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Commitments and Contingencies
 9 Months Ended
Sep. 30, 2015
Commitments and Contingencies [Abstract]  
Commitments and Contingencies

(17) Commitments and Contingencies

 

Operating Lease

 

Orient Paper leases 32.95 acres of land from a local government in Xushui County, Baoding City, Hebei, China through a real estate lease with a 30-year term, which expires on December 31, 2031. The lease requires an annual rental payment of approximately $18,864 (RMB 120,000). This operating lease is renewable at the end of the 30-year term.

 

On November 27, 2012, Orient Paper entered into a 49.4 acres land lease with an investment company in the Economic Development Zone in Wei County, Hebei Province, China. The lease term of the Wei County land lease commences on the date of the lease and lasts for 15 years. The lease requires an annual rental payment of $565,922 (RMB 3,600,000). The Company will be building two new tissue paper production lines and future production facilities in the leased Wei County land.

 

As mentioned in Note (9) Related Party Transactions, in connection with the sale of Industrial Buildings to Hebei Fangsheng, Hebei Fangsheng agrees to lease the Industrial Buildings back to Orient Paper at an annual rental of $157,201 (RMB 1,000,000), for a term of up to three years. The Company will continue its operations in the current location for a maximum of three years before the relocation completed.

 

Future minimum lease payments of all operating leases are as follows:

 

September 30,   Amount  
2016   $ 741,987  
2017     584,786  
2018     584,786  
2019     584,786  
2020     584,786  
Thereafter     4,216,119  
    $ 7,297,250  

 

Capital commitment

 

As of September 30, 2015, the Company has signed several contracts for construction of equipment and facilities, including a new tissue paper production line PM8. Total outstanding commitments under these contracts were $13,522,167 and $24,561,228 as of September 30, 2015 and December 31, 2014, respectively. The Company expected to pay off all the balances within 1 year.