What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-10 compared with 2023-05-11 · 454 added, 444 removed, 685 unchanged (57% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

OF MARCH 31, 2023 AND DECEMBER 31, 2022

OF JUNE 30, 2023 AND DECEMBER 31, 2022

Current Assets

1 unchanged sentence

Restricted cash

Accounts receivable (net of allowance for doubtful accounts of $ 647,787 and $ 881,878 as of March 31, 2023 and December 31, 2022, respectively)

Accounts receivable (net of allowance for doubtful accounts of $ 48,646 and $ 881,878 as of June 30, 2023 and December 31, 2022, respectively)

Prepayments and other current assets

9 unchanged sentences

$ 204,447,233

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’

Current Liabilities

3 unchanged sentences

Accounts payable

Advance from customers

Due to related parties

7 unchanged sentences

Derivative liability

Total liabilities (including amounts of the consolidated VIE without recourse to the Company of $ 19,412,310 and $ 16,784,878 as of March 31, 2023 and December 31, 2022, respectively)

Total liabilities (including amounts of the consolidated VIE without recourse to the Company of $ 19,100,011 and $ 16,784,878 as of June 30, 2023 and December 31, 2022, respectively)

Commitments and Contingencies

Stockholders’ Equity

Common stock, 50,000,000 shares authorized, $ 0.001 par value per share, 10,065,920 shares issued and outstanding as of March 31, 2023 and December, 31, 2022.

Common stock, 50,000,000 shares authorized, $ 0.001 par value per share, 10,065,920 shares issued and outstanding as of June 30, 2023 and December, 31, 2022.

Additional paid-in capital

4 unchanged sentences

Retained earnings

Total stockholders’ equity

Total Liabilities and Stockholders’ Equity

stockholders’ equity

Liabilities and Stockholders’ Equity

$ 196,742,889

3 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Three Months Ended

Six Months Ended

Cost of sales

1 unchanged sentence

( 31,154,847 )

Gross (Loss) Profit

( 48,907,932 )

( 46,326,020 )

Selling, general and administrative expenses

1 unchanged sentence

( 1,869,802 )

( 3,818,767 )

( 5,170,683 )

Loss on impairment of assets

Loss from Operations

1 unchanged sentence

( 3,291,044 )

( 4,226,201 )

Other Income (Expense):

Interest income

Subsidy income

Interest expense

7 unchanged sentences

( 3,986,658 )

Other Comprehensive Income

( 2,776,127 )

Other Comprehensive Loss

Foreign currency translation adjustment

( 9,063,695 )

( 11,524,747 )

( 6,560,939 )

( 10,598,609 )

Total Comprehensive Loss

1 unchanged sentence

$ ( 11,812,660 )

$ ( 10,547,597 )

$ ( 13,374,736 )

Losses Per Share:

4 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

Three Months Ended

THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Six Months Ended

Cash Flows from Operating Activities:

4 unchanged sentences

(Gain) Loss on derivative liability

( 1,346,633 )

(Gain) Loss from disposal and impairment of property, plant and equipment

(Recovery from) Allowance for bad debts

Allowance for bad debts

Gain on acquisition

4 unchanged sentences

( 3,940,417 )

( 1,111,160 )

Accounts payable

Advance from customers

Related parties

2 unchanged sentences

Income taxes payable

( 1,112,820 )

Net Cash Provided by Operating Activities

1 unchanged sentence

Purchases of property, plant and equipment

( 5,565,713 )

Acquisition of land

2 unchanged sentences

( 5,565,713 )

( 7,324,305 )

Cash Flows from Financing Activities:

Proceeds from short term bank loans

Proceeds from long term loans

16 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Comprehensive

Income (loss)

Balance at December 31, 2021

at December 31, 2021

$ 110,146,329

$ 215,749,908

Foreign currency translation adjustment

currency translation adjustment

( 10,598,609 )

Balance at March 31, 2022

( 2,776,127 )

at June 30, 2022

$ ( 102,441 )

$ 107,370,202

$ 202,375,172

Balance at December

1 unchanged sentence

$ 181,323,892

Issuance of shares to officer and directors

Foreign currency translation adjustment

of shares to officer and directors

currency translation adjustment

( 6,560,939 )

Balance at March 31, 2023

( 3,986,658 )

at June 30, 2023

$ ( 14,075,479 )

$ 170,776,295

accompanying notes to condensed consolidated financial statements.

13 unchanged sentences

of common stock, par value $ 0.001 per share (the “Common Stock”), at a ratio of 1-for-10 (the “Reverse Stock Split”).

The Reverse Stock Split become effective on July 7, 2022 (the “Effective Date”), and the shares began trading on the split-adjusted

The Reverse Stock Split became effective on July 7, 2022 (the “Effective Date”), and the shares began trading on the split-adjusted

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

32 unchanged sentences

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.

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 RMB 1 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

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

RMB 1 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 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.

A Dongfang Paper

Equity Owner will cease to be a party to the agreement once it transfers its equity interests with the prior approval of Baoding

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.

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.

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

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

As the Company had controlled Dongfang Paper since

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

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

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

10 unchanged sentences

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

(“Tengsheng Paper”), a limited liability company organized under the laws of the PRC, pursuant to which Dongfang Paper

would acquire Tengsheng Paper.

Full payment of the consideration in the amount of RMB 320 million (approximately $ 45 million) was

made on February 23, 2022.

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

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

QianrongQianhui

2 unchanged sentences

of high quality material solutions for textile, cosmetics and paper production.

