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Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

(14) 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 $17,160 (RMB 120,000). This operating lease is renewable at the end of the 30-year term.

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 $142,998 (RMB 1,000,000), for a total term of up to five years.

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

March 31,	Amount
2021		158,078
2022		158,078
2023		13,811
2024		16,937
2025		16,937
Thereafter		114,324
Total operating lease payments	$	478,166

Capital commitment

As of March 31, 2020, the Company has signed several contracts for improvement of Industrial Buildings. Total outstanding commitments under these contracts were $882,019 and $1,101,989 as of March 31, 2020 and December 31, 2019, respectively. The Company expected to pay off all the balances within 1 year.

On June 25, 2019, Dongfang Paper entered into an acquisition agreement with shareholder of Hebei Tengsheng Paper Co., Ltd.(“Hebei Tengsheng”), a limited liability company organized under the laws of the PRC, pursuant to which Dongfang Paper will acquire Hebei Tengsheng. The consideration for the acquisition is RMB 320 million (approximately $45 million), of which $1.4 million was paid by the Company, and the balance consideration of $43.6 million is payable by December 31, 2021.

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 March 31, 2020 and December 31, 2019, the Company guaranteed its long-term loan from financial institutions amounting to $4,375,379 (RMB31,000,000) that matured at various times in 2020-2023. If Huanrun Trading Co., were to become insolvent, the Company could be materially adversely affected.