What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-10 compared with 2023-05-11 · 363 added, 289 removed, 255 unchanged (72% of the section changed)

1 unchanged sentence

Notice Regarding Forward-Looking Statements

following discussion of the financial condition and results of operations of the Company for the periods ended March 31, 2023 and 2022

following discussion of the financial condition and results of operations of the Company for the periods ended June 30, 2023 and 2022

should be read in conjunction with the financial statements and the notes to the financial statements that are included elsewhere in

34 unchanged sentences

update forward-looking statements, except as otherwise required under federal securities laws.

of COVID-19 on Our Operations and Financial Performance

of epidemic, pandemic, or contagious diseases such as COVID-19, could have an adverse effect on our business, financial condition, and

results of operations.

The spread of COVID-19 has resulted in the World Health Organization declaring the outbreak of COVID-19 as a global

Substantially all of our revenues and workforce are concentrated in China.

In response to the intensifying efforts to contain

the spread of COVID-19, the Chinese government took a number of actions, which included extending the Chinese New Year holiday, quarantining

individuals suspected of having COVID-19, asking residents in China to stay at home and to avoid public gathering, among other things.

the basis of scientific assessment of the characteristics of the virus and the pandemic situation, as well as reference to the prevention

practices of other countries, at the end of 2022, the Chinese government refined its COVID-19 prevention and control measures and stopped

conducting nucleic acid testing for all residents.

By the end of 2022, vaccination rate has exceeded 90%.

And normal life is returning.

Under such circumstances, the government has taken positive service measures, including tax incentives, bank loan and financial support,

etc, to support domestic enterprises to overcome difficulties.

The market consolidation will be expedited eventually.

we resumed business operations after the outbreak of COVID-19, the Company kept continuous attention on the development of the COVID-19

pandemic and reacted actively to its impact on the financial position and operating results of the Company.

As of the date of the report,

COVID-19’s adverse impacts on the company’s financial position and operating result as of March 31, 2023 were limited.

of Operations

of the Three months ended March 31, 2023 and 2022

for the three months ended March 31, 2023 was $19,790,877, an increase of $4,309,259, or 27.83%, from $15,481,618 for the same period

in the previous year.

This was mainly due to the increase in sales volume of corrugating medium paper (“CMP”), partially

offset by the decrease of average selling prices of CMP.

of the Three months ended June 30, 2023 and 2022

for the three months ended June 30, 2023 was $30,019,914, a decrease of $1,768,970, or 5.56%, from $31,788,884 for the same period in

the previous year.

This was mainly due to the decrease of average selling prices of corrugating medium paper (“CMP”), partially

offset by the increase in sales volume of CMP and offset printing paper.

of Offset Printing Paper, Corrugating Medium Paper and Tissue Paper Products

from sales of offset printing paper, corrugating medium paper and tissue paper products for the three months ended March 31, 2023

was $19,751,148, an increase of $4,326,126, or 28.05%, from $15,425,022 for the first quarter of 2022.

Total offset printing paper,

CMP and tissue paper products sold during the three months ended March 31, 2023 amounted to 49,873 tonnes, an increase of 20,390

tonnes, or 69.16%, compared to 29,483 tonnes sold in the comparable period in the previous year.

Production of CMP was suspended in

January of 2023 and January and February of 2022 due to Chinese New Year and restriction on production required by the government.

The changes in revenue dollar amount and in quantity sold for the three months ended March 31, 2023 and 2022 are summarized as

from sales of offset printing paper, CMP and tissue paper products for the three months ended June 30, 2023 was $29,975,733, representing

a decrease of $1,725,572, or 5.44%, from $31,701,305 for the second quarter of 2022.

Total offset printing paper, CMP and tissue paper

products sold during the three months ended June 30, 2023 amounted to 78,636 tonnes, representing an increase of 12,668 tonnes, or 19.20%,

compared to 65,968 tonnes sold in the comparable period in the previous year.

Production of offset printing paper was resumed in May

The changes in revenue dollar amount and in quantity sold for the three months ended June 30, 2023 and 2022 are summarized as follows:

June 30, 2023

June 30, 2022

$ (3,922,112 )

Light-Weight CMP

$ (4,814,399 )

Printing Paper

1 unchanged sentence

CMP, Offset Printing Paper and Tissue Paper Revenue

sales revenue for the 24 months ended March 31, 2023, are summarized below:

Average Selling Prices (ASPs) for our main products in the three months ended March 31, 2023 and 2022 are summarized as follows:

Offset Printing Paper ASP

$ (1,725,572 )

sales revenue for the 24 months ended June 30, 2023, are summarized below:

Average Selling Prices (ASPs) for our main products in the three months ended June 30, 2023 and 2022 are summarized as follows:

Printing Paper ASP

Paper Products ASP

Three Months ended March 31, 2022

Three Months ended March 31, 2023

Increase (Decrease) from comparable period

in the previous year

Increase (Decrease) by percentage

The following

chart shows the month-by-month ASPs for the 24-month period ended March 31, 2023:

Months ended June 30, 2022

Months ended June 30, 2023

(Decrease) from comparable period in the previous year

(Decrease) by percentage

following chart shows the month-by-month ASPs for the 24-month period ended June 30, 2023:

from CMP amounted to $26,475,519 (88.32% of the total offset printing paper, CMP and tissue paper products revenues) for the three months

ended March 31, 2023, representing an increase of $4,501,561, or 29.96%, from $15,026,634 for the comparable period in 2022.

sold 49,682 tonnes of CMP in the three months ended March 31, 2023 as compared to 29,086 tonnes for the same period in 2022, representing

ended June 30, 2023, representing a decrease of $4,814,399, or 15.39%, from $31,289,918 for the comparable period in 2022.

sold 72,940 tonnes of CMP in the three months ended June 30, 2023 as compared to 65,585 tonnes for the same period in 2022, representing

a11.21% increase in quantity sold.

for regular CMP dropped from $519/tonne for the three months ended March 31, 2022 to $395/tonne for the three months ended March 31,

for regular CMP decreasedfrom $479/tonne for the three months ended June 30, 2022 to $365/tonne for the three months ended June 30, 2023,

representing a 23.80% decrease.

ASP in RMB for regular CMP for the first quarter of 2022 and 2023 was RMB3,294 and RMB2,712, respectively,

ASP in RMB for regular CMP for the second quarter of 2022 and 2023 was RMB3,156 and RMB2,574, respectively,

representing a 18.44% decrease.

