IT Tech Packaging(ITP) - 2024 Q4 - Annual Report

PART I Item 1. Business IT Tech Packaging, Inc. (ITP) is a Nevada holding company operating in China through subsidiaries and a VIE, producing paper products and medical face masks Introduction & Corporate Structure ITP, a Nevada holding company, operates in China via PRC subsidiaries and a VIE, Dongfang Paper, due to foreign investment restrictions - IT Tech Packaging, Inc. is a Nevada holding company with no direct operations, relying on its PRC subsidiaries and the VIE, Dongfang Paper, for business activities in China[17][18] - The company controls and receives economic benefits from Dongfang Paper through contractual arrangements (VIE Agreements), consolidating its financial results under U.S. GAAP[19][21] - Investors in ITP common stock do not directly hold equity interests in the Chinese operating entities, but rather in the Nevada holding company[19][20] Recent Regulatory Developments Recent Chinese regulatory changes in cybersecurity and overseas listings introduce uncertainties for ITP's operations and securities offerings - The revised Measures on Cyberspace Security Review (effective Feb 15, 2022) require 'network platform operators' controlling personal information of no less than one million users seeking foreign listing to undergo cybersecurity review[40] - The Trial Administrative Measures for Administration of Overseas Securities Offerings and Listings by Domestic Companies (effective March 31, 2023) require domestic companies seeking overseas listing to fulfill filing procedures with the CSRC[43] - The Prevention and Control of Noise Pollution Law (effective June 5, 2022) mandates compliance with industrial noise limits and requires a pollutant discharge permit, which ITP complies with through quarterly tests[44] Consolidation and Cash Flow ITP consolidates its VIE, Dongfang Paper, facing PRC cash transfer restrictions and HFCAA delisting risks due to auditor inspection issues - The VIE (Dongfang Paper) accounted for 96.07% of total assets and 78.97% of total liabilities as of December 31, 2024[46] VIE Financial Summary (as of December 31, 2024 and 2023) | Metric | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Total Assets | $170,571,325 | $184,873,623 | | Total Liabilities | $16,976,765 | $20,084,995 | | Net cash provided by operating activities | $5,779,834 | $17,444,376 | | Net cash used in investing activities | $(22,239,297) | $(329,611) | | Net cash (used in) provided by financing activities | $(2,529,263) | $3,965,631 | - PRC regulations restrict dividend payments from PRC subsidiaries, requiring allowances for statutory reserves and approval for foreign currency conversion for capital expenses[48][50][51] - The company's common stock faces delisting risk under the HFCAA if the PCAOB cannot adequately inspect its China-based auditor for two consecutive years[53] Summary of Risk Factors The company faces significant risks across business operations, PRC presence, corporate structure, and common stock, including regulatory and VIE challenges - Risks Relating to Business: Operating history, competition, growth management, acquisitions, key personnel dependence, operational fluctuations, product liability, raw material/energy availability and pricing, manufacturing disruptions, regulatory compliance, pricing pressures, product development, limited insurance, and intellectual property[55] - Risks Related to Doing Business in the PRC: Government oversight, CSRC/CAC regulations, cybersecurity, changes in government policies, vague laws, economic slowdown, dividend restrictions, currency conversion controls, and international trade tensions[57] - Risks Related to Corporate Structure: PRC regulation of loans/investments, Renminbi fluctuation, offshore SPV regulations, M&A rules, PRC legal system, enforcement of judgments, overseas regulator investigations, social security programs, Foreign Investment Law, VIE contractual obligations, and conflicts of interest[59] - Risks Related to Common Stock: Delisting under HFCAA, Sarbanes-Oxley Act compliance, scrutiny of U.S. listed Chinese companies, control by officers/directors, dividend policy, limited trading volume, and future financings[61] Our Business Operations ITP produces corrugating medium paper, offset printing paper, tissue paper, and face masks in China, focusing on recycled materials and North China markets - ITP produces corrugating medium paper, offset printing paper, tissue paper products, and medical face masks in China[62] - Corrugating medium paper comprised approximately 100% of total paper production quantities and 99.82% of total revenue for the year ended December 31, 2024[70] - Production of offset printing paper, tissue paper products, and face masks was suspended during the year ended December 31, 2024[71][72][73] Paper Production Capacities by Province (2023 vs. 2022) | Province | 2023 Capacity (10k tonnes) | 2022 Capacity (10k tonnes) | % Change | |:---|:---|:---|:---|\ | Shandong | 2,150 | 2,015 | 6.70 | | Guangdong | 2,113 | 1,969 | 7.31 | | Jiangsu | 1,417 | 1,373 | 3.20 | | Zhejiang | 1,213 | 1,193 | 1.68 | | Fujian | 869 | 821 | 5.85 | | Henan | 706 | 715 | (1.26) | | Guangxi | 660 | 559 | 18.07 | | Hubei | 645 | 592 | 8.95 | | Hebei | 432 | 378 | 14.29 | | Chongqing | 351 | 408 | (13.97) | Top 10 Major Customers (2024) | Company | Sales Amount (USD$, net of VAT) | % of Total Revenue | |:---|:---|:---|\ | Company A (Hebei) | 5,872,762 | 7.74% | | Company B (Hebei) | 5,630,649 | 7.42% | | Company C (Shandong) | 5,617,724 | 7.41% | | Company D (Tianjin) | 5,562,521 | 7.33% | | Company E (Tianjin) | 5,561,284 | 7.33% | | Company F (Hebei) | 4,204,968 | 5.54% | | Company G (Hebei) | 4,141,651 | 5.46% | | Company H (Hebei) | 4,003,315 | 5.28% | | Company I (Hebei) | 3,826,432 | 5.05% | | Company J (Hebei) | 3,815,617 | 5.03% | | Total Major Customers | 48,236,923 | 63.59% | Production Lines Status (as of December 31, 2024) | PM | Paper Product Produced | Capacity (tonnes/year) | Owned by | Operated by | Status as of Dec 31, 2024 | |:---|:---|:---|:---|:---|:---|\ | PM1 | Corrugating Medium Paper | 60,000 | Dongfang Paper | Dongfang Paper | In production | | PM2 | Offset Printing Paper | 50,000 | Dongfang Paper | Dongfang Paper | Suspended during 2024 | | PM3 | Offset Printing Paper | 40,000 | Dongfang Paper | Dongfang Paper | Suspended during 2024 | | PM4 | Digital Photo Paper | ** | Baoding Shengde | Baoding Shengde | Suspended in June 2016 due to low market demand | | PM5 | Digital Photo Paper | ** | Baoding Shengde | Baoding Shengde | Suspended in June 2016 due to low market demand | | PM6 | Corrugating Medium Paper | 360,000 | Baoding Shengde | Dongfang Paper | In production | | PM7 | Specialty paper | 10,000 | Dongfang Paper | Dongfang Paper | In renovation | | PM8 | Tissue paper | 15,000 | Dongfang Paper | Dongfang Paper | Suspended during 2024 | | PM9 | Tissue paper | 15,000 | Dongfang Paper | Dongfang Paper | Suspended during 2024 | | PM10 | Tissue paper | 20,000 | Dongfang Paper | Dongfang Paper | In construction | Top 3 Major Suppliers (2024) | Company | Purchase Amount (USD$) | % of Total Purchase | |:---|:---|:---|\ | Company A (Hebei) | 47,049,870 | 73% | | Company B (Hebei) | 11,201,353 | 17% | | Company C (Hebei) | 4,691,261 | 7% | | Total Major Suppliers | 62,942,484 | 97% | - The company holds eight registered trademarks and twelve utility patent certificates related to paper manufacturing equipment[102][104] - As of December 31, 2024, ITP had 383 full-time employees, all based in the PRC, with 19.6% female and 80.4% male[114] Item 1A. Risk Factors This section details ITP's significant business, PRC, corporate structure, and common stock risks, including regulatory uncertainties and VIE challenges Risks Relating to our Business ITP's business risks include inadequate operating history, intense competition, growth management, key personnel dependence, and raw material/energy volatility - Operating history may not adequately predict future results, with risks including failure to raise capital, implement strategy, increase brand awareness, manage operations, control expenses, or adapt to market changes[122][125] - The company is highly dependent on key personnel, including CEO Zhenyong Liu, and the loss of these individuals could materially affect business operations[131][132] - The company does not maintain product liability insurance, exposing it to substantial costs and adverse publicity from potential claims[134][146] - Operating results are sensitive to the availability and pricing of energy (natural gas) and raw materials (recycled paper), with potential disruptions from supply interruptions or government-mandated restrictions[136][137] - Failure to renew essential certificates, permits, and licenses, such as the Pollution Discharge Permit, could lead to termination of operations[140][142] - Inadequate protection of intellectual property rights (trademarks, trade secrets, patents) could undermine competitive position and lead to infringement claims[147][149][150] Risks Related To Doing Business in the PRC Operating in China exposes ITP to significant government oversight, regulatory uncertainties, economic fluctuations, and currency conversion restrictions - The PRC government has significant oversight and discretion over business operations, with potential for intervention that could materially change operations or the value of securities[151][152] - The CSRC's Trial Measures for Administration of Overseas Securities Offerings and Listings by Domestic Companies (effective March 31, 2023) may subject ITP to additional filing procedures and compliance requirements, with potential penalties for non-compliance[154][155] - The CAC's Cybersecurity Review Measures and Draft Regulations on Network Data Security Administration could require cybersecurity reviews for companies with over one million users' personal data or those affecting national security, potentially disrupting operations[157][158][159][169][172] - Changes in PRC government policies, vague laws, and inconsistent enforcement create substantial uncertainties for business operations and foreign investment[173][176] - A slowdown, inflation, or other adverse developments in the PRC economy could reduce demand for products and harm profitability[179][180] - PRC subsidiaries are subject to restrictions on dividend payments and other distributions, including statutory reserve requirements and withholding taxes, limiting cash available to the holding company[181][182][183][185][189][190] - Governmental control of Renminbi convertibility into foreign currencies may limit ITP's ability to utilize revenues effectively or pay dividends in foreign currencies[191][193] Risks Related to Our Corporate Structure ITP's VIE structure introduces risks from PRC regulations, Renminbi fluctuations, potential government intervention, and enforceability of contractual arrangements - PRC regulations on loans and direct investment in PRC entities by offshore holding companies may delay or hinder ITP's ability to fund and expand its business[194][197] - Fluctuations in the Renminbi exchange rate against the U.S. dollar can materially and adversely affect cash flows, revenues, and financial condition[198] - Failure to comply with SAFE regulations (e.g., Circular No. 37) for offshore special purpose companies by PRC residents could lead to fines, restrictions on investment activities, or limitations on dividend distributions[201][202] - The M&A Rules and other PRC regulations establish complex procedures for foreign acquisitions of Chinese companies, potentially delaying or inhibiting ITP's growth through acquisitions[208][209] - The PRC's legal and judicial system is rudimentary and inconsistent, potentially failing to adequately protect ITP's business, operations, and foreign investors' rights[210][211] - The newly enacted Foreign Investment Law (effective Jan 1, 2020) introduces uncertainties regarding the classification of VIEs as foreign-invested enterprises, potentially requiring restructuring if ITP's business falls under 'restricted' or 'prohibited' categories[219][220][221] - Any failure by the consolidated VIE or its shareholders to perform obligations under contractual arrangements could result in substantial costs to enforce rights or loss of effective control over business operations[222][223][226][227] - Reliance on the consulting services agreement with Dongfang Paper for revenue and cash flows means any difficulty in payment could materially affect operations, and the arrangement may be challenged by the PRC government[224] - Conflicts of interest between Dongfang Paper shareholders (e.g., CEO Zhenyong Liu) and ITP could adversely affect the business if shareholders do not act in ITP's best interests[229][230] - If the VIE goes bankrupt or liquidates, ITP may lose the ability to use material assets (permits, domain names, IP rights) held by the VIE, severely disrupting business[231][233] - Arrangements with Dongfang Paper and its shareholders may be subject to transfer pricing adjustments by PRC tax authorities, leading to additional taxes, penalties, and interest[232] - Exercise of the call option to purchase equity interests in Dongfang Paper may require PRC government approval, and failure to obtain it could impair ITP's control[234][235] Risks Related to Our Common Stock Common stock risks include potential delisting under HFCAA, Sarbanes-Oxley compliance, scrutiny of Chinese companies, and control by officers/directors - The company's common stock may be delisted from the NYSE American under the HFCAA if the PCAOB is unable to adequately inspect audit documentation located in China for two consecutive years[237][240] - Failure to comply with Section 404 of the Sarbanes-Oxley Act of 2002 in a timely manner could harm the business and lead to a decline in stock price[241] - The CEO, Zhenyong Liu, beneficially owns approximately 5.3% of common stock, allowing him to influence stockholder votes, and his interests may differ from other stockholders[243] - The company does not expect to pay cash dividends in the foreseeable future, limiting return on investment to stock value[244] Item 1B. Unresolved Staff Comments The company has no unresolved staff comments to report - The company states that Item 1B is not applicable, indicating no unresolved staff comments[247] Item 1C. Cybersecurity The Board oversees the company's cybersecurity program, with no material breaches or threats identified in the last three years - The Board of Directors oversees the company's cybersecurity program, with senior management responsible for identifying, managing, and mitigating cybersecurity risks[248] - The company's cybersecurity policy and procedures ensure timely information flow to senior management regarding threats and incident response, and oversee third-party vendor risks[249] - The company performs regular internal audits and engages third-party experts for cyber penetration testing[250] - To its knowledge, the company has not experienced a material cybersecurity breach or identified material cybersecurity threats in the last three years[251] Item 2. Properties The company's headquarters and two production bases are in China, operating on leased and owned land with multiple production lines - Headquarters are in Baoding City, Hebei Province, China, with two main production bases[252] - The Xushui Paper Mill (first production base) operates on 33 acres of land leased from the local government until December 31, 2031[254] - The Xingtai Paper Mill (second production base) operates on 50 acres of land owned by Hebei Tengsheng Paper Co., Ltd., acquired for approximately $45 million[255] - As of December 31, 2024, facilities include nine production lines (PM7 under renovation, PM4/PM5 suspended), nine warehouses, two office buildings, two cafeterias, and five dormitories[257] Item 3. Legal Proceedings The company faces a breach of contract lawsuit in New York and a civil loan dispute in China, with frozen assets and repayment orders - FT Global Capital, Inc. filed a breach of contract lawsuit against the company in New York Supreme Court. A default judgment on liability was granted against the company on August 20, 2024, with damages to be determined[258] - Tengsheng Paper is a defendant in a civil loan dispute in China. The PRC Court froze RMB3.35 million of bank deposits and ordered Tengsheng Paper to be jointly liable for repaying a RMB3.32 million loan[259] - Accrued litigation costs of $461,855 were recorded as current liabilities as of December 31, 2024[520] Item 4. Mine Safety Disclosures This item is not applicable to the company - The company states that Item 4, Mine Safety Disclosures, is not applicable[261] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ITP common stock trades on NYSE American, with approximately 10,000 shareholders, and no dividends are expected in the foreseeable future - IT Tech Packaging's common stock is traded on the NYSE American under the symbol 'ITP'[263] - As of April 11, 2025, there were approximately 10,000 shareholders of record[264] - The company declared and paid quarterly cash dividends in April 2012 and November 2013, but does not expect to pay any cash dividends in the foreseeable future, intending to retain all future earnings for operations and business expansion[52][265][266] - No recent sales of unregistered securities or purchases of equity securities by the issuer or affiliated purchasers were reported[268][269] Item 6. [RESERVED] This item is reserved and contains no information - Item 6 is reserved, indicating no information is provided for this section[270] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes ITP's 2024 financial performance, highlighting decreased revenue, increased gross profit, a net loss, and liquidity concerns Results of Operations ITP's 2024 revenue decreased by 12.37% to $75.84 million due to lower CMP sales, while gross profit increased significantly despite higher SG&A expenses Revenue Summary (Year Ended December 31) | Metric | 2024 (USD) | 2023 (USD) | Change (USD) | % Change | |:---|:---|:---|:---|:---|\ | Total Revenues | $75,837,943 | $86,546,950 | $(10,709,007) | (12.37)% | | CMP, Offset Printing Paper & Tissue Paper Revenue | $75,702,427 | $86,412,058 | $(10,709,631) | (12.39)% | | Face Mask Revenue | $0 | $106,064 | $(106,064) | (100.00)% | Sales Quantity and Revenue by Product (Year Ended December 31) | Product | 2024 Quantity (Tonne) | 2024 Amount (USD) | 2023 Quantity (Tonne) | 2023 Amount (USD) | Change in Quantity (Tonne) | Change in Amount (USD) | % Change in Quantity | % Change in Amount | |:---|:---|:---|:---|:---|:---|:---|:---|:---|\ | Regular CMP | 182,972 | $63,196,615 | 182,870 | $67,371,471 | 102 | $(4,174,856) | 0.06% | (6.20)% | | Light-Weight CMP | 37,580 | $12,505,812 | 40,953 | $14,520,205 | (3,373) | $(2,014,393) | (8.24)% | (13.87)% | | Total CMP | 220,552 | $75,702,427 | 223,823 | $81,891,676 | (3,271) | $(6,189,249) | (1.46)% | (7.56)% | | Offset Printing Paper | - | $0 | 5,573 | $3,215,190 | (5,573) | $(3,215,190) | (100.00)% | (100.00)% | | Tissue Paper Products | - | $0 | 1,205 | $1,305,192 | (1,205) | $(1,305,192) | (100.00)% | (100.00)% | | Total CMP, Offset Printing Paper and Tissue Paper Revenue | 220,552 | $75,702,427 | 230,601 | $86,412,058 | (10,049) | $(10,709,631) | (4.36)% | (12.39)% | Average Selling Price (ASP) by Product (Year Ended December 31) | Product | 2024 ASP (USD/tonne) | 2023 ASP (USD/tonne) | Decrease (USD) | Decrease (%) | |:---|:---|:---|:---|:---|\ | Offset Printing Paper | $0 | $577 | $(577) | -% | | Regular CMP | $345 | $368 | $(23) | (6.25)% | | Light-Weight CMP | $333 | $355 | $(22) | (6.20)% | | Tissue Paper Products | $0 | $1083 | $(1083) | -% | Cost of Sales and Cost per Tonne by Product (Year Ended December 31) | Product | 2024 Cost of Sales (USD) | 2024 Cost per Tonne (USD) | 2023 Cost of Sales (USD) | 2023 Cost per Tonne (USD) | Change in Cost of Sales (USD) | Change in Cost per Tonne (USD) | % Change in Cost of Sales | % Change in Cost per Tonne | |:---|:---|:---|:---|:---|:---|:---|:---|:---|\ | Regular CMP | $57,643,462 | $315 | $63,818,509 | $349 | $(6,175,047) | $(34) | (9.68)% | (9.74)% | | Light Weight CMP | $11,502,196 | $306 | $14,144,328 | $345 | $(2,642,132) | $(39) | (18.68)% | (11.30)% | | Total CMP | $69,145,658 | $314 | $77,962,837 | $348 | $(8,817,179) | $(34) | (11.31)% | (9.77)% | | Offset Printing Paper | $0 | $0 | $3,137,646 | $563 | $(3,137,646) | $(563) | (100.00)% | (100.00)% | | Tissue Paper Products | $0 | $0 | $4,318,339 | $3,584 | $(4,318,339) | $(3,584) | (100.00)% | (100.00)% | | Total CMP, Offset Printing Paper and Tissue Paper Revenue | $69,145,658 | n/a | $85,418,822 | n/a | $(16,273,164) | n/a | (19.05)% | n/a% | Key Financial Performance Indicators (Year Ended December 31) | Metric | 2024 (USD) | 2023 (USD) | Change (USD) | % Change | |:---|:---|:---|:---|:---|\ | Gross Profit | $6,691,740 | $999,885 | $5,691,855 | 569.25% | | Selling, General and Administrative Expenses | $14,799,969 | $9,075,475 | $5,724,494 | 63.08% | | Loss from Operations | $(8,210,719) | $(9,575,888) | $1,365,169 | (14.26)% | | Net Loss | $(9,843,094) | $(9,946,035) | $102,941 | (1.03)% | | Basic and Diluted Losses per Share | $(0.98) | $(0.99) | $0.01 | (1.01)% | - Selling, general and administrative expenses increased by $5.72 million, mainly due to $3.9 million in depreciation of idle fixed assets, $0.4 million in legal proceeding liability, $0.7 million for obsolete inventory reserve, and $0.9 million for doubtful receivables[302] - Net accounts receivable decreased by 50.03% to $287,576 as of December 31, 2024[307] - Net inventories decreased by 33.8% to $2,351,876 as of December 31, 2024, primarily due to a significant increase in inventory reserve of $723,160[308][309] Liquidity and Capital Resources ITP faces going concern doubts due to a working capital deficit, despite increased cash from operations and refinancing of long-term debt - As of December 31, 2024, current assets were $28,461,303 and current liabilities were $20,146,767, resulting in a working capital of $8,314,536. Excluding VAT recoverable, the net working capital was a deficit of $4,839,839, raising substantial doubt about the company's ability to continue as a going concern[390] - Cash, cash equivalents, and restricted cash increased by $2,558,655 to $6,950,576 as of December 31, 2024[313] Cash Flow Summary (Year Ended December 31) | Cash Flow Activity | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Net Cash Provided by Operating Activities | $6,299,469 | $12,871,086 | | Net Cash Used in Investing Activities | $(329,611) | $(22,239,297) | | Net Cash (Used in) Provided by Financing Activities | $(3,256,696) | $4,410,099 | - Short-term bank loans increased significantly from $423,567 in 2023 to $4,451,616 in 2024, primarily due to refinancing existing long-term debt at lower market rates[317][318][324] - Long-term loan balance decreased from $11,378,429 in 2023 to $4,672,806 in 2024, largely due to refinancing and repayments[325][466] - Total outstanding loans due to Mr. Zhenyong Liu (CEO) were $nil as of December 31, 2024 and 2023, with only accrued interest of approximately $304,600 outstanding in 2024[335] - Capital expenditure commitments totaled approximately $3.4 million as of December 31, 2024, mainly for the new tissue paper production line PM10[312][518] Critical Accounting Policies and Estimates The company's financial statements rely on critical accounting policies for revenue, asset impairment, and foreign currency, with ongoing evaluation of new pronouncements - Revenue is recognized when goods are delivered, price is fixed, delivery is complete, no other significant obligations exist, and collectability is assured[339] - Long-lived assets are evaluated for recoverability and written down to fair value if anticipated undiscounted cash flows are less than carrying value[340] - The functional currency of PRC entities is RMB, translated to USD using current exchange rates for assets/liabilities and average rates for revenues/expenses, with adjustments in other comprehensive income[341] - The company guarantees $4,312,503 of long-term bank loans for Baoding Huanrun Trading Co., a major raw material supplier, maturing in 2028[342][519] - The company is evaluating the impact of ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures) on its financial reporting[343][344] Item 7A. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to foreign exchange risk from RMB/USD fluctuations and inflation risk, with no current hedging strategies - The company is exposed to foreign exchange risk as most revenues, costs, and assets are RMB-denominated, while the reporting currency is USD. RMB depreciation against USD would reduce the value of RMB-denominated financial items[345] - The company does not currently use hedging transactions to reduce foreign exchange risk[345] - Inflation, especially in raw material and overhead costs, could adversely affect operating results if selling prices do not increase proportionally[346] Item 8. Financial Statements and Supplementary Data This section presents audited consolidated financial statements for 2024 and 2023, including the auditor's report and detailed notes on accounting policies and financial accounts Report of Independent Registered Public Accounting Firm GGF CPA Limited issued an unqualified opinion on ITP's 2024 and 2023 financial statements, highlighting deferred tax assets as a critical audit matter - GGF CPA Limited issued an unqualified opinion on the consolidated financial statements for the years ended December 31, 2024 and 2023[349] - A critical audit matter involved the significant accumulated balance and carrying value of deferred tax assets, which required complex judgments due to temporary differences and varying tax laws in multiple jurisdictions[354] - GGF CPA Limited has served as the company's auditor since March 1, 2024[355] Consolidated Balance Sheets As of December 31, 2024, total assets decreased to $177.55 million, liabilities decreased to $21.50 million, and stockholders' equity was $156.05 million Consolidated Balance Sheet Highlights (as of December 31) | Metric | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Total Assets | $177,546,786 | $194,743,649 | | Current Assets | $28,461,303 | $28,357,901 | | Cash and bank balances | $5,916,373 | $3,918,938 | | Restricted cash | $1,034,203 | $472,983 | | Accounts receivable (net) | $287,576 | $575,526 | | Inventories | $2,351,876 | $3,555,235 | | Total Liabilities | $21,496,469 | $26,406,786 | | Short-term bank loans | $4,451,616 | $423,567 | | Current portion of long-term loans | $3,559,902 | $6,874,497 | | Total Stockholders' Equity | $156,050,317 | $168,336,863 | Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) For 2024, revenues were $75.84 million, gross profit $6.69 million, and net loss $9.84 million, with a total comprehensive loss of $12.29 million Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) Highlights (Year Ended December 31) | Metric | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Revenues | $75,837,943 | $86,546,950 | | Cost of sales | $(69,146,203) | $(85,547,065) | | Gross Profit | $6,691,740 | $999,885 | | Selling, general and administrative expenses | $(14,799,969) | $(9,075,475) | | Loss from Operations | $(8,210,719) | $(9,575,888) | | Net Loss | $(9,843,094) | $(9,946,035) | | Foreign currency translation adjustment | $(2,443,452) | $(3,040,994) | | Total Comprehensive Loss | $(12,286,546) | $(12,987,029) | | Basic and Diluted Losses per Share | $(0.98) | $(0.99) | Consolidated Statements of Changes in Stockholders' Equity Total stockholders' equity decreased to $156.05 million in 2024, primarily due to a net loss and foreign currency translation adjustment Consolidated Statements of Changes in Stockholders' Equity Highlights (Year Ended December 31) | Metric | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Balance at beginning of year | $168,336,863 | $181,323,892 | | Foreign currency translation adjustment | $(2,443,452) | $(3,040,994) | | Net loss | $(9,843,094) | $(9,946,035) | | Balance at end of year | $156,050,317 | $168,336,863 | | Common Stock Shares Outstanding | 10,065,920 | 10,065,920 | | Additional Paid-in Capital | $89,172,771 | $89,172,771 | | Statutory Earnings Reserve | $6,080,574 | $6,080,574 | | Accumulated Other Comprehensive Loss | $(12,998,986) | $(10,555,534) | | Retained Earnings | $73,785,892 | $83,628,986 | Consolidated Statements of Cash Flows Net cash from operations was $6.30 million in 2024, with overall cash and equivalents increasing by $2.56 million to $6.95 million Consolidated Statements of Cash Flows Highlights (Year Ended December 31) | Cash Flow Activity | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Net Cash Provided by Operating Activities | $6,299,469 | $12,871,086 | | Net Cash Used in Investing Activities | $(329,611) | $(22,239,297) | | Net Cash (Used in) Provided by Financing Activities | $(3,256,696) | $4,410,099 | | Effect of Exchange Rate Changes on Cash and Cash Equivalents | $(154,507) | $(174,835) | | Net Increase (Decrease) in Cash and Cash Equivalents | $2,558,655 | $(5,132,947) | | Cash, Cash Equivalents and Restricted Cash - End of Year | $6,950,576 | $4,391,921 | - Cash paid for interest was $1,812,864 in 2024, up from $1,484,461 in 2023[362] - Cash paid for income taxes was $797,473 in 2024, up from $759,458 in 2023[362] Notes to Consolidated Financial Statements These notes detail ITP's organizational structure, accounting policies, liquidity concerns, and specific financial accounts, including VIE consolidation and legal contingencies (1) Organization and Business Background ITP, a Nevada holding company, controls its PRC operations, primarily Dongfang Paper, through a VIE structure due to foreign ownership restrictions - ITP was incorporated in Nevada on December 9, 2005, and became a holding company for Dongfang Paper's operations in China on October 29, 2007[23][365] - The company's name changed to 'IT Tech Packaging, Inc.' on August 1, 2018, and its common stock began trading under the symbol 'ITP'[23][366] - A 1-for-10 reverse stock split became effective on July 7, 2022[367] - ITP controls Dongfang Paper through a series of contractual agreements (VIE Agreements) with Baoding Shengde and Dongfang Paper's equity owners, allowing consolidation under US GAAP[27][373][378] - Dongfang Paper and Tengsheng Paper accounted for 100% and 99.88% of the company's total revenue in 2024 and 2023, respectively, and 96.07% and 94.93% of total assets as of December 31, 2024 and 2023, respectively[378] Company's Subsidiaries and VIE (as of December 31, 2024 and 2023) | Name | Place of Incorporation | Percentage of Ownership | Principal Activity | |:---|:---|:---|:---|\ | Subsidiary: | | | | | Dongfang Holding | BVI | 100% | Inactive investment holding | | Shengde Holdings | State of Nevada | 100% | Investment holding | | Baoding Shengde | PRC | 100% | Paper production and distribution | | Qianrong | PRC | 100% | New material technology service | | Variable interest entity ("VIE"): | | | | | Dongfang Paper | PRC | Control* | Paper production and distribution | | Tengsheng Paper | PRC | Control** | Paper production and distribution | * Dongfang Paper is treated as a 100% controlled variable interest entity of the Company. ** Tengsheng Paper is 100% subsidiary of Dongfang Paper. (2) Basis of Presentation and Significant Accounting Policies Financial statements adhere to US GAAP, consolidating subsidiaries and VIEs, with significant liquidity concerns and reliance on key accounting estimates - The company's consolidated financial statements are prepared in accordance with US GAAP, consolidating all subsidiaries and the VIE[389] - As of December 31, 2024, the company had a working capital deficit of $4,839,839 (excluding VAT recoverable), indicating substantial doubt about its ability to continue as a going concern[390] - The functional currency of Dongfang Paper and Baoding Shengde is RMB, translated to USD for reporting. Assets and liabilities are translated at year-end rates, while revenues and expenses use average rates[394][395] - Key estimates include allowance for uncollectible accounts receivable, inventory valuation, useful lives and impairment for property, plant and equipment, valuation allowance for deferred tax assets, and contingencies[397] Allowance for Doubtful Accounts (as of December 31) | Metric | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Opening balance | $11,745 | $881,878 | | Provision (Reversal) for the year | $41,956 | $(858,689) | | Exchange difference | $(590) | $(11,444) | | Closing balance | $53,111 | $11,745 | - Inventories are stated at the lower of cost (weighted average basis) or net realizable value, with provisions for excess, obsolescence, or impairment[401] - Property, plant, and equipment are stated at cost less accumulated depreciation and impairment losses, depreciated using the straight-line method[403][405] - Revenue from contracts with customers is recognized using a five-step model, primarily from sales of paper products upon delivery[413][416][417] - Research and development costs ($99,610 in 2024, $90,766 in 2023) and advertising costs ($nil in 2024 and 2023) are expensed as incurred[420][421] - Income taxes are accounted for using an asset and liability approach, with deferred tax assets and liabilities recognized for temporary differences, and a valuation allowance established for unrealizable deferred tax assets[423] - The company is evaluating ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures) for their impact on future financial reporting[437][438] (3) Restricted Cash Restricted cash increased to $1.03 million in 2024, representing Tengsheng Paper's bank deposits frozen due to a legal proceeding Restricted Cash (as of December 31) | Metric | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Restricted cash | $1,034,203 | $472,983 | - The restricted cash represents bank deposits of Tengsheng Paper, held due to a legal proceeding against the entity and its executive director[440] (4) Inventories Net inventory decreased by 33.8% to $2.35 million in 2024, primarily due to a significant increase in inventory reserve Inventories (as of December 31) | Inventory Category | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Recycled paper board | $1,353,543 | $198,744 | | Recycled white scrap paper | $10,491 | $10,647 | | Gas | $16,334 | $21,428 | | Base paper and other raw materials | $132,348 | $142,149 | | Total Raw Materials | $1,512,716 | $372,968 | | Semi-finished Goods | $295,792 | $300,207 | | Finished Goods | $1,269,487 | $2,885,019 | | Total inventory, gross | $3,077,995 | $3,558,194 | | Inventory reserve | $(726,119) | $(2,959) | | Total inventory, net | $2,351,876 | $3,555,235 | Movement of Inventory Reserve (Year Ended December 31) | Metric | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Balance at beginning of year | $2,959 | $0 | | Additional charge (written off), net | $730,490 | $2,970 | | Foreign currency translation difference | $(7,330) | $(11) | | Balance at the end of year | $726,119 | $2,959 | (5) Prepayments and other current assets Prepayments and other current assets decreased to $17.95 million in 2024, mainly due to lower VAT recoverable and prepaid gas Prepayments and Other Current Assets (as of December 31) | Category | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Prepayment for purchase of materials | $5,634,870 | $5,446,823 | | Value-added tax recoverable | $13,154,375 | $13,409,459 | | Prepaid gas | $14,096 | $116,372 | | Others | $8,527 | $8,636 | | Allowance for doubtful accounts | $(860,601) | $0 | | Totals | $17,951,267 | $18,981,290 | Movement of Allowance for Doubtful Accounts (Year Ended December 31) | Metric | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Balance at beginning of year | $0 | $0 | | Additional charge (written off), net | $869,272 | $0 | | Foreign currency translation difference | $(8,671) | $0 | | Balance at the end of year | $860,601 | $0 | (6) Property, plant and equipment Net property, plant, and equipment decreased to $146.91 million in 2024, primarily due to accumulated depreciation and asset disposals Property, Plant, and Equipment (as of December 31) | Category | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Land use rights | $80,306,144 | $81,504,608 | | Building and improvements | $66,580,793 | $67,939,059 | | Machinery and equipment | $156,179,361 | $158,629,858 | | Vehicles | $343,088 | $348,209 | | Construction in progress | $0 | $0 | | Totals | $303,409,386 | $308,421,734 | | Less: accumulated depreciation and amortization | $(156,497,503) | $(144,447,712) | | Property, Plant and Equipment, net | $146,911,883 | $163,974,022 | - Depreciation and amortization of property, plant and equipment was $14,221,082 in 2024 and $14,225,990 in 2023[447] - Loss from disposal and impairment of property, plant and equipment was $102,490 in 2024 and $1,500,298 in 2023[447] - Certain property, plant and equipment of Dongfang Paper (net value $nil) and Baoding Shengde (net value $3,407,848) were pledged as collateral for loans as of December 31, 2024[446] (7) Leases The company acts as both lessor and lessee, with a weighted average remaining lease term of 3.6 years and a discount rate of 7.56% - The company leases a plant to a tenant under a non-cancellable operating lease for one year (November 2023 to November 2024)[448] - As a lessee, the company leases space for plant and production equipment under non-cancellable operating leases[449] Operating Lease Costs (Year Ended December 31, 2024) | Metric | 2024 (RMB) | |:---|:---|\ | Operating lease cost | 100,004 | | Short-term lease cost | - | | Lease cost | 100,004 | Maturities of Lease Liabilities (as of December 31, 2024) | Fiscal year | Amount (USD) | |:---|:---|\ | 2025 | 139,113 | | 2026 | 139,113 | | 2027 | 139,113 | | 2028 | 139,113 | | 2029 | - | | Thereafter | - | | Total operating lease payments | $556,452 | | Less: Interest | $(79,701) | | Present value of lease liabilities | $476,751 | | Less: current portion, record in current liabilities | $(245,604) | | Present value of lease liabilities (non-current) | $231,147 | Weighted Average Lease Terms and Discount Rates (as of December 31, 2024) | Metric | 2024 | |:---|:---|\ | Weighted average remaining lease term (years) | 3.6 | | Weighted average discount rate | 7.56% | (8) Loans Payable Short-term bank loans significantly increased to $4.45 million in 2024 due to refinancing, while long-term loans decreased to $1.11 million Short-term Bank Loans (as of December 31) | Loan Type | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Rural Credit Union of Xushui District Loan 1 | $1,808,469 | $0 | | Rural Credit Union of Xushui District Loan 2 | $2,225,808 | $0 | | ICBC Loan 1 | $0 | $2,824 | | ICBC Loan 2 | $0 | $70,594 | | ICBC Loan 3 | $0 | $350,149 | | ICBC Loan 4 | $2,782 | $0 | | ICBC Loan 5 | $139,113 | $0 | | ICBC Loan 6 | $139,113 | $0 | | ICBC Loan 7 | $136,331 | $0 | | Total short-term bank loans | $4,451,616 | $423,567 | - Two new short-term loans from Rural Credit Union of Xushui District, totaling $4,034,277, were secured by Baoding Shengde's equipment and a third-party guarantee, bearing a 6% fixed rate and due December 23, 2025[458][459] - Several ICBC working capital loans from 2023 were repaid in June 2024, and new ICBC loans totaling $417,339 were obtained in June 2024, bearing a 3.45% fixed rate and due in June 2025[460][461][462][463][464] Long-term Loans (as of December 31) | Loan Type | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Rural Credit Union of Xushui District Loan 1 | $3,476,434 | $3,528,315 | | Rural Credit Union of Xushui District Loan 2 | $0 | $2,259,026 | | Rural Credit Union of Xushui District Loan 3 | $0 | $1,835,458 | | Rural Credit Union of Xushui District Loan 4 | $0 | $2,541,404 | | Rural Credit Union of Xushui District Loan 5 | $1,196,372 | $1,214,226 | | Total | $4,672,806 | $11,378,429 | | Less: Current portion of long-term loans | $(3,559,902) | $(6,874,497) | | Long-term loans (non-current) | $1,112,904 | $4,503,932 | - Total interest expenses for short-term and long-term bank loans were $762,377 in 2024, down from $977,678 in 2023[474] (9) Related Party Transactions All principal amounts of loans due to CEO Mr. Zhenyong Liu were repaid by 2024, with only accrued interest of $304,600 outstanding - As of December 31, 2024, total loans due to Mr. Zhenyong Liu were $nil, with accrued interest of approximately $304,600 outstanding[479] - Mr. Zhenyong Liu repaid all loans borrowed from the company by December 2023, with interest income of $nil in 2024 and $290,275 in 2023[480] - Amount due to shareholder (for U.S. expenses) was $nil in 2024, down from $727,433 in 2023, due on demand with interest-free terms[481] (10) Other payables and accrued liabilities Other payables and accrued liabilities decreased to $11.55 million in 2024, including $461,855 in accrued litigation costs Other Payables and Accrued Liabilities (as of December 31) | Category | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Accrued electricity | $2,964 | $3,054 | | Value-added tax payable | $21,868 | $696 | | Accrued interest to a related party | $304,600 | $598,319 | | Payable for purchase of property, plant and equipment | $10,711,678 | $11,175,858 | | Accrued commission to salesmen | $3,877 | $47,040 | | Accrued bank loan interest | $14,955 | $1,070,708 | | Accrued litigation costs | $461,855 | $0 | | Others | $24,193 | $16,842 | | Totals | $11,545,990 | $12,912,517 | (11) Derivative Liabilities Derivative liabilities, primarily from warrants, increased to $5,651 in 2024, resulting in a $5,597 loss from fair value changes - Derivative liabilities, primarily from warrants, are classified as Level 3 fair value measurements and valued using the Black-Scholes pricing model[485][487] Derivative Liabilities (as of December 31) | Metric | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Balance at December 31 | $5,651 | $54 | | Change in fair value of derivative liability | $5,597 | $(646,229) | | Loss (Gain) on derivative liability | $5,597 | $(646,229) | (12) Common Stock The company issued common stock and warrants in 2021 public offerings, raising approximately $14.4 million and $21.9 million - On January 20, 2021, the company sold 2,618,182 shares of common stock and corresponding warrants for approximately $14.4 million[491] - On March 1, 2021, the company sold 2,927,786 shares of common stock and corresponding warrants for approximately $21.9 million[492] (13) Warrants As of December 31, 2024, 3,016,635 warrants were outstanding with a weighted average exercise price of $6.6907 and 1.08 years remaining life - As of December 31, 2024, 3,016,635 warrants were outstanding and exercisable, with a weighted average exercise price of $6.6907 and a weighted average remaining contractual life of 1.08 years[499][500] - May 2020 Warrants: 352,000 outstanding, exercise price $7.425, expiring July 23, 2025[493] - January 2021 Warrants: 1,207,492 outstanding, exercise price $5.5, expiring January 20, 2026[494] - March 2021 Warrants: 1,457,143 outstanding, exercise price $7.5, expiring March 1, 2026[495] - The warrants are classified as liabilities and accounted for as derivatives[496] (14) Earnings Per Share Basic and diluted net loss per share were $(0.98) in 2024 and $(0.99) in 2023, with 10,065,920 weighted average shares outstanding Earnings Per Share (Year Ended December 31) | Metric | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Net (loss) income for the year - numerator | $(9,843,094) | $(9,946,035) | | Weighted average common stock outstanding - denominator | 10,065,920 | 10,065,920 | | Basic Net (loss) income per share | $(0.98) | $(0.99) | | Diluted Net (loss) income per share | $(0.98) | $(0.99) | (15) Income Taxes Total income tax expenses were $879,194 in 2024, with PRC companies subject to a 25% rate and a 100% valuation allowance on U.S. deferred tax assets - PRC operating companies (Dongfang Paper and Baoding Shengde) are subject to PRC Enterprise Income Tax at a statutory rate of 25%[505] Provision for Income Taxes (Year Ended December 31) | Category | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Current Tax Provision U.S. | $36,793 | $0 | | Current Tax Provision PRC | $842,401 | $346,954 | | Deferred Tax Provision PRC | $0 | $0 | | Total Income Tax Expenses (Benefits) | $879,194 | $346,954 | Deferred Tax Assets (Liabilities) (as of December 31) | Category | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Depreciation and amortization of property, plant and equipment | $18,875,162 | $16,922,756 | | Impairment of property, plant and equipment | $602,139 | $585,380 | | Impairment of inventory | $181,530 | $0 | | Provision for doubtful debts | $446,064 | $0 | | Miscellaneous | $247,969 | $135,714 | | Net operating loss carryover of PRC company | $432,365 | $274,525 | | (Gain) Loss on asset disposal | $(63,123) | $(64,065) | | Total deferred tax assets | $20,722,106 | $17,854,310 | | Less: Valuation allowance | $(20,722,106) | $(17,854,310) | | Total deferred tax assets, net | $0 | $0 | Effective Income Tax Rate Reconciliation (Year Ended December 31) | Metric | 2024 | 2023 | |:---|:---|:---|\ | PRC Statutory rate | 25.0% | 25.0% | | Effect of tax and book difference | (2.8)% | (20.7)% | | Change in valuation allowance | (32.0)% | (7.9)% | | Effective income tax rate | (9.8)% | (3.6)% | - A 100% valuation allowance is provided on U.S. deferred tax assets due to limited operating history and continuing losses, as management believes realization is not more than likely[506][509] (16) Stock Incentive Plans The company has two stock incentive plans, with 150,000 shares issued under the 2021 ISP and 1,500,000 shares reserved under the 2023 ISP - The 2021 Incentive Stock Plan (2021 ISP) authorized 150,000 shares of common stock, all of which have been issued[596][597] - The 2023 Omnibus Equity Incentive Plan (2023 ISP) reserved 1,500,000 shares of common stock for awards to directors, officers, employees, and consultants[511][598] - All shares authorized under the 2023 ISP have been reserved as of December 31, 2024[512][599] (17) Commitments and Contingencies Commitments include land and operating leases, $3.44 million for a new production line, a $4.31 million supplier loan guarantee, and $461,855 in litigation costs - The Xushui Paper Mill land lease requires annual payments of approximately $16,694 (RMB120,000) until December 31, 2031[514][515] - Industrial buildings are leased back for an annual rental payment of approximately $139,113 (RMB1,000,000), with the lease renewed in August 2022 for six years[256][310][517] - Capital expenditure commitments totaled $3,436,091 as of December 31, 2024, mainly for the PM10 tissue paper production line[518] - The company guarantees a $4,312,503 long-term bank loan for Baoding Huanrun Trading Co., a major supplier, maturing in 2028[519] - Tengsheng Paper is jointly liable in a civil loan dispute for RMB3,320,000, with accrued litigation costs of $461,855 recorded as current liabilities[520] (18) Segment Reporting The company operates through three segments: Dongfang Paper, Tengsheng Paper, and Baoding Shengde, with all sales to PRC customers - The company manages operations through three segments: Dongfang Paper, Tengsheng Paper, and Baoding Shengde[522] - Dongfang Paper and Tengsheng Paper produce offset printing paper, corrugating medium paper, and tissue paper. Baoding Shengde produces face masks and digital photo paper[522] Segment Financial Information (Year Ended December 31, 2024) | Metric | Dongfang Paper (USD) | Tengsheng Paper (USD) | Baoding Shengde (USD) | Not Attributable to Segments (USD) | Elimination of Intersegment (USD) | Enterprise-wide, Consolidated (USD) | |:---|:---|:---|:---|:---|:---|:---|\ | Revenues | $75,702,427 | $135,516 | $0 | $0 | $0 | $75,837,943 | | Gross profit | $6,556,487 | $135,253 | $0 | $0 | $0 | $6,691,740 | | Depreciation and amortization | $3,842,408 | $8,814,279 | $1,564,395 | $0 | $0 | $14,221,082 | | Loss on impairment of assets | $0 | $0 | $102,490 | $0 | $0 | $102,490 | | Interest income | $12,316 | $1,845 | $598 | $34 | $0 | $14,793 | | Interest expense | $356,788 | $94,334 | $296,891 | $14,364 | $0 | $762,377 | | Income tax expense | $842,401 | $0 | $0 | $36,793 | $0 | $879,194 | | Net income (loss) | $2,161,939 | $(10,051,366) | $(440,633) | $(1,513,034) | $0 | $(9,843,094) | Segment Total Assets (as of December 31, 2024) | Metric | Dongfang Paper (USD) | Tengsheng Paper (USD) | Baoding Shengde (USD) | Not Attributable to Segments (USD) | Elimination of Intersegment (USD) | Enterprise-wide, Consolidated (USD) | |:---|:---|:---|:---|:---|:---|:---|\ | Total assets | $54,180,471 | $116,390,854 | $6,020,713 | $954,748 | $0 | $177,546,786 | (19) Concentration and Major Customers and Suppliers No single customer exceeded 10% of sales in 2024, but three major suppliers accounted for 73%, 17%, and 7% of total purchases - No single customer contributed over 10% of total sales for the years ended December 31, 2024 and 2023[527] - For 2024, three major suppliers accounted for 73%, 17%, and 7% of total purchases, respectively[527] (20) Concentration of Credit Risk Credit risk is concentrated in PRC bank balances, with $6.67 million exceeding China's deposit insurance coverage as of December 31, 2024 - Cash is placed in reputable financial institutions in the PRC and the United States[528] - U.S. bank accounts are fully covered by FDIC insurance[528] - PRC bank balances exceeding RMB500,000 (approximately $69,557) are not fully covered by China's deposit insurance system. As of December 31, 2024, RMB47,952,082 (approximately $6,670,759) exceeded this coverage[528] (21) Risks and Uncertainties ITP faces substantial risks from intense competition, liquidity challenges, changing customer demands, foreign currency fluctuations, and PRC regulatory complexities - The company faces substantial risks from intense industry competition, financing and liquidity requirements, rapidly changing customer requirements, foreign currency exchange rates, and operating in the PRC under various laws and restrictions[529] (22) Subsequent Event There are no subsequent events to report as of the date of this filing - No subsequent events have been reported[532] (23) Summarized Quarterly Financial Data (Unaudited) Unaudited 2024 quarterly data shows fluctuating revenues and gross profits, with net losses reported in all quarters Summarized Quarterly Financial Data (Unaudited) - 2024 | Metric | Q1 2024 (USD) | Q2 2024 (USD) | Q3 2024 (USD) | Q4 2024 (USD) | |:---|:---|:---|:---|:---|\ | Revenues | $6,863,841 | $26,249,788 | $25,081,500 | $17,642,814 | | Gross profit | $399,113 | $3,265,300 | $1,917,381 | $1,109,946 | | (Loss) income from operations | $(3,501,670) | $547,752 | $(1,464,121) | $(3,792,680) | | Net loss | $(3,746,536) | $(77,747) | $(1,973,946) | $(4,044,865) | | Net loss per share (Basic & Diluted) | $(0.37) | $(0.01) | $(0.20) | $(0.40) | Summarized Quarterly Financial Data (Unaudited) - 2023 | Metric | Q1 2023 (USD) | Q2 2023 (USD) | Q3 2023 (USD) | Q4 2023 (USD) | |:---|:---|:---|:---|:---|\ | Revenues | $19,790,877 | $30,019,914 | $15,771,560 | $20,964,599 | | Gross (loss) profit | $(276,999) | $1,179,858 | $(153,223) | $250,249 | | Loss from operations | $(2,772,361) | $(518,683) | $(2,484,513) | $(3,800,331) | | Net loss | $(2,733,165) | $(1,253,493) | $(1,975,368) | $(3,984,009) | | Net income per share (Basic & Diluted) | $(0.27) | $(0.125) | $(0.20) | $(0.40) | (24) Condensed Financial Information of the Parent Company The parent company reported $160.75 million in total assets and a $(9.95) million net income in 2024, with PRC laws restricting asset transfers Parent Company Condensed Balance Sheet (as of December 31) | Metric | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Total Assets | $160,752,834 | $173,060,775 | | Current Assets | $1,694 | $678,347 | | Investment in subsidiaries | $160,751,140 | $172,382,428 | | Total Liabilities | $4,732,548 | $4,754,391 | | Inter-company payable | $4,726,897 | $4,026,904 | | Total Stockholders' Equity | $156,020,286 | $168,306,384 | Parent Company Condensed Statements of Income and Comprehensive Income (Loss) (Year Ended December 31) | Metric | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Selling, general and administrative expenses | $562,421 | $708,638 | | Loss from Operations | $(562,421) | $(708,638) | | Equity in earnings of unconsolidated subsidiaries | $(9,238,283) | $(9,883,626) | | Loss on derivative liability | $(5,597) | $646,229 | | Income before Income Taxes | $(9,806,301) | $(9,946,035) | | Provision for Income Taxes | $(36,793) | $0 | | Net Income | $(9,946,035) | $(9,843,094) | | Other comprehensive income /(loss) | $(2,443,452) | $(3,040,994) | | Total Comprehensive Income (loss) | $(12,987,029) | $(12,286,546) | Parent Company Condensed Statements of Cash Flows (Year Ended December 31) | Cash Flow Activity | 2024 (USD) | 2023 (USD) | |:---|:---|:---|\ | Net Cash Used in Operating Activities | $(591,173) | $(708,641) | | Net Cash Used in Investing Activities | $(50,000) | $(500,000) | | Net Cash Provided by Financing Activities | $(35,480) | $(43,253) | | Net Increase (Decrease) in Cash and Cash Equivalents | $(676,653) | $(1,251,894) | | Cash and Cash Equivalents - End of Year | $1,694 | $678,347 | - Under PRC laws, the company's PRC subsidiaries are restricted from transferring certain net assets (paid-in capital, capital surplus, statutory reserves) to the parent company, totaling $82,691,643 as of December 31, 2024[535] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure WWC, P.C. resigned as auditor on February 29, 2024, with no disagreements, and GGF CPA LIMITED was engaged as the new auditor on March 1, 2024 - WWC, P.C. Certified Public Accountants resigned as the independent registered public accounting firm on February 29, 2024[540] - WWC's audit reports for 2021 and 2022 were unqualified, and there were no disagreements or reportable events with WWC[540][541] - GGF CPA LIMITED was engaged as the new indepen