Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 11-May-15 | |
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-Q | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 20,316,400 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Current Assets | ||
Cash and cash equivalents | $2,544,567 | $3,891,473 |
Restricted cash | 5,047,052 | 8,873,999 |
Accounts receivable (net of allowance for doubtful accounts of $77,970 and $76,125 as of March 31, 2015 and December 31, 2014, respectively) | 3,820,506 | 3,730,123 |
Inventories | 10,931,611 | 7,139,599 |
Prepayments and other current assets | 941,251 | 2,919,668 |
Deferred tax asset - non-current | 6,018 | |
Total current assets | 23,291,005 | 26,554,862 |
Prepayment on property, plant and equipment | 1,484,810 | 1,490,440 |
Property, plant, and equipment, net | 209,095,769 | 208,213,198 |
Recoverable VAT | 3,089,938 | 3,228,075 |
Deferred tax asset - non-current | 424,900 | 281,010 |
Total Assets | 237,386,422 | 239,767,585 |
Current Liabilities | ||
Short-term bank loans | 9,768,487 | 9,805,524 |
Current portion of long-term loans from credit union | 146,527 | 147,083 |
Current portion of long-term loan from a related party | 2,377,962 | 2,386,978 |
Current obligations under capital lease | 11,898,798 | 12,258,488 |
Accounts payable | 839,255 | |
Notes payable | 10,094,103 | 16,113,744 |
Due to a related party | 267,741 | 227,900 |
Accrued payroll and employee benefits | 354,644 | 492,765 |
Other payables and accrued liabilities | 3,506,683 | 2,400,523 |
Income taxes payable | 1,591,192 | 637,143 |
Total current liabilities | 40,845,392 | 44,470,148 |
Loans from credit union | 5,738,986 | 5,760,745 |
Loan from a related party | 9,768,487 | 9,805,524 |
Deferred gain on sale-leaseback | 577,302 | 695,389 |
Long-term obligations under capital lease | 4,072,946 | 4,090,413 |
Total liabilities | 61,003,113 | 64,822,219 |
Commitments and Contingencies | ||
Stockholders' Equity | ||
Common stock, 500,000,000 shares authorized, $0.001 par value per share, 20,316,400 shares issued and outstanding as of March 31, 2015 and December 31, 2014 | 20,316 | 20,316 |
Additional paid-in capital | 49,218,982 | 49,218,982 |
Statutory earnings reserve | 6,080,574 | 6,080,574 |
Accumulated other comprehensive income | 16,353,619 | 17,021,165 |
Retained earnings | 104,709,818 | 102,604,329 |
Total stockholders' equity | 176,383,309 | 174,945,366 |
Total Liabilities and Stockholders' Equity | $237,386,422 | $239,767,585 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, Allowance for doubtful accounts | $77,970 | $76,125 |
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 | 20,316,400 |
Common stock, Shares outstanding | 20,316,400 | 20,316,400 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income and Comprehensive Income (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Statements Of Income and Comprehensive Income [Abstract] | ||
Revenues | $26,504,344 | $25,753,864 |
Cost of Sales | -21,517,611 | -21,083,028 |
Gross Profit | 4,986,733 | 4,670,836 |
Selling, general and administrative expenses | -1,706,392 | -908,916 |
Income from Operations | 3,280,341 | 3,761,920 |
Other Income (Expense): | ||
Interest income | 48,808 | 5,397 |
Subsidy income | 230,043 | |
Interest expense | -648,218 | -275,292 |
Income before Income Taxes | 2,910,974 | 3,492,025 |
Provision for Income Taxes | -805,485 | -958,731 |
Net income | 2,105,489 | 2,533,294 |
Other Comprehensive Income: | ||
Foreign currency translation adjustment | -667,546 | -1,375,490 |
Total Comprehensive Income | $1,437,943 | $1,157,804 |
Earnings Per Share: | ||
Basic and Fully Diluted Earnings per Share | $0.10 | $0.14 |
Weighted Average Number of Shares Outstanding - Basic and Fully Diluted | 20,316,400 | 18,753,900 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Cash Flows from Operating Activities: | ||
Net income | $2,105,489 | $2,533,294 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 2,514,884 | 1,938,794 |
Allowance for/(Recovery from) bad debts | 2,132 | -7,654 |
Deferred tax | -150,970 | 163,509 |
Changes in operating assets and liabilities: | ||
Accounts receivable | -106,604 | 398,185 |
Prepayments and other current assets | 2,093,569 | 305,382 |
Inventories | -3,818,979 | -1,572,609 |
Accounts payable | 839,255 | 45,697 |
Notes payable | -5,958,777 | 4,249,964 |
Accrued payroll and employee benefits | -136,260 | -61,855 |
Other payables and accrued liabilities | -315,737 | -866,457 |
Income taxes payable | 956,456 | 699,672 |
Net Cash (Used in)/Provided by Operating Activities | -1,975,542 | 7,825,922 |
Cash Flows from Investing Activities: | ||
Purchases of property, plant and equipment | -15,972 | -4,703 |
Payment for construction in progress | -2,655,675 | -2,960,341 |
Net Cash Used in Investing Activities | -2,671,647 | -2,965,044 |
Cash Flows from Financing Activities: | ||
Proceeds from related party loans | 80,000 | 123,500 |
Repayment of related party loans | -80,000 | -123,500 |
Payment of capital lease obligation | -471,459 | -6,039 |
Decrease/(Increase) in restricted cash | 3,793,429 | -2,075,943 |
Net Cash Provided by/(Used in) Financing Activities | 3,321,970 | -2,081,982 |
Effect of Exchange Rate Changes on Cash and Cash Equivalents | -21,687 | -69,833 |
Net (Decrease)/Increase in Cash and Cash Equivalents | -1,346,906 | 2,709,063 |
Cash and Cash Equivalents - Beginning of Period | 3,891,473 | 3,131,163 |
Cash and Cash Equivalents - End of Period | 2,544,567 | 5,840,226 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest, net of capitalized cost | 302,281 | 111,290 |
Cash paid for income taxes | $95,550 |
Organization_and_Business_Back
Organization and Business Background | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
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 three months ended March 31, 2015 and 2014 were 100.00% and 95.00%, respectively. Orient Paper HB also accounted for 83.75% and 83.73% of the total assets of the Company as of March 31, 2015 and December 31, 2014, respectively. | |||||||||
As of March 31, 2015 and December 31, 2014, 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 | 3 Months Ended |
Mar. 31, 2015 | |
Significant Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | (2) Basis of Presentation and Significant Accounting Policies |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for reporting on Form 10-Q. Accordingly, certain information and notes required by the United States of America generally accepted accounting principles (“GAAP”) for annual financial statements are not included herein. These interim statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2014 of Orient Paper, Inc. a Nevada corporation, and its subsidiaries and variable interest entity (which we sometimes refer to collectively as “Orient Paper”, “we”, “us” or “our”). | |
Principles of Consolidation | |
Our unaudited condensed consolidated financial statements reflect all adjustments, which are, in the opinion of management, necessary for a fair presentation of our financial position and results of operations. Such adjustments are of a normal recurring nature, unless otherwise noted. The balance sheet as of March 31, 2015 and the results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for any future period. | |
Our unaudited condensed consolidated financial statements are prepared in accordance with GAAP. These accounting principles require us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We believe that the estimates, judgments and assumptions are reasonable, based on information available at the time they are made. Actual results could differ materially from those estimates. | |
Liquidity and Going Concern | |
As of March 31, 2015, the Company had current assets of $23,291,005 and current liabilities of $40,845,392 (including amounts due to related parties of $3,586,266), resulting in a working capital deficit of approximately $17,554,387; while 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. 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 $940,563, which was recorded in other payables and accrued liabilities as part of the current liabilities in the condensed consolidated financial statement as of March 31, 2015 (see Note (11) 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 $2,377,962 which will expire at December 31, 2015. (see Note (9) 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 $267,741 and $227,900, which was recorded in as part of the current liabilities as of March 31, 2015 and December 31, 2014, 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 $19,536,974 (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. Nil amount has been drawn from the credit line as of March 31, 2015. | |