The quantity of regular CMP sold increased by 16,418 tonnes, from 25,245 tonnes in the first quarter

of 2022 to 41,663 tonnes in the first quarter of 2023.

for light-weight CMP decreased from $502/tonne for the three months ended March 31, 2022 to $382/tonne for the three months ended March

The quantity of regular CMP sold increased by 6,120 tonnes, from 53,943 tonnes in the second quarter

of 2022 to 60,063 tonnes in the second quarter of 2023.

for light-weight CMP decreased from $467/tonne for the three months ended June 30, 2022 to $353/tonne for the three months ended June

30, 2023, representing a 24.41% decrease.

ASP in RMB for light-weight CMP for the first quarter of 2022 and 2023 was RMB3,186 and RMB2,618,

ASP in RMB for light-weight CMP for the second quarter of 2022 and 2023 was RMB3,064 and RMB2,485,

respectively, representing a 18.90% decrease.

The quantity of light-weight CMP sold increased by 4,178 tonnes, from 3,841 tonnes in the

first quarter of 2022, to 8,019 tonnes in the first quarter of 2023.

The quantity of light-weight CMP sold increased by 1,235 tonnes, from 11,642 tonnes in

the second quarter of 2022, to 12,877 tonnes in the second quarter of 2023.

PM6 production line, which produces regular CMP, has a designated capacity of 360,000 tonnes /year.

The utilization rates for the first

The utilization rates for the second

quarter of 2023 and 2022 were 66.61% and 58.98%, respectively, representing an increase of 7.63%.

sold for regular CMP that was produced by the PM6 production line from April 2021 to March 2023 are as follows:

sold for regular CMP that was produced by the PM6 production line from July 2021 to June 2023 are as follows:

printing paper

from offset printing paper was $nil for the three months ended March 31, 2023 and 2022.

Production of offset printing paper was suspended

in the three months ended March 31, 2023.

The production is expected to be resumed in May 2023.

from offset printing paper was $3,155,882 (representing10.53% of the total offset printing paper, CMP and tissue paper products revenues)

for the three months ended June 30, 2023, representing an increase of $3,155,882, or 100%, from $nil for the three months ended June

We resumed production in May 2023 and sold 5,403 tonnes of offset printing paper in the second quarter of 2023.

Paper Products

from tissue paper products was $222,953 (1.13% of the total offset printing paper, CMP and tissue paper products revenues) for the three

months ended March 31, 2023, representing a decrease of $175,435, or 44.04%, from $398,388 for the three months ended March 31, 2022.

We sold 191 tonnes of tissue paper in the first quarter of 2023, as compared to 397 tonnes in the comparable period of 2022, representing

a decrease of 206 tonnes, or 51.89%.

for tissue paper products increased from $1,003/tonne for the three months ended March 31, 2022 to $1,167/tonne for the three months

ended March 31, 2023, representing a 16.35% increase.

ASP in RMB for tissue paper products for the first quarter of 2022 and 2023 was

RMB6,375 and RMB7,995, respectively, representing a 25.41% increase.

generated from selling face mask were $35,637 and $56,596 for the three months ended March 31, 2023 and 2022, respectively, representing

from tissue paper products was $344,332 (representing1.15% of the total offset printing paper, CMP and tissue paper products revenues)

for the three months ended June 30, 2023, representing a decrease of $67,055, or 16.30%, from $411,387 for the three months ended June

We sold 293 tonnes of tissue paper in the second quarter of 2023, as compared to 383 tonnes in the comparable period of 2022,

representing a decrease of 90 tonnes, or 23.50%.

for tissue paper products increased from $1,074/tonne for the three months ended June 30, 2022 to $1,175/tonne for the three months ended

June 30, 2023, representing a 9.4% increase.

ASP in RMB for tissue paper products for the second quarter of 2022 and 2023 was RMB7,153

and RMB8,269, respectively, representing a 15.60% increase.

generated from selling face mask were $44,246 and $87,579 for the three months ended June 30, 2023 and 2022, respectively, representing

a decrease of $43,333, or 49.48%.

We sold 1,105 thousand pieces of face masks in the first quarter of 2023, as compared to 1,160 thousand

We sold 1,411 thousand pieces of face masks in the second quarter of 2023, as compared to 1,852 thousand

pieces in the comparable period of 2022, a decrease of 441 thousand pieces, or 23.81%.

cost of sales for CMP, offset printing paper and tissue paper products for the quarter ended March 31, 2023 was $20,018,379, an increase

cost of sales for CMP, offset printing paper and tissue paper products for the quarter ended June 30, 2023 was $28,792,189, a decrease

of $2,293,283, or 7.38%, from $31,085,472 for the comparable period in 2022.

This was mainly due to the increase in sales quantity of

CMP, partially offset by the decrease in material costs of CMP.

of sales for CMP was $19,089,115 for the quarter ended March 31, 2023, as compared to $14,169,089 for the comparable period in 2022.

The increase in the cost of sales of $4,920,026 for CMP was mainly due to the increase in sales volume of CMP, partially offset by the

decrease in average cost of sales.

Average cost of sales per tonne for CMP decreased by 21.15%, from $487 in the first quarter of 2022

to $384 in the first quarter of 2023.

The decrease in average cost of sales was mainly attributable to the lower average unit purchase

costs (net of applicable value added tax) of recycled paper board in the first quarter of 2023 compared to the first quarter of 2022.

of sales for offset printing paper was $nil for the quarter ended March 31, 2023 and 2022.

of sales for tissue paper products was $929,264 for the quarter ended March 31, 2023, as compared to $962,165 for the comparable period

This was mainly due to thedecrease in unit material costs

of CMP, partially offset by the increase in sales quantity of CMP and offset printing paper.

of sales for CMP was $24,658,830 for the quarter ended June 30, 2023, as compared to $29,859,737 for the comparable period in 2022.

decrease in the cost of sales of $5,200,907 for CMP was mainly due to the decrease in average unit cost of sales, partially offset by

increase in sales volume of CMP and offset printing paper.

Average cost of sales per tonne for CMP decreased by 25.71%, from $455 in

the second quarter of 2022 to $338 in the second quarter of 2023.

The decrease in average cost of sales was mainly attributable to the

lower average unit purchase costs (net of applicable value added tax) of recycled paper board in the second quarter of 2023 compared

to the second quarter of 2022.

of sales for tissue paper products was $1,053,874 for the quarter ended June 30, 2023, as compared to $1,225,735 for the comparable period

The decrease in the cost of sales of $171,861 for tissue paper products was mainly due to the decrease in sales volume of tissue

1 unchanged sentence

Average cost of sales per tonne of tissue paper products increased

by 100.70%, from $2,424 in the three months ended March 31, 2022, to $4,865 for the comparable period in 2023.

