ITP 8-K
It Tech Packaging, Inc. (ITP)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): March 23, 2021
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 Xushui District, Baoding City 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 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. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
On March 23, 2021, IT Tech Packaging, Inc. (the “Company”) issued a press release announcing its financial results and operational results for the fourth quarter and fiscal year ended December 31, 2020. 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.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
The following exhibits are filed herewith:
| Exhibit Number |
Description | |
| 99.1 | Press Release dated March 23, 2021, announcing financial results and operational results of the Company for the fourth quarter and fiscal year ended December 31, 2020. |
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: March 24, 2021 | By: | /s/ Zhenyong Liu | |
| Name: | Zhenyong Liu | ||
| Title: | Chief Executive Officer | ||
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Exhibit 99.1
IT Tech Packaging, Inc. Announces Fourth Quarter and Fiscal Year 2020 Financial Results
Company to Host Earnings Conference Call on Wednesday, March 24, 2021, at 8:00 am ET
BAODING, China, March 23, 2021 /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 fourth quarter and audited financial results for the fiscal year ended December 31, 2020.
Fourth Quarter 2020 Financial Results
| For the Three Months Ended December 31, | ||||||||||||
| ($ millions) | 2020 | 2019 | % Change | |||||||||
| Revenues | 32.48 | 33.61 | -3.4 | % | ||||||||
| Regular Corrugating Medium Paper (“CMP”)* | 19.68 | 19.61 | 0.3 | % | ||||||||
| Light-Weight CMP** | 5.24 | 5.08 | 3.1 | % | ||||||||
| Offset Printing Paper | 4.88 | 7.16 | -31.9 | % | ||||||||
| Tissue Paper Products | 2.65 | 1.75 | 51.3 | % | ||||||||
| Face Masks | 0.04 | NM | NM | |||||||||
| Gross profit | 0.75 | 5.60 | -86.7 | % | ||||||||
| Gross profit (loss) margin | 2.3 | % | 16.7 | % | -14.4 | pp**** | ||||||
| Regular Corrugating Medium Paper (“CMP”)* | 1.4 | % | 15.4 | % | -14.0 | pp**** | ||||||
| Light-Weight CMP** | 3.9 | % | 18.3 | % | -14.4 | pp**** | ||||||
| Offset Printing Paper | 13.6 | % | 33.7 | % | -20.1 | pp**** | ||||||
| Tissue Paper Products*** | -15.0 | % | -43.1 | % | 28.1 | pp**** | ||||||
| Face Masks | 5.81 | % | NM | NM | ||||||||
| Operating income (loss) | -1.97 | 3.19 | -161.7 | % | ||||||||
| Net income | -2.69 | 2.16 | -224.8 | % | ||||||||
| EBITDA | 1.56 | 6.98 | -77.6 | % | ||||||||
| Basic and Diluted earnings (loss) per share | -0.06 | 0.10 | -160.0 | % | ||||||||
| * | Products from PM6 |
| ** | Products from PM1 |
| *** | Products from PM8 and PM9 |
| **** | pp represents percentage points |
| ● | Revenue slightly decreased by 3.4% to $32.48 million, primarily attributable to a decrease in sales volume of offset printing paper. |
| ● | Gross profit decreased by 86.7% to $0.75 million. Total gross margin decreased by 14.4 percentage point to 2.3%. |
| ● | Loss from operations was $1.97 million, compared to income from operations of $3.19 million for the same period of last year. |
| ● | Net loss was $2.69 million, or loss of $0.06 per basic and diluted share, compared to net income of $2.16 million, or $0.10 per basic and diluted share, for the same period of last year. |
| ● | Earnings before interest, taxes, depreciation and amortization (“EBITDA”) decreased by 77.6% to $1.56 million. |
Mr. Zhenyong Liu, Chairman and Chief Executive Officer of the Company, commented, “We continued to making improvements in the sales volume of tissue paper products and posted slight decrease in sales of CMP products for this quarter. Our total revenue had a slight decline of 3.4% to $32.5 million but we managed to grow sales from tissue paper products by 51.3% to a total volume of 3,165 tonnes for this quarter. The average selling prices (ASPs) of our products for this quarter increased by 5.6% from Q3 2020, or a minor growth compared to the same period last year (Q4 2019).
