8-K
IT TECH PACKAGING, INC. (ITP)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORTPursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of
earliest event reported): November 10, 2022
IT TECH PACKAGING, INC.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation)
| 001-34577 | 20-4158835 |
|---|---|
| (Commission File Number) | (IRS Employer Identification No.) |
| Science Park, Juli Road<br><br> <br>Xushui District,<br> Baoding City<br><br> <br>Hebei<br> Province, People’s Republic of China | 072550 |
| --- | --- |
| (Address of principal executive offices) | (Zip Code) |
(86) 312-8698215
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (seeGeneral Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.001 per share | ITP | NYSE American LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item2.02 Results of Operations and Financial Condition.
On November 10, 2022, IT Tech Packaging, Inc. (the “Company”) issued a press release announcing its unaudited financial results for the nine and three months ended September 30, 2022. A copy of the press release making the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed as “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are filed herewith:
| Exhibit<br><br> Number | Description |
|---|---|
| 99.1 | Press Release dated November 10, 2022. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| IT TECH PACKAGING, INC. | |||
|---|---|---|---|
| Date: November 10, 2022 | By: | /s/ Zhenyong Liu | |
| Name: | Zhenyong Liu | ||
| Title: | Chief Executive Officer |
2
Exhibit 99.1
IT Tech Packaging,Inc. Announces Third Quarter 2022 Unaudited Financial Results
BAODING, China, Nov.10,2022 /PRNewswire/ -- IT Tech Packaging, Inc. (NYSE American: ITP) (“IT Tech Packaging” or the “Company”), a leading manufacturer and distributor of diversified paper products in North China, today announced its unaudited financial results for the three and nine months ended September 30, 2022.
Mr. Zhenyong Liu, Chairman and Chief Executive Officer of the Company, commented, “Due to the sporadic situation of COVID-19 in China, the operation of our factory facilities is highly restricted during the three months ended September 30, 2022. However, we still achieved a positive profit year-on-year growth rate of 53% despite facing a volatile commodity price environment impacting our operating costs and the COVID-19 pandemic lockout policies limiting our factory facilities operations. On the strategic front, we continued to deliver high-quality products to our customers, strengthen our business operation, optimize the product portfolio, and seek significant economic benefits. Consistent with our stated strategy, we continued to utilize excess cash flow in a balanced way to make investments in our long-term strategic growth initiatives and to further strengthen the balance sheet. Looking forward, we are committed to creating value for its customers, employees, shareholders, partners, industry, and society by seizing new opportunities and diversifying businesses.”
Third Quarter 2022Unaudited Financial Results
| For<br> the Three Months Ended September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ millions) | 2022 | 2021 | %<br> Change | ||||||
| Revenues | 31.71 | 45.09 | -29.7 | % | |||||
| Regular Corrugating Medium<br> Paper (“CMP”)* | 26.06 | 31.20 | -16.5 | % | |||||
| Light-Weight CMP** | 5.30 | 6.13 | -13.6 | % | |||||
| Offset Printing Paper | - | 4.80 | -100.0 | % | |||||
| Tissue Paper Products | 0.29 | 2.81 | -89.6 | % | |||||
| Face Masks | 0.06 | 0.15 | -62.6 | % | |||||
| Gross profit | 2.78 | 1.82 | 52.8 | % | |||||
| Gross profit (loss) margin | 8.8 | % | 4.0 | % | 4.8<br> pp | **** | |||
| Regular Corrugating Medium<br> Paper (“CMP”)* | 10.9 | % | 2.9 | % | 8.0<br> pp | **** | |||
| Light-Weight CMP** | 12.8 | % | 5.6 | % | 7.2<br> pp | **** | |||
| Offset Printing Paper | - | 16.2 | % | -16.2<br> pp | **** | ||||
| Tissue Paper Products*** | -258.5 | % | -8.7 | % | -249.8<br> pp | **** | |||
| Face Masks | 29.6 | % | 20.4 | % | 9.2<br> pp | **** | |||
