PART I [Business](index=5&type=section&id=Item%201.%20Business) The company produces paper products and face masks in China through a VIE structure, funded by recent public offerings - The company operates through a complex **Variable Interest Entity (VIE) structure**, where it controls its primary operating entity, Dongfang Paper, through a series of contractual agreements rather than direct equity ownership[16](index=16&type=chunk)[93](index=93&type=chunk)[281](index=281&type=chunk) - In response to the COVID-19 pandemic, the company launched a production line for **non-medical single-use face masks** in April 2020[44](index=44&type=chunk) 2020 Product Revenue and Production Breakdown | Product Category | % of Total Revenue | % of Total Production Quantity | | :--- | :--- | :--- | | Corrugating Medium Paper | 78.42% | 86.61% | | Offset Printing Paper | 12.15% | 8.96% | | Tissue Paper Products | 8.34% | 4.43% | 2021 Public Offerings | Offering Date | Gross Proceeds | Price per Share/Warrant | Use of Proceeds | | :--- | :--- | :--- | :--- | | March 2021 | ~$21.9 million | $0.75 | General corporate and working capital | | January 2021 | ~$14.4 million | $0.55 | General corporate and working capital | - The company is developing a **biomass cogeneration project**, having selected a supplier for a 75-tonne-per-hour biomass boiler in February 2021, with plans to participate in bidding for urban central heating projects[27](index=27&type=chunk) [Risk Factors](index=25&type=section&id=Item%201A.%20RISK%20FACTORS) The company faces significant operational, regulatory, and structural risks related to its VIE structure and operations in China - The COVID-19 outbreak caused a temporary closure of Corrugating Medium Paper (CMP) production in early 2020, leading to a **49.89% decrease in CMP revenue** in the first quarter of 2020[90](index=90&type=chunk) - The company relies on contractual arrangements with its **VIE, Dongfang Paper**, for nearly all revenue; if the PRC government deems these agreements non-compliant, the business could face fines, license revocation, or be forced to restructure[93](index=93&type=chunk)[94](index=94&type=chunk)[96](index=96&type=chunk) - The Chairman and CEO, Zhenyong Liu, owns **93.39% of the equity in the operating entity Dongfang Paper**, creating potential conflicts of interest with his duties to the Company[98](index=98&type=chunk) - The **PRC's legal system is described as vague and uncertain**, which poses risks regarding the interpretation and enforcement of laws governing business operations and contractual arrangements[136](index=136&type=chunk) - The newly enacted **Foreign Investment Law in China creates uncertainty** as to whether the company's VIE structure will be classified as foreign investment, which could lead to restructuring requirements[159](index=159&type=chunk)[160](index=160&type=chunk) [Unresolved Staff Comments](index=43&type=section&id=Item%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reports no unresolved staff comments - There are no unresolved staff comments[173](index=173&type=chunk) [Properties](index=43&type=section&id=Item%202.%20PROPERTIES) The company's production facilities are located in Hebei Province on leased and soon-to-be-acquired land - The company's main production base, Xushui Paper Mill, is on approximately **33 acres of land leased from the local government** under a 30-year lease expiring in 2031[174](index=174&type=chunk) - Dongfang Paper is acquiring Hebei Tengsheng Paper Co, Ltd for approximately **$46 million (RMB 320 million)**, which owns the land for the second production base in Xingtai[175](index=175&type=chunk) - The office and industrial buildings at the headquarters are **leased from Hebei Fangsheng, a related party**, under a lease extended to August 2022[176](index=176&type=chunk) [Legal Proceedings](index=43&type=section&id=Item%203.%20LEGAL%20PROCEEDINGS) The company reports no legal proceedings - There are no legal proceedings[177](index=177&type=chunk) [Mine Safety Disclosures](index=43&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Not Applicable[177](index=177&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=44&type=section&id=Item%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock trades on the NYSE AMERICAN, with no dividends expected and all incentive plan shares issued - The company's common stock is traded on the **NYSE AMERICAN exchange under the symbol 'ITP'**[178](index=178&type=chunk) - The company **does not expect to pay dividends** in the near future, with the last dividend paid in December 2013[178](index=178&type=chunk) - The company has a 2015 Omnibus Equity Incentive Plan (1.5 million shares) and a 2019 Incentive Stock Plan (2.0 million shares); as of December 31, 2020, **all shares authorized under these plans have been issued**[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk) [Selected Financial Data](index=46&type=section&id=Item%206.%20SELECTED%20FINANCIAL%20DATA) Financials show a revenue decline to $100.9 million and a net loss of $5.6 million in 2020, with increased total assets Selected Financial Data (in millions, except per share data) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | **Revenues** | $100.9 | $117.6 | | **Gross Profit** | $5.7 | $13.7 | | **(Loss) Income from Operations** | $(5.5) | $3.9 | | **Net (Loss) Income** | $(5.6) | $2.2 | | **Basic and Diluted (Losses) Earnings per Share** | $(0.21) | $0.10 | | **Total Assets** | $199.9 | $190.2 | | **Total Stockholders' Equity** | $175.1 | $166.0 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=47&type=section&id=Item%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) FY2020 saw a 14.17% revenue decrease and a net loss of $5.6 million, driven by lower paper sales and a working capital deficit FY2020 vs FY2019 Revenue Performance | Metric | FY2020 | FY2019 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $100.9M | $117.6M | -14.17% | | Gross Profit | $5.7M | $13.7M | -58.32% | | Net (Loss) Income | $(5.6M) | $2.2M | -350.05% | Revenue by Product (FY2020 vs FY2019) | Product | 2020 Revenue | 2019 Revenue | Change (%) | | :--- | :--- | :--- | :--- | | Total CMP | $79.2M | $90.8M | -12.84% | | Offset Printing Paper | $12.3M | $20.4M | -39.98% | | Tissue Paper Products | $8.4M | $6.4M | +32.49% | | Face Masks | $1.1M | $0 | N/A | - The company had a **working capital deficit of approximately $3.4 million** as of December 31, 2020, a significant shift from a working capital of $7.2 million in 2019, mainly attributed to payments for the acquisition of Hebei Tengsheng[220](index=220&type=chunk) - The company entered into a **sale-leaseback financing arrangement** in August 2020 for proceeds of approximately US$2.5 million (RMB 16 million)[223](index=223&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to foreign exchange risk from RMB/USD fluctuations and does not use hedging instruments - The company is exposed to **foreign exchange risk** as almost all revenues and costs are in RMB, while reporting is in USD; a depreciation of the RMB against the USD would negatively impact reported results[247](index=247&type=chunk) - The company has **not entered into any hedging transactions** to mitigate foreign exchange risk[247](index=247&type=chunk) [Financial Statements and Supplementary Data](index=60&type=section&id=Item%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) Audited financial statements for fiscal years 2020 and 2019 are included in the report beginning on page F-1 - The audited financial statements for fiscal years 2020 and 2019 are included in the report, starting from page F-1[249](index=249&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=105&type=section&id=Item%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The company reports no changes in or disagreements with its accountants - None reported[435](index=435&type=chunk) [Controls and Procedures](index=105&type=section&id=Item%209A.%20CONTROLS%20AND%20PROCEDURES) This item is not applicable - Not Applicable[435](index=435&type=chunk) [Other Information](index=105&type=section&id=Item%209B.%20OTHER%20INFORMATION) The company reports no other information - None reported[435](index=435&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=106&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The board consists of five members, including three independent directors, and has established audit, compensation, and nominating committees - The Board of Directors has five members, with **three classified as independent**: Marco Ku Hon Wai, Wenbing Christopher Wang, and Lusha Niu[437](index=437&type=chunk)[447](index=447&type=chunk) - The Board has an Audit Committee, a Compensation Committee, and a Nominating Committee, **all comprised solely of independent directors**[447](index=447&type=chunk) - The company has determined that both Marco Ku Hon Wai and Wenbing Christopher Wang qualify as **audit committee financial experts**[448](index=448&type=chunk) - Zhenyong Liu holds the **dual role of Chairman and Chief Executive Officer**, which the Board believes is the most effective leadership structure for the company[454](index=454&type=chunk) [Executive Compensation](index=112&type=section&id=Item%2011.