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Item 2. Management’s Discussion and Analysis

2023-11-09 compared with 2023-08-10 · 326 added, 334 removed, 284 unchanged (70% 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 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

this quarterly report.

following discussion of the financial condition and results of operations of the Company for the periods ended September 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 this quarterly report.

this quarterly report, references to “the Company,” “we,” “our” and “us” refer to IT

33 unchanged sentences

of Operations

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 the Three months ended September 30, 2023 and 2022

for the three months ended September 30, 2023 was $15,771,560, a decrease of $15,937,654, or 50.26%, from $31,709,214 for the same period

in the previous year.

This was mainly due to the decrease of sales volume of corrugating medium paper (“CMP”) and a decrease

in average selling prices of CMP and tissue paper products.

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

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

from sales of offset printing paper, corrugating medium paper (“CMP”) and tissue paper products for the three months ended

September 30, 2023 was $15,756,399, representing a decrease of $15,895,944, or 50.22%, from $31,652,343 for the third quarter of 2022.

Total offset printing paper, CMP and tissue paper products sold during the three months ended September 30, 2023 amounted to 44,807 tonnes,

representing a decrease of 27,808 tonnes, or 38.30%, compared to 72,615 tonnes sold in the comparable period in the previous year.

of regular CMP was limited in August 2023 due to unfavorable weather conditions (i.e.

continuous rainstorm in August 2023).

of offset printing paper had been suspended in year 2022 and first nine months of 2023 except for an intermittent production in May and

The production of offset print paper was resumed in early October 2023.

The changes in revenue dollar amount and in quantity

sold for the three months ended September 30, 2023 and 2022 are summarized as follows:

$ (14,109,184 )

Light-Weight CMP

$ (1,826,929 )

$ (15,936,113 )

Printing Paper

2 unchanged sentences

$ (15,895,944 )

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

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:

Monthly sales

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

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

Months ended September 30, 2023

Three Months ended

September 30, 2022

from comparable period in the previous year

by percentage

The following

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

from CMP amounted to $15,423,073 (97.88% of the total offset printing paper, CMP and tissue paper products revenues) for the three months

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 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 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 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

ended September 30, 2023, representing a decrease of $15,936,113, or 50.82%, from $31,359,186 for the comparable period in 2022.

sold 44,396 tonnes of CMP in the three months ended September 30, 2023 as compared to 72,355 tonnes for the same period in 2022, representing

a 38.64% decrease in quantity sold.

for regular CMP decreased from $435/tonne for the three months ended September 30, 2022 to $350/tonne for the three months ended September

30, 2023, representing a 19.54% decrease.

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

ASP in RMB for regular CMP for the third quarter of 2022 and 2023 was RMB2,980 and RMB2,532,

respectively, representing a 15.03% decrease.

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.

The quantity of regular CMP sold decreased by 25,662 tonnes, from 59,848 tonnes in the

third quarter of 2022 to 34,186 tonnes in the third quarter of 2023.

for light-weight CMP decreased from $423/tonne for the three months ended September 30, 2022 to $340/tonne for the three months ended

September 30, 2023, representing a 19.62% decrease.

ASP in RMB for light-weight CMP for the third quarter of 2022 and 2023 was RMB2,892

and RMB2,439, respectively, representing a 15.66% decrease.

The quantity of light-weight CMP sold decreased by 2,297 tonnes, from 12,507

tonnes in the third quarter of 2022, to 10,210 tonnes in the third quarter of 2023.

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

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 July 2021 to June 2023 are as follows:

The utilization rates for the third

quarter of 2023 and 2022 were 38.07% and 66.82%, respectively, representing a decrease of 28.75%.

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

printing paper

from offset printing paper was $69,227 (representing 0.44% 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.

for the three months ended September 30, 2023, representing an increase of $69,227, or 100.00%, from $nil for the three months ended

September 30, 2022.

Production of offset printing paper had been suspended in year 2022 and first nine months of 2023 except for an intermittent

production in May and June 2023.

The production of offset print paper was resumed in early October 2023.

We sold 170 tonnes of offset

printing paper in the third quarter of 2023.

