SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   Form 10-QSB

|X|   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

                For the quarterly period ended November 30, 2007

|_|   Transition Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

       For the transition period from _______________ to ________________

                        Commission file number 000-52639

                                ORIENT PAPER INC.
           ----------------------------------------------------------
           (Exact name of small business as specified in its charter)

             Nevada                                     20-4158835
---------------------------------           ------------------------------------
  (State or other jurisdiction              (IRS Employer Identification Number)
of incorporation or organization)

                            Science Park, Xushui Town
                          Baoding City, Hebei Province
                       People's Republic of China 072550 .
          ------------------------------------------------------------
          (Address of Principal Executive Offices, including Zip Code)

                             011 - (86) 312-8605508
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

                                Carlateral, Inc.
                 112 North Currie Street, Carson City, NV 89703
             -------------------------------------------------------
             (Former Name and Address, if Changed Since Last Report)

Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|

Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |_| No |X|

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 40,101,987 shares of Common
Stock, $0.001 per share, as of January 14, 2008.

Transitional Small Business Disclosure Format (check one): Yes |_| No |X|

<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

Item 1. Financial Statements.

                               ORIENT PAPER, INC.
                           (FORMERLY CARLATERAL, INC.)
                                NOVEMBER 30, 2007
                                  BALANCE SHEET
                                   (Unaudited)

<TABLE>
<S>                                                                            <C>
                                      ASSETS

CURRENT ASSETS:
Cash and cash equivalents                                                      $    25,538
Accounts receivable, trade                                                       1,043,617
Other receivables                                                                    2,226
Inventories                                                                        523,696
                                                                               -----------

Total current assets                                                             1,595,077
                                                                               -----------

PROPERTY AND EQUIPMENT, Net
of accumulated depreciation                                                     34,452,130
                                                                               -----------

TOTAL ASSETS                                                                   $36,047,207
                                                                               ===========

                         LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Short-term loans payable                                                       $ 6,033,439
Accounts payable and accrued expenses                                              558,451
Taxes payable                                                                      371,741
Related party note, current portion                                              2,590,000
                                                                               -----------

Total current liabilities                                                        9,553,631
                                                                               -----------

Long-term related party note, net of current portion                             3,190,897
                                                                               -----------

Total liabilities                                                               12,744,528
                                                                               -----------

COMMITMENTS AND CONTIGENCIES

STOCKHOLDERS' EQUITY:
Common stock, 75,000,000 shares authorized, $0.001 par value,
   40,101,987 issued and outstanding                                                40,102
Additional paid-in capital                                                       9,070,117
Statutory earnings reserve                                                       1,153,628
Retained earnings                                                               10,974,477
Accumulated other comprehensive income                                           2,064,355
                                                                               -----------

TOTAL STOCKHOLDERS' EQUITY                                                      23,302,679
                                                                               -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                     $36,047,207
                                                                               ===========
</TABLE>

           The accompanying notes to interim financial statements are
                     an integral part of this balance sheet.


                                       1
<PAGE>

                               ORIENT PAPER, INC.
                           (FORMERLY CARLATERAL, INC.)
                            STATEMENTS OF OPERATIONS
                   FOR THE THREE MONTHS AND NINE MONTHS ENDED
                           NOVEMBER 30, 2007, AND 2006
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                         Three Months Ended                Nine Months Ended
                                                             November 30,                     November 30,
                                                       2007             2006             2007             2006
                                                       ----             ----             ----             ----
<S>                                                <C>              <C>              <C>              <C>
REVENUES:
Sales, net                                         $ 12,033,736     $  8,418,631     $ 31,152,349     $ 23,808,322
                                                   ------------     ------------     ------------     ------------

COST OF SALES:
Cost of sales                                        10,130,588        7,073,142       25,715,537       19,588,010
Business tax and surcharges                              55,063           31,357          129,001           94,240
                                                   ------------     ------------     ------------     ------------
Total cost of sales                                  10,185,651        7,104,499       25,844,538       19,682,250
                                                   ------------     ------------     ------------     ------------

GROSS PROFIT                                          1,848,085        1,314,132        5,307,811        4,126,072
                                                   ------------     ------------     ------------     ------------

GENERAL AND ADMINISTRATIVE EXPENSES                     (60,929)         (75,191)        (195,402)        (255,509)
                                                   ------------     ------------     ------------     ------------

INCOME FROM OPERATIONS                                1,787,156        1,238,941        5,112,409        3,870,563

OTHER INCOME (EXPENSE):
Interest expense                                       (131,261)         (66,730)        (292,314)        (234,566)
Non-operating expense                                        --               --               --           (4,018)
                                                   ------------     ------------     ------------     ------------
Total other income (expense), net                      (131,261)         (66,730)        (292,314)        (238,584)
                                                   ------------     ------------     ------------     ------------

INCOME BEFORE INCOME TAXES                            1,655,895        1,172,211        4,820,095        3,631,979

PROVISION FOR INCOME TAXES                                   --               --       (1,449,632)              --
                                                   ------------     ------------     ------------     ------------

NET INCOME                                         $  1,655,895     $  1,172,211     $  3,370,463     $  3,631,979
                                                   ============     ============     ============     ============

EARNINGS PER SHARE:

Basic and fully diluted earnings per share         $       0.04     $       0.03     $       0.08     $       0.09
                                                   ============     ============     ============     ============

Weighted average number of shares
outstanding, basic and diluted                       40,101,987       40,101,987       40,101,987       40,101,987
                                                   ============     ============     ============     ============
</TABLE>

           The accompanying notes to interim financial statements are
                      an integral part of these statements.


                                       2
<PAGE>

                               ORIENT PAPER, INC.
                           (FORMERLY CARLATERAL, INC.)
                       STATEMENTS OF COMPREHENSIVE INCOME
                   FOR THE THREE MONTHS AND NINE MONTHS ENDED
                           NOVEMBER 30, 2007, AND 2006
                                   (Unaudited)

<TABLE>
<CAPTION>
                                               Three Months Ended          Nine Months Ended
                                                   November 30,               November 30,
                                               2007          2006          2007          2006
                                               ----          ----          ----          ----
<S>                                         <C>           <C>           <C>           <C>
NET INCOME                                  $1,655,895    $1,172,211    $3,370,463    $3,631,979

OTHER COMPREHENSIVE INCOME:

    FOREIGN CURRENCY
       TRANSLATION ADJUSTMENT                  506,238       193,116     1,035,090       476,268
                                            ----------    ----------    ----------    ----------

NET COMPREHENSIVE INCOME                    $2,162,133    $1,365,327    $4,405,553    $4,108,247
                                            ==========    ==========    ==========    ==========
</TABLE>

           The accompanying notes to interim financial statements are
                      an integral part of these statements.


