(17) Segment Reporting

Since March 10, 2010, Orient Paper Shengde started its operations and thereafter the Company manages its operations through two business operating segments: Orient Paper HB, which produces offset printing paper and corrugating medium paper, and Orient Paper Shengde, which produces digital photo paper. They are managed separately because each business requires different technology and marketing strategies.

The Company evaluates performance of its operating segments based on net income. Administrative functions such as finance, treasury, and information systems are centralized. However, where applicable, portions of the administrative function expenses are allocated between the operating segments based on gross revenue generated. The operating segments do share facilities in Xushui County, Baoding City, Hebei Province, China. All sales were sold to customers located in the PRC.

Summarized financial information for the two reportable segments is as follows:

	Three Months Ended
	June 30, 2017
	Orient Paper		Orient Paper			Not Attributable			Elimination of		Enterprise-wide,
	HB		Shengde			to Segments			Inter-segment		consolidated

Revenues	$	22,787,683	$	-		$	-		$	-	$	22,787,683
Gross profit		3,464,666		-			-			-		3,464,666
Depreciation and amortization		3,359,013		225,128			-			-		3,584,141
Interest income		4,510		1,301			-			-		5,811
Interest expense		669,944		26,586			-			-		696,530
Income tax expense(benefit)		135,756		(78,275	)		-			-		57,481
Net income (loss)		411,396		(193,304	)		(202,175	)		-		15,917

	Three Months Ended
	June 30, 2016
	Orient		Orient			Not					Enterprise-
	Paper		Paper			Attributable			Elimination of		wide,
	HB		Shengde			to Segments			Inter-segment		consolidated

Revenues	$	37,705,017	$	286,875		$	-		$	-	$	37,991,892
Gross profit (loss)		7,018,870		(129,116	)		-			-		6,889,754
Depreciation and amortization		3,550,017		235,264			-			-		3,785,281
Interest income		49,317		290			-			-		49,607
Interest expense		695,983		-			-			-		695,983
Income tax expense(benefit)		989,702		(49,161	)		-			-		940,541
Net income (loss)		2,985,112		(190,551	)		(212,955	)		-		2,581,606

	Six Months Ended
	June 30, 2017
	Orient		Orient			Not					Enterprise-
	Paper		Paper			Attributable			Elimination of		wide,
	HB		Shengde			to Segments			Inter-segment		consolidated

Revenues	$	48,077,342	$	-		$	-		$	-	$	48,077,342
Gross profit		9,118,586		-			-			-		9,118,586
Depreciation and amortization		6,750,301		449,199			-			-		7,199,500
Interest income		22,219		1,537			-			-		23,756
Interest expense		1,349,028		26,586			-			-		1,375,614
Income tax expense(benefit)		823,326		(222,563	)		-			-		600,763
Net income (loss)		2,434,010		(290,927	)		(419,297	)		-		1,723,786

As of June 30, 2017

Orient

Not

Enterprise-

Paper

Attributable

Elimination of

wide,

Shengde

to Segments

Inter-segment

consolidated

Total assets

196,120,326

30,505,902

10,783

226,637,011

	Six Months Ended
	June 30, 2016
	Orient Paper		Orient Paper			Not Attributable			Elimination of		Enterprise- wide,
	HB		Shengde			to Segments			Inter-segment		consolidated

Revenues	$	65,306,582	$	599,643		$	-		$	-	$	65,906,225
Gross profit (loss)		11,028,817		(373,179	)		-			-		10,655,638
Depreciation and amortization		7,480,934		472,020			-			-		7,952,954
Interest income		79,862		532			-			-		80,394
Interest expense		1,416,872		-			-			-		1,416,872
Income tax expense(benefit)		1,150,676		(106,709	)		-			-		1,043,967
Net income (loss)		3,433,708		(363,190	)		(1,862,809	)		-		1,207,709

As of December 31, 2016