IT Tech Packaging, Inc. Announces Second Quarter 2022 Unaudited Financial Results

BAODING, China, Aug. 10, 2022 /PRNewswire/ — IT Tech Packaging, Inc. (NYSE American: ITP) ("IT Tech Packaging" or the "Company"), a leading manufacturer and distributor of diversified paper products in North China, today announced its unaudited financial results for the six and three months ended June 30, 2022.

Mr. Zhenyong Liu, Chairman and Chief Executive Officer of the Company, commented, "Despite the negative impact associated with the resurgence of COVID-19 pandemic to our business during the second quarter of 2022, we strived to provide high-quality products to our customers. As business activities gradually return to normal, we expect to take the necessary steps to strengthen our business resilience and improve our competitive advantages to prepare for growth opportunities ahead. With our dedicated team’s effort and our long-term strategy of exploring growth opportunities in the industry, we remain confident about our business fundamentals and potential to grow. Despite the challenging environment, we anticipate to continue to execute our strategic initiatives, expand our business, and improve operating efficiency. In addition, we remain focused on improving our products to meet the evolving demands of our customers and strengthen our relationship with customers. Looking ahead to the remainder of 2022 and beyond, we believe we are well positioned to achieve our growth goals and create long-term values for shareholders."

Second Quarter 2022 Unaudited Financial Results

For the Three Months Ended June 30,

 ($ millions)

2022

2021

% Change

 Revenues

31.79

46.53

-31.7 %

 Regular Corrugating Medium Paper ("CMP")*

25.85

30.25

-14.5 %

 Light-Weight CMP**

5.44

6.56

-17.1 %

 Offset Printing Paper

7.18

-100.0 %

 Tissue Paper Products

0.41

2.43

-83.1 %

  Face Masks

0.09

0.11

-19.6 %

 Gross profit

0.63

3.03

-79.1 %

 Gross profit (loss) margin

2.0 %

6.5 %

-4.5 pp****

 Regular Corrugating Medium Paper ("CMP")*

4.3 %

5.1 %

-0.8 pp****

 Light-Weight CMP**

6.0 %

6.7 %

-0.7 pp****

 Offset Printing Paper

17.7 %

-17.7 pp****

 Tissue Paper Products***

-198.0 %

-9.6 %

-188.4 pp****

 Face Masks

20.8 %

10.0 %

10.8 pp****

 Operating income (loss)

-1.24

0.43

-386.9 %

 Net loss

-0.29

-0.45

36.5 %

 EBITDA

3.55

9.03

-60.7 %

 Basic and Diluted loss per share

-0.003

-0.01

70.1 %

 * Products from PM6

 ** Products from PM1

 *** Products from PM8 and PM9

 **** pp represents percentage points

 

  • Revenue decreased by 31.7% to approximately $31.79 million, mainly due to the decrease in sales volume of CMP, offset printing paper and tissue paper products.
  • Gross profit decreased by 79.1% to approximately $0.63 million. Total gross margin decreased by 4.5 percentage point to 2.0%.  
  • Loss from operations was approximately $1.24million, compared to income from operations of approximately $0.43 million for the same period of last year.
  • Net loss was approximately $0.29 million, or loss per share of $0.003, compared to net loss of approximately $0.45 million, or loss per share of $0.01, for the same period of last year.
  • Earnings before interest, taxes, depreciation and amortization ("EBITDA") was approximately $3.55million, compared to $9.03 million for the same period of last year.

Revenue

For the second quarter of 2022, total revenue decreased by 31.7%, to approximately $31.79 million from approximately $46.53 million for the same period of last year. The decrease in total revenue was mainly due to the decrease in sales volume of CMP, offset printing paper and tissue paper products.

The following table summarizes revenue, volume and ASP by product for the second quarter of 2022 and 2021, respectively:

For the Three Months Ended June 30,

2022

2021

Revenue
($’000)

Volume
(tonne)

ASP
($/tonne)

Revenue
($’000)

Volume
(tonne)

ASP
($/tonne)

 Regular CMP

25,853

53,943

479

30,252

60,507

500

 Light-Weight CMP

5,436

11,642

467

6,561

13,491

486

 Offset Printing Paper

7,184

10,415

690

 Tissue Paper Products

411

383

1,074

2,428

2,196

1,106

 Total

31,701

65,968

481

46,426

86,609

536

Revenue
($’000)

Volume
(thousand
pieces)

ASP
($/thousand
pieces)

Revenue
($’000)

Volume
(thousand
pieces)

ASP
($/thousand
pieces)

 Face Masks

88

3,014

29

109

2,635

41

 

Revenue from CMP, including both regular CMP and light-Weight CMP, decreased by 15.0%, to approximately $31.29 million and accounted for 98.4% of total revenue for the second quarter of 2022, compared to approximately $36.81million, or 79.1% of total revenue for the same period of last year. The Company sold 65,585 tonnes of CMP at an ASP of $477/tonne in the second quarter of 2022, compared to 73,998 tonnes at an ASP of $497/tonne in the same period of last year.

Of the total CMP sales, revenue from regular CMP decreased by 14.5%, to approximately $25.85 million for the second quarter of 2022, compared to revenue of approximately $30.25 million for the same period of last year. The Company sold 53,943 tonnes of regular CMP at an ASP of $479/tonne during the second quarter of 2022, compared to 60,507 tonnes at an ASP of $500/tonne for the same period of last year. Revenue from light-weight CMP decreased by 17.1%, to approximately $5.44 million for the second quarter of 2022, compared to revenue of approximately $6.56 million for the same period of last year. The Company sold 11,642 tonnes of light-weight CMP at an ASP of $467/tonne for the second quarter of 2022, compared to 13,491 tonnes at an ASP of $486/tonne for the same period of last year.

Revenue from offset printing paper was $nil for the second quarter of 2022, compared to revenue of approximately $7.18 million for the same period of last year. The Company sold 10,415 tonnes of offset printing paper at an ASP of $690/tonne in the second quarter of 2021.

Revenue from tissue paper products decreased by 83.1%, to approximately $0.41million for the second quarter of 2022, from approximately $2.43 million for the same period of last year. The Company sold 383 tonnes of tissue paper products at an ASP of $1,074/tonne for the second quarter of 2022, compared to 2,196 tonnes at an ASP of $1,106/tonne for the same period of last year.

Revenue from face masks decreased by 19.6%, to approximately $0.09 million for the second quarter of 2022, from $0.11 million for the same period of last year. The Company sold 3,014 thousand pieces of face masks for the second quarter of 2022, compared to 2,635 thousand pieces of face masks for the same period of last year.

Gross Profit and Gross Margin

Total cost of sales decreased by 28.4%, to approximately $31.15 million for the second quarter of 2022 from approximately $43.51 million for the same period of last year. The decrease in overall cost of sales was mainly due to the decrease in sales quantity of regular CMP, offset printing paper and tissue paper products.  Costs of sales per tonne for regular CMP, light-weight CMP, offset printing paper, and tissue paper products were $459, $439, $nil and $3,200, respectively, for the second quarter of 2022, compared to $475, $454, $567 and $1,211, respectively, for the same period of last year.

Total gross profit was approximately $0.63 million for the second quarter of 2022, compare to the gross profit of approximately $3.03 million for the same period of last year as a result of factors described above. Overall gross margin was 2.0% for the second quarter of 2022, compared to 6.5% for the same period of last year. Gross profit(loss) margins for regular CMP, light-weight CMP, offset printing paper, tissue paper products and face mask products were 4.3%, 6.0%, nil%, -198.0% and 20.8%, respectively, for the second quarter of 2022, compared to 5.1%, 6.7%, 17.7%, -9.6% and 10.0%, respectively, for the same period of last year.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SG&A") decreased by 28.0%, to approximately $1.87 million for the second quarter of 2022 from approximately $2.60 million for the same period of last year.

Loss from Operations

Loss from operations was approximately $1.24 million for the second quarter of 2022, a decrease of 386.9%, from income from operations of approximately $0.43 million for the same period of last year. Operating loss margin was 3.9% for the second quarter of 2022, compared to operating income margin of 0.9% for the same period of last year.

Net Loss

Net loss was approximately $0.29 million, or loss per share of $0.003, for the second quarter of 2022, compared to net loss of approximately $0.45 million, or loss per share of $0.01, for the same period of last year.

EBITDA

EBITDA was approximately $3.55 million for the second quarter of 2022, compared to approximately $9.03 million for the same period of last year.

Note 1: Non-GAAP Financial Measures

In addition to our U.S. GAAP results, this press release includes a discussion of EBITDA, a non-GAAP financial measure as defined by the Securities and Exchange Commission ("SEC"). The Company defines EBITDA as net income before interest, income taxes, depreciation and amortization. EBITDA is a key measure used by management to evaluate our results and make strategic decisions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, the Company’s presentation of EBITDA may not be comparable to similarly titled measures of other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with the U.S. GAAP.

Reconciliation of Net Income to EBITDA

(Amounts expressed in US$)

 For the Three Months Ended June 30,

 ($ millions)

2022

2021

 Net loss

-0.29

-0.45

 Add: Income tax

-0..24

5.12

         Net interest expense

0.26

0.28

         Depreciation and amortization

3.82

4.07

 EBITDA

3.55

9.03

 

First Half of 2022 Unaudited Financial Results

For the Six Months Ended June 30,

 ($ millions)

2022

2021

% Change

 Revenues

47.27

70.74

-33.2 %

 Regular Corrugating Medium Paper ("CMP")*

38.95

47.22

-17.5 %

 Light-Weight CMP**

7.36

10.31

-28.6 %

 Offset Printing Paper

9.30

-100.0 %

 Tissue Paper Products

0.81

3.68

-78.0 %

  Face Masks

0.14

0.24

-39.8 %

 Gross profit

0.94

4.86

-80.6 %

 Gross profit (loss) margin

2.0 %

6.9 %

-4.9 pp****

 Regular Corrugating Medium Paper ("CMP")*

4.6 %

6.3 %

-1.7 pp****

 Light-Weight CMP**

6.5 %

8.3 %

-1.8 pp****

 Offset Printing Paper

18.1 %

-18.1 pp****

 Tissue Paper Products***

-170.2 %

-18.7 %

-151.5 pp****

 Face Masks

24.2 %

14.8 %

9.4 pp****

 Operating loss

-4.19

-0.29

-1331.9 %

 Net loss

-2.78

-4.79

42.1 %

 EBITDA

4.75

8.96

-46.9 %

 Basic and Diluted loss per share

-0.03

-0.10

72.7 %

 * Products from PM6

 ** Products from PM1

 *** Products from PM8 and PM9

 **** pp represents percentage points

 

Revenue

For the first half of 2022, total revenue decreased by 33.2%, to approximately $47.27 million from approximately $70.74 million for the same period of last year. The decrease in total revenue was mainly due to the decrease in sales volume of CMP, offset printing paper and tissue paper products.

The following table summarizes revenue, volume and ASP by product for the first half of 2022 and 2021, respectively:

For the Six Months Ended June 30,

2022

2021

Revenue
($’000)

Volume
(tonne)

ASP
($/tonne)

Revenue
($’000)

Volume
(tonne)

ASP
($/tonne)

 Regular CMP

38,953

79,188

492

47,216

94,133

502

 Light-Weight CMP

7,364

15,483

476

10,309

21,161

487

 Offset Printing Paper

9,300

13,557

686

 Tissue Paper Products

810

780

1,038

3,680

3,317

1,109

 Total

47,126

95,451

494

70,505

132,168

533

Revenue
($’000)

Volume
(thousand
pieces)

ASP
($/thousand
pieces)

Revenue
($’000)

Volume
(thousand
pieces)

ASP
($/thousand
pieces)

 Face Masks

144

12,664

11

239

6,470

37

 

Revenue from CMP, including both regular CMP and light-Weight CMP, decreased by 19.5%, to approximately $46.32 million and accounted for 98.0% of total revenue for first half of 2022, compared to approximately $57.53million, or 81.3% of total revenue for the same period of last year. The Company sold 94,671 tonnes of CMP at an ASP of $489/tonne in first half of 2022, compared to 115,294 tonnes at an ASP of $499/tonne in the same period of last year.

Of the total CMP sales, revenue from regular CMP decreased by 17.5%, to approximately $38.95 million for first half of 2022, compared to revenue of approximately $47.22 million for the same period of last year. The Company sold 79,188 tonnes of regular CMP at an ASP of $492/tonne during the first half of 2022, compared to 94,133 tonnes at an ASP of $502/tonne for the same period of last year. Revenue from light-weight CMP decreased by 28.6%, to approximately $7.36 million for the first half of 2022, compared to revenue of approximately $10.31 million for the same period of last year. The Company sold 15,483 tonnes of light-weight CMP at an ASP of $476/tonne for the first half of 2022, compared to 21,161tonnes at an ASP of $487/tonne for the same period of last year.

Revenue from offset printing paper was $nil for the first half of 2022, compared to revenue of approximately $9.30 million for the same period of last year. The Company sold 13,557 tonnes of offset printing paper at an ASP of $686/tonne in the first half of 2021.

Revenue from tissue paper products decreased by 78.0%, to approximately $0.81 million for the first half of 2022, from approximately $3.68 million for the same period of last year. The Company sold 780 tonnes of tissue paper products at an ASP of $1,038/tonne for the first half of 2022, compared to 3,317 tonnes at an ASP of $1,109/tonne for the same period of last year.

Revenue from face masks decreased by 39.8%, to approximately $0.14 million for the first half of 2022, from $0.24 million for the same period of last year. The Company sold 12,664 thousand pieces of face masks for the first half of 2022, compared to 6,470 thousand pieces of face masks for the same period of last year.

Gross Profit and Gross Margin

Total cost of sales decreased by 29.7%, to approximately $46.33 million for the first half of 2022 from approximately $65.88 million for the same period of last year. The decrease in overall cost of sales was mainly due to the decrease in sales quantity of CMP, offset printing paper and tissue paper products.  Costs of sales per tonne for regular CMP, light-weight CMP, offset printing paper, and tissue paper products were $469, $445,$nil and $2,805, respectively, for the first half of 2022, compared to $470, $447, $562 and $1,317, respectively, for the same period of last year.

Total gross profit was approximately $0.94 million for the first half of 2022, compare to the gross profit of approximately $4.86 million for the same period of last year as a result of factors described above. Overall gross margin was 2.0% for the first half of 2022, compared to 6.9% for the same period of last year. Gross profit(loss) margins for regular CMP, light-weight CMP, offset printing paper, tissue paper products and face mask products were 4.6%, 6.5%, nil%, -170.2% and 24.2%, respectively, for the first half of 2022, compared to 6.3%, 8.3%, 18.1%, -18.7% and 14.8%, respectively, for the same period of last year.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SG&A") increased by 0.3%, to approximately $5.17 million for the first half of 2022 from approximately $5.15 million for the same period of last year.

Loss from Operations

Loss from operations was approximately $4.19 million for the first half of 2022, an increase of 1331.9%, from loss from operations of approximately $0.29 million for the same period of last year. Operating loss margin was 8.9% for the first half of 2022, compared to operating loss margin of 0.4% for the same period of last year.

Net Loss

Net loss was approximately $2.78 million, or loss per share of $0.03, for the first half of 2022, compared to net loss of approximately $4.79 million, or loss per share of $0.10, for the same period of last year.

EBITDA

EBITDA was approximately $4.75 million for the first half of 2022, compared to approximately $8.96 million for the same period of last year.

Note 1: Non-GAAP Financial Measures

In addition to our U.S. GAAP results, this press release includes a discussion of EBITDA, a non-GAAP financial measure as defined by the Securities and Exchange Commission ("SEC"). The Company defines EBITDA as net income before interest, income taxes, depreciation and amortization. EBITDA is a key measure used by management to evaluate our results and make strategic decisions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, the Company’s presentation of EBITDA may not be comparable to similarly titled measures of other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with the U.S. GAAP.

Reconciliation of Net Income to EBITDA

(Amounts expressed in US$)

 For the Six Months Ended June 30,

 ($ millions)

2022

2021

 Net loss

-2.78

-4.79

 Add: Income tax

-0.59

5.02

         Net interest expense

0.53

0.56

         Depreciation and amortization

7.59

8.17

 EBITDA

4.75

8.96

 

Cash, Liquidity and Financial Position

As of June 30, 2022, the Company had cash and bank balances, short-term debt (including bank loans, current portion of long-term loans from credit union and related party loans), and long-term debt (including related party loans) of approximately $14.34million, $11.10million and $4.92million, respectively, compared to approximately $11.20 million, $13.52 million and $2.98 million, respectively, as of December 31, 2021.

Net accounts receivable was approximately $3.82 million as of June 30, 2022, compared to approximately $4.87 million as of December 31, 2021. Net inventory was approximately $6.63 million as of June 30, 2022, compared to approximately $5.84 million as of December 31, 2021. As of June 30, 2022, the Company had current assets of approximately $48.45 million and current liabilities of approximately $17.33million, resulting in a working capital of approximately $31.12 million. This was compared to current assets of approximately $55.52 million and current liabilities of approximately $20.43 million, resulting in a working capital of approximately $35.09 million as of December 31, 2021.

Net cash provided by operating activities was approximately $3.95million for the first half of 2022, compared to net cash used in operating activities of approximately $15.57 million for the same period of last year. Net cash used in investing activities was approximately $7.32 million for the first half of 2022, compared to approximately $0.17 million for the same period of last year. Net cash provided by financing activities was approximately $6.67 million for the first half of 2022, compared to approximately $41.67 million for the same period of last year.

About IT Tech Packaging, Inc.

Founded in 1996, IT Tech Packaging, Inc. is a leading manufacturer and distributor of diversified paper products and single-use face masks in North China. Using recycled paper as its primary raw material (with the exception of its tissue paper products), ITP produces and distributes three categories of paper products: corrugating medium paper, offset printing paper and tissue paper products. With production based in Baoding and Xingtai in North China’s Hebei Province, ITP is located strategically close to the Beijing and Tianjin region, home to a growing base of industrial and manufacturing activities and one of the largest markets for paper products consumption in the country. ITP has been listed on the NYSE American since December 2009. For more information, please visit: http://www.itpackaging.cn/.

Forward-looking Statement

This release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements give our current expectations, opinion, belief or forecasts of future events and performance. A statement identified by the use of forward-looking words including "will," "may," "expects," "projects," "anticipates," "plans," "believes," "estimate," "should," and certain of the other foregoing statements may be deemed forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including market and other conditions. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company’s filings with the SEC. Investors and security holders are urged to read these documents free of charge on the SEC’s web site at http://www.sec.gov.  The Company undertakes no obligation to update any such forward-looking statements after the date hereof to conform to actual results or changes in expectations, except as required by law.

For more information, please contact:

At the Company
Email: ir@itpackaging.cn 
Tel: +86 312 8698215

Investor Relations
Ascent Investor Relations LLC
Ms. Tina Xiao
Email: tina.xiao@ascent-ir.com
Tel: +1-917-609-0333

 

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2022 AND DECEMBER 31, 2021

(Unaudited)

June 30,

December 31,

2022

2021

ASSETS

    Current Assets

Cash and bank balances

$

14,344,077

$

11,201,612

Restricted cash

Accounts receivable (net of allowance for doubtful accounts of $51,319 and

   $69,053 as of June 30, 2022 and December 31, 2021, respectively)

3,820,123

4,868,934

Inventories

6,629,657

5,844,895

Prepayments and other current assets

22,807,300

25,796,640

Due from related parties

844,431

7,804,068

Total current assets

48,445,588

55,516,149

Prepayment on property, plant and equipment

43,446,210

Finance lease right-of-use assets, net

2,092,625

2,286,459

Property, plant, and equipment, net

161,195,384

126,587,428

Value-added tax recoverable

2,226,703

2,430,277

Deferred tax asset non-current

11,501,093

11,268,679

Total Assets

$

225,461,393

$

241,535,202

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities

Short-term bank loans

$

5,958,518

$

5,958,561

Current portion of long-term loans from credit union

4,410,406

6,838,465

Lease liability

224,219

210,161

Accounts payable

17,098

10,255

Advance from customers

37,709

39,694

Due to related parties

727,433

727,433

Accrued payroll and employee benefits

228,624

291,206

Other payables and accrued liabilities

5,507,880

5,250,539

Income taxes payable

219,307

1,108,038

Total current liabilities

17,331,194

20,434,352

Loans from credit union

4,917,007

2,980,065

Deferred gain on sale-leaseback

100,820

155,110

Lease liability – non-current

20,299

152,233

Derivative liability

716,901

2,063,534

Total liabilities (including amounts of the consolidated VIE without recourse
    to the Company of $16,668,603 and $17,924,475 as of June 30, 2022 and
    December 31, 2021, respectively)

23,086,221

25,785,294

Commitments and Contingencies

Stockholders’ Equity

Common stock, 500,000,000 shares authorized, $0.001 par value per share,
    99,049,900 shares issued and outstanding as of June 30, 2022 and
    December, 31,2021.

99,050

99,050

Additional paid-in capital

88,927,787

88,927,787

Statutory earnings reserve

6,080,574

6,080,574

Accumulated other comprehensive (loss) income

(102,441)

10,496,168

Retained earnings

107,370,202

110,146,329

Total stockholders’ equity

202,375,172

215,749,908

Total Liabilities and Stockholders’ Equity

$

225,461,393

$

241,535,202

 

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2022

2021

2022

2021

Revenues

$

31,788,884

$

46,534,915

$

47,270,502

$

70,744,342

Cost of sales

(31,154,847)

(43,505,895)

(46,326,020)

(65,884,317)

Gross Profit

634,037

3,029,019

944,482

4,860,024

Selling, general and administrative expenses

(1,869,802)

(2,597,611)

(5,170,683)

(5,152,929)

Gain on acquisition

(1,840)

32,163

(Loss) Income from Operations

(1,237,605)

431,408

(4,194,038)

(292,905)

Other Income (Expense):

Interest income

4,924

11,719

8,379

16,052

Subsidy income

1,104

197,891

Interest expense

(259,106)

(283,899)

(529,919)

(562,800)

Gain (Loss) on derivative liability

960,045

4,509,007

1,346,633

872,040

(Loss) Income before Income Taxes

(531,742)

4,669,339

(3,368,945)

230,278

Provision for Income Taxes

243,829

(5,122,587)

592,818

(5,022,382)

Net Loss

(287,913)

(453,248)

(2,776,127)

(4,792,104)

Other Comprehensive (Loss) Income

Foreign currency translation adjustment

(11,524,747)

3,416,162

(10,598,609)

1,947,392

Total Comprehensive (Loss) Income

$

(11,812,660)

$

2,962,914

$

(13,374,736)

$

(2,844,712)

Losses Per Share:

Basic and Diluted Losses per Share

$

(0.003)

$

(0.01)

$

(0.03)

$

(0.10)

Outstanding – Basic and Diluted

99,049,900

46,638,550

99,049,900

46,638,550

 

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(Unaudited)

Six Months Ended

June 30,

2022

2021

Cash Flows from Operating Activities:

Net income

$

(2,776,127)

$

(4,792,104)

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

7,592,319

8,166,403

(Gain) Loss on derivative liability

(1,346,633)

(872,040)

Gain on acquisition

(33,178)

(Recovery from) Allowance for bad debts

(14,731)

53,074

Deferred tax

(821,225)

3,764,689

Changes in operating assets and liabilities:

Accounts receivable

845,450

(3,229,340)

Prepayments and other current assets

1,963,348

(8,060,524)

Inventories

(1,111,160)

(10,412,117)

Accounts payable

7,588

144,206

Related parties

(860,721)

Accrued payroll and employee benefits

(49,534)

86,928

Other payables and accrued liabilities

553,308

15,529

Income taxes payable

(859,643)

425,654

Net Cash Provided by (Used in) Operating Activities

3,949,782

(15,570,363)

Cash Flows from Investing Activities:

Purchases of property, plant and equipment

(681,640)

(171,541)

Acquisition of land

(6,642,665)

Net Cash Used in Investing Activities

(7,324,305)

(171,541)

Cash Flows from Financing Activities:

Proceeds from issuance of shares and warrants, net

41,837,553

Repayment of bank loans

(77,301)

Payment of capital lease obligation

(102,902)

(88,661)

Loan repaid by a related party

6,776,889

Net Cash Provided by Financing Activities

6,673,987

41,671,591

Effect of Exchange Rate Changes on Cash and Cash Equivalents

(156,999)

201,419

Net Increase in Cash and Cash Equivalents

3,142,465

26,131,106

Cash, Cash Equivalents and Restricted Cash – Beginning of Period

11,201,612

4,142,437

Cash, Cash Equivalents and Restricted Cash – End of Period

$

14,344,077

$

30,273,543

Supplemental Disclosure of Cash Flow Information:

Cash paid for interest, net of capitalized interest cost

$

165,629

$

312,344

Cash paid for income taxes

$

1,088,049

$

265,450

Cash and bank balances

14,344,077

30,273,543

Restricted cash

Total cash, cash equivalents and restricted cash shown in the statement of cash
flows

14,344,077

30,273,543

 

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