                                       3
<PAGE>

                               ORIENT PAPER, INC.
                           (FORMERLY CARLATERAL, INC.)
                        STATEMENT OF STOCKHOLDERS' EQUITY
                   FOR THE NINE MONTHS ENDED NOVEMBER 30, 2007
                                   (Unaudited)

<TABLE>
<CAPTION>
                                     Common Stock
                              --------------------------
                                                                                                        Accumulated
                                                             Additional    Statutory                       Other           Total
                                              $0.001 Par      Paid-In       Earnings      Retained     Comprehensive   Stockholders'
                                 Shares         Value         Capital       Reserve       Earnings         Income          Equity
                              -----------    -----------    -----------   -----------    -----------    -----------      -----------
<S>                            <C>           <C>            <C>           <C>            <C>            <C>              <C>
Balance, February 28, 2007     40,101,987    $    40,102    $ 9,101,706   $ 1,153,628    $ 7,572,425    $ 1,029,265      $18,897,126

Recapitalization related to
 reverse merger                        --             --        (31,589)           --         31,589             --               --

Foreign currency
 translation adjustment                --             --             --            --             --      1,035,090        1,035,090

Net income for the period              --             --             --            --      3,370,463             --        3,370,463
                              -----------    -----------    -----------   -----------    -----------    -----------      -----------

Balance, November 30, 2007     40,101,987    $    40,102    $ 9,070,117   $ 1,153,628    $10,974,477    $ 2,064,355      $23,302,679
                              ===========    ===========    ===========   ===========    ===========    ===========      ===========
</TABLE>

           The accompanying notes to interim financial statements are
                      an integral part of this statement..


                                       4
<PAGE>

                               ORIENT PAPER, INC.
                           (FORMERLY CARLATERAL, INC.)
                            STATEMENTS OF CASH FLOWS
                            FOR THE NINE MONTHS ENDED
                           NOVEMBER 30, 2007, AND 2006
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                 2007            2006
                                                                 ----            ----
<S>                                                         <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                  $  3,370,463     $  3,631,979
Adjustments to reconcile net income to net
  cash provided by operating activities:
    Depreciation                                               2,206,130        1,614,614
Changes in operating assets and liabilities:
    Accounts receivable, trade                                   438,087       (1,264,394)
    Other receivables                                             (2,226)              --
    Advances to suppliers                                             --        3,121,818
    Inventories                                                2,097,404           23,456
    Accounts payable and accrued expenses                     (1,111,529)       1,944,702
    Taxes payable                                             (1,360,436)          92,340
                                                            ------------     ------------

Net cash provided by operating activities                      5,637,893        9,164,515
                                                            ------------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property and equipment                       (2,488,928)     (15,718,670)
                                                            ------------     ------------

Net cash (used in) investing activities                       (2,488,928)     (15,718,670)
                                                            ------------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from related party                                       --        4,760,025
    Payments to related party                                 (5,382,161)              --
    Proceeds from borrowing on credit facility                   643,834          989,383
                                                            ------------     ------------

Net cash (used in) provided by financing activities           (4,738,327)       5,749,408
                                                            ------------     ------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH
    AND CASH EQUIVALENTS                                       1,035,090          476,268
                                                            ------------     ------------

NET (DECREASE) IN CASH
    AND CASH EQUIVALENTS                                    $   (554,272)        (328,479)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                   579,810          798,803
                                                            ------------     ------------

CASH AND CASH EQUIVALNETS, END OF PERIOD                    $     25,538     $    470,324
                                                            ============     ============

SUPPLEMENTAL DISCLOSURE OF CASH
    FLOW INFORMATION:

    CASH PAID FOR INTEREST                                  $    336,539     $    237,417
                                                            ============     ============

    CASH PAID FOR TAXES                                     $  3,576,358     $    344,144
                                                            ============     ============
</TABLE>

           The accompanying notes to interim financial statements are
                      an integral part of these statements.


                                       5
<PAGE>

                               ORIENT PAPER, INC.
                           (FORMERLY CARLATERAL, INC.)
                      STATEMENTS OF CASH FLOWS (CONTINUED)
                            FOR THE NINE MONTHS ENDED
                           NOVEMBER 30, 2007, AND 2006
                                   (Unaudited)

SUPPLEMENTAL INFORMATION OF NONCASH INVESTING AND FINANCING ACTIVITIES:

On October 29, 2007, the Company entered into an Agreement and Plan of Merger
between Orient Paper, Inc., CARZ Merger Sub, Inc., a Nevada corporation and
wholly owned subsidiary of the Company, Dongfang Zhiye Holding Limited, and each
of the stockholders of Dongfang Zhiye Holding Limited. Under the terms of the
Agreement and Plan of Merger, the Company issued to the stockholders of Dongfang
Zhiye Holding Limited 29,801,987 shares of the Company's common stock, par value
$0.001, in exchange for all of the issued and outstanding shares of stock of
Dongfang Zhiye Holding Limited (50,000 shares). As a result of the Agreement and
Plan of Merger, the stockholders of Dongfang Zhiye Holding Limited control
Orient Paper, and Dongfang Zhiye Holding Limited has been deemed to have
effected a reverse merger for financial reporting purposes. The reverse merger
has been recorded as a recapitalization of the Company, with the net
consolidated assets of Dongfang Zhiye Holding Limited and the net assets of the
Company brought forward at their historical bases.

           The accompanying notes to interim financial statements are
                      an integral part of these statements.


                                       6
<PAGE>

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Basis of Presentation and Organization -- Orient Paper, Inc. ("Orient
      Paper" or the "Company" and formerly Carlateral, Inc.) is a Nevada
      corporation that initially provided financing services specializing in sub
      prime title loans, secured primarily using automobiles (but also boats,
      recreational vehicles, machinery, and other equipment) as collateral. The
      Company was incorporated under the laws of the State of Nevada on December
      9, 2005, under the name of Carlateral, Inc. The target market of the
      Company was individuals needing short-term capital (30 to 90 days). Such
      individuals generally were those individuals that either did not meet the
      lending criteria of established banks and lending institutions, or did not
      wish to incur the delays associated with a lengthy loan application and
      approval process. The accompanying financial statements of Orient Paper
      were prepared from the accounts of the Company under the accrual basis of
      accounting in United States dollars. In addition, the accompanying
      financial statements reflect the completion of a reverse merger between
      Orient Paper, CARZ Merger Sub, Inc., a Nevada corporation and wholly owned
      subsidiary of the Company, Dongfang Zhiye Holding Limited, a British
      Virgin Islands company ("DZH Limited"), and the stockholders of DZH
      Limited, which was effected on October 29, 2007. DZH Limited is a holding
      company with no operations, and owns 100 percent of the outstanding stock
      and ownership of Hebei Baoding Orient Paper Milling Co., Ltd. ("HBOP"), a
      company organized under the laws of the People's Republic of China
      ("PRC").

