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Commitments and Contingencies
 6 Months Ended
Jun. 30, 2022
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 $18,445 (RMB120,000). This operating lease is renewable at the end of the 30-year term.

 

On August 7, 2013, the Company’s Audit Committee and the Board of Directors approved the sale of the land use right of the Headquarters Compound (the “LUR”), the office building and essentially all industrial-use buildings in the Headquarters Compound (the “Industrial Buildings”), and three employee dormitory buildings located within the Headquarters Compound (the “Dormitories”) to Hebei Fangsheng for cash prices of approximately $2.77 million, $1.15 million, and $4.31 million respectively. Sales of the LUR and the Industrial Buildings were completed in year 2013.

  

In connection with the sale of the Industrial Buildings, Hebei Fangsheng agreed to lease the Industrial Buildings back to the Company for its original use with an annual rental payment of approximately $153,709 (RMB1,000,000). The lease agreement is renewable in August 2022.

 

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

 

June 30,  Amount 
2023   30,297 
2024   17,880 
2025   17,880 
2026   17,880 
2027   17,880 
Thereafter   80,460 
Total operating lease payments  $182,277 

 

Capital commitment

 

As of June 30, 2022, 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 $4,492,610 and $4,700,927 as of June 30, 2022 and December 31, 2021, respectively. The Company expected to pay off all the balances within 1-3 years.

 

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 June 30, 2022 and December 31, 2021, the Company guaranteed its long-term loan from financial institutions amounting to $4,619,006 (RMB31,000,000) and $4,862,211 (RMB31,000,000), respectively, that matured at various times in 2018-2023. If Huanrun Trading Co., were to become insolvent, the Company could be materially adversely affected.