What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-03-15 compared with 2021-03-23 · 1032 added, 1070 removed, 349 unchanged (86% of the section changed)

Financial Statements and Supplementary Data

Our audited financial

statement for the fiscal year ended December 31, 2020 and 2019, together with the report of the independent certified public accounting

firms thereon and the notes thereto, are presented beginning at page F-1.

audited financial statement for the fiscal year ended December 31, 2021 and 2020, together with the report of the independent certified

public accounting firms thereon and the notes thereto, are presented beginning at page F-1.

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

2 unchanged sentences

on the Financial Statements

We have audited the accompanying

consolidated balance sheets of IT Tech Packaging, Inc.

(the Company) as of December 31, 2020, and 2019, and the related

consolidated statements of income (loss) and comprehensive income (loss), changes in stockholders’

equity, and cash

flows for each of the years in the two-year period ended December 31, 2020, and the related notes (collectively referred to

as the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the

financial position of the Company as of December 31, 2020, and 2019, and the results of its operations and its cash flows for

each of the years in the two-year period ended December 31, 2020, in conformity with accounting principles generally accepted

in the United States of America.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on

the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company

Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance

with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the

have audited the accompanying consolidated balance sheets of IT Tech Packaging, Inc.

(the Company) as of December 31, 2021, and 2020,

and the related consolidated statements of income (loss) and comprehensive income (loss), changes in stockholders’ equity, and

cash flows for each of the years in the two-year period ended December 31, 2021, and the related notes (collectively referred to as the

financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the

Company as of December 31, 2021, and 2020, and the results of its operations and its cash flows for each of the years in the two-year

period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but

not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits,

we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters were related to accounts

or disclosures that are material to the financial statements and involve judgment.

The Company has a substantial amount of property, plant,

and equipment, and the carrying value of such assets are subject to estimation, which involves judgment.

The plant and equipment may be

placed into service at varying times, and their ability to contribute to the generation of cash flows is impacted by multiple factors.

The audit engagement team performed extended procedures and independent analysis to gather adequate evidence to support our audit opinion

and to mitigate the risk of material misstatement to an acceptable level.

Our opinion on the consolidated financial statements, taken

as a whole, is not affected by the reporting of critical audit matters.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

Audit Matters

The critical audit matter communicated below is

a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the

audit committee and that:

(1) related to the accounts or disclosures that are material to the financial statements and (2) involved our

especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in anyway our

opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate

opinion on the critical audit matters or on the accounts or disclosures to which they relate.

We determined that the auditing of deferred tax

asset should be considered a critical audit matter.

The principal considerations in determining that this was a critical audit matter

was that the Company had a significant accumulated balance and the carrying value of such assets are subject to estimation, judgment,

and complex calculations.

The balance resulted from temporary differences in taxes dues as the result of the difference in timing of recognition

of expenses that are required under generally accepted accounting principles, but may require deferral under local tax regulations.

Company’s consolidated financial statements include entities in multiple jurisdictions with varying tax laws.

These circumstances

lead to estimation and interpretation that may be challenging to assess and evaluate as part of the audit.

The audit engagement team addressed

this critical accounting matter by reviewing the Company’s accounting policies, perform extended audit procedures including examination

of relevant local tax laws, testing for arithmetical accuracy of the asset, review of the Company’s assumptions and estimates concerning

future profitability, and independent recalculation of the future tax asset.

The engagement team was satisfied with the evidence accumulated

to support our audit opinion and to mitigate the risk of material misstatement to an acceptable level.

The accounts that are affected

by this critical audit matter are deferred tax assets, related valuation allowance and income tax expense.

Public Accountants

have served as the Company’s auditor since March 25, 2018.

Mateo, California

March 23, 2021

TECH PACKAGING, INC.

2 unchanged sentences

Current Assets

Cash and bank balances

Cash and bank

Restricted cash

Accounts receivable (net of allowance for doubtful accounts of $ 69,053 and $ 34,391 as of December 31, 2021 and December 31, 2020, respectively)

Prepayments and other current assets

Due from related parties

Total current assets

Prepayment on property, plant and equipment

Finance lease right-of-use assets, net

Property, plant, and equipment, net

Prepayments and other current

from related parties

Total current

Prepayment on property, plant

and equipment

Finance lease right-of-use

Property, plant, and equipment,

Value-added tax recoverable

Deferred tax asset non-current

LIABILITIES AND STOCKHOLDERS' EQUITY

tax asset non-current

$ 241,535,202

$ 199,874,474

AND STOCKHOLDERS' EQUITY

Current Liabilities

Short-term bank loans

Current portion of long-term loans from credit union

Current portion of long-term

loans from credit union

Lease liability

2 unchanged sentences

Due to related parties

Accrued payroll and employee benefits

Other payables and accrued liabilities

Income taxes payable

Total current liabilities

Accrued payroll and employee

Other payables and accrued

taxes payable

Total current

Loans from credit union

1 unchanged sentence

Lease liability - non-current

Derivative liability

Total liabilities (including amounts of the consolidated VIE without recourse to the Company of $ 17,924,475 and $ 17,950,224 as of December 31, 2021 and 2020, respectively)

Commitments and Contingencies

Stockholders' Equity

Common stock, 500,000,000 shares authorized,

$0.001 par value per share, 28,535,816 and 22,054,816 shares issued and outstanding as of December 31, 2020 and December 31,

2019, respectively

and Contingencies

Stockholders'

Common stock, 500,000,000 shares authorized, $ 0.001 par value per share, 99,049,900 and 28,535,816 shares issued and outstanding as of December 31, 2021 and December, 31,2020, respectively

Additional paid-in capital

Statutory earnings reserve

Accumulated other comprehensive income (loss)

Retained earnings

Total stockholders' equity

Total Liabilities and Stockholders' Equity

Accumulated other comprehensive

stockholders' equity

Liabilities and Stockholders' Equity

$ 241,535,202

$ 199,874,474

accompanying notes to consolidated financial statements.

IT TECH PACKAGING, INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

AND COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED DECEMBER 31, 2020

TECH PACKAGING, INC.

STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

THE YEARS ENDED DECEMBER 31, 2021 AND 2020

$ 160,881,720

$ 100,943,269

Cost of sales

Selling, general and administrative expenses

(Loss) Income from Operations

Other Income (Expense):

( 149,864,161 )

( 95,241,284 )

Selling, general and administrative

( 9,558,190 )

( 11,157,789 )

on acquisition of a subsidiary

(Loss) from Operations

( 5,455,804 )

Interest income

1 unchanged sentence

Interest expense

Loss on change in derivative liability

(Loss) Income before Income Taxes

Tax Benefit (Provision for Income Taxes)

Net (Loss) Income

Other Comprehensive Income (Loss)

Foreign currency translation adjustment

Total Comprehensive Income (Loss)

(Loss) Earnings Per Share:

Basic and Diluted (Loss) Earnings per Share

Outstanding –

( 1,124,702 )

( 1,026,512 )

(Loss) on derivative liability

(Loss) before Income Taxes

( 6,655,860 )

for Income Taxes

( 5,546,954 )

( 5,554,002 )

Other Comprehensive

Income (Loss)

currency translation adjustment

Comprehensive Income (Loss)

Earnings (Losses) Per Share:

and Diluted Earnings (Losses) per Share

– Basic and Diluted

accompanying notes to consolidated financial statements.

TECH PACKAGING, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Comprehensive

Income (loss)

Balance at December 31, 2018

at December 31, 2019

$ ( 6,057,537 )

1 unchanged sentence

$ 165,995,062

Issuance of shares to Weitian

Foreign currency translation adjustment

Balance at December 31, 2019

of shares to officer and directors

of shares to a consultant

currency translation adjustment

( 5,554,002 )

at December 31, 2020

$ 109,240,794

Issuance of shares to officer and directors

Issuance of shares

Issuance of shares to a consultant

Foreign currency translation adjustment

Balance at December 31, 2020

$ 175,080,174

of shares to institutional investors

of shares to public investors

currency translation adjustment

at December 31, 2021

$ 110,146,329

$ 215,749,908

accompanying notes to consolidated financial statements.

2 unchanged sentences

THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Cash Flows from Operating Activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Cash Flows from Operating

$ ( 5,554,002 )

Adjustments to reconcile net

income to net cash provided by operating activities:

Depreciation and amortization

Loss on derivative liability

Allowances for obsolete inventories, net

(Recovery from) Allowance for bad debts

Share-based compensation and expenses

Gain on acquisition of a subsidiary

Changes in operating assets and liabilities:

(Gain) Loss on derivative

( 5,880,526 )

(Recovery from) Allowance

for bad debts

Share-based compensation and

( 2,364,575 )

Changes in operating assets

and liabilities:

Accounts receivable

Prepayments and other current assets

( 2,430,495 )

Prepayments and other current

( 8,350,716 )

( 4,531,263 )

Accounts payable

Advance from customers

Notes payable

Related parties

Accrued payroll and employee benefits

Other payables and accrued liabilities

Income taxes payable

Net Cash Provided by Operating Activities

Cash Flows from Investing Activities:

Purchases of property, plant and equipment

Proceeds from sale of property, plant and equipment

Acquisition of a subsidiary

Net Cash Used in Investing Activities

Cash Flows from Financing Activities:

Proceeds from issuance of shares and warrants, net

Repayments of related party loans

Proceeds from short term bank loans

Proceeds from credit union loans

Accrued payroll and employee

Other payables and accrued

( 1,105,508 )

taxes payable

( 1,153,191 )

Cash (Used in) Provided by Operating Activities

( 2,436,071 )

from Investing Activities:

Purchases of property, plant

and equipment

( 25,071,372 )

( 21,106,210 )

from sale of property, plant and equipment

Cash Used in Investing Activities

( 25,071,372 )

( 20,526,004 )

from Financing Activities:

Proceeds from issuance of

shares and warrants, net

Proceeds from short term bank

Repayment of bank loans

( 6,512,703 )

( 6,237,217 )

Payment of capital lease obligation

Net Cash Provided by (Used in) Financing Activities

Effect of Exchange Rate Changes on Cash and Cash Equivalents

Net (Decrease) Increase in Cash and Cash Equivalents

Cash, Cash Equivalents and Restricted Cash - Beginning of Year

Cash, Cash Equivalents and Restricted Cash - End of Year

Supplemental Disclosure of Cash Flow Information:

Cash paid for interest, net of capitalized interest cost

Cash paid for income taxes

to a related party

( 6,838,274 )

Cash Provided by (Used in) Financing Activities

of Exchange Rate Changes on Cash and Cash Equivalents

(Decrease) in Cash and Cash Equivalents

( 1,695,308 )

Cash Equivalents and Restricted Cash - Beginning of Year

Cash Equivalents and Restricted Cash - End of Year

Disclosure of Cash Flow Information:

paid for interest, net of capitalized interest cost

paid for income taxes

Cash and bank balances

Restricted cash

Total cash, cash equivalents and restricted cash shown in the statement of cash flows

cash, cash equivalents and restricted cash shown in the statement of cash flows

accompanying notes to consolidated financial statements.

3 unchanged sentences

Tech Packaging, Inc.

(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.”.

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

Inc.” 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.

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.

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

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.

Shengde Holdings Inc was incorporated in the State of Nevada

on February 25, 2009.

On June 1, 2009, Shengde Holdings Inc incorporated Baoding Shengde, a limited liability company organized

under the laws of the PRC.

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

foreign-owned entity under PRC law.

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.

Shengde Holdings Inc.

was incorporated in the State of Nevada on February 25,

On June 1, 2009, Shengde Holdings Inc.

incorporated Baoding Shengde, a limited liability company organized under the laws of the

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

TECH PACKAGING, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

ensure proper compliance of the Company’s control over the ownership and operations of Dongfang Paper with certain PRC regulations,

on June 24, 2009, the Company entered into a series of contractual agreements (the “Contractual Agreements”) with

Dongfang Paper and Dongfang Paper Equity Owners via the Company’s wholly owned subsidiary Shengde Holdings Inc (“Shengde

Holdings”) a Nevada corporation and Baoding Shengde Paper Co., Ltd.

(“Baoding Shengde”), a wholly foreign-owned

enterprise in the PRC with an original registered capital of $10,000,000 (subsequently increased to $60,000,000 in June 2010).

Baoding Shengde is mainly engaged in production and distribution of digital photo paper and single-use face masks and is 100%

owned by Shengde Holdings.

Prior to February 10, 2010, the Contractual Agreements included (i) Exclusive Technical Service and

Business Consulting Agreement, which generally 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;

(ii) Loan Agreement, which provides that Baoding Shengde will make a loan in the aggregate principal

amount of $10,000,000 to Dongfang Paper Equity Owners in exchange for each such shareholder agreeing to contribute all of its

proceeds from the loan to the registered capital of Dongfang Paper;

(iii) Call Option Agreement, which generally provides, among

other things, that Dongfang Paper Equity Owners irrevocably grant to Baoding Shengde an option to purchase all or part of each

owner’s equity interest in Dongfang Paper.

The exercise price for the options shall be RMB1 which Baoding Shengde should

pay to each of Dongfang Paper Equity Owner for all their equity interests in Dongfang Paper;

(iv) Share Pledge Agreement, which

provides that Dongfang Paper Equity Owners will pledge all of their equity interests in Dongfang Paper to Baoding Shengde as security

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

Specifically, Baoding Shengde is entitled to dispose

of the pledged equity interests in the event that Dongfang Paper Equity Owners breach their obligations under the Loan Agreement

ensure proper compliance of the Company’s control over the ownership and operations of Dongfang Paper with certain PRC regulations,

on June 24, 2009, the Company entered into a series of contractual agreements (the “Contractual Agreements”) with Dongfang

Paper and Dongfang Paper Equity Owners via the Company’s wholly owned subsidiary Shengde Holdings Inc.

(“Shengde Holdings”)

a Nevada corporation and Baoding Shengde Paper Co., Ltd.

(“Baoding Shengde”), a wholly foreign-owned enterprise in the PRC

with an original registered capital of $ 10,000,000 (subsequently increased to $ 60,000,000 in June 2010).

Baoding Shengde is mainly engaged

in production and distribution of digital photo paper and single-use face masks and is 100 % owned by Shengde Holdings.

Prior to February

10, 2010, the Contractual Agreements included (i) Exclusive Technical Service and Business Consulting Agreement, which generally 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;

(ii) Loan Agreement, which provides

that Baoding Shengde will make a loan in the aggregate principal amount of $ 10,000,000 to Dongfang Paper Equity Owners in exchange for

each such shareholder agreeing to contribute all of its proceeds from the loan to the registered capital of Dongfang Paper;

Option Agreement, which generally provides, among other things, that Dongfang Paper Equity Owners irrevocably grant to Baoding Shengde

an option to purchase all or part of each owner’s equity interest in Dongfang Paper.

The exercise price for the options shall be

RMB1 which Baoding Shengde should pay to each of Dongfang Paper Equity Owner for all their equity interests in Dongfang Paper;

Pledge Agreement, which provides that Dongfang Paper Equity Owners will pledge all of their equity interests in Dongfang Paper to Baoding

Shengde as security for their obligations under the other agreements described in this section.

Specifically, Baoding Shengde is entitled

to dispose of the pledged equity interests in the event that Dongfang Paper Equity Owners breach their obligations under the Loan Agreement

or Dongfang Paper fails to pay the service fees to Baoding Shengde pursuant to the Exclusive Technical Service and Business Consulting

and (v) Proxy Agreement, which provides that Dongfang Paper Equity Owners shall irrevocably entrust a designee of Baoding

Shengde with such shareholder’s voting rights and the right to represent such shareholder to exercise such owner’s

rights at any equity owners’

meeting of Dongfang Paper or with respect to any equity owner action to be taken in accordance

with the laws and Dongfang Paper’s Articles of Association.

The terms of the agreement are binding on the parties for as

long as Dongfang Paper Equity Owners continue to hold any equity interest in Dongfang Paper.

An Dongfang Paper Equity Owner will

cease to be a party to the agreement once it transfers its equity interests with the prior approval of Baoding Shengde.

Company had controlled Dongfang Paper since July 16, 2007 through Dongfang Holding and the trust until June 24, 2009 and continued

to control Dongfang Paper through Baoding Shengde and the Contractual Agreements, the execution of the Contractual Agreements

is considered as a business combination under common control.

February 10, 2010, Baoding Shengde and the Dongfang Paper Equity Owners entered into a Termination of Loan Agreement to terminate

the above-mentioned $10,000,000 Loan Agreement.

Because of the Company’s decision to fund future business expansions through

Baoding Shengde instead of Dongfang Paper, the $10,000,000 loan contemplated was never made prior to the point of termination.

The parties believe the termination of the Loan Agreement does not in itself compromise the effective control of the Company over

Dongfang Paper and its businesses in the PRC.

An agreement was also entered into among

Baoding Shengde, Dongfang Paper and the Dongfang Paper Equity Owners on December 31, 2010, reiterating that Baoding Shengde is

entitled to 100% of the distributable profit of Dongfang Paper, pursuant to the above- mentioned Contractual Agreements.

Dongfang Paper and the Dongfang Paper Equity Owners shall not declare any of Dongfang Paper’s unappropriated earnings as

dividend, including the unappropriated earnings of Dongfang Paper from its establishment to 2010 and thereafter.

On June 25, 2019, Dongfang Paper entered

into an acquisition agreement with shareholder of Hebei Tengsheng Paper Co., Ltd.

(“Hebei Tengsheng”), a limited liability

company organized under the laws of the PRC, pursuant to which Dongfang Paper will acquire Hebei Tengsheng.

Upon full payment of

the consideration in the amount of RMB 320 million (approximately $45 million), Hebei Tengsheng will gain control over substantial

parcels of land that under the possession of Hebei Tengsheng.

Shengde with such shareholder’s voting rights and the right to represent such shareholder to exercise such owner’s rights

at any equity owners’ meeting of Dongfang Paper or with respect to any equity owner action to be taken in accordance with the laws

and Dongfang Paper’s Articles of Association.

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

Equity Owners continue to hold any equity interest in Dongfang Paper.

A Dongfang Paper Equity Owner will cease to be a party to the agreement

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

As the Company had controlled Dongfang Paper since

July 16, 2007 through Dongfang Holding and the trust until June 24, 2009 and continued to control Dongfang Paper through Baoding Shengde

and the Contractual Agreements, the execution of the Contractual Agreements is considered as a business combination under common control.

February 10, 2010, Baoding Shengde and the Dongfang Paper Equity Owners entered into a Termination of Loan Agreement to terminate the

above-mentioned $ 10,000,000 Loan Agreement.

Because of the Company’s decision to fund future business expansions through Baoding

Shengde instead of Dongfang Paper, the $ 10,000,000 loan contemplated was never made prior to the point of termination.

The parties believe

the termination of the Loan Agreement does not in itself compromise the effective control of the Company over Dongfang Paper and its

businesses in the PRC.

agreement was also entered into among Baoding Shengde, Dongfang Paper and the Dongfang Paper Equity Owners on December 31, 2010, reiterating

that Baoding Shengde is entitled to 100 % of the distributable profit of Dongfang Paper, pursuant to the above- mentioned Contractual

In addition, Dongfang Paper and the Dongfang Paper Equity Owners shall not declare any of Dongfang Paper’s unappropriated

earnings as dividend, including the unappropriated earnings of Dongfang Paper from its establishment to 2010 and thereafter.

June 25, 2019, Dongfang Paper entered into an acquisition agreement with shareholder of Hebei Tengsheng Paper Co., Ltd.

Tengsheng”), a limited liability company organized under the laws of the PRC, pursuant to which Dongfang Paper will acquire Hebei

Full payment of the consideration in the amount of RMB 320 million (approximately $ 45 million) was made on February 23, 2022.

Company has no direct equity interest in Dongfang Paper.

However, through the Contractual Agreements described above, the Company

is found to be the primary beneficiary (the “Primary Beneficiary”) of Dongfang Paper and is deemed to have the effective

control over Dongfang Paper’s activities that most significantly affect its economic performance, resulting in Dongfang

Paper being treated as a controlled variable interest entity of the Company in accordance with Topic 810 - Consolidation of the

Accounting Standards Codification (the “ASC”) issued by the Financial Accounting Standard Board (the “FASB”).

The revenue generated from Dongfang Paper for the years ended December 31, 2020 and 2019 was accounted for 98.91% and 100% of

the Company’s total revenue, respectively.

Dongfang Paper also accounted for 90.70% and 91.01% of the total assets of the

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

However, through the Contractual Agreements described above, the Company is

found to be the primary beneficiary (the “Primary Beneficiary”) of Dongfang Paper and is deemed to have the effective control

over Dongfang Paper’s activities that most significantly affect its economic performance, resulting in Dongfang Paper being treated

as a controlled variable interest entity of the Company in accordance with Topic 810 - Consolidation of the Accounting Standards Codification

(the “ASC”) issued by the Financial Accounting Standard Board (the “FASB”).

The revenue generated from Dongfang

Paper for the years ended December 31, 2021 and 2020 was accounted for 99.11 %and 98.91 % of the Company’s total revenue, respectively.

Dongfang Paper also accounted for 84.13 % and 90.70 % of the total assets of the Company as of December 31, 2021 and 2020, respectively.

TECH PACKAGING, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

of December 31, 2020, and 2019, details of the Company’s subsidiaries and variable interest entity are as follows:

of December 31, 2021, and 2020, details of the Company’s subsidiaries and variable interest entity are as follows:

Incorporation

Incorporation or

or Establishment

Incorporation

Establishment

Principal Activity

Establishment

Dongfang Holding

7 unchanged sentences

Paper production and distribution

Variable interest entity (“VIE”):

interest entity (“VIE”):

Dongfang Paper

1 unchanged sentence

Paper production and distribution

Dongfang Paper is treated as a 100% controlled

variable interest entity of the Company.

uncertainties in the PRC legal system could cause the Company’s current ownership structure to be found to be in violation

of any existing and/or future PRC laws or regulations and could limit the Company’s ability, through its subsidiary, to

enforce its rights under these contractual arrangements.

Furthermore, shareholders of the VIE may have interests that are different

than those of the Company, which could potentially increase the risk that they would seek to act contrary to the terms of the

aforementioned agreements.

addition, if the current structure or any of the contractual arrangements were found to be in violation of any existing or future

PRC law, the Company may be subject to penalties, which may include, but not be limited to, the cancellation or revocation of

the Company’s business and operating licenses, being required to restructure the Company’s operations or being required

to discontinue the Company’s operating activities.

The imposition of any of these or other penalties may result in a material

and adverse effect on the Company’s ability to conduct its operations.

In such case, the Company may not be able to operate

or control the VIE, which may result in deconsolidation of the VIE.

The Company believes the possibility that it will no longer

be able to control and consolidate its VIE will occur as a result of the aforementioned risks and uncertainties is remote.

* Dongfang Paper is treated as a 100 % controlled variable interest entity of the Company.

uncertainties in the PRC legal system could cause the Company’s current ownership structure to be found to be in violation of any

existing and/or future PRC laws or regulations and could limit the Company’s ability, through its subsidiary, to enforce its rights

under these contractual arrangements.

Furthermore, shareholders of the VIE may have interests that are different than those of the Company,

which could potentially increase the risk that they would seek to act contrary to the terms of the aforementioned agreements.

addition, if the current structure or any of the contractual arrangements were found to be in violation of any existing or future PRC

law, the Company may be subject to penalties, which may include, but not be limited to, the cancellation or revocation of the Company’s

business and operating licenses, being required to restructure the Company’s operations or being required to discontinue the Company’s

operating activities.

The imposition of any of these or other penalties may result in a material and adverse effect on the Company’s

ability to conduct its operations.

In such case, the Company may not be able to operate or control the VIE, which may result in deconsolidation

The Company believes the possibility that it will no longer be able to control and consolidate its VIE will occur as a result

of the aforementioned risks and uncertainties is remote.

TECH PACKAGING, INC.

1 unchanged sentence

Company has aggregated the financial information of Dongfang Paper in the table below.

The aggregate carrying value of Dongfang

Paper’s assets and liabilities (after elimination of intercompany transactions and balances) in the Company’s consolidated

balance sheets as of December 31, 2020, and 2019 are as follows:

The aggregate carrying value of Dongfang Paper’s

assets and liabilities (after elimination of intercompany transactions and balances) in the Company’s consolidated balance sheets

as of December 31, 2021, and 2020 are as follows:

Current Assets

Cash and bank balances

Cash and bank

Restricted cash

Accounts receivable

Prepayments and other current assets

Prepayments and other current

Due from related parties

Total current assets

Prepayment on property, plant and equipment

Finance lease right-of-use assets, net

Property, plant, and equipment, net

Deferred tax asset non-current

Total current

Prepayment on property, plant

and equipment

Finance lease right-of-use

Property, plant, and equipment,

tax asset non-current

$ 203,211,041

$ 181,262,737

Current Liabilities

Short-term bank loans

Current portion of long-term loans from credit union

Current portion of long-term

loans from credit union

Lease liability

2 unchanged sentences

Due to related parties

Accrued payroll and employee benefits

Other payables and accrued liabilities

Accrued payroll and employee

Other payables and accrued

Income taxes payable

Total current liabilities

Total current

Loans from credit union

Lease liability - non-current

Total liabilities

Deferred gain on sale-leaseback

liability - non-current

TECH PACKAGING, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

Company and its consolidated subsidiaries are not required to provide financial support to the VIE, and no creditor (or beneficial

interest holders) of the VIE have recourse to the assets of Company unless the Company separately agrees to be subject to such

There are no terms in any agreements or arrangements, implicit or explicit, which require the Company or its subsidiaries

to provide financial support to the VIE.

However, if the VIE does require financial support, the Company or its subsidiaries may,

at its option and subject to statutory limits and restrictions, provide financial support to the VIE.

Company and its consolidated subsidiaries are not required to provide financial support to the VIE, and no creditor (or beneficial interest

holders) of the VIE have recourse to the assets of Company unless the Company separately agrees to be subject to such claims.

no terms in any agreements or arrangements, implicit or explicit, which require the Company or its subsidiaries to provide financial

support to the VIE.

However, if the VIE does require financial support, the Company or its subsidiaries may, at its option and subject

to statutory limits and restrictions, provide financial support to the VIE.

Basis of Presentation and Significant Accounting Policies

of Consolidation

consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the

United States of America (“US GAAP”), and include the assets, liabilities, revenues, expenses and cash flows of all

subsidiaries and variable interest entity.

All significant inter-company balances, transactions and cash flows are eliminated

on consolidation.

consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United

States of America (“US GAAP”), and include the assets, liabilities, revenues, expenses and cash flows of all subsidiaries

and variable interest entity.

All significant inter-company balances, transactions and cash flows are eliminated on consolidation.

Currency Translation

1 unchanged sentence

The functional currency

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

Monetary assets and liabilities denominated

in currencies other than RMB are translated into RMB at the rates of exchange ruling at the balance sheet date.

Transactions in

currencies other than RMB are converted into RMB at the applicable rates of exchange prevailing the transactions occurred.

gains and losses are recognized in the consolidated statements of income.

The functional currency of IT Tech Packaging and Shengde

Holdings is United States dollars.

Monetary assets and liabilities denominated in currencies other than United States dollars

are translated into United States dollars at the rates of exchange ruling at the balance sheet date.

Translation in currencies

other than United States dollars are converted into United States dollars at the applicable rates of exchange prevailing when

the transactions occurred.

Transaction gains or losses are recognized in the consolidated statement of income.

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 average exchange rates prevailing throughout the respective

years 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 (loss).

preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions

that affect the reported amounts of assets and liabilities as of December 31, 2020, and 2019, and revenues and expenses for the

years ended December 31, 2020, and 2019.

The most significant estimates relate to allowance for uncollectible accounts receivable,

inventory valuation, useful lives and impairment for property, plant and equipment, valuation allowance for deferred tax assets

and contingencies.

Actual results could differ from those estimates made by management.

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

Monetary assets and liabilities denominated in

currencies other than RMB are translated into RMB at the rates of exchange ruling at the balance sheet date.

Transactions in currencies

other than RMB are converted into RMB at the applicable rates of exchange prevailing the transactions occurred.

Transaction gains and

losses are recognized in the consolidated statements of income.

The functional currency of IT Tech Packaging and Shengde Holdings is

United States dollars.

Monetary assets and liabilities denominated in currencies other than United States dollars are translated into

United States dollars at the rates of exchange ruling at the balance sheet date.

Translation in currencies other than United States dollars

are converted into United States dollars at the applicable rates of exchange prevailing when the transactions occurred.

Transaction gains

or losses are recognized in the consolidated statement of income.

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.

The current exchange rates used by the Company as of December 31, 2021, and 2020 to translate the Chinese RMB to

Dollars are 6.3757:1, and 6.5249:1, respectively.

Revenues and expenses are translated using the average exchange rates prevailing

throughout the respective years at 6.4474:1 and 6.8941:1 for the years ended December 31, 2021, and 2020, respectively.

Translation adjustments

are included in other comprehensive income (loss).

preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that

affect the reported amounts of assets and liabilities as of December 31, 2021, and 2020, and revenues and expenses for the years ended

December 31, 2021, and 2020.

The most significant estimates relate to allowance for uncollectible accounts receivable, inventory valuation,

useful lives and impairment for property, plant and equipment, valuation allowance for deferred tax assets and contingencies.

results could differ from those estimates made by management.

TECH PACKAGING, INC.

1 unchanged sentence

accounts receivable are recorded on shipment of products to customers.

The trade receivables are all without customer collateral

and interest is not accrued on past due accounts.

Periodically, management reviews the adequacy of its provision for doubtful

accounts based on historical bad debt expense results and current economic conditions using factors based on the aging of its

accounts receivable.

Additionally, the Company may identify additional allowance requirements based on indications that a specific

customer may be experiencing financial difficulties.

The trade receivables are all without customer collateral and

interest is not accrued on past due accounts.

Periodically, management reviews the adequacy of its provision for doubtful accounts based

on historical bad debt expense results and current economic conditions using factors based on the aging of its accounts receivable.

Additionally,

the Company may identify additional allowance requirements based on indications that a specific customer may be experiencing financial

difficulties.

Actual bad debt results could differ materially from these estimates.

of December 31, 2020, and 2019, the balance of allowance for doubtful accounts was $34,391 and $59,922, respectively;

movement of the provision of the doubtful accounts is as below.

While management uses the best information available upon which

to base estimates, future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions

used for the purposes of analysis.

Allowance of doubtful accounts

As of December 31, 2021, and 2020, the balance of

allowance for doubtful accounts was $ 69,053 and $ 34,391 , respectively;

and the movement of the provision of the doubtful accounts is

While management uses the best information available upon which to base estimates, future adjustments to the allowance may

be necessary if economic conditions differ substantially from the assumptions used for the purposes of analysis.

of doubtful accounts

Opening balance

Provision (Reversal) for the year

Exchange difference

Closing balance

Provision (Reversal) for the

consist principally of raw materials and finished goods, and are stated at the lower of cost (average cost method) or market.

Cost includes labor, raw materials, and allocated overhead.

Provision in inventories were $nil and $75,719 for the years ended

December 31, 2020, and 2019, respectively.

Cost includes

labor, raw materials, and allocated overhead.

Provision in inventories were $ nil for the years ended December 31, 2021, and 2020, respectively.

Plant, and Equipment

plant, and equipment are stated at cost less accumulated depreciation and any impairment losses.

Major renewals, betterments,

and improvements are capitalized to the asset accounts while replacements, maintenance, and repairs, which do not improve or extend

the lives of the respective assets, are expensed to operations.

At the time property, plant, and equipment are retired or otherwise

disposed of, the asset and related accumulated depreciation or amortization accounts are relieved of the applicable amounts.

or losses from retirements or sales are credited or charged to operations.

Major renewals, betterments, and improvements

are capitalized to the asset accounts while replacements, maintenance, and repairs, which do not improve or extend the lives of the respective

assets, are expensed to operations.

At the time property, plant, and equipment are retired or otherwise disposed of, the asset and related

accumulated depreciation or amortization accounts are relieved of the applicable amounts.

Gains or losses from retirements or sales are

credited or charged to operations.

Construction-in-progress

is stated at cost and capitalized as expenses are incurred or as payments are made pursuant to relevant construction contracts.

Contract retention is recorded as accrued liability.

Construction in progress is not depreciated until project completion and

the constructed property being placed in service, at which time the capitalized balance will be transferred to appropriate account

of property, plant and equipment.

retention is recorded as accrued liability.

Construction in progress is not depreciated until project completion and the constructed

property being placed in service, at which time the capitalized balance will be transferred to appropriate account of property, plant

and equipment.

Company depreciates property, plant, and equipment using the straight-line method as follows:

5 unchanged sentences

Company reviews the carrying value of long-lived assets to be held and used when events and circumstances warrants such a review.

The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is

separately identifiable and is less than its carrying value.

In that event, a loss is recognized based on the amount by which

the carrying value exceeds the fair market value of the long-lived asset and intangible assets.

Fair market value is determined

primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved.

Losses on long-lived assets

and intangible assets to be disposed are determined in a similar manner, except that fair market values are reduced for the cost

carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately

identifiable and is less than its carrying value.

In that event, a loss is recognized based on the amount by which the carrying value

exceeds the fair market value of the long-lived asset and intangible assets.

Fair market value is determined primarily using the anticipated

cash flows discounted at a rate commensurate with the risk involved.

Losses on long-lived assets and intangible assets to be disposed

are determined in a similar manner, except that fair market values are reduced for the cost to dispose.

TECH PACKAGING, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

to the laws and regulations in the PRC, the Company is required to provide for certain statutory funds, namely, a reserve fund

by an appropriation from net profit after taxation but before dividend distribution based on the local statutory financial statements

of the PRC subsidiary and variable interest entity prepared in accordance with the PRC accounting principles and relevant financial

of the Company’s wholly owned subsidiary and variable interest entity in the PRC are required to allocate at least 10% of

its net profit to the reserve fund until the balance of such fund has reached 50% of its registered capital.

Appropriations of

additional reserve fund are determined at the discretion of its directors.

The reserve fund can only be used, upon approval by

the relevant authority, to offset accumulated losses or increase capital.

to the laws and regulations in the PRC, the Company is required to provide for certain statutory funds, namely, a reserve fund by an

appropriation from net profit after taxation but before dividend distribution based on the local statutory financial statements of the

PRC subsidiary and variable interest entity prepared in accordance with the PRC accounting principles and relevant financial regulations.

of the Company’s wholly owned subsidiary and variable interest entity in the PRC are required to allocate at least 10 % of its net

profit to the reserve fund until the balance of such fund has reached 50 % of its registered capital.

Appropriations of additional reserve

fund are determined at the discretion of its directors.

The reserve fund can only be used, upon approval by the relevant authority, to

offset accumulated losses or increase capital.

the years ended December 31, 2021, and 2020, IT Tech Packaging made transfers of $ nil to this reserve fund.

As a result of net

loss in fiscal year 2019 and 2018 of Baoding Shengde, no statutory reserves were provided for the year ended December 31, 2020,

The Company’s variable interest entity Dongfang Paper, the statutory reserve account of which has been fully funded

for 50% of its registered capital in the amount of RMB 75,030,000 (or approximately $11,811,470) since December 31, 2010, did

not make any transfer to statutory reserves during the years ended December 31, 2020, and 2019.

time employees of the PRC entities participate in a government mandated multi-employer defined contribution plan pursuant to which

certain pension benefits, medical care, unemployment insurance and other welfare benefits are provided to employees.

provision for such employee benefits was $nil for the years ended December 31, 2020, and 2019.

Company adopted ASC Topic 606, Revenue from Contracts with Customers , and all subsequent ASUs that modified ASC 606 on

April 1, 2017 using the full retrospective method which requires the Company to present the financial statements for all periods

as if Topic 606 had been applied to all prior periods.

The company derives revenue principally from producing and sales of paper

Revenue from contracts with customers is recognized using the following five steps:

Identify the contract(s) with a customer;

Identify the performance obligations in the

No statutory reserves were

provided for the year ended December 31, 2021, and 2020.

The Company’s variable interest entity Dongfang Paper, the statutory reserve

account of which has been fully funded for 50 % of its registered capital in the amount of RMB 75,030,000 (or approximately $ 11,811,470 )

since December 31, 2010, did not make any transfer to statutory reserves during the years ended December 31, 2021, and 2020.

time employees of the PRC entities participate in a government mandated multi-employer defined contribution plan pursuant to which certain

pension benefits, medical care, unemployment insurance and other welfare benefits are provided to employees.

The total provision for

such employee benefits was $ nil for the years ended December 31, 2021, and 2020.

Company adopted ASC Topic 606, Revenue from Contracts with Customers , and all subsequent ASUs that modified ASC 606 on April 1,

2017 using the full retrospective method which requires the Company to present the financial statements for all periods as if Topic 606

had been applied to all prior periods.

The company derives revenue principally from producing and sales of paper products.

contracts with customers is recognized using the following five steps:

Identify the contract(s) with

Identify the performance obligations

in the contract;

Determine the transaction price;

Allocate the transaction price to the performance

obligations in the contract;

Recognize revenue when (or as) the entity satisfies

a performance obligation.

Allocate the transaction price

to the performance obligations in the contract;

Recognize revenue when (or

as) the entity satisfies a performance obligation.

contract contains a promise (or promises) to transfer goods or services to a customer.

A performance obligation is a promise (or

a group of promises) that is distinct.

The transaction price is the amount of consideration a company expects to be entitled from

a customer in exchange for providing the goods or services.

The unit of account for revenue recognition

is a performance obligation (a good or service).

A contract may contain one or more performance obligations.

Performance obligations

are accounted for separately if they are distinct.

A good or service is distinct if the customer can benefit from the good or service

either on its own or together with other resources that are readily available to the customer, and the good or service is distinct

in the context of the contract.

Otherwise, performance obligations are combined with other promised goods or services until the

Company identifies a bundle of goods or services that is distinct.

Promises in contracts which do not result in the transfer of

a good or service are not performance obligations, as well as those promises that are administrative in nature, or are immaterial

in the context of the contract.

A performance obligation is a promise (or a group

of promises) that is distinct.

The transaction price is the amount of consideration a company expects to be entitled from a customer

in exchange for providing the goods or services.

unit of account for revenue recognition is a performance obligation (a good or service).

A contract may contain one or more performance

Performance obligations are accounted for separately if they are distinct.

A good or service is distinct if the customer

can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and

the good or service is distinct in the context of the contract.

Otherwise, performance obligations are combined with other promised goods

or services until the Company identifies a bundle of goods or services that is distinct.

Promises in contracts which do not result in

the transfer of a good or service are not performance obligations, as well as those promises that are administrative in nature, or are

immaterial in the context of the contract.

The Company has addressed whether various goods and services promised to the customer represent

distinct performance obligations.

The Company applied the guidance of ASC Topic 606-10-25-16 through 18 in order to verify which

promises should be assessed for classification as distinct performance obligations.

The Company’s revenue is primary

derived from sales of paper products.

The Company recognizes revenue when goods are delivered, when 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 customer’s truck picks up goods at the Company’s finished

goods inventory warehouse.

The Company applied the guidance of ASC Topic 606-10-25-16 through 18 in order to verify which promises

should be assessed for classification as distinct performance obligations.

Company’s revenue is primary derived from sales of paper products.

The Company recognizes revenue when goods are delivered, when

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 customer’s truck picks up goods at the Company’s

finished goods inventory warehouse.

Substantially

all customers use their own trucks or hire commercial trucking companies to pick up goods from the Company.

The Company usually

incurs no shipping cost for delivery of goods to customers.

For those rare situations where products are not shipped utilizing

customer specified shipping services, the Company charges customers a shipping fee which is included in net revenues and was not

Freight-in and handling costs incurred by the Company with respect to purchased goods are recorded as a component of

inventory cost and charged to cost of sales when the inventory items are sold.

The Company usually incurs

no shipping cost for delivery of goods to customers.

For those rare situations where products are not shipped utilizing customer specified

shipping services, the Company charges customers a shipping fee which is included in net revenues and was not material.

Freight-in and

handling costs incurred by the Company with respect to purchased goods are recorded as a component of inventory cost and charged to cost

of sales when the inventory items are sold.

TECH PACKAGING, INC.

1 unchanged sentence

Company expenses all advertising and promotion costs as incurred.

The Company incurred $nil of advertising and promotion costs

The Company incurred $ 3,972 and $ nil of advertising and promotion costs

for the years ended December 31, 2021, and 2020.

3 unchanged sentences

expenses incurred $ 101,410 and $ 69,208 for the years ended December 31, 2021, and 2020, respectively.

costs attributable directly to the acquisition, construction or production of qualifying assets which require a substantial period

of time to be ready for their intended use or sale, are capitalized as part of the cost of those assets.

Income earned on temporary

investments of specific borrowings pending their expenditure on those assets is deducted from borrowing costs capitalized.

other borrowing costs are recognized in interest expenses in the period in which they are incurred.

A government subsidy is not recognized

until there is reasonable assurance that:

(a) the enterprise will comply with the conditions attached to the grant;

and(b)the grant

will be received.

When the Company receives government subsidies but the conditions attached to the grants have not been fulfilled,

such government subsidies are deferred and recorded under other payables and accrued expenses, and other long-term liability.

classification of short-term or long-term liabilities is depended on the management’s expectation of when the conditions

costs attributable directly to the acquisition, construction or production of qualifying assets which require a substantial period of

time to be ready for their intended use or sale, are capitalized as part of the cost of those assets.

Income earned on temporary investments

of specific borrowings pending their expenditure on those assets is deducted from borrowing costs capitalized.

All other borrowing costs

are recognized in interest expenses in the period in which they are incurred.

government subsidy is not recognized until there is reasonable assurance that:

(a) the enterprise will comply with the conditions attached

to the grant;

and(b)the grant will be received.

When the Company receives government subsidies but the conditions attached to the grants

have not been fulfilled, such government subsidies are deferred and recorded under other payables and accrued expenses, and other long-term

The classification of short-term or long-term liabilities is depended on the management’s expectation of when the conditions

attached to the grant can be fulfilled.

For the years ended December 31, 2020, and 2019, the Company received government subsidies

of $220,478 and $261,136, which are recognized as subsidy income in the consolidated statements of income in that fiscal year.

For the years ended December 31, 2021, and 2020, the Company received government subsidies of

$ 198,530 and $ 220,478 , which are recognized as subsidy income in the consolidated statements of income in that fiscal year.

Company accounts for income taxes pursuant to ASC Topic 740, Income Taxes.

Income taxes are provided on an asset and liability

approach for financial accounting and reporting of income taxes.

Income taxes are provided on an asset and liability approach

for financial accounting and reporting of income taxes.

Any tax paid by subsidiaries during the year is recorded.

tax is based on the profit or loss from ordinary activities adjusted for items that are non-assessable or disallowable for income

tax purpose and is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date.

740 also requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the

financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax

losses and tax credit carry-forwards.

ASC Topic 740 additionally requires the establishment of a valuation allowance to reflect

the likelihood of realization of deferred tax assets.

Current tax is based

on the profit or loss from ordinary activities adjusted for items that are non-assessable or disallowable for income tax purpose and

is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date.

ASC Topic 740 also requires

the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and

the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry-forwards.

ASC Topic 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax

Realization of deferred tax assets, including those related to the U.S.

net operating loss carry-forwards, are dependent upon future earnings, if any, of which the timing and amount are uncertain.

net operating loss carry-forwards, are dependent upon

future earnings, if any, of which the timing and amount are uncertain.

Company adopted ASC Topic 740-10-05, Income Tax , which provides guidance for recognizing and measuring uncertain tax positions,

it prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be

recognized in the financial statements.

It also provides accounting guidance on derecognizing, classification and disclosure of

these uncertain tax positions.

Company’s policy on classification of all interest and penalties related to unrecognized income tax positions, if any, is

to present them as a component of income tax expense.

the PRC subsidiary and variable interest entity of the Company are subject to value added tax (“VAT”) imposed by the

PRC government on its purchase and sales of goods.

The output VAT is charged to customers who purchase goods from the Company

and the input VAT is paid when the Company purchases goods from its vendors.

VAT rate is 17% (before May 1, 2018), 16% (after

May 1, 2018) and 13% (after April 1, 2019) in general, depending on the types of products purchased and sold.

The input VAT can

be offset against the output VAT.

Debit balance of VAT payable represents a credit against future collection of output VAT instead

of a receivable due from government.

it prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized

in the financial statements.

It also provides accounting guidance on derecognizing, classification and disclosure of these uncertain

tax positions.

Company’s policy on classification of all interest and penalties related to unrecognized income tax positions, if any, is to present

them as a component of income tax expense.

the PRC subsidiary and variable interest entity of the Company are subject to value added tax (“VAT”) imposed by the PRC

government on its purchase and sales of goods.

The output VAT is charged to customers who purchase goods from the Company and the input

VAT is paid when the Company purchases goods from its vendors.

VAT rate is 17 % (before May 1, 2018), 16 % (after May 1, 2018) and 13 %

(after April 1, 2019) in general, depending on the types of products purchased and sold.

The input VAT can be offset against the output

Debit balance of VAT payable represents a credit against future collection of output VAT instead of a receivable due from government.

Comprehensive

1 unchanged sentence

Company presents comprehensive income (loss) in accordance with ASC Topic 220, Comprehensive Income .

ASC Topic 220 states

that all items that are required to be recognized under accounting standards as components of comprehensive income (loss) be reported

in the consolidated financial statements.

The components of comprehensive income (loss) were the net income for the years and

the foreign currency translation adjustments.

ASC Topic 220 states that

all items that are required to be recognized under accounting standards as components of comprehensive income (loss) be reported in the

consolidated financial statements.

The components of comprehensive income (loss) were the net income for the years and the foreign currency

translation adjustments.

TECH PACKAGING, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

Basic earnings per share is computed by

dividing the net income attributable to the common stockholders by the weighted average number of shares of common stock outstanding

during the period.

Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased

to include the number of additional common shares that would have been outstanding if the potential common shares had been issued

and if the additional common shares were dilutive.

There were no potentially dilutive securities that were in-the-money that were

outstanding during the years ended December 31, 2020.

Company uses the fair value recognition provision of ASC Topic 718, Compensation-Stock Compensation, which requires the

Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date

fair value of such instruments over the vesting period.

Company also applies the provisions of ASC Topic 505-50, Equity Based Payments to Non-Employees to account for stock-based

compensation awards issued to non-employees for services.

Such awards for services are recorded at either the fair value of the

consideration received or the fair value of the instruments issued in exchange for such services, whichever is more reliably measurable.

earnings per share is computed by dividing the net income attributable to the common stockholders by the weighted average number of shares

of common stock outstanding during the period.

Diluted earnings per share is computed similar to basic earnings per share except that

the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common

shares had been issued and if the additional common shares were dilutive.

There were no potentially dilutive securities that were in-the-money

that were outstanding during the years ended December 31, 2021.

Company uses the fair value recognition provision of ASC Topic 718, Compensation-Stock Compensation, which requires the Company

to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of

such instruments over the vesting period.

Company also applies the provisions of ASC Topic 505-50, Equity Based Payments to Non-Employees to account for stock-based compensation

awards issued to non-employees for services.

Such awards for services are recorded at either the fair value of the consideration received

or the fair value of the instruments issued in exchange for such services, whichever is more reliably measurable.

Value Measurements

Company has adopted ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework

for measuring fair value in GAAP, and expands disclosures about fair value measurements.

It does not require any new fair

value measurement, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify

the source of the information.

It establishes a three-level valuation hierarchy of valuation techniques based on observable

and unobservable inputs, which may be used to measure fair value and include the following:

Company has adopted ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring

fair value in GAAP, and expands disclosures about fair value measurements.

It does not require any new fair value measurement, but provides

guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information.

It establishes

a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair

value and include the following:

1 - Quoted prices in active markets for identical assets or liabilities.

2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or

2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities;

quoted prices in markets that are not active;

or other inputs that are observable or can be corroborated by observable

market data for substantially the full term of the assets or liabilities.

3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets

or liabilities.

or other inputs that are observable or can be corroborated by observable market data for

substantially the full term of the assets or liabilities.

3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or

Classification

2 unchanged sentences

judgment is required in estimating fair value.

Accordingly, the estimates of fair value may not be indicative of the amounts that

the Company could realize in a current market exchange.

As of December 31, 2020, and 2019, the carrying value of the Company’s

short term financial instruments, such as cash and bank balances, accounts receivable, accounts and notes payable, short-term

bank loans and balance due to related parties, approximate at their fair values because of the short maturity of these instruments;

while loans from credit union approximates at their fair value as the interest rates thereon are close to the market rates of

interest published by the People’s Bank of China.

Derivative liabilities are measured at fair value on a recurring

Accordingly, the estimates of fair value may not be indicative of the amounts that the

Company could realize in a current market exchange.

As of December 31, 2021, and 2020, the carrying value of the Company’s short

term financial instruments, such as cash and bank balances, accounts receivable, accounts and notes payable, short-term bank loans and

balance due to related parties, approximate at their fair values because of the short maturity of these instruments;

while loans from

credit union approximates at their fair value as the interest rates thereon are close to the market rates of interest published by the

People’s Bank of China.

liabilities are measured at fair value on a recurring basis.

Non-Recurring

Fair Value Measurements

The Company reviews long-lived assets for

impairment annually or more frequently if events or changes in circumstances indicate the possibility of impairment.

For the continuing

operations, long-lived assets are measured at fair value on a nonrecurring basis when there is an indicator of impairment, and

they are recorded at fair value only when impairment is recognized.

For discontinued operations, long-lived assets are measured

at the lower of carrying amount or fair value less cost to sell.

The fair value of these assets was determined using models with

significant unobservable inputs which were classified as Level 3 inputs, primarily the discounted future cash flow.

Company reviews long-lived assets for impairment annually or more frequently if events or changes in circumstances indicate the possibility

of impairment.

For the continuing operations, long-lived assets are measured at fair value on a nonrecurring basis when there is an indicator

of impairment, and they are recorded at fair value only when impairment is recognized.

For discontinued operations, long-lived assets

are measured at the lower of carrying amount or fair value less cost to sell.

The fair value of these assets was determined using models

with significant unobservable inputs which were classified as Level 3 inputs, primarily the discounted future cash flow.

TECH PACKAGING, INC.

3 unchanged sentences

materials inventory includes mainly recycled paper and coal.

Finished goods include mainly products of corrugating medium paper

and offset printing paper.

Finished goods include mainly products of corrugating medium paper and offset

printing paper.

Inventories consisted of the following as of and December 31, 2021, and 2020:

Raw Materials

Recycled paper board

Recycled white scrap paper

Base paper and other raw materials

white scrap paper

paper and other raw materials

Semi-finished Goods

Finished Goods

Total inventory, gross

Inventory reserve

Total inventory, net

inventory, net

Prepayments and other current assets

1 unchanged sentence

Prepaid land lease

Prepayment for purchase of materials

Prepayment for purchase of

Value-added tax recoverable

TECH PACKAGING, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

Property, plant and equipment

4 unchanged sentences

Machinery and equipment

Construction in progress

accumulated depreciation and amortization

Property, Plant and Equipment, net

As of December 31, 2020, and December 31,

2019, land use rights represented two parcel of state-owned lands located in Xushui District of Hebei Province in China, with lease

terms of 50 years expiring from 2061 to 2066.

in progress mainly represents payments for paper machine of a new tissue paper production line PM10 and improvement of the office

building and essentially all industrial-use buildings in the Headquarters Compound.

( 131,687,537 )

( 113,590,606 )

Plant and Equipment, net

$ 126,587,428

$ 145,142,642

TECH PACKAGING, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

of December 31, 2021, and 2020, land use rights represented two parcel of state-owned lands located in Xushui District of Hebei Province

in China, with lease terms of 50 years expiring from 2061 to 2066.

in progress mainly represents payments for paper machine of a new tissue paper production line PM10.

of December 31, 2021, and 2020, certain property, plant and equipment of Dongfang Paper with net values of $ 1,130,333 and $ 2,349,796 ,

respectively, have been pledged pursuant to a long-term loan from credit union of Dongfang Paper.

Land use right of Dongfang Paper

with net values of $6,010,359 and $5,757,546, respectively, as of December 31, 2020 and 2019 was pledged for the bank loan from

Bank of Industrial & Commercial Bank of China.

Land use right of Hebei Tengsheng with net value of $5,560,146 and $5,200,452,

respectively, as of December 31, 2020 and 2019 was pledged for a long-term loan from credit union of Baoding Shengde.

land use right of Hebei Tengsheng with net value of $8,614,194 and $8,056,930, respectively, as of December 31, 2020 and 2019

was pledged for another long-term loan from credit union of Baoding Shengde.

Short-term bank loans ”

under Note (7), Loans Payable, for details of the transaction and asset collaterals.

and amortization of property, plant and equipment was $15,793,854 and $15,304,039 for the years ended December 31, 2020, and 2019,

respectively.

Land use right of Dongfang Paper with

net values of $ 6,002,195 and $ 6,010,359 , respectively, as of December 31, 2021 and 2020 was pledged for the bank loan from Bank of Industrial

& Commercial Bank of China.

Land use right of Hebei Tengsheng with net value of $5,690,261 and $5,560,146 , respectively, as of December

31, 2021 and 2020 was pledged for a long-term loan from credit union of Baoding Shengde.

In addition, land use right of Hebei Tengsheng

with net value of $ 8,815,778 and $ 8,614,194 , respectively, as of December 31, 2021 and 2020 was pledged for another long-term loan from

credit union of Baoding Shengde.

See “ Short-term bank loans ” under Note (7), Loans Payable, for details of the transaction

and asset collaterals.

and amortization of property, plant and equipment was $ 15,304,686 and $ 15,793,854 for the years ended December 31, 2021, and 2020, respectively.

No Impairment loss was recorded for the years ended December 31, 2021, and 2020.

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 of15.6% per annum and stated at $567,099 at the inception of the lease on August 17,

Hebei 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

was $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 expense for the sale lease back arrangement was $28,083 for the year

ended December 31, 2020.

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 of15.

6 % per annum and stated at $ 567,099 at the inception of the lease

on August 17, 2020.

Tengsheng made payments due according to the schedule.

As of December 31, 2021 and 2020, the balance of Leased Equipment net of amortization

was $ 2,286,459 and $ 2,397,653 , respectively.

The lease liability were $ 362,394 and $ 536,959 , and its current portion in the amount of

$ 210,161 and $ 182,852 as of December 31, 2021 and 2020, respectively.

of the Leased Equipment was $ 165,441 and $ 51,574 for the year ended December 31, 2021 and 2020, respectively.

Total interest expenses

for the sale lease back arrangement was $ 71,798 and $ 28,083 for the year ended December 31, 2021 and 2020, respectively.

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

The deferred gain is amortized over

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

The deferred gain is amortized over the lease

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

future minimum lease payments of the capital lease as of December 31, 2021 were as follows:

1 unchanged sentence

Current portion lease liability

TECH PACKAGING, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

Loans Payable

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

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

Total short-term bank loans

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

The working capital loan was secured by the Land use right of Dongfang Paper as collateral for the benefit of the

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

The loan was repaid on December 14, 2020.

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

The working capital loan was secured by the Land use right of Dongfang Paper as collateral for the benefit of the

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

The loan will be due and repaid at various installments by

December 7, 2021.

Industrial and

Commercial Bank of China (“ICBC”) Loan 1

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

short-term bank loans

TECH PACKAGING, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

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

The working capital loan was secured by the Land use right of Dongfang Paper as collateral for the benefit of the bank.

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

The loan was fully repaid in November 2021.

November 25, 2021, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 5,958,561 as of December

The working capital loan was secured by the Land use right of Dongfang Paper as collateral for the benefit of the bank and

guaranteed by Mr.

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

The loan will be due and repaid at various installments

by November 17, 2022.

of December 31, 2020, there were guaranteed short-term borrowings of $ 5,958,561 and unsecured bank loans of $ nil .

4 unchanged sentences

of December 31, 2020, and 2019, loans payable to Rural Credit Union of Xushui County, amounted to $ 9,818,530 and $ 9,594,017 , respectively.

Rural Credit Union of Xushui District Loan 1

Rural Credit Union of Xushui District Loan 2

Rural Credit Union of Xushui District Loan 3

Rural Credit Union of Xushui District Loan 4

Rural Credit Union

of Xushui District Loan 1

Rural Credit Union of Xushui

District Loan 2

Rural Credit Union of Xushui

District Loan 3

Credit Union of Xushui District Loan 4

Current portion of long-term loans from credit union

Long-term loans from credit union

of Dec 31, 2020, the Company’s long-term debt repayments for the next five years were as follows:

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

( 6,838,465 )

( 4,996,245 )

loans from credit union

of Dec 31, 2021, the Company’s long-term debt repayments for the next two years were as follows:

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

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

The loan is guaranteed by an independent third party.

Interest payment is due quarterly and 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.

TECH PACKAGING, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

On June 21, 2018, the loan

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

The loan is 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.

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.

On April 17, 2019, the Company entered

into a loan agreement with the Rural Credit Union of Xushui District for a term of 2 years, which was due and payable in various

installments from August 21, 2019 to April 16, 2021.

The loan 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% per month.

As of December

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

Out 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.

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

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

The loan 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,

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, 2021, and 2020, total

outstanding loan balance was $ 1,348,871 and $ 1,318,028 , respectively, Out of the total outstanding loan balance, current portion amounted

were $ 329,376 and $ 214,563 as of December 31, 2021, and 2020, respectively, which are presented as current liabilities in the consolidated

balance sheet and the remaining balance of $ 1,019,495 and $ 1,103,465 are presented as non-current liabilities in the consolidated balance

sheet as of December 31, 2021, and 2020, respectively.

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

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

On June 21, 2018, the loan was extended

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

The loan is secured

by certain of the Company’s manufacturing equipment with net book value of $ 1,130,333 and $ 2,349,796 as of December 31, 2021, and

2020, respectively.

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.

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

As of December 31, 2021, and 2020, the

total outstanding loan balance was $ 3,921,139 and $ 3,831,476 , respectively.

Out of the total outstanding loan balance, current portion

amounted were $ 1,960,569 and $ 337,169 as of December 31, 2021, and 2020 respectively, which are presented as current liabilities in the

consolidated balance sheet and the remaining balance of $ 1,960,570 and $ 3,494,307 are presented as non-current liabilities in the consolidated

balance sheet as of December 31, 2021, and 2020, respectively.

TECH PACKAGING, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

The loan was renewed on March 22, 2021 and December

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

secured by 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 % per month.

As of December 31, 2021, and 2020, the total outstanding loan balance was $ 2,509,528 and $ 2,452,145 ,

respectively, which are presented as current liabilities in the consolidated balance sheet as of December 31, 2021, and 2020.

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

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

The loan was renewed on March 22, 2021 and December

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

is secured by 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, 2021, and 2020, the total outstanding loan balance was $ 2,038,992 and $ 1,992,368 ,

respectively, which are presented as current liabilities in the consolidated balance sheet as of December 31, 2021, and 2020.

interest expenses for the short-term bank loans and long-term loans for the years ended December 31, 2021, and 2020 were $ 1,052,904 and

$ 998,429 , respectively.

Related Party Transactions

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

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

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.

Zhenyong Liu has loaned money to Dongfang Paper for working capital purposes over a period of time.

On January 1, 2013, Dongfang Paper

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 $ 402,047 and $ 392,855 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, 2021, and 2020,

respectively.

December 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 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.

In February 2018, the company paid off the remaining balance, together

with interest of $ 20,400 .

As of December 31, 2021, and 2020, approximately $ 47,054 and $ 45,978 of interest were outstanding to Mr.

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

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

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.

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

to $ 17,201,342 (RMB 120,000,000 ) 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

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.

In February 2018, the company repaid $ 1,507,432

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.

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

2021, and 2020, the outstanding interest was $ 215,565 and $ 210,635 , respectively, which was recorded in other payables and accrued liabilities

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

of December 31, 2021, and 2020, 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.

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 interest expense incurred for such related

party loans are $nil for the years ended December 31, 2021, and 2020.

The accrued interest owe to the CEO was approximately $ 664,666

and $ 649,468 , as of December 31, 2021, and 2020, respectively, which was recorded in other payables and accrued liabilities.

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

Zhenyong Liu, which allows Mr.Zhenyong Liu to borrow from the Company an

amount of $ 6,915,176 (RMB 44,089,085 ).

The loan will be due on June 29, 2022.

The loan is unsecured and carries a fixed interest rate of

3 % per annum.

As of December 31, 2021, the outstanding balance of the loan was $ 6,915,176 and outstanding interest due from CEO is $ nil ,

which was recorded in due from related parties as part of the current assets in the consolidated balance sheet.

of December 31, 2021, and 2020, amount due to shareholder are $727,433 , which represent funds from shareholders to pay for various expenses

incurred in the U.S.

The amount is due on demand with interest free.

of Headquarters Compound Real Properties to a Related Party

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.

Sales of the LUR and the Industrial Buildings were completed in year 2013.

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).

The lease 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 for another four years in total, with the same rental payment as original

lease agreement.

TECH PACKAGING, INC.

3 unchanged sentences

Accrued electricity

Accrued rental

Value-added tax payable

Accrued interest to a related party

Accrued interest to a related

Payable for purchase of equipment

2 unchanged sentences

Derivative Liabilities

Company analyzed the warrant for derivative accounting consideration under ASC 815, “

Derivatives and Hedging, and hedging, ”

and determined that the instrument should be classified as a liability since the warrant becomes effective at issuance resulting

in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change

in the fair market value as other income or expense item.

Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model

to calculate the fair value as of December 31, 2020.

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

and determined that the instrument should be classified as a liability since the warrant becomes effective at issuance resulting in there

being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in

the fair market value as other income or expense item.

Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate

the fair value as of December 31, 2021.

The Black-Scholes model requires six basic data inputs:

the exercise or strike

price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in

the future, and the dividend rate.

the exercise or strike price, time to

expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the

dividend rate.

Changes to these inputs could produce a significantly higher or lower fair value measurement.

The fair value of each warrant is estimated using the Black-Scholes valuation model.

The following weighted-average assumptions

were used in the December 31, 2020:

The fair value of each warrant

is estimated using the Black-Scholes valuation model.

The following weighted-average assumptions were used in the December 31, 2021:

Expected term

3 unchanged sentences

0.19 % - 0.97 %

TECH PACKAGING, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the changes in the derivative liabilities during the year ended December 31, 2020:

Fair Value Measurements Using Significant Observable Inputs (Level 3)

following table summarizes the changes in the derivative liabilities during the year ended December 31, 2021:

Value Measurements Using Significant Observable Inputs (Level 3)

Balance at December 31, 2020

Addition of new derivatives recognized as warrant

Addition of new derivatives recognized as loss on derivatives

Change in fair value of derivative liability

Addition of new derivatives

recognized as warrant

Addition of new derivatives

recognized as loss on derivatives

Exercise of warrants

( 2,902,119 )

in fair value of derivative liability

( 16,693,873 )

Balance at December 31,

following table summarizes the loss on derivative liability included in the income statement for the year ended December 31, 2020

and 2019, respectively.

Day one loss due to derivative liabilities as warrant

following table summarizes the loss on derivative liability included in the income statement for the year ended December 31, 2021 and

2020, respectively.

Day one loss due

to derivative liabilities as warrant

Loss on change in fair value of derivative liability

( 16,693,873 )

( 5,880,526 )

TECH PACKAGING, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

of common stock to investors

August 27, 2014, the Company issued 1,562,500 shares of our common stock and warrants to purchase up to 781,250 shares of our

common stock.

share of common stock and accompanying warrant was sold at a price of $1.60.

April 29, 2020, the Company and certain institutional investors entered into a securities purchase agreement, as amended on May 4, 2020

4, 2020 (the “2020 Purchase Agreement”), pursuant to which the Company agreed to sell to such investors an aggregate

of 4,400,000 shares of common stock in a registered direct offering and warrants to purchase up to 4,400,000 shares of the Company’s

common stock in a concurrent private placement, for gross proceeds of approximately $2.55 million (net proceeds of approximately

(the “2020 Purchase Agreement”), pursuant to which the Company agreed to sell to such investors an aggregate of 4,400,000

shares of common stock in a registered direct offering and warrants to purchase up to 4,400,000 shares of the Company’s common

stock in a concurrent private placement, for gross proceeds of approximately $ 2.55 million (net proceeds of approximately 2.27 million).

The purchase price for each share of Common Stock and the corresponding warrant was $ 0.58 .

The exercise price of the warrant was $ 0.7425

January 20, 2021, the Company offered and sold to certain institutional investors an aggregate of 26,181,818 shares of common stock and

26,181,818warrants to purchase up to 26,181,818 shares of common stock in a best efforts public offering for gross proceeds of approximately

$14.4 million.

The purchase price for each share of common stock and the corresponding warrant was $ 0.55 .

TECH PACKAGING, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

of common stock pursuant to the 2012 Incentive Stock Plan, 2015 Omnibus Equity Incentive and 2019 Omnibus Equity Incentive

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.

Please see Note (14), Stock Incentive Plans for more details.

fair value of the stock was calculated at $1,417,395 as of the date of grant.

September 13, 2018, the compensation committee granted an aggregate of 534,500 shares of common stock at $0.88 per share to fifteen

officers, directors and employees of the Company, which were granted under the 2015 Omnibus Equity Incentive Plan.

value of the shares of common stock granted was calculated at $470,360 as of the date of issuance.

April 2, 2020, the compensation committee granted an aggregate of 2,000,000 shares of restricted common stock to fifteen officers,

The exercise price of the warrant

was $ 0.55 per share.

March 1, 2021, the Company offered and sold to the public investors an aggregate of 29,277,866 shares of common stock and 14,638,933

warrants to purchase up to 14,638,933 shares of common stock in a firm commitment underwritten public offering for gross proceeds of

approximately $ 21.9 million.

The purchase price for each share of common stock and accompanying warrant was $ 0.75 .

The exercise price

of the warrant was $ 0.75 per share.

of common stock pursuant to the 2015 Omnibus Equity Incentive and 2019 Omnibus Equity Incentive

September 13, 2018, the compensation committee granted an aggregate of 534,500 shares of common stock at $ 0.88 per share 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 $1,200,000 as of the date of issuance at $0.60 per share.

TECH PACKAGING, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

Total fair value of the shares

of common stock granted was calculated at $ 470,360 as of the date of issuance.

April 2, 2020, the compensation committee granted an aggregate of 2,000,000 shares of restricted common stock to fifteen officers, directors

and employees of the Company, which were granted under the 2019 Omnibus Equity Incentive Plan.

Total fair value of the shares of common

stock granted was calculated at $ 1,200,000 as of the date of issuance at $ 0.60 per share.

of common stock to a consultant

January 2, 2020, the Company entered into an agreement with a consultant and agreed as compensation to issue to the consultant

in the aggregate of 60,000 shares of common stock for merger and acquisition consulting service rendered from January 2, 2020

to January 2, 2021.

January 2, 2020, the Company entered into an agreement with a consultant and agreed as compensation to issue to the consultant in the

aggregate of 60,000 shares of common stock for merger and acquisition consulting service rendered from January 2, 2020 to January 2,

60,000 shares of common stock were issued to this consultant on April 28, 2020.

Total fair value of the shares

of common stock issued was calculated at $42,000 at $0.70 per share.

Total fair value of the shares of common stock

issued was calculated at $ 42,000 at $ 0.70 per share.

of common stock to a consultant

November 2, 2020, the Company entered an agreement with a consultant and agreed as compensation to issue to the consultant in

the aggregate of 21,000 shares of common stock for investor relations consulting service rendered from November 2, 2020 to November

November 2, 2020, the Company entered into an agreement with a consultant and agreed as compensation to issue to the consultant in the

aggregate of 21,000 shares of common stock for investor relations consulting service rendered from November 2, 2020 to November 2, 2021.

21,000 shares of common stock were issued to this consultant on November 30, 2020.

Total fair value of the shares of

common stock issued was calculated at $14,700 at $0.7 per share.

to the 2020 Purchase Agreement, the Company agreed to sell to such investors an aggregate of 4,400,000 shares of common stock

and warrants to purchase up to 4,400,000 shares of the Common Stock in a concurrent private placement.

The exercise price of the

warrant is $0.7425 per share.

These warrants are exercisable on November 4, 2020 and have a term of exercise equal to five years

and six months from the date of issuance till November 4, 2025.

The Company classified warrant as liabilities and accounted for

the issuance of the Warrants as a derivative.

Total fair value of the shares of common stock issued

was calculated at $14,700 at $0.70 per share.

to the 2020 Purchase Agreement, the Company agreed to sell to such investors an aggregate of 4,400,000 shares of common stock and warrants

to purchase up to 4,400,000 shares of common stock in a concurrent private placement (the “May 2020 Warrants”).

price of the May 2020 Warrant is $ 0.7425 per share.

These warrants are exercisable on July 23, 2020 and have a term of exercise equal

to five years and six months from the date of issuance till July 23, 2025.

880,000 May 2020 Warrants were exercised in February 2021

at the exercise price of $0.7425 per share and 3,520,000 May 2020 Warrants were outstanding as of September 30, 2021.

The Company classified

warrant as liabilities and accounted for the issuance of the May 2020 Warrants as a derivative.

TECH PACKAGING, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

January 20, 2021, the Company offered and sold to certain institutional investors an aggregate of 26,181,818 shares of common stock and

26,181 ,818warrants to purchase up to 26,181,818 shares of common stock (the “January 2021 Warrants”).

The January 2021 Warrants

are exercisable commencing on January 20, 2021 at an exercise price of $0.55 and will expire on January 20, 2026.

14,106,900 January

2021 Warrants were exercised in January and February of 2021 at the exercise price of $0.55 per share.

12,074,918 January 2021 Warrants

were outstanding as of December 31, 2021 .

March 1, 2021, the Company offered and sold to the public investors an aggregate of 29,277,866 shares of common stock and 14,638,933

warrants to purchase up to 14,638,933 shares of common stock (the “March 2021 Warrants”).

The March 2021Warrants are exercisable

commencing on March 1, 2021 at an exercise price of $0.75 and will expire on March 1, 2026.

67,500 March 2021 Warrants were exercised

in January and March 2021 at the exercise price of $0.75 per share and 14,571,433 March 2021 Warrants were outstanding as of December

summary of stock warrant activities is as below:

Outstanding and exercisable at beginning of the period

Outstanding and

exercisable at beginning of the period

Issued during the period

Exercised during the period

Cancelled or expired during the period

Outstanding and exercisable at end of the period

TECH PACKAGING, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

( 15,054,400 )

or expired during the period

and exercisable at end of the period

following table summarizes information relating to outstanding and exercisable warrants as of December 31, 2021.

intrinsic value is the sum of the amounts by which the quoted market price of the Company’s stock exceeded the exercise

price of the warrants at December 31, 2020 for those warrants for which the quoted market price was in excess of the exercise

price (“in-the-money”

There is no intrinsic value of the warrants as of December 31, 2020.

intrinsic value is the sum of the amounts by which the quoted market price of the Company’s stock exceeded the exercise price of

the warrants at December 31, 2021 for those warrants for which the quoted market price was in excess of the exercise price (“in-the-money”

The intrinsic value of the warrants as of December 31, 2021 and 2020 are $nil.

Earnings Per Share

the years ended December 31, 2021, and 2020, basic and diluted net income per share are calculated as follows:

Year Ended December 31,

Basic (loss) income per share

Net (loss) income for the year - numerator

Basic income (loss) per share

income (loss) for the year - numerator

$ ( 5,554,002 )

Weighted average common stock outstanding - denominator

Net (loss) income per share

Diluted (loss) income per share

Net (loss) income for the year - numerator

average common stock outstanding - denominator

Net income (loss) per share

Diluted income (loss) per

income (loss) for the year - numerator

$ ( 5,554,002 )

Weighted average common stock outstanding - denominator

average common stock outstanding - denominator

Effect of dilution

Weighted average common stock outstanding - denominator

Diluted (loss) income per share

average common stock outstanding - denominator

Diluted income (loss) per

TECH PACKAGING, INC.

1 unchanged sentence

Company and Shengde Holdings are incorporated in the State of Nevada and are subject to the U.S.

federal tax and state

statutory tax rates up to 34% and 0%, respectively.

federal tax and state statutory tax

rates up to 34 % and 0 %, respectively.

On December 22, 2017, the U.S.

enacted the Tax Cuts and Jobs Act (the

“2017 TCJA Act”), which significantly changed U.S.

The Act 2017 TCJA lowered the Company’s U.S.

statutory federal income tax rate from the highest rate of 35% to 21% effective January 1, 2018, while also imposing a deemed

repatriation tax on deferred foreign income which requires companies to pay a one-time transition tax on previously

unremitted earnings of non-U.S.

subsidiaries that were previously tax deferred and creates new taxes on certain foreign

sourced earnings.

The SEC staff issued Staff Accounting Bulletin (SAB) 118, which provides guidance on accounting for

enactment effects of the 2017 TCJA.

SAB 118 provides a measurement period of up to one year from the 2017 TCJA’s

enacted the Tax Cuts and Jobs Act (the “2017 TCJA”),

which significantly changed U.S.

The 2017 TCJAlowered the Company’s U.S.

statutory federal income tax rate from the highest

rate of 35 % to 21 % effective January 1, 2018, while also imposing a deemed repatriation tax on deferred foreign income which requires

companies to pay a one-time transition tax on previously unremitted earnings of non-U.S.

subsidiaries that were previously tax deferred

and creates new taxes on certain foreign sourced earnings.

The SEC staff issued Staff Accounting Bulletin (SAB) 118, which provides guidance

on accounting for enactment effects of the 2017 TCJA.

SAB 118 provides a measurement period of up to one year from the 2017 TCJA’s

enactment date for companies to complete their accounting under ASC 740.

In accordance with SAB 118, to the extent that a

company’s accounting for certain income tax effects of the 2017 TCJA is incomplete but it is able to determine a

reasonable estimate, it must record a provisional estimate in its financial statements.

If a company cannot determine a

provisional estimate to be included in its financial statements, it should continue to apply ASC 740 on the basis of the

provisions of the tax laws that were in effect immediately before the enactment of the 2017 TCJA.

The transition tax is a tax on previously untaxed accumulated and current earnings and profits (E&P) of certain of the

Company’s non-U.S.

In accordance with SAB 118, to the extent that a company’s

accounting for certain income tax effects of the 2017 TCJA is incomplete but it is able to determine a reasonable estimate, it must record

a provisional estimate in its financial statements.

If a company cannot determine a provisional estimate to be included in its financial

statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before

the enactment of the 2017 TCJA.

The transition tax is a tax on previously untaxed accumulated and current earnings and profits (E&P) of certain of the Company’s

subsidiaries.

To determine the amount of the transition tax, the Company must determine, in addition

to other factors, the amount of post-1986 E&P of the relevant subsidiaries, as well as the amount of non-U.S.

paid on such earnings.

Further, the transition tax is based in part on the amount of those earnings held in cash and other specified

The Company was able to make a reasonable estimate of the transition tax and recorded a provisional obligation and additional

income tax expense of approximately $80,000 in the fourth quarter of 2017.

However, the Company is continuing to gather additional

information and will consider additional technical guidance to more precisely compute and account for the amount of the transition

This amount may change when the Company finalizes the calculation of post-1986 foreign E&P previously deferred from U.S.

federal taxation and finalizes the amounts held in cash or other specified assets.

The 2017 TCJA’s transition tax is payable

over eight years beginning in 2018.

TECH PACKAGING, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

To determine the amount of the transition tax, the Company must determine, in addition to other factors, the amount

of post-1986 E&P of the relevant subsidiaries, as well as the amount of non-U.S.

income taxes paid on such earnings.

transition tax is based in part on the amount of those earnings held in cash and other specified assets.

The Company was able to make

a reasonable estimate of the transition tax and recorded a provisional obligation and additional income tax expense of approximately

$ 80,000 in the fourth quarter of 2017.

However, the Company is continuing to gather additional information and will consider additional

technical guidance to more precisely compute and account for the amount of the transition tax.

This amount may change when the Company

finalizes the calculation of post-1986 foreign E&P previously deferred from U.S.

federal taxation and finalizes the amounts held

in cash or other specified assets.

The 2017 TCJA’s transition tax is payable over eight years beginning in 2018.

Paper and Baoding Shengde are PRC operating companies and are subject to PRC Enterprise Income Tax.

3 unchanged sentences

Provision for Income Taxes

Current Tax Provision U.S.

Current Tax Provision

Current Tax Provision PRC

Deferred Tax Provision PRC

Total Provision for (Deferred tax benefit)/ Income Taxes

Tax Provision PRC

( 2,364,575 )

In addition to the reversible future PRC income tax

benefits stemming from the timing differences of items such as recognition of asset disposal gain or loss and asset depreciation, the

Company was incorporated in the United States and incurred net operating losses of approximately $2,508,797 and $0 for U.S.

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

The net operating loss carried forward may be available to reduce

future years’

taxable income.

These carry forwards would expire, if not utilized, during the period of 2030 through 2035.

December 31, 2020, management believed that the realization of all the U.S.

income tax benefits from these losses, which generally would

generate a deferred tax asset if it can be expected to be utilized in the future, appears not more than likely due to the Company’s

limited operating history and continuing losses for United States income tax purposes.

Accordingly, As of December 31, 2020, the Company

provided a 100% valuation allowance on the U.S.

deferred tax asset benefit to reduce the total deferred tax asset to the amount realizable

for the PRC income tax purposes.

Management reviews this valuation allowance periodically and will make adjustments as warranted.

of the otherwise deductible (or taxable) deferred tax items is as follows:

Provision for (Deferred tax benefit)/ Income Taxes

$ ( 1,101,858 )

addition to the reversible future PRC income tax benefits stemming from the timing differences of items such as recognition of asset

disposal gain or loss and asset depreciation, the Company was incorporated in the United States and incurred net operating losses of

approximately $ 2,508,797 and $ 0 for U.S.

income tax purposes for the years ended December 31, 2021 and 2019, respectively.

The net operating

loss carried forward may be available to reduce future years’ taxable income.

These carry forwards would expire, if not utilized,

during the period of 2030 through 2035.

As of December 31, 2021, management believed that the realization of all the U.S.

benefits from these losses, which generally would generate a deferred tax asset if it can be expected to be utilized in the future, appears

not more than likely due to the Company’s limited operating history and continuing losses for United States income tax purposes.

Accordingly, As of December 31, 2021, the Company provided a 100 % valuation allowance on the U.S.

deferred tax asset benefit to reduce

the total deferred tax asset to the amount realizable for the PRC income tax purposes.

Management reviews this valuation allowance periodically

and will make adjustments as warranted.

A summary of the otherwise deductible (or taxable) deferred tax items is as follows:

Deferred tax assets (liabilities)

Depreciation and amortization of property, plant and equipment

Impairment of property, plant and equipment

Depreciation and

amortization of property, plant and equipment

Impairment of property, plant

and equipment

Miscellaneous

Net operating loss carryover of PRC company

operating loss carryover of PRC company

Total deferred tax assets

Valuation allowance

Total deferred tax assets, net

( 5,000,000 )

deferred tax assets, net

TECH PACKAGING, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

following table reconciles the statutory rates to the Company’s effective tax rate as of:

PRC Statutory rate

following table reconciles the statutory rates to the Company’s effective tax rate as of:

Statutory rate

Effect of different tax jurisdiction

Effect of expenses not deductible for PRC tax purposes

(Over) Under-provision in previous year

Change in valuation allowance

Effective income tax rate

During the years ended December 31, 2020, and 2019, the effective

income tax rate was estimated by the Company to be 19.4% and 48.4%, respectively.

As of December 31, 2017, except for the one-time transition

tax under the 2017 TCJA which imposes a U.S.

tax liability on all unrepatriated foreign E&Ps, the Company does not believe that its

future dividend policy and the available U.S.

tax deductions and net operating losses will cause the Company to recognize any other substantial

federal or state corporate income tax liability in the near future.

Nor does it believe that the amount of the repatriation

of the VIE’s earnings and profits for purposes of paying dividends will change the Company’s position that its PRC subsidiary

Baoding Shengde and the VIE, Dongfang Paper are considered or are expected to be indefinitely reinvested offshore to support our future

capacity expansion.

Effect of tax and book difference

(Over) Under-provision in

previous year

in valuation allowance

income tax rate

the years ended December 31, 2021, and 2020, the effective income tax rate was estimated by the Company to be 86.0 % and 16.6 %, respectively.

of December 31, 2017, except for the one-time transition tax under the 2017 TCJA which imposes a U.S.

tax liability on all unrepatriated

foreign E&Ps, the Company does not believe that its future dividend policy and the available U.S.

tax deductions and net operating

losses will cause the Company to recognize any other substantial current U.S.

federal or state corporate income tax liability in the

Nor does it believe that the amount of the repatriation of the VIE’s earnings and profits for purposes of paying dividends

will change the Company’s position that its PRC subsidiary Baoding Shengde and the VIE, Dongfang Paper are considered or are expected

to be indefinitely reinvested offshore to support our future capacity expansion.

If these earnings are repatriated to the U.S.

resulting in U.S.

taxable income in the future, or if it is determined

that such earnings are to be remitted in the foreseeable future, additional tax provisions would be required.

taxable income in the future, or if it is determined that such earnings are to be remitted in the foreseeable future, additional

tax provisions would be required.

Company has adopted ASC Topic 740-10-05, Income Taxes.

To date, the adoption of this interpretation has not impacted the Company’s

financial position, results of operations, or cash flows.

The Company performed self-assessment and the Company’s liability

for income taxes includes the liability for unrecognized tax benefits, interest and penalties which relate to tax years still

subject to review by taxing authorities.

Audit periods remain open for review until the statute of limitations has passed, which

in the PRC is usually 5 years.

The completion of review or the expiration of the statute of limitations for a given audit period

could result in an adjustment to the Company’s liability for income taxes.

Any such adjustment could be material to the

Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations

for the given period.

As of December 31, 2020and 2019, management considered that the Company had no uncertain tax positions affecting

its consolidated financial position and results of operations or cash flows, and will continue to evaluate for any uncertain position

There are no estimated interest costs and penalties provided in the Company’s consolidated financial statements

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

The Company’s tax positions related to open tax years are subject

to examination by the relevant tax authorities and the major one is the China Tax Authority.

TECH PACKAGING, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

The Company performed self-assessment and the Company’s liability for

income taxes includes the liability for unrecognized tax benefits, interest and penalties which relate to tax years still subject to

review by taxing authorities.

Audit periods remain open for review until the statute of limitations has passed, which in the PRC is usually

The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment

to the Company’s liability for income taxes.

Any such adjustment could be material to the Company’s results of operations

for any given quarterly or annual period based, in part, upon the results of operations for the given period.

As of September 30, 2021

and December 31, 2021, management considered that the Company had no uncertain tax positions affecting its consolidated financial position

and results of operations or cash flows, and will continue to evaluate for any uncertain position in future.

There are no estimated interest

costs and penalties provided in the Company’s consolidated financial statements for the nine months ended December 31, 2021and

2020, respectively.

The Company’s tax positions related to open tax years are subject to examination by the relevant tax authorities

and the major one is the China Tax Authority.

Stock Incentive Plans

of common stock pursuant to the 2011 Incentive Stock Plan and 2012 Incentive Stock Plan

August 28, 2011, the Company’s Annual General Meeting approved the 2011 Incentive Stock Plan of IT Tech Packaging, Inc.

(the “2011 ISP”) as previously adopted by the Board of Directors on July 5, 2011.

Under the 2011 ISP, the Company

may grant an aggregate of 375,000 shares of the Company’s common stock to the Company’s directors, officers, employees

or consultants.

No stock or option was issued under the 2011 ISP until January 2, 2012, when the Compensation Committee granted

109,584 shares of restricted common stock to certain officers and directors of the Company when the stock was at $3.45 per share,

as compensation for their services in the past years.

Total fair value of the stock was calculated at $378,065 as of the date

September 10, 2012, the Company’s Annual General Meeting approved the 2012 Incentive Stock Plan of IT Tech Packaging, Inc.

(the “2012 ISP”) as previously adopted by the Board of Directors on July 4, 2012.

Under the 2012 ISP, the Company

may grant an aggregate of 200,000 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;

restrictions, terms and conditions to be included in such grants;

and (d) make all other determinations necessary or advisable

for the 2012 ISP’s administration.

On December 31, 2013, the Compensation Committee granted restricted common shares of

297,000, out of which 265,416 shares were granted under the 2011 ISP and 31,584 shares under the 2012 ISP, to certain officers,

directors and employees of the Company when the stock was at $2.66 per share, as compensation for their services in the past years.

Total fair value of the stock was calculated at $790,020 as of the date of grant.

Incentive Stock Plan

August 29, 2015, the Company’s Annual General Meeting approved the 2015 Omnibus Equity Incentive Plan of IT Tech Packaging,

(the “2015 ISP”) as previously adopted by the Board of Directors on July 10, 2015.

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

October 31, 2019, the shareholders of the Company at the Company’s Annual Shareholders General Meeting adopted and approved the

2019 Omnibus Equity Incentive Plan of IT Tech Packaging, Inc.

(the “2019 ISP”).

Under the 2019 ISP, the Company has reserved

a total of 2,000,000 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.

On January 12, 2016, the Compensation Committee granted restricted common shares of 1,133,916,

of which 168,416 shares were granted under the 2012 ISP and 965,500 shares under the 2015 ISP, to certain officers, directors,

employees and a consultant of the Company as compensation for their services in the past years.

Total fair value of the stock

was calculated at $1,417,395 as of the date of issuance at $1.25 per share.

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 ISP.

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 April 2, 2020, 2,000,000 shares of common stock were granted under the 2019 ISP.

Total fair value

of the shares of common stock granted was calculated at $ 1,200,000 as of the date of issuance at $ 0.60 per share.

Incentive Stock Plan

October 31, 2019, the shareholders of the Company at the Company’s Annual Shareholders General Meeting adopted and approved

the 2019 Omnibus Equity Incentive Plan of IT Tech Packaging, Inc.

(the “2019 ISP”).

Under the 2019 ISP, the Company

has reserved a total of 2,000,000 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.

On April 2, 2020, 2,000,000 shares of common stock were granted

under the 2019 ISP.

Total fair value of the shares of common stock granted was calculated at $1,200,000 as of the date of issuance

at $0.60 per share.

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.

TECH PACKAGING, INC.

1 unchanged sentence

Commitments and Contingencies

Company leases 32.95 acres of land from a local government in Xushui District, Baoding City, Hebei, China through a real estate

lease with a 30-year term, which expires on December 31, 2031.

The lease requires an annual rental payment of approximately $17,406

(RMB120,000).

Company leases 32.95 acres of land from a local government in Xushui District, Baoding City, Hebei, China through a real estate lease

with a 30 -year term, which expires on December 31, 2031.

The lease requires an annual rental payment of approximately $ 18,612 (RMB 120,000 ).

This operating lease is renewable at the end of the 30-year term.

mentioned in Note (8) Related Party Transactions, in connection with the sale of Industrial Buildings to Hebei Fangsheng, Hebei

Fangsheng agrees to lease the Industrial Buildings back to the Company at an annual rental of $145,052 (RMB1,000,000), for a total

term of up to five years.

of Headquarters Compound Real Properties

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.

Sales of the LUR and

the Industrial Buildings were completed in year 2013.

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 $ 155,101 (RMB 1,000,000 ).

The lease 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 for another four years in total, with the same rental payment as original lease agreement.

minimum lease payments are as follows:

Total operating lease payments

operating lease payments

TECH PACKAGING, INC.

5 unchanged sentences

The Company expected to pay off all the balances within 1-3 years.

On June 25, 2019, Dongfang Paper entered

into an acquisition agreement with shareholder of Hebei Tengsheng Paper Co., Ltd.

(“Hebei Tengsheng”), a limited liability

company organized under the laws of the PRC, pursuant to which Dongfang Paper will acquire Hebei Tengsheng.

The consideration for

the acquisition is RMB320 million (approximately $49 million), of which $20 million was paid by the Company, and the balance consideration

of $29 million is payable by December 31, 2021.

and Indemnities

Company agreed with Baoding Huanrun Trading Co., a major supplier of raw materials, to guarantee certain obligations of this third

party, and as of December 31, 2020, and 2019, the Company guaranteed its long-term loan from financial institutions amounting

to $4,751,031 (RMB31,000,000) and $4,443,680 (RMB31,000,000), respectively, that matured at various times in 2018-2023.

Trading Co., were to become insolvent, the Company could be materially adversely affected.

Company agreed with Baoding Huanrun Trading Co., a major supplier of raw materials, to guarantee certain obligations of this third party,

and as of December 31, 2021, and 2020, the Company guaranteed its long-term loan from financial institutions amounting to $ 4,862,211

(RMB 31,000,000 ) and $ 4,751,031 (RMB 31,000,000 ), respectively, that matured at various times in 2018-2023.

If Huanrun Trading Co., were

to become insolvent, the Company could be materially adversely affected.

Segment Reporting

March 10, 2010, Baoding Shengde started its operations and thereafter the Company manages its operations through two business

operating segments:

Dongfang Paper, which produces offset printing paper and corrugating medium paper, and Baoding Shengde, which

produces digital photo paper.

March 10, 2010, Baoding Shengde started its operations and thereafter the Company manages its operations through two business operating

Dongfang Paper, which produces offset printing paper and corrugating medium paper, and Baoding Shengde, which produces digital

They are managed separately because each business requires different technology and marketing strategies.

Company evaluates performance of its operating segments based on net income.

Administrative functions such as finance, treasury,

and information systems are centralized.

However, where applicable, portions of the administrative function expenses are allocated

between the operating segments based on gross revenue generated.

The operating segments do share facilities in Xushui County,

Baoding City, Hebei Province, China.

Administrative functions such as finance, treasury, and

information systems are centralized.

However, where applicable, portions of the administrative function expenses are allocated between

the operating segments based on gross revenue generated.

The operating segments do share facilities in Xushui County, Baoding City, Hebei

Province, China.

All sales were sold to customers located in the PRC.

2 unchanged sentences

financial information for the two reportable segments is as follows:

December 31, 2020

Attributable to Segments

of Inter-segment

Enterprise-wide,

$ 151,574,318

( 5,336,546 )

( 1,255,190 )

and amortization

tax expense(benefit)

income (loss)

( 10,620,350 )

Attributable to Segments

of Inter-segment

Enterprise-wide,

and amortization

tax expense(benefit)

of December 31, 2021

Not Attributable

Elimination of

Enterprise-wide,

Inter-segment

Depreciation and amortization

Interest income

Interest expense

Income tax expense(benefit)

Net income (loss)

December 31, 2019

of December 31, 2020

Not Attributable

2 unchanged sentences

Inter-segment

$ 113,072,638

$ 117,614,886

Depreciation and amortization

Loss from impairment and disposal of

property, plant and equipment

Interest income

Interest expense

Income tax expense(benefit)

Net income (loss)

TECH PACKAGING, INC.

2 unchanged sentences

the years ended December 31, 2021, and 2020, the Company had no single customer contributed over 10 % of total sales.

the year ended December 31, 2020, the Company had two major suppliers that accounted for 72% and 12% of total purchases by the

the year ended December 31, 2019, the Company had two major suppliers that accounted for 74% and 12% of total purchases by the

the year ended December 31, 2021, the Company had two major suppliers that accounted for 78 % and 11 % of total purchases by the Company.

the year ended December 31, 2020, the Company had two major suppliers that accounted for 72 % and 12 % of total purchases by the Company.

Concentration of Credit Risk

instruments for which the Company is potentially subject to concentration of credit risk consist principally of cash.

places its cash in reputable financial institutions in the PRC and the United States.

Although it is generally understood that

the PRC central government stands behind all of the banks in China in the event of bank failure, there is no deposit insurance

system in China that is similar to the protection provided by the Federal Deposit Insurance Corporation (“FDIC”) of

the United States as of December 31, 2018 and December 31, 2017.

On May 1, 2015, the new “Deposit Insurance Regulations”

was effective in the PRC that the maximum protection would be up to RMB500,000 (US$76,630) per depositor per insured financial

intuition, including both principal and interest.

For the cash placed in financial institutions in the United States, the Company’s

bank accounts are all fully covered by the FDIC insurance as of December 31, 2020, and 2019, while for the cash placed in

financial institutions in the PRC, the balances exceeding the maximum coverage of RMB500,000 amounted to RMB25,322,558 (US$3,880,911)

as of December 31, 2020.

The Company places

its cash in reputable financial institutions in the PRC and the United States.

Although it is generally understood that the PRC central

government stands behind all of the banks in China in the event of bank failure, there is no deposit insurance system in China that is

similar to the protection provided by the Federal Deposit Insurance Corporation (“FDIC”) of the United States as of December

31, 2018 and December 31, 2017.

On May 1, 2015, the new “Deposit Insurance Regulations” was effective in the PRC that the

maximum protection would be up to RMB 500,000 (US$ 78,423 ) per depositor per insured financial intuition, including both principal and

For the cash placed in financial institutions in the United States, the Company’s U.S.

bank accounts are all fully covered

by the FDIC insurance as of December 31, 2021, and 2020, while for the cash placed in financial institutions in the PRC, the balances

exceeding the maximum coverage of RMB 500,000 amounted to RMB 11,520,053 (US$ 1,806,869 ) as of December 31, 2021.

Risks and Uncertainties

Tech Packaging is subject to substantial risks from, among other things, intense competition associated with the industry in general,

other risks associated with financing, liquidity requirements, rapidly changing customer requirements, foreign currency exchange

rates, and operating in the PRC under its various laws and restrictions.

other risks associated with financing, liquidity requirements, rapidly changing customer requirements, foreign currency exchange rates,

and operating in the PRC under its various laws and restrictions.

Recent Accounting Pronouncements

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

Measurement of Credit Losses on Financial

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

In October 2019, the FASB issued ASU No.

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

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.

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.

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

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

In October 2019, the FASB issued ASU

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.

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

Simplifying the Accounting for Income Taxes.

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.

For public 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.

We are currently evaluating

the impact of the adoption of ASU 2016-13 on our condensed consolidated financial statements.

TECH PACKAGING, INC.

1 unchanged sentence

Subsequent Event

The Company adopts ASC Topic 855 “Subsequent

Events”.

The Company evaluates subsequent events that have occurred after the balance sheet date but before the financial

statements are issued.

There are two types of subsequent events:

(1) recognized, or those that provide additional evidence with

respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing

financial statements, and (2) non-recognized, or those that provide evidence with respect to conditions that did not exist at the

date of the balance sheet but arose subsequent to that date.

The Company performed its evaluation of subsequent events through

March 23, 2021.

March 2021 Public Offering

On March 1, 2021, the Company offered and

sold to the public investors an aggregate of 29,277,866 shares of common stock and 14,638,933 warrants to purchase up to 14,638,933

shares of common stock in a firm commitment underwritten public offering for gross proceeds of approximately $21.9 million.

purchase price for each share of common stock and accompanying warrant sold in the offering was $0.75.

The warrants are exercisable

commencing on March 1, 2021 at an exercise price of $0.75 and will expire on March 1, 2026.

In the event of a stock split, stock

dividend, combination, subsequent right offering or reclassification of the outstanding shares of Common Stock, the exercise price

and the number of shares issuable upon exercise of the warrants shall be proportionately adjusted.

The Company intends to use the

net proceeds from the offering for general corporate and working capital purposes.

January 2021 Public Offering

On January 20, 2021, the Company offered

and sold to certain institutional investors an aggregate of 26,181,818 shares of common stock and 26,181,818 warrants to purchase

up to 26,181,818 shares of common stock in a best-efforts public offering for gross proceeds of approximately $14.4 million.

purchase price for each share of common stock and the corresponding warrant sold in the offering was $0.55.

The warrants are exercisable

commencing on January 20, 2021 at an exercise price of $0.55 and will expire on January 20, 2026.

In the event of a stock split,

stock dividend, combination, subsequent right offering or reclassification of the outstanding shares of Common Stock, the exercise

price and the number of shares issuable upon exercise of the warrants shall be proportionately adjusted.

The Company intends to

use the net proceeds from the offering for general corporate and working capital purposes.

February 23, 2022, Dongfang Paper fully paid the RMB320 million (approximately $45million) as the consideration for the acquisition per

agreement that Dongfang Paper had entered into with the shareholder of Hebei Tengsheng Paper Co., Ltd.

Summarized Quarterly Financial Data (Unaudited)

financial information for 2021and 2020is as follows:

Gross (loss) profit

(Loss) income from operations

Net (loss) income

( 4,338,856 )

Net income per share

1 unchanged sentence

(Loss) income from operations

Net (loss) income

Net income per share

( 2,866,682 )

( 1,967,110 )

( 2,436,287 )

( 1,616,710 )

Net loss per share

TECH PACKAGING, INC.

2 unchanged sentences

condensed financial statements of IT Tech Packaging Inc.

(“ITP”, the “parent company”) have been prepared

in accordance with accounting principles generally accepted in the United States of America.

Under the PRC laws and regulations,

the Company’s PRC subsidiaries are restricted in their ability to transfer certain of their net assets to the parent company

in the form of dividend payments, loans or advances.

The amounts restricted include paid-in capital, capital surplus and statutory

reserves, as determined pursuant to PRC generally accepted accounting principles, totaling $45,589,643 as of December 31, 2020,

(“ITP”, the “parent company”) have been prepared in

accordance with accounting principles generally accepted in the United States of America.

Under the PRC laws and regulations, the Company’s

PRC subsidiaries are restricted in their ability to transfer certain of their net assets to the parent company in the form of dividend

payments, loans or advances.

The amounts restricted include paid-in capital, capital surplus and statutory reserves, as determined pursuant

to PRC generally accepted accounting principles, totaling $ 79,641,643 ad $ 47,589,643 as of December 31, 2021, and 2020.

following represents condensed unconsolidated financial information of the parent company only:

Current Assets

Cash and cash equivalents

Total current assets

Investment in subsidiaries

Cash and cash

Total current

in subsidiaries

$ 222,940,435

$ 181,210,840

LIABILITIES AND STOCKHOLDERS' EQUITY

AND STOCKHOLDERS’ EQUITY

Current Liabilities

Inter-company payable

Due to related parties

Total current liabilities

to related parties

current liabilities

Derivative liability

Total liabilities

Total stockholders' equity

Total Liabilities and Stockholders' Equity

stockholders’ equity

Liabilities and Stockholders’ Equity

$ 222,940,435

3 unchanged sentences

STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

Selling, general and administrative expenses

general and administrative expenses

Loss from Operations

Equity in earnings of unconsolidated subsidiaries

( 2,082,743 )

Equity in earnings of unconsolidated

( 4,198,678 )

( 3,030,487 )

Loss on derivative liability

Income (Expense)

Income before Income Taxes

Provision for Income Taxes

( 5,539,285 )

Other comprehensive income /(loss)

Total Comprehensive Income (loss)

Net Cash (Used in) Provided by Operating Activities

Net Cash Used in Investing Activities

Net Cash Provided by Financing Activities

Net Increase (Decrease) in Cash and Cash Equivalents

Cash and Cash Equivalents - Beginning of Year

Cash and Cash Equivalents - End of Year

condensed financial information has been prepared using the same accounting policies as set out in the Company’s consolidated

financial statements except that the parent company has used equity method to account for its investments in the subsidiaries.

for Income Taxes

$ ( 5,554,002 )

comprehensive income /(loss)

Comprehensive Income (loss)

Cash Used in Operating Activities

$ ( 776,313 )

$ ( 846,820 )

Used in Investing Activities

( 32,053,000 )

( 2,000,000 )

Provided by Financing Activities

(Decrease) in Cash and Cash Equivalents

Cash Equivalents - Beginning of Year

Cash Equivalents - End of Year

condensed financial information has been prepared using the same accounting policies as set out in the Company’s consolidated financial

statements except that the parent company has used equity method to account for its investments in the subsidiaries.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data