Paper Products

from tissue paper products was $264,099 (representing 1.68% 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

for the three months ended September 30, 2023, representing a decrease of $29,058, or 9.91%, from $293,157 for the three months ended

September 30, 2022.

We sold 241 tonnes of tissue paper in the third quarter of 2023, as compared to 260 tonnes in the comparable period

of 2022, representing a decrease of 19 tonnes, or 7.31%.

Except for the production suspension in the first quarter of 2020, the production

and sales of tissue paper products have been growing up steadily since the launch of PM8 and PM9 in December 2018 and November 2019.

for tissue paper products decreased from $1,128/tonne for the three months ended September 30, 2022 to $1,096/tonne for the three months

ended September 30, 2023, representing a 2.84% decrease.

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

was RMB7,913 and RMB7,849, respectively, representing a 0.81% decrease.

generated from selling face mask were $15,198 and $56,871 for the three months ended September 30, 2023 and 2022, respectively, representing

a decrease of $41,673, or 73.28%.

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

We sold 507 thousand pieces of face masks in the third quarter of 2023, as compared to 1,282 thousand

pieces in the comparable period of 2022, a decrease of 775 thousand pieces, or 60.45%.

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

cost of sales for CMP, offset printing paper and tissue paper products for the quarter ended September 30, 2023 was $15,907,217, a decrease

of $12,978,386, or 44.93%, from $28,885,603 for the comparable period in 2022.

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

paper products, partially offset by the increase in average cost of sales.

Average cost of sales per tonne of tissue paper products increased

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:

This was mainly due to the decrease in sales quantity

and the decrease in the unit material costs of CMP.

of sales for CMP was $14,844,637 for the quarter ended September 30, 2023, as compared to $27,834,752 for the comparable period in 2022.

The decrease in the cost of sales of $12,990,115 for CMP was mainly due to the decrease in sales volume and average unit cost of sales

Average cost of sales per tonne for CMP decreased by 13.25%, from $385 in the third quarter of 2022 to $334 in the third quarter

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 third quarter of 2023 compared to the third quarter of 2022.

of sales for tissue paper products was $998,569 for the quarter ended September 30, 2023, as compared to $1,050,851 for the comparable

period in 2022.

The decrease in the cost of sales of $52,282 for tissue paper products was mainly due to the decrease in sales volume

of tissue paper products, partially offset by the increase in average cost of sales.

Average cost of sales per tonne of tissue paper

products increased by 2.50%, from $4,042 in the three months ended September 30, 2022, to $4,143 for the comparable period in 2023.

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 September 30, 2023 and 2022 are summarized below:

in percentage

$ (12,102,181 )

4 unchanged sentences

$ (12,978,386 )

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

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

was RMB 1,239/tonne (approximately $176/tonne), as compared to RMB 1,561/tonne (approximately $235/tonne) for the three months ended

September 30, 2022.

These changes (in US dollars) represent a year-over-year decrease of 25.11% for the recycled paper board.

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.

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

Although we do not rely on imported

1 unchanged sentence

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:

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

and gas are our two main energy sources.

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.

Electricity and gas accounted for approximately 5% and 13.3% of total sales in the third quarter

of 2023, respectively, compared to 4% and 11.6% of total sales in the third 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:

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

Profit (Loss)

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,

loss for the three months ended September 30, 2023 was $153,223 (representing 0.97% of the total revenue), representing a decrease of

$2,936,811, or 105.50%, from the gross profit of $2,783,588 (representing 8.78% of the total revenue) for the three months ended September

30, 2022, as a result of factors described above.

Printing Paper, CMP and Tissue Paper Products

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.

loss for offset printing paper, CMP and tissue paper products for the three months ended September 30, 2023 was $150,818, representing

a decrease of $2,917,558, or 105.45%, from the gross profit of $2,766,740 for the three months ended September 30, 2022.

was mainly the result of the factors discussed above.

overall gross profit margin for offset printing paper, CMP and tissue paper products decreased by 9.70 percentage points, from 8.74%

for the three months ended September 30, 2022, to -0.96% for the three months ended September 30, 2023.

profit margin for regular CMP for the three months ended September 30, 2023 was 7.01%, or 3.90 percentage points lower, as compared to

gross profit margin of 10.91% for the three months ended September 30, 2022.

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

CMP, partially offset by the decrease in cost of recycled paper board in the third quarter of 2023.

profit margin for light-weight CMP for the three months ended September 30, 2023 was -7.47%, or 20.31 percentage points lower, as compared

to gross profit margin of 12.84% for the three months ended September 30, 2022.

The decrease was mainly due to the decrease of ASP of

light-weight CMP, partially offset by the decrease in cost of recycled paper board in the third quarter of 2023.

profit margin for offset printing paper was 7.53% for the three months ended September 30, 2023.

profit margin for tissue paper products for the three months ended September 30, 2023 was -278.10%, or 19.64 percentage points lower,

as compared to gross profit margin of -258.46% for the three months ended September 30, 2022.

The decrease in gross loss was mainly due

to the decrease in ASP of tissue paper products and the increase in cost of base paper.

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

profit for face masks was a gross loss of $2,393 and a gross profit of $16,848, respectively, for the three months ended September 30,

2023 and 2022, representing a gross margin of -15.75% and 29.62%, 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.

general and administrative expenses for the three months ended September 30, 2023 were $2,334,746, a decrease of $1,035,795, or 30.73%

from $3,370,541 for the three months ended September 30, 2022.

The decrease was mainly due to the shares of common stock granted and

issued under our compensatory incentive plan in August 2022.

loss for the quarter ended September 30, 2023 was $2,484,513, a decrease of $1,897,560, or 323.29%, from $586,953 for the quarter ended

September 30, 2022.

The increase in loss from operations was primarily due to the decrease in gross profit, partially offset by decrease

in selling, general and administrative expenses.

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.

expense for the three months ended September 30, 2023 decreased by $8,860, from $256,678 in the three months ended September 30, 2022,

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

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

on derivative liability

$12,105,731 as of September 30, 2023, as compared to $14,681,595 as of September 30, 2022.

derivative liability

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

2 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 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.

change in fair value of derivative liability for the three months ended September 30, 2023 and 2022 was a gain of $660,429 and a loss

of $617,370, respectively.

a result and the factors discussed above, net loss was $1,975,368 for the quarter ended September 30, 2023, representing a decrease of

$88,050, or 4.67%, from $1,887,318 for the quarter ended September 30, 2022.

of the nine months ended September 30, 2023 and 2022

for the nine months ended September 30, 2023 was $65,582,351, representing a decrease of $13,397,365, or 16.96%, from $78,979,716 for

the same period in the previous year.

This was mainly due to 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:

from sales of offset printing paper, CMP and tissue paper products for the nine months ended September 30, 2023 was $65,483,282, a decrease

of $13,295,389, or 16.88%, from $78,778,671 for the nine months ended September 30, 2022.

This was mainly due to the decrease in ASPs

Total quantities of offset printing paper, CMP and tissue paper products sold during the nine months ended September 30, 2023

amounted to 173,317 tonnes, an increase of 5,251 tonnes, or 3.12%, compared to 168,066 tonnes sold during the nine months ended September

Total quantities of CMP and offset printing paper sold increased by 5,565 tonnes in the nine months of 2023 as compared to

the same period of 2022.

We sold 726 tonnes of tissue paper products in the nine months of 2023 as opposed to 1,040 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 nine months

ended September 30, 2023 and 2022 are summarized as follows:

$ (14,662,549 )

$ (1,586,401 )

$ (16,248,950 )

Printing Paper

1 unchanged sentence

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

$ (13,295,389 )

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

Months Ended September 30, 2023

Nine Months Ended

September 30, 2022

(Decrease) from comparable period in the previous year

1 unchanged sentence

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

generated from selling face masks were $95,080 and $201,045 for the nine months ended September 30, 2023 and 2022.

We sold 3,023 thousand

pieces of face masks for the nine months ended September 30, 2023, as compared to 4,295 thousand pieces in the comparable period of 2022,

a decrease of 1,272 thousand pieces, or 29.62%.

cost of sales for CMP, offset printing paper and tissue paper products in the nine months ended September 30, 2023 was $64,717,786, a

decrease of $10,384,544, or 13.83%, from $75,102,330 for the nine months ended September 30, 2022.

This was mainly due to the decrease

of material costs of CMP.

Cost of sales for CMP was $58,592,582 for the nine months ended September 30, 2023, as compared to $71,863,579

in the same period of 2022.

Average cost of sales per tonne for CMP decreased by 18.37%, from $430 for the nine months ended September

30, 2022, to $351 in the same period of 2023.

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:

This was 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 $2,981,708 for the nine months ended September

30, 2023, as compared to $3,238,751 in the same period of 2022.

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

in percentage

$ (12,658,744 )

$ (13,270,997 )

Printing Paper

1 unchanged sentence

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.

$ (10,384,544 )

profit for the nine months ended September 30, 2023 was $749,636 (representing 1.14% of the total revenue), representing a decrease of

$2,978,434, or 79.89%, from the gross profit of $3,728,070 (representing 4.72% of the total revenue) for the nine months ended September

The decrease was mainly due to (i) the decrease in ASP of CMP, and (ii) the increase in material costs of tissue paper products.

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.

profit for offset printing paper, CMP and tissue paper products for the nine months ended September 30, 2023 was $765,496, a decrease

of $2,910,845, or 79.18%, from the gross profit of $3,676,341 for the nine months ended September 30, 2022.

The decrease was mainly the

result of the factors discussed above.

overall gross profit margin for offset printing paper, CMP and tissue paper products decreased by 3.50 percentage points, from 4.67%

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.

for the nine months ended September 30, 2022, to 1.17% for the nine months ended September 30, 2023.

profit margin for regular CMP for the nine months ended September 30, 2023 was 5.26%, or 1.89 percentage points lower, as compared to

gross profit margin of 7.15% for the nine months ended September 30, 2022.

Such decrease was primarily due to the decrease in ASP of

profit margin for light-weight CMP for the nine months ended September 30, 2023 was 1.68%, or 7.49 percentage points lower, as compared

to gross profit margin of 9.17% for the nine months ended September 30, 2022.

Such decrease was primarily due to the decrease in ASP

of light-weight CMP.

margin for offset printing paper was 2.53% for the nine months ended September 30, 2023.

profit margin for tissue paper products was -258.64% for the nine months ended September 30, 2023, a decrease of 64.99 percentage points,

as compared to -193.65% for the nine months ended September 30, 2022.

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

loss for face mask for the nine months ended September 30, 2023 was $8,801, representing a gross margin of -9.26% compared with a gross

profit of $51,729, representing a gross margin of 25.73%, for the nine months ended September 30, 2022.

General and Administrative Expenses

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

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.

general and administrative expenses for the nine months ended September 30, 2023 were $6,153,513, a decrease of $2,387,711, or 27.96%

from $8,541,224 for the nine months ended September 30, 2022.

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

decrease in depreciation of idle fixed assets during production suspension.

loss for the nine months ended September 30, 2023 was $5,775,557, a decrease of $962,403, or 20.00%, from $4,813,154 for the nine months

ended September 30, 2022.

The decrease was primarily due to the decrease in gross profit and recognition of impairment loss on assets,

partially offset by the decrease in selling, general and administrative expenses.

Income and Expenses

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

expense for the nine months ended September 30, 2023 decreased by $18,929, from $786,597 for the nine months ended September 30, 2022,

The Company had short-term and long-term interest-bearing loans and lease obligation that aggregated $12,105,731 as of September

30, 2023, as compared to $14,681,595 as of September 30, 2022.

derivative liability

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

2 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 sixmonths ended June 30, 2023 and 2022 was a loss of $14,409 and a gain of $1,346,633,

respectively.

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.

As a result of better control over stock turnover and volatility

of recycled paper board price, inventory was kept in a minimum level as of December 31, 2022.

change in fair value of derivative liability for the three months ended September 30, 2023 and 2022 was a gain of $ 646,020 and a gain

of $729,263, respectively.

a result of the above, net loss was $5,962,026 for the nine months ended September 30, 2023, representing an increase of net loss of

$1,298,581, or 27.85%, from $4,663,445 for the nine months ended September 30, 2022.

accounts receivable was $2,794,437 as of September 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 74.58% of total value of inventory as of September 30, 2023), semi-finished goods and finished

As of September 30, 2023, the recorded value of inventory increased by 86.76% to $5,364,777 from $2,872,622 as of December 31,

As of September 30, 2023, the inventory of recycled paper board, which is the main raw material for the production of CMP, was

$3,580,255, approximately $2,322,094, or 184.56%, higher than the balance as of December 31, 2022.

As a result of better control over

stock turnover and volatility of recycled paper board price, inventory was kept in a minimum level as of December 2022.

summary of changes in major inventory items is as follows:

Raw Materials

Recycled paper board

Recycled white scrap paper

Tissue base paper

Mask fabric and other

September 30,

white scrap paper

fabric and other raw materials

Raw Materials

Total Raw Materials

Semi-finished Goods

Finished Goods

Total inventory, gross

Inventory reserve

Semi-finished

inventory, gross

inventory, net

9 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 June 30, 2023

Expenditure Commitment as of September 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 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.

of September 30, 2023, we had approximately $3.8 million in capital expenditure commitments that were mainly related to the purchase

of paper machine of PM10.

The infrastructure work of PM10 has been completed and the associated ancillary facilities are working in progress.

14 unchanged sentences

Paper made payments due according to the schedule.

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

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 $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.

The deferred gain is amortized over the lease

term and as an offset to amortization of the Leased Equipment.

and Cash Equivalents

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

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

On July 17, 2023, the Company made a final payment on outstanding obligations and

bought back the Lease Equipment at nominal price according to the agreement.

The lease assets were reclassified as own assets and balance

of Leased Equipment net of amortization were $nil and $1,939,970 as of September 30, 2023 and December 31, 2022, respectively.

Cash Equivalents

cash, cash equivalents and restricted cash as of September 30, 2023 was $9,437,941, a decrease of $86,927, from $9,524,868 as of December

The decrease of cash and cash equivalents for the nine months ended September 30, 2023 was attributable to a number of factors

cash provided by (used in) operating activities

cash provided by operating activities was $7,494,114 for the nine months ended September 30, 2023.

The balance represented an increase

of cash of $62,847, or 0.85%, from $7,431,267 provided for the nine months ended September 30, 2022.

Net loss for the nine months ended

September 30, 2023 was $5,962,026, representing a decrease of $1,298,581, or 27.85%, from a net loss of $4,663,445 for the nine months

ended September 30, 2022.

Changes in various asset and liability account balances throughout the nine months ended September 30, 2023

also contributed to the net change in cash from operating activities in nine months ended September 30, 2023.

Chief among such changes

is the increase of accounts receivable in the amount of $2,037,003 during the nine months of 2023.

There was also an increase of $2,631,661

in the ending inventory balance as of September 30, 2023 (a decrease to net cash for the nine months ended September 30, 2023 cash flow

In addition, the Company had non-cash expenses relating to depreciation and amortization in the amount of $10,573,288.

Company also had a net decrease of $7,968,553 in prepayment and other current assets (an increase to net cash) and a net increase of

$381,203 in other payables and accrued liabilities and related parties (an increase to net cash), as well as a decrease in income tax

payable of $413,777 (a decrease to net cash) during the nine months ended September 30, 2023.

cash used in investing activities

incurred $9,211,711 in net cash expenditures for investing activities during the nine months ended September 30, 2023, as compared to

$8,189,410 for the same period of 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 Loan

cash provided by financing activities was $1,997,269 for the nine months ended September 30, 2023, as compared to net cash provided by

financing activities in the amount of $6,840,080 for the nine months ended September 30, 2022.

September 30,

and Commercial Bank of China (“ICBC”) Loan 1

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

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

as collateral for the benefit of the bank and guaranteed by Mr.

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

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

November 10, 2022, the Company entered into a working capital loan agreement with the ICBC.

The loan was secured by the land use right

of Dongfang Paper as collateral for the benefit of the bank and guaranteed by Mr.

The loan bore a fixed interest rate of 4.785%

The company repaid $71,743 in May 2023 and paid off the remaining balance of the loan in August 2023.

The balance of the loan

was $nil and $5,023,978 as of September 30, 2023 and December 31, 2022, respectively.

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.

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

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

1 unchanged sentence

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.

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

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

The loan was repaid in May

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.

May 29, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $417,839 as of September 30,

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 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.

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.

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

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

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

was fully repaid in July 2023.

June 29, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $417,839 as of September 30,

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.

of September 30, 2023, there were guaranteed short-term borrowings of $nil 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 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.

average short-term borrowing rates for the three months ended September 30, 2023 and 2022 were approximately 4.52% and 4.28%.

short-term borrowing rates for the nine months ended September 30, 2023 and 2022 were approximately 4.66% and 4.6%.

of September 30, 2023 and December 31, 2022, long-term loans were $11,270,053 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

1 unchanged sentence

The loan is guaranteed by an independent third party.

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.

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

Effective from November 15, 2022, the interest rate was 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 September 30, 2023 and December 31, 2022, total outstanding loan balance was $1,197,805

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

1 unchanged sentence

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.

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

On June 19, 2023, the

1 unchanged sentence

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.

manufacturing equipment with net book value of $29,713 and $280,466 as of September 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.

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

As of September 30, 2023 and December 31, 2022, the total outstanding loan balance was $3,481,536 and $3,589,582, which are presented

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

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

5 unchanged sentences

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.

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

As of September

30, 2023 and December 31, 2022, the total outstanding loan balance was $2,228,474 and $2,297,332, respectively, which are presented as

current liabilities and non-current liabilities in the consolidated balance sheet as of September 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

5 unchanged sentences

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.

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

As of September

30, 2023 and December 31, 2022, the total outstanding loan balance was $1,810,635 and $1,866,582, respectively, which are presented as

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

of September 30, 2023, the total outstanding loan balance was $2,507,034.

Out of the total outstanding loan balance, current portion

amounted was $1,267,445, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of $1,239,589

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

As of September 30, 2023 and December 31, 2022, the total outstanding loan balance was $44,569 and $51,690, respectively.

the total outstanding loan balance, current portion amounted $11,072 and $13,928, respectively, which are presented as current liabilities

and the remaining balance of $30,641 and $40,204 are presented as non-current liabilities in the consolidated balance sheet as of September

30, 2023 and December 31, 2022, 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

interest expenses for the short-term bank loans and long-term loans for the three months ended September 30, 2023 and 2022 were $247,628

and $248,239, respectively.

Total interest expenses for the short-term bank loans and long-term loans for the nine months ended September

30, 2023 and 2022 were $760,807 and $753,789, respectively.

7 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 June

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

30, 2023 and December 31, 2022, respectively.

9 unchanged sentences

with interest of $20,400.

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

outstanding to Mr.

Zhenyong Liu, which was recorded in other payables and accrued liabilities as part of the current liabilities in the

consolidated balance sheet.

As of September 30, 2023 and December 31, 2022, approximately $41,784 and $43,075 of interest, respectively

were outstanding to Mr.

Zhenyong Liu, which was recorded in other payables and accrued liabilities as part of the current liabilities

in the consolidated balance sheet.

March 1, 2015, the Company entered an agreement with Mr.

16 unchanged sentences

In December 2019, the Company paid off the remaining balance, together with interest of 94,636.

As of September

30, 2023 and December 31, 2022, the outstanding interest was $191,422 and $197,338, respectively, which was recorded in other payables

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

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

of September 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 and six months ended June 30, 2023 and 2022.

The interest expense incurred for

such related party loans were $nil for the three and nine months ended September 30, 2023 and 2022.

The accrued interest owing to 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.

Zhenyong Liu was approximately $590,227 and $608,465, as of September 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.

10 unchanged sentences

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

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.

$4,264,938 (RMB30,000,000) was repaid by Mr.

Zhenyong Liu in August 2023.

The remaining balance will be repaid in November

Interest income of the loan for the nine months ended September 30, 2023 was $263,342.

of September 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 June 30, 2023 and 2022, no events or circumstances occurred for which an evaluation of the recoverability

For the three months ended September 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 June 30, 2023 and December 31, 2022 to translate the Chinese RMB to the U.S.

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

are 7.1798:1 and 6.9646:1, respectively.

Revenues and expenses are translated using the prevailing average exchange rates at 7.0341:1

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

and 6.6410:1 for the nine months ended September 30, 2023 and 2022, respectively.

Translation adjustments are included in other comprehensive

23 unchanged sentences

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