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Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

(16) Commitments and Contingencies

Operating Lease

The Company leases 32.95 acres of land from a local government in Xushui District, 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 $18,089 (RMB 120,000). This operating lease is renewable at the end of the 30-year term.

O November 27, 2012, the company 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 $542,675 (RMB 3,600,000). The Company is currently building two new tissue paper production lines and future production facilities in the leased Wei County land.

As mentioned in Note (8) Related Party Transactions, in connection with the sale of Industrial Buildings to Hebei Fangsheng, Hebei Fangsheng agrees to lease the Industrial Buildings back to the Company at an annual rental of $150,743 (RMB 1,000,000), for a total term of up to five years.

Future minimum lease payments are as follows:

December 31,	Amount
2019		542,021
2020		542,021
2021		542,021
2022		542,021
2023		542,021
Thereafter		2,194,312
Total operating lease payments	$	4,904,417

Capital commitment

As of December 31, 2018, the Company has signed several contracts for improvement of Industrial Buildings. Total outstanding commitments under these contracts were $2,300,187 and $11,227,896 as of December 31, 2018 and 2017, respectively. The Company expected to pay off all the balances within 1 year.

Guarantees and Indemnities

The Company agreed with Baoding Huanrun Trading Co., a major supplier of raw materials, to guarantee certain obligations of this third party, and as of December 31, 2018 and 2017, the Company guaranteed its long-term loan from financial institutions amounting to $4,516,843 (RMB31,000,000) and $8,159,459 (RMB56,000,000) that matured at various times in 2023. If Huanrun Trading Co., were to become insolvent, the Company could be materially adversely affected.