Company has no direct equity interest in Dongfang Paper.

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

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

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

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

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

generated from Dongfang Paper and Tengsheng Paper for the three months ended March 31, 2023 and 2022 was accounted for 99.82 % and 99.63 %

of the Company’s total revenue, respectively.

Dongfang Paper and Tengsheng Paper also accounted for 89.22 % and 93.76 % of the total

assets of the Company as of March 31, 2023 and December 31, 2022, respectively.

The Company has no direct equity interest in Dongfang

However, through the Contractual Agreements described above, the Company is found to be the primary beneficiary (the “Primary

Beneficiary”) of Dongfang Paper and is deemed to have the effective control over Dongfang Paper’s activities that most significantly

affect its economic performance, resulting in Dongfang Paper and its subsidiary, being treated as a controlled variable interest entity

of the Company in accordance with Topic 810 - Consolidation of the Accounting Standards Codification (the “ASC”) issued by

the Financial Accounting Standard Board (the “FASB”).

The revenue generated from Dongfang Paper and Tengsheng Paper for the

three months ended June 30, 2023 and 2022 was accounted for 99.72 % and 99.73 % of the Company’s total revenue, respectively.

revenue generated from Dongfang Paper and Tengsheng Paper for the six months ended June 30, 2023 and 2022 was accounted for 99.84 % and

99.70 % of the Company’s total revenue, respectively.Dongfang Paper and Tengsheng Paper also accounted for 91.04 % and 93.76 % of the

total assets of the Company as of June 30, 2023 and December 31, 2022, respectively.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of March 31, 2023 and December 31, 2022, details of the Company’s subsidiaries and variable interest entities are as follows:

of June 30, 2023 and December 31, 2022, details of the Company’s subsidiaries and variable interest entities are as follows:

Incorporation

Incorporation or

or Establishment

Percentage of

Establishment

Principal Activity

Establishment

Dongfang Holding

16 unchanged sentences

Paper production and distribution

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

Paper is 100 % subsidiary of Dongfang Paper.

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

** Tengsheng Paper is 100 % subsidiary of Dongfang Paper.

*** Qianrong is a wholly owned subsidiary of ShengdeHolding.

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

17 unchanged sentences

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

sheets as of March 31, 2023 and December 31, 2022 are as follows:

sheets as of June 30, 2023 and December 31, 2022 are as follows:

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

4 unchanged sentences

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

and bank balances

and other current assets

from related parties

current assets

Cash and bank balances

Restricted cash

Accounts receivable

Prepayments and other current assets

Due from related parties

Total current assets

Prepayment on property, plant and equipment

Operating lease right-of-use assets, net

Finance lease right-of-use assets, net

Property, plant, and equipment, net

on property, plant and equipment

lease right-of-use assets, net

plant, and equipment, net

$ 179,112,815

$ 181,011,814

portion of long-term loans

from customers

to related parties

payroll and employee benefits

payables and accrued liabilities

taxes payable

current liabilities

Short-term bank loans

Current portion of long-term loans

Lease liability

Due to related parties

Accounts payable

Accrued payroll and employee benefits

Other payables and accrued liabilities

Income taxes payable

Total current liabilities

Long-term loans

Deferred gain on sale-leaseback

Lease liability - non-current

Total liabilities

gain on sale-leaseback

liability - non-current

TECH PACKAGING, INC.

13 unchanged sentences

Such adjustments are of a normal recurring nature, unless otherwise

The balance sheet as of March 31, 2023 and the results of operations for the three months ended March 31, 2023 are not necessarily

The balance sheet as of June 30, 2023 and the results of operations for the six months ended June 30, 2023 are not necessarily

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

45 unchanged sentences

Company could realize in a current market exchange.

As of March 31, 2023 and December 31, 2022, the carrying value of the Company’s

As of June 30, 2023 and December 31, 2022, the carrying value of the Company’s

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

3 unchanged sentences

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

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

The fair value of these derivative liabilities was determined based on management’s estimate of the expected

future cash flows required to settle the liabilities.

This valuation technique involves management’s estimates and judgment

based on unobservable inputs and is classified in level 3.

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

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

The fair value

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

the liabilities.

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

Non-Recurring

18 unchanged sentences

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 March 31,

2023 and December 31, 2022:

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, 2023 and December

Raw Materials

Recycled paper board

Recycled white scrap paper

Base paper and other raw materials

white scrap paper

paper and other raw materials

Semi-finished Goods

1 unchanged sentence

Total inventory, gross

Inventory reserve

Total inventory, net

Total inventory,

Prepayments and other current assets

and other current assets consisted of the following as of March 31, 2023 and December 31, 2022:

and other current assets consisted of the following as of June 30, 2023 and December 31, 2022:

Prepaid land lease

Prepayment for purchase of materials

Prepayment for purchase of equipment

Prepayment for purchase of

Value-added tax recoverable

Property, plant and equipment, net

of March 31, 2023 and December 31, 2022, property, plant and equipment consisted of the following:

of June 30, 2023 and December 31, 2022, property, plant and equipment consisted of the following:

Property, Plant, and Equipment:

9 unchanged sentences

$ 151,569,898

of March 31, 2023 and December 31, 2022, land use rights represented twenty three parcels of state-owned lands located in Xushui District

of June 30, 2023 and December 31, 2022, land use rights represented twenty-three parcels of state-owned lands located in Xushui District

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

1 unchanged sentence

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of March 31, 2023 and December 31, 2022, certain property, plant and equipment of Dongfang Paper with net values of $ 93,136 and $ 280,466 ,

of June 30, 2023 and December 31, 2022, certain property, plant and equipment of Dongfang Paper with net values of $ 59,048 and $ 280,466 ,

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 $ 4,334,537 and $ 4,301,204 , respectively, as of March 31, 2023 and December 31, 2022 was pledged for the bank loan from

Industrial & Commercial Bank of China (“ICBC”).