%20Executive%20Compensation) CEO Zhenyong Liu's 2020 total compensation was $196,782, including salary, bonus, and stock awards 2020 Executive Compensation Summary | Name and Position | Salary ($) | Bonus ($) | Stock Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | | Zhenyong Liu, Chairman, CEO | 36,782 | 40,000 | 120,000 | 196,782 | | Jing Hao, CFO | 36,782 | 40,000 | - | 76,782 | | Dahong Zhou, Secretary | 4,452 | - | - | 4,452 | - On April 8, 2020, the company issued **200,000 shares of common stock to CEO Zhenyong Liu** under the 2019 ISP, valued at $120,000[461](index=461&type=chunk) - Independent directors Marco Ku Hon Wai and Wenbing Christopher Wang each received **annual compensation of $20,000**[465](index=465&type=chunk)[466](index=466&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=115&type=section&id=Item%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) CEO Zhenyong Liu beneficially owned 4.7% of common stock, with all executives and directors as a group owning 4.8% Beneficial Ownership of Directors and Executive Officers (as of March 19, 2021) | Name | Beneficial Ownership (Shares) | Percentage of Common Stock | | :--- | :--- | :--- | | Zhenyong Liu (CEO and Director) | 5,364,841 | 4.7% | | All Directors and Executive Officers as a Group (7 persons) | 5,417,161 | 4.8% | [Certain Relationships and Related Transactions, and Director Independence](index=115&type=section&id=Item%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) The company engaged in related party transactions, primarily loans from its CEO and a property leaseback arrangement - CEO Zhenyong Liu has historically provided significant loans to the company for working capital; as of year-end 2020, the principal on these loans was fully paid, but **accrued interest of $649,468 was still owed to him**[473](index=473&type=chunk)[477](index=477&type=chunk) - In 2013, the company sold its headquarters' land use right and buildings to **Hebei Fangsheng, a related party**, and leased back the industrial buildings[477](index=477&type=chunk)[478](index=478&type=chunk) - The Board of Directors reviews and approves all potential **related party transactions** on a case-by-case basis[479](index=479&type=chunk) - The company identifies Marco Ku Hon Wai, Wenbing Christopher Wang, and Lusha Niu as its **three independent directors**[480](index=480&type=chunk) [Principal Accountant Fees and Services](index=118&type=section&id=Item%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) The company paid its auditor, WWC, P.C., $188,208 in audit fees for 2020, with no other service fees incurred Audit Fees Paid to WWC, P.C. | Fiscal Year | Audit Fees | | :--- | :--- | | 2020 | $188,208 | | 2019 | $171,600 | - **No fees were paid for audit-related, tax, or other services** to the principal accountant in fiscal years 2020 and 2019[481](index=481&type=chunk)[482](index=482&type=chunk) PART IV [Exhibits, Financial Statements Schedules](index=119&type=section&id=Item%2015.%20EXHIBITS%2C%20FINANCIAL%20STATEMENTS%20SCHEDULES) This section lists all filed exhibits, including VIE agreements, financing documents, and Sarbanes-Oxley certifications - The exhibits include the full set of contractual agreements establishing the **VIE structure with Dongfang Paper**, such as the Exclusive Technical Service Agreement, Proxy Agreement, and Call Option Agreement[484](index=484&type=chunk)[485](index=485&type=chunk) - Exhibits related to recent financing activities are included, such as the **Securities Purchase Agreements from 2020 and 2021** and the Underwriting Agreement from March 2021[487](index=487&type=chunk) - **Certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act**, signed by the CEO and CFO, are filed as exhibits[487](index=487&type=chunk) [Form 10-K Summary](index=122&type=section&id=Item%2016%20FORM%2010-K%20SUMMARY) This item is not applicable - Not applicable[487](index=487&type=chunk) Financial Statements and Supplementary Data [Report of Independent Registered Public Accounting Firm](index=62&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The auditor issued an unqualified opinion on the financial statements, identifying property valuation as a critical audit matter - The auditor, WWC, P.C., provided an **unqualified opinion** on the company's consolidated financial statements for fiscal years 2020 and 2019[251](index=251&type=chunk) - A **critical audit matter** was noted regarding the substantial amount and valuation of property, plant, and equipment, which required extended audit procedures[255](index=255&type=chunk) [Consolidated Financial Statements](index=64&type=section&id=Consolidated%20Financial%20Statements) The statements show a $5.6 million net loss for 2020 on assets of $199.9 million and liabilities of $24.8 million Consolidated Balance Sheet Highlights (as of Dec 31, in millions) | Account | 2020 | 2019 | | :--- | :--- | :--- | | Total Current Assets | $14.9 | $24.0 | | Property, Plant, and Equipment, net | $145.1 | $151.6 | | **Total Assets** | **$199.9** | **$190.2** | | Total Current Liabilities | $18.3 | $16.8 | | **Total Liabilities** | **$24.8** | **$24.2** | | **Total Stockholders' Equity** | **$175.1** | **$166.0** | Consolidated Statement of Income Highlights (Year Ended Dec 31, in millions) | Account | 2020 | 2019 | | :--- | :--- | :--- | | Revenues | $100.9 | $117.6 | | Gross Profit | $5.7 | $13.7 | | (Loss) Income from Operations | $(5.5) | $3.9 | | **Net (Loss) Income** | **$(5.6)** | **$2.2** | Consolidated Statement of Cash Flows Highlights (Year Ended Dec 31, in millions) | Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $16.1 | $7.5 | | Net Cash Used in Investing Activities | $(20.5) | $(7.9) | | Net Cash Provided by (Used in) Financing Activities | $2.1 | $(5.8) | [Notes to Consolidated Financial Statements](index=70&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail the VIE structure, debt, capital commitments, related party transactions, and two subsequent public offerings in 2021 - The company's VIE, Dongfang Paper, generated **98.91% of total revenue in 2020** and held **90.70% of total assets** as of December 31, 2020[285](index=285&type=chunk) - As of Dec 31, 2020, the company had **short-term bank loans of $6.4 million** and **long-term loans of $9.6 million**, with certain property, plant, and equipment pledged as collateral[346](index=346&type=chunk)[350](index=350&type=chunk) - The company has significant capital commitments, including a remaining payment of **$29 million for the acquisition of Hebei Tengsheng** and **$4.6 million for new machinery**[408](index=408&type=chunk) - Subsequent to year-end, the company conducted two public offerings in January and March 2021, raising gross proceeds of approximately **$14.4 million and $21.9 million**, respectively[422](index=422&type=chunk)[423](index=423&type=chunk)

IT Tech Packaging, Inc. (NYSE:ITP) Q3 2020 Earnings Conference Call November 13, 2020 8:00 AM ET Company Participants Zhenyong Liu - Chairman & Chief Executive Officer Jing Hao - Chief Financial Officer Conference Call Participants Operator Hello ladies and gentlemen, and welcome to participate in IT Tech Packaging's Third Quarter 2020 earnings conference call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. Joining us toda ...

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 September 30, 2020 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 Data and Key Metrics Changes - For Q2 2020, total revenue decreased by 21.6% to $26.4 million due to lower average selling prices (ASP) across all paper products and a significant drop in offset printing paper sales volume [8][12] - Net loss for Q2 2020 was $1 million, resulting in a loss of $0.04 per share, compared to a net income of $0.5 million or $0.02 per share in the same period last year [12][15] - Earnings before interest, taxes, depreciation, and amortization (EBITDA) decreased by $1.7 million to $2.9 million from $4.6 million year-over-year [12][15] Business Line Data and Key Metrics Changes - The Corrugating Medium Paper (CMP) segment generated $21.9 million, accounting for 83% of total revenue, with a slight volume decrease of 1.6% [9] - Offset printing paper revenue fell by 79.8% to $1.3 million, with a volume decrease of 74.5% [9] - Tissue paper products revenue increased by 100.2% to $2.4 million, driven by a sales volume of 2,884 tons [10] Market Data and Key Metrics Changes - The ASP for regular CMP decreased by 15% to $370 per ton, while lightweight CMP ASP decreased by 15.4% to $357 per ton [9] - The ASP for offset printing paper decreased by 24.7% to $578 per ton [9] - The ASP for tissue paper products was $825 per ton, reflecting a 13% decrease [10] Company Strategy and Development Direction - The company aims to stabilize ASP for all paper products as the economy recovers from the pandemic, indicating a focus on improving overall performance [6][7] - The launch of the face mask business in April 2020 generated $0.9 million in revenue, highlighting diversification into new product lines [6] Management Comments on Operating Environment and Future Outlook - Management noted that while sales and operations were impacted by COVID-19 in Q1, improvements were seen in Q2, particularly in the tissue paper and face mask segments [6] - The underlying demand for products remains strong, and management expects continued improvement as the economy recovers [7] Other Important Information - As of June 30, 2020, the company had cash and bank balances of $12.8 million, with current assets of $27.8 million and current liabilities of $16.6 million, resulting in a working capital of $11.2 million [16] - SG&A expenses increased by 39.4% to $3.4 million, contributing to a loss from operations of $0.8 million [11] Q&A Session Summary - No specific questions or answers were recorded in the provided content, indicating the end of the call without a Q&A segment [18]

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 June 30, 2020 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 Data and Key Metrics Changes - In Q1 2020, total revenue decreased by 49.9% year-over-year to $8.7 million, primarily due to production suspension from mid-January to early March 2020 caused by the COVID-19 pandemic and the seasonal effect of the Chinese New Year [7][9] - Net loss for Q1 2020 was $2.4 million, resulting in a net loss of $0.11 per basic and diluted share, compared to a net loss of $2.7 million or $0.12 per share for the same period last year [12] - Earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by $0.3 million to $1.1 million from $0.8 million for the same period last year [13] Business Line Data and Key Metrics Changes - The CMP segment generated revenue of $7.7 million, accounting for 88.5% of total revenue, with volumes decreasing by 44.6% to 18,677 tons [10] - The offset printing paper segment did not generate any revenue due to production suspension during the pandemic, with expectations to generate revenue in Q2 2020 [9][10] - Tissue paper products generated $1 million in revenue from sales of 1,185 tons at an average selling price (ASP) of $849 per ton [11] Market Data and Key Metrics Changes - The average selling price for regular CMP decreased by 10.8% to $415 per ton, while the ASP for lightweight CMP decreased by 9.1% to $412 per ton [10] - The company noted a growing demand for tissue paper products due to COVID-19 control measures, with production lines running at full capacity since April [7][8] Company Strategy and Development Direction - The company is launching a new tissue paper production line (PM10) and has also started a non-medical face masks production line to meet increased demand for protective gear [8] - Management expressed confidence in the underlying demand for products and aims to improve overall performance in the coming quarters [8] Management Comments on Operating Environment and Future Outlook - Management acknowledged the unprecedented challenges posed by the COVID-19 pandemic but remains optimistic about the recovery of CMP products in Q2 and Q3 2020 [18] - The company plans to consider stock buybacks or dividends if profitability improves, with expectations of solid cash positions in the latter half of the year [20] Other Important Information - As of March 31, 2020, the company had current assets of $21.6 million and current liabilities of $14 million, resulting in a working capital of $7.6 million [14] - Net cash provided by operating activities was $6.9 million for Q1 2020, compared to net cash used in operating activities of $3.1 million for the same period last year [15] Q&A Session Summary Question: Will the company’s regular cardboard business, lightweight cardboard business, and offset paper return to normal levels? - Management expects the CMP products business to be back on track in Q2 and Q3 of this year [18] Question: Will the company consider stock buybacks or dividends if profitability improves? - Currently, the company has no dividend plans but will consider this if profitability improves, with expectations of solid cash positions in the third and fourth quarters [20]

Part I - Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for the quarter ended March 31, 2020, show a significant decrease in revenue and a net loss of $2.4 million, with total assets decreasing to $182.3 million, while cash flow from operations turned strongly positive at $6.9 million, leading to an increase in the company's cash balance to $11.7 million [Condensed Consolidated Balance Sheets](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of March 31, 2020, total assets were $182.3 million, a decrease from $190.2 million at the end of 2019, primarily in property, plant, and equipment and prepayments, partially offset by a significant increase in cash and bank balances, while total liabilities decreased to $21.3 million from $24.2 million, and stockholders' equity fell to $161.0 million from $166.0 million Condensed Consolidated Balance Sheets | Financial Metric | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total Current Assets** | $21,634,039 | $24,041,239 | | **Total Assets** | $182,256,298 | $190,198,430 | | **Total Current Liabilities** | $14,032,616 | $16,835,460 | | **Total Liabilities** | $21,287,277 | $24,203,368 | | **Total Stockholders' Equity** | $160,969,021 | $165,995,062 | - Cash and bank balances nearly doubled to **$11.7 million** from **$5.8 million** at the end of 2019[5](index=5&type=chunk) [Condensed Consolidated Statements of Income and Comprehensive Income](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME%20AND%20COMPREHENSIVE%20INCOME) For the three months ended March 31, 2020, the company's revenues fell by nearly 50% year-over-year to $8.7 million, yet the net loss slightly narrowed to $2.4 million from $2.7 million in the prior-year period, resulting in a loss per share of $0.11 Condensed Consolidated Statements of Income and Comprehensive Income | Metric | Three Months Ended Mar 31, 2020 | Three Months Ended Mar 31, 2019 | | :--- | :--- | :--- | | **Revenues** | $8,743,851 | $17,450,292 | | **Gross Loss** | ($169,719) | ($192,466) | | **Loss from Operations** | ($2,866,682) | ($3,173,939) | | **Net Loss** | ($2,436,287) | ($2,722,595) | | **Basic and Diluted Losses per Share** | ($0.11) | ($0.12) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) The company generated $6.9 million in cash from operating activities for the first quarter of 2020, a significant improvement from the $3.1 million used in the same period of 2019, with net cash used in investing activities at $0.8 million and financing activities neutral, resulting in a net increase in cash of $5.9 million, boosting the ending cash balance to $11.7 million Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Three Months Ended Mar 31, 2020 | Three Months Ended Mar 31, 2019 | | :--- | :--- | :--- | | **Net Cash Provided by (Used in) Operating Activities** | $6,860,307 | ($3,052,152) | | **Net Cash Used in Investing Activities** | ($756,514) | ($1,415,761) | | **Net Cash Used in Financing Activities** | $0 | ($5,366,166) | | **Net Increase (Decrease) in Cash** | $5,874,407 | ($9,492,366) | | **Cash - End of Period** | $11,712,152 | $2,625,059 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The notes reveal the company's reliance on its Variable Interest Entity (VIE), Dongfang Paper, which generates 100% of revenue, with key details including the company's debt structure comprising $6.1 million in short-term and $8.8 million in long-term loans, significant commitments including a $43.6 million payment for the acquisition of Hebei Tengsheng, and the COVID-19 pandemic highlighted as a major risk that impacted production, while subsequent to the quarter's end, the company issued new stock and warrants to raise capital - The company operates through a Variable Interest Entity (VIE) structure, with Dongfang Paper in the PRC accounting for **100% of the company's total revenue** for the quarter[21](index=21&type=chunk) - As of March 31, 2020, the company had total loans payable of approximately **$14.9 million**, consisting of **$6.1 million** in short-term bank loans and **$8.8 million** in long-term loans from a credit union[47](index=47&type=chunk)[50](index=50&type=chunk) - A significant capital commitment of **$43.6 million** remains payable by December 31, 2021, for the acquisition of Hebei Tengsheng[89](index=89&type=chunk) - The company's revenue was affected by a temporary suspension in production during the quarter due to the COVID-19 pandemic outbreak[101](index=101&type=chunk) - Subsequent to the quarter end, in April 2020, the company granted **2 million shares** of restricted stock and entered an agreement to sell **4.4 million shares** and warrants for gross proceeds of approximately **$2.55 million**[104](index=104&type=chunk)[105](index=105&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 49.9% year-over-year revenue decrease to $8.7 million for Q1 2020, attributing it to lower sales volumes and prices for Corrugating Medium Paper (CMP) and tissue paper, primarily due to the COVID-19 pandemic and Chinese New Year production halts, while the company's liquidity improved significantly, with cash increasing by $5.9 million, driven by strong operating cash flow from better working capital management, and the report details operational performance by product, cost analysis, and capital resources [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Revenue for Q1 2020 plummeted by 49.9% to $8.7 million from $17.5 million in Q1 2019, driven by a 43.8% decrease in sales volume and lower Average Selling Prices (ASPs), with the decline most pronounced in Corrugating Medium Paper (CMP), resulting in a gross loss of $169,719, a slight increase from a loss of $192,466 in the prior year, and an overall gross margin deteriorating to -1.94%, leading to a net loss for the quarter of $2.4 million Revenue by Product | Product | Q1 2020 Revenue | Q1 2019 Revenue | % Change | | :--- | :--- | :--- | :--- | | Total CMP | $7,737,502 | $15,590,011 | -50.37% | | Tissue Paper | $1,006,349 | $1,860,281 | -45.90% | | **Total** | **$8,743,851** | **$17,450,292** | **-49.89%** | - The decrease in revenue was attributed to production suspension from mid-January to early March 2020 due to the Chinese New Year and the COVID-19 pandemic outbreak[112](index=112&type=chunk) Average Selling Prices by Product | Product ASP | Q1 2020 | Q1 2019 | % Decrease | | :--- | :--- | :--- | :--- | | Regular CMP | $415/tonne | $465/tonne | -10.75% | | Light-Weight CMP | $412/tonne | $453/tonne | -9.05% | | Tissue Paper | $849/tonne | $1,160/tonne | -26.81% | - Gross profit margin for tissue paper products fell sharply to **-70.74%** from **1.81%** in the prior year, mainly due to higher unit fixed costs absorbed by lower production volume[134](index=134&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) The company's cash and cash equivalents increased by $5.9 million to $11.7 million as of March 31, 2020, primarily driven by a strong net cash inflow from operating activities of $6.9 million, a significant reversal from the prior year, with the positive operating cash flow resulting from effective working capital management, including a large decrease in accounts receivable, and the company finances its operations through cash flow, bank loans, and has recently raised additional capital through a stock and warrant offering - Cash and cash equivalents increased to **$11.7 million** at March 31, 2020, from **$5.8 million** at December 31, 2019[144](index=144&type=chunk) - Net cash provided by operating activities was **$6.9 million**, a turnaround of **$9.9 million** from the **$3.1 million** used in the same period in 2019, chiefly due to a **$1.3 million** decrease in accounts receivable and a **$5.5 million** decrease in prepayments[144](index=144&type=chunk) - The company had approximately **$0.9 million** in capital expenditure commitments as of March 31, 2020, mainly for building improvements[143](index=143&type=chunk) - Subsequent to the quarter, the company raised approximately **$2.55 million** in gross proceeds from a registered direct offering to institutional investors[148](index=148&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are foreign exchange risk, due to operations in Chinese RMB and reporting in U.S. dollars, and inflation risk in China, which could compress margins if cost increases cannot be passed on to customers, and the company does not use hedging instruments to mitigate these risks - The company is exposed to foreign exchange risk as almost all revenues and costs are denominated in RMB, while financial statements are reported in USD. No hedging transactions are used[171](index=171&type=chunk) - Inflation in China poses a risk to operating results if the company cannot increase selling prices to offset rising costs[172](index=172&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on an evaluation conducted by management, including the CEO and CFO, the company concluded that its disclosure controls and procedures were effective as of March 31, 2020, and there were no material changes to internal controls over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of the end of the period[173](index=173&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2020[174](index=174&type=chunk) Part II - Other Information [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - None[176](index=176&type=chunk) [Item 1A. Risk Factors](index=46&type=page&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, IT Tech Packaging, Inc. is not required to provide risk factor disclosures in its Form 10-Q - The company is a smaller reporting company and is not required to provide this information[177](index=177&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) The company announced its intention to hold its 2020 Annual Meeting of Stockholders on July 23, 2020, and provided the deadline for the submission of stockholder proposals - The company intends to hold its 2020 Annual Meeting of Stockholders on July 23, 2020[178](index=178&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, which include certifications by the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act, and XBRL-related documents - The report includes certifications from the CEO and CFO pursuant to Sarbanes-Oxley Act sections 302 and 906, as well as XBRL data files[180](index=180&type=chunk)

IT Tech Packaging, Inc. (NYSE:ITP) Q4 2019 Earnings Conference Call March 24, 2020 8:00 AM ET Company Participants Zhenyong Liu - Chairman and Chief Executive Officer Jing Hao - Chief Financial Officer Melody Shi - IR, Evergreen Consulting Inc. Janice Wang - IR, EverGreen Consulting Inc. Operator Hello, ladies and gentlemen, and welcome to IT Tech Packaging’s Fourth Quarter and Fiscal Year 2019 Earnings Conference Call. At this time, I would like to inform you that this conference is being recorded and that ...