| Operating loss | -0.59 | -0.20 | -197.3 | % | |||||
| Net income (loss) | -1.89 | 1.54 | -222.3 | % | |||||
| EBITDA | 2.43 | 5.32 | -54.4 | % | |||||
| Basic and Diluted loss<br> per share | -0.03 | 0.03 | -200.0 | % | |||||
| * | Productsfrom PM6 | ||||||||
| --- | --- | ||||||||
| ** | Productsfrom PM1 | ||||||||
| --- | --- | ||||||||
| *** | Productsfrom PM8 and PM9 | ||||||||
| --- | --- | ||||||||
| **** | pprepresents percentage points | ||||||||
| --- | --- | ||||||||
| · | Revenue decreased by 29.7% to approximately<br>$31.71 million, mainly due to the decrease in sales volume of CMP, offset printing paper and tissue paper products. | ||||||||
| --- | --- | ||||||||
| · | Gross profit increased by 52.8% to approximately<br>$2.78 million. Total gross margin increased by 4.8 percentage point to 8.8%. | ||||||||
| --- | --- | ||||||||
| · | Loss from operations was approximately $0.59<br>million, compared to loss from operations of approximately $0.20 million for the same period of last year. | ||||||||
| --- | --- | ||||||||
| · | Net loss was approximately $1.89 million,<br>or loss per share of $0.03, compared to net income of approximately $1.54 million, or earnings per share of $0.03, for the same period<br>of last year. | ||||||||
| --- | --- | ||||||||
| · | Earnings before interest, taxes, depreciation<br>and amortization (“EBITDA”) was approximately $2.43 million, compared to$5.32 million for the same period of last year. | ||||||||
| --- | --- |
Revenue
For the third quarter of 2022, total revenue decreased by 29.7%, to approximately $31.71 million from approximately $45.09 million for the same period of last year. This was mainly due to the decrease in sales volume of regular CMP, offset printing paper and tissue paper products.
The following table summarizes revenue, volume and ASP by product for the third quarter of 2022 and 2021, respectively:
| For the Three Months Ended September 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||||
| Revenue (’000) | Volume<br> (tonne) | ASP (/tonne) | Revenue (’000) | Volume<br> (tonne) | ASP (/tonne) | |||
| Regular CMP | 59,848 | 61,947 | ||||||
| Light-Weight CMP | 12,507 | 12,497 | ||||||
| Offset Printing Paper | - | 7,045 | ||||||
| Tissue Paper Products | 260 | 2,646 | ||||||
| Total | 72,615 | 84,135 |
All values are in US Dollars.
| Revenue (’000) | Volume<br> (thousand<br> pieces) | ASP (/thousand pieces) | Revenue (’000) | Volume<br> (thousand<br> pieces) | ASP (/thousand pieces) | |||
|---|---|---|---|---|---|---|---|---|
| Face Masks | 1,282 | 3,180 |
All values are in US Dollars.
Revenue from CMP, including both regular CMP and light-Weight CMP, decreased by 16.0%, to approximately $31.36 million and accounted for 98.9% of total revenue for the third quarter of 2022, compared to approximately $37.33million, or 82.8% of total revenue for the same period of last year. The Company sold 72,355 tonnes of CMP at an ASP of $433/tonne in the third quarter of 2022, compared to 74,444 tonnes at an ASP of $501/tonne in the same period of last year.
Of the total CMP sales, revenue from regular CMP decreased by 16.5%, to approximately $26.06 million for the third quarter of 2022, compared to revenue of approximately $31.20 million for the same period of last year. The Company sold 59,848 tonnesof regular CMP at an ASP of $435/tonne during the third quarter of 2022, compared to 61,947 tonnes at an ASP of $504/tonne for the same period of last year. Revenue from light-weight CMP decreased by 13.6%, to approximately $5.30 million for the third quarter of 2022, compared to revenue of approximately $6.13 million for the same period of last year. The Company sold 12,507 tonnes of light-weight CMP at an ASP of $423/tonne for the third quarter of 2022, compared to 12,497 tonnes at an ASP of $490/tonne for the same period of last year.
Revenue from offset printing paper was $nil for the third quarter of 2022, compared to revenue of approximately $4.80 million for the same period of last year.
