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Related Party Transactions
 9 Months Ended
Sep. 30, 2012
Related Party Transactions [Abstract]  
Related Party Transactions

(8) Related Party Transactions

 

Mr. Zhenyong Liu is the director, principal stockholder and chief executive officer of the Company. He loaned money to HBOP for working capital purposes over a period of time. On August 31, 2009, Orient Paper, HBOP, and Mr. Liu entered into a tri-party Debt Assignment and Assumption Agreement, under which Orient Paper agreed to assume the loan of $4,000,000 due from HBOP to Mr. Liu. Concurrently, Orient Paper issued 1,204,341 shares of restricted common stock to Mr. Liu at the market price of $3.32132 per share. As of September 30, 2012 and December 31, 2011, net amount due to Mr. Liu were $2,308,688 and $2,299,312, respectively.

 

The loan of Mr. Liu is interest bearing and the interest rate is equal to the rate established by the People's Bank of China, which was 5.85% and 5.85% per annum, respectively, as of September 30, 2012 and December 31, 2011. The term is for 3 years and starts from January 1, 2010 and is due on December 31, 2012.

 

On August 1 and August 5, 2008, two members of the Board of Directors of HBOP loaned money to the Company for working capital purposes. The amounts owed bear interest equals the rate established by the People's bank of China and are due on July 31 and August 4, 2011, respectively. The Company paid off the loan balance to both directors of HBOP by August 4, 2011. The interest rate was 5.85% and 5.85% per annum before the payoff in year 2011.

 

The interest expenses incurred for above related party loan are $33,768 and $44,057 for the three months ended September 30, 2012, and 2011, while the interest expenses were $101,430 and $169,923 for the nine months ended September 30, 2012 and 2011.

 

On November 30, 2011, the Company borrowed $200,000 from a shareholder to pay for various expenses incurred in the U.S. During the period, the Company further borrowed $890,000 from a shareholder to pay for various expenses incurred in the U.S. The amount is repayable on demand with interest free. The Company repaid the entire balance on September 30, 2012.