What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-10 compared with 2021-11-10 · 456 added, 709 removed, 51 unchanged (96% of the section changed)

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Cautionary Notice Regarding Forward-Looking Statements

The following discussion of the financial

condition and results of operations of the Company for the periods ended September 30, 2021 and 2020 should be read in conjunction with

the financial statements and the notes to the financial statements that are included elsewhere in this quarterly report.

In this quarterly report, references to “the

Company,” “we,” “our” and “us” refer to IT Tech Packaging, Inc.

and its PRC subsidiary and variable

interest entity unless the context requires otherwise.

We make certain forward-looking statements in

Statements concerning our future operations, prospects, strategies, financial condition, future economic performance (including

growth and earnings), demand for our products, and other statements of our plans, beliefs, or expectations, including the statements contained

under the captions “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as

captions elsewhere in this document, are forward-looking statements.

In some cases these statements are identifiable through the use of

words such as “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan”,

“project”, “target”, “can”, “could”, “may”, “should”, “will”,

“would”, and similar expressions.

We intend such forward-looking statements to be covered by the safe harbor provisions contained

in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and in Section 21E of the Securities Exchange

Act of 1934, as amended (the “Exchange Act”).

The forward-looking statements we make are not guarantees of future performance

and are subject to various assumptions, risks, and other factors that could cause actual results to differ materially from those suggested

by these forward-looking statements.

Because such statements are subject to risks and uncertainties, actual results may differ materially

from those expressed or implied by the forward-looking statements.

Indeed, it is likely that some of our assumptions may prove to be incorrect.

Our actual results and financial position may vary from those projected or implied in the forward-looking statements and the variances

may be material.

You are cautioned not to place undue reliance on such forward-looking statements.

These risks and uncertainties, together

with the other risks described from time to time in reports and documents that we file with the Securities and Exchange Commission (the

“SEC”) should be considered in evaluating forward-looking statements.

In evaluating the forward-looking statements contained

in this report, you should consider various factors, including, without limitation, the following:

(a) those risks and uncertainties related

to general economic conditions, (b) whether we are able to manage our planned growth efficiently and operate profitably, (c) whether we

are able to generate sufficient revenues or obtain financing to sustain and grow our operations, and (d) whether we are able to successfully

fulfill our primary requirements for cash.

We assume no obligation to update forward-looking statements, except as otherwise required

under federal securities laws.

Impact of COVID-19 on Our Operations and Financial Performance

Outbreaks of epidemic, pandemic, or contagious

diseases such as COVID-19, could have an adverse effect on our business, financial condition, and results of operations.

The spread of

COVID-19 has resulted in the World Health Organization declaring the outbreak of COVID-19 as a global pandemic.

Substantially all of our

revenues and workforce are concentrated in China.

In response to the intensifying efforts to contain the spread of COVID-19, the Chinese

government took a number of actions, which included extending the Chinese New Year holiday, quarantining individuals suspected of having

COVID-19, asking residents in China to stay at home and to avoid public gathering, among other things.

During the early part of 2020,

COVID-19 caused temporary closure of our CMP production, and as a result, our revenue of CMP decreased by 49.89 % in the first quarter

It is, however, still unclear how the pandemic will evolve going forward, and we cannot assure you whether the COVID-19 pandemic

will again bring about significant negative impact on our business operations, financial condition and operating results, including but

not limited to negative impact to our total revenues.

While we have resumed business operations, there

remain significant uncertainties surrounding the COVID-19 outbreak and its further development as a global pandemic.

Hence, the extent

of the business disruption and the related impact on our financial results and outlook for the rest of 2021 cannot be reasonably estimated

at this time.

The extent to which the COVID-19 impacts our results will depend on future developments, which are highly uncertain and

cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and the actions taken globally

to contain the coronavirus or treat its impact, among others.

Existing insurance coverage may not provide protection for all costs that

may arise from all such possible events.

We are still assessing our business operations and the total impact COVID-19 may have on our

results and financial condition, but there can be no assurance that this analysis will enable us to avoid part or all of any impact from

the spread of COVID-19 or its consequences, including downturns in business sentiment generally.

Recent Development

In November 2020, we completed inviting bids for

the 75 tonne per hour biomass boiler procurement for our biomass cogeneration project (the “Cogeneration Project”).

well-known enterprises in the biomass industry participated in tendering opening bids.

In February 2021, we completed evaluation on the

bidding proposals and announced that Tai Shan Group Co., Ltd., a top manufacturer in the biomass industry in China, has won the bid.

of the boilers is expected to commence in the near future.

We expect to participate in the bidding process for urban central heating projects.

In April 2021, the Company obtained qualification to supply central heating in industrial parks for the Cogeneration Project.

On April 2021, the Company announced it has completed

fundamental constructions on its new tissue paper production line (the “PM10”) and is working on the installation of accessory

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Notice Regarding Forward-Looking Statements

following discussion of the financial condition and results of operations of the Company for the periods ended March 31, 2022 and 2021

should be read in conjunction with the financial statements and the notes to the financial statements that are included elsewhere in

this quarterly report.

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

Tech Packaging, Inc.

and its PRC subsidiary and variable interest entity unless the context requires otherwise.

make certain forward-looking statements in this report.

Statements concerning our future operations, prospects, strategies, financial

condition, future economic performance (including growth and earnings), demand for our products, and other statements of our plans, beliefs,

or expectations, including the statements contained under the captions “Management’s Discussion and Analysis of Financial

Condition and Results of Operations” as well as captions elsewhere in this document, are forward-looking statements.

In some cases

these statements are identifiable through the use of words such as “anticipate”, “believe”, “estimate”,

“expect”, “intend”, “plan”, “project”, “target”, “can”, “could”,

“may”, “should”, “will”, “would”, and similar expressions.

We intend such forward-looking

statements to be covered by the safe harbor provisions contained in Section 27A of the Securities Act of 1933, as amended (the “Securities

Act”) and in Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The forward-looking

statements we make are not guarantees of future performance and are subject to various assumptions, risks, and other factors that could

cause actual results to differ materially from those suggested by these forward-looking statements.

Because such statements are subject

to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements.

it is likely that some of our assumptions may prove to be incorrect.

Our actual results and financial position may vary from those projected

or implied in the forward-looking statements and the variances may be material.

You are cautioned not to place undue reliance on such

forward-looking statements.

These risks and uncertainties, together with the other risks described from time to time in reports and documents

that we file with the Securities and Exchange Commission (the “SEC”) should be considered in evaluating forward-looking statements.

In evaluating the forward-looking statements contained in this report, you should consider various factors, including, without limitation,

the following:

(a) those risks and uncertainties related to general economic conditions, (b) whether we are able to manage our planned

growth efficiently and operate profitably, (c) whether we are able to generate sufficient revenues or obtain financing to sustain and

grow our operations, and (d) whether we are able to successfully fulfill our primary requirements for cash.

We assume no obligation to

update forward-looking statements, except as otherwise required under federal securities laws.

of COVID-19 on Our Operations and Financial Performance

of epidemic, pandemic, or contagious diseases such as COVID-19, could have an adverse effect on our business, financial condition, and

results of operations.

The spread of COVID-19 has resulted in the World Health Organization declaring the outbreak of COVID-19 as a global

Substantially all of our revenues and workforce are concentrated in China.

In response to the intensifying efforts to contain

the spread of COVID-19, the Chinese government took a number of actions, which included extending the Chinese New Year holiday, quarantining

individuals suspected of having COVID-19, asking residents in China to stay at home and to avoid public gathering, among other things.

It is, however, still unclear how the pandemic will evolve going forward, and we cannot assure you whether the COVID-19 pandemic will

again bring about significant negative impact on our business operations, financial condition and operating results, including but not

limited to negative impact to our total revenues.

we have resumed business operations, there remain significant uncertainties surrounding the COVID-19 outbreak and its further development

as a global pandemic.

The extent to which the COVID-19 impacts our results will depend on future developments, which are highly uncertain

and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and the actions taken

globally to contain the coronavirus or treat its impact, among others.

Existing insurance coverage may not provide protection for all

costs that may arise from all such possible events.

We are still assessing our business operations and the total impact COVID-19 may

have on our results and financial condition, but there can be no assurance that this analysis will enable us to avoid part or all of

any impact from the spread of COVID-19 or its consequences, including downturns in business sentiment generally.

December 7, 2021, the Company announced that it has officially started its surgical masks production after a month of trial production

since the end of November 2021.

The Company’s surgical masks comply with China’s pharmaceutical industry standard YY0469-2011.

of Operations

Comparison of the Three months ended September 30, 2021 and 2020

Revenue for the three months ended September 30,

2021 was $45,087,671, an increase of $11,730,220, or 35.17%, from $33,357,451 for the same period in the previous year.

This was mainly

due to the increase in sales volume of regular corrugating medium paper (“regular CMP”) and the increase in Average Selling

Prices (ASPs) of CMP and tissue paper products.

Revenue of Offset Printing Paper, Corrugating Medium Paper and Tissue

Paper Products

Revenue from sales of offset printing paper, corrugating

medium paper (“CMP”) and tissue paper products for the three months ended September 30, 2021 was $44,935,480, an increase

of $11,799,131, or 35.61%, from $33,136,349 for the third quarter of 2020.

Total offset printing paper, CMP and tissue paper products

sold during the three months ended September 30, 2021 amounted to 84,135 tonnes, an increase of 10,009 tonnes, or 13.50%, compared to

74,126 tonnes sold in the comparable period in the previous year.

The changes in revenue dollar amount and in quantity sold for the three

months ended September 30, 2021 and 2020 are summarized as follows:

of the Three months ended March 31, 2022 and 2021

Revenue for the three months ended March 31, 2022

was $15,481,618, a decrease of $8,727,809, or 36.05%, from $24,209,427 for the same period in the previous year.

This was mainly due to

the decrease in sales volume of Regular corrugating medium paper, Offset Printing Paper and tissue paper products.

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

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

March 31, 2022 was $15,425,022, a decrease of $8,653,947, or 35.94%, from $24,078,969 for the first quarter of 2021.

Total offset printing

paper, CMP and tissue paper products sold during the three months ended March 31, 2022 amounted to 29,483 tonnes, a decrease of 16,075

tonnes, or 35.28%, compared to 45,558 tonnes sold in the comparable period in the previous year.

Production of CMP was suspended during

January and February and offset printing paper suspended in the first quarter of 2022, due to China’s New Year and restriction

on production during Beijing Winter Olympics as required by the government.

The changes in revenue dollar amount and in quantity sold

for the three months ended March 31, 2022 and 2021 are summarized as follows:

Three Months Ended

September 30, 2021

September 30, 2020

March 31, 2022

March 31, 2021

Sales Revenue

$ (3,864,816 )

Light-Weight CMP

$ (1,820,322 )

$ (5,685,137 )

Offset Printing Paper

2 unchanged sentences

Total CMP, Offset Printing Paper and Tissue Paper Revenue

Monthly sales revenue for the 24 months ended September 30, 2021, are

summarized below:

Average Selling Prices (ASPs) for our main products in the three months ended September 30, 2021 and 2020 are summarized as follows:

Offset Printing

Three Months ended September 30, 2020

Three Months ended September 30, 2021

Increase from comparable period in the previous year

Increase by percentage

The following chart shows the month-by-month ASPs for the 24-month

period ended September 30, 2021:

Corrugating Medium Paper

Revenue from CMP amounted to $37,328,464 (83.07%

of the total offset printing paper, CMP and tissue paper products revenues) for the three months ended September 30, 2021, representing

an increase of $12,698,470, or 51.56%, from $24,629,994 for the comparable period in 2020.

We sold 74,444 tonnes of CMP in the three months

ended September 30, 2021 as compared to 60,991 tonnes for the same period in 2020, representing a 22.06% increase in quantity sold.

ASP for regular CMP increased from $406/tonne

for the three months ended September 30, 2020 to $504/tonne for the three months ended September 30, 2021, representing a 24.14% increase.

ASP in RMB for regular CMP for the third quarter of 2020 and 2021 was RMB2,816 and RMB3,259, respectively, representing a 15.73% increase.

The quantity of regular CMP sold increased by 13,840 tonnes, from 48,107 tonnes in the third quarter of 2020 to 61,947 tonnes in the third

quarter of 2021.

ASP for light-weight CMP increased from $394/tonne

for the three months ended September 30, 2020 to $490/tonne for the three months ended September 30, 2021, representing a 24.37% increase.

ASP in RMB for light-weight CMP for the third quarter of 2020 and 2021 was RMB2,727 and RMB3,173, respectively, representing a 16.35%

The quantity of light-weight CMP sold decreased by 387 tonnes, from 12,884 tonnes in the third quarter of 2020, to 12,497 tonnes

in the third quarter of 2021.

Our PM6 production line, which produces regular

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

The utilization rates for the third quarter of 2021 and 2020 were 67.42% and 53.77%,

respectively, representing an increase of 13.65%.

sold for regular CMP that was produced by the PM6 production line from October 2019 to September 2021 are as follows:

Tissue Paper Products

Revenue from tissue paper products was $2,811,625

(6.26% of the total offset printing paper, CMP and tissue paper products revenues) for the three months ended September 30, 2021, representing

an increase of $431,573, or 18.13%, from $2,380,052 for the three months ended September 30, 2020.

We sold 2,646 tonnes of tissue paper

in the third quarter of 2021, as compared to 2,855 tonnes in the comparable period of 2020, representing a decrease of 209 tonnes, or

ASP for tissue paper products increased

from $834/tonne for the three months ended September 30, 2020 to $1,063/tonne for the three months ended September 30, 2021, representing

a 27.46% increase.

ASP in RMB for tissue paper products for the third quarter of 2020 and 2021 was RMB5,766 and RMB6,875, respectively,

$ (8,653,947 )

Monthly sales revenue for the 24 months ended March 31, 2022, are summarized

Average Selling Prices (ASPs) for our main products in the three months ended March 31, 2022 and 2021 are summarized as follows:

Three Months ended March 31, 2021

Three Months ended March 31, 2022

Increase (Decrease) from comparable period in the previous year

Increase (Decrease) by percentage

following chart shows the month-by-month ASPs for the 24-month period ended March 31, 2022:

from CMP amounted to $15,026,634 (97.42% of the total offset printing paper, CMP and tissue paper products revenues) for the three months

ended March 31, 2022, representing a decrease of $5,685,137, or 27.45%, from $20,711,771 for the comparable period in 2021, as a result

of production suspension of CMP.

sold 29,086 tonnes of CMP in the three months ended March 31, 2022 as compared to 41,296 tonnes for the same period in 2021, representing

a 29.57% decrease in quantity sold.

for regular CMP increased from $504/tonne for the three months ended March 31, 2021 to $519/tonne for the three months ended March 31,

2022, representing a 2.98% increase.

Offset printing paper

Revenue from offset printing paper was $4,795,391

(10.67% of the total offset printing paper, CMP and tissue paper products revenues) for the three months ended September 30, 2021, representing

a decrease of $1,330,912, or 21.72%, from $6,126,303 for the three months ended September 30, 2020.

We sold 7,045 tonnes of offset printing

paper in the third quarter of 2021, as compared to 10,280 tonnes in the comparable period of 2020, a decrease of 3,235 tonnes, or 31.47%.

ASPs for offset printing paper for the third quarter of 2020 and 2021 were $596 and $681, respectively, representing a 14.26% increase.

ASP in RMB for offset printing paper for the third quarter of 2020 and 2021 was RMB4,159 and RMB4,404, respectively, representing a 5.89%

On April 29, 2020, we launched production line

of non-medical single-use face masks, following completion of raw materials preparation, trial run of the equipment and the sample products

Revenue generated from selling face mask were $152,191 and $221,102 for the three months ended September 30, 2021 and 2020.