Revenue from tissue paper products decreased by 89.6%, to approximately $0.29 million for the third quarter of 2022, from approximately $2.81 million for the same period of last year. The Company sold 260tonnesof tissue paper products at an ASP of $1,128/tonne for the third quarter of 2022, compared to 2,646 tonnes at an ASP of $1,063/tonne for the same period of last year.
Revenue from face masks decreased by 62.6%, to approximately $0.06 million for the third quarter of 2022, from $0.15 million for the same period of last year. The Company sold 1,282 thousand pieces of face masks for the third quarter of 2022, compared to3,180 thousand pieces of face masks for the same period of last year.
2
Gross Profit and GrossMargin
Total cost of sales decreased by 33.1%, to approximately $28.93 million for the third quarter of 2022 from approximately $43.27 million for the same period of last year. This was mainly due to the decrease in sales quantity of regular CMP, offset printing paper and tissue paper products, and the decrease in material costs of CMP. Costs of sales per tonne for regular CMP, light-weight CMP, offset printing paper, and tissue paper products were $388, $369,$nil and $4,042, respectively, for the third quarter of 2022, compared to $489, $463, $570 and $1,155, respectively, for the same period of last year.
Total gross profit was approximately $2.78 million for the third quarter of 2022, compared to the gross profit of approximately $1.82 million for the same period of last year as a result of factors described above. Overall gross margin was 8.8% for the third quarter of 2022, compared to 4.0% for the same period of last year. Gross profit(loss) margins for regular CMP, light-weight CMP, offset printing paper, tissue paper products and face mask products were 10.9%, 12.8%, nil%, -258.5% and 29.6%, respectively, for the third quarter of 2022, compared to 2.9%, 5.6%, 16.2%, -8.7% and 20.4%, respectively, for the same period of last year.
Selling, General andAdministrative Expenses
Selling, general and administrative expenses (“SG&A”) increased by 66.9%, to approximately $3.37 million for the third quarter of 2022 from approximately $2.02million for the same period of last year.
Loss from Operations
Loss from operations was approximately $0.59 million for the third quarter of 2022, a decrease of 197.3%, from loss from operations of approximately $0.20 million for the same period of last year. Operating loss margin was 1.9% for the third quarter of 2022, compared to operating loss margin of 0.4% for the same period of last year.
Net Loss
Net loss was approximately $1.89 million, or loss per share of $0.03, for the third quarter of 2022, compared to net income of approximately $1.54 million, or earnings per share of $0.03, for the same period of last year.
EBITDA
EBITDA was approximately $2.43 million for the third quarter of 2022, compared to approximately $5.32 million for the same period of last year.
Note 1: Non-GAAP Financial Measures
In addition to our U.S. GAAP results, this press release includes a discussion of EBITDA, a non-GAAP financial measure as defined by the Securities and Exchange Commission (“SEC”). The Company defines EBITDA as net income before interest, income taxes, depreciation and amortization. EBITDA is a key measure used by management to evaluate our results and make strategic decisions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, the Company’s presentation of EBITDA may not be comparable to similarly titled measures of other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with the U.S. GAAP.
