||||
Interest expense | 1,446,439 | 995,694 | 867,561 | ||||||||
Income tax expense | 4,337,424 | 4,845,970 | 5,129,304 | ||||||||
Net Income (Loss) | 11,299,155 | 14,604,244 | 15,109,345 | ||||||||
Total Assets | 200,764,663 | 168,149,877 | 200,764,663 | 168,149,877 | |||||||
Orient Paper Shengde [Member] | |||||||||||
Summarized financial information for reportable segments | |||||||||||
Revenues | 4,829,046 | 4,969,997 | 6,188,014 | ||||||||
Gross Profit | 2,376,328 | 1,006,860 | 1,439,577 | ||||||||
Depreciation and amortization | 2,821,727 | 965,773 | 1,829,739 | ||||||||
Impairment | |||||||||||
Interest income | 4,193 | 4,009 | 4,634 | ||||||||
Interest expense | |||||||||||
Income tax expense | 95,080 | 248,565 | 335,539 | ||||||||
Net Income (Loss) | 1,900,145 | 638,031 | 965,444 | ||||||||
Total Assets | 38,914,243 | 41,264,704 | 38,914,243 | 41,264,704 | |||||||
Not Attributable to Segments [Member] | |||||||||||
Summarized financial information for reportable segments | |||||||||||
Revenues | |||||||||||
Gross Profit | |||||||||||
Depreciation and amortization | |||||||||||
Impairment | |||||||||||
Interest income | 83 | 90 | |||||||||
Interest expense | 4,273 | ||||||||||
Income tax expense | |||||||||||
Net Income (Loss) | -1,492,940 | -2,227,627 | -1,402,126 | ||||||||
Total Assets | 88,679 | 111,621 | 88,679 | 111,621 | |||||||
Elimination of Inter-segment [Member] | |||||||||||
Summarized financial information for reportable segments | |||||||||||
Revenues | -1,754,630 | ||||||||||
Gross Profit | |||||||||||
Depreciation and amortization | |||||||||||
Impairment | |||||||||||
Interest income | |||||||||||
Interest expense | |||||||||||
Income tax expense | |||||||||||
Net Income (Loss) | |||||||||||
Total Assets | |||||||||||
Enterprise-wide, consolidated [Member] | |||||||||||
Summarized financial information for reportable segments | |||||||||||
Revenues | 137,041,447 | 125,717,630 | 151,116,806 | ||||||||
Gross Profit | 22,778,148 | 23,325,599 | 27,056,247 | ||||||||
Depreciation and amortization | 8,289,320 | 7,794,743 | 8,382,859 | ||||||||
Impairment | 2,762,349 | ||||||||||
Interest income | 149,783 | 90,260 | 30,674 | ||||||||
Interest expense | 1,446,439 | 995,694 | 871,834 | ||||||||
Income tax expense | 4,432,504 | 5,094,535 | 5,464,843 | ||||||||
Net Income (Loss) | 11,706,360 | 13,014,648 | 14,672,663 | ||||||||
Total Assets | $239,767,585 | $209,526,202 | $239,767,585 | $209,526,202 |
Segment_Reporting_Details_Text
Segment Reporting (Details Textual) | 12 Months Ended |
Dec. 31, 2014 | |
Segments | |
Segment Reporting (Textual) | |
Number of business operating segments | 2 |
Number of reportable segment | 2 |
Concentration_and_Major_Custom1
Concentration and Major Customers and Suppliers (Details) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Supplier | Supplier | Supplier | |
Customer | Customer | Customer | |
Concentration and major customers and suppliers (Textual) | |||
Number of major suppliers | 3 | 3 | 2 |
Number of customer contributed over 10% of total sales | |||
Supplier A [Member] | |||
Concentration and major customers and suppliers (Textual) | |||
Percentage of revenue from Orient Paper HB | 62.00% | 75.00% | 77.00% |
Supplier B [Member] | |||
Concentration and major customers and suppliers (Textual) | |||
Percentage of revenue from Orient Paper HB | 14.00% | 10.00% | 8.00% |
Supplier C [Member] | |||
Concentration and major customers and suppliers (Textual) | |||
Percentage of revenue from Orient Paper HB | 9.00% | 7.00% |
Subsequent_Event_Details
Subsequent Event (Details) | Dec. 31, 2014 | Mar. 01, 2015 | Mar. 01, 2015 |
USD ($) | Subsequent Event [Member] | Subsequent Event [Member] | |
Mr. Zhenyong Liu [Member] | Mr. Zhenyong Liu [Member] | ||
USD ($) | CNY | ||
Subsequent Event (Textual) | |||
Working capital loans | $3,268,508 | $19,611,048 | 120,000,000 |
Summarized_Quarterly_Financial2
Summarized Quarterly Financial Data (Unaudited) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Summary of quarterly financial information | |||||||||||
Revenues | $32,697,113 | $40,754,205 | $37,836,265 | $25,753,864 | $35,246,348 | $37,686,114 | $33,038,512 | $19,746,656 | $137,041,447 | $125,717,630 | $151,116,806 |
Gross Profit | 5,575,457 | 6,410,848 | 6,121,007 | 4,670,836 | 7,161,153 | 8,435,814 | 6,098,395 | 1,630,237 | 22,778,148 | 23,325,599 | 27,056,247 |
Income from Operations | 3,589,978 | 4,929,301 | 5,131,707 | 3,761,920 | 5,325,060 | 7,563,522 | 5,211,839 | 743,071 | 17,412,906 | 18,843,492 | 20,978,666 |
Net Income | $2,228,015 | $3,372,944 | $3,572,107 | $2,533,294 | $3,520,613 | $5,534,844 | $3,656,136 | $303,055 | $11,706,360 | $13,014,648 | $14,672,663 |
Net income per share: | |||||||||||
Basic | $0.11 | $0.18 | $0.19 | $0.13 | $0.19 | $0.30 | $0.20 | $0.02 | $0.61 | $0.71 | $0.79 |
Diluted | $0.11 | $0.18 | $0.19 | $0.13 | $0.19 | $0.30 | $0.20 | $0.02 | $0.61 | $0.71 | $0.79 |
Condensed_Financial_Informatio2
Condensed Financial Information of the Parent Company (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Current Assets | ||||
Cash and cash equivalents | $3,891,473 | $3,131,163 | $13,140,288 | $4,165,446 |
Prepayments and other current assets | 2,919,668 | 1,068,031 | ||
Total current assets | 26,554,862 | 25,953,328 | ||
Total Assets | 239,767,585 | 4,325,023 | ||
Current Liabilities | ||||
Accrued payroll and employee benefits | 492,765 | 498,010 | ||
Insurance premium payable | 62,348 | |||
Total current liabilities | 44,470,148 | 28,372,723 | ||
Total liabilities | 64,822,219 | 48,473,054 | ||
Total stockholders' equity | 174,945,366 | 161,053,148 | 142,768,801 | 127,525,443 |
Total Liabilities and Stockholders' Equity | 239,767,585 | 209,526,202 | ||
Orient Paper [Member] | ||||
Current Assets | ||||
Cash and cash equivalents | 26,179 | 42,592 | -96 | 145,386 |
Prepayments and other current assets | 62,500 | 69,029 | ||
Total current assets | 88,679 | 111,621 | ||
Investment in subsidiaries | 176,732,554 | 163,658,397 | ||
Total Assets | 176,821,233 | 163,770,018 | ||
Current Liabilities | ||||
Inter-company payable | 1,875,867 | 2,544,855 | ||
Accrued payroll and employee benefits | 51,667 | |||
Accrued liabilities | 58,000 | |||
Insurance premium payable | 62,348 | |||
Total current liabilities | 1,875,867 | 2,716,870 | ||
Total liabilities | 1,875,867 | 2,716,870 | ||
Total stockholders' equity | 174,945,366 | 161,053,148 | 142,768,801 | |
Total Liabilities and Stockholders' Equity | $176,821,233 | $163,770,018 |
Condensed_Financial_Informatio3
Condensed Financial Information of the Parent Company (Details 1) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Operating expenses | |||||||||||
Selling, general and administrative expenses | $4,859,215 | $4,567,079 | $3,360,520 | ||||||||
Loss from Operations | 3,589,978 | 4,929,301 | 5,131,707 | 3,761,920 | 5,325,060 | 7,563,522 | 5,211,839 | 743,071 | 17,412,906 | 18,843,492 | 20,978,666 |
Income before Income Taxes | 16,138,864 | 18,109,183 | 20,137,506 | ||||||||
Provision for Income Taxes | 4,432,504 | 5,094,535 | 5,464,843 | ||||||||
Net Income | 2,228,015 | 3,372,944 | 3,572,107 | 2,533,294 | 3,520,613 | 5,534,844 | 3,656,136 | 303,055 | 11,706,360 | 13,014,648 | 14,672,663 |
Orient Paper [Member] | |||||||||||
Operating expenses | |||||||||||
Selling, general and administrative expenses | 1,492,940 | 2,227,711 | 1,397,943 | ||||||||
Loss from Operations | -1,492,940 | -2,227,711 | -1,397,943 | ||||||||
Equity in earnings of unconsolidated subsidiaries | 13,199,300 | 15,242,276 | 16,074,789 | ||||||||
Other Income (Expense) | 83 | -4,183 | |||||||||
Income before Income Taxes | 11,706,360 | 13,014,648 | 14,672,663 | ||||||||
Provision for Income Taxes | |||||||||||
Net Income | $11,706,360 | $13,014,648 | $14,672,663 |
Condensed_Financial_Informatio4
Condensed Financial Information of the Parent Company (Details 2) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
CONDENSED STATEMENTS OF CASH FLOWS | |||
Net Cash (Used in) Provided by Operating Activities | $32,313,173 | $29,921,941 | $22,231,966 |
Net Cash Used in Investing Activities | -36,281,351 | -60,362,479 | -11,915,693 |
Net Cash Provided by (Used in) Financing Activities | 4,734,262 | 20,100,686 | -1,367,557 |
Net (Decrease) Increase in Cash and Cash Equivalents | 760,310 | -10,009,125 | 8,974,842 |
Cash and Cash Equivalents - Beginning of Period | 3,131,163 | 13,140,288 | 4,165,446 |
Cash and Cash Equivalents - End of Period | 3,891,473 | 3,131,163 | 13,140,288 |
Orient Paper [Member] | |||
CONDENSED STATEMENTS OF CASH FLOWS | |||
Net Cash (Used in) Provided by Operating Activities | -1,658,426 | 365,720 | 546,760 |
Net Cash Used in Investing Activities | |||
Net Cash Provided by (Used in) Financing Activities | 1,642,013 | -323,032 | -692,242 |
Net (Decrease) Increase in Cash and Cash Equivalents | -16,413 | 42,688 | -145,482 |
Cash and Cash Equivalents - Beginning of Period | 42,592 | -96 | 145,386 |
Cash and Cash Equivalents - End of Period | $26,179 | $42,592 | ($96) |
Condensed_Financial_Informatio5
Condensed Financial Information of the Parent Company (Details Textual) (Orient Paper [Member], USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Orient Paper [Member] | ||
Condensed Financial Information of the Parent Company (Textual) | ||
Restricted stock including paid-in capital, capital surplus and statutory reserves | $52,649,848 | $52,666,026 |