We sold 3,180 thousand pieces of face masks in the third quarter of 2021, as compared to 3,576 thousand pieces in the comparable period

of 2020, a decrease of 396 thousand pieces, or 31.17%.

Cost of Sales

Total cost of sales for CMP, offset printing paper

and tissue paper products for the quarter ended September 30, 2021 was $43,145,052, an increase of $12,551,657, or 41.03%, from $30,593,395

for the comparable period in 2020.

This was mainly due to the increase in sales quantity of regular CMP and the increase in material costs.

Cost of sales for CMP was $36,069,192 for the

quarter ended September 30, 2021, as compared to $22,898,910 for the comparable period in 2020.

The increase in the cost of sales of $13,170,282

for CMP was mainly due to the increase in sales volume of regular CMP and the increase in average cost of sales.

Average cost of sales

per tonne for CMP increased by 29.33%, from $375 in the third quarter of 2020 to $485 in the third quarter of 2021.

The increase in average

cost of sales was mainly attributable to the higher average unit purchase costs (net of applicable value added tax) of recycled paper

board in the third quarter of 2021 compared to the third quarter of 2020.

Cost of sales for offset printing paper was $4,018,447

for the quarter ended September 30, 2021, as compared to $4,969,350 for the comparable period in 2020.

The decrease in cost of sales of

offset printing paper was mainly due to the decrease in sales volume, partially offset by the increase in average cost of sales of offset

ASP in RMB for regular CMP for the first quarter of 2021 and 2022 was RMB3,282 and RMB3,294, respectively,

representing a 0.37% increase.

The quantity of regular CMP sold decreased by 8,381 tonnes, from 33,626 tonnes in the first quarter of

2021 to 25,245 tonnes in the first quarter of 2022.

for light-weight CMP increased from $489/tonne for the three months ended March 31, 2021 to $502/tonne for the three months ended March

31, 2022, representing a 2.66% increase.

ASP in RMB for light-weight CMP for the first quarter of 2021 and 2022 was RMB3,178 and RMB3,186,

respectively, representing a 0.25% increase.

The quantity of light-weight CMP sold decreased by 3,829 tonnes, from 7,670 tonnes in the

first quarter of 2021, to 3,841 tonnes in the first quarter of 2022.

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

The utilization rates for the first

quarter of 2022 and 2021 were 23.04% and 38.42%, respectively, representing a decrease of 15.38%.

sold for regular CMP that was produced by the PM6 production line from April 2020 to March 2022 are as follows:

printing paper

Average cost of sales per tonne of offset printing paper increased by 18.01%, from $483 in the three months ended September

30, 2020, to $570 during the comparable period in 2021.

The increase in average cost of sales of offset printing paper was mainly due

to the increase in average unit purchase costs (net of applicable value added tax) of recycled white scrap paper.

from offset printing paper was $nil for the three months ended March 31, 2022, representing a decrease of $2,115,782, or 100.00%, from

$2,115,782 for the three months ended March 31, 2021.

Production ceased in the first quarter of 2022.

We sold 0 tonne of offset printing

paper in the first quarter of 2022, as compared to 3,142 tonnes in the comparable period of 2021, a decrease of 3,142 tonnes, or 100.00%.

Paper Products

from tissue paper products was $398,388 (2.58% of the total offset printing paper, CMP and tissue paper products revenues) for the three

months ended March 31, 2022, representing a decrease of $853,028, or 68.17%, from $1,251,416 for the three months ended March 31, 2021.

We sold 397 tonnes of tissue paper in the first quarter of 2022, as compared to 1,120 tonnes in the comparable period of 2021, representing

a decrease of 723 tonnes, or 64.55%.

for tissue paper products decreased from $1,117/tonne for the three months ended March 31, 2021 to $1,003/tonne for the three months

ended March 31, 2022, representing a 10.21% decrease.

ASP in RMB for tissue paper products for the first quarter of 2021 and 2022 was

RMB7,267 and RMB6,375, respectively, representing a 12.27% decrease.

April 29, 2020, we launched production line of non-medical single-use face masks, following completion of raw materials preparation,

trial run of the equipment and the sample products inspection.

Revenue generated from selling face mask were $56,596 and $130,458 for

the three months ended March 31, 2022 and 2021, respectively, representing a decrease of $73,862, or 56.62%.

We sold 3,014 thousand pieces

of face masks in the first quarter of 2022, as compared to 3,836 thousand pieces in the comparable period of 2021, a decrease of 822

thousand pieces, or 21.43%.

cost of sales for CMP, offset printing paper and tissue paper products for the quarter ended March 31, 2022 was $15,131,254, a decrease

of $7,141,241, or 32.06%, from $22,272,495 for the comparable period in 2021.

This was mainly due to the decrease in sales quantity of

regular CMP, offset printing paper and tissue paper products.

of sales for CMP was $14,169,089 for the quarter ended March 31, 2022, as compared to $18,858,935 for the comparable period in 2021.

The decrease in the cost of sales of $4,689,846 for CMP was mainly due to the decrease in sales volume of regular CMP.

Average cost of

sales per tonne for CMP increased by 6.56%, from $457 in the first quarter of 2021 to $487 in the first quarter of 2022.

in average cost of sales was mainly attributable to the increase in repair and maintenance costs.

of sales for offset printing paper was $nil for the quarter ended March 31, 2022, as compared to $1,705,938 for the comparable period

Cost of sales for tissue paper products was $962,165

for the quarter ended September 30, 2021, as compared to $2,725,135 for the comparable period in 2020.

The increase in the cost of sales

of $332,278 for tissue paper products was mainly due to the increase in average cost of sales, partially offset by the decrease in sales

volume of tissue paper products.

Average cost of sales per tonne of tissue paper products increased by 20.94%, from $955 in the three

months ended September 30, 2020, to $1,155 for the comparable period in 2021.

This is mainly due to the increase in cost of tissue base

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

ended September 30, 2021 and 2020 are summarized below:

for the quarter ended March 31, 2022, as compared to $1,707,623 for the comparable period in 2021.

The decrease in the cost of sales of

$745,458 for tissue paper products was mainly due to the decrease in sales volume of tissue paper products and the increase in average

cost of sales.

Average cost of sales per tonne of tissue paper products increased by 58.95%, from $1,525 in the three months ended March

31, 2021, to $2,424 for the comparable period in 2022.

in cost of sales and cost per tonne by product for the quarters ended March 31, 2022 and 2021 are summarized below:

Three Months Ended

September 30, 2021

September 30, 2020

March 31, 2022

March 31, 2021

Change in percentage

Cost of Sales

Cost per Tonne

Cost of Sales

Cost per Tonne

Cost of Sales

Cost per Tonne

Cost of Sales

Cost per Tone

Light-Weight CMP

Offset Printing Paper

Tissue Paper Products

Total CMP, Offset

Printing Paper and Tissue Paper

Our average unit purchase costs (net of applicable

value added tax) of recycled paper board and recycled white scrap paper in the three months ended September 30, 2021 were RMB 1,966/tonne

(approximately $304/tonne) and RMB 2,319/tonne (approximately $358/tonne), as compared to RMB 1,754/tonne (approximately $251/tonne) and

RMB 2,078/tonne (approximately $297/tonne) for the three months ended September 30, 2020.

These changes (in US dollars) represent a year-over-year

increase of 21.12% for the recycled paper board.

We use domestic recycled paper (sourced mainly from the Beijing-Tianjin metropolitan

area) exclusively.

Although we do not rely on imported recycled paper, the pricing of which tends to be more volatile than domestic recycled

paper, our experience suggests that the pricing of domestic recycled paper bears some correlation to the pricing of imported recycled

pricing trends of our major raw materials for the 24-month period from October 2019 to September 2021 are shown below:

Electricity and gas are our two main energy sources.

