XML 41 R29.htm IDEA: XBRL DOCUMENT v2.4.0.8
Basis of Presentation and Significant Accounting Policies (Policies)
 6 Months Ended
Jun. 30, 2014
Basis of Presentation and Significant Accounting Policies [Abstract]  
Principles of Consolidation
Principles of Consolidation
 
Our unaudited condensed consolidated financial statements reflect all adjustments, which are, in the opinion of management, necessary for a fair presentation of our financial position and results of operations. Such adjustments are of a normal recurring nature, unless otherwise noted. The balance sheet as of June 30, 2014 and the results of operations for the three and six months ended June 30, 2014 are not necessarily indicative of the results to be expected for any future period.
 
Our unaudited condensed consolidated financial statements are prepared in accordance with GAAP. These accounting principles require us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We believe that the estimates, judgments and assumptions are reasonable, based on information available at the time they are made. Actual results could differ materially from those estimates.
Liquidity and Going Concern
Liquidity and Going Concern
 
As of June 30, 2014, the Company had current assets of $32,215,826 and current liabilities of $40,949,564 (including amounts due to related parties for $2,406,262), resulting in a working capital deficit of approximately $8,733,738; while as of December 31, 2013, the Company had current assets of $25,953,328 and current liabilities of $28,372,723 (including amounts due to related parties for $2,266,961), resulting in a working capital deficit of approximately $2,419,395. We are currently seeking to restructure the term of our liabilities by raising funds through long-term loans to pay off liabilities with shorter terms. Our ability to continue as a going concern is dependent upon obtaining the necessary financing or negotiating the terms of the existing short-term liabilities to meet our current and future liquidity needs. Although management believes it can secure financial resources to satisfy the Company's current liabilities and the capital expenditure needs in the next 12 months, there are no guarantees that these financial resources will be secured. Therefore, there is a substantial doubt about the ability of the Company to continue as going concern. Our condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
 
Between July 17 and July 21, 2014, we entered into a series of bank acceptance note and working capital loan agreements with the Commercial Bank of the City of Zhangjiakou in Zhangjiakou, Hebei, China for a total amount of approximately $11.4 million (the “CBCZ Financing,” see Note (23), Subsequent Events, for details). The CBCZ Financing is guaranteed by the our Chairman and CEO Mr. Zhenyong Liu and a third party guaranty company, which entered into the CBCZ Financing as a co-guarantor taking approximately 41 acres of the Wei County land use rights that are currently leased to the Company by Hebei Tengsheng Paper Co. Ltd. as collateral.
  
On March 25, 2014, our Chairman and CEO Mr. Zhenyong Liu in writing agrees to permit the Company to continue to postpone the repayment of the accrued interest on his loan to Orient Paper HB until the Company is able to pay its other creditors in its normal course of business. The accrued interest owned to Mr. Liu was approximately $635,602, which was recorded in other payables and accrued liabilities as part of the current liabilities in the condensed financial statement as of June 30, 2014 (see Note (12) below).