      Prior to the completion of the reverse merger, Orient Paper was a
      corporation with limited operations (since its incorporation on December
      9, 2005). On December 21, 2007, the name of the Company was changed from
      Carlateral, Inc. to Orient Paper, Inc. in order to better reflect the
      current business plan subsequent to the reverse merger.

      DZH Limited was formed on November 13, 2006, under the laws of the British
      Virgin Islands, and is a holding company. As such, DZH Limited does not
      generate any financial or operating transactions. It owns 100 percent of
      the issued and outstanding stock and ownership HBOP.

      HBOP was organized on March 3, 1996, under the laws of the PRC. HBOP
      engages mainly in the production and distribution of products such as copy
      paper, uncoated and coated paper, digital photo paper, corrugated paper,
      plastic paper, kraft paper, graphic design paper, antifraud thermal
      security paper, and other paper and packaging-related products. HBOP uses
      recycled paper as its raw materials.

      Given that DZH Limited is considered to have acquired Orient Paper by a
      reverse merger through an Agreement and Plan of Merger (see Note 7), and
      its stockholders currently have voting control of the Company, the
      accompanying financial statements and related disclosures in the notes to
      financial statements present the financial position as of November 30,
      2007, and the operations for the three months and nine months ended
      November 30, 2007, and 2006, of DZH Limited and its subsidiary HBOP under
      the name of Orient Paper. The reverse merger has been recorded as a
      recapitalization of the Company, with the consolidated net assets of DZH
      Limited and its wholly owned operating subsidiary HBOP, and net assets
      Orient Paper brought forward at their historical bases. The costs
      associated with the reverse merger have been expensed as incurred.

      Unaudited Interim Financial Statements - The interim financial statements
      as of November 30, 2007, and for the periods ended November 30, 2007, and
      2006, are unaudited. However, in the opinion of management, the interim
      financial statements include all adjustments, consisting only of normal
      recurring adjustments, necessary to present fairly the Company's financial


                                       7
<PAGE>

      position as of November 30, 2007, and the results of its operations and
      its cash flows for the periods ended November 30, 2007, and 2006. These
      results are not necessarily indicative of the results expected for the
      calendar year ending December 31, 2007. The accompanying financial
      statements and notes thereto do not reflect all disclosures required under
      accounting principles generally accepted in the United States of America.
      Refer to Orient Paper's audited financial statements contained in its
      Annual Report on Form 10-KSB as of February 28, 2007, for additional
      information, including significant accounting policies.

      Foreign Currency Translation - The Company accounts for foreign currency
      translation pursuant to SFAS No. 52, "Foreign Currency Translation" ("SFAS
      No. 52"). The Company's functional currency is the Chinese Yuan Renminbi
      ("CNY"). Under SFAS No. 52, all assets and liabilities are translated into
      United States dollars using the current exchange rate at the end of each
      fiscal period. Revenues and expenses are translated using the average
      exchange rates prevailing throughout the respective periods. Translation
      adjustments are included in other comprehensive income (loss) for the
      period. Certain transactions of the Company are denominated in United
      States dollars. Translation gains or losses related to such transactions
      are recognized for each reporting period in the related statement of
      operations and comprehensive income (loss).

      Use of Estimates - The preparation of financial statements in conformity
      with accounting principles generally accepted in the United States of
      America requires management to make estimates and assumptions that affect
      the reported amounts of assets and liabilities as of November 30, 2007,
      and revenues and expenses for the three months and nine months ended
      November 30, 2007, and 2006. Actual results could differ from those
      estimates made by management.

      Risks and Uncertainties - The Company is subject to substantial risks
      from, among other things, intense competition associated with the industry
      in general, other risks associated with financing, liquidity requirements,
      rapidly changing customer requirements, limited operating history, foreign
      currency exchange rates, and operating in the PRC under its various laws
      and restrictions.

      Cash and Cash Equivalents - For purposes of reporting within the
      statements of cash flows, the Company considers all cash on hand, cash
      accounts not subject to withdrawal restrictions or penalties, and all
      highly liquid debt instruments purchased with a maturity of three months
      or less to be cash and cash equivalents.

      Concentration of Credit Risk - Financial instruments which potentially
      subject the Company to concentrations of credit risk consist principally
      of cash. The Company places its temporary cash investments in reputable
      financial institutions which are fully insured by the PRC government.

      Accounts Receivable - Trade accounts receivable are recorded on shipment
      of products to customers, and generally are due under the terms of net 30
      days. The trade receivables are not collateralized and interest is not
      accrued on past due accounts. Periodically, management reviews the
      adequacy of its provision for doubtful accounts based on historical bad
      debt expense results and current economic conditions using factors based
      on the aging of its accounts receivable. Additionally, the Company may
      identify additional allowance requirements based on indications that a
      specific customer may be experiencing financial difficulties. Actual bad
      debt results could differ materially from these estimates. As of November
      30, 2007, management determined that a reserve for bad debts was not
      needed. While management uses the best information available upon which to
      base estimates, future adjustments to the allowance may be necessary if
      economic conditions differ substantially from the assumptions used for the
      purposes of analysis.


                                       8
<PAGE>

      Inventories - Inventories consist principally of raw materials (used
      paper) and finished goods and are stated at the lower of cost (first-in,
      first-out method) or market.

      Property and Equipment - Property and equipment are stated at cost. Major
      renewals, betterments, and improvements are charged to the asset accounts
      while replacements, maintenance, and repairs, which do not improve or
      extend the lives of the respective assets, are expensed to operations. At
      the time property and equipment are retired or otherwise disposed of, the
      asset and related accumulated depreciation accounts are relieved of the
      applicable amounts. Gains or losses from retirements or sales are credited
      or charged to income.

      The Company depreciates property and equipment using the straight-line
      method as follows:

           Building and interior                    30 years
           Furniture and fixtures                   5-15 years
           Vehicles                                 15 years

      Long-Lived Assets - The Company evaluates the recoverability of long-lived
      assets and the related estimated remaining useful lives when events or
      circumstances lead management to believe that the carrying value of an
      asset may not be recoverable and the undiscounted cash flows estimated to
      be generated by those assets are less than the assets' carrying amount. In
      such circumstances, those assets are written down to estimated fair value.
      For the nine-month periods ended November 30, 2007, and 2006, no events or
      circumstances occurred for which an evaluation of the recoverability of
      long-lived asset was required.

      Fair Value of Financial Instruments -The Company estimates the fair value
      of financial instruments using the available market information and
      valuation methods. Considerable judgment is required in estimating fair
      value. Accordingly, the estimates of fair value may not be indicative of
      the amounts the Company could realize in a current market exchange. As of
      November 30, 2007, the Company's financial instruments approximated fair
      value to do the nature and maturity of such instruments.

      Statutory Reserves - The laws and regulations of the PRC require that
      before an enterprise distributes profits to its shareholders, it must
      first satisfy all tax liabilities, provide for losses in previous years,
      and make allocations, in proportions determined at the discretion of the
      Board of Directors, after the statutory reserve. The statutory reserves
      include a surplus reserve fund and a common welfare fund. These statutory
      reserves represent restricted retained earnings.

      Surplus Reserve Fund - The Company is required to transfer 10% of its net
      income, as determined in accordance with the PRC accounting rules and
      regulations, to a statutory surplus reserve fund until such reserve
      balance reaches 50% of the Company's registered capital.

      The transfer to this reserve must be made before distribution of any
      dividend to shareholders. For the nine months ended November 30, 2007, and
      2006, the Company transferred approximately $0 and $318,000, respectively,
      representing 10% of the year's net income determined in accordance with
      PRC accounting rules and regulations, to this reserve. The surplus reserve
      fund is non-distributable other than during liquidation and can be used to
      fund previous years' losses, if any, and may be utilized for business
      expansion or converted into share capital by issuing new shares to
      existing shareholders in proportion to their shareholdings or by
      increasing the par value of the shares currently held by them, provided
      that the remaining reserve balance after such issue is not less than 25%
      of the registered capital.


                                       9
<PAGE>

      Common Welfare Fund - The Company is required to transfer 5% to 10% of its
      net income, as determined in accordance with the PRC accounting rules and
      regulations, to the statutory common welfare fund. For the nine months
      ended November 30, 2007, and 2006, the Company transferred approximately
      $0 and $159,000, respectively, representing 5% of the year's net income
      determined in accordance with PRC accounting rules and regulations, to
      this reserve. This fund can only be utilized on capital items for the
      collective benefit of the Company's employees, such as construction of
      dormitories, cafeteria facilities, and other staff welfare facilities.
      This fund is non-distributable other than upon liquidation. The transfer
      to this fund must be made before distribution of any dividend to
      shareholders.

      Revenue Recognition Policy - The Company recognizes revenue when goods are
      shipped, when a formal arrangement exists, the price is fixed or
      determinable, the delivery is completed, no other significant obligations
      of the Company exist, and collectability is reasonably assured. The
      Company is required to collect a 3% value-added-tax ("VAT") on each sale.
      Gross revenues do not include this VAT which is remitted to the government
      quarterly.

      Advertising - The Company expenses all advertising and promotion costs as
      incurred. Advertising and promotion costs for the three months ended
      November 30, 2007, and 2006, were $198 and $0, respectively.
      Advertising and promotion costs for the nine months ended November 30,
      2007, and 2006, were $198 and $1,068, respectively.

      Lease Obligations - All noncancellable leases with an initial term greater
      than one year are categorized as either capital or operating leases.
      Assets recorded under capital leases are amortized according to the same
      methods employed for property and equipment or over the term of the
      related lease, if shorter.

      Income Taxes - The Company accounts for income taxes pursuant to SFAS No.
      109, "Accounting for Income Taxes" ("SFAS No. 109"). Under SFAS No. 109,
      deferred tax assets and liabilities are determined based on temporary
      differences between the bases of certain assets and liabilities for income
      tax and financial reporting purposes. The deferred tax assets and
      liabilities are classified according to the financial statement
      classification of the assets and liabilities generating the differences.

      The Company maintains a valuation allowance with respect to deferred tax
      assets. The Company establishes a valuation allowance based upon the
      potential likelihood of realizing the deferred tax asset and taking into
      consideration the Company's financial position and results of operations
      for the current period. Future realization of the deferred tax benefit
      depends on the existence of sufficient taxable income within the
      carryforward period under the Federal tax laws.

      Changes in circumstances, such as the Company generating taxable income,
      could cause a change in judgment about the realizability of the related
      deferred tax asset. Any change in the valuation allowance will be included
      in income in the year of the change in estimate.

      Foreign operations of the Company are governed by the Income Tax Laws of
      the PRC. Pursuant to the PRC Income Tax Laws, the Enterprise Income Tax
      ("EIT") is at a statutory rate of 33%, which is comprises of 30% national
      income tax and 3% local income tax.


                                       10
<PAGE>

      Comprehensive Income (Loss) - The Company presents comprehensive income
      (loss) in accordance with Statement of Financial Accounting Standards No.
      130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No. 130
      states that all items that are required to be recognized under accounting
      standards as components of comprehensive income (loss) be reported in the
      financial statements. For the periods ended November 30, 2007, and 2006,
      the only components of comprehensive income were the net income for the
      periods, and the foreign currency translation adjustments.

      Earnings Per Common Share - Basic earnings per share is computed by
      dividing the net income attributable to the common stockholders by the
      weighted average number of shares of common stock outstanding during the
      period. Fully diluted earnings per share is computed similar to basic
      earnings per share except that the denominator is increased to include the
      number of additional common shares that would have been outstanding if the
      potential common shares had been issued and if the additional common
      shares were dilutive.

      Fiscal Year End - On November 16, 2007, the Board of Directors of the
      Company elected under the Bylaws of the Company to change the fiscal year
      end from February 28th to December 31st.

2.    INVENTORIES

      Inventories consisted of the following as of November 30, 2007:

         Raw materials                                 $290,713
         Finished goods                                 232,983
                                                       --------

         Total inventories                             $523,696
                                                       ========

3.    PROPERTY AND EQUIPMENT

      Property and equipment consisted of the following as of November 30, 2007:

         Building and interior                        $39,540,323
         Furniture and fixtures                         3,192,519
         Vehicles                                           9,881
                                                      -----------

         Total property and equipment                  42,742,723

              Less -- accumulated depreciation         (8,290,593)
                                                      -----------

         Property and equipment, net                  $34,452,130
                                                      ===========

4.    SHORT-TERM LOANS PAYABLE

      The Company had the following short-term loans payable as of November 30,
      2007:

         Note payable, secured by equipment, payable at maturity,
         including interest at 7.8% per annum. Matures 2007          $2,705,858
         Credit facility payable, secured by building,
         payable at maturity, including interest at 2% plus
         the Bank's reference interest rate. Matures 2007             2,000,000
         Note payable, secured by equipment, payable at maturity,
         including interest at 6.7% per annum. Matures 2007           1,289,150
         Note payable, secured by equipment, payable at maturity,
         including interest at 6.7% per annum. Matures 2007              38,431
                                                                     ----------

         Total short-term loans payable                              $6,033,439
                                                                     ==========


                                       11
<PAGE>

      As of November 30, 2007, the Company's credit facility had a maximum
      borrowing level of $2,000,000, which left $0 in borrowing capacity. The
      average short-term borrowing rate for the year was approximately 7.9%.

5.    COMMITMENTS AND CONTINGENCIES

      Operating Lease

      The Company leases 133,200 metric acres of land at its location from a
      local government through a real estate lease with a 30-year term and
      expires on December 31, 2031. The lease requires an annual rental payment
      of approximately $15,384. This operating lease is renewable at the end of
      the 30-year term.

      Future minimum lease payments are as follows:

         November 30, 2008                                $ 15,384
         November 30, 2009                                  15,384
         November 30, 2010                                  15,384
         November 30, 2011                                  15,384
         November 30, 2012                                  15,384
         Thereafter                                        292,296
                                                          --------

         Total lease payments                             $369,216
                                                          ========

      Environmental Remediation

      In accordance with the real estate lease, the Company will be obligated to
      return the land to its condition prior to the lease. As such, the Company
      will accrue the cost estimated to return the land to its prior condition
      over the 30-year life of the lease. The Company has not obtained an
      estimate for those costs, but management is confident that any such costs
      that should be accrued in the nine months ended November 30, 2007, or
      2006, are not material.

6.    RELATED PARTY TRANSACTION

      The Chief Executive Officer of the Company loaned to the Company
      $8,009,731 and $3,531,272 during the years ended December 31, 2006, and
      2005, respectively. As of November 30, 2007, the Company owed the Chief
      Executive Officer $5,780,897. There are provisions for deferring payment
      if the Company's cash flow is not sufficient to cover the obligation. The
      loan is non-interest bearing.

      The obligation owed to the Chief Executive Officer matures as follows:

         November 30, 2008                             $2,590,000
         November 30, 2009                              3,190,897
                                                       ----------

         Total                                         $5,780,897
                                                       ==========


                                       12
<PAGE>

7.    COMMON STOCK

      On October 29, 2007, the Company entered into an Agreement and Plan of
      Merger (the "Merger Agreement") between Orient Paper, CARZ Merger Sub,
      Inc., a Nevada corporation and wholly owned subsidiary of the Company, DZH
      Limited, and the stockholders of DZH Limited. Under the terms of the
      Merger Agreement, the Company issued to the stockholders of DZH Limited
      29,801,987 shares of the Company's common stock, par value $0.001, in
      exchange for all of the issued and outstanding shares of stock of DZH
      Limited (50,000 shares). The shares of common stock of the Company were
      issued without registration under the Securities Act of 1933, and were
      distributed pro rata among the stockholders of DZH Limited in accordance
      with their respective ownership interests in DZH Limited immediately
      before completion of the merger transaction. As a result of the Merger
      Agreement, DZH Limited merged with CARZ Merger Sub, Inc., with DZH Limited
      as the surviving entity. As such, DZH Limited became a wholly owned
      subsidiary of the Company, which, in turn, made the Company the indirect
      owner of DZH Limited's operating subsidiary, HBOP.

      For financial reporting purposes, DZH Limited is considered to have
      acquired Orient Paper by a reverse merger through the Merger Agreement,
      and its stockholders currently have voting control of the Company. As
      such, the accompanying financial statements and related disclosures in the
      notes to financial statements present the financial position as of
      November 30, 2007, and the operations for the three months and nine months
      ended November 30, 2007, and 2006, of DZH Limited and its subsidiary HBOP
      under the name of Orient Paper. The reverse merger has been recorded as a
      recapitalization of the Company, with the consolidated net assets of DZH
      Limited and its wholly owned operating subsidiary HBOP, and net assets
      Orient Paper brought forward at their historical bases. The costs
      associated with the reverse merger have been expensed as incurred.

8.    RECENT ACCOUNTING PRONOUNCEMENTS

      In September 2006, the FASB issued SFAS No. 157, "Fair Value
      Measurements." This statement defines fair value, establishes a framework
      for measuring fair value in generally accepted accounting principles, and
      expands disclosure about fair value measurements. This statement applies
      under other accounting pronouncements that require or permit fair value
      measurement, the FASB having previously concluded in those accounting
      pronouncements that fair value is the relevant measurement attribute. This
      statement does not require any new fair value measurements. However, for
      some entities, the application of the statement will change current
      practice. This statement is effective for financial statements issued for
      fiscal years beginning after November 15, 2007, and interim periods within
      those fiscal years. The management of the Company does not expect the
      adoption of this pronouncement to have a material impact on its financial
      statements.

      In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting
      for Defined Benefit Pension and Other Postretirement Plans - An Amendment
      of FASB Statements No. 87, 88, 106 and 132(R)." This statement improves
      financial reporting by requiring an employer to recognize the overfunded
      or underfunded status of a defined benefit postretirement plan (other than
      a multi-employer plan) as an asset or liability in its statement of
      financial position and to recognize changes in that funded status in the


                                       13
<PAGE>

      year in which the changes occur through comprehensive income of a business
      entity or changes in unrestricted net assets of a not-for-profit
      organization. This statement also improves financial reporting by
      requiring an employer to measure the funded status of a plan as of the
      date of its year-end statement of financial position, with limited
      exceptions. The management of the Company does not expect the adoption of
      this pronouncement to have a material impact on its financial statements.

      In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
      Financial Assets and Financial Liabilities - Including An Amendment of
      FASB Statement No. 115," which permits entities to choose to measure many
      financial instruments and certain other items at fair value that are not
      currently required to be measured at fair value. An entity would report
      unrealized gains and losses on items for which the fair value option has
      been elected in earnings at each subsequent reporting date. The objective
      is to improve financial reporting by providing entities with the
      opportunity to mitigate volatility in reported earnings caused by
      measuring related assets and liabilities differently without having to
      apply complex hedge accounting provisions. The decision about whether to
      elect the fair value option is applied instrument by instrument, with a
      few exceptions; the decision is irrevocable; and it is applied only to
      entire instruments and not to portions of instruments. SFAS No. 159
      requires disclosures that facilitate comparisons (a) between entities that
      choose different measurement attributes for similar assets and liabilities
      and (b) between assets and liabilities in the financial statements of an
      entity that selects different measurement attributes for similar assets
      and liabilities. SFAS No. 159 is effective for financial statements issued
      for fiscal years beginning after November 15, 2007. Early adoption is
      permitted as of the beginning of a fiscal year provided the entity also
      elects to apply the provisions of SFAS No. 157. Upon implementation, an
      entity shall report the effect of the first re-measurement to fair value
      as a cumulative-effect adjustment to the opening balance of retained
      earnings. Since the provisions of SFAS No. 159 are applied prospectively,
      any potential impact will depend on the instruments selected for fair
      value measurement at the time of implementation. The management of the
      Company does not expect the adoption of this pronouncement to have a
      material impact on its financial statements.

      In December 2007, the FASB issued SFAS 141R, "Business Combinations -
      Revised 2007," which replaces FASB Statement No. 141, "Business
      Combinations." SFAS 141R establishes principles and requirements intending
      to improve the relevance, representational faithfulness, and comparability
      of information that a reporting entity provides in its financial reports
      about a business combination and its effects. This is accomplished through
      requiring the acquirer to recognize assets acquired and liabilities
      assumed arising from contractual contingencies as of the acquisition date,
      measured at their acquisition-date fair values. This includes contractual
      contingencies only if it is more likely than not that they meet the
      definition of an asset of a liability in FASB Concepts Statement No. 6,
      "Elements of Financial Statements - A Replacement of FASB Concepts
      Statement No. 3." This statement also requires the acquirer to recognized
      goodwill as of the acquisition date, measured as a residual. However, this
      statement improves the way in which an acquirer's obligations to make
      payments conditioned on the outcome of future events are recognized and
      measured, which in turn improves the measure of goodwill. This statement


                                       14
<PAGE>

      also defines a bargain purchases as a business combination in which the
      total acquisition-date fair value of the consideration transferred plus
      any noncontrolling interest in the acquiree, and it requires the acquirer
      to recognize that excess in earnings as a gain attributable to the
      acquirer. This therefore improves the representational faithfulness and
      completeness of the information provided about both the acquirer's
      earnings during the period in which it makes a bargain purchase and the
      measures of the assets acquired in the bargain purchase. The management of
      the Company does not expect the adoption of this pronouncement to have a
      material impact on its financial statements.

      In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests
      in Consolidated Financial Statements - An Amendment of ARB No. 51," which
      establishes accounting and reporting standards to improve the relevance,
      comparability, and transparency of financial information in its
      consolidated financial statements. This is accomplished by requiring all
      entities, except not-for-profit organizations, that prepare consolidated
      financial statements to (a) clearly identify, label, and present ownership
      interests in subsidiaries held by parties other than the parent in the
      consolidated statement of financial position within equity, but separate
      from the parent's equity, (b) clearly identify and present both the
      parent's and the noncontrolling interest's attributable consolidated net
      income on the face of the consolidated statement of income, (c)
      consistently account for changes in parent's ownership interest while the
      parent retains it controlling financial interest in subsidiary and for all
      transactions that are economically similar to be accounted for similarly,
      (d) measure of any gain, loss or retained noncontrolling equity at fair
      value after a subsidiary is deconsolidated, and (e) provide sufficient
      disclosures that clearly identify and distinguish between the interests of
      the parent and the interests of the noncontrolling owners. This Statement
      also clarifies that a noncontrolling interest in a subsidiary is an
      ownership interest in the consolidated entity that should be reported as
      equity in the consolidated financial statements. SFAS No. 160 is effective
      for fiscal years, and interim periods on or after December 15, 2008. The
      management of the Company does not expect the adoption of this
      pronouncement to have a material impact on its financial statements.

9.    CHANGE IN THE BOARD OF DIRECTORS AND MANAGEMENT

      Effective November 16, 2007, each of the following individuals were
      appointed by the Board of Directors of the Company to serve until his or
      her successor is chosen or upon his or her earlier resignation or removal
      as an officer of the Company in accordance with the Bylaws of the Company:
      Zhenyong Liu, Chief Executive Officer; Jing Hao, Chief Financial Officer;
      and, Dahong Zhou, Secretary.

      Effective November 30, 2007, Hui Ping Cheng resigned in her capacity as
      the sole member of the Board of Directors of the Company. Effective the
      same date, Zhenyong Liu, Xiaodong Liu, Fuzeng Liu, and Chen Li were
      appointed appointed to the Board of Directors to serve until his or her
      successor is chosen or upon his or her earlier death, resignation or
      removal as a member of the Board of Directors in accordance with the
      Bylaws of the Company. Zhenyong Liu was also appointed as Chairman of the
      Board of Directors of the Company.

10.   SUBSEQUENT EVENT

      As of December 21, 2007, by a majority vote of the stockholders of the
      Company, the amount of authorized common stock, par value $0.001 per
      share, was increased from 75,000,000 shares to 500,000,000 shares. In
      addition, the Company eliminated preemptive rights to acquire unissued
      shares of its common stock.


                                       15
<PAGE>

Item 2. Management's Discussion and Analysis or Plan of Operation

Cautionary Notice Regarding Forward Looking Statements

Orient Paper Inc. (referred to herein as "we" or the "Company") desires to take
advantage of the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. This report contains a number of forward-looking statements
that reflect management's current views and expectations with respect to our
business, strategies, future results and events and financial performance. All
statements made in this annual report other than statements of historical fact,
including statements that address operating performance, events or developments
that management expects or anticipates will or may occur in the future,
including statements related to future reserves, cash flows, revenues,
profitability, adequacy of funds from operations, statements expressing general
optimism about future operating results and non-historical information, are
forward-looking statements. In particular, the words "believe," "expect,"
"intend," "anticipate," "estimate," "may," "plan," "will," variations of such
words and similar expressions identify forward-looking statements, but are not
the exclusive means of identifying such statements and their absence does not
mean that the statement is not forward-looking.

These forward-looking statements are subject to certain known and unknown risks
and uncertainties, which may cause our actual results, performance, or
achievements to differ materially from historical results as well as those
expressed in, anticipated, or implied by these forward-looking statements. We do
not undertake any obligation to revise these forward-looking statements to
reflect any future events or circumstances. Factors that could cause or
contribute to such differences include, but are not limited to, those set forth
in our annual reports filed with the Securities and Exchange Commission,
together with the risks discussed in our press releases and other communications
to shareholders issued by us from time to time, which attempt to advise
interested parties of the risks and factors that may affect our business.
Important factors that could cause actual results to differ materially from
those in the forward-looking statements herein include, but are not limited to,
our ability to raise capital as and, when required, the availability of raw
products and other supplies, competition, environmental risks, the prices of
goods and services, government regulations, and political and economic factors
in the People's Republic of China in which our operating subsidiary operates.

Plan of Operations

      Our wholly owned subsidiary, Dongfang Zhiye Holding Limited ("DZH
Limited"), was the surviving entity in a merger transaction completed October
29, 2007, involving us, our newly-formed wholly owned subsidiary, DZH Limited,
and each of its stockholders (the "Merger Transaction"). For financial reporting
purposes, the Merger Transaction has been treated as a reverse merger, with DZH
Limited deemed to be the accounting acquirer. Accordingly, the transaction has
been reflected in the accompanying financial statements as a recapitalization,
and the financial information presented is that of DZH Limited and its wholly
owned operating company subsidiary, Hebei Baoding Orient Paper Milling Company
Limited (the "Operating Subsidiary"), located in the People's Republic of China.

      The core business of our Operating Subsidiary consists of the production
and distribution of paper products such as copy paper, uncoated and coated
paper, digital photo paper, corrugated paper, plastic paper, kraft paper,
graphic design paper, antifraud thermal security paper, and other paper and
packaging related products. Our main products include various specifications of
(i) corrugated paper, (ii) tea paperboard, (iii) middle-grade offset paper, (iv)
high-grade offset paper, and (v) printing paper.

      Products currently in development include (a) security paper, (b)
environmental news printing paper, and (c) digital photographic paper. With
respect to each of these products, HBOP has already established process orders,
installed production equipment, and completed small pilot production.


                                       16
<PAGE>

      Our Operating Subsidiary's main competitors are: (1) Nine Dragons Paper
(Holdings) Limited; (2) Huatai Group Limited; (3) Chenming Paper Group Limited;
(4) Sun Paper Group Limited; and (5) Qingshan Paper Co., Ltd.

      Our largest suppliers are Dongfang Business Company Limited, Beijing
Heerwang Industrial Material Company Limited, Shanghai Paper Machine Company
Limited-Beijing Branch, Tianhe Coal Company Limited, and AP Procurement Business
Company Limited-Macao Branch.

      Our Operating Subsidiary's largest customers are Beijing Zhongji Star
Paper Company Limited, Shanghai Hengshi Paper Company Limited, Hebei Mancheng
Printing Company Limited, Beijing Star Paper Company Limited, and Baoding Hengyi
Printing Company Limited.

      Our Operating Subsidiary continues to maintain a rapid pace of
development, proactively designing and constructing new product offerings, such
as anti-counterfeit paper, digital photo paper, and environmental newsprint.

      In order to adapt to product diversification requirements from the market,
our Operating Subsidiary intends to focus on middle and high-end products and
brands, offering "excellent technology, superior quality and diversified
products," and to enhance our product competitiveness in both the domestic and
foreign markets.

      We plan to modernize production techniques, replace aging equipment, and
upgrade our existing factories during the next five years. Initially, we intend
to update outdated equipment, accelerate the use of advanced papermaking
equipment, and improve papermaking productivity. Thereafter, we expect to
promote the use of new technologies, improve pulp quality and yield, and,
ultimately, promote the use of chemical agents to improve the quality of paper
and cardboard.

Results of Operations

Three Months Ended November 30, 2007, and 2006-

      The following table presents certain information derived from our
unaudited statements of operations for the three months ended November 30, 2007,
and 2006:

                                     Three Months Ended November 30,
                                     -------------------------------  Percentage
            (Unaudited)                    2007           2006          Change
            -----------                -----------    --------------------------
 Sales, net                            $12,033,736    $ 8,418,631       42.94%
 Gross Profit                            1,848,085      1,314,132       40.63%
 General and Administrative expenses        60,929         75,191      -18.97%
 Income from operations                  1,787,156      1,238,941       44.25%
 Net Income                            $ 1,655,895      1,172,211       41.26%

Net sales

      Net sales for three months ended November 30, 2007, increased by 42.94 %,
as compared to three months ended November 30, 2006, for a total of $12,033,736
in the three months ended November 30, 2007, compared to $ 8,418,631 in three
months ended November 30, 2006. The increase was driven primarily by:


                                       17
<PAGE>

      a. demand in the market exceeding supply of the product, as a result of
many small paper milling companies closing down because of heightened
environmental laws and regulations. HBOP launched a successful market expansion
plan that increased the sales volume in domestic market.

      b. appreciation of Chinese currency (Renminbi Yuan) against the United
States dollar from year 2006 to 2007.

Gross Profit

      Gross Profit was $1,314,132 in three months ended November 30, 2006, and
increased to $1,848,085 for three months ended November 30, 2007, an increase of
40.63%. The increase was attributed to the demand for the product exceeding
supply in the market.

General and Administrative Expense

      In three months ended November 30, 2007, the general and administrative
expenses were $60,929, as compared to $75,191 in three months ended November 30,
2006, a decrease of approximately $14,262 or 18.97%. The decrease was due to the
reduction in advertisement expenses occasioned by heightened market demand
relative to supply.

Income (Loss) from Operations

      Income from operations in three months ended November 30, 2007, was
$1,787,156, an increase of $548,215 or 44.25%, as compared to three months ended
November 30, 2006, which was $1,238,941. This increase was primarily due to the
higher net sales generated.

Net Income

      Net income for three months ended November 30, 2007, was $1,655,895, an
increase of $483,684 or 41.26%, as compared to three months ended November 30,
2006, which was $1,172,211. The increase was due to the higher net sales
generated, together with the moderate increase in the cost of sales and slightly
reduced expenses.

Nine Months Ended November 30, 2007, and 2006-

      The following table presents certain information derived from our
unaudited statements of operations for the nine months ended November 30, 2007,
and 2006:

                                      Nine Months Ended November 30,
                                      ------------------------------  Percentage
            (Unaudited)                    2007           2006          Change
            -----------                -----------    --------------------------
 Sales, net                            $31,152,349    $23,808,322    30.85%
 Gross Profit                            5,307,811      4,126,072    28.64%
 General and Administrative expenses       195,402        255,509    -23.52%
 Income from operations                  5,112,409      3,870,563    32.08%
 Net Income                            $ 3,370,463    $ 3,631,979    -7.20%


                                       18
<PAGE>

Net sales

      Net sales for nine months ended November 30, 2007, increased by 30.85%, as
compared to nine months ended November 30, 2006, for a total of $31,152,349 in
the nine months ended November 30, 2007, compared to $23,808,322 in the nine
months ended November 30, 2006. The increase was driven primarily by:

      a. demand in the market exceeding supply of the product, as a result of
many small paper milling companies closing down because of heightened
environmental laws and regulations. HBOP launched a successful market expansion
plan that increased the sales volume in domestic market.

      b. appreciation of Chinese currency (Renminbi Yuan) against the United
States dollar from year 2006 to 2007.

Gross Profit

      Gross Profit was $4,126,072 in nine months ended November 30, 2006, and
increased to $5,307,811 for nine months ended November 30, 2007, an increase of
28.64%. The increase was attributed to the demand for the product exceeding the
supply in the market.

General and Administrative Expense

      In nine months ended November 30, 2007, the general and administrative
expenses were $195,402, as compared to $255,509 in the nine months ended
November 30, 2006. It decreased about $60,107 or 23.52%. The decrease was due to
the reduction in advertisement expenses occasioned by heightened market demand
relative to supply.

Income (Loss) from Operations

      Income from operations in nine months ended November 30, 2007, was
$5,112,409, an increase of $1,241,846 or 32.08%, as compared to nine months
ended November 30, 2006, which was $3,870,563. This increase was primarily due
to the higher net sales generated.

Net Income

      Net income for nine months ended November 30, 2007, was $3,370,463, a
decrease of $261,516 or 7.20%, as compared to nine months ended November 30,
2006, which was $3,631,979. The decrease was due to the provision for income
taxes in the nine months ended November 30, 2007.

Liquidity and Sources of Capital

      As of November 30, 2007, we had cash and cash equivalents of $25,538. Cash
flows from operating activities were $5,637,893 for the nine months ended
November 30, 2007, as compared to $9,164,515 for the nine months ended November
30, 2006. Cash flows used in investing activities were $2,488,928 for the nine
months ended November 30, 2007, as compared to $15,718,670 for the nine months
ended November 30, 2006. Cash flows used in financing activities were $4,738,327
for the nine months ended November 30, 2007, as compared to $5,749,408 provided
by financing activities for the nine months ended November 30, 2006. We expect
that our cash and cash equivalents will be sufficient to satisfy our cash
requirements for the next twelve months.

      On a long-term basis, our liquidity is dependent on successfully executing
our business plan, receipt of revenues, and additional infusions of capital
through equity and debt financing. Any funds raised from an offering of our
equity or debt will be used to continue to develop and execute our business
plan. However, there can be no assurance that we will be able to obtain
additional equity or debt financing on terms acceptable to us. We believe that
the funds available to us are adequate to meet our operating needs for market
expansion.


                                       19
<PAGE>

Off-Balance Sheet Arrangements

      We have never entered into any off-balance sheet financing arrangements
and have never established any special purpose entities. We have not guaranteed
any debt or commitments of other entities or entered into any options on
non-financial assets. We have no off balance sheet arrangements that have, or
are reasonably likely to have, a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures, or capital resources that would be
material to any investor in our securities.

Item 3. Controls and Procedures.

      We maintain disclosure controls and procedures that are designed to ensure
that information required to be disclosed in our reports under the Securities
Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized,
and reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission (the "SEC"), and that such information is
accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure based closely on the definition of "disclosure
controls and procedures" in Rule 15d-15(e) under the Exchange Act. In designing
and evaluating the disclosure controls and procedures, management recognized
that any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.

      At the end of the period covered by this Quarterly Report, we carried out
an evaluation, under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of our Company's disclosure
controls and procedures. Based upon the foregoing, our Chief Executive Officer
and Chief Financial Officer concluded that, as of November 30, 2007, the
disclosure controls and procedures of our Company were effective to ensure that
the information required to be disclosed in our Exchange Act reports was
recorded, processed, summarized, and reported on a timely basis.

      We adopted the system of internal controls over financial reporting (as
defined in Rule 15d-15(f) of the Exchange Act) used by our Operating Subsidiary,
following the completion of the Merger Transaction on October 29, 2007. Under
the Merger Transaction, we acquired DZH Limited, then a privately held company,
and the Operating Subsidiary, its operating subsidiary in China and also a
privately held company, as a result of which the consolidated financial
statements of DZH Limited and the Operating Subsidiary were treated as our
historical financial statements for financial accounting and reporting purposes.
We observe, however, that such financial controls were not designed to
facilitate the external financial reporting required of a publicly held company
under the Sarbanes-Oxley Act of 2002 and further, because the Operating
Subsidiary's accounting records have historically been maintained using
accounting principles generally accepted in the People's Republic of China, that
its personnel may not be fully familiar with accounting principles generally
accepted in the United States of America. Accordingly, to ensure the reliability
of future financial reports our management has determined to continue to augment
the financial reporting system inherited from the Operating Subsidiary into a
fully-integrated financial and operating control system for our Company and its
operations during the fiscal year ending December 31, 2008, and, as necessary,
to hire the requisite support to facilitate the timely preparation of accurate
financial reports.


                                       20
<PAGE>

                                     PART II
                                OTHER INFORMATION

Item 1. Legal Proceedings.

        None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

      We issued an aggregate of 29,801,987 shares of our common stock in the
Merger Transaction, which shares were distributed pro ratably among the
shareholders of DZH Limited in accordance with their respective ownership
interests in DZH Limited immediately before completion of the Merger
Transaction. The shares were issued without registration under Section 5 of the
Securities Act of 1933, as amended (the "Securities Act"), in reliance on the
exemptions from registration contained (i) in Section 4(2) of the Securities Act
and (ii) under Regulation S of the Securities Act afforded generally to offshore
transactions involving non-U.S. persons. The foregoing transaction was the
subject of our Current Report on Form 8-K filed with the SEC on November 2,
2007.

Item 3. Defaults Upon Senior Securities.

        None.

Item 4. Submission of Matters to a Vote of Security Holders.

      As previously reported by us in our definitive Information Statement on
Schedule 14C filed with the Securities and Exchange Commission on November 30,
2007, stockholders holding an aggregate of 22,646,043 our shares, representing
56.5% percent of the 40,101,987 shares of our common stock issued and
outstanding as of November 19, 2007 (the "Record Date"), consented in writing to
our amending our Articles of Incorporation, effective December 21, 2007, (i) to
change the name of our Company from Carlateral, Inc. to Orient Paper Inc., (ii)
to eliminate any provisions therein with respect to preemptive rights to acquire
unissued shares of our common stock, and (iii) to increase the authorized number
of shares of our common stock from 75,000,000 shares to 500,000,000 shares.

      No other matters were submitted to the vote or consent of the holders of
the outstanding shares of our common stock during the quarter ended November 30,
2007.

Item 5. Other Information.

        None.

Item 6. Exhibits.

     Exhibit
     No.             Description
     --------------  ----------------------------------------------------------

     31.1            Certification of Chief Executive Officer pursuant to
                     Section 302 of the Sarbanes-Oxley Act of 2002

     31.2            Certification of Chief Financial Officer pursuant to
                     Section 302 of the Sarbanes-Oxley Act of 2002

     32.1            Certification pursuant to 18 U.S.C. 1350, adopted pursuant
                     to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief
                     Executive Officer

     32.2            Certification pursuant to 18 U.S.C. 1350, adopted pursuant
                     to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief
                     Financial Officer


                                       21
<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                        ORIENT PAPER INC.


Date: January 16, 2008                  By:    /s/ Zhenyong Liu
                                               =================================
                                        Name:  Zhenyong Liu
                                        Title: Chief Executive Officer


Date: January 16, 2008                  By:    /s/ Jing Hao
                                               =================================
                                        Name:  Jing Hao
                                        Title: Chief Financial Officer


                                       23
<PAGE>

                             INDEX TO EXHIBITS

Exhibit
No.             Description
--------------  ----------------------------------------------------------

31.1            Certification of Chief Executive Officer pursuant to
                Section 302 of the Sarbanes-Oxley Act of 2002

31.2            Certification of Chief Financial Officer pursuant to
                Section 302 of the Sarbanes-Oxley Act of 2002

32.1            Certification pursuant to 18 U.S.C. 1350, adopted pursuant
                to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief
                Executive Officer

32.2            Certification pursuant to 18 U.S.C. 1350, adopted pursuant
                to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief
                Financial Officer