Land use right of Tengsheng Paper with net value of $5,150,283 and $5,111,014 ,

respectively, as of March 31, 2023 and December 31, 2022 was pledged for a long-term loan from credit union of Baoding Shengde.

land use right of Tengsheng Paper with net value of $ 3,976,123 and $ 3,948,953 , respectively, as of March 31, 2023 and December 31, 2022

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

Land use right of Dongfang Paper with net value of $ 5,396,364

as of March 31, 2023 was pledged for a long-term loan from credit union of Tengsheng Paper.

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 $ 3,686,243 and $ 3,773,236 for the three months ended March 31, 2023 and 2022, respectively.

net values of $ 4,098,523 and $ 4,301,204 , respectively, as of June 30, 2023 and December 31, 2022 was pledged for the bank loan from Industrial

& Commercial Bank of China (“ICBC”).

Land use right of Tengsheng Paper with net value of $4,869,528 and $5,111,014 , respectively,

as of June 30, 2023 and December 31, 2022 was pledged for a long-term loan from credit union of Baoding Shengde.

In addition, land use

right of Tengsheng Paper with net value of $ 3,756,342 and $ 3,948,953 , respectively, as of June 30, 2023 and December 31, 2022 was pledged

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

Land use right of Dongfang Paper with net value of $ 5,099,089 as of

June 30, 2023 was pledged for a long-term loan from credit union of Tengsheng Paper.

See “ Short-term bank loans ” under

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

An impairment loss of $ 375,136 was recognized for property, plant and

equipment of Baoding Shengde for the three and six months ended June 30, 2023.

and amortization of property, plant and equipment was $ 3,686,243 and $ 3,819,083 for the three months ended June 30, 2023 and 2022, respectively.

Depreciation and amortization of property, plant and equipment was $ 7,150,057 and $ 7,592,319 for the six months ended June 30, 2023 and

2022, respectively.

with Sale-Leaseback

2 unchanged sentences

Under the sale-leaseback

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

Concurrent with the sale

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

At the end of the lease term, Tengsheng

Paper 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.

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

Concurrent with the

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

At the end of the lease term,

Tengsheng Paper may pay a nominal purchase price of RMB 100 (approximately US$ 16 ) to TLCL and buy back the Leased Equipment.

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.

Paper made payments due according to the schedule.

The balance of Leased Equipment net of amortization was $ 1,796,034 and $ 1,939,970

as of March 31, 2023 and December 31, 2022, respectively.

as of June 30, 2023 and December 31, 2022, respectively.

The lease liability was $ 18,854 and $ 131,772 , and its current portion in the

amount of $ 77,789 and $ 131,772 as of March 31, 2023 and December 31, 2022, respectively.

of the Leased Equipment was $ 38,865 and $ 42,006 for the three months ended March 31, 2023 and 2022.

Total interest expenses for the sale-leaseback

arrangement was $ 4,490 and $ 13,507 for the three months ended March 31, 2023 and 2022.

amount of $ 18,854 and $ 131,772 as of June 30, 2023 and December 31, 2022, respectively.

of the Leased Equipment was $ 37,661 and $ 39,972 for the three months ended June 30, 2023 and 2022.

Amortization of the Leased Equipment

was $ 76,526 and $ 81,978 for the six months ended June 30, 2023 and 2022.

Total interest expenses for the sale-leaseback arrangement was

$ 2,182 and $ 10,862 for the three months ended June 30, 2023 and 2022.

Total interest expenses for the sale-leaseback arrangement was

$ 6,671 and $ 24,369 for the six months ended June 30, 2023 and 2022.

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

1 unchanged sentence

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

future minimum lease payments of the capital lease as of March 31, 2023 were as follows:

future minimum lease payments of the capital lease as of June 30, 2023 were as follows:

unearned discount

15 unchanged sentences

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

March 31, 2023

Operating lease cost

Short-term lease cost

cash flow information related to its operating leases was as follows for the period ended March 31, 2023:

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

Operating cash outflow from operating leases

of its lease liabilities for all operating leases are as follows as of March 31, 2023:

cash flow information related to its operating leases was as follows for the period ended June 30, 2023:

paid for amounts included in the measurement of lease liabilities:

cash outflow from operating leases

of its lease liabilities for all operating leases are as follows as of June 30, 2023:

Total operating lease payments

Present value of lease liabilities

current portion, record in current liabilities

current portion,

record in current liabilities

Present value of lease liabilities

weighted average remaining lease terms and discount rates for all of its operating leases were as follows as of March 31, 2023:

Remaining lease term and discount rate:

Weighted average remaining lease term (years)

Weighted average discount rate

weighted average remaining lease terms and discount rates for all of its operating leases were as follows as of June 30, 2023:

lease term and discount rate:

average remaining lease term (years)

average discount rate

Loans Payable

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

China Construction Bank Loan

Total short-term bank loans

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

Construction Bank Loan

short-term bank loans

TECH PACKAGING, INC.

