IT TECH PACKAGING INC
For the period ended Sep 30, 2024. Filed Nov 15, 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.
Sep 30, 2024 · Filed Nov 15, 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 2024-06-30; filed 2024-08-12.
0001213900-24-067681
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-15.
0001213900-24-099096
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 151 previous paragraphs and 144 current paragraphs.
62 unchanged; 65 reworded; 17 added; 23 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 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 (17)
Current report
Revenue for the three months ended September 30, 2024 was $25,081,500, an increase of $9,309,940, or 59.03%, from $15,771,560 for the same period in the previous year. This was mainly due to the increase of sales volume of corrugating medium paper (“CMP”), partially offset by the decrease in average selling prices (“ASP”) of
Current report
CMP.
Current report
ASP for light-weight CMP decreased from $340/tonne for the three months ended September 30, 2023 to $324/tonne for the three months ended September 30, 2024, representing a 4.71% decrease. ASP in RMB for light-weight CMP for the third quarter of 2023 and 2024 was RMB2,439 and RMB2,297, respectively, representing a 5.81% decrease. The quantity of light-weight CMP sold increased by 2,553 tonnes, from 10,210 tonnes in the third quarter of 2023, to 12,763 tonnes in the third quarter of 2024.
Current report
Comparison of the Nine months ended September 30, 2024 and 2023
Current report
Revenue for the nine months ended September 30, 2024 was $58,195,129, representing a decrease of $7,387,222, or 11.26%, from $65,582,351 for the same period in the previous year. This was mainly due to the decrease in ASP of CMP, partially offset by the increase in sales quantity of regular CMP.
Current report
Cost of sales for offset printing paper was $nil for the nine months ended September 30, 2024, as compared to $3,143,496 in the same period of 2023.
Current report
Loss from Operations
Current report
Gain on derivative liability
Current report
On June 11, 2024, the Company entered into a working capital loan agreement with the ICBC, with a balance of $2,854 as of September 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 $142,706 as of September 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 $142,706 as of September 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 $139,852 as of September 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 $365,804 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 September 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 September 30, 2024 and December 31, 2023, approximately $42,812 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 September 30, 2024 and December 31, 2023, the outstanding interest was $196,132 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 September 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 nine months ended September 30, 2024 and 2023. The accrued interest owing to Mr. Zhenyong Liu was approximately $604,748 and $598,319, as of September 30, 2024 and December 31, 2023, respectively, which was recorded in other payables and accrued liabilities.
Current report
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. Under this ASU, public entities must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). This ASU’s amendments are effective for all entities that are subject to Topic 740, Income Taxes, for annual periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact of this pronouncement on our disclosures.
Removed paragraphs (23)
Previous 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.
Previous report
Income (Loss) from Operations
Previous report
Comparison of the Six months ended June 30, 2024 and 2023
Previous report
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 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.
Previous report
Gain (Loss) on derivative liability
Previous report
Financing with Sale-Leaseback
Previous report
The Company entered into a sale-leaseback arrangement (the “Lease Financing Agreement”) with TAC Leasing Co., Ltd.(“TLCL”) on August 6, 2020, for a total financing proceeds in the amount of RMB 16 million (approximately US$2.3 million). Under the sale-leaseback arrangement, Tengsheng Paper sold the Leased Equipment to TLCL for 16 million (approximately US$2.3 million). Concurrent with the sale of equipment, Tengsheng Paper leases back the equipment sold to TLCL for a lease term of three years. At the end of the lease term, Tengsheng Paper may pay a nominal purchase price of RMB 100 (approximately $14) to TLCL and buy back the Leased Equipment. The Leased Equipment in amount of $2,349,452 was recorded as right of use assets and the net present value of the minimum lease payments was recorded as lease liability and calculated with TLCL’s implicit interest rate of 15.6% per annum and stated at $567,099 at the inception of the lease on August 17, 2020.
Previous report
Tengsheng Paper made payments due according to the schedule. On July 17, 2023, the Company made a final payment on outstanding obligations and bought back the Lease Equipment at nominal price according to the agreement. The lease assets were reclassified as own assets and balance of Leased Equipment net of amortization were $nil as of June 30, 2024 and December 31, 2023.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
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 $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.
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 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.
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 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.
Previous 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.
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 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.
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 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.
Previous 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.
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 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.
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 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.
Previous 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.
Reworded paragraphs (65)
Previous 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:
Current wording
Revenue from sales of offset printing paper, CMP and tissue paper products for the three months ended September 30, 2024 was $25,044,375, representing an increase of $9,287,976, or 58.95%, from $15,756,399 for the third quarter of 2023. Total offset printing paper, CMP and tissue paper products sold during the three months ended September 30, 2024 amounted to 74,884 tonnes, representing an increase of 30,077 tonnes, or 67.13%, compared to 44,807 tonnes sold in the comparable period in the previous year. Production of offset printing paper and tissue paper products were suspended due to the rising natural gas price in first half of 2024 and is expected to resume at the end of 2024. The changes in revenue dollar amount and in quantity sold for the three months ended September 30, 2024 and 2023 are summarized as follows:
Previous 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.
Current wording
Revenue from CMP amounted to $25,044,375 (100.00% of the total offset printing paper, CMP and tissue paper products revenues) for the three months ended September 30, 2024, representing an increase of $9,621,302, or 62.38%, from $15,423,073 for the comparable period in 2023.
Previous 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.
Current wording
We sold 74,884 tonnes of CMP in the three months ended September 30, 2024 as compared to 44,396 tonnes for the same period in 2023, representing a 68.67% increase in quantity sold.
Previous 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.
Current wording
ASP for regular CMP decreased from $350/tonne for the three months ended September 30, 2023 to $337/tonne for the three months ended September 30, 2024, representing a 3.71% decrease. ASP in RMB for regular CMP for the third quarter of 2023 and 2024 was RMB2,532 and RMB2,386, respectively, representing a 5.76% decrease. The quantity of regular CMP sold increased by 27,935 tonnes, from 34,186 tonnes in the third quarter of 2023 to 62,121 tonnes in the third 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 second quarter of 2024 and 2023 were 68.02% and 66.61%, respectively, representing an increase of 1.41%.
Current wording
Our PM6 production line, which produces regular CMP, has a designated capacity of 360,000 tonnes /year. The utilization rates for the third quarter of 2024 and 2023 were 68.96% and 38.07%, respectively, representing an increase of 30.89%. Quantities sold for regular CMP that was produced by the PM6 production line from October 2022 to September 2024 are as follows:
Previous 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.
Current wording
Revenue from offset printing paper was $nil for the three months ended September 30, 2024, representing a decrease of $69,227, or 100.00%, from $69,227 for the three months ended September 30, 2023. Production of offset printing paper was suspended during the third quarter of 2024.
Previous 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.
Current wording
Revenue from tissue paper products was $nil for the three months ended September 30, 2024, representing a decrease of $264,099, or 100.00%, from $264,099 for the three months ended September 30, 2023. Production of tissue paper products was suspended during the third quarter of 2024.
Previous wording
Revenue generated from selling face mask were $nil and $44,246 for the three months ended June 30, 2024 and 2023, respectively.
Current wording
Revenue generated from selling face mask were $nil and $15,198 for the three months ended September 30, 2024 and 2023, respectively.
Previous wording
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 wording
Total cost of sales for CMP, offset printing paper and tissue paper products for the quarter ended September 30, 2024 was $23,163,835, an increase of $7,256,618, or 45.62%, from $15,907,217 for the comparable period in 2023. This was mainly due to the increase in sales quantity of CMP, partially offset by and the decrease of the unit material cost of CMP products.
Previous 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.
Current wording
Cost of sales for CMP was $23,163,835 for the quarter ended September 30, 2024, as compared to $14,844,637 for the comparable period in 2023. The increase in the cost of sales of $8,319,198 for CMP was mainly due to the increase in sales volume of CMP, partially offset by the decrease in average unit cost of sales of CMP. Average cost of sales per tonne for CMP decreased by 7.49%, from $334 in the third quarter of 2023 to $309 in the third 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 third quarter of 2024 compared to the third quarter of 2023.
Previous wording
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 wording
Cost of sales for offset printing paper was $ nil for the quarter ended September 30, 2024, as compared to $64,011 for the comparable period in 2023. The production of offset printing paper was suspended in the third quarter of 2024.
Previous 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.
Current wording
Cost of sales for tissue paper products was $ nil for the quarter ended September 30, 2024, as compared to $998,569 for the comparable period in 2023. The production of tissue paper products was suspended in the third 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 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.
Current wording
Our average unit purchase costs (net of applicable value added tax) of recycled paper board in the three months ended September 30, 2024 were RMB 1,214/tonne (approximately $171/tonne), as compared to RMB 1,239/tonne (approximately $176/tonne) for the three months ended September 30, 2023. These changes (in US dollars) represent a year-over-year decrease of 2.84% 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 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:
Current wording
Electricity and gas are our two main energy sources. Electricity and gas accounted for approximately 5% and 14.3% of total sales in the third quarter of 2024, respectively, compared to 5% and 13.3% of total sales in the third quarter of 2023. The monthly energy cost as a percentage of total monthly sales of our main paper products for the 24 months ended September 30, 2024 are summarized as follows:
Previous 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.
Current wording
Gross profit for the three months ended September 30, 2024 was $1,917,381 (representing 7.64% of the total revenue), representing an increase of $2,070,604, from the gross loss of $153,223 (representing 0.97% of the total revenue) for the three months ended September 30, 2023, as a result of factors described above.
Previous wording
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 wording
Gross profit for offset printing paper, CMP and tissue paper products for the three months ended September 30, 2024 was $1,880,540, representing an increase of $2,031,358, from the gross loss of $150,818 for the three months ended September 30, 2023. The increase was mainly the result of the factors discussed above.
Previous 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.
Current wording
The overall gross profit margin for offset printing paper, CMP and tissue paper products increased by 8.47 percentage points, from -0.96% for the three months ended September 30, 2023, to 7.51% for the three months ended September 30, 2024.
Previous 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.
Current wording
Gross profit margin for regular CMP for the three months ended September 30, 2024 was 7.54%, or 0.53 percentage points higher, as compared to gross profit margin of 7.01% for the three months ended September 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 third quarter of 2024.
Previous wording
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 wording
Gross profit margin for light-weight CMP for the three months ended September 30, 2024 was 7.33%, or 14.80 percentage points higher, as compared to gross profit margin of -7.47% for the three months ended September 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 third quarter of 2024.
Previous wording
Gross loss for face masks for the three months ended June 30, 2024 and 2023 were $nil and $3,568.
Current wording
Gross loss for face masks for the three months ended September 30, 2024 and 2023 were $nil and $2,393.
Previous 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.
Current wording
Selling, general and administrative expenses for the three months ended September 30, 2024 were $3,381,502, an increase of $1,046,756, or 44.83% from $2,334,746 for the three months ended September 30, 2023. The increase was mainly due to the increase in depreciation of idle fixed assets during production suspension and accrued liability for legal proceeding the Company was jointly liable for repayment of a loan.
Previous wording
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 wording
Operating loss for the quarter ended September 30, 2024 was $1,464,121, a decrease of loss of $1,020,392 or 41.07%, from $2,484,513 for the quarter ended September 30, 2023. The increase in income from operations was primarily due to the increase in gross profit, partially offset by the increase in selling, general and administrative expenses.
Previous 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.
Current wording
Interest expense for the three months ended September 30, 2024 decreased by $76,388, from $247,818 in the three months ended September 30, 2023, to $171,430. The Company had short-term and long-term interest-bearing loans, related party loans and leasing obligations that aggregated $9,788,224 as of September 30, 2024, as compared to $12,105,731 as of September 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 June 30, 2024 and 2023 was a gain of $15 and a loss of $166,506, 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 September 30, 2024 and 2023 was a gain of $2 and $660,429, respectively.
Previous 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.
Current wording
As a result and the factors discussed above, net loss was $1,973,946 for the quarter ended September 30, 2024, representing a decrease of loss of $1,422, or 0.07%, from $1,975,368 for the quarter ended September 30, 2023.
Previous wording
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 wording
Revenue from sales of offset printing paper, CMP and tissue paper products for the nine months ended September 30, 2024 was $58,083,990, a decrease of $7,399,292, or 11.30%, from $65,483,282 for the nine months ended September 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 nine months ended September 30, 2024 amounted to 168,919 tonnes, a decrease of 4,398 tonnes, or 2.54%, compared to 173,317 tonnes sold during the nine months ended September 30, 2023. Total quantities of CMP and offset printing paper sold decreased by 3,672 tonnes in the nine 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 nine months ended September 30, 2024. The changes in revenue and quantity sold for the nine months ended September 30, 2024 and 2023 are summarized as follows:
Previous wording
ASPs for our main products in the six-month period ended June 30, 2024 and 2023 are summarized as follows:
Current wording
ASPs for our main products in the nine-month period ended September 30, 2024 and 2023 are summarized as follows:
Previous wording
Revenue generated from selling face masks were $nil and $79,883 for the six months ended June 30, 2024 and 2023.
Current wording
Revenue generated from selling face masks were $nil and $95,080 for the nine months ended September 30, 2024 and 2023.
Previous 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.
Current wording
Total cost of sales for CMP, offset printing paper and tissue paper products in the nine months ended September 30, 2024 was $52,612,788, a decrease of $12,104,998, or 18.70%, from $64,717,786 for the nine months ended September 30, 2023. This was mainly due to the decrease in the unit material costs of CMP.
Previous wording
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 wording
Cost of sales for CMP was $52,612,788 for the nine months ended September 30, 2024, as compared to $58,592,582 in the same period of 2023. The decrease in the cost of sales of $5,979,794 for CMP was mainly due to the decrease in average cost of sales, partially offset by the increase in the quantities of regular CMP sold in the nine months of 2024. Average cost of sales per tonne for CMP decreased by 11.40%, from $351 for the nine months ended September 30, 2023, to $311 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.
Previous wording
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 wording
Cost of sales for tissue paper products was $nil for the nine months ended September 30, 2024, as compared to $2,981,708 in the same period of 2023.
Previous wording
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 wording
Changes in cost of sales and cost per tonne by product for the nine months ended September 30, 2024 and 2023 are summarized below:
Previous wording
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 wording
Gross profit for the nine months ended September 30, 2024 was $5,581,794 (representing 9.59% of the total revenue), representing an increase of $4,832,158, or 644.60%, from the gross profit of $749,636 (representing 1.14% of the total revenue) for the nine months ended September 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.
Previous wording
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 wording
Gross profit for offset printing paper, CMP and tissue paper products for the nine months ended September 30, 2024 was $5,471,202, an increase of $4,705,706, or 614.73%, from the gross profit of $765,496 for the nine months ended September 30, 2023. The increase was mainly the result of the factors discussed above.
Previous wording
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 wording
The overall gross profit margin for offset printing paper, CMP and tissue paper products increased by 8.25 percentage points, from 1.17% for the nine months ended September 30, 2023, to 9.42% for the nine months ended September 30, 2024.
Previous wording
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 wording
Gross profit margin for regular CMP for the nine months ended September 30, 2024 was 9.44%, or 4.18 percentage points higher, as compared to gross profit margin of 5.26% for the nine months ended September 30, 2023. Such increase was primarily due to the decrease in material costs, partially offset by the decrease in ASP of regular CMP.
Previous 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.
Current wording
Gross profit margin for light-weight CMP for the nine months ended September 30, 2024 was 9.33%, or 7.65 percentage points higher, as compared to gross profit margin of 1.68% for the nine months ended September 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
Gross loss for face mask for the six months ended June 30, 2024 and 2023 was $nil and $6,407, respectively.
Current wording
Gross loss for face mask for the nine months ended September 30, 2024 and 2023 was $nil and $8,801, respectively.
Previous wording
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 wording
Selling, general and administrative expenses for the nine months ended September 30, 2024 were $9,999,833, an increase of $3,846,320, or 62.51% from $6,153,513 for the nine months ended September 30, 2023. The increase was mainly due to the increase in depreciation of idle fixed assets during production suspension and accrued liability for legal proceeding the Company was jointly liable for repayment of a loan.
Previous 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.
Current wording
Operating loss for the nine months ended September 30, 2024 was $4,418,039, a decrease of loss of $1,357,518, or 23.50%, from $5,775,557 for the nine months ended September 30, 2023. The decrease of loss from operations was primarily due to the increase in gross profit, partially offset by the increase in selling, general and administrative expenses.
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Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Quantities sold for regular CMP that was produced by the PM6 production line from July 2022 to June 2024 are as follows: