What changed in this filing

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Item 1. Financial Statements

2022-11-10 compared with 2022-08-09 · 885 added, 685 removed, 421 unchanged (79% of the section changed)

Financial Statements

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2022 AND DECEMBER 31, 2021

September 30,

Current Assets

1 unchanged sentence

Restricted cash

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

Accounts receivable (net of allowance for doubtful accounts of $ 61,270 and $ 69,053 as of September 30, 2022 and December 31, 2021, respectively)

Prepayments and other current assets

2 unchanged sentences

Prepayment on property, plant and equipment

Operating lease right-of-use assets, net

Finance lease right-of-use assets, net

20 unchanged sentences

Derivative liability

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)

Total liabilities (including amounts of the consolidated VIE without recourse to the Company of $ 17,417,813 and $ 17,924,475 as of September 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 June 30, 2022 and December, 31,2021.

Common stock, 50,000,000 shares authorized, $ 0.001 par value per share, 11,415,920 and 9,915,920 shares issued and outstanding as of September 30, 2022 and December, 31, 2021, respectively.

Additional paid-in capital

1 unchanged sentence

Accumulated other comprehensive (loss) income

( 11,273,597 )

Retained earnings

3 unchanged sentences

$ 241,535,202

accompanying notes to condensed consolidated financial statements.

TECH PACKAGING, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

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

See accompanying notes to condensed consolidated

financial statements.

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2022 AND 2021

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Cost of sales

( 109,150,452

( 43,505,895 )

( 46,326,020 )

( 65,884,317 )

Selling, general and administrative expenses

( 1,869,802 )

( 2,597,611 )

( 5,170,683 )

( 5,152,929 )

Gain on acquisition

(Loss) Income from Operations

( 1,237,605 )

( 4,194,038 )

Loss from Operations

Other Income (Expense):

4 unchanged sentences

(Loss) Income before Income Taxes

( 3,368,945 )

Provision for Income Taxes

( 5,122,587 )

( 5,022,382 )

( 2,776,127 )

( 4,792,104 )

Net (Loss) Income

Other Comprehensive (Loss) Income

Foreign currency translation adjustment

( 11,524,747 )

( 10,598,609 )

Total Comprehensive (Loss) Income

$ ( 11,812,660 )

$ ( 13,374,736 )

$ ( 2,844,712 )

Losses Per Share:

Basic and Diluted Losses per Share

(Losses) Earnings Per Share:

Basic and Diluted (Losses) Earnings per Share

Outstanding – Basic and Diluted

See accompanying notes to condensed consolidated financial statements.

TECH PACKAGING, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Six Months Ended

See accompanying notes to condensed consolidated

financial statements.

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30,

2022 AND 2021

Nine Months Ended

September 30,

Cash Flows from Operating Activities:

7 unchanged sentences

(Recovery from) Allowance for bad debts

Share-based compensation and expenses

( 1,197,630 )

Changes in operating assets and liabilities:

4 unchanged sentences

( 6,396,066 )

( 10,412,117 )

Accounts payable

Advance from customers

Related parties

6 unchanged sentences

Purchases of property, plant and equipment

( 1,681,979 )

( 12,781,114 )

Acquisition of land

2 unchanged sentences

( 8,189,410 )

( 12,781,114 )

Cash Flows from Financing Activities:

Proceeds from issuance of shares and warrants, net

Proceeds from short term bank loans

Proceeds from long term loans

Repayment of bank loans

3 unchanged sentences

Effect of Exchange Rate Changes on Cash and Cash Equivalents

( 1,264,048 )

Net Increase in Cash and Cash Equivalents

7 unchanged sentences

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

accompanying notes to condensed consolidated financial statements.

TECH PACKAGING, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

THE THREE MONTHS ENDED JUNE 30, 2022 AND 2021

See accompanying notes to condensed consolidated

financial statements.

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022

Comprehensive

9 unchanged sentences

( 3,249,528 )

Balance at June 30, 2021

Balance at September 30, 2021

$ 105,991,266

3 unchanged sentences

$ 215,749,908

Issuance of shares to officer and directors

Foreign currency translation adjustment

3 unchanged sentences

( 4,663,445 )

Balance at June 30, 2022

Balance at September 30, 2022

$ ( 11,273,597 )

1 unchanged sentence

$ 190,876,698

accompanying notes to condensed consolidated financial statements.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

See accompanying notes to condensed consolidated

financial statements.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(1) Organization and Business Background

Tech Packaging, Inc.

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

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

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

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

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

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

IT Tech Packaging, Inc.

(the “Company”)

was incorporated in the State of Nevada on December 9, 2005, under the name “Carlateral, Inc.” Through the steps described

immediately below, we became the holding company for Hebei Baoding Dongfang Paper Milling Company Limited (“Dongfang Paper”),

a producer and distributor of paper products in China, on October 29, 2007.

On August 1, 2018, we changed our corporate name

to IT Tech Packaging, Inc..

The name change was effected through a parent/subsidiary short-form merger of IT Tech Packaging, Inc., our

wholly-owned Nevada subsidiary formed solely for the purpose of the name change, with and into us.

We were the surviving entity.

In connection with the name change, our common stock began being traded under a new NYSE symbol, “ITP”.

In connection

with the name change, our common stock began being traded under a new NYSE symbol, “ITP”.

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

6 unchanged sentences

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,

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

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

with their respective ownership interests in Dongfang Holding.

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

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

Xiaodong Liu and Shuangxi Zhao, for Mr.

Zhao (the original shareholders of Dongfang Paper) to exercise control over

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

completed the change in registration of Dongfang Paper’s capital with the relevant PRC Administration of Industry and Commerce

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

As a result of the merger transaction, Dongfang Holding became a wholly owned subsidiary

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

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

within the proper time limits set forth under PRC law.

In connection with the consummation of the restructuring transactions described

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

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

(“Baoding Shengde”) to transfer

the control of Dongfang Paper over to Baoding Shengde.

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

shares of Shengde Holdings Inc., a Nevada corporation.

All references made to share or per share amounts in the accompanying consolidated financial statements

and applicable disclosures have been retroactively adjusted to reflect the effects of the Reverse Stock Split.

On 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, and issued the shareholders of Dongfang Holding

an aggregate of 7,450,497 (as adjusted for a four-for-one reverse stock split effected in November 2009) shares of our common stock, which

shares were distributed pro-rata to the shareholders of Dongfang Holding in accordance with their respective ownership interests in Dongfang

At the time of the Merger Agreement, Dongfang Holding owned all of the issued and outstanding stock and ownership of Dongfang

Paper and such shares of Dongfang Paper were held in trust with Zhenyong Liu, Xiaodong Liu and Shuangxi Zhao, for Mr.

Zhao (the original shareholders of Dongfang Paper) to exercise control over the disposition of Dongfang Holding’s shares in

Dongfang Paper on Dongfang Holding’s behalf until Dongfang Holding successfully completed the change in registration of Dongfang

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

As a result of the merger transaction, Dongfang Holding became a wholly owned subsidiary of the Company, and Dongfang Holding’s

wholly owned subsidiary, Dongfang Paper, became an indirectly owned subsidiary of the Company.

Dongfang Holding, as the 100 % owner of Dongfang

Paper, was unable to complete the registration of Dongfang Paper’s capital under its name within the proper time limits set forth

under PRC law.

In connection with the consummation of the restructuring transactions described below, Dongfang Holding directed the trustees

to return the shares of Dongfang Paper to their original shareholders, and the original Dongfang Paper shareholders entered into certain

agreements with Baoding Shengde Paper Co., Ltd.

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

On June 24, 2009, the Company consummated a number

of restructuring transactions pursuant to which it acquired all of the issued and outstanding shares of Shengde Holdings Inc., a Nevada

Shengde Holdings Inc.

1 unchanged sentence

On June 1, 2009, Shengde Holdings Inc.

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

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

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

(“Shengde Holdings”)

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

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

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

Baoding Shengde is mainly engaged

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

Prior to February

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

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

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

(ii) Loan Agreement, which provides

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

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

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

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

The exercise price for the options shall be

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

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

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

Specifically, Baoding Shengde is entitled

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

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

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

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

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

and Dongfang Paper’s Articles of Association.

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

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

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

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

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

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

The parties believe

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

businesses in the PRC.

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

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

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

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

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

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

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

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

Because Baoding Shengde is a wholly-owned

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

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

To ensure proper compliance of the Company’s

control over the ownership and operations of Dongfang Paper with certain PRC regulations, on June 24, 2009, the Company entered into a

series of contractual agreements (the “Contractual Agreements”) with Dongfang Paper and Dongfang Paper Equity Owners via the

Company’s wholly owned subsidiary Shengde Holdings Inc.

(“Shengde Holdings”) a Nevada corporation and Baoding Shengde

Paper Co., Ltd.

(“Baoding Shengde”), a wholly foreign-owned enterprise in the PRC with an original registered capital of $ 10,000,000

(subsequently increased to $ 60,000,000 in June 2010).

Baoding Shengde is mainly engaged in production and distribution of digital photo

paper and single-use face masks and is 100 % owned by Shengde Holdings.

Prior to February 10, 2010, the Contractual Agreements included

(i) Exclusive Technical Service and Business Consulting Agreement, which generally provides that Baoding Shengde shall provide exclusive

technical, business and management consulting services to Dongfang Paper, in exchange for service fees including a fee equivalent to 80 %

of Dongfang Paper’s total annual net profits;

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

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

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

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

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

equity interest in Dongfang Paper.

The exercise price for the options shall be RMB1 which Baoding Shengde should pay to each of Dongfang

Paper Equity Owner for all their equity interests in Dongfang Paper;

(iv) Share Pledge Agreement, which provides that Dongfang Paper Equity

Owners will pledge all of their equity interests in Dongfang Paper to Baoding Shengde as security for their obligations under the other

agreements described in this section.

Specifically, Baoding Shengde is entitled to dispose of the pledged equity interests in the event

that Dongfang Paper Equity Owners breach their obligations under the Loan Agreement or Dongfang Paper fails to pay the service fees to

Baoding Shengde pursuant to the Exclusive Technical Service and Business Consulting Agreement;

and (v) Proxy Agreement, which provides

that Dongfang Paper Equity Owners shall irrevocably entrust a designee of Baoding Shengde with such shareholder’s voting rights

and the right to represent such shareholder to exercise such owner’s rights at any equity owners’ meeting of Dongfang Paper

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

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

in Dongfang Paper.

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.

On February 10, 2010, Baoding Shengde and the

Dongfang Paper Equity Owners entered into a Termination of Loan Agreement to terminate the above-mentioned $ 10,000,000 Loan Agreement.

Because of the Company’s decision to fund future business expansions through Baoding Shengde instead of Dongfang Paper, the $ 10,000,000

loan contemplated was never made prior to the point of termination.

The parties believe the termination of the Loan Agreement does not

in itself compromise the effective control of the Company over Dongfang Paper and its businesses in the PRC.

An agreement was also entered into among Baoding

Shengde, Dongfang Paper and the Dongfang Paper Equity Owners on December 31, 2010, reiterating that Baoding Shengde is entitled to 100 %

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

In addition, Dongfang Paper and

the Dongfang Paper Equity Owners shall not declare any of Dongfang Paper’s unappropriated earnings as dividend, including the unappropriated

earnings of Dongfang Paper from its establishment to 2010 and thereafter.

On June 25, 2019, Dongfang Paper entered into

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

(“Hebei Tengsheng”), a limited liability

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

Full payment of the consideration

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

QianrongQianhui Hebei Technology Co., Ltd, a wholly

owned subsidiary of Shengde holding, was incorporated on July 15, 2021.

It is a service provider of high quality material solutions for

textile, cosmetics and paper production.

The Company has no direct equity interest in Dongfang

5 unchanged sentences

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 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

three months ended September 30, 2022 and 2021 was accounted for 99.83 % and 97.01 % of the Company’s total revenue, respectively.

The revenue generated from Dongfang Paper and Hebei Tengsheng for the nine months endedSeptember 30, 2022 and 2021 was accounted for 99.75 %

and 98.89 % of the Company’s total revenue, respectively.

Dongfang Paper and Hebei Tengsheng also accounted for 87.51 % and 84.13 %

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

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

Date of Incorporation or

Place of Incorporation or

Percentage of

Establishment

Principal Activity

8 unchanged sentences

Paper production and distribution

QianrongQianhuiHeibei

July 15, 2021

New material technology service

Variable interest entity (“VIE”):

2 unchanged sentences

Paper production and distribution

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

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

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

under these contractual arrangements.

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

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

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

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

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

operating activities.

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

ability to conduct its operations.

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

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

of the aforementioned risks and uncertainties is remote.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The aggregate carrying value of Dongfang Paper’s

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

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

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

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

support to the VIE.

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

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

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

However, uncertainties in the PRC legal system

could cause the Company’s current ownership structure to be found to be in violation of any existing and/or future PRC laws or regulations

and could limit the Company’s ability, through its subsidiary, to enforce its rights under these contractual arrangements.

shareholders of the VIE may have interests that are different than those of the Company, which could potentially increase the risk that

they would seek to act contrary to the terms of the aforementioned agreements.

In addition, if the current structure or any of

the contractual arrangements were found to be in violation of any existing or future PRC law, the Company may be subject to penalties,

which may include, but not be limited to, the cancellation or revocation of the Company’s business and operating licenses, being

required to restructure the Company’s operations or being required to discontinue the Company’s operating activities.

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

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

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

risks and uncertainties is remote.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The Company has aggregated the financial information

of Dongfang Paper in the table below.

The aggregate carrying value of Dongfang Paper’s assets and liabilities (after elimination

of intercompany transactions and balances) in the Company’s condensed consolidated balance sheets as of September 30, 2022 and December

31, 2021 are as follows:

The Company and its consolidated subsidiaries

are not required to provide financial support to the VIE, and no creditor (or beneficial interest holders) of the VIE have recourse to

the assets of Company unless the Company separately agrees to be subject to such claims.

There are no terms in any agreements or arrangements,

implicit or explicit, which require the Company or its subsidiaries to provide financial support to the VIE.

However, if the VIE does

require financial support, the Company or its subsidiaries may, at its option and subject to statutory limits and restrictions, provide

financial support to the VIE.

September 30,

Current Assets

17 unchanged sentences

Advance from customers

Due to related parties

Accrued payroll and employee benefits

6 unchanged sentences

Total liabilities

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(2) Basis of Presentation and Significant Accounting Policies

accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of

the Securities and Exchange Commission (“SEC”) for reporting on Form 10-Q.

Accordingly, certain information and notes required

by the United States of America generally accepted accounting principles (“GAAP”) for annual financial statements are not

included herein.

These interim statements should be read in conjunction with the consolidated financial statements and notes thereto

included in the Annual Report on Form 10-K for the year ended December 31, 2021 of the Company, and its subsidiaries and variable interest

entity (which we sometimes refer to collectively as “the Company”, “we”, “us” or “our”).

of Consolidation

unaudited condensed consolidated financial statements reflect all adjustments, which are, in the opinion of management, necessary for

a fair presentation of our financial position and results of operations.

Such adjustments are of a normal recurring nature, unless otherwise

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.

unaudited condensed consolidated financial statements are prepared in accordance with GAAP.

These accounting principles require us to

make certain estimates, judgments 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

We believe that the estimates, judgments and assumptions are reasonable, based on information available at the time they are

Actual results could differ materially from those estimates.

of long-lived asset

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

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

identifiable and is less than its carrying value.

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

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

Fair market value is determined primarily using the anticipated

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

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

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

Value Measurements

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

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

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

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

It establishes

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

value and include the following:

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

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

quoted prices in markets that are not active;

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

substantially the full term of the assets or liabilities.

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

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Classification

within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.

Company estimates the fair value of financial instruments using the available market information and valuation methods.

judgment is required in estimating fair value.

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

Company could realize in a current market exchange.

As of 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

loans, balance due to a related party and obligation under capital lease, approximate at their fair values because of the short maturity

of these instruments;

while loans from credit union and loans from a related party approximate at their fair value as the interest rates

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

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

The accompanying unaudited condensed consolidated

financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”)

for reporting on Form 10-Q.

Accordingly, certain information and notes required by the United States of America generally accepted accounting

principles (“GAAP”) for annual financial statements are not included herein.

These interim statements should be read in conjunction

with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31,

2021 of the Company, and its subsidiaries and variable interest entity (which we sometimes refer to collectively as “the Company”,

“we”, “us” or “our”).

Principles of Consolidation

Our unaudited condensed consolidated financial

statements reflect all adjustments, which are, in the opinion of management, necessary for a fair presentation of our financial position

and results of operations.

Such adjustments are of a normal recurring nature, unless otherwise noted.

The balance sheet as of September

30, 2022 and the results of operations for the nine months ended September 30, 2022 are not necessarily indicative of the results to be

expected for any future period.

Our unaudited condensed consolidated financial

statements are prepared in accordance with GAAP.

These accounting principles require us to make certain estimates, judgments 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 period.

We believe that the estimates, judgments and

assumptions are reasonable, based on information available at the time they are made.

Actual results could differ materially from those

Reverse stock split

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

Company approved the Reverse Stock Split, at a ratio of 1-for-10, 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.

The par value per share of our stock remains unchanged at $ 0.001 per share after the Reverse Stock

All references made to share or per share amounts in the accompanying consolidated financial statements and applicable disclosures

have been retroactively adjusted to reflect the effects of the Reverse Stock Split.

Valuation of long-lived asset

The Company reviews the carrying value of long-lived

assets to be held and used when events and circumstances warrants such a review.

The carrying value of a long-lived asset is considered

impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value.

that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset

and intangible assets.

Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with

the risk involved.

Losses on long-lived assets and intangible assets to be disposed are determined in a similar manner, except that fair

market values are reduced for the cost to dispose.

Fair Value Measurements

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

of impairment.

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

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

For discontinued operations, long-lived assets

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

The fair value of these assets were determined using models

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

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

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

such instruments over the vesting period.

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

awards issued to non-employees for services.

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

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

The Company has adopted ASC Topic 820, Fair Value

Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures

about fair value measurements.

It does not require any new fair value measurements, but provides guidance on how to measure fair value

by providing a fair value hierarchy used to classify the source of the information.

It establishes a three-level valuation hierarchy of

valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following:

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

Level 2 - Inputs other than Level 1 that are observable,

either directly or indirectly, such as quoted prices for similar assets or liabilities;

quoted prices in markets that are not active;

or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or

Level 3 - Unobservable inputs that are supported by little or no market

activity and that are significant to the fair value of the assets or liabilities.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Classification within the hierarchy is determined based on the lowest

level of input that is significant to the fair value measurement.

The Company estimates the fair value of financial

instruments using the available market information and valuation methods.

Considerable judgment is required in estimating fair value.

Accordingly, the estimates of fair value may not be indicative of the amounts that the Company could realize in a current market exchange.

As of September 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 loans, balance due to a related party and obligation

under capital lease, approximate at their fair values because of the short maturity of these instruments;

while loans from credit union

and loans from a related party approximate at their fair value as the interest rates thereon are close to the market rates of interest

published by the People’s Bank of China.

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.

Non-Recurring Fair Value Measurements

The Company reviews long-lived assets for impairment

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

For the continuing operations,

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

fair value only when impairment is recognized.

For discontinued operations, long-lived assets are measured at the lower of carrying amount

or fair value less cost to sell.

The fair value of these assets were determined using models with significant unobservable inputs which

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

Share-Based Compensation

The Company uses the fair value recognition provision

of ASC Topic 718, Compensation-Stock Compensation , which requires the Company to expense the cost of employee services received

in exchange for an award of equity instruments based on the grant date fair value of such instruments over the vesting period.

The Company also applies the provisions of ASC

Topic 505-50, Equity Based Payments to Non-Employees to account for stock-based compensation awards issued to non-employees for

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

issued in exchange for such services, whichever is more reliably measurable.

(3) Restricted Cash

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

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

materials inventory includes mainly recycled paper board and recycled white scrap paper.

Finished goods include mainly products of corrugating

medium paper, offset printing paper and tissue paper products.

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

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

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(4) Inventories

Raw materials inventory includes mainly recycled paper board and recycled

white scrap paper.

Finished goods include mainly products of corrugating medium paper, offset printing paper and tissue paper products.

Inventories consisted of the following as of September 30, 2022 and December 31, 2021:

September 30,

Raw Materials

8 unchanged sentences

(5) Prepayments and other current assets

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

Prepayments and other current assets consisted of the following as

of September 30, 2022 and December 31, 2021:

September 30,

Prepaid land lease

3 unchanged sentences

(6) Property, plant and equipment, net

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

As of September 30, 2022 and December 31, 2021, property, plant and

equipment consisted of the following:

September 30,

Property, Plant, and Equipment:

9 unchanged sentences

$ 126,587,428

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.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 $ 5,631,283 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 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 $ 4,151,619 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.

See “ Short-term bank loans ” under Note (7), Loans

Payable, for details of the transaction and asset collaterals.

and amortization of property, plant and equipment was $ 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.

As of September 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.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

As of September 30, 2022 and December 31, 2021,

certain property, plant and equipment of Dongfang Paper with net values of $ 460,107 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 $ 5,289,810 and $ 6,002,195 ,

respectively, as of September 30, 2022 and December 31, 2021 was pledged for the bank loan from Industrial & Commercial Bank of China

Land use right of Hebei Tengsheng with net value of $5,042,556 and $5,690,261 , respectively, as of September 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 $ 3,899,128 and $ 4,407,889 , respectively, as of September 30, 2022 and December 31, 2021 was pledged for another

long-term loan from credit union of Baoding Shengde.

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

details of the transaction and asset collaterals.

Depreciation and amortization of property, plant and equipment was

$ 3,609,985 and $ 3,500,145 for the three months ended September 30, 2022 and 2021, respectively.

Depreciation and amortization of property,

plant and equipment was $ 11,168,328 and $ 11,659,670 for the nine months ended September 30, 2022 and 2021, respectively.

Financing with Sale-Leaseback

Company entered into a sale-leaseback arrangement (the “Lease Financing Agreement”) with TAC Leasing Co., Ltd.(“TLCL”)

on August 6, 2020, for a total financing proceeds in the amount of RMB 16 million (approximately US$ 2.5 million).

Under the sale-leaseback

arrangement, Hebei Tengsheng sold the Leased Equipment to TLCL for 16 million (approximately US$ 2.5 million).

Concurrent with the sale

of equipment, Hebei Tengsheng leases back the equipment sold to TLCL for a lease term of three years .

At the end of the lease term, Hebei

Tengsheng may pay a nominal purchase price of RMB 100 (approximately $ 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 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 $ 224,219 and $ 210,161 as of June 30, 2022 and December 31, 2021, respectively.

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.

Hebei Tengsheng made payments due according to

the schedule.

The balance of Leased Equipment net of amortization was $ 1,940,586 and $ 2,286,459 as of September 30, 2022 and December

31, 2021, respectively.

The lease liability was $ 181,187 and $ 362,394 , and its current portion in the amount of $ 181,187 and $ 210,161

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

Amortization of the Leased Equipment was $ 38,486

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.

The deferred gain is amortized over the lease

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

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

and $ 41,208 for the three months ended September 30, 2022 and 2021.

Amortization of the Leased Equipment was $ 120,464 and $ 123,663 for

the nine months ended September 30, 2022 and 2021.

Total interest expenses for the sale-leaseback arrangement was $ 8,439 and $ 17,026 for

the three months ended September 30, 2022 and 2021.Total interest expenses for the sale-leaseback arrangement was $ 32,808 and $ 56,376

for the nine months ended September 30, 2022 and 2021.

As a result of the sale and leaseback, a deferred

gain in the amount of $ 430,695 was recorded.

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

Leased Equipment.

The future minimum lease payments of the capital

lease as of September 30, 2022 were as follows:

September 30,

unearned discount

Current portion lease liability

Operating lease

The Company leases space under non-cancelable operating leases for

office and manufacturing locations.

These leases do not have significant rent escalation holidays, concessions, leasehold improvement

incentives, or other build-out clauses.

Further, the leases do not contain contingent rent provisions.

The leases include option to renew in condition that it is agreed by

the landlord before expiry.

Therefore, the majority of renewals to extend the lease terms are not included in its right-of-use assets

and lease liabilities as they are not reasonably certain of exercise.

The Company regularly evaluate the renewal options and when they

are reasonably certain of exercise, the Company includes the renewal period in its lease term.

As the Company’s leases do not provide an implicit rate, it uses

its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the

lease payments.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The components of the Company’s lease expense are as follows:

Operating lease cost

Short-term lease cost

Supplemental cash flow information related to its operating leases

was as follows for the period ended September 30, 2022:

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash outflow from operating leases

Maturities of its lease liabilities for

all operating leases are as follows as of September 30 , 2022:

September 30,

Total operating lease payments

Present value of lease liabilities

current portion, record in current liabilities

Present value of lease liabilities

The weighted average remaining lease terms and discount rates for all

of its operating leases were as follows as of September 30, 2022:

September 30,

Remaining lease term and discount rate:

Weighted average remaining lease term (years)

Weighted average discount rate

(8) Loans Payable

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 June 30, 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.

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

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 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.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

loans from credit union

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 ,

Short-term bank loans

September 30,

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

China Construction Bank Loan

Total short-term bank loans

On November 25, 2021, the Company entered into

a working capital loan agreement with the ICBC, with a balance of $ 5,069,157 and $ 5,958,561 as of September 30, 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 November 17, 2022.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

On June 28, 2022, the Company entered into a working

capital loan agreement with the ICBC, with a balance of $ 422,547 as of September 30, 2022.

The loan bears a fixed interest rate of 4.3 %

The loan will be due by December 25, 2022 .

On July 29, 2022, the Company entered into a working capital loan agreement

with the China Construction Bank, with a balance of $ 140,849 as of September 30, 2022.

The loan bears a fixed interest rate of 3.95 % per

The loan will be due by July 29, 2023 .

As of September 30, 2022, there were guaranteed

short-term borrowings of $ 5,069,157 and unsecured bank loans of $ 563,396 .

As of December 31, 2021, there were guaranteed short-term borrowings

of $ 5,958,561 and unsecured bank loans of $ nil .

The average short-term borrowing rates for the

three months ended September 30, 2022 and 2021 were approximately 4.28 % and 4.79 %.

The average short-term borrowing rates for the nine

months endedSeptember 30, 2022 and 2021 were approximately 4.6 % and 4.79 %.

Long-term loans from credit union

As of September 30, 2022 and December 31, 2021,

loans payable to Rural Credit Union of Xushui District, amounted to $ 8,867,855 and $ 9,818,530 , respectively.

September 30,

Rural Credit Union of Xushui District Loan 1

6 unchanged sentences

Long-term loans from credit union

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

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

Remainder of 2022

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.

On April 16, 2014, the Company entered into a

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

from June 21, 2014 to November 18, 2018.

The loan is guaranteed by an independent third party.

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 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 $ 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

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 $ 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 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 $ 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

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, 2022 and December 31, 2021, total outstanding loan balance was $ 1,211,302

and$ 1,348,871 , respectively, Out of the total outstanding loan balance, current portion amounted were $ 647,906 and $ 329,376 as of September

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

balance of $ 563,396 and $ 1,019,495 are presented as non-current liabilities in the consolidated balance sheet as of September 30, 2022

and December 31, 2021, 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 $ 460,107 and $ 1,130,333 as of September 30, 2022 and December 31, 2021, respectively.

Interest payment is due quarterly

and bears a fixed rate of 0.64 % 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.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

As of September 30, 2022 and December 31, 2021, the total outstanding loan balance was $ 3,521,225

and $ 3,921,139 , 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

Out of the total outstanding loan balance, current portion amounted were $ 3,521,225 and $ 1,960,569 as of

September 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 September

30, 2022 and December 31, 2021, respectively.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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.

of September 30, 2022 and December 31, 2021, the total outstanding loan balance was $ 2,253,585 and $ 2,509,528 , respectively.

total outstanding loan balance, current portion amounted were $ nil and $ 2,509,528 as of September 30, 2022 and December 31, 2021 respectively,

which are presented as current liabilities in the consolidated balance sheet and the remaining balance of $ 2,253,585 and $ nil are presented

as non-current liabilities in the consolidated balance sheet as of September 30, 2022 and December 31, 2021, 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 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.

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.

of September 30, 2022 and December 31, 2021, the total outstanding loan balance was $ 1,831,037 and $ 2,038,992 , respectively.

total outstanding loan balance, current portion amounted were $ nil and $ 2,038,992 as of September 30, 2022 and December 31, 2021 respectively,

which are presented as current liabilities in the consolidated balance sheet and the remaining balance of $ 1,831,037 and $ nil are presented

as non-current liabilities in the consolidated balance sheet as of September 30, 2022 and December 31, 2021, respectively.

On July 1, 2022, the Company entered into a loan

agreement with Jiangna Yu, a customer of the Company, pursuant to which the Company borrowed RMB 400,000 from Jiangna Yu for a term of

The loan is payable in monthly installment of RMB 10,667 from July 2022 to July 2027.

As of September 30, 2022, the total outstanding

loan balance was $ 50,706 .

Out of the total outstanding loan balance, the current portion amounted $ 6,489 , which is presented as current

liabilities and the remaining balance of $ 44,217 is presented as non-current liabilities in the consolidated balance sheet as of September

Total interest expenses for the short-term bank

loans and long-term loans for the three months ended September 30, 2022 and 2021 were $ 248,239 and $ 264,644 , respectively.

Total interest

expenses for the short-term bank loans and long-term loans for the nine months ended September 30, 2022 and 2021 were $ 753,789 and $ 788,094 ,

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.

(9) Related Party Transactions

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.

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 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 $ 361,044 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, 2022 and December 31, 2021, 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, 2022 and December 31, 2021, approximately $ 42,255 and $ 47,054 of interest, respectively 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 June

30, 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 June 30, 2022 and December 31, 2021, approximately $ 44,700 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 (RMB 120,000,000 ) for working capital purposes.

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

date each amount is funded.

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

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

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

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

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

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 an agreement

Zhenyong Liu which allows Dongfang Paper to borrow from the CEO an amount up to $ 17,201,342 (RMB 120,000,000 ) for working capital

The advances or funding under the agreement are due three years from the date each amount is funded.

The loan is unsecured and

carries an annual interest rate set on the basis of the primary lending rate of the People’s Bank of China at the time of the borrowing.

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

On October 14, 2016 an unsecured amount of $ 2,883,091

was drawn from the facility.

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

Zhenyong Liu.

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

Zhenyong Liu agreed to extend the loan for additional 3 years

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

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

Zhenyong Liu, together

with interest of $ 158,651 .

In December 2019, the Company paid off the remaining balance, together with interest of 94,636 .

30, 2022 and December 31, 2021, the outstanding interest was $ 204,782 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 June 30, 2022 and December 31, 2021, total amount of loans due to Mr.

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 was due on July 12, 2021.

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

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

In December 2019, the Company

paid off the remaining balance, together with interest of 94,636 .

As of September 30, 2022 and December 31, 2021, the outstanding interest

was $ 193,579 and $ 215,565 , respectively, which was recorded in other payables and accrued liabilities as part of the current liabilities

in the consolidated balance sheet.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

As of September 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 and six months ended June 30, 2022 and 2021.

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

three and nine months ended September 30, 2022 and 2021.

The accrued interest owing to Mr.

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.

Zhenyong Liu was approximately $ 596,878 and

$ 664,666 , as of September 30, 2022 and December 31, 2021, respectively, which was recorded in other payables and accrued liabilities.

On December 8, 2021, the Company entered an agreement

Zhenyong Liu, which allows Mr.

Zhenyong Liu to borrow from the Company an

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

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

The loan was repaid by

Zhenyong Liu to borrow from the Company an amount of $ 6,507,431 (RMB 44,089,085 ).

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 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.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of September 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.

amount is due on demand with interest free.

(10) Other payables and accrued liabilities

payables and accrued liabilities consist of the following:

Other payables and accrued liabilities consist of the following:

September 30,

Accrued electricity

6 unchanged sentences

(11) Derivative Liabilities

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

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

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

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

the fair market value as other income or expense item.

Company determined 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 Company analyzed the warrant for derivative

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

be classified as a liability since the warrant becomes effective at issuance resulting in there being no explicit limit to the number

of shares to be delivered upon settlement of the above conversion options.

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

The 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 September 30, 2022.

The Black-Scholes model requires six basic data inputs:

the exercise or strike price, time to expiration,

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

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

The fair value of each warrant is estimated

using the Black-Scholes valuation model.

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

Three months ended June 30, 2022

the exercise or strike price, time to expiration, the risk-free interest rate,

the current stock price, the estimated volatility of the stock price in the future, and the dividend rate.

Changes to these inputs could

produce a significantly higher or lower fair value measurement.

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

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

September 30,

Expected term

3 unchanged sentences

0.19 % - 4.25 %

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

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

Fair Value Measurements Using Significant Observable Inputs (Level 3)

4 unchanged sentences

Change in fair value of derivative liability

( 1,346,633 )

Balance at June 30, 2022

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of common stock to investors

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

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

$14.4 million.

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

The exercise price of the warrant

was $ 0.55 per share.

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

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

approximately $ 21.9 million.

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

The exercise price

of the warrant was $ 0.75 per share,

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

Balance at September 30, 2022

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(12) Common Stock

Issuance of common stock to investors

On January 20, 2021, the Company offered and sold

to certain institutional investors an aggregate of 2,618,182 shares of common stock and 2,618,182 warrants to purchase up to 2,618,182

shares of common stock in a best-efforts public offering for gross proceeds of approximately $14.4 million.

The purchase price for each

share of common stock and the corresponding warrant was $ 0.55 .

The exercise price of the warrant was $ 0.55 per share.

On March 1, 2021, the Company offered and sold

to the public investors an aggregate of 2,927,786 shares of common stock and 1,463,893 warrants to purchase up to 1,463,893 shares of

common stock in a firm commitment underwritten public offering for gross proceeds of approximately $ 21.9 million.

The purchase price for

each share of common stock and accompanying warrant was $ 0.75 .

The exercise price of the warrant was $ 0.75 per share.

Reverse stock split

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

Company approved the Reverse Stock Split, at a ratio of 1-for-10, 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.

The par value per share of our stock remains unchanged at $ 0.001 per share after the Reverse Stock

All references made to share or per share amounts in the accompanying consolidated financial statements and applicable disclosures

have been retroactively adjusted to reflect the effects of the Reverse Stock Split.

Issuance of common stock pursuant to the 2021

Incentive Stock Plan

On August 15, 2022, the Company granted an aggregate

of 1,500,000 shares of common stock under its compensatory incentive plans to fifteen employees, as awards under the 2021 Incentive Stock

Please see Note (16), Stock Incentive Plans for more details.

Total fair value of the stock was calculated at $ 1,560,000 as of the

date of grant.

(13) 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

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

The January 2021 Warrants

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 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 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 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:

Six months Ended

June 30, 2022

Weight average exercise price

On 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 440,000 shares of common stock and warrants to purchase up to 440,000

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.

88,000 May 2020 Warrants were exercised in February 2021 at the exercise price of $0.7425

per share and 352,000 May 2020 Warrants were outstanding as of September 30, 2022.

The Company classified warrant as liabilities and accounted

for the issuance of the May 2020 Warrants as a derivative.

On January 20, 2021, the Company offered and sold

to certain institutional investors an aggregate of 2,618,182 shares of common stock and 2,618,182 warrants to purchase up to 2,618,182

shares of common stock (the “January 2021 Warrants”).

The January 2021 Warrants became exercisable on January 20, 2021 at

an exercise price of $0.55 and will expire on January 20, 2026.

1,410,690 January 2021 Warrants were exercised in January and February

of 2021 at the exercise price of $0.55 per share.

1,207,492 January 2021 Warrants were outstanding as of September 30, 2022.

On March 1, 2021, the Company offered and sold to the public investors

an aggregate of 2,927,786 shares of common stock and 1,463,893 warrants to purchase up to 1,463,893 shares of common stock (the “March

2021 Warrants”).

The March 2021 Warrants became exercisable on March 1, 2021 at an exercise price of $0.75 and will expire on March

6,750 March 2021 Warrants were exercised in January and March 2021 at the exercise price of $0.75 per share and 1,457,143 March

2021 Warrants were outstanding as of September 30, 2022.

The Company classified warrants as liabilities and accounted for the

issuance of the warrants as a derivative.

A summary of stock warrant activities is as below:

Nine months ended

September 30, 2022

Outstanding and exercisable at beginning of the period

1 unchanged sentence

Exercised during the period

Cancelled or expired during the period

Outstanding and exercisable at end of the period

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

Warrants Outstanding

7 unchanged sentences

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.

by which the quoted market price of the Company’s stock exceeded the exercise price of the warrants at September 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 September 30, 2022 and December 31, 2021 are nil.

(14) Earnings Per Share

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

For the three months ended September 30, 2022

and 2021, basic and diluted net income per share are calculated as follows:

Three Months Ended

Basic loss per share

Net loss for the period - numerator

$ ( 287,913 )

September 30,

Basic (loss) income per share

Net (loss) income for the period - numerator

$ ( 1,887,318 )

Weighted average common stock outstanding - denominator

Net loss per share

Net (loss) income per share

Diluted income per share

1 unchanged sentence

$ ( 1,887,318 )

$ ( 453,248 )

Weighted average common stock outstanding - denominator

1 unchanged sentence

Weighted average common stock outstanding - denominator

Diluted loss per share

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

Six Months Ended

Diluted (loss) income per share

For the nine months ended September 30, 2022 and

2021, basic and diluted net income per share are calculated as follows:

Nine Months Ended

September 30,

Basic loss per share

12 unchanged sentences

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.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

federal tax and state statutory tax

rates up to 34 %and 0 %, respectively.

On December 22, 2017, the U.S.

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

which significantly changed U.S.

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

statutory federal income tax rate from the highest

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

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

subsidiaries that were previously tax deferred

and creates new taxes on certain foreign sourced earnings.

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

on accounting for enactment effects of the 2017 TCJA.

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

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

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

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

a provisional estimate in its financial statements.

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

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

the enactment of the 2017 TCJA.

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

For the three and nine months ended September 30, 2022 and 2021 there

were no securities with dilutive effect issued and outstanding.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(15) Income Taxes

United States

The Company and Shengde Holdings are incorporated

in the State of Nevada and are subject to the U.S.

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

22, 2017, the U.S.

enacted the Tax Cuts and Jobs Act (the “2017 TCJA”), which significantly changed U.S.

TCJA lowered the Company’s U.S.

statutory federal income tax rate from the highest rate of 35 % to 21 % effective January 1, 2018,

while also imposing a deemed repatriation tax on deferred foreign income which requires companies to pay a one-time transition tax on

previously unremitted earnings of non-U.S.

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

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

SAB 118 provides a measurement period of up to one year from the 2017 TCJA’s enactment date for companies to complete

their accounting under ASC 740.

In accordance with SAB 118, to the extent that a company’s accounting for certain income tax effects

of the 2017 TCJA is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in its financial

If a company cannot determine a provisional estimate to be included in its financial statements, it should continue to apply

ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the 2017 TCJA.

Transition tax:

The transition tax is a tax on

previously untaxed accumulated and current earnings and profits (E&P) of certain of the Company’s non-U.S.

subsidiaries.

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

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

determine the amount of the transition tax, the Company must determine, in addition to other factors, the amount of post-1986 E&P

of the relevant subsidiaries, as well as the amount of non-U.S.

income taxes paid on such earnings.

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

The Company was able to make

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

$ 80,000 in the fourth quarter of 2017.

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

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

This amount may change when the Company

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

federal taxation and finalizes the amounts held

in cash or other specified assets.

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

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

Pursuant to the PRC New Enterprise

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

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

Further, the transition tax is based

in part on the amount of those earnings held in cash and other specified assets.

The Company was able to make a reasonable estimate of

the transition tax and recorded a provisional obligation and additional income tax expense of approximately $ 80,000 in the fourth quarter

However, the Company is continuing to gather additional information and will consider additional technical guidance to more precisely

compute and account for the amount of the transition tax.

This amount may change when the Company finalizes the calculation of post-1986

foreign E&P previously deferred from U.S.

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

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

Dongfang Paper and Baoding Shengde are PRC operating

companies and are subject to PRC Enterprise Income Tax.

Pursuant to the PRC New Enterprise Income Tax Law, Enterprise Income Tax is generally

imposed at a statutory rate of 25 %.

The provisions for income taxes for three months

ended September 30, 2022 and 2021 were as follows:

Three Months Ended

September 30,

Provision for Income Taxes

3 unchanged sentences

Total Provision for (Deferred tax benefit)/ Income Taxes

$ ( 243,829 )

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

Six Months Ended

The provisions for income taxes for nine months

ended September 30, 2022 and 2021 were as follows:

Nine Months Ended

September 30,

Provision for Income Taxes

2 unchanged sentences

Deferred Tax Provision PRC

( 1,197,630 )

Total Provision for (Deferred tax benefit)/ Income Taxes

$ ( 160,531 )

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

In addition to the reversible future PRC income

5 unchanged sentences

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

As of September 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.

Accordingly, As of September 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:

September 30,

Deferred tax assets (liabilities)

9 unchanged sentences

Three Months Ended

September 30,

PRC Statutory rate

3 unchanged sentences

Effective income tax rate

Six Months Ended

Nine Months Ended

September 30,

PRC Statutory rate

4 unchanged sentences

Effective income tax rate

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

During the three months ended September 30, 2022

and 2021, the effective income tax rate was estimated by the Company to be 29.7 % and 4.9 %, respectively.

During the nine months ended September 30, 2022

and 2021, the effective income tax rate was estimated by the Company to be 3.3 % and 291 %, respectively.

As of September 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 current U.S.

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.

Nor does it believe that the amount

of the repatriation of the VIE’s earnings and profits for purposes of paying dividends will change the Company’s position

that its PRC subsidiary Baoding Shengde and the VIE, Dongfang Paper are considered or are expected to be indefinitely reinvested offshore

to support our future capacity expansion.

If these earnings are repatriated to the U.S.

resulting in U.S.

taxable income in the future, or if it is determined

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

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.

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.

IT TECH PACKAGING, INC.

NOTES 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

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.

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

the Company’s liability for income taxes.

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

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

As of September 30,

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 nine months ended September 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.

(16) Stock Incentive Plans

2021 Incentive Stock Plan

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

Packaging, Inc.

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

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

On November 12, 2021, the Company’s

Annual General Meeting adopted and approved the 2021 Omnibus Equity Incentive Plan of IT Tech Packaging, Inc.

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.

On August 15, 2022,

the Compensation Committee granted common shares of 1,500,000 shares under the 2021 Plan, to fifteen officers.

Total fair value of

the stock was calculated at $ 1,560,000 as of the date of issuance at $ 1.04 per share.

(17) Commitments and Contingencies

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

with a 30 -year term, which expires on December 31, 2031.

Xushui Land Lease

The Company leases 32.95 acres of land from a

local government in Xushui District, Baoding City, Hebei, China through a real estate lease with a 30 -year term, which expires on December

The lease requires an annual rental payment of approximately $ 16,902 (RMB 120,000 ).

This operating lease is renewable at the end of the 30 -year term.

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.

This lease is renewable at the end of the

30 -year term.

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.

2 unchanged sentences

of approximately $ 140,849 (RMB 1,000,000 ).

The lease agreement is renewable in August 2022.

minimum lease payments of all operating leases are as follows:

The lease was recorded in lease assets and liabilities in the consolidated balance sheet as

of September 30, 2022.

See ’ Operating lease’ under note (7).

Future minimum lease payments of the land lease

isas follows:

September 30,

Total operating lease payments

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.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Capital commitment

As of September 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

Total outstanding commitments under these contracts were $ 7,146,745 and $ 4,700,927 as of September 30, 2022 and December 31,

2021, respectively.

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

and Indemnities

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

and as of 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.

If Huanrun Trading Co., were

to become insolvent, the Company could be materially adversely affected.

Guarantees and Indemnities

The Company agreed with Baoding Huanrun Trading

Co., a major supplier of raw materials, to guarantee certain obligations of this third party, and as of September 30, 2022 and December

31, 2021, the Company guaranteed its long-term loan from financial institutions amounting to $ 4,366,320 (RMB 31,000,000 ) and $ 4,862,211

(RMB 31,000,000 ), respectively, that matured at various times in 2018-2023.

If Huanrun Trading Co., were to become insolvent, the Company

could be materially adversely affected.

(18) Segment Reporting

March 10, 2010, Baoding Shengde started its operations and thereafter the Company manages its operations through two business operating

Dongfang Paper, which produces offset printing paper and corrugating medium paper, and Baoding Shengde, which produces digital

They are managed separately because each business requires different technology and marketing strategies.

Company evaluates performance of its operating segments based on net income.

Administrative functions such as finance, treasury, and

information systems are centralized.

However, where applicable, portions of the administrative function expenses are allocated between

the operating segments based on gross revenue generated.

The operating segments do share facilities in Xushui County, Baoding City, Hebei

Province, China.

All sales were sold to customers located in the PRC.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

financial information for the three reportable segments is as follows:

Three Months Ended

June 30, 2022

Since March 10, 2010, Baoding Shengde started

its operations and thereafter the Company manages its operations through two business operating segments:

Dongfang Paper, which produces

offset printing paper and corrugating medium paper, and Baoding Shengde, which produces digital photo paper.

They are managed separately

because each business requires different technology and marketing strategies.

The Company evaluates performance of its operating

segments based on net income.

Administrative functions such as finance, treasury, and information systems are centralized.

However, where

applicable, portions of the administrative function expenses are allocated between the operating segments basedon gross revenue generated.

The operating segments do share facilities in Xushui County, Baoding City, Hebei Province, China.

All sales were sold to customers located

Summarized financial information for the three reportable segments

is as follows:

September 30, 2022

Not Attributable

8 unchanged sentences

( 1,871,128 )

Three Months Ended

June 30, 2021

( 2,101,863 )

( 1,887,318 )

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended September 30, 2021

Not Attributable

9 unchanged sentences

( 1,258,593 )

Six Months Ended

June 30, 2022

Nine Months Ended September 30,

Elimination of

6 unchanged sentences

Income tax expense(benefit)

( 1,128,442 )

Net income (loss)

1 unchanged sentence

( 4,663,445 )

Six Months Ended

June 30, 2021

Nine Months Ended September 30, 2021

Not Attributable

2 unchanged sentences

Inter-segment

$ 108,949,261

( 5,318,563 )

Gross profit (loss)

6 unchanged sentences

( 3,249,528 )

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2022

Not Attributable

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2022

Elimination of

Enterprise-wide,

Inter-segment

6 unchanged sentences

(19) Concentration and Major Customers and Suppliers

For the three months ended June 30, 2022, the

For the three months ended September 30, 2022,

the Company had five customers accounted for approximately 12 % of total sales.

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

hadno single customer contributed over 10 % of total sales.

For the nine months ended September 30,

2022, the Company had no single customer contributed over 10 % of total sales.

For the nine months ended September 30, 2021, 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.

For the three months ended September 30, 2022,

the Company had three major suppliers accounted for 77 %, 14 % and 7 % of total purchases.

For the three months ended September 30, 2021,

the Company had three major suppliers accounted for 74 %, 12 % and 5 % of total purchases.

For the nine months ended September 30,

2022, the Company had three major suppliers accounted for 77 %, 15 % and 5 % of total purchases.

For the nine months ended September

30, 2021, the Company had two major suppliers accounted for 78 % and 11 % of total purchases.

(20) Concentration of Credit Risk

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.

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 September 30, 2022 and December 31, 2021.

2015, the new “Deposit Insurance Regulations” was effective in the PRC that the maximum protection would be up to RMB 500,000

($ 70,425 ) 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 September 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 96,281,183 ($ 13,561,112 ) as of September 30, 2022.

(21) Risks and Uncertainties

Company is subject to substantial risks from, among other things, intense competition associated with the industry in general, other

risks associated with financing, liquidity requirements, rapidly changing customer requirements, foreign currency exchange rates, and

operating in the PRC under its various laws and restrictions.

The Company is subject to substantial risks from,

among other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements,

rapidly changing customer requirements, foreign currency exchange rates, and operating in the PRC under its various laws and restrictions.

(22) Recent 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.

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 (Topic326):

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.

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

Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.ASU 2016-13 replaced the incurred loss impairment

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

reasonable and supportable information to inform credit loss estimates.

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

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

ASU 2016-13 is effective for fiscal years beginning after

December 15, 2019, with early adoption permitted.

In October 2019, the FASB issued ASU No.

2019-10, “Financial Instruments-Credit

Losses (Topic326):

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.

(23) 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