EX-99.1 2 f8k030719ex99-1_ittechpack.htm PRESS RELEASE DATED MARCH 7, 2019, ANNOUNCING FINANCIAL RESULTS AND OPERATIONAL RESULTS OF THE COMPANY FOR THE FOURTH QUARTER AND FISCAL YEAR ENDED DECEMBER 31, 2018

Exhibit 99.1

 

IT Tech Packaging, Inc. Announces Fourth Quarter and Fiscal Year 2018 Financial Results

 

Company to Host Earnings Conference Call on Friday, March 8, 2019, at 8:00 am ET

 

BAODING, China, March 7, 2019 /PRNewswire/ -- IT Tech Packaging, Inc. (NYSE MKT: 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 fourth quarter and audited financial results for the fiscal year ended December 31, 2018.

 

   For the Three Months Ended December 31, 
($ millions)  2018   2017   % Change 
Revenues   24.99    35.44    -29.5%
Regular Corrugating Medium Paper (“CMP”)*   19.77    24.64    -19.8%
Light-Weight CMP**   5.30    5.15    2.8%
Offset Printing Paper   0.00    5.38    -100.0%
Tissue Paper Products   0.00    0.27    -100.0%
Digital Photo Paper   0.00    0.00    NM 
                
Gross profit   2.24    3.62    -38.0%
Gross profit (loss) margin   9.0%   10.2%   -1.2 pp 
Regular Corrugating Medium Paper (“CMP”)*   10.0%   8.9%   1.1 pp 
Light-Weight CMP**   4.9%   10.0%   -5.1 pp 
Offset Printing Paper   NM    16.5%   -16.5 pp 
Tissue Paper Products   NA    5.8%   NM 
Digital Photo Paper   NA    NA    NM 
                
Operating income (loss)   -5.08    -1.67    -203.4%
Net income (loss)   -5.16    -1.64    -215.6%
EBITDA   -1.66    2.04    -181.7%
Basic and Diluted earnings (loss) per share   -0.24    -0.08    -213.5%

       

*Products from PM6          
**Products from PM1          
***pp represents percentage points          

 

Revenue for the fourth quarter of 2018 decreased by 29.5% to $25 million, primarily due to the decrease in both sales volume and ASP of Regular CMP and no sales recorded for offset printing paper.

 

Gross profit for the fourth quarter of 2018 decreased by 38% to $2.2 million. Gross margin decreased by 1.2 percentage points to 9.0%. The gross margins for Light-Weight CMP and Offset Printing Paper products continued to decrease.

 

 

 

 

Net loss was $5.2 million, or loss per share of $0.24, compared to net loss of $1.6 million, or loss per share of $0.08, for the same period of the prior year.

 

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) decreased by 181.7% to $(1.7) million.

 

Mr. Zhenyong Liu, Chairman and Chief Executive Officer of the Company, commented, “With decreases in both revenues and margins, our fourth quarter results highlighted continued challenges facing our business. In late January 2018, we temporarily suspended production due to government-mandated restrictions on natural gas supply. Though we resumed production in mid-March, the Company incurred a net loss of $4 million in the first quarter of 2018. In the second half of 2018, we completed construction of one of our business expansion projects, our first tissue paper production line, in Wei County Industrial Park, launching it in December 2018. As production in this line increases over the coming months, and with our existing packaging equipment, we expect to see continuous cash flow and improved financial conditions from 2019 sales. Looking ahead, as China’s paper market continues to grow, government environmental protection heightens, and market completion escalates, we will be focusing on actively diversifying our product portfolio, opportunities for equipment upgrades, reducing raw material costs, and leveraging new technologies.”

