(17) Segment Reporting

Since March 10, 2010, Baoding Shengde started its operations and thereafter the Company manages its operations through two business operating segments: Dongfang Paper, which produces offset printing paper and corrugating medium paper, and Baoding 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, 2018
	Dongfang Paper			Baoding Shengde			Not Attributable to Segments			Elimination of Inter-segment		Enterprise-wide, consolidated

Revenues	$	33,135,162		$	14,028		$	-		$	-	$	33,149,190
Gross profit		3,018,995			(3,573	)		-			-		3,015,422
Depreciation and amortization		3,492,033			188,215			-			-		3,680,248
Loss from disposal of property, plant and equipment		(113	)		-			-			-		(113	)
Interest income		(17,447	)		103			-			-		(17,344	)
Interest expense		362,158			45,024			-			-		407,182
Income tax expense(benefit)		(491,642	)		(57,380	)		-			-		(549,022	)
Net income (loss)		340,468			(175,962	)		(54,512	)		-		109,994
Total Assets		185,996,162			24,786,027			7,054			-		210,789,243

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

	Six Months Ended
	June 30, 2018
	Dongfang Paper			Baoding Shengde			Not Attributable to Segments			Elimination of Inter-segment		Enterprise-wide, consolidated

Revenues	$	35,023,356		$	14,028		$	-		$	-	$	35,037,384
Gross profit		2,323,687			(3,573	)		-			-		2,320,114
Depreciation and amortization		7,030,192			380,641			-			-		7,410,833
Loss from disposal of property, plant and equipment		10,263			-			-			-		10,263
Interest income		27,168			251			-			-		27,419
Interest expense		720,948			90,045			-			-		810,993
Income tax expense(benefit)		(964,278	)		(123,713	)		-			-		(1,087,991	)
Net income (loss)		(3,209,922	)		(374,686	)		(391,674	)		-		(3,976,282	)

	As of June 30, 2018
	Dongfang Paper		Baoding Shengde		Not Attributable to Segments		Elimination of Inter-segment		Enterprise-wide, consolidated

Total assets	$	185,996,162		24,786,027		7,054		-		210,789,243

	Six Months Ended
	June 30, 2017
	Dongfang Paper		Baoding Shengde			Not Attributable to Segments			Elimination of Inter-segment		Enterprise-wide, 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 December 31, 2017
	Dongfang Paper		Baoding Shengde		Not Attributable to Segments		Elimination of Inter-segment		Enterprise-wide, consolidated

Total assets	$	192,620,887		26,363,435		5,159		-		218,989,481