“We took a quick recovery from the impact caused by global outbreaks of COVID-19 pandemic, posting growing revenues from sales of tissue paper, regular and light-weight CMP products. Our production and sales of tissue paper products have been growing up steadily since the launch of PM8 and PM9 in December 2018 and November 2019.
“Currently we are in the process to apply for surgical face masks production license which we expect to boost both our sales and margins in the very near future. Though on-site inspection on our production facilities by the authorities was delayed by the pandemic, we are expecting final review results by local food and drug administration in Hebei province. We anticipate to obtain the license once the relevant review works are finished.”
1
Revenue
For the fourth quarter of 2020, total revenue decreased by $1.1 million, or 3.4%, to $32.5 million from $33.6 million for the same period of last year. The decrease in total revenue was mainly due to the decrease in sales volume of CMP and offset printing paper.
The following table summarizes revenue, volume and ASP by product for the fourth quarter of 2020 and 2019, respectively:
| For the Three Months Ended December 31, | ||||||||||||||||||||||||
| 2020 | 2019 | |||||||||||||||||||||||
| Revenue ($’000) | Volume (tonne) | ASP ($/tonne) | Revenue ($’000) | Volume (tonne) | ASP ($/tonne) | |||||||||||||||||||
| Regular CMP | 19,677 | 45,210 | 435 | 19,610 | 47,063 | 417 | ||||||||||||||||||
| Light-Weight CMP | 5,242 | 12,417 | 422 | 5,083 | 12,582 | 404 | ||||||||||||||||||
| Offset Printing Paper | 4,877 | 7,895 | 618 | 7,162 | 10,450 | 685 | ||||||||||||||||||
| Tissue Paper Products | 2,648 | 3,164 | 837 | 1,751 | 2,558 | 684 | ||||||||||||||||||
| Total | 32,444 | 68,686 | 472 | 33,606 | 72,654 | 463 | ||||||||||||||||||
| Revenue ($’000) | Volume (thousand pieces) | ASP ($/thousand pieces) | Revenue ($’000) | Volume ($/thousand pieces) | ASP ($/thousand pieces) | |||||||||||||||||||
| Face Masks | 35 | 445 | 79 | NM | NM | NM | ||||||||||||||||||
Revenue from CMP, including both regular CMP and light-Weight CMP, increased by $0.2 million, or 0.9%, to $24.9 million and accounted for 76.7% of total revenue for the fourth quarter of 2020, compared to $24.7 million, or 73.5% of total revenue, for the same period of last year. The Company sold 57,627 tonnes of CMP at an ASP of $432/tonne in the fourth quarter of 2020, compared to 59,646 tonnes at an ASP of $414/tonne in the same period of last year.
Of the total CMP sales, revenue from regular CMP increased by $0.1 million, or 0.3%, to $19.7 million, resulting from sales of 45,210 tonnes at an ASP of $435/tonne, during the fourth quarter of 2020, compared to revenue of $19.6 million, resulting from sales of 47,063 tonnes at an ASP of $417/tonne, for the same period of last year. Revenue from light-weight CMP increased by $0.2 million, or 3.1%, to $5.2 million, resulting from sales of 12,417 tonnes at an ASP of $422/tonne for the fourth quarter of 2020, compared to revenue of $5.1 million, resulting from sales of 12,583 tonnes at an ASP of $404/tonne for the same period of last year.
Revenue from offset printing paper decreased by $2.3 million, or 31.9%, to $4.9 million for the fourth quarter of 2020, from $7.2 million for the same period of last year. The Company sold 7,895 tonnes of offset printing paper at an ASP of $618/tonne in the fourth quarter of 2020, compared to 10,450 tonnes at an ASP of $685/tonne in the same period of last year.
2
Revenue from tissue paper products increased by $0.9 million, or 51.3%, to $2.6 million, resulting from sales of 3,165 tonnes at an ASP of $837/tonne, for the fourth quarter of 2020, compared to revenue of $1.7 million, resulting from sales of 2,558tonnes at an ASP of $684/tonne for the same period of last year.
Revenue generated from selling face masks was $0.04 million for the fourth quarter ended December 31, 2020. The Company sold 445 thousand pieces of face masks in the fourth quarter of 2020.
Gross Profit and Gross Margin
Total cost of sales increased by $3.7 million, or 13.2%, to $31.7 million for the fourth quarter of 2020 from $28.0 million for the same period of last year. For paper products, overall cost of sales per tonne was $462 for the fourth quarter of 2020, compared to $388 for the same period of last year. The increase in overall cost of sales was mainly due to the increased manufacturing overhead costs and increased material costs, specifically higher average unit purchase costs of recycled paper board and recycled white scrap paper in the fourth quarter of 2020. Costs of sales per tonne for regular CMP, light-weight CMP, offset printing paper, and tissue paper products were $429, $406, $534, and $962, respectively, for the fourth quarter of 2020, compared to $353, $330, $454 and $979, respectively, for the same period of last year. Total gross profit was $0.7 million for the fourth quarter of 2020, compare to the gross profit of $5.6 million for the same period of last year as a result of factors described above. Overall gross margin was 2.3% for the fourth quarter of 2020, compared to 16.7% 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 1.4%, 3.9%, 13.6%, -15.0% and 5.81%, respectively, for the fourth quarter of 2020, compared to 15.4%, 18.3%, 33.7%,-45.1%,-43.1 and nil, respectively, for the same period of last year.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (“SG&A”) increased by $0.3 million, or 14.6%, to $2.7 million for the fourth quarter of 2020 from $2.4 million for the same period of last year. The increase was mainly due to issuance of 2,000,000 shares of common stock valued at $1,200,000 to officers and directors under the Company’s omnibus equity incentive plan.
Income (loss) from Operations
Loss from operations was $2.0 million for the fourth quarter of 2020, compared to income from operations of $3.2 million for the same period of last year. The decrease in income from operations was primarily due to increased SG&A expenses and decreased gross profit this quarter as discussed above. Operating margin was -6.1% for the fourth quarter of 2020, compared to operating margin of 9.5% for the same period of last year.
Net Income (Loss)
Net loss was $2.7 million, or $0.06 loss per basic and diluted share, for the fourth quarter of 2020, compared to net income of $2.2 million, or $0.10 per basic and diluted share, for the same period of last year.
EBITDA
EBITDA was $1.6 million for the fourth quarter of 2020, compared to $7.0 million for the same period of last year.
Note 1: Non-GAAP Financial Measures
In addition to our U.S. GAAP results, this press release includes a discussion of EBITDA, a non-GAAP financial measure as defined by the Securities and Exchange Commission (“SEC”). The Company defines EBITDA as net income before interest, income taxes, depreciation and amortization. EBITDA is a key measure used by management to evaluate our results and make strategic decisions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, the Company’s presentation of EBITDA may not be comparable to similarly titled measures of other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with the U.S. GAAP.
3
Reconciliation of Net Income to EBITDA
(Amounts expressed in US$)
| For
the Three Months Ended December 31, | ||||||||
| ($ millions) | 2020 | 2019 | ||||||
| Net income (loss) | -2.69 | 2.16 | ||||||
| Add: Income tax | -0.52 | 0.87 | ||||||
| Net interest expense | 0.28 | 0.20 | ||||||
| Depreciation and amortization | 4.49 | 3.76 | ||||||
| EBITDA | 1.56 | 6.98 | ||||||
Full Year Ended December 31, 2020 Financial Results
| For the Twelve Months Ended December 31, | ||||||||||||
| ($ millions) | 2020 | 2019 | % Change | |||||||||
| Revenues | 100.94 | 117.61 | -14.2 | % | ||||||||
| Regular Corrugating Medium Paper (“CMP”)* | 62.32 | 72.05 | -13.5 | % | ||||||||
| Light-Weight CMP** | 16.84 | 18.78 | -10.3 | % | ||||||||
| Offset Printing Paper | 12.27 | 20.44 | -40.0 | % | ||||||||
| Tissue Paper Products | 8.41 | 6.35 | 32.5 | % | ||||||||
| Face Masks | 1.10 | NM | NM | |||||||||
| Gross profit | 5.70 | 13.68 | -58.3 | % | ||||||||
| Gross profit (loss) margin | 5.6 | % | 11.6 | % | -6.0 | pp**** | ||||||
| Regular Corrugating Medium Paper (“CMP”)* | 5.4 | % | 10.3 | % | -4.9 | pp**** | ||||||
| Light-Weight CMP** | 8.9 | % | 10.1 | % | -1.2 | pp**** | ||||||
| Offset Printing Paper | 17.3 | % | 31.2 | % | -13.9 | pp**** | ||||||
| Tissue Paper Products*** | -21.7 | % | -31.5 | % | 9.7 | pp**** | ||||||
| Face Masks | 48.1 | % | NM | NM | ||||||||
| Operating income (loss) | -5.46 | 3.90 | -240.0 | % | ||||||||
| Net income | -5.55 | 2.22 | -350.0 | % | ||||||||
| EBITDA | 10.16 | 19.33 | -47.4 | % | ||||||||
| Basic and Diluted earnings (loss) per share | -0.21 | 0.10 | -307.9 | % | ||||||||
| * | Products from PM6 |
| ** | Products from PM1 |
| *** | Products from PM8 and PM9 |
| **** | pp represents percentage points |
4
Revenue
For the year ended December 31, 2020, total revenue decreased by $16.7 million, or 14.2%, to $100.9 million from $117.6 million for 2019. The decrease in total revenue was mainly due to a decrease in sales volume of Regular CMP, offset printing paper and a decrease in ASPs over all paper products categories. The following table summarizes revenue, volume and ASP by product for the years ended December 31, 2020 and 2019, respectively:
| For the Twelve Months Ended December 31, | ||||||||||||||||||||||||
| 2020 | 2019 | |||||||||||||||||||||||
| Revenue ($’000) | Volume (tonne) | ASP ($/tonne) | Revenue ($’000) | Volume (tonne) | ASP ($/tonne) | |||||||||||||||||||
| Regular CMP | 62,325 | 154,084 | 404 | 72,050 | 168,837 | 427 | ||||||||||||||||||
| Light-Weight CMP | 16,836 | 42,801 | 393 | 18,776 | 45,310 | 414 | ||||||||||||||||||
| Offset Printing Paper | 12,266 | 20,358 | 603 | 20,436 | 29,207 | 700 | ||||||||||||||||||
| Tissue Paper Products | 8,415 | 10,088 | 834 | 6,351 | 6,790 | 935 | ||||||||||||||||||
| Total | 99,841 | 227,331 | 439 | 117,614 | 250,144 | 470 | ||||||||||||||||||
| Revenue ($’000) | Volume (thousand pieces) | ASP ($/thousand pieces) | Revenue ($’000) | Volume ($/thousand pieces) | ASP ($/thousand pieces) | |||||||||||||||||||
| Face Masks | 1,102 | 10,301 | 107 | NM | NM | NM | ||||||||||||||||||
Revenue from CMP, including both regular CMP and light-Weight CMP decreased by $11.7 million, or 12.8%, to $79.2 million, and accounted for 78.4% of total revenue for the year ended December 31, 2020, compared to $90.8 million, or 77.2% of total revenue for 2019. The Company sold 196,885 tonnes of CMP at an ASP of $402/tonne in the year ended December 31, 2020, compared to 214,147 tonnes at an ASP of $424/tonne in 2019.
Of the total CMP sales, revenue from regular CMP decreased by $9.7 million, or 13.5%, to $62.3 million, resulting from sales of 154,084 tonnes at an ASP of $404/tonne during the year ended December 31, 2020, compared to revenue of $72.1 million, resulting from sales of 168,837 tonnes at an ASP of $427/tonne for 2019. Revenue from light-weight CMP decreased by $1.9 million, or 10.3%, to $16.8 million, resulting from sales of 42,801 tonnes at an ASP of $393/tonne for the year ended December 31, 2020, compared to revenue of $18.8 million, resulting from sales of 45,310 tonnes at an ASP of $414/tonne for 2019.
Revenue from offset printing paper decreased by $8.1 million, or 40.0%, to $12.3 million for the year ended December 31, 2020 from $20.4 million for 2019. The Company sold 20,358 tonnes of offset printing paper at an ASP of $603/tonne in the year ended December 31, 2020, compared to 29,207 tonnes at an ASP of $700/tonne in 2019.
Revenue from tissue paper products increased by $2.1 million, or 32.5%, to $8.4 million, resulting from sales of 10,088 tonnes at an ASP of $834/tonne, for the year ended December 31, 2020, compared to revenue of $6.4 million, resulting from sales of 6,790 tonnes at an ASP of $935/tonne for 2019.
Revenue generated from selling face masks was $1.1 million for the year ended December 31, 2020. The Company sold 10,301 thousand pieces of face masks for the year ended December 31, 2020.
Gross Profit and Gross Margin
Total cost of sales decreased by 8.7 million, or 8.4%, to $95.2 million for the year ended December 31, 2020 from $104.0 million for 2019. The decrease in overall cost of sales was mainly due to the decreased sales volume of CMP and offset printing paper in the year ended December 31, 2020. Costs of sales per tonne for regular CMP, light-weight CMP, offset printing paper, tissue paper products were, $383, $358, $498, and $1,015, respectively, for the year ended December 31, 2020 compared to $383, $372, $481, and $1,230, respectively, for 2019.
5
Total gross profit decreased by $8.0 million, or 58.3%, to $5.7 million for the year ended December 31, 2020 from $13.7 million for 2019. Overall gross margin decreased by 6.0 percentage points to 5.6% for the year ended December 31, 2020 from 11.6% for 2019. Gross margins for regular CMP, light-weight CMP, offset printing paper, tissue paper products and face mask products were 5.4%, 8.9%, 17.3%, -21.7% and 48.1%, respectively, for the year ended December 31, 2020, compared to 10.3%, 10.1%, 31.2%, -31.5% and nil, respectively, for 2019.
Selling, General and Administrative Expenses
SG&A expenses increased by $1.4 million, or 14.1%, to $11.2 million for the year ended December 31, 2020 from $9.8 million for 2019. As a percentage of total revenue, SG&A expenses was 11.1% for the year ended December 31, 2020, compared to 8.3% for 2019.
Income (Loss) from Operations
Loss from operations increased by $9.4 million, or 240.0%, to $5.5 million for the year ended December 31, 2020 from income from operations of $3.9 million for 2019. Operating loss margin was 5.4% for the year ended December 31, 2020, compared to operating margin of 3.3% for 2019.
Net Income (Loss)
Net loss increased by $7.8 million, or 350.0%, to $5.6 million, or loss per basic and diluted share of $0.21, for the year ended December 31, 2020, compared to net income of $2.2 million, or earnings per basic and diluted share of $0.10, for 2019.
EBITDA
EBITDA decreased by $9.1 million, or 47.4%, to $10.2 million for the year ended December 31, 2020 from $19.3 million for 2019.
Note 1: Non-GAAP Financial Measures
In addition to our U.S. GAAP results, this press release includes a discussion of EBITDA, a non-GAAP financial measure as defined by the Securities and Exchange Commission (“SEC”). The Company defines EBITDA as net income before interest, income taxes, depreciation and amortization. EBITDA is a key measure used by management to evaluate our results and make strategic decisions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, the Company’s presentation of EBITDA may not be comparable to similarly titled measures of other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with the U.S. GAAP.
6
Reconciliation of Net Income to EBITDA
(Amounts expressed in US$)
| For the Twelve Months Ended December 31, | ||||||||
| ($ millions) | 2020 | 2019 | ||||||
| Net income (loss) | -5.55 | 2.22 | ||||||
| Add: Income tax | -1.10 | 1.08 | ||||||
| Net interest expense | 1.03 | 0.73 | ||||||
| Depreciation and amortization | 15.79 | 15.30 | ||||||
| EBITDA | 10.16 | 19.33 | ||||||
Cash, Liquidity and Financial Position
As of December 31, 2020, 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 loan from credit union) of $4.14 million, $12.16 million and $4.60 million, respectively, compared to $5.84 million, $8.31 million and $7.37 million, respectively, at the end of 2019.
Net accounts receivable was $2.39 million as of December 31, 2020, compared to $3.12 million as of December 31, 2019. Net inventory was $1.23 million as of December 31, 2020, compared to $1.61 million at the end of 2019. As of December 31, 2020, the Company had current assets of $14.91 million and current liabilities of $18.34 million, resulting in a working capital deficit of $3.43 million. This was compared to current assets of $24.04 million and current liabilities of $16.84 million, resulting in a working capital of $7.21 million at the end of 2019.
Net cash provided by operating activities was $16.14 million for the year ended December 31, 2020, compared to net cash provided by operating activities of $7.53 million for 2019. Net cash used in investing activities was $20.53 million for the year ended December 31, 2020, compared to $7.87 million for 2019. Net cash provided by financing activities was $2.05 million for the year ended December 31, 2020, compared to net cash used in financing activities of $5.77 million for 2019.
Recent development
In November 2020, the Company completed inviting bids for the 75 tonne per hour biomass boiler procurement for its biomass cogeneration project. Multiple well-known enterprises in the biomass industry participated in tendering opening bids. In February 2021, the Company completed evaluation on the bidding proposals and announced that Tai Shan Group Co., Ltd., a top manufacturer in the biomass industry in China, has won the bid. Installation of the boilers is expected to commence in the near future. The Company expects to participate in the bidding process for urban central heating projects.
On January 12, 2021, the Company announced it has submitted its application for the license for its new single-use surgical masks from local food and drug administration in Hebei province. Production of its single-use non-medical face masks was in full capacity as the number of confirmed Covid-19 cases surged again and anti-Covid-19 efforts became increasingly normalized globally.
7
On January 20, 2021, the Company offered and sold to certain institutional investors an aggregate of 26,181,818 shares of common stock and 26,181,818 warrants to purchase up to 26,181,818 shares of common stock in a best-efforts public offering for gross proceeds of approximately $14.4 million. The purchase price for each share of common stock and the corresponding warrant sold in the offering was $0.55. The warrants are exercisable commencing on January 20, 2021 at an exercise price of $0.55 and will expire on January 20, 2026. The Company intends to use the net proceeds from the offering for general corporate and working capital purposes.
On March 1, 2021, the Company offered and sold to the public investors an aggregate of 29,277,866 shares of common stock and 14,638,933 warrants to purchase up to 14,638,933 shares of common stock in a firm commitment underwritten public offering for gross proceeds of approximately $21.9 million. The purchase price for each share of common stock and accompanying warrant sold in the offering was $0.75. The warrants are exercisable commencing on March 1, 2021 at an exercise price of $0.75 and will expire on March 1, 2026. The Company intends to use the net proceeds from the offering for general corporate and working capital purposes.
Earnings Conference Call
The Company’s management will host a conference call to discuss its fourth quarter and fiscal year 2020 financial results at 8:00 am US Eastern Time on Wednesday, March 24, 2021. To attend the conference call, please use the information below.
Conference Topic: IT Tech Packaging Inc. Fourth Quarter and Fiscal Year 2020 Earnings Conference Call and Webcast
Date of call: March 24, 2021
Time of call: 8:00 AM Eastern Time (8:00 PM Beijing/Hong Kong Time)
Conference ID: 8679484
To attend the conference call, please register in advance of the conference using the link: http://apac.directeventreg.com/registration/event/8679484 to complete the online registration at least 15 minutes prior to the start of the call. Upon registering, the conference access information including participant dial-in numbers, a Direct Event passcode and a registrant ID will be provided to you via an email.
This conference call will be broadcast live on the Internet and can be accessed by all interested parties at https://edge.media-server.com/mmc/p/5soq5wdd. Please access the link at least 15 minutes prior to the start of the call to register, download, and install any necessary audio software.
A playback will be available through 11:00 am ET on March 24, 2021 to 8:59 am ET on April 1, 2021. To listen, please dial+1-855-452-5696 if calling fromthe United States, or +61-281-990-299 if calling internationally. Use the conference ID 8679484 to access the replay.
8
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/ ..
Safe Harbor Statements
This press release may contain forward-looking statements. These forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks outlined in the Company’s public filings with the Securities and Exchange Commission, including the Company’s latest annual report on Form 10-K. All information provided in this press release speaks as of the date hereof. Except as otherwise required by law, the Company undertakes no obligation to update or revise its forward-looking statements.
For more information, please contact:
At the Company Email:
Tel: +86 0312 8698215
Investor
Relations:
Janice Wang
Phone: +1 571-464-9470 (from U.S.)
+86 13811768559 (from China)
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IT TECH PACKAGING, INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2020 AND 2019
| December 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and bank balances | $ | 4,142,437 | $ | 5,837,745 | ||||
| Restricted cash | - | - | ||||||
| Accounts receivable (net of allowance for doubtful accounts of $34,391 and $59,922 as of December 31, 2020 and December 2019, respectively) | 2,389,057 | 3,119,311 | ||||||
| Inventories | 1,233,801 | 1,607,463 | ||||||
| Prepayments and other current assets | 7,051,515 | 11,613,241 | ||||||
| Due from related parties | 92,795 | 1,863,479 | ||||||
| Total current assets | 14,909,605 | 24,041,239 | ||||||
| Prepayment on property, plant and equipment | 21,149,749 | 1,433,445 | ||||||
| Finance lease right-of-use assets, net | 2,397,653 | - | ||||||
| Property, plant, and equipment, net | 145,142,642 | 151,616,852 | ||||||
| Value-added tax recoverable | 2,566,195 | 2,621,841 | ||||||
| Deferred tax asset non-current | 13,708,630 | 10,485,053 | ||||||
| Total Assets | $ | 199,874,474 | $ | 190,198,430 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Short-term bank loans | $ | 6,435,348 | $ | 6,163,814 | ||||
| Current portion of long-term loans from credit union | 4,996,245 | 1,605,459 | ||||||
| Lease liability | 182,852 | - | ||||||
| Accounts payable | 592,391 | 250,486 | ||||||
| Advance from customers | 82,625 | 98,311 | ||||||
| Due to related parties | 727,433 | 539,985 | ||||||
| Accrued payroll and employee benefits | 224,930 | 291,924 | ||||||
| Other payables and accrued liabilities | 4,838,601 | 6,503,010 | ||||||
| Income taxes payable | 259,649 | 1,382,471 | ||||||
| Total current liabilities | 18,340,074 | 16,835,460 | ||||||
| Loans from credit union | 4,597,772 | 7,367,908 | ||||||
| Deferred gain on sale-leaseback | 387,087 | - | ||||||
| Lease liability - non-current | 354,107 | - | ||||||
| Derivative liability | 1,115,260 | - | ||||||
| Total liabilities (including amounts of the consolidated VIE without recourse to the Company of $17,950,224 and $19,558,568 as of December 31, 2020 and 2019, respectively) | 24,794,300 | 24,203,368 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity | ||||||||
| Common stock, 500,000,000 shares authorized, $0.001 par value per share, 28,535,816 and 22,054,816 shares issued and outstanding as of December 31, 2020 and December, 31,2019, respectively | 28,536 | 22,055 | ||||||
| Additional paid-in capital | 53,989,548 | 51,155,174 | ||||||
| Statutory earnings reserve | 6,080,574 | 6,080,574 | ||||||
| Accumulated other comprehensive income (loss) | 5,740,722 | (6,057,537 | ) | |||||
| Retained earnings | 109,240,794 | 114,794,796 | ||||||
| Total stockholders’ equity | 175,080,174 | 165,995,062 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 199,874,474 | $ | 190,198,430 | ||||
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IT TECH PACKAGING, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
| Year Ended | ||||||||
| December 31, | ||||||||
| 2020 | 2019 | |||||||
| Revenues | $ | 100,943,269 | $ | 117,614,886 | ||||
| Cost of sales | (95,241,284 | ) | (103,935,368 | ) | ||||
| Gross Profit | 5,701,985 | 13,679,518 | ||||||
| Selling, general and administrative expenses | (11,157,789 | ) | (9,781,719 | ) | ||||
| Gain on acquisition of a subsidiary | - | - | ||||||
| (Loss) Income from Operations | (5,455,804 | ) | 3,897,799 | |||||
| Other Income (Expense): | ||||||||
| Interest income | 32,033 | 64,717 | ||||||
| Subsidy income | 220,478 | 261,136 | ||||||
| Interest expense | (1,026,512 | ) | (926,368 | ) | ||||
| Loss on derivative liability | (426,055 | ) | - | |||||
| (Loss) Income before Income Taxes | (6,655,860 | ) | 3,297,284 | |||||
| Provision for Income Taxes | 1,101,858 | (1,076,102 | ) | |||||
| Net (Loss) Income | (5,554,002 | ) | 2,221,182 | |||||
| Other Comprehensive Income (Loss) | ||||||||
| Foreign currency translation adjustment | 11,798,259 | (2,793,585 | ) | |||||
| Total Comprehensive Income (Loss) | $ | 6,244,257 | $ | (572,403 | ) | |||
| (Losses) Earnings Per Share: | ||||||||
| Basic and Diluted (Losses) Earnings per Share | $ | (0.21 | ) | $ | 0.10 | |||
| Outstanding – Basic and Diluted | 26,498,298 | 22,034,905 | ||||||
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IT TECH PACACKING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
| Year Ended | ||||||||
| December 31, | ||||||||
| 2020 | 2019 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | $ | (5,554,002 | ) | $ | 2,221,182 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 15,793,854 | 15,304,039 | ||||||
| Loss on derivative liability | 426,055 | - | ||||||
| Allowances for obsolete inventories, net | - | 75,719 | ||||||
| (Recovery from) Allowance for bad debts | (28,087 | ) | 2,192 | |||||
| Share-based compensation and expenses | 1,256,700 | - | ||||||
| Gain on acquisition of a subsidiary | - | - | ||||||
| Deferred tax | (2,364,575 | ) | (2,369,683 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 923,429 | (294,882 | ) | |||||
| Prepayments and other current assets | 5,301,953 | (5,392,916 | ) | |||||
| Inventories | 458,878 | 1,207,958 | ||||||
| Accounts payable | 307,198 | (372,728 | ) | |||||
| Advance from customers | (21,281 | ) | 99,472 | |||||
| Notes payable | - | (3,625,921 | ) | |||||
| Related parties | 1,984,619 | (1,757,231 | ) | |||||
| Accrued payroll and employee benefits | (82,516 | ) | 82,813 | |||||
| Other payables and accrued liabilities | (1,105,508 | ) | 1,169,967 | |||||
| Income taxes payable | (1,153,191 | ) | 1,180,493 | |||||
| Net Cash Provided by Operating Activities | 16,143,526 | 7,530,474 | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Purchases of property, plant and equipment | (21,106,210 | ) | (6,416,481 | ) | ||||
| Proceeds from sale of property, plant and equipment | 580,206 | |||||||
| Acquisition of a subsidiary | - | (1,450,368 | ) | |||||
| Net Cash Used in Investing Activities | (20,526,004 | ) | (7,866,849 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from issuance of shares and warrants, net | 2,273,360 | - | ||||||
| Repayments of related party loans | - | (2,175,553 | ) | |||||
| Proceeds from short term bank loans | 6,090,715 | 10,152,579 | ||||||
| Proceeds from credit union loans | - | 4,206,068 | ||||||
| Repayment of bank loans | (6,237,217 | ) | (17,955,561 | ) | ||||
| Payment of capital lease obligation | (72,003 | ) | - | |||||
| Net Cash Provided by (Used in) Financing Activities | 2,054,855 | (5,772,467 | ) | |||||
| Effect of Exchange Rate Changes on Cash and Cash Equivalents | 632,315 | (170,838 | ) | |||||
| Net (Decrease) Increase in Cash and Cash Equivalents | (1,695,308 | ) | (6,279,680 | ) | ||||
| Cash, Cash Equivalents and Restricted Cash - Beginning of Year | 5,837,745 | 12,117,425 | ||||||
| Cash, Cash Equivalents and Restricted Cash - End of Year | $ | 4,142,437 | $ | 5,837,745 | ||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Cash paid for interest, net of capitalized interest cost | $ | 592,140 | $ | 926,368 | ||||
| Cash paid for income taxes | $ | 2,401,191 | $ | 2,250,546 | ||||
| Cash and bank balances | 4,142,437 | 5,837,745 | ||||||
| Restricted cash | - | - | ||||||
| Total cash, cash equivalents and restricted cash shown in the statement of cash flows | 4,142,437 | 5,837,745 | ||||||
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