What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-09 compared with 2022-05-10 · 359 added, 250 removed, 747 unchanged (45% of the section changed)

Financial Statements

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2022 AND DECEMBER 31, 2021

Current Assets

1 unchanged sentence

Restricted cash

Accounts receivable (net of allowance for doubtful accounts of $ 73,563 and $ 69,053 as of March 31, 2022 and December 31, 2021, respectively)

Accounts receivable (net of allowance for doubtful accounts of $ 51,319 and $ 69,053 as of June 30, 2022 and December 31, 2021, respectively)

Prepayments and other current assets

24 unchanged sentences

Derivative liability

Total liabilities (including amounts of the consolidated VIE without recourse to the Company of $ 17,240,190 and $ 17,924,475 as of March 31, 2022 and December 31, 2021, respectively)

Total liabilities (including amounts of the consolidated VIE without recourse to the Company of $ 16,668,603 and $ 17,924,475 as of June 30, 2022 and December 31, 2021, respectively)

Commitments and Contingencies

Stockholders’ Equity

Common stock, 500,000,000 shares authorized, $ 0.001 par value per share, 99,049,900 shares issued and outstanding as of March 31, 2022 and December, 31,2021.

Common stock, 500,000,000 shares authorized, $ 0.001 par value per share, 99,049,900 shares issued and outstanding as of June 30, 2022 and December, 31,2021.

Additional paid-in capital

Statutory earnings reserve

Accumulated other comprehensive income

Accumulated other comprehensive (loss) income

Retained earnings

6 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Three Months Ended

Six Months Ended

Cost of sales

1 unchanged sentence

( 43,505,895 )

( 46,326,020 )

( 65,884,317 )

Selling, general and administrative expenses

1 unchanged sentence

( 2,597,611 )

( 5,170,683 )

( 5,152,929 )

Gain on acquisition

Loss from Operations

(Loss) Income from Operations

( 1,237,605 )

( 4,194,038 )

Other Income (Expense):

3 unchanged sentences

Gain (Loss) on derivative liability

(Loss) Income before Income Taxes

( 3,368,945 )

Loss before Income Taxes

Provision for Income Taxes

( 5,122,587 )

( 5,022,382 )

Provision for Income Taxes

( 2,776,127 )

( 4,792,104 )

Other Comprehensive Income (Loss)

Other Comprehensive (Loss) Income

Foreign currency translation adjustment

( 11,524,747 )

Total Comprehensive Loss

( 10,598,609 )

Total Comprehensive (Loss) Income

$ ( 11,812,660 )

$ ( 13,374,736 )

$ ( 2,844,712 )

Losses Per Share:

1 unchanged sentence

Outstanding – Basic and Diluted

See accompanying notes to condensed consolidated financial statements.

TECH PACKAGING, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Three Months Ended

THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Six Months Ended

Cash Flows from Operating Activities:

4 unchanged sentences

(Gain) Loss on derivative liability

( 1,346,633 )

Gain on acquisition

Allowance for bad debts

(Recovery from) Allowance for bad debts

Changes in operating assets and liabilities:

4 unchanged sentences

( 1,111,160 )

( 10,412,117 )

Accounts payable

3 unchanged sentences

Income taxes payable

( 1,112,820 )

Net Cash Provided by (Used in) Operating Activities

8 unchanged sentences

Proceeds from issuance of shares and warrants, net

Repayment of bank loans

Payment of capital lease obligation

14 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

THE THREE MONTHS ENDED JUNE 30, 2022 AND 2021

Comprehensive

9 unchanged sentences

( 4,792,104 )

( 4,338,856 )

Balance at March 31, 2021

Balance at June 30, 2021

$ 104,448,690

6 unchanged sentences

( 10,598,609 )

Balance at March 31, 2022

( 2,776,127 )

Balance at June 30, 2022

$ ( 102,441 )

$ 107,370,202

$ 202,375,172

accompanying notes to condensed consolidated financial statements.

TECH PACKAGING, INC.

10 unchanged sentences

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

On June 9, 2022, the Board of Directors of the

Company approved a reverse stock split of the Company’s issued and outstanding shares of common stock, par value $ 0.001 per share

(the “Common Stock”), at a ratio of 1-for-10 (the “Reverse Stock Split”).

The Reverse Stock Split become effective

on July 7, 2022 (the “Effective Date”), and the shares began trading on the split-adjusted basis on the NYSE American under

the Company’s existing trading symbol “ITP” at market open on July 8, 2022.

The new CUSIP number following the Reverse

Stock Split will be 46527C 209.

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

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

58 unchanged sentences

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.

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

AnDongfang 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

15 unchanged sentences

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 three months ended March 31, 2022 and 2021

was accounted for 99.63 % and 99.46 % of the Company’s total revenue, respectively.

Dongfang Paper also accounted for 86.52 % and 84.13 %

of the total assets of the Company as of March 31, 2022 and December 31, 2021, respectively.

affect its economic performance, resulting in Dongfang Paper and its subsidiary, 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 and Hebei Tengsheng for the

three months ended June 30, 2022 and 2021 was accounted for 99.73 % and 99.77 % of the Company’s total revenue, respectively.

revenue generated from Dongfang Paper and Hebei Tengsheng for the six months ended June 30, 2022 and 2021 was accounted for 99.70 % and

99.66 % of the Company’s total revenue, respectively.

Dongfang Paper and Hebei Tengsheng also accounted for 87.11 % and 84.13 % of

the total assets of the Company as of June 30, 2022 and December 31, 2021, respectively.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of March 31, 2022 and December 31, 2021, details of the Company’s subsidiaries and variable interest entities are as follows:

Incorporation

Incorporation or

Percentage of

or Establishment

Establishment

of June 30, 2022 and December 31, 2021, details of the Company’s subsidiaries and variable interest entities are as follows:

Date of Incorporation or Establishment

Place of Incorporation or Establishment

Percentage of Ownership

Principal Activity

12 unchanged sentences

Paper production and distribution

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

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

17 unchanged sentences

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

sheets as of March 31, 2022 and December 31, 2021 are as follows:

sheets as of June 30, 2022 and December 31, 2021 are as follows:

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

23 unchanged sentences

Advance from customers

Due to related parties

Accrued payroll and employee benefits

21 unchanged sentences

Such adjustments are of a normal recurring nature, unless otherwise

The balance sheet as of March 31, 2022 and the results of operations for the three months ended March 31, 2022 are not necessarily

The balance sheet as of June 30, 2022 and the results of operations for the three months ended June 30, 2022 are not necessarily

indicative of the results to be expected for any future period.

37 unchanged sentences

Company could realize in a current market exchange.

As of March 31, 2022 and December 31, 2021, the carrying value of the Company’s

As of June 30, 2022 and December 31, 2021, the carrying value of the Company’s

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

3 unchanged sentences

thereon are close to the market rates of interest published by the People’s Bank of China.

Management determined that liabilities created by

beneficial conversion features associated with the issuance of certain warrants (see “ Derivative liabilities” under

Note (10)), meet the criteria of derivatives and are required to be measured at fair value.

The fair value of these derivative liabilities

was determined based on management’s estimate of the expected future cash flows required to settle the liabilities.

This valuation

technique involves management’s estimates and judgment based on unobservable inputs and is classified in level 3.

determined that liabilities created by beneficial conversion features associated with the issuance of certain warrants (see “ Derivative

liabilities” under Note (10)), meet the criteria of derivatives and are required to be measured at fair value.

The fair value

of these derivative liabilities was determined based on management’s estimate of the expected future cash flows required to settle

the liabilities.

This valuation technique involves management’s estimates and judgment based on unobservable inputs and is classified

Non-Recurring

16 unchanged sentences

Restricted Cash

cash was nil as of March 31, 2022 and December 31, 2021.

cash was nil as of June 30, 2022 and December 31, 2021.

TECH PACKAGING, INC.

3 unchanged sentences

medium paper, offset printing paper and tissue paper products.

