What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-04-11 compared with 2024-03-27 · 278 added, 313 removed, 277 unchanged (68% of the section changed)

16 unchanged sentences

December 31, 2024 was $75,837,943, representing a decrease of $10,709,007, or 12.37%, from $86,546,950 for the previous year.

mainly due to the decrease in average selling price (“ASP”) of CMP.

mainly due to the decrease in sales quantity of Corrugating Medium Paper (“CMP”), offset printing paper and tissue paper products

and the decrease in Average Selling Price (“ASP”) of CMP.

Revenue of Offset Printing Paper, Corrugating Medium Paper and Tissue

3 unchanged sentences

from $86,412,058 for the year ended December 31, 2023.

This was mainly due to the decrease in ASP of CMP, partially offset by increase

in sales volume of regular CMP, light-weight CMP and offset printing paper.

This was mainly due to the decrease in ASPs of CMP and the decrease in sales volume

of offset printing paper and tissue paper products.

Total quantities of offset

printing paper, CMP and tissue paper products sold during the year ended December 31, 2023 amounted to 230,601 tonnes, an increase of

printing paper, CMP and tissue paper products sold during the year ended December 31, 2024 amounted to 220,552 tonnes, a decrease of 10,049

tonnes, or 4.36%, compared to 230,601 tonnes sold during the year ended December 31, 2023.

Total quantities of CMP and offset printing

paper sold increased by 11,065 tonnes in the year of 2023 as compared to 2022.

We sold 1,205 tonnes of tissue paper products in the year

of 2023 as opposed to 1,273 tonnes in 2022.

Production of offset printing paper was resumed in May 2023.

The changes in revenue and quantity

sold for the year ended December 31, 2023 and 2022 are summarized as follows:

December 31, 2023

December 31, 2022

Percentage Change

paper sold decreased by 8,844 tonnes in the year of 2024 as compared to 2023.

Production of CMP was suspended in January and February

of 2024 and resumed in mid of March 2024, and production of offset printing paper and tissue paper products was suspended in 2024.

changes in revenue and quantity sold for the year ended December 31, 2024 and 2023 are summarized as follows:

Sales Revenue

Quantity (Tonne)

1 unchanged sentence

Quantity (Tonne)

Sales Revenue

$ (4,174,856 )

3 unchanged sentences

Offset Printing Paper

$ (3,215,190 )

Tissue Paper Products

Total CMP, Offset Printing Paper and Tissue Paper Revenue

$ (1,305,192 )

Total CMP, Offset Printing Paper and Tissue Paper Revenue

$ (10,709,631 )

1 unchanged sentence

photo paper and tissue paper products) for the 24 months ended December 31, 2024, are summarized below:

The average selling price, or ASP, for our major products

for the years ended December 31, 2023 and 2022 are summarized as follows:

The average selling price,

or ASP, for our major products for the years ended December 31, 2024 and 2023 are summarized as follows:

Offset Printing Paper ASP

Regular CMP ASP

Light-Weight CMP ASP

Tissue Paper Products ASP

Year Ended December 31, 2024

Year Ended December 31, 2023

Increase (Decrease) from comparable period in the previous year

Increase (Decrease) by percentage

The following is a chart showing the month-by-month ASPs for

the 24 month period ended December 31, 2023:

Decrease from comparable period in the previous year

Decrease by percentage

The following is a chart

showing the month-by-month ASPs for the 24 month period ended December 31, 2024:

Corrugating Medium Paper

3 unchanged sentences

We sold 220,552 tonnes of

CMP in the year ended December 31, 2023 as compared to 218,331 tonnes in the year ended December 31, 2022, representing a 2.52% increase

CMP in the year ended December 31, 2024 as compared to 223,823 tonnes in the year ended December 31, 2023, representing a 1.46% decrease

in quantity sold.

5 unchanged sentences

in 2023 to 182,972 tonnes in 2024.

ASP for light-weight CMP

dropped from $440/tonne in 2022 to $355/tonne in 2023, representing a $19.32% decrease.

ASP in RMB for light-weight CMP in 2022 and 2023

was RMB2,972 and RMB2,502, respectively, representing a 15.82% decrease.

The quantity of light-weight CMP sold increased by 3,599 tonnes,

from 37,354 tonnes in 2022, to 40,953 tonnes in 2023.

Our PM6 production line,

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

The utilization rates for the year ended December 31, 2023

and 2022 were 51.98% and 49.28%, respectively, representing an increase of 2.70%.

ASP for light-weight

CMP dropped from $355/tonne in 2023 to $333/tonne in 2024, representing a $6.2% decrease.

ASP in RMB for light-weight CMP in 2023

and 2024 was RMB2,502 and RMB2,368, respectively, representing a 5.36% decrease.

The quantity of light-weight CMP sold decreased by

3,373 tonnes, from 40,953 tonnes in 2023, to 37,580 tonnes in 2024.

Our PM6 production line, which produces regular CMP, has a

designated capacity of 360,000 tonnes /year.

The utilization rates for the year ended December 31, 2024 and 2023 were 49.75% and

51.98%, respectively, representing a decrease of 2.23%.

Quantities sold for regular

CMP that was produced by the PM6 production line from January 2023 to December 2024 are as follows:

Offset Printing Paper

Revenue from offset

printing paper was $3,215,190 (3.72% of the total offset printing paper, CMP and tissue paper products revenues) for the year ended December

31, 2023, representing an increase of $3,215,190, or 100%, from year of 2022.

We sold 5,573 tonnes of offset printing paper in the year

ended December 31, 2023.

Tissue Paper Products

Revenue from tissue paper

products was $1,305,192 (1.51% of the total offset printing paper, CMP and tissue paper products revenues) for the year ended December

31, 2023, representing a decrease of $51,063, or 3.76%, from $1,356,255 in 2022.

We sold 1,205 tonnes of tissue paper products in the

year ended December 31, 2023, as compared to 1,273 tonnes in 2022, a decrease of 68 tonnes, or 5.34%.

ASP for tissue paper products

was $1,065/tonne and $1,083/tonne in the year ended December 31, 2022 and 2023, respectively, representing a 1.69% increase.

for tissue paper products for the year ended 2022 and 2023 was RMB7,198 and RMB7,640, respectively, representing a 6.14% increase.

Revenue of Face Mask

Revenue generated from selling

face masks were $106,064 and $257,820 for the year ended December 31, 2023 and 2022.

We sold 3,383 thousand pieces of face masks in 2023,

as compared to 5,625 thousand pieces in 2022, a decrease of 2,242 thousand pieces, or 39.86%.

face masks were $nil and $106,064 for the year ended December 31, 2024 and 2023.

Cost of Sales

Total cost of sales for CMP, offset printing paper

and tissue paper products in the year ended December 31, 2023 was $85,418,822, a decrease of $9,965,512, or 10.45%, from $95,384,334 for

the year ended December 31, 2022.

This was mainly due to the decrease of material costs of CMP.

Cost of sales for CMP was $77,962,837 for the

year ended December 31, 2023, as compared to $91,093,891 in 2022.

The decrease in the cost of sales of $13,131,054 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 year of 2023.

Average cost of sales per tonne for CMP decreased by 16.55%, from $417 for the year ended December 31, 2022, to $348 in 2023.

mainly attributable to the lower average unit purchase costs (net of applicable value added tax) of recycled paper board.

Cost of sales for offset printing paper was $3,134,832

for the year ended December 31, 2023.

Cost of sales for tissue paper products was $4,318,339

Total cost of sales

for CMP, offset printing paper and tissue paper products in the year ended December 31, 2024 was $69,145,658, a decrease of $16,273,164,

or 19.05%, from $85,418,822 for the year ended December 31, 2023.

This was mainly due to the decrease in unit material costs of CMP and

decrease in sales volume of offset printing paper and tissue paper products.

Cost of sales for CMP was

$69,145,658 for the year ended December 31, 2024, as compared to $77,962,837 in 2023.

Average cost of sales per tonne of tissue paper products increased

by 6.35%, from $3,370 for the year ended December 31, 2022, to $3,584 for 2023.

Changes in cost of sales and cost per tonne by product for

the year ended December 31, 2023 and 2022 are summarized below:

December 31, 2023

December 31, 2022

in percentage

The decrease in the cost of sales of $8,817,179

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 year of 2024.

Average cost of sales per tonne for CMP decreased by 9.77%, from $348 for the year ended December 31, 2023, to $314

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 offset

printing paper was $nil for the year ended December 31, 2024, as compared to $3,137,646 in 2023.

Cost of sales for tissue

paper products was $nil for the year ended December 31, 2024, as compared to $4,318,339 in 2023.