Electricity and gas accounted for approximately 4% and 10.8% of total sales in the third quarter of 2021, respectively, compared to 4%

and 10.9% of total sales in the third quarter of 2020.

The monthly energy cost as a percentage of total monthly sales of our main paper

products for the 24 months ended September 30, 2021 are summarized as follows:

Gross profit for the three months ended September

30, 2021 was $1,821,536 (4.04% of the total revenue), representing a decrease of $746,015, or 29.06%, from the gross profit of $2,567,551

(7.70% of the total revenue) for the three months ended September 30, 2020, as a result of factors described above.

Printing Paper, CMP and Tissue Paper Products

Gross profit for offset printing paper, CMP and

tissue paper products for the three months ended September 30, 2021 was $1,790,428, a decrease of $752,526, or 29.59%, from the gross

profit of $2,542,954 for the three months ended September 30, 2020.

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

The overall gross profit margin for offset printing

paper, CMP and tissue paper products decreased by 3.69 percentage points, from 7.67% for the three months ended September 30, 2020, to

3.98% for the three months ended September 30, 2021.

Gross profit margin for regular CMP for the three

months ended September 30, 2021 was 2.94%, or 3.46 percentage points lower, as compared to gross profit margin of 6.40% for the three

months ended September 30, 2020.

Such decrease was mainly due to the increase in cost of recycled paper board, partially offset by the

increase of ASP of regular CMP in the third quarter of 2021.

Gross profit margin for light-weight CMP for the

three months ended September 30, 2021 was 5.59%, or 3.85 percentage points lower, as compared to gross profit margin of 9.44% for the

three months ended September 30, 2020.

The decrease was mainly due to the increase in cost of recycled paper board, partially offset by

the increase in ASP of light-weight CMP in the third quarter of 2021.

Gross profit margin for offset printing paper

was 16.20% for the three months ended September 30, 2021, a decrease of 2.69 percentage points, as compared to 18.89% for the three months

ended September 30, 2020.

The decrease was mainly due to the increase in cost of recycled white scrap paper, partially offset by the increase

in ASP of offset printing paper in the third quarter of 2021.

Gross profit margin for tissue paper products

for the three months ended September 30, 2021 was -8.74%, or 5.76 percentage points higher, as compared to gross profit margin of -14.50%

for the three months ended September 30, 2020.

The decrease in gross loss was mainly due to the increase in ASP of tissue paper products,

partially offset by the increase in cost of base paper in the third quarter of 2021.

gross profit margins on the sales of our CMP and offset printing paper for the 24-month period ended September 30, 2021 are as follows:

Gross profit for face mask for the three months ended September 30,

2021 and 2020 were $31,108 and $24,598, representing a gross margin of 20.44% and 11.13%, respectively.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for

the three months ended September 30, 2021 were $2,019,565, a decrease of $371,355, or 15.53% from $2,390,920 for the three months ended

September 30, 2020.

(Loss) Income from Operations

Operating loss for the quarter ended September

30, 2021 was $198,029, a decrease of $374,660, or 212.11%, from income from operations of $176,631 for the quarter ended September 30,

The decrease in income from operations was primarily due to the decrease in gross profit.

Other Income and Expenses

Interest expense for the three months

ended September 30, 2021 increased by $23,232, from $258,438 in the three months ended September 30, 2020, to $281,670.

The Company had

short-term and long-term interest-bearing loans, related party loans and leasing obligations that aggregated $16,377,758 as of September

30, 2021, as compared to $16,060,576 as of September 30, 2020.

Gain on derivative liability

The Company analyzed the warrants for derivative

accounting consideration under ASC 815, “Derivatives and Hedging, and hedging,” and determined that the instrument should

be classified as a liability.

ASC 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.

The change in fair value of derivative liability for

the three months ended September 30, 2021 was $1,938,873.

As a result and the factors discussed

above, net income was $1,542,576 for the quarter ended September 30, 2021, representing an increase of $2,063,550, or 396.09%, from net

loss of $520,974 for the quarter ended September 30, 2020.

Comparison of the nine months ended September 30, 2021 and 2020

Revenue for the nine months ended September 30,

2021 was $115,832,013, an increase of $47,368,438, or 69.19%, from $68,463,575 for the same period in the previous year.

Revenue of Offset Printing Paper, Corrugating Medium Paper and Tissue

Paper Products

Revenue from sales of offset printing paper, CMP

and tissue paper products for the nine months ended September 30, 2021 was $115,440,494, an increase of $48,043,574, or 71.28%, from $67,396,920

for the nine months ended September 30, 2020.

This was mainly due to the increase in sales volume of CMP and offset printing paper and

the increase in ASP of CMP, offset printing paper and tissue paper products.

Total quantities of offset printing paper, CMP and tissue

paper products sold during the nine months ended September 30, 2021 amounted to 216,303 tonnes, an increase of 57,659 tonnes, or 36.34%,

compared to 158,644 tonnes sold during the nine months ended September 30, 2020.

Total quantities of CMP and offset printing paper sold

increased by 58,619 tonnes in the nine months of 2021 as compared to the same period of 2020.

We sold 5,963 tonnes of tissue paper products

in the nine months of 2021 as opposed to 6,923 tonnes in the same period of 2020.

A summary of the above changes and further analyses of the changes

in our sales revenue are as follows:

Nine Months Ended

September 30, 2021

September 30, 2020

Sales Revenue

Light-Weight CMP

Offset Printing Paper

Tissue Paper Products

Total CMP, Offset Printing Paper and Tissue Paper Revenue

$ (3,122,681 )

ASPs for our main products in the nine-month period ended September

30, 2021and 2020 are summarized as follows:

Offset Printing

Nine Months Ended September 30, 2020

Nine Months Ended September 30, 2021

Increase from comparable period in the previous year

Increase by percentage

Revenue of Face Mask

Revenue generated from selling face mask were

$391,519 and $1,066,654 for the nine months ended September 30, 2021 and 2020.

We sold 9,650 thousand pieces of face masks in the third

quarter of 2021, as compared to 9,856 thousand pieces in the comparable period of 2020, a decrease of 206 thousand pieces, or 2.09%.

Total cost of sales for CMP, offset printing paper

and tissue paper products in the nine months ended September 30, 2021 was $108,825,403, an increase of $45,857,147, or 72.83%, from $62,968,256

for the nine months ended September 30, 2020.

This was mainly a result of the increase in sales volume of CMP and offset printing paper

and increase of material costs.

Cost of sales for CMP was $89,766,509 for the nine months ended September 30, 2021, as compared to $49,838,234

in the same period of 2020.

The increase in the cost of sales of $39,928,274 for CMP was mainly due to the increase in the quantities

of regular CMP sold and the increase in cost of recycled paper board in the nine months of 2021.

Average cost of sales per tonne for CMP

increased by 32.12%, from $358 for the nine months ended September 30, 2020, to $473 in the same period of 2021.This is mainly attributable

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

Cost of sales for offset printing

paper was $11,633,414 for the nine months ended September 30, 2021, as compared to $5,932,881 in the same period of 2020.

of sales per tonne of offset printing paper increased by 18.70%, from $476 for the nine months ended September 30, 2020, to $565 in the

same period of 2021.

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

recycled white scrap paper.

Cost of sales for tissue paper products was $7,425,480 for the nine months ended September 30, 2021, as compared

to $7,197,141 in the same period of 2020.

Average cost of sales per tonne of tissue paper products increased by 19.71%, from $1,040 for

the nine months ended September 30, 2020, to $1,245 for the same period of 2021.

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

months ended September 30, 2021 and 2020 are summarized below:

Nine Months Ended

September 30, 2021

September 30, 2020

Change in percentage

Cost of Sales

Cost per Tonne

Cost of Sales

Cost per tonne

Cost of Sales

Cost per Tonne

Cost of Sales

Cost per Tone

Light-Weight CMP

$ (1,567,165 )

$ (4,689,846 )

Offset Printing Paper

$ (1,705,938 )

Tissue Paper Products

Total CMP, Offset

Printing Paper and Tissue Paper Revenue

Total CMP, Offset Printing Paper and Tissue Paper

$ (7,141,241 )

Gross profit for the nine months ended September

30, 2021 was $6,681,561 (5.77% of the total revenue), representing an increase of $1,724,899, or 34.80%, from the gross profit of $4,956,662

(7.24% of the total revenue) for the nine months ended September 30, 2020.

