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 9, 2023
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<br><br> Identification No.) |
| Science Park, Juli Road<br><br> <br>Xushui District, Baoding City<br><br> <br>Hebei 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 (see General 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 whichregistered |
|---|---|---|
| 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. ☐
Item 2.02 Results of Operations and FinancialCondition.
On November 9, 2023, IT Tech Packaging, Inc. (the “Company”) issued a press release announcing its unaudited financial results for the nine and three months ended September 30, 2023. 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.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are filed herewith:
| Exhibit<br><br> Number | Description |
|---|---|
| 99.1 | Press Release. |
| 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 13, 2023 | By: | /s/ Zhenyong Liu | |
| Name: | Zhenyong Liu | ||
| Title: | Chief Executive Officer |
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Exhibit 99.1
IT Tech Packaging, Inc. Announces third Quarter2023 Unaudited Financial Results
BAODING, China, Nov. 10, 2023 /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 nine and three months ended September 30, 2023.
Mr. Zhenyong Liu, Chairman and Chief Executive Officer of the Company, commented, “For the first nine months of 2023, the Company realized a total revenue of $65.58 million with a net loss of $5.96 million, slightly falling from the same period of last year. Looking forward, we can see opportunities and challenges coexist, and the long-term positive fundamentals remain unchanged in the uncertain business environment. We believe with the increased policy support for the private economy, the domestic demand and consumption will accelerate further and industrial economy will continue improving. We will make our efforts for a reasonable profit with measures to balance the production and sales, optimize overall products, develop new customers and increase efficiency with a decreased cost.”
Third Quarter 2023 Unaudited Financial Results
| **** | For the Three Months Ended September 30, | **** | |||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ millions) | 2023 | 2022 | % Change | ||||||
| Revenues | 15.77 | 31.71 | -50.26 | % | |||||
| Regular Corrugating Medium Paper (“CMP”)* | 11.95 | 26.06 | -54.14 | % | |||||
| Light-Weight CMP** | 3.47 | 5.30 | -34.49 | % | |||||
| Offset Printing Paper | 0.07 | - | - | ||||||
| Tissue Paper Products | 0.26 | 0.29 | -9.91 | % | |||||
| Face Masks | 0.02 | 0.06 | -73.28 | % | |||||
| Gross profit (loss) | (0.15 | ) | 2.78 | -105.50 | % | ||||
| Gross profit (loss) margin | -0.97 | % | 8.78 | % | -9.75 | pp*** | |||
| Regular Corrugating Medium Paper (“CMP”)* | 7.01 | % | 10.91 | % | -3.90 | pp**** | |||
| Light-Weight CMP** | -7.47 | % | 12.84 | % | -20.31 | pp**** | |||
| Offset Printing Paper | 7.53 | % | - | 7.53 | pp**** | ||||
| Tissue Paper Products*** | -278.10 | % | -258.46 | % | -19.64 | pp**** | |||
| Face Masks | -15.75 | % | 29.62 | % | -45.37 | pp**** | |||
| Operating income（loss） | (2.48 | ) | (0.59 | ) | -323.29 | % | |||
| Net income (loss) | (1.98 | ) | (1.89 | ) | -4.67 | % | |||
| EBITDA | 1.69 | 2.43 | -30.45 | % | |||||
| Basic and Diluted earnings (loss) per share | (0.20 | ) | (0.19 | ) | -5.26 | % | |||
| * | Products from PM6 | ||||||||
| --- | --- | ||||||||
| ** | Products from PM1 | ||||||||
| *** | Products from PM8 and PM9 | ||||||||
| **** | pp represents percentage points | ||||||||
| ● | Revenue<br> decreased by 50.26% to approximately $15.77 million, This was mainly due to the decrease<br> of sales volume of corrugating medium paper (“CMP”) and decrease of average selling<br> prices of CMP and tissue paper products. Gross loss increased by 105.50% to approximately<br> $0.15 million. Total gross loss margin decreased by 9.75 percentage point to 0.97%. | ||||||||
| --- | --- | ||||||||
| ● | Loss<br> from operations was approximately $2.48 million, compared to approximately $0.59 million<br> for the same period of last year. | ||||||||
| --- | --- | ||||||||
| ● | Net<br> loss was approximately $1.98 million, or loss per share of $0.20, compared to net loss of<br> approximately $1.89 million, or loss per share of $0.19, for the same period of last year. | ||||||||
| --- | --- | ||||||||
| ● | Earnings<br> before interest, taxes, depreciation and amortization (“EBITDA”) was approximately<br> $1.69million, compared to$2.43 million for the same period of last year. | ||||||||
| --- | --- |
Revenue
For the third quarter of 2023, total revenue decreased by 50.26%, to approximately $15.77 million from approximately $31.71 million for the same period of last year. This was mainly due to the decrease of sales volume of corrugating medium paper (“CMP”) and decrease of average selling prices of CMP and tissue paper products.
The following table summarizes revenue, volume and ASP by product for the third quarter of 2023 and 2022, respectively:
| For the Three Months Ended September 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||||
| Revenue (’000) | Volume<br> (tonne) | ASP (/tonne) | Revenue (’000) | Volume<br> (tonne) | ASP (/tonne) | |||
| Regular CMP | 34,186 | 59,848 | ||||||
| Light-Weight CMP | 10,210 | 12,507 | ||||||
| Offset Printing Paper | 170 | - | ||||||
| Tissue Paper Products | 241 | 260 | ||||||
| Total | 44,807 | 72,615 |
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 | 507 | 1,282 |
All values are in US Dollars.
2
Revenue from CMP, including both regular CMP and light-Weight CMP, decreased by 50.82%, to approximately $15.42 million and accounted for 97.79% of total revenue for the third quarter of 2023, compared to approximately $31.36 million, or 98.89% of total revenue for the same period of last year. The Company sold 44,396tonnes of CMP at an ASP of $347/tonne in the third quarter of 2023, compared to 72,355 tonnes at an ASP of $433/tonne in the same period of last year.
Of the total CMP sales, revenue from regular CMPdecreased by 54.14%, to approximately $11.95million for the third quarter of 2023, compared to revenue of approximately $26.06 million for the same period of last year. The Company sold 34,186tonnesof regular CMP at an ASP of $350/tonne during the third quarter of 2023, compared to 59,848 tonnes at an ASP of $435/tonne for the same period of last year. Revenue from light-weight CMP decreased by 34.49%, to approximately $3.47 million for the third quarter of 2023, compared to revenue of approximately $5.30 million for the same period of last year. The Company sold 10,210 tonnes of light-weight CMP at an ASP of $340/tonne for the third quarter of 2023, compared to12,507 tonnes at an ASP of $423/tonne for the same period of last year.
The Company sold 170tonnes of offset printing paper at an ASP of $407/tonne in the third quarter of 2023. Revenue from offset printing paper was $nil for the third quarter of 2022.
Revenue from tissue paper products decreased by 9.91%, to approximately $0.26 million for the third quarter of 2023, from approximately $0.29 million for the same period of last year. The Company sold 241 tonnes of tissue paper products at an ASP of $1,096/tonne for the third quarter of 2023, compared to 260tonnes at an ASP of $1,128/tonne for the same period of last year.
Revenue from face masks decreased by 73.28%, to approximately $0.02 million for the third quarter of 2023, from $0.06 million for the same period of last year. The Company sold 507 thousand pieces of face masks for the third quarter of 2023, compared to 1,282 thousand pieces of face masks for the same period of last year.
Gross Profit and Gross Margin
Total cost of sales decreased by 44.95%, to approximately $15.92 million for the third quarter of 2023 from approximately $28.93 million for the same period of last year. This was mainly due to the decrease in sales quantity and the decrease in the unit material costs of CMP. Costs of sales per tonne for regular CMP, light-weight CMP, offset printing paper, and tissue paper products were $325, $365,$377 and $4,143, respectively, for the third quarter of 2023, compared to $388, $369,$nil and $4,042 respectively, for the same period of last year.
Total gross loss was approximately $0.15 million for the third quarter of 2023, compare to the gross profit of approximately $2.78 million for the same period of last year as a result of factors described above. Overall gross loss margin was 0.97% for the third quarter of 2023, compared to gross profit margin of 8.78% 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 7.01%, -7.47%, 7.53%, -278.10% and -15.75%, respectively, for the third quarter of 2023, compared to 10.91%, 12.84%, nil%, -258.46% and 29.62%, respectively, for the same period of last year.
3
Selling, General and Administrative Expenses
Selling, general and administrative expenses (“SG&A”) decreased by 30.73%, to approximately $2.33 million for the third quarter of 2023 from approximately $3.37 million for the same period of last year.
Loss from Operations
Loss from operations was approximately $2.48 million for the third quarter of 2023, a decrease of 323.29%, from loss from operations of approximately $0.59 million for the same period of last year. Operating loss margin was 15.75% for the third quarter of 2023, compared to operating loss margin of 1.85% for the same period of last year.
Net Loss
Net loss was approximately $1.98 million, or loss per share of $0.20, for the third quarter of 2023, compared to net loss of approximately $1.89 million, or loss per share of $0.19, for the same period of last year.
EBITDA
EBITDA was approximately $1.69 million for the third quarter of 2023, compared to approximately $2.43 million for the same period of last year.
Note 1: Non-GAAP Financial Measures
In addition to our U.S. GAAP results, this press release includes a discussion of EBITDA, a non-GAAP financial measure as defined by the Securities and Exchange Commission (“SEC”). The Company defines EBITDA as net income before interest, income taxes, depreciation and amortization. EBITDA is a key measure used by management to evaluate our results and make strategic decisions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, the Company’s presentation of EBITDA may not be comparable to similarly titled measures of other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with the U.S. GAAP.
Reconciliation of Net Income to EBITDA
(Amounts expressed in US$)
| For the Three Months<br> Ended September 30, | ||||
|---|---|---|---|---|
| ($ millions) | 2023 | 2022 | ||
| Net loss | -1.98 | -1.89 | ||
| Add: Income tax | 0.00 | 0.43 | ||
| Net interest expense | 0.25 | 0.26 | ||
| Depreciation and amortization | 3.42 | 3.63 | ||
| EBITDA | 1.69 | 2.43 |
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Nine Months Ended September 30, 2023 UnauditedFinancial Results
| For<br> the Nine Months Ended September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($<br> millions) | 2023 | 2022 | %<br> Change | ||||||
| Revenues | 65.58 | 78.98 | -16.96 | % | |||||
| Regular<br> Corrugating Medium Paper (“CMP”)* | 50.35 | 65.02 | -22.55 | % | |||||
| Light-Weight<br> CMP** | 11.07 | 12.66 | -12.53 | % | |||||
| Offset<br> Printing Paper | 3.23 | - | - | ||||||
| Tissue<br> Paper Products | 0.83 | 1.10 | -24.62 | % | |||||
| Face<br> Masks | 0.10 | 0.20 | -52.71 | % | |||||
| Gross<br> profit | 0.75 | 3.73 | -79.89 | % | |||||
| Gross<br> profit (loss) margin | 1.14 | % | 4.72 | % | -3.58 | pp**** | |||
| Regular<br> Corrugating Medium Paper (“CMP”)* | 5.26 | % | 7.15 | % | -1.89 | pp**** | |||
| Light-Weight<br> CMP** | 1.68 | % | 9.17 | % | -7.49 | pp**** | |||
| Offset<br> Printing Paper | 2.53 | % | - | 2.53 | pp**** | ||||
| Tissue<br> Paper Products*** | -258.64 | % | -193.65 | % | -64.99 | pp**** | |||
| Face<br> Masks | -9.26 | % | 25.73 | % | -34.99 | **** | |||
| Operating<br> loss | -5.78 | -4.81 | -20.00 | % | |||||
| Net<br> loss | -5.96 | -4.66 | -27.85 | % | |||||
| EBITDA | 5.73 | 7.19 | -20.31 | % | |||||
| Basic<br> and Diluted loss per share | -0.59 | -0.47 | -25.53 | % | |||||
| * | Products from PM6 | ||||||||
| --- | --- | ||||||||
| ** | Products from PM1 | ||||||||
| --- | --- | ||||||||
| *** | Products from PM8 and PM9 | ||||||||
| --- | --- | ||||||||
| **** | pp represents percentage points | ||||||||
| --- | --- |
Revenue
For the nine months ended September 30, 2023, total revenue decreased by 16.96%, to approximately $65.58 million from approximately $78.98 million for the same period of last year. This was mainly due to the decrease in ASP of CMP.
5
The following table summarizes revenue, volume and ASP by product for the nine months ended September 30, 2023 and 2022, respectively:
| For the Nine Months Ended September 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||||
| Revenue (’000) | Volume (tonne) | ASP (/tonne) | Revenue (’000) | Volume (tonne) | ASP (/tonne) | |||
| Regular CMP | 135,912 | 139,036 | ||||||
| Light-Weight CMP | 31,106 | 27,990 | ||||||
| Offset Printing Paper | 5,573 | - | ||||||
| Tissue Paper Products | 726 | 1,040 | ||||||
| Total | 173,317 | 168,066 |
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 | 3,023 | 4,295 |
All values are in US Dollars.
Revenue from CMP, including both regular CMP and light-Weight CMP, decreased by 20.92%, to approximately $61.43 million and accounted for 93.66% of total revenue for nine months ended September 30, 2023, compared to approximately $77.68 million, or 98.35% of total revenue for the same period of last year. The Company sold 167,018tonnes of CMP at an ASP of $368/tonne in nine months ended September 30, 2023, compared to 167,026 tonnes at an ASP of $465/tonne in the same period of last year.
Of the total CMP sales, revenue from regular CMP decreased by 22.55%, to approximately $50.35 million for nine months ended September 30, 2023, compared to revenue of approximately $65.02 million for the same period of last year. The Company sold 135,912tonnesof regular CMP at an ASP of $370/tonne during the nine months ended September 30, 2023, compared to 139,036 tonnes at an ASP of $468/tonne for the same period of last year. Revenue from light-weight CMP decreased by 12.53%, to approximately $11.07 million for the nine months ended September 30, 2023, compared to revenue of approximately $12.66 million for the same period of last year. The Company sold 31,106 tonnes of light-weight CMP at an ASP of $356/tonne for the nine months ended September 30, 2023, compared to 27,990 tonnes at an ASP of $452/tonne for the same period of last year.
Revenue from offset printing paper was $3.22 million for the nine months ended September 30, 2023. The Company sold 5,573tonnes of offset printing paper at an ASP of $579/tonne in the nine months ended September 30, 2023. Revenue from offset printing paper was $nil for the nine months ended September 30, 2022.
Revenue from tissue paper products decreased by 24.62%, to approximately $0.83million for the nine months ended September 30, 2023, from approximately $1.10 million for the same period of last year. The Company sold 726 tonnes of tissue paper products at an ASP of $1,145/tonne for the nine months ended September 30, 2023, compared to 1,040tonnes at an ASP of $1,061/tonne for the same period of last year.
6
Revenue from face masks decreased by 52.71%, to approximately $0.10 million for the nine months ended September 30, 2023, from $0.20 million for the same period of last year. The Company sold 3,023 thousand pieces of face masks for the nine months ended September 30, 2023, compared to 4,295 thousand pieces of face masks for the same period of last year.
Gross Profit and Gross Margin
Total cost of sales decreased by 13.85%, to approximately $64.83 million for the nine months ended September 30, 2023 from approximately $75.25 million for the same period of last year. This was mainly due to the 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 $351, $350, $564 and $4,107, respectively, for the nine months ended September 30, 2023, compared to $434, $411,$nil and $3,114, respectively, for the same period of last year.
Total gross profit was approximately $0.75 million for the nine months ended September 30, 2023, compare to the gross profit of approximately $3.73 million for the same period of last year as a result of factors described above. Overall gross margin was 1.14% for the nine months ended September 30, 2023, compared to 4.72% 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 5.26%, 1.68%, 2.53%, -258.64% and -9.26%, respectively, for the nine months ended September 30, 2023, compared to 7.15%, 9.17%, nil%, -193.65% and 25.73%, respectively, for the same period of last year.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (“SG&A”) decreased by 27.96%, to approximately $6.15 million for the nine months ended September 30, 2023 from approximately $8.54 million for the same period of last year.
Loss from Operations
Loss from operations was approximately $5.78 million for the nine months ended September 30, 2023, a decrease of 20.00%, from loss from operations of approximately $4.81 million for the same period of last year. Operating loss margin was 8.81% for the nine months ended September 30, 2023, compared to operating loss margin of 6.09% for the same period of last year.
Net Loss
Net loss was approximately $5.96 million, or loss per share of $0.59, for the nine months ended September 30, 2023, compared to net loss of approximately $4.66 million, or loss per share of $0.47, for the same period of last year.
EBITDA
EBITDA was approximately $5.73 million for the nine months ended September 30, 2023, compared to approximately $7.19 million for the same period of last year.
7
Note 1: Non-GAAP Financial Measures
In addition to our U.S. GAAP results, this press release includes a discussion of EBITDA, a non-GAAP financial measure as defined by the Securities and Exchange Commission (“SEC”). The Company defines EBITDA as net income before interest, income taxes, depreciation and amortization. EBITDA is a key measure used by management to evaluate our results and make strategic decisions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, the Company’s presentation of EBITDA may not be comparable to similarly titled measures of other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with the U.S. GAAP.
Reconciliation of Net Income to EBITDA
(Amounts expressed in US$)
| For the Nine Months Ended September 30, | ||||
|---|---|---|---|---|
| ($ millions) | 2023 | 2022 | ||
| Net loss | -5.96 | -4.66 | ||
| Add: Income tax | 0.35 | -0.16 | ||
| Net interest expense | 0.77 | 0.79 | ||
| Depreciation and amortization | 10.57 | 11.22 | ||
| EBITDA | 5.73 | 7.19 |
Cash, Liquidity and Financial Position
As of September 30, 2023, 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 $9.44million, $6.65million and $6.56 million, respectively, compared to approximately$9.52million, $11.16million and $4.20 million, respectively, as of December 31, 2022.
Net accounts receivable was approximately $2.79 million as of September 30, 2023, compared to $nil as of December 31, 2022. Net inventory was approximately $5.36 million as of September 30, 2023, compared to approximately $2.87 million as of December 31, 2022. As of September 30, 2023, the Company had current assets of approximately $41.06 million and current liabilities of approximately$12.02million, resulting in a working capital of approximately $29.04 million. This was compared to current assets of approximately $47.17 million and current liabilities of approximately $17.64 million, resulting in a working capital of approximately $29.53 million as of December 31, 2022.
Net cash provided by operating activities was approximately $7.50million for the nine months ended September 30, 2023, compared to approximately $7.43 million for the same period of last year. Net cash used in investing activities was approximately $9.21 million for the nine months ended September 30, 2023, compared to approximately $8.19 million for the same period of last year. Net cash provided by financing activities was approximately $2.00 million for the nine months ended September 30, 2023, compared to approximately $6.84million for the same period of last year.
8
About IT Tech Packaging, Inc.
Founded in 1996, IT Tech Packaging, Inc. is a leading manufacturer and distributor of diversified paper products and single-use face masks 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:
Email: ir@itpackaging.cn
Tel: +86 312 8698215
9
IT TECH PACKAGING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2023 AND DECEMBER 31, 2022
(unaudited)
| December 31, | |||||
|---|---|---|---|---|---|
| 2022 | |||||
| ASSETS | |||||
| Current Assets | |||||
| Cash and bank balances | 9,437,941 | $ | 9,524,868 | ||
| Restricted cash | - | - | |||
| Accounts receivable (net of allowance for doubtful accounts of 56,674 and 881,878 as of September 30, 2023 and December 31, 2022, respectively) | 2,794,437 | - | |||
| Inventories | 5,364,777 | 2,872,622 | |||
| Prepayments and other current assets | 20,049,101 | 27,207,127 | |||
| Due from related parties | 3,414,815 | 7,561,858 | |||
| Total current assets | 41,061,071 | 47,166,475 | |||