3
Reconciliation ofNet Income to EBITDA
(Amounts expressedin US$)
| For the Three Months Ended <br><br>September 30, | ||||
|---|---|---|---|---|
| ($ millions) | 2022 | 2021 | ||
| Net income (loss) | -1.89 | 1.54 | ||
| Add: Income tax | 0.43 | -0.07 | ||
| Net interest expense | 0.26 | 0.28 | ||
| Depreciation and amortization | 3.63 | 3.57 | ||
| EBITDA | 2.43 | 5.32 |
Nine Months EndedSeptember 30, 2022 Unaudited Financial Results
| For<br> the Nine Months Ended September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ millions) | 2022 | 2021 | %<br> Change | ||||||
| Revenues | 78.98 | 115.83 | -31.8 | % | |||||
| Regular Corrugating Medium<br> Paper (“CMP”)* | 65.02 | 78.42 | -17.1 | % | |||||
| Light-Weight CMP** | 12.66 | 16.44 | -23.0 | % | |||||
| Offset Printing Paper | - | 14.10 | -100.0 | % | |||||
| Tissue Paper Products | 1.10 | 6.49 | -83.0 | % | |||||
| Face Masks | 0.20 | 0.39 | -48.7 | % | |||||
| Gross profit | 3.73 | 6.68 | -44.2 | % | |||||
| Gross profit (loss) margin | 4.7 | % | 5.8 | % | -1.1<br> pp | **** | |||
| Regular Corrugating Medium<br> Paper (“CMP”)* | 7.2 | % | 5.0 | % | 2.2<br> pp | **** | |||
| Light-Weight CMP** | 9.2 | % | 7.3 | % | 1.9<br> pp | **** | |||
| Offset Printing Paper | - | 17.5 | % | -17.5<br> pp | **** | ||||
| Tissue Paper Products*** | -193.6 | % | -14.4 | % | -179.2<br> pp | **** | |||
| Face Masks | 25.7 | % | 17.0 | % | 8.7<br> pp | **** | |||
| Operating loss | -4.78 | -0.49 | -874.2 | % | |||||
| Net loss | -4.66 | -3.25 | -43.5 | % | |||||
| EBITDA | 7.18 | 2.69 | 166.91 | % | |||||
| Basic and Diluted loss<br> per share | -0.07 | -0.06 | -16.7 | % | |||||
| * | Productsfrom PM6 | ||||||||
| --- | --- | ||||||||
| ** | Productsfrom PM1 | ||||||||
| --- | --- | ||||||||
| *** | Productsfrom PM8 and PM9 | ||||||||
| --- | --- | ||||||||
| **** | pprepresents percentage points | ||||||||
| --- | --- |
4
Revenue
For the nine months ended September 30, 2022, total revenue decreased by 31.8%, to approximately $78.98million from approximately $115.83 million for the same period of last year. This was mainly due to the decrease in sales volume of corrugating medium paper (“CMP”) and offset printing paper and tissue paper products. The following table summarizes revenue, volume and ASP by product for the nine months ended September 30, 2022 and 2021, respectively:
| For the Nine Months Ended September 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||||
| Revenue (’000) | Volume<br> (tonne) | ASP (/tonne) | Revenue (’000) | Volume<br> (tonne) | ASP (/tonne) | |||
| Regular CMP | 139,036 | 156,080 | ||||||
| Light-Weight CMP | 27,990 | 33,658 | ||||||
| Offset Printing Paper | - | 20,602 | ||||||
| Tissue Paper Products | 1,040 | 5,963 | ||||||
| Total | 168,066 | 216,303 |
All values are in US Dollars.
| Revenue (’000) | Volume<br> (thousand<br> pieces) | ASP (/thousand pieces) | Revenue (’000) | Volume<br> (thousand<br> pieces) | ASP (/thousand pieces) | |||
|---|---|---|---|---|---|---|---|---|
| Face Masks | 4,295 | 9,650 |
All values are in US Dollars.
Revenue from CMP, including both regular CMP and light-Weight CMP, decreased by 18.1%, to approximately $77.68 million and accounted for 98.3% of total revenue for nine months ended September 30, 2022, compared to approximately $94.85 million, or 81.9% of total revenue for the same period of last year. The Company sold 167,026tonnes of CMP at an ASP of $465/tonne in nine months ended September 30, 2022, compared to 189,738 tonnes at an ASP of $500/tonne in the same period of last year.
Of the total CMP sales, revenue from regular CMP decreased by 17.1%, to approximately $65.02 million for nine months ended September 30, 2022, compared to revenue of approximately $78.42million for the same period of last year. The Company sold 139,036tonnesof regular CMP at an ASP of $468/tonne during the nine months ended September 30, 2022, compared to 156,080 tonnes at an ASP of $502/tonne for the same period of last year. Revenue from light-weight CMP decreased by 23.0%, to approximately $12.66 million for the nine months ended September 30, 2022, compared to revenue of approximately $16.44 million for the same period of last year. The Company sold 27,990 tonnes of light-weight CMP at an ASP of $452/tonne for the nine months ended September 30, 2022, compared to 33,658 tonnes at an ASP of $488/tonne for the same period of last year.
