Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 14, 2020 | |
Document Information Line Items | ||
Entity Registrant Name | IT TECH PACKAGING, INC. | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 28,454,816 | |
Amendment Flag | false | |
Entity Central Index Key | 0001358190 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Mar. 31, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity File Number | 001-34577 | |
Entity Address, State or Province | NV | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Current Assets | ||
Cash and bank balances | $ 11,712,152 | $ 5,837,745 |
Restricted cash | ||
Accounts receivable (net of allowance for doubtful accounts of $36,645 and $59,922 as of March 31, 2020 and December 2019, respectively) | 1,795,671 | 3,119,311 |
Inventories | 1,951,376 | 1,607,463 |
Prepayments and other current assets | 6,054,096 | 11,613,241 |
Due from related parties | 120,744 | 1,863,479 |
Total current assets | 21,634,039 | 24,041,239 |
Prepayment on property, plant and equipment | 1,411,413 | 1,433,445 |
Property, plant, and equipment, net | 145,805,724 | 151,616,852 |
Value-added tax recoverable | 2,547,211 | 2,621,841 |
Deferred tax asset non-current | 10,857,911 | 10,485,053 |
Total Assets | 182,256,298 | 190,198,430 |
Current Liabilities | ||
Short-term bank loans | 6,069,075 | 6,163,814 |
Current portion of long-term loans from credit union | 1,580,782 | 1,605,459 |
Accounts payable | 205,769 | 250,486 |
Advance from customers | 151,016 | 98,311 |
Notes payable | ||
Due to related parties | 617,433 | 539,985 |
Accrued payroll and employee benefits | 225,993 | 291,924 |
Other payables and accrued liabilities | 5,182,548 | 6,503,010 |
Income taxes payable | 1,382,471 | |
Total current liabilities | 14,032,616 | 16,835,460 |
Loans from credit union | 7,254,661 | 7,367,908 |
Loans from a related party | ||
Other long-term payable | ||
Total liabilities (including amounts of the consolidated VIE without recourse to the Company of $16,342,512 and $19,460,257 as of March 31, 2020 and December 31, 2019, respectively) | 21,287,277 | 24,203,368 |
Commitments and Contingencies | ||
Stockholders’ Equity | ||
Common stock, 500,000,000 shares authorized, $0.001 par value per share, 22,054,816 shares issued | 22,685 | 22,685 |
Additional paid-in capital | 51,154,544 | 51,154,544 |
Statutory earnings reserve | 6,080,574 | 6,080,574 |
Accumulated other comprehensive loss | (8,647,291) | (6,057,537) |
Retained earnings | 112,358,509 | 114,794,796 |
Total stockholders’ equity | 160,969,021 | 165,995,062 |
Total Liabilities and Stockholders’ Equity | $ 182,256,298 | $ 190,198,430 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Allowance for doubtful accounts | $ 36,645 | $ 59,922 |
Consolidated VIE, liabilities | $ 16,342,512 | $ 19,460,257 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 22,054,816 | 22,054,816 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues | $ 8,743,851 | $ 17,450,292 |
Cost of sales | (8,913,570) | (17,642,758) |
Gross Loss | (169,719) | (192,466) |
Selling, general and administrative expenses | (2,696,963) | (2,981,473) |
Loss from Operations | (2,866,682) | (3,173,939) |
Other Income (Expense): | ||
Interest income | 5,790 | 58,818 |
Subsidy income | 142,998 | |
Interest expense | (244,718) | (255,269) |
Loss before Income Taxes | (2,962,612) | (3,370,390) |
Provision for Income Taxes | 526,325 | 647,795 |
Net Loss | (2,436,287) | (2,722,595) |
Other Comprehensive (Loss) Income | ||
Foreign currency translation adjustment | (2,589,754) | 3,293,680 |
Total Comprehensive (Loss) Income | $ (5,026,041) | $ 571,085 |
Losses Per Share: | ||
Basic and Diluted Losses per Share (in Dollars per share) | $ (0.11) | $ (0.12) |
Outstanding - Basic and Diluted (in Shares) | 22,054,816 | 22,022,316 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash Flows from Operating Activities: | ||
Net income | $ (2,436,287) | $ (2,722,595) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 3,774,674 | 3,930,060 |
Allowance for bad debts | (22,650) | (10,704) |
Deferred tax | (541,042) | (647,795) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,315,128 | 535,220 |
Prepayments and other current assets | 5,486,216 | 187,711 |
Inventories | (373,470) | (1,181,371) |
Accounts payable | (41,405) | 1,009,834 |
Advance from customers | 54,930 | |
Notes payable | (3,726,504) | |
Related parties | 1,814,228 | 37,265 |
Accrued payroll and employee benefits | (62,252) | 87,823 |
Other payables and accrued liabilities | (728,633) | (326,741) |
Income taxes payable | (1,379,130) | (224,355) |
Net Cash Provided by (Used in) Operating Activities | 6,860,307 | (3,052,152) |
Cash Flows from Investing Activities: | ||
Purchases of property, plant and equipment | (756,514) | (1,415,761) |
Net Cash Used in Investing Activities | (756,514) | (1,415,761) |
Cash Flows from Financing Activities: | ||
Proceeds from short term bank loans | 4,024,625 | |
Repayment of bank loans | (9,390,791) | |
Net Cash Used in Financing Activities | (5,366,166) | |
Effect of Exchange Rate Changes on Cash and Cash Equivalents | (229,386) | 341,713 |
Net Increase (Decrease) in Cash and Cash Equivalents | 5,874,407 | (9,492,366) |
Cash, Cash Equivalents and Restricted Cash - Beginning of Period | 5,837,745 | 12,117,425 |
Cash, Cash Equivalents and Restricted Cash - End of Period | 11,712,152 | 2,625,059 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest, net of capitalized interest cost | 116,019 | 230,953 |
Cash paid for income taxes | 1,379,130 | 224,355 |
Cash and bank balances | 11,712,152 | 2,625,059 |
Restricted cash | ||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | $ 11,712,152 | $ 2,625,059 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - 3 months ended Mar. 31, 2020 - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Statutory Earnings Reserve | AOCI Attributable to Parent [Member] | Retained Earnings [Member] | Total |
Balance at Dec. 31, 2019 | $ 22,685 | $ 51,154,544 | $ 6,080,574 | $ (6,057,537) | $ 114,794,796 | $ 165,995,062 |
Balance (in Shares) at Dec. 31, 2019 | 22,054,816 | |||||
Foreign currency translation adjustment | (2,589,754) | (2,589,754) | ||||
Net loss | (2,436,287) | (2,436,287) | ||||
Balance at Mar. 31, 2020 | $ 22,685 | $ 51,154,544 | $ 6,080,574 | $ (8,647,291) | $ 112,358,509 | $ 160,969,021 |
Balance (in Shares) at Mar. 31, 2020 | 22,054,816 |
Organization and Business Backg
Organization and Business Background | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | (1) Organization and Business Background IT Tech Packaging, Inc. (the “Company”) 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 Dongfang Paper Milling Company Limited (“Dongfang Paper”), 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.”. Effective on August 1, 2018, we changed our corporate name to IT Tech Packaging, Inc.. The name change was effected through a parent/subsidiary short-form merger of IT Tech Packaging, Inc., our wholly-owned Nevada subsidiary formed solely for the purpose of the name change, with and into us. We were the surviving entity. In connection with the name change, our common stock began being traded under a new NYSE symbol, “ITP,” and a new CUSIP number, 46527C100, at such time. 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 Dongfang Paper and such shares of Dongfang Paper were held in trust with Zhenyong Liu, Xiaodong Liu and Shuangxi Zhao, for Mr. Liu, Mr. Liu and Mr. Zhao (the original shareholders of Dongfang Paper) to exercise control over the disposition of Dongfang Holding’s shares in Dongfang Paper on Dongfang Holding’s behalf until Dongfang Holding successfully completed the change in registration of Dongfang Paper’s capital with the relevant PRC Administration of Industry and Commerce as the 100% owner of Dongfang Paper’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, Dongfang Paper, became an indirectly owned subsidiary of the Company. Dongfang Holding, as the 100% owner of Dongfang Paper, was unable to complete the registration of Dongfang Paper’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 Dongfang Paper to their original shareholders, and the original Dongfang Paper shareholders entered into certain agreements with Baoding Shengde Paper Co., Ltd. (“Baoding Shengde”) to transfer the control of Dongfang Paper over to Baoding 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 Baoding Shengde, a limited liability company organized under the laws of the PRC. Because Baoding 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 Dongfang Paper with certain PRC regulations, on June 24, 2009, the Company entered into a series of contractual agreements (the “Contractual Agreements”) with Dongfang Paper and Dongfang Paper Equity Owners via the Company’s wholly owned subsidiary Shengde Holdings Inc (“Shengde Holdings”) a Nevada corporation and Baoding Shengde Paper Co., Ltd. (“Baoding 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). Baoding 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 Baoding Shengde shall provide exclusive technical, business and management consulting services to Dongfang Paper, in exchange for service fees including a fee equivalent to 80% of Dongfang Paper’s total annual net profits; (ii) Loan Agreement, which provides that Baoding Shengde will make a loan in the aggregate principal amount of $10,000,000 to Dongfang Paper Equity Owners in exchange for each such shareholder agreeing to contribute all of its proceeds from the loan to the registered capital of Dongfang Paper; (iii) Call Option Agreement, which generally provides, among other things, that Dongfang Paper Equity Owners irrevocably grant to Baoding Shengde an option to purchase all or part of each owner’s equity interest in Dongfang Paper. The exercise price for the options shall be RMB1 which Baoding Shengde should pay to each of Dongfang Paper Equity Owner for all their equity interests in Dongfang Paper; (iv) Share Pledge Agreement, which provides that Dongfang Paper Equity Owners will pledge all of their equity interests in Dongfang Paper to Baoding Shengde as security for their obligations under the other agreements described in this section. Specifically, Baoding Shengde is entitled to dispose of the pledged equity interests in the event that Dongfang Paper Equity Owners breach their obligations under the Loan Agreement or Dongfang Paper fails to pay the service fees to Baoding Shengde pursuant to the Exclusive Technical Service and Business Consulting Agreement; and (v) Proxy Agreement, which provides that Dongfang Paper Equity Owners shall irrevocably entrust a designee of Baoding 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 Dongfang Paper or with respect to any equity owner action to be taken in accordance with the laws and Dongfang Paper’s Articles of Association. The terms of the agreement are binding on the parties for as long as Dongfang Paper Equity Owners continue to hold any equity interest in Dongfang Paper. An Dongfang Paper Equity Owner will cease to be a party to the agreement once it transfers its equity interests with the prior approval of Baoding Shengde. As the Company had controlled Dongfang Paper since July 16, 2007 through Dongfang Holding and the trust until June 24, 2009, and continued to control Dongfang Paper through Baoding Shengde and the Contractual Agreements, the execution of the Contractual Agreements is considered as a business combination under common control. On February 10, 2010, Baoding Shengde and the Dongfang Paper 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 Baoding Shengde instead of Dongfang Paper, 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 Dongfang Paper and its businesses in the PRC. An agreement was also entered into among Baoding Shengde, Dongfang Paper and the Dongfang Paper Equity Owners on December 31, 2010, reiterating that Baoding Shengde is entitled to 100% of the distributable profit of Dongfang Paper, pursuant to the above mentioned Contractual Agreements. In addition, Dongfang Paper and the Dongfang Paper Equity Owners shall not declare any of Dongfang Paper’s unappropriated earnings as dividend, including the unappropriated earnings of Dongfang Paper from its establishment to 2010 and thereafter. On June 25, 2019, Dongfang Paper entered into an acquisition agreement with shareholder of Hebei Tengsheng Paper Co., Ltd.