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. | |
Restricted_Cash
Restricted Cash | 3 Months Ended |
Mar. 31, 2015 | |
Restricted Cash [Abstract] | |
Restricted Cash | (3) Restricted Cash |
Restricted cash of $5,047,052 as of March 31, 2015 was presented for the cash deposited at the Shanghai Pudong Development Bank (“SPD Bank”) and the Commercial Bank of the City of Zhangjiakou for purpose of securing the bank acceptance notes from the bank (see Note (10)). The restriction will be lifted upon the maturity of the notes payable from April 14 through July 22 during the year of 2015. | |
Restricted cash of $8,873,999 as of December 31, 2014 was presented for the cash deposited at the Bank of Hebei, SPD Bank and the Commercial Bank of the City of Zhangjiakou for purpose of securing the bank acceptance notes from these banks (see Note (10)). The restriction will be lifted upon the maturity of the notes payable from January 7, 2015 through April 23, 2015. |
Inventories
Inventories | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
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 March 31, 2015 and December 31, 2014: | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Raw Materials | |||||||||
Recycled paper board | $ | 8,202,491 | $ | 4,338,069 | |||||
Recycled white scrap paper | 1,446,171 | 1,212,588 | |||||||
Coal | 472,949 | 497,038 | |||||||
Base paper and other raw materials | 86,331 | 95,053 | |||||||
10,207,942 | 6,142,748 | ||||||||
Finished Goods | 723,669 | 996,851 | |||||||
Totals | $ | 10,931,611 | $ | 7,139,599 | |||||
Prepayments_and_Other_Current_
Prepayments and Other Current Assets | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
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 March 31, 2015 and December 31, 2014: | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Prepaid NYSE MKT annual fee | $ | 26,250 | $ | 7,500 | |||||
Recoverable VAT | 375,000 | 250,000 | |||||||
Prepaid insurance | - | 55,000 | |||||||
Prepayment for purchase of materials | - | 1,910,643 | |||||||
Prepaid land lease | 341,897 | 490,276 | |||||||
Others | 198,104 | 206,249 | |||||||
$ | 941,251 | $ | 2,919,668 | ||||||
Prepayment_on_Property_Plant_a
Prepayment on Property, Plant and Equipment | 3 Months Ended |
Mar. 31, 2015 | |
Prepayment on Property, Plant and Equipment [Abstract] | |
Prepayment on property, plant and equipment | (6) Prepayment on property, plant and equipment |
As of March 31, 2015 and December 31, 2014, prepayment on property, plant and equipment consisted of $1,484,810 and $1,490,440, 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 2016. |
Property_Plant_and_Equipment_N
Property, Plant and Equipment, Net | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Property, Plant and Equipment, Net [Abstract] | |||||||||
Property, plant and equipment, net | (7) Property, plant and equipment, net | ||||||||
As of March 31, 2015 and December 31, 2014, property, plant and equipment consisted of the following: | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Property, Plant, and Equipment: | |||||||||
Land use rights | $ | 7,723,602 | $ | 7,752,886 | |||||
Building and improvements | 80,080,972 | 44,889,395 | |||||||
Machinery and equipment | 122,184,521 | 121,332,310 | |||||||
Vehicles | 703,880 | 706,548 | |||||||
Construction in progress | 45,815,355 | 78,484,066 | |||||||
Totals | 256,508,330 | 253,165,205 | |||||||
Less: accumulated depreciation and amortization | (47,412,561 | ) | (44,952,007 | ) | |||||
Property, Plant and Equipment, net | $ | 209,095,769 | $ | 208,213,198 | |||||
As of March 31, 2015 and December 31, 2014, 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 March 31, 2015 and December 31, 2014. 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 $25,866,717 and $25,964,790 as of March 31, 2015 and December 31, 2014, respectively. See “Financing with Sale-Leaseback” under Note (8), 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 three months ended March 31, 2015 and 2014, depreciation of Leased Equipment were $412,870 and $414,524, respectively. The accumulated depreciation of the leased asset were $2,890,093 and $2,486,615 as of March 31, 2015 and December 31, 2014. During the three months ended March 31, 2015 and 2014, the gain realized on sale-leaseback transaction were $115,460 and $115,923, respectively. The gain realized was recorded in cost of sales as a reduction of depreciation expenses. The unamortized deferred gains on sale-lease back are $577,302 and $695,389 as of March 31, 2015 and December 31, 2014, respectively. | |||||||||
Construction in progress mainly represents payments for the new 15,000 tonnes per year tissue paper manufacturing equipment PM8, the tissue paper workshops 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 $65,860,783 to the Company’s building and improvements, and machinery and equipment. For the three months ended March 31, 2015 and 2014, the amount of interest capitalized is $17,739 and $261,433, respectively. | |||||||||
As of March 31, 2015 and December 31, 2014, certain property, plant and equipment of Orient Paper HB with net values of $15,715,157 and $19,300,765 have been pledged for the long-term loan from credit union of Orient Paper HB, respectively. As of December 31, 2014, certain of the Company’s property, plant and equipment in the amount of $29,995 have been pledged for the facility obtained from Bank of Hebei. See “Notes Payable” under Note (10) for details. In addition, land use right with net values of $7,273,059 and $7,339,399 as of March 31, 2015 and December 31, 2014 was pledged for the sale-leaseback financing. See “Financing with Sale-Leaseback” under Note (8), Loans Payable, for details of the transaction and asset collaterals. | |||||||||
As of March 31, 2015 and December 31, 2014, essentially all production equipment of Orient Paper Shengde with net value of $32,468,616 and $33,287,324 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 $2,514,884 and $1,938,794 for the three months ended March 31, 2015 and 2014, respectively. | |||||||||
Loans_Payable
Loans Payable | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Loans Payable [Abstract] | |||||||||||
Loans Payable | (8) Loans Payable | ||||||||||
Short-term bank loans | |||||||||||
March 31, | December 31, | ||||||||||
2015 | 2014 | ||||||||||
Industrial & Commercial Bank of China (“ICBC”) Loan 1 | (a) | $ | 2,442,122 | $ | 2,451,381 | ||||||
The Commercial Bank of the City of Zhangjiakou | (b) | 3,256,162 | 3,268,508 | ||||||||
ICBC Loan 2 | (c) | 814,041 | 817,127 | ||||||||
ICBC Loan 3 | (d) | 3,256,162 | 3,268,508 | ||||||||
Total short-term bank loans | $ | 9,768,487 | $ | 9,805,524 | |||||||
(a) | On June 26, 2014, the Company obtained an accounts receivable factoring facility from the ICBC for $2,442,122 and $2,451,381 as of March 31, 2015 and December 31, 2014, respectively. 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. | |||||||||||
(b) | 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 $3,256,162 and $3,268,508 as of March 31, 2015 and December 31, 2014, respectively. The loan will be repayable on June 9, 2015 and bears a fixed interest rate of 11.88% per annum. | ||||||||||
(c) | On August 19, 2014, the Company obtained a new accounts receivable factoring facility from the ICBC for $814,041 and $817,127 as of March 31, 2015 and December 31, 2014, respectively. 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. | ||||||||||
(d) | On November 20, 2014, the Company entered into a working capital loan agreement with the ICBC for $3,256,162 and $3,268,508 as of March 31, 2015 and December 31, 2014, respectively. 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 be repayable 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 March 31, 2015, there were guaranteed short-term borrowings of $3,256,162 and secured bank loans of $6,512,325. As of December 31, 2014, there were guaranteed short-term borrowings of $3,268,508 and secured bank loans of $6,537,016. The factoring facility was secured by the Company’s accounts receivable in the amount of $3,820,506 and $3,730,123 as of March 31, 2015 and December 31, 2014, respectively. | |||||||||||
The average short-term borrowing rates for the three months ended March 31, 2015 and 2014 were approximately 8.21% and 6.79%, respectively. | |||||||||||
Long-term loans from credit union | |||||||||||
As of March 31, 2015 and December 31, 2014, loans payable to Rural Credit Union of Xushui County, amounted to $5,885,513 and $5,907,828, respectively. | |||||||||||
On April 16, 2014, the Company entered into an agreement with the Rural Credit Union of Xushui County for an amount that is $1,603,660 and $1,609,740 as of March 31, 2015 and 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 March 31, 2015, total outstanding loan balance was $1,603,660 with $65,123 becoming due within one year and presented as current portion of long term loans from credit union in the condensed consolidated balance sheet. 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 $15,715,157 and $19,300,765 as of March 31, 2015 and December 31, 2014, respectively. Interest payment is due quarterly and bears a fixed rate of 0.72% per month. As of March 31, 2015, the total outstanding loan balance was $4,281,853, with $81,404 becoming due within one year and presented as current portion of long term loans from credit union in the condensed consolidated balance sheet. 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. | |||||||||||
Total interest expenses for the short-term bank loans and long-term loans for the three months ended March 31, 2015 and 2014 were $327,707 and $238,585, 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$1.36 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 $4,072,946 and $4,090,413 as of March 31, 2015 and December 31, 2014, which is net of its current portion in the amount of $11,898,798 and $12,258,488, respectively. | |||||||||||
Total interest expenses for the sale-leaseback arrangement for the three months ended March 31, 2015 and 2014 were $156,054 and $261,433, 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 $7,273,059 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 $32,468,616 and $33,287,324 as of March 31, 2015 and December 31, 2014, respectively. | |||||||||||
The future minimum lease payments of the capital lease as of March 31, 2015 were as follows: | |||||||||||
March 31, | Amount | ||||||||||
2016 | $ | 12,425,754 | |||||||||
2017 | 4,134,173 | ||||||||||
16,559,927 | |||||||||||
Less: unearned discount | (588,183 | ) | |||||||||
15,971,744 | |||||||||||
Less: Current portion of obligation under capital lease, net | (11,898,798 | ) | |||||||||
$ | 4,072,946 | ||||||||||
Related_Party_Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2015 | |
Related Parties Transactions [Abstract] | |
Related Parties Transactions | (9) Related Party 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 $2,377,962 and $2,386,978 as of March 31, 2015 and December 31, 2014, respectively. The unsecured loan carries an annual interest rate based on the People’s Bank of China 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 condensed consolidated balance sheet as of March 31, 2015. | |
On December 10, 2014, Mr. Liu loaned $9,768,487 and $9,805,524 as of March 31, 2015 and December 31, 2014, to Orient Paper HB for working capital purpose with an annual interest rate based on the People’s Bank of China and was set at 6.00% per annum. The unsecured loan will expire on December 10, 2017. | |
As of March 31, 2015 and December 31, 2014, total amount of loans due to Mr. Liu were $12,146,449 and $12,192,502, respectively. The interest expenses incurred for above related party loans are $182,196 and $36,707 for the three months ended March 31, 2015 and 2014, respectively. On January 20, 2015, the Company’s 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 $940,563 and $761,242, which was recorded in other payables and accrued liabilities (see Note (11) below) as part of the current liabilities as of March 31, 2015 and December 31, 2014, respectively. | |
During the three months ended March 31, 2015 and 2014, the Company borrowed $80,000 and $123,500, 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. 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 $162,808 (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 $267,741 and $227,900, which was recorded as part of the current liabilities as of March 31, 2015 and December 31, 2014, respectively. | |
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 (10) 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 | 3 Months Ended |
Mar. 31, 2015 | |
Notes Payable [Abstract] | |
Notes payable | (10) Notes payable |
As of March 31, 2015, the Company had four bank acceptance notes that totaled of $6,512,325 and $3,581,778, respectively, from the Commercial Bank of the City of Zhangjiakou and SPD Bank, 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 two banks as well as the restricted bank deposit of $5,047,052 in these two banks as mentioned in Note (3). The banking facility obtained from SPD Bank was secured by land use right from a related party as mentioned in Note (9). 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 (8). The bank acceptance notes from those two 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 April 14, 2015 to July 22, 2015. | |
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 were used to essentially extend the payment of accounts payable and were 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 (9). 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 (8). The bank acceptance notes from those three banks bore interest rate at nil% per annum and 0.05% of notes amount as handling change. They become due and payable on various dates starting from January 7, 2015 to April 23, 2015. |
Other_Payables_and_Accrued_Lia
Other Payables and Accrued Liabilities | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Other Payables and Accrued Liabilities [Abstract] | |||||||||
Other payables and accrued liabilities | (11) Other payables and accrued liabilities | ||||||||
Other payables and accrued liabilities consist of the following: | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Accrued electricity | $ | 401,774 | $ | 334,212 | |||||
Value-added tax payable | 80,168 | 841,556 | |||||||
Accrued interest to a related party | 940,563 | 761,242 | |||||||
Accrued bank loan interest | 25,425 | - | |||||||
Payable for purchase of equipment | 1,870,847 | 244,050 | |||||||
Others | 187,906 | 219,463 | |||||||
Totals | $ | 3,506,683 | $ | 2,400,523 | |||||
Common_Stock
Common Stock | 3 Months Ended |
Mar. 31, 2015 | |
Common Stock [Abstract] | |
Common Stock | (12) 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 (13), Stock Warrants, for details. | |
Stock_warrants
Stock warrants | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Stock Warrants [Abstract] | |||||||||
Stock warrants | (13) 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 at the date of issuance. | |||||||||
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 at the date of issuance 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: | |||||||||
Three months ended | |||||||||
31-Mar-15 | |||||||||
Number | Weight average | ||||||||
exercise price | |||||||||
Outstanding and exercisable at beginning of the period | 820,312 | $ | 1.71 | ||||||
Issued during the period | - | - | |||||||
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 three months ended March 31, 2015 and 2014. As of March 31, 2015, the aggregated intrinsic value of warrants outstanding and exercisable was $117,188. |
Earnings_Per_Share
Earnings Per Share | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Earnings Per Share [Abstract] | |||||||||
Earnings Per Share | (14) Earnings Per Share | ||||||||
For the three months ended March 31, 2015 and 2014, basic and diluted net income per share are calculated as follows: | |||||||||
Three Months Ended March 31, | |||||||||
2015 | 2014 | ||||||||
Basic income per share | |||||||||
Net income for the period - numerator | $ | 2,105,489 | $ | 2,533,294 | |||||
Weighted average common stock outstanding - denominator | 20,316,400 | 18,753,900 | |||||||
Net income per share | $ | 0.1 | $ | 0.14 | |||||
Diluted income per share | |||||||||
Net income for the period- numerator | $ | 2,105,489 | $ | 2,533,294 | |||||
Weighted average common stock outstanding - denominator | 20,316,400 | 18,753,900 | |||||||
Effect of dilution | - | - | |||||||
Weighted average common stock outstanding - denominator | 20,316,400 | 18,753,900 | |||||||
Diluted income per share | $ | 0.1 | $ | 0.14 | |||||
For the three months ended March 31, 2014, there were no securities with dilutive effect issued and outstanding. For the three months ended March 31, 2015, 820,312 warrants shares 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 three months ended March 31, 2015 were lower than the warrants exercise price. | |||||||||
Income_Taxes
Income Taxes | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Income Taxes [Abstract] | |||||||||
Income Taxes | (15) 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 three months ended March 31, 2015 and 2014 were as follows: | |||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Provision for Income Taxes | |||||||||
Current Tax Provision – PRC | $ | 956,455 | $ | 795,222 | |||||
Deferred Tax Provision – PRC | (150,970 | ) | 163,509 | ||||||
Total Provision for Income Taxes | $ | 805,485 | $ | 958,731 | |||||
During the three months ended March 31, 2015 and 2014, the effective income tax rate was estimated by the Company to be 27.7% and 27.5%, 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 March 31, 2015 and December 31, 2014, management considered that the Company had no uncertain tax positions affecting its condensed 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 condensed consolidated financial statements for the three months ended March 31, 2015 and 2014, 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 | 3 Months Ended |
Mar. 31, 2015 | |
Stock Incentive Plans [Abstract] | |
Stock Incentive Plans | (16) Stock Incentive Plans |
Issuance of common stock pursuant to the 2012 Incentive Stock Plan | |
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 Incentive Stock Plan 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. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Commitments and Contingencies [Abstract] | |||||
Commitments and Contingencies | (17) 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 $19,537 (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 $586,109 (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 (9) 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 $162,808 (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 currently located in the headquarters compound. | |||||
Future minimum lease payments of all operating leases are as follows: | |||||
March 31, | Amount | ||||
2016 | $ | 768,454 | |||
2017 | 659,916 | ||||
2018 | 605,646 | ||||
2019 | 605,646 | ||||
2020 | 605,646 | ||||
Thereafter | 4,674,221 | ||||
$ | 7,919,529 | ||||
Capital commitment | |||||
As of March 31, 2015, 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 $20,205,927 and $24,561,228 as of March 31, 2015 and December 31, 2014, respectively. The Company expected to pay off all the balances within 1 year. |
Segment_Reporting
Segment Reporting | 3 Months Ended | ||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||
Segment Reporting | (18) 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: | |||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||
March 31, 2015 | |||||||||||||||||||||
Orient Paper | Orient Paper | Not Attributable | Elimination | Enterprise-wide, | |||||||||||||||||
HB | Shengde | to Segments | of Inter-segment | consolidated | |||||||||||||||||
Revenues | $ | 26,504,344 | $ | - | $ | - | $ | - | $ | 26,504,344 | |||||||||||
Gross Profit | 4,986,733 | - | - | - | 4,986,733 | ||||||||||||||||
Depreciation and amortization | 2,262,688 | 252,196 | - | - | 2,514,884 | ||||||||||||||||
Interest income | 48,316 | 492 | - | - | 48,808 | ||||||||||||||||
Interest expense | (648,218 | ) | - | - | - | (648,218 | ) | ||||||||||||||
Income tax expense | (874,254 | ) | 68,769 | - | - | (805,485 | ) | ||||||||||||||
Net Income (Loss) | 2,638,118 | (231,747 | ) | (300,882 | ) | - | 2,105,489 | ||||||||||||||
Total Assets | 198,799,547 | 38,556,591 | 30,284 | - | 237,386,422 | ||||||||||||||||
Three Months Ended | |||||||||||||||||||||
March 31, 2014 | |||||||||||||||||||||
Orient Paper | Orient Paper | Not Attributable | Elimination | Enterprise-wide, | |||||||||||||||||
HB | Shengde | to Segments | of Inter-segment | consolidated | |||||||||||||||||
Revenues | $ | 24,459,708 | $ | 1,294,156 | $ | - | $ | - | $ | 25,753,864 | |||||||||||
Gross Profit | 4,314,871 | 355,965 | - | - | 4,670,836 | ||||||||||||||||
Depreciation and amortization | 1,270,737 | 668,057 | - | - | 1,938,794 | ||||||||||||||||
Interest income | 4,906 | 491 | - | - | 5,397 | ||||||||||||||||
Interest expense | 275,292 | - | - | - | 275,292 | ||||||||||||||||
Income tax expense | 870,365 | 88,366 | - | - | 958,731 | ||||||||||||||||
Net Income (Loss) | 2,645,585 | 229,793 | (342,084 | ) | - | 2,533,294 | |||||||||||||||
Year Ended | |||||||||||||||||||||
December 31, 2014 | |||||||||||||||||||||
Orient Paper | Orient Paper | Not Attributable | Elimination | Enterprise-wide, | |||||||||||||||||
HB | Shengde | to Segments | of Inter-segment | consolidated | |||||||||||||||||
Total Assets | $ | 200,764,663 | $ | 38,914,243 | $ | 88,679 | $ | - | $ | 239,767,585 | |||||||||||
Concentration_and_Major_Custom
Concentration and Major Customers and Suppliers | 3 Months Ended |
Mar. 31, 2015 | |
Concentration of Major Customers and Suppliers of Credit Risk Under Risks and Uncertainties [Abstract] | |
Concentration and Major Customers and Suppliers | (19) Concentration and Major Customers and Suppliers |
For the three months ended March 31, 2015 and 2014, the Company had no single customer contributed over 10% of total sales. For the three months ended March 31, 2015, the Company had three major suppliers accounted for 66%, 18% and 8% of total purchases. For the three months ended March 31, 2014, the Company had two major suppliers accounted for 78% and 8% of total purchases. | |
Concentration_of_Credit_Risk
Concentration of Credit Risk | 3 Months Ended |
Mar. 31, 2015 | |
Concentration of Major Customers and Suppliers of Credit Risk Under Risks and Uncertainties [Abstract] | |
Concentration of Credit Risk | (20) 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 cash 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 as of March 31, 2015 and December 31, 2014. On May 1, 2015, the new “Deposit Insurance Regulations” was effective in the PRC that the maximum protection would be up to RMB500,000 (US$81,404) per depositor per insured financial intuition, including both principal and interest. For the cash placed in financial institutions in the United States, the Company’s U.S. bank accounts are all fully covered by the FDIC insurance as of March 31, 2015 and December 31, 2014, respectively. | |
Risks_and_Uncertainties
Risks and Uncertainties | 3 Months Ended |
Mar. 31, 2015 | |
Concentration of Major Customers and Suppliers of Credit Risk Under Risks and Uncertainties [Abstract] | |
Risks and Uncertainties | (21) 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. | |
Basis_of_Presentation_and_Sign1
Basis of Presentation and Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Significant Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation |
Our unaudited condensed consolidated financial statements reflect all adjustments, which are, in the opinion of management, necessary for a fair presentation of our financial position and results of operations. Such adjustments are of a normal recurring nature, unless otherwise noted. The balance sheet as of March 31, 2015 and the results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for any future period. | |
Our unaudited condensed consolidated financial statements are prepared in accordance with GAAP. These accounting principles require us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We believe that the estimates, judgments and assumptions are reasonable, based on information available at the time they are made. Actual results could differ materially from those estimates. | |
Liquidity and Going Concern | Liquidity and Going Concern |
As of March 31, 2015, the Company had current assets of $23,291,005 and current liabilities of $40,845,392 (including amounts due to related parties of $3,586,266), resulting in a working capital deficit of approximately $17,554,387; while 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. 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 $940,563, which was recorded in other payables and accrued liabilities as part of the current liabilities in the condensed consolidated financial statement as of March 31, 2015 (see Note (11) 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 $2,377,962 which will expire at December 31, 2015. (see Note (9) 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 $267,741 and $227,900, which was recorded in as part of the current liabilities as of March 31, 2015 and December 31, 2014, 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 $19,536,974 (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. Nil amount has been drawn from the credit line as of March 31, 2015. | |
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. |
Organization_and_Business_Back1
Organization and Business Background (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
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 |
Inventories_Tables