This is mainly due to

the increase in cost of tissue base paper.

in cost of sales and cost per tonne by product for the quarters ended March 31, 2023 and 2022 are summarized below:

in percentage

by 12.41%, from $3,200 in the three months ended June 30, 2022, to $3,597 for the comparable period in 2023.

This is mainly due to the

increase in cost of tissue base paper.

in cost of sales and cost per tonne by product for the quarters ended June 30, 2023 and 2022 are summarized below:

$ (4,307,809 )

$ (5,200,907 )

Printing Paper

1 unchanged sentence

CMP, Offset Printing Paper and Tissue Paper

average unit purchase costs (net of applicable value added tax) of recycled paper board in the three months ended March 31, 2023

were RMB 1,502/tonne (approximately $219/tonne), as compared to RMB 1,858/tonne (approximately $293/tonne) for the three months

ended March 31, 2022.

$ (2,293,283 )

average unit purchase costs (net of applicable value added tax) of recycled paper board in the three months ended June 30, 2023 were

RMB 1,340/tonne (approximately $192/tonne), as compared to RMB 1,776/tonne (approximately $273/tonne) for the three months ended June

These changes (in US dollars) represent a year-over-year decrease of 29.67% for the recycled paper board.

domestic recycled paper (sourced mainly from the Beijing-Tianjin metropolitan area) exclusively.

The average unit

purchase costs (net of applicable value added tax) of tissue base paper was RMB 10,012/tonne (approximately $1,437/tonne) in the three

months ended June 30, 2023, as compared to RMB 6,968/tonne (approximately $1,071/tonne) for the three months ended June 30, 2012.

use domestic recycled paper (sourced mainly from the Beijing-Tianjin metropolitan area) exclusively.

Although we do not rely on imported

recycled paper, the pricing of which tends to be more volatile than domestic recycled paper, our experience suggests that the

pricing of domestic recycled paper bears some correlation to the pricing of imported recycled paper.

pricing trends of our major raw materials for the 24-month period from April 2021 to March 2023 are shown below:

recycled paper, the pricing of which tends to be more volatile than domestic recycled paper, our experience suggests that the pricing

of domestic recycled paper bears some correlation to the pricing of imported recycled paper.

pricing trends of our major raw materials for the 24-month period from July 2021 to June 2023 are shown below:

and gas are our two main energy sources.

Electricity and gas accounted for approximately 4% and 14% of total sales in the first

quarter of 2023, respectively, compared to 3% and 9.6% of total sales in the first quarter of 2022.

The monthly energy cost as a

percentage of total monthly sales of our main paper products for the 24 months ended March 31, 2023 are summarized as

Electricity and gas accounted for approximately 5% and 14.9% of total sales in the second quarter

of 2023, respectively, compared to 4% and 15.4% of total sales in the second quarter of 2022.

The monthly energy cost as a percentage

of total monthly sales of our main paper products for the 24 months ended June 30, 2023 are summarized as follows:

Profit (Loss)

loss for the three months ended March 31, 2023 was $276,999 (1.40% of the total revenue), representing a decrease of $587,444, or 189.23%,

from the gross profit of $310,445 (2.01% of the total revenue) for the three months ended March 31, 2022, as a result of factors described

profit for the three months ended June 30, 2023 was $1,179,858 (representing 3.93% of the total revenue), representing an increase of

$545,821, or 86.09%, from the gross profit of $634,037 (representing 1.99% of the total revenue) for the three months ended June 30,

2022, as a result of factors described above.

Printing Paper, CMP and Tissue Paper Products

loss for offset printing paper, CMP and tissue paper products for the three months ended March 31, 2023 was $267,231, representing a

decrease of $560,999, or 190.97%, from the gross profit of $293,768 for the three months ended March 31, 2022.

The decrease was mainly

profit for offset printing paper, CMP and tissue paper products for the three months ended June 30, 2023 was $1,183,544, representing

an increase of $567,711, or 92.19%, from the gross profit of $615,833 for the three months ended June 30, 2022.

The increase was mainly

the result of the factors discussed above.

overall gross profit margin for offset printing paper, CMP and tissue paper products increased by 2.01 percentage points, from 1.94%

for the three months ended June 30, 2022, to 3.95% for the three months ended June 30, 2023.

profit margin for regular CMP for the three months ended June 30, 2023 was 6.81%, or 2.53 percentage points higher, as compared to gross

profit margin of 4.28% for the three months ended June 30, 2022.

Such increase was mainly due to the decrease in cost of recycled paper

board, partially offset by the decrease in of ASP of regular CMP in the second quarter of 2023.

profit margin for light-weight CMP for the three months ended June 30, 2023 was 7.14%, or 1.19 percentage points higher, as compared

to gross profit margin of 5.95% for the three months ended June 30, 2022.

The increase was mainly due to the decrease of cost of recycled

paper board, partially offset by the decrease in ASP of light-weight CMP in the second quarter of 2023.

profit margin for offset printing paper was 2.42% for the three months ended June 30, 2023.

profit margin for tissue paper products for the three months ended June 30, 2023 was -206.06%, or 8.11 percentage points lower, as compared

to gross profit margin of -197.95% for the three months ended June 30, 2022.

The increase in gross loss was mainly due to the increase

in cost of base paper, partially offset by the increase in ASP of tissue paper products.

gross profit margins on the sales of our CMP and offset printing paper for the 24-month period ended June 30, 2023 are as follows:

loss for face masks for the three months ended June 30, 2023 and 2022 were $3,569 and a gross profit of $18,204, representing a gross

margin of -8.07% and 20.79%, respectively.

General and Administrative Expenses

general and administrative expenses for the three months ended June 30, 2023 were $1,323,405, a decrease of $546,397, or 29.22% from

$1,869,802 for the three months ended June 30, 2022.

The decrease was mainly due to the reversal of doubtful debt loss.

from Operations

Operating loss for the quarter ended June 30,

2023 was $518,683, a decrease of $717,082, or 58.03%, from $1,235,765 for the quarter ended June 30, 2022.

The decrease in loss from operations

was primarily due to the increase in gross profit, decrease in selling, general and administrative expenses, partially offset by the recognition

of impairment loss on assets.

Income and Expenses

expense for the three months ended June 30, 2023 increased by $11,575, from $259,106 in the three months ended June 30, 2022, to $270,681.

The Company had short-term and long-term interest-bearing loans, related party loans and leasing obligations that aggregated $17,607,943

as of June 30, 2023, as compared to $15,530,449 as of June 30, 2022.

on derivative liability

Company analyzed the warrant for derivative accounting consideration under ASC 815, “Derivatives and Hedging, and hedging,”

and determined that the instrument should be classified as a liability.

