IT TECH PACKAGING, INC.
For the period ended Dec 31, 2024. Filed Apr 11, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Apr 11, 2025
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-K
Period ended 2023-12-31; filed 2024-03-27.
0001213900-24-026607
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-K
Period ended 2024-12-31; filed 2025-04-11.
0001213900-25-031072
Item 7. 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 115 previous paragraphs and 104 current paragraphs.
38 unchanged; 50 reworded; 16 added; 27 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 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 (16)
Current report
Cost of sales for offset printing paper was $nil for the year ended December 31, 2024, as compared to $3,137,646 in 2023.
Current report
Cost of sales for tissue paper products was $nil for the year ended December 31, 2024, as compared to $4,318,339 in 2023.
Current report
Selling, general and administrative expenses for the year ended December 31, 2024 were $14,799,969, an increase of $5,724,494, or 63.08% from $9,075,475 for the year ended December 31, 2023. The increase was mainly due to the increase in i) depreciation of idle fixed assets during the production suspension of $3.9 million; ii) accrued liability related to a legal proceeding in which the Company was jointly liable for repaying a loan of $0.4 million and iii) impairment reserve for obsolete inventory of $0.7 million and allowance for doubtful receivables of $0.9 million.
Current report
In December 2024, we refinanced $4 million existing long-term debt by securing new loans at lower market rates, to repay our obligations to Rural Credit Union. This refinancing transaction did not involve any cash inflows or outflows. As a result, it was not reflected in the financing activities in the cash flow statement. Although the new loans have distinct terms and interest rates compared to the old ones, they do not qualify as a traditional debt restructuring according to U.S. GAAP. We anticipate financial benefits from this refinancing, particularly lower interest expenses over the loan’s remaining term.
Current report
On December 24, 2024, the Company entered into a loan agreement with the Rural Credit Union of Xushui District to borrow $1,808,469 (RMB13,000,000) to repay the existing long-term loan of the same amount. The loan was secured by the equipment of Baoding Shengde as collateral for the benefit of the bank. The loan bears a fixed rate of 6% and is due for repayment by December 23, 2025.
Current report
On December 24, 2024, the Company entered into a loan agreement with the Rural Credit Union of Xushui District to borrow $2,225,808(RMB16,000,000) to repay the existing long-term loan of the same amount. The loan was secured by the equipment of Baoding Shengde as collateral for the benefit of the bank and guaranteed by a third party company. The loan bears a fixed rate of 6% and is due for repayment by December 23, 2025.
Current report
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 December 31, 2024 and 2023, respectively. The loan bore a fixed interest rate of 3.45% per annum. The loan was repaid in June 2024.
Current report
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 December 31, 2024 and 2023, respectively. The loan bore a fixed interest rate of 3.45% per annum. The loan was repaid in June 2024.
Current report
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 December 31, 2024 and 2023, respectively. The loan bore a fixed interest rate of 3.45% per annum. The loan was repaid in June 2024.
Current report
On June 11, 2024, the Company entered into a working capital loan agreement with the ICBC, with a balance of $2,782 as of December 31, 2024. The loan bears a fixed interest rate of 3.45% per annum. The loan is due for repayment 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 $139,113 as of December 31, 2024. The loan bears a fixed interest rate of 3.45% per annum. The loan is due for repayment 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 $139,113 as of December 31, 2024. The loan bears a fixed interest rate of 3.45% per annum. The loan is due for repayment 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 $136,331 as of December 31, 2024. The loan bears a fixed interest rate of 3.45% per annum. The loan is due for repayment by June 24, 2025.
Current report
Shareholder Loans
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.
Current report
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures, which emphasizes the importance of providing more granular and detailed expense information in financial statements. The update requires entities to disaggregate expenses by nature and function on the income statement, offering a clearer picture of an entity’s cost structure and operational efficiency. This enhanced disclosure is intended to improve the transparency and comparability of financial reporting. Entities must apply the new guidance retrospectively to all periods presented in the financial statements. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is in the process of assessing the impact of these changes on its financial reporting and will implement the necessary adjustments to comply with the updated standards.
Removed paragraphs (27)
Previous report
Offset Printing Paper
Previous report
Revenue from offset printing paper was $3,215,190 (3.72% of the total offset printing paper, CMP and tissue paper products revenues) for the year ended December 31, 2023, representing an increase of $3,215,190, or 100%, from year of 2022. We sold 5,573 tonnes of offset printing paper in the year ended December 31, 2023.