 

Fourth Quarter 2018 Financial Results

 

Revenue

 

For the fourth quarter of 2018, total revenue decreased by $10.45 million, or 29.5%, to $24.99 million from $35.44 million for the same period of the prior year. The decrease in total revenue was mainly due to the decrease in both sales volume and ASP of Regular CMP and no sales recorded for offset printing paper. The following table summarizes revenue, volume and ASP by product for the fourth quarter of 2018 and 2017, respectively:

 

   For the Three Months Ended December 31, 
   2018   2017 
  

Revenue

($’000)

   Volume  (tonne)   ASP  ($/tonne)  

Revenue

($’000)

   Volume  (tonne)   ASP  ($/tonne) 
Regular CMP   19,765    41,870    472    24,638    44,411    555 
Light-Weight CMP   5,296    11,532    459    5,151    9,294    554 
Offset Printing Paper   -    -    -    5,381    6,512    826 
Tissue Paper Products   -    -    -    269    186    1,448 
Digital Photo Paper   -    -    -    -    -    - 
Total   25,061    53,402    469    35,439    60,403    587 

 

Revenue from CMP, including both regular CMP and Light-Weight CMP, decreased by $4.73 million, or 15.9%, to $25.06 million and accounted for 100 % of total revenue for the fourth quarter of 2018, compared to $29.79 million, or 84.1% of total revenue, for the same period of the prior year. The Company sold 53,402 tonnes of CMP at an ASP of $469/tonne in the fourth quarter of 2018, compared to 53,705 tonnes at an ASP of $555/tonne in the same period of the prior year.

 

Of the total CMP sales, revenue from regular CMP decreased by $4.87 million, or 19.8%, to $19.77 million, resulting from sales of 41,871 tonnes at an ASP of $472/tonne, during the fourth quarter of 2018, compared to revenue of $24.64 million, resulting from sales of 44,411 tonnes at an ASP of $555/tonne, for the same period of the prior year. Revenue from light-weight CMP increased by $0.15 million, or 2.8%, to $5.30 million, resulting from sales of 11,533 tonnes at an ASP of $459/tonne for the fourth quarter of 2018, compared to revenue of $5.15 million, resulting from sales of 9,294 tonnes at an ASP of $554/tonne for the same period of the prior year.

 

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Revenue from offset printing paper decreased by $5.46 million, or 100%, to $0 million for the fourth quarter of 2018, from $5.38 million for the same period of the prior year. The Company sold 0 tonnes of offset printing paper in the fourth quarter of 2018, compared to 6,512 tonnes at an ASP of $826/tonne in the same period of the prior year.

 

We had no revenue from tissue paper products for the fourth quarter of 2018, compared to $0.27 million, resulting from sales of 185 tonnes at an ASP of $1,456/tonne, for the fourth quarter of 2017.

 

We process base tissue paper purchased from a long-term supplier and produce finished tissue paper products, including toilet paper, boxed and soft-packed tissues, handkerchief tissues and paper napkins, as well as bathroom and kitchen paper towels that are marketed and sold under the Dongfang Paper brand. In December 2018, we completed the construction and installation and test of operation of PM8 and announced the commercial launch of tissue paper production. We expect to commence the full operation of production and sales of tissue paper products in year 2019.

 

In June 2016, we suspended the production of digital photo paper due to low market demand for our products and now are considering renovating the line to produce more competitive products. We expect that our digital photo paper production will remain suspended for the near future.

 

Gross Profit and Gross Margin

 

Total cost of sales decreased by $9.08 million, or 28.5%, to $22.7 million for the fourth quarter of 2018, from $31.82 million for the same period of the prior year. Cost of sales per tonne was $426 for the fourth quarter of 2018, compared to $527 for the same period of the prior year. The decrease in overall cost of sales per tonne was mainly attributable to the decrease in the quantities of regular CMP sold, partially offset by the increase in cost of recycled paper board and increase in sales volume of light-weighted CMP in the fourth quarter of 2018. Costs of sales per tonne for regular CMP and light-weight CMP were, $425 and $437, respectively, for the fourth quarter of 2018, compared to $505 and $499, respectively, for the same period of the prior year.

 

Total gross profit decreased by $1.38 million, or 38%, to $2.24 million for the fourth quarter of 2018, from $3.6 million for the same period of the prior year. The decrease in overall gross profit were mainly due to the decrease in overall sales volume and decrease in average selling prices of regular CMP and light-weight CMP as discussed above. Overall gross margin was 9% for the fourth quarter of 2018, compared to 10.2% for the same period of the prior year. Gross margins for regular CMP, light-weight CMP were 10% and 4.9%, respectively, for the fourth quarter of 2018, compared to 8.9% and 10%, respectively, for the same period of the prior year.

