(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
	September 30, 2017
	Orient Paper			Orient Paper			Not Attributable			Elimination of		Enterprise-wide,
	HB			Shengde			to Segments			Inter-segment		consolidated

Revenues	$	33,507,053		$	-		$	-		$	-	$	33,507,053
Gross profit		7,221,288			-			-			-		7,221,288
Depreciation and amortization		3,497,635			231,367			-			-		3,729,002
Loss from disposal of property, plant and equipment		(1,653,039	)		-			-			-		(1,653,039	)
Interest income		3,548			1,955			-			-		5,503
Interest expense		604,351			43,612			-			-		647,963
Income tax expense(benefit)		579,232			(74,067	)		-			-		505,165
Net income (loss)		1,916,821			(225,778	)		(118,708	)		-		1,572,335

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

Revenues	$	37,397,395	$	64,671		$	-		$	-	$	37,462,066
Gross profit (loss)		7,347,908		(17,065	)		-			-		7,330,843
Depreciation and amortization		3,485,154		230,868			-			-		3,716,022
Loss from disposal of property, plant and equipment		-		-			-			-		-
Interest income		14,568		264			-			-		14,832
Interest expense		677,576		-			-			-		677,576
Income tax expense(benefit)		1,098,270		(64,411	)		-			-		1,033,859
Net income (loss)		3,313,671		(196,558	)		(82,571	)		-		3,034,542

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

Revenues	$	81,584,395		$	-		$	-		$	-	$	81,584,395
Gross profit		16,339,874			-			-			-		16,339,874
Depreciation and amortization		10,247,936			680,566			-			-		10,928,502
Loss from disposal of property, plant and equipment		(1,665,140	)		-			-			-		(1,665,140	)
Interest income		25,767			3,492			-			-		29,259
Interest expense		1,953,379			70,198			-			-		2,023,577
Income tax expense(benefit)		1,402,558			(296,630	)		-			-		1,105,928
Net income (loss)		4,350,831			(516,705	)		(538,005	)		-		3,296,121

As of September 30, 2017

Orient

Not

Elimination

Enterprise-

Paper

Attributable

wide,

Shengde

to Segments

Inter-segment

consolidated

Total assets

191,096,727

30,480,117

276

221,577,120

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

Revenues	$	102,703,977		$	664,314		$	-		$	-	$	103,368,291
Gross profit (loss)		18,376,724			(390,243	)		-			-		17,986,481
Depreciation and amortization		10,966,088			702,888			-			-		11,668,976
Loss from disposal of property, plant and equipment		(25,774	)		-			-					(25,774	)
Interest income		94,430			796			-			-		95,226
Interest expense		2,094,448			-			-			-		2,094,448
Income tax expense(benefit)		2,248,946			(171,120	)		-			-		2,077,826
Net income (loss)		6,747,378			(559,747	)		(1,945,380	)		-		4,242,251

As of December 31, 2016