IT TECH PACKAGING INC
For the period ended Jun 30, 2024. Filed Aug 12, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 12, 2024
ITP$0.12-2.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-10.
0001213900-24-041827
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-12.
0001213900-24-067681
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 107 previous paragraphs and 151 current paragraphs.
51 unchanged; 49 reworded; 44 added; 7 removed; 0 previous and 7 current paragraphs rearranged.
Tables are not compared: 5 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (44)
Current report
Revenue for the three months ended June 30, 2024 was $26,249,788, a decrease of $3,770,126, or 12.56%, from $30,019,914 for the same period in the previous year. This was mainly due to the production suspension of offset printing paper and tissue paper products in the second quarter of 2024.
Current report
Total cost of sales for CMP, offset printing paper and tissue paper products for the quarter ended June 30, 2024 was $22,984,488, a decrease of $5,807,701, or 20.17%, from $28,792,189 for the comparable period in 2023. This was mainly due to the decrease in sales quantity of offset printing paper and tissue paper products and the decrease of the unit material cost of CMP products.
Current report
Cost of sales for offset printing paper was $nil for the quarter ended June 30, 2024, as compared to $3,079,485 for the comparable period in 2023. The production of offset printing paper was suspended in the second quarter of 2024.
Current report
Gross profit for offset printing paper, CMP and tissue paper products for the three months ended June 30, 2024 was $3,228,327, representing an increase of $2,044,782, or 172.77%, from the gross profit of $1,183,544 for the three months ended June 30, 2023. The increase was mainly the result of the factors discussed above.
Current report
Gross profit margin for light-weight CMP for the three months ended June 30, 2024 was 12.82%, or 5.68 percentage points higher, as compared to gross profit margin of 7.14% for the three months ended June 30, 2023. The increase was mainly due to the decrease in cost of recycled paper board, partially offset by the decrease of ASP of light-weight CMP in the second quarter of 2024.
Current report
Income (Loss) from Operations
Current report
Operating income for the quarter ended June 30, 2024 was $547,752, an increase of $1,066,435, or 205.60%, from loss from operations of $518,683 for the quarter ended June 30, 2023. The increase in income from operations was primarily due to the increase gross profit, partially offset by the increase in selling, general and administrative expenses.
Current report
Comparison of the Six months ended June 30, 2024 and 2023
Current report
Revenue from sales of offset printing paper, CMP and tissue paper products for the six months ended June 30, 2024 was $33,039,615, a decrease of $16,687,267, or 33.56%, from $49,726,882 for the six months ended June 30, 2023. This was mainly due to the decrease in sales volume of CMP, offset printing paper and tissue paper products, and the decrease in ASPs of CMP. Total quantities of offset printing paper, CMP and tissue paper products sold during the six months ended June 30, 2024 amounted to 94,034 tonnes, a decrease of 34,475 tonnes, or 26.83%, compared to 128,509 tonnes sold during the six months ended June 30, 2023. Total quantities of CMP and offset printing paper sold decreased by 33,991 tonnes in the six months of 2024 as compared to the same period of 2023. Production of CMP was suspended in January and February of 2024 and resumed in mid of March 2024, and production of offset printing paper and tissue paper products was suspended in the first half of 2024 due to energy price rise and Chinese New Year holiday. The production of offset printing paper and tissue paper products is expected to resume in the third quarter of 2024. The changes in revenue and quantity sold for the six months ended June 30, 2024 and 2023 are summarized as follows:
Current report
Revenue of Face Masks
Current report
Revenue generated from selling face masks were $nil and $79,883 for the six months ended June 30, 2024 and 2023.
Current report
Cost of Sales
Current report
Cost of sales for offset printing paper was $nil for the six months ended June 30, 2024, as compared to $3,079,485 in the same period of 2023.
Current report
Cost of sales for tissue paper products was $nil for the six months ended June 30, 2024, as compared to $1,983,139 in the same period of 2023.
Current report
Gross profit
Current report
Gross profit for the six months ended June 30, 2024 was $3,664,413 (representing 11.07% of the total revenue), representing an increase of $2,761,554, or 305.87%, from the gross profit of $902,859 (representing 1.81% of the total revenue) for the six months ended June 30, 2023. The increase was mainly due to the decrease in unit cost of materials of CMP, partially offset by the decrease in ASP of CMP.
Current report
Gross profit for offset printing paper, CMP and tissue paper products for the six months ended June 30, 2024 was $3,590,662, an increase of $2,674,349, or 291.86%, from the gross profit of $916,313 for the six months ended June 30, 2023. The increase was mainly the result of the factors discussed above.
Current report
The overall gross profit margin for offset printing paper, CMP and tissue paper products increased by 9.03 percentage points, from 1.84% for the six months ended June 30, 2023, to 10.87% for the six months ended June 30, 2024.
Current report
Gross profit margin for regular CMP for the six months ended June 30, 2024 was 10.86%, or 6.15 percentage points higher, as compared to gross profit margin of 4.71% for the six months ended June 30, 2023. Such increase was primarily due to decrease in material costs, partially offset by the decrease in ASP of regular CMP.
Current report
Face Masks
Current report
Gross loss for face mask for the six months ended June 30, 2024 and 2023 was $nil and $6,407, respectively.
Current report
Selling, General and Administrative Expenses
Current report
Selling, general and administrative expenses for the six months ended June 30, 2024 were $6,618,331, an increase of $2,799,564, or 73.31% from $3,818,767 for the six months ended June 30, 2023. The increase was mainly due to the increase in depreciation of idle fixed assets during production suspension.