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses (“SG&A”) increased by $0.44 million, or 14.7%, to $3.43 million for the fourth quarter of 2018 from $2.99 million for the same period of the prior year. As a percentage of total revenue, SG&A was 13.7% for the fourth quarter of 2018, compared to 8.4% for the same period of the prior year.

 

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Income(loss) from Operations

 

Loss from operations was $5.08 million for the fourth quarter of 2018, compared to loss from operations of $1.67 million for the same period of the prior year. Operating loss margin was 20.3% for the fourth quarter of 2018, compared to operating loss margin of 4.7% for the same period of the prior year.

 

Net Income (loss)

 

Net loss was $5.16 million, or $0.24 per loss basic and diluted share, for the fourth quarter of 2018, compared to net loss of $1.64 million, or earnings per basic and diluted share of $0.08, for the same period of the prior year.

 

EBITDA

 

EBITDA decreased by $3.70 million, or 181.7%, to $(1.7) million for the fourth quarter of 2018 from $2.04 million for the same period of the prior 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 December 31, 
($ millions)  2018   2017 
Net income (loss)   -5.16    -1.64 
Add: Income tax   -0.22    -0.44 
Net interest expense   0.31    0.41 
Depreciation and amortization   3.42    3.71 
EBITDA   -1.66    2.04 

 

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Full Year 2018 Financial Results

 

   For the Twelve Months Ended December 31, 
($ millions)  2018   2017   % Change 
Revenues   86.75    117.02    -25.9%
Regular Corrugating Medium Paper (“CMP”)*   63.20    80.38    -21.4%
Light-Weight CMP**   18.40    15.60    17.9%
Offset Printing Paper   5.14    18.69    -72.5%
Tissue Paper Products   0.00    2.36    -100.0%
Digital Photo Paper   0.01    0.00    NM 
Gross profit   5.8    20.0    -70.8%
Gross margin   6.7%   17.1%   -10.3 pp 
Regular Corrugating Medium Paper (“CMP”)*   7.7%   16.9%   -9.3 pp 
Light-Weight CMP**   5.0%   18.9%   -13.9 pp 
Offset Printing Paper   0.8%   17.3%   -16.6 pp 
Tissue Paper Products   N/A    6.4%   NM 
Digital Photo Paper   N/A    0.0%   NM 
Operating income (loss)   -11.2    4.7    -338.9%
Net income (loss)   -10.5    1.7    -735.4%
EBITDA   3.4    19.4    -82.5%
Basic and Diluted earnings per share   -0.49    0.08    -712.5%

 

*Products from PM6

**Products from PM1

***pp represents percentage points

 

Revenue

 

For the year ended December 31, 2018, total revenue decreased by $30.28 million, or 25.9%, to $86.75 million from $117.02 million for 2017. The decrease in total revenue was mainly due to the decrease in sales volume of Regular CMP and offset printing paper, which was partially offset by the increase in ASP of these products.

 

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We decreased the production volume of regular CMP, light-Weight CMP and offset printing paper and sales of these products due to environmental conditions in Northern China. The government strengthened its pollution control and rectification measures, resulting in restrictions on production in the manufacturing industry. In addition, production of tissue paper was suspended during the year 2018. In December 2018, we completed the construction and installation and test of operation of PM8 and announced the commercial launch of tissue paper production. We expect to commence the full operation of production and sales of tissue paper products in year 2019. As a result, the production volume of regular CMP, light-Weight CMP and offset printing paper and sales of these products decreased in 2018 as compared to 2017. The following table summarizes revenue, volume and ASP by product for 2018 and 2017, respectively:

 

   For the Twelve Months Ended December 31, 
   2018   2017 
  

Revenue

($’000)

   Volume  (tonne)   ASP  ($/tonne)  

Revenue

($’000)

   Volume  (tonne)   ASP  ($/tonne) 
Regular CMP   63,199    116,012    545    80,379    173,399    464 
Light-Weight CMP   18,397    34,646    531    15,600    33,690    463 
Offset Printing Paper   5,137    6,191    830    18,688    26,610    702 
Tissue Paper Products   -    -    -    2,357    1,804    1,306 
Digital Photo Paper   14    -    NM    -    -    - 
Total   86,747    156,849    553    117,024    235,503    497 

 

Revenue from CMP, including both regular CMP and light-Weight CMP, decreased by $14.38 million, or 15%, to $81.60 million, and accounted for 94.1% of total revenue for 2018, compared to $95.98 million, or 82.0% of total revenue for 2017. The Company sold 150,658 tonnes of CMP at an ASP of $542/tonne in 2018, compared to 207,089 tonnes at an ASP of $463/tonne in 2017.

 

Of the total CMP sales, revenue from regular CMP decreased by $17.18 million, or 21.4%, to $63.20 million, resulting from sales of 116,012 tonnes at an ASP of $545/tonne, for 2018, compared to revenue of $80.38 million, resulting from sales of 173,399 tonnes at an ASP of $464/tonne for 2017. Revenue from light-weight CMP increased by $2.80 million, or 17.9%, to $18.40 million, resulting from sales of 34,646 tonnes at an ASP of $531/tonne for 2018, compared to revenue of $15.60 million, resulting from sales of 33,690 tonnes at an ASP of $463/tonne for 2017.

 

Revenue from offset printing paper decreased by $13.55 million, or 72.5%, to $5.14 million for 2018, from $18.69 million for 2017. The Company sold 6,191 tonnes of offset printing paper at an ASP of $830/tonne in 2018, compared to 26,610 tonnes at an ASP of $702/tonne in 2017.

 

Revenue from tissue paper products decreased from $2.36 million for 2017, or 100%, to $0 million, for 2018. The Company sold 0 tonnes of tissue paper products, compared to 1,804 tonnes at an ASP of $1,306/tonne in 2017.

 

Revenue from digital photo paper were $13,622 for year 2018. In June 2016, we suspended the production of digital photo paper due to low market demand for our products and now are considering renovating the line to produce more competitive products. We expect that our digital photo paper production will remain suspended for the near future.

 

Gross Profit and Gross Margin

 

Total cost of sales decreased by $16.16 million, or 16.65%, to $80.93 million for 2018, from $97.07 million for 2017. This was mainly a result of the decrease in volume sold, partially offset by increase in cost of recycled paper board and recycled white scrap paper. Cost of sales per tonne was $516 for 2018, compared to $412 for 2017. The increase in overall cost of sales per tonne was mainly attributable to the higher average unit purchase costs (net of applicable value added tax) of recycled paper board in 2018 as compared to 2017. Costs of sales per tonne for regular CMP, light-weight CMP, offset printing paper and tissue paper products, $503, $504, $823 and $nil, respectively, for 2018, compared to $385, $375, $581, $1,222, respectively, for 2017.

 

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Total gross profit decreased by $14.14 million, or 70.8%, to $5.82 million for 2018, from $19.96 million for 2017. Overall gross margin decreased by 10.3 percentage points to 6.7% for 2018 from 17.1% for 2017. Gross margin for regular CMP, light-weight CMP, offset printing paper and tissue paper, was 7.7%, 5.0%, 0.8% and nil, respectively, for 2018, compared to 16.9%, 18.9%, 17.3% and 6.4%, respectively, for 2017. The decrease in gross profit and gross margin were mainly due to the increase in average unit purchase costs (net of applicable value added tax) of recycled paper board and recycled white scrap paper and decrease in overall sales volume, partially offset by an increase in average selling prices as discussed above.

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses (“SG&A”) increased by $1.79 million, or 15.8%, to $13.10 million for 2018, from $11.31 million for 2017. As a percentage of total revenue, SG&A was 15.1% for 2018, compared to 9.7% for 2017. The increase was mainly due to (i) compensation expenses resulting from the issuance of 534,500 shares of common stock under our compensatory incentive plans in the year ended December 31, 2018, valued at $470,360 and (ii) the depreciation of idle equipment during the suspension of production in the first quarter and third quarter of 2018.

 

Loss from Operations

 

Income from operations decreased by $15.86 million, or 338.9%, to operating loss of $11.18 million for 2018 from $4.68 million for 2017. Operating loss margin was 12.9% for 2018, compared to 4.0% for 2017.

 

Net Income (loss)

 

Net loss was $10.55 million, or $0.49 per loss basic and diluted share, for 2018, compared to net income of $1.66 million, or earnings per basic and diluted share of $0.08, for the same period of the prior year.

 

EBITDA

 

EBITDA decreased by $16.00 million, or 82.5%, to $ 3.39 million for 2018, from $19.39 million for 2017.

 

Note 2: 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.

 

7

 

 

Reconciliation of Net Income to EBITDA

(Amounts expressed in US$)

 

 

   For the Twelve Months Ended December 31, 
($ millions)  2018   2017 
Net income (loss)   -10.55    1.66 
Add: Income tax   -1.85    0.66 
Net interest expense   1.49    2.43 
Depreciation and amortization   14.29    14.63 
EBITDA   3.39    19.39 

 

Cash, Liquidity and Financial Position

 

Our cash, cash equivalents and restricted cash as of December 31, 2018 was $12.12 million, an increase of $3.1 million, from $9.02 million as of December 31, 2017. Net cash provided by operating activities was $9.79 million for 2018, compared to $18.15 million for 2017. Net cash used in investing activities was $2.2 million for 2018, compared to $9.32 million for 2017. Net cash used by financing activities was $3.17 million for 2018, compared to $4.92 million for 2017.

 

As of December 31, 2018, we had a net working capital deficit of $5.48 million, an increase of $3.7 million, from the net working capital deficit of $1.77 million at December 31, 2017. Substantially all cash and cash equivalents are cash deposits in bank accounts. Restricted cash of $3.64 million is deposited at the Bank of Cangzhou for purpose of securing the bank acceptance notes from the bank. The acceptance notes was paid off in January 2019.

 

Recent Development

 

In December 2018, the Company commercially launched its tissue paper production, following the completion of construction and equipment installation, the receipt of proper approvals, including wastewater discharge permit, from local authorities, and the success of trial production of its first tissue paper production line, the PM8 Production Line which is located at Wei County Industrial Park in Hebei Province, China, with annual production capacity of 15,000 tonnes.

 

Earnings Conference Call

 

The Company’s management will host a conference call to discuss its fourth quarter and fiscal year 2018 financial results at 8:00 am US Eastern Time (5:00 am US Pacific Time/9:00 pm Beijing Time) on Friday, March 8, 2019.

 

To attend the conference call, please dial in using the information below. When prompted upon dialing-in, please provide the conference ID or ask for the “IT Tech Packaging Fourth Quarter and Fiscal Year 2018 Earnings Conference Call.”

 

Date:

Friday, March 8, 2019
Time: 8:00 am ET
International Toll Free:

United States: +1-855-500-8701

Mainland China: 400-120-0654

Hong Kong: 800-906-606

International: +65-6713-5440

Conference ID: 1988048

 

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This conference call will be broadcast live over the Internet, and can be accessed by all interested parties at http://www.itpacking.cn/ or   https://edge.media-server.com/m6/p/e5c2bjyr

 

Please access the link at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software.

 

A playback will be available through 11:00 am ET on March 8, 2019 to 8:59 am ET on March 16, 2019. To listen, please dial+1-855-452-5696 if calling from the United States, or +61-290-034-211 if calling internationally. Use the passcode 1988048 to access the replay.

 

About IT Tech Packaging, Inc.

 

Founded in 1996, IT Tech Packaging, Inc. is a leading manufacturer and distributor of diversified paper products in North China. Using recycled paper as its primary raw material (with the exception of its digital photo paper and tissue paper products), the Company produces and distributes three categories of paper products: corrugating medium paper, offset printing paper and tissue paper products. With production based in Baoding, Xingtai and Wei County in North China’s Hebei Province, the Company 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. The Company has been listed on the NYSE MKT since December 2009.

 

Safe Harbor Statements

 

This press release may contain forward-looking statements. These forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks outlined in the Company’s public filings with the Securities and Exchange Commission, including the Company’s latest annual report on Form 10-K. All information provided in this press release speaks as of the date hereof. Except as otherwise required by law, the Company undertakes no obligation to update or revise its forward-looking statements.

 

For more information, please contact:

 

Investor Relations:

Tony Tian, CFA
Weitian Group LLC
Email: ttian@weitianco.com

Phone: +1-732-910-9692

 

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IT TECH PACKING, INC.

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2018 AND 2017

 

   December 31,   December 31, 
   2018   2017 
ASSETS        
         
Current Assets        
Cash and bank balances  $8,474,809   $2,895,790 
Restricted cash   3,642,616    6,121,637 
Accounts receivable (net of allowance for doubtful accounts of $58,707 and $37,626 as of December 31, 2018 and December 2017, respectively)   2,876,632    1,843,682 
Inventories   2,923,516    8,474,165 
Prepayments and other current assets   6,241,299    651,523 
           
Total current assets   24,158,872    19,986,797 
           
Property, plant, and equipment, net   167,829,716    189,388,709 
Value-added tax recoverable   2,810,331    3,041,416 
Deferred tax asset non-current   8,277,091    6,572,559 
           
Total Assets  $203,076,010   $218,989,481 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
Current Liabilities          
Short-term bank loans  $11,802,075   $7,192,923 
Current portion of long-term loans from credit union   2,491,549    6,366,502 
Accounts payable   629,054    422,705 
Notes payable   3,642,616    6,121,637 
Due to related parties   413,336    60,378 
Accrued payroll and employee benefits   213,536    231,247 
Other payables and accrued liabilities   10,222,796    836,337 
Income taxes payable   219,305    525,804 
           
Total current liabilities   29,634,267    21,757,533 
           
Loans from credit union   4,706,259    1,193,719 
Loans from a related party   2,185,569    10,712,865 
           
Total liabilities (including amounts of the consolidated VIE without recourse to the Company of $34,008,908 and $31,235,520 as of December 31, 2018 and 2017, respectively)   36,526,095    33,664,117 
           
Commitments and Contingencies          
           
Stockholders’ Equity          
Common stock, 500,000,000 shares authorized, $0.001 par value per share, 20,022,316 and 21,450,316 shares issued and outstanding as of December 31, 2018 and 2017, respectively   22,360    21,450 
Additional paid-in capital   51,137,319    50,635,243 
Statutory earnings reserve   6,080,574    6,080,574 
Accumulated other comprehensive (loss) income   (3,263,952)   5,468,799 
Retained earnings   112,573,614    123,119,298 
           
Total stockholders’ equity   166,549,915    185,325,364 
           
Total Liabilities and Stockholders’ Equity  $203,076,010   $218,989,481 

 

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IT TECH PACKING, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

 

   Year Ended 
   December 31, 
   2018   2017 
         
Revenues  $86,746,758   $117,023,578 
           
Cost of sales   (80,926,357)   (97,067,627)
           
Gross Profit   5,820,401    19,955,951 
           
Selling, general and administrative expenses   (13,098,373)   (11,307,395)
Loss from disposal of property, plant and equipment   (9,881)   (1,677,262)
Loss on impairment of assets   (3,894,461)   (2,291,027)
           
(Loss) Income from Operations   (11,182,314)   4,680,267 
           
Other Income (Expense):          
Interest income   36,632    34,590 
Subsidy income   241,189    41,529 
Interest expense   (1,492,119)   (2,433,770)
           
(Loss) Income before Income Taxes   (12,396,612)   2,322,616 
           
Provision for Income Taxes   1,850,928    (662,828)
           
Net (Loss) Income   (10,545,684)   1,659,788 
           
Other Comprehensive (Loss) Income          
Foreign currency translation adjustment   (8,732,751)   10,910,190 
           
Total Comprehensive (Loss) Income  $(19,278,435)  $12,569,978 
           
(Losses) Earnings Per Share:          
           
Basic and Diluted (Losses) Earnings per Share  $(0.49)  $0.08 
           
Outstanding – Basic and Diluted   21,618,305    21,450,316 

 

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IT TECH PACKING, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

 

Balance at January 1, 2017   21,450,316   $21,450   $50,635,243   $6,080,574   $(5,441,391)  $121,459,510   $172,755,386 
                                    
Foreign currency translation adjustment                       10,910,190         10,910,190 
Net income for the year of 2017                            1,659,788    1,659,788 
Balance at December 31, 2017   21,450,316    21,450    50,635,243    6,080,574    5,468,799    123,119,298    185,325,364 
                                    
Issuance of shares to officer and directors   534,500    535    469,826                   470,361 
Issuance of shares to Weitian   37,500    375    32,250                   32,625 
Foreign currency translation adjustment                       (8,732,751)        (8,732,751)
Net loss for the year of 2018                            (10,545,684)   (10,545,684)
Balance at December 31, 2018   22,022,316   $22,360   $51,137,319   $6,080,574   $(3,263,952)  $112,573,614   $166,549,915 

  

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IT TECH PACKING, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

  

   Year Ended 
   December 31, 
   2018   2017 
         
Cash Flows from Operating Activities:        
Net income  $(10,545,684)  $1,659,788 
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization   14,290,919    14,633,780 
Loss from disposal and impairment of property, plant and equipment   4,524,581    3,968,289 
(Recovery from) Allowance for bad debts   23,676    (45,309)
Share-based compensation expenses   470,361    - 
Deferred tax   (2,089,439)   (3,010,577)
Changes in operating assets and liabilities:          
Accounts receivable   (1,183,782)   2,265,428 
Prepayments and other current assets   (5,726,546)   (79,264)
Inventories   5,322,320    (2,417,942)
Accounts payable   234,448    (166,464)
Advance from customers   -    (29,663)
Notes payable   (2,261,147)   3,707,933 
Due to related parties   150,743    - 
Accrued payroll and employee benefits   (6,855)   8,111 
Other payables and accrued liabilities   6,878,137    (1,503,275)
Income taxes payable   (291,119)   (839,047)
Net Cash Provided by Operating Activities   9,790,613    18,151,788 
           
Cash Flows from Investing Activities:          
Purchases of property, plant and equipment   (2,198,852)   (9,380,702)
Proceeds from sale of property, plant and equipment   -    59,066 
           
Net Cash Used in Investing Activities   (2,198,852)   (9,321,636)
           
Cash Flows from Financing Activities:          
Proceeds from related party loans   4,522,295    - 
Repayments of related party loans   (12,813,169)   - 
Proceeds from short term bank loans   12,210,196    12,903,609 
Repayment of bank loans   (12,149,899)   (11,153,463)
Proceeds from credit union loans   5,064,970    2,373,077 
Payment of capital lease obligation   -    (9,040,260)
           
Net Cash Used in Financing Activities   (3,165,607)   (4,917,037)
           
Effect of Exchange Rate Changes on Cash and Cash Equivalents   (1,326,156)   609,348 
           
Net Increase (Decrease) in Cash and Cash Equivalents   3,099,998    4,522,463 
           
Cash, Cash Equivalents and Restricted Cash - Beginning of Year   9,017,427    4,494,964 
           
Cash, Cash Equivalents and Restricted Cash - End of Year  $12,117,425   $9,017,427 
           
Supplemental Disclosure of Cash Flow Information:          
Cash paid for interest, net of capitalized interest cost  $1,866,093   $1,359,343 
Cash paid for income taxes  $515,001   $3,247,406 
           
Cash and bank balances   8,474,809    2,895,790 
Restricted cash   3,642,616    6,121,637 
Total cash, cash equivalents and restricted cash shown in the statement of cash flows   12,117,425    9,017,427 

 

 

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