Changes in cost of sales

and cost per tonne by product for the year ended December 31, 2024 and 2023 are summarized below:

Change in percentage

$ (6,175,047 )

Light-Weight CMP

$ (2,642,132 )

Printing Paper

Paper Products

CMP, Offset Printing Paper and Tissue Paper Revenue

$ (8,817,179 )

Our average unit purchase

costs (net of applicable value added tax) of recycled paper board and recycled white scrap paper for the year ended December 31, 2023

were RMB 1,350/tonne (approximately $191/tonne) as compared to RMB 1,690/tonne (approximately $250/tonne) for the year ended December

Offset Printing Paper

$ (3,137,646 )

Tissue Paper Products

$ (4,318,339 )

Total CMP, Offset Printing Paper and Tissue Paper Revenue

$ (16,273,164 )

Our average unit purchase costs (net of applicable value added tax) of recycled paper board and recycled white scrap paper for the year

ended December 31, 2024 was RMB 1,214/tonne (approximately $171/tonne), as compared to RMB 1,350/tonne (approximately $191/tonne) in 2023.

These changes (in US dollars) represent a year-over-year decrease of 10.47% for the unit purchase cost of recycled paper board.

We 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.

The pricing trends of our major raw materials for the 24-month

period from January 2022 to December 2023 are shown below:

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.

The pricing trends of our

major raw materials for the 24-month period from January 2023 to December 2024 are shown below:

Electricity and gas are

1 unchanged sentence

Electricity and gas accounted for approximately 5% and 13.6% of total sales in 2024, respectively, compared

to 4% and 12.4% of total sales 2022.

to 5% and 15.3% of total sales in 2023.

The monthly energy cost (electricity and gas) as a percentage of total monthly sales of our main

1 unchanged sentence

Gross profit for December

31, 2023 was $999,885 (representing 1.16% of the total revenue), representing a decrease of $3,754,311, or 78.97%, from the gross profit

of $4,754,196 (representing 4.74% of the total revenue) for the year ended December 31, 2022.

The decrease was mainly due to the decrease

in ASP of CMP, partially offset by the decrease of material costs of CMP, and (ii) the increase in material costs of tissue paper products.

31, 2024 was $6,691,740 (representing 8.82% of the total revenue), representing an increase of $5,691,855, or 569.25%, from the gross

profit of $999,885 (representing 1.16% of the total revenue) for the year ended December 31, 2023.

The increase was mainly due to the

decrease in unit cost of materials of CMP, partially offset by the decrease in ASP of CMP.

Corrugating Medium Paper, Offset Printing Paper and Tissue Paper

Gross profit for offset

printing paper, CMP and tissue paper products for the year ended December 31, 2023 was $993,236, a decrease of $3,704,094, or 78.86%,

from the gross profit of $4,697,330 for the year ended December 31, 2022.

The decrease was mainly the result of the factors discussed

Gross profit for offset printing

paper, CMP and tissue paper products for the year ended December 31, 2024 was $6,556,769, an increase of $5,563,533, or 560.14%, from

the gross profit of $993,236 for the year ended December 31, 2023.

The increase was mainly the result of the factors discussed above.

The overall gross profit

margin for offset printing paper, CMP and tissue paper products decreased by 3.54 percentage points, from 4.69% for the year ended December

margin for offset printing paper, CMP and tissue paper products increased by 7.51 percentage points, from 1.15% for the year ended December

31, 2023, to 8.66% for the year ended December 31, 2024.

Gross profit margin for

regular CMP for the year ended December 31, 2023 was 5.27%, or 2.12 percentage points lower, as compared to gross profit margin of 7.39%

for the year ended December 31, 2022.

Such decrease was primarily due to the decrease in ASP of regular CMP, partially offset by the decrease

in material costs.

Gross profit margin for

light-weight CMP for the year ended December 31, 2023 was 2.59%, or 6.83 percentage points lower, as compared to gross profit margin of

9.42% for the year ended December 31, 2022.

Such decrease was primarily due to the decrease in ASP of light-weight CMP, partially offset

by the decrease in material costs.

Gross profit margin for

offset printing paper was 2.41% for the year ended December 31, 2023.

Gross profit margin for regular

CMP for the year ended December 31, 2024 was 8.79%, or 3.52 percentage points higher, as compared to gross profit margin of 5.27% for

the year ended December 31, 2023.

Such increase was primarily due to the decrease in material costs, partially offset by the decrease

in ASP of regular CMP.

Gross profit margin for

tissue paper products was -230.86% for the year ended December 31, 2023, a decrease of 14.52 percentage points, as compared to -216.34%

for the year ended December 31, 2022.

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

light-weight CMP for the year ended December 31, 2024 was 8.03%, or 5.44 percentage points higher, as compared to gross profit margin

of 2.59% for the year ended December 31, 2023.

Such increase was primarily due to the decrease in material costs, partially offset by

the decrease in ASP of light-weight CMP.

Monthly gross profit margins

1 unchanged sentence

Gross loss for face mask

for the year ended December 31, 2023 was $11,127, representing a gross margin of -10.49% compared with a gross profit of $67,328, representing

a gross margin of 26.11%, for the year ended December 31, 2022.

for the year ended December 31, 2024 and 2023 was $nil and $11,127, respectively.

Selling, General and Administrative Expenses

Selling, general and administrative

expenses for the year ended December 31, 2023 were $9,075,475, a decrease of $983,248, or 9.78% from $10,058,723 for the year ended December

The decrease was mainly due to the decrease in depreciation of idle fixed assets during production suspension.

expenses for the year ended December 31, 2024 were $14,799,969, an increase of $5,724,494, or 63.08% from $9,075,475 for the year ended

December 31, 2023.

The increase was mainly due to the increase in i) depreciation of idle fixed assets during the production suspension

of $3.9 million;

ii) accrued liability related to a legal proceeding in which the Company was jointly liable for repaying a loan of $0.4

million and iii) impairment reserve for obsolete inventory of $0.7 million and allowance for doubtful receivables of $0.9 million.

Loss from Operations

Operating loss for

the year ended December 31, 2023 was $9,575,888, a decrease of $4,271,361, or 80.52%, from $5,304,527 for the year ended December 31,

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

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

Operating loss for the year

ended December 31, 2024 was $8,210,719, a decrease of loss of $1,365,169, or 14.26%, from $9,575,888 for the year ended December 31, 2023.

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

Other Income and Expenses

1 unchanged sentence

year ended December 31, 2024 decreased by $222,141, from $984,518 for the year ended December 31, 2023, to $762,377.

The Company had

short-term and long-term interest-bearing loans and lease obligation that aggregated $12,386,346 as of December 31, 2023, as compared

to $15,442,807 as of December 31, 2022.

The Company had short-term

and long-term interest-bearing loans that aggregated $9,124,422 as of December 31, 2024, as compared to $11,801,996 as of December 31,

Provision for Income Taxes

Full allowance for

deferred tax asset loss was provided in the year of 2023 and 2022.

Income tax for the year ended December 31, 2023 is $346,954 as compared

to the income tax $11,711,339 for the year ended December 31, 2022.

Full allowance for deferred

tax asset loss was provided in the year of 2024 and 2023.

Income tax for the year ended December 31, 2024 was $879,194 as compared to

the income tax $346,954 for the year ended December 31, 2023.

As a result of the above,

net loss was $9,946,035 for the year ended December 31, 2023, representing an increase of $6,625,273, or 39.98%, from $16,571,308 for

net loss was $9,843,094 for the year ended December 31, 2024, representing a decrease of loss of $102,941, or 1.03%, from $9,946,035 for

the year ended December 31, 2023.

1 unchanged sentence

Net accounts receivable

was $575,526 as of December 31, 2023, as compared with $nil as of December 31, 2022.

We usually collect accounts receivable within 30

days of delivery and completion of sales.

decreased by $287,950, or 50.03%, to $287,576 as of December 31, 2024, as compared with $575,526 as of December 31, 2023.

We usually collect

accounts receivable within 30 days of delivery and completion of sales.

Inventories consist of raw

1 unchanged sentence

As of December

31, 2023, the recorded value of inventory increased by 23.87% to $3,558,193 from $2,872,622 as of December 31, 2022.

The increase is mainly

due to the increase of finished goods, partially offset by the decrease of recycle paper board.

More CMP products were produced in December

2023 to mitigate the impact of energy price rise starting from January 2024.

As of December 31, 2023, the inventory of recycled paper

board, which is the main raw material for the production of CMP, was $198,744, approximately $1,059,417, or 84.20%, lower than the balance

31, 2024, the recorded value of inventory decreased by 33.85% to $2,351,876 from $3,555,235 as of December 31, 2023.

As of December 31,

As a result of better control over stock turnover and volatility of recycled paper board price, inventory was

kept in a minimum level.

2024, the inventory of recycled paper board, which is the main raw material for the production of CMP, was $1,353,543, approximately $1,154,799,

or 581.05%, higher than the balance as of December 31, 2023.

In anticipation of the rising energy prices, we enhanced the production capacity

for CMP during the fourth quarter of 2023.

As a result, by December 31, 2023, our raw material balance had decreased, whereas the inventory

balance of our finished goods had increased significantly, compared to the balances recorded on December 31, 2024.

This was due to a substantial

portion of the materials being processed and converted into finished goods during that period.

A summary of changes in

33 unchanged sentences

are expected to be financed by bank loans and cash flows generated from our business operations.

Financing with Sale-Leaseback

The Company entered into

a sale-leaseback arrangement (the “Lease Financing Agreement”) with TAC Leasing Co., Ltd.(“TLCL”) on August 6,

2020, for a total financing proceeds in the amount of RMB 16 million (approximately US$2.3 million).

Under the sale-leaseback arrangement,

Tengsheng Paper sold the Leased Equipment to TLCL for 16 million (approximately US$2.3 million).

Concurrent with the sale of equipment,

Tengsheng Paper leases back the equipment sold to TLCL for a lease term of three years.

At the end of the lease term, Tengsheng Paper

may pay a nominal purchase price of RMB 100 (approximately $14) to TLCL and buy back the Leased Equipment.

The Leased Equipment in amount

of $2,349,452 was recorded as right of use assets and the net present value of the minimum lease payments was recorded as lease liability

and calculated with TLCL’s implicit interest rate of 15.6% per annum and stated at $567,099 at the inception of the lease on August

Tengsheng Paper made payments

due according to the schedule.

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 December 31, 2023 and 2022, respectively.

Cash, Cash Equivalents and restricted cash

Our cash, cash equivalents and restricted cash

as of December 31, 2023 was $4,391,921, a decrease of $5,132,947, from $9,524,868 as of December 31, 2022.

The decrease of cash and cash

equivalents for the year ended December 31, 2023 was attributable to a number of factors including:

Our cash, cash equivalents

and restricted cash as of December 31, 2024 was $6,950,576, an increase of $2,558,655, from $4,391,921 as of December 31, 2023.

of cash and cash equivalents for the year ended December 31, 2024 was attributable to a number of factors including:

Net cash provided by operating activities

1 unchanged sentence

activities was $6,299,469 for the year ended December 31, 2024.

The balance represented an increase of cash of $2,151,698, or 20.07%,

from $10,719,388 provided for the year ended December 31, 2022.

The balance represented a decrease of cash of $6,571,617, or 51.06%, from

$12,871,086 provided for the year ended December 31, 2023.

Net loss for the year ended December 31, 2024 was $9,843,094, representing

a decrease of loss $6,625,273, or 39.98%, from a net loss of $16,571,308 for the year ended December 31, 2022.

a decrease of loss of $102,941, or 1.03%, from a net loss of $9,946,035 for the year ended December 31, 2023.

Changes in various asset

3 unchanged sentences

year of 2024.

There was also an increase of $736,267 in the ending inventory balance as of December 31, 2023 (a decrease to net cash for

There was also a decrease of $432,189 in the ending inventory balance as of December 31, 2024 (an increase to net cash for

the year ended December 31, 2024 cash flow purposes).

1 unchanged sentence

in the amount of $14,221,082.

The Company also had a net decrease of $9,322,532 in prepayment and other current assets (an increase to

net cash) and a net decrease of $999,812 in other payables and accrued liabilities and related parties (a decrease to net cash), as well

as a decrease in income tax payable of $412,504 (a decrease to net cash) during the year ended December 31, 2023.

The Company also had a net increase of $6,090 in prepayment and other current assets (a decrease to net

cash) and a net decrease of $447,899 in other payables and accrued liabilities and related parties (a decrease to net cash), as well as

an increase in income tax payable of $81,720 (an increase to net cash) during the year ended December 31, 2024.

Net cash used in investing activities

We incurred $22,239,297

in net cash expenditures for investing activities during the year ended December 31, 2023, as compared to $10,898,531 for the year ended

We incurred $329,611 in

net cash expenditures for investing activities during the year ended December 31, 2024, as compared to $22,239,297 for the year ended

December 31, 2023.

Payments in 2023 were mainly for the payment for land use right.

Net cash provided by financing activities

Net cash provided by financing

activities was $4,410,099 for the year ended December 31, 2023, as compared to net cash used in financing activities in the amount of

$879,596 for the year ended December 31, 2022.

Net cash (used in) provided by financing activities

Net cash used in financing

activities was $3,256,696 for the year ended December 31, 2024, as compared to net cash provided by financing activities in the amount

of $4,410,099 for the year ended December 31, 2023.

In December 2024, we refinanced

$4 million existing long-term debt by securing new loans at lower market rates, to repay our obligations to Rural Credit Union.

This refinancing

transaction did not involve any cash inflows or outflows.

As a result, it was not reflected in the financing activities in the cash flow

Although the new loans have distinct terms and interest rates compared to the old ones, they do not qualify as a traditional

debt restructuring according to U.S.

We anticipate financial benefits from this refinancing, particularly lower interest expenses

over the loan’s remaining term.

Rural Credit Union of Xushui District Loan 1

Rural Credit Union of Xushui District Loan 2

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

China Construction Bank Loan

Total short-term bank loans

On 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% per annum.

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 December

31, 2023 and 2022, respectively.

On November 30, 2022, the

On December 24, 2024, the

Company entered into a loan agreement with the Rural Credit Union of Xushui District to borrow $1,808,469 (RMB13,000,000) to repay the

existing long-term loan of the same amount.

The loan was secured by the equipment of Baoding Shengde as collateral for the benefit of

The loan bears a fixed rate of 6% and is due for repayment by December 23, 2025.

On December 24, 2024, the

Company entered into a loan agreement with the Rural Credit Union of Xushui District to borrow $2,225,808(RMB16,000,000) to repay the

existing long-term loan of the same amount.

The loan was secured by the equipment of Baoding Shengde as collateral for the benefit of

the bank and guaranteed by a third party company.

The loan bears a fixed rate of 6% and is due for repayment by December 23, 2025.

On September 15, 2023, the

Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $2,824 as of December 31, 2024 and 2023,

respectively.

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

The loan was fully repaid in May 2023.

On November 30, 2022, the

The loan bore a fixed interest rate of 3.45% per annum.

The loan was repaid in June 2024.

On September 22, 2023, the

Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $70,594 as of December 31, 2024 and 2023,

respectively.

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

The loan was fully repaid in May 2023.

On May 29, 2023, the Company

entered into a working capital loan agreement with the ICBC, to borrow $423,567 at a fixed interest rate of 4.25% per annum.

was repaid in November 2023.

On 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 December 31,

2023 and 2022, respectively.

The loan bore a fixed interest rate of 3.45% per annum.

The loan was fully repaid in July 2023.

On June 29, 2023, the Company

entered into a working capital loan agreement with the ICBC, to borrow $423,567 at a fixed interest rate of 3.55% per annum.

was repaid in September, 2023.

On September 15, 2023, the

Company entered into a working capital loan agreement with the ICBC, with a balance of $2,824 as of December 31, 2023.

The loan bears

a fixed interest rate of 3.45% per annum.

The loan will be due by September 14, 2024.

On September 22, 2023, the

Company entered into a working capital loan agreement with the ICBC, with a balance of $ 70,594 as of December 31, 2023.

The loan bears

a fixed interest rate of 3.45% per annum.

The loan will be due by September 21, 2024.

The loan was repaid in June 2024.

On September 22, 2023, the

Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $350,149 as of December 31, 2024 and 2023,

respectively.

The loan bore a fixed interest rate of 3.45% per annum.

The loan was repaid in June 2024.

On June 11, 2024, the

Company entered into a working capital loan agreement with the ICBC, with a balance of $2,782 as of December 31, 2024.

1 unchanged sentence

a fixed interest rate of 3.45% per annum.

The loan will be due by September 21, 2024.

The loan is due for repayment by June 11, 2025.

On June 21, 2024, the Company

entered into a working capital loan agreement with the ICBC, with a balance of $139,113 as of December 31, 2024.

The loan bears a fixed

interest rate of 3.45% per annum.

The loan is due for repayment by June 21, 2025.

On June 22, 2024, the Company

entered into a working capital loan agreement with the ICBC, with a balance of $139,113 as of December 31, 2024.

The loan bears a fixed

interest rate of 3.45% per annum.

The loan is due for repayment by June 22, 2025.

On June 24, 2024, the Company

entered into a working capital loan agreement with the ICBC, with a balance of $136,331 as of December 31, 2024.

The loan bears a fixed

interest rate of 3.45% per annum.

The loan is due for repayment by June 24, 2025.

As of December 31, 2024,

2 unchanged sentences

short-term borrowings of $nil and unsecured bank loans of $423,567.

The average short-term borrowing rates for the

years ended December 31, 2023, and 2022 were approximately 4.48% and 4.72%, respectively.

The average short-term borrowing

rates for the years ended December 31, 2024, and 2023 were approximately 4.6% and 4.48%, respectively.

Long-term loans

As of December 31, 2023, and 2022, long-term loan balance

is $11,378,429 and $9,040,002, respectively.

On 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 was guaranteed by an independent third party.

Interest payment was 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,

The loan was fully repaid in December 2023.

As of December 31, 2023 and 2022, total outstanding loan balance was $nil and $1,234,816,

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

On 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 was due and payable in various

installments from December 21, 2018 to June 20, 2023.

On August 24, 2023, the loan was extended for another 3 years and will be due and

payable on August 24, 2026.

The loan is secured by certain of the Company’s manufacturing equipment with net book value of $nil

and $280,466 as of December 31, 2023 and 2022, respectively.

As of December 31, 2024, and 2023, long-term loan

balance is $4,672,806 and $11,378,429, respectively.

On 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 was

due and payable in various installments from December 21, 2018 to June 20, 2023.

On August 24, 2023, the loan was extended for another

3 years and will be due and payable on August 24, 2026.

The loan is secured by certain of the Company’s manufacturing equipment

with net book value of $nil as of December 31, 2024 and 2023.

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

2 unchanged sentences

was $3,476,434 and $3,528,315.

Out of the total outstanding loan balance, current portion amounted was $1,269,290, which is presented

as current liabilities in the consolidated balance sheet and the remaining balance of $2,259,025 is presented as non-current liabilities

in the consolidated balance sheet as of December 31, 2023.

On 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.

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

As of December 31, 2023 and 2022, the total outstanding loan balance

was $2,259,026 and $2,297,332, respectively, which are presented as current liabilities and non-current liabilities in the consolidated

balance sheet as of December 31, 2023 and 2022, respectively.

Out of the total outstanding loan balance, current portion amounted was $2,641,756 and $1,269,290, which

is presented as current liabilities in the consolidated balance sheet and the remaining balance of $834,678 and $2,259,025 is presented

as non-current liabilities in the consolidated balance sheet as of December 31, 2024 and 2023, respectively.

On 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, December 24, 2021 and April 16, 2024 and

extended for additional 5 years in total, which is due on April 15, 2026 according to the new schedule.

The loan was secured by Tengsheng

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

Interest payment was due quarterly and bore a rate of

7.2% per annum.

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

On December 24, 2024, the Company entered

into a one-year loan agreement with the Rural Credit Union of Xushui District for same amount to repay the loan.

This refinancing arrangement

secured a lower market rate and did not involve any cash inflows or outflows.

As of December 31, 2024 and 2023, the total outstanding

loan balance was $nil and $2,259,026, respectively, which are presented as current liabilities in the consolidated balance sheet as of

December 31, 2024 and 2023.

On 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 was due on December 11, 2024 according to the new schedule.

The loan was 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

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

On December 24, 2024, 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.

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 monthly and bore a rate of 7.56% per annum.

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

As of December 31, 2023 and 2022, the total outstanding loan balance

was $1,835,458 and $1,866,582, respectively, which are presented as current liabilities and non-current liabilities in the consolidated

balance sheet as of December 31, 2023 and 2022, respectively.

On 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 is due and payable in various installments

from August 21, 2023 to February 24, 2025.

The loan is secured by Dongfang Paper with its land use right as collateral for the benefit

of the credit union.

a one-year loan agreement with the Rural Credit Union of Xushui District for same amount to repay the loan.

This refinancing arrangement

secured a lower market rate and did not involve any cash inflows or outflows.

As of December 31, 2024 and 2023, the total outstanding

loan balance was $nil and $1,835,458, respectively, which are presented as current liabilities in the consolidated balance sheet as of

December 31, 2024 and 2023, respectively.

On 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 is due and payable in

various installments from August 21, 2023 to February 24, 2025.

The loan is secured by Dongfang 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% per annum.

As of December 31, 2023, the total outstanding loan

balance was $2,541,404.

Out of the total outstanding loan balance, current portion amounted was $1,284,820, which is presented as current

liabilities in the consolidated balance sheet and the remaining balance of $1,256,584 is presented as non-current liabilities in the consolidated

balance sheet as of December 31, 2023.

On July 1, 2022, the Company entered into a loan

agreement with Jiangna Yu, a customer of the Company, pursuant to which the Company borrowed RMB 400,000 from Jiangna Yu for a term of

The loan is payable in monthly installment of RMB10,667 from July 2022 to July 2027.

The company repaid the loan in November

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

Out of the total outstanding

loan balance, current portion amounted $nil and $11,486, respectively, which are presented as current liabilities and the remaining balance

of $nil and $40,204 are presented as non-current liabilities in the consolidated balance sheet as of December 31, 2023 and 2022, respectively.

The loan was repaid in July 2024.

As of December 31, 2024 and 2023, the total outstanding loan balance was $nil and $2,541,404.

Out of the total outstanding loan balance,

current portion amounted was $nil and $1,284,820, which is presented as current liabilities in the consolidated balance sheet and the

remaining balance of $nil and $1,256,584 is presented as non-current liabilities in the consolidated balance sheet as of December 31,

2024 and 2023, respectively.

On December 5, 2023, the

1 unchanged sentence

from June 21, 2024 to December 5, 2026.

The loan was guaranteed by an independent third party.

Interest payment was due monthly and bore

The loan is guaranteed by an independent third party.

Interest payment is due monthly and bears

a rate of 7% per annum.

As of December 31, 2023, total outstanding loan balance was $1,214,226.

Out of the total outstanding loan balance,

current portion amounted $225,903, which is presented as current liabilities and the remaining balance of $ 988,323 is presented as non-current

liabilities in the consolidated balance sheet as of December 31, 2023.

As of December 31, 2024 and 2023, total outstanding loan balance was $1,196,372 and $1,214,226, respectively.

Out of the total outstanding loan balance, current portion amounted $918,146 and $225,903, which is presented as current liabilities and

the remaining balance of $278,226 and $988,323 is presented as non-current liabilities in the consolidated balance sheet as of December

31, 2024 and 2023, respectively.

Total interest expenses

for the short-term bank loans and long-term loans for the years ended December 31, 2024, and 2023 were $762,377 and $977,678, respectively.

Related party transactions

Shareholder Loans

Zhenyong Liu has loaned

44 unchanged sentences

Zhenyong Liu were $nil.

The interest expense incurred for such related party loans are $nil

The interest expense incurred for such related party loans were $nil

for the years ended December 31, 2024, and 2023.

The accrued interest owe to Mr.

Zhenyong Liu was approximately $598,319 and $608,465,

as of December 31, 2023 and 2022, respectively, which was recorded in other payables and accrued liabilities.

On 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).

The loan was unsecured and carried a fixed interest rate of 3% per annum.

The loan was repaid by Mr.

Zhenyong Liu in

February 2022.

The net interest owe to Mr.

Zhenyong Liu was approximately $304,600 and $598,319, as

of December 31, 2024, and 2023, respectively, which was recorded in other payables and accrued liabilities.

In October 2022 and November

8 unchanged sentences

Interest income of the loan for

the year ended December 31, 2023 was $290,275.

the years ended December 31, 2024 and 2023 were $nil and $290,275.

As of December 31, 2024,

and 2022, amount due to shareholder are $727,433, which represent funds from shareholders to pay for various expenses incurred in the

and 2023, amount due to shareholder was $nil and $727,433, respectively, which represent funds from shareholders to pay for various expenses

incurred in the U.S.

The amount is due on demand with interest free.

25 unchanged sentences

For the years ended December 31,

2023 and 2022, no events or circumstances occurred for which an evaluation of the recoverability of long-lived assets was required.

are currently not aware of any events or circumstances that may indicate any need to record such impairment in the future.

2024 and 2023, we recorded $102,490 and $292,922 loss from impairment of property, plant and equipment, respectively.

Foreign Currency Translation

21 unchanged sentences

Recent Accounting Pronouncements

In 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 should be applied prospectively

to business combinations occurring on or after the effective date of the amendments, with early adoption permitted.

The Company does not

expect the adoption of this standard to have a material impact on its consolidated financial statements.

In December 2023, the FASB

issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

Under this ASU, public entities must annually (1)

disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative

threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax

income or loss by the applicable statutory income tax rate).

This ASU’s amendments are effective for all entities that are subject

to Topic 740, Income Taxes, for annual periods beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating

the impact of this pronouncement on our disclosures.

In November 2024, the FASB

issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures, which emphasizes the importance

of providing more granular and detailed expense information in financial statements.

The update requires entities to disaggregate expenses

by nature and function on the income statement, offering a clearer picture of an entity’s cost structure and operational efficiency.

enhanced disclosure is intended to improve the transparency and comparability of financial reporting.

Entities must apply the new guidance

retrospectively to all periods presented in the financial statements.

The amendments are effective for annual reporting periods beginning

after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The Company is

in the process of assessing the impact of these changes on its financial reporting and will implement the necessary adjustments to comply

with the updated standards.

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-K

Item 7. Management’s Discussion and Analysis