Revenue from offset printing paper was $nil for the nine months ended September 30, 2022, compared to revenue of approximately $14.10 million for the same period of last year. The Company sold 20,602 tonnes of offset printing paper at an ASP of $684/tonne in the nine months ended September 30, 2021.
Revenue from tissue paper products decreased by 83.0%, to approximately $1.10million for the nine months ended September 30, 2022, from approximately $6.49 million for the same period of last year. The Company sold 1,040 tonnes of tissue paper products at an ASP of $1,061/tonne for the nine months ended September 30, 2022, compared to 5,963 tonnes at an ASP of $1,089/tonne for the same period of last year.
Revenue from face masks decreased by 48.7%, to approximately $0.20 million for the nine months ended September 30, 2022, from $0.39 million for the same period of last year. The Company sold 4,295 thousand pieces of face masks for the nine months ended September 30, 2022, compared to 9,650 thousand pieces of face masks for the same period of last year.
5
Gross Profit and GrossMargin
Total cost of sales decreased by 31.1%, to approximately $75.25 million for the nine months ended September 30, 2022 from approximately $109.15 million for the same period of last year. This was mainly a result of the decrease in sales volume of CMP and offset printing paper and decrease of material costs of CMP. Costs of sales per tonne for regular CMP, light-weight CMP, offset printing paper and tissue paper products were $434, $411,$nil and$3,114, respectively, for the nine months ended September 30, 2022, compared to $477, $453, $565 and $1,245, respectively, for the same period of last year.
Total gross profit was approximately $3.73million for the nine months ended September 30, 2022, compared to the gross profit of approximately $6.68 million for the same period of last year as a result of factors described above. Overall gross margin was 4.7% for the nine months ended September 30, 2022, compared to 5.8% for the same period of last year. Gross profit(loss) margins for regular CMP, light-weight CMP, offset printing paper, tissue paper products and face mask products were 7.2%, 9.2%, nil%, -193.6%, and25.7%, respectively, for the nine months ended September 30, 2022, compared to 5.0%, 7.3%, 17.5%, -14.4% and 17.0%, respectively, for the same period of last year.
Selling, General andAdministrative Expenses
Selling, general and administrative expenses (“SG&A”) increased by 19.1%, to approximately $8.54 million for the nine months ended September 30, 2022 from approximately $7.17million for the same period of last year.
Loss from Operations
Loss from operations was approximately $4.78 million for the nine months ended September 30, 2022, a decrease of 874.2%, from loss from operations of approximately $0.49 million for the same period of last year. Operating loss margin was 6.1% for the nine months ended September 30, 2022, compared to operating loss margin of 0.4% for the same period of last year.
Net Loss
Net loss was approximately $4.66 million, or loss per share of $0.07, for the nine months ended September 30, 2022, compared to net loss of approximately $3.25 million, or loss per share of $0.06, for the same period of last year.
EBITDA
EBITDA was approximately $7.18 million for the nine months ended September 30, 2022, compared to approximately $2.69 million for the same period of last year.
Note 1: Non-GAAP Financial Measures
In addition to our U.S. GAAP results, this press release includes a discussion of EBITDA, a non-GAAP financial measure as defined by the Securities and Exchange Commission (“SEC”). The Company defines EBITDA as net income before interest, income taxes, depreciation and amortization. EBITDA is a key measure used by management to evaluate our results and make strategic decisions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, the Company’s presentation of EBITDA may not be comparable to similarly titled measures of other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with the U.S. GAAP.
Reconciliation ofNet Income to EBITDA
(Amounts expressedin US$)
| For the Nine Months Ended<br><br> September 30, | ||||
|---|---|---|---|---|
| ($ millions) | 2022 | 2021 | ||
| Net loss | -4.66 | -3.25 | ||
| Add: Income tax | -0.16 | -4.95 | ||
| Net interest expense | 0.79 | -0.84 | ||
| Depreciation and amortization | 11.22 | 11.73 | ||
| EBITDA | 7.18 | 2.69 |
6
Cash, Liquidity andFinancial Position
As of September 30, 2022, the Company had cash and bank balances, short-term debt (including bank loans, current portion of long-term loans from credit union and related party loans), and long-term debt (including related party loans) of approximately $16.02million, $10.54 million and $4.69 million, respectively, compared to approximately$11.20 million, $13.52 million and $2.98 million, respectively, as of December 31, 2021.
Net accounts receivable was approximately $4.24 million as of September 30, 2022, compared to approximately $4.87 million as of December 31, 2021. Net inventory was approximately $4.44 million as of September 30, 2022, compared to approximately$5.84 million as of December 31, 2021. As of September 30, 2022, the Company had current assets of approximately$48.43 million and current liabilities of approximately$17.59million, resulting in a working capital of approximately$30.84 million. This was compared to current assets of approximately $55.52 million and current liabilities of approximately $20.43 million, resulting in a working capital of approximately $35.09 million as of December 31, 2021.
Net cash provided by operating activities was approximately$7.43 million for the nine months ended September 30, 2022, compared to net cash used in operating activities of approximately $6.44 million for the same period of last year. Net cash used in investing activities was approximately$8.19 million for the nine months ended September 30, 2022, compared to approximately$12.78 million for the same period of last year. Net cash provided by financing activities was approximately$6.84million for the nine months ended September 30, 2022, compared to approximately$41.55 million for the same period of last year.
About IT Tech Packaging,Inc.
Founded in 1996, IT Tech Packaging, Inc. is a leading manufacturer and distributor of diversified paper products in North China. Using recycled paper as its primary raw material (with the exception of its tissue paper products), ITP produces and distributes three categories of paper products: corrugating medium paper, offset printing paper and tissue paper products. With production based in Baoding and Xingtai in North China’s Hebei Province, ITP is located strategically close to the Beijing and Tianjin region, home to a growing base of industrial and manufacturing activities and one of the largest markets for paper products consumption in the country. ITP has been listed on the NYSE American since December 2009. For more information, please visit: http://www.itpackaging.cn/.
Forward-looking Statement
This release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements give our current expectations, opinion, belief or forecasts of future events and performance. A statement identified by the use of forward-looking words including “will,” “may,” “expects,” “projects,” “anticipates,” “plans,” “believes,” “estimate,” “should,” and certain of the other foregoing statements may be deemed forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including market and other conditions. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company’s filings with the SEC. Investors and security holders are urged to read these documents free of charge on the SEC’s web site at http://www.sec.gov. The Company undertakes no obligation to update any such forward-looking statements after the date hereof to conform to actual results or changes in expectations, except as required by law.
For more information, please contact:
At the Company
Email: ir@itpackaging.cn
Tel: +86 312 8698215
Investor Relations
Ascent Investor Relations LLC
Ms. Tina Xiao
Email: tina.xiao@ascent-ir.com
Tel: +1-917-609-0333
7
IT TECH PACKAGING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2022 AND DECEMBER 31, 2021
(unaudited)
| December 31, | ||||
|---|---|---|---|---|
| 2021 | ||||
| ASSETS | ||||
| Current Assets | ||||
| Cash and bank balances | 16,017,403 | $ | 11,201,612 | |
| Restricted cash | - | - | ||
| Accounts receivable (net of allowance for doubtful accounts of 61,270 and 69,053 as of September 30, 2022 and December 31, 2021, respectively) | 4,236,299 | 4,868,934 | ||
| Inventories | 4,441,390 | 5,844,895 | ||
| Prepayments and other current assets | 22,795,907 | 25,796,640 | ||
| Due from related parties | 938,803 | 7,804,068 | ||
| Total current assets | 48,429,802 | 55,516,149 | ||
| Prepayment on property, plant and equipment | 1,266,120 | 43,446,210 | ||
| Operating lease right-of-use assets, net | 659,912 | - | ||
| Finance lease right-of-use assets, net | 1,940,586 | 2,286,459 | ||
| Property, plant, and equipment, net | 149,535,243 | 126,587,428 | ||
| Value-added tax recoverable | 2,066,239 | 2,430,277 | ||
| Deferred tax asset non-current | 11,239,637 | 11,268,679 | ||
| Total Assets | 215,137,539 | $ | 241,535,202 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
| Current Liabilities | ||||
| Short-term bank loans | 5,632,553 | $ | 5,958,561 | |
| Current portion of long-term loans from credit union | 4,175,620 | 6,838,465 | ||
| Lease liability | 272,147 | 210,161 | ||
| Accounts payable | 144,213 | 10,255 | ||
| Advance from customers | 35,646 | 39,694 | ||
| Due to related parties | 727,856 | 727,433 | ||
| Accrued payroll and employee benefits | 221,530 | 291,206 | ||
| Other payables and accrued liabilities | 5,635,813 | 5,250,539 | ||
| Income taxes payable | 746,694 | 1,108,038 | ||
| Total current liabilities | 17,592,072 | 20,434,352 | ||
| Loans from credit union | 4,692,235 | 2,980,065 | ||
| Deferred gain on sale-leaseback | 73,311 | 155,110 | ||
| Lease liability - non-current | 568,952 | 152,233 | ||
| Derivative liability | 1,334,271 | 2,063,534 | ||
| Total liabilities (including amounts of the consolidated VIE without recourse to the Company of 17,417,813 and 17,924,475 as of September 30, 2022 and December 31, 2021, respectively) | 24,260,841 | 25,785,294 | ||
| Commitments and Contingencies | ||||
| Stockholders’ Equity | ||||
| Common stock, 50,000,000 shares authorized, 0.001 par value per share, 11,415,920 and 9,915,920 shares issued and outstanding as of September 30, 2022 and December, 31, 2021, respectively. | 11,416 | 9,916 | ||
| Additional paid-in capital | 90,575,421 | 89,016,921 | ||
| Statutory earnings reserve | 6,080,574 | 6,080,574 | ||
| Accumulated other comprehensive (loss) income | (11,273,597 | ) | 10,496,168 | |
| Retained earnings | 105,482,884 | 110,146,329 | ||
| Total stockholders’ equity | 190,876,698 | 215,749,908 | ||
| Total Liabilities and Stockholders’ Equity | 215,137,539 | $ | 241,535,202 |
All values are in US Dollars.
8
IT TECH PACKAGING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOMEAND COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER30, 2022 AND 2021
(Unaudited)
| Three Months Ended<br> September 30, | Nine Months Ended<br> September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Revenues | $ | 31,709,214 | $ | 45,087,671 | $ | 78,979,716 | $ | 115,832,013 | ||||
| Cost of sales | (28,925,626 | ) | (43,266,135 | ) | (75,251,646 | ) | (109,150,452 | ) | ||||
| Gross Profit | 2,783,588 | 1,821,536 | 3,728,070 | 6,681,561 | ||||||||
| Selling, general and administrative expenses | (3,370,541 | ) | (2,019,565 | ) | (8,541,224 | ) | (7,172,495 | ) | ||||
| Gain on acquisition | (1,759 | ) | - | 30,404 | - | |||||||
| Loss from Operations | (588,712 | ) | (198,029 | ) | (4,782,750 | ) | (490,934 | ) | ||||
| Other Income (Expense): | ||||||||||||
| Interest income | 7,729 | 12,044 | 16,108 | 28,096 | ||||||||
| Subsidy income | - | (30 | ) | - | 197,861 | |||||||
| Interest expense | (256,678 | ) | (281,670 | ) | (786,597 | ) | (844,470 | ) | ||||
| Gain (Loss) on derivative liability | (617,370 | ) | 1,938,873 | 729,263 | 2,810,913 | |||||||
| (Loss) Income before Income Taxes | (1,455,031 | ) | 1,471,188 | (4,823,976 | ) | 1,701,466 | ||||||
| Provision for Income Taxes | (432,287 | ) | 71,388 | 160,531 | (4,950,994 | ) | ||||||
| Net (Loss) Income | (1,887,318 | ) | 1,542,576 | (4,663,445 | ) | (3,249,528 | ) | |||||
| Other Comprehensive (Loss) Income | ||||||||||||
| Foreign currency translation adjustment | (11,171,156 | ) | (819,183 | ) | (21,769,765 | ) | 1,128,209 | |||||
| Total Comprehensive (Loss) Income | $ | (13,058,474 | ) | $ | 723,393 | $ | (26,433,210 | ) | $ | (2,121,319 | ) | |
| (Losses) Earnings Per Share: | ||||||||||||
| Basic and Diluted (Losses) Earnings per Share | $ | (0.03 | ) | $ | 0.03 | $ | (0.07 | ) | $ | (0.06 | ) | |
| Outstanding – Basic and Diluted | 71,449,208 | 54,196,300 | 71,449,208 | 54,196,300 |
9
IT TECH PACKAGING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022AND 2021
(Unaudited)
| Nine Months Ended | ||||||
|---|---|---|---|---|---|---|
| September 30, | ||||||
| 2022 | 2021 | |||||
| Cash Flows from Operating Activities: | ||||||
| Net income | $ | (4,663,445 | ) | $ | (3,249,528 | ) |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 11,218,254 | 11,733,664 | ||||
| (Gain) Loss on derivative liability | (729,263 | ) | (2,810,913 | ) | ||
| Gain on acquisition | (32,502 | ) | - | |||
| (Recovery from) Allowance for bad debts | (791 | ) | 20,118 | |||
| Share-based compensation and expenses | 1,560,000 | - | ||||
| Deferred tax | (1,197,630 | ) | 3,235,556 | |||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable | 146,250 | (1,742,594 | ) | |||
| Prepayments and other current assets | (422,092 | ) | (6,918,816 | ) | ||
| Inventories | 863,170 | (6,396,066 | ) | |||
| Accounts payable | 144,331 | (242,357 | ) | |||
| Advance from customers | - | (43,161 | ) | |||
| Related parties | (149,827 | ) | (821,943 | ) | ||
| Accrued payroll and employee benefits | (42,738 | ) | 92,207 | |||
| Other payables and accrued liabilities | 1,000,945 | 522,353 | ||||
| Income taxes payable | (265,493 | ) | 178,903 | |||
| Net Cash Provided by (Used in) Operating Activities | 7,429,169 | (6,442,577 | ) | |||
| Cash Flows from Investing Activities: | ||||||
| Purchases of property, plant and equipment | (1,681,979 | ) | (12,781,114 | ) | ||
| Acquisition of land | (6,507,431 | ) | - | |||
| Net Cash Used in Investing Activities | (8,189,410 | ) | (12,781,114 | ) | ||
| Cash Flows from Financing Activities: | ||||||
| Proceeds from issuance of shares and warrants, net | - | 41,837,553 | ||||
| Proceeds from short term bank loans | 602,319 | - | ||||
| Proceeds from long term loans | 60,232 | - | ||||
| Repayment of bank loans | (307,182 | ) | (154,579 | ) | ||
| Payment of capital lease obligation | (154,212 | ) | (135,611 | ) | ||
| Loan repaid by a related party | 6,638,923 | - | ||||
| Net Cash Provided by Financing Activities | 6,840,080 | 41,547,363 | ||||
| Effect of Exchange Rate Changes on Cash and Cash Equivalents | (1,264,048 | ) | 109,473 | |||
| Net Increase in Cash and Cash Equivalents | 4,815,791 | 22,433,145 | ||||
| Cash, Cash Equivalents and Restricted Cash - Beginning of Period | 11,201,612 | 4,142,437 | ||||
| Cash, Cash Equivalents and Restricted Cash - End of Period | $ | 16,017,403 | $ | 26,575,582 | ||
| Supplemental Disclosure of Cash Flow Information: | ||||||
| Cash paid for interest, net of capitalized interest cost | $ | 248,275 | $ | 485,075 | ||
| Cash paid for income taxes | $ | 1,287,530 | $ | 1,523,555 | ||
| Cash and bank balances | 16,017,403 | 26,575,582 | ||||
| Restricted cash | - | - | ||||
| Total cash, cash equivalents and restricted cash shown in the statement of cash flows | 16,017,403 | 26,575,582 |
10