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Commitments and Contingencies
 9 Months Ended
Sep. 30, 2020
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

(17) 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 $17,169 (RMB120,000). 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 $143,078 (RMB1,000,000), for a total term of up to five years.


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


September 30,  Amount 
2021   38,842 
2022   139,988 
2023   17,621 
2024   17,621 
2025   17,621 
Thereafter   110,131 
Total operating lease payments  $341,824 

Capital commitment


As of September 30, 2020, the Company has entered into several contracts for the purchase of paper machine of a new tissue paper production line PM10 and the improvement of Industrial Buildings. Total outstanding commitments under these contracts were $5,205,861 and $1,101,989 as of September 30, 2020 and December 31, 2019, respectively. The Company expected to pay off all the balances within 1-3 years.


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 RMB320 million (approximately $46 million), of which $2.8 million was paid by the Company, and the balance consideration of $43.2 million is payable by December 31, 2021.


Guarantees and Indemnities


The Company agreed with Baoding Huanrun Trading Co., Ltd.(“Baoding Huanrun”), a major supplier of raw materials, to guarantee certain obligations of this third party, and as of September 30, 2020 and December 31, 2019, the Company guaranteed its long-term loan from financial institutions amounting to $4,552,062 (RMB31,000,000) that matured at various times in 2020-2023. If Baoding Huanrun were to become insolvent, the Company could be materially adversely affected.