The increase was mainly due to (i) the increase in quantities

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

offset by the increase in material costs.

Offset Printing Paper, CMP and Tissue Paper Products

Gross profit for offset printing paper, CMP and

tissue paper products for the nine months ended September 30, 2021 was $6,615,092, an increase of $2,186,428, or 49.37%, from the gross

profit of $4,428,664 for the nine months ended September 30, 2020.

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

The overall gross profit margin for offset printing

paper, CMP and tissue paper products decreased by 0.84 percentage points, from 6.57% for the nine months ended September 30, 2020, to

5.73% for the nine months ended September 30, 2021.

Gross profit margin for regular CMP for the nine

months ended September 30, 2021 was 4.97%, or 2.30 percentage points lower, as compared to gross profit margin of 7.27% for the nine months

ended September 30, 2020.

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

profit margin for light-weight CMP for the nine months ended September 30, 2021 was 7.26%, or 3.97 percentage points lower, as compared

to gross profit margin of 11.23% for the nine months ended September 30, 2020.

Such decrease was primarily due to the increase in unit

cost of sales, partially offset by the increase in ASP of regular CMP.

Gross profit margin for offset printing paper

was 17.47% for the nine months ended September 30, 2021, a decrease of 2.23 percentage points, as compared to 19.70% for the nine months

ended September 30, 2020.

Such decrease was mainly due to the increase of purchase price of recycled white scrap paper, partially offset

by the increase in ASP of offset printing paper.

Gross profit margin for tissue paper products

was -14.39% for the nine months ended September 30, 2021, an increase of 10.43 percentage points, as compared to -24.82% for the nine

months ended September 30, 2020.

The increase was mainly due to the increase in ASP of tissue base paper, partially offset by the increase

in cost of tissue base paper.

Gross profit for face mask for the nine months ended September 30,

2021 was $66,469, representing a gross margin of 16.98% compared with a gross profit of $527,997, representing a gross margin of 49.50%,

for the nine months ended September 30, 2020.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for

the nine months ended September 30, 2021 were $7,172,495, a decrease of $1,272,861, or 15.07% from $8,445,356 for the nine months ended

September 30, 2020.

The decrease was mainly due to higher share based compensation and expenses in April 2020.

Loss from Operations

Operating loss for the nine months ended

September 30, 2021 was $490,934, a decrease of loss of $2,997,760, or 85.93%, from $3,488,694 for the nine months ended September 30,

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

Other Income and Expenses

Interest expense for the nine months ended September

30, 2021 increased by $99,878, from $744,592 for the nine months ended September 30, 2020, to $844,470.

The Company had short-term and

long-term interest-bearing loans and lease obligation that aggregated $16,377,758 as of September 30, 2021, as compared to $16,060,576

as of September 30, 2020.

Gain on derivative liability

The Company analyzed warrants for derivative accounting

consideration under ASC 815, “Derivatives and Hedging, and hedging,” and determined that the instrument should be classified

as a liability.

ASC 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.

The change in fair value of derivative liability for the nine months

ended September 30, 2021 was $ 2,810,913.

As a result of the above, net loss was $3,249,528

for the nine months ended September 30, 2021, representing a decrease of loss of $687,764, or 17.47%, from $3,937,292 for nine months

ended September 30, 2020.

Accounts Receivable

Net accounts receivable increased by $1,732,724, or 72.53%, to $4,121,781

as of September 30, 2021, as compared with $2,389,057 as of December 31, 2020.

We usually collect accounts receivable within 30 days of

delivery and completion of sales.

Inventories consist of raw materials (accounting

for 79.45% of total value of inventory as of September 30, 2021), semi-finished goods and finished goods.

As of September 30, 2021, the

recorded value of inventory increased by 517.72% to $7,621,405 from $1,233,801 as of December 31, 2020.

As of September 30, 2021, the

inventory of recycled paper board, which is the main raw material for the production of CMP, was $4,869,733, approximately $4,850,274,

average unit purchase costs (net of applicable value added tax) of recycled paper board in the three months ended March 31, 2022 was

RMB 1,858/tonne (approximately $293/tonne), as compared to RMB 1,878/tonne (approximately $289/tonne) for the three months ended March

These changes (in US dollars) represent a year-over-year increase of 1.38% for the recycled paper board.

We use domestic recycled

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

Although we do not rely on imported recycled paper, the

pricing of which tends to be more volatile than domestic recycled paper, our experience suggests that the pricing of domestic recycled

paper bears some correlation to the pricing of imported recycled paper.

pricing trends of our major raw materials for the 24-month period from April 2020 to March 2022 are shown below:

and gas are our two main energy sources.

Electricity and gas accounted for approximately 3% and 9.6% of total sales in the first quarter

of 2022, respectively, compared to 4% and 9.7% of total sales in the first quarter of 2021.

The monthly energy cost as a percentage of

total monthly sales of our main paper products for the 24 months ended March 31, 2022 are summarized as follows:

profit for the three months ended March 31, 2022 was $310,445 (2.01% of the total revenue), representing a decrease of $1,520,560, or

83.05%, from the gross profit of $1,831,005 (7.56% of the total revenue) for the three months ended March 31, 2021, as a result of factors

described above.

Printing Paper, CMP and Tissue Paper Products

profit for offset printing paper, CMP and tissue paper products for the three months ended March 31, 2022 was $293,768, a decrease of

$1,512,706, or 83.74%, from the gross profit of $1,806,474 for the three months ended March 31, 2021.

The decrease was mainly the result

of the factors discussed above.

overall gross profit margin for offset printing paper, CMP and tissue paper products decreased by 5.60 percentage points, from 7.50%

for the three months ended March 31, 2021, to 1.90% for the three months ended March 31, 2022.

profit margin for regular CMP for the three months ended March 31, 2022 was 5.35%, or 3.15 percentage points lower, as compared to gross

profit margin of 8.50% for the three months ended March 31, 2021.

Such decrease was mainly due to the increase average cost of sales.

profit margin for light-weight CMP for the three months ended March 31, 2022 was 8.15%, or 2.79 percentage points lower, as compared

to gross profit margin of 10.94% for the three months ended March 31, 2021.

Gross profit margin for tissue paper products for

the three months ended March 31, 2022 was -141.51%, or 105.05 percentage points lower, as compared to gross profit margin of -36.46% for

the three months ended March 31, 2021.

The increase in gross loss was mainly due to the increase in cost of base paper.

gross profit margins on the sales of our CMP and offset printing paper for the 24-month period ended March 31, 2022 are as follows:

profit for face mask for the three months ended March 31, 2022 and 2021 were $16,677 and $24,531, representing a gross margin of 29.47%

and 18.80%, respectively.

General and Administrative Expenses

general and administrative expenses for the three months ended March 31, 2022 were $3,300,881, an increase of $745,563, or 29.18% from

$2,555,318 for the three months ended March 31, 2021.

The increase was mainly due to the deprecation of idle fixed assets during production

suspension in first quarter of 2022.

from Operations

loss for the quarter ended March 31, 2022 was 2,956,433, a decrease of $2,232,120, or 308.17%, from $724,313 for the quarter ended March

The decrease in income from operations was primarily due to the decrease in gross profit and increase in selling, general and

administrative expenses.

Income and Expenses

expense for the three months ended March 31, 2022 decreased by $8,088, from $278,901 in the three months ended March 31, 2021, to $270,813.

The Company had short-term and long-term interest-bearing loans, related party loans and leasing obligations that aggregated $16,157,692

as of March 31, 2022, as compared to $16,406,559 as of March 31, 2021.

on derivative liability

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.

ASC 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.

gain recognized on addition and change in fair value of derivative liability for the three months ended March 31, 2022 was $386,588.

a result and the factors discussed above, net loss was $2,488,214 for the quarter ended March 31, 2022, representing an increase of $1,850,642,

or 42.65%, from $4,338,856 for the quarter ended March 31, 2021.

accounts receivable increased by $115,804, or 2.38%, to $4,984,738 as of March 31, 2022, as compared with $4,868,934 as of December 31,

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

consist of raw materials (accounting for 61.98% of total value of inventory as of March 31, 2022), semi-finished goods and finished goods.

As of March 31, 2022, the recorded value of inventory decreased by 25.50% to $4,354,676 from $5,844,895 as of December 31, 2021.

March 31, 2022, the inventory of recycled paper board, which is the main raw material for the production of CMP, was $2,373,036, approximately

$275,974, or 13.16%, higher than the balance as of December 31, 2021.

Due to the volatility of recycled paper board price, a minimum level of

inventory was maintained at the end of 2020.

A summary of changes in major inventory items

is as follows:

September 30,

summary of changes in major inventory items is as follows:

Raw Materials

9 unchanged sentences

Total inventory, net

Renewal of operating lease

On August 7, 2013, the Company’s Audit Committee

and the Board of Directors approved the sale of the land use right of the Headquarters Compound (the “LUR”), the office building

and essentially all industrial-use buildings in the Headquarters Compound (the “Industrial Buildings”), and three employee

dormitory buildings located within the Headquarters Compound (the “Dormitories”) to Hebei Fangsheng for cash prices of approximately

$2.77 million, $1.15 million, and $4.31 million, respectively.

In connection with the sale of the Industrial Buildings, Hebei Fangsheng

agreed to lease the Industrial Buildings back to the Company for its original use for a term of up to three years, with an annual rental

payment of approximately $154,579 (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 to August 9, 2022 with the

same rental payment as original lease agreement.

Capital Expenditure Commitment as of September 30, 2021

On May 5, 2020, the Company announced it planned

the commercial launch of a new tissue paper production line PM10.

In connection with the PM10, the Company signed an agreement to purchase

paper machine with a paper machine supplier.

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

of trial run.

As of September 30, 2021, we had approximately

$4.3 million in capital expenditure commitments that were mainly related to the purchase of paper machine of PM10.

The infrastructure

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

In February 2021, we completed evaluation on the

bidding proposals and announced that Tai Shan Group Co., Ltd., a top manufacturer in the biomass industry in China, has won the bid for

the 75 tonne per hour biomass boiler procurement for the Cogeneration Project.

Installation of the boilers is expected to commence in

the near future.

We expect to participate in the bidding process for urban central heating projects.

In April 2021, the Company obtained

qualification to supply central heating in industrial parks for the Cogeneration Project.

Financing with Sale-Leaseback

The Company entered into a sale-leaseback arrangement

(the “Lease Financing Agreement”) with TAC Leasing Co., Ltd.(“TLCL”) on August 6, 2020, for a total financing

proceeds in the amount of RMB 16 million (approximately US$2.5 million).

Under the sale-leaseback arrangement, Hebei Tengsheng sold the

Leased Equipment to TLCL for 16 million (approximately US$2.5 million).

Concurrent with the sale of equipment, Hebei Tengsheng leases

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

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

price of RMB 100 (approximately $15) to TLCL and buy back the Leased Equipment.

The Leased Equipment in amount of $2,349,452 was recorded

as right of use assets and the net present value of the minimum lease payments was recorded as lease liability and calculated with TLCL’s

implicit interest rate of 15.6% per annum and stated at $567,099 at the inception of the lease on August 17, 2020.

Hebei Tengsheng made payments due according to

the schedule.

The balance of Leased Equipment net of amortization was $2,288,902 and $2,397,653 as of September 30, 2021 and December

31, 2020, respectively.

The lease liability was $404,958 and $536,959, and its current portion in the amount of $206,606 and $182,852

as of September 30, 2021 and December 31, 2020, respectively.

of the Leased Equipment was $41,208 and $12,718 for the three months ended September 30, 2021 and 2020.

Amortization of the Leased Equipment

was $123,663 and $12,718 for the nine months ended September 30, 2021 and 2020.

Total interest expenses for the sale-leaseback arrangement

was $17,026 and $7,172 for the three months ended September 30, 2021 and 2020.

Total interest expenses for the sale-leaseback arrangement

was $56,376 and $7,172 for the nine months ended September 30, 2021 and 2020.

As a result of the sale and leaseback, a deferred

gain in the amount of $288,922 was recorded.

The deferred gain is amortized over the lease term and as an offset to amortization of the

Leased Equipment.

Cash and Cash Equivalents

Our cash, cash equivalents and restricted cash as of September

30, 2021 was $26,575,582, an increase of $22,433,145, from $4,142,437 as of December 31, 2020.

The increase of cash and cash equivalents

for the nine months ended September 30, 2021 was attributable to a number of factors:

of operating lease

August 7, 2013, the Company’s Audit Committee and the Board of Directors approved the sale of the land use right of the Headquarters

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

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

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

In connection with

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

for a term of up to three years, with an annual rental payment of approximately $157,522 (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 to August 9, 2022 with the same rental payment as original lease agreement.

Expenditure Commitment as of March 31, 2022

May 5, 2020, the Company announced it planned the commercial launch of a new tissue paper production line PM10 and the Company signed

an agreement to purchase paper machine with paper machine supplier.

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

after the completion of trial run.

of March 31, 2022, we had approximately $4.7 million in capital expenditure commitments that were mainly related to the purchase of paper

machine of PM10.

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

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

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 $16) 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.

The balance of Leased Equipment net of amortization was $2,254,357 and $2,286,459

as of March 31, 2022 and December 31, 2021, respectively.

The lease liability was $312,255 and $362,394, and its current portion in the

amount of $228,051 and $210,161 as of March 31, 2022 and December 31, 2021, respectively.

of the Leased Equipment was $42,006 and $40,997 for the three months ended March 31, 2022 and 2021.

Total interest expenses for the sale-leaseback

arrangement was $13,507 and $20,418 for the three months ended March 31, 2022 and 2021.

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

The deferred gain is amortized over the lease

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

and Cash Equivalents

cash, cash equivalents and restricted cash as of March 31, 2022 was $15,358,443, an increase of $4,156,831, from $11,201,612 as of December

The increase of cash and cash equivalents for the three months ended March 31, 2022 was attributable to a number of factors:

Net cash provided by (used in) operating activities

Net cash used in operating activities was $6,442,577

for the nine months ended September 30, 2021.

The balance represented a decrease of cash of $8,812,064, or 371.90%, from $2,369,487 provided

by operating activities for the nine months ended September 30, 2020.

Net loss for the nine months ended September 30, 2021 was $3,249,528,

representing a decrease of loss of $687,764, or 17.47%, from a net loss of $3,937,292 for the nine months ended September 30, 2020.

in various asset and liability account balances throughout the nine months ended September 30, 2021 also contributed to the net change

in cash from operating activities in nine months ended September 30, 2021.

Chief among such changes is the increase of accounts receivable

in the amount of $1,742,594 (a decrease to net cash) during the nine months of 2021.

There was also an increase of $6,396,066 in the ending

inventory balance as of September 30, 2021 (a decrease to net cash for the nine months ended September 30, 2021 cash flow purposes).

addition, the Company had non-cash expenses relating to depreciation and amortization in the amount of $11,733,664.

The Company also had

a net increase of $6,918,816 in prepayment and other current assets (a decrease to net cash) and a net increase of $207,383 in other payables

and accrued liabilities and related parties (a decrease to net cash), as well as an increase in income tax payable of $178,903 (an increase

to net cash) during the nine months ended September 30, 2021.

cash provided by operating activities was $4,411,418 for the three months ended March 31, 2022.

The balance represented an increase of

cash of $12,691,750, or 153.28%, from -$8,280,332 used in operating activities for the three months ended March 31, 2021.

the three months ended March 31, 2022 was $2,488,214, representing a decrease of loss of $1,850,642, or 42.65%, from a net loss of $4,338,856

for the three months ended March 31, 2021.

Changes in various asset and liability account balances throughout the three months ended

March 31, 2022 also contributed to the net change in cash from operating activities in three months ended March 31, 2022.

such changes is the increase of accounts receivable in the amount of $98,921 during the three months of 2022.

There was also a decrease

of $1,515,515 in the ending inventory balance as of March 31, 2022 (an increase to net cash for the three months ended March 31, 2022

cash flow purposes).

In addition, the Company had non-cash expenses relating to depreciation and amortization in the amount of $3,773,236.

The Company also had a net decrease of $3,056,189 in prepayment and other current assets (an increase to net cash) and a net decrease

of $469,485 in other payables and accrued liabilities and related parties (an increase to net cash), as well as a decrease in income

tax payable of $1,112,820 (a decrease to net cash) during the three months ended March 31, 2022.

Net cash used in investing activities

We incurred $ 12,781,114 in net cash expenditures

for investing activities during the nine months ended September 30, 2021, as compared to $ 2,571,949 for the same period of 2020.

in the nine months ended September 30, 2021 were mainly for the payments for the acquisition of lands of Hebei Tengsheng.

incurred $7,175,972 in net cash expenditures for investing activities during the three months ended March 31, 2022, as compared to $44,599

for the same period of 2021.

Payments were mainly for the last installments for the Tengsheng land acquisition.

Net cash provided by financing activities

Net cash provided by financing activities was

proceeds from issuance of shares and warrants net of repayment of loans and lease obligation of $41,547,363 for the nine months ended

September 30, 2021, as compared to net cash provided by financing activities in the amount of $2,241,043 for the nine months ended September

Short-term bank loans

September 30,

Industrial and Commercial Bank of China (“ICBC”)

Total short-term bank loans

On December 11, 2020, the Company entered into

a working capital loan agreement with the ICBC, with a balance of $6,320,350 and $6,435,348 as of September 30, 2021 and December 31,

2020, respectively.

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

cash provided by financing activities was $6,893,314 for the three months ended March 31, 2022, as compared to net cash provided by financing

activities in the amount of $41,794,323 for the three months ended March 31, 2021.

A $6.9 million loan was repaid by a related party

during the period.

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

November 25, 2021, the Company entered into a working capital loan agreement with the ICBC, with a balance of $5,984,374 and $5,958,561

as of March 31, 2022 and December 31, 2021, respectively.

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

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

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

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

As of September 30, 2021, there were guaranteed

short-term borrowings of $6,320,350 and unsecured bank loans of $nil.

As of December 31, 2020, there were guaranteed short-term borrowings

of $6,435,348 and unsecured bank loans of $nil.

The average short-term borrowing rates for the three and nine months

ended September 30, 2021 and 2020 were approximately 4.79%.

will be due and repaid at various installments by November 17, 2022.

of March 31, 2022, there were guaranteed short-term borrowings of $5,984,374 and unsecured bank loans of $nil.

As of December 31, 2021,

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

average short-term borrowing rates for the three months ended March 31, 2022 and 2021 were approximately 4.79%.

loans from credit union

As of September 30, 2021 and December 31, 2020, loans payable to Rural

Credit Union of Xushui District, amounted to $9,652,450 and $9,594,017, respectively.

On April 16, 2014, the Company entered into a

loan agreement with the Rural Credit Union of Xushui District for a term of 5 years, which was originally due in various installments

from June 21, 2014 to November 18, 2018.

of March 31, 2022 and December 31, 2021, loans payable to Rural Credit Union of Xushui District, amounted to $9,861,063 and $9,818,530,

respectively.

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

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 September 30, 2021 and December 31, 2020, total outstanding loan balance was $1,326,055

and $1,318,028, respectively, Out of the total outstanding loan balance, current portion amounted were $246,708 and $214,563 as of September

30, 2021 and December 31, 2020, respectively, which are presented as current liabilities in the consolidated balance sheet and the remaining

balance of $1,079,347 and $11,103,465 are presented as non-current liabilities in the consolidated balance sheet as of September 30, 2021

and December 31, 2020, respectively.

On July 15, 2013, the Company entered into a loan

agreement with the Rural Credit Union of Xushui District for a term of 5 years, which was originally due and payable in various installments

from December 21, 2013 to July 26, 2018.

On June 21, 2018, the loan was extended for additional 5 years and 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 $1,313,720 and $2,349,796 as of September 30, 2021 and December 31, 2020, respectively.

Interest payment is due

quarterly and bears a fixed rate of 0.64% per month.

As of September 30, 2021 and December 31, 2020, the total outstanding loan balance

was $3,854,813 and $3,831,476, respectively.

Out of the total outstanding loan balance, current portion amounted were $416,320 and $337,169

as of September 30, 2021 and December 31, 2020 respectively, which are presented as current liabilities in the consolidated balance sheet

and the remaining balance of $3,438,493 and $3,494,307 are presented as non-current liabilities in the consolidated balance sheet as of

September 30, 2021 and December 31, 2020, 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.

On March 22, 2021, the loan was renewed

for additional one year and the repayments will be due on April 16, 2022.

As of September 30, 2021 and December 31, 2020, the total outstanding

loan balance was $2,467,080 and $2,452,145, respectively.

Out of the total outstanding loan balance, current portion amounted were $2,467,080

and $2,452,145 as of September 30, 2021 and December 31, 2020, respectively, which are presented as current liabilities in the consolidated

balance sheet as of September 30, 2021 and December 31, 2020, respectively.

On December 12, 2019, the Company entered into

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

from June 21, 2020 to December 11, 2021.

The loan 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.

On March 22, 2021, the loan was extended

and the repayments will be due on August 18, 2022.

As of September 30, 2021 and December 31, 2020, the total outstanding loan balance

was $2,004,502 and $1,992,368, respectively.

Out of the total outstanding loan balance, current portion amounted were $2,004,502 and $1,992,368

as of September 30, 2021 and December 31, 2020, respectively, which are presented as current liabilities in the consolidated balance sheet

as of September 30, 2021 and December 31, 2020, respectively.

Total interest expenses for the short-term bank

loans and long-term loans for the three months ended September 30, 2021 and 2020 were $264,644 and $251,266, respectively.

Total interest

expenses for the short-term bank loans and long-term loans for the nine months ended September 30, 2021 and 2020 were $788,094 and $737,420,

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 March 31, 2022 and December 31,

2021, total outstanding loan balance was $1,354,715 and$1,348,871, respectively, Out of the total outstanding loan balance, current portion

amounted were $330,802 and $329,376 as of March 31, 2022 and December 31, 2021, respectively, which are presented as current liabilities

in the consolidated balance sheet and the remaining balance of $1,023,913 and $1,019,495 are presented as non-current liabilities in

the consolidated balance sheet as of March 31, 2022 and December 31, 2021, 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 $928,347 and $1,130,333 as of March 31, 2022 and December

31, 2021, respectively.

Zhenyong Liu, the Company’s CEO, has

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

On January 1, 2013, Dongfang Paper and Mr.

Liu renewed the three-year term loan previously entered into on January 1, 2010, and extended the maturity date further to December 31,

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

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

As of March 31, 2022 and December

31, 2021, the total outstanding loan balance was $3,938,124 and $3,921,139, respectively.

Out of the total outstanding loan balance,

current portion amounted were $1,969,062 and $1,960,569 as of March 31, 2022 and December 31, 2021 respectively, which are presented

as current liabilities in the consolidated balance sheet and the remaining balance of $1,969,062 and $1,960,570 are presented as non-current

liabilities in the consolidated balance sheet as of March 31, 2022 and December 31, 2021, respectively.

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

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 March 31, 2022 and December 31, 2021, the total outstanding loan balance was $2,520,399

and $2,509,528, respectively, which are presented as current liabilities in the consolidated balance sheet as of March 31, 2022 and December

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 March 31, 2022 and December 31, 2021, the total outstanding loan balance was $2,047,825

and $2,038,992, respectively, which are presented as current liabilities in the consolidated balance sheet as of March 31, 2022 and December

interest expenses for the short-term bank loans and long-term loans for the three months ended March 31, 2022 and 2021 were $257,306

and $258,483, respectively.

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

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 $403,791 and $402,047 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 September 30, 2021 and December 31, 2020,

respectively.

On 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, together with

interest of $288,596.

In February 2018, the company paid off the remaining balance, together with interest of $20,400.

As of September

30, 2021 and December 31, 2020, approximately $46,258 and $45,978 of interest, respectively were outstanding to Mr.

Zhenyong Liu, which

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

On March 1, 2015, the Company entered into an

agreement with Mr.

Zhenyong Liu which allows Dongfang Paper to borrow from Mr.

Zhenyong Liu 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.

loan is unsecured and carries an annual interest rate set on the basis of the primary lending rate of the People’s Bank of China

at the time of the borrowing.

On July 13, 2015, an unsecured amount of $4,324,636 was drawn from the facility.

On October 14, 2016 an

unsecured amount of $2,883,091 was drawn from the facility.

In February 2018, the Company repaid $1,507,432 to Mr.

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

31, 2022 and December 31, 2021, 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, together with interest of $288,596.

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

with interest of $20,400.

As of March 31, 2022 and December 31, 2021, approximately $47,257 and $47,054 of interest, respectively were

outstanding to Mr.

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

consolidated balance sheet.

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

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

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

Zhenyong Liu.

would be originally due on July 12, 2018.

Zhenyong Liu agreed to extend the loan for additional 3 years and the remaining balance

would be due on July 12, 2021.

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.

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 September 30, 2021 and December

31, 2020, the outstanding interest was $211,918 and $210,635, respectively, which was recorded in other payables and accrued liabilities

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

As of September 30, 2021 and December 31, 2020,

total amount of loans due to Mr.

31, 2022 and December 31, 2021, the outstanding interest was $216,498 and $215,565, respectively, which was recorded in other payables

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

of March 31, 2022 and December 31, 2021, total amount of loans due to Mr.

Zhenyong Liu were $nil.

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

and nine months ended September 30, 2021 and 2020.

The interest expense incurred for such

related party loans were $nil for the three months ended March 31, 2022 and 2021.

The accrued interest owing to Mr.

Zhenyong Liu was approximately $653,424 and $649,468,

as of September 30, 2021 and December 31, 2020, respectively, which was recorded in other payables and accrued liabilities.

As of September 30, 2021 and December 31, 2020,

amount due to shareholder was $727,433, which represents funds from shareholders to pay for various expenses incurred in the U.S.

amount is due on demand with interest free.

Zhenyong Liu was

approximately $667,546 and $664,666, as of March 31, 2022 and December 31, 2021, 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(RMB44,089,085).

The loan will be due on June 29, 2022.

The loan is unsecured and carries a fixed interest rate of

3% per annum.

The loan was repaid by Mr.

Zhenyong Liu in February 2022.

of March 31, 2022 and December 31, 2021, amount due to shareholder was$727,433, which represents funds from shareholders to pay for various

expenses incurred in the U.S.

The amount is due on demand with interest free.

Accounting Policies and Estimates

The Company’s financial statements are prepared

in accordance with accounting principles generally accepted in the United States, which require us to make estimates and assumptions that

affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial

statements and the reported amounts of revenues and expenses during the reporting periods.

Management makes these estimates using the

best information available at the time the estimates are made.

However, actual results could differ materially from those estimates.

most critical accounting policies are listed below:

Revenue Recognition Policy

The Company recognizes revenue when goods are

delivered and a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations

of the Company exist, and collectability is reasonably assured.

Goods are considered delivered when the customer’s truck picks up

goods at our finished goods inventory warehouse.

Long-Lived Assets

The Company evaluates the recoverability of long-lived

assets and the related estimated remaining useful lives when events or circumstances lead management to believe that the carrying value

of an asset may not be recoverable and the undiscounted cash flows estimated to be generated by those assets are less than the assets’

carrying amount.

In such circumstances, those assets are written down to estimated fair value.

Our judgments regarding the existence of

impairment indicators are based on market conditions, assumptions for operational performance of our businesses, and possible government

policy toward operating efficiency of the Chinese paper manufacturing industry.

For the three months ended September 30, 2021 and 2020,

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

We are currently

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

Foreign Currency Translation

The functional currency of Dongfang Paper and

Baoding Shengde is the Chinese Yuan Renminbi (“RMB”).

Under ASC Topic 830-30, all assets and liabilities are translated into

United States dollars using the current exchange rate at the end of each fiscal period.

The current exchange rates used by the Company

as of September 30, 2021 and December 31, 2020 to translate the Chinese RMB to the U.S.

Dollars are 6.4601:1 and 6.5249:1, respectively.

Revenues and expenses are translated using the prevailing average exchange rates at 6.4682:1 and 6.9931:1 for the three months ended September

30, 2021 and 2020, respectively.

Translation adjustments are included in other comprehensive income (loss).

Off-Balance Sheet Arrangements

We were the guarantor for Baoding Huanrun

Trading Co., for its long-term bank loans in an amount of $4,779,967 (RMB31,000,000), which matures at various times in 2023.

Huanrun Trading Co.

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

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

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

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

However, actual results

could differ materially from those estimates.

The most critical accounting policies are listed below:

Recognition Policy

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

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

Goods are considered delivered

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

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

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

generated by those assets are less than the assets’ carrying amount.

In such circumstances, those assets are written down to estimated

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

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

For the three months ended March 31, 2022 and 2021, no events or circumstances occurred for which an evaluation of the recoverability

of long-lived assets was required.

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

impairment in the future.

Currency Translation

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

Under ASC Topic 830-30, all

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

current exchange rates used by the Company as of March 31, 2022 and December 31, 2021 to translate the Chinese RMB to the U.S.

are 6.3482:1 and 6.3757:1, respectively.

Revenues and expenses are translated using the prevailing average exchange rates at 6.

and 6.5045:1 for the three months ended March 31, 2022 and 2021, respectively.

Translation adjustments are included in other comprehensive

income (loss).

Sheet Arrangements

were the guarantor for Baoding Huanrun Trading Co., for its long-term bank loans in an amount of $4,883,274 (RMB31,000,000), which matures

at various times in 2023.

Baoding Huanrun Trading Co.

is one of our major suppliers of raw materials.

This helps us to maintain a good relationship with the supplier and

negotiate for better terms in payment for materials.

If Baoding Huanrun Trading Co.

were to become insolvent, the Company could be materially

adversely affected.

This helps us to maintain a good

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

If Huanrun Trading Co.

were to become insolvent,

the Company could be materially adversely affected.

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

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial

Instruments-Credit Losses (Topic 326):

Accounting Pronouncements

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

Measurement of Credit Losses on Financial Instruments.

ASU 2016-13 replaced the incurred loss impairment

methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of

reasonable and supportable information to inform credit loss estimates.

ASU 2016-13 requires use of a forward-looking expected credit

loss model for accounts receivables, loans, and other financial instruments.

ASU 2016-13 is effective for fiscal years beginning after

December 15, 2019, with early adoption permitted.

In October 2019, the FASB issued ASU No.

2019-10, “Financial Instruments-Credit

Losses (Topic 326):

Effective Dates”, to finalize the effective date delays for private companies, not-for-profits, and smaller

reporting companies applying the CECL standards.

The ASU is effective for reporting periods beginning after December 15, 2022 and interim

periods within those fiscal years.

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.

We are currently evaluating

the impact of the adoption of ASU 2016-13 on our condensed consolidated financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis