What changed in this filing

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Item 1. Business

2020-03-23 compared with 2019-03-07 · 508 added, 485 removed, 41 unchanged (96% of the section changed)

Tech Packaging, Inc.

Corporate History

IT Tech Packaging,

(the “Company”) was incorporated in the State of Nevada on December 9, 2005, under the name “Carlateral,

Through the steps described immediately below, we became the holding company for Hebei Baoding Dongfang Paper Milling

Company Limited (“Dongfang Paper”), a producer and distributor of paper products in China, on October 29, 2007, and

effective December 21, 2007, we changed our name to “Orient Paper, Inc.”.

on August 1, 2018, we changed our corporate name to IT Tech Packaging, Inc..

The name change was effected through a parent/subsidiary

short-form merger of IT Tech Packaging, Inc., our wholly-owned Nevada subsidiary formed solely for the purpose of the name change,

with and into us.

Through the steps described below, we became the holding company for Hebei Baoding Dongfang Paper Milling Company Limited

(“Dongfang Paper”), a producer and distributor of paper products in China, on October 29, 2007, and effective December

21, 2007, we changed our name to “Orient Paper, Inc.”.

Effective on August

1, 2018, we changed our corporate name to IT Tech Packaging, Inc.

The name change was effected through a parent/subsidiary short-form

merger of IT Tech Packaging, Inc., our wholly-owned Nevada subsidiary formed solely for the purpose of the name change, with and

We were the surviving entity.

In connection with the name change, our common stock began being traded under

a new NYSE symbol, “ITP,”

and a new CUSIP number, 46527C100, at such time.

October 29, 2007, pursuant to an agreement and plan of merger (the “Merger Agreement”), the Company acquired Dongfang

Zhiye Holding Limited (“Dongfang Holding”), a corporation formed on November 13, 2006 under the laws of the British

Virgin Islands, and issued the shareholders of Dongfang Holding an aggregate of 7,450,497 (as adjusted for a four-for-one reverse

stock split effected in November 2009) shares of our common stock, which shares were distributed pro-rata to the shareholders

of Dongfang Holding in accordance with their respective ownership interests in Dongfang Holding.

At the time of the Merger Agreement,

Dongfang Holding owned all of the issued and outstanding stock and ownership of Dongfang Paper and such shares of Dongfang Paper

were held in trust with Zhenyong Liu, Xiaodong Liu and Shuangxi Zhao, for Mr.

Zhao (the original shareholders

of Dongfang Paper) to exercise control over the disposition of Dongfang Holding’s shares in Dongfang Paper on Dongfang Holding’s

behalf until Dongfang Holding successfully completed the change in registration of Dongfang Paper’s capital with the relevant

PRC Administration of Industry and Commerce as the 100% owner of Dongfang Paper’s shares.

As a result of the merger transaction,

Dongfang Holding became a wholly owned subsidiary of the Company, and Dongfang Holding’s wholly owned subsidiary, Dongfang

Paper, became an indirectly owned subsidiary of the Company.

Holding, as the 100% owner of Dongfang Paper, was unable to complete the registration of Dongfang Paper’s capital under

its name within the proper time limits set forth under PRC law.

In connection with the consummation of the restructuring transactions

described below, Dongfang Holding directed the trustees to return the shares of Dongfang Paper to their original shareholders,

and the original Dongfang Paper shareholders entered into certain agreements with Baoding Shengde Paper Co., Ltd.

(“Baoding

Shengde”) to transfer the control of Dongfang Paper over to Baoding Shengde.

June 24, 2009, the Company consummated a number of restructuring transactions pursuant to which it acquired all of the issued

and outstanding shares of Shengde Holdings Inc., a Nevada corporation.

In connection with the name change, our common stock began being traded under a new NYSE

symbol, “ITP,”

at such time.

On October 29, 2007,

pursuant to an agreement and plan of merger (the “Merger Agreement”), the Company acquired Dongfang Zhiye Holding Limited

(“Dongfang Holding”), a corporation formed on November 13, 2006 under the laws of the British Virgin Islands, and issued

the shareholders of Dongfang Holding an aggregate of 7,450,497 (as adjusted for a four-for-one reverse stock split effected in

November 2009) shares of our common stock, which shares were distributed pro-rata to the shareholders of Dongfang Holding in accordance

with their respective ownership interests in Dongfang Holding.

At the time of the Merger Agreement, Dongfang Holding owned all

of the issued and outstanding stock and ownership of Dongfang Paper and such shares of Dongfang Paper were held in trust with Zhenyong

Liu, Xiaodong Liu and Shuangxi Zhao, for Mr.

Zhao (the original shareholders of Dongfang Paper) to exercise

control over the disposition of Dongfang Holding’s shares in Dongfang Paper on Dongfang Holding’s behalf until Dongfang

Holding successfully completed the change in registration of Dongfang Paper’s capital with the relevant PRC Administration

of Industry and Commerce as the 100% owner of Dongfang Paper’s shares.

As a result of the merger transaction, Dongfang Holding

became a wholly owned subsidiary of the Company, and Dongfang Holding’s wholly owned subsidiary, Dongfang Paper, became an

indirectly owned subsidiary of the Company.

Dongfang Holding,

as the 100% owner of Dongfang Paper, was unable to complete the registration of Dongfang Paper’s capital under its name within

the proper time limits set forth under PRC law.

In connection with the consummation of the restructuring transactions described

below, Dongfang Holding directed the trustees to return the shares of Dongfang Paper to their original shareholders, and the original

Dongfang Paper shareholders entered into certain agreements with Baoding Shengde Paper Co., Ltd.

(“Baoding Shengde”)

to transfer the control of Dongfang Paper over to Baoding Shengde.

On June 24, 2009,

the Company consummated a number of restructuring transactions pursuant to which it acquired all of the issued and outstanding

shares of Shengde Holdings Inc., a Nevada corporation.

Shengde Holdings Inc.

was incorporated in the State of

Nevada on February 25, 2009, and holds a wholly-owned subsidiary, Baoding Shengde, a limited liability company organized under

the laws of the PRC on June 1, 2009.

Because Baoding Shengde is a wholly-owned subsidiary of Shengde Holdings Inc., it is regarded

as a wholly foreign-owned entity under PRC law.

June 24, 2009, Baoding Shengde, Dongfang Paper and the original shareholders of Dongfang Paper entered into a number of contractual

arrangements, as subsequently amended on February 10, 2010, pursuant to which Baoding Shengde acts as the management company for

Dongfang Paper, and Dongfang Paper conducts the principal operations of the business.

The contractual arrangements, as amended,

effectively transferred the preponderance of the economic benefits of Dongfang Paper to Baoding Shengde, and Baoding Shengde assumed

effective control and management over Dongfang Paper.

was incorporated in the State of Nevada on February

25, 2009, and holds a wholly-owned subsidiary, Baoding Shengde, a limited liability company organized under the laws of the PRC

on June 1, 2009.

Because Baoding Shengde is a wholly-owned subsidiary of Shengde Holdings Inc., it is regarded as a wholly foreign-owned

entity under PRC law.

Effective June 24,

2009, Baoding Shengde, Dongfang Paper and the original shareholders of Dongfang Paper entered into a number of contractual arrangements,

as subsequently amended on February 10, 2010, pursuant to which Baoding Shengde acts as the management company for Dongfang Paper,

and Dongfang Paper conducts the principal operations of the business.

The contractual arrangements, as amended, effectively transferred

the preponderance of the economic benefits of Dongfang Paper to Baoding Shengde, and Baoding Shengde assumed effective control

and management over Dongfang Paper.

The contractual arrangements, as amended, include the following:

Technical Service and Business Consulting Agreement

exclusive technical service and business consulting agreement, entered into by and between Baoding Shengde and Dongfang Paper,

provides that Baoding Shengde shall provide exclusive technical, business and management consulting services to Dongfang Paper,

in exchange for service fees including a fee equivalent to 80% of Dongfang Paper’s total annual net profits.

The agreement

is terminable upon mutual written agreement.

call option agreement, entered into by and between Baoding Shengde, Dongfang Paper and the shareholders of Dongfang Paper, provides

that the shareholders of Dongfang Paper irrevocably grant to Baoding Shengde an option to purchase all or part of each shareholder’s

equity interest in Dongfang Paper.

(i) Exclusive Technical Service and Business Consulting

The exclusive technical

service and business consulting agreement, entered into by and between Baoding Shengde and Dongfang Paper, provides that Baoding

Shengde shall provide exclusive technical, business and management consulting services to Dongfang Paper, in exchange for service

fees including a fee equivalent to 80% of Dongfang Paper’s total annual net profits.

The agreement is terminable upon

mutual written agreement.

(ii) Call Option Agreement

The call option agreement,

entered into by and between Baoding Shengde, Dongfang Paper and the shareholders of Dongfang Paper, provides that the shareholders

of Dongfang Paper irrevocably grant to Baoding Shengde an option to purchase all or part of each shareholder’s equity interest

in Dongfang Paper.

The exercise price for the options shall be RMB yuan for each of the shareholders’

interests, or if at any time there are PRC laws regulating the minimum exercise price of such options, then to the extent permitted

under PRC Law.

The call option agreement contains covenants from Dongfang Paper and its shareholders that they will refrain from

taking certain actions without Baoding Shengde’s consent that would materially affect Dongfang Paper’s operations

and asset value, including (i) supplementing or amending its articles of association or bylaws, (ii) changing Dongfang Paper’s

registered capital or shareholding structure, (iii) selling, transferring, mortgaging or disposing of any interests in Dongfang

Paper’s assets or income, or encumbering Dongfang Paper’s assets or income in a way that would approve a security

interest on such assets, (iv) incurring or guaranteeing any debts not incurred in its normal business operations, (v) entering

into any material contract or urging Dongfang Paper management to dispose of any Dongfang Paper assets, unless it is within the

company’s normal business operations;

equity interests, or

if at any time there are PRC laws regulating the minimum exercise price of such options, then to the extent permitted under PRC

The call option agreement contains covenants from Dongfang Paper and its shareholders that they will refrain from taking certain

actions without Baoding Shengde’s consent that would materially affect Dongfang Paper’s operations and asset value,

including (i) supplementing or amending its articles of association or bylaws, (ii) changing Dongfang Paper’s registered

capital or shareholding structure, (iii) selling, transferring, mortgaging or disposing of any interests in Dongfang Paper’s

assets or income, or encumbering Dongfang Paper’s assets or income in a way that would approve a security interest on such

assets, (iv) incurring or guaranteeing any debts not incurred in its normal business operations, (v) entering into any material

contract or urging Dongfang Paper management to dispose of any Dongfang Paper assets, unless it is within the company’s normal

business operations;

(vi) providing any loan or guarantee to any third party;

(vii) appointing or removing

any management personnel or directors that can be changed upon Dongfang Paper shareholder approval;

(viii) declaring or distributing

any dividends to the stockholders.

The agreement remains effective until Baoding Shengde or its designees have acquired

100% of the equity interests of Dongfang Paper underlying the options.

share pledge agreement entered into by and between Baoding Shengde, Dongfang Paper and the shareholders of Dongfang Paper, provides

that the Dongfang Paper shareholders will pledge all of their equity interests in Dongfang Paper to Baoding Shengde as security

for their obligations under the other management agreements described in this section.

Specifically, Baoding Shengde is entitled

to dispose of the pledged equity interests in the event that the Dongfang Paper shareholders or Dongfang Paper fails to pay the

service fees to Baoding Shengde pursuant to the exclusive technical service and business consulting agreement or fails to perform

their other obligations under the other management agreement.

The agreement contains covenants from Dongfang Paper’s shareholders

that they will refrain from taking certain actions without Baoding Shengde’s prior written consent, such as transferring

or assigning their equity interests, or creating or permitting the creation of any pledges which may have an adverse effect on

the rights or benefits of Baoding Shengde under the agreement.

The Dongfang Paper shareholders also promise to comply with

the laws and regulations relevant to the pledges under the agreement and to facilitate in good faith the protection of the ability

of Baoding Shengde to exercise its rights under the agreement.

The terms of the share pledge agreement remains in effect

until all the obligations under the other management agreements have been fulfilled, whether or not the terms of the other management

agreements have expired.

Proxy Agreement

proxy agreement, entered into by and between Baoding Shengde, Dongfang Paper and the shareholders of Dongfang Paper, provides

that the Dongfang Paper shareholders shall irrevocably entrust a designee of Baoding Shengde with such shareholder’s voting

rights and the right to represent such shareholder to exercise his or her rights at any shareholder’s meeting of Dongfang

Paper or with respect to any shareholder action to be taken in accordance with the laws and Dongfang Paper’s Articles of

The terms of the agreement are binding on the parties for as long as the Dongfang Paper shareholders continue

to hold any equity interest in Dongfang Paper.

An Dongfang Paper shareholder will cease to be a party to the agreement once

it transfers its equity interests with the prior approval of Baoding Shengde.

June 24, 2009, Zhao Tianqing, the sole shareholder of Shengde Holdings Inc., assigned to the Company, for good and valuable consideration,

(vii) appointing or removing any management personnel

or directors that can be changed upon Dongfang Paper shareholder approval;

(viii) declaring or distributing any dividends to the

stockholders.

The agreement remains effective until Baoding Shengde or its designees have acquired 100% of the equity interests

of Dongfang Paper underlying the options.

(iii) Share Pledge Agreement

The share pledge agreement

entered into by and between Baoding Shengde, Dongfang Paper and the shareholders of Dongfang Paper, provides that the Dongfang

Paper shareholders will pledge all of their equity interests in Dongfang Paper to Baoding Shengde as security for their obligations

under the other management agreements described in this section.

Specifically, Baoding Shengde is entitled to dispose of the pledged

equity interests in the event that the Dongfang Paper shareholders or Dongfang Paper fails to pay the service fees to Baoding Shengde

pursuant to the exclusive technical service and business consulting agreement or fails to perform their other obligations under

the other management agreement.

The agreement contains covenants from Dongfang Paper’s shareholders that they will refrain

from taking certain actions without Baoding Shengde’s prior written consent, such as transferring or assigning their equity

interests, or creating or permitting the creation of any pledges which may have an adverse effect on the rights or benefits of

Baoding Shengde under the agreement.

The Dongfang Paper shareholders also promise to comply with the laws and regulations

relevant to the pledges under the agreement and to facilitate in good faith the protection of the ability of Baoding Shengde to

exercise its rights under the agreement.

The terms of the share pledge agreement remains in effect until all the obligations

under the other management agreements have been fulfilled, whether or not the terms of the other management agreements have expired.

(iv) Proxy Agreement

The proxy agreement,

entered into by and between Baoding Shengde, Dongfang Paper and the shareholders of Dongfang Paper, provides that the Dongfang

Paper shareholders shall irrevocably entrust a designee of Baoding Shengde with such shareholder’s voting rights and the

right to represent such shareholder to exercise his or her rights at any shareholder’s meeting of Dongfang Paper or with

respect to any shareholder action to be taken in accordance with the laws and Dongfang Paper’s Articles of Association.

terms of the agreement are binding on the parties for as long as the Dongfang Paper shareholders continue to hold any equity interest

in Dongfang Paper.

An Dongfang Paper shareholder will cease to be a party to the agreement once it transfers its equity interests

with the prior approval of Baoding Shengde.

On June 24, 2009,

Zhao Tianqing, the sole shareholder of Shengde Holdings Inc., assigned to the Company, for good and valuable consideration, 100

shares representing 100% of the issued and outstanding shares of Shengde Holdings Inc.

As a result of this assignment

and the restructuring transactions described above, Shengde Holdings Inc., Baoding Shengde, and Dongfang Paper became directly

and indirectly controlled by the Company, and Dongfang Paper continued to function as the Company’s operating entity.

addition to controlling the operations and beneficial ownership of Dongfang Paper, Baoding Shengde also acquired a digital photo

paper production line (including two photo paper coating lines and ancillary equipment) in an asset acquisition transaction on

November 25, 2009 and began directly conducting business in the PRC.

We suspended production of photo paper in June 2016 and now

are upgrading the production line to produce more competitive photo paper products.

We expect to resume our digital photo paper

production in the near future.

agreement was entered into among Baoding Shengde, Dongfang Paper and the shareholders of Dongfang Paper on December 31, 2010,

reiterating that Baoding Shengde is entitled to the distributable profit of Dongfang Paper, pursuant to the above mentioned Exclusive

Technical Service and Business Consulting Agreement.

In addition, Dongfang Paper and the shareholders of Dongfang Paper agreed

that they would not declare any of Dongfang Paper’s unappropriated earnings, including any earnings of Dongfang Paper from

its establishment to 2010 and thereafter, as dividend.

following diagram sets forth the current corporate structure of IT Tech Packaging:

As a result of this assignment and

the restructuring transactions described above, Shengde Holdings Inc., Baoding Shengde, and Dongfang Paper became directly and

indirectly controlled by the Company, and Dongfang Paper continued to function as the Company’s operating entity.

In addition to controlling

the operations and beneficial ownership of Dongfang Paper, Baoding Shengde also acquired a digital photo paper production line

(including two photo paper coating lines and ancillary equipment) in an asset acquisition transaction on November 25, 2009 and

began directly conducting business in the PRC.

We suspended production of photo paper in June 2016 and now are upgrading the production

line to produce more competitive photo paper products.

We expect to resume our digital photo paper production in the near future.

An agreement was entered

into among Baoding Shengde, Dongfang Paper and the shareholders of Dongfang Paper on December 31, 2010, reiterating that Baoding

Shengde is entitled to the distributable profit of Dongfang Paper, pursuant to the above mentioned Exclusive Technical Service

and Business Consulting Agreement.

In addition, Dongfang Paper and the shareholders of Dongfang Paper agreed that they would not

declare any of Dongfang Paper’s unappropriated earnings, including any earnings of Dongfang Paper from its establishment

to 2010 and thereafter, as dividend.

The following diagram

sets forth the current corporate structure of IT Tech Packaging:

100% ownership

by contractual arrangements

engage in production and distribution of three categories of paper products:

corrugating medium paper, offset printing paper and

tissue paper products.

late January 2018 to mid-March 2018, the Company temporarily suspended its production due to a government-mandated restriction

on the supply of natural gas, which is the energy resource we need for production.

On March 14, 2018, the Company resumed production

at its manufacturing facilities.

principal executive offices are located at Science Park, Juli Road, Xushui District, Baoding City, Hebei Province, People’s

Republic of China.

Controlled by contractual arrangements

We engage in production

and distribution of three categories of paper products:

corrugating medium paper, offset printing paper and tissue paper products.

From late January

2018 to mid-March 2018, the Company temporarily suspended its production due to a government-mandated restriction on the supply

of natural gas, which is the energy resource we need for production.

On March 14, 2018, the Company resumed production at its manufacturing

Our principal executive

offices are located at Science Park, Juli Road, Xushui District, Baoding City, Hebei Province, People’s Republic of China.

Our telephone number is (86) 312-869-8215.

Our website is located at http://www.itpackaging.cn.

Manufacturing

Medium Paper and Offset Printing Paper

current products (excluding tissue paper products) generally undergo two stages of manufacturing:

(1) creating pulp from recycled

paper products, and (2) treating the pulp and molding it into the desired types of paper products.

A brief overview

of the pulp and papermaking process is provided below.

recycled waste paper is first sorted by machine, and then broken down and beaten or smashed into small pieces using water and

mechanical energy.

It is then put through a course screening drum, followed by a fine screening drum to separate different grades

of pulp, a process that we refer as “concentration”.

In order to purify the pulp further, an approach flow system

is used to filter out any impurities or inconsistencies, such as sand, in the pulp.

pulp is sieved to remove the excess water and molded into a specific size.

The moisture content is further reduced by applying

hydraulic pressure to the pulp.

Manufacturing Process

Corrugating Medium Paper and Offset Printing Paper

Our current products

(excluding tissue paper products) generally undergo two stages of manufacturing:

(1) creating pulp from recycled paper products,

and (2) treating the pulp and molding it into the desired types of paper products.

A brief overview of the pulp and

papermaking process is provided below.

The recycled waste

paper is first sorted by machine, and then broken down and beaten or smashed into small pieces using water and mechanical energy.

It is then put through a course screening drum, followed by a fine screening drum to separate different grades of pulp, a process

that we refer as “concentration”.

In order to purify the pulp further, an approach flow system is used to filter out

any impurities or inconsistencies, such as sand, in the pulp.

The pulp is sieved

to remove the excess water and molded into a specific size.

The moisture content is further reduced by applying hydraulic pressure

The pulp then enters the drying section where it is rolled over by heated cylinders.

The dried paper is then coated with a mixture of clay, white pigment and binder to produce a surface on which ink can sit without

being fully absorbed, enabling crisper, more consistent print quality.

paper goes through a process called calendaring, which flattens and smoothens the paper into long sheets.

The paper is then wound

onto a reel that is mounted in a roll-slitting machine for rewinding, during which cutters are used to cut the paper into the

desired widths.

Upon completion, the rolls are fitted with sleeves and labeled, and then sent to quality control before shipment

we make tissue paper products, we currently do not manufacture base tissue paper.

medium paper, or CMP is used in the manufacturing of cardboard.

Since the launch of our new Paper Machine (“PM6”)

production line in December 2011, corrugating medium paper has become a major product of the Company.

For the year ended December

31, 2018, corrugating medium paper comprised approximately 96.05% of our total paper production quantities and roughly 94.08%

of our total revenue.

Raw materials used in the production of corrugating medium paper include recycled paper board

(or Old Corrugating Cardboard or “OCC,”

as it is commonly referred to in the United States) and certain supplementary

In January 2013, we suspended the operation of our PM1 production line for renovation, which was then used to produce

The dried paper is

then coated with a mixture of clay, white pigment and binder to produce a surface on which ink can sit without being fully absorbed,

enabling crisper, more consistent print quality.

The paper goes through

a process called calendaring, which flattens and smoothens the paper into long sheets.

The paper is then wound onto a reel that

is mounted in a roll-slitting machine for rewinding, during which cutters are used to cut the paper into the desired widths.

completion, the rolls are fitted with sleeves and labeled, and then sent to quality control before shipment or storage.

Base Tissue Paper

While we make tissue

paper products, we currently purchase paper pulp from suppliers and use it to manufacture base tissue paper directly.

Corrugating medium paper

Corrugating medium

paper, or CMP is used in the manufacturing of cardboard.

Since the launch of our new Paper Machine (“PM6”) production

line in December 2011, corrugating medium paper has become a major product of the Company.

For the year ended December 31, 2019,

corrugating medium paper comprised approximately 85.61% of our total paper production quantities and roughly 77.22% of our total

Raw materials used in the production of corrugating medium paper include recycled paper board (or Old Corrugating

Cardboard or “OCC,”

as it is commonly referred to in the United States) and certain supplementary agents.

2013, we suspended the operation of our PM1 production line for renovation, which was then used to produce corrugating medium

In May 2014, we launched the commercial production of a renovated PM1 production line.

The renovated

PM1 production line produces light-weight corrugating medium paper with a specification of 40 to 80 grams per square meter (“g/s/m”).

The renovated PM1 production line

produces light-weight corrugating medium paper with a specification of 40 to 80 grams per square meter (“g/s/m”).

PM1’s light-weight corrugating medium paper products have a wide range of commercial applications.

9 unchanged sentences

line as Regular CMP and products produced from the PM1 production line as Light-Weight CMP.

printing paper

printing paper is used for offset printing in the publishing industry.

Offset printing paper comprised approximately

3.95% of our total paper production quantities and approximately 5.92% of our total sales revenue for the year ended December

Raw materials used in making offset printing paper include recycled white scrap paper, fluorescent whitening

agent and sizing agent.

Offset printing paper

is used for offset printing in the publishing industry.

Offset printing paper comprised approximately 11.68% of our

total paper production quantities and approximately 17.38% of our total sales revenue for the year ended December 31, 2019.

materials used in making offset printing paper include recycled white scrap paper, fluorescent whitening agent and sizing

We currently have two production lines, PM2 and PM3, for the production of offset printing paper.

Paper Products

began the commercial production of tissue paper products in Wei County Industry Park in June 2015.

We process base tissue paper

purchased from long-term cooperative third party and produce finished tissue paper products, including toilet paper, boxed and

soft-packed tissues, handkerchief tissues and paper napkins, as well as bathroom and kitchen paper towels that are marketed and

sold under the Dongfang Paper brand.

In December 2018, we completed the construction and installation and test of operation of

PM8 and announced the commercial launch of tissue paper production.

We expect to commence the full operation of production and

sales of tissue paper products in year 2019.

for our Products

PRC Paper Making Industry

to the 2017 China Paper Industry Annual Report, issued by the China Paper Association, there were approximately 2,800 paper and

paper board manufacturers (down from 3,700 in 2010) in China, with a total output of 111.30 million tonnes, up by 2.53% from 108.55

million tonnes in 2016.

Total domestic consumption was 108.97 million tonnes in 2017, up by 4.59% from 104.19 million tonnes in

with 2008, output in 2017 increased by approximately 39.47% and consumption grew by approximately 37.33%.

The output of paper

and paper board maintained an average growth rate of approximately 3.77% during the ten-year period from 2008 to 2017, while consumption

increased at an average annual rate of 3.59%.

Tissue Paper Products

We began the commercial

production of tissue paper products in Wei County Industry Park in June 2015.

We process base tissue paper purchased from long-term

cooperative third party and produce finished tissue paper products, including toilet paper, boxed and soft-packed tissues, handkerchief

tissues and paper napkins, as well as bathroom and kitchen paper towels that are marketed and sold under the Dongfang Paper brand.

In December 2018 and November 2019, we completed the construction, installation and test of operation of PM8 and PM9, respectively,

and commercially launched tissue paper production of PM8 and PM9 at such time.

Tissue paper products comprised approximately 2.71%

of our total paper production quantities and approximately 5.4% of our total sales revenue for the year ended December 31, 2019.

Market for our Products

The PRC Paper Making Industry

According to the 2018

China Paper Industry Annual Report, issued by the China Paper Association, there were approximately 2,700 paper and paper board

manufacturers (down from 3,700 in 2010) in China, with a total output of 104.35 million tonnes, down by 6.24% from 111.30 million

tonnes in 2017.

Total domestic consumption was 104.39 million tonnes in 2018, down by 4.20% from 108.97 million tonnes in 2017.

Compared with 2009,

output in 2018 increased by approximately 20.78% and consumption grew by approximately 21.82%.

The output of paper and paper board

maintained an average growth rate of approximately 2.12% during the ten-year period from 2009 to 2018, while consumption increased

at an average annual rate of 2.22%.

The growth is expected to continue.

It is estimated that China currently has the

largest paper and paper board products output and consumption in the world.

It is estimated that China currently has the largest paper

and paper board products output and consumption in the world.

(Data source:

2017 Annual Report of China Paper

Manufacturing, August 2018, China Paper Association)

2017 Annual Report of China Paper Manufacturing, August 2018, China Paper Association

medium paper production in China totaled 23.35 million tonnes in 2017, a 2.86% increase from 2016.

Consumption of corrugating

medium paper in China amounted to 23.96 million tonnes in 2017, an increase of 5.50% as compared to 2016.

offset printing paper production in China totaled 17.90 million tonnes in 2017, a 1.13% increase from 2016.

Consumption of uncoated

offset printing paper in China amounted to 17.44 million tonnes in 2017, an increase of 3.26% as compared to 2016.

paper making industry in China is concentrated in the east coast provinces.

The largest paper production capacities by province

for 2016 and 2017 (the most recent year for which relevant information is available) are summarized in the table below.

provinces with largest capacities showed moderate increases in paper production capacities;

provinces with smaller capacities,

such as, Chongqing, Hebei and Fujian, showed noticeable increases as well.

2018 Annual Report of China Paper Manufacturing,

September 2019, China Paper Association)

Annual Report of China’s Paper Industry, September 2019, China Paper Association

Corrugating medium

paper production in China totaled 21.05 million tonnes in 2018, a 9.85% decrease from 2017.

Consumption of corrugating medium paper

in China amounted to 22.13 million tonnes in 2018, a decrease of 7.64% as compared to 2017.

Uncoated offset printing

paper production in China totaled 17.50 million tonnes in 2018, a 2.23% decrease from 2017.

Consumption of uncoated offset printing

paper in China amounted to 17.51 million tonnes in 2018, an increase of 0.40% as compared to 2017.

The paper making industry

in China is concentrated in the east coast provinces.

The largest paper production capacities by province for 2017 and 2018 (the

most recent year for which relevant information is available) are summarized in the table below.

The three provinces with largest

capacities showed moderate increases in paper production capacities;

provinces with smaller capacities, such as, Chongqing, Hubei

and Fujian, showed noticeable increases as well.

2017 Capacity

2018 Capacity

2017 Annual Report of China Paper Manufacturing, August 2018, China Paper Association

Consolidation

Historically,

the paper and pulp industry in China was comprised of numerous small-scale production enterprises, many of which used low-technology

production processes that produce significant pollution.

In 1996, China’s State Council issued “Decisions

on Environmental Protection Issues,”

setting forth strict rules and regulations intended to reduce pollution, including

a directive for the closure of all paper plants with an annual output of less than 50,000 tonnes.

Recognizing that

China constitutes one of the largest markets for paper consumption in the world and with potential for continued expansion, the

PRC government continues its efforts to consolidate, modernize, and promote the environmental sustainability of the industry.

part of its 11th “Five Year Economic Development Plan,”

the PRC State Council announced on May 5, 2010 that up to

530,000 tonnes of inefficient/polluting paper production capacity was to be eliminated or shut down in 2010.

On August 5, 2010,

the Ministry of Industry and Information Technology (the “MIIT”) published a list of mandatory capacity closures and

ordered the shutdown of a total of 4.6 million tonnes of capacity by September 2010.

Following the first wave of mandatory capacity

closures in 2010, the MIIT announced on July 11, 2011 that 8.2 million tonnes of outdated paper milling capacity at 599 paper

companies across China were required to close down in 2011, of which 72 companies with a total capacity of 1.07 million tonnes

that accounts for 13% of total closures were located in the province of Hebei.

The Twelfth ‘Five-Year Plan’

for the Chinese Paper Industry ,”

published jointly by the National

Development and Reform Commission, the MIIT and the National Forestry Bureau in December 2011, the central government of China

determined to eliminate more than 10 million tonnes of paper production capacity during the five-year period ended 2015.

through mandatory capacity elimination and industry consolidation, was to transform the paper industry landscape into one where

the number of one-million-tonnes-and-above manufacturers would increase from 10 to more than 20.

According to the MIIT announcement

on September 6, 2012, a total of 9.9 million tonnes of outdated paper production capacity was ordered to close in 2012.

25, 2013, the MIIT announced a list of outdated paper facilities slated for closure in 2013.

According to MIIT, a total of 6.21

million tonnes of paper manufacturing capacity on the July 25, 2013 list across the country was required to be shut down by the

end of 2013, including 930,800 tonnes in the Hebei Province.

In September 2013, the second batch of closures targeting 1.2 million

tonnes nationwide was announced by the MIIT.

The closure of outdated facilities continued in 2014 and a total of 4.92 million

tonnes of paper manufacturing capacity was shut down.

On July 24, 2014, the MIIT announced that facilities producing 3.97 million

tonnes of paper and pulp, including 500,000 tonnes in Hebei Province, were mandated to be retired by the end of 2014.

18, 2014, MIIT announced another list of outdated paper facilities that were required to be closed by the end of 2014.

18, 2014 list shut down 0.66 million tonnes of paper manufacturing capacity, including 5,000 tonnes in Hebei Province.

the mandatory closures in previous years when, most of the closures involved small-scale local mills, usually with less than 50,000

tonnes of production capability and without proper water treatment practices, the 2013 and 2014 mandatory closure lists included

a number of large capacity paper machines (up to 226,000 tonnes per line) that failed to meet the environmental and energy savings

mandatory closure of outdated capacity is expected to continue in the next few years.

As a result, we estimate that the average

selling prices for corrugating medium paper and other packaging paper will be volatile in 2019, and the paper industry will witness

increased competition and higher standards for environmental protection measures.

See “Risk Factors - Risks Related to Our

Business -We might be negatively affected by the industry capacity elimination mandated by the government.”

generally sell our corrugating medium paper to companies making corrugating cardboards and offset printing paper to printing companies.

Our largest customer is a printing company in Tianjin City.

Our total corrugating medium and offset printing paper revenue in

2018 was primarily derived from customers in Tianjin, Hebei Province and Shandong Province.

the year ended December 31, 2018, five major customers who individually accounted for more than 5% of our total sales revenue

are as follows:

net of applicable VAT)

of Total Revenue

E ( Langdang)

Major Customers

of our top-ten customers of 2018 are also in the top-ten customer list in 2017, representing 46.2% of the 2017 top-ten customer

target corporate customers in the middle range of the marketplace, where, with solid quality and competitive pricing, we see potential

for high volume growth for corrugating medium paper and offset printing paper.

Our primary market has been the region of North

China, especially in the province of Hebei.

Production Lines

the year ended December 31, 2018, we had five PM production lines in operation and are in the process of launching two more that

are tentatively designated as PM7and PM9.

Data Sources:

Annual Report of China’s Paper Industry, September 2019, China Paper Association

We generally sell

our corrugating medium paper to companies making corrugating cardboards and offset printing paper to printing companies.

customer is a packaging company in Tianjin City.

Our total corrugating medium and offset printing paper revenue in 2019 was primarily

derived from customers in Tianjin, Hebei Province and Shandong Province.

For the year ended

December 31, 2019, four major customers who individually accounted for more than 5% of our total sales revenue are as follows:

(USD$, net of applicable VAT)

Total Revenue

Company A (Tianjin)

Company B (Hebei)

Company C (Shandong)

Company D (Hebei)

Total Major Customers

Nine of our top-ten

customers of 2019 are also in the top-ten customer list in 2018, representing 35% of the 2019 top-ten customer sales.

Target Market

We target corporate

customers in the middle range of the marketplace, where, with solid quality and competitive pricing, we see potential for high

volume growth for corrugating medium paper and offset printing paper.

Our primary market has been the region of North China, especially

in the province of Hebei.

Our Production Lines

During the year ended

December 31, 2019, we had six PM production lines in operation and are in the process of launching one more that are designated

These production lines include the followings:

Product Produced

Capacity (tonnes/year)

as of December 31, 2018

Offset Printing

Paper Product Produced

Designed Capacity (tonnes/year)

Status as of December 31, 2019

Corrugating Medium Paper

Dongfang Paper

In production

Offset Printing

Offset Printing Paper

Dongfang Paper

In production

Digital Photo

in June 2016 due to low market demand

Digital Photo

in June 2016 due to low market demand

Offset Printing Paper

Dongfang Paper

In production

Under renovation

and preparing for launch by the end of 2019

Digital Photo Paper

Baoding Shengde

Suspended in June 2016 due to low market demand

Digital Photo Paper

Baoding Shengde

Suspended in June 2016 due to low market demand

Corrugating Medium Paper

Baoding Shengde

Dongfang Paper***

In production

The ancillary

equipment has been installed.

machines under renovation, under construction, or in the planning stage.

is funded and owned by Baoding Shengde;

ancillary facilities that support the PM6 operation

are built and owned by Dongfang Paper.

December 31, 2009, we acquired a digital photo paper production line, including two coating lines that are designated as PM4 and

PM5 and ancillary equipment, for a total purchase price of approximately $13.6 million.

We suspended production of photo paper

in June 2016.

order to meet the growing domestic demand for paper, which we believe currently exceeds domestic supply in the case of corrugating

medium paper, especially in the region of North China, we installed a corrugating medium paper production line (PM6) with a designed

capacity of 360,000 tonnes per year.

We completed the installation of the PM6 production line in November 2011 and began commercial

production in December 2011.

have implemented a plan to renovate one of the old production lines that has been idle since the end of 2007.

We previously made

paper with anti-counterfeit features from that production line.

When the renovation is completed, we intend to use the renovated

production line to produce high-profit margin specialty papers.

Our current plan is to complete the renovation project, put in

place a new production and marketing team and launch the renovated production line as PM7 by the end of 2019.

November 27, 2012, we signed a 15-year lease relating to approximately 49.4 acres of land in the Economic Development Zone in

Wei County, Hebei Province, China for the purpose of developing a new tissue paper production plant.

We plan to build two tissue

paper production lines, each with 15,000 tonnes/year capacity, and other packaging facilities and infrastructures on the leased

In December 2012, we signed a contract with an equipment contractor in Shanghai to build PM8, the first of our two tissue

paper production lines in Wei County.

In December 2018, we completed the construction and installation and test of operation of

PM8 and announced the commercial launch of tissue paper production.

We will commence the full operation of production and sales

of tissue paper products in year 2019.

voluntarily renovated our 150,000 tonnes/year corrugating medium paper PM1 in anticipation of increased regulatory concerns on

energy efficiencies as well as to improve the quality of our corrugating medium products.

Rather than converting PM1 to a regular

corrugating medium paper machine, we decided in 2013 that, based on the market conditions and our waste water treatment capability,

the better option was to convert PM1 to produce Light-Weight CMP with a specification of 40 to 80 grams per square meter (“g/s/m”)

with a designed capacity of 60,000 tonnes/year.

We started the renovation in January 2013 and launched commercial production of

the renovated PM1 production line in May 2014.

Materials and Principal Suppliers

supplies used in our production processes are comprised mainly of recycled paper board and unprinted recycled white scrap paper,

both of which are ready-to-use items and available from multiple domestic and foreign sources.

We currently purchase all of our

recycled paper supplies from some domestic recycling stations and do not rely on imported recycled paper.

We also purchase coal

and chemical agents from nearby suppliers.

Ongoing inflationary pressures and higher demand for recycled paper could

lead to an increase in our costs of raw materials and production, which we may or may not be able to pass to our customers.

sign annual raw materials supplier contracts with our suppliers.

Although we have contracts with our suppliers, these

contracts do not lock-in the purchase price of our raw materials or provide hedge against the fluctuation in the market price

of these raw materials.

For the year ended December 31, 2018, we had two large suppliers which accounted for approximately

82% and 7% of our total purchases, respectively.

the years ended December 31, 2018, two major suppliers who individually accounted for more than 5% of our total purchase are as

Specialty paper

Dongfang Paper

Under renovation and preparing for launch by the end of 2020

Dongfang Paper

In production

Dongfang Paper

In production.

Paper machines under renovation, under construction, or in the planning stage.

PM6 is funded and owned by Baoding Shengde;

ancillary facilities that support the PM6 operation are built and owned by Dongfang

On December 31, 2009,

we acquired a digital photo paper production line, including two coating lines that are designated as PM4 and PM5 and ancillary

equipment, for a total purchase price of approximately $13.6 million.

We suspended production of photo paper in June 2016.

In order to meet the

growing domestic demand for paper, which we believe currently exceeds domestic supply in the case of corrugating medium paper,

especially in the region of North China, we installed a corrugating medium paper production line (PM6) with a designed capacity

of 360,000 tonnes per year.

We completed the installation of the PM6 production line in November 2011 and began commercial production

in December 2011.

We have implemented

a plan to renovate one of the old production lines that has been idle since the end of 2007.

We previously made paper with anti-counterfeit

features from that production line.

When the renovation is completed, we intend to use the renovated production line to produce

high-profit margin specialty papers.

Our current plan is to complete the renovation project, put in place a new production and

marketing team and launch the renovated production line as PM7 by the end of 2020.

On November 27, 2012,

we signed a 15-year lease relating to approximately 49.4 acres of land in the Economic Development Zone in Wei County, Hebei Province,

China for the purpose of developing a new tissue paper production plant.

We plan to build two tissue paper production lines, each

with 15,000 tonnes/year capacity, and other packaging facilities and infrastructures on the leased land.

In December 2012, we signed

a contract with an equipment contractor in Shanghai to build PM8, the first of our two tissue paper production lines in Wei County.

In December 2018 and November 2019, we completed the construction,installation and test of operation of PM8 and PM9, respectively

and commercially launched tissue paper productions of PM8 and PM9 at such time.

We voluntarily renovated

our 150,000 tonnes/year corrugating medium paper PM1 in anticipation of increased regulatory concerns on energy efficiencies as

well as to improve the quality of our corrugating medium products.

Rather than converting PM1 to a regular corrugating medium paper

machine, we decided in 2013 that, based on the market conditions and our waste water treatment capability, the better option was

to convert PM1 to produce Light-Weight CMP with a specification of 40 to 80 grams per square meter (“g/s/m”) with a

designed capacity of 60,000 tonnes/year.

We started the renovation in January 2013 and launched commercial production of the renovated

PM1 production line in May 2014.

Raw Materials and Principal Suppliers

The supplies used

in our production processes are comprised mainly of recycled paper board and unprinted recycled white scrap paper, both of which

are ready-to-use items and available from multiple domestic and foreign sources.

We currently purchase all of our recycled paper

supplies from some domestic recycling stations and do not rely on imported recycled paper.

We also purchase coal and chemical agents

from nearby suppliers.

Ongoing inflationary pressures and higher demand for recycled paper could lead to an increase

in our costs of raw materials and production, which we may or may not be able to pass to our customers.

We sign annual raw

materials supplier contracts with our suppliers.

Although we have contracts with our suppliers, these contracts do not

lock-in the purchase price of our raw materials or provide hedge against the fluctuation in the market price of these raw materials.

For the year ended December 31, 2019, we had two large suppliers which accounted for approximately 74% and 12% of our total

purchases, respectively.

For the year ended

December 31, 2019, two major suppliers who individually accounted for more than 5% of our total purchase are as follows:

Purchase Amount

net of applicable VAT)

of Total Purchase

Major Suppliers

Paper’s main competitors are:

Chenming Paper Group Limited, Huatai Group Limited, Nine Dragons Paper (Holdings) Limited

and Sun Paper Group Limited.

A number of our competitors are public entities with larger capacities, broader customer bases

and greater financial resources than those available to us.

(USD$, net of applicable VAT)

Total Purchase

Company A (Baoding)

Company B (Baoding)

Total Major Suppliers

Dongfang Paper’s

main competitors are:

Chenming Paper Group Limited, Huatai Group Limited, Nine Dragons Paper (Holdings) Limited and Sun Paper Group

A number of our competitors are public entities with larger capacities, broader customer bases and greater financial

resources than those available to us.

The businesses of our primary competitors are briefly described below:

Paper Group, Ltd.

(“Chenming”), based in Shandong Province (located in northeast China), produces primarily newsprint

paper and art paper (high quality, heavy and two-side coated printing paper).

Chenming is believed to be the first

company to have listed on all three stock exchanges in China:

Renminbi A-shares and foreign currency B-shares in Shenzhen, the

smaller of the mainland’s two stock exchanges, and H-shares in Hong Kong.

Chenming has annual production capacity

of 8.5 million tonnes for its coated wood-free paper product and is believed to rank among the top 500 enterprises in China.

(“Huatai”), based in Shandong Province (located in the northern part of the eastern coastal region of

China), primarily produces newsprint, fine paper, special printing paper, coated board and tissue paper.

the first Shandong papermaker to publicly list its stock and has become a famous brand in China.

Its annual paper production is

estimated to have reached 4 million tonnes.

Dragons Paper (Holdings) Limited (“ND Paper”), based in Guangdong Province (located in southern China), is the largest

paper manufacturer in China and primarily produces kraft paper and high-strength corrugating medium paper with annual capacity

of 13 million tonnes.

ND Paper has reported that it has five production lines in the city of Tianjin with a total designed capacity

of 2.15 million tonnes, producing products such as kraft paper, high strength corrugating medium paper and grey-back duplex board.

Paper Group, Ltd., based in Shandong Province, primarily produces card paper, whiteboard paper and art paper.

produces alkaline peroxide mechanical pulp, sourced in part from woodchips harvested by the company’s poplar plantations.

company has reported that it has an aggregate annual production capacity of paper and pulp of approximately 5.7 million tonnes

and has been listed on the Shenzhen Stock Exchange since 2006.

the exceptions of Chenming and ND Paper, which may compete directly with us in the offset printing paper market and the corrugating

medium paper market, respectively, in the Beijing/Tianjin/greater Hebei regions, we believe that we face only indirect competition

from the above-listed companies, either because we have a different product assortment from these companies, or because, to the

extent they do offer products similar to ours, the transportation costs and storage costs make it difficult for these companies

to compete effectively with us on pricing.

Competitive Edge

advantage (Northern China) .

Chenming Paper Group,

(“Chenming”), based in Shandong Province (located in northeast China), produces primarily newsprint paper and

art paper (high quality, heavy and two-side coated printing paper).

Chenming is believed to be the first company to

have listed on all three stock exchanges in China:

Renminbi A-shares and foreign currency B-shares in Shenzhen, the smaller of

the mainland’s two stock exchanges, and H-shares in Hong Kong.

Chenming has annual production capacity of 8.5 million

tonnes for its coated wood-free paper product and is believed to rank among the top 500 enterprises in China.

Huatai Group, Ltd.

(“Huatai”), based in Shandong Province (located in the northern part of the eastern coastal region of China), primarily

produces newsprint, fine paper, special printing paper, coated board and tissue paper.

Huatai is the first Shandong

papermaker to publicly list its stock and has become a famous brand in China.

Its annual paper production is estimated to have

reached 4 million tonnes.

Nine Dragons Paper

(Holdings) Limited (“ND Paper”), based in Guangdong Province (located in southern China), is the largest paper manufacturer

in China and primarily produces kraft paper and high-strength corrugating medium paper with annual capacity of 13 million tonnes.

ND Paper has reported that it has five production lines in the city of Tianjin with a total designed capacity of 2.15 million tonnes,

producing products such as kraft paper, high strength corrugating medium paper and grey-back duplex board.

Sun Paper Group, Ltd.,

based in Shandong Province, primarily produces card paper, whiteboard paper and art paper.

It also produces alkaline

peroxide mechanical pulp, sourced in part from woodchips harvested by the company’s poplar plantations.

has reported that it has an aggregate annual production capacity of paper and pulp of approximately 5.7 million tonnes and has

been listed on the Shenzhen Stock Exchange since 2006.

With the exceptions

of Chenming and ND Paper, which may compete directly with us in the offset printing paper market and the corrugating medium paper

market, respectively, in the Beijing/Tianjin/greater Hebei regions, we believe that we face only indirect competition from the

above-listed companies, either because we have a different product assortment from these companies, or because, to the extent they

do offer products similar to ours, the transportation costs and storage costs make it difficult for these companies to compete

effectively with us on pricing.

Our Competitive Edge

Regional advantage

(Northern China) .

We believe that Dongfang Paper is one of the leading papermaking enterprises in Hebei Province.

proximity to large urban centers in northern China, Beijing and Tianjin, gives us access to a large market to sell our products.

are other paper manufacturers that are also located in Hebei Province (and close to metropolitan Beijing and Tianjin areas), but

most of these other manufacturers are small in scale and unable to compete with us effectively.

We also compete with other large

printing paper manufacturers for Beijing printing company customers.

We believe that we have cost and geographical advantages

over these larger competitors.

Unlike some of our out-of-province competitors who must set up interim warehouses and ship products

from their production base to such interim warehouses close to their customer base in Beijing, there is no need for us to set

up interim warehouses, because we are approximately 60 miles (100 kilometers) from Beijing, the cultural center of China and our

largest target market.

While we do not separately pay for transportation cost on raw material purchases, the transportation cost

included in the raw material purchase prices from our recycled paper suppliers is lower than the transportation cost paid by our

competitors in the province of Shandong.

We also enjoy lower transportation costs for coal, a major source of energy used in our

production process.

Similarly, our customers pay lower transportation cost to pick up their orders from our finished goods warehouse

in Baoding than what they would pay if they had to pick up goods from locations further away from Beijing.

Tianjin, another large

urban center, is also approximately 60 miles from our facilities.

Baoding city itself is also home to numerous printing and

packaging companies.

Our geographical advantage and easy access to low-cost raw materials allow us to implement a more flexible

inventory purchase policy, lower our purchase prices and inventory management expenses and reduce our production cost.

we have lower freight costs and other associated costs of sales, which enable us to charge lower prices, if necessary, for our

Additionally, because we buy all recycled paper raw materials from Beijing and Tianjin, rather than from the United

States or Japan, our purchase lead time is shorter as compared to manufacturers who rely on imported recycled paper.

and Development

R&D activities are carried out by a task force led by a group of senior managers (in charge of product development and quality

control) and by a group of selected engineers and technicians.

The Company charged the time spent on the R&D projects

(manufacturing waste discharge recycling, digital photo paper and tissue paper manufacturing) to R&D expenses.

efforts in 2018 has focused on evaluating and developing new products that are in the pipeline for 2018 and included developing

and improving the manufacturing process of Light-Weight CMP and the production and packaging technology of tissue paper.

of our production lines, PM7, is under renovation.

Since the fourth quarter of 2010, we have spent approximately $1.57 million

in machine parts and new components to renovate this production line, with which we expect to produce certain specialty papers,

including wood-grain deco and furniture paper, wallpaper and paper with security features (for anti-counterfeiting purposes).

While we are optimistic about the prospect of the renovation project, we cannot guarantee the launch of the specialty paper production

(which is tentatively scheduled by the end of 2019) or the success of such renovation.

Paper has registered three trademarks with the Trademark Bureau under the State of Administration for Industry & Commerce.

paper, thermal paper, blueprint paper, sensitized paper, spectrum sensitized paper, blueprint cloth, photographic paper, cyanotype

solution, diazo paper

7, 2014 through April 6, 2024

Toilet paper,

handkerchief tissues, tissues, paper napkins, paper mats, beer mats, paper place mats, printing paper (including offset paper,

newsprint, books paper, bond paper, plate paper and halftone paper), coated paper

28, 2014 through December 27, 2024

Toilet paper,

handkerchief tissues, tissues for makeup remover, paper napkin, tissues, paper duster cloth, paper face towels, paper table

cloth, paper tablecloths, drawer liner (with or without flavor)

28, 2014 through December 27, 2024

Tech Packaging has registered the internet domain name, http://www.itpackaging.cn .

testing, approval, manufacturing, labeling, advertising and marketing, post-approval safety reporting and export of our products

are extensively regulated by governmental authorities in the PRC.

We are also subject to various other regulations and permit

requirements by the Chinese government.

There are other paper

manufacturers that are also located in Hebei Province (and close to metropolitan Beijing and Tianjin areas), but most of these

other manufacturers are small in scale and unable to compete with us effectively.

We also compete with other large printing paper

manufacturers for Beijing printing company customers.

We believe that we have cost and geographical advantages over these larger

Cost advantage .

some of our out-of-province competitors who must set up interim warehouses and ship products from their production base to such

interim warehouses close to their customer base in Beijing, there is no need for us to set up interim warehouses, because we are

approximately 60 miles (100 kilometers) from Beijing, the cultural center of China and our largest target market.

While we do not

separately pay for transportation cost on raw material purchases, the transportation cost included in the raw material purchase

prices from our recycled paper suppliers is lower than the transportation cost paid by our competitors in the province of Shandong.

We also enjoy lower transportation costs for coal, a major source of energy used in our production process.

Similarly, our customers

pay lower transportation cost to pick up their orders from our finished goods warehouse in Baoding than what they would pay if

they had to pick up goods from locations further away from Beijing.

Tianjin, another large urban center, is also approximately

60 miles from our facilities.

Baoding city itself is also home to numerous printing and packaging companies.

Our geographical

advantage and easy access to low-cost raw materials allow us to implement a more flexible inventory purchase policy, lower our

purchase prices and inventory management expenses and reduce our production cost.

As such, we have lower freight costs and other

associated costs of sales, which enable us to charge lower prices, if necessary, for our products.

Additionally, because we buy

all recycled paper raw materials from Beijing and Tianjin, rather than from the United States or Japan, our purchase lead time

is shorter as compared to manufacturers who rely on imported recycled paper.

Research and Development

Our R&D activities

are carried out by a task force led by a group of senior managers (in charge of product development and quality control) and by

a group of selected engineers and technicians.

The Company charged the time spent on the R&D projects (manufacturing

waste discharge recycling, digital photo paper and tissue paper manufacturing) to R&D expenses.

Our R&D efforts in 2019

has focused on evaluating and developing new products that are in the pipeline for 2019 and included developing and improving the

manufacturing process of Light-Weight CMP and the production and packaging technology of tissue paper.

One of our production

lines, PM7, is under renovation.

Since the fourth quarter of 2010, we have spent approximately $1.57 million in machine parts and

new components to renovate this production line, with which we expect to produce certain specialty papers, including wood-grain

deco and furniture paper, wallpaper and paper with security features (for anti-counterfeiting purposes).

While we are optimistic

about the prospect of the specialty papers, we cannot guarantee the launch of the specialty paper production (which is tentatively

scheduled by the end of 2020) or the success of such renovation.

Intellectual Property

Dongfang Paper has

registered three trademarks with the Trademark Bureau under the State of Administration for Industry & Commerce.

Fax paper, thermal paper, blueprint paper, sensitized paper, spectrum sensitized paper, blueprint cloth, photographic paper, cyanotype solution, diazo paper

Dongfang Paper

April 7, 2014 through April 6, 2024

Toilet paper, handkerchief tissues, tissues, paper napkins, paper mats, beer mats, paper place mats, printing paper (including offset paper, newsprint, books paper, bond paper, plate paper and halftone paper), coated paper

Dongfang Paper

December 28, 2014 through December 27, 2024

Toilet paper, handkerchief tissues, tissues for makeup remover, paper napkin, tissues, paper duster cloth, paper face towels, paper table cloth, paper tablecloths, drawer liner (with or without flavor)

Dongfang Paper

December 28, 2014 through December 27, 2024

IT Tech Packaging

has registered the internet domain name, http://www.itpackaging.cn.

Government Regulation

The testing, approval,

manufacturing, labeling, advertising and marketing, post-approval safety reporting and export of our products are extensively regulated

by governmental authorities in the PRC.

We are also subject to various other regulations and permit requirements by the Chinese

These regulations and their impact on our business are set forth in more details below.

Environmental

operations and facilities are subject to environmental laws and regulations stipulated by the national and the local environment

protection bureaus in the PRC.

the implementation of the State Council’s “Decisions on Environmental Protection Issues”

in 1996, the PRC paper

industry has been subject to more rigorous environmental standards.

Effective January 1, 2015, a new law promulgated

by the National People’s Congress of the People’s Republic of China makes certain violations of the environmental

laws a criminal offense.

We believe that we are one of the few major paper manufacturers in Hebei Province that have obtained

a Pollution Discharge Permit.

We initially received the permit in September 1996 and, we have successfully renewed the permit

each year by complying with applicable environmental requirements.

Water Treatment

Paper uses a multi-level water recycling process.

Waste water from the pulping process is fed into collection pools, where it

is divided into two parts, water and recovered pulp fiber.

Environmental Regulation

Our operations and

facilities are subject to environmental laws and regulations stipulated by the national and the local environment protection bureaus

Since the implementation

of the State Council’s “Decisions on Environmental Protection Issues”

in 1996, the PRC paper industry has been

subject to more rigorous environmental standards.

Effective January 1, 2015, a new law promulgated by the National People’s

Congress of the People’s Republic of China makes certain violations of the environmental laws a criminal offense.

that we are one of the few major paper manufacturers in Hebei Province that have obtained a Pollution Discharge Permit.

received the permit in September 1996 and, we have successfully renewed the permit each year by complying with applicable environmental

requirements.

Waste Water Treatment

Dongfang Paper uses

a multi-level water recycling process.

Waste water from the pulping process is fed into collection pools, where it is divided into

two parts, water and recovered pulp fiber.

The latter is returned to the pulping process.

agents are added to the waste water, and the waste water is fed into a biogas reactor and filtering pools, producing purified

water and depositing sludge.

Most of the purified water is recycled to produce corrugating medium paper and the sludge

is pumped into a sludge pool, condensed and dehydrated.

We then use the sludge as a raw material in the manufacture of corrugating

medium paper.

maintain computerized controls at our production facilities on a 24-hour basis to monitor compliance with environmental rules

and regulations.

We are not aware of any environmental investigations, prosecutions, disputes, claims or other environmental proceedings,

nor have we been subject to any action by any environmental administration authorities of the PRC.

To our knowledge, our operations

meet or exceed the existing environmental requirements of the PRC.

of December 31, 2018, we have approximately 537 full time employees.

The Company provides private insurance coverage for any workplace

accident or injury for all the operators of paper milling machinery in the workshops.

These employees are organized into a labor

union under the labor laws of the PRC and have collective bargain power against us.

We generally maintain good relations

with our employees and the labor union.

are required to file annual, quarterly and current reports, proxy statements and other information with the U.S.

Securities and

Exchange Commission (“SEC”).

Chemical agents are

added to the waste water, and the waste water is fed into a biogas reactor and filtering pools, producing purified water and depositing

Most of the purified water is recycled to produce corrugating medium paper and the sludge is pumped into a sludge

pool, condensed and dehydrated.

We then use the sludge as a raw material in the manufacture of corrugating medium paper.

We maintain computerized

controls at our production facilities on a 24-hour basis to monitor compliance with environmental rules and regulations.

not aware of any environmental investigations, prosecutions, disputes, claims or other environmental proceedings, nor have we been

subject to any action by any environmental administration authorities of the PRC.

To our knowledge, our operations meet or exceed

the existing environmental requirements of the PRC.

As of December 31,

2019, we have approximately 428 full time employees.

The Company provides private insurance coverage for any workplace accident

or injury for all the operators of paper milling machinery in the workshops.

These employees are organized into a labor union under

the labor laws of the PRC and have collective bargain power against us.

We generally maintain good relations with our

employees and the labor union.

Available Information

We are required to

file annual, quarterly and current reports, proxy statements and other information with the U.S.

Securities and Exchange Commission

(“SEC”).

The public may read and copy any materials that we file with the SEC.

In addition, the

SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers

like our Company that file electronically with the SEC at http://www.sec.gov.

Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and amendments to those

reports (including exhibits) filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as

amended, are also available free of charge on our Internet site at http://www.itpackaging.cn as soon as reasonably practicable

after such reports are electronically filed with or furnished to the SEC.

The information on our website is not, and shall not

be deemed to be, a part hereof or incorporated into this or any of our other filings with the SEC.

information regarding our executive officers as of March 7, 2019, see Part III, Item 10, “Directors, Executive Officers

and Corporate Governance.”

In addition, the SEC maintains an Internet

site that contains reports, proxy and information statements, and other information regarding issuers like our Company that file

electronically with the SEC at http://www.sec.gov.

Our Annual Reports

on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and amendments to those reports (including

exhibits) filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are also available

free of charge on our Internet site at http://www.itpackaging.cn as soon as reasonably practicable after such reports are electronically

filed with or furnished to the SEC.

The information on our website is not, and shall not be deemed to be, a part hereof or incorporated

into this or any of our other filings with the SEC.

Executive Officers

For information regarding

our executive officers as of March 23, 2020, see Part III, Item 10, “Directors, Executive Officers and Corporate Governance.”

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 1. Business