Current report
Other Income and Expenses
Current report
Interest expense for the six months ended June 30, 2024 decreased by $130,820, from $519,850 for the six months ended June 30, 2023, to $389,030. The Company had short-term and long-term interest-bearing loans and lease obligation that aggregated $12,149,914 as of June 30, 2024, as compared to $17,607,943 as of June 30, 2023.
Current report
Gain (Loss) on derivative liability
Current report
Net Loss
Current report
As a result of the above, net loss was $3,824,283 for the six months ended June 30, 2024, representing a decrease of loss of $162,375, or 4.07%, from $3,986,658 for the six months ended June 30, 2023.
Current report
On June 11, 2024, the Company entered into a working capital loan agreement with the ICBC, with a balance of $2,806 as of June 30, 2024. The loan bears a fixed interest rate of 3.45% per annum. The loan will be due by June 11, 2025.
Current report
On June 21, 2024, the Company entered into a working capital loan agreement with the ICBC, with a balance of $140,316 as of June 30, 2024. The loan bears a fixed interest rate of 3.45% per annum. The loan will be due by June 21, 2025.
Current report
On June 22, 2024, the Company entered into a working capital loan agreement with the ICBC, with a balance of $140,316 as of June 30, 2024. The loan bears a fixed interest rate of 3.45% per annum. The loan will be due by June 22, 2025.
Current report
On June 24, 2024, the Company entered into a working capital loan agreement with the ICBC, with a balance of $137,509 as of June 30, 2024. The loan bears a fixed interest rate of 3.45% per annum. The loan will be due by June 24, 2025.
Current report
Mr. Zhenyong Liu, the Company’s CEO has loaned money to Dongfang Paper for working capital purposes over a period of time. On January 1, 2013,Dongfang Paper and Mr. Zhenyong Liu renewed the three-year term loan previously entered on January 1, 2010, and extended the maturity date further to December 31, 2015. On December 31, 2015, the Company paid off the loan of $2,249,279, together with interest of $391,374 for the period from 2013 to 2015. Approximately $359,676 and $361,915 of interest were outstanding to Mr. Zhenyong Liu, which were recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet as of June 30, 2024 and December 31, 2023, respectively.
Current report
On December 10, 2014, Mr. Zhenyong Liu provided a loan to the Company, amounted to $8,742,278 to Dongfang Paper for working capital purpose with an interest rate of 4.35% per annum, which was based on the primary lending rate of People’s Bank of China. The unsecured loan was provided on December 10, 2014, and would be originally due on December 10, 2017. During the year of 2016, the Company repaid $6,012,416 to Mr. Zhenyong Liu, together with interest of $288,596. In February 2018, the Company paid off the remaining balance, together with interest of $20,400. As of June 30, 2024 and December 31, 2023, approximately $42,095 and $42,357 of interest, respectively, were outstanding to Mr. Zhenyong Liu, which was recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet.
Current report
On March 1, 2015, the Company entered an agreement with Mr. Zhenyong Liu which allows Dongfang Paper to borrow from the CEO an amount up to $17,201,342 (RMB120,000,000) for working capital purposes. The advances or funding under the agreement are due three years from the date each amount is funded. The loan is unsecured and carries an annual interest rate set on the basis of the primary lending rate of the People’s Bank of China at the time of the borrowing. On July 13, 2015, an unsecured amount of $4,324,636 was drawn from the facility. On October 14, 2016 an unsecured amount of $2,883,091 was drawn from the facility. In February 2018, the Company repaid $1,507,432 to Mr. Zhenyong Liu. The loan would be originally due on July 12, 2018. Mr. Zhenyong Liu agreed to extend the loan for additional 3 years and the remaining balance will be due on July 12, 2021. On November 23, 2018, the company repaid $3,768,579 to Mr. Zhenyong Liu, together with interest of $158,651. In December 2019, the company paid off the remaining balance, together with interest of 94,636. As of June 30, 2024 and December 31, 2023, the outstanding interest was $192,846 and $194,047, respectively, which was recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet.
Current report
As of June 30, 2024 and December 31, 2023, total amount of loans due to Mr. Zhenyong Liu were $nil. The interest expense incurred for such related party loans were $nil for the three and six months ended June 30, 2024 and 2023. The accrued interest owing to Mr. Zhenyong Liu was approximately $594,617 and $598,319, as of June 30, 2024 and December 31, 2023, respectively, which was recorded in other payables and accrued liabilities. Mr. Zhenyong Liu, the Company’s CEO has loaned money to Dongfang Paper for working capital purposes over a period of time. On January 1, 2013,Dongfang Paper and Mr. Zhenyong Liu renewed the three-year term loan previously entered on January 1, 2010, and extended the maturity date further to December 31, 2015. On December 31, 2015, the Company paid off the loan of $2,249,279, together with interest of $391,374 for the period from 2013 to 2015. Approximately $359,676 and $361,915 of interest were outstanding to Mr. Zhenyong Liu, which were recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet as of June 30, 2024 and December 31, 2023, respectively.
Current report
On December 10, 2014, Mr. Zhenyong Liu provided a loan to the Company, amounted to $8,742,278 to Dongfang Paper for working capital purpose with an interest rate of 4.35% per annum, which was based on the primary lending rate of People’s Bank of China. The unsecured loan was provided on December 10, 2014, and would be originally due on December 10, 2017. During the year of 2016, the Company repaid $6,012,416 to Mr. Zhenyong Liu, together with interest of $288,596. In February 2018, the Company paid off the remaining balance, together with interest of $20,400. As of June 30, 2024 and December 31, 2023, approximately $42,095 and $42,357 of interest, respectively, were outstanding to Mr. Zhenyong Liu, which was recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet.
Current report
On March 1, 2015, the Company entered an agreement with Mr. Zhenyong Liu which allows Dongfang Paper to borrow from the CEO an amount up to $17,201,342 (RMB120,000,000) for working capital purposes. The advances or funding under the agreement are due three years from the date each amount is funded. The loan is unsecured and carries an annual interest rate set on the basis of the primary lending rate of the People’s Bank of China at the time of the borrowing. On July 13, 2015, an unsecured amount of $4,324,636 was drawn from the facility. On October 14, 2016 an unsecured amount of $2,883,091 was drawn from the facility. In February 2018, the Company repaid $1,507,432 to Mr. Zhenyong Liu. The loan would be originally due on July 12, 2018. Mr. Zhenyong Liu agreed to extend the loan for additional 3 years and the remaining balance will be due on July 12, 2021. On November 23, 2018, the company repaid $3,768,579 to Mr. Zhenyong Liu, together with interest of $158,651. In December 2019, the company paid off the remaining balance, together with interest of 94,636. As of June 30, 2024 and December 31, 2023, the outstanding interest was $192,846 and $194,047, respectively, which was recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet.
Current report
As of June 30, 2024 and December 31, 2023, total amount of loans due to Mr. Zhenyong Liu were $nil. The interest expense incurred for such related party loans were $nil for the three and six months ended June 30, 2024 and 2023. The accrued interest owing to Mr. Zhenyong Liu was approximately $594,617 and $598,319, as of June 30, 2024 and December 31, 2023, respectively, which was recorded in other payables and accrued liabilities. Mr. Zhenyong Liu, the Company’s CEO has loaned money to Dongfang Paper for working capital purposes over a period of time. On January 1, 2013,Dongfang Paper and Mr. Zhenyong Liu renewed the three-year term loan previously entered on January 1, 2010, and extended the maturity date further to December 31, 2015. On December 31, 2015, the Company paid off the loan of $2,249,279, together with interest of $391,374 for the period from 2013 to 2015. Approximately $359,676 and $361,915 of interest were outstanding to Mr. Zhenyong Liu, which were recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet as of June 30, 2024 and December 31, 2023, respectively.
Current report
On December 10, 2014, Mr. Zhenyong Liu provided a loan to the Company, amounted to $8,742,278 to Dongfang Paper for working capital purpose with an interest rate of 4.35% per annum, which was based on the primary lending rate of People’s Bank of China. The unsecured loan was provided on December 10, 2014, and would be originally due on December 10, 2017. During the year of 2016, the Company repaid $6,012,416 to Mr. Zhenyong Liu, together with interest of $288,596. In February 2018, the Company paid off the remaining balance, together with interest of $20,400. As of June 30, 2024 and December 31, 2023, approximately $42,095 and $42,357 of interest, respectively, were outstanding to Mr. Zhenyong Liu, which was recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet.
Showing the first 40 of 44 passages. Open the source sections for the rest.
Removed paragraphs (7)
Previous report
ASP for light-weight CMP decreased from $382/tonne for the three months ended March 31, 2023 to $355/tonne for the three months ended March 31, 2024, representing a 7.07% decrease. ASP in RMB for light-weight CMP for the first quarter of 2023 and 2024 was RMB2,618 and RMB2,522, respectively, representing a 3.68% decrease. The quantity of light-weight CMP sold decreased by 4,989 tonnes, from 8,019 tonnes in the first quarter of 2023, to 3,030 tonnes in the first quarter of 2024.
Previous report
Gross profit for offset printing paper, CMP and tissue paper products for the three months ended March 31, 2024 was $362,336, representing an increase of $629,567, or 235.59%, from the gross loss of $267,231 for the three months ended March 31, 2023. This was mainly due to the gross loss incurred for tissue paper products in the first quarter of 2023.
Previous report
i. Net cash provided by (used in) operating activities
Previous report
Mr. Zhenyong Liu, the Company’s CEO has loaned money to Dongfang Paper for working capital purposes over a period of time. On January 1, 2013,Dongfang Paper and Mr. Zhenyong Liu renewed the three-year term loan previously entered on January 1, 2010, and extended the maturity date further to December 31, 2015. On December 31, 2015, the Company paid off the loan of $2,249,279, together with interest of $391,374 for the period from 2013 to 2015. Approximately $361,289 and $361,915 of interest were outstanding to Mr. Zhenyong Liu, which were recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet as of March 31, 2024 and December 31, 2023, respectively.
Previous report
On December 10, 2014, Mr. Zhenyong Liu provided a loan to the Company, amounted to $8,742,278 to Dongfang Paper for working capital purpose with an interest rate of 4.35% per annum, which was based on the primary lending rate of People’s Bank of China. The unsecured loan was provided on December 10, 2014, and would be originally due on December 10, 2017. During the year of 2016, the Company repaid $6,012,416 to Mr. Zhenyong Liu, together with interest of $288,596. In February 2018, the company paid off the remaining balance, together with interest of $20,400. As of March 31, 2024 and December 31, 2023, approximately $42,283 and $42,357 of interest, respectively were outstanding to Mr. Zhenyong Liu, which was recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet.