Inventories consisted of the following as of March 31, 2022 and December

Inventories consisted of the following as of June 30, 2022 and December

Raw Materials

8 unchanged sentences

Prepayments and other current assets

and other current assets consisted of the following as of March 31, 2022 and December 31, 2021:

and other current assets consisted of the following as of June 30, 2022 and December 31, 2021:

Prepaid land lease

3 unchanged sentences

Property, plant and equipment, net

of March 31, 2022 and December 31, 2021, property, plant and equipment consisted of the following:

of June 30, 2022 and December 31, 2021, property, plant and equipment consisted of the following:

Property, Plant, and Equipment:

9 unchanged sentences

$ 126,587,428

of March 31, 2022 and December 31, 2021, land use rights represented twenty three parcels of state-owned lands located in Xushui District

of June 30, 2022 and December 31, 2021, land use rights represented twenty three parcels of state-owned lands located in Xushui District

and Wei County of Hebei Province in China, with lease terms of 50 years expiring in 2061 and 2068, respectively.

1 unchanged sentence

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of March 31, 2022 and December 31, 2021, certain property, plant and equipment of Dongfang Paper with net values of $ 928,347 and $ 1,130,333 ,

of June 30, 2022 and December 31, 2021, certain property, plant and equipment of Dongfang Paper with net values of $ 682,421 and $ 1,130,333 ,

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 $ 5,990,831 and $ 6,002,195 , respectively, as of March 31, 2022 and December 31, 2021 was pledged for the bank loan from

Industrial & Commercial Bank of China.

net values of $ 5,631,283 and $ 6,002,195 , respectively, as of June 30, 2022 and December 31, 2021 was pledged for the bank loan from Industrial

& Commercial Bank of China (“ICBC”).

Land use right of Hebei Tengsheng with net value of $5,364,917 and $5,690,261 , respectively,

as of March 31, 2022 and December 31, 2021 was pledged for a long-term loan from credit union of Baoding Shengde.

as of June 30, 2022 and December 31, 2021 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 $ 4,417,524 and $ 4,407,889 , respectively, as of March 31, 2022 and December 31, 2021 was pledged

right of Hebei Tengsheng with net value of $ 4,151,619 and $ 4,407,889 , respectively, as of June 30, 2022 and December 31, 2021 was pledged

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

1 unchanged sentence

Payable, for details of the transaction and asset collaterals.

and amortization of property, plant and equipment was $ 3,773,236 and $ 4,089,067 for the three months ended March 31, 2022 and 2021, respectively.

and amortization of property, plant and equipment was $ 3,819,083 and $ 4,073,916 for the three months ended June 30, 2022 and 2021, respectively.

Depreciation and amortization of property, plant and equipment was $ 7,592,319 and $ 8,166,403 for the six months ended June 30, 2022 and

2021, respectively.

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 $ 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 of 15.6 % per annum and stated at $ 567,099 at the inception of the lease on August 17, 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 $ 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 of 15.6 % 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 $ 2,092,625 and $ 2,286,459

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

as of June 30, 2022 and December 31, 2021, respectively.

The lease liability was $ 244,518 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 ,997for 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.

amount of $ 224,219 and $ 210,161 as of June 30, 2022 and December 31, 2021, respectively.

Amortization of the Leased Equipment was $ 39,972

and $ 41,457 for the three months ended June 30, 2022 and 2021.

Amortization of the Leased Equipment was $ 81,978 and $ 82,454 for the six

months ended June 30, 2022 and 2021.

Total interest expenses for the sale-leaseback arrangement was $ 10,862 and $ 18,932 for the three

months ended June 30, 2022 and 2021.Total interest expenses for the sale-leaseback arrangement was $ 24,369 and $ 39,350 for the six months

ended June 30, 2022 and 2021.

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

1 unchanged sentence

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

future minimum lease payments of the capital lease as of March 31, 2022 were as follows:

future minimum lease payments of the capital lease as of June 30, 2022 were as follows:

unearned discount

2 unchanged sentences

November 25, 2021, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 5,660,518 and $ 5,958,561

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

as of June 30, 2022 and December 31, 2021, respectively.