1 unchanged sentence

November 10, 2022, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 4,773,174 and $ 5,023,978

as of March 31, 2023 and December 31, 2022, respectively.

as of June 30, 2023 and December 31, 2022, respectively.

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

1 unchanged sentence

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

will be due by November 13, 2023.

November 30, 2022, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 291,049 and $ 287,167 as

of March 31, 2023 and December 31, 2022, respectively.

The loan bears an interest rate of 4.25 % per annum.

The loan will be due by May

November 30, 2022, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 145,524 and $ 143,583 as

of March 31, 2023 and December 31, 2022, respectively.

The loan bears an interest rate of 4.25 % per annum.

The loan will be due by May

repaid $ 71,743 in May 2023 and the balance of the loan will be due by November 13, 2023.

November 30, 2022, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ nil and $ 287,167 as of

June 30, 2023 and December 31, 2022, respectively.

The loan bore an interest rate of 4.25 % per annum.

The loan was repaid in May 2023.

November 30, 2022, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ nil and $ 143,583 as of

June 30, 2023 and December 31, 2022, respectively.

The loan bore an interest rate of 4.25 % per annum.

The loan was repaid in May 2023.

May 29, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 415,179 as of June 30, 2023.

The loan bears a fixed interest rate of 4.25 % per annum.

The loan will be due by November 25, 2023.

July 29, 2022, the Company entered into a working capital loan agreement with the China Construction Bank, with a balance of $ 138,393

and $ 143,583 as of March 31, 2023 and December 31, 2022, respectively.

and $ 143,583 as of June 30, 2023 and December 31, 2022, respectively.

The loan bears a fixed interest rate of 3.95 % per annum.

will be due by July 29, 2023.

of March 31, 2023, there were guaranteed short-term borrowings of $ 5,091,899 and unsecured bank loans of $ 582,097 .

June 29, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 415,179 as of June 30, 2023.

The loan bears a fixed interest rate of 3.55 % per annum.

The loan will be due by June 28, 2024.

of June 30, 2023, there were guaranteed short-term borrowings of $ 4,773,174 and unsecured bank loans of $ 968,751 .

As of December 31,

2022, there were guaranteed short-term borrowings of $ 5,023,978 and unsecured bank loans of $ 574,333 .

average short-term borrowing rates for the three months ended March 31, 2023 and 2022 were approximately 4.72 % and 4.79 %.

of March 31, 2023 and December 31, 2022, long-term loans were $ 11,778,745 and $ 9,040,002 , respectively.

Rural Credit Union of Xushui District Loan 1

average short-term borrowing rates for the three months ended June 30, 2023 and 2022 were approximately 4.83 % and 4.79 %.

short-term borrowing rates for the six months ended June 30, 2023 and 2022 were approximately 4.77 % and 4.79 %.

of June 30, 2023 and December 31, 2022, long-term loans were $ 11,198,760 and $ 9,040,002 , respectively.

Rural Credit Union of Xushui District

Rural Credit Union of Xushui District Loan

2 unchanged sentences

Rural Credit Union of Xushui District Loan

Current portion of long-term loans

Current portion

of long-term loans

( 3,761,521 )

( 4,835,884 )

Long-term loans

As of March 31, 2023, the Company’s long-term debt

repayments for the next coming years were as follows:

Remainder of 2023

of June 30, 2023, the Company’s long-term debt repayments for the next coming years were as follows:

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

6 unchanged sentences

December 21, 2018 to November 5, 2023.

As of March 31, 2023 and December 31, 2022, total outstanding loan balance was $1,251,510 and$ 1,234,816 ,

As of June 30, 2023 and December 31, 2022, total outstanding loan balance was $ 1,190,180 and$ 1,234,816 ,

respectively, which are presented as current liabilities in the consolidated balance sheet.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

1 unchanged sentence

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 $ 93,136 and $ 280,466 as of March 31, 2023 and December

31, 2022, respectively.

Interest payment is due quarterly and bore arate of 7.68 % per annum.

Effective from November 15, 2022, the interest

rate is reduced to 7 % per annum.

As of March 31, 2023 and December 31, 2022, the total outstanding loan balance was $ 3,638,111 and $ 3,589,582 ,

respectively, which are presented as current liabilities in the consolidated balance sheet.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

The loan was renewed on March 22, 2021 and

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

The loan is secured by Tengsheng Paper with its land use right as collateral for the benefit of the credit union.

Interest payment

is due quarterly and bore a rate of 7.68 % per annum.

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

On June 19, 2023, the loan

was extended for another 5 years and will be due and payable on June 20, 2028.The loan is secured by certain of the Company’s manufacturing

equipment with net book value of $ 59,048 and $ 280,466 as of June 30, 2023 and December 31, 2022, respectively.

Interest payment is due

quarterly and bore arate of 7.68 % per annum.

Effective from November 15, 2022, the interest rate is reduced to 7 % per annum.

As of March 31, 2023 and December 31, 2022, the total outstanding loan balance was $ 2,328,390 and $ 2,297,332 , respectively, which

are presented as non-current liabilities in the consolidated balance sheet as of March 31, 2023 and December 31, 2022,

respectively.

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

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

The loan 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

The loan is secured by Tengsheng Paper with its land use right as collateral for the benefit of the credit union.

payment is due monthly and bore a rate of 7.56 % per annum.

Effective from November 15, 2022, the interest rate is reduced to 7 % per

As of March 31, 2023 and December 31, 2022, the total outstanding loan balance was $ 1,891,817 and $ 1,866,582 , respectively,

which are presented as non-current liabilities in the consolidated balance sheet as of March 31, 2023 and December 31, 2022,

respectively.

30, 2023 and December 31, 2022, the total outstanding loan balance was $ 3,459,824 and $ 3,589,582 , respectively, which are presented as

non-current liabilities and current liabilities in the consolidated balance sheet, 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 Tengsheng Paper with its land use right as collateral for the benefit of the credit union.

Interest payment is due quarterly

and bore a rate of 7.68 % per annum.

Effective from November 15, 2022, the interest rate is reduced to 7 % per annum.

As of June 30, 2023

and December 31, 2022, the total outstanding loan balance was $ 2,214,288 and $ 2,297,332 , respectively, which are presented as current

liabilities and non-current liabilities in the consolidated balance sheet as of June 30, 2023 and December 31, 2022, respectively.

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

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

The loan 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 Tengsheng Paper with its land use right as collateral for the benefit of the credit union.

Interest payment is due monthly

and bore a rate of 7.56 % per annum.

Effective from November 15, 2022, the interest rate is reduced to 7 % per annum.

As of June 30, 2023

and December 31, 2022, the total outstanding loan balance was $ 1,799,109 and $ 1,866,582 , respectively, which are presented as non-current

liabilities in the consolidated balance sheet as of June 30, 2023 and December 31, 2022, respectively.

February 26, 2023, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 2 years, which

3 unchanged sentences

Interest payment is due monthly and bore a rate of 7 % per annum.

of March 31, 2023, the total outstanding loan balance was $ 2,619,439 .

of June 30, 2023, the total outstanding loan balance was $ 2,491,073 .

Out of the total outstanding loan balance, current portion amounted

was $ 345,982 , which is presented as current liabilities in the consolidated balance sheet and the remaining balance of $ 2,145,092 is

presented as non-current liabilities in the consolidated balance sheet as of March 31, 2023.

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 five years.

The loan is payable in monthly installment of RMB 10,667 from July

2022 to July 2027.

As of March 31, 2023 and December 31, 2022, the total outstanding loan balance was $ 49,478 and$ 51,690 ,

respectively.

Out of the total outstanding loan balance, current portion amounted were $ 11,642 and $ 11,486 , which are presented as

current liabilities and the remaining balance of $ 37,836 and $ 40,204 are presented as non-current liabilities in the consolidated

balance sheet as of March 31, 2023 and December 31, 2022, respectively.

interest expenses for the short-term bank loans and long-term loans for the three months ended March 31, 2023 and 2022 were $ 244,679

presented as non-current liabilities in the consolidated balance sheet as of June 30, 2023.

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 (approximately US$ 55,357 ) from Jiangna Yu for a term of five years.

The loan is payable in monthly installment of RMB 10,667

(approximately US$ 1,531 ) from July 2022 to July 2027.

As of June 30, 2023 and December 31, 2022, the total outstanding loan balance was

$ 44,286 and$ 51,690 , respectively.

Out of the total outstanding loan balance, current portion amounted were $ 11,072 and $ 11,486 , which

are presented as current liabilities and the remaining balance of $ 33,214 and $ 40,204 are presented as non-current liabilities in the

consolidated balance sheet as of June 30, 2023 and December 31, 2022, respectively.

interest expenses for the short-term bank loans and long-term loans for the three months ended June 30, 2023 and 2022 were $ 268,499 and

$ 248,244 , respectively.

Total interest expenses for the short-term bank loans and long-term loans for the six months ended June 30, 2023

and 2022 were $ 513,179 and $ 505,550 , respectively.

Related Party Transactions

7 unchanged sentences

Zhenyong Liu, which

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

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

30, 2023 and December 31, 2022, respectively.

9 unchanged sentences

with interest of $ 20,400 .

As of March 31, 2023 and December 31, 2022, approximately $ 43,657 and $ 43,075 of interest, respectively were

As of June 30, 2023 and December 31, 2022, approximately $ 41,518 and $ 43,075 of interest, respectively were

outstanding to Mr.

2 unchanged sentences

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

Zhenyong Liu which allows Dongfang Paper to borrow from Mr.

Zhengyong Liu 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 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.

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 .

Zhenyong Liu,

together with interest of $ 158,651 .

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

31, 2023 and December 31, 2022, the outstanding interest was $ 200,006 and $ 197,338 , respectively, which was recorded in other payables

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

of March 31, 2023 and December 31, 2022, total amount of loans due to Mr.

of June 30, 2023 and December 31, 2022, the outstanding interest was $ 190,204 and $ 197,338 , respectively, which was recorded in other

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

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of June 30, 2023 and December 31, 2022, total amount of loans due to Mr.

Zhenyong Liu were $ nil .

The interest expense incurred for such

related party loans were $ nil for the three months ended March 31, 2023 and 2022.

related party loans were $ nil for the three and six months ended June 30, 2023 and 2022.

The accrued interest owing to Mr.

Zhenyong Liu was

approximately $ 616,691 and $ 608,465 , as of March 31, 2023 and December 31, 2022, respectively, which was recorded in other payables and

accrued liabilities.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

was approximately $ 586,470 and $ 608,465 as of June 30, 2023 and December 31, 2022, respectively, which was recorded in other payables

and accrued liabilities.

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

10 unchanged sentences

The loans were unsecured and carried a fixed interest rate of 4.35 %

The loan will be repaid in May 2023.

Interest income of the loan for the three months ended March 31, 2023 was $ 131,553 .

of March 31, 2023 and December 31, 2022, amount due to shareholder was $ 727,433 , which represents funds from shareholders to pay for

various expenses incurred in the U.S.

The loan will be repaid by the end of August 2023.

Interest income of the loan for the six months ended June 30, 2023 was

of June 30, 2023 and December 31, 2022, 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.

1 unchanged sentence

payables and accrued liabilities consist of the following:

Accrued electricity

Accrued rental

Value-added tax payable

Accrued interest to a related party

Payable for purchase of equipment

Accrued commission to salesmen

Accrued bank loan interest

interest to a related party

for purchase of equipment

commission to salesmen

bank loan interest

Derivative Liabilities

5 unchanged sentences

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 March 31, 2023.

the fair value as of June 30, 2023.

The Black-Scholes model requires six basic data inputs:

4 unchanged sentences

using the Black-Scholes valuation model.

The following weighted-average assumptions were used in the March 31, 2023:

Expected term

Expected average volatility

Expected dividend yield

Risk-free interest rate

The following weighted-average assumptions were used in the June 30, 2023:

average volatility

dividend yield

interest rate

0.19 % - 4.49 %

following table summarizes the changes in the derivative liabilities during the three months ended March 31, 2023:

Fair Value Measurements Using Significant Observable Inputs (Level 3)

Balance at December 31, 2022

Addition of new derivatives recognized as warrant

Addition of new derivatives recognized as loss on derivatives

Exercise of warrants

Change in fair value of derivative liability

Balance at March 31, 2023

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

following table summarizes the changes in the derivative liabilities during the six months ended June 30, 2023:

Value Measurements Using Significant Observable Inputs (Level 3)

Balance at December 31, 2022

Addition of new derivatives

recognized as warrant

Addition of new derivatives

recognized as loss on derivatives

Exercise of warrants

Change in fair value of derivative

Balance at June 30, 2023

of common stock to investors

32 unchanged sentences

88,000 May 2020 Warrants

were exercised in February 2021 at the exercise price of $7.425 per share and 352,000 May 2020 Warrants were outstanding as of March

were exercised in February 2021 at the exercise price of $7.425 per share and 352,000 May 2020 Warrants were outstanding as of June 30,

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

6 unchanged sentences

1,207,492 January 2021 Warrants were outstanding

as of March 31, 2023.

as of June 30, 2023.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

3 unchanged sentences

6,750 March 2021 Warrants were exercised in January and

March 2021 at the exercise price of $7.5 per share and 1,457,143 March 2021 Warrants were outstanding as of March 31, 2023.

March 2021 at the exercise price of $7.5 per share and 1,457,143 March 2021 Warrants were outstanding as of June 30, 2023.

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

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

summary of stock warrant activities is as below:

Three months ended

March 31, 2023

Outstanding and exercisable at beginning of the period

June 30, 2023

Outstanding and exercisable at

beginning of the period

Issued during the period

Exercised during the period

Cancelled or expired during the period

Outstanding and exercisable at end of the period

The following table summarizes information relating to outstanding and exercisable warrants as of March 31, 2023.

Warrants Outstanding

Warrants Exercisable

Weighted Average

following table summarizes information relating to outstanding and exercisable warrants as of June 30, 2023.

Average Remaining

Contractual life

Weighted Average

Exercise Price

1 unchanged sentence

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

the warrants at March 31, 2023 for those warrants for which the quoted market price was in excess of the exercise price (“in-the-money”

The intrinsic value of the warrants as of March 31, 2023 and December 31, 2022 are nil.

the warrants at June 30, 2023 for those warrants for which the quoted market price was in excess of the exercise price (“in-the-money”

The intrinsic value of the warrants as of June 30, 2023 and December 31, 2022 are nil.

Earnings Per Share

the three months ended March 31, 2023 and 2022, basic and diluted net income per share are calculated as follows:

the three months ended June 30, 2023 and 2022, basic and diluted net income per share are calculated as follows:

Three Months Ended

13 unchanged sentences

Diluted loss per share

the three months ended March 31, 2023 and 2022 there were no securities with dilutive effect issued and outstanding.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended June 30,

Basic loss per share

Net loss for the period - numerator

$ ( 3,986,658 )

$ ( 2,776,127 )

Weighted average common stock outstanding - denominator

Net loss per share

Diluted loss per share

Net loss for the period - numerator

$ ( 3,986,658 )

$ ( 2,776,127 )

Weighted average common stock outstanding - denominator

Effect of dilution

Weighted average common stock outstanding - denominator

Diluted loss per share

the three andsix months ended June 30, 2023 and 2022 there were no securities with dilutive effect issued and outstanding.

Company may be subject to the United States of America Tax laws at a tax rate of 21 %.

No provision for the US federal income taxes

has been made as the Company had no US taxable income for the first quarter ended March 31, 2023 and 2022, and management believes that

its earnings are permanently invested in the PRC.

has been made as the Company had no US taxable income for the six months ended June 30, 2023 and 2022, and management believes that its

earnings are permanently invested in the PRC.

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

1 unchanged sentence

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

provisions for income taxes for three months ended March 31, 2023 and 2022 were as follows:

Three Months Ended

Provision for Income Taxes

Current Tax Provision U.S.

Current Tax Provision PRC

Deferred Tax Provision PRC

Total Provision for (Deferred tax benefit)/Income Taxes

provisions for income taxes for three months ended June 30, 2023 and 2022 were as follows:

for Income Taxes

Tax Provision U.S.

Tax Provision PRC

Provision for (Deferred tax benefit)/ Income Taxes

$ ( 243,829 )

provisions for income taxes for six months ended June 30, 2023 and 2022 were as follows:

for Income Taxes

Tax Provision U.S.

Tax Provision PRC

Provision for (Deferred tax benefit)/ Income Taxes

$ ( 592,818 )

TECH PACKAGING, INC.

4 unchanged sentences

income tax purposes for the years ended December 31, 2022 and 2021, respectively.

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

These carry forwards would expire,

if not utilized, during the period of 2030 through 2035.

As of March 31, 2023, management believed that the realization of all the

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 March 31, 2023 and December 31, 2022, the Company provided a 100 % valuation allowance

deferred tax asset benefit to reduce the total deferred tax asset to the amount realizable for the PRC income tax

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

A summary of the

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

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

These carry forwards would expire, if not

utilized, during the period of 2030 through 2035.

As of June 30, 2023, management believed that the realization of all the U.S.

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

Accordingly, As of June 30, 2023 and December 31, 2022, the Company provided a 100 % valuation allowance on the U.S.

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

Management reviews

this valuation allowance periodically and will make adjustments as warranted.

A summary of the otherwise deductible (or taxable) deferred

tax items is as follows:

Deferred tax assets (liabilities)

10 unchanged sentences

PRC Statutory rate

Effect of different tax jurisdiction

Effect of tax and book difference

1 unchanged sentence

Effective income tax rate

the three months ended March 31, 2023 and 2022, the effective income tax rate was estimated by the Company to be 0 % and 12.3 %, respectively.

of March 31, 2023, except for the one-time transition tax under the 2017 TCJA which imposes a U.S.

Six Months Ended

PRC Statutory rate

Effect of tax and book difference

Change in valuation allowance

Effective income tax rate

During the three months ended June 30, 2023 and

2022, the effective income tax rate was estimated by the Company to be - 38.9 % and 45.9 %, respectively.

During the six months ended June 30, 2023 and

2022, the effective income tax rate was estimated by the Company to be - 9.7 % and 17.6 %, respectively.

of June 30, 2023, except for the one-time transition tax under the 2017 TCJA which imposes a U.S.

tax liability on all unrepatriated

12 unchanged sentences

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

To date, the adoption of this interpretation has not impacted the

Company’s financial position, results of operations, or cash flows.

The Company performed self-assessment and the

Company’s liability for income taxes includes the liability for unrecognized tax benefits, interest and penalties which relate

to tax years still subject to review by taxing authorities.

Audit periods remain open for review until the statute of limitations

has passed, which in the PRC is usually 5 years.

The completion of review or the expiration of the statute of limitations for a

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

Any such adjustment could be

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

operations for the given period.

As of March 31, 2023 and December 31, 2022, 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 three months ended March 31, 2023 and 2022, 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.

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

financial position, results of operations, or cash flows.

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

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

review by taxing authorities.

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

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

to the Company’s liability for income taxes.

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

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

As of June 30, 2023 and

December 31, 2022, 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, 2023

and 2022, respectively.

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

and the major one is the China Tax Authority.

Stock Incentive Plans

2 unchanged sentences

Packaging, Inc.(the”2021 Plan”).

Under the 2021 ISP, the Company has reserved a total of 150,000 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 Company granted an aggregate of 150,000 shares of common stock under its compensatory

incentive plans to fifteen employees.

Under the 2021 ISP, the Company has reserved a total of 150,000 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 Company granted an aggregate of 150,000 shares of common stock under its compensatory incentive plans to fifteen

Total fair value of the stock was calculated at $ 156,000 as of the date of grant.

4 unchanged sentences

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

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.

of Headquarters Compound Real Properties

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

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

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

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

Sales of the LUR and

the Industrial Buildings were completed in year 2013.

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

1 unchanged sentence

The lease was recorded in lease assets and liabilities

in the consolidated balance sheet as of March 31, 2023.

in the consolidated balance sheet as of June 30, 2023.

See ‘ Operating lease’ under note (6).

minimum lease payments of the land lease is as follows:

Total operating lease payments

operating lease payments

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of Headquarters Compound Real Properties

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

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

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

(the “Dormitories”) to Hebei Fangsheng for cash prices of approximately $2.77 million, $1.15 million, and $4.31 million

respectively .

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

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

for its original use with an annual rental payment of approximately $ 147,988 (RMB 1,000,000 ).

The lease was recorded in lease assets

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

minimum lease payments of the building lease is as follows:

Total operating lease payments

Present value of lease liabilities

current portion, record in current liabilities

Present value of lease liabilities

of March 31, 2023, 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.

of June 30, 2023, 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 $ 3,889,576 and $ 4,329,279

as of March 31, 2023 and December 31, 2022, respectively.

as of June 30, 2023 and December 31, 2022, respectively.

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

1 unchanged sentence

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

and as of March 31, 2023 and December 31, 2022, the Company guaranteed its long-term loan from financial institutions amounting to $ 4,511,256

and as of June 30, 2023 and December 31, 2022, the Company guaranteed its long-term loan from financial institutions amounting to $ 4,290,182

(RMB 31,000,000 ), that matured at various times in 2028.

2 unchanged sentences

Segment Reporting

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

operating segments:

Dongfang Paper and Tengsheng Paper, which produces offset printing paper, corrugating medium paper and tissue

paper, and Baoding Shengde, which produces face masks and digital photo paper.

They are managed separately because each business

requires different technology and marketing strategies.

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

Dongfang Paper and Tengsheng Paper, which produces offset printing paper, corrugating medium paper and tissue paper, and Baoding

Shengde, which produces face masks and digital photo paper.

They are managed separately because each business requires different technology

and marketing strategies.

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

3 unchanged sentences

the operating segments based on gross revenue generated.

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

Hebei Province, China.

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

March 31, 2023

June 30, 2023

Not Attributable

2 unchanged sentences

Inter-segment

Gross profit (loss)

Depreciation and amortization

Loss on impairment of assets

Interest income

1 unchanged sentence

Income tax expense(benefit)

Net income (loss)

( 1,487,869 )

( 1,253,493 )

Three Months Ended

March 31, 2022

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Inter-segment

Enterprise-wide,

and amortization

tax expense(benefit)

income (loss)

( 2,003,653 )

Six Months Ended

June 30, 2023

Not Attributable

Elimination of

Enterprise-wide,

Inter-segment

of Inter-segment

( 1,422,900 )

Depreciation and amortization

Loss on impairment of assets

Interest income

4 unchanged sentences

( 3,986,658 )

As of March 31, 2023

Not Attributable

Elimination of

of Inter-segment

Enterprise-wide,

Inter-segment

As of December 31, 2022

Not Attributable

Elimination of

( 1,378,124 )

and amortization

tax expense(benefit)

income (loss)

( 3,609,095 )

( 2,776,127 )

of June 30, 2023

of Inter-segment

Enterprise-wide,

Inter-segment

of December 31, 2022

of Inter-segment

Enterprise-wide,

TECH PACKAGING, INC.

1 unchanged sentence

Concentration and Major Customers and Suppliers

the three months ended March 31, 2023 and 2022, the Company had no single customer contributed over 10 % of total sales.

the three months ended March 31, 2023, the Company had two major suppliers accounted for 76 % and 14 % of total purchases.

For the three

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

the three months ended June 30, 2023 and 2022, the Company had no single customer contributed over 10 % of total sales.

the six months ended June 30, 2023 and 2022, the Company had no single customer contributed over 10 % of total sales.

the three months ended June 30, 2023, the Company had three major suppliers accounted for 74 %, 16 % and 6 % of total purchases.

three months ended June 30, 2022, the Company had three major suppliers accounted for 77 %, 16 % and 5 % of total purchases.

the six months ended June 30, 2023, the Company had three major suppliers accounted for 67 %, 13 % and 10 %of total purchases.

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

Concentration of Credit Risk

5 unchanged sentences

similar to the protection provided by the Federal Deposit Insurance Corporation (“FDIC”) of the United States as of as of

March 31, 2023 and December 31, 2022.

June 30, 2023 and December 31, 2022.

On May 1, 2015, the new “Deposit Insurance Regulations” was effective in the PRC that

2 unchanged sentences

bank accounts are all fully covered

by the FDIC insurance as of March 31, 2023 and December 31, 2022, while for the cash placed in financial institutions in the PRC, the

balances exceeding the maximum coverage of RMB 500,000 amounted to RMB 100,908,070 ($ 14,684,586 ) as of March 31, 2023.

by the FDIC insurance as of June 30, 2023 and December 31, 2022, while for the cash placed in financial institutions in the PRC, the

balances exceeding the maximum coverage of RMB 500,000 amounted to RMB 77,162,745 ($ 10,678,782 ) as of June 30, 2023.

Risks and Uncertainties

3 unchanged sentences

Recent Accounting Pronouncements

May 2019, the FASB issued ASU 2019-05, which is an update to ASU Update No.

2016-13, Financial Instruments—Credit Losses (Topic

Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement

of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology.

October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities

from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets

and contract liabilities in a business combination in accordance with Topic 606, Revenue from Contracts with Customers.

The new amendments

are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

The amendments

in Update 2016-13 added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments to the Codification.

Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit losses

when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments— Credit Losses—Available-for-Sale

Debt Securities.

The amendments in this Update address those stakeholders’ concerns by providing an option to irrevocably elect

the fair value option for certain financial assets previously measured at amortized cost basis.

For those entities, the targeted transition

relief will increase comparability of financial statement information by providing an option to align measurement methodologies for similar

financial assets.

Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments

in Update 2016-13 while still providing financial statement users with decision-useful information.

In November 2019, the FASB issued

2019-10, which to update the effective date of ASU No.

2016-02 for private companies, not-for-profit organizations and certain

smaller reporting companies applying for credit losses, leases, and hedging standard.

The new effective date for these preparers is for

fiscal years beginning after December 15, 2022.

The Company is currently evaluating the impact of ASU 2019-05 will have on its consolidated

financial statements.

October 2021, the FASB issued ASU 2021-08, “Business Combinations”.

The amendments in this Update address how to determine

whether a contract liability is recognized by the acquirer in a business combination and resolve the inconsistency of measuring revenue

contracts with customers acquired in a business combination by providing specific guidance on how to recognize and measure acquired contract

assets and contract liabilities from revenue contracts in a business combination.

The amendments in this Update apply to all entities

that enter into a business combination within the scope of Subtopic 805-10, Business Combination-Overalls.

For public business entities,

ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

application is permitted.

The amendments in this Update should be applied prospectively to business combinations occurring on or after

the effective date of the amendments.

The Company does not expect the adoption of this standard to have a material impact on its consolidated

financial statements.

should be applied prospectively to business combinations occurring on or after the effective date of the amendments, with early adoption

The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

Subsequent Event

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