Previous report
On March 1, 2015, the Company entered an agreement with Mr. Zhenyong Liu which allows Dongfang Paper to borrow from the CEO an amount up to $17,201,342 (RMB120,000,000) for working capital purposes. The advances or funding under the agreement are due three years from the date each amount is funded. The loan is unsecured and carries an annual interest rate set on the basis of the primary lending rate of the People’s Bank of China at the time of the borrowing. On July 13, 2015, an unsecured amount of $4,324,636 was drawn from the facility. On October 14, 2016 an unsecured amount of $2,883,091 was drawn from the facility. In February 2018, the company repaid $1,507,432 to Mr. Zhenyong Liu. The loan would be originally due on July 12, 2018. Mr. Zhenyong Liu agreed to extend the loan for additional 3 years and the remaining balance will be due on July 12, 2021. On November 23, 2018, the company repaid $3,768,579 to Mr. Zhenyong Liu, together with interest of $158,651. In December 2019, the company paid off the remaining balance, together with interest of 94,636. As of March 31, 2024 and December 31, 2023, the outstanding interest was $193,710 and $194,047, respectively, which was recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet.
Previous report
As of March 31, 2024 and December 31, 2023, total amount of loans due to Mr. Zhenyong Liu were $nil. The interest expense incurred for such related party loans were $nil for the three months ended March 31, 2024 and 2023. The accrued interest owing to Mr. Zhenyong Liu was approximately $597,282 and $598,319, as of March 31, 2024 and December 31, 2023, respectively, which was recorded in other payables and accrued liabilities.
Reworded paragraphs (49)
Previous wording
Revenue from sales of offset printing paper, CMP and tissue paper products for the three months ended March 31, 2024 was $6,826,800, representing a decrease of $12,924,348, or 65.44%, from $19,751,148 for the first quarter of 2023. Total offset printing paper, CMP and tissue paper products sold during the three months ended March 31, 2024 amounted to 18,670 tonnes, representing a decrease of 31,203 tonnes, or 62.56%, compared to 49,873 tonnes sold in the comparable period in the previous year. Production orders of CMP were arranged ahead of schedule (in December 2023), in order to mitigate the impact of energy price rise in 2024. Production of CMP was suspended in January and February 2024 due to the change of production schedule and Chinese New Year holiday. Production of CMP was resumed in mid of March 2024. Production of offset printing paper and tissue paper products were suspended due to the higher natural gas price and Chinese New Year in the first quarter of 2024 and expected to resume in the third quarter of 2024. The changes in revenue dollar amount and in quantity sold for the three months ended March 31, 2024 and 2023 are summarized as follows:
Current wording
Revenue from sales of offset printing paper, corrugating medium paper (“CMP”) and tissue paper products for the three months ended June 30, 2024 was $26,212,815, representing a decrease of $3,762,919, or 12.55%, from $29,975,734 for the second quarter of 2023. Total offset printing paper, CMP and tissue paper products sold during the three months ended June 30, 2024 amounted to 75,365 tonnes, representing a decrease of 3,271 tonnes, or 4.16%, compared to 78,636 tonnes sold in the comparable period in the previous year. Production of offset printing paper and tissue paper products was suspended due to the rising natural gas prices in the first half of 2024. It is expected that production will resume in the third quarter of 2024. The changes in revenue dollar amount and in quantity sold for the three months ended June 30, 2024 and 2023 are summarized as follows:
Previous wording
Revenue from CMP amounted to $6,826,800 (100.00% of the total offset printing paper, CMP and tissue paper products revenues) for the three months ended March 31, 2024, representing a decrease of $12,701,395, or 65.04%, from $19,528,195 for the comparable period in 2023. Production of CMP was suspended in January and February of 2024 and production of offset printing paper was suspended in the first quarter of 2024.
Current wording
Revenue from CMP amounted to $26,212,815 (100.00% of the total offset printing paper, CMP and tissue paper products revenues) for the three months ended June 30, 2024, representing a decrease of $262,705, or 0.99%, from $26,475,520 for the comparable period in 2023. Production of offset printing paper and tissue paper products was suspended in the second quarter of 2024.
Previous wording
We sold 18,670 tonnes of CMP in the three months ended March 31, 2024 as compared to 49,682 tonnes for the same period in 2023, representing a 62.42% decrease in quantity sold.
Current wording
We sold 75,365 tonnes of CMP in the three months ended June 30, 2024 as compared to 72,940 tonnes for the same period in 2023, representing a 3.32% increase in quantity sold.
Previous wording
ASP for regular CMP decreased from $395/tonne for the three months ended March 31, 2023 to $368/tonne for the three months ended March 31, 2024, representing a 6.84% decrease. ASP in RMB for regular CMP for the first quarter of 2023 and 2024 was RMB2,712 and RMB2,611, respectively, representing a 3.73% decrease. The quantity of regular CMP sold decreased by 26,023 tonnes, from 41,663 tonnes in the first quarter of 2023 to 15,640 tonnes in the first quarter of 2024.
Current wording
ASP for regular CMP decreased from $365/tonne for the three months ended June 30, 2023 to $350/tonne for the three months ended June 30, 2024, representing a 4.11% decrease. ASP in RMB for regular CMP for the second quarter of 2023 and 2024 was RMB2,574 and RMB2,488, respectively, representing a 3.35% decrease. The quantity of regular CMP sold increased by 2,750 tonnes, from 60,063 tonnes in the second quarter of 2023 to 62,813 tonnes in the second quarter of 2024.
Previous wording
Our PM6 production line, which produces regular CMP, has a designated capacity of 360,000 tonnes /year. The utilization rates for the first quarter of 2024 and 2023 were 15.11% and 44.49%, respectively, representing a decrease of 29.38%.
Current wording
Our PM6 production line, which produces regular CMP, has a designated capacity of 360,000 tonnes /year. The utilization rates for the second quarter of 2024 and 2023 were 68.02% and 66.61%, respectively, representing an increase of 1.41%.
Previous wording
Revenue from offset printing paper was $nil for the three months ended March 31, 2024 and 2023. Production of offset printing paper was suspended in the three months ended March 31, 2024 and 2023.
Current wording
Revenue from offset printing paper was $nil for the three months ended June 30, 2024, representing a decrease of $3,155,882, or 100.00%, from $3,155,882 for the three months ended June 30, 2023. Production of offset printing paper was suspended during the second quarter of 2024.
Previous wording
Revenue from tissue paper products was $nil and $222,953 for the three months ended March 31, 2024 and 2023, respectively. Production of tissue paper products was suspended during the first quarter of 2024.
Current wording
Revenue from tissue paper products was $nil for the three months ended June 30, 2024, representing a decrease of $344,332, or 100.00%, from $344,332 for the three months ended June 30, 2023. Production of tissue paper products was suspended during the second quarter of 2024.
Previous wording
Revenue generated from selling face mask were $nil and $35,637 for the three months ended March 31, 2024 and 2023, respectively.
Current wording
Revenue generated from selling face mask were $nil and $44,246 for the three months ended June 30, 2024 and 2023, respectively.
Previous wording
Cost of sales for CMP was $6,464,464 for the quarter ended March 31, 2024, as compared to $19,089,115 for the comparable period in 2023. The decrease in the cost of sales of $12,624,651 for CMP was mainly due to the decreases in sales volume and average unit cost of sales of CMP. Average cost of sales per tonne for CMP decreased by 9.90%, from $384 in the first quarter of 2023 to $346 in the first quarter of 2024. The decrease in average cost of sales was mainly attributable to the lower average unit purchase costs (net of applicable value added tax) of recycled paper board in the first quarter of 2024 compared to the first quarter of 2023.
Current wording
Cost of sales for CMP was $22,984,488 for the quarter ended June 30, 2024, as compared to $24,658,830 for the comparable period in 2023. The decrease in the cost of sales of $1,674,342 for CMP was mainly due to the decrease in average unit cost of sales of CMP, partially offset by the increase in sales volume of regular CMP. Average cost of sales per tonne for CMP decreased by 9.76%, from $338 in the second quarter of 2023 to $305 in the second quarter of 2024. The decrease in average cost of sales was mainly attributable to the lower average unit purchase costs (net of applicable value added tax) of recycled paper board in the second quarter of 2024 compared to the second quarter of 2023.
Previous wording
Cost of sales for tissue paper products was $nil for the quarter ended March 31, 2024, as compared to $929,264 for the comparable period in 2023. The production of tissue paper products was suspended in the first quarter of 2024.
Current wording
Cost of sales for tissue paper products was $nil for the quarter ended June 30, 2024, as compared to $1,053,874 for the comparable period in 2023. The production of tissue paper products was suspended in the second quarter of 2024.
Previous wording
Our average unit purchase costs (net of applicable value added tax) of recycled paper board in the three months ended March 31, 2024 was RMB 1,276/tonne (approximately $180/tonne), as compared to RMB 1,502/tonne (approximately $219/tonne) for the three months ended March 31, 2023. These changes (in US dollars) represent a year-over-year decrease of 17.81% for the recycled paper board. We use domestic recycled paper (sourced mainly from the Beijing-Tianjin metropolitan area) exclusively. Although we do not rely on imported recycled paper, the pricing of which tends to be more volatile than domestic recycled paper, our experience suggests that the pricing of domestic recycled paper bears some correlation to the pricing of imported recycled paper.
Current wording
Our average unit purchase costs (net of applicable value added tax) of recycled paper board in the three months ended June 30, 2024 were RMB 1,167/tonne (approximately $164/tonne), as compared to RMB 1,340/tonne (approximately $192/tonne) for the three months ended June 30, 2023. These changes (in US dollars) represent a year-over-year decrease of 14.58% for the recycled paper board. We use domestic recycled paper (sourced mainly from the Beijing-Tianjin metropolitan area) exclusively. Although we do not rely on imported recycled paper, the pricing of which tends to be more volatile than domestic recycled paper, our experience suggests that the pricing of domestic recycled paper bears some correlation to the pricing of imported recycled paper.
Previous wording
Electricity and gas are our two main energy sources. Electricity and gas accounted for approximately 4% and 12.4% of total sales in the first quarter of 2024, respectively, compared to 4% and 14% of total sales in the first quarter of 2023. The monthly energy cost as a percentage of total monthly sales of our main paper products for the 24 months ended March 31, 2024 are summarized as follows:
Current wording
Electricity and gas are our two main energy sources. Electricity and gas accounted for approximately 5% and 12.9% of total sales in the second quarter of 2024, respectively, compared to 5% and 14.9% of total sales in the second quarter of 2023. The monthly energy cost as a percentage of total monthly sales of our main paper products for the 24 months ended June 30, 2024 are summarized as follows:
Previous wording
Gross profit for the three months ended March 31, 2024 was $399,113 (representing 5.81% of the total revenue), representing an increase of $676,112, or 244.08%, from the gross loss of $276,999 (representing 1.40% of the total revenue) for the three months ended March 31, 2023.
Current wording
Gross profit for the three months ended June 30, 2024 was $3,265,300 (representing 12.44% of the total revenue), representing an increase of $2,085,442, or 176.75%, from the gross profit of $1,179,858 (representing 3.93% of the total revenue) for the three months ended June 30, 2023, as a result of factors described above.
Previous wording
The overall gross profit margin for offset printing paper, CMP and tissue paper products increased by 6.66 percentage points, from -1.35% for the three months ended March 31, 2023, to 5.31% for the three months ended March 31, 2024.
Current wording
The overall gross profit margin for offset printing paper, CMP and tissue paper products increased by 8.37 percentage points, from 3.95% for the three months ended June 30, 2023, to 12.32% for the three months ended June 30, 2024.
Previous wording
Gross profit margin for regular CMP for the three months ended March 31, 2024 was 5.68%, or 3.75 percentage points higher, as compared to gross profit margin of 1.93% for the three months ended March 31, 2023. Such increase was mainly due to the decrease in cost of recycled paper board, partially offset by the decrease in ASP of regular CMP in the first quarter of 2024.
Current wording
Gross profit margin for regular CMP for the three months ended June 30, 2024 was 12.22%, or 5.41 percentage points higher, as compared to gross profit margin of 6.81% for the three months ended June 30, 2023. Such increase was mainly due to the decrease in cost of recycled paper board, partially offset by the decrease in ASP of regular CMP in the second quarter of 2024.
Previous wording
Gross loss for face masks for the three months ended March 31, 2024 and 2023 were gross loss of $nil and $2,839, respectively.
Current wording
Gross loss for face masks for the three months ended June 30, 2024 and 2023 were $nil and $3,568.
Previous wording
Selling, general and administrative expenses for the three months ended March 31, 2024 were $3,900,783, an increase of $1,405,421, or 56.32% from $2,495,362 for the three months ended March 31, 2023. The decrease was mainly due to the increase in depreciation of idle fixed assets during production suspension.
Current wording
Selling, general and administrative expenses for the three months ended June 30, 2024 were $2,717,548, an increase of $1,394,143, or 105.35% from $1,323,405 for the three months ended June 30, 2023. The increase was mainly due to the increase in depreciation of idle fixed assets during production suspension.
Previous wording
Interest expense for the three months ended March 31, 2024 decreased by $38,879, from $249,169 in the three months ended March 31, 2023, to $210,290. The Company had short-term and long-term interest-bearing loans, related party loans and leasing obligations that aggregated $12,204,370 as of March 31, 2024, as compared to $18,212,347 as of March 31, 2023.
Current wording
Interest expense for the three months ended June 30, 2024 decreased by $91,941, from $270,681 in the three months ended June 30, 2023, to $178,740. The Company had short-term and long-term interest-bearing loans, related party loans and leasing obligations that aggregated $12,149,914 as of June 30, 2024, as compared to $17,607,943 as of June 30, 2023.
Previous wording
The Company analyzed the warrant for derivative accounting consideration under ASC 815, “Derivatives and Hedging, and hedging,” and determined that the instrument should be classified as a liability. ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item. The change in fair value of derivative liability for the three months ended March 31, 2024 and 2023 was a gain of $34 and $152,097, respectively.
Current wording
The Company analyzed the warrant for derivative accounting consideration under ASC 815, “Derivatives and Hedging, and hedging,” and determined that the instrument should be classified as a liability. ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item. The change in fair value of derivative liability for the three months ended June 30, 2024 and 2023 was a gain of $15 and a loss of $166,506, respectively.
Previous wording
As a result and the factors discussed above, net loss was $3,746,536 for the quarter ended March 31, 2024, representing a decrease of $1,013,371, or 37.08%, from $2,733,165 in net loss for the quarter ended March 31, 2023.
Current wording
As a result and the factors discussed above, net loss was $77,747 for the quarter ended June 30, 2024, representing a decrease of loss of $1,175,746, or 93.80%, from $1,253,493 for the quarter ended June 30, 2023.
Previous wording
Revenue for the three months ended March 31, 2024 was $6,863,841, representing a decrease of $12,927,036, or 65.32%, from $19,790,877 for the same period in the previous year. This was mainly due to the production suspension of corrugating medium paper (“CMP”) in January and February of 2024, and production suspension of tissue paper products in the first quarter of 2024.
Current wording
Revenue for the six months ended June 30, 2024 was $33,113,629, representing a decrease of $16,697,162, or 33.52%, from $49,810,791 for the same period in the previous year. This was mainly due to the production suspension of CMP in January and February of 2024, and production suspension of offset printing paper and tissue paper products in the first half of 2024.
Previous wording
Total cost of sales for CMP, offset printing paper and tissue paper products for the quarter ended March 31, 2024 was $6,464,464, a decrease of $13,553,915, or 67.71%, from $20,018,379 for the comparable period in 2023. This was mainly due to the decrease in sales quantity and the decrease in the unit material costs of CMP.
Current wording
Total cost of sales for CMP, offset printing paper and tissue paper products in the six months ended June 30, 2024 was $29,448,953, a decrease of $19,361,616, or 39.67%, from $48,810,569 for the six months ended June 30, 2023. This was mainly due to the decrease in sales quantity and the decrease in the unit material costs of CMP.
Previous wording
Gross profit margin for light-weight CMP for the three months ended March 31, 2024 was 3.32%, or 0.64 percentage points lower, as compared to gross profit margin of 3.96% for the three months ended March 31, 2023.
Current wording
Gross profit margin for light-weight CMP for the six months ended June 30, 2024 was 10.90%, or 5.04 percentage points higher, as compared to gross profit margin of 5.86% for the six months ended June 30, 2023. Such increase was primarily due to the decrease in material costs, partially offset by the decrease in ASP of light-weight CMP.
Previous wording
Operating loss for the quarter ended March 31, 2024 was $3,501,670, a decrease of $729,309, or 26.31%, from $2,772,361 for the quarter ended March 31, 2023. The decrease in loss from operations was primarily due to the increase in selling, general and administrative expenses, partially offset by the increase in gross profit.
Current wording
Operating loss for the six months ended June 30, 2024 was $2,953,918, a decrease of loss of $337,126, or 10.24%, from $3,291,044 for the six months ended June 30, 2023. The decrease of loss was primarily due to the increase in gross profit, partially offset by the increase in selling, general and administrative expenses.