| Prepayment on property, plant and equipment | 877,462 | 1,031,502 | |||
| Operating lease right-of-use assets, net | 562,612 | 672,722 | |||
| Finance lease right-of-use assets, net | - | 1,939,970 | |||
| Property, plant, and equipment, net | 144,603,052 | 151,569,898 | |||
| Value-added tax recoverable | 1,893,510 | 2,066,666 | |||
| Deferred tax asset non-current | - | - | |||
| Total Assets | 188,997,707 | $ | 204,447,233 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
| Current Liabilities | |||||
| Short-term bank loans | 835,678 | $ | 5,598,311 | ||
| Current portion of long-term loans | 4,707,652 | 4,835,884 | |||
| Lease liability | 96,746 | 224,497 | |||
| Accounts payable | 104,146 | 5,025 | |||
| Advance from customers | 18,751 | - | |||
| Due to related parties | 1,103,317 | 727,462 | |||
| Accrued payroll and employee benefits | 299,908 | 165,986 | |||
| Other payables and accrued liabilities | 4,858,444 | 5,665,558 | |||
| Income taxes payable | - | 417,906 | |||
| Total current liabilities | 12,024,642 | 17,640,629 | |||
| Long-term loans | 6,562,401 | 4,204,118 | |||
| Deferred gain on sale-leaseback | - | 52,314 | |||
| Lease liability - non-current | 465,866 | 579,997 | |||
| Derivative liability | 263 | 646,283 | |||
| Total liabilities (including<br> amounts of the consolidated VIE without recourse to the Company of 12,010,014 and 16,784,878 as of September 30, 2023 and<br> December 31, 2022, respectively) | 19,053,172 | 23,123,341 | |||
| Commitments and Contingencies | |||||
| Stockholders’ Equity | |||||
| Common stock, 50,000,000 shares authorized, 0.001 par value per share, 10,065,920 shares issued and outstanding as of September 30, 2023 and December, 31, 2022. | 10,066 | 10,066 | |||
| Additional paid-in capital | 89,172,771 | 89,172,771 | |||
| Statutory earnings reserve | 6,080,574 | 6,080,574 | |||
| Accumulated other comprehensive loss | (12,931,871 | ) | (7,514,540 | ) | |
| Retained earnings | 87,612,995 | 93,575,021 | |||
| Total stockholders’ equity | 169,944,535 | 181,323,892 | |||
| Total Liabilities and Stockholders’ Equity | 188,997,707 | $ | 204,447,233 |
All values are in US Dollars.
See accompanying notes to condensed consolidated financial statements.
10
IT TECH PACKAGING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSAND COMPREHENSIVE INCOME (LOSS)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023AND 2022
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | September 30, | |||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Revenues | $ | 15,771,560 | $ | 31,709,214 | $ | 65,582,351 | $ | 78,979,716 | ||||
| Cost of sales | (15,924,783 | ) | (28,925,626 | ) | (64,832,715 | ) | (75,251,646 | ) | ||||
| Gross (Loss) Profit | (153,223 | ) | 2,783,588 | 749,636 | 3,728,070 | |||||||
| Selling, general and administrative expenses | (2,334,746 | ) | (3,370,541 | ) | (6,153,513 | ) | (8,541,224 | ) | ||||
| Loss on impairment of assets | 3,456 | - | (371,680 | ) | - | |||||||
| Loss from Operations | (2,484,513 | ) | (586,953 | ) | (5,775,557 | ) | (4,813,154 | ) | ||||
| Other Income (Expense): | ||||||||||||
| Interest income | 93,298 | 7,729 | 283,203 | 16,108 | ||||||||
| Interest expense | (247,818 | ) | (256,678 | ) | (767,668 | ) | (786,597 | ) | ||||
| Gain on acquisition | - | (1,759 | ) | - | 30,404 | |||||||
| Gain (Loss) on derivative liability | 660,429 | (617,370 | ) | 646,020 | 729,263 | |||||||
| Loss before Income Taxes | (1,978,604 | ) | (1,455,031 | ) | (5,614,002 | ) | (4,823,976 | ) | ||||
| Provision for Income Taxes | 3,236 | (432,287 | ) | (348,024 | ) | 160,531 | ||||||
| Net Loss | (1,975,368 | ) | (1,887,318 | ) | (5,962,026 | ) | (4,663,445 | ) | ||||
| Other Comprehensive Income (Loss) | ||||||||||||
| Foreign currency translation adjustment | 1,143,608 | (11,171,156 | ) | (5,417,331 | ) | (21,769,765 | ) | |||||
| Total Comprehensive Loss | $ | (831,760 | ) | $ | (13,058,474 | ) | $ | (11,379,357 | ) | $ | (26,433,210 | ) |
| Losses Per Share: | ||||||||||||
| Basic and Diluted Losses per Share | $ | (0.20 | ) | $ | (0.19 | ) | $ | (0.59 | ) | $ | (0.47 | ) |
| Outstanding – Basic and Diluted | 10,065,920 | 9,991,744 | 10,065,920 | 9,941,288 |
See accompanying notes to condensed consolidated financial statements.
11
IT TECH PACKAGING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023AND 2022
(Unaudited)
| Nine Months Ended | ||||||
|---|---|---|---|---|---|---|
| September 30, | ||||||
| 2023 | 2022 | |||||
| Cash Flows from Operating Activities: | ||||||
| Net income | $ | (5,962,026 | ) | $ | (4,663,445 | ) |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 10,573,288 | 11,218,254 | ||||
| (Gain) Loss on derivative liability | (646,020 | ) | (729,263 | ) | ||
| (Gain) Loss from disposal and impairment of property, plant and equipment | 956,406 | - | ||||
| Allowance for bad debts | (815,317 | ) | (791 | ) | ||
| Share-based compensation and expenses | - | 1,560,000 | ||||
| Gain on acquisition | - | (30,404 | ) | |||
| Deferred tax | - | (1,197,630 | ) | |||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable | (2,037,003 | ) | 146,250 | |||
| Prepayments and other current assets | 7,968,553 | (422,092 | ) | |||
| Inventories | (2,631,661 | ) | 863,170 | |||
| Accounts payable | 101,328 | 144,331 | ||||
| Advance from customers | 19,140 | - | ||||
| Related parties | 120,298 | (149,827 | ) | |||
| Accrued payroll and employee benefits | 141,773 | (42,738 | ) | |||
| Other payables and accrued liabilities | 119,132 | 1,000,945 | ||||
| Income taxes payable | (413,777 | ) | (265,493 | ) | ||
| Net Cash Provided by Operating Activities | 7,494,114 | 7,431,267 | ||||
| Cash Flows from Investing Activities: | ||||||
| Purchases of property, plant and equipment | (9,211,711 | ) | (1,681,979 | ) | ||
| Acquisition of land | - | (6,507,431 | ) | |||
| Net Cash Used in Investing Activities | (9,211,711 | ) | (8,189,410 | ) | ||
| Cash Flows from Financing Activities: | ||||||
| Proceeds from short term bank loans | 852,988 | 602,319 | ||||
| Proceeds from long term loans | 2,558,963 | 60,232 | ||||
| Repayment of bank loans | (5,549,150 | ) | (307,182 | ) | ||
| Payment of capital lease obligation | (130,470 | ) | (154,212 | ) | ||
| Loan to a related party (net) | 4,264,938 | 6,638,923 | ||||
| Net Cash Provided by Financing Activities | 1,997,269 | 6,840,080 | ||||
| Effect of Exchange Rate Changes on Cash and Cash Equivalents | (366,599 | ) | (1,266,146 | ) | ||
| Net (Decrease) Increase in Cash and Cash Equivalents | (86,927 | ) | 4,815,791 | |||
| Cash, Cash Equivalents and Restricted Cash - Beginning of Period | 9,524,868 | 11,201,612 | ||||
| Cash, Cash Equivalents and Restricted Cash - End of Period | $ | 9,437,941 | $ | 16,017,403 | ||
| Supplemental Disclosure of Cash Flow Information: | ||||||
| Cash paid for interest, net of capitalized interest cost | $ | 1,118,672 | $ | 248,275 | ||
| Cash paid for income taxes | $ | 761,801 | $ | 1,287,530 | ||
| Cash and bank balances | 9,437,941 | 16,017,403 | ||||
| Restricted cash | - | - | ||||
| Total cash, cash equivalents and restricted cash shown in the statement of cash flows | 9,437,941 | 16,017,403 |
12