Inventories (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Inventories [Abstract] | |||||||||
Schedule of inventories | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Raw Materials | |||||||||
Recycled paper board | $ | 8,202,491 | $ | 4,338,069 | |||||
Recycled white scrap paper | 1,446,171 | 1,212,588 | |||||||
Coal | 472,949 | 497,038 | |||||||
Base paper and other raw materials | 86,331 | 95,053 | |||||||
10,207,942 | 6,142,748 | ||||||||
Finished Goods | 723,669 | 996,851 | |||||||
Totals | $ | 10,931,611 | $ | 7,139,599 |
Prepayments_and_Other_Current_1
Prepayments and Other Current Assets (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Prepayments and Other Current Assets [Abstract] | |||||||||
Summary of prepayments and other current assets | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Prepaid NYSE MKT annual fee | $ | 26,250 | $ | 7,500 | |||||
Recoverable VAT | 375,000 | 250,000 | |||||||
Prepaid insurance | - | 55,000 | |||||||
Prepayment for purchase of materials | - | 1,910,643 | |||||||
Prepaid land lease | 341,897 | 490,276 | |||||||
Others | 198,104 | 206,249 | |||||||
$ | 941,251 | $ | 2,919,668 |
Property_Plant_and_Equipment_N1
Property, Plant and Equipment Net (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Property, Plant and Equipment, Net [Abstract] | |||||||||
Schedule of property, plant and equipment | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Property, Plant, and Equipment: | |||||||||
Land use rights | $ | 7,723,602 | $ | 7,752,886 | |||||
Building and improvements | 80,080,972 | 44,889,395 | |||||||
Machinery and equipment | 122,184,521 | 121,332,310 | |||||||
Vehicles | 703,880 | 706,548 | |||||||
Construction in progress | 45,815,355 | 78,484,066 | |||||||
Totals | 256,508,330 | 253,165,205 | |||||||
Less: accumulated depreciation and amortization | (47,412,561 | ) | (44,952,007 | ) | |||||
Property, Plant and Equipment, net | $ | 209,095,769 | $ | 208,213,198 |
Loans_Payable_Tables
Loans Payable (Tables) | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Loans Payable [Abstract] | |||||||||||
Schedule of short-term bank loans | March 31, | December 31, | |||||||||
2015 | 2014 | ||||||||||
Industrial & Commercial Bank of China (“ICBC”) Loan 1 | (a) | $ | 2,442,122 | $ | 2,451,381 | ||||||
The Commercial Bank of the City of Zhangjiakou | (b) | 3,256,162 | 3,268,508 | ||||||||
ICBC Loan 2 | (c) | 814,041 | 817,127 | ||||||||
ICBC Loan 3 | (d) | 3,256,162 | 3,268,508 | ||||||||
Total short-term bank loans | $ | 9,768,487 | $ | 9,805,524 | |||||||
(a) | On June 26, 2014, the Company obtained an accounts receivable factoring facility from the ICBC for $2,442,122 and $2,451,381 as of March 31, 2015 and December 31, 2014, respectively. 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. | |||||||||||
(b) | 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 $3,256,162 and $3,268,508 as of March 31, 2015 and December 31, 2014, respectively. The loan will be repayable on June 9, 2015 and bears a fixed interest rate of 11.88% per annum. | ||||||||||
(c) | On August 19, 2014, the Company obtained a new accounts receivable factoring facility from the ICBC for $814,041 and $817,127 as of March 31, 2015 and December 31, 2014, respectively. 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. | ||||||||||
(d) | On November 20, 2014, the Company entered into a working capital loan agreement with the ICBC for $3,256,162 and $3,268,508 as of March 31, 2015 and December 31, 2014, respectively. 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 be repayable 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 | March 31, | Amount | |||||||||
2016 | $ | 12,425,754 | |||||||||
2017 | 4,134,173 | ||||||||||
16,559,927 | |||||||||||
Less: unearned discount | (588,183 | ) | |||||||||
15,971,744 | |||||||||||
Less: Current portion of obligation under capital lease, net | (11,898,798 | ) | |||||||||
$ | 4,072,946 |
Other_Payables_and_Accrued_Lia1
Other Payables and Accrued Liabilities (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Other Payables and Accrued Liabilities [Abstract] | |||||||||
Summary of other Payables and Accrued Liabilities | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Accrued electricity | $ | 401,774 | $ | 334,212 | |||||
Value-added tax payable | 80,168 | 841,556 | |||||||
Accrued interest to a related party | 940,563 | 761,242 | |||||||
Accrued bank loan interest | 25,425 | - | |||||||
Payable for purchase of equipment | 1,870,847 | 244,050 | |||||||
Others | 187,906 | 219,463 | |||||||
Totals | $ | 3,506,683 | $ | 2,400,523 |
Stock_Warrants_Tables
Stock Warrants (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Stock Warrants [Line Items] | |||||||||
Summary of stock warrant activities | Three months ended | ||||||||
31-Mar-15 | |||||||||
Number | Weight average | ||||||||
exercise price | |||||||||
Outstanding and exercisable at beginning of the period | 820,312 | $ | 1.71 | ||||||
Issued during the period | - | - | |||||||
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) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Earnings Per Share [Abstract] | |||||||||
Summary of basic and diluted net income per share | Three Months Ended March 31, | ||||||||
2015 | 2014 | ||||||||
Basic income per share | |||||||||
Net income for the period - numerator | $ | 2,105,489 | $ | 2,533,294 | |||||
Weighted average common stock outstanding - denominator | 20,316,400 | 18,753,900 | |||||||
Net income per share | $ | 0.1 | $ | 0.14 | |||||
Diluted income per share | |||||||||
Net income for the period- numerator | $ | 2,105,489 | $ | 2,533,294 | |||||
Weighted average common stock outstanding - denominator | 20,316,400 | 18,753,900 | |||||||
Effect of dilution | - | - | |||||||
Weighted average common stock outstanding - denominator | 20,316,400 | 18,753,900 | |||||||
Diluted income per share | $ | 0.1 | $ | 0.14 | |||||
Income_Taxes_Tables
Income Taxes (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Income Taxes [Abstract] | |||||||||
Summary of provisions for income taxes | Three Months Ended | ||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Provision for Income Taxes | |||||||||
Current Tax Provision – PRC | $ | 956,455 | $ | 795,222 | |||||
Deferred Tax Provision – PRC | (150,970 | ) | 163,509 | ||||||
Total Provision for Income Taxes | $ | 805,485 | $ | 958,731 |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Commitments and Contingencies [Abstract] | |||||
Schedule of future minimum lease payments of capital lease | |||||
March 31, | Amount | ||||
2016 | $ | 768,454 | |||
2017 | 659,916 | ||||
2018 | 605,646 | ||||
2019 | 605,646 | ||||
2020 | 605,646 | ||||
Thereafter | 4,674,221 | ||||
$ | 7,919,529 |
Segment_Reporting_Tables
Segment Reporting (Tables) | 3 Months Ended | ||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||
Summarized financial information for reportable segments | Three Months Ended | ||||||||||||||||||||
March 31, 2015 | |||||||||||||||||||||
Orient Paper | Orient Paper | Not Attributable | Elimination | Enterprise-wide, | |||||||||||||||||
HB | Shengde | to Segments | of Inter-segment | consolidated | |||||||||||||||||
Revenues | $ | 26,504,344 | $ | - | $ | - | $ | - | $ | 26,504,344 | |||||||||||
Gross Profit | 4,986,733 | - | - | - | 4,986,733 | ||||||||||||||||
Depreciation and amortization | 2,262,688 | 252,196 | - | - | 2,514,884 | ||||||||||||||||
Interest income | 48,316 | 492 | - | - | 48,808 | ||||||||||||||||
Interest expense | (648,218 | ) | - | - | - | (648,218 | ) | ||||||||||||||
Income tax expense | (874,254 | ) | 68,769 | - | - | (805,485 | ) | ||||||||||||||
Net Income (Loss) | 2,638,118 | (231,747 | ) | (300,882 | ) | - | 2,105,489 | ||||||||||||||
Total Assets | 198,799,547 | 38,556,591 | 30,284 | - | 237,386,422 | ||||||||||||||||
Three Months Ended | |||||||||||||||||||||
March 31, 2014 | |||||||||||||||||||||
Orient Paper | Orient Paper | Not Attributable | Elimination | Enterprise-wide, | |||||||||||||||||
HB | Shengde | to Segments | of Inter-segment | consolidated | |||||||||||||||||
Revenues | $ | 24,459,708 | $ | 1,294,156 | $ | - | $ | - | $ | 25,753,864 | |||||||||||
Gross Profit | 4,314,871 | 355,965 | - | - | 4,670,836 | ||||||||||||||||
Depreciation and amortization | 1,270,737 | 668,057 | - | - | 1,938,794 | ||||||||||||||||
Interest income | 4,906 | 491 | - | - | 5,397 | ||||||||||||||||
Interest expense | 275,292 | - | - | - | 275,292 | ||||||||||||||||
Income tax expense | 870,365 | 88,366 | - | - | 958,731 | ||||||||||||||||
Net Income (Loss) | 2,645,585 | 229,793 | (342,084 | ) | - | 2,533,294 | |||||||||||||||
Year Ended | |||||||||||||||||||||