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

2 unchanged sentences

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 .

of June 30, 2022, there were guaranteed short-term borrowings of $ 5,660,518 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 %.

average short-term borrowing rates for the three months ended June 30, 2022 and 2021 were approximately 4.79 %.

The average short-term

borrowing rates for the six months ended June 30, 2022 and 2021 were approximately 4.79 %.

TECH PACKAGING, INC.

1 unchanged sentence

loans from credit union

As of Mar 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.

of June 30, 2022 and December 31, 2021, loans payable to Rural Credit Union of Xushui District, amounted to $ 9,327,413 and $ 9,818,530 ,

respectively.

Rural Credit Union of Xushui District Loan 1

6 unchanged sentences

Long-term loans from credit union

of Mar 31, 2022, the Company’s long-term debt repayments for the next coming years were as follows:

of Jun 30, 2022, the Company’s long-term debt repayments for the next coming years were as follows:

Remainder of 2022

5 unchanged sentences

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,

As of June 30, 2022 and December 31,

2021, total outstanding loan balance was $ 1,281,402 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.

amounted were $ 685,401 and $ 329,376 as of June 30, 2022 and December 31, 2021, respectively, which are presented as current liabilities

in the consolidated balance sheet and the remaining balance of $ 596,001 and $ 1,019,495 are presented as non-current liabilities in the

consolidated balance sheet as of June 30, 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

3 unchanged sentences

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

by certain of the Company’s manufacturing equipment with net book value of $ 682,421 and $ 1,130,333 as of June 30, 2022 and December

31, 2021, respectively.

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

As of March 31, 2022 and December

As of June 30, 2022 and December

31, 2021, the total outstanding loan balance was $ 3,725,005 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.

On April 17, 2019, the Company entered into a loan

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

August 21, 2019 to April 16, 2021.

The loan was renewed on March 22, 2021 and December 24, 2021 and extended for additional 3 years in

total, which will be due on April 16, 2024 according to the new schedule.

The loan is secured by 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.

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 31, 2021.

current portion amounted were $ 3,725,005 and $ 1,960,569 as of June 30, 2022 and December 31, 2021 respectively, which are presented as

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

in the consolidated balance sheet as of June 30, 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 June 30, 2022 and December 31, 2021, the total outstanding loan balance was $ 2,384,003

and $ 2,509,528 , respectively.

Out of the total outstanding loan balance, current portion amounted were $ nil and $ 2,509,528 as of June

30, 2022 and December 31, 2021 respectively, which are presented as current liabilities in the consolidated balance sheet and the remaining

balance of $ 2,384,003 and $ nil are presented as non-current liabilities in the consolidated balance sheet as of June 30, 2022 and December

31, 2021, respectively.

TECH PACKAGING, INC.

7 unchanged sentences

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

As of June 30, 2022 and December 31, 2021, the total outstanding loan balance was $ 1,937,003

and $ 2,038,992 , respectively.

Out of the total outstanding loan balance, current portion amounted were $ nil and $ 2,038,992 as of June

30, 2022 and December 31, 2021 respectively, which are presented as current liabilities in the consolidated balance sheet and the remaining

balance of $ 1,937,003 and $ nil are presented as non-current liabilities in the consolidated balance sheet as of June 30, 2022 and December

31, 2021, respectively.

interest expenses for the short-term bank loans and long-term loans for the three months ended June 30, 2022 and 2021 were $ 248,244 and

$ 264,967 , respectively.

Total interest expenses for the short-term bank loans and long-term loans for the six months ended June 30, 2022

and 2021 were $ 505,550 and $ 523,450 , respectively.

Related Party Transactions

7 unchanged sentences

Zhenyong Liu, which

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

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

30, 2022 and December 31, 2021, respectively.

9 unchanged sentences

with interest of $ 20,400 .

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

As of June 30, 2022 and December 31, 2021, approximately $ 44,700 and $ 47,054 of interest, respectively were

outstanding to Mr.

14 unchanged sentences

Zhenyong Liu agreed to extend the loan for additional 3 years

and the remaining balance will be due on July 12, 2021.

and the remaining balance was due on July 12, 2021.

On November 23, 2018, the Company repaid $ 3,768,579 to Mr.

4 unchanged sentences

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.

of June 30, 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 were $ nil for the three months ended March 31, 2022 and 2021.

related party loans were $ nil for the three and six months ended June 30, 2022 and 2021.

The accrued interest owing to Mr.

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.

was approximately $ 631,420 and $ 664,666 , as of June 30, 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.

2 unchanged sentences

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.

The loan was repaid by Mr.

The loan is unsecured and carries a fixed interest rate of 3 % per annum.

The loan was repaid by

Zhenyong Liu in February 2022.

As 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.

is due on demand with interest free.

of Headquarters Compound Real Properties from 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 $ 157,522 (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.

of June 30, 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.

TECH PACKAGING, INC.

15 unchanged sentences

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 March 31, 2022.

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

the fair value as of June 30, 2022.

The Black-Scholes model requires six basic data inputs:

4 unchanged sentences

using the Black-Scholes valuation model.

The following weighted-average assumptions were used in the March 31, 2022:

Three months ended

The following weighted-average assumptions were used in the June 30, 2022:

Three months ended June 30, 2022

Expected term

3 unchanged sentences

0.19 % - 2.99 %

The following table summarizes the changes in the derivative liabilities

during the three months ended March 31, 2022:

following table summarizes the changes in the derivative liabilities during the three months ended June 30, 2022:

Fair Value Measurements Using Significant Observable Inputs (Level 3)

4 unchanged sentences

Change in fair value of derivative liability

Balance at March 31, 2022

( 1,346,633 )

Balance at June 30, 2022

TECH PACKAGING, INC.

13 unchanged sentences

of the warrant was $ 0.75 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 March 31, 2022.

The Company classified

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

April 29, 2020, the Company and certain institutional investors entered into a securities purchase agreement, as amended on May 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 and warrants to purchase up to 4,400,000 shares of common stock in a concurrent private placement (the “May

2020 Warrants”).

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

These warrants become 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 June

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

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

1 unchanged sentence

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.

became exercisable 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 outstanding as of March 31, 2022 .

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 June 30, 2022 .

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

The March 2021 Warrants became

exercisable 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 March 31,

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 June 30,

Company classified warrants as liabilities and accounted for the issuance of the warrants as a derivative.

summary of stock warrant activities is as below:

Three months Ended

exercise price

Six months Ended

June 30, 2022

Weight average exercise price

Outstanding and exercisable at beginning of the period

5 unchanged sentences

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes information relating to outstanding and exercisable warrants as of March 31, 2022.

following table summarizes information relating to outstanding and exercisable warrants as of June 30, 2022.

Warrants Outstanding

Warrants Exercisable

1 unchanged sentence

Contractual life

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 March 31, 2022 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 March 31, 2022and December 31, 2021 are nil.

Weighted Average

Exercise Price

Aggregate 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 June 30, 2022 for those warrants

for which the quoted market price was in excess of the exercise price (“in-the-money” warrants).

The intrinsic value of the

warrants as of June 30, 2022 and December 31, 2021 are nil.

Earnings Per Share

the three months ended March 31, 2022 and 2021, basic and diluted net income per share are calculated as follows:

the three months ended June 30, 2022 and 2021, basic and diluted net income per share are calculated as follows:

Three Months Ended

13 unchanged sentences

Diluted loss per share

the three months ended March 31, 2022 and 2021 there were no securities with dilutive effect issued and outstanding.

the six months ended June 30, 2022 and 2021, basic and diluted net income per share are calculated as follows:

Six Months Ended

Basic loss per share

Net loss for the period - numerator

$ ( 2,776,127 )

$ ( 4,792,104 )

Weighted average common stock outstanding - denominator

Net loss per share

Diluted loss per share

Net loss for the period - numerator

$ ( 2,776,127 )

$ ( 4,792,104 )

Weighted average common stock outstanding - denominator

Effect of dilution

Weighted average common stock outstanding - denominator

Diluted loss per share

the three and six months ended June 30, 2022 and 2021 there were no securities with dilutive effect issued and outstanding.

TECH PACKAGING, INC.

41 unchanged sentences

Income Tax Law, Enterprise Income Tax is generally imposed at a statutory rate of 25 %.

provisions for income taxes for three months ended March 31, 2022 and 2021 were as follows:

provisions for income taxes for three months ended June 30, 2022 and 2021 were as follows:

Three Months Ended

Provision for Income Taxes

Current Tax Provision U.S.

Current Tax Provision PRC

2 unchanged sentences

$ ( 243,829 )

provisions for income taxes for six months ended June 30, 2022 and 2021 were as follows:

Six Months Ended

Provision for Income Taxes

Current Tax Provision U.S.

Current Tax Provision PRC

Deferred Tax Provision PRC

Total Provision for (Deferred tax benefit)/ Income Taxes

$ ( 592,818 )

1 unchanged sentence

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 March 31, 2022,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.

As of March 31, 2022, 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:

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 $ 776,533 and $ 882,743 for U.S.

tax purposes for the years ended December 31, 2021 and 2020, 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 June 30, 2022,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 June 30, 2022, 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:

Deferred tax assets (liabilities)

8 unchanged sentences

Total deferred tax assets, net

Three Months Ended

PRC Statutory rate

Effect of different tax jurisdiction

Effect of tax and book difference

Effect of reconciling items in the PRC for tax purposes

Change in valuation allowance

Effective income tax rate

Six Months Ended

PRC Statutory rate

Effect of different tax jurisdiction

Effect of reconciling items in the PRC for tax purposes

(Over) Under-provision in previous year

1 unchanged sentence

Effective income tax rate

the three months ended March 31, 2022 and 2021, the effective income tax rate was estimated by the Company to be 12.3 % and 2.3 %, 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.

the three months ended June 30, 2022 and 2021, the effective income tax rate was estimated by the Company to be 45.9 % and 109.7 %, respectively.

the six months ended June30, 2022 and 2021, the effective income tax rate was estimated by the Company to be 17.6 % and 2181.0 %, respectively.

As of June 30, 2022, 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.

If these earnings are repatriated to the 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.

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

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 March 31, 2022 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 three months ended March 31, 2022 and 2021,

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.

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.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The 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 June 30, 2022 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 three and six months ended June 30, 2022 and 2021, 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

Incentive Stock Plan

On 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.

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.

Commitments and Contingencies

3 unchanged sentences

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 $ 157,522 (RMB 1,000,000 ), for a total term of up to

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.

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

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 with an annual rental payment

of approximately $ 153,709 (RMB 1,000,000 ).

The lease agreement is renewable in August 2022.

minimum lease payments of all operating leases are as follows:

Total operating lease payments

of March 31, 2022, the Company has entered into several contracts for the purchase of paper machine of a new tissue paper production

line PM10 and the improvement of Industrial Buildings.

Total outstanding commitments under these contracts were $ 4,749,646 and $ 4,700,927

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

As of June 30, 2022, the Company has entered into

several contracts for the purchase of paper machine of a new tissue paper production line PM10 and the improvement of Industrial Buildings.

Total outstanding commitments under these contracts were $ 4,492,610 and $ 4,700,927 as of June 30, 2022 and December 31, 2021, respectively.

The Company expected to pay off all the balances within 1 - 3 years.

1 unchanged sentence

Company agreed with Baoding Huanrun Trading Co., a major supplier of raw materials, to guarantee certain obligations of this third party,

and as of March 31, 2022 and December 31, 2021, the Company guaranteed its long-term loan from financial institutions amounting to $ 4,883,274

and as of June 30, 2022 and December 31, 2021, the Company guaranteed its long-term loan from financial institutions amounting to $ 4,619,006

(RMB 31,000,000 ) and $ 4,862,211 (RMB 31,000,000 ), respectively, that matured at various times in 2018-2023.

17 unchanged sentences

Three Months Ended

March 31, 2022

June 30, 2022

Not Attributable

Elimination of

7 unchanged sentences

( 2,003,653 )

( 2,488,214 )

Three Months Ended

March 31, 2021

June 30, 2021

Not Attributable

Elimination of

1 unchanged sentence

Inter-segment

$ ( 2,984,697 )

Depreciation and amortization

4 unchanged sentences

( 6,482,307 )

Six Months Ended

June 30, 2022

Elimination of

Enterprise-wide,

Inter-segment

( 1,378,124 )

Depreciation and amortization

Interest income

Interest expense

Income tax expense(benefit)

Net income (loss)

( 3,609,095 )

As of March 31, 2022

As of December 31, 2021

( 2,776,127 )

Six Months Ended

June 30, 2021

Not Attributable

Elimination of

Enterprise-wide,

Inter-segment

Gross profit (loss)

Depreciation and amortization

Interest income

Interest expense

Income tax expense(benefit)

Net income (loss)

( 7,960,911 )

( 4,792,104 )

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2022

Not Attributable

Elimination of

Inter-segment

As of December 31, 2021

Not Attributable

Elimination of

Enterprise-wide,

Inter-segment

$ 109,369,166

Concentration and Major Customers and Suppliers

the three months ended March 31, 2022, the Company had no single customer contributed over 10 % of total sales.

the three months ended March 31, 2021, the Company had no single customer contributed over 10 % of total sales.

the three months ended March 31, 2022, the Company had two major suppliers accounted for 77 % and 13 % of total purchases.

the three months ended March 31, 2021, the Company had two major suppliers accounted for 81 % and 10 % of total purchases.

For the three months ended June 30, 2022, the

Company had no single customer contributed over 10 % of total sales.

For the three months ended June 30, 2021, the Company had no single

customer contributed over 10 % of total sales.

the six months ended June 30, 2022, the Company had no single customer contributed over 10 % of total sales.

For the six months ended

June 30, 2021, the Company had no single customer contributed over 10 % of total sales.

For the three months ended June 30, 2022, the

Company had three major suppliers accounted for 77 %, 16 % and 5 % of total purchases.

For the three months ended June 30, 2021, the Company

had three major suppliers accounted for 79 %, 10 % and 3 % of total purchases.

the six months ended June 30, 2022, the Company had three major suppliers accounted for 77 %, 15 % and 5 % of total purchases.

months ended June 30, 2021, the Company had three major suppliers accounted for 80 %, 10 % and 2 % of total purchases.

Concentration of Credit Risk

Financial instruments for which the Company is potentially

subject to concentration of credit risk consist principally of cash.

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

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 ($

78,762) 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 U.S.

bank accounts are all fully covered by the FDIC insurance as of March 31, 2022 and December

31, 2021, while for the cash placed in financial institutions in the PRC, the balances exceeding the maximum coverage of RMB 500,000 amounted

to RMB 39,944,290 ($ 6,292,223 ) as of March 31, 2022.

instruments for which the Company is potentially subject to concentration of credit risk consist principally of cash.

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 as of

June 30, 2022 and December 31, 2021.

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 ($ 74,500 ) 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 June 30, 2022 and December 31, 2021, while for the cash placed in financial institutions in the PRC, the

balances exceeding the maximum coverage of RMB 500,000 amounted to RMB 55,139,496 ($ 8,215,796 ) as of June 30, 2022.

Risks and Uncertainties

19 unchanged sentences

Subsequent Event

June 9, 2022, the Board of Directors of the Company approved the Reverse Stock Split, pursuant to Section 78.207 of the Nevada Revised

Statutes (“NRS”).

The Reverse Stock Split was effected by the Company filing of a Certificate of Change Pursuant to NRS 78.209

with the Secretary of State of the State of Nevada on July 7, 2022.

As a result of the Reverse Stock Split, the number of shares of the

Company’s authorized Common Stock was reduced from 500,000,000 shares to 50,000,000 shares and the issued and outstanding number

of shares of the Company’s common stock reduced from 99,049,900 to 9,915,920 .

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 1. Financial Statements