PART I - FINANCIAL INFORMATION This section provides comprehensive financial statements and management's analysis of the company's financial performance and condition [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of income and comprehensive income, cash flows, and changes in stockholders' equity, along with detailed notes explaining the company's organization, accounting policies, and specific financial line items [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheets | Metric | September 30, 2024 | December 31, 2023 | | :----------------------- | :----------------- | :---------------- | | Total Assets | $190,018,239 | $194,743,649 | | Total Liabilities | $25,694,194 | $26,406,786 | | Total Stockholders' Equity | $164,324,045 | $168,336,863 | - Total assets decreased by approximately **$4.7 million**, and total liabilities decreased by about **$0.7 million**, leading to a decrease in total stockholders' equity by approximately **$4 million**[7](index=7&type=chunk)[8](index=8&type=chunk) [Condensed Consolidated Statements of Income and Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) This section presents the company's financial performance, including revenues, gross profit, and net loss, for the reporting periods Three Months Ended September 30, | Metric | 2024 | 2023 | Change ($) | Change (%) | | :----------------- | :------------- | :------------- | :----------- | :--------- | | Revenues | $25,081,500 | $15,771,560 | $9,309,940 | 59.03% | | Gross Profit (Loss)| $1,917,381 | $(153,223) | $2,070,604 | - | | Net Loss | $(1,973,946) | $(1,975,368) | $1,422 | (0.07)% | | Basic & Diluted EPS| $(0.20) | $(0.20) | $0.00 | 0.00% | Nine Months Ended September 30, | Metric | 2024 | 2023 | Change ($) | Change (%) | | :----------------- | :------------- | :------------- | :------------ | :--------- | | Revenues | $58,195,129 | $65,582,351 | $(7,387,222) | (11.26)% | | Gross Profit | $5,581,794 | $749,636 | $4,832,158 | 644.60% | | Net Loss | $(5,798,229) | $(5,962,026) | $163,797 | (2.75)% | | Basic & Diluted EPS| $(0.58) | $(0.59) | $0.01 | (1.69)% | - For the three months ended September 30, 2024, revenues significantly increased by **59.03%**, and the company moved from a gross loss to a gross profit. However, the net loss remained relatively stable. For the nine months, revenues decreased by **11.26%**, but gross profit saw a substantial increase of **644.60%**, leading to a slight reduction in net loss[8](index=8&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the company's cash inflows and outflows from operating, investing, and financing activities Nine Months Ended September 30, | Cash Flow Activity | 2024 | 2023 | Change ($) | | :---------------------------------- | :------------ | :------------ | :------------ | | Net Cash Provided by Operating Activities | $2,831,111 | $7,494,114 | $(4,663,003) | | Net Cash Used in Investing Activities | $(315,152) | $(9,211,711) | $8,896,559 | | Net Cash (Used in) Provided by Financing Activities | $(2,112,706) | $1,997,269 | $(4,109,975) | | Net Increase (Decrease) in Cash and Cash Equivalents | $500,993 | $(86,927) | $587,920 | - Operating cash flow decreased significantly, while investing cash outflow reduced substantially. Financing activities shifted from providing cash to using cash, resulting in a net increase in cash and cash equivalents for the period, reversing the prior year's decrease[10](index=10&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section details changes in the company's equity, including net loss and foreign currency adjustments Stockholders' Equity Changes (Nine Months Ended September 30, 2024) | Item | Amount ($) | | :---------------------------------- | :------------ | | Balance at December 31, 2023 | $168,336,863 | | Foreign currency translation adjustment | $1,785,411 | | Net loss | $(5,798,229) | | Balance at September 30, 2024 | $164,324,045 | - Total stockholders' equity decreased from **$168.3 million** to **$164.3 million**, primarily due to the net loss, partially offset by a positive foreign currency translation adjustment[12](index=12&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's accounting policies, financial line items, and business context [(1) Organization and Business Background](index=10&type=section&id=(1)%20Organization%20and%20Business%20Background) This note describes the company's structure, operations, and its Variable Interest Entity (VIE) arrangements in China - IT Tech Packaging, Inc. operates as a holding company for Hebei Baoding Dongfang Paper Milling Company Limited ('Dongfang Paper'), a producer and distributor of paper products in China, acquired in 2007. The company also controls Dongfang Paper and its subsidiary Tengsheng Paper through a Variable Interest Entity (VIE) structure via contractual agreements[13](index=13&type=chunk)[16](index=16&type=chunk)[19](index=19&type=chunk) VIE Contribution to Company's Financials | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | As of Sep 30, 2024 | As of Dec 31, 2023 | | :---------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :----------------- | :----------------- | | Revenue | 100% | 99.90% | 100% | 99.86% | - | - | | Total Assets| - | - | - | - | 95.31% | 94.93% | - Dongfang Paper and Tengsheng Paper (VIEs) are critical to the company's operations, contributing **nearly 100%** of total revenue and **over 95%** of total assets[25](index=25&type=chunk) [(2) Basis of Presentation and Significant Accounting Policies](index=14&type=section&id=(2)%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) This note outlines the accounting principles, estimates, and key policies used in preparing the financial statements - The financial statements are prepared in accordance with GAAP, requiring management estimates and judgments. Key policies include valuation of long-lived assets, fair value measurements (classified into Level 1, 2, and 3 hierarchy), and share-based compensation accounting[32](index=32&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk)[43](index=43&type=chunk) - Derivative liabilities, specifically from warrants, are measured at fair value using the Black-Scholes pricing model and are classified as Level 3 fair value measurements due to significant unobservable inputs[41](index=41&type=chunk) [(3) Restricted Cash](index=16&type=section&id=(3)%20Restricted%20Cash) This note details the nature and amount of cash held under restrictions, primarily for legal proceedings Restricted Cash Balances | Date | Amount | | :----------------- | :---------- | | September 30, 2024 | $478,066 | | December 31, 2023 | $472,983 | - Restricted cash is held at the Industrial and Commercial Bank of China for Tengsheng Paper, due to a legal proceeding against Tengsheng Paper and its executive director[46](index=46&type=chunk) [(4) Inventories](index=16&type=section&id=(4)%20Inventories) This note provides a breakdown of inventory components and changes over the reporting periods Inventories Breakdown | Category | September 30, 2024 | December 31, 2023 | | :----------------- | :----------------- | :---------------- | | Raw Materials | $4,110,074 | $372,968 | | Semi-finished Goods| $303,433 | $300,207 | | Finished Goods | $1,319,032 | $2,885,019 | | Total Inventory, net | $5,732,539 | $3,555,235 | - Total net inventory increased by **61.24%** from December 31, 2023, primarily driven by a significant increase in raw materials, especially recycled paper board, which rose from **$198,744** to **$3,873,233**[47](index=47&type=chunk) [(5) Prepayments and other current assets](index=16&type=section&id=(5)%20Prepayments%20and%20other%20current%20assets) This note details the composition and changes in the company's prepayments and other short-term assets Prepayments and Other Current Assets | Category | September 30, 2024 | December 31, 2023 | | :--------------------------- | :----------------- | :---------------- | | Prepaid land lease | $7,135 | $- | | Prepayment for purchase of materials | $5,737,653 | $5,446,823 | | Value-added tax recoverable | $13,494,151 | $13,409,459 | | Total | $19,384,595 | $18,981,290 | - Prepayments and other current assets saw a slight increase, mainly due to prepayments for materials and value-added tax recoverable[48](index=48&type=chunk) [(6) Property, plant and equipment, net](index=16&type=section&id=(6)%20Property,%20plant%20and%20equipment,%20net) This note presents the company's fixed assets, including land use rights, buildings, and machinery, net of depreciation Property, Plant and Equipment, Net | Category | September 30, 2024 | December 31, 2023 | | :-------------------------------------- | :----------------- | :---------------- | | Land use rights | $82,380,439 | $81,504,608 | | Building and improvements | $68,300,564 | $67,939,059 | | Machinery and equipment | $160,198,007 | $158,629,858 | | Less: accumulated depreciation and amortization | $(156,475,574) | $(144,447,712) | | Property, Plant and Equipment, net | $154,755,386 | $163,974,022 | - Net property, plant, and equipment decreased by approximately **$9.2 million**, primarily due to increased accumulated depreciation and amortization. Certain land use rights and equipment are pledged as collateral for long-term loans[49](index=49&type=chunk)[50](index=50&type=chunk)[52](index=52&type=chunk) Depreciation and Amortization | Period | 2024 | 2023 | | :------------------------------------ | :------------ | :------------ | | Three months ended September 30 | $3,483,298 | $3,423,231 | | Nine months ended September 30 | $10,346,181 | $10,573,288 | [(7) Leases](index=18&type=section&id=(7)%20Leases) This note describes the company's lease arrangements, both as a lessor and lessee, and associated liabilities - The company acts as both an operating lease lessor (leasing plant to a tenant) and lessee (leasing plant and production equipment). Lease liabilities are determined using the incremental borrowing rate[54](index=54&type=chunk)[56](index=56&type=chunk) Lease Information (Nine Months Ended September 30, 2024) | Metric | Amount ($) | | :-------------------------------------- | :--------- | | Operating lease cost | $74,717 | | Total operating lease payments | $713,531 | | Present value of lease liabilities | $622,942 | | Weighted average remaining lease term (years) | **3.9** | | Weighted average discount rate | **7.56%** | [(8) Loans Payable](index=20&type=section&id=(8)%20Loans%20Payable) This note details the company's short-term and long-term bank loans, including terms and interest expenses Short-term Bank Loans | Bank/Loan Type | September 30, 2024 | December 31, 2023 | | :------------- | :----------------- | :---------------- | | Bank of Cangzhou | $428,119 | $- | | ICBC Loans | $428,119 | $423,567 | | Total | $856,238 | $423,567 | - Short-term bank loans increased by **over 100%** to **$856,238**, with new loans from Bank of Cangzhou and ICBC in 2024. Several ICBC loans from 2023 were repaid in June 2024[62](index=62&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk)[69](index=69&type=chunk) Long-term Loans | Lender/Loan Type | September 30, 2024 | December 31, 2023 | | :--------------- | :----------------- | :---------------- | | Rural Credit Union | $8,931,986 | $11,378,429 | | Less: Current portion | $(4,365,385) | $(6,874,497) | | Long-term loans | $4,566,601 | $4,503,932 | - Total long-term loans decreased by approximately **$2.4 million**. Several loans from the Rural Credit Union of Xushui District were renewed or repaid, with varying interest rates (mostly **7% per annum**)[71](index=71&type=chunk)[73](index=73&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) Total Interest Expenses | Period | 2024 | 2023 | | :------------------------------------ | :------------ | :------------ | | Three months ended September 30 | $171,430 | $247,628 | | Nine months ended September 30 | $593,271 | $760,807 | [(9) Related Party Transactions](index=22&type=section&id=(9)%20Related%20Party%20Transactions) This note discloses financial transactions and balances with related parties, including the CEO - All loans from CEO Mr. Zhenyong Liu to Dongfang Paper were fully repaid as of September 30, 2024. Accrued interest owing to Mr. Liu was **$604,748** as of September 30, 2024[84](index=84&type=chunk)[216](index=216&type=chunk) - Loans from the Company to Mr. Zhenyong Liu, totaling **$7,059,455**, were fully repaid by December 2023[85](index=85&type=chunk)[217](index=217&type=chunk) Accrued Interest to Related Party (Mr. Zhenyong Liu) | Date | Amount | | :----------------- | :---------- | | September 30, 2024 | $604,748 | | December 31, 2023 | $598,319 | [(10) Other payables and accrued liabilities](index=23&type=section&id=(10)%20Other%20payables%20and%20accrued%20liabilities) This note provides a breakdown of various accrued expenses and other short-term liabilities Other Payables and Accrued Liabilities | Category | September 30, 2024 | December 31, 2023 | | :-------------------------------------- | :----------------- | :---------------- | | Accrued electricity | $117,171 | $3,054 | | Value-added tax payable | $226,354 | $696 | | Accrued interest to a related party | $604,748 | $598,319 | | Payable for purchase of property, plant and equipment | $10,988,359 | $11,175,858 | | Accrued bank loan interest | $1,295,773 | $1,070,708 | | Others (incl. legal proceeding liability) | $552,528 | $16,842 | | Totals | $13,800,118 | $12,912,517 | - Total other payables and accrued liabilities increased by approximately **$0.9 million**, primarily due to higher accrued electricity, VAT payable, accrued bank loan interest, and a **$473,785** accrued liability for a legal proceeding[86](index=86&type=chunk) [(11) Derivative Liabilities](index=24&type=section&id=(11)%20Derivative%20Liabilities) This note explains the company's derivative financial instruments, their valuation, and changes in fair value - Derivative liabilities, related to warrants, are classified as Level 3 fair value measurements and valued using the Black-Scholes pricing model[87](index=87&type=chunk)[89](index=89&type=chunk) Derivative Liabilities Fair Value | Date | Amount ($) | | :----------------- | :--------- | | Balance at Dec 31, 2023 | $54 | | Change in fair value | $(51) | | Balance at Sep 30, 2024 | $3 | - The fair value of derivative liabilities significantly decreased from **$54** to **$3**, resulting in a gain of **$2** for the three months ended September 30, 2024 (compared to **$660,429** in 2023)[91](index=91&type=chunk)[169](index=169&type=chunk) [(12) Common Stock](index=25&type=section&id=(12)%20Common%20Stock) This note details the company's common stock, including outstanding shares and historical stock offerings - As of November 14, 2024, there were **10,065,920 shares** of common stock outstanding. A **1-for-10 reverse stock split** was effective on July 7, 2022[4](index=4&type=chunk)[15](index=15&type=chunk) - The company issued common stock and warrants in public offerings in January and March 2021, raising approximately **$14.4 million** and **$21.9 million**, respectively[93](index=93&type=chunk)[94](index=94&type=chunk) [(13) Warrants](index=25&type=section&id=(13)%20Warrants) This note provides information on outstanding warrants, their exercise prices, and remaining contractual life Outstanding Warrants as of September 30, 2024 | Metric | Value | | :-------------------------- | :--------- | | Number of Shares | 3,016,635 | | Weighted Average Exercise Price | $6.6907 | | Weighted Average Remaining Contractual Life (years) | **1.33** | - The company has **3,016,635 warrants** outstanding and exercisable, with an aggregate intrinsic value of **nil** as of September 30, 2024[100](index=100&type=chunk)[101](index=101&type=chunk) [(14) Earnings Per Share](index=26&type=section&id=(14)%20Earnings%20Per%20Share) This note presents the basic and diluted earnings (loss) per share for the reporting periods Basic and Diluted Loss Per Share | Period | 2024 ($) | 2023 ($) | | :------------------------------------ | :------- | :------- | | Three months ended September 30 | (0.20) | (0.20) | | Nine months ended September 30 | (0.58) | (0.59) | - Basic and diluted loss per share remained stable at **$(0.20)** for the three months ended September 30, 2024, and slightly improved to **$(0.58)** for the nine months ended September 30, 2024, compared to **$(0.59)** in the prior year[102](index=102&type=chunk)[104](index=104&type=chunk) [(15) Income Taxes](index=27&type=section&id=(15)%20Income%20Taxes) This note details the company's income tax provisions, effective tax rates, and deferred tax assets and liabilities - PRC operating companies (Dongfang Paper and Baoding Shengde) are subject to a **25%** Enterprise Income Tax. No U.S. federal income tax provision is made as earnings are considered permanently invested in the PRC[105](index=105&type=chunk)[106](index=106&type=chunk) Total Income Tax Expenses (Benefits) | Period | 2024 ($) | 2023 ($) | | :------------------------------------ | :------- | :------- | | Three months ended September 30 | 345,710 | (3,236) | | Nine months ended September 30 | 799,273 | 348,024 | Effective Income Tax Rate | Period | 2024 | 2023 | | :------------------------------------ | :------- | :------- | | Three months ended September 30 | (21.2)% | 0.2% | | Nine months ended September 30 | (16.0)% | (6.2)% | - The company maintains a **100%** valuation allowance on U.S. deferred tax assets due to limited operating history and continuing losses for U.S. income tax purposes[109](index=109&type=chunk) [(16) Stock Incentive Plans](index=30&type=section&id=(16)%20Stock%20Incentive%20Plans) This note describes the company's equity incentive plans for directors, officers, employees, and consultants - The 2023 Omnibus Equity Incentive Plan was adopted on October 31, 2023, reserving **1,500,000 shares** of common stock for issuance to directors, officers, employees, and consultants[116](index=116&type=chunk) [(17) Commitments and Contingencies](index=30&type=section&id=(17)%20Commitments%20and%20Contingencies) This note outlines the company's contractual obligations, capital expenditure commitments, and guarantees - The company has an annual land lease payment of approximately **$16,902** for **32.95 acres** in Xushui District, expiring in 2031[118](index=118&type=chunk) Capital Expenditure Commitments | Date | Amount | | :----------------- | :---------- | | September 30, 2024 | $3,524,845 | | December 31, 2023 | $3,499,936 | - The company has capital commitments of **$3.5 million** for a new tissue paper production line (PM10) and building improvements, expected to be paid within **1-3 years**[122](index=122&type=chunk) - The company guarantees a **$4,423,895** long-term loan for Baoding Huanrun Trading Co., a major raw material supplier, maturing in 2028[123](index=123&type=chunk) [(18) Segment Reporting](index=31&type=section&id=(18)%20Segment%20Reporting) This note provides financial information by operating segment, including revenues and net income (loss) - The company operates through three segments: Dongfang Paper and Tengsheng Paper (offset printing, corrugating medium, tissue paper) and Baoding Shengde (face masks, digital photo paper). All sales are to customers in the PRC[124](index=124&type=chunk)[125](index=125&type=chunk) Segment Revenues (Three Months Ended September 30, 2024) | Segment | Revenues ($) | | :-------------- | :----------- | | Dongfang Paper | $25,044,376 | | Tengsheng Paper | $37,124 | | Baoding Shengde | $- | Segment Net Income (Loss) (Nine Months Ended September 30, 2024) | Segment | Net Income (Loss) ($) | | :-------------- | :-------------------- | | Dongfang Paper | $1,910,971 | | Tengsheng Paper | $(6,790,051) | | Baoding Shengde | $(227,256) | - Dongfang Paper is the primary revenue generator and profitable segment, while Tengsheng Paper and Baoding Shengde reported net losses for the nine months ended September 30, 2024[128](index=128&type=chunk) [(19) Concentration and Major Customers and Suppliers](index=34&type=section&id=(19)%20Concentration%20and%20Major%20Customers%20and%20Suppliers) This note discloses concentrations of business with major customers and suppliers - No single customer accounted for **over 10%** of total sales for the three and nine months ended September 30, 2024 and 2023[134](index=134&type=chunk) - Three major suppliers accounted for **74%**, **16%**, and **7%** of total purchases for the nine months ended September 30, 2024[136](index=136&type=chunk) [(20) Concentration of Credit Risk](index=34&type=section&id=(20)%20Concentration%20of%20Credit%20Risk) This note describes the company's exposure to credit risk, particularly regarding cash held in financial institutions - The company's cash is primarily held in PRC financial institutions, with balances exceeding the **RMB500,000 ($71,353)** deposit insurance coverage amounting to **$4,557,735** as of September 30, 2024[137](index=137&type=chunk) [(21) Risks and Uncertainties](index=34&type=section&id=(21)%20Risks%20and%20Uncertainties) This note outlines various operational, financial, and regulatory risks and uncertainties faced by the company - The company faces substantial risks from intense industry competition, financing and liquidity requirements, rapidly changing customer demands, foreign currency exchange rates, and operating under PRC laws and restrictions[138](index=138&type=chunk) [(22) Subsequent Event](index=34&type=section&id=(22)%20Subsequent%20Event) This note reports on significant events occurring after the balance sheet date - No subsequent events were reported[138](index=138&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition for the three and nine months ended September 30, 2024, compared to the prior year, highlighting key drivers of revenue, cost, and profitability changes, as well as liquidity and capital resources [Cautionary Notice Regarding Forward-Looking Statements](index=35&type=section&id=Cautionary%20Notice%20Regarding%20Forward-Looking%20Statements) This section warns that forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially - The report contains forward-looking statements subject to various assumptions, risks, and factors that could cause actual results to differ materially. Readers are cautioned not to place undue reliance on these statements[142](index=142&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenue, cost of sales, and profitability, for the reporting periods [Comparison of the Three months ended September 30, 2024 and 2023](index=35&type=section&id=Comparison%20of%20the%20Three%20months%20ended%20September%2030,%202024%20and%202023) This section compares the company's financial results for the three months ended September 30, 2024 and 2023 [Revenue](index=35&type=section&id=Revenue_3M) This section analyzes the drivers of revenue changes, including sales volume and average selling prices Revenue (Three Months Ended September 30) | Metric | 2024 ($) | 2023 ($) | Change ($) | Change (%) | | :-------------------------------------- | :----------- | :----------- | :----------- | :--------- | | Total Revenues | 25,081,500 | 15,771,560 | 9,309,940 | 59.03% | | CMP, Offset Printing, Tissue Paper Revenue | 25,044,375 | 15,756,399 | 9,287,976 | 58.95% | | CMP Quantity Sold (tonnes) | 74,884 | 44,396 | 30,488 | 68.67% | | Regular CMP ASP ($/tonne) | 337 | 350 | (13) | (3.71)% | | Light-Weight CMP ASP ($/tonne) | 324 | 340 | (16) | (4.71)% | - Total revenue increased by **59.03%** primarily due to a **68.67%** increase in Corrugating Medium Paper (CMP) sales volume, despite a decrease in average selling prices (ASPs) for both regular and light-weight CMP. Production of offset printing paper and tissue paper products was suspended[143](index=143&type=chunk)[145](index=145&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) [Cost of Sales](index=39&type=section&id=Cost%20of%20Sales_3M) This section examines the factors influencing the cost of goods sold, such as material costs and production volume Cost of Sales (Three Months Ended September 30) | Metric | 2024 ($) | 2023 ($) | Change ($) | Change (%) | | :-------------------------------------- | :----------- | :----------- | :----------- | :--------- | | Total Cost of Sales | 23,163,835 | 15,907,217 | 7,256,618 | 45.62% | | CMP Cost of Sales | 23,163,835 | 14,844,637 | 8,319,198 | 56.04% | | CMP Average Cost per Tonne ($) | 309 | 334 | (25) | (7.49)% | | Recycled Paper Board Unit Cost ($/tonne)| 171 | 176 | (5) | (2.84)% | - Cost of sales increased by **45.62%** due to higher CMP sales volume, but the average unit cost of sales for CMP decreased by **7.49%**, mainly attributable to lower average unit purchase costs of recycled paper board[156](index=156&type=chunk)[157](index=157&type=chunk)[159](index=159&type=chunk) [Gross Profit (Loss)](index=40&type=section&id=Gross%20Profit%20(Loss)_3M) This section discusses changes in gross profit and gross profit margin, highlighting profitability trends Gross Profit (Loss) (Three Months Ended September 30) | Metric | 2024 ($) | 2023 ($) | Change ($) | Change (%) | | :-------------------------------------- | :----------- | :----------- | :----------- | :--------- | | Gross Profit (Loss) | 1,917,381 | (153,223) | 2,070,604 | - | | Gross Profit Margin | 7.64% | (0.97)% | 8.61 pp | - | | Regular CMP Gross Profit Margin | 7.54% | 7.01% | 0.53 pp | - | | Light-Weight CMP Gross Profit Margin | 7.33% | (7.47)% | 14.80 pp | - | - The company shifted from a gross loss to a gross profit, with the overall gross profit margin improving significantly from **-0.97%** to **7.64%**. This improvement was driven by decreased recycled paper board costs, partially offset by lower ASPs[162](index=162&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk) [Selling, General and Administrative Expenses](index=41&type=section&id=Selling,%20General%20and%20Administrative%20Expenses_3M) This section details the components and changes in the company's operating expenses SG&A Expenses (Three Months Ended September 30) | Metric | 2024 ($) | 2023 ($) | Change ($) | Change (%) | | :----- | :---------- | :---------- | :---------- | :--------- | | SG&A | 3,381,502 | 2,334,746 | 1,046,756 | 44.83% | - Selling, general and administrative expenses increased by **44.83%**, mainly due to depreciation of idle fixed assets during production suspension and an accrued liability for a legal proceeding[166](index=166&type=chunk) [Loss from Operations](index=41&type=section&id=Loss%20from%20Operations_3M) This section analyzes the company's operating performance before non-operating income and expenses Operating Loss (Three Months Ended September 30) | Metric | 2024 ($) | 2023 ($) | Change ($) | Change (%) | | :-------------- | :---------- | :---------- | :---------- | :--------- | | Operating Loss | (1,464,121) | (2,484,513) | 1,020,392 | (41.07)% | - Operating loss decreased by **41.07%**, primarily due to the increase in gross profit, partially offset by higher selling, general and administrative expenses[167](index=167&type=chunk) [Other Income and Expenses](index=41&type=section&id=Other%20Income%20and%20Expenses_3M) This section covers non-operating income and expenses, including interest and derivative gains/losses Other Income (Expense) (Three Months Ended September 30) | Metric | 2024 ($) | 2023 ($) | | :----------------------- | :------- | :------- | | Interest expense | (171,430)| (247,818)| | Gain on derivative liability | 2 | 660,429 | - Interest expense decreased by **$76,388**. The gain on derivative liability significantly decreased from **$660,429** in 2023 to **$2** in 2024[168](index=168&type=chunk)[169](index=169&type=chunk) [Net Loss](index=43&type=section&id=Net%20Loss_3M) This section summarizes the company's overall profitability or loss for the reporting period Net Loss (Three Months Ended September 30) | Metric | 2024 ($) | 2023 ($) | Change ($) | Change (%) | | :------- | :---------- | :---------- | :--------- | :--------- | | Net Loss | (1,973,946) | (1,975,368) | 1,422 | (0.07)% | - Net loss remained relatively stable, decreasing slightly by **0.07%** compared to the prior year[170](index=170&type=chunk) [Comparison of the Nine months ended September 30, 2024 and 2023](index=43&type=section&id=Comparison%20of%20the%20Nine%20months%20ended%20September%2030,%202024%20and%202023) This section compares the company's financial results for the nine months ended September 30, 2024 and 2023 [Revenue](index=43&type=section&id=Revenue_9M) This section analyzes the drivers of revenue changes, including sales volume and average selling prices Revenue (Nine Months Ended September 30) | Metric | 2024 ($) | 2023 ($) | Change ($) | Change (%) | | :-------------------------------------- | :----------- | :----------- | :------------ | :--------- | | Total Revenues | 58,195,129 | 65,582,351 | (7,387,222) | (11.26)% | | CMP, Offset Printing, Tissue Paper Revenue | 58,083,990 | 65,483,282 | (7,399,292) | (11.30)% | | Total CMP Quantity Sold (tonnes) | 168,919 | 167,018 | 1,901 | 1.14% | | Regular CMP ASP ($/tonne) | 346 | 370 | (24) | (6.49)% | | Light-Weight CMP ASP ($/tonne) | 333 | 356 | (23) | (6.46)% | - Total revenue decreased by **11.26%**, primarily due to a decrease in ASPs for CMP and the suspension of offset printing paper and tissue paper products production, despite a slight increase in total CMP quantity sold[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) [Cost of Sales](index=44&type=section&id=Cost%20of%20Sales_9M) This section examines the factors influencing the cost of goods sold, such as material costs and production volume Cost of Sales (Nine Months Ended September 30) | Metric | 2024 ($) | 2023 ($) | Change ($) | Change (%) | | :-------------------------------------- | :----------- | :----------- | :------------ | :--------- | | Total Cost of Sales | 52,612,788 | 64,717,786 | (12,104,998) | (18.70)% | | CMP Cost of Sales | 52,612,788 | 58,592,582 | (5,979,794) | (10.21)% | | CMP Average Cost per Tonne ($) | 311 | 351 | (40) | (11.40)% | - Total cost of sales decreased by **18.70%**, mainly due to a significant decrease in the average unit material costs of CMP (down **11.40%**), partially offset by increased regular CMP sales volume[175](index=175&type=chunk)[176](index=176&type=chunk) [Gross Profit](index=44&type=section&id=Gross%20Profit_9M) This section discusses changes in gross profit and gross profit margin, highlighting profitability trends Gross Profit (Nine Months Ended September 30) | Metric | 2024 ($) | 2023 ($) | Change ($) | Change (%) | | :-------------------------------------- | :----------- | :----------- | :----------- | :--------- | | Gross Profit | 5,581,794 | 749,636 | 4,832,158 | 644.60% | | Gross Profit Margin | 9.59% | 1.14% | 8.45 pp | - | | Regular CMP Gross Profit Margin | 9.44% | 5.26% | 4.18 pp | - | | Light-Weight CMP Gross Profit Margin | 9.33% | 1.68% | 7.65 pp | - | - Gross profit increased substantially by **644.60%**, with the overall gross profit margin improving from **1.14%** to **9.59%**. This was primarily driven by the decrease in unit material costs of CMP, despite lower ASPs[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk) [Selling, General and Administrative Expenses](index=45&type=section&id=Selling,%20General%20and%20Administrative%20Expenses_9M) This section details the components and changes in the company's operating expenses SG&A Expenses (Nine Months Ended September 30) | Metric | 2024 ($) | 2023 ($) | Change ($) | Change (%) | | :----- | :---------- | :---------- | :---------- | :--------- | | SG&A | 9,999,833 | 6,153,513 | 3,846,320 | 62.51% | - Selling, general and administrative expenses increased by **62.51%**, mainly due to depreciation of idle fixed assets during production suspension and an accrued liability for a legal proceeding[182](index=182&type=chunk) [Loss from Operations](index=45&type=section&id=Loss%20from%20Operations_9M) This section analyzes the company's operating performance before non-operating income and expenses Operating Loss (Nine Months Ended September 30) | Metric | 2024 ($) | 2023 ($) | Change ($) | Change (%) | | :-------------- | :---------- | :---------- | :---------- | :--------- | | Operating Loss | (4,418,039) | (5,775,557) | 1,357,518 | (23.50)% | - Operating loss decreased by **23.50%**, driven by the significant increase in gross profit, partially offset by higher selling, general and administrative expenses[183](index=183&type=chunk) [Other Income and Expenses](index=45&type=section&id=Other%20Income%20and%20Expenses_9M) This section covers non-operating income and expenses, including interest and derivative gains/losses Other Income (Expense) (Nine Months Ended September 30) | Metric | 2024 ($) | 2023 ($) | | :----------------------- | :------- | :------- | | Interest expense | (593,271)| (767,668)| | Gain on derivative liability | 51 | 646,020 | - Interest expense decreased by **$174,397**. The gain on derivative liability significantly decreased from **$646,020** in 2023 to **$51** in 2024[184](index=184&type=chunk)[185](index=185&type=chunk) [Net Loss](index=45&type=section&id=Net%20Loss_9M) This section summarizes the company's overall profitability or loss for the reporting period Net Loss (Nine Months Ended September 30) | Metric | 2024 ($) | 2023 ($) | Change ($) | Change (%) | | :------- | :---------- | :---------- | :--------- | :--------- | | Net Loss | (5,798,229) | (5,962,026) | 163,797 | (2.75)% | - Net loss decreased by **2.75%**, primarily due to improved operating results[186](index=186&type=chunk) [Accounts Receivable](index=45&type=section&id=Accounts%20Receivable) This section analyzes changes in the company's accounts receivable balance and its implications Accounts Receivable, Net | Date | Amount | Change ($) | Change (%) | | :----------------- | :---------- | :---------- | :--------- | | September 30, 2024 | $1,727,370 | 1,151,844 | 200.14% | | December 31, 2023 | $575,526 | - | - | - Net accounts receivable increased significantly by **200.14%** to **$1,727,370** as of September 30, 2024[186](index=186&type=chunk) [Inventories](index=45&type=section&id=Inventories_MD&A) This section discusses inventory levels and management strategies, particularly for raw materials Inventory Changes | Category | September 30, 2024 | December 31, 2023 | Change ($) | Change (%) | | :----------------- | :----------------- | :---------------- | :---------- | :--------- | | Total Inventory, net | $5,732,539 | $3,555,235 | 2,177,304 | 61.2% | | Recycled paper board | $3,873,233 | $198,744 | 3,674,489 | 1848.9% | - Total net inventory increased by **61.24%**, primarily driven by an **1848.9%** increase in recycled paper board inventory, reflecting a strategy to manage stock turnover and price volatility[187](index=187&type=chunk)[188](index=188&type=chunk) [Renewal of operating lease](index=46&type=section&id=Renewal%20of%20operating%20lease_MD&A) This section details the renewal of a significant operating lease agreement for industrial buildings - The lease agreement for industrial buildings, originally sold and leased back, was renewed in August 2022 for a term of **six years** with an annual rental payment of approximately **$140,847**[189](index=189&type=chunk) [Capital Expenditure Commitment as of September 30, 2024](index=46&type=section&id=Capital%20Expenditure%20Commitment%20as%20of%20September%2030,%202024_MD&A) This section outlines the company's future capital spending plans and their financing - As of September 30, 2024, the company had approximately **$3.5 million** in capital expenditure commitments, mainly for the purchase of paper machinery for the new PM10 tissue paper production line, to be financed by bank loans and cash flows[190](index=190&type=chunk)[191](index=191&type=chunk) [Cash and Cash Equivalents](index=46&type=section&id=Cash%20and%20Cash%20Equivalents_MD&A) This section analyzes the company's cash position and the factors influencing its changes Cash, Cash Equivalents and Restricted Cash | Date | Amount | Change ($) | Change (%) | | :----------------- | :---------- | :---------- | :--------- | | September 30, 2024 | $4,892,914 | 500,993 | 11.41% | | December 31, 2023 | $4,391,921 | - | - | - Cash, cash equivalents, and restricted cash increased by **$500,993**. This was influenced by a decrease in net cash from operating activities, a significant reduction in cash used in investing activities, and a shift to net cash used in financing activities[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) [Short-term bank loans](index=48&type=section&id=Short-term%20bank%20loans_MD&A) This section details the company's short-term borrowing activities and associated interest rates Short-term Bank Loans | Bank/Loan Type | September 30, 2024 | December 31, 2023 | | :------------- | :----------------- | :---------------- | | Bank of Cangzhou | $428,119 | $- | | ICBC Loans | $428,119 | $423,567 | | Total | $856,238 | $423,567 | - Short-term bank loans increased to **$856,238**, with new loans from Bank of Cangzhou and ICBC in 2024. The average short-term borrowing rate for the nine months ended September 30, 2024, was approximately **4.47%**[195](index=195&type=chunk)[199](index=199&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk) [Long-term loans](index=49&type=section&id=Long-term%20loans_MD&A) This section discusses the company's long-term debt obligations, renewals, and repayment schedules Long-term Loans | Lender/Loan Type | September 30, 2024 | December 31, 2023 | | :--------------- | :----------------- | :---------------- | | Rural Credit Union | $8,931,986 | $11,378,429 | | Less: Current portion | $(4,365,385) | $(6,874,497) | | Long-term loans | $4,566,601 | $4,503,932 | - Total long-term loans decreased by approximately **$2.4 million**. Several loans from the Rural Credit Union of Xushui District were renewed or repaid, with interest rates around **7% per annum**[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk) [Shareholder Loans](index=50&type=section&id=Shareholder%20Loans_MD&A) This section provides an update on loans involving the company's CEO and their repayment status - All loans from CEO Mr. Zhenyong Liu to Dongfang Paper were fully repaid as of September 30, 2024. Accrued interest owing to Mr. Liu was **$604,748**[216](index=216&type=chunk) - Loans from the Company to Mr. Zhenyong Liu, totaling **$7,059,455**, were fully repaid by December 2023[217](index=217&type=chunk) [Critical Accounting Policies and Estimates](index=51&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section highlights the key accounting policies and significant management judgments impacting financial reporting - Key accounting policies include revenue recognition (upon delivery and fixed price), valuation of long-lived assets (impairment review based on cash flows), and foreign currency translation (RMB functional currency, translated to USD at period-end rates)[219](index=219&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) [Off-Balance Sheet Arrangements](index=51&type=section&id=Off-Balance%20Sheet%20Arrangements) This section discloses the company's off-balance sheet obligations, such as loan guarantees - The company guarantees a **$4,423,895** long-term bank loan for Baoding Huanrun Trading Co., a major raw material supplier, maturing in 2028[223](index=223&type=chunk) [Recent Accounting Pronouncements](index=52&type=section&id=Recent%20Accounting%20Pronouncements) This section discusses the potential impact of newly issued accounting standards on the company's financial statements - The company is evaluating the impact of ASU 2023-09 (Improvements to Income Tax Disclosures) and ASU 2021-08 (Accounting for Contract Assets and Liabilities from Contracts with Customers), with no material impact expected from ASU 2021-08[224](index=224&type=chunk)[225](index=225&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section assesses the company's exposure to market risks, including foreign exchange and inflation [Foreign Exchange Risk](index=52&type=section&id=Foreign%20Exchange%20Risk) This section assesses the company's exposure to currency fluctuations and their potential financial impact - The company is exposed to foreign exchange risk due to RMB-denominated revenues and costs, and US dollar reporting. No hedging transactions are currently in place[226](index=226&type=chunk) [Inflation](index=52&type=section&id=Inflation) This section discusses the potential effects of inflation on the company's operating costs and profitability - Inflation, particularly in product and overhead costs, could adversely affect operating results if selling prices do not increase proportionally. The company does not believe inflation in China has had a material impact to date[227](index=227&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and internal control over financial reporting [Effectiveness of Disclosure Controls and Procedures](index=52&type=section&id=Effectiveness%20of%20Disclosure%20Controls%20and%20Procedures) This section reports on management's assessment of the effectiveness of the company's disclosure controls - Management, including the principal executive and financial officers, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2024[228](index=228&type=chunk) [Changes in Internal Control over Financial Reporting](index=52&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section addresses any material changes in the company's internal control over financial reporting - There were no material changes to internal control over financial reporting during the quarter ended September 30, 2024[229](index=229&type=chunk) PART II - OTHER INFORMATION This section covers non-financial information, including legal proceedings, risk factors, equity security sales, defaults, mine safety disclosures, other information, and exhibits [Item 1. Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) This section details ongoing legal disputes and their potential financial implications for the company - The company is a defendant in a breach of contract lawsuit by FT Global Capital, Inc., where a default judgment on liability was granted against the company, with damages to be determined[231](index=231&type=chunk) - Tengsheng Paper, a VIE, was ordered by a PRC court to repay a **RMB3.32 million** loan, for which it is jointly liable, and its bank deposits were frozen[232](index=232&type=chunk) [Item 1A. Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) This section identifies and describes the significant risks and uncertainties that could affect the company's business and financial results - As a smaller reporting company, the registrant is not required to provide information under this item[234](index=234&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on any sales of equity securities not registered under the Securities Act and the application of proceeds - No unregistered sales of equity securities or use of proceeds were reported[234](index=234&type=chunk) [Item 3. Defaults Upon Senior Securities](index=53&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section discloses any defaults on the company's senior debt obligations - No defaults upon senior securities were reported[234](index=234&type=chunk) [Item 4. Mine Safety Disclosures](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section provides information related to mine safety, if applicable to the company's operations - This item is not applicable to the company[234](index=234&type=chunk) [Item 5. Other Information](index=54&type=section&id=Item%205.%20Other%20Information) This section includes any other material information not covered elsewhere in the report - No directors or officers reported the adoption or termination of Rule 10b5-1 trading arrangements during the quarter[236](index=236&type=chunk) [Item 6. Exhibits](index=54&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the report, including certifications and financial data - The report includes various certifications (e.g., Rule 13a-14, 18 U.S.C. Section 1350) and Inline XBRL documents as exhibits[237](index=237&type=chunk) [SIGNATURES](index=55&type=section&id=SIGNATURES) This section contains the official signatures of the company's principal executive and financial officers, certifying the report - The report is signed by Zhenyong Liu, Chief Executive Officer, and Jing Hao, Chief Financial Officer, on November 15, 2024[240](index=240&type=chunk)

Core Points - IT Tech Packaging, Inc. emphasizes the importance of every stockholder's vote for the upcoming annual meeting scheduled for October 31, 2024 [1][2][3] - The company has filed a definitive proxy statement with the SEC on September 6, 2024, and urges stockholders to read it carefully as it contains important information regarding the company and its proposals [5] - IT Tech Packaging, Inc. is a leading manufacturer and distributor of diversified paper products in North China, producing corrugating medium paper, offset printing paper, and tissue paper products [6][7] Voting Information - Stockholders are encouraged to vote online, by telephone, or by returning a completed proxy card to ensure their shares are represented at the meeting [2][4] - The company cannot hold the meeting if the quorum requirement is not met, which could lead to delays and increased costs [4] - Stockholders of record as of September 6, 2024, are entitled to vote at the annual meeting [1] Company Overview - Founded in 1996, IT Tech Packaging, Inc. is strategically located in North China's Hebei Province, close to major markets in Beijing and Tianjin [6] - The company has been listed on the NYSE American since December 2009 [7]

Core Viewpoint - IT Tech Packaging, Inc. has announced its 2024 annual meeting of stockholders scheduled for October 31, 2024, where several key proposals will be voted on by stockholders [1][2]. Meeting Details - The annual meeting will take place at 10:00 a.m. Beijing Time on October 31, 2024, at the company's production base in Wei County, Hebei Province, China [1]. - Stockholders of record as of September 6, 2024, are entitled to receive a Notice of Meeting and vote [2]. Proposals for Vote - The stockholders will consider the following proposals: 1. Election of three Class II directors to serve until the 2026 Annual Meeting [1]. 2. An advisory vote to approve executive compensation [1]. 3. An advisory vote on the frequency of future advisory votes on executive compensation [1]. 4. Ratification of GGF CPA Limited as the independent registered public accounting firm for the fiscal year ending December 31, 2024 [1]. 5. Other matters that may properly come before the meeting [1]. Company Overview - IT Tech Packaging, Inc. is a leading manufacturer and distributor of diversified paper products in North China, founded in 1996 [5]. - The company primarily uses recycled paper as raw material, producing corrugating medium paper, offset printing paper, and tissue paper products [5]. - The production bases are strategically located in Baoding and Xingtai, close to major markets in the Beijing and Tianjin region [5][6]. - IT Tech Packaging has been listed on the NYSE American since December 2009 [6].

Revenue Performance - Total revenue for Q2 2024 decreased by 12.56% to approximately $26.25 million, down from $30.02 million in Q2 2023, primarily due to the suspension of offset printing paper and tissue paper production[3] - For the first half of 2024, total revenue decreased by 33.52% to approximately $33.11 million from approximately $49.81 million in the same period last year, largely due to production suspensions[20] - Revenue from Regular Corrugating Medium Paper (CMP) increased slightly by 0.24% to approximately $21.98 million, while Light-Weight CMP revenue decreased by 6.93% to approximately $4.23 million[7] - Revenue from CMP decreased by 28.18% to approximately $33.04 million for the first half of 2024, accounting for 99.78% of total revenue[21] - Regular CMP revenue decreased by 27.77% to approximately $27.73 million, with sales of 78,452 tonnes at an ASP of $354/tonne[22] - Light-weight CMP revenue decreased by 30.23% to approximately $5.31 million, with sales of 15,582 tonnes at an ASP of $340/tonne[22] Profitability - Gross profit increased significantly to approximately $3.27 million, compared to $1.18 million in the same period last year, resulting in a gross profit margin of 12.44%, up 8.51 percentage points[3] - Operating income for Q2 2024 was approximately $0.55 million, a turnaround from an operating loss of $0.52 million in Q2 2023, with an operating margin of 2.09%[13] - EBITDA for Q2 2024 was approximately $3.93 million, an increase from $2.83 million in Q2 2023, indicating improved operational performance[16] - Total gross profit increased to approximately $3.66 million for the first half of 2024, with a gross margin of 11.07%[26] - EBITDA was approximately $3.91 million for the first half of 2024, compared to approximately $4.03 million for the same period last year[29] Losses and Expenses - Net loss narrowed to approximately $0.08 million, or loss per share of $0.01, compared to a net loss of $1.25 million, or loss per share of $0.12, in the same period last year[15] - Net loss was approximately $3.82 million for the first half of 2024, compared to a net loss of approximately $3.99 million for the same period last year[28] - Selling, general and administrative expenses rose by 105.35% to approximately $2.72 million, mainly due to increased depreciation of idle fixed assets during production suspension[12] - Selling, general and administrative expenses increased by 73.31% to approximately $6.62 million for the first half of 2024[26] - Selling, general, and administrative expenses for the six months ended June 30, 2024, were $(6,618,331), an increase from $(3,818,767) for the same period in 2023[44] Cash and Assets - Cash and bank balances increased to approximately $5.14 million as of June 30, 2024, compared to $3.92 million as of December 31, 2023[32] - Net accounts receivable increased to approximately $2.64 million as of June 30, 2024, compared to $0.58 million as of December 31, 2023[33] - Current assets increased to approximately $33.43 million with working capital of approximately $10.51 million as of June 30, 2024[33] - Cash provided by operating activities for the six months ended June 30, 2024, was $1,346,337, compared to $5,746,719 for the same period in 2023[46] - Cash, cash equivalents, and restricted cash at the end of the period were $6,043,922, compared to $11,980,759 at the end of the same period in 2023[47] Stockholders' Equity - Total stockholders' equity as of June 30, 2024, was $163,454,811, down from $168,336,863 as of December 31, 2023[41] Other Financial Metrics - Interest income for the three months ended June 30, 2024, was $2,807, compared to $53,637 for the same period in 2023, indicating a decline[44] - The company reported a loss per share of $(0.008) for the three months ended June 30, 2024, compared to $(0.12) for the same period in 2023[44] - Total comprehensive loss for the three months ended June 30, 2024, was $(833,897), compared to $(10,317,188) for the same period in 2023, reflecting a substantial decrease[44]

Revenue Performance - Revenue for the three months ended June 30, 2024, was $26,249,788, a decrease of $3,770,126, or 12.56%, from $30,019,914 for the same period in 2023[156]. - Revenue from sales of offset printing paper, corrugating medium paper (CMP), and tissue paper products for the three months ended June 30, 2024, was $26,212,815, representing a decrease of $3,762,919, or 12.55%, from $29,975,734 for the same period in 2023[158]. - Revenue from offset printing paper was $nil for the three months ended June 30, 2024, representing a decrease of $3,155,882, or 100.00%, from $3,155,882 for the same period in 2023[166]. - Revenue from tissue paper products was $nil for the three months ended June 30, 2024, representing a decrease of $344,332, or 100.00%, from $344,332 for the same period in 2023[170]. - Revenue for the six months ended June 30, 2024 was $33,113,629, a decrease of $16,697,162, or 33.52%, from $49,810,791 for the same period in 2023[186]. Sales and Production Metrics - Total CMP sold during the three months ended June 30, 2024, amounted to 75,365 tonnes, representing a decrease of 3,271 tonnes, or 4.16%, compared to 78,636 tonnes sold in the comparable period in 2023[158]. - Total quantities of offset printing paper, CMP, and tissue paper products sold decreased by 34,475 tonnes, or 26.83%, from 128,509 tonnes in the first half of 2023 to 94,034 tonnes in 2024[187]. - The utilization rate for the PM6 production line, which produces regular CMP, was 68.02% for the second quarter of 2024, compared to 66.61% for the same period in 2023[165]. Cost and Profitability - Total cost of sales for CMP, offset printing paper, and tissue paper products for the quarter ended June 30, 2024, was $22,984,488, a decrease of $5,807,701, or 20.17%, from $28,792,189 for the comparable period in 2023[168]. - Average cost of sales per tonne for CMP decreased by 9.76%, from $338 in the second quarter of 2023 to $305 in the second quarter of 2024[169]. - Gross profit for the three months ended June 30, 2024 was $3,265,300, an increase of $2,085,442, or 176.75%, from $1,179,858 for the same period in 2023[176]. - Gross profit margin for offset printing paper, CMP, and tissue paper products increased by 8.37 percentage points, from 3.95% in Q2 2023 to 12.32% in Q2 2024[178]. - Gross profit for the six months ended June 30, 2024 was $3,664,413, an increase of $2,761,554, or 305.87%, from $902,859 for the same period in 2023[195]. - The overall gross profit margin for offset printing paper, CMP, and tissue paper products increased by 9.03 percentage points, from 1.84% in the first half of 2023 to 10.87% in the first half of 2024[196]. - Gross profit margin for regular CMP increased to 10.86%, up 6.15 percentage points from 4.71% in the same period last year, primarily due to decreased material costs[197]. - Gross profit margin for light-weight CMP rose to 10.90%, an increase of 5.04 percentage points from 5.86% year-over-year, also driven by lower material costs[197]. Operating Income and Loss - Operating income for the quarter ended June 30, 2024 was $547,752, an increase of $1,066,435, or 205.60%, from a loss of $518,683 in Q2 2023[182]. - Operating loss decreased to $2,953,918, a reduction of $337,126 or 10.24% from $3,291,044 in the prior year[199]. - Net loss for the quarter ended June 30, 2024 was $77,747, a decrease of $1,175,746, or 93.80%, from a net loss of $1,253,493 in Q2 2023[185]. - Net loss for the six months ended June 30, 2024, was $3,824,283, a decrease of $162,375 or 4.07% from $3,986,658 in the same period last year[202]. Financial Position and Cash Flow - Net accounts receivable surged by $2,062,693, or 358.40%, reaching $2,638,219 as of June 30, 2024, compared to $575,526 at the end of 2023[203]. - Inventory value increased by 48.58% to $5,282,420 from $3,555,235 as of December 31, 2023, with recycled paper board inventory rising by 1,642.01%[204]. - Cash and cash equivalents rose to $6,043,922, an increase of $1,652,001 from $4,391,921 at the end of 2023[211]. - Net cash provided by operating activities was $1,346,337, a decrease of $4,400,382 or 76.57% from $5,746,719 in the same period last year[212]. Debt and Interest Expenses - Long-term loans as of June 30, 2024, totaled $11,308,021, a slight decrease from $11,378,429 as of December 31, 2023[221]. - Total interest expenses for short-term and long-term loans for the three months ended June 30, 2024, were $211,551, compared to $268,499 in 2023, representing a decrease of approximately 21.2%[228]. - Total interest expenses for the six months ended June 30, 2024, were $421,841, down from $513,179 in 2023, indicating a decrease of approximately 17.8%[228]. - The total outstanding loan balance for a new loan entered on December 5, 2023, was $1,206,713 as of June 30, 2024, compared to $1,214,226 as of December 31, 2023[227]. - The accrued interest owing to Mr. Zhenyong Liu was approximately $594,617 as of June 30, 2024, down from $598,319 as of December 31, 2023[233]. - The total amount of loans due to Mr. Zhenyong Liu was $nil as of June 30, 2024, with interest expenses for related party loans also reported as $nil for the same period[240]. Other Financial Considerations - The Company has not entered into any hedging transactions to mitigate foreign exchange risks, which may affect revenues and results of operations due to fluctuations in the RMB/USD exchange rate[250]. - The Company does not expect the adoption of new accounting standards to have a material impact on its consolidated financial statements[248]. - The Company has not identified any events indicating the need to record impairment of long-lived assets for the six months ended June 30, 2024[245]. - Inflation has not materially impacted the Company's financial position or results of operations to date, but future high inflation rates may adversely affect gross margins[251].

Revenue Performance - Revenue for Q1 2024 decreased by 65.32% to approximately $6.86 million, down from $19.79 million in Q1 2023[3] - Revenues for Q1 2024 were $6,863,841, a decrease of 65.3% compared to $19,790,877 in Q1 2023[27] Profitability - Gross profit was approximately $0.40 million, compared to a gross loss of $0.28 million for the same period last year, resulting in a gross profit margin of 5.81%[4] - Gross profit for Q1 2024 was $399,113, compared to a gross loss of $276,999 in Q1 2023[28] - Loss from operations was approximately $3.50 million, a decrease of 26.31% from a loss of $2.77 million in Q1 2023[14] - Net loss for Q1 2024 was approximately $3.75 million, or loss per share of $0.37, compared to a net loss of $2.73 million, or loss per share of $0.27, in Q1 2023[15] - Net loss for Q1 2024 was $3,746,536, compared to a net loss of $2,733,165 in Q1 2023, representing an increase in loss of 37.1%[28] - EBITDA for Q1 2024 was approximately negative $0.02 million, compared to $1.21 million for the same period last year[16] - The company reported a basic and diluted loss per share of $0.37 for Q1 2024, compared to a loss of $0.27 per share in Q1 2023[28] Expenses - Selling, general and administrative expenses increased by 56.32% to approximately $3.90 million for Q1 2024 from approximately $2.50 million in Q1 2023[13] - Selling, general and administrative expenses increased to $3,900,783 in Q1 2024 from $2,495,362 in Q1 2023, an increase of 56.5%[28] Cash and Assets - Cash and bank balances as of March 31, 2024, were approximately $4.51 million, compared to $3.92 million as of December 31, 2023[18] - Cash and cash equivalents at the end of Q1 2024 were $5,417,560, down from $16,750,940 at the end of Q1 2023, a decrease of 67.6%[30] - Operating cash flow for Q1 2024 was $624,420, a significant decline from $4,809,928 in Q1 2023[30] - Current assets were approximately $30.01 million and current liabilities were approximately $24.57 million, resulting in working capital of approximately $5.44 million as of March 31, 2024[20] - Total current assets increased to $30,014,832 in Q1 2024 from $28,357,901 in Q4 2023, a growth of 5.8%[25] - Total liabilities rose to $28,307,396 in Q1 2024 from $26,406,786 in Q4 2023, an increase of 7.2%[25] Strategic Plans - The company plans to optimize raw material structure and explore new products and markets to capture greater market share[2]

Financial Performance - Revenue decreased by 65.32% to $6.86 million in Q1 2024, primarily due to production suspensions of corrugating medium paper (CMP) and tissue paper products [3][4] - Gross profit improved to $0.40 million from a loss of $0.28 million in Q1 2023, with gross profit margin increasing by 7.21 percentage points to 5.81% [3][7] - Net loss widened to $3.75 million in Q1 2024 from $2.73 million in Q1 2023, with loss per share increasing to $0.37 from $0.27 [3][9] - EBITDA turned negative at -$0.02 million in Q1 2024 compared to $1.21 million in Q1 2023 [3][11] Product Performance - CMP revenue, including regular and light-weight, decreased by 65.04% to $6.83 million, accounting for 100% of total revenue in Q1 2024 [5] - Regular CMP revenue fell by 65.08% to $5.75 million, with sales volume dropping to 15,640 tonnes at an ASP of $368/tonne [6] - Light-weight CMP revenue declined by 64.83% to $1.08 million, with sales volume decreasing to 3,030 tonnes at an ASP of $355/tonne [6] - Tissue paper products and face masks generated no revenue in Q1 2024 due to production suspensions [6][7] Industry and Market Conditions - Domestic packaging paper faced sluggish demand and price pressures in Q1 2024 [2] - Increased production capacity from industry peers and intensified competition from imported finished products posed challenges [2] - Interest rate hikes added persistent pressure on the industry [2] - China is implementing policies to stimulate the economy and support enterprises, which may improve the packaging paper industry's business environment [2] Operational Strategies - The company plans to optimize raw material structure and minimize purchase prices to ensure production efficiency and consistent quality [2] - Exploration of new products and markets with appropriate price adjustments is underway to capture greater market share [2] - Better control of inventory, working capital, and cash flow is expected to improve the company's operational health [2] Financial Position - Cash and bank balances increased to $4.51 million as of March 31, 2024, from $3.92 million at the end of 2023 [12] - Short-term debt rose to $9.69 million, while long-term debt decreased to $3.24 million [12] - Working capital stood at $5.44 million as of March 31, 2024, down from $6.94 million at the end of 2023 [13] - Net cash provided by operating activities was $0.62 million in Q1 2024, significantly lower than $4.81 million in Q1 2023 [14][15]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 or ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-34577 IT TECH PACKAGING, INC. (Exact name of registrant as specified in its charter) | --- | --- | |--------------------------------------- ...

Financial Performance - For the fiscal year 2023, total revenue decreased by 13.76% to approximately $86.55 million, down from $100.35 million in 2022[17]. - In Q4 2023, total revenue decreased by 1.91% to approximately $20.96 million, compared to $21.37 million in Q4 2022[3]. - Total revenue decreased by $13.67 million, or 13.66%, to approximately $86.41 million for the year ended December 31, 2023, compared to $100.08 million for 2022[21]. - Total revenues for the year ended December 31, 2023, were $86,546,950, a decrease of 13.7% from $100,352,434 in 2022[43]. Profitability - Gross profit for Q4 2023 was approximately $0.25 million, a decrease of 75.61% from $1.03 million in Q4 2022, resulting in a gross margin of 1.19%[11]. - For the full year 2023, the gross profit margin decreased by 3.58 percentage points to 1.16% compared to 4.74% in 2022[17]. - Total gross profit decreased by $3.75 million, or 78.97%, to approximately $1.00 million, resulting in a gross margin of 1.16% for the year ended December 31, 2023, down from 4.74% in 2022[27]. - Gross profit for 2023 was $999,885, down 79.0% from $4,754,196 in 2022[43]. Net Loss - The net loss for Q4 2023 was approximately $3.98 million, or a loss of $0.40 per share, compared to a net loss of $11.91 million, or a loss of $1.19 per share, in Q4 2022[12]. - Net loss increased by $6.63 million, or 39.98%, to approximately $9.95 million for the year ended December 31, 2023, with a loss per share of $0.99[28]. - Net loss for 2023 was $9,946,035, compared to a net loss of $16,571,308 in 2022, representing a 40.0% improvement[43]. - Basic and diluted losses per share improved to $(0.99) in 2023 from $(1.66) in 2022[43]. EBITDA - EBITDA for Q4 2023 was approximately $0.11 million, a significant decrease of 97.08% from $3.77 million in Q4 2022[13]. - EBITDA decreased by $5.35 million, or 48.81%, to approximately $5.61 million for the year ended December 31, 2023, compared to $10.96 million for 2022[29]. Expenses - Selling, general and administrative expenses increased by 122.80% to approximately $3.38 million in Q4 2023, up from $1.52 million in Q4 2022[12]. - SG&A expenses decreased by $0.98 million, or 9.78%, to approximately $9.08 million for the year ended December 31, 2023[27]. Revenue Breakdown - Revenue from regular Corrugating Medium Paper (CMP) decreased by 1.52% to approximately $17.02 million in Q4 2023, with an average selling price (ASP) of $362 per tonne[9]. - Revenue from tissue paper products increased by 87.04% to approximately $0.47 million in Q4 2023, with an ASP of $987 per tonne[10]. - Revenue from regular CMP decreased by $14.93 million, or 18.14%, to approximately $67.37 million, while revenue from light-weight CMP decreased by $1.91 million, or 11.61%, to approximately $14.52 million for the year ended December 31, 2023[22]. - Revenue from face masks decreased by $0.15 million, or 58.86%, to approximately $0.11 million for the year ended December 31, 2023[25]. Cash Flow and Assets - Cash and bank balances decreased to approximately $3.92 million as of December 31, 2023, down from $9.52 million at the end of 2022[32]. - Current assets decreased to approximately $28.36 million, while current liabilities increased to approximately $21.42 million, resulting in working capital of approximately $6.94 million as of December 31, 2023[33]. - Net cash provided by operating activities increased to approximately $12.87 million for the year ended December 31, 2023, compared to $10.72 million for 2022[34]. - Total current assets decreased to $28,357,901 in 2023 from $47,166,475 in 2022, a decline of 39.8%[40]. - Cash and bank balances at the end of 2023 were $3,918,938, down from $9,524,868 at the end of 2022, a decrease of 58.8%[46]. - Net cash provided by operating activities for 2023 was $12,871,086, an increase from $10,719,388 in 2022[45]. - Cash used in investing activities was $22,239,297 in 2023, compared to $10,898,531 in 2022, indicating increased capital expenditures[45]. Strategic Focus - The company plans to focus on acquiring new customers and improving efficiency while implementing flexible pricing strategies to adapt to market trends[2].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________to ______________ Commission file number 001-34577 IT Tech Packaging, Inc. (Exact name of registrant as specified in its charter) Nevada 20-4158835 St ...