Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 09, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Orient Paper Inc. | |
Entity Central Index Key | 1,358,190 | |
Trading Symbol | ONP | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 21,450,316 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash and cash equivalents | $ 6,505,284 | $ 2,332,646 |
Restricted cash | 6,026,910 | 2,162,318 |
Accounts receivable (net of allowance for doubtful accounts of $2,672 and $79,478 as of September 30, 2017 and December 31, 2016, respectively) | 130,928 | 3,894,436 |
Inventories | 9,603,313 | 5,632,030 |
Prepayments and other current assets | 55,899 | 455,892 |
Total current assets | 22,322,334 | 14,477,322 |
Property, plant, and equipment, net | 190,744,883 | 187,689,880 |
Value-added tax recoverable | 3,015,460 | 2,945,575 |
Deferred tax asset non-current | 5,494,443 | 3,264,841 |
Total Assets | 221,577,120 | 208,377,618 |
Current Liabilities | ||
Short-term bank loans | 10,245,747 | 5,045,409 |
Current portion of long-term loans from credit union | 3,857,222 | |
Current obligations under capital lease | 8,786,528 | |
Accounts payable | 11,020 | 559,952 |
Advance from customers | 28,831 | |
Notes payable | 6,026,910 | 2,162,318 |
Due to a related party | 21,775 | 56,872 |
Accrued payroll and employee benefits | 342,492 | 209,936 |
Other payables and accrued liabilities | 1,561,476 | 2,424,778 |
Income taxes payable | 1,260,633 | 1,310,967 |
Total current liabilities | 23,327,275 | 20,585,591 |
Loans from credit union | 3,616,146 | 4,843,592 |
Loans from a related party | 10,547,093 | 10,090,817 |
Deferred gain on sale-leaseback | 102,232 | |
Total liabilities (including amounts of the consolidated VIE without recourse to the Company of $35,075,274 and $35,618,995 as of September 30, 2017 and December 31, 2016, respectively) | 37,490,514 | 35,622,232 |
Commitments and Contingencies | ||
Stockholders' Equity | ||
Common stock, 500,000,000 shares authorized, $0.001 par value per share, 21,450,316 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 21,450 | 21,450 |
Additional paid-in capital | 50,635,243 | 50,635,243 |
Statutory earnings reserve | 6,080,574 | 6,080,574 |
Accumulated other comprehensive income | 2,593,708 | (5,441,391) |
Retained earnings | 124,755,631 | 121,459,510 |
Total stockholders' equity | 184,086,606 | 172,755,386 |
Total Liabilities and Stockholders' Equity | $ 221,577,120 | $ 208,377,618 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 2,672 | $ 79,478 |
Consolidated VIE, liabilities | $ 35,075,274 | $ 35,618,995 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares issued | 21,450,316 | 21,450,316 |
Common stock, shares outstanding | 21,450,316 | 21,450,316 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statements of Income and Comprehensive Income (Loss) [Abstract] | ||||
Revenues | $ 33,507,053 | $ 37,462,066 | $ 81,584,395 | $ 103,368,291 |
Cost of sales | (26,285,765) | (30,131,223) | (65,244,521) | (85,381,810) |
Gross Profit | 7,221,288 | 7,330,843 | 16,339,874 | 17,986,481 |
Selling, general and administrative expenses | (2,848,699) | (2,599,698) | (8,319,590) | (9,641,408) |
Loss from disposal of property, plant and equipment | (1,653,039) | (1,665,140) | (25,774) | |
Income from Operations | 2,719,550 | 4,731,145 | 6,355,144 | 8,319,299 |
Other Income (Expense): | ||||
Interest income | 5,503 | 14,832 | 29,259 | 95,226 |
Subsidy income | 410 | 41,223 | ||
Interest expense | (647,963) | (677,576) | (2,023,577) | (2,094,448) |
Income before Income Taxes | 2,077,500 | 4,068,401 | 4,402,049 | 6,320,077 |
Provision for Income Taxes | (505,165) | (1,033,859) | (1,105,928) | (2,077,826) |
Net Income | 1,572,335 | 3,034,542 | 3,296,121 | 4,242,251 |
Other Comprehensive Income (Loss) | ||||
Foreign currency translation adjustment | 3,790,338 | (1,263,906) | 8,035,099 | (5,009,467) |
Total Comprehensive Income (Loss) | $ 5,362,673 | $ 1,770,636 | $ 11,331,220 | $ (767,216) |
Earnings Per Share: | ||||
Basic and Diluted Earnings per Share | $ 0.07 | $ 0.14 | $ 0.15 | $ 0.20 |
Outstanding - Basic and Diluted | 21,450,316 | 21,450,316 | 21,450,316 | 21,404,627 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash Flows from Operating Activities: | ||
Net income | $ 3,296,121 | $ 4,242,251 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 10,928,502 | 11,668,976 |
Loss from disposal of property, plant and equipment | 1,665,140 | 25,774 |
(Recovery from) Allowance for bad debts | (78,562) | 20,833 |
Share-based compensation expenses | 1,417,395 | |
Deferred tax | (2,034,373) | (1,515,689) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 3,928,087 | (1,041,625) |
Prepayments and other current assets | 472,847 | 1,708,601 |
Inventories | (3,631,641) | 1,482,013 |
Accounts payable | (561,121) | 1,064,764 |
Advance from customers | (29,446) | |
Notes payable | 3,680,693 | (11,392,982) |
Due to a related party | (36,807) | (341,790) |
Accrued payroll and employee benefits | 120,250 | (252,632) |
Other payables and accrued liabilities | (771,027) | 911,234 |
Income taxes payable | (107,105) | 632,911 |
Net Cash Provided by Operating Activities | 16,841,558 | 8,630,034 |
Cash Flows from Investing Activities: | ||
Purchases of property, plant and equipment | (7,628,798) | (7,713,993) |
Proceeds from sale of property, plant and equipment | 58,632 | 39,344 |
Net Cash Used in Investing Activities | (7,570,166) | (7,674,649) |
Cash Flows from Financing Activities: | ||
Proceeds from related party loans | 14,000 | |
Repayments of related party loans | (6,090,257) | |
Proceeds from short term bank loans | 10,011,484 | 3,493,848 |
Proceeds from Rural Credit Union loans | 2,355,643 | |
Repayment of bank loans | (5,152,970) | (3,038,129) |
Payment of capital lease obligation | (8,973,845) | (542,678) |
(Increase in) Release of restricted cash | (3,680,693) | 8,354,853 |
Net Cash (Used in) Provided by Financing Activities | (5,440,381) | 2,191,637 |
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 341,627 | (197,154) |
Net Increase in Cash and Cash Equivalents | 4,172,638 | 2,949,868 |
Cash and Cash Equivalents - Beginning of Period | 2,332,646 | 2,641,917 |
Cash and Cash Equivalents - End of Period | 6,505,284 | 5,591,785 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest, net of capitalized interest cost | 1,359,343 | 1,746,568 |
Cash paid for income taxes | $ 3,247,406 | $ 2,960,604 |
Organization and Business Backg
Organization and Business Background | 9 Months Ended |
Sep. 30, 2017 | |
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-mentioned $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 (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 generated from Orient Paper HB for the three months ended September 30, 2017 and 2016 was accounted for 100% and 99.83%, respectively, of the Company’s total revenue for the same periods. The revenue of the Company generated from Orient Paper HB for the nine months ended September 30, 2017 and 2016 were 100% and 99.36%, respectively. Orient Paper HB also accounted for 86.24% and 86.23% of the total assets of the Company as of September 30, 2017 and December 31, 2016, respectively. As of September 30, 2017 and December 31, 2016, details of the Company’s subsidiaries and variable interest entities are as follows: Date of Incorporation Place of Incorporation or Percentage of Name or Establishment Establishment Ownership Principal Activity Subsidiary: Dongfang Holding November 13, 2006 BVI 100 % Inactive investment holding Shengde Holdings February 25, 2009 State of Nevada 100 % Investment holding Orient Paper Shengde June 1, 2009 PRC 100 % Paper Production and distribution Variable interest entity (“VIE”): Orient Paper HB March 10, 1996 PRC Control * Paper Production and distribution * Orient Paper HB is treated as a 100% controlled variable interest entity of the Company. However, uncertainties in the PRC legal system could cause the Company’s current ownership structure to be found to be in violation of any existing and/or future PRC laws or regulations and could limit the Company’s ability, through its subsidiary, to enforce its rights under these contractual arrangements. Furthermore, shareholders of the VIE may have interests that are different than those of the Company, which could potentially increase the risk that they would seek to act contrary to the terms of the aforementioned agreements. In addition, if the current structure or any of the contractual arrangements were found to be in violation of any existing or future PRC law, the Company may be subject to penalties, which may include, but not be limited to, the cancellation or revocation of the Company’s business and operating licenses, being required to restructure the Company’s operations or being required to discontinue the Company’s operating activities. The imposition of any of these or other penalties may result in a material and adverse effect on the Company’s ability to conduct its operations. In such case, the Company may not be able to operate or control the VIE, which may result in deconsolidation of the VIE. The Company believes the possibility that it will no longer be able to control and consolidate its VIE will occur as a result of the aforementioned risks and uncertainties is remote. The Company has aggregated the financial information of Orient Paper HB in the table below. The aggregate carrying value of Orient Paper HB’s assets and liabilities (after elimination of intercompany transactions and balances) in the Company’s condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016 are as follows: September 30, December 31, 2017 2016 (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 3,953,938 $ 2,005,288 Restricted cash 6,026,910 2,162,318 Accounts receivable 130,928 3,894,435 Inventories 9,561,773 5,592,230 Prepayments and other current assets 51,229 451,349 Total current assets 19,724,778 14,105,620 Property, plant, and equipment, net 166,662,735 162,779,492 Deferred tax asset non-current 4,709,214 2,804,019 Total Assets $ 191,096,727 $ 179,689,131 LIABILITIES Current Liabilities Short-term bank loans $ 10,245,747 $ 5,045,409 Current portion of long-term loans from credit union 3,766,819 - Current obligations under capital lease 8,786,528 Accounts payable 11,020 559,952 Advance from customers 28,831 Notes payable 6,026,910 2,162,318 Due to a related party 21,775 56,872 Accrued payroll and employee benefits 337,957 206,642 Other payables and accrued liabilities 1,561,446 2,424,751 Income taxes payable 1,260,721 1,311,051 Total current liabilities 23,232,395 20,582,354 Loans from credit union 1,295,786 4,843,592 Loans from a related party 10,547,093 10,090,817 Deferred gain on sale-leaseback - 102,232 Total liabilities $ 35,075,274 $ 35,618,995 The Company and its consolidated subsidiaries are not required to provide financial support to the VIE, and no creditor (or beneficial interest holders) of the VIE have recourse to the assets of Company unless the Company separately agrees to be subject to such claims. There are no terms in any agreements or arrangements, implicit or explicit, which require the Company or its subsidiaries to provide financial support to the VIE. However, if the VIE does require financial support, the Company or its subsidiaries may, at its option and subject to statutory limits and restrictions, provide financial support to the VIE. |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Basis of Presentation and 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, 2016 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 September 30, 2017 and the results of operations for the three and nine months ended September 30, 2017 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. Valuation of long-lived asset The Company reviews the carrying value of long-lived assets to be held and used when events and circumstances warrants such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset and intangible assets. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets and intangible assets to be disposed are determined in a similar manner, except that fair market values are reduced for the cost to dispose. Fair Value Measurements The Company has adopted ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. It does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. It establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement. The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts that the Company could realize in a current market exchange. As of September 30, 2017 and December 31, 2016, the carrying value of the Company’s short term financial instruments, such as cash and cash equivalents, accounts receivable, accounts and notes payable, short-term bank loans, balance due to a related party and obligation under capital lease, approximate at their fair values because of the short maturity of these instruments; while loans from credit union and loans from a related party approximate at their fair value as the interest rates thereon are close to the market rates of interest published by the People’s Bank of China. The Company does not have any assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016. Non-Recurring Fair Value Measurements The Company reviews long-lived assets for impairment annually or more frequently if events or changes in circumstances indicate the possibility of impairment. For the continuing operations, long-lived assets are measured at fair value on a nonrecurring basis when there is an indicator of impairment, and they are recorded at fair value only when impairment is recognized. For discontinued operations, long-lived assets are measured at the lower of carrying amount or fair value less cost to sell. The fair value of these assets were determined using models with significant unobservable inputs which were classified as Level 3 inputs, primarily the discounted future cash flow. Share-Based Compensation The Company uses the fair value recognition provision of ASC Topic 718, Compensation-Stock Compensation The Company also applies the provisions of ASC Topic 505-50, Equity Based Payments to Non-Employees |
Restricted Cash
Restricted Cash | 9 Months Ended |
Sep. 30, 2017 | |
Restricted Cash [Abstract] | |
Restricted cash | (3) Restricted Cash Restricted cash of $6,026,910 as of September 30, 2017 was presented for the cash deposited at the Bank of Cangzhou for purpose of securing the bank acceptance notes from the bank (see Note (9)). The restriction will be lifted upon the maturity of the notes payable on January 5, 2018. Restricted cash of $2,162,318 as of December 31, 2016 was presented for the cash deposited at the Bank of Hebei for purpose of securing the bank acceptance notes from these banks. The restriction has been lifted upon the maturity of the notes payable on February 1, 2017. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2017 | |
Inventories [Abstract] | |
Inventories | (4) Inventories Raw materials inventory includes mainly recycled paper and coal. Finished goods include mainly products of corrugating medium paper, offset printing paper and tissue paper products. Inventories consisted of the following as of September 30, 2017 and December 31, 2016: September 30, December 31, 2017 2016 Raw Materials Recycled paper board $ 6,711,977 $ 3,337,649 Recycled white scrap paper 838,086 - Recycled scrap binding margin 831,968 547,803 Coal & gas 85,950 242,307 Base paper and other raw materials 222,062 265,464 8,690,043 4,393,223 Finished Goods 913,270 1,238,807 Totals $ 9,603,313 $ 5,632,030 |
Prepayments and Other Current A
Prepayments and Other Current Assets | 9 Months Ended |
Sep. 30, 2017 | |
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 September 30, 2017 and December 31, 2016: September 30, December 31, 2017 2016 Prepaid land lease $ 49,722 $ 432,464 Others 6,177 23,428 $ 55,899 $ 455,892 |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment, Net [Abstract] | |
Property, plant and equipment, net | (6) Property, plant and equipment, net As of September 30, 2017 and December 31, 2016, property, plant and equipment consisted of the following: September 30, December 31, 2017 2016 Property, Plant, and Equipment: Land use rights $ 12,286,700 $ 11,755,168 Building and improvements 97,336,831 92,927,111 Machinery and equipment 126,892,546 123,932,336 Vehicles 584,085 590,619 Construction in progress 33,797,507 25,084,416 Totals 270,897,669 254,289,650 Less: accumulated depreciation and amortization (80,152,786 ) (66,599,770 ) Property, Plant and Equipment, net $ 190,744,883 $ 187,689,880 As of September 30, 2017 and December 31, 2016, land use rights represented two parcel of state-owned lands located in Xushui County of Hebei Province in China, with lease terms of 50 years expiring from 2061 to 2066. 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$23 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$23 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 $2,260) to the leasing company and buy back all of the Leased Equipment. The sale-leaseback was 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 was included as part of the property, plant and equipment of the Company during the lease preiod. 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 has been amortized by the Company during the lease term and used to offset the depreciation of the Leased Equipment. See ” Financing with Sale-Leaseback” On July 1, 2015, Orient Paper HB, China Orient, and other guarantors of Lease Financing Agreement, entered into the 2015 Agreement, to amend and restate the Lease Financing Agreement entered into in 2013. The 2015 Agreement sets forth a modified and extended payment schedule with respect to the remaining payment obligation, with the final repayment date extended to June 21, 2017. In accordance with ASC 840-30-35, the present balances of the capital lease assets and obligations under capital lease were adjusted by an amount equal to the difference between the present value of the future minimum lease payments under the revised agreement (computed using the interest rate used to recognize the lease initially) and the present balance of the obligation, which was approximately $1,617,574 at the date of the 2015 Agreement. As a result, the capital lease asset cost was recorded at the new cost of $27,599,774 at the date of the 2015 Agreement. On August 24, 2017, the Company made a final payment on outstanding obligations and bought back all of the Lease Equipment at nominal price according to the agreement. The lease assets were reclassified as own assets and capital lease cost were $nil and $24,328,940 as of September 30, 2017 and December 31, 2016, 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 2017. For the three months ended September 30, 2017 and 2016, the amount of interest capitalized is $nil and $10,839, respectively. For the nine months ended September 30, 2017 and 2016, the amount of interest capitalized is $9,761 and $43,786, respectively. As of September 30, 2017 and December 31, 2016, certain property, plant and equipment of Orient Paper HB with net values of $8,579,118 and $9,813,294, respectively, have been pledged pursuant to a long-term loan from credit union of Orient Paper HB. In addition, plant and equipment of Orient Paper Shengde with net values of $15,461,557 and $nil as of September 30, 2017 and December 31, 2016 respectively, and another land use right with net values of $5,053,152 and $nil as of September 30, 2017 and December 31, 2016 were pledged for the bank loan from Bank of Cangzhou. See ” Short-term bank loans Depreciation and amortization of property, plant and equipment was $3,729,002 and $3,716,022 for the three months ended September 30, 2017 and 2016, respectively. Depreciation and amortization of property, plant and equipment was $10,928,502 and $11,668,976 for the nine months ended September 30, 2017 and 2016, respectively. |
Loans Payable
Loans Payable | 9 Months Ended |
Sep. 30, 2017 | |
Loans Payable [Abstract] | |
Loans Payable | (7) Loans Payable Short-term bank loans September 30, December 31, 2017 2016 Bank of Hebei (a) $ - $ 2,162,318 Industrial and Commercial Bank of China (“ICBC”) Loan 1 (b) - 2,883,091 Bank of Cangzhou (c) 6,026,910 - ICBC Loan 2 (d) 4,218,837 - Total short-term bank loans $ 10,245,747 $ 5,045,409 (a) On July 8, 2016, the Company entered into a working capital loan agreement with the Bank of Hebei, with a balance of $nil as of September 30, 2017 and $2,162,318 as of December 31, 2016, respectively. The loan bears a fixed interest rate of 5.22% per annum. The loan was due on July 8, 2017. The working capital loan is guaranteed by the Company’s CEO and Hebei Tengsheng with its land use right and real property pledged by Hebei Tengsheng as collateral for the benefit of the bank. The loan was repaid on July 6, 2017. (b) On September 13, 2016, the Company entered into a working capital loan agreement with ICBC, with a balance of $nil as of September 30, 2017 and $2,883,091 as of December 31, 2016, respectively. The loan bears a fixed interest rate of 4.5675% per annum. The loan was due on October 19, 2017. The working capital loan was guaranteed by Hebei Tengsheng with its land use right pledged as collateral for the benefit of the bank. The loan was repaid on September 7, 2017. (c) On December 5, 2016, the Company entered into a working capital loan agreement with the Bank of Cangzhou. The loan was drawn on January 3, 2017, with a balance of $6,026,910 as of September 30, 2017. The loan bears a fixed interest rate of 6.09% per annum. The loan will be due on January 3, 2018. The working capital loan is secured by the Company’s land use right and guaranteed by Orient Paper Shengde with its production equipment and plant as collateral for the benefit of the bank. (d) On January 10, 2017, the Company entered into a working capital loan agreement with the ICBC, with a balance of $4,218,837 as of September 30, 2017. The working capital loan was guaranteed by Hebei Tengsheng with its land use right pledged as collateral for the benefit of the bank. The loan bears a fixed interest rate of 4.5675% per annum. The loan will be due on January 17, 2018. As of September 30, 2017, there were guaranteed short-term borrowings of $10,245,747 and unsecured bank loans of $nil. As of December 31, 2016, there were guaranteed short-term borrowings of $5,045,409 and unsecured bank loans of $nil. The average short-term borrowing rates for the three months ended September 30, 2017 and 2016 were approximately 5.30% and 8.19%, respectively. The average short-term borrowing rates for the nine months ended September 30, 2017 and 2016 were approximately 5.28% and 8.53%, respectively. Long-term loans from credit union As of September 30, 2017 and December 31, 2016, loans payable to Rural Credit Union of Xushui County, amounted to $7,473,368 and $4,843,592, respectively. On April 16, 2014, the Company entered into a loan agreement with the Rural Credit Union of Xushui County for a term of 5 years, which is payable in various installments from June 21, 2014 to November 18, 2018. The loan is guaranteed by an independent third party. Interest payment is due quarterly and bears the rate of 0.72% per month. In August 2015, after giving the required notice to the Rural Credit Union of Xushui County in accordance with the terms on the agreement, the Company repaid a portion of the loan in an amount of $188,341, of which $82,870 was paid ahead of its original repayment schedule as of September 30, 2017. As of September 30, 2017 and December 31, 2016, total outstanding loan balance was $1,295,786 and $1,239,729, respectively, which is presented as non-current liabilities in the condensed consolidated balance sheet. On July 15, 2013, the Company entered into a loan agreement with the Rural Credit Union of Xushui County for a term of 5 years, which is due and payable in various installments from December 21, 2013 to July 26, 2018. The loan is secured by certain of the Company’s manufacturing equipment with net book value of $8,579,118 and $9,813,294 as of September 30, 2017 and December 31, 2016, respectively. Interest payment is due quarterly and bears a fixed rate of 0.72% per month. In August 2015, after giving the required notice to the Rural Credit Union of Xushui County in accordance with the terms on the agreement, the Company repaid a portion of the loan in an amount of $195,875, of which $75,336 was paid ahead of its original repayment schedule as of September 30, 2017. As of September 30, 2017 and December 31, 2016, the total outstanding loan balance was $3,766,818 and $3,603,863 respectively. Out of the total outstanding loan balance, current portion amounted were $3,766,818 and $nil as of September 30, 2017 and December 31, 2016, respectively, which are presented as current liabilities in the condensed consolidated balance sheet and the remaining balance of $nil and $3,603,863 are presented as non-current liabilities in the condensed consolidated balance sheet as of September 30, 2017 and December 31, 2016, respectively. On April 20, 2017, the Company entered into a loan agreement with the Rural Credit Union of Xushui County for a term of 2 years, which is due and payable in various installments from August 26, 2017 to April 19, 2019. The loan is guaranteed by Hebei Tengsheng with its land use right pledged as collateral for the benefit of the bank. Interest payment is due quarterly and bears a fixed rate of 0.6% per month. As of September 30, 2017 the total outstanding loan balance was $2,410,764, out of which $90,404 and $2,320,360 are presented as current and non-current liabilities in the condensed consolidated balance sheet respectively. Total interest expenses for the short-term bank loans and long-term loans for the three months ended September 30, 2017 and 2016 were $320,077 and $354,011, respectively. Total interest expenses for the short-term bank loans and long-term loans for the nine months ended September 30, 2017 and 2016 were $907,785 and $1,172,692, respectively. Financing with Sale-Leaseback The Company entered into a sale-leaseback arrangement (the “Lease Financing Agreement”) with CNFTFL on June 16, 2013, for a total financing proceeds in the amount of RMB 150 million (approximately US$23 million). Under the sale-leaseback arrangement, Orient Paper HB sold the Leased Equipment to CNFTFL for RMB 150 million (approximately US$23 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 $2,260) to CNFTFL and buy back all of the Leased Equipment. The sale-leaseback was 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 were 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. Orient Paper HB made all payments due according to the schedule prior to December 15, 2014. On December 15, 2014, Orient Paper HB stopped making principal payments and entered into negotiations with the CNFTFL regarding a modified payment schedule for the remaining obligations. On July 1, 2015, Orient Paper HB, China Orient, and other guarantors of Lease Financing Agreement, entered into an agreement (the “2015 Agreement”), to amend and restate the Lease Financing Agreement entered into in 2013 (the “2015 Agreement”). The 2015 Agreement sets forth a modified and extended payment schedule with respect to the remaining payment obligation, with the final repayment date extended to June 21, 2017. Under the 2015 Agreement, the interest accrues at a rate of 15% per annum starting on June 16, 2015, and is payable on the 20th of every March, June, September and December until the principal is paid off, except for the first payment, which is due on July 31, 2015. Orient Paper HB made all payments due according to the modified schedule prior to June 20, 2016. Orient Paper HB made partial payments in the following payment obligations as well as interests on overdue balance in accordance with the 2015 Agreement until August 24, 2017, when the remaining overdue amount was fully paid off. All the Lease Equipment was bought back at the nominal price according to the agreement. The balance of the long-term obligations under capital lease were $nil as of September 30, 2017 and December 31, 2016, and its current portion in the amount of $nil and $8,786,528, respectively. Total interest expenses for the sale-leaseback arrangement for the three months ended September 30, 2017 and 2016 were $213,571 and $237,053, respectively. Total interest expenses for the sale-leaseback arrangement for the nine months ended September 30, 2017 and 2016 were $789,322 and $526,912, 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 was amortized over the lease term and as an offset to depreciation of the Leased Equipment. In term of the extension of the new payment schedule, the deferred gain was amortized over the remaining lease term up to June 21, 2017. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | (8) Related Party Transactions The Company’s CEO has loaned money to Orient Paper HB for working capital purposes over a period of time. On January 1, 2013, Orient Paper HB and Mr. Zhenyong Liu renewed the three-year term loan previously entered on January 1, 2010, and extended the maturity date further to December 31, 2015. On December 31, 2015, the Company paid off the loan of $2,249,279, together with interest of $391,374 for the period from 2013 to 2015. Approximately $386,225 and $369,517 of interest were outstanding to Mr. Zhenyong Liu, which were recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet as of September 30, 2017 and December 31, 2016, respectively. On December 10, 2014, Mr. Zhenyong Liu provided a loan to the Company, amounted to $9,040,365 and $8,649,272 as of September 30, 2017 and December 31, 2016, to Orient Paper HB for working capital purpose with an interest rate of 5.25% per annum, which was based on the primary lending rate of People’s Bank of China. The unsecured loan was provided on December 10, 2014, and would be originally due on December 10, 2017. During the year of 2016, the Company repaid $6,012,416 to Mr. Zhenyong Liu, together with interest of $288,596. Mr. Zhenyong Liu agreed to extend the loan for additional 3 years and the remaining balance will be due on December 2, 2020. As of September 30, 2017 and December 31, 2016, the outstanding loan balance was $3,013,455 and $2,883,090, respectively and the accrued interest was $143,516 and $43,246, respectively, which was recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet. On March 1, 2015, the Company entered an agreement with Mr. Zhenyong Liu which allows Orient Paper HB to borrow from the CEO an amount up to $18,080,730 (RMB120,000,000) for working capital purposes. The advances or funding under the agreement are due three years from the date each amount is funded. The loan is unsecured and carries 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. On July 13, 2015, an unsecured amount of $4,348,267 was drawn from the facility, which carried an interest rate of 5.25%. On October 14, 2016 an unsecured amount of $2,898,845 was drawn from the facility, which carried an interest rate of 4.35%. The loan would be originally due on July 12, 2018. Mr. Zhenyong Liu agreed to extend the loan for additional 3 years and the remaining balance will be due on July 12, 2021. As of September 30, 2017 and December 31, 2016, the outstanding loan balance were $7,533,638 and $7,207,727, respectively and the accrued interest was $354,552 and $104,062, respectively, which was recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet. As of September 30, 2017 and December 31, 2016, total amount of loans due to Mr. Zhenyong Liu were $10,547,093 and $10,090,817, respectively. The interest expenses incurred for such related party loans are $114,315 and $97,351 for the three months ended September 30, 2017 and 2016, respectively. The interest expenses incurred for such related party loans are $336,231 and $438,630 for the nine months ended September 30, 2017 and 2016, respectively. On October 20, 2017, the Company’s CEO agreed 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 owe to Mr. Zhenyong Liu was approximately $884,293 and $516,825 as of September 30, 2017 and December 31, 2016, respectively, which was recorded in other payables and accrued liabilities (see Note (10) below) as part of the current liabilities. During the three and nine months ended September 30, 2017 the Company borrowed $nil from shareholders. During the three and nine months ended September 30, 2016, the Company borrowed $nil and $14,000 from shareholders to pay for various expenses incurred in the U.S. The amount was due on demand with interest free. The Company repaid the entire balance by the end of the period. Lease of Headquarters Compound Real Properties from a Related Party On August 7, 2013, the Company’s Audit Committee and the Board of Directors approved the sale of the land use right of the Headquarters Compound (the “LUR”), the office building and essentially all industrial-use buildings in the Headquarters Compound (the “Industrial Buildings”), and three employee dormitory buildings located within the Headquarters Compound (the “Dormitories”) to Hebei Fangsheng for cash prices of approximately $2.77 million, $1.15 million, and $4.31 million respectively. Sales of the LUR and the Industrial Buildings were completed in year 2013. 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 $147,228 (RMB1,000,000). The lease agreement expired in August 2016. On August 9, 2016, the Company paid off the rental for the first lease agreement and entered into a supplementary agreement with Hebei Fangsheng, who agreed to extend the lease term for another two years, with the same rental payment as original lease agreement. On October 20, 2017, Hebei Fangsheng agreed 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 owed to Hebei Fangsheng was approximately $21,775 and $56,872, which was recorded as part of the current liabilities as of September 30, 2017 and December 31, 2016, respectively. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2017 | |
Notes Payable [Abstract] | |
Notes payable | (9) Notes payable As of September 30, 2017, the Company had bank acceptance notes of $6,026,910 from the Bank of Cangzhou to one of its major suppliers for settling purchase of raw materials. The acceptance notes are used to essentially extend the payment of accounts payable and are issued under the banking facilities obtained from bank as well as the restricted bank deposit of $6,026,910 in the bank as mentioned in Note (3). The bank acceptance notes from the bank bore interest rate at nil% per annum and 0.05% of notes amount as handling charge. The acceptance notes will become due and payable on January 5, 2018. As of December 31, 2016, the Company had bank acceptance notes of $2,162,318 from the Bank of Hebei to one of its major suppliers for settling purchases of raw materials. The acceptance notes are used to essentially extend the payment of accounts payable and are issued under the banking facilities obtained from bank as well as the restricted bank deposit of $2,162,318 in the bank as mentioned in Note (3). The bank acceptance notes from the bank bore interest rate at nil% per annum and 0.05% of notes amount as handling change. The acceptance note was repaid in February 2017. |
Other Payables and Accrued Liab
Other Payables and Accrued Liabilities | 9 Months Ended |
Sep. 30, 2017 | |
Other Payables and Accrued Liabilities [Abstract] | |
Other payables and accrued liabilities | (10) Other payables and accrued liabilities Other payables and accrued liabilities consist of the following: September 30, December 31, 2017 2016 Accrued electricity $ 2,754 $ 335,169 Value-added tax payable 557,316 1,080,055 Accrued interest to a related party 884,293 516,825 Payable for purchase of equipment 48,818 223,143 Accrued commission to salesmen 10,952 160,014 Others 57,343 109,572 Totals $ 1,561,476 $ 2,424,778 |
Common Stock
Common Stock | 9 Months Ended |
Sep. 30, 2017 | |
Common Stock [Abstract] | |
Common Stock | (11) 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 (12), Stock Warrants, for details. Issuance of common stock pursuant to the 2012 Incentive Stock Plan and 2015 Omnibus Equity Incentive On January 12, 2016, the Company granted an aggregate of 1,133,916 shares of common stock under its compensatory incentive plans to nine officers, directors and employees of and a consultant when the stock was at $1.25 per share, as compensation for their services in the past years, of which 168,416 shares of common stock were granted under the 2012 Incentive Stock Plan and 965,500 shares were granted under the 2015 Omnibus Equity Incentive. Please see Note (15), Stock Incentive Plans for more details. Total fair value of the stock was calculated at $1,417,395 as of the date of grant. |
Stock Warrants
Stock Warrants | 9 Months Ended |
Sep. 30, 2017 | |
Stock Warrants [Abstract] | |
Stock warrants | (12) 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 72.0 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 and Nine Months Ended 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 nine months ended September 30, 2017. As of September 30, 2017, the aggregated intrinsic value of warrants outstanding and exercisable was $nil. No warrants were issued, exercised, cancelled or expired during the nine months ended September 30, 2016. As of December 31, 2016, the aggregated intrinsic value of warrants outstanding and exercisable was $nil. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | (13) Earnings Per Share For the three months ended September 30, 2017 and 2016, basic and diluted net income per share are calculated as follows: Three Months Ended September 30, 2017 2016 Basic income per share Net income for the period - numerator $ 1,572,335 $ 3,034,542 Weighted average common stock outstanding - denominator 21,450,316 21,450,316 Net income per share $ 0.07 $ 0.14 Diluted income per share Net income for the period- numerator $ 1,572,335 $ 3,034,542 Weighted average common stock outstanding - denominator 21,450,316 21,450,316 Effect of dilution - - Weighted average common stock outstanding - denominator 21,450,316 21,450,316 Diluted income per share $ 0.07 $ 0.14 For the nine months ended September 30, 2017 and 2016, basic and diluted net income per share are calculated as follows: Nine Months Ended September 30, 2017 2016 Basic income per share Net income for the period - numerator $ 3,296,121 $ 4,242,251 Weighted average common stock outstanding - denominator 21,450,316 21,404,627 Net income per share $ 0.15 $ 0.20 Diluted income per share Net income for the period- numerator $ 3,296,121 $ 4,242,251 Weighted average common stock outstanding - denominator 21,450,316 21,404,627 Effect of dilution - - Weighted average common stock outstanding - denominator 21,450,316 21,404,627 Diluted income per share $ 0.15 $ 0.20 For the three and nine months ended September 30, 2017 and 2016, 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 were lower than the warrants exercise price. For the three and nine months ended September 30, 2017, there were no securities with dilutive effect issued and outstanding. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Taxes [Abstract] | |
Income Taxes | (14) 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 September 30, 2017 and 2016 were as follows: Three Months Ended September 30, 2017 2016 Provision for Income Taxes Current Tax Provision PRC $ 1,211,668 $ 1,521,099 Deferred Tax Provision PRC (706,503 ) (487,240 ) Total Provision for Income Taxes $ 505,165 $ 1,033,859 The provisions for income taxes for the nine months ended September 30, 2017 and 2016 were as follows: Nine Months Ended September 30, 2017 2016 Provision for Income Taxes Current Tax Provision PRC $ 2,993,819 $ 3,534,967 Deferred Tax Provision PRC (1,887,891 ) (1,457,141 ) Total Provision for Income Taxes $ 1,105,928 $ 2,077,826 During the three months ended September 30, 2017 and 2016, the effective income tax rate was estimated by the Company to be 24.3% and 25.4%, respectively. During the nine months ended September 30, 2017 and 2016, the effective income tax rate was estimated by the Company to be 25.1% and 32.9%, respectively. The following table reconciles the PRC statutory rates to the Company’s effective tax rate for: Three Months Ended September 30, 2017 2016 PRC Statutory rate 25.0 % 25.0 % Effect of different tax jurisdiction (0.5 ) (0.2 ) Effect of expenses not deductible for PRC tax purposes 0.3 (0.1 ) Over provision in previous years (2.4 ) - Change in valuation allowance 1.9 0.7 Effective income tax rate 24.3 % 25.4 % Nine months ended September 30, 2017 2016 PRC Statutory rate 25.0 % 25.0 % Effect of different tax jurisdiction (0.3 ) (2.8 ) Effect of expenses not deductible for PRC tax purposes 0.3 0.1 (Over) Under provision in previous years (1.1 ) 0.1 Change in valuation allowance 1.2 10.5 Effective income tax rate 25.1 % 32.9 % 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 September 30, 2017 and December 31, 2016, management considered that the Company had no uncertain tax positions affecting its consolidated financial position and results of operations or cash flows, and will continue to evaluate for any uncertain position in future. There are no estimated interest costs and penalties provided in the Company’s condensed consolidated financial statements for the three and nine months ended September 30, 2017 and 2016, 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 | 9 Months Ended |
Sep. 30, 2017 | |
Stock Incentive Plans [Abstract] | |
Stock Incentive Plans | (15) Stock Incentive Plans Issuance of common stock pursuant to the 2011 Incentive Stock Plan and 2012 Incentive Stock Plan On August 28, 2011, the Company’s Annual General Meeting approved the 2011 Incentive Stock Plan of Orient Paper, Inc. (the “2011 ISP”) as previously adopted by the Board of Directors on July 5, 2011. Under the 2011 ISP, the Company may grant an aggregate of 375,000 shares of the Company’s common stock to the Company’s directors, officers, employees or consultants. No stock or option was issued under the 2011 ISP until January 2, 2012, when the Compensation Committee granted 109,584 shares of restricted common stock to certain officers and directors of the Company when the stock was at $3.45 per share, as compensation for their services in the past years. Total fair value of the stock was calculated at $378,065 as of the date of issuance. On September 10, 2012, the Company’s Annual General Meeting approved the 2012 Incentive Stock Plan of Orient Paper, Inc. (the “2012 ISP”) as previously adopted by the Board of Directors on July 4, 2012. Under the 2012 ISP, the Company may grant an aggregate of 200,000 shares of the Company’s common stock to the Company’s directors, officers, employees or consultants. Specifically, the Board and/or the Compensation Committee have authority to (a) grant, in its discretion, Incentive Stock Options or Non-statutory Options, Stock Awards or Restricted Stock Purchase Offers; (b) determine in good faith the fair market value of the stock covered by any grant; (c) determine which eligible persons shall receive grants and the number of shares, restrictions, terms and conditions to be included in such grants; and (d) make all other determinations necessary or advisable for the 2012 ISP’s administration. On December 31, 2013, the Compensation Committee granted restricted common shares of 297,000, out of which 265,416 shares were granted under the 2011 ISP and 31,584 shares under the 2012 ISP, to certain officers, directors and employees of the Company when the stock was at $2.66 per share, as compensation for their services in the past years. Total fair value of the stock was calculated at $790,020 as of the date of grant. 2015 Incentive Plan On August 29, 2015, the Company’s Annual General Meeting approved the 2015 Omnibus Equity Incentive Plan of Orient Paper, Inc. (the “2015 ISP”) as previously adopted by the Board of Directors on July 10, 2015. Under the 2015 ISP, the Company may grant an aggregate of 1,500,000 shares of the Company’s common stock to the directors, officers, employees and/or consultants of the Company and its subsidiaries. On January 12, 2016, the Compensation Committee granted un-restricted common shares of 1,133,916, of which 168,416 shares were granted under the 2012 ISP and 965,500 shares under the 2015 ISP, to certain officers, directors, employees and a consultant of the Company as compensation for their services in the past years. Total fair value of the stock was calculated at $1,417,395 as of the date of issuance at $1.25 per share. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | (16) 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 $17,667 (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 $530,020 (RMB 3,600,000). The Company is currently 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 $147,228 (RMB 1,000,000), for a total term of up to five years. Future minimum lease payments of all operating leases are as follows: September 30, Amount 2018 686,063 2019 560,503 2020 560,503 2021 560,503 2022 560,503 Thereafter 2,924,558 Total operating lease payments $ 5,852,633 Capital commitment As of September 30, 2017, 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 $11,002,635 and $13,921,168 as of September 30, 2017 and December 31, 2016, respectively. The Company expected to pay off all the balances within 1 year. Guarantees and Indemnities The Company agreed with a third party to guarantee certain obligations of the third party, and as of September 30, 2017 and December 31, 2016, the Company guaranteed the third party’s long-term loan from financial institutions amounting to $8,437,674 (RMB56,000,000) and $8,072,654 (RMB56,000,000) that matured at various times in 2018. In most cases, the Company cannot estimate the potential amount of future payments under these guarantees until events arise that would result in a liability under the guarantees. The Company believes that payment under this guarantee is not probable. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Reporting | (17) 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 September 30, 2017 Orient Paper Orient Paper Not Attributable Elimination Enterprise-wide, HB Shengde to Segments Inter-segment consolidated Revenues $ 33,507,053 $ - $ - $ - $ 33,507,053 Gross profit 7,221,288 - - - 7,221,288 Depreciation and amortization 3,497,635 231,367 - - 3,729,002 Loss from disposal of property, plant and equipment (1,653,039 ) - - - (1,653,039 ) Interest income 3,548 1,955 - - 5,503 Interest expense 604,351 43,612 - - 647,963 Income tax expense(benefit) 579,232 (74,067 ) - - 505,165 Net income (loss) 1,916,821 (225,778 ) (118,708 ) - 1,572,335 Three Months Ended September 30, 2016 Orient Paper Orient Paper Not Attributable Elimination Enterprise-wide, HB Shengde to Segments Inter-segment consolidated Revenues $ 37,397,395 $ 64,671 $ - $ - $ 37,462,066 Gross profit (loss) 7,347,908 (17,065 ) - - 7,330,843 Depreciation and amortization 3,485,154 230,868 - - 3,716,022 Loss from disposal of property, plant and equipment - - - - - Interest income 14,568 264 - - 14,832 Interest expense 677,576 - - - 677,576 Income tax expense(benefit) 1,098,270 (64,411 ) - - 1,033,859 Net income (loss) 3,313,671 (196,558 ) (82,571 ) - 3,034,542 Nine Months Ended September 30, 2017 Orient Paper Orient Paper Not Attributable Elimination Enterprise-wide, HB Shengde to Segments Inter-segment consolidated Revenues $ 81,584,395 $ - $ - $ - $ 81,584,395 Gross profit 16,339,874 - - - 16,339,874 Depreciation and amortization 10,247,936 680,566 - - 10,928,502 Loss from disposal of property, plant and equipment (1,665,140 ) - - - (1,665,140 ) Interest income 25,767 3,492 - - 29,259 Interest expense 1,953,379 70,198 - - 2,023,577 Income tax expense(benefit) 1,402,558 (296,630 ) - - 1,105,928 Net income (loss) 4,350,831 (516,705 ) (538,005 ) - 3,296,121 As of September 30, 2017 Orient Orient Not Elimination Enterprise- Paper Paper Attributable of wide, HB Shengde to Segments Inter-segment consolidated Total assets $ 191,096,727 $ 30,480,117 $ 276 $ - $ 221,577,120 Nine Months Ended September 30, 2016 Orient Paper Orient Paper Not Attributable Elimination Enterprise-wide, HB Shengde to Segments Inter-segment consolidated Revenues $ 102,703,977 $ 664,314 $ - $ - $ 103,368,291 Gross profit (loss) 18,376,724 (390,243 ) - - 17,986,481 Depreciation and amortization 10,966,088 702,888 - - 11,668,976 Loss from disposal of property, plant and equipment (25,774 ) - - (25,774 ) Interest income 94,430 796 - - 95,226 Interest expense 2,094,448 - - - 2,094,448 Income tax expense(benefit) 2,248,946 (171,120 ) - - 2,077,826 Net income (loss) 6,747,378 (559,747 ) (1,945,380 ) - 4,242,251 As of December 31, 2016 Orient Orient Not Elimination Enterprise- Paper Paper Attributable of wide, HB Shengde to Segments Inter-segment consolidated Total assets $ 179,689,131 $ 28,687,027 $ 1,460 $ - $ 208,377,618 |
Concentration and Major Custome
Concentration and Major Customers and Suppliers | 9 Months Ended |
Sep. 30, 2017 | |
Concentration and Major Customers and Suppliers and Concentration of Credit Risk and Risks and Uncertainties [Abstract] | |
Concentration and Major Customers and Suppliers | (18) Concentration and Major Customers and Suppliers For the three months ended September 30, 2017 and 2016, the Company had no single customer contributed over 10% of total sales. For the nine months ended September 30, 2017 and 2016, the Company had no single customer contributing over 10% of total sales. For the three months ended September 30, 2017, the Company had three major suppliers accounted for 83%, 7% and 4% of total purchases. For the three months ended September 30, 2016, the Company had three major suppliers which primarily accounted for 63%, 14% and 8% of the total purchases. For the nine months ended September 30, 2017, the Company had three major suppliers which primarily accounted for 66%, 11% and 6% of the total purchases. For the nine months ended September 30, 2016, the Company had three major suppliers which primarily accounted for 63%, 10% and 7% of the total purchases. |
Concentration of Credit Risk
Concentration of Credit Risk | 9 Months Ended |
Sep. 30, 2017 | |
Concentration and Major Customers and Suppliers and Concentration of Credit Risk and Risks and Uncertainties [Abstract] | |
Concentration of Credit Risk | (19) 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 September 30, 2017 and December 31, 2016. 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$75,336) 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 September 30, 2017 and December 31, 2016, respectively, while for the cash placed in financial institutions in the PRC, the balances exceeding the maximum coverage of RMB500,000 amounted to RMB81,101,668 (US$12,219,812) as of September 30, 2017. |
Risks and Uncertainties
Risks and Uncertainties | 9 Months Ended |
Sep. 30, 2017 | |
Concentration and Major Customers and Suppliers and Concentration of Credit Risk and Risks and Uncertainties [Abstract] | |
Risks and Uncertainties | (20) Risks and Uncertainties Orient Paper is subject to substantial risks from, among other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, foreign currency exchange rates, and operating in the PRC under its various laws and restrictions. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2017 | |
Recent Accounting Pronouncements [Abstract] | |
Recent Accounting Pronouncements | (21) Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Gross versus Net), which is effective upon adoption of ASU 2014-09. This ASU clarifies the implementation guidance in ASU 2014-09 on principal versus agent considerations. These ASUs are effective for annual reporting periods beginning after December 15, 2017 and interim periods within those annual periods. The Company will adopt ASU 2014-09, and its related clarifying ASUs, as of January 1, 2018. The Company is continuing to assess the potential effects of these ASUs on its consolidated financial statements, business processes, systems and controls. While the assessment process is ongoing, the Company anticipates adopting the standard using the modified retrospective transition approach. Under this approach, the new standard would apply to all new contracts initiated on or after January 1, 2018. For existing contracts that have remaining obligations as of January 1, 2018, any difference between the recognition criteria in these ASUs and the Company’s current revenue recognition practices would be recognized using a cumulative effect adjustment to the opening balance of retained earnings. We do not expect the adoption of these ASUs to have a material impact on our condensed consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). The amendments in this update require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). The amendments in this update also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition the amendments in this update eliminate the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that are required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public entities. For public business entities, the amendments in ASU 2016-01 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Except for the early application guidance discussed in ASU 2016-01, early adoption of the amendments in this update is not permitted. We do not expect the adoption of ASU 2016-01 to have a material impact on our condensed consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The amendments in this update create Topic 842, Leases, and supersede the leases requirements in Topic 840, Leases. Topic 842 specifies the accounting for leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. The main difference between Topic 842 and Topic 840 is the recognition of lease assets and lease liabilities for those leases classified as operating leases under Topic 840. Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases guidance. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in the statement of comprehensive income and the statement of cash flows is largely unchanged from previous GAAP. The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years for public business entities. Early application of the amendments in ASU 2016-02 is permitted. We are currently in the process of evaluating the impact of the adoption of ASU 2016-02 on our condensed consolidated financial statements. In April 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”), which simplifies several aspects of the accounting for employee share-based payment transactions. The areas for simplification in ASU 2016-09 include the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this ASU will be effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2016-09 on our condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). Financial Instruments-Credit Losses (Topic 326) amends guidelines on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available-for-sale debt securities, credit losses should be measured in a manner similar to current GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The amendments in this ASU will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently evaluating the impact of the adoption of ASU 2016-13 on our condensed consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”), which addresses the following eight specific cash flow issues: debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies; distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We are currently evaluating the impact of the adoption of ASU 2016-15 on our condensed consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (“ASU 2016-18”), which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this ASU do not provide a definition of restricted cash or restricted cash equivalents. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We are currently evaluating the impact of the adoption of ASU 2016-18 on our condensed consolidated financial statements. The Company had $6,026,910 and $2,162,318 of restricted cash as of September 30, 2017 and December 31, 2016, respectively. In January 2017, the FASB issued ASU No. 2017-01, “‘Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”), which clarify the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted so long as the transaction has not been reported in financial statements that have been issued or made available for issuance. We are currently evaluating the impact of the adoption of ASU 2017-01 on our condensed consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, “‘Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting” (“ASU 2017-09”), which provide guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We are currently evaluating the impact of the adoption of ASU 2017-09 on our condensed consolidated financial statements. |
Basis of Presentation and Sig27
Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Basis of Presentation and 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 September 30, 2017 and the results of operations for the three and nine months ended September 30, 2017 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. |
Valuation of long-lived asset | Valuation of long-lived asset The Company reviews the carrying value of long-lived assets to be held and used when events and circumstances warrants such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset and intangible assets. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets and intangible assets to be disposed are determined in a similar manner, except that fair market values are reduced for the cost to dispose. |
Fair Value Measurements | Fair Value Measurements The Company has adopted ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. It does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. It establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement. The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts that the Company could realize in a current market exchange. As of September 30, 2017 and December 31, 2016, the carrying value of the Company’s short term financial instruments, such as cash and cash equivalents, accounts receivable, accounts and notes payable, short-term bank loans, balance due to a related party and obligation under capital lease, approximate at their fair values because of the short maturity of these instruments; while loans from credit union and loans from a related party approximate at their fair value as the interest rates thereon are close to the market rates of interest published by the People’s Bank of China. The Company does not have any assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016. |
Non-Recurring Fair Value Measurements | Non-Recurring Fair Value Measurements The Company reviews long-lived assets for impairment annually or more frequently if events or changes in circumstances indicate the possibility of impairment. For the continuing operations, long-lived assets are measured at fair value on a nonrecurring basis when there is an indicator of impairment, and they are recorded at fair value only when impairment is recognized. For discontinued operations, long-lived assets are measured at the lower of carrying amount or fair value less cost to sell. The fair value of these assets were determined using models with significant unobservable inputs which were classified as Level 3 inputs, primarily the discounted future cash flow. |
Share-Based Compensation | Share-Based Compensation The Company uses the fair value recognition provision of ASC Topic 718, Compensation-Stock Compensation The Company also applies the provisions of ASC Topic 505-50, Equity Based Payments to Non-Employees |
Organization and Business Bac28
Organization and Business Background (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Organization and Business Background [Abstract] | |
Schedule of subsidiaries and variable interest entities | Date of Incorporation Place of Incorporation or Percentage of Name or Establishment Establishment Ownership Principal Activity Subsidiary: Dongfang Holding November 13, 2006 BVI 100 % Inactive investment holding Shengde Holdings February 25, 2009 State of Nevada 100 % Investment holding Orient Paper Shengde June 1, 2009 PRC 100 % Paper Production and distribution Variable interest entity (“VIE”): Orient Paper HB March 10, 1996 PRC Control * Paper Production and distribution * Orient Paper HB is treated as a 100% controlled variable interest entity of the Company. |
Schedule of aggregate financial information of assets and liabilities | September 30, December 31, 2017 2016 (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 3,953,938 $ 2,005,288 Restricted cash 6,026,910 2,162,318 Accounts receivable 130,928 3,894,435 Inventories 9,561,773 5,592,230 Prepayments and other current assets 51,229 451,349 Total current assets 19,724,778 14,105,620 Property, plant, and equipment, net 166,662,735 162,779,492 Deferred tax asset non-current 4,709,214 2,804,019 Total Assets $ 191,096,727 $ 179,689,131 LIABILITIES Current Liabilities Short-term bank loans $ 10,245,747 $ 5,045,409 Current portion of long-term loans from credit union 3,766,819 - Current obligations under capital lease 8,786,528 Accounts payable 11,020 559,952 Advance from customers 28,831 Notes payable 6,026,910 2,162,318 Due to a related party 21,775 56,872 Accrued payroll and employee benefits 337,957 206,642 Other payables and accrued liabilities 1,561,446 2,424,751 Income taxes payable 1,260,721 1,311,051 Total current liabilities 23,232,395 20,582,354 Loans from credit union 1,295,786 4,843,592 Loans from a related party 10,547,093 10,090,817 Deferred gain on sale-leaseback - 102,232 Total liabilities $ 35,075,274 $ 35,618,995 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventories [Abstract] | |
Schedule of inventories | September 30, December 31, 2017 2016 Raw Materials Recycled paper board $ 6,711,977 $ 3,337,649 Recycled white scrap paper 838,086 - Recycled scrap binding margin 831,968 547,803 Coal & gas 85,950 242,307 Base paper and other raw materials 222,062 265,464 8,690,043 4,393,223 Finished Goods 913,270 1,238,807 Totals $ 9,603,313 $ 5,632,030 |
Prepayments and Other Current30
Prepayments and Other Current Assets (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Prepayments and Other Current Assets [Abstract] | |
Summary of prepayments and other current assets | September 30, December 31, 2017 2016 Prepaid land lease $ 49,722 $ 432,464 Others 6,177 23,428 $ 55,899 $ 455,892 |
Property, Plant and Equipment31
Property, Plant and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment, Net [Abstract] | |
Schedule of property, plant and equipment | September 30, December 31, 2017 2016 Property, Plant, and Equipment: Land use rights $ 12,286,700 $ 11,755,168 Building and improvements 97,336,831 92,927,111 Machinery and equipment 126,892,546 123,932,336 Vehicles 584,085 590,619 Construction in progress 33,797,507 25,084,416 Totals 270,897,669 254,289,650 Less: accumulated depreciation and amortization (80,152,786 ) (66,599,770 ) Property, Plant and Equipment, net $ 190,744,883 $ 187,689,880 |
Loans Payable (Tables)
Loans Payable (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Loans Payable [Abstract] | |
Schedule of short-term bank loans | September 30, December 31, 2017 2016 Bank of Hebei (a) $ - $ 2,162,318 Industrial and Commercial Bank of China (“ICBC”) Loan 1 (b) - 2,883,091 Bank of Cangzhou (c) 6,026,910 - ICBC Loan 2 (d) 4,218,837 - Total short-term bank loans $ 10,245,747 $ 5,045,409 (a) On July 8, 2016, the Company entered into a working capital loan agreement with the Bank of Hebei, with a balance of $nil as of September 30, 2017 and $2,162,318 as of December 31, 2016, respectively. The loan bears a fixed interest rate of 5.22% per annum. The loan was due on July 8, 2017. The working capital loan is guaranteed by the Company’s CEO and Hebei Tengsheng with its land use right and real property pledged by Hebei Tengsheng as collateral for the benefit of the bank. The loan was repaid on July 6, 2017. (b) On September 13, 2016, the Company entered into a working capital loan agreement with ICBC, with a balance of $nil as of September 30, 2017 and $2,883,091 as of December 31, 2016, respectively. The loan bears a fixed interest rate of 4.5675% per annum. The loan was due on October 19, 2017. The working capital loan was guaranteed by Hebei Tengsheng with its land use right pledged as collateral for the benefit of the bank. The loan was repaid on September 7, 2017. (c) On December 5, 2016, the Company entered into a working capital loan agreement with the Bank of Cangzhou. The loan was drawn on January 3, 2017, with a balance of $6,026,910 as of September 30, 2017. The loan bears a fixed interest rate of 6.09% per annum. The loan will be due on January 3, 2018. The working capital loan is secured by the Company’s land use right and guaranteed by Orient Paper Shengde with its production equipment and plant as collateral for the benefit of the bank. (d) On January 10, 2017, the Company entered into a working capital loan agreement with the ICBC, with a balance of $4,218,837 as of September 30, 2017. The working capital loan was guaranteed by Hebei Tengsheng with its land use right pledged as collateral for the benefit of the bank. The loan bears a fixed interest rate of 4.5675% per annum. The loan will be due on January 17, 2018. |
Other Payables and Accrued Li33
Other Payables and Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Other Payables and Accrued Liabilities [Abstract] | |
Summary of other payables and accrued liabilities | September 30, December 31, 2017 2016 Accrued electricity $ 2,754 $ 335,169 Value-added tax payable 557,316 1,080,055 Accrued interest to a related party 884,293 516,825 Payable for purchase of equipment 48,818 223,143 Accrued commission to salesmen 10,952 160,014 Others 57,343 109,572 Totals $ 1,561,476 $ 2,424,778 |
Stock Warrants (Tables)
Stock Warrants (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Stock Warrants [Line Items] | |
Summary of stock warrant activities | Three and Nine Months Ended 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] | |
Schedule fair value of warrants issued was estimated by using Binominal pricing model | Terms of warrants 5 years Expected volatility 72.0 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] | |
Schedule fair value of warrants issued was estimated by using 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) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Summary of basic and diluted net income per share | Three Months Ended September 30, 2017 2016 Basic income per share Net income for the period - numerator $ 1,572,335 $ 3,034,542 Weighted average common stock outstanding - denominator 21,450,316 21,450,316 Net income per share $ 0.07 $ 0.14 Diluted income per share Net income for the period- numerator $ 1,572,335 $ 3,034,542 Weighted average common stock outstanding - denominator 21,450,316 21,450,316 Effect of dilution - - Weighted average common stock outstanding - denominator 21,450,316 21,450,316 Diluted income per share $ 0.07 $ 0.14 Nine Months Ended September 30, 2017 2016 Basic income per share Net income for the period - numerator $ 3,296,121 $ 4,242,251 Weighted average common stock outstanding - denominator 21,450,316 21,404,627 Net income per share $ 0.15 $ 0.20 Diluted income per share Net income for the period- numerator $ 3,296,121 $ 4,242,251 Weighted average common stock outstanding - denominator 21,450,316 21,404,627 Effect of dilution - - Weighted average common stock outstanding - denominator 21,450,316 21,404,627 Diluted income per share $ 0.15 $ 0.20 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Income Taxes [Abstract] | |
Schedule of provisions for income taxes | Three Months Ended September 30, 2017 2016 Provision for Income Taxes Current Tax Provision PRC $ 1,211,668 $ 1,521,099 Deferred Tax Provision PRC (706,503 ) (487,240 ) Total Provision for Income Taxes $ 505,165 $ 1,033,859 Nine Months Ended September 30, 2017 2016 Provision for Income Taxes Current Tax Provision PRC $ 2,993,819 $ 3,534,967 Deferred Tax Provision PRC (1,887,891 ) (1,457,141 ) Total Provision for Income Taxes $ 1,105,928 $ 2,077,826 |
Schedule of reconciliation of PRC statutory rates to Company's effective tax rate | Three Months Ended September 30, 2017 2016 PRC Statutory rate 25.0 % 25.0 % Effect of different tax jurisdiction (0.5 ) (0.2 ) Effect of expenses not deductible for PRC tax purposes 0.3 (0.1 ) Over provision in previous years (2.4 ) - Change in valuation allowance 1.9 0.7 Effective income tax rate 24.3 % 25.4 % Nine months ended September 30, 2017 2016 PRC Statutory rate 25.0 % 25.0 % Effect of different tax jurisdiction (0.3 ) (2.8 ) Effect of expenses not deductible for PRC tax purposes 0.3 0.1 (Over) Under provision in previous years (1.1 ) 0.1 Change in valuation allowance 1.2 10.5 Effective income tax rate 25.1 % 32.9 % |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies [Abstract] | |
Schedule of future minimum lease payments of all operating leases | September 30, Amount 2018 686,063 2019 560,503 2020 560,503 2021 560,503 2022 560,503 Thereafter 2,924,558 Total operating lease payments $ 5,852,633 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Summarized financial information for reportable segments | Three Months Ended September 30, 2017 Orient Paper Orient Paper Not Attributable Elimination Enterprise-wide, HB Shengde to Segments Inter-segment consolidated Revenues $ 33,507,053 $ - $ - $ - $ 33,507,053 Gross profit 7,221,288 - - - 7,221,288 Depreciation and amortization 3,497,635 231,367 - - 3,729,002 Loss from disposal of property, plant and equipment (1,653,039 ) - - - (1,653,039 ) Interest income 3,548 1,955 - - 5,503 Interest expense 604,351 43,612 - - 647,963 Income tax expense(benefit) 579,232 (74,067 ) - - 505,165 Net income (loss) 1,916,821 (225,778 ) (118,708 ) - 1,572,335 Three Months Ended September 30, 2016 Orient Paper Orient Paper Not Attributable Elimination Enterprise-wide, HB Shengde to Segments Inter-segment consolidated Revenues $ 37,397,395 $ 64,671 $ - $ - $ 37,462,066 Gross profit (loss) 7,347,908 (17,065 ) - - 7,330,843 Depreciation and amortization 3,485,154 230,868 - - 3,716,022 Loss from disposal of property, plant and equipment - - - - - Interest income 14,568 264 - - 14,832 Interest expense 677,576 - - - 677,576 Income tax expense(benefit) 1,098,270 (64,411 ) - - 1,033,859 Net income (loss) 3,313,671 (196,558 ) (82,571 ) - 3,034,542 Nine Months Ended September 30, 2017 Orient Paper Orient Paper Not Attributable Elimination Enterprise-wide, HB Shengde to Segments Inter-segment consolidated Revenues $ 81,584,395 $ - $ - $ - $ 81,584,395 Gross profit 16,339,874 - - - 16,339,874 Depreciation and amortization 10,247,936 680,566 - - 10,928,502 Loss from disposal of property, plant and equipment (1,665,140 ) - - - (1,665,140 ) Interest income 25,767 3,492 - - 29,259 Interest expense 1,953,379 70,198 - - 2,023,577 Income tax expense(benefit) 1,402,558 (296,630 ) - - 1,105,928 Net income (loss) 4,350,831 (516,705 ) (538,005 ) - 3,296,121 As of September 30, 2017 Orient Orient Not Elimination Enterprise- Paper Paper Attributable of wide, HB Shengde to Segments Inter-segment consolidated Total assets $ 191,096,727 $ 30,480,117 $ 276 $ - $ 221,577,120 Nine Months Ended September 30, 2016 Orient Paper Orient Paper Not Attributable Elimination Enterprise-wide, HB Shengde to Segments Inter-segment consolidated Revenues $ 102,703,977 $ 664,314 $ - $ - $ 103,368,291 Gross profit (loss) 18,376,724 (390,243 ) - - 17,986,481 Depreciation and amortization 10,966,088 702,888 - - 11,668,976 Loss from disposal of property, plant and equipment (25,774 ) - - (25,774 ) Interest income 94,430 796 - - 95,226 Interest expense 2,094,448 - - - 2,094,448 Income tax expense(benefit) 2,248,946 (171,120 ) - - 2,077,826 Net income (loss) 6,747,378 (559,747 ) (1,945,380 ) - 4,242,251 As of December 31, 2016 Orient Orient Not Elimination Enterprise- Paper Paper Attributable of wide, HB Shengde to Segments Inter-segment consolidated Total assets $ 179,689,131 $ 28,687,027 $ 1,460 $ - $ 208,377,618 |
Organization and Business Bac39
Organization and Business Background (Details) | 9 Months Ended | |
Sep. 30, 2017 | ||
Dongfang Holding [Member] | ||
Schedule of company's subsidiaries and variable interest entities | ||
Entity Incorporation, Date of Incorporation | Nov. 13, 2006 | |
Entity Incorporation State Country Name | BVI | |
Percentage of Ownership | 100.00% | |
Principal Activity | Inactive investment holding | |
Shengde Holdings [Member] | ||
Schedule of company's subsidiaries and variable interest entities | ||
Entity Incorporation, Date of Incorporation | Feb. 25, 2009 | |
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 | Jun. 1, 2009 | |
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 | Mar. 10, 1996 | |
Entity Incorporation State Country Name | PRC | |
Percentage of Ownership | Control | [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 Bac40
Organization and Business Background (Details 1) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2015 |
Current Assets | ||||
Cash and cash equivalents | $ 6,505,284 | $ 2,332,646 | $ 5,591,785 | $ 2,641,917 |
Restricted cash | 6,026,910 | 2,162,318 | ||
Accounts receivable | 130,928 | 3,894,436 | ||
Inventories | 9,603,313 | 5,632,030 | ||
Prepayments and other current assets | 55,899 | 455,892 | ||
Total current assets | 22,322,334 | 14,477,322 | ||
Property, plant, and equipment, net | 190,744,883 | 187,689,880 | ||
Deferred tax asset non-current | 5,494,443 | 3,264,841 | ||
Total Assets | 221,577,120 | 208,377,618 | ||
Current Liabilities | ||||
Short-term bank loans | 10,245,747 | 5,045,409 | ||
Current obligations under capital lease | 8,786,528 | |||
Accounts payable | 11,020 | 559,952 | ||
Notes payable | 6,026,910 | 2,162,318 | ||
Due to a related party | 21,775 | 56,872 | ||
Accrued payroll and employee benefits | 342,492 | 209,936 | ||
Other payables and accrued liabilities | 1,561,476 | 2,424,778 | ||
Income taxes payable | 1,260,633 | 1,310,967 | ||
Total current liabilities | 23,327,275 | 20,585,591 | ||
Loans from credit union | 3,616,146 | 4,843,592 | ||
Loans from a related party | 10,547,093 | 10,090,817 | ||
Deferred gain on sale-leaseback | 102,232 | |||
Total liabilities | 37,490,514 | 35,622,232 | ||
Orient Paper HB [Member] | ||||
Current Assets | ||||
Cash and cash equivalents | 3,953,938 | 2,005,288 | ||
Restricted cash | 6,026,910 | 2,162,318 | ||
Accounts receivable | 130,928 | 3,894,435 | ||
Inventories | 9,561,773 | 5,592,230 | ||
Prepayments and other current assets | 51,229 | 451,349 | ||
Total current assets | 19,724,778 | 14,105,620 | ||
Property, plant, and equipment, net | 166,662,735 | 162,779,492 | ||
Deferred tax asset non-current | 4,709,214 | 2,804,019 | ||
Total Assets | 191,096,727 | 179,689,131 | ||
Current Liabilities | ||||
Short-term bank loans | 10,245,747 | 5,045,409 | ||
Current portion of long-term loans from credit union | 3,766,819 | |||
Current obligations under capital lease | 8,786,528 | |||
Accounts payable | 11,020 | 559,952 | ||
Advance from customers | 28,831 | |||
Notes payable | 6,026,910 | 2,162,318 | ||
Due to a related party | 21,775 | 56,872 | ||
Accrued payroll and employee benefits | 337,957 | 206,642 | ||
Other payables and accrued liabilities | 1,561,446 | 2,424,751 | ||
Income taxes payable | 1,260,721 | 1,311,051 | ||
Total current liabilities | 23,232,395 | 20,582,354 | ||
Loans from credit union | 1,295,786 | 4,843,592 | ||
Loans from a related party | 10,547,093 | 10,090,817 | ||
Deferred gain on sale-leaseback | 102,232 | |||
Total liabilities | $ 35,075,274 | $ 35,618,995 |
Organization and Business Bac41
Organization and Business Background (Details Textual) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
Feb. 10, 2010USD ($)¥ / shares | Jun. 24, 2009USD ($) | Oct. 29, 2007shares | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2010 | Jun. 30, 2010USD ($) | |
Organization and Business Background (Textual) | ||||||||||
Percentage of distributable profit of Orient Paper HB | 100.00% | |||||||||
Exercise price for options | ¥ / shares | ¥ 1 | |||||||||
Shengde Holdings [Member] | ||||||||||
Organization and Business Background (Textual) | ||||||||||
Percentage of ownership | 100.00% | |||||||||
Dongfang Holding [Member] | ||||||||||
Organization and Business Background (Textual) | ||||||||||
Percentage of ownership | 100.00% | |||||||||
Shares of common stock issued to shareholders under merger agreement | shares | 7,450,497 | |||||||||
Reverse stock split | Four-for-one | |||||||||
Orient Paper Shengde [Member] | ||||||||||
Organization and Business Background (Textual) | ||||||||||
Registered capital | $ 10,000,000 | $ 60,000,000 | ||||||||
Loan agreement to terminate | ¥ 10,000,000 | |||||||||
Orient Paper HB [Member] | ||||||||||
Organization and Business Background (Textual) | ||||||||||
Percentage of ownership | 100.00% | |||||||||
Service fees percentage of annual net profits | 80.00% | |||||||||
Aggregate principal amount | $ 10,000,000 | |||||||||
Loan agreement to terminate | ¥ 10,000,000 | |||||||||
Percentage of revenue | 100.00% | 99.83% | 100.00% | 99.36% | ||||||
Percentage of assets accounted | 86.24% | 86.24% | 86.23% |
Restricted Cash (Details)
Restricted Cash (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Restricted Cash (Textual) | ||
Restricted cash | $ 6,026,910 | $ 2,162,318 |
Description of restricted cash notes payable maturity | The restriction will be lifted upon the maturity of the notes payable on January 5, 2018. | The restriction has been lifted upon the maturity of the notes payable on February 1, 2017. |
Inventories (Details)
Inventories (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Schedule of inventories | ||
Raw materials | $ 8,690,043 | $ 4,393,223 |
Finished Goods | 913,270 | 1,238,807 |
Totals | 9,603,313 | 5,632,030 |
Recycled paper board [Member] | ||
Schedule of inventories | ||
Raw materials | 6,711,977 | 3,337,649 |
Recycled white scrap paper [Member] | ||
Schedule of inventories | ||
Raw materials | 838,086 | |
Recycled scrap binding margin [Member] | ||
Schedule of inventories | ||
Raw materials | 831,968 | 547,803 |
Coal & gas [Member] | ||
Schedule of inventories | ||
Raw materials | 85,950 | 242,307 |
Base paper and other raw materials [Member] | ||
Schedule of inventories | ||
Raw materials | $ 222,062 | $ 265,464 |
Prepayments and Other Current44
Prepayments and Other Current Assets (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Summary of prepayments and other current assets | ||
Prepaid land lease | $ 49,722 | $ 432,464 |
Others | 6,177 | 23,428 |
Total prepayments and other current assets | $ 55,899 | $ 455,892 |
Property, Plant and Equipment45
Property, Plant and Equipment, Net (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Schedule of property, plant and equipment | ||
Totals | $ 270,897,669 | $ 254,289,650 |
Less: accumulated depreciation and amortization | (80,152,786) | (66,599,770) |
Property, Plant and Equipment, net | 190,744,883 | 187,689,880 |
Land use rights [Member] | ||
Schedule of property, plant and equipment | ||
Totals | 12,286,700 | 11,755,168 |
Building and improvements [Member] | ||
Schedule of property, plant and equipment | ||
Totals | 97,336,831 | 92,927,111 |
Machinery and equipment [Member] | ||
Schedule of property, plant and equipment | ||
Totals | 126,892,546 | 123,932,336 |
Vehicles [Member] | ||
Schedule of property, plant and equipment | ||
Totals | 584,085 | 590,619 |
Construction in progress [Member] | ||
Schedule of property, plant and equipment | ||
Totals | $ 33,797,507 | $ 25,084,416 |
Property, Plant and Equipment46
Property, Plant and Equipment, Net (Details Textual) | Jun. 16, 2013USD ($) | Jun. 16, 2013CNY (¥) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)T | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | Jul. 01, 2015USD ($) | Jun. 16, 2013CNY (¥) |
Property, Plant and Equipment, Net (Textual) | |||||||||
Deferred gain on sale of leased equipment | $ 102,232 | ||||||||
Production capacity of manufacturing equipment PM8 (per year) | T | 15,000 | ||||||||
Amount of interest capitalized | $ 10,839 | $ 9,761 | $ 43,786 | ||||||
Value of land use right pledged for bank loan | 5,053,152 | 5,053,152 | |||||||
Depreciation and amortization | 3,729,002 | $ 3,716,022 | 10,928,502 | $ 11,668,976 | |||||
Property, plant and equipment pledged for long term loan | 8,579,118 | 8,579,118 | 9,813,294 | ||||||
Land use right net values pledged for sale-leaseback financing | 15,461,557 | 15,461,557 | |||||||
Sale-leaseback arrangement [Member] | |||||||||
Property, Plant and Equipment, Net (Textual) | |||||||||
Term of lease | 3 years | 3 years | |||||||
Total financing proceeds | $ 23,000,000 | ¥ 150,000,000 | |||||||
Proceeds from sale of paper manufacturing equipment to leasing company | 23,000,000 | ¥ 150,000,000 | |||||||
Nominal purchase price | 2,260 | ¥ 15,000 | |||||||
Deferred gain on sale of leased equipment | $ 1,379,282 | ||||||||
Future minimum lease payments | $ 1,617,574 | ||||||||
Capital lease asset cost | $ 24,328,940 | $ 27,599,774 | |||||||
Land use rights [Member] | |||||||||
Property, Plant and Equipment, Net (Textual) | |||||||||
Term of lease | 50 years | 50 years | |||||||
Lease expiration year | From 2061 to 2066. | From 2061 to 2066. |
Loans Payable (Details)
Loans Payable (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 | |
Schedule of short-term bank loans | |||
Total short-term bank loans | $ 10,245,747 | $ 5,045,409 | |
Bank of Hebei [Member] | |||
Schedule of short-term bank loans | |||
Total short-term bank loans | [1] | 2,162,318 | |
Industrial & Commercial Bank of China ("ICBC") Loan 1 [Member] | |||
Schedule of short-term bank loans | |||
Total short-term bank loans | [2] | 2,883,091 | |
Bank of Cangzhou (Member) | |||
Schedule of short-term bank loans | |||
Total short-term bank loans | [3] | 6,026,910 | |
ICBC Loan 2 [Member] | |||
Schedule of short-term bank loans | |||
Total short-term bank loans | [4] | $ 4,218,837 | |
[1] | On July 8, 2016, the Company entered into a working capital loan agreement with the Bank of Hebei, with a balance of $nil as of September 30, 2017 and $2,162,318 as of December 31, 2016, respectively. The loan bears a fixed interest rate of 5.22% per annum. The loan was due on July 8, 2017. The working capital loan is guaranteed by the Company's CEO and Hebei Tengsheng with its land use right and real property pledged by Hebei Tengsheng as collateral for the benefit of the bank. The loan was repaid on July 6, 2017. | ||
[2] | On September 13, 2016, the Company entered into a working capital loan agreement with ICBC, with a balance of $nil as of September 30, 2017 and $2,883,091 as of December 31, 2016, respectively. The loan bears a fixed interest rate of 4.5675% per annum. The loan was due on October 19, 2017. The working capital loan was guaranteed by Hebei Tengsheng with its land use right pledged as collateral for the benefit of the bank. The loan was repaid on September 7, 2017. | ||
[3] | On December 5, 2016, the Company entered into a working capital loan agreement with the Bank of Cangzhou. The loan was drawn on January 3, 2017, with a balance of $6,026,910 as of September 30, 2017. The loan bears a fixed interest rate of 6.09% per annum. The loan will be due on January 3, 2018. The working capital loan is secured by the Company's land use right and guaranteed by Orient Paper Shengde with its production equipment and plant as collateral for the benefit of the bank. | ||
[4] | On January 10, 2017, the Company entered into a working capital loan agreement with the ICBC, with a balance of $4,218,837 as of September 30, 2017. The working capital loan was guaranteed by Hebei Tengsheng with its land use right pledged as collateral for the benefit of the bank. The loan bears a fixed interest rate of 4.5675% per annum. The loan will be due on January 17, 2018. |
Loans Payable (Details Textual)
Loans Payable (Details Textual) | Jan. 10, 2017 | Dec. 05, 2016 | Sep. 13, 2016 | Jul. 08, 2016 | Apr. 16, 2014 | Jul. 15, 2013 | Jun. 16, 2013USD ($) | Jun. 16, 2013CNY (¥) | Apr. 20, 2017 | Jul. 01, 2015USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | Oct. 14, 2016USD ($) | Jun. 16, 2013CNY (¥) | |
Loans Payable (Textual) | ||||||||||||||||||
Unpaid balance of short term debt | $ 10,245,747 | $ 10,245,747 | $ 5,045,409 | |||||||||||||||
Unsecured bank loans | ||||||||||||||||||
Long-term debt, Interest rate per month | 0.60% | 0.60% | ||||||||||||||||
Loan extension period | 2 years | |||||||||||||||||
Installment repayment description | The Rural Credit Union of Xushui County for a term of 2 years, which is due and payable in various installments from August 26, 2017 to April 19, 2019. | |||||||||||||||||
Total outstanding loan balance | ||||||||||||||||||
Current portion of total outstanding loan | $ 3,857,222 | $ 3,857,222 | ||||||||||||||||
Average short-term borrowing rates | 5.30% | 8.19% | 5.28% | 8.53% | ||||||||||||||
Long-term obligations under capital lease | ||||||||||||||||||
Current obligations under capital lease | 8,786,528 | |||||||||||||||||
Total interest expenses for the sale-leaseback arrangement | 213,571 | $ 237,053 | 789,322 | $ 526,912 | ||||||||||||||
Value of land use right pledged for sale-leaseback financing | 5,053,152 | 5,053,152 | ||||||||||||||||
Sale-leaseback arrangement [Member] | ||||||||||||||||||
Loans Payable (Textual) | ||||||||||||||||||
Proceeds from sale of paper manufacturing equipment to leasing company | $ 23,000,000 | ¥ 150,000,000 | ||||||||||||||||
Total financing proceeds | 23,000,000 | ¥ 150,000,000 | ||||||||||||||||
Nominal purchase price | $ 2,260 | ¥ 15,000 | ||||||||||||||||
Maturities repayment terms, description | The remaining lease term up to June 21, 2017. | The remaining lease term up to June 21, 2017. | ||||||||||||||||
Future minimum lease payment | $ 1,617,574 | |||||||||||||||||
Term of lease | 3 years | 3 years | ||||||||||||||||
Rural Credit Union of Xushui County [Member] | ||||||||||||||||||
Loans Payable (Textual) | ||||||||||||||||||
Total outstanding loan balance | 2,410,764 | 2,410,764 | ||||||||||||||||
Current portion of total outstanding loan | 90,404 | 90,404 | ||||||||||||||||
Non-current portion of total outstanding loan | 2,320,360 | 2,320,360 | ||||||||||||||||
Loans from credit union | 7,473,368 | 7,473,368 | 4,843,592 | |||||||||||||||
Long-term loan [Member] | Rural Credit Union of Xushui County [Member] | ||||||||||||||||||
Loans Payable (Textual) | ||||||||||||||||||
Long-term debt, Interest rate per month | 0.72% | |||||||||||||||||
Loan extension period | 5 years | |||||||||||||||||
Installment repayment description | The Rural Credit Union of Xushui County for a term of 5 years, which is payable in various installments from June 21, 2014 to November 18, 2018. | |||||||||||||||||
Loan amount | 188,341 | 188,341 | ||||||||||||||||
Original repayment of loan | 82,870 | 82,870 | ||||||||||||||||
Total outstanding loan balance | $ 1,295,786 | $ 1,295,786 | 1,239,729 | |||||||||||||||
New term loan agreement [Member] | Rural Credit Union of Xushui County [Member] | ||||||||||||||||||
Loans Payable (Textual) | ||||||||||||||||||
Long-term debt, Interest rate per month | 0.72% | 0.72% | ||||||||||||||||
Loan extension period | 5 years | |||||||||||||||||
Installment repayment description | The Rural Credit Union of Xushui County for a term of 5 years, which is due and payable in various installments from December 21, 2013 to July 26, 2018. | |||||||||||||||||
Loan amount | $ 195,875 | $ 195,875 | ||||||||||||||||
Original repayment of loan | 75,336 | 75,336 | ||||||||||||||||
Total outstanding loan balance | 3,766,818 | 3,766,818 | 3,603,863 | |||||||||||||||
Current portion of total outstanding loan | 3,766,818 | 3,766,818 | ||||||||||||||||
Interest expense for the short-term bank loans and long-term loans | 320,077 | $ 354,011 | 907,785 | $ 1,172,692 | ||||||||||||||
Security loan agreement by manufacturing equipment | 8,579,118 | 8,579,118 | 9,813,294 | |||||||||||||||
Non-current liabilities | 3,603,863 | |||||||||||||||||
Lease financing agreement [Member] | ||||||||||||||||||
Loans Payable (Textual) | ||||||||||||||||||
Security loan agreement by manufacturing equipment | $ 2,898,845 | |||||||||||||||||
Maturities repayment terms, description | The 2015 Agreement sets forth a modified and extended payment schedule with respect to the remaining payment obligation, with the final repayment date extended to June 21, 2017. Under the 2015 Agreement, the interest accrues at a rate of 15% per annum starting on June 16, 2015, and is payable on the 20th of every March, June, September and December until the principal is paid off, except for the first payment, which is due on July 31, 2015. | |||||||||||||||||
Current obligations under capital lease | 8,786,528 | |||||||||||||||||
ICBC Loan 1 [Member] | ||||||||||||||||||
Loans Payable (Textual) | ||||||||||||||||||
Unpaid balance of short term debt | [1] | 2,883,091 | ||||||||||||||||
Short-term bank loans, bore interest rate | 4.5675% | |||||||||||||||||
Loan, maturity date | Oct. 19, 2017 | |||||||||||||||||
ICBC Loan 2 [Member] | ||||||||||||||||||
Loans Payable (Textual) | ||||||||||||||||||
Unpaid balance of short term debt | [2] | 4,218,837 | 4,218,837 | |||||||||||||||
Short-term bank loans, bore interest rate | 4.5675% | |||||||||||||||||
Loan, maturity date | Jan. 17, 2018 | |||||||||||||||||
China National Foreign Trade Financial & Leasing Co. [Member] | Lease financing agreement [Member] | ||||||||||||||||||
Loans Payable (Textual) | ||||||||||||||||||
Proceeds from sale of paper manufacturing equipment to leasing company | $ 23,000,000 | ¥ 150,000,000 | ||||||||||||||||
Total financing proceeds | 23,000,000 | ¥ 150,000,000 | ||||||||||||||||
Nominal purchase price | $ 2,260 | ¥ 15,000 | ||||||||||||||||
Lease service charge, description | Equal to 5.55% of the amount financed. | Equal to 5.55% of the amount financed. | ||||||||||||||||
Lease service expense | $ 1,360,000 | |||||||||||||||||
Implicit interest rate | 6.15% | 6.15% | ||||||||||||||||
Stated capital lease | $ 25,750,170 | |||||||||||||||||
Bank of Hebei [Member] | ||||||||||||||||||
Loans Payable (Textual) | ||||||||||||||||||
Unpaid balance of short term debt | [3] | 2,162,318 | ||||||||||||||||
Short-term bank loans, bore interest rate | 5.22% | |||||||||||||||||
Loan, maturity date | Jul. 8, 2017 | |||||||||||||||||
Bank Of Cangzhou [Member] | ||||||||||||||||||
Loans Payable (Textual) | ||||||||||||||||||
Unpaid balance of short term debt | [4] | $ 6,026,910 | $ 6,026,910 | |||||||||||||||
Short-term bank loans, bore interest rate | 6.09% | |||||||||||||||||
Loan, maturity date | Jan. 3, 2018 | |||||||||||||||||
[1] | On September 13, 2016, the Company entered into a working capital loan agreement with ICBC, with a balance of $nil as of September 30, 2017 and $2,883,091 as of December 31, 2016, respectively. The loan bears a fixed interest rate of 4.5675% per annum. The loan was due on October 19, 2017. The working capital loan was guaranteed by Hebei Tengsheng with its land use right pledged as collateral for the benefit of the bank. The loan was repaid on September 7, 2017. | |||||||||||||||||
[2] | On January 10, 2017, the Company entered into a working capital loan agreement with the ICBC, with a balance of $4,218,837 as of September 30, 2017. The working capital loan was guaranteed by Hebei Tengsheng with its land use right pledged as collateral for the benefit of the bank. The loan bears a fixed interest rate of 4.5675% per annum. The loan will be due on January 17, 2018. | |||||||||||||||||
[3] | On July 8, 2016, the Company entered into a working capital loan agreement with the Bank of Hebei, with a balance of $nil as of September 30, 2017 and $2,162,318 as of December 31, 2016, respectively. The loan bears a fixed interest rate of 5.22% per annum. The loan was due on July 8, 2017. The working capital loan is guaranteed by the Company's CEO and Hebei Tengsheng with its land use right and real property pledged by Hebei Tengsheng as collateral for the benefit of the bank. The loan was repaid on July 6, 2017. | |||||||||||||||||
[4] | On December 5, 2016, the Company entered into a working capital loan agreement with the Bank of Cangzhou. The loan was drawn on January 3, 2017, with a balance of $6,026,910 as of September 30, 2017. The loan bears a fixed interest rate of 6.09% per annum. The loan will be due on January 3, 2018. The working capital loan is secured by the Company's land use right and guaranteed by Orient Paper Shengde with its production equipment and plant as collateral for the benefit of the bank. |
Related Party Transactions (Det
Related Party Transactions (Details) | Oct. 14, 2016USD ($) | Jul. 13, 2015USD ($) | Mar. 01, 2015USD ($) | Dec. 10, 2014 | Aug. 07, 2013USD ($)Employee | Aug. 07, 2013CNY (¥)Employee | Jan. 01, 2013 | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Mar. 01, 2015CNY (¥) |
Related Party Transactions (Textual) | ||||||||||||||
Accrued interest | $ 884,293 | $ 884,293 | $ 516,825 | |||||||||||
Proceeds from shareholders loan | $ 14,000 | |||||||||||||
Accrued rental owned to Hebei Fangsheng | 21,775 | 21,775 | 56,872 | |||||||||||
Interest paid | 1,359,343 | 1,746,568 | ||||||||||||
Repayment of related party loans | 6,090,257 | |||||||||||||
CEO [Member] | ||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||
Loans payable to related party | $ 2,898,845 | $ 4,348,267 | $ 18,080,730 | ¥ 120,000,000 | ||||||||||
Term of loan | 3 years | |||||||||||||
Interest rate on loans | 4.35% | 5.25% | ||||||||||||
Outstanding loan balance | 7,533,638 | 7,533,638 | 7,207,727 | |||||||||||
Loan matures date | Jul. 12, 2018 | |||||||||||||
Accrued interest | 354,552 | 354,552 | 104,062 | |||||||||||
Orient Paper HB [Member] | ||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||
Lease term renewed | 3 years | |||||||||||||
Hebei Fangsheng [Member] | ||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||
Rental payment | $ 147,228 | ¥ 1,000,000 | ||||||||||||
Industrial building lease term | 3 years | 3 years | ||||||||||||
Number of dormitory buildings | Employee | 3 | 3 | ||||||||||||
Sale price of industrial land use rights | $ 2,770,000 | |||||||||||||
Sale price of industrial building | $ 1,150,000 | |||||||||||||
Lease expiration date | Aug. 31, 2016 | Aug. 31, 2016 | ||||||||||||
Sale price of dormitory buildings | $ 4,310,000 | |||||||||||||
Mr. Zhenyong Liu [Member] | ||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||
Loan paid off | 288,596 | $ 2,249,279 | ||||||||||||
Loans payable to related party | 10,547,093 | 10,547,093 | 10,090,817 | |||||||||||
Term of loan | 3 years | |||||||||||||
Interest rate on loans | 5.25% | |||||||||||||
Outstanding loan balance | 3,013,455 | 3,013,455 | 2,883,090 | |||||||||||
Loan matures date | Jul. 12, 2021 | |||||||||||||
Accrued interest | 143,516 | 143,516 | 43,246 | |||||||||||
Loan from related parties, interest expense | 114,315 | $ 97,351 | 336,231 | $ 438,630 | ||||||||||
Interest paid | $ 391,374 | |||||||||||||
Repayment of related party loans | 6,012,416 | |||||||||||||
Lease term renewed | 3 years | |||||||||||||
Mr. Zhenyong Liu [Member] | Orient Paper HB [Member] | ||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||
Loans payable to related party | 9,040,365 | 9,040,365 | 8,649,272 | |||||||||||
Loan matures date | Dec. 10, 2017 | |||||||||||||
Other payables and accrued liabilities | $ 386,225 | $ 386,225 | $ 369,517 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Notes Payable (Textual) | ||
Notes payable | $ 6,026,910 | $ 2,162,318 |
Restricted cash | $ 6,026,910 | $ 2,162,318 |
Bank of Hebei [Member] | ||
Notes Payable (Textual) | ||
Bank acceptance notes from bank, interest rate | ||
Handling charges of bank acceptance notes percentage | 0.05% | |
Description of maturity of notes payable | The acceptance note was repaid in February 2017. | |
Bank of Cangzhou (Member) | ||
Notes Payable (Textual) | ||
Bank acceptance notes from bank, interest rate | ||
Handling charges of bank acceptance notes percentage | 0.05% | |
Description of maturity of notes payable | The acceptance notes will become due and payable on January 5, 2018. |
Other Payables and Accrued Li51
Other Payables and Accrued Liabilities (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Summary of other payables and accrued liabilities | ||
Accrued electricity | $ 2,754 | $ 335,169 |
Value-added tax payable | 557,316 | 1,080,055 |
Accrued interest to a related party | 884,293 | 516,825 |
Payable for purchase of equipment | 48,818 | 223,143 |
Accrued commission to salesmen | 10,952 | 160,014 |
Others | 57,343 | 109,572 |
Totals | $ 1,561,476 | $ 2,424,778 |
Common Stock (Details)
Common Stock (Details) | Jan. 12, 2016USD ($)Employee$ / sharesshares | Aug. 27, 2014$ / sharesshares | Aug. 28, 2011USD ($)$ / shares | Dec. 31, 2013USD ($)$ / shares |
Common Stock (Textual) | ||||
Share price | $ / shares | $ 1.25 | $ 3.45 | $ 2.66 | |
Number of officers | Employee | 9 | |||
Total fair value of stock of grant | $ | $ 1,417,395 | $ 378,065 | $ 790,020 | |
Compensatory incentive plans [Member] | ||||
Common Stock (Textual) | ||||
Shares of common stock under compensatory incentive plans | 1,133,916 | |||
2012 Incentive Stock Plan [Member] | ||||
Common Stock (Textual) | ||||
Shares of common stock under compensatory incentive plans | 168,416 | |||
2015 Omnibus Equity Incentive [Member] | ||||
Common Stock (Textual) | ||||
Shares of common stock under compensatory incentive plans | 965,500 | |||
Investors [Member] | ||||
Common Stock (Textual) | ||||
Issuance of common stock and warrants | 1,562,500 | |||
Warrants to purchase of common stock | 781,250 | |||
Share price | $ / shares | $ 1.60 |
Stock Warrants (Details)
Stock Warrants (Details) | 9 Months Ended |
Sep. 30, 2017 | |
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] - $ / shares | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | |
Number | ||
Outstanding and exercisable at beginning of the period | 820,312 | 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 | 820,312 |
Weight average exercise price | ||
Outstanding and exercisable at beginning of the period | $ 1.71 | $ 1.71 |
Issued during the period | ||
Exercised during the period | ||
Cancelled or expired during the period | ||
Outstanding and exercisable at end of the period | 1.71 | 1.71 |
Range of exercise price, lower range limit | 1.70 | 1.70 |
Range of exercise price, upper range limit | $ 2 | $ 2 |
Stock Warrants (Details Textual
Stock Warrants (Details Textual) - Warrant [Member] - USD ($) | Aug. 27, 2014 | Sep. 30, 2017 | Dec. 31, 2016 |
Stock Warrants (Textual) | |||
Issuance of common stock and warrants | 1,562,500 | ||
Warrants to purchase shares of common stock | 781,250 | ||
Exercise price | $ 1.70 | $ 2 | |
Warrants exercisable term | 5 years | ||
Fair value of common stock sold | $ 780,000 | $ 35,191 | |
Aggregate percentage of common stock sold under offering | 2.50% | ||
Aggregate number of shares of common stock sold | 39,062 | ||
Warrants expiration date | Sep. 2, 2019 | Jun. 26, 2019 | |
Aggregated intrinsic value of warrants outstanding and exercisable |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Basic income per share | ||||
Net income for the period - numerator | $ 1,572,335 | $ 3,034,542 | $ 3,296,121 | $ 4,242,251 |
Weighted average common stock outstanding - denominator | 21,450,316 | 21,450,316 | 21,450,316 | 21,404,627 |
Net income per share | $ 0.07 | $ 0.14 | $ 0.15 | $ 0.20 |
Diluted income per share | ||||
Net income for the period - numerator | $ 1,572,335 | $ 3,034,542 | $ 3,296,121 | $ 4,242,251 |
Weighted average common stock outstanding - denominator | 21,450,316 | 21,450,316 | 21,450,316 | 21,404,627 |
Effect of dilution | ||||
Weighted average common stock outstanding - denominator | 21,450,316 | 21,450,316 | 21,450,316 | 21,404,627 |
Diluted income per share | $ 0.07 | $ 0.14 | $ 0.15 | $ 0.20 |
Earnings Per Share (Details Tex
Earnings Per Share (Details Textual) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings Per Share (Textual) | ||||
Warrants shares are excluded from calculations of dilutive net income per share | 820,312 | 820,312 | 820,312 | 820,312 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Provision for Income Taxes | ||||
Current Tax Provision PRC | $ 1,211,668 | $ 1,521,099 | $ 2,993,819 | $ 3,534,967 |
Deferred Tax Provision PRC | (706,503) | (487,240) | (2,034,373) | (1,515,689) |
Total Provision for Income Taxes | $ 505,165 | $ 1,033,859 | $ 1,105,928 | $ 2,077,826 |
Income Taxes (Details 1)
Income Taxes (Details 1) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Schedule of reconciliation of statutory rates to Company's effective tax rate | ||||
PRC Statutory rate | 25.00% | 25.00% | 25.00% | 25.00% |
Effect of different tax jurisdiction | (0.50%) | (0.20%) | (0.30%) | (2.80%) |
Effect of expenses not deductible for PRC tax purposes | 0.30% | (0.10%) | 0.30% | 0.10% |
(Over) Under provision in previous years | (2.40%) | (1.10%) | 0.10% | |
Change in valuation allowance | 1.90% | 0.70% | 1.20% | 10.50% |
Effective income tax rate | 24.30% | 25.40% | 25.10% | 32.90% |
Income Taxes (Details Textual)
Income Taxes (Details Textual) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Taxes (Textual) | ||||
Statutory tax rate | 25.00% | 25.00% | 25.00% | 25.00% |
Effective income tax rate | 24.30% | 25.40% | 25.10% | 32.90% |
Income tax, statute of limitations period | 5 years | |||
United States [Member] | ||||
Income Taxes (Textual) | ||||
Statutory tax rate | 34.00% | |||
State tax rates | 0.00% | |||
PRC [Member] | ||||
Income Taxes (Textual) | ||||
Statutory tax rate | 25.00% |
Stock Incentive Plans (Details)
Stock Incentive Plans (Details) - USD ($) | Jan. 12, 2016 | Aug. 28, 2011 | Dec. 31, 2013 | Aug. 29, 2015 | Sep. 10, 2012 |
Stock Incentive Plans (Textual) | |||||
Shares issued under incentive stock plan | 109,584 | 297,000 | |||
Un-restricted common shares | 1,133,916 | ||||
Share price | $ 1.25 | $ 3.45 | $ 2.66 | ||
Total fair value of stock of grant | $ 1,417,395 | $ 378,065 | $ 790,020 | ||
2011 ISP [Member] | |||||
Stock Incentive Plans (Textual) | |||||
Number of shares authorized for issuance under stock incentive plan | 375,000 | ||||
Shares issued under incentive stock plan | 265,416 | ||||
2012 ISP [Member] | |||||
Stock Incentive Plans (Textual) | |||||
Number of shares authorized for issuance under stock incentive plan | 200,000 | ||||
Shares issued under incentive stock plan | 168,416 | 31,584 | |||
2015 ISP [Member] | |||||
Stock Incentive Plans (Textual) | |||||
Number of shares authorized for issuance under stock incentive plan | 1,500,000 | ||||
Shares issued under incentive stock plan | 965,500 |
Commitments and Contingencies62
Commitments and Contingencies (Details) | Sep. 30, 2017USD ($) |
Schedule of future minimum lease payments of all operating leases | |
2,018 | $ 686,063 |
2,019 | 560,503 |
2,020 | 560,503 |
2,021 | 560,503 |
2,022 | 560,503 |
Thereafter | 2,924,558 |
Total operating lease payments | $ 5,852,633 |
Commitments and Contingencies63
Commitments and Contingencies (Details Textual) | 1 Months Ended | 9 Months Ended | |||||
Nov. 27, 2012USD ($)a | Nov. 27, 2012CNY (¥)a | Sep. 30, 2017USD ($)a | Sep. 30, 2017CNY (¥) | Sep. 30, 2017CNY (¥)a | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | |
Commitments and Contingencies (Textual) | |||||||
Outstanding commitments for construction of equipment and facilities | $ | $ 11,002,635 | $ 13,921,168 | |||||
Performance holdback on new tissue paper payment, description | The Company expected to pay off all the balances within 1 year. | The Company expected to pay off all the balances within 1 year. | |||||
Long-term loan from financial institutions | $ 8,437,674 | ¥ 56,000,000 | $ 8,072,654 | ¥ 56,000,000 | |||
Long-term loan maturity, description | The Company agreed with a third party to guarantee certain obligations of the third party, and as of September 30, 2017 and December 31, 2016, the Company guaranteed the third party's long-term loan from financial institutions amounting to $8,437,674 (RMB56,000,000) and $8,072,654 (RMB56,000,000) that matured at various times in 2018. | The Company agreed with a third party to guarantee certain obligations of the third party, and as of September 30, 2017 and December 31, 2016, the Company guaranteed the third party's long-term loan from financial institutions amounting to $8,437,674 (RMB56,000,000) and $8,072,654 (RMB56,000,000) that matured at various times in 2018. | |||||
Local government in Xushui County [Member] | |||||||
Commitments and Contingencies (Textual) | |||||||
Area of land | 32.95 | 32.95 | |||||
Lease expiration period | 30 years | 30 years | |||||
Lease expiration date | Dec. 31, 2031 | Dec. 31, 2031 | |||||
Operating lease annual rental payment | $ 17,667 | ¥ 120,000 | |||||
Investment company [Member] | |||||||
Commitments and Contingencies (Textual) | |||||||
Area of land | 49.4 | 49.4 | |||||
Lease expiration period | 15 years | 15 years | |||||
Operating lease annual rental payment | $ 530,020 | ¥ 3,600,000 | |||||
Hebei Fangsheng [Member] | |||||||
Commitments and Contingencies (Textual) | |||||||
Lease expiration period | 5 years | 5 years | |||||
Operating lease annual rental payment | $ 147,228 | ¥ 1,000,000 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Summarized financial information for reportable segments | |||||
Revenues | $ 33,507,053 | $ 37,462,066 | $ 81,584,395 | $ 103,368,291 | |
Gross profit (loss) | 7,221,288 | 7,330,843 | 16,339,874 | 17,986,481 | |
Depreciation and amortization | 3,729,002 | 3,716,022 | 10,928,502 | 11,668,976 | |
Loss from disposal of property, plant and equipment | (1,653,039) | (1,665,140) | (25,774) | ||
Interest income | 5,503 | 14,832 | 29,259 | 95,226 | |
Interest expense | 647,963 | 677,576 | 2,023,577 | 2,094,448 | |
Income tax expense(benefit) | 505,165 | 1,033,859 | 1,105,928 | 2,077,826 | |
Net income (loss) | 1,572,335 | 3,034,542 | 3,296,121 | 4,242,251 | |
Total assets | 221,577,120 | 221,577,120 | $ 208,377,618 | ||
Orient Paper HB [Member] | |||||
Summarized financial information for reportable segments | |||||
Revenues | 33,507,053 | 37,397,395 | 81,584,395 | 102,703,977 | |
Gross profit (loss) | 7,221,288 | 7,347,908 | 16,339,874 | 18,376,724 | |
Depreciation and amortization | 3,497,635 | 3,485,154 | 10,247,936 | 10,966,088 | |
Loss from disposal of property, plant and equipment | (1,653,039) | (1,665,140) | (25,774) | ||
Interest income | 3,548 | 14,568 | 25,767 | 94,430 | |
Interest expense | 604,351 | 677,576 | 1,953,379 | 2,094,448 | |
Income tax expense(benefit) | 579,232 | 1,098,270 | 1,402,558 | 2,248,946 | |
Net income (loss) | 1,916,821 | 3,313,671 | 4,350,831 | 6,747,378 | |
Total assets | 191,096,727 | 191,096,727 | 179,689,131 | ||
Orient Paper Shengde [Member] | |||||
Summarized financial information for reportable segments | |||||
Revenues | 64,671 | 664,314 | |||
Gross profit (loss) | (17,065) | (390,243) | |||
Depreciation and amortization | 231,367 | 230,868 | 680,566 | 702,888 | |
Loss from disposal of property, plant and equipment | |||||
Interest income | 1,955 | 264 | 3,492 | 796 | |
Interest expense | 43,612 | 70,198 | |||
Income tax expense(benefit) | (74,067) | (64,411) | (296,630) | (171,120) | |
Net income (loss) | (225,778) | (196,558) | (516,705) | (559,747) | |
Total assets | 30,480,117 | 30,480,117 | 28,687,027 | ||
Not Attributable to Segments [Member] | |||||
Summarized financial information for reportable segments | |||||
Revenues | |||||
Gross profit (loss) | |||||
Depreciation and amortization | |||||
Loss from disposal of property, plant and equipment | |||||
Interest income | |||||
Interest expense | |||||
Income tax expense(benefit) | |||||
Net income (loss) | (118,708) | (82,571) | (538,005) | (1,945,380) | |
Total assets | 276 | 276 | 1,460 | ||
Elimination of Inter-segment [Member] | |||||
Summarized financial information for reportable segments | |||||
Revenues | |||||
Gross profit (loss) | |||||
Depreciation and amortization | |||||
Loss from disposal of property, plant and equipment | |||||
Interest income | |||||
Interest expense | |||||
Income tax expense(benefit) | |||||
Net income (loss) | |||||
Total assets | |||||
Enterprise-wide, consolidated [Member] | |||||
Summarized financial information for reportable segments | |||||
Revenues | 33,507,053 | 37,462,066 | 81,584,395 | 103,368,291 | |
Gross profit (loss) | 7,221,288 | 7,330,843 | 16,339,874 | 17,986,481 | |
Depreciation and amortization | 3,729,002 | 3,716,022 | 10,928,502 | 11,668,976 | |
Loss from disposal of property, plant and equipment | (1,653,039) | (1,665,140) | (25,774) | ||
Interest income | 5,503 | 14,832 | 29,259 | 95,226 | |
Interest expense | 647,963 | 677,576 | 2,023,577 | 2,094,448 | |
Income tax expense(benefit) | 505,165 | 1,033,859 | 1,105,928 | 2,077,826 | |
Net income (loss) | 1,572,335 | $ 3,034,542 | 3,296,121 | $ 4,242,251 | |
Total assets | $ 221,577,120 | $ 221,577,120 | $ 208,377,618 |
Segment Reporting (Details Text
Segment Reporting (Details Textual) | 9 Months Ended |
Sep. 30, 2017Customers | |
Segment Reporting (Textual) | |
Number of business operating segments | 2 |
Number of reportable segment | 2 |
Concentration and Major Custo66
Concentration and Major Customers and Suppliers (Details) - Customers | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Concentration and Major Customers and Suppliers (Textual) | ||||
Number of major suppliers | 3 | 3 | 3 | 3 |
Number of customer contributed over 10% of total sales | ||||
Sales [Member] | ||||
Concentration and Major Customers and Suppliers (Textual) | ||||
Percentage of revenue | 10.00% | 10.00% | 10.00% | 10.00% |
Supplier One [Member] | ||||
Concentration and Major Customers and Suppliers (Textual) | ||||
Percentage of revenue | 83.00% | 63.00% | 66.00% | 63.00% |
Supplier Two [Member] | ||||
Concentration and Major Customers and Suppliers (Textual) | ||||
Percentage of revenue | 7.00% | 14.00% | 11.00% | 10.00% |
Supplier Three [Member] | ||||
Concentration and Major Customers and Suppliers (Textual) | ||||
Percentage of revenue | 4.00% | 8.00% | 6.00% | 7.00% |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details) | May 01, 2015USD ($) | May 01, 2015CNY (¥) | Sep. 30, 2017USD ($) | Sep. 30, 2017CNY (¥) |
Concentration of Credit Risk (Textual) | ||||
Federal deposit insurance corporation | $ 75,336 | ¥ 500,000 | $ 12,219,812 | ¥ 81,101,668 |
Maximum coverage [Member] | ||||
Concentration of Credit Risk (Textual) | ||||
Federal deposit insurance corporation | ¥ 500,000 |
Recent Accounting Pronounceme68
Recent Accounting Pronouncements (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Recent Accounting Pronouncements (Textual) | ||
Restricted cash | $ 6,026,910 | $ 2,162,318 |