Previous wording
Net accounts receivable increased by $1,810,651, or 314.61%, to $2,386,177 as of March 31, 2024, as compared with $575,526 as of December 31, 2023. We usually collect accounts receivable within 30 days of delivery and completion of sales.
Current wording
Net accounts receivable increased by $2,062,693, or 358.40%, to $2,638,219 as of June 30, 2024, as compared with $575,526 as of December 31, 2023. We usually collect accounts receivable within 30 days of delivery and completion of sales.
Previous wording
Inventories consist of raw materials (accounting for 36.15% of total value of inventory as of March 31, 2024), semi-finished goods and finished goods. As of March 31, 2024, the recorded value of inventory decreased by 1.77% to $3,492,364 from $3,555,235 as of December 31, 2023. As of March 31, 2024, the inventory of recycled paper board, which is the main raw material for the production of CMP, was $1,031,201, approximately $832,457, or 418.86%, higher than the balance as of December 31, 2023. As a result of better control over stock turnover and volatility of recycled paper board price, inventory was kept in a minimum level as of December 2023.
Current wording
Inventories consist of raw materials (accounting for 70.41% of total value of inventory as of June 30, 2024), semi-finished goods and finished goods. As of June 30, 2024, the recorded value of inventory increased by 48.58% to $5,282,420 from $3,555,235 as of December 31, 2023. As of June 30, 2024, the inventory of recycled paper board, which is the main raw material for the production of CMP, was $3,462,147, approximately $3,263,403, or 1642.01%, higher than the balance as of December 31, 2023. As a result of better control over stock turnover and volatility of recycled paper board price, inventory was kept in a minimum level as of December 2023.
Previous wording
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. 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 for a term of up to three years, with an annual rental payment of approximately $140,829 (RMB1,000,000). The lease agreement was renewed in August 2022 with a term of six years with the same rental payments as provided for in the original lease agreement.
Current wording
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. 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 for a term of up to three years, with an annual rental payment of approximately $140,698 (RMB1,000,000). The lease agreement was renewed in August 2022 with a term of six years with the same rental payments as provided for in the original lease agreement.
Previous wording
As of March 31, 2024, we had approximately $3.5 million in capital expenditure commitments that were mainly related to the purchase of paper machine of PM10. The infrastructure work of PM10 has been completed and the associated ancillary facilities are working in progress. These commitments are expected to be financed by bank loans and cash flows generated from our business operations.
Current wording
As of June 30, 2024, we had approximately $3.5 million in capital expenditure commitments that were mainly related to the purchase of paper machine of PM10. The infrastructure work of PM10 is complete, while work on the related ancillary facilities is ongoing. These commitments are expected to be financed by bank loans and cash flows generated from our business operations.
Previous wording
Our cash, cash equivalents and restricted cash as of March 31, 2024 was $5,417,560, an increase of $1,025,639, from $4,391,921 as of December 31, 2023. The increase of cash and cash equivalents for the three months ended March 31, 2024 was attributable to a number of factors including:
Current wording
Our cash, cash equivalents and restricted cash as of June 30, 2024 was $6,043,922, an increase of $1,652,001, from $4,391,921 as of December 31, 2023. The increase of cash and cash equivalents for the six months ended June 30, 2024 was attributable to a number of factors including:
Previous wording
Net cash provided by operating activities was $624,420 for the three months ended March 31, 2024. The balance represented a decrease of cash of $4,185,507, or 87.02%, from $4,809,928 provided for the three months ended March 31, 2023. Net loss for the three months ended March 31, 2024 was $3,746,536, representing a decrease of $1,013,371, or 37.08%, from a net loss of $2,733,165 for the three months ended March 31, 2023. Changes in various asset and liability account balances throughout the three months ended March 31, 2024 also contributed to the net change in cash from operating activities in three months ended March 31, 2024. Chief among such changes is the increase of accounts receivable in the amount of $1,847,112 during the three months of 2024. There was also a decrease of $59,612 in the ending inventory balance as of March 31, 2024 (an increase to net cash for the three months ended March 31, 2024 cash flow purposes). In addition, the Company had non-cash expenses relating to depreciation and amortization in the amount of $3,481,788. The Company also had a net decrease of $1,276,805 in prepayment and other current assets (an increase to net cash) and a net increase of $908,127 in other payables and accrued liabilities and related parties (an increase to net cash) during the three months ended March 31, 2024.
Current wording
Net cash provided by operating activities was $1,346,337 for the six months ended June 30, 2024. The balance represented a decrease of cash of $4,400,382, or 76.57%, from $5,746,719 provided for the six months ended June 30, 2023. Net loss for the six months ended June 30, 2024 was $3,824,283, representing a decrease of loss of $162,375, or 4.07%, from $3,986,658 for the six months ended June 30, 2023. Changes in various asset and liability account balances throughout the six months ended June 30, 2024 also contributed to the net change in cash from operating activities in six months ended June 30, 2024. Chief among such changes is the increase of accounts receivable in the amount of $2,121,357 during the six months of 2024. There was also an increase of $1,751,011 in the ending inventory balance as of June 30, 2024 (a decrease to net cash for the six months ended June 30, 2024 cash flow purposes). In addition, the Company had non-cash expenses relating to depreciation and amortization in the amount of $6,862,883. The Company also had a net decrease of $660,470 in prepayment and other current assets (an increase to net cash) and a net increase of $692,857 in other payables and accrued liabilities and related parties (an increase to net cash), as well as an increase in income tax payable of $416,770 (an increase to net cash) during the six months ended June 30, 2024.
