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What changed in IT TECH PACKAGING, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of IT TECH PACKAGING, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+152 added−165 removedSource: 10-K (2025-04-11) vs 10-K (2024-03-27)

Top changes in IT TECH PACKAGING, INC.'s 2024 10-K

152 paragraphs added · 165 removed · 126 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

32 edited+2 added−1 removed188 unchanged
Biggest changePM10 Tissue paper 20,000 Dongfang Paper Dongfang Paper In construction *: Paper machines under renovation, under construction, or in the planning stage. ***: PM6 is funded and owned by Baoding Shengde; ancillary facilities that support the PM6 operation are built and owned by Dongfang Paper. 17 On December 31, 2009, we acquired a digital photo paper production line, including two coating lines that are designated as PM4 and PM5 and ancillary equipment, for a total purchase price of approximately $13.6 million.
Biggest changeThese production lines include the followings: Paper Product Designed Capacity Status as of December 31, PM# Produced (tonnes/year) Owned by Operated by 2024 PM1 Corrugating Medium Paper 60,000 Dongfang Paper Dongfang Paper In production PM2 Offset Printing Paper 50,000 Dongfang Paper Dongfang Paper Suspended during 2024 PM3 Offset Printing Paper 40,000 Dongfang Paper Dongfang Paper Suspended during 2024 PM4 Digital Photo Paper ** Baoding Shengde Baoding Shengde Suspended in June 2016 due to low market demand PM5 Digital Photo Paper ** Baoding Shengde Baoding Shengde Suspended in June 2016 due to low market demand PM6 Corrugating Medium Paper 360,000 Baoding Shengde Dongfang Paper*** In production PM7* Specialty paper 10,000 Dongfang Paper Dongfang Paper In renovation PM8 Tissue paper 15,000 Dongfang Paper Dongfang Paper Suspended during 2024 PM9 Tissue paper 15,000 Dongfang Paper Dongfang Paper Suspended during 2024 PM10 Tissue paper 20,000 Dongfang Paper Dongfang Paper In construction *: Paper machines under renovation, under construction, or in the planning stage. ***: PM6 is funded and owned by Baoding Shengde; ancillary facilities that support the PM6 operation are built and owned by Dongfang Paper. 17 On December 31, 2009, we acquired a digital photo paper production line, including two coating lines that are designated as PM4 and PM5 and ancillary equipment, for a total purchase price of approximately $13.6 million.
On October 29, 2007, pursuant to an agreement and plan of merger (the “Merger Agreement”), the Company acquired Dongfang Zhiye Holding Limited (“Dongfang Holding”), a corporation formed on November 13, 2006 under the laws of the British Virgin Islands, and issued the shareholders of Dongfang Holding an aggregate of 7,450,497 (as adjusted for a four-for-one reverse stock split effected in November 2009) shares of our common stock, which shares were distributed pro-rata to the shareholders of Dongfang Holding in accordance with their respective ownership interests in Dongfang Holding.
On October 29, 2007, pursuant to an agreement and plan of merger (the “Merger Agreement”), the Company acquired Dongfang Zhiye Holding Limited (“Dongfang Holding”), a corporation formed on November 13, 2006 under the laws of the British Virgin Islands, and issued the shareholders of Dongfang Holding an aggregate of 7,450,497 shares of our common stock (as adjusted for a four-for-one reverse stock split effected in November 2009), which shares were distributed pro-rata to the shareholders of Dongfang Holding in accordance with their respective ownership interests in Dongfang Holding.
At the time of the Merger Agreement, Dongfang Holding owned all of the issued and outstanding stock and ownership of Dongfang Paper and such shares of Dongfang Paper were held in trust with Zhenyong Liu, Xiaodong Liu and Shuangxi Zhao, for Mr. Liu, Mr. Liu and Mr.
At the time of the Merger Agreement, Dongfang Holding owned all of the issued and outstanding stock and ownership of Dongfang Paper and such shares of Dongfang Paper were held in trust with Zhenyong Liu, Xiaodong Liu and Shuangxi Zhao, for Mr. Zhenyong Liu, Mr. Xiaodong Liu and Mr.
According to the Prevention and Control of Noise Pollution Law, entities subject to the pollutant discharge licensing management requirements shall not emit industrial noise without a pollutant discharge permit and shall prevent and control noise pollution according to the requirements of the pollutant discharge permit.
According to the Prevention and Control of Noise Pollution Law, entities subject to the pollutant discharge licensing management requirements shall not emit industrial noise without a pollutant discharge permit and shall prevent and control noise pollution according to the requirements of the pollutant discharge permit.
We completed the installation of the PM6 production line in November 2011 and began commercial production in December 2011. We have implemented a plan to renovate one of the old production lines that has been idle since the end of 2007. We previously made paper with anti-counterfeit features from that production line.
We completed the installation of the PM6 production line in November 2011 and began commercial production in December 2011. We have implemented a plan to renovate one of the old production lines (PM7) that has been idle since the end of 2007. We previously made paper with anti-counterfeit features from that production line.
On May 5, 2020, the Company announced it planned the commercial launch of a new tissue paper production line PM10 and the Company signed an agreement to purchase paper machine with paper machine supplier. The Company expected the new tissue paper production line to be launched after the completion of trial run.
On May 5, 2020, the Company announced it planned the commercial launch of a new tissue paper production line PM10 and the Company signed an agreement to purchase paper machine with paper machine supplier. We expected the new tissue paper production line to be launched after the completion of trial run.
Our R&D efforts in 2023 were focused on evaluating and developing new products that are in the pipeline for 2023 and included developing and improving the manufacturing process of Light-Weight CMP and the production and packaging technology of tissue paper. One of our production lines, PM7, is under renovation.
Our R&D efforts in 2024 were focused on evaluating and developing new products that are in the pipeline for 2024 and included developing and improving the manufacturing process of Light-Weight CMP and the production and packaging technology of tissue paper. One of our production lines, PM7, is under renovation.
Category Registrant Valid Term Shuangxing 3298963 Fax paper, thermal paper, blueprint paper, sensitized paper, spectrum sensitized paper, blueprint cloth, photographic paper, cyanotype solution, diazo paper Dongfang Paper April 7, 2014 through April 6, 2024 Fangmenglai 12955328 Toilet paper, handkerchief tissues, tissues, paper napkins, paper mats, beer mats, paper place mats, printing paper (including offset paper, newsprint, books paper, bond paper, plate paper and halftone paper), coated paper Dongfang Paper December 28, 2014 through December 27, 2024 Fangqingxin 12955235 Toilet paper, handkerchief tissues, tissues for makeup remover, paper napkin, tissues, paper duster cloth, paper face towels, paper table cloth, paper tablecloths, drawer liner (with or without flavor) Dongfang Paper December 28, 2014 through December 27, 2024 Kaimeilai 20212149 Xuan Paper (for traditional Chinese painting and calligraphy), Paper, tissue paper, watercolor paper, writing paper, printing publications, ink, painting brush, packaging plastic film, color box, photographic plate, heliographic paper Baoding Shengde July 28, 2017 through July 27, 2027 Lanmeier 15635879 Paper table cover, paper pinafore, drawer lining (with flavor or not) Tengsheng Paper November 21, 2016 through November 20, 2026 Qingmu 15635916 Tissue paper, paper handkerchief, paper napkin, facial paper, grained paper, cardboard, white board, container board, kraft liner, corrugated medium paper (board) Tengsheng Paper January 7, 2016 through January 6, 2026 Rongou 20063034 Paper, tissue paper, paper handkerchief, paper napkin, facial paper, paper billboard, cleansing tissue, packaging paper or plastic bag (envelop, sachet), carton, paper box Tengsheng Paper July 14, 2017 through July 13, 2027 Weizun 15636093 Coasters, paper table cover, paper costers, cleansing paper Tengsheng Paper February 28, 2016 through February 27, 2026 20 The Company has also been granted twelve new utility patent certificates on paper manufacturing related equipment issued by the State Intellectual Property Office, including equipment testing, screening and filtering, and mixing.
Category Registrant Valid Term Shuangxing 12301651 Fax paper, thermal paper, blueprint paper, sensitized paper, spectrum sensitized paper, blueprint cloth, photographic paper, cyanotype solution, diazo paper Dongfang Paper September 7, 2015 through September 6, 2025 Fangmenglai 12955328 Toilet paper, handkerchief tissues, tissues, paper napkins, paper mats, beer mats, paper place mats, printing paper (including offset paper, newsprint, books paper, bond paper, plate paper and halftone paper), coated paper Dongfang Paper December 28, 2014 through December 27, 2034 Fangqingxin 12955235 Toilet paper, handkerchief tissues, tissues for makeup remover, paper napkin, tissues, paper duster cloth, paper face towels, paper table cloth, paper tablecloths, drawer liner (with or without flavor) Dongfang Paper December 28, 2014 through December 27, 2034 Kaimeilai 20212149 Xuan Paper (for traditional Chinese painting and calligraphy), Paper, tissue paper, watercolor paper, writing paper, printing publications, ink, painting brush, packaging plastic film, color box, photographic plate, heliographic paper Baoding Shengde July 28, 2017 through July 27, 2027 Lanmeier 15635879 Paper table cover, paper pinafore, drawer lining (with flavor or not) Tengsheng Paper November 21, 2016 through November 20, 2026 Qingmu 15635916 Tissue paper, paper handkerchief, paper napkin, facial paper, grained paper, cardboard, white board, container board, kraft liner, corrugated medium paper (board) Tengsheng Paper January 7, 2016 through January 6, 2026 Rongou 20063034 Paper, tissue paper, paper handkerchief, paper napkin, facial paper, paper billboard, cleansing tissue, packaging paper or plastic bag (envelop, sachet), carton, paper box Tengsheng Paper July 14, 2017 through July 13, 2027 Weizun 15636093 Coasters, paper table cover, paper costers, cleansing paper Tengsheng Paper February 28, 2016 through February 27, 2026 20 The Company has also been granted twelve new utility patent certificates on paper manufacturing related equipment issued by the State Intellectual Property Office, including equipment testing, screening and filtering, and mixing.
Our Production Lines During the year ended December 31, 2023, we had six PM production lines in operation and are in the process of launching one more that is designated as PM7.
Our Production Lines During the year ended December 31, 2024, we had six PM production lines in operation and are in the process of launching one more that is designated as PM7.
Our largest customer is a packaging company in Hebei Province. Our total corrugating medium and offset printing paper revenue in 2023 was primarily derived from customers in Hebei Province and Shandong Province.
Our largest customer is a packaging company in Hebei Province. Our total corrugating medium and offset printing paper revenue in 2024 was primarily derived from customers in Hebei Province and Shandong Province.
The largest paper production capacities by province for 2022 and 2021 (the most recent year for which relevant information is available) are summarized in the table below.
The largest paper production capacities by province for 2023 and 2022 (the most recent year for which relevant information is available) are summarized in the table below.
On May 5, 2020, the Company announced it planned the commercial launch of a new tissue paper production line PM10 and the Company entered into an agreement to purchase paper machine with paper machine supplier. The Company expected the new tissue paper production line to be launched after the completion of trial run.
On May 5, 2020, we announced we planned the commercial launch of a new tissue paper production line PM10 and we entered into an agreement to purchase paper machine with paper machine supplier. We expected the new tissue paper production line to be launched after the completion of trial run.
Although we have contracts with our suppliers, these contracts do not lock-in the purchase price of our raw materials or provide hedge against the fluctuation in the market price of these raw materials. For the year ended December 31, 2023, we had two large suppliers which accounted for approximately 72% and 17% of our total purchases, respectively.
Although we have contracts with our suppliers, these contracts do not lock-in the purchase price of our raw materials or provide hedge against the fluctuation in the market price of these raw materials. For the year ended December 31, 2024, we had two large suppliers which accounted for approximately 73% and 17% of our total purchases, respectively.
The information on our website is not, and shall not be deemed to be, a part hereof or incorporated into this or any of our other filings with the SEC. Executive Officers For information regarding our executive officers as of March 27, 2024, see Part III, Item 10, “Directors, Executive Officers and Corporate Governance.” 22
The information on our website is not, and shall not be deemed to be, a part hereof or incorporated into this or any of our other filings with the SEC. Executive Officers For information regarding our executive officers as of April 11, 2025, see Part III, Item 10, “Directors, Executive Officers and Corporate Governance.” 22
For the year ended December 31, 2023, corrugating medium paper comprised approximately 97.06% of our total paper production quantities and roughly 94.47% of our total revenue. Raw materials used in the production of corrugating medium paper include recycled paper board (or Old Corrugating Cardboard or “OCC,” as it is commonly referred to in the United States) and certain supplementary agents.
For the year ended December 31, 2024, corrugating medium paper comprised approximately 100% of our total paper production quantities and roughly 99.82% of our total revenue. Raw materials used in the production of corrugating medium paper include recycled paper board (or Old Corrugating Cardboard or “OCC,” as it is commonly referred to in the United States) and certain supplementary agents.
As of December 31, 2023 and 2022, $3,705,111 and $7,612,294 of cash and cash equivalents were denominated in RMB, respectively. IT Tech Packaging and its directly owned subsidiary, Shengde Holding, do not have any substantial assets or liabilities or result of operations.
As of December 31, 2024 and 2023, $6,948,799 and $3,705,111 of cash and cash equivalents were denominated in RMB, respectively. IT Tech Packaging and its directly owned subsidiary, Shengde Holding, do not have any substantial assets or liabilities or result of operations.
For details, see “ Risk Factors — Risk Factors Relating to Doing Business in China — We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC Subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business. ” In addition, cash transfers from IT Tech Packaging are subject to applicable PRC laws and regulations on loans and direct investment.
For details, see “ Risk Factors — Risk Factors Relating to Doing Business in China — We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC Subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.
The following table sets forth the assets, liabilities, results of operations and changes in cash, cash equivalents of the VIE, which were included in the Company’s consolidated balance sheets and statements of comprehensive income and statements of cash flows with intercompany transactions eliminated: As of December 31, December 31, 2023 2022 Current assets $ 26,317,876 $ 33,832,930 Total non-current assets $ 158,555,747 $ 147,178,884 Total Assets $ 184,873,623 $ 181,011,814 Total liabilities $ 20,084,995 $ 16,784,877 For the Fiscal Year Ended December 31, 2023 2022 Net cash provided by operating activities $ 17,444,376 $ 13,064,529 Net cash used in investing activities $ (22,239,297 ) $ (7,494,805 ) Net cash provided by (used in) financing activities $ 3,965,631 $ (7,074,857 ) 7 Distributions and Other Transfers of Cash through our Organization We are a holding company, although other means are available for us to obtain financing at the holding company level, we may receive dividends and other distributions on equity paid by our subsidiary established in China for our cash needs, including the funds necessary to pay dividends and other cash distributions to our shareholders to the extent we choose to do so, to service any debt we may incur and to pay our operating expenses.
The following table sets forth the assets, liabilities, results of operations and changes in cash, cash equivalents of the VIE, which were included in the Company’s consolidated balance sheets and statements of comprehensive income and statements of cash flows with intercompany transactions eliminated: As of December 31, December 31, 2024 2023 Current assets $ 27,446,794 $ 26,317,876 Total non-current assets $ 143,124,531 $ 158,555,747 Total Assets $ 170,571,325 $ 184,873,623 Total liabilities $ 16,976,765 $ 20,084,995 For the Fiscal Year Ended December 31, 2024 2023 Net cash provided by operating activities $ 5,779,834 $ 17,444,376 Net cash used in investing activities $ (329,611 ) $ (22,239,297 ) Net cash (used in) provided by financing activities $ (2,529,263 ) $ 3,965,631 7 Distributions and Other Transfers of Cash through our Organization We are a holding company, although other means are available for us to obtain financing at the holding company level, we may receive dividends and other distributions on equity paid by our subsidiaries established in China for our cash needs, including the funds necessary to pay dividends and other cash distributions to our shareholders to the extent we choose to do so, to service any debt we may incur and to pay our operating expenses.
Human Capital Resources Employee Profiles As of December 31, 2023, we have approximately 383 full time employees, all of whom were based in PRC. As of December 31, 2023, approximately 24.3% of our current workforce is female and 75.7% male.
Human Capital Resources Employee Profiles As of December 31, 2024, we have approximately 383 full time employees, all of whom were based in PRC. As of December 31, 2024, approximately 19.6% of our current workforce is female and 80.4% male.
We believe that we are currently not required to obtain any permission or approval from the China Securities Regulatory Commission (“CSRC”) and Cyberspace Administration of China (“CAC”) in the PRC to issue securities to foreign investors.
Based on our understanding of the current PRC law, we believe that we are currently not required to obtain any permission or approval from the China Securities Regulatory Commission (“CSRC”) and Cyberspace Administration of China (“CAC”) in the PRC to issue securities to foreign investors or continue listing of our company’s securities on the NYSE American.
(Data source: 2022 Annual Report of China Paper Manufacturing, May 2023,China Paper Association) Unit: Million tons Data source: 2022Annual Report of China’s Paper Industry, May 2023, China Paper Association Corrugating medium paper production in China totaled 27.70 million tonnes in 2022, a 3.17% increase from 2021.
(Data source: 2023 Annual Report of China Paper Manufacturing, May 2024,China Paper Association) Unit: Million tons Data source: 2023 Annual Report of China’s Paper Industry, May 2024, China Paper Association Corrugating medium paper production in China totaled 29.15 million tonnes in 2023, a 5.23% increase from 2022.
Revenue from offset printing paper was $3,215,190 with 5,573 tonnes sold for the year ended December 31, 2023. Raw materials used in making offset printing paper include recycled white scrap paper, fluorescent whitening agent and sizing agent. We currently have two production lines, PM2 and PM3, for the production of offset printing paper.
Production of offset printing paper was suspended during the year ended December 31, 2024. Raw materials used in making offset printing paper include recycled white scrap paper, fluorescent whitening agent and sizing agent. We currently have two production lines, PM2 and PM3, for the production of offset printing paper.
As of December 31, 2023, our variable interest entity accounted for an aggregate of 94.81% and 75.92% of our total assets and total liabilities. As of December 31, 2022, our variable interest entity accounted for an aggregate of 88.54% and 72.59% of our total assets and total liabilities.
As of December 31, 2024, our variable interest entity accounted for an aggregate of 96.07% and 78.97% of our total assets and total liabilities. As of December 31, 2023, our variable interest entity accounted for an aggregate of 94.81% and 75.92% of our total assets and total liabilities.
Total domestic consumption was 124.03 million tonnes in 2022, down by 1.94% from 126.48 million tonnes in 2021. The output of paper and paper board maintained an average growth rate of approximately 2.32% during the ten-year period from 2013 to 2022, while consumption increased at an average annual rate of 2.67%. The growth is expected to continue.
Total domestic consumption was 131.65 million tonnes in 2023, up by 6.14% from 124.03 million tonnes in 2022. The output of paper and paper board maintained an average growth rate of approximately 2.40% during the ten-year period from 2014 to 2023, while consumption increased at an average annual rate of 3.02%. The growth is expected to continue.
Consumption of uncoated offset printing paper in China amounted to 16.78 million tonnes in 2022, a decrease of 6.41% as compared to 2021. The paper making industry in China is concentrated in the east coast provinces.
Consumption of uncoated offset printing paper in China amounted to 17.11 million tonnes in 2023, an increase of 1.97% as compared to 2022. The paper making industry in China is concentrated in the east coast provinces.
The three provinces with largest capacities showed moderate decreases in paper production capacities. 2022 Capacity 2021 Capacity % Province (10k tonnes) (10k tonnes) Change Shandong 2,015 2,035 (0.98 ) Guangdong 1,969 1,970 (0.05 ) Jiangsu 1,373 1,415 (2.97 ) Zhejiang 1,193 1,050 13.62 Fujian 821 845 (2.84 ) Henan 715 672 6.40 Hubei 592 570 3.86 Guangxi 559 423 65.88 Chongqing 408 423 (3.55 ) Hebei 378 408 (7.35 ) Data Sources: 2022 Annual Report of China’s Paper Industry, May 2023, China Paper Association 16 Customers We generally sell our corrugating medium paper to companies making corrugating cardboards and offset printing paper to printing companies.
The three provinces with largest capacities showed moderate decreases in paper production capacities. 2023 Capacity 2022 Capacity % Province (10k tonnes) (10k tonnes) Change Shandong 2,150 2,015 6.70 Guangdong 2,113 1,969 7.31 Jiangsu 1,417 1,373 3.20 Zhejiang 1,213 1,193 1.68 Fujian 869 821 5.85 Henan 706 715 (1.26 ) Guangxi 660 559 18.07 Hubei 645 592 8.95 Hebei 432 378 14.29 Chongging 351 408 (13.97 ) Data Sources: 2023 Annual Report of China’s Paper Industry, May 2024, China Paper Association 16 Customers We generally sell our corrugating medium paper to companies making corrugating cardboards and offset printing paper to printing companies.
For the year ended December 31, 2023, three major suppliers who individually accounted for more than 5% of our total purchase are as follows: 2023 Purchase % of Amount Total (USD$) Purchase Company A (Hebei) 56,159,754 72 % Company B (Hebei) 13,631,622 17 % Company C (Hebei) 5,034,368 6 % Total Major Suppliers 64,825,744 95 % 18 Competition Dongfang Paper’s main competitors are: Chenming Paper Group Limited, Huatai Group Limited, Nine Dragons Paper (Holdings) Limited and Sun Paper Group Limited.
For the year ended December 31, 2024, three major suppliers who individually accounted for more than 5% of our total purchase are as follows: 2024 Purchase % of Amount Total (USD$) Purchase Company A (Hebei) 47,049,870 73 % Company B (Hebei) 11,201,353 17 % Company C (Hebei) 4,691,261 7 % Total Major Suppliers 62,942,484 97 % 18 Competition Dongfang Paper’s main competitors are: Chenming Paper Group Limited, Huatai Group Limited, Nine Dragons Paper (Holdings) Limited and Sun Paper Group Limited.
Consumption of corrugating medium paper in China amounted to 30.10 million tonnes in 2022, an increase of 1.11% as compared to 2021. Uncoated offset printing paper production in China totaled 17.35 million tonnes in 2022, a 0.87% increase from 2021.
Consumption of corrugating medium paper in China amounted to 32.72 million tonnes in 2023, an increase of 8.70% as compared to 2022. Uncoated offset printing paper production in China totaled 18.05 million tonnes in 2023, a 4.03% increase from 2022.
In May 2021, the Company obtained the license for its new single-use surgical masks from local food and drug administration in Hebei province, and began commercial production in November 2021. 15 Market for our Products The PRC Paper Making Industry According to the 2022 China Paper Industry Annual Report, issued by the China Paper Association, there were approximately 2,500 paper and paper board manufacturers in China, with a total output of 124.25 million tonnes, up by 2.64% from 121.05 million tonnes in 2021.
Face mask production was suspended during the year ended December 31, 2024. 15 Market for our Products The PRC Paper Making Industry According to the 2023 China Paper Industry Annual Report, issued by the China Paper Association, there were approximately 2,500 paper and paper board manufacturers in China, with a total output of 129.65 million tonnes, up by 4.35% from 124.25 million tonnes in 2022.
The machine supplier was delayed because of pandemic. We are closely following up the provider for further actions. Tissue paper products comprised approximately 0.52% of our total paper production quantities and approximately 1.51% of our total sales revenue for the year ended December 31, 2023.
The machine supplier was delayed because the supplier extended the production schedule. We are closely following up the provider for further actions. Tissue paper production was suspended during the year ended December 31, 2024.
For the year ended December 31, 2023, the major cash flows occurred between IT Tech Packaging, its subsidiaries and the VIE included (i) loans in the total amount of $4,251,821 provided by Baoding Shengde to Tengsheng Paper; (ii) loans in the total amount of $2,834,547 from Baoding Shengde loans to Dongfang Paper; (iii) the payment in the amount of $5,491,139 made from Dongfang Paper to Baoding Shengde for purchase of raw materials; and (iv) funding through Shengde Holdings Inc. to Qianrong, with an amount of $500,000 as capital contributions.
For the year ended December 31, 2024, the major cash flows occurred between IT Tech Packaging, its subsidiaries and the VIE included (i) loans in the total amount of $1,059,480 provided by Dongfang Paper to Baoding Shengde; and (ii) repayment of shareholder loans in the total amount of $727,433 on behalf of IT Tech Packaging Inc.
For the year ended December 31, 2023, five major customers who individually accounted for more than 5% of our total sales revenue are as follows: 2023 Sales Amount (USD$, net of % of applicable Total VAT) Revenue Company A (Hebei) 6,387,786 7.38 % Company B (Shandong) 6,167,272 7.13 % Company C (Hebei) 6,097,717 7.05 % Company D (Shandong) 6,085,824 7.03 % Company E (Tianjin) 6,006,103 6.94 % Total Major Customers 30,744,703 35.53 % Eight of our top-ten customers of 2023 are also in the top-ten customer list in 2022, representing 85.66% of the 2022 top-ten customer sales.
For the year ended December 31, 2024, 10 major customers who individually accounted for more than 5% of our total sales revenue are as follows: 2024 Sales Amount (USD$, net of % of applicable Total VAT) Revenue Company A (Hebei) 5,872,762 7.74 % Company B (Hebei) 5,630,649 7.42 % Company C (Shandong) 5,617,724 7.41 % Company D (Tianjin) 5,562,521 7.33 % Company E (Tianjin) 5,561,284 7.33 % Company F (Hebei) 4,204,968 5.54 % Company G (Hebei) 4,141,651 5.46 % Company H (Hebei) 4,003,315 5.28 % Company I (Hebei) 3,826,432 5.05 % Company J (Hebei) 3,815,617 5.03 % Total Major Customers 48,236,923 63.59 % All of our top-ten customers of 2024 are also in the top-ten customer list in 2023.
Removed
These production lines include the followings: Paper Product Designed Capacity PM# Produced (tonnes/year) Owned by Operated by Status as of December 31, 2023 PM1 Corrugating Medium Paper 60,000 Dongfang Paper Dongfang Paper In production PM2 Offset Printing Paper 50,000 Dongfang Paper Dongfang Paper In production PM3 Offset Printing Paper 40,000 Dongfang Paper Dongfang Paper In production PM4 Digital Photo Paper ** Baoding Shengde Baoding Shengde Suspended in June 2016 due to low market demand PM5 Digital Photo Paper ** Baoding Shengde Baoding Shengde Suspended in June 2016 due to low market demand PM6 Corrugating Medium Paper 360,000 Baoding Shengde Dongfang Paper*** In production PM7* Specialty paper 10,000 Dongfang Paper Dongfang Paper In renovation PM8 Tissue paper 15,000 Dongfang Paper Dongfang Paper In production PM9 Tissue paper 15,000 Dongfang Paper Dongfang Paper In production.
Added
“ In addition, cash transfers from IT Tech Packaging are subject to applicable PRC laws and regulations on loans and direct investment.
Added
In May 2021, the Company obtained the license for its new single-use surgical masks from local food and drug administration in Hebei province, and began commercial production in November 2021.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

10 edited+0 added−1 removed359 unchanged
Biggest changeIf we do not receive or maintain the approvals, or we inadvertently conclude that such approvals are not required, or applicable laws, regulations, or interpretations change such that we are required to obtain approval in the future, we may be subject to an investigation by competent regulators, fines or penalties, or an order prohibiting us from conducting an offering, and these risks could result in a material adverse change in our operations and the value of our company’s securities, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless.
Biggest changeIf we do not receive or maintain the approvals, or we inadvertently conclude that such approvals are not required, or applicable laws, regulations, or interpretations change such that we are required to obtain approval in the future, we may be subject to an investigation by competent regulators, fines or penalties, or an order prohibiting us from conducting an offering, and these risks could result in a material adverse change in our operations and the value of our company’s securities, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless. 37 As of the date of this annual report, we have not received any inquiry, notice, warning, sanctions or regulatory objection to our operations from the CSRC, CAC or any other PRC governmental authorities, and our PRC Subsidiaries and the VIE have obtained all requisite permissions from PRC governmental authorities to operate our business as currently conducted under relevant PRC laws and regulations and no permissions have been denied by governmental authorities.
While such rules have become into effect, the Chinese government may exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers, which could significantly limit or completely hinder our ability to continue to offer our securities to investors and could cause the value of our securities to significantly decline or become worthless ” 37 We believe that, as of the date of this annual report, we are not required to obtain any permission from PRC authorities to operate and issue securities to foreign investors, including permissions from the CSRC or CAC.
While such rules have become into effect, the Chinese government may exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers, which could significantly limit or completely hinder our ability to continue to offer our securities to investors and could cause the value of our securities to significantly decline or become worthless ” We believe that, as of the date of this annual report, we are not required to obtain any permission from PRC authorities to operate and issue securities to foreign investors, including permissions from the CSRC or CAC.
While we have not detected any significant deficiency or material weakness in our internal control and with respect to the assessment of the internal control for the year ended December 31, 2023, we cannot guarantee the implementation of controls and procedures in future years to be without any significant deficiency or material weakness.
While we have not detected any significant deficiency or material weakness in our internal control and with respect to the assessment of the internal control for the year ended December 31, 2024, we cannot guarantee the implementation of controls and procedures in future years to be without any significant deficiency or material weakness.
All of our operations are conducted in the PRC and all of our revenue is generated from sales in the PRC. Although the PRC economy has grown significantly in recent years, we cannot assure you that this growth will continue. In 2023, China’s Gross Domestic Product (“GDP”) growth rate was 5.2% as compared to 3.0% in 2022.
All of our operations are conducted in the PRC and all of our revenue is generated from sales in the PRC. Although the PRC economy has grown significantly in recent years, we cannot assure you that this growth will continue. In 2024, China’s Gross Domestic Product (“GDP”) growth rate was 5.0% as compared to 5.2% in 2023.
The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. According to the Bureau of the Fiscal Service, as of December 31, 2023, $1 is converted into 7.0827 Yuan (RMB).
The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. According to the Bureau of the Fiscal Service, as of December 31, 2024, $1 is converted into 7.1884 Yuan (RMB).
Our officers and directors control us through their positions and stock ownership and their interests may differ from other stockholders. As of March 27, 2024, there were 10,065,920 shares of our common stock issued and outstanding. Mr. Zhenyong Liu, our Chief Executive Officer, beneficially owns approximately 5.3% of our common stock.
Our officers and directors control us through their positions and stock ownership and their interests may differ from other stockholders. As of April 11, 2025, there were 10,065,920 shares of our common stock issued and outstanding. Mr. Zhenyong Liu, our Chief Executive Officer, beneficially owns approximately 5.3% of our common stock.
Under the new policy, the Renminbi is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. This change in policy resulted in an approximately 4.55% appreciation of the Renminbi against the U.S. dollar as of December 31, 2023.
Under the new policy, the Renminbi is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. This change in policy resulted in an approximately 2.9% appreciation of the Renminbi against the U.S. dollar as of December 31, 2024.
Thus, if Dongfang Paper has RMB1,000,000 in assets and Renminbi is depreciated against the U.S. dollar by 15%, then the assets will be valued at $122,773 as opposed to $141,189 prior to the depreciation. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S. dollar.
Thus, if Dongfang Paper has RMB1,000,000 in assets and Renminbi is depreciated against the U.S. dollar by 15%, then the assets will be valued at $120,968 as opposed to $139,113 prior to the depreciation. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S. dollar.
Thus, if we raise 1,000,000 U.S. dollars and the Renminbi appreciates against the U.S. dollar by 15%, then the proceeds will be worth only RMB6,020,295 as opposed to RMB 7,082,700 prior to the appreciation.
Thus, if we raise 1,000,000 U.S. dollars and the Renminbi appreciates against the U.S. dollar by 15%, then the proceeds will be worth only RMB 6,110,140 as opposed to RMB 7,188,400 prior to the appreciation.
For the year ended December 31, 2023, the cash flows occurred between IT Tech Packaging, its subsidiaries and the VIE included (i) loans in the amount of $4,233,999 provided by Baoding Shengde to Tengsheng Paper; (ii) loans in the amount of $2,822,666 provided by Baoding Shengde to Dongfang Paper; (iii) the payment in the amount of 5,468,122 made by Dongfang Paper to Baoding Shengde for purchase of raw materials; and (iv) funding through Shengde Holdings Inc. to Qianrong, with an amount of $500,000 as capital contributions.
For the year ended December 31, 2024, the cash flows occurred between IT Tech Packaging, its subsidiaries and the VIE included (i) loans in the amount of $1,059,480 provided by Dongfang Paper to Baoding Shengde; and (ii) repayment of shareholder loans in the total amount of $727,433 on behalf of IT Tech Packaging Inc.
Removed
As of the date of this annual report, we have not received any inquiry, notice, warning, sanctions or regulatory objection to our operations from the CSRC, CAC or any other PRC governmental authorities, and our PRC Subsidiaries and the VIE have obtained all requisite permissions from PRC governmental authorities to operate our business as currently conducted under relevant PRC laws and regulations and no permissions have been denied by governmental authorities.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of December 31, 2023, our facilities include a total of nine production lines, among which PM7 is currently idle and under renovation, and each PM4 and PM5 (both for digital photo paper) has been suspended, nine warehouses, two office buildings, two cafeterias, and five dormitories.
Biggest changeAs of December 31, 2024, our facilities include a total of nine production lines, among which PM7 is currently idle and under renovation, and each PM4 and PM5 (both for digital photo paper) has been suspended, nine warehouses, two office buildings, two cafeterias, and five dormitories.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+7 added−1 removed3 unchanged
Biggest changeDiscovery is continuing. The ultimate resolution of the proceedings may have a material adverse impact on our business, financial condition, results of operations or cash flows. Failure to settle the proceedings or other unfavorable outcomes in this proceedings could result in significant damages, additional penalties or other remedies imposed against the Company.
Biggest changeFailure to settle the proceedings or other unfavorable outcomes in this proceedings could result in significant damages, additional penalties or other remedies imposed against the Company. Litigation of this kind could result in substantial costs and a diversion of our management’s attention and resources.
Litigation of this kind could result in substantial costs and a diversion of our management’s attention and resources. It could also result in our reputation being harmed and our stock price could decline as a result of allegations made in the course of the proceedings, regardless of the truthfulness of the allegations. Item 4.
It could also result in our reputation being harmed and our stock price could decline as a result of allegations made in the course of the proceedings, regardless of the truthfulness of the allegations. Item 4. Mine Safety Disclosures Not Applicable. 46 PART II
Removed
Mine Safety Disclosures Not Applicable. 46 PART II
Added
Discovery is continuing. The Court issued a Status Conference Order (the “Order”) dated April 15, 2024.
Added
According to the Order, the Court ordered that the Company has failed to appear and is in default, and that pursuant to the warning given in the Court’s order dated March 22, 2024, the Company’s default renders its answer subject to being stricken, and accordingly the answer of the Company was stricken.
Added
On April 18, 2024, FT Global filed a notice of motion for default judgment against the Company. By an order dated August 20, 2024, the Court granted the plaintiff’s default motion on the issue of liability, with damages to be determined by a referee.
Added
The Company then moved to vacate the order dated August 20, 2024, but the Court denied the Company’s motion on November 1, 2024, stating that the excuse proffered by the Company as to the reason it did not retain counsel in a timely fashion was not sufficient.
Added
In November 2023, an individual plaintiff involved in a civil loan dispute filed a lawsuit against the defendants including Tengsheng Paper and Jie Ping, who served as the executive director and the legal representative of Tengsheng Paper, at the Lianchi District People’s Court of Baoding City, China (the “PRC Court”).
Added
On December 1, 2023, the plaintiff sought property preservation measures, requesting the PRC Court to freeze RMB6.70 million worth of bank deposits held by Jie Ping and Tengsheng Paper. Following this request, on the same day, the PRC Court issued a ruling to immediately freeze the RMB3.35 million worth of bank deposits of Jie Ping and Tengsheng Paper.
Added
On June 14, 2024, the PRC Court ordered the defendants to repay the principal of the loan in the amount of RMB3,320,000 to the plaintiff, and Tengsheng Paper was jointly liable for repayment. The ultimate resolution of the proceedings may have a material adverse impact on our business, financial condition, results of operations or cash flows.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers None. Item 6. [Reserved] 47
Biggest changeSecurity Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ” for the aggregate information regarding our equity compensation plans in effect on December 31, 2024. Recent Sales of Unregistered Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Item 6. [Reserved] 47
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information IT Tech Packaging’s common stock is traded on the NYSE American under the symbol “ITP”. Holders As of March 27, 2024, we had approximately 11,000 shareholders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information IT Tech Packaging’s common stock is traded on the NYSE American under the symbol “ITP”. Holders As of April 11, 2025, we had approximately 10,000 shareholders of record of our common stock.
Future declaration of dividends will depend on, among other things, the Company’s results of operations, capital requirements, financial condition and on such other factors as the Company’s Board of Directors may in its discretion consider relevant and in the best long term interest of the shareholders.
Future declaration of dividends will depend on, among other things, the Company’s results of operations, capital requirements, financial condition and on such other factors as the Company’s Board of Directors may in its discretion consider relevant and in the best long term interest of the shareholders. Securities Authorized for Issuance Under Equity Compensation Plans See “Item 12.
Removed
Equity Compensation Plan Information 2021 Incentive Stock Plan On November 12, 2021, the Company’s Annual General Meeting adopted and approved the 2021 Omnibus Equity Incentive Plan of IT Tech Packaging, Inc.(the”2021 Plan”).
Removed
Under the 2021 ISP, the Company has reserved a total of 150,000 shares of common stock for issuance as or under awards to be made to the directors, officers, employees and/or consultants of the Company and its subsidiaries.
Removed
All shares of common stock under the 2021 ISP, including shares originally authorized by equity holders and shares remaining for future issuance as of December 31, 2022, have been issued. 2023 Incentive Stock Plan On October 31, 2023, the Company’s Annual General Meeting adopted and approved the 2023 Omnibus Equity Incentive Plan of IT Tech Packaging, Inc.(the”2023 Plan”).
Removed
Under the 2023 ISP, the Company has reserved a total of 1,500,000 shares of common stock for issuance as or under awards to be made to the directors, officers, employees and/or consultants of the Company and its subsidiaries.
Removed
All shares of common stock under the 2023 ISP, including shares originally authorized by equity holders and shares remaining for future issuance as of December 31, 2023, have been reserved.
Removed
Equity Compensation Plan The following table provides information as of December 31, 2023 about our equity compensation plan and arrangements: Plan category Number of securities to be issued upon exercise of outstanding options and restricted stock units Weighted- average exercise price of outstanding options, and restricted stock units Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by security holders - $ - - Equity compensation plans not approved by security holders - - - Total $ Recent Sales of Unregistered Securities None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe changes in revenue and quantity sold for the year ended December 31, 2023 and 2022 are summarized as follows: Year Ended December 31, 2023 Year Ended December 31, 2022 Change in Percentage Change Quantity (Tonne) Amount Quantity (Tonne) Amount Quantity (Tonne) Amount Quantity Amount Sales Revenue Regular CMP 182,870 $ 67,371,471 180,977 $ 82,297,055 1,893 $ (14,925,584 ) 1.05 % -18.14 % Light-Weight CMP 40,953 $ 14,520,205 37,354 $ 16,428,354 3,599 $ (1,908,149 ) 9.63 % -11.61 % Total CMP 223,823 $ 81,891,676 218,331 $ 98,725,409 5,492 $ (16,833,733 ) 2.52 % -17.05 % Offset Printing Paper 5,573 $ 3,215,190 - $ - 5,573 $ 3,215,190 - % - % Tissue Paper Products 1,205 $ 1,305,192 1,273 $ 1,356,255 (68 ) $ (51,063 ) -5.34 % -3.76 % Total CMP, Offset Printing Paper and Tissue Paper Revenue 230,601 $ 86,412,058 219,604 $ 100,081,664 10,997 $ (13,669,606 ) 5.01 % -13.66 % 48 Monthly revenue (excluding revenue of digital photo paper and tissue paper products) for the 24 months ended December 31, 2023, are summarized below: The average selling price, or ASP, for our major products for the years ended December 31, 2023 and 2022 are summarized as follows: Offset Printing Paper ASP Regular CMP ASP Light- Weight CMP ASP Tissue Paper Products ASP Year Ended December 31, 2023 $ 577 $ 368 $ 355 $ 1083 Year Ended December 31, 2022 $ - $ 455 $ 440 $ 1065 Increase (Decrease) from comparable period in the previous year $ 577 $ (87 ) $ (85 ) $ 18 Increase (Decrease) by percentage - % -19.12 % -19.32 % 1.69 % The following is a chart showing the month-by-month ASPs for the 24 month period ended December 31, 2023: 49 Corrugating Medium Paper Revenue from CMP amounted to $81,891,676 (94.77% of the total offset printing paper, CMP and tissue paper products revenues) for the year ended December 31, 2023, representing a decrease of $16,833,733, or 17.05%, from $98,725,409 during 2022.
Biggest changeThe changes in revenue and quantity sold for the year ended December 31, 2024 and 2023 are summarized as follows: Year Ended December 31, 2024 Year Ended December 31, 2023 Change in Percentage Change Sales Revenue Quantity (Tonne) Amount Quantity (Tonne) Amount Quantity (Tonne) Amount Quantity Amount Regular CMP 182,972 $ 63,196,615 182,870 $ 67,371,471 102 $ (4,174,856 ) 0.06 % (6.20 )% Light-Weight CMP 37,580 $ 12,505,812 40,953 $ 14,520,205 (3,373 ) $ (2,014,393 ) (8.24 )% (13.87 )% Total CMP 220,552 $ 75,702,427 223,823 $ 81,891,676 (3,271 ) $ (6,189,249 ) (1.46 )% (7.56 )% Offset Printing Paper - $ - 5,573 $ 3,215,190 (5,573 ) $ (3,215,190 ) (100.00 )% (100.00 )% Tissue Paper Products - $ - 1,205 $ 1,305,192 (1,205 ) $ (1,305,192 ) (100.00 )% (100.00 )% Total CMP, Offset Printing Paper and Tissue Paper Revenue 220,552 $ 75,702,427 230,601 $ 86,412,058 (10,049 ) $ (10,709,631 ) (4.36 )% (12.39 )% 48 Monthly revenue (excluding revenue of digital photo paper and tissue paper products) for the 24 months ended December 31, 2024, are summarized below: The average selling price, or ASP, for our major products for the years ended December 31, 2024 and 2023 are summarized as follows: Offset Printing Paper ASP Regular CMP ASP Light-Weight CMP ASP Tissue Paper Products ASP Year Ended December 31, 2024 $ - $ 345 $ 333 $ - Year Ended December 31, 2023 $ 577 $ 368 $ 355 $ 1083 Decrease from comparable period in the previous year $ (577 ) $ (23 ) $ (22 ) $ (1083 ) Decrease by percentage - % (6.25 )% (6.20 )% - % The following is a chart showing the month-by-month ASPs for the 24 month period ended December 31, 2024: 49 Corrugating Medium Paper Revenue from CMP amounted to $75,702,427 (100.00% of the total offset printing paper, CMP and tissue paper products revenues) for the year ended December 31, 2024, representing a decrease of $6,189,249, or 7.56%, from $81,891,676 during 2023.
On December 5, 2023, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 3 years, which was due in various installments from June 21, 2024 to December 5, 2026. The loan was guaranteed by an independent third party.
On December 5, 2023, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 3 years, which was due in various installments from June 21, 2024 to December 5, 2026. The loan is guaranteed by an independent third party.
Although we do not rely on imported recycled paper, the pricing of which tends to be more volatile than domestic recycled paper, our experience suggests that the pricing of domestic recycled paper bears some correlation to the pricing of imported recycled paper. 51 The pricing trends of our major raw materials for the 24-month period from January 2022 to December 2023 are shown below: Electricity and gas are our two main energy sources.
Although we do not rely on imported recycled paper, the pricing of which tends to be more volatile than domestic recycled paper, our experience suggests that the pricing of domestic recycled paper bears some correlation to the pricing of imported recycled paper. 51 The pricing trends of our major raw materials for the 24-month period from January 2023 to December 2024 are shown below: Electricity and gas are our two main energy sources.
Capital Expenditure Commitment as of December 31, 2023 On May 5, 2020, the Company announced it planned the commercial launch of a new tissue paper production line PM10 and the Company signed an agreement to purchase paper machine with paper machine supplier. The Company expected the new tissue paper production line to be launched after the completion of trial run.
Capital Expenditure Commitment as of December 31, 2024 On May 5, 2020, the Company announced it planned the commercial launch of a new tissue paper production line PM10 and the Company signed an agreement to purchase paper machine with paper machine supplier. The Company expected the new tissue paper production line to be launched after the completion of trial run.
Zhenyong Liu, which were recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet as of December 31, 2023, and 2022, respectively. 58 On December 10, 2014, Mr.
Zhenyong Liu, which were recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet as of December 31, 2024, and 2023, respectively. 58 On December 10, 2014, Mr.
The loan was renewed on March 22, 2021 and December 24, 2021 and extended for additional 3 years in total, which will be due on December 11, 2024 according to the new schedule. The loan is secured by Tengsheng Paper with its land use right as collateral for the benefit of the credit union.
The loan was renewed on March 22, 2021 and December 24, 2021 and extended for additional 3 years in total, which was due on December 11, 2024 according to the new schedule. The loan was secured by Tengsheng Paper with its land use right as collateral for the benefit of the credit union.
Zhenyong Liu renewed the three-year term loan previously entered on January 1, 2010, and extended the maturity date further to December 31, 2015. On December 31, 2015, the Company paid off the loan of $2,249,279, together with interest of $391,374 for the period from 2013 to 2015. Approximately $361,915 and $368,052 of interest were outstanding to Mr.
Zhenyong Liu renewed the three-year term loan previously entered on January 1, 2010, and extended the maturity date further to December 31, 2015. On December 31, 2015, the Company paid off the loan of $2,249,279, together with interest of $391,374 for the period from 2013 to 2015. Approximately $356,594 and $361,915 of interest were outstanding to Mr.
Out of the total outstanding loan balance, current portion amounted was $1,269,290, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of $2,259,025 is presented as non-current liabilities in the consolidated balance sheet as of December 31, 2023. 57 On April 17, 2019, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 2 years, which was due and payable in various installments from August 21, 2019 to April 16, 2021.
Out of the total outstanding loan balance, current portion amounted was $2,641,756 and $1,269,290, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of $834,678 and $2,259,025 is presented as non-current liabilities in the consolidated balance sheet as of December 31, 2024 and 2023, respectively. 57 On April 17, 2019, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 2 years, which was due and payable in various installments from August 21, 2019 to April 16, 2021.
Out of the total outstanding loan balance, current portion amounted was $1,284,820, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of $1,256,584 is presented as non-current liabilities in the consolidated balance sheet as of December 31, 2023.
Out of the total outstanding loan balance, current portion amounted was $nil and $1,284,820, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of $nil and $1,256,584 is presented as non-current liabilities in the consolidated balance sheet as of December 31, 2024 and 2023, respectively.
The loan is secured by certain of the Company’s manufacturing equipment with net book value of $nil and $280,466 as of December 31, 2023 and 2022, respectively. Interest payment is due monthly and bore a rate of 7.68% per annum. Effective from November 15, 2022, the interest rate was reduced to 7% per annum.
The loan is secured by certain of the Company’s manufacturing equipment with net book value of $nil as of December 31, 2024 and 2023. Interest payment is due monthly and bore a rate of 7.68% per annum. Effective from November 15, 2022, the interest rate was reduced to 7% per annum.
Off-Balance Sheet Arrangements We were the guarantor for Baoding Huanrun Trading Co., for its long-term bank loans in an amount of $4,376,862 (RMB31,000,000), which matures at various times in 2028. Baoding Huanrun Trading Co. is one of our major suppliers of raw materials.
Off-Balance Sheet Arrangements We were the guarantor for Baoding Huanrun Trading Co., for its long-term bank loans in an amount of $4,312,503 (RMB31,000,000), which matures at various times in 2028. Baoding Huanrun Trading Co. is one of our major suppliers of raw materials.
Under ASC Topic 830-30, all assets and liabilities are translated into United States dollars using the current exchange rate at the end of each fiscal period. The current exchange rates used by the Company as of December 31, 2023 and 2022 to translate the Chinese RMB to the U.S. Dollars are 7.0827:1 and 6.9646:1, respectively.
Under ASC Topic 830-30, all assets and liabilities are translated into United States dollars using the current exchange rate at the end of each fiscal period. The current exchange rates used by the Company as of December 31, 2024 and 2023 to translate the Chinese RMB to the U.S. Dollars are 7.1884:1 and 7.0827:1, respectively.
As of December 31, 2023, we had approximately $3.5 million in capital expenditure commitments that were mainly related to the purchase of paper machine of PM10. The infrastructure work of PM10 has been completed and the associated ancillary facilities are working in progress.
As of December 31, 2024, we had approximately $3.4 million in capital expenditure commitments that were mainly related to the purchase of paper machine of PM10. The infrastructure work of PM10 has been completed and the associated ancillary facilities are working in progress.
The loan is secured by Dongfang Paper with its land use right as collateral for the benefit of the credit union. Interest payment is due monthly and bore a rate of 7% per annum. As of December 31, 2023, the total outstanding loan balance was $2,541,404.
The loan is secured by Dongfang Paper with its land use right as collateral for the benefit of the credit union. Interest payment is due monthly and bore a rate of 7% per annum. The loan was repaid in July 2024. As of December 31, 2024 and 2023, the total outstanding loan balance was $nil and $2,541,404.
In connection with the sale of the Industrial Buildings, Hebei Fangsheng agreed to lease the Industrial Buildings back to the Company for its original use for a term of up to three years, with an annual rental payment of approximately $141,727 (RMB1,000,000).
In connection with the sale of the Industrial Buildings, Hebei Fangsheng agreed to lease the Industrial Buildings back to the Company for its original use for a term of up to three years, with an annual rental payment of approximately $140,515 (RMB1,000,000).
These changes (in US dollars) represent a year-over-year decrease of 23.60% for the unit purchase cost of recycled paper board. We use domestic recycled paper (sourced mainly from the Beijing-Tianjin metropolitan area) exclusively.
These changes (in US dollars) represent a year-over-year decrease of 10.47% for the unit purchase cost of recycled paper board. We use domestic recycled paper (sourced mainly from the Beijing-Tianjin metropolitan area) exclusively.
The loan was renewed on March 22, 2021 and December 24, 2021 and extended for additional 3 years in total, which will be due on April 16, 2024 according to the new schedule. The loan is secured by Tengsheng Paper with its land use right as collateral for the benefit of the credit union.
The loan was renewed on March 22, 2021, December 24, 2021 and April 16, 2024 and extended for additional 5 years in total, which is due on April 15, 2026 according to the new schedule. The loan was secured by Tengsheng Paper with its land use right as collateral for the benefit of the credit union.
During the year of 2016, the Company repaid $6,012,416 to Mr. Zhenyong Liu, together with interest of $288,596. In February 2018, the company paid off the remaining balance, together with interest of $20,400. As of December 31, 2023, and 2022, approximately $42,357 and $43,075 of interest were outstanding to Mr.
During the year of 2016, the Company repaid $6,012,416 to Mr. Zhenyong Liu, together with interest of $288,596. In February 2018, the company paid off the remaining balance, together with interest of $20,400. As of December 31, 2024, and 2023, approximately $41,734 and $42,357 of interest were outstanding to Mr.
Revenues and expenses are translated using the prevailing average exchange rates at 7.0558:1, and 6.7573:1 for the years ended December 31, 2023 and 2022, respectively. Translation adjustments are included in other comprehensive income (loss).
Revenues and expenses are translated using the prevailing average exchange rates at 7.1167:1, and 7.0558:1 for the years ended December 31, 2024 and 2023, respectively. Translation adjustments are included in other comprehensive income (loss).
As of December 2023, and 2022, the outstanding interest was $194,047 and $197,338, respectively, which was recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet. As of December 31, 2023, and 2022, total amount of loans due to Mr. Zhenyong Liu were $nil.
As of December 2024, and 2023, the outstanding interest was $191,193 and $194,047, respectively, which was recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet. As of December 31, 2024, and 2023, total amount of loans due to Mr. Zhenyong Liu were $nil.
Changes in various asset and liability account balances throughout the year ended December 31, 2023 also contributed to the net change in cash from operating activities in year ended December 31, 2023. Chief among such changes is the decrease of accounts receivable in the amount of $280,970 during the year of 2023.
Changes in various asset and liability account balances throughout the year ended December 31, 2024 also contributed to the net change in cash from operating activities in year ended December 31, 2024. Chief among such changes is the decrease of accounts receivable in the amount of $240,346 during the year of 2024.
Out of the total outstanding loan balance, current portion amounted $225,903, which is presented as current liabilities and the remaining balance of $ 988,323 is presented as non-current liabilities in the consolidated balance sheet as of December 31, 2023.
Out of the total outstanding loan balance, current portion amounted $918,146 and $225,903, which is presented as current liabilities and the remaining balance of $278,226 and $988,323 is presented as non-current liabilities in the consolidated balance sheet as of December 31, 2024 and 2023, respectively.
Average cost of sales per tonne for CMP decreased by 16.55%, from $417 for the year ended December 31, 2022, to $348 in 2023. This was mainly attributable to the lower average unit purchase costs (net of applicable value added tax) of recycled paper board.
Average cost of sales per tonne for CMP decreased by 9.77%, from $348 for the year ended December 31, 2023, to $314 in 2024. This was mainly attributable to the lower average unit purchase costs (net of applicable value added tax) of recycled paper board.
Net cash used in investing activities We incurred $22,239,297 in net cash expenditures for investing activities during the year ended December 31, 2023, as compared to $10,898,531 for the year ended December 31, 2022. Payments in 2023 were mainly for the payment for Land Use Right. iii.
Net cash used in investing activities We incurred $329,611 in net cash expenditures for investing activities during the year ended December 31, 2024, as compared to $22,239,297 for the year ended December 31, 2023. Payments in 2023 were mainly for the payment for land use right. iii.
Total interest expenses for the short-term bank loans and long-term loans for the years ended December 31, 2023, and 2022 were $977,678 and $988,997 respectively. Related party transactions Mr. Zhenyong Liu has loaned money to Dongfang Paper for working capital purposes over a period of time. On January 1, 2013, Dongfang Paper and Mr.
Total interest expenses for the short-term bank loans and long-term loans for the years ended December 31, 2024, and 2023 were $762,377 and $977,678, respectively. Shareholder Loans Mr. Zhenyong Liu has loaned money to Dongfang Paper for working capital purposes over a period of time. On January 1, 2013, Dongfang Paper and Mr.
The interest expense incurred for such related party loans are $nil for the years ended December 31, 2023, and 2022. The accrued interest owe to Mr. Zhenyong Liu was approximately $598,319 and $608,465, as of December 31, 2023 and 2022, respectively, which was recorded in other payables and accrued liabilities.
The interest expense incurred for such related party loans were $nil for the years ended December 31, 2024, and 2023. The net interest owe to Mr. Zhenyong Liu was approximately $304,600 and $598,319, as of December 31, 2024, and 2023, respectively, which was recorded in other payables and accrued liabilities.
There was also an increase of $736,267 in the ending inventory balance as of December 31, 2023 (a decrease to net cash for the year ended December 31, 2023 cash flow purposes). In addition, the Company had non-cash expenses relating to depreciation and amortization in the amount of $14,225,990.
There was also a decrease of $432,189 in the ending inventory balance as of December 31, 2024 (an increase to net cash for the year ended December 31, 2024 cash flow purposes). In addition, the Company had non-cash expenses relating to depreciation and amortization in the amount of $14,221,082.
Net cash provided by financing activities Net cash provided by financing activities was $4,410,099 for the year ended December 31, 2023, as compared to net cash used in financing activities in the amount of $879,596 for the year ended December 31, 2022.
Net cash (used in) provided by financing activities Net cash used in financing activities was $3,256,696 for the year ended December 31, 2024, as compared to net cash provided by financing activities in the amount of $4,410,099 for the year ended December 31, 2023.
Interest payment was due monthly and bore a rate of 7% per annum. As of December 31, 2023, total outstanding loan balance was $1,214,226.
Interest payment is due monthly and bears a rate of 7% per annum. As of December 31, 2024 and 2023, total outstanding loan balance was $1,196,372 and $1,214,226, respectively.
ASP in RMB for light-weight CMP in 2022 and 2023 was RMB2,972 and RMB2,502, respectively, representing a 15.82% decrease. The quantity of light-weight CMP sold increased by 3,599 tonnes, from 37,354 tonnes in 2022, to 40,953 tonnes in 2023. Our PM6 production line, which produces regular CMP, has a designated capacity of 360,000 tonnes /year.
ASP in RMB for light-weight CMP in 2023 and 2024 was RMB2,502 and RMB2,368, respectively, representing a 5.36% decrease. The quantity of light-weight CMP sold decreased by 3,373 tonnes, from 40,953 tonnes in 2023, to 37,580 tonnes in 2024. Our PM6 production line, which produces regular CMP, has a designated capacity of 360,000 tonnes /year.
Electricity and gas accounted for approximately 5% and 15.3% of total sales in 2023, respectively, compared to 4% and 12.4% of total sales 2022.
Electricity and gas accounted for approximately 5% and 13.6% of total sales in 2024, respectively, compared to 5% and 15.3% of total sales in 2023.
Cost of sales for offset printing paper was $3,134,832 for the year ended December 31, 2023. Cost of sales for tissue paper products was $4,318,339 for the year ended December 31, 2023, as compared to $4,290,443 in 2022.
Cost of sales for offset printing paper was $nil for the year ended December 31, 2024, as compared to $3,137,646 in 2023. Cost of sales for tissue paper products was $nil for the year ended December 31, 2024, as compared to $4,318,339 in 2023.
Gross profit margin for light-weight CMP for the year ended December 31, 2023 was 2.59%, or 6.83 percentage points lower, as compared to gross profit margin of 9.42% for the year ended December 31, 2022. Such decrease was primarily due to the decrease in ASP of light-weight CMP, partially offset by the decrease in material costs.
Gross profit margin for light-weight CMP for the year ended December 31, 2024 was 8.03%, or 5.44 percentage points higher, as compared to gross profit margin of 2.59% for the year ended December 31, 2023. Such increase was primarily due to the decrease in material costs, partially offset by the decrease in ASP of light-weight CMP.
Gross profit margin for regular CMP for the year ended December 31, 2023 was 5.27%, or 2.12 percentage points lower, as compared to gross profit margin of 7.39% for the year ended December 31, 2022. Such decrease was primarily due to the decrease in ASP of regular CMP, partially offset by the decrease in material costs.
Gross profit margin for regular CMP for the year ended December 31, 2024 was 8.79%, or 3.52 percentage points higher, as compared to gross profit margin of 5.27% for the year ended December 31, 2023. Such increase was primarily due to the decrease in material costs, partially offset by the decrease in ASP of regular CMP.
On September 15, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $2,824 as of December 31, 2023. The loan bears a fixed interest rate of 3.45% per annum. The loan will be due by September 14, 2024.
The loan bears a fixed rate of 6% and is due for repayment by December 23, 2025. On September 15, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $2,824 as of December 31, 2024 and 2023, respectively. The loan bore a fixed interest rate of 3.45% per annum.
As of December 31, 2023 and 2022, the total outstanding loan balance was $3,528,315 and $3,589,582.
As of December 31, 2024 and 2023, the total outstanding loan balance was $3,476,434 and $3,528,315.
On July 15, 2013, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 5 years, which was originally due and payable in various installments from December 21, 2013 to July 26, 2018.
Long-term loans As of December 31, 2024, and 2023, long-term loan balance is $4,672,806 and $11,378,429, respectively. On July 15, 2013, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 5 years, which was originally due and payable in various installments from December 21, 2013 to July 26, 2018.
The decrease of cash and cash equivalents for the year ended December 31, 2023 was attributable to a number of factors including: i. Net cash provided by operating activities Net cash provided by operating activities was $12,871,086 for the year ended December 31, 2023.
The increase of cash and cash equivalents for the year ended December 31, 2024 was attributable to a number of factors including: i. Net cash provided by operating activities Net cash provided by operating activities was $6,299,469 for the year ended December 31, 2024.
The decrease was mainly the result of the factors discussed above. The overall gross profit margin for offset printing paper, CMP and tissue paper products decreased by 3.54 percentage points, from 4.69% for the year ended December 31, 2022, to 1.15 for the year ended December 31, 2023.
The increase was mainly the result of the factors discussed above. The overall gross profit margin for offset printing paper, CMP and tissue paper products increased by 7.51 percentage points, from 1.15% for the year ended December 31, 2023, to 8.66% for the year ended December 31, 2024.
On September 22, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 350,149 as of December 31, 2023. The loan bears a fixed interest rate of 3.45% per annum. The loan will be due by September 21, 2024.
On September 22, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $350,149 as of December 31, 2024 and 2023, respectively. The loan bore a fixed interest rate of 3.45% per annum. The loan was repaid in June 2024.
The Company also had a net decrease of $9,322,532 in prepayment and other current assets (an increase to net cash) and a net decrease of $999,812 in other payables and accrued liabilities and related parties (a decrease to net cash), as well as a decrease in income tax payable of $412,504 (a decrease to net cash) during the year ended December 31, 2023. ii.
The Company also had a net increase of $6,090 in prepayment and other current assets (a decrease to net cash) and a net decrease of $447,899 in other payables and accrued liabilities and related parties (a decrease to net cash), as well as an increase in income tax payable of $81,720 (an increase to net cash) during the year ended December 31, 2024. 55 ii.
On September 22, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 70,594 as of December 31, 2023. The loan bears a fixed interest rate of 3.45% per annum. The loan will be due by September 21, 2024.
On June 21, 2024, the Company entered into a working capital loan agreement with the ICBC, with a balance of $139,113 as of December 31, 2024. The loan bears a fixed interest rate of 3.45% per annum. The loan is due for repayment by June 21, 2025.
As of December 31, 2022, there were guaranteed short-term borrowings of $5,023,978 and unsecured bank loans of $574,333. As of December 31, 2023, there were guaranteed short-term borrowings of $nil and unsecured bank loans of $423,567. The average short-term borrowing rates for the years ended December 31, 2023, and 2022 were approximately 4.48% and 4.72%, respectively.
As of December 31, 2024, there were guaranteed short-term borrowings of $2,225,808 and unsecured bank loans of $417,339. As of December 31, 2023, there were guaranteed short-term borrowings of $nil and unsecured bank loans of $423,567. The average short-term borrowing rates for the years ended December 31, 2024, and 2023 were approximately 4.6% and 4.48%, respectively.
Monthly gross profit margins for our corrugating medium paper and offset printing paper for the 24-month period ended December 31, 2023 are as follows: Face Masks Gross loss for face mask for the year ended December 31, 2023 was $11,127, representing a gross margin of -10.49% compared with a gross profit of $67,328, representing a gross margin of 26.11%, for the year ended December 31, 2022.
Monthly gross profit margins for our corrugating medium paper and offset printing paper for the 24-month period ended December 31, 2024 are as follows: Face Masks Gross loss for face mask for the year ended December 31, 2024 and 2023 was $nil and $11,127, respectively.
The Company had short-term and long-term interest-bearing loans and lease obligation that aggregated $12,386,346 as of December 31, 2023, as compared to $15,442,807 as of December 31, 2022. Provision for Income Taxes Full allowance for deferred tax asset loss was provided in the year of 2023 and 2022.
The Company had short-term and long-term interest-bearing loans that aggregated $9,124,422 as of December 31, 2024, as compared to $11,801,996 as of December 31, 2023. Provision for Income Taxes Full allowance for deferred tax asset loss was provided in the year of 2024 and 2023.
The utilization rates for the year ended December 31, 2023 and 2022 were 51.98% and 49.28%, respectively, representing an increase of 2.70%.
The utilization rates for the year ended December 31, 2024 and 2023 were 49.75% and 51.98%, respectively, representing a decrease of 2.23%.
The decrease was primarily due to the decrease in gross profit and recognition of impairment and disposal loss on assets, partially offset by the decrease in selling, general and administrative expenses. 53 Other Income and Expenses Interest expense for the year ended December 31, 2023 decreased by $43,433, from $1,027,951 for the year ended December 31, 2022, to $984,518.
The decrease was primarily due to the increase in gross profit, partially offset by the increase in selling, general and administrative expenses. 53 Other Income and Expenses Interest expense for the year ended December 31, 2024 decreased by $222,141, from $984,518 for the year ended December 31, 2023, to $762,377.
We sold 223,823 tonnes of CMP in the year ended December 31, 2023 as compared to 218,331 tonnes in the year ended December 31, 2022, representing a 2.52% increase in quantity sold. ASP for regular CMP dropped from $455/tonne in 2022 to $368/tonne in 2023, representing a 19.12% decrease.
We sold 220,552 tonnes of CMP in the year ended December 31, 2024 as compared to 223,823 tonnes in the year ended December 31, 2023, representing a 1.46% decrease in quantity sold. ASP for regular CMP dropped from $368/tonne in 2023 to $345/tonne in 2024, representing a 6.25% decrease.
Total quantities of offset printing paper, CMP and tissue paper products sold during the year ended December 31, 2023 amounted to 230,601 tonnes, an increase of 10,997 tonnes, or 5.01%, compared to 219,604 tonnes sold during the year ended December 31, 2022.
Total quantities of offset printing paper, CMP and tissue paper products sold during the year ended December 31, 2024 amounted to 220,552 tonnes, a decrease of 10,049 tonnes, or 4.36%, compared to 230,601 tonnes sold during the year ended December 31, 2023.
This was mainly due to the decrease in ASP of CMP, partially offset by increase in sales volume of regular CMP, light-weight CMP and offset printing paper.
This was mainly due to the decrease in ASPs of CMP and the decrease in sales volume of offset printing paper and tissue paper products.
Revenue of Offset Printing Paper, Corrugating Medium Paper and Tissue Paper Products Revenue from sales of offset printing paper, CMP and tissue paper products for the year ended December 31, 2023 was $86,412,058, a decrease of $13,669,606, or 13.66%, from $100,081,664 for the year ended December 31, 2022.
Revenue of Offset Printing Paper, Corrugating Medium Paper and Tissue Paper Products Revenue from sales of offset printing paper, CMP and tissue paper products for the year ended December 31, 2024 was $75,702,427, a decrease of $10,709,631, or 12.39%, from $86,412,058 for the year ended December 31, 2023.
The monthly energy cost (electricity and gas) as a percentage of total monthly sales of our main paper products for the 24 months ended December 31, 2023are summarized as follows: Gross Profit Gross profit for December 31, 2023 was $999,885 (representing 1.16% of the total revenue), representing a decrease of $3,754,311, or 78.97%, from the gross profit of $4,754,196 (representing 4.74% of the total revenue) for the year ended December 31, 2022.
The monthly energy cost (electricity and gas) as a percentage of total monthly sales of our main paper products for the 24 months ended December 31, 2024 are summarized as follows: Gross Profit Gross profit for December 31, 2024 was $6,691,740 (representing 8.82% of the total revenue), representing an increase of $5,691,855, or 569.25%, from the gross profit of $999,885 (representing 1.16% of the total revenue) for the year ended December 31, 2023.
The loan was fully repaid in May 2023. 56 On November 30, 2022, the Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $143,583 as of December 31, 2023 and 2022, respectively. The loan bore an interest rate of 4.25% per annum. The loan was fully repaid in May 2023.
The loan was repaid in June 2024. 56 On September 22, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $70,594 as of December 31, 2024 and 2023, respectively. The loan bore a fixed interest rate of 3.45% per annum. The loan was repaid in June 2024.
ASP in RMB for regular CMP in 2022 and 2023 was RMB3,073 and RMB2,599, respectively, representing a 15.42% decrease. The quantity of regular CMP sold increased by 1,893 tonnes, from 180,977 tonnes in 2022 to 182,870 tonnes in 2023. ASP for light-weight CMP dropped from $440/tonne in 2022 to $355/tonne in 2023, representing a $19.32% decrease.
ASP in RMB for regular CMP in 2023 and 2024 was RMB2,599 and RMB2,458, respectively, representing a 5.43% decrease. The quantity of regular CMP sold increased by 102 tonnes, from 182,870 tonnes in 2023 to 182,972 tonnes in 2024. ASP for light-weight CMP dropped from $355/tonne in 2023 to $333/tonne in 2024, representing a $6.2% decrease.
The decrease was mainly due to the decrease in ASP of CMP, partially offset by the decrease of material costs of CMP, and (ii) the increase in material costs of tissue paper products. 52 Corrugating Medium Paper, Offset Printing Paper and Tissue Paper Products Gross profit for offset printing paper, CMP and tissue paper products for the year ended December 31, 2023 was $993,236, a decrease of $3,704,094, or 78.86%, from the gross profit of $4,697,330 for the year ended December 31, 2022.
The increase was mainly due to the decrease in unit cost of materials of CMP, partially offset by the decrease in ASP of CMP. 52 Corrugating Medium Paper, Offset Printing Paper and Tissue Paper Products Gross profit for offset printing paper, CMP and tissue paper products for the year ended December 31, 2024 was $6,556,769, an increase of $5,563,533, or 560.14%, from the gross profit of $993,236 for the year ended December 31, 2023.
Zhengyong Liu in August 2023 and the remaining balance was repaid in December 2023. Interest income of the loan for the year ended December 31, 2023 was $290,275. As of December 31, 2023, and 2022, amount due to shareholder are $727,433, which represent funds from shareholders to pay for various expenses incurred in the U.S.
As of December 31, 2024, and 2023, amount due to shareholder was $nil and $727,433, respectively, which represent funds from shareholders to pay for various expenses incurred in the U.S. The amount is due on demand with interest free.
Total quantities of CMP and offset printing paper sold increased by 11,065 tonnes in the year of 2023 as compared to 2022. We sold 1,205 tonnes of tissue paper products in the year of 2023 as opposed to 1,273 tonnes in 2022. Production of offset printing paper was resumed in May 2023.
Total quantities of CMP and offset printing paper sold decreased by 8,844 tonnes in the year of 2024 as compared to 2023. Production of CMP was suspended in January and February of 2024 and resumed in mid of March 2024, and production of offset printing paper and tissue paper products was suspended in 2024.
Cost of Sales Total cost of sales for CMP, offset printing paper and tissue paper products in the year ended December 31, 2023 was $85,418,822, a decrease of $9,965,512, or 10.45%, from $95,384,334 for the year ended December 31, 2022. This was mainly due to the decrease of material costs of CMP.
Cost of Sales Total cost of sales for CMP, offset printing paper and tissue paper products in the year ended December 31, 2024 was $69,145,658, a decrease of $16,273,164, or 19.05%, from $85,418,822 for the year ended December 31, 2023.
A summary of changes in major inventory items is as follows: December 31, December 31, 2023 2022 $ Change % Change Raw Materials Recycled paper board $ 198,744 $ 1,258,161 -1,059,417 -84.20 % Recycled white scrap paper 10,647 10,809 -162 -1.50 % Tissue base paper 21,138 60,660 -39,522 -65.15 % Gas 21,428 42,237 -20,809 -49.27 % Mask fabric and other raw materials 121,011 99,569 21,442 21.53 % Total Raw Materials 372,968 1,471,436 -1,098,468 -74.65 % Semi-finished Goods 300,207 132,810 167,397 126.04 % Finished Goods 2,885,019 1,268,376 1,616,643 127.46 % Total inventory, gross 3,558,194 2,872,622 685,572 23.87 % Inventory reserve (2,959 ) - -2,959 Total inventory, net $ 3,555,235 $ 2,872,622 682,613 23.76 % 54 Renewal of operating lease On August 7, 2013, the Company’s Audit Committee and the Board of Directors approved the sale of the land use right of the Headquarters Compound (the “LUR”), the office building and essentially all industrial-use buildings in the Headquarters Compound (the “Industrial Buildings”), and three employee dormitory buildings located within the Headquarters Compound (the “Dormitories”) to Hebei Fangsheng for cash prices of approximately $2.77 million, $1.15 million, and $4.31 million respectively.
A summary of changes in major inventory items is as follows: December 31, December 31, 2024 2023 $ Change % Change Raw Materials Recycled paper board $ 1,353,543 $ 198,744 1,154,799 581.0 % Recycled white scrap paper 10,491 10,647 (156 ) (1.5 )% Tissue base paper 20,827 21,138 (311 ) (1.5 )% Gas 16,334 21,428 (5,094 ) (23.8 )% Mask fabric and other raw materials 111,521 121,011 (9,490 ) (7.8 )% Total Raw Materials 1,512,716 372,968 1,139,748 305.6 % Semi-finished Goods 295,792 300,207 (4,415 ) (1.5 )% Finished Goods 1,269,487 2,885,019 (1,615,532 ) (56.0 )% Total inventory, gross 3,077,995 3,558,194 (480,199 ) (13.5 )% Inventory reserve (726,119 ) (2,959 ) (723,160 ) 24439.3 % Total inventory, net $ 2,351,876 $ 3,555,235 (1,203,359 ) (33.8 )% 54 Renewal of operating lease On August 7, 2013, the Company’s Audit Committee and the Board of Directors approved the sale of the land use right of the Headquarters Compound (the “LUR”), the office building and essentially all industrial-use buildings in the Headquarters Compound (the “Industrial Buildings”), and three employee dormitory buildings located within the Headquarters Compound (the “Dormitories”) to Hebei Fangsheng for cash prices of approximately $2.77 million, $1.15 million, and $4.31 million, respectively.
Changes in cost of sales and cost per tonne by product for the year ended December 31, 2023 and 2022 are summarized below: Year Ended December 31, 2023 Year Ended December 31, 2022 Change in Change in percentage Cost of Sales Cost per Tonne Cost of Sales Cost per tonne Cost of Sales Cost per Tonne Cost of Sales Cost per Tone Regular CMP $ 63,818,509 $ 349 $ 76,213,404 $ 421 $ (12,394,895 ) $ (72 ) -16.26 % -17.10 % Light-Weight CMP $ 14,144,328 $ 345 $ 14,880,487 $ 398 $ (736,159 ) $ (53 ) -4.95 % -13.32 % Total CMP $ 77,962,837 $ 348 $ 91,093,891 $ 417 $ (13,131,054 ) $ (69 ) -14.41 % -16.55 % Offset Printing Paper $ 3,137,646 $ 563 $ - $ - $ 3,137,646 $ 563 - % 0.00 % Tissue Paper Products $ 4,318,339 $ 3,584 $ 4,290,443 $ 3,370 $ 27,896 $ 214 0.65 % 6.35 % Total CMP, Offset Printing Paper and Tissue Paper Revenue $ 85,418,822 $ n/a $ 95,384,334 $ n/a $ (9,965,512 ) $ n/a -10.45 % n/a % Our average unit purchase costs (net of applicable value added tax) of recycled paper board and recycled white scrap paper for the year ended December 31, 2023 were RMB 1,350/tonne (approximately $191/tonne) as compared to RMB 1,690/tonne (approximately $250/tonne) for the year ended December 31, 2022.
Changes in cost of sales and cost per tonne by product for the year ended December 31, 2024 and 2023 are summarized below: Year Ended Year Ended December 31, 2024 December 31, 2023 Change in Change in percentage Cost of Sales Cost per Tonne Cost of Sales Cost per tonne Cost of Sales Cost per Tonne Cost of Sales Cost per Tone Regular CMP $ 57,643,462 $ 315 $ 63,818,509 $ 349 $ (6,175,047 ) $ (34 ) (9.68 )% (9.74 )% Light-Weight CMP $ 11,502,196 $ 306 $ 14,144,328 $ 345 $ (2,642,132 ) $ (39 ) (18.68 )% (11.30 )% Total CMP $ 69,145,658 $ 314 $ 77,962,837 $ 348 $ (8,817,179 ) $ (34 ) (11.31 )% (9.77 )% Offset Printing Paper $ - $ - $ 3,137,646 $ 563 $ (3,137,646 ) $ (563 ) (100.00 )% (100.00 )% Tissue Paper Products $ - $ - $ 4,318,339 $ 3,584 $ (4,318,339 ) $ (3,584 ) (100.00 )% (100.00 )% Total CMP, Offset Printing Paper and Tissue Paper Revenue $ 69,145,658 $ n/a $ 85,418,822 $ n/a $ (16,273,164 ) $ n/a (19.05 )% n/a % Our average unit purchase costs (net of applicable value added tax) of recycled paper board and recycled white scrap paper for the year ended December 31, 2024 was RMB 1,214/tonne (approximately $171/tonne), as compared to RMB 1,350/tonne (approximately $191/tonne) in 2023.
Interest payment is due monthly and bore a rate of 7.56% per annum. Effective from November 15, 2022, the interest rate was reduced to 7% per annum.
Interest payment is due monthly and bore a rate of 7.56% per annum. Effective from November 15, 2022, the interest rate was reduced to 7% per annum. On December 24, 2024, the Company entered into a one-year loan agreement with the Rural Credit Union of Xushui District for same amount to repay the loan.
As of December 31, 2023 and 2022, the total outstanding loan balance was $2,259,026 and $2,297,332, respectively, which are presented as current liabilities and non-current liabilities in the consolidated balance sheet as of December 31, 2023 and 2022, respectively.
This refinancing arrangement secured a lower market rate and did not involve any cash inflows or outflows. As of December 31, 2024 and 2023, the total outstanding loan balance was $nil and $2,259,026, respectively, which are presented as current liabilities in the consolidated balance sheet as of December 31, 2024 and 2023.
As of December 31, 2023 and 2022, the total outstanding loan balance was $1,835,458 and $1,866,582, respectively, which are presented as current liabilities and non-current liabilities in the consolidated balance sheet as of December 31, 2023 and 2022, respectively.
This refinancing arrangement secured a lower market rate and did not involve any cash inflows or outflows. As of December 31, 2024 and 2023, the total outstanding loan balance was $nil and $1,835,458, respectively, which are presented as current liabilities in the consolidated balance sheet as of December 31, 2024 and 2023, respectively.
Results of Operations Revenue for the year ended December 31, 2023 was $86,546,950, representing a decrease of $13,805,484, or 13.76%, from $100,352,434 for the previous year. This was mainly due to the decrease in average selling price (“ASP”) of CMP.
Results of Operations Revenue for the year ended December 31, 2024 was $75,837,943, representing a decrease of $10,709,007, or 12.37%, from $86,546,950 for the previous year. This was mainly due to the decrease in sales quantity of Corrugating Medium Paper (“CMP”), offset printing paper and tissue paper products and the decrease in Average Selling Price (“ASP”) of CMP.
Loss from Operations Operating loss for the year ended December 31, 2023 was $9,575,888, a decrease of $4,271,361, or 80.52%, from $5,304,527 for the year ended December 31, 2022.
Loss from Operations Operating loss for the year ended December 31, 2024 was $8,210,719, a decrease of loss of $1,365,169, or 14.26%, from $9,575,888 for the year ended December 31, 2023.
Cost of sales for CMP was $77,962,837 for the year ended December 31, 2023, as compared to $91,093,891 in 2022. The decrease in the cost of sales of $13,131,054 for CMP was mainly due to the decrease in average cost of sales, partially offset by the increase in the quantities of regular CMP sold in the year of 2023.
The decrease in the cost of sales of $8,817,179 for CMP was mainly due to the decrease in average cost of sales, partially offset by the increase in the quantities of regular CMP sold in the year of 2024.
Quantities sold for regular CMP that was produced by the PM6 production line from January 2022 to December 2023 are as follows: Offset Printing Paper Revenue from offset printing paper was $3,215,190 (3.72% of the total offset printing paper, CMP and tissue paper products revenues) for the year ended December 31, 2023, representing an increase of $3,215,190, or 100%, from year of 2022.
Quantities sold for regular CMP that was produced by the PM6 production line from January 2023 to December 2024 are as follows: 50 Revenue of Face Mask Revenue generated from selling face masks were $nil and $106,064 for the year ended December 31, 2024 and 2023.
December 31, December 31, 2023 2022 Industrial and Commercial Bank of China (“ICBC”) Loan 1 $ - $ 5,023,978 ICBC Loan 2 - 287,167 ICBC Loan 3 - 143,583 ICBC Loan 4 - - China Construction Bank Loan - 143,583 ICBC Loan 5 - ICBC Loan 6 2,824 - ICBC Loan 7 70,594 - ICBC Loan 8 350,149 - Total short-term bank loans $ 423,567 $ 5,598,311 On November 10, 2022, the Company entered into a working capital loan agreement with the ICBC.
December 31, December 31, 2024 2023 Rural Credit Union of Xushui District Loan 1 $ 1,808,469 $ - Rural Credit Union of Xushui District Loan 2 2,225,808 - Industrial and Commercial Bank of China (“ICBC”) Loan 1 - 2,824 ICBC Loan 2 - 70,594 ICBC Loan 3 - 350,149 ICBC Loan 4 2,782 - ICBC Loan 5 139,113 - ICBC Loan 6 139,113 - ICBC Loan 7 136,331 - Total short-term bank loans $ 4,451,616 $ 423,567 On December 24, 2024, the Company entered into a loan agreement with the Rural Credit Union of Xushui District to borrow $1,808,469 (RMB13,000,000) to repay the existing long-term loan of the same amount.
Interest payment is due quarterly and bore a rate of 7.68% per annum. Effective from November 15, 2022, the interest rate was reduced to 7% per annum.
Interest payment was due quarterly and bore a rate of 7.2% per annum. Effective from November 15, 2022, the interest rate was reduced to 7% per annum. On December 24, 2024, the Company entered into a one-year loan agreement with the Rural Credit Union of Xushui District for same amount to repay the loan.
The balance represented an increase of cash of $2,151,698, or 20.07%, from $10,719,388 provided for the year ended December 31, 2022. Net loss for the year ended December 31, 2023 was $9,946,035, representing a decrease of loss $6,625,273, or 39.98%, from a net loss of $16,571,308 for the year ended December 31, 2022.
The balance represented a decrease of cash of $6,571,617, or 51.06%, from $12,871,086 provided for the year ended December 31, 2023. Net loss for the year ended December 31, 2024 was $9,843,094, representing a decrease of loss of $102,941, or 1.03%, from a net loss of $9,946,035 for the year ended December 31, 2023.
Accounts Receivable Net accounts receivable was $575,526 as of December 31, 2023, as compared with $nil as of December 31, 2022. We usually collect accounts receivable within 30 days of delivery and completion of sales. Inventories Inventories consist of raw materials (accounting for 10.48% of total value of inventory as of December 31, 2023), semi-finished goods and finished goods.
Accounts Receivable Net accounts receivable decreased by $287,950, or 50.03%, to $287,576 as of December 31, 2024, as compared with $575,526 as of December 31, 2023. We usually collect accounts receivable within 30 days of delivery and completion of sales.
More CMP products were produced in December 2023 to mitigate the impact of energy price rise starting from January 2024. As of December 31, 2023, the inventory of recycled paper board, which is the main raw material for the production of CMP, was $198,744, approximately $1,059,417, or 84.20%, lower than the balance as of December 31, 2022.
As of December 31, 2024, the inventory of recycled paper board, which is the main raw material for the production of CMP, was $1,353,543, approximately $1,154,799, or 581.05%, higher than the balance as of December 31, 2023. In anticipation of the rising energy prices, we enhanced the production capacity for CMP during the fourth quarter of 2023.
Income tax for the year ended December 31, 2023 is $346,954 as compared to the income tax $11,711,339 for the year ended December 31, 2022. Net Loss As a result of the above, net loss was $9,946,035 for the year ended December 31, 2023, representing an increase of $6,625,273, or 39.98%, from $16,571,308 for the year ended December 31, 2022.
Net Loss As a result of the above, net loss was $9,843,094 for the year ended December 31, 2024, representing a decrease of loss of $102,941, or 1.03%, from $9,946,035 for the year ended December 31, 2023.
On June 29, 2023, the Company entered into a working capital loan agreement with the ICBC, to borrow $423,567 at a fixed interest rate of 3.55% per annum. The loan was repaid in September, 2023.
On June 11, 2024, the Company entered into a working capital loan agreement with the ICBC, with a balance of $2,782 as of December 31, 2024. The loan bears a fixed interest rate of 3.45% per annum. The loan is due for repayment by June 11, 2025.
On July 29, 2022, the Company entered into a working capital loan agreement with the China Construction Bank, with a balance of $nil and $143,583 as of December 31, 2023 and 2022, respectively. The loan bore a fixed interest rate of 3.95% per annum. The loan was fully repaid in July 2023.
On June 22, 2024, the Company entered into a working capital loan agreement with the ICBC, with a balance of $139,113 as of December 31, 2024. The loan bears a fixed interest rate of 3.45% per annum. The loan is due for repayment by June 22, 2025.
The balance of the loan was $nil and $5,023,978 as of December 31, 2023 and 2022, respectively. On November 30, 2022, the Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $287,167 as of December 31, 2023 and 2022, respectively. The loan bore an interest rate of 4.25% per annum.
On June 24, 2024, the Company entered into a working capital loan agreement with the ICBC, with a balance of $136,331 as of December 31, 2024. The loan bears a fixed interest rate of 3.45% per annum. The loan is due for repayment by June 24, 2025.
Selling, General and Administrative Expenses Selling, general and administrative expenses for the year ended December 31, 2023 were $9,075,475, a decrease of $983,248, or 9.78% from $10,058,723 for the year ended December 31, 2022. The decrease was mainly due to the decrease in depreciation of idle fixed assets during production suspension.
Selling, General and Administrative Expenses Selling, general and administrative expenses for the year ended December 31, 2024 were $14,799,969, an increase of $5,724,494, or 63.08% from $9,075,475 for the year ended December 31, 2023.
We are currently not aware of any events or circumstances that may indicate any need to record such impairment in the future. 59 Foreign Currency Translation The functional currency of Dongfang Paper and Baoding Shengde is the Chinese Yuan Renminbi (“RMB”).
For the years ended December 31, 2024 and 2023, we recorded $102,490 and $292,922 loss from impairment of property, plant and equipment, respectively. 59 Foreign Currency Translation The functional currency of Dongfang Paper and Baoding Shengde is the Chinese Yuan Renminbi (“RMB”).
Removed
We sold 5,573 tonnes of offset printing paper in the year ended December 31, 2023. 50 Tissue Paper Products Revenue from tissue paper products was $1,305,192 (1.51% of the total offset printing paper, CMP and tissue paper products revenues) for the year ended December 31, 2023, representing a decrease of $51,063, or 3.76%, from $1,356,255 in 2022.
Added
This was mainly due to the decrease in unit material costs of CMP and decrease in sales volume of offset printing paper and tissue paper products. Cost of sales for CMP was $69,145,658 for the year ended December 31, 2024, as compared to $77,962,837 in 2023.

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