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Item 5. Market for Registrant’s Common Equity

2022-03-15 compared with 2021-03-23 · 49 added, 645 removed, 2 unchanged (100% of the section changed)

Market for Registrant’s Common Equity, Related

Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

IT Tech Packaging’s

common stock is traded on the NYSE AMERICAN exchange under the symbol “ITP”.

As of March 23, 2021,

we had approximately 3,100 shareholders of record of our common stock.

On November 21, 2013, the Company declared another

quarterly dividend of $0.005 per share to shareholders of record as of November 29, 2013.

The dividend was paid on December 10, 2013.

Total dividends

declared and paid for the year ended December 31, 2013 were $323,032.

We do not expect to

pay dividends in the near future.

Future declaration of dividends will depend on, among other things, the Company’s results

of operations, capital requirements, financial condition and on such other factors as the Company’s Board of Directors may

in its discretion consider relevant and in the best long term interest of the shareholders.

Equity Compensation Plan Information

On August 29, 2015,

the Company’s Annual General Meeting approved the 2015 Omnibus Equity Incentive Plan (the “2015 ISP”).

the 2015 ISP, the Company may grant an aggregate of 1,500,000 shares of the Company’s common stock to the directors, officers,

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Tech Packaging’s common stock is traded on the NYSE American under the symbol “ITP”.

of March 15, 2022, we had approximately 9,000 shareholders of record of our common stock.

November 21, 2013, the Company declared another quarterly dividend of $0.005 per share to shareholders of record as of November 29, 2013.

dividend was paid on December 10, 2013.

Total dividends declared and paid for the year ended December 31, 2013 were $323,032.

do not expect to pay dividends in the near future.

Future declaration of dividends will depend on, among other things, the Company’s

results of operations, capital requirements, financial condition and on such other factors as the Company’s Board of Directors

may in its discretion consider relevant and in the best long term interest of the shareholders.

Compensation Plan Information

August 29, 2015, the Company’s Annual General Meeting approved the 2015 Omnibus Equity Incentive Plan (the “2015 ISP”).

Under the 2015 ISP, the Company may grant an aggregate of 1,500,000 shares of the Company’s common stock to the directors, officers,

employees and/or consultants of the Company and its subsidiaries.

The 2015 ISP provides for the granting of non-qualified stock

options, incentive stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance

stock awards, performance unit awards, unrestricted stock awards, distribution equivalent rights or any combination of the foregoing.

The 2015 ISP is administered by the Compensation Committee of the Board of Directors.

Subject to the provisions of the 2015 ISP,

the Compensation Committee has the sole authority, in its discretion, to make all determinations under the plan, including but

not limited to (i) determining which employees, directors or consultants shall receive an award, (ii) the time or times when an

award shall be made, (iii) what type of award shall be granted, (iv) the term of an award, (v) the date or dates on which an award

vests, (vi) the form of any payment to be made pursuant to an award, (vii) the terms and conditions of an award, (viii) the restrictions

under a restricted stock award, (ix) the number of shares which may be issued under an award, (x) performance goals applicable

to any award and certification of the achievement of such goals, and (xi) the waiver of any restrictions or performance goals,

subject in all cases to compliance with applicable laws.

On January 12, 2016, the Company granted an aggregate of 1,133,916 shares

of common stock under its compensatory incentive plans to nine officers, directors and employees of and a consultant when the stock

was at $1.25 per share, as compensation for their services in the past years, of which 168,416 shares of common stock were granted

under the 2012 Incentive Stock Plan and 965,500 shares were granted under the 2015 Omnibus Equity Incentive.

On September 13, 2018,

the compensation committee granted an aggregate of 534,500 shares of common stock to fifteen officers, directors and employees

of the Company, which were granted under the 2015 Omnibus Equity Incentive Plan.

Total fair value of the shares of common stock

granted was calculated at $470,360 as of the date of issuance at $0.88 per share.

On August 14, 2019,

the Company’s Annual General Meeting approved the 2019 Incentive Stock Plan (the “2019 ISP”).

Under the 2019

ISP, the Company may grant an aggregate of 2,000,000 shares of the Company’s common stock to the Company’s directors,

The 2015 ISP provides for the granting of non-qualified stock options,

incentive stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance stock awards,

performance unit awards, unrestricted stock awards, distribution equivalent rights or any combination of the foregoing.

is administered by the Compensation Committee of the Board of Directors.

Subject to the provisions of the 2015 ISP, the Compensation

Committee has the sole authority, in its discretion, to make all determinations under the plan, including but not limited to (i) determining

which employees, directors or consultants shall receive an award, (ii) the time or times when an award shall be made, (iii) what type

of award shall be granted, (iv) the term of an award, (v) the date or dates on which an award vests, (vi) the form of any payment to

be made pursuant to an award, (vii) the terms and conditions of an award, (viii) the restrictions under a restricted stock award, (ix)

the number of shares which may be issued under an award, (x) performance goals applicable to any award and certification of the achievement

of such goals, and (xi) the waiver of any restrictions or performance goals, subject in all cases to compliance with applicable laws.

On January 12, 2016, the Company granted an aggregate of 1,133,916 shares of common stock under its compensatory incentive plans to nine

officers, directors and employees of and a consultant when the stock was at $1.25 per share, as compensation for their services in the

past years, of which 168,416 shares of common stock were granted under the 2012 Incentive Stock Plan and 965,500 shares were granted

under the 2015 Omnibus Equity Incentive.

On September 13, 2018, the compensation committee granted an aggregate of 534,500 shares of

common stock to fifteen officers, directors and employees of the Company, which were granted under the 2015 Omnibus Equity Incentive

Total fair value of the shares of common stock granted was calculated at $470,360 as of the date of issuance at $0.88 per share.

August 14, 2019, the Company’s Annual General Meeting approved the 2019 Incentive Stock Plan (the “2019 ISP”).

the 2019 ISP, the Company may grant an aggregate of 2,000,000 shares of the Company’s common stock to the Company’s directors,

officers, employees or consultants.

Specifically, the Board and/or the Compensation Committee have authority to (a) grant, in its

discretion, Incentive Stock Options or Non-statutory Options, Stock Awards or Restricted Stock Purchase Offers;

(b) determine in

good faith the fair market value of the stock covered by any grant;

the number of shares, restrictions, terms and conditions to be included in such grants;

and (d) make all other determinations necessary

or advisable for the 2019 ISP’s administration.

All shares of common

stock under the 2015 and 2019 ISPs, including shares originally authorized by equity holders and shares remaining for future issuance

as of December 31, 2020, have been issued.

Recent Sales of Unregistered Securities

Purchases of Equity Securities by the Issuer and Affiliated

Selected Financial Data

selected financial data set forth below is derived from the consolidated financial statements of the Company.

consolidated statements of income and comprehensive income 2020 have been derived from our audited consolidated financial

statements included elsewhere in this annual report.

Our selected consolidated statements of income and comprehensive income

data for the year ended December 31, 2016, 2017, 2018 and 2019 and the selected consolidated balance sheet data as of

December 31, 2016, 2017, 2018 and 2019 have been derived from our audited consolidated financial statements not included in

this annual report.

Our historical results do not necessarily indicate results expected for any future periods.

consolidated financial data below should be read in conjunction with “Management’s Discussion and Analysis of

Financial Condition and Results of Operations”, the consolidated financial statements and notes thereto and the other

information contained in this Form 10-K.

The financial information has been prepared in accordance with U.S.

financial information referred to herein is expressed in U.S.

dollars unless otherwise noted.

Year Ended December 31,

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME DATA

(in thousands, except per share data)

Selling, general and administrative expenses

Loss from impairment and disposal of property, plant and equipment

(Loss) income from operations

Interest expense

Net (Loss) Income

Basic and Diluted (Losses) Earnings per Share

CONSOLIDATED BALANCE SHEETS DATA

Cash and bank balances

Accounts receivable, net

Property, plant, and equipment, net

Total liabilities

Total stockholders’

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

The following discussion

of the financial condition and results of operations of the Company should be read in conjunction with the selected financial data,

the financial statements, and the notes to those statements that are included elsewhere in this annual report.

Results of Operations

for the year ended December 31, 2020 was $100,943,269, a decrease of $16,671,617, or 14.17%, from $117,614,886 for the

previous year.

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

printing paper and decrease in average selling prices (“ASP”) of CMP, offset printing paper and tissue paper

products, partially offset by the revenue generated from face masks in year 2020.

Revenue of Offset Printing Paper, Corrugating Medium Paper

and Tissue Paper Products

Revenue from sales

of offset printing paper, CMP and tissue paper products for the year ended December 31, 2020 was $99,841,325, a decrease of $17,772,411,

or 15.11%, from $117,613,736 for the year ended December 31, 2019.

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

offset printing paper and the decrease in ASP of CMP, 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, 2020 amounted to 227,331 tonnes, a decrease

of 22,813 tonnes, or 9.12%, compared to 250,144 tonnes sold during the year ended December 31, 2019.

Total quantities of CMP and offset printing paper sold decreased

by 26,111 tonnes in the year of 2020 as compared to 2019.

We sold 10,088 tonnes of tissue paper products in the year of 2020 as

opposed to 6,790 tonnes in 2019.

CMP production was suspended in mid-January to early March 2020 due to Chinese New Year and COVID-19

We resumed full capacity of CMP production in May 2020.

The production of offset printing paper was suspended during

January to May 2020 and resumed in June 2020.

The changes in revenue and quantity sold for the year ended December 31, 2020 and

2019 are summarized as follows:

December 31, 2020

December 31, 2019

Sales Revenue

$ (9,725,603 )

Light-Weight CMP

$ (1,939,909 )

$ (11,665,512 )

Offset Printing Paper

$ (8,170,384 )

Tissue Paper Products

Total CMP, Offset Printing Paper and Tissue Paper Revenue

$ 117,613,736

$ (17,772,411 )

Monthly revenue (excluding revenue of digital

photo paper and tissue paper products) for the 24 months ended December 31, 2020, are summarized below:

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

for the years ended December 31, 2020 and 2019 are summarized as follows:

Year Ended December 31, 2019

Year Ended December 31, 2020

Decrease from comparable period in the previous year

Decrease by percentage

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

ASPs (excluding the ASPs of digital photo paper and tissue paper products) for the 24 month period ended December 31, 2020:

Corrugating Medium Paper

Revenue from CMP amounted

to $79,160,926 (79.29% of the total offset printing paper, CMP and tissue paper products revenues) for the year ended December

31, 2020, representing a decrease of $11,665,512, or 12.84%, from $90,826,438 during 2019.

We sold 196,885 tonnes

of CMP in the year ended December 31, 2020 as compared to 214,147 tonnes in the year ended December 31, 2019, representing a 8.06%

decrease in quantity sold.

ASP for regular CMP

dropped from $427/tonne in 2019 to $404/tonne in 2020, representing a 5.39% decrease.

ASP in RMB for regular CMP in 2019 and 2020

was RMB2,942 and RMB2,789, respectively, representing a 5.20% decrease.

The quantity of regular CMP sold decreased by 14,753 tonnes,

from 168,837 tonnes in 2019 to 154,084 tonnes in 2020.

ASP for light-weight

CMP dropped from $414/tonne in 2019 to $393/tonne in 2020, representing a $5.07% decrease.

ASP in RMB for light-weight CMP in 2019

and 2020 was RMB2,857 and RMB2,712, respectively, representing a 5.08% decrease.

The quantity of light-weight CMP sold decreased

by 2,509 tonnes, from 45,310 tonnes in 2019, to 42,801 tonnes in 2020.

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, 2020 and 2019 were 42.56% and 46.68%, respectively, representing a decrease of 4.12%.

Quantities sold for regular CMP that was produced by

the PM6 production line from January 2019 to December 2020 are as follows:

Offset Printing Paper

Revenue from offset

printing paper was $12,265,746 (12.29% of the total offset printing paper, CMP and tissue paper products revenues) for the year

ended December 31, 2020, representing a decrease of $8,170,384, or 39.98%, from $20,436,130 in 2019.

We sold 20,358 tonnes of offset

printing paper in the year ended December 31, 2020, compared to 29,207 tonnes in 2019, a decrease of 8,849 tonnes, or 30.30%.

for offset printing paper in the year ended December 31, 2019 and 2020 was $700/tonne and $603/tonne, respectively, representing

a 13.86% decrease.

ASP in RMB for offset printing paper for the year ended December 31, 2019 and 2020 was RMB4,824 and RMB4,154,

respectively, representing a 13.89% decrease.

Tissue Paper Products

produce 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 brand “Qingmu”.

2018 and November 2019, we completed the construction, installation and test of operation of our PM8 and PM9 production

We launched the complete line of processing base tissue paper with designated capacity of 15,000 tonnes/year, and

producing finished tissue paper products with designated capacity of 15,000 tonnes/year.

Revenue from tissue

paper products was $8,414,653 (8.43% of the total offset printing paper, CMP and tissue paper products revenues) for the year ended

December 31, 2020, representing an increase of $2,063,485, or 32.49%, from $6,351,168 in 2019.

We sold 10,088 tonnes of tissue

paper products (including 305 tonnes of tissue base paper) in the year ended December 31, 2020, as compared to 6,790 tonnes in

2019, an increase of 3,298 tonnes, or 48.57%.

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

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

Revenue of Face Mask

On April 29, 2020,

we launched a production line of non-medical single-use face masks, following the completion of raw materials preparation, trial

run of the equipment and the sample products inspection.

Revenue generated from selling face masks were $1,101,944 for the year

ended December 31, 2020.

We sold 10,301 thousand pieces of face masks in year of 2020.

Cost of Sales

Total cost of sales for CMP, offset printing paper and tissue

paper products in the year ended December 31, 2020 was $94,669,389, a decrease of $9,253,025, or 8.90%, from $103,922,414 for the

year ended December 31, 2019.

This was mainly a result of the decrease in sales volume of CMP and offset printing paper, partially

offset by the increase in sales volume of tissue paper products.

Cost of sales for CMP was $74,279,241 for the year ended December

31, 2020, as compared to $81,511,234 in 2019.

The decrease in the cost of sales of $7,231,993 for CMP was mainly due to the decrease

in the quantities of CMP sold, partially offset by the increase in cost of recycled paper board in the year of 2020.

of sales per tonne for CMP decreased by 1.05%, from $381 for the year ended December 31, 2019, to $377 in 2020.

The slight decrease

was mainly attributable to lower unit cost of manufacturing overhead (e.g.

wages, repair and maintenance etc.) due to suspension

of production in February 2020, partially offset by higher average unit purchase costs (net of applicable value added tax) of recycled

Cost of sales for offset printing paper was $10,147,280 for the year ended December 31, 2020, as compared to $14,061,771

Average cost of sales per tonne of offset printing paper increased by 3.53%, from $481 for the year ended December 31,

2019, to $498 in 2020.

The increase was mainly attributable to higher average unit purchase costs (net of applicable value added

tax) of recycled white scrap paper.

Cost of sales for tissue paper products was $10,242,868 for the year ended December 31, 2020,

as compared to $8,349,409 in 2019.

Average cost of sales per tonne of tissue paper products decreased by 17.48%, from $1,230 for

the year ended December 31, 2019, to $1,015 for 2020.

Changes in cost of sales and cost per tonne by product

for the year ended December 31, 2020 and 2019 are summarized below:

December 31, 2020

December 31, 2019

Change in percentage

Cost of Sales

$ (5,689,393 )

Light-Weight CMP

$ (1,542,600 )

$ (7,231,993 )

Offset Printing Paper

$ (3,914,491 )

Tissue Paper Products

Total CMP, Offset Printing Paper and Tissue Paper Revenue

$ 103,922,414

$ (9,253,025 )

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,

2020 were RMB 1,582/tonne (approximately $229/tonne) and RMB 2,086/tonne (approximately $303/tonne), respectively, as compared

to RMB 1,536/tonne (approximately $223/tonne) and RMB 1,855/tonne (approximately 269/tonne) for the year ended December 31, 2019,

respectively.

These changes (in US dollars) represent a year-over-year increase of 2.69% for the unit purchase cost of recycled

paper board and a year-over-year increase of 12.64% for the unit purchase cost of recycled white scrap paper.

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 2019 to December 2020 are shown below:

and gas are our two main energy sources.

Electricity and gas accounted for approximately 5% and 10.5% of total sales in 2020,

respectively, compared to 6% and 10.3% of total sales 2019.

The monthly energy cost (electricity, coal and gas) as a

percentage of total monthly sales of our main paper products for the 24 months ended December 31, 2020 are summarized as

Gross profit for December 31, 2020 was $5,701,985 (5.65% of

the total revenue), representing a decrease of $7,977,533, or 58.32%, from the gross profit of $13,679,518 (11.63% of the total

revenue) for the year ended December 31, 2019.

The decrease was mainly due to (i) the decrease in quantities sold of CMP and offset

printing paper and (ii) the decrease of ASP of CMP, offset printing paper and tissue paper products, partially offset by the increase

in sales quantities of tissue paper products.

Corrugating Medium Paper, Offset Printing Paper and Tissue

Paper Products

Gross profit for offset printing paper, CMP and tissue paper

products for the year ended December 31, 2020 was $5,171,937, a decrease of $8,519,386, or 62.22%, from the gross profit of $13,691,322

for the year ended December 31, 2019.

The decrease 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 6.46 percentage points, from 11.64% for the year ended December 31, 2019, to 5.18% for the

year ended December 31, 2020.

Gross profit margin for regular CMP for the year ended December

31, 2020 was 5.

42%, or 4.87 percentage points lower, as compared to gross profit margin of 10.29% for the year ended December

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

Gross profit margin for light-weight CMP for the year ended

December 31, 2020 was 8.93%, or 1.20 percentage points lower, as compared to gross profit margin of 10.13% for the year ended December

Gross profit margin for offset printing paper was 17.27% for

the year ended December 31, 2020, a decrease of 13.92 percentage points, as compared to 31.19% for the year ended December 31,

Such increase was mainly due to the increase of purchase price of recycled white scrap paper and the decrease in ASP of offset

printing paper.

Gross profit margin

for tissue paper products was -21.73% for the year ended December 31, 2020, an increase of 9.73 percentage points, as compared

to -31.46% for the year ended December 31, 2019.

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

Monthly gross profit margins for our corrugating

medium paper and offset printing paper for the 24-month period ended December 31, 2020 are as follows:

Gross profit for face masks for the year

ended December 31, 2020 was $530,049, representing a gross margin of 48.10%.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the year ended

December 31, 2020 were $11,157,789, an increase of $1,376,070, or 14.07% from $9,781,719 for the year ended December 31, 2019.

The increase was mainly attributed to issuance of 2,000,000 shares of common stock valued at $1,200,000 to officers and directors.

Income (Loss) from Operations

Operating loss for the year ended December 31, 2020 was $5,455,804,

a decrease of $9,353,603, or 239.97%, from income from operations of $3,897,799 for the year ended December 31, 2019.

was primarily due to the decrease in gross profit and increase in selling, general and administrative expenses.

Other Income and Expenses

Interest expense for

the year ended December 31, 2020 increased by $100,144, from $926,368 for the year ended December 31, 2019, to $1,026,512.

Company had short-term and long-term interest-bearing loans and lease obligation that aggregated $16,566,324 as of December 31,

2020, as compared to $15,137,181 as of December 31, 2019.

Net Income (Loss)

result of the above, net loss was $5,554,002 for the year ended December 31, 2020, representing a decrease of $7,775,184, or

350.05%, from net income of $2,221,182 for year ended December 31, 2019.

Accounts Receivable

Net accounts receivable

decreased by $730,254, or 23.41%, to $2,389,057 as of December 31, 2020, as compared with $3,119,311 as of December 31, 2019.

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

Inventories consist

of raw materials (accounting for 21.69% of total value of inventory as of December 31, 2020), semi-finished goods and finished

As of December 31, 2020, the recorded value of inventory decreased by 23.25% to $1,233,801 from $1,607,463 as of December

Due to the uncertainty of market and economy situation during the pandemic, a minimum level of inventory was maintained

at the end of 2020.

A summary of changes

in major inventory items is as follows:

Raw Materials

Recycled paper board

Recycled white scrap paper

Tissue base paper

Mask fabric and other raw materials

Total Raw Materials

Semi-finished Goods

Finished Goods

Total inventory, gross

Inventory reserve

Total inventory, net

Accounts Payable

Accounts payable was

$592,391 as of December 31, 2020, an increase of 341,905, or 136.50%, from $250,486 as of December 31, 2019.

Liquidity and Capital resources

As of December 31, 2020 the we had current assets of $14,909,605

and current liabilities of $18,340,074 (including amounts due to related parties of $727,433 and interest payable for related party

loans of $649,468), resulting in a working capital deficit of approximately $3,430,469;

as of December 31, 2019, the Company had

current assets of $24,041,239 and current liabilities of $16,835,460 (including amounts due to related parties of $1,147,438),

resulting in a working capital of approximately $7,205,779.

The deficit as of December 31, 2020 was mainly attributed to

the payments for acquisition of Hebei Tengsheng.

On June 25, 2019, Dongfang Paper entered into an acquisition agreement with shareholder

of Hebei Tengsheng, to buy up 100% shares of Hebei Tengsheng with a purchase price of RMB 320 million (approximately $49 million).

As of December 31, 2020, RMB 128 million (approximately $20 million) has been paid and recorded as ‘Prepayment on property,

plant and equipment’

in the consolidated balance sheet.

Renewal of operating lease

On August 7, 2013,

the Company’s Audit Committee and the Board of Directors approved the sale of the land use right of the Headquarters Compound

(the “LUR”), the office building and essentially all industrial-use buildings in the Headquarters Compound (the “Industrial

Buildings”), and three employee dormitory buildings located within the Headquarters Compound (the “Dormitories”)

to Hebei Fangsheng for cash prices of approximately $2.77 million, $1.15 million, and $4.31 million respectively.

In connection

with the sale of the Industrial Buildings, Hebei Fangsheng agreed to lease the Industrial Buildings back to the Company for its

original use for a term of up to three years, with an annual rental payment of approximately $145,052 (RMB1,000,000).

agreement expired in August 2016.

On August 6, 2016 and August 6, 2018, the Company entered into two supplementary agreements with

Hebei Fangsheng, who agreed to extend the lease term to August 9, 2022 with the same rental payment as original lease agreement.

The accrued rental owed to Hebei Fangsheng was approximately $nil and $56,552 which was recorded as part of the current liabilities

as of December 31, 2020 and December 31, 2019, respectively.

Capital Expenditure Commitment as of December 31, 2019

On May 5, 2020, the

Company announced it planned the commercial launch of a new tissue paper production line PM10 and the Company signed an agreement

to purchase paper machine with paper machine supplier.

The Company expected the new tissue paper production line to be launched

after the completion of trial run.

As of December 31, 2020, we had approximately $4.6 million in

capital expenditure commitments that were mainly related to the purchase of paper machine of PM10.

These commitments are expected

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

Financing with Sale-Leaseback

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$2.5 million).

Under the sale-leaseback arrangement, Hebei Tengsheng sold the Leased Equipment to TLCL for 16 million

(approximately US$2.5 million).

Concurrent with the sale of equipment, Hebei Tengsheng leases back the equipment sold to TLCL

for a lease term of three years.

At the end of the lease term, Hebei Tengsheng may pay a nominal purchase price of RMB 100

(approximately $15) 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 made payments due according to the schedule.

As of December 31, 2020, the balance of Leased Equipment net of

amortization was $2,397,653.

The lease liability were $536,959 and its current portion in the amount of $182,852 as of

December 31, 2020.

Amortization of the Leased Equipment was $51,574 for the year ended December 31, 2020.

Total interest

expenses for the sale lease back arrangement was $28,083 for the year ended December 31, 2020.

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

The deferred gain is amortized over

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

Cash, Cash Equivalents and restricted

Our cash, cash equivalents and restricted

cash as of December 31, 2020 was $4,142,437, a decrease of $1,695,308, from $5,837,745 as of December 31, 2019.

The decrease of

cash and cash equivalents for the year ended December 31, 2020 was attributable to a number of factors:

Net cash provided by operating activities

Net cash provided by operating activities was $16,143,527 for

the year ended December 31, 2020.

The balance represented an increase of cash of $8,613,053, or 114.38%, from $7,530,474 provided

for the year ended December 31, 2019.

Net loss for the year ended December 31, 2020 was $5,554,002, representing a decrease of

$7,775,184, or 350.05%, from a net income of $2,221,182 for the year ended December 31, 2019.

Changes in various asset and liability

account balances throughout the year ended December 31, 2020 also contributed to the net change in cash from operating activities

in year ended December 31, 2020.

Chief among such changes is the decrease of accounts receivable in the amount of $923,429 during

the year of 2020 (an increase to net cash for the year ended December 31, 2020 cash flow purposes).

There was also a decrease of

$458,878 in the ending inventory balance as of December 31, 2020 (an increase to net cash).

In addition, the Company had non-cash

expenses relating to depreciation and amortization in the amount of $15,793,854.

The Company also had a net decrease of $5,301,953

in prepayment and other current assets (an increase to net cash) and a net decrease of $796,595 in other payables and accrued liabilities

and related parties (an increase to net cash), as well as a decrease in income tax payable of $1,153,191 (a decrease to net cash)

during the year ended December 31, 2020.

Net cash used in investing activities

We incurred $20,526,004

in net cash expenditures for investing activities during the year ended December 31, 2020, as compared to $7,866,849 for the year

ended December 31, 2019.

Expenditures in the year ended December 31, 2020 were mainly for the prepayment of acquisition of Hebei

Tengsheng assets and expenditures on improvement of industrial building.

Net cash provided in financing

Net cash provided

by financing activities was proceeds from issuance of shares and warrants and repayment of lease liability of $2,054,855 for the

year ended December 31, 2020, as compared to net cash used in financing activities in the amount of $5,772,467 for the year ended

December 31, 2019.

Short-term bank loans

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

Industrial and Commercial Bank of China (“ICBC”) Loan 2

Total short-term bank loans

(a) On December 20, 2019, the Company entered into a working

capital loan agreement with the ICBC, with a balance of $6,163,814 as of December 31, 2019.

The working capital loan was secured

by the Land use right of Dongfang Paper as collateral for the benefit of the bank.

The loan bears a fixed interest rate of 4.785%

The loan was repaid on December 14, 2020.

(b) On December 11, 2020, the Company entered into a working

capital loan agreement with the ICBC, with a balance of $6,435,348 as of December 31, 2020.

The working capital loan was secured

by the Land use right of Dongfang Paper as collateral for the benefit of the bank.

The loan bears a fixed interest rate of 4.785%

The loan will be due and repaid at various installments by December 7, 2021.

As of December 31, 2020, there were guaranteed

short-term borrowings of $6,435,348 and unsecured bank loans of $nil.

As of December 31, 2019, there were guaranteed short-term

borrowings of $6,163,814 and unsecured bank loans of $nil.

The average short-term borrowing rates

for the years ended December 31, 2020, and 2019 were approximately 4.79% and 4.93%, respectively.

Long-term loans from credit union

As of December 31, 2020, and 2019, loans

payable to Rural Credit Union of Xushui County, amounted to $9,594,017 and $8,973,367, 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 is guaranteed by an independent third party.

payment is due quarterly and bears the rate of 0.64% per month.

On November 6, 2018, the loan was renewed for additional 5 years

and will be due and payable in various installments from December 21, 2018 to November 5, 2023.

As of December 31, 2020, and 2019,

total outstanding loan balance was $1,318,028 and $1,232,763, respectively, Out of the total outstanding loan balance, current

portion amounted were $214,563 and $143,345 as of December 31, 2020, and 2019, respectively, which are presented as current liabilities

in the consolidated balance sheet and the remaining balance of $1,103,465 and $1,089,418 are presented as non-current liabilities

in the consolidated balance sheet as of December 31, 2020, and 2019, respectively.

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

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

On June 21, 2018, the loan was extended

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

secured by certain of the Company’s manufacturing equipment with net book value of $2,349,796 and $3,935,270 as of December

31, 2020, and 2019, respectively.

Interest payment is due quarterly and bears a fixed rate of 0.64% per month.

As of December 31,

2020, and 2019, the total outstanding loan balance was $3,831,476 and $3,583,613, respectively.

Out of the total outstanding loan

balance, current portion amounted were $337,169 and $172,013 as of December 31, 2020, and 2019 respectively, which are presented

as current liabilities in the consolidated balance sheet and the remaining balance of $3,494,307 and $3,411,600 are presented as

non-current liabilities in the consolidated balance sheet as of December 31, 2020, and 2019, respectively.

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 is secured by Hebei Tengsheng with its

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

Interest payment is due quarterly and bears a fixed rate of 0.6%

As of December 31, 2020 and 2019, the total outstanding loan balance was $2,452,145 and $2,293,512, respectively.

of the total outstanding loan balance, current portion amounted were $2,452,145 and $1,146,756 as of December 31, 2020 and 2019,

respectively, which are presented as current liabilities in the consolidated balance sheet and the remaining balance of $nil and

$1,146,756 are presented as non-current liabilities in the consolidated balance sheet as of December 31, 2020 and 2019, respectively.

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 is secured by Hebei Tengsheng with

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

Interest payment is due monthly and bears a fixed rate of

7.56% per annum.

As of December 31, 2020, and 2019, the total outstanding loan balance was $1,992,368 and $1,863,479, respectively.

Out of the total outstanding loan balance, current portion amounted were $1,992,368 and $143,345 as of December 31, 2020, and 2019,

respectively, which are presented as current liabilities in the consolidated balance sheet and the remaining balance of $nil and

$1,720,134 are presented as non-current liabilities in the consolidated balance sheet as of December 31, 2020, and 2019, respectively.

Total interest

expenses for the short-term bank loans and long-term loans for the years ended December 31, 2020, and 2019 were $695,287 and $831,732,

respectively.

Shareholder Loans

Mr Zhenyong Liu, the

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

On January 1, 2013,

Dongfang Paper and Mr.

Zhenyong Liu renewed the three-year term loan previously entered on January 1, 2010, and extended the maturity

date further to December 31, 2015.

On December 31, 2015, the Company paid off the loan of $2,249,279, together with interest of

$391,374 for the period from 2013 to 2015.

Approximately $392,855 and $367,441 of interest were outstanding to Mr.

Zhenyong Liu,

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

as of December 31, 2020, and 2019, respectively.

10, 2014, Mr.

Zhenyong Liu provided a loan to the Company, amounted to $8,742,278 to Dongfang Paper for working capital purpose

with an interest rate of 4.35% per annum, which was based on the primary lending rate of People’s Bank of China.

The unsecured

loan was provided on December 10, 2014, and would be originally due on December 10, 2017.

During the year of 2016, the Company

repaid $6,012,416 to Mr.

Zhenyong Liu, together with interest of $288,596.

In February 2018, the company paid off the remaining

balance, together with interest of $20,400.

As of December 31, 2020, and 2019, approximately $45,978 and $43,003 of interest were

outstanding to Mr.

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

in the consolidated balance sheet.

2015, the Company entered an agreement with Mr.

Zhenyong Liu which allows Dongfang Paper to borrow from the CEO an amount up to

$17,201,342 (RMB120,000,000) for working capital purposes.

The advances or funding under the agreement are due three years from

the date each amount is funded.

The loan is unsecured and carries an annual interest rate set on the basis of the primary lending

rate of the People’s Bank of China at the time of the borrowing.

On July 13, 2015, an unsecured amount of $4,324,636 was

drawn from the facility.

On October 14, 2016 an unsecured amount of $2,883,091 was drawn from the facility.

In February 2018, the

company repaid $1,507,432 to Mr.

Zhenyong Liu.

The loan would be originally due on July 12, 2018.

Zhenyong Liu agreed to extend

the loan for additional 3 years and the remaining balance will be due on July 12, 2021.

On November 23, 2018, the company repaid

$3,768,579 to Mr.

Zhenyong Liu, together with interest of $158,651.

In December 2019, the company paid off the remaining balance,

together with interest of 94,636.

As of December 31, 2020, and 2019, the outstanding interest was $210,635 and $197,009, respectively,

which was recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet.

As of December

31, 2020, and 2019, total amount of loans due to Mr.

Zhenyong Liu were $nil.

The interest expense incurred for such related party

loans are $nil and $94,636 for the years ended December 31, 2020, and 2019, respectively.

The accrued interest owe to the CEO was

approximately $649,468 and $607,453, as of December 31, 2020, and 2019, respectively, which was recorded in other payables and

accrued liabilities.

As of December

31, 2020, and 2019, amount due to shareholder are $727,433 and $483,433, respectively, which represents funds from shareholders

to pay for various expenses incurred in the U.S.

The amount is due on demand with interest free.

Critical Accounting Policies and Estimates

The Company’s

financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require

us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets

and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting

Management makes these estimates using the best information available at the time the estimates are made.

However, actual

results could differ materially from those estimates.

The most critical accounting policies are listed below:

Revenue Recognition Policy

The Company recognizes

revenue when goods are delivered and a formal arrangement exists, the price is fixed or determinable, the delivery is completed,

no other significant obligations of the Company exist, and collectability is reasonably assured.

Goods are considered delivered

when the customer’s truck picks up goods at our finished goods inventory warehouse.

Long-Lived Assets

The Company evaluates

the recoverability of long-lived assets and the related estimated remaining useful lives when events or circumstances lead management

to believe that the carrying value of an asset may not be recoverable and the undiscounted cash flows estimated to be generated

by those assets are less than the assets’

carrying amount.

In such circumstances, those assets are written down to estimated

Our judgments regarding the existence of impairment indicators are based on market conditions, assumptions for operational

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

For the years ended December 31, 2020 and 2019, no events or circumstances occurred for which an evaluation of the recoverability

of long-lived assets was required.

We are currently not aware of any events or circumstances that may indicate any need to record

such impairment in the future.

Foreign Currency Translation

The functional currency

of Dongfang Paper and Baoding Shengde is the Chinese Yuan Renminbi (“RMB”).

Under ASC Topic 830-30, all assets and

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

exchange rates used by the Company as of December 31, 2020 and 2019 to translate the Chinese RMB to the U.S.

Dollars are 6.5249:1

and 6.9762:1, respectively.

Revenues and expenses are translated using the prevailing average exchange rates at 6.8941:1, and 6.8948:1

for the years ended December 31, 2020 and 2019, respectively.

Translation adjustments are included in other comprehensive income

Off-Balance Sheet Arrangements

We were the guarantor

for Baoding Huanrun Trading Co., for its long-term bank loans in an amount of $4,751,031 (RMB31,000,000), which matures at various

times in 2023.

Baoding Huanrun Trading Co.

is one of our major suppliers of raw materials.

This helps us to maintain a good relationship

with the supplier and negotiate for better terms in payment for materials.

If Huanrun Trading Co.

were to become insolvent, the

Company could be materially adversely affected.

Except as aforesaid, we have no material off-balance sheet transactions.

Recent Accounting Pronouncements

In June 2016, the

FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

ASU 2016-13 replaced the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit

losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

ASU 2016-13 requires use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments.

ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, with early adoption permitted.

In October 2019, the

FASB issued ASU No.

2019-10, “Financial Instruments-Credit Losses (Topic 326):

Effective Dates”, to finalize the effective

date delays for private companies, not-for-profits, and smaller reporting companies applying the CECL standards.

The ASU is effective

for reporting periods beginning after December 15, 2022 and interim periods within those fiscal years.

Early adoption is permitted.

We are currently evaluating the impact of the adoption of ASU 2016-13 on our condensed consolidated financial statements.

In December 2019,

the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

ASU 2019-12 will simplify the

accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The amendments also improve

consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

business entities, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning

after December 15, 2020.

All other amendments should be applied on a prospective basis.

We do not expect the adoption of ASU 2019-12

to have a material impact on our condensed consolidated financial statements.

Specifically, the Board and/or the Compensation Committee have authority to (a) grant, in its discretion,

Incentive Stock Options or Non-statutory Options, Stock Awards or Restricted Stock Purchase Offers;

(b) determine in good faith the fair

market value of the stock covered by any grant;

terms and conditions to be included in such grants;

and (d) make all other determinations necessary or advisable for the 2019 ISP’s

administration.

shares of common stock under the 2015 and 2019 ISPs, including shares originally authorized by equity holders and shares remaining for

future issuance as of December 31, 2021, have been issued.

Incentive Stock Plan

November 12, 2021, the Company’s Annual General Meeting adopted and approved the 2021 Omnibus Equity Incentive Plan of IT Tech

Packaging, Inc.(the”2021 Plan”).Under the 2021 ISP, the Company has reserved a total of 1,500,000 shares of common stock

for issuance as or under awards to be made to the directors, officers, employees and/or consultants of the Company and its subsidiaries.

Sales of Unregistered Securities

of Equity Securities by the Issuer and Affiliated Purchasers

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 5. Market for Registrant’s Common Equity