ASC 815 requires we assess the fair market value of derivative

liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.

change in fair value of derivative liability for the three months ended June 30, 2023 and 2022 was a loss of $166,506 and a gain of $960,045,

respectively.

As a result and the factors discussed above, net

loss was $1,253,493 for the quarter ended June 30, 2023, representing an increase of loss of $965,580, or 335.37%, from $287,913 for the

quarter ended June 30, 2022.

of the six months ended June 30, 2023 and 2022

for the six months ended June 30, 2023 was $49,810,791, representing an increase of $2,540,289, or 5.37%, from $47,270,502 for the same

period in the previous year.

This was mainly due to the increase in sales volume of CMP and offset printing paper and tissue paper products,

partially offset by the decrease in ASP of CMP.

of Offset Printing Paper, Corrugating Medium Paper and Tissue Paper Products

from sales of offset printing paper, CMP and tissue paper products for the six months ended June 30, 2023 was $49,726,882, an increase

of $2,600,555, or 5.52%, from $47,126,327 for the six months ended June 30, 2022.

This was mainly due to the increase in sales volume

of regular CMP, light-weight CMP and offset printing paper, partially offset by the decrease in ASPs of CMP.

Total quantities of offset

printing paper, CMP and tissue paper products sold during the six months ended June 30, 2023 amounted to 128,509 tonnes, an increase

of 33,058 tonnes, or 34.63%, compared to 95,451 tonnes sold during the six months ended June 30, 2022.

Total quantities of CMP and offset

printing paper sold increased by 33,354 tonnes in the six months of 2023 as compared to the same period of 2022.

We sold 484 tonnes of

tissue paper products in the six months of 2023 as opposed to 780 tonnes in the same period of 2022.

Production of offset printing paper

was resumed in May 2023.

The changes in revenue and quantity sold for the six months ended June 30, 2023 and 2022 are summarized as follows:

Printing Paper

Paper Products

CMP, Offset Printing Paper and Tissue Paper Revenue

our main products in the six-month period ended June 30, 2023 and 2022 are summarized as follows:

Printing Paper ASP

Paper Products ASP

Months Ended June 30, 2022

Months Ended June 30, 2023

(Decrease) from comparable period in the previous year

(Decrease) by percentage

of Face Masks

generated from selling face masks were $79,883 and $144,175 for the six months ended June 30, 2023 and 2022.

We sold 2,516 thousand pieces

of face masks for the six months ended June 30, 2023, as compared to 3,012 thousand pieces in the comparable period of 2022, a decrease

of 496 thousand pieces, or 16.47%.

cost of sales for CMP, offset printing paper and tissue paper products in the six months ended June 30, 2023 was $48,810,569, an increase

of $2,593,842, or 5.61%, from $46,216,727 for the six months ended June 30, 2022.

This was mainly a result of the increase in sales volume

of CMP and offset printing paper, partially offset by the decrease of material costs of CMP.

Cost of sales for CMP was $43,747,945 for

the six months ended June 30, 2023, as compared to $44,028,827 in the same period of 2022.

The decrease in the cost of sales of $280,882

for CMP was mainly due to the decrease in average cost of sales, partially offset by the increase in the quantities of regular CMP sold

in the six months of 2023.

Average cost of sales per tonne for CMP decreased by 23.23%, from $465 for the six months ended June 30, 2022,

to $357 in the same period of 2023.This is mainly attributable to the lower average unit purchase costs (net of applicable value added

tax) of recycled paper board.

Cost of sales for tissue paper products was $1,983,139 for the six months ended June 30, 2023, as compared

to $2,187,900 in the same period of 2022.

The decrease was mainly due to the decrease in sales quantity of tissue paper products, partially

offset by the increase in cost of tissue base paper.

Average cost of sales per tonne of tissue paper products increased by 46.06%, from

$2,805 for the six months ended June 30, 2022, to $4,097 for the same period of 2023.

in cost of sales and cost per tonne by product for the six months ended June 30, 2023 and 2022 are summarized below:

Printing Paper

Paper Products

CMP, Offset Printing Paper and Tissue Paper Revenue

profit for the six months ended June 30, 2023 was $902,859 (representing1.81% of the total revenue), representing a decrease of $41,623,

or 4.41%, from the gross profit of $944,482 (representing 2.00% of the total revenue) for the six months ended June 30, 2022.

Printing Paper, CMP and Tissue Paper Products

profit for offset printing paper, CMP and tissue paper products for the six months ended June 30, 2023 was $916,313, an increase of $6,713,

or 0.74%, from the gross profit of $909,600 for the six months ended June 30, 2022.

overall gross profit margin for offset printing paper, CMP and tissue paper products decreased by 0.09 percentage points, from 1.93%

for the three months ended March 31, 2022, to -1.35% for the three months ended March 31, 2023.

profit margin for regular CMP for the three months ended March 31, 2023 was 1.93%, or 3.42 percentage points lower, as compared to

gross profit margin of 5.35% for the three months ended March 31, 2022.

Such decrease was mainly due to the decrease in of ASP of

regular CMP, partially offset by the decrease in cost of recycled paper board.

profit margin for light-weight CMP for the three months ended March 31, 2023 was 3.96%, or 4.19 percentage points lower, as compared

to gross profit margin of 8.15% for the three months ended March 31, 2022.

The decrease was mainly due to the decrease in ASP of

light-weight CMP, partially offset by the decrease of cost of recycled paper board.

profit margin for tissue paper products for the three months ended March 31, 2023 was -316.80%, or 175.29 percentage points lower, as

compared to gross profit margin of -141.51% for the three months ended March 31, 2022.

The decrease in gross loss was mainly due to the

increase in cost of base paper, partially offset by the increase in ASP of tissue paper products.

gross profit margins on the sales of our CMP and offset printing paper for the 24-month period ended March 31, 2023 are as follows:

loss for face masks for the three months ended March 31, 2023 and 2022 were gross loss of $2,839 and a gross profit of $16,677, representing

a gross margin of -7.97% and 29.47%, respectively.

for the six months ended June 30, 2022, to 1.84% for the six months ended June 30, 2023.

profit margin for regular CMP for the six months ended June 30, 2023 was 4.71%, or 0.07 percentage points higher, as compared to gross

profit margin of 4.64% for the six months ended June 30, 2022.

profit margin for light-weight CMP for the six months ended June 30, 2023 was 5.86%, or 0.66 percentage points lower, as compared to

gross profit margin of 6.52% for the six months ended June 30, 2022.

profit margin for offset printing paper was 2.42% for the six months ended June 30, 2023.

profit margin for tissue paper products was -249.58% for the six months ended June 30, 2023, a decrease of 79.39 percentage points, as

compared to -170.19% for the six months ended June 30, 2022.