(“Hebei Tengsheng”), a limited liability company organized under the laws of the PRC, pursuant to which Dongfang Paper will acquire Hebei Tengsheng. Upon full payment of the consideration in the amount of RMB 320 million (approximately $45 million), Hebei Tengsheng will become a wholly owned subsidiary of Dongfang Paper that manufactures and sells tissue paper products. The Company has no direct equity interest in Dongfang Paper. However, through the Contractual Agreements described above, the Company is found to be the primary beneficiary (the “Primary Beneficiary”) of Dongfang Paper and is deemed to have the effective control over Dongfang Paper’s activities that most significantly affect its economic performance, resulting in Dongfang Paper being treated as a controlled variable interest entity of the Company 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 Dongfang Paper for the three months ended March 31, 2020 and 2019 was accounted for 100% of the Company’s total revenue. Dongfang Paper also accounted for 90.02% and 91.01% of the total assets of the Company as of March 31, 2020 and December 31, 2019, respectively. As of March 31, 2020 and December 31, 2019, details of the Company’s subsidiaries and variable interest entities are as follows: Date of Place of Incorporation 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 Baoding Shengde June 1, 2009 PRC 100 % Paper production and distribution Variable interest entity (“VIE”): Dongfang Paper March 10, 1996 PRC Control* Paper production and distribution * Dongfang Paper 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 Dongfang Paper in the table below. The aggregate carrying value of Dongfang Paper’s assets and liabilities (after elimination of intercompany transactions and balances) in the Company’s condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019 are as follows: March 31, December 31, 2020 2019 (Unaudited) ASSETS Current Assets Cash and bank balances $ 9,786,499 $ 5,675,374 Restricted cash - - Accounts receivable 1,795,671 3,119,312 Inventories 1,947,019 1,603,038 Prepayments and other current assets 6,051,551 11,610,576 Due from related parties 120,744 1,863,479 Total current assets 19,701,484 23,871,779 Prepayment on property, plant and equipment 1,411,413 1,433,445 Property, plant, and equipment, net 133,697,308 138,920,440 Deferred tax asset non-current 9,257,440 8,869,385 Total Assets $ 164,067,645 $ 173,095,049 LIABILITIES Current Liabilities Short-term bank loans $ 6,069,075 $ 6,163,814 Current portion of long-term loans from credit union 310,511 315,358 Accounts payable 205,768 250,486 Due to related parties 56,552 Accrued payroll and employee benefits 224,922 287,584 Other payables and accrued liabilities 5,100,400 6,502,974 Income taxes payable - 1,382,471 Total current liabilities 11,910,676 14,959,239 Loans from credit union 4,431,836 4,501,018 Total liabilities $ 16,342,512 $ 19,460,257 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 | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block] | (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 Principles of Consolidation Our unaudited condensed consolidated financial statements reflect all adjustments, which are, in the opinion of management, necessary for a fair presentation of our financial position and results of operations. Such adjustments are of a normal recurring nature, unless otherwise noted. The balance sheet as of March 31, 2020 and the results of operations for the three months ended March 31, 2020 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 March 31, 2020 and December 31, 2019, 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 March 31, 2020 and December 31, 2019. 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 | 3 Months Ended |
Mar. 31, 2020 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents Disclosure [Text Block] | (3) Restricted Cash Restricted cash was nil as of March 31, 2020 and December 31, 2019. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventory Disclosure [Text Block] | (4) Inventories Raw materials inventory includes mainly recycled paper board and recycled white scrap paper. Finished goods include mainly products of corrugating medium paper, offset printing paper and tissue paper products. Inventories consisted of the following as of March 31, 2020 and December 31, 2019: March 31, December 31, 2020 2019 Raw Materials Recycled paper board $ 727,392 $ 40,032 Recycled white scrap paper 10,379 10,541 Coal & gas 45,691 41,675 Base paper and other raw materials 235,931 293,935 1,019,392 386,183 Semi-finished Goods 145,259 83,266 Finished Goods 855,431 1,212,849 Total inventory, gross 2,020,083 1,682,298 Inventory reserve (68,706 ) (74,835 ) Total inventory, net $ 1,951,376 $ 1,607,463 |
Prepayments and Other Current A
Prepayments and Other Current Assets | 3 Months Ended |
Mar. 31, 2020 | |
Prepayments and Other Current Assets [Abstract] | |
Prepayments and Other Current Assets [Text Block] | (5) Prepayments and other current assets Prepayments and other current assets consisted of the following as of March 31, 2020 and December 31, 2019: March 31, December 31, 2020 2019 Prepaid land lease $ 169,370 $ 301,023 Prepayment for purchase of materials 218,785 5,394,297 Value-added tax recoverable 5,579,872 5,666,975 Others 86,069 250,946 $ 6,054,096 $ 11,613,241 |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment Disclosure [Text Block] | (6) Property, plant and equipment, net As of March 31, 2020 and December 31, 2019, property, plant and equipment consisted of the following: March 31, December 31, 2020 2019 Property, Plant, and Equipment: Land use rights $ 11,509,449 $ 11,689,114 Building and improvements 69,723,406 70,811,803 Machinery and equipment 150,603,073 152,954,020 Vehicles 578,771 587,806 Construction in progress 6,546,542 6,399,986 Totals 238,961,241 242,442,729 Less: accumulated depreciation and amortization (93,155,517 ) (90,825,877 ) Property, Plant and Equipment, net $ 145,805,724 $ 151,616,852 As of March 31, 2020 and December 31, 2019, land use rights represented two parcel of state-owned lands located in Xushui District and Wei County of Hebei Province in China, with lease terms of 50 years expiring in 2061 and 2066, respectively. Construction in progress mainly represents payments for improvement of the office building and essentially all industrial-use buildings in the Headquarters Compound (the “Industrial Buildings”). As of March 31, 2020 and December 31, 2019, certain property, plant and equipment of Dongfang Paper with net values of $3,443,097 and $3,935,270, respectively, have been pledged pursuant to a long-term loan from credit union for Dongfang Paper. Land use right of Dongfang Paper with net values of $5,635,572 and $5,757,546 as of March 31, 2020 and December 31, 2019, respectively, was pledged for the bank loan from Industrial & Commercial Bank of China. Land use right of Hebei Tengsheng with net value of $5,120,520 and $5,200,452 as of March 31, 2020 and December 31, 2019, respectively, was pledged for a long-term loan from credit union of Baoding Shengde. In addition, land use right of Hebei Tengsheng with net value of $7,933,093 and $8,056,930 as of March 31, 2020 and December 31, 2019, respectively, was pledged for another long-term loan from credit union of Baoding Shengde. See “ Short-term bank loans Long-term loans from credit union Depreciation and amortization of property, plant and equipment was $3,774,674 and $3,930,060 for the three months ended March 31, 2020 and 2019, respectively. |
Loans Payable
Loans Payable | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | (7) Loans Payable Short-term bank loans March 31, December 31, 2020 2019 Industrial and Commercial Bank of China (“ICBC”) Loan 1 (a) $ 6,069,075 $ 6,163,814 Total short-term bank loans $ 6,069,075 $ 6,163,814 On December 20, 2019, the Company entered into a working capital loan agreement with the ICBC, with a balance of $6,069,075 $6,163,814 as of March 31, 2020 and December 31, 2019, respectively. The working capital loan was secured by land use right of Hebei Tengsheng as collateral for the benefit of the bank. The loan bears a fixed interest rate of 4.785% per annum. The loan will be due and repaid by December 23, 2020. As of March 31, 2020, there were guaranteed short-term borrowings of $6,069,075 and unsecured bank loans of $nil. As of December 31, 2019, there were guaranteed short-term borrowings of $6,163,814 and unsecured bank loans of $nil. The average short-term borrowing rates for the three months ended March 31, 2020 and 2019 were approximately 4.79% and 4.76%, respectively. Long-term loans from credit union As of March 31, 2020 and December 31, 2019, loans payable to Rural Credit Union of Xushui District, amounted to $8,835,443 and $8,973,367, respectively. March 31, December 31, 2020 2019 Rural Credit Union of Xushui District Loan 1 $ 1,213,815 $ 1,232,763 Rural Credit Union of Xushui District Loan 2 3,528,532 3,583,613 Rural Credit Union of Xushui District Loan 3 2,258,260 2,293,512 Rural Credit Union of Xushui District Loan 4 1,834,836 1,863,479 Total 8,835,443 8,973,367 Less: Current portion of long-term loans from credit union (1,580,782 ) (1,605,459 ) Long-term loans from credit union $ 7,254,661 $ 7,367,908 As of March 31, 2020, the Company’s long-term debt repayments for the next five years were as follows: Amount Fiscal year Remainder of 2020 $ 1,580,782 2021 3,020,423 2022 1,552,554 2023 2,681,684 Total 8,835,443 On April 16, 2014, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 5 years, which was originally due 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 0.64% per month. On November 6, 2018, the loan was renewed for additional 5 years and will be due and payable in various installments from December 21, 2018 to November 5, 2023. As of March 31, 2020 and December 31, 2019, total outstanding loan balance was $1,213,815 and $1,232,763, respectively. Out of the total outstanding loan balance, current portion amounted were $141,141 and $143,345 as of March 31, 2020 and December 31, 2019, respectively, which are presented as current liabilities in the consolidated balance sheet and the remaining balance of $1,072,674 and $1,089,418 are presented as non-current liabilities in the consolidated balance sheet as of March 31, 2020 and December 31, 2019, respectively. On July 15, 2013, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 5 years, which was originally due and payable in various installments from December 21, 2013 to July 26, 2018. On June 21, 2018, the loan was extended for additional 5 years and will be due and payable in various installments from December 21, 2018 to June 20, 2023. The loan is secured by certain of the Company’s manufacturing equipment with net book value of $3,443,097 and $3,935,270 as of March 31, 2020 and December 31, 2019, respectively. Interest payment is due quarterly and bears a fixed rate of 0.64% per month. As of March 31, 2020 and December 31, 2019, the total outstanding loan balance was $3,528,532 and $3,583,613, respectively. Out of the total outstanding loan balance, current portion amounted were $169,370 and $172,013 as of March 31, 2020 and December 31, 2019, respectively, which are presented as current liabilities in the consolidated balance sheet and the remaining balance of $3,359,162 and $3,411,600 are presented as non-current liabilities in the consolidated balance sheet as of March 31, 2020 and December 31, 2019, respectively. On April 17, 2019, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 2 years, which was due and payable in various installments from August 21, 2019 to April 16, 2021. The loan is secured by Hebei Tengsheng with its land use right 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 March 31, 2020 and December 31, 2019, the total outstanding loan balance was $2,258,260 and $2,293,512, respectively. Out of the total outstanding loan balance, current portion amounted were $1,129,130 and $1,146,756 as of March 31, 2020 and December 31, 2019, respectively, which are presented as current liabilities in the consolidated balance sheet and the remaining balance of $1,129,130 and $1,146,756 are presented as non-current liabilities in the consolidated balance sheet as of March 31, 2020 and December 31, 2019, respectively. On December 12, 2019, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 2 years, which was due and payable in various installments from June 21, 2020 to December 11, 2021. The loan is secured by Hebei Tengsheng with its land use right as collateral for the benefit of the bank. Interest payment is due monthly and bears a fixed rate of 7.56% per annum. As of March 31, 2020 and December 31, 2019, the total outstanding loan balance was $1,834,836 and $1,863,479, respectively. Out of the total outstanding loan balance, current portion amounted were $141,141 and $143,345 as of March 31, 2020 and December 31, 2019, respectively, which are presented as current liabilities in the consolidated balance sheet and the remaining balance of $1,693,695 and $1,720,134 are presented as non-current liabilities in the consolidated balance sheet as of March 31, 2020 and December 31, 2019, respectively. Total interest expenses for the short-term bank loans and long-term loans for the three months ended March 31, 2020 and 2019 were $244,718 and $230,953, respectively. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | (8) Related Party Transactions Mr. Zhenyong Liu, the Company’s CEO has loaned money to Dongfang Paper for working capital purposes over a period of time. On January 1, 2013, Dongfang Paper 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 $361,793 and $367,441 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 March 31, 2020 and December 31, 2019, respectively. On December 10, 2014, Mr. Zhenyong Liu provided a loan to the Company, amounted to $8,483,083 to Dongfang Paper for working capital purpose with an interest rate of 4.35% 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. In February 2018, the company paid off the remaining balance, together with interest of $20,400. As of March 31, 2020 and December 31, 2019, approximately $42,342 and $43,003 of interest were outstanding to Mr. Zhenyong Liu, 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 Dongfang Paper to borrow from the CEO an amount up to $16,936,952 (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 $4,324,636 was drawn from the facility. On October 14, 2016 an unsecured amount of $2,883,091 was drawn from the facility. In February 2018, the company repaid $1,507,432 to Mr. Zhenyong Liu. 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. On November 23, 2018, the company repaid $3,768,579 to Mr. Zhenyong Liu, together with interest of $158,651. In December 2019, the company paid off the remaining balance, together with interest of 94,636. As of March 31, 2020 and December 31, 2019, the outstanding loan balance were $nil and the accrued interest was $193,981 and $197,009, respectively, which was recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet. As of March 31, 2020 and December 31, 2019, total amount of loans due to Mr. Zhenyong Liu were $nil. The interest expense incurred for such related party loans are $nil and $24,316 for the three months ended March 31, 2020 and 2019, respectively. The accrued interest owed to the CEO was approximately $598,116 and $607,453, as of March 31, 2020 and December 31, 2019, respectively, which was recorded in other payables and accrued liabilities. As of March 31, 2020 and December 31, 2019, amount due to shareholder are $617,433 and $483,433, respectively, which represents funds from shareholders to pay for various expenses incurred in the U.S. The amount is due on demand with interest free. 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 $142,998 (RMB1,000,000). The lease agreement expired in August 2016. On August 6, 2016 and August 6, 2018, the Company entered into two supplementary agreements with Hebei Fangsheng, who agreed to extend the lease term for another four years in total, with the same rental payment as original lease agreement. |
Other Payables and Accrued Liab
Other Payables and Accrued Liabilities | 3 Months Ended |
Mar. 31, 2020 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Liabilities Disclosure [Text Block] | (9) Other payables and accrued liabilities Other payables and accrued liabilities consist of the following: March 31, December 31, 2020 2019 Accrued electricity $ 79,199 $ 129,466 Value-added tax payable 122,423 854,728 Accrued interest to a related party 598,116 607,453 Payable for purchase of equipment 3,373,783 3,936,047 Accrued commission to salesmen 7,545 17,162 Accrued bank loan interest 127,027 - Others 874,455 958,154 Totals $ 5,182,548 $ 6,503,010 |
Common Stock
Common Stock | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity Note Disclosure [Text Block] | (10) 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. 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 (14), Stock Incentive Plans for more details. Total fair value of the stock was calculated at $1,417,395 as of the date of grant. On September 13, 2018, the compensation committee granted an aggregate of 534,500 shares of common stock at $0.88 per share to fifteen officers, directors and employees of the Company, which were granted under the 2015 Omnibus Equity Incentive Plan. Total fair value of the shares of common stock granted was calculated at $470,360 as of the date of issuance. Issuance of common stock to Weitian On October 15, 2018, the Company entered an agreement with Weitian Group LCC (“Weitian”) and agreed as compensation to issue to Weitian in the aggregate of 70,000 shares of common stock for investor relation consulting service rendered from October 15, 2018 to October 15, 2019. 37,500 shares of common stock were issued to Weitian on November 12, 2018. Total fair value of the shares of common stock granted was calculated at $32,625 at $0.87 per share. 32,500 shares of common stock were issued to Weitian on August 13, 2019. Total fair value of the shares of common stock granted was calculated at $17,550 at $0.54 per share. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share [Text Block] | (11) Earnings Per Share For the three months ended March 31, 2020 and 2019, basic and diluted net income per share are calculated as follows: Three Months Ended 2020 2019 Basic loss per share Net loss for the period - numerator $ (2,436,287 ) $ (2,722,595 ) Weighted average common stock outstanding - denominator 22,054,816 22,022,316 Net loss per share $ (0.11 ) $ (0.12 ) Diluted income per share Net income for the period- numerator $ (2,436,287 ) $ (2,722,595 ) Weighted average common stock outstanding - denominator 22,054,816 22,022,316 Effect of dilution - - Weighted average common stock outstanding - denominator 22,054,816 22,022,316 Diluted loss per share $ (0.11 ) $ (0.12 ) For the three months ended March 31, 2020 and 2019 there were no securities with dilutive effect issued and outstanding. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | (12) Income Taxes United States The Company 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. On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “2017 TCJAAct”), which significantly changed U.S. tax law. The Act 2017 TCJA lowered the Company’s U.S. statutory federal income tax rate from the highest rate of 35% to 21% effective January 1, 2018, while also imposing a deemed repatriation tax on deferred foreign income which requires companies to pay a one-time transition tax on previously unremitted earnings of non-U.S. subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. The SEC staff issued Staff Accounting Bulletin (SAB) 118, which provides guidance on accounting for enactment effects of the 2017 TCJA. SAB 118 provides a measurement period of up to one year from the 2017 TCJA’s enactment date for companies to complete their accounting under ASC 740. In accordance with SAB 118, to the extent that a company’s accounting for certain income tax effects of the 2017 TCJA is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in its financial statements. If a company cannot determine a provisional estimate to be included in its financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the 2017 TCJA. In connection with the Company’s initial analysis of the impact of the enactment of the 2017 TCJA, the Company recorded a net tax expense of approximately $80,000 in the fourth quarter of 2017. For various reasons that are discussed more fully below, including the issuance of additional technical and interpretive guidance, the Company has not completed its accounting for the income tax effects of certain elements of the 2017 TCJA. However, with respect to the following, the Company was able to make reasonable estimates of the 2017 TCJA’s effects and, as such, recorded provisional amounts: Transition tax: The transition tax is a tax on previously untaxed accumulated and current earnings and profits (E&P) of certain of the Company’s non-U.S. subsidiaries. To determine the amount of the transition tax, the Company must determine, in addition to other factors, the amount of post-1986 E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. The Company was able to make a reasonable estimate of the transition tax and recorded a provisional obligation and additional income tax expense of approximately $80,000 in the fourth quarter of 2017. However, the Company is continuing to gather additional information and will consider additional technical guidance to more precisely compute and account for the amount of the transition tax. This amount may change when the Company finalizes the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and finalizes the amounts held in cash or other specified assets. The 2017 TCJA’s transition tax is payable over eight years beginning in 2018. Hence, the Company only provided $6,528 for the year ended 31 December 2017. PRC Dongfang Paper and Baoding Shengde are PRC operating companies and are subject to PRC Enterprise Income Tax. Pursuant to the PRC New Enterprise Income Tax Law, Enterprise Income Tax is generally imposed at a statutory rate of 25%. The provisions for income taxes for three months ended March 31, 2020 and 2019 were as follows: Three Months Ended March 31, 2020 2019 Provision for Income Taxes Current Tax Provision U.S. $ 14,717 $ - Current Tax Provision PRC - - Deferred Tax Provision PRC (541,042 ) (647,795 ) Total Provision for (Deferred tax benefit)/ Income Taxes $ (526,325 ) $ (647,795 ) In addition to the reversible future PRC income tax benefits stemming from the timing differences of items such as recognition of asset disposal gain or loss and asset depreciation, the Company was incorporated in the United States and incurred aggregate net operating losses of approximately $nil and $6,710,939 for U.S. income tax purposes for the years ended December 31, 2018 and 2017, respectively. The net operating loss carried forward may be available to reduce future years’ taxable income. These carry forwards would expire, if not utilized, during the period of 2030 through 2035. As of December 31, 2019, management believed that the realization of all the U.S. income tax benefits from these losses, which generally would generate a deferred tax asset if it can be expected to be utilized in the future, appears not more than likely due to the Company’s limited operating history and continuing losses for United States income tax purposes. Accordingly, As of December 31, 2019, the Company provided a 100% valuation allowance on the U.S. deferred tax asset benefit to reduce the total deferred tax asset to the amount realizable for the PRC income tax purposes. Management reviews this valuation allowance periodically and will make adjustments as warranted. A summary of the otherwise deductible (or taxable) deferred tax items is as follows: March 31, December 31, 2020 2019 Deferred tax assets (liabilities) Depreciation and amortization of property, plant and equipment $ 9,699,121 $ 9,277,009 Impairment of property, plant and equipment 509,875 521,803 Miscellaneous 413,352 277,511 Net operating loss carryover of PRC company 235,563 408,730 Total deferred tax assets 10,857,911 10,485,053 Less: Valuation allowance - - Total deferred tax assets, net $ 10,857,911 $ 10,485,053 The following table reconciles the statutory rates to the Company’s effective tax rate for: Three Months Ended March 31 2020 2019 PRC Statutory rate 25.0 % 25.0 % Effect of different tax jurisdiction - - Effect of reconciling items in the PRC for tax purposes (7.2 ) 2.2 Change in valuation allowance - (8.0 ) Effective income tax rate 17.8 % 19.2 % During the three months ended March 31, 2020 and 2019, the effective income tax rate was estimated by the Company to be 17.8% and 19.2%, respectively. As of December 31, 2017, except for the one-time transition tax under the 2017 TCJA which imposes a U.S. tax liability on all unrepatriated foreign E&Ps, the Company does not believe that its future dividend policy and the available U.S. tax deductions and net operating losses will cause the Company to recognize any other substantial current U.S. federal or state corporate income tax liability in the near future. Nor does it believes that the amount of the repatriation of the VIE’s earnings and profits for purposes of paying dividends will change the Company’s position that its PRC subsidiary Baoding Shengde and the VIE, Dongfang Paper are considered or are expected to be indefinitely reinvested offshore to support our future capacity expansion. If these earnings are repatriated to the U.S. resulting in U.S. taxable income in the future, or if it is determined that such earnings are to be remitted in the foreseeable future, additional tax provisions would be required. The Company has adopted ASC Topic 740-10-05, Income Taxes. To date, the adoption of this interpretation has not impacted the Company’s financial position, results of operations, or cash flows. The Company performed self-assessment and the Company’s liability for income taxes includes the liability for unrecognized tax benefits, interest and penalties which relate to tax years still subject to review by taxing authorities. Audit periods remain open for review until the statute of limitations has passed, which in the PRC is usually 5 years. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of December 31, 2019 and 2018, management considered that the Company had no uncertain tax positions affecting its consolidated financial position and results of operations or cash flows, and will continue to evaluate for any uncertain position in future. There are no estimated interest costs and penalties provided in the Company’s consolidated financial statements for the years ended December 31, 2019 and 2018, respectively. The Company’s tax positions related to open tax years are subject to examination by the relevant tax authorities and the major one is the China Tax Authority. |
Stock Incentive Plans
Stock Incentive Plans | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-based Payment Arrangement [Text Block] | (13) 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 IT Tech Packaging, 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 IT Tech Packaging, 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 Stock Plan On August 29, 2015, the Company’s Annual General Meeting approved the 2015 Omnibus Equity Incentive Plan of IT Tech Packaging, 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 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. On September 13, 2018, the compensation committee granted an aggregate of 534,500 shares of common stock to fifteen officers, directors and employees of the Company, which were granted under the 2015 ISP. Total fair value of the shares of common stock granted was calculated at $470,360 as of the date of issuance at $0.88 per share. 2019 Incentive Stock Plan On October 31, 2019, the shareholders of the Company at the Company’s Annual Shareholders General Meeting adopted and approved the 2019 Omnibus Equity Incentive Plan of IT Tech Packaging, Inc. (the “2019 ISP”). Under the 2019 ISP, the Company has reserved a total of 2,000,000 shares of common stock for issuance as or under awards to be made to the directors, officers, employees and/or consultants of the Company and its subsidiaries. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | (14) Commitments and Contingencies Operating Lease The Company leases 32.95 acres of land from a local government in Xushui District, 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 $17,160 (RMB 120,000). This operating lease is renewable at the end of the 30-year term. As mentioned in Note (8) Related Party Transactions, in connection with the sale of Industrial Buildings to Hebei Fangsheng, Hebei Fangsheng agrees to lease the Industrial Buildings back to the Company at an annual rental of $142,998 (RMB 1,000,000), for a total term of up to five years. Future minimum lease payments of all operating leases are as follows: March 31, Amount 2021 158,078 2022 158,078 2023 13,811 2024 16,937 2025 16,937 Thereafter 114,324 Total operating lease payments $ 478,166 Capital commitment As of March 31, 2020, the Company has signed several contracts for improvement of Industrial Buildings. Total outstanding commitments under these contracts were $882,019 and $1,101,989 as of March 31, 2020 and December 31, 2019, respectively. The Company expected to pay off all the balances within 1 year. On June 25, 2019, Dongfang Paper entered into an acquisition agreement with shareholder of Hebei Tengsheng Paper Co., Ltd.(“Hebei Tengsheng”), a limited liability company organized under the laws of the PRC, pursuant to which Dongfang Paper will acquire Hebei Tengsheng. The consideration for the acquisition is RMB 320 million (approximately $45 million), of which $1.4 million was paid by the Company, and the balance consideration of $43.6 million is payable by December 31, 2021. Guarantees and Indemnities The Company agreed with Baoding Huanrun Trading Co., a major supplier of raw materials, to guarantee certain obligations of this third party, and as of March 31, 2020 and December 31, 2019, the Company guaranteed its long-term loan from financial institutions amounting to $4,375,379 (RMB31,000,000) that matured at various times in 2020-2023. If Huanrun Trading Co., were to become insolvent, the Company could be materially adversely affected. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Reporting Disclosure [Text Block] | (15) Segment Reporting Since March 10, 2010, Baoding Shengde started its operations and thereafter the Company manages its operations through two business operating segments: Dongfang Paper, which produces offset printing paper and corrugating medium paper and Baoding 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 District, Baoding City, Hebei Province, China. All sales were sold to customers located in the PRC. Summarized financial information for the three reportable segments is as follows: Three Months Ended March 31, 2020 Dongfang Hebei Baoding Not Attributable Elimination of Enterprise-wide, Paper Tengsheng Shengde to Segments Inter-segment consolidated Revenues $ 7,737,502 $ 1,006,349 $ - $ - $ - $ 8,743,851 Gross profit 542,155 (711,874 ) - - - (169,719 ) Depreciation and amortization 1,506,627 2,135,371 132,676 - - 3,774,674 Interest income 5,517 83 190 - - 5,790 Interest expense 167,581 - 77,137 - - 244,718 Income tax expense(benefit) (8,363 ) (522,916 ) (9,763 ) 14,717 - (526,325 ) Net income (loss) (496,085 ) (1,594,938 ) (200,397 ) (144,867 ) - (2,436,287 ) Three Months Ended March 31, 2019 Dongfang Baoding Not Attributable Elimination of Enterprise-wide, Paper Shengde to Segments Inter-segment consolidated Revenues $ 17,450,292 $ - $ - $ - $ 17,450,292 Gross profit (192,466 ) - - - (192,466 ) Depreciation and amortization 3,930,054 6 - - 3,930,060 Interest income 58,727 91 - - 58,818 Interest expense 212,876 42,393 - - 255,269 Income tax expense(benefit) (622,304 ) (25,491 ) - - (647,795 ) Net income (loss) (2,440,828 ) (38,807 ) (242,960 ) - (2,722,595 ) As of March 31, 2020 Dongfang Hebei Baoding Not Attributable Elimination Enterprise-wide, Paper Tengsheng Shengde to Segments of Inter-segment consolidated Total assets $ 67,512,415 96,555,230 18,151,252 37,401 - 182,256,298 As of December 31, 2019 Dongfang Hebei Baoding Not Attributable Elimination Enterprise-wide, Paper Tengsheng Shengde to Segments of Inter-segment consolidated Total assets $ 73,347,811 99,747,236 17,031,392 71,991 - 190,198,430 |
Concentration and Major Custome
Concentration and Major Customers and Suppliers | 3 Months Ended |
Mar. 31, 2020 | |
Concentration And Major Customers And Suppliers [Abstract] | |
Concentration and Major Customers and Suppliers | (16) Concentration and Major Customers and Suppliers For the three months ended March 31, 2020, the Company had no single customer contributed over 10% of total sales. For the three months ended March 31, 2019, the Company had no single customer contributed over 10% of total sales. For the three months ended March 31, 2020, the Company had three major suppliers accounted for 70%, 11% and 9% of total purchases. For the three months ended March 31, 2019, the Company had three major suppliers accounted for 80%, 9% and 4% of total purchases. |
Concentration of Credit Risk
Concentration of Credit Risk | 3 Months Ended |
Mar. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
Concentration Risk Disclosure [Text Block] | (17) Concentration of Credit Risk Financial instruments for which the Company is potentially subject to concentration of credit risk consist principally of cash. The Company places its cash in reputable financial institutions in the PRC and the United States. Although it is generally understood that the PRC central government stands behind all of the banks in China in the event of bank failure, there is no deposit insurance system in China that is similar to the protection provided by the Federal Deposit Insurance Corporation (“FDIC”) of the United States as of March 31, 2020 and December 31, 2019. 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$70,571) per depositor per insured financial intuition, including both principal and interest. For the cash placed in financial institutions in the United States, the Company’s U.S. bank accounts are all fully covered by the FDIC insurance as of March 31, 2020 and December 31, 2019, respectively, while for the cash placed in financial institutions in the PRC, the balances exceeding the maximum coverage of RMB500,000 amounted to RMB80,720,243 (US$11,392,957) as of March 31, 2020. |
Risks and Uncertainties
Risks and Uncertainties | 3 Months Ended |
Mar. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
Risks and Uncertainties [Text Block] | (18) Risks and Uncertainties The Company 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. Our business, financial condition and results of operations may be materially adversely affected by global health epidemics, including the recent COVID-19 outbreak. Outbreaks of epidemic, pandemic, or contagious diseases such as COVID-19, could have an adverse effect on our business, financial condition, and results of operations. The spread of COVID-19 has resulted in the World Health Organization declaring the outbreak of COVID-19 as a global pandemic. While the COVID-19 outbreak is still in relatively early stages, international stock markets have begun to reflect the uncertainty associated with the slow-down in the global economy and the reduced levels of international travel experienced since the beginning of January, large declines in oil prices and the significant decline in the Dow Industrial Average at the end of February and beginning of March 2020 was largely attributed to the effects of COVID-19. Any resulting financial impact cannot be reasonably estimated at this time. The extent to which the COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and the actions taken globally to contain the coronavirus or treat its impact, among others. Existing insurance coverage may not provide protection for all costs that may arise from all such possible events. During the quarter ended March 31, 2020, our revenue was affected by the temporary suspension in production as a result of the pandemic outbreak. We are still assessing our business operations and the total impact COVID-19 may have on our results and financial condition, but there can be no assurance that this analysis will enable us to avoid part or all of any impact from the spread of COVID-19 or its consequences, including downturns in business sentiment generally. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2020 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | (19) Recent Accounting Pronouncements In August 2018, the FASB issued ASU 2018-13, Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this standard will remove, modify and add certain disclosures under ASC Topic 820, Fair Value Measurement, with the objective of improving disclosure effectiveness. ASU 2018-13 will be effective for the Company’s fiscal year beginning April 1, 2020, with early adoption permitted. The transition requirements are dependent upon each amendment within this update and will be applied either prospectively or retrospectively. The Company does not expect ASU 2018-13 to have a material impact to the Company’s consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes. The amendments in this Update related to separate financial statements of legal entities that are not subject to tax should be applied on a retrospective basis for all periods presented. The amendments related to changes in ownership of foreign equity method investments or foreign subsidiaries should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The amendments related to franchise taxes that are partially based on income should be applied on either a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. All other amendments should be applied on a prospective basis. We do not expect the adoption of ASU 2019-12 to have a material impact on our condensed consolidated financial statements. |
Subsequent Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | (20) Subsequent Event On April 2, 2020, the compensation committee granted an aggregate of 2,000,000 shares of restricted common stock to fifteen officers, directors and employees of the Company, which were granted under the 2019 Omnibus Equity Incentive Plan. Total fair value of the shares of common stock granted was calculated at $1,200,000 as of the date of issuance at $0.60 per share. On April 29, 2020, the Company and certain institutional investors entered into a securities purchase agreement, as amended on May 4, 2020, pursuant to which the Company agreed to sell to such investors an aggregate of 4,400,000 shares of common stock in a registered direct offering and warrants to purchase up to 4,400,000 shares of the Company’s common stock in a concurrent private placement, for gross proceeds of approximately $2.55 million (net proceeds of approximately 2.27 million). |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation Our unaudited condensed consolidated financial statements reflect all adjustments, which are, in the opinion of management, necessary for a fair presentation of our financial position and results of operations. Such adjustments are of a normal recurring nature, unless otherwise noted. The balance sheet as of March 31, 2020 and the results of operations for the three months ended March 31, 2020 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 March 31, 2020 and December 31, 2019, 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 March 31, 2020 and December 31, 2019. |
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 Bac_2
Organization and Business Background (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Variable Interest Entities [Table Text Block] | Date of Place of Incorporation 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 Baoding Shengde June 1, 2009 PRC 100 % Paper production and distribution Variable interest entity (“VIE”): Dongfang Paper March 10, 1996 PRC Control* Paper production and distribution * Dongfang Paper is treated as a 100% controlled variable interest entity of the Company. |
Condensed Balance Sheet [Table Text Block] | March 31, December 31, 2020 2019 (Unaudited) ASSETS Current Assets Cash and bank balances $ 9,786,499 $ 5,675,374 Restricted cash - - Accounts receivable 1,795,671 3,119,312 Inventories 1,947,019 1,603,038 Prepayments and other current assets 6,051,551 11,610,576 Due from related parties 120,744 1,863,479 Total current assets 19,701,484 23,871,779 Prepayment on property, plant and equipment 1,411,413 1,433,445 Property, plant, and equipment, net 133,697,308 138,920,440 Deferred tax asset non-current 9,257,440 8,869,385 Total Assets $ 164,067,645 $ 173,095,049 LIABILITIES Current Liabilities Short-term bank loans $ 6,069,075 $ 6,163,814 Current portion of long-term loans from credit union 310,511 315,358 Accounts payable 205,768 250,486 Due to related parties 56,552 Accrued payroll and employee benefits 224,922 287,584 Other payables and accrued liabilities 5,100,400 6,502,974 Income taxes payable - 1,382,471 Total current liabilities 11,910,676 14,959,239 Loans from credit union 4,431,836 4,501,018 Total liabilities $ 16,342,512 $ 19,460,257 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current [Table Text Block] | March 31, December 31, 2020 2019 Raw Materials Recycled paper board $ 727,392 $ 40,032 Recycled white scrap paper 10,379 10,541 Coal & gas 45,691 41,675 Base paper and other raw materials 235,931 293,935 1,019,392 386,183 Semi-finished Goods 145,259 83,266 Finished Goods 855,431 1,212,849 Total inventory, gross 2,020,083 1,682,298 Inventory reserve (68,706 ) (74,835 ) Total inventory, net $ 1,951,376 $ 1,607,463 |
Prepayments and Other Current_2
Prepayments and Other Current Assets (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Prepayments and Other Current Assets [Abstract] | |
Schedule of prepayments and other current assets [Table Text Block] | March 31, December 31, 2020 2019 Prepaid land lease $ 169,370 $ 301,023 Prepayment for purchase of materials 218,785 5,394,297 Value-added tax recoverable 5,579,872 5,666,975 Others 86,069 250,946 $ 6,054,096 $ 11,613,241 |
Property, Plant and Equipment_2
Property, Plant and Equipment, Net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment [Table Text Block] | March 31, December 31, 2020 2019 Property, Plant, and Equipment: Land use rights $ 11,509,449 $ 11,689,114 Building and improvements 69,723,406 70,811,803 Machinery and equipment 150,603,073 152,954,020 Vehicles 578,771 587,806 Construction in progress 6,546,542 6,399,986 Totals 238,961,241 242,442,729 Less: accumulated depreciation and amortization (93,155,517 ) (90,825,877 ) Property, Plant and Equipment, net $ 145,805,724 $ 151,616,852 |
Loans Payable (Tables)
Loans Payable (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Short-term Debt [Table Text Block] | March 31, December 31, 2020 2019 Industrial and Commercial Bank of China (“ICBC”) Loan 1 (a) $ 6,069,075 $ 6,163,814 Total short-term bank loans $ 6,069,075 $ 6,163,814 |
Schedule of Long-term Debt Instruments [Table Text Block] | March 31, December 31, 2020 2019 Rural Credit Union of Xushui District Loan 1 $ 1,213,815 $ 1,232,763 Rural Credit Union of Xushui District Loan 2 3,528,532 3,583,613 Rural Credit Union of Xushui District Loan 3 2,258,260 2,293,512 Rural Credit Union of Xushui District Loan 4 1,834,836 1,863,479 Total 8,835,443 8,973,367 Less: Current portion of long-term loans from credit union (1,580,782 ) (1,605,459 ) Long-term loans from credit union $ 7,254,661 $ 7,367,908 |
Schedule of long-term debt repayments | Amount Fiscal year Remainder of 2020 $ 1,580,782 2021 3,020,423 2022 1,552,554 2023 2,681,684 Total 8,835,443 |
Other Payables and Accrued Li_2
Other Payables and Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] | March 31, December 31, 2020 2019 Accrued electricity $ 79,199 $ 129,466 Value-added tax payable 122,423 854,728 Accrued interest to a related party 598,116 607,453 Payable for purchase of equipment 3,373,783 3,936,047 Accrued commission to salesmen 7,545 17,162 Accrued bank loan interest 127,027 - Others 874,455 958,154 Totals $ 5,182,548 $ 6,503,010 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Three Months Ended 2020 2019 Basic loss per share Net loss for the period - numerator $ (2,436,287 ) $ (2,722,595 ) Weighted average common stock outstanding - denominator 22,054,816 22,022,316 Net loss per share $ (0.11 ) $ (0.12 ) Diluted income per share Net income for the period- numerator $ (2,436,287 ) $ (2,722,595 ) Weighted average common stock outstanding - denominator 22,054,816 22,022,316 Effect of dilution - - Weighted average common stock outstanding - denominator 22,054,816 22,022,316 Diluted loss per share $ (0.11 ) $ (0.12 ) |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] | Three Months Ended March 31, 2020 2019 Provision for Income Taxes Current Tax Provision U.S. $ 14,717 $ - Current Tax Provision PRC - - Deferred Tax Provision PRC (541,042 ) (647,795 ) Total Provision for (Deferred tax benefit)/ Income Taxes $ (526,325 ) $ (647,795 ) |
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | March 31, December 31, 2020 2019 Deferred tax assets (liabilities) Depreciation and amortization of property, plant and equipment $ 9,699,121 $ 9,277,009 Impairment of property, plant and equipment 509,875 521,803 Miscellaneous 413,352 277,511 Net operating loss carryover of PRC company 235,563 408,730 Total deferred tax assets 10,857,911 10,485,053 Less: Valuation allowance - - Total deferred tax assets, net $ 10,857,911 $ 10,485,053 |
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | Three Months Ended March 31 2020 2019 PRC Statutory rate 25.0 % 25.0 % Effect of different tax jurisdiction - - Effect of reconciling items in the PRC for tax purposes (7.2 ) 2.2 Change in valuation allowance - (8.0 ) Effective income tax rate 17.8 % 19.2 % |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | March 31, Amount 2021 158,078 2022 158,078 2023 13,811 2024 16,937 2025 16,937 Thereafter 114,324 Total operating lease payments $ 478,166 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment [Table Text Block] | Three Months Ended March 31, 2020 Dongfang Hebei Baoding Not Attributable Elimination of Enterprise-wide, Paper Tengsheng Shengde to Segments Inter-segment consolidated Revenues $ 7,737,502 $ 1,006,349 $ - $ - $ - $ 8,743,851 Gross profit 542,155 (711,874 ) - - - (169,719 ) Depreciation and amortization 1,506,627 2,135,371 132,676 - - 3,774,674 Interest income 5,517 83 190 - - 5,790 Interest expense 167,581 - 77,137 - - 244,718 Income tax expense(benefit) (8,363 ) (522,916 ) (9,763 ) 14,717 - (526,325 ) Net income (loss) (496,085 ) (1,594,938 ) (200,397 ) (144,867 ) - (2,436,287 ) Three Months Ended March 31, 2019 Dongfang Baoding Not Attributable Elimination of Enterprise-wide, Paper Shengde to Segments Inter-segment consolidated Revenues $ 17,450,292 $ - $ - $ - $ 17,450,292 Gross profit (192,466 ) - - - (192,466 ) Depreciation and amortization 3,930,054 6 - - 3,930,060 Interest income 58,727 91 - - 58,818 Interest expense 212,876 42,393 - - 255,269 Income tax expense(benefit) (622,304 ) (25,491 ) - - (647,795 ) Net income (loss) (2,440,828 ) (38,807 ) (242,960 ) - (2,722,595 ) As of March 31, 2020 Dongfang Hebei Baoding Not Attributable Elimination Enterprise-wide, Paper Tengsheng Shengde to Segments of Inter-segment consolidated Total assets $ 67,512,415 96,555,230 18,151,252 37,401 - 182,256,298 As of December 31, 2019 Dongfang Hebei Baoding Not Attributable Elimination Enterprise-wide, Paper Tengsheng Shengde to Segments of Inter-segment consolidated Total assets $ 73,347,811 99,747,236 17,031,392 71,991 - 190,198,430 |
Organization and Business Bac_3
Organization and Business Background (Details) ¥ / shares in Units, ¥ in Millions | 1 Months Ended | 3 Months Ended | ||||||
Jun. 24, 2009USD ($)¥ / shares | Oct. 29, 2007shares | Mar. 31, 2020USD ($) | Mar. 31, 2020CNY (¥) | Mar. 31, 2019 | Dec. 31, 2019 | Jun. 30, 2010USD ($) | Feb. 10, 2010USD ($) | |
Organization and Business Background (Details) [Line Items] | ||||||||
Registered capital (in Dollars) | $ 60,000,000 | |||||||
Exercise price per share (in Yuan Renminbi per share) | ¥ / shares | ¥ 1 | |||||||
Percentage of distributable profit of Dongfang Paper | 100.00% | |||||||
Dongfang Holding [Member] | ||||||||
Organization and Business Background (Details) [Line Items] | ||||||||
Reverse stock split | 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. | |||||||
Shares of common stock issued to shareholders under merger agreement (in Shares) | shares | 7,450,497 | |||||||
Percentage of ownership | 100.00% | |||||||
Dongfang Paper [Member] | ||||||||
Organization and Business Background (Details) [Line Items] | ||||||||
Percentage of ownership | 100.00% | 100.00% | ||||||
Service fees percentage of annual net profits | 80.00% | |||||||
Aggregate principal amount (in Dollars) | ¥ 10,000,000 | $ 10,000,000 | ||||||
Percentage of distributable profit of Dongfang Paper | 100.00% | 100.00% | ||||||
Percentage of revenue | 100.00% | 100.00% | 100.00% | |||||
Percentage of assets accounted | 91.01% | |||||||
Baoding Shengde [Member] | ||||||||
Organization and Business Background (Details) [Line Items] | ||||||||
Percentage of ownership | 100.00% | |||||||
Registered capital (in Dollars) | ¥ 10,000,000 | |||||||
Loan agreement to terminate (in Dollars) | $ 10,000,000 | |||||||
Hebei Tengsheng [Member] | ||||||||
Organization and Business Background (Details) [Line Items] | ||||||||
Percentage of distributable profit of Dongfang Paper | 90.02% | 90.02% | ||||||
Business combination, consideration transferred | $ 45,000,000 | ¥ 320 |
Organization and Business Bac_4
Organization and Business Background (Details) - Schedule of subsidiaries and variable interest entity | 3 Months Ended | |
Mar. 31, 2020 | ||
Dongfang Holding [Member] | ||
Variable Interest Entity [Line Items] | ||
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 Holding [Member] | ||
Variable Interest Entity [Line Items] | ||
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 | |
Baoding Shengde [Member] | ||
Variable Interest Entity [Line Items] | ||
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 | |
Dongfang Paper [Member] | ||
Variable Interest Entity [Line Items] | ||
Entity Incorporation, Date of Incorporation | Mar. 10, 1996 | |
Entity Incorporation State Country Name | PRC | |
Percentage of Ownership | [1] | |
Principal Activity | Paper production and distribution | |
[1] | Dongfang Paper is treated as a 100% controlled variable interest entity of the Company. |
Organization and Business Bac_5
Organization and Business Background (Details) - Schedule of aggregate financial information of assets and liabilities - Variable Interest Entity, Primary Beneficiary [Member] - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash and bank balances | $ 9,786,499 | $ 5,675,374 |
Restricted cash | ||
Accounts receivable | 1,795,671 | 3,119,312 |
Inventories | 1,947,019 | 1,603,038 |
Prepayments and other current assets | 6,051,551 | 11,610,576 |
Due from related parties | 120,744 | 1,863,479 |
Total current assets | 19,701,484 | 23,871,779 |
Prepayment on property, plant and equipment | 1,411,413 | 1,433,445 |
Property, plant, and equipment, net | 133,697,308 | 138,920,440 |
Deferred tax asset non-current | 9,257,440 | 8,869,385 |
Total Assets | 164,067,645 | 173,095,049 |
LIABILITIES | ||
Short-term bank loans | 6,069,075 | 6,163,814 |
Current portion of long-term loans from credit union | 310,511 | 315,358 |
Accounts payable | 205,768 | 250,486 |
Due to related parties | 56,552 | |
Accrued payroll and employee benefits | 224,922 | 287,584 |
Other payables and accrued liabilities | 5,100,400 | 6,502,974 |
Income taxes payable | 1,382,471 | |
Total current liabilities | 11,910,676 | 14,959,239 |
Loans from credit union | 4,431,836 | 4,501,018 |
Total liabilities | $ 16,342,512 | $ 19,460,257 |
Restricted Cash (Details)
Restricted Cash (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Cash and Cash Equivalents [Abstract] | ||
Restricted cash |
Inventories (Details) - Schedul
Inventories (Details) - Schedule of inventories - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Raw Materials | ||
Raw Materials | $ 1,019,392 | $ 386,183 |
Semi-finished Goods | 145,259 | 83,266 |
Finished Goods | 855,431 | 1,212,849 |
Total inventory, gross | 2,020,083 | 1,682,298 |
Inventory reserve | (68,706) | (74,835) |
Total inventory, net | 1,951,376 | 1,607,463 |
Recycled Paper Board [Member] | ||
Raw Materials | ||
Raw Materials | 727,392 | 40,032 |
Recycled White Scrap Paper [Member] | ||
Raw Materials | ||
Raw Materials | 10,379 | 10,541 |
Coal & gas [Member] | ||
Raw Materials | ||
Raw Materials | 45,691 | 41,675 |
Base Paper and Other Raw Materials [Member] | ||
Raw Materials | ||
Raw Materials | $ 235,931 | $ 293,935 |
Prepayments and Other Current_3
Prepayments and Other Current Assets (Details) - Schedule of prepayments and other current assets - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Schedule of prepayments and other current assets [Abstract] | ||
Prepaid land lease | $ 169,370 | $ 301,023 |
Prepayment for purchase of materials | 218,785 | 5,394,297 |
Value-added tax recoverable | 5,579,872 | 5,666,975 |
Others | 86,069 | 250,946 |
Total prepayments and other current assets | $ 6,054,096 | $ 11,613,241 |
Property, Plant and Equipment_3
Property, Plant and Equipment, Net (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |||
Term of lease, description | land use rights represented two parcel of state-owned lands located in Xushui District and Wei County of Hebei Province in China, with lease terms of 50 years expiring in 2061 and 2066, | land use rights represented two parcel of state-owned lands located in Xushui District and Wei County of Hebei Province in China, with lease terms of 50 years expiring in 2061 and 2066, | |
Assets pledged for guarantee of Dongfang Paper capital lease | $ 3,443,097 | $ 3,935,270 | |
Land use right net values pledged for sale-leaseback financing | $ 5,635,572 | $ 5,757,546 | |
Impaired assets to be disposed of by method other than sale, method for determining fair value | $5,120,520 | $5,200,452 | |
Value of land use right pledged for bank loan | $ 7,933,093 | $ 8,056,930 | |
Depreciation and amortization | $ 3,774,674 | $ 3,930,060 |
Property, Plant and Equipment_4
Property, Plant and Equipment, Net (Details) - Schedule of property, plant and equipment - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Totals | $ 238,961,241 | $ 242,442,729 |
Less: accumulated depreciation and amortization | (93,155,517) | (90,825,877) |
Property, Plant and Equipment, net | 145,805,724 | 151,616,852 |
Land use rights [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Totals | 11,509,449 | 11,689,114 |
Building and improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Totals | 69,723,406 | 70,811,803 |
Machinery and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Totals | 150,603,073 | 152,954,020 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Totals | 578,771 | 587,806 |
Construction in Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Totals | $ 6,546,542 | $ 6,399,986 |
Loans Payable (Details)
Loans Payable (Details) - USD ($) | Dec. 12, 2019 | Nov. 06, 2018 | Jul. 15, 2013 | Apr. 17, 2019 | Jun. 21, 2018 | Apr. 16, 2014 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 |
Loans Payable (Details) [Line Items] | |||||||||
Short-term bank loans | $ 6,069,075 | $ 6,163,814 | |||||||
Maturity date, description | 2020-2023 | ||||||||
Unsecured bank loans | |||||||||
Average short-term borrowing rates | 4.79% | 4.76% | |||||||
Loans from credit union | $ 8,835,443 | 8,973,367 | |||||||
Loan extension period | 2 years | 5 years | 2 years | 5 years | |||||
Long-term debt, Interest rate per month | 7.56% | 0.60% | |||||||
Total outstanding loan balance | 1,213,815 | 1,232,763 | |||||||
Current portion of total outstanding loan | 1,580,782 | 1,605,459 | |||||||
Non current portion of total outstanding loan | 2,258,260 | 2,293,512 | |||||||
Interest expense for the short-term bank loans and long-term loans | 244,718 | $ 230,953 | |||||||
ICBC Loan 3 [Member] | |||||||||
Loans Payable (Details) [Line Items] | |||||||||
Short-term bank loans | $ 6,069,075 | 6,163,814 | |||||||
Short-term bank loans, bore interest rate | 4.785% | ||||||||
ICBC Loan 4 [Member] | |||||||||
Loans Payable (Details) [Line Items] | |||||||||
Maturity date, description | December 23, 2020. | ||||||||
Rural Credit Union Of Xushui County Loan [Member] | |||||||||
Loans Payable (Details) [Line Items] | |||||||||
Current portion of total outstanding loan | $ 141,141 | ||||||||
Non current portion of total outstanding loan | 1,072,674 | ||||||||
Rural credit union of xushui District [Member] | |||||||||
Loans Payable (Details) [Line Items] | |||||||||
Installment repayment description | On November 6, 2018, the loan was renewed for additional 5 years and will be due and payable in various installments from December 21, 2018 to November 5, 2023. | On April 17, 2019, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 2 years, which was due and payable in various installments from August 21, 2019 to April 16, 2021. | On April 16, 2014, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 5 years, which was originally due in various installments from June 21, 2014 to November 18, 2018. | ||||||
Loan extension period | 5 years | 5 years | |||||||
Total outstanding loan balance | 3,528,532 | 3,583,613 | |||||||
Current portion of total outstanding loan | 1,129,130 | 1,146,756 | |||||||
Rural credit union of xushui District [Member] | Long-term loan [Member] | |||||||||
Loans Payable (Details) [Line Items] | |||||||||
Total outstanding loan balance | $ 169,370 | 172,013 | |||||||
Current portion of total outstanding loan | 143,345 | ||||||||
Non current portion of total outstanding loan | 1,089,418 | ||||||||
Rural credit union of xushui District [Member] | New term loan agreement [Member] | |||||||||
Loans Payable (Details) [Line Items] | |||||||||
Long-term debt, Interest rate per month | 0.64% | ||||||||
Current portion of total outstanding loan | $ 3,359,162 | 3,411,600 | |||||||
Security loan agreement by manufacturing equipment | 3,443,097 | 3,935,270 | |||||||
Rural credit union of xushui District One [Member] | |||||||||
Loans Payable (Details) [Line Items] | |||||||||
Long-term debt, Interest rate per month | 0.64% | ||||||||
Rural Credit Union of Xushui [Member] | |||||||||
Loans Payable (Details) [Line Items] | |||||||||
Non current portion of total outstanding loan | 1,129,130 | 1,146,756 | |||||||
Rural Credit Union of Xushui Three [Member] | |||||||||
Loans Payable (Details) [Line Items] | |||||||||
Total outstanding loan balance | 1,834,836 | 1,863,479 | |||||||
Rural credit union of xushui District Two [Member] | |||||||||
Loans Payable (Details) [Line Items] | |||||||||
Current portion of total outstanding loan | 141,141 | 143,345 | |||||||
Non current portion of total outstanding loan | $ 1,693,695 | $ 1,720,134 |
Loans Payable (Details) - Sched
Loans Payable (Details) - Schedule of short-term bank loans - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Short-term Debt [Line Items] | ||
Total short-term bank loans | $ 6,069,075 | $ 6,163,814 |
ICBC Loan 1 [Member] | ||
Short-term Debt [Line Items] | ||
Total short-term bank loans | $ 6,069,075 | $ 6,163,814 |
Loans Payable (Details) - Sch_2
Loans Payable (Details) - Schedule of loans payable - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Total | $ 8,835,443 | $ 8,973,367 |
Less: Current portion of long-term loans from credit union | (1,580,782) | (1,605,459) |
Long-term loans from credit union | 7,254,661 | 7,367,908 |
Rural Credit Union of Xushui District Loan 1 [Member] | ||
Debt Instrument [Line Items] | ||
Total | 1,213,815 | 1,232,763 |
Rural Credit Union of Xushui District Loan 2 [Member] | ||
Debt Instrument [Line Items] | ||
Total | 3,528,532 | 3,583,613 |
Rural Credit Union of Xushui District Loan 3 [Member] | ||
Debt Instrument [Line Items] | ||
Total | 2,258,260 | 2,293,512 |
Rural Credit Union of Xushui District Loan 4 [Member] | ||
Debt Instrument [Line Items] | ||
Total | $ 1,834,836 | $ 1,863,479 |
Loans Payable (Details) - Sch_3
Loans Payable (Details) - Schedule of long-term debt repayments | Mar. 31, 2020USD ($) |
Schedule of long-term debt repayments [Abstract] | |
Remainder of 2020 | $ 1,580,782 |
2021 | 3,020,423 |
2022 | 1,552,554 |
2023 | 2,681,684 |
Total | $ 8,835,443 |
Related Party Transactions (Det
Related Party Transactions (Details) | Oct. 14, 2016USD ($) | Mar. 01, 2015USD ($) | Dec. 10, 2014USD ($) | Aug. 07, 2013USD ($) | Aug. 07, 2013CNY (¥) | Nov. 23, 2018USD ($) | Feb. 28, 2018USD ($) | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Jul. 13, 2015USD ($) | Mar. 01, 2015CNY (¥) |
Related Party Transactions (Details) [Line Items] | ||||||||||||||
Loan paid off | $ 94,636 | $ 2,249,279 | ||||||||||||
Amount due to shareholder | $ 391,374 | |||||||||||||
Accrued interest | $ 127,027 | |||||||||||||
Outstanding loan balance | 2,258,260 | 2,293,512 | ||||||||||||
Amount due to shareholder | 617,433 | 483,433 | ||||||||||||
Lease expiration date, description | August 2016 | August 2016 | ||||||||||||
Mr Zhenyong Liu [Member] | ||||||||||||||
Related Party Transactions (Details) [Line Items] | ||||||||||||||
Loan paid off | $ 20,400 | |||||||||||||
Loans payable to related party | ||||||||||||||
Repayment of related party loans | $ 6,012,416 | |||||||||||||
Interest paid | $ 288,596 | |||||||||||||
Accrued interest | 42,342 | 43,003 | ||||||||||||
Term of loan | 3 years | |||||||||||||
Loan from related parties, interest expense | $ 24,316 | |||||||||||||
Chief Executive Officer [Member] | ||||||||||||||
Related Party Transactions (Details) [Line Items] | ||||||||||||||
Loans payable to related party | $ 2,883,091 | $ 16,936,952 | $ 4,324,636 | ¥ 120,000,000 | ||||||||||
Accrued interest | 197,009 | |||||||||||||
Term of loan | 3 years | |||||||||||||
Outstanding loan balance | 193,981 | |||||||||||||
Chief Executive Officer [Member] | Mr Zhenyong Liu [Member] | ||||||||||||||
Related Party Transactions (Details) [Line Items] | ||||||||||||||
Accrued interest | 598,116 | 607,453 | ||||||||||||
Dongfang Paper [Member] | Mr Zhenyong Liu [Member] | ||||||||||||||
Related Party Transactions (Details) [Line Items] | ||||||||||||||
Loan paid off | $ 158,651 | |||||||||||||
Other payables and accrued liabilities | $ 361,793 | $ 367,441 | ||||||||||||
Loans payable to related party | $ 8,483,083 | |||||||||||||
Interest rate on loans | 4.35% | |||||||||||||
Repayment of related party loans | $ 3,768,579 | $ 1,507,432 | ||||||||||||
Hebei Fangsheng [Member] | ||||||||||||||
Related Party Transactions (Details) [Line Items] | ||||||||||||||
Sale price of industrial land use rights | $ 2,770,000 | |||||||||||||
Sale price of industrial building | 1,150,000 | |||||||||||||
Sale price of dormitory buildings | $ 4,310,000 | |||||||||||||
Industrial building lease term | 3 years | 3 years | ||||||||||||
Rental payment | $ 142,998 | ¥ 1,000,000 |
Other Payables and Accrued Li_3
Other Payables and Accrued Liabilities (Details) - Schedule of other payables and accrued liabilities - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Schedule of other payables and accrued liabilities [Abstract] | ||
Accrued electricity | $ 79,199 | $ 129,466 |
Value-added tax payable | 122,423 | 854,728 |
Accrued interest to a related party | 598,116 | 607,453 |
Payable for purchase of equipment | 3,373,783 | 3,936,047 |
Accrued commission to salesmen | 7,545 | 17,162 |
Accrued bank loan interest | 127,027 | |
Others | 874,455 | 958,154 |
Totals | $ 5,182,548 | $ 6,503,010 |
Common Stock (Details)
Common Stock (Details) | Aug. 13, 2019USD ($)$ / sharesshares | Nov. 12, 2018shares | Oct. 15, 2018USD ($)$ / sharesshares | Sep. 13, 2018USD ($)$ / sharesshares | Jan. 12, 2016USD ($)$ / sharesshares | Aug. 27, 2014$ / sharesshares | Dec. 31, 2013USD ($)$ / shares | Mar. 31, 2020shares | Dec. 31, 2019shares |
Common Stock (Details) [Line Items] | |||||||||
Total fair value of stock of grant (in Dollars) | $ | $ 470,360 | ||||||||
Common Stock, Shares, Issued | 22,054,816 | 22,054,816 | |||||||
Weitian Group LCC [Member] | |||||||||
Common Stock (Details) [Line Items] | |||||||||
Share price (in Dollars per share) | $ / shares | $ 0.54 | ||||||||
Total fair value of stock of grant (in Dollars) | $ | $ 17,550 | ||||||||
Common Stock, Shares, Issued | 32,500 | ||||||||
Investor [Member] | |||||||||
Common Stock (Details) [Line Items] | |||||||||
Issuance of common stock and warrants | 1,562,500 | ||||||||
Warrants to purchase of common stock | 781,250 | ||||||||
Share price (in Dollars per share) | $ / shares | $ 1.60 | ||||||||
Weitian Group LCC [Member] | |||||||||
Common Stock (Details) [Line Items] | |||||||||
Issuance of common stock and warrants | 37,500 | ||||||||
Share price (in Dollars per share) | $ / shares | $ 0.87 | ||||||||
Shares of common stock under compensatory incentive plans | 70,000 | ||||||||
Total fair value of stock of grant (in Dollars) | $ | $ 32,625 | ||||||||
Compensatory Incentive Plans [Member] | |||||||||
Common Stock (Details) [Line Items] | |||||||||
Share price (in Dollars per share) | $ / shares | $ 0.88 | $ 1.25 | |||||||
Shares of common stock under compensatory incentive plans | 534,500 | 1,133,916 | |||||||
Number of officers | 15 | 9 | |||||||
2012 Incentive Stock Plan [Member] | |||||||||
Common Stock (Details) [Line Items] | |||||||||
Share price (in Dollars per share) | $ / shares | $ 2.66 | ||||||||
Shares of common stock under compensatory incentive plans | 168,416 | ||||||||
Total fair value of stock of grant (in Dollars) | $ | $ 790,020 | ||||||||
2015 Incentive Stock Plan [Member] | |||||||||
Common Stock (Details) [Line Items] | |||||||||
Share price (in Dollars per share) | $ / shares | $ 0.88 | $ 1.25 | |||||||
Shares of common stock under compensatory incentive plans | 965,500 | ||||||||
Total fair value of stock of grant (in Dollars) | $ | $ 470,360 | $ 1,417,395 |
Earnings Per Share (Details) -
Earnings Per Share (Details) - Schedule of basic and diluted net income per share - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Basic loss per share | ||
Net loss for the period - numerator (in Dollars) | $ (2,436,287) | $ (2,722,595) |
Weighted average common stock outstanding - denominator | 22,054,816 | 22,022,316 |
Net loss per share (in Dollars per share) | $ (0.11) | $ (0.12) |
Diluted income per share | ||
Net income for the period- numerator (in Dollars) | $ (2,436,287) | $ (2,722,595) |
Weighted average common stock outstanding - denominator | 22,054,816 | 22,022,316 |
Effect of dilution | ||
Weighted average common stock outstanding - denominator | 22,054,816 | 22,022,316 |
Diluted loss per share (in Dollars per share) | $ (0.11) | $ (0.12) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Taxes (Details) [Line Items] | ||||||
Statutory tax rate | 25.00% | 25.00% | ||||
Effective income tax rate | 17.80% | 19.20% | ||||
Income tax expense (in Dollars) | $ (526,325) | $ (647,795) | ||||
Provided cash (in Dollars) | $ 6,528 | |||||
Description of carry forwards expire | These carry forwards would expire, if not utilized, during the period of 2030 through 2035. | |||||
Percentage of valuation allowance | 100.00% | |||||
Income tax, statute of limitations period | 5 years | |||||
Maximum [Member] | ||||||
Income Taxes (Details) [Line Items] | ||||||
Effective income tax rate | 35.00% | |||||
Minimum [Member] | ||||||
Income Taxes (Details) [Line Items] | ||||||
Effective income tax rate | 21.00% | |||||
UNITED STATES | ||||||
Income Taxes (Details) [Line Items] | ||||||
Statutory tax rate | 34.00% | |||||
State tax rates | 0.00% | |||||
Income tax expense (in Dollars) | $ 80,000 | |||||
Additional income tax expense (in Dollars) | 80,000 | |||||
CHINA | ||||||
Income Taxes (Details) [Line Items] | ||||||
Net operating losses (in Dollars) | $ 6,710,939 | $ 6,710,939 |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of provisions for income taxes - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Provision for Income Taxes | ||
Current Tax Provision U.S. | $ 14,717 | |
Current Tax Provision PRC | ||
Deferred Tax Provision PRC | (541,042) | (647,795) |
Total Provision for (Deferred tax benefit)/ Income Taxes | $ (526,325) | $ (647,795) |
Income Taxes (Details) - Sche_2
Income Taxes (Details) - Schedule of deferred tax - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Income Tax Disclosure [Abstract] | ||
Depreciation and amortization of property, plant and equipment | $ 9,699,121 | $ 9,277,009 |
Impairment of property, plant and equipment | 509,875 | 521,803 |
Miscellaneous | 413,352 | 277,511 |
Net operating loss carryover of PRC company | 235,563 | 408,730 |
Total deferred tax assets | 10,857,911 | 10,485,053 |
Less: Valuation allowance | ||
Total deferred tax assets, net | $ 10,857,911 | $ 10,485,053 |
Income Taxes (Details) - Sche_3
Income Taxes (Details) - Schedule of reconciles the statutory rates effective tax rates | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Schedule of reconciles the statutory rates effective tax rates [Abstract] | ||
PRC Statutory rate | 25.00% | 25.00% |
Effect of different tax jurisdiction | ||
Effect of reconciling items in the PRC for tax purposes | (7.20%) | 2.20% |
Change in valuation allowance | (8.00%) | |
Effective income tax rate | 17.80% | 19.20% |
Stock Incentive Plans (Details)
Stock Incentive Plans (Details) - USD ($) | Sep. 13, 2018 | Jan. 12, 2016 | Dec. 31, 2013 | Aug. 28, 2011 | Oct. 31, 2019 | Aug. 29, 2015 | Sep. 10, 2012 |
2011 Incentive Stock Plan [Member] | |||||||
Stock Incentive Plans (Details) [Line Items] | |||||||
Number of shares authorized for issuance under stock incentive plan | 375,000 | ||||||
Shares issued under incentive stock plan | 109,584 | ||||||
Share price (in Dollars per share) | $ 3.45 | ||||||
Total fair value of stock of grant (in Dollars) | $ 378,065 | ||||||
Restricted common shares granted | 265,416 | ||||||
2012 Incentive Stock Plan [Member] | |||||||
Stock Incentive Plans (Details) [Line Items] | |||||||
Number of shares authorized for issuance under stock incentive plan | 200,000 | ||||||
Shares issued under incentive stock plan | 168,416 | 31,584 | |||||
Share price (in Dollars per share) | $ 2.66 | ||||||
Total fair value of stock of grant (in Dollars) | $ 790,020 | ||||||
Restricted common shares granted | 297,000 | ||||||
Un-restricted common shares | 1,133,916 | ||||||
2015 Incentive Stock Plan [Member] | |||||||
Stock Incentive Plans (Details) [Line Items] | |||||||
Number of shares authorized for issuance under stock incentive plan | 534,500 | 1,500,000 | |||||
Shares issued under incentive stock plan | 965,500 | ||||||
Share price (in Dollars per share) | $ 0.88 | $ 1.25 | |||||
Total fair value of stock of grant (in Dollars) | $ 470,360 | $ 1,417,395 | |||||
2019 Incentive Stock Plan [Member] | |||||||
Stock Incentive Plans (Details) [Line Items] | |||||||
Number of shares authorized for issuance under stock incentive plan | 2,000,000 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | 3 Months Ended | |||||
Mar. 31, 2020USD ($)m² | Mar. 31, 2020CNY (¥)m² | Mar. 31, 2020CNY (¥) | Dec. 31, 2019USD ($) | Jun. 25, 2019USD ($) | Jun. 25, 2019CNY (¥) | |
Commitments and Contingencies (Details) [Line Items] | ||||||
Outstanding commitments for construction of equipment and facilities | $ 882,019 | $ 1,101,989 | ||||
Business combination, contingent consideration, liability | $ 45,000,000 | ¥ 320,000,000 | ||||
Business combination, contingent consideration, liability paid | 1,400,000 | |||||
Business combination, contingent consideration, liability balance | $ 43,600,000 | |||||
Long-term loan maturity | 2020-2023 | 2020-2023 | ||||
Amount of long-term loan | $ 8,835,443 | |||||
Local Government [Member] | ||||||
Commitments and Contingencies (Details) [Line Items] | ||||||
Leases acres of land (in Square Meters) | m² | 32.95 | 32.95 | ||||
Lease expiration period | 30 years | 30 years | ||||
Lease expiry date | Dec. 31, 2031 | Dec. 31, 2031 | ||||
Operating lease annual rental payment | $ 17,160 | ¥ 120,000 | ||||
Hebei Fangsheng [Member] | ||||||
Commitments and Contingencies (Details) [Line Items] | ||||||
Lease expiration period | 5 years | 5 years | ||||
Operating lease annual rental payment | $ 142,998 | ¥ 1,000,000 | ||||
Financial Institution Long Term Loan [Member] | ||||||
Commitments and Contingencies (Details) [Line Items] | ||||||
Amount of long-term loan | $ 4,375,379 | ¥ 31,000,000 |
Commitments and Contingencies_3
Commitments and Contingencies (Details) - Schedule of future minimum lease payments | Mar. 31, 2020USD ($) |
Schedule of future minimum lease payments [Abstract] | |
2021 | $ 158,078 |
2022 | 158,078 |
2023 | 13,811 |
2024 | 16,937 |
2025 | 16,937 |
Thereafter | 114,324 |
Total operating lease payments | $ 478,166 |
Segment Reporting (Details)
Segment Reporting (Details) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Number of business operating segments | 2 |
Number of reportable segment | 3 |
Segment Reporting (Details) - S
Segment Reporting (Details) - Summarized financial information for the two reportable segments - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Dongfang Paper [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | $ 7,737,502 | $ 17,450,292 | |
Gross profit | 542,155 | (192,466) | |
Depreciation and amortization | 1,506,627 | 3,930,054 | |
Interest income | 5,517 | 58,727 | |
Interest expense | 167,581 | 212,876 | |
Income tax expense(benefit) | (8,363) | (622,304) | |
Net income for the period- numerator (in Dollars) | (496,085) | (2,440,828) | |
Total assets | 67,512,415 | $ 73,347,811 | |
Hebei Tengsheng [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 1,006,349 | ||
Gross profit | (711,874) | ||
Depreciation and amortization | 2,135,371 | ||
Interest income | 83 | ||
Interest expense | |||
Income tax expense(benefit) | (522,916) | ||
Net income for the period- numerator (in Dollars) | (1,594,938) | ||
Total assets | 96,555,230 | 99,747,236 | |
Baoding Shengde [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | |||
Gross profit | |||
Depreciation and amortization | 132,676 | 6 | |
Interest income | 190 | 91 | |
Interest expense | 77,137 | 42,393 | |
Income tax expense(benefit) | (9,763) | (25,491) | |
Net income for the period- numerator (in Dollars) | (200,397) | (38,807) | |
Total assets | 18,151,252 | 17,031,392 | |
Not Attributable to Segments [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | |||
Gross profit | |||
Depreciation and amortization | |||
Interest income | |||
Interest expense | |||
Income tax expense(benefit) | 14,717 | ||
Net income for the period- numerator (in Dollars) | (144,867) | (242,960) | |
Total assets | 37,401 | 71,991 | |
Elimination of Inter-segment [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | |||
Gross profit | |||
Depreciation and amortization | |||
Interest income | |||
Interest expense | |||
Income tax expense(benefit) | |||
Net income for the period- numerator (in Dollars) | |||
Total assets | |||
Enterprise-wide, consolidated [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 8,743,851 | 17,450,292 | |
Gross profit | (169,719) | (192,466) | |
Depreciation and amortization | 3,774,674 | 3,930,060 | |
Interest income | 5,790 | 58,818 | |
Interest expense | 244,718 | 255,269 | |
Income tax expense(benefit) | (526,325) | (647,795) | |
Net income for the period- numerator (in Dollars) | (2,436,287) | $ (2,722,595) | |
Total assets | $ 182,256,298 | $ 190,198,430 |
Concentration and Major Custo_2
Concentration and Major Customers and Suppliers (Details) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Concentration and Major Customers and Suppliers (Details) [Line Items] | ||
Number of major supplier | 3 | 3 |
Sales [Member] | ||
Concentration and Major Customers and Suppliers (Details) [Line Items] | ||
Percentage of revenue | 10.00% | 10.00% |
Supplier One [Member] | ||
Concentration and Major Customers and Suppliers (Details) [Line Items] | ||
Percentage of revenue | 70.00% | 80.00% |
Supplier Two [Member] | ||
Concentration and Major Customers and Suppliers (Details) [Line Items] | ||
Percentage of revenue | 11.00% | 9.00% |
Supplier Three [Member] | ||
Concentration and Major Customers and Suppliers (Details) [Line Items] | ||
Percentage of revenue | 9.00% | 4.00% |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details) | May 01, 2015USD ($) | May 01, 2015CNY (¥) | Mar. 31, 2020USD ($) | Mar. 31, 2020CNY (¥) |
Risks and Uncertainties [Abstract] | ||||
Federal deposit insurance corporation | $ 70,571 | ¥ 500,000 | $ 11,392,957 | ¥ 80,720,243 |
Maximum coverage from FDIC | ¥ 500,000 |
Subsequent Event (Details)
Subsequent Event (Details) - Subsequent Event [Member] - USD ($) | Apr. 02, 2020 | Apr. 29, 2020 |
Subsequent Event (Details) [Line Items] | ||
Restricted common stock shares issued | 2,000,000 | |
Restricted common stock shares issued, value | $ 1,200,000 | |
Share price | $ 0.60 | |
Investors aggregate shares of common stock | 4,400,000 | |
Warrants to purchase shares of common stock | 4,400,000 | |
Proceeds from private placement | $ 2,550,000 | |
Net proceeds | $ 2,270,000 |