Previous report
Tissue Paper Products
Previous report
Revenue from tissue paper products was $1,305,192 (1.51% of the total offset printing paper, CMP and tissue paper products revenues) for the year ended December 31, 2023, representing a decrease of $51,063, or 3.76%, from $1,356,255 in 2022. We sold 1,205 tonnes of tissue paper products in the year ended December 31, 2023, as compared to 1,273 tonnes in 2022, a decrease of 68 tonnes, or 5.34%.
Previous report
ASP for tissue paper products was $1,065/tonne and $1,083/tonne in the year ended December 31, 2022 and 2023, respectively, representing a 1.69% increase. ASP in RMB for tissue paper products for the year ended 2022 and 2023 was RMB7,198 and RMB7,640, respectively, representing a 6.14% increase.
Previous report
Cost of sales for offset printing paper was $3,134,832 for the year ended December 31, 2023.
Previous report
Cost of sales for tissue paper products was $4,318,339 for the year ended December 31, 2023, as compared to $4,290,443 in 2022. Average cost of sales per tonne of tissue paper products increased by 6.35%, from $3,370 for the year ended December 31, 2022, to $3,584 for 2023.
Previous report
Gross profit margin for offset printing paper was 2.41% for the year ended December 31, 2023.
Previous report
Gross profit margin for tissue paper products was -230.86% for the year ended December 31, 2023, a decrease of 14.52 percentage points, as compared to -216.34% for the year ended December 31, 2022. The decrease was mainly due to the increase in cost of tissue base paper.
Previous report
Selling, general and administrative expenses for the year ended December 31, 2023 were $9,075,475, a decrease of $983,248, or 9.78% from $10,058,723 for the year ended December 31, 2022. The decrease was mainly due to the decrease in depreciation of idle fixed assets during production suspension.
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 and $1,939,970 as of December 31, 2023 and 2022, respectively.
Previous report
On November 10, 2022, the Company entered into a working capital loan agreement with the ICBC. The loan was secured by the land use right of Dongfang Paper as collateral for the benefit of the bank and guaranteed by Mr. Liu. The loan bore a fixed interest rate of 4.785% per annum. The Company repaid $71,743 in May 2023 and paid off the remaining balance of the loan in August 2023. The balance of the loan was $nil and $5,023,978 as of December 31, 2023 and 2022, respectively.
Previous report
On November 30, 2022, the Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $287,167 as of December 31, 2023 and 2022, respectively. The loan bore an interest rate of 4.25% per annum. The loan was fully repaid in May 2023.
Previous report
On November 30, 2022, the Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $143,583 as of December 31, 2023 and 2022, respectively. The loan bore an interest rate of 4.25% per annum. The loan was fully repaid in May 2023.
Previous report
On May 29, 2023, the Company entered into a working capital loan agreement with the ICBC, to borrow $423,567 at a fixed interest rate of 4.25% per annum. The loan was repaid in November 2023.
Previous report
On July 29, 2022, the Company entered into a working capital loan agreement with the China Construction Bank, with a balance of $nil and $143,583 as of December 31, 2023 and 2022, respectively. The loan bore a fixed interest rate of 3.95% per annum. The loan was fully repaid in July 2023.
Previous report
On June 29, 2023, the Company entered into a working capital loan agreement with the ICBC, to borrow $423,567 at a fixed interest rate of 3.55% per annum. The loan was repaid in September, 2023.
Previous report
On September 15, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $2,824 as of December 31, 2023. The loan bears a fixed interest rate of 3.45% per annum. The loan will be due by September 14, 2024.
Previous report
On September 22, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 70,594 as of December 31, 2023. The loan bears a fixed interest rate of 3.45% per annum. The loan will be due by September 21, 2024.
Previous report
On September 22, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 350,149 as of December 31, 2023. The loan bears a fixed interest rate of 3.45% per annum. The loan will be due by September 21, 2024.
Previous report
On April 16, 2014, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 5 years, which was originally due in various installments from June 21, 2014 to November 18, 2018. The loan was guaranteed by an independent third party. Interest payment was due quarterly and bore a rate of 7.68% per annum. Effective from November 15, 2022, the interest rate was reduced to 7% per annum. On November 6, 2018, the loan was renewed for additional 5 years and will be due and payable in various installments from December 21, 2018 to November 5, 2023. The loan was fully repaid in December 2023. As of December 31, 2023 and 2022, total outstanding loan balance was $nil and $1,234,816, respectively, which are presented as current liabilities in the consolidated balance sheet.
Previous report
On July 1, 2022, the Company entered into a loan agreement with Jiangna Yu, a customer of the Company, pursuant to which the Company borrowed RMB 400,000 from Jiangna Yu for a term of five years. The loan is payable in monthly installment of RMB10,667 from July 2022 to July 2027. The company repaid the loan in November 2023. As of December 31, 2023 and 2022, the total outstanding loan balance was $nil and $51,690, respectively. Out of the total outstanding loan balance, current portion amounted $nil and $11,486, respectively, which are presented as current liabilities and the remaining balance of $nil and $40,204 are presented as non-current liabilities in the consolidated balance sheet as of December 31, 2023 and 2022, respectively.
Previous report
Related party transactions
Previous report
On December 8, 2021, the Company entered into an agreement with Mr. Zhenyong Liu, which allows Mr. Zhenyong Liu to borrow from the Company an amount of $6,507,431 (RMB44,089,085). The loan was unsecured and carried a fixed interest rate of 3% per annum. The loan was repaid by Mr. Zhenyong Liu in February 2022.
Previous report
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. The new amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments, with early adoption permitted. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.
Reworded paragraphs (50)
Previous wording
Revenue for the year ended December 31, 2023 was $86,546,950, representing a decrease of $13,805,484, or 13.76%, from $100,352,434 for the previous year. This was mainly due to the decrease in average selling price (“ASP”) of CMP.
Current wording
Revenue for the year ended December 31, 2024 was $75,837,943, representing a decrease of $10,709,007, or 12.37%, from $86,546,950 for the previous year. This was mainly due to the decrease in sales quantity of Corrugating Medium Paper (“CMP”), offset printing paper and tissue paper products and the decrease in Average Selling Price (“ASP”) of CMP.
Previous wording
Revenue from sales of offset printing paper, CMP and tissue paper products for the year ended December 31, 2023 was $86,412,058, a decrease of $13,669,606, or 13.66%, from $100,081,664 for the year ended December 31, 2022. This was mainly due to the decrease in ASP of CMP, partially offset by increase in sales volume of regular CMP, light-weight CMP and offset printing paper.
Current wording
Revenue from sales of offset printing paper, CMP and tissue paper products for the year ended December 31, 2024 was $75,702,427, a decrease of $10,709,631, or 12.39%, from $86,412,058 for the year ended December 31, 2023. This was mainly due to the decrease in ASPs of CMP and the decrease in sales volume of offset printing paper and tissue paper products.
Previous wording
Total quantities of offset printing paper, CMP and tissue paper products sold during the year ended December 31, 2023 amounted to 230,601 tonnes, an increase of 10,997 tonnes, or 5.01%, compared to 219,604 tonnes sold during the year ended December 31, 2022. Total quantities of CMP and offset printing paper sold increased by 11,065 tonnes in the year of 2023 as compared to 2022. We sold 1,205 tonnes of tissue paper products in the year of 2023 as opposed to 1,273 tonnes in 2022. Production of offset printing paper was resumed in May 2023. The changes in revenue and quantity sold for the year ended December 31, 2023 and 2022 are summarized as follows:
Current wording
Total quantities of offset printing paper, CMP and tissue paper products sold during the year ended December 31, 2024 amounted to 220,552 tonnes, a decrease of 10,049 tonnes, or 4.36%, compared to 230,601 tonnes sold during the year ended December 31, 2023. Total quantities of CMP and offset printing paper sold decreased by 8,844 tonnes in the year of 2024 as compared to 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 2024. The changes in revenue and quantity sold for the year ended December 31, 2024 and 2023 are summarized as follows:
Previous wording
Revenue from CMP amounted to $81,891,676 (94.77% of the total offset printing paper, CMP and tissue paper products revenues) for the year ended December 31, 2023, representing a decrease of $16,833,733, or 17.05%, from $98,725,409 during 2022.
Current wording
Revenue from CMP amounted to $75,702,427 (100.00% of the total offset printing paper, CMP and tissue paper products revenues) for the year ended December 31, 2024, representing a decrease of $6,189,249, or 7.56%, from $81,891,676 during 2023.
Previous wording
We sold 223,823 tonnes of CMP in the year ended December 31, 2023 as compared to 218,331 tonnes in the year ended December 31, 2022, representing a 2.52% increase in quantity sold.
Current wording
We sold 220,552 tonnes of CMP in the year ended December 31, 2024 as compared to 223,823 tonnes in the year ended December 31, 2023, representing a 1.46% decrease in quantity sold.
Previous wording
ASP for regular CMP dropped from $455/tonne in 2022 to $368/tonne in 2023, representing a 19.12% decrease. ASP in RMB for regular CMP in 2022 and 2023 was RMB3,073 and RMB2,599, respectively, representing a 15.42% decrease. The quantity of regular CMP sold increased by 1,893 tonnes, from 180,977 tonnes in 2022 to 182,870 tonnes in 2023.
Current wording
ASP for regular CMP dropped from $368/tonne in 2023 to $345/tonne in 2024, representing a 6.25% decrease. ASP in RMB for regular CMP in 2023 and 2024 was RMB2,599 and RMB2,458, respectively, representing a 5.43% decrease. The quantity of regular CMP sold increased by 102 tonnes, from 182,870 tonnes in 2023 to 182,972 tonnes in 2024.
Previous wording
ASP for light-weight CMP dropped from $440/tonne in 2022 to $355/tonne in 2023, representing a $19.32% decrease. ASP in RMB for light-weight CMP in 2022 and 2023 was RMB2,972 and RMB2,502, respectively, representing a 15.82% decrease. The quantity of light-weight CMP sold increased by 3,599 tonnes, from 37,354 tonnes in 2022, to 40,953 tonnes in 2023.
Current wording
ASP for light-weight CMP dropped from $355/tonne in 2023 to $333/tonne in 2024, representing a $6.2% decrease. ASP in RMB for light-weight CMP in 2023 and 2024 was RMB2,502 and RMB2,368, respectively, representing a 5.36% decrease. The quantity of light-weight CMP sold decreased by 3,373 tonnes, from 40,953 tonnes in 2023, to 37,580 tonnes in 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 year ended December 31, 2023 and 2022 were 51.98% and 49.28%, respectively, representing an increase of 2.70%.
Current wording
Our PM6 production line, which produces regular CMP, has a designated capacity of 360,000 tonnes /year. The utilization rates for the year ended December 31, 2024 and 2023 were 49.75% and 51.98%, respectively, representing a decrease of 2.23%.
Previous wording
Revenue generated from selling face masks were $106,064 and $257,820 for the year ended December 31, 2023 and 2022. We sold 3,383 thousand pieces of face masks in 2023, as compared to 5,625 thousand pieces in 2022, a decrease of 2,242 thousand pieces, or 39.86%.
Current wording
Revenue generated from selling face masks were $nil and $106,064 for the year ended December 31, 2024 and 2023.
Previous wording
Total cost of sales for CMP, offset printing paper and tissue paper products in the year ended December 31, 2023 was $85,418,822, a decrease of $9,965,512, or 10.45%, from $95,384,334 for the year ended December 31, 2022. This was mainly due to the decrease of material costs of CMP.
Current wording
Total cost of sales for CMP, offset printing paper and tissue paper products in the year ended December 31, 2024 was $69,145,658, a decrease of $16,273,164, or 19.05%, from $85,418,822 for the year ended December 31, 2023. This was mainly due to the decrease in unit material costs of CMP and decrease in sales volume of offset printing paper and tissue paper products.
Previous wording
Cost of sales for CMP was $77,962,837 for the year ended December 31, 2023, as compared to $91,093,891 in 2022. The decrease in the cost of sales of $13,131,054 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 year of 2023. Average cost of sales per tonne for CMP decreased by 16.55%, from $417 for the year ended December 31, 2022, to $348 in 2023. 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 $69,145,658 for the year ended December 31, 2024, as compared to $77,962,837 in 2023. The decrease in the cost of sales of $8,817,179 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 year of 2024. Average cost of sales per tonne for CMP decreased by 9.77%, from $348 for the year ended December 31, 2023, to $314 in 2024. This was mainly attributable to the lower average unit purchase costs (net of applicable value added tax) of recycled paper board.
Previous wording
Our average unit purchase costs (net of applicable value added tax) of recycled paper board and recycled white scrap paper for the year ended December 31, 2023 were RMB 1,350/tonne (approximately $191/tonne) as compared to RMB 1,690/tonne (approximately $250/tonne) for the year ended December 31, 2022. These changes (in US dollars) represent a year-over-year decrease of 23.60% for the unit purchase cost of 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 and recycled white scrap paper for the year ended December 31, 2024 was RMB 1,214/tonne (approximately $171/tonne), as compared to RMB 1,350/tonne (approximately $191/tonne) in 2023. These changes (in US dollars) represent a year-over-year decrease of 10.47% for the unit purchase cost of 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 15.3% of total sales in 2023, respectively, compared to 4% and 12.4% of total sales 2022. The monthly energy cost (electricity and gas) as a percentage of total monthly sales of our main paper products for the 24 months ended December 31, 2023are summarized as follows:
Current wording
Electricity and gas are our two main energy sources. Electricity and gas accounted for approximately 5% and 13.6% of total sales in 2024, respectively, compared to 5% and 15.3% of total sales in 2023. The monthly energy cost (electricity and gas) as a percentage of total monthly sales of our main paper products for the 24 months ended December 31, 2024 are summarized as follows:
Previous wording
Gross profit for December 31, 2023 was $999,885 (representing 1.16% of the total revenue), representing a decrease of $3,754,311, or 78.97%, from the gross profit of $4,754,196 (representing 4.74% of the total revenue) for the year ended December 31, 2022. The decrease was mainly due to the decrease in ASP of CMP, partially offset by the decrease of material costs of CMP, and (ii) the increase in material costs of tissue paper products.
Current wording
Gross profit for December 31, 2024 was $6,691,740 (representing 8.82% of the total revenue), representing an increase of $5,691,855, or 569.25%, from the gross profit of $999,885 (representing 1.16% of the total revenue) for the year ended December 31, 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 year ended December 31, 2023 was $993,236, a decrease of $3,704,094, or 78.86%, from the gross profit of $4,697,330 for the year ended December 31, 2022. The decrease was mainly the result of the factors discussed above.
Current wording
Gross profit for offset printing paper, CMP and tissue paper products for the year ended December 31, 2024 was $6,556,769, an increase of $5,563,533, or 560.14%, from the gross profit of $993,236 for the year ended December 31, 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 decreased by 3.54 percentage points, from 4.69% for the year ended December 31, 2022, to 1.15 for the year ended December 31, 2023.
Current wording
The overall gross profit margin for offset printing paper, CMP and tissue paper products increased by 7.51 percentage points, from 1.15% for the year ended December 31, 2023, to 8.66% for the year ended December 31, 2024.
Previous wording
Gross profit margin for regular CMP for the year ended December 31, 2023 was 5.27%, or 2.12 percentage points lower, as compared to gross profit margin of 7.39% for the year ended December 31, 2022. Such decrease was primarily due to the decrease in ASP of regular CMP, partially offset by the decrease in material costs.
Current wording
Gross profit margin for regular CMP for the year ended December 31, 2024 was 8.79%, or 3.52 percentage points higher, as compared to gross profit margin of 5.27% for the year ended December 31, 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 year ended December 31, 2023 was 2.59%, or 6.83 percentage points lower, as compared to gross profit margin of 9.42% for the year ended December 31, 2022. Such decrease was primarily due to the decrease in ASP of light-weight CMP, partially offset by the decrease in material costs.
Current wording
Gross profit margin for light-weight CMP for the year ended December 31, 2024 was 8.03%, or 5.44 percentage points higher, as compared to gross profit margin of 2.59% for the year ended December 31, 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 year ended December 31, 2023 was $11,127, representing a gross margin of -10.49% compared with a gross profit of $67,328, representing a gross margin of 26.11%, for the year ended December 31, 2022.
Current wording
Gross loss for face mask for the year ended December 31, 2024 and 2023 was $nil and $11,127, respectively.
Previous wording
Operating loss for the year ended December 31, 2023 was $9,575,888, a decrease of $4,271,361, or 80.52%, from $5,304,527 for the year ended December 31, 2022. The decrease was primarily due to the decrease in gross profit and recognition of impairment and disposal loss on assets, partially offset by the decrease in selling, general and administrative expenses.
Current wording
Operating loss for the year ended December 31, 2024 was $8,210,719, a decrease of loss of $1,365,169, or 14.26%, from $9,575,888 for the year ended December 31, 2023. The decrease 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 year ended December 31, 2023 decreased by $43,433, from $1,027,951 for the year ended December 31, 2022, to $984,518. The Company had short-term and long-term interest-bearing loans and lease obligation that aggregated $12,386,346 as of December 31, 2023, as compared to $15,442,807 as of December 31, 2022.
Current wording
Interest expense for the year ended December 31, 2024 decreased by $222,141, from $984,518 for the year ended December 31, 2023, to $762,377. The Company had short-term and long-term interest-bearing loans that aggregated $9,124,422 as of December 31, 2024, as compared to $11,801,996 as of December 31, 2023.
Previous wording
Full allowance for deferred tax asset loss was provided in the year of 2023 and 2022. Income tax for the year ended December 31, 2023 is $346,954 as compared to the income tax $11,711,339 for the year ended December 31, 2022.
Current wording
Full allowance for deferred tax asset loss was provided in the year of 2024 and 2023. Income tax for the year ended December 31, 2024 was $879,194 as compared to the income tax $346,954 for the year ended December 31, 2023.
Previous wording
As a result of the above, net loss was $9,946,035 for the year ended December 31, 2023, representing an increase of $6,625,273, or 39.98%, from $16,571,308 for the year ended December 31, 2022.
Current wording
As a result of the above, net loss was $9,843,094 for the year ended December 31, 2024, representing a decrease of loss of $102,941, or 1.03%, from $9,946,035 for the year ended December 31, 2023.
Previous wording
Net accounts receivable was $575,526 as of December 31, 2023, as compared with $nil as of December 31, 2022. We usually collect accounts receivable within 30 days of delivery and completion of sales.
Current wording
Net accounts receivable decreased by $287,950, or 50.03%, to $287,576 as of December 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.
Previous wording
Inventories consist of raw materials (accounting for 10.48% of total value of inventory as of December 31, 2023), semi-finished goods and finished goods. As of December 31, 2023, the recorded value of inventory increased by 23.87% to $3,558,193 from $2,872,622 as of December 31, 2022. The increase is mainly due to the increase of finished goods, partially offset by the decrease of recycle paper board. More CMP products were produced in December 2023 to mitigate the impact of energy price rise starting from January 2024. As of December 31, 2023, the inventory of recycled paper board, which is the main raw material for the production of CMP, was $198,744, approximately $1,059,417, or 84.20%, lower than the balance as of December 31, 2022. As a result of better control over stock turnover and volatility of recycled paper board price, inventory was kept in a minimum level.
Current wording
Inventories consist of raw materials (accounting for 59.29% of total value of inventory as of December 31, 2024), semi-finished goods and finished goods. As of December 31, 2024, the recorded value of inventory decreased by 33.85% to $2,351,876 from $3,555,235 as of December 31, 2023. As of December 31, 2024, the inventory of recycled paper board, which is the main raw material for the production of CMP, was $1,353,543, approximately $1,154,799, or 581.05%, higher than the balance as of December 31, 2023. In anticipation of the rising energy prices, we enhanced the production capacity for CMP during the fourth quarter of 2023. As a result, by December 31, 2023, our raw material balance had decreased, whereas the inventory balance of our finished goods had increased significantly, compared to the balances recorded on December 31, 2024. This was due to a substantial portion of the materials being processed and converted into finished goods during that period.
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 $141,727 (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 $140,515 (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 December 31, 2023, 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 December 31, 2024, we had approximately $3.4 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.
Previous wording
Our cash, cash equivalents and restricted cash as of December 31, 2023 was $4,391,921, a decrease of $5,132,947, from $9,524,868 as of December 31, 2022. The decrease of cash and cash equivalents for the year ended December 31, 2023 was attributable to a number of factors including:
Current wording
Our cash, cash equivalents and restricted cash as of December 31, 2024 was $6,950,576, an increase of $2,558,655, from $4,391,921 as of December 31, 2023. The increase of cash and cash equivalents for the year ended December 31, 2024 was attributable to a number of factors including:
Previous wording
Net cash provided by operating activities was $12,871,086 for the year ended December 31, 2023. The balance represented an increase of cash of $2,151,698, or 20.07%, from $10,719,388 provided for the year ended December 31, 2022. Net loss for the year ended December 31, 2023 was $9,946,035, representing a decrease of loss $6,625,273, or 39.98%, from a net loss of $16,571,308 for the year ended December 31, 2022. Changes in various asset and liability account balances throughout the year ended December 31, 2023 also contributed to the net change in cash from operating activities in year ended December 31, 2023. Chief among such changes is the decrease of accounts receivable in the amount of $280,970 during the year of 2023. There was also an increase of $736,267 in the ending inventory balance as of December 31, 2023 (a decrease to net cash for the year ended December 31, 2023 cash flow purposes). In addition, the Company had non-cash expenses relating to depreciation and amortization in the amount of $14,225,990. The Company also had a net decrease of $9,322,532 in prepayment and other current assets (an increase to net cash) and a net decrease of $999,812 in other payables and accrued liabilities and related parties (a decrease to net cash), as well as a decrease in income tax payable of $412,504 (a decrease to net cash) during the year ended December 31, 2023.
Current wording
Net cash provided by operating activities was $6,299,469 for the year ended December 31, 2024. The balance represented a decrease of cash of $6,571,617, or 51.06%, from $12,871,086 provided for the year ended December 31, 2023. Net loss for the year ended December 31, 2024 was $9,843,094, representing a decrease of loss of $102,941, or 1.03%, from a net loss of $9,946,035 for the year ended December 31, 2023. Changes in various asset and liability account balances throughout the year ended December 31, 2024 also contributed to the net change in cash from operating activities in year ended December 31, 2024. Chief among such changes is the decrease of accounts receivable in the amount of $240,346 during the year of 2024. There was also a decrease of $432,189 in the ending inventory balance as of December 31, 2024 (an increase to net cash for the year ended December 31, 2024 cash flow purposes). In addition, the Company had non-cash expenses relating to depreciation and amortization in the amount of $14,221,082. The Company also had a net increase of $6,090 in prepayment and other current assets (a decrease to net cash) and a net decrease of $447,899 in other payables and accrued liabilities and related parties (a decrease to net cash), as well as an increase in income tax payable of $81,720 (an increase to net cash) during the year ended December 31, 2024.
Previous wording
We incurred $22,239,297 in net cash expenditures for investing activities during the year ended December 31, 2023, as compared to $10,898,531 for the year ended December 31, 2022. Payments in 2023 were mainly for the payment for Land Use Right.
Current wording
We incurred $329,611 in net cash expenditures for investing activities during the year ended December 31, 2024, as compared to $22,239,297 for the year ended December 31, 2023. Payments in 2023 were mainly for the payment for land use right.
Previous wording
iii. Net cash provided by financing activities
Current wording
iii. Net cash (used in) provided by financing activities
Previous wording
Net cash provided by financing activities was $4,410,099 for the year ended December 31, 2023, as compared to net cash used in financing activities in the amount of $879,596 for the year ended December 31, 2022.
Current wording
Net cash used in financing activities was $3,256,696 for the year ended December 31, 2024, as compared to net cash provided by financing activities in the amount of $4,410,099 for the year ended December 31, 2023.
Previous wording
As of December 31, 2022, there were guaranteed short-term borrowings of $5,023,978 and unsecured bank loans of $574,333. As of December 31, 2023, there were guaranteed short-term borrowings of $nil and unsecured bank loans of $423,567.
Current wording
As of December 31, 2024, there were guaranteed short-term borrowings of $2,225,808 and unsecured bank loans of $417,339. 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 years ended December 31, 2023, and 2022 were approximately 4.48% and 4.72%, respectively.
Current wording
The average short-term borrowing rates for the years ended December 31, 2024, and 2023 were approximately 4.6% and 4.48%, respectively.
Previous wording
As of December 31, 2023, and 2022, long-term loan balance is $11,378,429 and $9,040,002, respectively.
Current wording
As of December 31, 2024, and 2023, long-term loan balance is $4,672,806 and $11,378,429, respectively.
Previous wording
On July 15, 2013, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 5 years, which was originally due and payable in various installments from December 21, 2013 to July 26, 2018. On June 21, 2018, the loan was extended for additional 5 years and was due and payable in various installments from December 21, 2018 to June 20, 2023. On August 24, 2023, the loan was extended for another 3 years and will be due and payable on August 24, 2026. The loan is secured by certain of the Company’s manufacturing equipment with net book value of $nil and $280,466 as of December 31, 2023 and 2022, respectively. Interest payment is due monthly and bore a rate of 7.68% per annum. Effective from November 15, 2022, the interest rate was reduced to 7% per annum. As of December 31, 2023 and 2022, the total outstanding loan balance was $3,528,315 and $3,589,582. Out of the total outstanding loan balance, current portion amounted was $1,269,290, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of $2,259,025 is presented as non-current liabilities in the consolidated balance sheet as of December 31, 2023.
Current wording
On July 15, 2013, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 5 years, which was originally due and payable in various installments from December 21, 2013 to July 26, 2018. On June 21, 2018, the loan was extended for additional 5 years and was due and payable in various installments from December 21, 2018 to June 20, 2023. On August 24, 2023, the loan was extended for another 3 years and will be due and payable on August 24, 2026. The loan is secured by certain of the Company’s manufacturing equipment with net book value of $nil as of December 31, 2024 and 2023. Interest payment is due monthly and bore a rate of 7.68% per annum. Effective from November 15, 2022, the interest rate was reduced to 7% per annum. As of December 31, 2024 and 2023, the total outstanding loan balance was $3,476,434 and $3,528,315. Out of the total outstanding loan balance, current portion amounted was $2,641,756 and $1,269,290, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of $834,678 and $2,259,025 is presented as non-current liabilities in the consolidated balance sheet as of December 31, 2024 and 2023, respectively.
Previous wording
On April 17, 2019, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 2 years, which was due and payable in various installments from August 21, 2019 to April 16, 2021. The loan was renewed on March 22, 2021 and December 24, 2021 and extended for additional 3 years in total, which will be due on April 16, 2024 according to the new schedule. The loan is secured by Tengsheng Paper with its land use right as collateral for the benefit of the credit union. Interest payment is due quarterly and bore a rate of 7.68% per annum. Effective from November 15, 2022, the interest rate was reduced to 7% per annum. As of December 31, 2023 and 2022, the total outstanding loan balance was $2,259,026 and $2,297,332, respectively, which are presented as current liabilities and non-current liabilities in the consolidated balance sheet as of December 31, 2023 and 2022, respectively.
Current wording
On April 17, 2019, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 2 years, which was due and payable in various installments from August 21, 2019 to April 16, 2021. The loan was renewed on March 22, 2021, December 24, 2021 and April 16, 2024 and extended for additional 5 years in total, which is due on April 15, 2026 according to the new schedule. The loan was secured by Tengsheng Paper with its land use right as collateral for the benefit of the credit union. Interest payment was due quarterly and bore a rate of 7.2% per annum. Effective from November 15, 2022, the interest rate was reduced to 7% per annum. On December 24, 2024, the Company entered into a one-year loan agreement with the Rural Credit Union of Xushui District for same amount to repay the loan. This refinancing arrangement secured a lower market rate and did not involve any cash inflows or outflows. As of December 31, 2024 and 2023, the total outstanding loan balance was $nil and $2,259,026, respectively, which are presented as current liabilities in the consolidated balance sheet as of December 31, 2024 and 2023.
Previous wording
On December 12, 2019, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 2 years, which is due and payable in various installments from June 21, 2020 to December 11, 2021. The loan was renewed on March 22, 2021 and December 24, 2021 and extended for additional 3 years in total, which will be due on December 11, 2024 according to the new schedule. The loan is secured by Tengsheng Paper with its land use right as collateral for the benefit of the credit union. Interest payment is due monthly and bore a rate of 7.56% per annum. Effective from November 15, 2022, the interest rate was reduced to 7% per annum. As of December 31, 2023 and 2022, the total outstanding loan balance was $1,835,458 and $1,866,582, respectively, which are presented as current liabilities and non-current liabilities in the consolidated balance sheet as of December 31, 2023 and 2022, respectively.
Current wording
On December 12, 2019, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 2 years, which is due and payable in various installments from June 21, 2020 to December 11, 2021. The loan was renewed on March 22, 2021 and December 24, 2021 and extended for additional 3 years in total, which was due on December 11, 2024 according to the new schedule. The loan was secured by Tengsheng Paper with its land use right as collateral for the benefit of the credit union. Interest payment is due monthly and bore a rate of 7.56% per annum. Effective from November 15, 2022, the interest rate was reduced to 7% per annum. On December 24, 2024, the Company entered into a one-year loan agreement with the Rural Credit Union of Xushui District for same amount to repay the loan. This refinancing arrangement secured a lower market rate and did not involve any cash inflows or outflows. As of December 31, 2024 and 2023, the total outstanding loan balance was $nil and $1,835,458, respectively, which are presented as current liabilities in the consolidated balance sheet as of December 31, 2024 and 2023, respectively.
Previous wording
On February 26, 2023, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 2 years, which is due and payable in various installments from August 21, 2023 to February 24, 2025. The loan is secured by Dongfang Paper with its land use right as collateral for the benefit of the credit union. Interest payment is due monthly and bore a rate of 7% per annum. As of December 31, 2023, the total outstanding loan balance was $2,541,404. Out of the total outstanding loan balance, current portion amounted was $1,284,820, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of $1,256,584 is presented as non-current liabilities in the consolidated balance sheet as of December 31, 2023.
Current wording
On February 26, 2023, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 2 years, which is due and payable in various installments from August 21, 2023 to February 24, 2025. The loan is secured by Dongfang Paper with its land use right as collateral for the benefit of the credit union. Interest payment is due monthly and bore a rate of 7% per annum. The loan was repaid in July 2024. As of December 31, 2024 and 2023, the total outstanding loan balance was $nil and $2,541,404. Out of the total outstanding loan balance, current portion amounted was $nil and $1,284,820, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of $nil and $1,256,584 is presented as non-current liabilities in the consolidated balance sheet as of December 31, 2024 and 2023, respectively.
Previous wording
On December 5, 2023, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 3 years, which was due in various installments from June 21, 2024 to December 5, 2026. The loan was guaranteed by an independent third party. Interest payment was due monthly and bore a rate of 7% per annum. As of December 31, 2023, total outstanding loan balance was $1,214,226. Out of the total outstanding loan balance, current portion amounted $225,903, which is presented as current liabilities and the remaining balance of $ 988,323 is presented as non-current liabilities in the consolidated balance sheet as of December 31, 2023.
Current wording
On December 5, 2023, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 3 years, which was due in various installments from June 21, 2024 to December 5, 2026. The loan is guaranteed by an independent third party. Interest payment is due monthly and bears a rate of 7% per annum. As of December 31, 2024 and 2023, total outstanding loan balance was $1,196,372 and $1,214,226, respectively. Out of the total outstanding loan balance, current portion amounted $918,146 and $225,903, which is presented as current liabilities and the remaining balance of $278,226 and $988,323 is presented as non-current liabilities in the consolidated balance sheet as of December 31, 2024 and 2023, respectively.
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