December 31, 2014 | |||||||||||||||||||||
Orient Paper | Orient Paper | Not Attributable | Elimination | Enterprise-wide, | |||||||||||||||||
HB | Shengde | to Segments | of Inter-segment | consolidated | |||||||||||||||||
Total Assets | $ | 200,764,663 | $ | 38,914,243 | $ | 88,679 | $ | - | $ | 239,767,585 | |||||||||||
Organization_and_Business_Back2
Organization and Business Background (Details) | 3 Months Ended | |
Mar. 31, 2015 | ||
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 | 3 Months Ended | ||||||||
Feb. 10, 2010 | Dec. 31, 2010 | Jun. 30, 2009 | Oct. 29, 2007 | Jun. 30, 2010 | Feb. 10, 2010 | Jun. 24, 2009 | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Feb. 10, 2010 | |
CNY | 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 | ||||||||||
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 | $10,000,000 | |||||||||
Percentage of distributable profit of Orient Paper HB | 100.00% | ||||||||||
Percentage of revenue from Orient Paper HB | 100.00% | 95.00% | |||||||||
Percentage of assets accounted by Orient Paper HB | 83.75% | 83.73% |
Basis_of_Presentation_and_Sign2
Basis of Presentation and Significant Accounting Policies (Details Textual) | Mar. 31, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2015 | Mar. 09, 2015 | Dec. 31, 2014 | Mar. 31, 2015 | Dec. 31, 2014 |
USD ($) | CNY | USD ($) | Mr Zhenyong Liu [Member] | Mr Zhenyong Liu [Member] | Mr Zhenyong Liu [Member] | Hebei Fangsheng [Member] | Hebei Fangsheng [Member] | |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | ||||
Current liabilities | $40,845,392 | $44,470,148 | ||||||
Current assets | 23,291,005 | 26,554,862 | ||||||
Current liabilities including amounts due to related parties | 3,586,266 | 3,376,120 | ||||||
Working capital deficit | 17,554,387 | 17,915,286 | ||||||
Accrued interest to a related party | 940,563 | 761,242 | ||||||
Loans payable to related party | -2,377,962 | -2,386,978 | 12,146,449 | 2,377,962 | 12,192,502 | |||
Accrued the rent due to Hebei Fangsheng | 267,741 | 227,900 | 267,741 | 227,900 | ||||
Working capital borrowings | $19,536,974 | 120,000,000 |
Restricted_Cash_Details
Restricted Cash (Details) (USD $) | 1 Months Ended | 3 Months Ended |
Dec. 31, 2014 | Mar. 31, 2015 | |
Restricted Cash (Textual) | ||
Restricted cash | $8,873,999 | $5,047,052 |
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 will be lifted upon the maturity of the notes payable from April 14 through July 22 during the year of 2015. |
Inventories_Details
Inventories (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Schedule of inventories | ||
Raw materials, Gross | $10,207,942 | $6,142,748 |
Finished goods | 723,669 | 996,851 |
Totals | 10,931,611 | 7,139,599 |
Recycled paper board [Member] | ||
Schedule of inventories | ||
Raw materials, Gross | 8,202,491 | 4,338,069 |
Recycled white scrap paper [Member] | ||
Schedule of inventories | ||
Raw materials, Gross | 1,446,171 | 1,212,588 |
Coal [Member] | ||
Schedule of inventories | ||
Raw materials, Gross | 472,949 | 497,038 |
Base paper and other raw materials [Member] | ||
Schedule of inventories | ||
Raw materials, Gross | $86,331 | $95,053 |
Prepayments_and_Other_Current_2
Prepayments and Other Current Assets (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Summary of prepayments and other current assets | ||
Prepaid NYSE MKT annual fee | $26,250 | $7,500 |
Recoverable VAT | 375,000 | 250,000 |
Prepaid insurance | 55,000 | |
Prepayment for purchase of materials | 1,910,643 | |
Prepaid land lease | 341,897 | 490,276 |
Others | 198,104 | 206,249 |
Totals | $941,251 | $2,919,668 |
Prepayment_on_Property_Plant_a1
Prepayment on Property, Plant and Equipment (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
sqm | ||
Prepayment on property, plant and equipment (Textual) | ||
Prepayment on property, plant and equipment | $1,484,810 | $1,490,440 |
Entitlement of land use rights in Xushui County, Baoding plant | 65,023 |
Property_Plant_and_Equipment_D
Property, Plant and Equipment (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Schedule of property, plant and equipment | ||
Totals | $256,508,330 | $253,165,205 |
Less: accumulated depreciation and amortization | -47,412,561 | -44,952,007 |
Property, Plant and Equipment, net | 209,095,769 | 208,213,198 |
Land use rights [Member] | ||
Schedule of property, plant and equipment | ||
Totals | 7,723,602 | 7,752,886 |
Building and improvements [Member] | ||
Schedule of property, plant and equipment | ||
Totals | 80,080,972 | 44,889,395 |
Machinery and equipment [Member] | ||
Schedule of property, plant and equipment | ||
Totals | 122,184,521 | 121,332,310 |
Vehicles [Member] | ||
Schedule of property, plant and equipment | ||
Totals | 703,880 | 706,548 |
Construction in progress [Member] | ||
Schedule of property, plant and equipment | ||
Totals | $45,815,355 | $78,484,066 |
Property_Plant_and_Equipment_D1
Property, Plant and Equipment (Details Textual) | 3 Months Ended | 12 Months Ended | 0 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | ||||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Jun. 16, 2013 | Jun. 16, 2013 | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Mar. 31, 2015 | Dec. 31, 2013 | |
USD ($) | USD ($) | USD ($) | Sale-leaseback arrangement [Member] | Sale-leaseback arrangement [Member] | Sale-leaseback arrangement [Member] | Sale-leaseback arrangement [Member] | Sale-leaseback arrangement [Member] | Land use rights [Member] | Land use rights [Member] | |
T | USD ($) | CNY | USD ($) | USD ($) | USD ($) | USD ($) | ||||
Property, Plant and Equipment (Textual) | ||||||||||
Lease expiration year | 2061 | |||||||||
Property plant and equipment pledged for long term loan | $15,715,157 | $19,300,765 | ||||||||
Total financing proceeds | 24,000,000 | 150,000,000 | ||||||||
Proceeds from sale of paper manufacturing equipment to leasing company | 24,000,000 | 150,000,000 | ||||||||
Term of lease | 3 years | 3 years | 50 years | |||||||
Nominal purchase price | 2,400 | 15,000 | ||||||||
Deferred gain on sale of leased equipment | 577,302 | 695,389 | 1,379,282 | |||||||
Capital lease equipment | 25,866,717 | 25,964,790 | ||||||||
Depreciation of capital lease equipment | 412,870 | 414,524 | ||||||||
Accumulated depreciation of lease asset | 2,890,093 | 2,486,615 | ||||||||
Gain on sale leaseback realized transaction | 115,460 | 115,923 | ||||||||
Amount of interest capitalized | 17,739 | 261,433 | ||||||||
Assets pledged for the guarantee of Orient Paper HB's capital lease | 32,468,616 | 33,287,324 | ||||||||
Production capacity of manufacturing equipment PM8 (per year) | 15,000 | |||||||||
Value of land use right pledged for sale-leaseback financing | 7,273,059 | 7,339,399 | ||||||||
Depreciation and amortization | 2,514,884 | 1,938,794 | ||||||||
Addition of building and improvements and machinery and equipment | 65,860,783 | |||||||||
Property plant and equipment loan drawn from banking facility | 29,995 | |||||||||
Unamortized deferred gain | $695,389 |
Loans_Payable_Details
Loans Payable (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | ||
Schedule of short-term bank loans | ||||
Short-term bank loans | $9,768,487 | $9,805,524 | ||
Industrial & Commercial Bank of China (''ICBC'') Loan 1[Member] | Factoring Facility [Member] | ||||
Schedule of short-term bank loans | ||||
Short-term bank loans | 2,442,122 | [1] | 2,451,381 | [1] |
The Commercial Bank of the City of Zhangjiakou [Member] | ||||
Schedule of short-term bank loans | ||||
Short-term bank loans | 3,256,162 | [2] | 3,268,508 | [2] |
ICBC Loan 2 [Member] | Factoring Facility [Member] | ||||
Schedule of short-term bank loans | ||||
Short-term bank loans | 814,041 | [3] | 817,127 | [3] |
ICBC Loan 3 [Member] | Factoring Facility [Member] | ||||
Schedule of short-term bank loans | ||||
Short-term bank loans | $3,256,162 | [4] | $3,268,508 | [4] |
[1] | On June 26, 2014, the Company obtained an accounts receivable factoring facility from the ICBC for $2,442,122 and $2,451,381 as of March 31, 2015 and December 31, 2014, respectively. 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. | |||
[2] | 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 $3,256,162 and $3,268,508 as of March 31, 2015 and December 31, 2014, respectively. The loan will be repayable on June 9, 2015 and bears a fixed interest rate of 11.88% per annum. | |||
[3] | On August 19, 2014, the Company obtained a new accounts receivable factoring facility from the ICBC for $814,041 and $817,127 as of March 31, 2015 and December 31, 2014, respectively. 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. | |||
[4] | On November 20, 2014, the Company entered into a working capital loan agreement with the ICBC for $3,256,162 and $3,268,508 as of March 31, 2015 and December 31, 2014, respectively. 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 be repayable 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. |
Loans_Payable_Details_1
Loans Payable (Details 1) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Schedule of future minimum capital lease payments | ||
2016 | $12,425,754 | |
2017 | 4,134,173 | |
Capital Leases, Future Payments | 16,559,927 | |
Unearned discount on capital lease | -588,183 | |
Long-term debt and capital lease obligations, including current maturities | 15,971,744 | |
Less: Current portion of obligation under capital lease, net | 11,898,798 | |
Long-term obligations under capital lease | $4,072,946 | $4,090,413 |
Loans_Payable_Details_Textual
Loans Payable (Details Textual) | 3 Months Ended | 12 Months Ended | 3 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | 3 Months Ended | |||||||||||||||||||||||||
Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2015 | Dec. 31, 2014 | Jul. 15, 2013 | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2015 | Jun. 26, 2014 | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2015 | Dec. 31, 2014 | Jun. 09, 2014 | Aug. 19, 2014 | Mar. 31, 2015 | Dec. 31, 2014 | Nov. 20, 2014 | Mar. 31, 2015 | Dec. 31, 2014 | Jun. 16, 2013 | Jun. 16, 2013 | Mar. 31, 2015 | Mar. 31, 2015 | |||||||||
USD ($) | USD ($) | Rural Credit Union of Xushui County [Member] | Rural Credit Union of Xushui County [Member] | Term Loan [Member] | Term Loan [Member] | New term loan agreement [Member] | New term loan agreement [Member] | New term loan agreement [Member] | Lease financing agreement [Member] | ICBC Loan 1 [Member] | ICBC Loan 1 [Member] | ICBC Loan 1 [Member] | The Commercial Bank of the City of Zhangjiakou [Member] | The Commercial Bank of the City of Zhangjiakou [Member] | The Commercial Bank of the City of Zhangjiakou [Member] | ICBC Loan 2 [Member] | ICBC Loan 2 [Member] | ICBC Loan 2 [Member] | ICBC Loan 3 [Member] | ICBC Loan 3 [Member] | ICBC Loan 3 [Member] | China National Foreign Trade Financial & Leasing Co. [Member] | China National Foreign Trade Financial & Leasing Co. [Member] | China National Foreign Trade Financial & Leasing Co. [Member] | China National Foreign Trade Financial & Leasing Co. [Member] | |||||||||
USD ($) | USD ($) | Rural Credit Union of Xushui County [Member] | Rural Credit Union of Xushui County [Member] | Rural Credit Union of Xushui County [Member] | Rural Credit Union of Xushui County [Member] | Rural Credit Union of Xushui County [Member] | USD ($) | Factoring Facility [Member] | Factoring Facility [Member] | Factoring Facility [Member] | USD ($) | USD ($) | 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 ($) | USD ($) | acre | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | CNY | USD ($) | |||||||||||||||||||||
sqm | ||||||||||||||||||||||||||||||||||
Loans Payable (Textual) | ||||||||||||||||||||||||||||||||||
Unpaid balance of short term debt | $9,768,487 | $9,805,524 | $2,442,122 | [1] | $2,451,381 | [1] | $3,256,162 | [2] | $3,268,508 | [2] | $814,041 | [3] | $817,127 | [3] | $3,256,162 | [4] | $3,268,508 | [4] | ||||||||||||||||
Notes payable | 10,094,103 | 16,113,744 | ||||||||||||||||||||||||||||||||
Short-term bank loans, fixed interest rate | 6.60% | 11.88% | 6.60% | 6.16% | ||||||||||||||||||||||||||||||
Short-term bank loans interest rate as percentage of prime rate | 110.00% | 110.00% | 110.00% | |||||||||||||||||||||||||||||||
Loan, maturity date | 25-Jun-15 | 9-Jun-15 | 11-Jun-15 | 3-Dec-15 | ||||||||||||||||||||||||||||||
Area of land | 330 | |||||||||||||||||||||||||||||||||
Guaranteed short-term borrowings | 3,256,162 | 3,268,508 | ||||||||||||||||||||||||||||||||
Secured bank loans | 6,512,325 | 6,537,016 | ||||||||||||||||||||||||||||||||
Accounts receivable | 3,820,506 | 3,730,123 | ||||||||||||||||||||||||||||||||
Average short-term borrowing rates | 8.21% | 6.79% | ||||||||||||||||||||||||||||||||
Loans from credit union | 5,885,513 | 5,907,828 | 1,603,660 | 1,609,740 | 4,281,853 | 4,298,088 | ||||||||||||||||||||||||||||
Long-term debt, Interest rate per month | 0.72% | 0.72% | ||||||||||||||||||||||||||||||||
Installment repayment description | The loan balance would be repayable by various installments from June 21, 2014 to November 18, 2018. | Between December 21, 2013 and July 26, 2018. | ||||||||||||||||||||||||||||||||
Current portion of long-term loan from credit union | 65,370 | 81,804 | 81,713 | |||||||||||||||||||||||||||||||
Loan extension period | 5 years | |||||||||||||||||||||||||||||||||
Security loan agreement by manufacturing equipment | 15,715,157 | 19,300,765 | ||||||||||||||||||||||||||||||||
Interest expense for the short-term bank loans and long-term loans | 327,707 | 238,585 | ||||||||||||||||||||||||||||||||
Total financing proceeds | 24,000,000 | 150,000,000 | ||||||||||||||||||||||||||||||||
Proceeds from sale of paper manufacturing equipment to leasing company | 24,000,000 | 150,000,000 | ||||||||||||||||||||||||||||||||
Nominal purchase price | 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 | 4,072,946 | 4,090,413 | ||||||||||||||||||||||||||||||||
Current obligations under capital lease | 11,898,798 | 12,258,488 | ||||||||||||||||||||||||||||||||
Total interest expenses for the sale-leaseback arrangement | 156,054 | 261,433 | ||||||||||||||||||||||||||||||||
Deferred gain on sale of leased equipment | 577,302 | 695,389 | 1,379,282 | |||||||||||||||||||||||||||||||
Value of land use right pledged for sale-leaseback financing | 7,273,059 | 7,339,399 | 7,339,399 | |||||||||||||||||||||||||||||||
Land collateral for capital lease | 58,566 | |||||||||||||||||||||||||||||||||
Assets pledged for the guarantee of Orient Paper HB's capital lease | $32,468,616 | $33,287,324 | ||||||||||||||||||||||||||||||||
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 June 26, 2014, the Company obtained an accounts receivable factoring facility from the ICBC for $2,442,122 and $2,451,381 as of March 31, 2015 and December 31, 2014, respectively. 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. | |||||||||||||||||||||||||||||||||
[2] | 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 $3,256,162 and $3,268,508 as of March 31, 2015 and December 31, 2014, respectively. The loan will be repayable on June 9, 2015 and bears a fixed interest rate of 11.88% per annum. | |||||||||||||||||||||||||||||||||
[3] | On August 19, 2014, the Company obtained a new accounts receivable factoring facility from the ICBC for $814,041 and $817,127 as of March 31, 2015 and December 31, 2014, respectively. 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. | |||||||||||||||||||||||||||||||||
[4] | On November 20, 2014, the Company entered into a working capital loan agreement with the ICBC for $3,256,162 and $3,268,508 as of March 31, 2015 and December 31, 2014, respectively. The loan bears an interest rate of 110% over the primary lending rate of the People's Bank of China and was at 6.16% per annum at the time of funding. The loan will be repayable on December 3, 2015. The working capital loan was guaranteed by Hebei Tengsheng with its land use right and real estates pledged by Hebei Tengsheng as collateral for the benefit of the bank. |
Related_Party_Transactions_Det
Related Party Transactions (Details) | 0 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | |||||||||
Aug. 07, 2013 | Aug. 07, 2013 | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2015 | Mar. 09, 2015 | Dec. 31, 2014 | Dec. 10, 2014 | Mar. 31, 2015 | Dec. 31, 2014 | |
USD ($) | CNY | USD ($) | USD ($) | USD ($) | Hebei Fangsheng [Member] | Hebei Fangsheng [Member] | Mr. Liu [Member] | Mr. Liu [Member] | Mr. Liu [Member] | Mr. Liu [Member] | Mr. Liu [Member] | Mr. Liu [Member] | |
Apartment | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Orient Paper HB [Member] | Orient Paper HB [Member] | Orient Paper HB [Member] | |||||
USD ($) | USD ($) | ||||||||||||
Related Party Transactions (Textual) | |||||||||||||
Loans payable to related party | ($2,377,962) | ($2,386,978) | $12,146,449 | $2,377,962 | $12,192,502 | $2,377,962 | $2,386,978 | ||||||
Proceeds from shareholder loan | 80,000 | 123,500 | |||||||||||
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 | 17,554,387 | 17,915,286 | 9,768,487 | 9,805,524 | |||||||||
Extended maturity date of loans from related party | 31-Dec-15 | ||||||||||||
Rental payment | 162,808 | 1,000,000 | |||||||||||
Industrial building lease term | 3 years | 3 years | |||||||||||
Number of dormitory buildings | 3 | 3 | |||||||||||
Loan from related parties, interest expense | 182,196 | 36,707 | |||||||||||
Accrued interest | 940,563 | 761,242 | |||||||||||
Accrued rental | $267,741 | $227,900 |
Notes_Payable_Details
Notes Payable (Details) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Notes payable (Textual) | ||
Notes payable | $10,094,103 | $16,113,744 |
Restricted cash | 5,047,052 | 8,873,999 |
Property plant and equipment loan drawn from banking facility | 29,995 | |
Description of maturity of loans payable | Due and payable on various dates starting from April 14, 2015 to July 22, 2015. | Due and payable on various dates starting from January 7, 2015 to April 23, 2015. |
Bank of Hebei (b) [Member] | ||
Notes payable (Textual) | ||
Number of bank acceptance notes | 11 | |
Notes payable | 6,512,325 | 1,405,458 |
Property plant and equipment loan drawn from banking facility | 29,995 | |
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 | 3,581,778 | 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% |
Other_Payables_and_Accrued_Lia2
Other Payables and Accrued Liabilities (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Summary of other payables and accrued liabilities | ||
Accrued electricity | $401,774 | $334,212 |
Value-added tax payable | 80,168 | 841,556 |
Accrued interest to a related party | 940,563 | 761,242 |
Accrued bank loan interest | 25,425 | |
Payable for purchase of equipment | 1,870,847 | 244,050 |
Others | 187,906 | 219,463 |
Totals | $3,506,683 | $2,400,523 |
Common_Stock_Details
Common Stock (Details) (USD $) | 0 Months Ended | |
Aug. 27, 2014 | Dec. 31, 2013 | |
Common Stock (Textual) | ||
Share price | 1.6 | $2.66 |
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) | 3 Months Ended |
Mar. 31, 2015 | |
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 $) | 3 Months Ended |
Mar. 31, 2015 | |
Warrant [Member] | |
Number | |
Outstanding and exercisable at beginning of the period | 820,312 |
Issued during the period | |
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 | $1.71 |
Issued during the period | |
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 | 3 Months Ended |
Aug. 27, 2014 | Mar. 31, 2015 | |
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 |
Aggregated intrinsic value of warrants outstanding and exercisable | $117,188 |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Basic income per share | ||
Net income for the year - numerator | $2,105,489 | $2,533,294 |
Weighted average common stock outstanding - denominator | 20,316,400 | 18,753,900 |
Net income per share | $0.10 | $0.14 |
Diluted income per share | ||
Net income for the period - numerator | $2,105,489 | $2,533,294 |
Weighted average common stock outstanding - denominator | 20,316,400 | 18,753,900 |
Effect of dilution | ||
Weighted average common stock outstanding - denominator | 20,316,400 | 18,753,900 |
Diluted income per share | $0.10 | $0.14 |
Earnings_Per_Share_Details_Tex
Earnings Per Share (Details Textual) | 3 Months Ended |
Mar. 31, 2015 | |
Earnings Per Share (Textual) | |
Shares excluded from calculations of dilutive net income per share | 820,312 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Provision for Income Taxes | ||
Current Tax Provision - PRC | $956,455 | $795,222 |
Deferred Tax Provision - PRC | -150,970 | 163,509 |
Total Provision for Income Taxes | $805,485 | $958,731 |
Income_Taxes_Details_Textual
Income Taxes (Details Textual) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Income Taxes (Textual) | ||
Income tax, statute of limitations period | 5 years | |
Effective income tax rate | 27.70% | 27.50% |
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% |
Stock_Incentive_Plans_Details
Stock Incentive Plans (Details) (USD $) | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Aug. 27, 2014 | Sep. 10, 2012 |
Stock Incentive Plans (Textual) | |||
Shares issued under incentive stock plan | 297,000 | ||
Share price | $2.66 | $1.60 | |
Total fair value of stock | $790,020 | ||
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 | ||
2011 Incentive Stock Plan [Member] | |||
Stock Incentive Plans (Textual) | |||
Shares issued under incentive stock plan | 265,416 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | Mar. 31, 2015 |
Schedule of future minimum lease payments | |
2016 | $768,454 |
2017 | 659,916 |
2018 | 605,646 |
2019 | 605,646 |
2020 | 605,646 |
Thereafter | 4,674,221 |
Total operating lease payments | $7,919,529 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details Textual) | 3 Months Ended | 3 Months Ended | 1 Months Ended | 3 Months Ended | ||||
Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2015 | Nov. 27, 2012 | Nov. 27, 2012 | Mar. 31, 2015 | Mar. 31, 2015 | |
USD ($) | 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 | $19,537 | 120,000 | $586,109 | 3,600,000 | $162,808 | 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 | $20,205,927 | $24,561,228 | ||||||
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 | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Summarized financial information for reportable segments | |||
Revenues | $26,504,344 | $25,753,864 | |
Gross Profit | 4,986,733 | 4,670,836 | |
Depreciation and amortization | 2,514,884 | 1,938,794 | |
Interest income | 48,808 | 5,397 | |
Interest expense | 648,218 | 275,292 | |
Income tax expense | 805,485 | 958,731 | |
Net Income (Loss) | 2,105,489 | 2,533,294 | |
Total Assets | 237,386,422 | 239,767,585 | |
Orient Paper HB [Member] | |||
Summarized financial information for reportable segments | |||
Revenues | 26,504,344 | 24,459,708 | |
Gross Profit | 4,986,733 | 4,314,871 | |
Depreciation and amortization | 2,262,688 | 1,270,737 | |
Interest income | 48,316 | 4,906 | |
Interest expense | -648,218 | 275,292 | |
Income tax expense | -874,254 | 870,365 | |
Net Income (Loss) | 2,638,118 | 2,645,585 | |
Total Assets | 198,799,547 | 200,764,663 | |
Orient Paper Shengde [Member] | |||
Summarized financial information for reportable segments | |||
Revenues | 1,294,156 | ||
Gross Profit | 355,965 | ||
Depreciation and amortization | 252,196 | 668,057 | |
Interest income | 492 | 491 | |
Interest expense | |||
Income tax expense | 68,769 | 88,366 | |
Net Income (Loss) | -231,747 | 229,793 | |
Total Assets | 38,556,591 | 38,914,243 | |
Not Attributable to Segments [Member] | |||
Summarized financial information for reportable segments | |||
Revenues | |||
Gross Profit | |||
Depreciation and amortization | |||
Interest income | |||
Interest expense | |||
Income tax expense | |||
Net Income (Loss) | -300,882 | -342,084 | |
Total Assets | 30,284 | 88,679 | |
Elimination of Inter-segment [Member] | |||
Summarized financial information for reportable segments | |||
Revenues | |||
Gross Profit | |||
Depreciation and amortization | |||
Interest income | |||
Interest expense | |||
Income tax expense | |||
Net Income (Loss) | |||
Total Assets | |||
Enterprise-wide, consolidated [Member] | |||
Summarized financial information for reportable segments | |||
Revenues | 26,504,344 | 25,753,864 | |
Gross Profit | 4,986,733 | 4,670,836 | |
Depreciation and amortization | 2,514,884 | 1,938,794 | |
Interest income | 48,808 | 5,397 | |
Interest expense | -648,218 | 275,292 | |
Income tax expense | -805,485 | 958,731 | |
Net Income (Loss) | 2,105,489 | 2,533,294 | |
Total Assets | $237,386,422 | $239,767,585 |
Segment_Reporting_Details_Text
Segment Reporting (Details Textual) | 3 Months Ended |
Mar. 31, 2015 | |
Apartment | |
Segment Reporting (Textual) | |
Number of business operating segments | 2 |
Number of reportable segment | 2 |
Concentration_and_Major_Custom1
Concentration and Major Customers and Suppliers (Details) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Customers | Customers | |
Concentration and major customers and suppliers (Textual) | ||
Number of major suppliers | 3 | 2 |
Number of customer contributed over 10% of total sales | ||
Supplier A [Member] | ||
Concentration and major customers and suppliers (Textual) | ||
Percentage of revenue from Orient Paper HB | 66.00% | 78.00% |
Supplier B [Member] | ||
Concentration and major customers and suppliers (Textual) | ||
Percentage of revenue from Orient Paper HB | 18.00% | 8.00% |
Supplier C [Member] | ||
Concentration and major customers and suppliers (Textual) | ||
Percentage of revenue from Orient Paper HB | 8.00% |
Concentration_of_Credit_Risk_D
Concentration of Credit Risk (Details) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2015 | |
USD ($) | CNY | |
Concentration of Major Customers and Suppliers of Credit Risk Under Risks and Uncertainties [Abstract] | ||
Federal deposit insurance corporation | $81,404 | 500,000 |