Previous wording
We incurred $9,027 in net cash expenditures for investing activities during the three months ended March 31, 2024, as compared to $295,018 for the same period of 2023.
Current wording
We incurred $62,640 in net cash expenditures for investing activities during the six months ended June 30, 2024, as compared to $5,565,713 for the same period of 2023.
Previous wording
Net cash provided by financing activities was $422,488 for the three months ended March 31, 2024, as compared to net cash provided by financing activities in the amount of $2,564,646 for the three months ended March 31, 2023.
Current wording
Net cash provided by financing activities was $422,096 for the six months ended June 30, 2024, as compared to net cash provided by financing activities in the amount of $2,823,597 for the six months ended June 30, 2023.
Previous wording
On December 31, 2023, the Company entered into a working capital loan agreement with the Bank of Cangzhou, to borrow $140,944 at a fixed interest rate of 5.5% per annum. The loan is secured by certain of the Company’s manufacturing equipment with net book value of $306,528 as of March 31, 2024. The loan will be due by December 30, 2024.
Current wording
On December 31, 2023, the Company entered into a working capital loan agreement with the Bank of Cangzhou, to borrow $140,315 at a fixed interest rate of 5.5% per annum. The loan is secured by certain of the Company’s manufacturing equipment with net book value of $276,269 as of June 30, 2024. The loan will be due by December 30, 2024.
Previous wording
On December 31, 2023, the Company entered into a working capital loan agreement with the Bank of Cangzhou, to borrow $281,889 at a fixed interest rate of 5.5% per annum. The loan will be due by December 30, 2024.
Current wording
On December 31, 2023, the Company entered into a working capital loan agreement with the Bank of Cangzhou, to borrow $280,631 at a fixed interest rate of 5.5% per annum. The loan will be due by December 30, 2024.
Previous wording
On September 15, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $2,819 and $2,824 as of March 31, 2024 and December 31, 2023, respectively. The loan bears a fixed interest rate of 3.45% per annum. The loan will be due by September 14, 2024.
Current wording
On September 15, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $2,824 as of June 30, 2024 and December 31, 2023, respectively. The loan bore a fixed interest rate of 3.45% per annum. The loan was repaid in June 2024.
Previous wording
On September 22, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $70,472 and $70,594 as of March 31, 2024 and December 31, 2023, respectively. The loan bears a fixed interest rate of 3.45% per annum. The loan will be due by September 21, 2024.
Current wording
On September 22, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $70,594 as of June 30, 2024 and December 31, 2023, respectively. The loan bore a fixed interest rate of 3.45% per annum. The loan was repaid in June 2024.
Previous wording
On September 22, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $349,542 and $350,149 as of March 31, 2024 and December 31, 2023, respectively. The loan bears a fixed interest rate of 3.45% per annum. The loan will be due by September 21, 2024.
Current wording
On September 22, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $350,149 as of June 30, 2024 and December 31, 2023, respectively. The loan bore a fixed interest rate of 3.45% per annum. The loan was repaid in June 2024.
Previous wording
As of March 31, 2024, there were guaranteed short-term borrowings of $nil and unsecured bank loans of $704,722. As of December 31, 2023, there were guaranteed short-term borrowings of $nil and unsecured bank loans of $423,567.
Current wording
As of June 30, 2024, there were guaranteed short-term borrowings of $nil and unsecured bank loans of $701,577. As of December 31, 2023, there were guaranteed short-term borrowings of $nil and unsecured bank loans of $423,567.
Previous wording
The average short-term borrowing rates for the three months ended March 31, 2024 and 2023 were approximately 4.48% and 4.72%.
Current wording
The average short-term borrowing rates for the three months ended June 30, 2024 and 2023 were approximately 4.45% and 4.83%. The average short-term borrowing rates for the six months ended June 30, 2024 and 2023 were approximately 4.46% and 4.77%.
Previous wording
As of March 31, 2024 and December 31, 2023, long-term loans were $11,358,704 and $11,378,429, respectively.
Current wording
As of June 30, 2024 and December 31, 2023, long-term loans were $ 11,308,021 and $11,378,429, respectively.
Showing the first 40 of 49 pairs. Open the source sections for the rest.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
Revenue of Offset Printing Paper, Corrugating Medium Paper and Tissue Paper Products
Current report — wording carried from elsewhere
ASPs for our main products in the six-month period ended June 30, 2024 and 2023 are summarized as follows:
Current report — wording carried from elsewhere
Cost of sales for CMP was $29,448,953for the six months ended June 30, 2024, as compared to $43,747,945 in the same period of 2023. The decrease in the cost of sales of $14,298,992 for CMP was mainly due to the decreases in sales volume and average unit cost of sales of CMP. Average cost of sales per tonne for CMP decreased by 12.32%, from $357 for the six months ended June 30, 2023, to $313 in the same period of 2024. This was mainly attributable to the lower average unit purchase costs (net of applicable value added tax) of recycled paper board.
Current report — wording carried from elsewhere
Changes in cost of sales and cost per tonne by product for the six months ended June 30, 2024 and 2023 are summarized below:
Current report — wording carried from elsewhere
Offset Printing Paper, CMP and Tissue Paper Products
Current report — wording carried from elsewhere
The Company analyzed the warrant for derivative accounting consideration under ASC 815, “Derivatives and Hedging, and hedging,” and determined that the instrument should be classified as a liability. ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item. The change in fair value of derivative liability for the six months ended June 30, 2022 and 2023 was a gain of $49 and a loss of $14,409, respectively.
Current report — wording carried from elsewhere
i. Net cash provided by operating activities