The decrease was mainly due to the increase in cost of tissue base paper.

loss for face mask for the six months ended June 30, 2023 was $6,407, representing a gross margin of -8.02% compared with a gross profit

of $34,882, representing a gross margin of 24.19%, for the six months ended June 30, 2022.

General and Administrative Expenses

general and administrative expenses for the three months ended March 31, 2023 were $2,495,362, a decrease of $805,519, or 24.40% from

$3,300,881 for the three months ended March 31, 2022.

The decrease was mainly due to the reversal of doubtful debt loss and decrease

in depreciation of idle fixed assets during production suspension.

general and administrative expenses for the six months ended June 30, 2023 were $3,818,767, a decrease of $1,351,916, or 26.15% from

$5,170,683 for the six months ended June 30, 2022.

The decrease was mainly due to the reversal of doubtful debt loss and decrease in

depreciation of idle fixed assets during production suspension.

from Operations

loss for the quarter ended March 31, 2023 was $2,772,361, a decrease of $218,075, or 7.29%, from $2,990,436 for the quarter ended

March 31, 2022.

The decrease in loss from operations was primarily due to the decrease in selling, general and administrative

expenses, partially offset by the decrease in gross profit.

Operating loss for the six months ended June 30,

2023 was $3,291,044, a decrease of $935,157or 22.13%, from $4,226,201 for the six months ended June 30, 2022.

The decrease was primarily

due to the decrease in selling, general and administrative expenses, partially offset by the recognition of impairment loss on assets.

Income and Expenses

expense for the three months ended March 31, 2023 decreased by $21,644, from $270,813 in the three months ended March 31, 2022, to $249,169.

This was mainly due to the decrease in interest rates of long-term bank loans.

The Company had short-term and long-term interest-bearing

loans and leasing obligations that aggregated $18,212,347 as of March 31, 2023, as compared to $16,157,692 as of March 31, 2022.

expense for the six months ended June 30, 2023 decreased by $10,069, from $529,919 for the six months ended June 30, 2022, to $519,850.

The Company had short-term and long-term interest-bearing loans and lease obligation that aggregated $17,607,943 as of June 30, 2023,

as compared to $15,530,449 as of June 30, 2022.

on derivative liability

3 unchanged sentences

liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.

change in fair value of derivative liability for the three months ended March 31, 2023 and 2022 was a loss of $152,097 and a gain of

change in fair value of derivative liability for the sixmonths ended June 30, 2023 and 2022 was a loss of $14,409 and a gain of $1,346,633,

respectively.

a result and the factors discussed above, net loss was $2,733,165 for the quarter ended March 31, 2023, representing an increase of loss

of $244,951, or 9.84%, from $2,488,214 for the quarter ended March 31, 2022.

accounts receivable increased by $2,231,924, as compared with $nil as of December 31, 2022.

We usually collect accounts receivable within

30 days of delivery and completion of sales.

consist of raw materials (accounting for 82.79% of total value of inventory as of March 31, 2023), semi-finished goods and finished goods.

As of March 31, 2023, the recorded value of inventory increased by 107.81% to $5,969,604 from $2,872,622 as of December 31, 2022.

of March 31, 2023, the inventory of recycled paper board, which is the main raw material for the production of CMP, was $4,257,163, approximately

As a result of the above, net loss was $3,986,658

for the six months ended June 30, 2023, representing an increase of loss of $1,210,531, or 43.61%, from $2,776,127 for the six months

ended June 30, 2022.

accounts receivable was $2,416,572 as of June 30, 2023, as compared with $nil as of December 31, 2022.

We usually collect accounts receivable

within 30 days of delivery and completion of sales.

consist of raw materials (accounting for 83.83% of total value of inventory as of June 30, 2023), semi-finished goods and finished goods.

As of June 30, 2023, the recorded value of inventory increased by 128.69% to $6,569,323 from $2,872,622 as of December 31, 2022.

June 30, 2023, the inventory of recycled paper board, which is the main raw material for the production of CMP, was $4,871,125, approximately

$3,612,964, or 287.16%, higher than the balance as of December 31, 2022.

6 unchanged sentences

Tissue base paper

Mask fabric and other raw materials

Mask fabric and other

raw materials

Total Raw Materials

3 unchanged sentences

Inventory reserve

Total inventory, net

inventory, net

of operating lease

8 unchanged sentences

in August 2022 with a term of six years with the same rental payments as provided for in the original lease agreement.

Expenditure Commitment as of March 31, 2023

Expenditure Commitment as of June 30, 2023

May 5, 2020, the Company announced it planned the commercial launch of a new tissue paper production line PM10 and the Company signed

2 unchanged sentences

after the completion of trial run.

of March 31, 2023, we had approximately $5.9 million in capital expenditure commitments that were mainly related to the purchase of paper

of June 30, 2023, we had approximately $3.9 million in capital expenditure commitments that were mainly related to the purchase of paper

machine of PM10.

16 unchanged sentences

The balance of Leased Equipment net of amortization was $1,796,034 and $1,939,970

as of March 31, 2023 and December 31, 2022, respectively.

as of June 30, 2023 and December 31, 2022, respectively.

The lease liability was $18,854 and $131,772, and its current portion in the

amount of $77,789 and $131,772 as of March 31, 2023 and December 31, 2022, respectively.

of the Leased Equipment was $38,865 and $42,006 for the three months ended March 31, 2023 and 2022.

Total interest expenses for the sale-leaseback

arrangement was $4,490 and $13,507 for the three months ended March 31, 2023 and 2022.

amount of $18,854 and $131,772 as of June 30, 2023 and December 31, 2022, respectively.

of the Leased Equipment was $37,661 and $39,972 for the three months ended June 30, 2023 and 2022.

Amortization of the Leased Equipment

was $76,526 and $81,978 for the six months ended June 30, 2023 and 2022.

Total interest expenses for the sale-leaseback arrangement was

$2,182 and $10,862 for the three months ended June 30, 2023 and 2022.

Total interest expenses for the sale-leaseback arrangement was

$6,671 and $24,369 for the six months ended June 30, 2023 and 2022.

a result of the sale and leaseback, a deferred gain in the amount of $430,695 was recorded.

2 unchanged sentences

and Cash Equivalents

cash, cash equivalents and restricted cash as of March 31, 2023 was $16,750,893, an increase of $7,226,025, from $9,524,868 as of December

The increase of cash and cash equivalents for the three months ended March 31, 2023 was attributable to a number of factors

cash, cash equivalents and restricted cash as of June 30, 2023 was $11,980,759, an increase of $2,455,891, from $9,524,868 as of December

The increase of cash and cash equivalents for the six months ended June 30, 2023 was attributable to a number of factors including:

Net cash provided by (used in) operating activities

cash provided by operating activities was $4,809,928for the three months ended March 31, 2023.

The balance represented an increase of

cash of $398,510, or 9.03%, from $4,411,418 provided for the three months ended March 31, 2022.

Net loss for the three months ended March

31, 2023 was $2,733,165, representing an increase of loss of $244,951, or 9.84%, from $2,488,214 for the three months ended March 31,

Changes in various asset and liability account balances throughout the three months ended March 31, 2023 also contributed to the

net change in cash from operating activities in three months ended March 31, 2023.

Chief among such changes is the increase of accounts

receivable in the amount of $1,988,921 during the three months of 2023.

There was also an increase of $3,062,782 in the ending inventory

balance as of March 31, 2023 (a decrease to net cash for the three months ended March 31, 2023 cash flow purposes).

In addition, the

Company had non-cash expenses relating to depreciation and amortization in the amount of $3,686,243 and decrease of bad debt loss of

The Company also had a net decrease of $9,461,336 in prepayment and other current assets (an increase to net cash) and a net

increase of $262,073 in other payables and accrued liabilities and related parties (an increase to net cash), as well as a decrease in

income tax payable of $424,198 (a decrease to net cash) during the three months ended March 31, 2023.

Net cash provided by operating activities was

$5,746,719 for the six months ended June 30, 2023.

The balance represented an increase of cash of $1,796,937, or 45.49%, from $3,949,782

provided for the six months ended June 30, 2022.

Net loss for the six months ended June 30, 2023 was $3,986,658, representing an increase

of loss of $1,210,531, or 43.61%, from a net loss of $2,776,127 for the six months ended June 30, 2022.

Changes in various asset and liability

account balances throughout the six months ended June 30, 2023 also contributed to the net change in cash from operating activities in

six months ended June 30, 2023.

Chief among such changes is the increase of accounts receivable in the amount of $1,674,665 during the

six months of 2023.

There was also an increase of $3,940,417 in the ending inventory balance as of June 30, 2023 (a decrease to net cash

for the six months ended June 30, 2023 cash flow purposes).

In addition, the Company had non-cash expenses relating to depreciation and

amortization in the amount of $7,150,057, reversal of allowance of bad debts of $830,847 and loss from disposal of $126,797 and impairment

of $375,136 on property, plant and equipment.

The Company also had a net decrease of $7,634,922 in prepayment and other current assets

(an increase to net cash) and a net increase of $807,717 in other payables and accrued liabilities and related parties (an increase to

net cash), as well as a decrease in income tax payable of $67,515 (a decrease to net cash) during the six months ended June 30, 2023.

Net cash used in investing activities

incurred $295,018 in net cash expenditures for investing activities during the three months ended March 31, 2023, as compared to $7,175,972

incurred $5,565,713 in net cash expenditures for investing activities during the six months ended June 30, 2023, as compared to $7,324,305

for the same period of 2022.

Net cash provided by financing activities

cash provided by financing activities was $2,564,646 for the three months ended March 31, 2023, as compared to net cash provided by financing

activities in the amount of $6,893,314 for the three months ended March 31, 2022.

cash provided by financing activities

cash provided by financing activities was $2,823,597 for the six months ended June 30, 2023, as compared to net cash provided by financing

activities in the amount of $6,673,987 for the six months ended June 30, 2022.

Industrial and Commercial Bank

of China (“ICBC”) Loan 1

China Construction Bank

China Construction Bank Loan

short-term bank loans

November 10, 2022, the Company entered into a working capital loan agreement with the ICBC, with a balance of $4,773,174 and $5,023,978

as of March 31, 2023 and December 31, 2022, respectively.

as of June 30, 2023 and December 31, 2022, respectively.

The working capital loan was secured by the land use right of Dongfang Paper

1 unchanged sentence

The loan bears a fixed interest rate of 4.785% per annum.

will be due by November 13, 2023.

November 30, 2022, the Company entered into a working capital loan agreement with the ICBC, with a balance of $291,049 and $287,167 as

of March 31, 2023 and December 31, 2022, respectively.

The loan bears an interest rate of 4.25% per annum.

The loan will be due by May

November 30, 2022, the Company entered into a working capital loan agreement with the ICBC, with a balance of $145,524 and $143,583 as

of March 31, 2023 and December 31, 2022, respectively.

The loan bears an interest rate of 4.25% per annum.

The loan will be due by May

repaid $71,743 in May 2023 and the balance of the loan will be due by November 13, 2023.

November 30, 2022, the Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $287,167 as of

June 30, 2023 and December 31, 2022, respectively.

The loan bore an interest rate of 4.25% per annum.

The loan was repaid in May 2023.

November 30, 2022, the Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $143,583 as of

June 30, 2023 and December 31, 2022, respectively.

The loan bore an interest rate of 4.25% per annum.

The loan was repaid in May 2023.

May 29, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $415,179 as of June 30, 2023.

The loan bears a fixed interest rate of 4.25% per annum.

The loan will be due by November 25, 2023.

July 29, 2022, the Company entered into a working capital loan agreement with the China Construction Bank, with a balance of $138,393

and $143,583 as of March 31, 2023 and December 31, 2022, respectively.

and $143,583 as of June 30, 2023 and December 31, 2022, respectively.

The loan bears a fixed interest rate of 3.95% per annum.

will be due by July 29, 2023.

of March 31, 2023, there were guaranteed short-term borrowings of $5,091,899 and unsecured bank loans of $582,097.

June 29, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $415,179 as of June 30, 2023.

The loan bears a fixed interest rate of 3.55% per annum.

The loan will be due by June 28, 2024.

of June 30, 2023, there were guaranteed short-term borrowings of $4,773,174 and unsecured bank loans of $968,751.

As of December 31,

2022, there were guaranteed short-term borrowings of $5,023,978 and unsecured bank loans of $574,333.

average short-term borrowing rates for the three months ended March 31, 2023 and 2022 were approximately 4.72% and 4.79%.

of March 31, 2023 and December 31, 2022, long-term loans were $11,778,745 and $9,040,002, respectively.

16, 2014, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 5 years, which was originally

due in various installments from June 21, 2014 to November 18, 2018.

average short-term borrowing rates for the three months ended June 30, 2023 and 2022 were approximately 4.83% and 4.79%.

short-term borrowing rates for the six months ended June 30, 2023 and 2022 were approximately 4.77% and 4.79%.

30, 2023 and December 31, 2022, long-term loans were $11,198,760 and $9,040,002, respectively.

April 16, 2014, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 5 years, which

was originally due in various installments from June 21, 2014 to November 18, 2018.

The loan is guaranteed by an independent third party.

Interest payment

is due quarterly and bore a rate of 7.68% per annum.

With effective from November 15, 2022, the interest rate is reduced to 7% per annum.

On November 6, 2018, the loan was renewed for additional 5 years and will be due and payable in various installments from December 21,

2018 to November 5, 2023.

As of March 31, 2023 and December 31, 2022, total outstanding loan balance was $1,251,510 and$1,234,816, respectively,

which are presented as current liabilities in the consolidated balance sheet.

Interest payment is duequarterly and bore a rate of 7.68% per annum.

Effective from November 15, 2022, the interest rate is reduced to

7% per annum.

On November 6, 2018, the loan was renewed for additional 5 years and will be due and payable in various installments from

December 21, 2018 to November 5, 2023.

As of June 30, 2023 and December 31, 2022, total outstanding loan balance was $1,190,180 and $1,234,816,

respectively, which are presented as current liabilities in the consolidated balance sheet.

July 15, 2013, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 5 years, which

was originally due and payable in various installments from December 21, 2013 to July 26, 2018.

On June 21, 2018, the loan was

extended for additional 5 years and will be due and payable in various installments from December 21, 2018 to June 20, 2023.

loan is secured by certain of the Company’s manufacturing equipment with net book value of $93,136 and $280,466 as of March

31, 2023 and December 31, 2022, respectively.

Interest payment is due quarterly and bore a rate of 7.68% per annum.

With effective

from November 15, 2022, the interest rate is reduced to 7% per annum.

As of March 31, 2023 and December 31, 2022, the total

outstanding loan balance was $3,638,111 and $3,589,582, respectively, which are presented as current liabilities in the consolidated

balance sheet.

April 17, 2019, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 2 years,

which was due and payable in various installments from August 21, 2019 to April 16, 2021.

The loan was renewed on March 22, 2021 and

December 24, 2021 and extended for additional 3 years in total, which will be due on April 16, 2024 according to the new schedule.

The loan is secured by Tengsheng Paper with its land use right as collateral for the benefit of the credit union.

Interest payment

is due quarterly and bore a rate of 7.68% per annum.

With effective from November 15, 2022, the interest rate is reduced to 7% per

As of March 31, 2023 and December 31, 2022, the total outstanding loan balance was $2,328,390 and $2,297,332, respectively,

which are presented as non-current liabilities in the consolidated balance sheet as of March 31, 2023 and December 31, 2022,

respectively.

December 12, 2019, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 2 years,

which is due and payable in various installments from June 21, 2020 to December 11, 2021.

The loan was renewed on March 22, 2021 and

December 24, 2021 and extended for additional 3 years in total, which will be due on December 11, 2024 according to the new

The loan is secured by Tengsheng Paper with its land use right as collateral for the benefit of the credit union.

payment is due monthly and bore a rate of 7.56% per annum.

With effective from November 15, 2022, the interest rate is reduced to 7%

As of March 31, 2023 and December 31, 2022, the total outstanding loan balance was $1,891,817 and $1,866,582,

respectively, which are presented as non-current liabilities in the consolidated balance sheet as of March 31, 2023 and December 31,

2022, respectively.

On June 21, 2018, the loan was extended

for additional 5 years andwas due and payable in various installments from December 21, 2018 to June 20, 2023.

On June 19, 2023, the

loan was extended for another 5 years and will be due and payable on June 20, 2028.

The loan is secured by certain of the Company’s

manufacturing equipment with net book value of $59,048 and $280,466 as of June 30, 2023 and December 31, 2022, respectively.

payment is due quarterly and bore a rate of 7.68% per annum.

Effective from November 15, 2022, the interest rate is reduced to 7% per

As of June 30, 2023 and December 31, 2022, the total outstanding loan balance was $3,459,824 and $3,589,582, respectively, which

are presented as non-current liabilities and current liabilities in the consolidated balance sheet, respectively.

April 17, 2019, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 2 years, which

was due and payable in various installments from August 21, 2019 to April 16, 2021.

The loan was renewed on March 22, 2021 and December

24, 2021 and extended for additional 3 years in total, which will be due on April 16, 2024 according to the new schedule.

secured by Tengsheng Paper with its land use right as collateral for the benefit of the credit union.

Interest payment is due quarterly

and bore a rate of 7.68% per annum.

Effective from November 15, 2022, the interest rate is reduced to 7% per annum.

As of June 30, 2023

and December 31, 2022, the total outstanding loan balance was $2,214,288 and $2,297,332, respectively, which are presented as current

liabilities and non-current liabilities in the consolidated balance sheet as of June 30, 2023 and December 31, 2022, respectively.

December 12, 2019, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 2 years, which

is due and payable in various installments from June 21, 2020 to December 11, 2021.

The loan was renewed on March 22, 2021 and December

24, 2021 and extended for additional 3 years in total, which will be due on December 11, 2024 according to the new schedule.

is secured by Tengsheng Paper with its land use right as collateral for the benefit of the credit union.

Interest payment is due monthly

and bore a rate of 7.56% per annum.

Effective from November 15, 2022, the interest rate is reduced to 7% per annum.

As of June 30, 2023

and December 31, 2022, the total outstanding loan balance was $1,799,109 and $1,866,582, respectively, which are presented as non-current

liabilities in the consolidated balance sheet as of June 30, 2023 and December 31, 2022, respectively.

February 26, 2023, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 2 years, which

3 unchanged sentences

Interest payment is due monthly and bore a rate of 7% per annum.

of March 31, 2023, the total outstanding loan balance was $2,619,439.

of June 30, 2023, the total outstanding loan balance was $2,491,073.

Out of the total outstanding loan balance, current portion amounted

was $345,982, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of $2,145,092 is

presented as non-current liabilities in the consolidated balance sheet as of March 31, 2023.

presented as non-current liabilities in the consolidated balance sheet as of June 30, 2023.

July 1, 2022, the Company entered into a loan agreement with Jiangna Yu, a customer of the Company, pursuant to which the Company borrowed

1 unchanged sentence

The loan is payable in monthly installment of RMB10,667 from July 2022 to July

As of March 31, 2023 and December 31, 2022, the total outstanding loan balance was $49,478 and$51,690, respectively.

As of June 30, 2023 and December 31, 2022, the total outstanding loan balance was $44,286 and $51,690, respectively.

total outstanding loan balance, current portion amounted were $11,072 and $11,486, which are presented as current liabilities and the

remaining balance of $37,836 and $40,204 are presented as non-current liabilities in the consolidated balance sheet as of March 31, 2023

remaining balance of $33,214 and $40,204 are presented as non-current liabilities in the consolidated balance sheet as of June 30, 2023

and December 31, 2022, respectively.

interest expenses for the short-term bank loans and long-term loans for the three months ended March 31, 2023 and 2022 were $244,679

and $257,306, respectively.

interest expenses for the short-term bank loans and long-term loans for the three months ended June 30, 2023 and 2022 were $268,499 and

$248,244, respectively.

Total interest expenses for the short-term bank loans and long-term loans for the six months ended June 30, 2023

and 2022 were $513,179 and $505,550, respectively.

Zhenyong Liu, the Company’s CEO has loaned money to Dongfang Paper for working capital purposes over a period of time.

6 unchanged sentences

Zhenyong Liu, which

were recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet as of March

were recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet as of June

30, 2023 and December 31, 2022, respectively.

9 unchanged sentences

with interest of $20,400.

As of March 31, 2023 and December 31, 2022, approximately $43,657 and $43,075 of interest, respectively were

As of June 30, 2023 and December 31, 2022, approximately $41,518 and $43,075 of interest, respectively were

outstanding to Mr.

21 unchanged sentences

and accrued liabilities as part of the current liabilities in the consolidated balance sheet.

of March 31, 2023 and December 31, 2022, total amount of loans due to Mr.

of June 30, 2023 and December 31, 2022, total amount of loans due to Mr.

Zhenyong Liu were $nil.

The interest expense incurred for such

related party loans were $nil for the three months ended March 31, 2023 and 2022.

related party loans were $nil for the three and six months ended June 30, 2023 and 2022.

The accrued interest owing to Mr.

Zhenyong Liu was

approximately $616,691 and $608,465, as of March 31, 2023 and December 31, 2022, respectively, which was recorded in other payables and

accrued liabilities.

December 8, 2021, the Company entered an agreement with Mr.

was approximately $586,470 and $608,465, as of June 30, 2023 and December 31, 2022, respectively, which was recorded in other payables

and accrued liabilities.

December 8, 2021, the Company entered into an agreement with Mr.

Zhenyong Liu, which allows Mr.

Zhenyong Liu to borrow from the Company an

amount of $6,507,431 (RMB44,089,085).

Zhenyong Liu to borrow from the Company

an amount of $6,507,431 (RMB44,089,085).

The loan is unsecured and carries a fixed interest rate of 3% per annum.

The loan was repaid by

The loan was repaid

Zhenyong Liu in February 2022.

October 2022 and November 2022, the Company entered two agreements with Mr.

October 2022 and November 2022, the Company entered into two agreements with Mr.

Zhenyong Liu, which allowed Mr.

2 unchanged sentences

The loans were unsecured and carried a fixed interest rate of 4.35%

4.35% per annum.

The loan will be repaid in May 2023.

Interest income of the loan for the three months ended March 31, 2023 was

of March 31, 2023 and December 31, 2022, amount due to shareholder was $727,433, which represents funds from shareholders to pay for

various expenses incurred in the U.S.

The loan will be repaid by the end of August 2023.

Interest income of the loan for the six months ended June 30, 2023 was

of June 30, 2023 and December 31, 2022, amount due to shareholder was $727,433, which represents funds from shareholders to pay for various

expenses incurred in the U.S.

The amount is due on demand with interest free.

18 unchanged sentences

performance of our businesses, and possible government policy toward operating efficiency of the Chinese paper manufacturing industry.

For the three months ended March 31, 2023 and 2022, no events or circumstances occurred for which an evaluation of the recoverability

For the three months ended June 30, 2023 and 2022, no events or circumstances occurred for which an evaluation of the recoverability

of long-lived assets was required.

5 unchanged sentences

assets and liabilities are translated into United States dollars using the current exchange rate at the end of each fiscal period.

current exchange rates used by the Company as of March 31, 2023 and December 31, 2022 to translate the Chinese RMB to the U.S.

current exchange rates used by the Company as of June 30, 2023 and December 31, 2022 to translate the Chinese RMB to the U.S.

are 7.2258:1 and 6.9646:1, respectively.

Revenues and expenses are translated using the prevailing average exchange rates at 6.9693:1

3483:1 for the three months ended March 31, 2023 and 2022, respectively.

and 6.5058:1 for the six months ended June 30, 2023 and 2022, respectively.

Translation adjustments are included in other comprehensive

12 unchanged sentences

Accounting Pronouncements

May 2019, the FASB issued ASU 2019-05, which is an update to ASU Update No.

2016-13, Financial Instruments—Credit Losses (Topic

Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement

of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology.

October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities

from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets

and contract liabilities in a business combination in accordance with Topic 606, Revenue from Contracts with Customers.

The new amendments

are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

The amendments

in Update 2016-13 added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments to the Codification.

Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit losses

when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments— Credit Losses—Available-for-Sale

Debt Securities.

The amendments in this Update address those stakeholders’ concerns by providing an option to irrevocably elect

the fair value option for certain financial assets previously measured at amortized cost basis.

For those entities, the targeted transition

relief will increase comparability of financial statement information by providing an option to align measurement methodologies for similar

financial assets.

Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments

in Update 2016-13 while still providing financial statement users with decision-useful information.

In November 2019, the FASB issued

2019-10, which to update the effective date of ASU No.

2016-02 for private companies, not-for-profit organizations and certain

smaller reporting companies applying for credit losses, leases, and hedging standard.

The new effective date for these preparers is for

fiscal years beginning after December 15, 2022.

The Company is currently evaluating the impact of ASU 2019-05 will have on its consolidated

financial statements.

October 2021, the FASB issued ASU 2021-08, “Business Combinations”.

The amendments in this Update address how to determine

whether a contract liability is recognized by the acquirer in a business combination and resolve the inconsistency of measuring revenue

contracts with customers acquired in a business combination by providing specific guidance on how to recognize and measure acquired contract

assets and contract liabilities from revenue contracts in a business combination.

The amendments in this Update apply to all entities

that enter into a business combination within the scope of Subtopic 805-10, Business Combination-Overalls.

For public business entities,

ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

application is permitted.

The amendments in this Update should be applied prospectively to business combinations occurring on or after

the effective date of the amendments.

The Company does not expect the adoption of this standard to have a material impact on its consolidated

financial statements.

should be applied prospectively to business combinations occurring on or after the effective date of the amendments, with early adoption

The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis