What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-10 compared with 2023-11-09 · 936 added, 945 removed, 234 unchanged (89% of the section changed)

Financial Statements

TECH PACKAGING, INC.

PACKAGING, INC.

CONSOLIDATED BALANCE SHEETS

OF SEPTEMBER 30, 2023 AND DECEMBER 31, 2022

and bank balances

Accounts receivable (net of allowance for doubtful accounts of $ 56,674 and $ 881,878 as of September 30, 2023 and December 31, 2022, respectively)

and other current assets

from related parties

31, 2024 AND DECEMBER 31, 2023

Current Assets

on property, plant and equipment

lease right-of-use assets, net

plant, and equipment, net

tax recoverable

tax asset non-current

Cash and bank balances

Restricted cash

Accounts receivable (net of allowance for doubtful accounts of $ 48,697 and $ 11,745 as of March 31, 2024 and December 31, 2023, respectively)

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

Property, plant, and equipment, net

Value-added tax recoverable

Deferred tax asset non-current

$ 192,596,104

$ 194,743,649

AND STOCKHOLDERS’ EQUITY

portion of long-term loans

from customers

to related parties

payroll and employee benefits

payables and accrued liabilities

taxes payable

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities

gain on sale-leaseback

liability - non-current

Total liabilities (including amounts of the consolidated VIE without recourse to the Company of $ 12,010,014 and $ 16,784,878 as of September 30, 2023 and December 31, 2022, respectively)

and Contingencies

Stockholders’

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

paid-in capital

earnings reserve

other comprehensive loss

( 12,931,871 )

( 7,514,540 )

Short-term bank loans

Current portion of long-term loans

Lease liability

Accounts payable

Advance from customers

Notes payable

Due to related parties

Accrued payroll and employee benefits

Other payables and accrued liabilities

Total current liabilities

Long-term loans

Lease liability - non-current

Derivative liability

Total liabilities (including amounts of the consolidated VIE without recourse to the Company of $ 21,648,803 and $ 20,084,995 as of March 31, 2024 and December 31, 2023, respectively)

Commitments and Contingencies

Stockholders’ Equity

Liabilities and 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, 2024 and December, 31, 2023.

Additional paid-in capital

Statutory earnings reserve

Accumulated other comprehensive loss

( 10,857,153 )

( 10,555,534 )

accompanying notes to condensed consolidated financial statements.

TECH PACKAGING, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Cost of sales

Retained earnings

Total stockholders’ equity

Total Liabilities and Stockholders’ Equity

$ 192,596,104

$ 194,743,649

See accompanying notes to condensed

consolidated financial statements.

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS

OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

Three Months Ended

Cost of sales

( 6,464,728 )

( 20,067,876 )

Gross (Loss) Profit

Gross Profit (Loss)

Selling, general and administrative expenses

1 unchanged sentence

( 2,495,362 )

( 6,153,513 )

( 8,541,224 )

Loss on impairment of

Loss from Operations

1 unchanged sentence

( 2,772,361 )

( 4,813,154 )

Other Income (Expense):

1 unchanged sentence

Interest expense

Gain on acquisition

Gain (Loss) on derivative

Gain (Loss) on derivative liability

Loss before Income Taxes

1 unchanged sentence

( 2,733,165 )

( 5,614,002 )

( 4,823,976 )

for Income Taxes

( 1,975,368 )

( 1,887,318 )

( 5,962,026 )

( 4,663,445 )

Other Comprehensive Income

Foreign currency translation

( 11,171,156 )

( 5,417,331 )

( 21,769,765 )

Comprehensive Loss

Provision for Income Taxes

( 3,746,536 )

( 2,733,165 )

Other Comprehensive (Loss) Income

Foreign currency translation adjustment

Total Comprehensive Loss

$ ( 4,048,155 )

4 unchanged sentences

accompanying notes to condensed consolidated financial statements.

TECH PACKAGING, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS

OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

Three Months Ended

Cash Flows from Operating Activities:

1 unchanged sentence

$ ( 2,733,165 )

Adjustments to reconcile net income to net

cash provided by operating activities:

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

Depreciation and amortization

(Gain) Loss on derivative liability

(Gain) Loss from disposal and impairment of

property, plant and equipment

Allowance for bad debts

Share-based compensation and expenses

Gain on acquisition

( 1,197,630 )

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

(Recovery from) Allowance for bad debts

Allowances for inventories, net

Changes in operating assets and liabilities:

1 unchanged sentence

( 1,847,112 )

( 1,988,921 )

Prepayments and other current assets

2 unchanged sentences

Advance from customers

Notes payable

Related parties

2 unchanged sentences

Income taxes payable

Cash Provided by Operating Activities

Cash Flows from Investing

Net Cash Provided by Operating Activities

Cash Flows from Investing Activities:

Purchases of property, plant and equipment

( 9,211,711 )

( 1,681,979 )

Acquisition of land

( 6,507,431 )

Cash Used in Investing Activities

( 9,211,711 )

( 8,189,410 )

Cash Flows from Financing

Net Cash Used in Investing Activities

Cash Flows from Financing Activities:

Proceeds from short term bank loans

1 unchanged sentence

Repayment of bank loans

( 5,549,150 )

Payment of capital lease obligation

Loan to a related party

Cash Provided by Financing Activities

of Exchange Rate Changes on Cash and Cash Equivalents

( 1,266,146 )

Net (Decrease) Increase

in Cash and Cash Equivalents

Cash Equivalents and Restricted Cash - Beginning of Period

Cash Equivalents and Restricted Cash - End of Period

Supplemental Disclosure

of Cash Flow Information:

Cash paid for interest,

net of capitalized interest cost

Cash paid for income

Net Cash Provided by Financing Activities

Effect of Exchange Rate Changes on Cash and Cash Equivalents

Net Increase in Cash and Cash Equivalents

Cash, Cash Equivalents and Restricted Cash - Beginning of Period

Cash, Cash Equivalents and Restricted Cash - End of Period

Supplemental Disclosure of Cash Flow Information:

Cash paid for interest, net of capitalized interest cost

Cash paid for income taxes

Cash and bank balances

Restricted cash

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 NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Comprehensive

at December 31, 2021

$ 110,146,329

$ 215,749,908

of shares to officer and directors

currency translation adjustment

( 21,769,765 )

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

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 MARCH 31, 2024 AND 2023

Balance at December 31, 2021

$ ( 7,514,540 )

$ 181,323,892

Foreign currency translation adjustment

( 2,733,165 )

Balance at Sep

( 2,733,165 )

Balance at March 31, 2022

$ ( 5,011,784 )

3 unchanged sentences

$ 168,336,863

of shares to officer and directors

currency translation adjustment

( 5,417,331 )

Foreign currency translation adjustment

( 3,746,536 )

at September 30, 2023

Balance at March 31, 2024

$ ( 10,857,153 )

$ 164,288,708

accompanying notes to condensed consolidated financial statements.

TECH PACKAGING, INC.

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..

See accompanying notes to condensed

consolidated financial statements.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(1) Organization and Business Background

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.

Effective 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

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

We were the surviving entity.

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

June 9, 2022, the Board of Directors of the Company approved a reverse stock split of the Company’s issued and outstanding shares

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

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

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

CUSIP number following the Reverse Stock Split is 46527C 209.

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.

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.

In connection with the name change, our common stock began being traded under a new NYSE

symbol, “ITP,” and a new CUSIP number, 46527C100, at such time.

On June 9, 2022, the Board of Directors

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

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

The Reverse Stock Split become

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

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

The new CUSIP number following the

Reverse Stock Split is 46527C 209.

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 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

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

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 Shengde.

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 corporation.

Shengde Holdings Inc.

was incorporated in the State of Nevada on February 25, 2009.

On June 1, 2009, Shengde Holdings Inc.

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

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

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

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

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 Tengsheng Paper Co., Ltd.

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.

On June 1, 2009, Shengde Holdings

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 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 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 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 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.

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.

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 September 30, 2023 and 2022 was accounted for 99.66 % and

99.83 % of the Company’s total revenue, respectively.

The revenue generated from Dongfang Paper and Tengsheng Paper for the nine

months ended September 30, 2023 and 2022 was accounted for 99.86 % and 99.75 % of the Company’s total revenue, respectively.

Paper and Tengsheng Paper also accounted for 90.71 % and 88.54 % of the total assets of the Company as of September 30, 2023 and December

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 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 FinancialAccounting Standard Board (the “FASB”).

The revenue generated from Dongfang Paper and Tengsheng Paper

for the three months ended March 31, 2024 and 2023 was accounted for 100 % and 99.82 % of the Company’s total revenue, respectively.

Dongfang Paper and Tengsheng Paper also accounted for 95.18 % and 94.93 % of the total assets of the Company as of March 31, 2024 and December

31, 2023, respectively.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Incorporation

Establishment

Incorporation

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

As of March 31, 2024 and December 31, 2023, details of the

Company’s subsidiaries and variable interest entities are as follows:

Incorporation or

Establishment

Incorporation or Establishment

Percentage of

Dongfang Holding

16 unchanged sentences

Paper production and distribution

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

* Dongfang Paper is treated as a 100 % controlled variable interest

entity of the Company.

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

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.

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.

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.

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.

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

its operations.

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

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

risks and uncertainties is remote.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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, 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

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.

sheets as of March 31, 2024 and December 31, 2023 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.

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.

Current Assets

5 unchanged sentences

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

8 unchanged sentences

Advance from customers

Due to related parties

Accrued payroll and employee benefits

3 unchanged sentences

Long-term loans

Deferred gain on sale-leaseback

Lease liability - non-current

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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, 2022 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 September 30, 2023 and the results of operations for the nine months ended September 30, 2023 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.

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 Split.

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.

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.

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 September 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

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

Total liabilities

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(2) Basis of Presentation and Significant Accounting Policies

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, 2023 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

March 31, 2024 and the results of operations for the three months ended March 31, 2024 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 estimates.

Valuation of long-lived asset

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

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.

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

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

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 liabilities.

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

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 March 31, 2024 and December 31, 2023, 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 (12)), 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

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.

1 unchanged sentence

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

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(3) Restricted Cash

Out of the restricted cash, $ 431,376 as of March 31, 2024

was presented for the cash deposited at the Bank of Cangzhou for purpose of securing the bank acceptance notes from this bank (see Note

The restriction will be lifted upon the maturity of the notes payable on July 16, 2024.

Restricted cash of 472,163 and $ 472,983

as of March 31, 2024 and December 31, 2023 was presented for the cash deposited at the Industrial and Commercial Bank of China of Tengsheng

The deposit was restricted due to the personal legal proceeding of Mr.

Ping, the Legal Representative of Tengsheng Paper.

(4) Inventories

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, 2023 and December

September 30,

Raw Materials

Recycled white scrap

Base paper and other

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

Inventories consisted of the following as of March 31, 2024 and December 31, 2023:

Raw Materials

Recycled paper board

Recycled white scrap paper

Base paper and other raw materials

Semi-finished Goods

1 unchanged sentence

Total inventory, gross

Inventory reserve

Total inventory, net

(4) Prepayments

and other current assets

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

September 30,

(5) Prepayments and other current assets

Prepayments and other current assets consisted of the following

as of March 31, 2024 and December 31, 2023:

Prepaid land lease

1 unchanged sentence

Value-added tax recoverable

(5) Property,

plant and equipment, net

As of September

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

September 30,

(6) Property, plant and equipment, net

As of March 31, 2024 and December 31, 2023, property, plant

and equipment consisted of the following:

Property, Plant, and Equipment:

2 unchanged sentences

Machinery and equipment

Construction in progress

accumulated depreciation

and amortization

accumulated depreciation and amortization

( 147,681,929 )

( 144,447,712 )

Property, Plant and Equipment,

Property, Plant and Equipment, net

$ 160,205,120

$ 163,974,022

of September 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.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of September 30, 2023 and December 31, 2022, certain property, plant and equipment of Dongfang Paper with net values of $ 29,713 and $ 280,466 ,

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

Land use right of Tengsheng Paper with

net value of $ 4,872,178 and $ 5,111,014 , respectively, as of September 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 $ 3,755,317 and $ 3,948,953 , respectively,

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

right of Dongfang Paper with net value of $ 5,098,721 as of September 30, 2023 was pledged for a long-term loan from credit union of Tengsheng

As of March 31, 2024 and December 31, 2023, 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 March 31, 2024 and December

31, 2023, certain property, plant and equipment of Dongfang Paper with net values of $ nil , have been pledged pursuant to a long-term loan

from credit union of Dongfang Paper.

Land use right of Tengsheng Paper with net value of $ 4,872,632 and $ 4,910,034 , respectively, as of

March 31, 2024 and December 31, 2023 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 $ 3,749,419 and $ 3,781,366 , respectively, as of March 31, 2024 and December 31, 2023 was pledged for

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

Land use right of Dongfang Paper with net value of $ 5,092,797 and $ 5,135,132 ,

respectively, as of March 31, 2024 and December 31, 2023 was pledged for a long-term loan from credit union of Tengsheng Paper.

property, plant and equipment of Dongfang Paper with net values of $ 306,528 was pledged for a short-term loan from Bank of Cangzhou.

See “Short-term bank loans” under Note (8), Loans Payable, for details of the transaction and asset collaterals.

and amortization of property, plant and equipment was $ 3,423,231 and $ 3,609,985 for the three months ended September 30, 2023 and 2022,

respectively.

Depreciation and amortization of property, plant and equipment was $ 10,573,288 and $ 11,168,328 for the nine months ended

September 30, 2023 and 2022, respectively.

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, 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.

Paper made payments due according to the schedule.

On July 17, 2023, the Company made a final payment on outstanding obligations and

bought back the Lease Equipment at nominal price according to the agreement.

Depreciation and amortization of

property, plant and equipment was $ 3,481,788 and $ 3,686,243 for the three months ended March 31, 2024 and 2023, respectively.

Financing with Sale-Leaseback

The Company entered

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

August 6, 2020, for a total financing proceeds in the amount of RMB 16 million (approximately US$ 2.3 million).

sale-leaseback arrangement, Tengsheng Paper sold the Leased Equipment to TLCL for 16 million (approximately US$ 2.3 million).

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

the end of the lease term, Tengsheng Paper may pay a nominal purchase price of RMB 100 (approximately $ 14 ) 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 Paper made

payments due according to the schedule.

On July 17, 2023, the Company made a final payment on outstanding obligations and bought

back the Lease Equipment at nominal price according to the agreement.

The lease assets were reclassified as own assets and balance

of Leased Equipment net of amortization were $ nil and $ 1,939,970 as of September 30, 2023 and December 31, 2022, respectively.

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.

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.

Company regularly evaluate the renewal options and when they are reasonably certain of exercise, the Company includes the renewal period

in its lease term.

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.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The components

of the Company’s lease expense are as follows:

Nine Months Ended

September 30,

of Leased Equipment net of amortization were $ nil as of March 31, 2024 and December 31, 2023.

of the Leased Equipment was $ nil and $ 38,865 for the three months ended March 31, 2024 and 2023.

Total interest expenses for the sale-leaseback

arrangement was $ nil and $ 4,490 for the three months ended March 31, 2024 and 2023.

Operating lease lessor

The Company has a non-cancellable agreement

to lease plant to tenant under operating lease for 1 year from November 2023 to November 2024.

The lease does not contain contingent payments.

The rental income of the year was paid in advance by the tenant in December 2023.

Operating lease as lessee

The Company leases space under

non-cancelable operating leases for plant and production equipment.

The lease does not have significant rent escalation holidays, concessions,

leasehold improvement incentives, or other build-out clauses.

Further, the lease does not contain contingent rent provisions.

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.

regularly evaluate the renewal options and when they are reasonably certain of exercise, the Company includes the renewal period in its

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.

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

Three Months Ended

Operating lease cost

Short-term lease cost

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

Nine Months Ended

September 30,

Supplemental cash flow information related to its operating

leases was as follows for the period ended March 31, 2024:

Cash paid for amounts included in the measurement of lease

Three Months Ended

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 September 30, 2023:

Total operating lease

Maturities of its lease liabilities for all operating leases

are as follows as of March 31, 2024:

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 September 30, 2023:

September 30,

The weighted average remaining lease terms and discount rates

for all of its operating leases were as follows as of March 31, 2024:

Remaining lease term and discount rate:

Weighted average remaining lease

Weighted average remaining lease term (years)

Weighted average discount rate

September 30,

Industrial and Commercial Bank

of China (“ICBC”) Loan 1

China Construction Bank Loan

(8) Loans Payable

Short-term bank loans

Bank of Cangzhou 1

Bank of Cangzhou 2

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

Total short-term bank loans

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

November 10, 2022, the Company entered into a working capital loan agreement with the ICBC.

The 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 bore a fixed interest rate of 4.785 %

The Company repaid $ 71,743 in May 2023 and paid off the remaining balance of the loan in August 2023.

The balance of the loan

was $ nil and $ 5,023,978 as of September 30, 2023 and December 31, 2022, respectively.

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

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

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

The loan was fully repaid

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

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

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

The loan was fully repaid

May 29, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 417,839 as of September 30,

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

On December 31, 2023, the Company

entered into a working capital loan agreement with the Bank of Cangzhou, to borrow $ 140,944 at a fixed interest rate of 5.5 % per annum.

The loan is secured by certain of the Company’s manufacturing equipment with net book value of $ 306,528 as of March 31, 2024.

loan will be due by December 30, 2024 .

On December 31, 2023, the Company

entered into a working capital loan agreement with the Bank of Cangzhou, to borrow $ 281,889 at a fixed interest rate of 5.5 % per annum.

The loan will be due by December 30, 2024.

On September 15, 2023, the Company

entered into a working capital loan agreement with the ICBC, with a balance of $ 2,819 and $ 2,824 as of March 31, 2024 and December 31,

2023, respectively.

The loan bears a fixed interest rate of 3.45 % 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 $ nil and

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

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

was fully repaid in July 2023.

June 29, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 417,839 as of September 30,

The loan will be due by September 14, 2024 .

On September 22, 2023, the Company

entered into a working capital loan agreement with the ICBC, with a balance of $ 70,472 and $ 70,594 as of March 31, 2024 and December 31,

2023, respectively.

The loan bears a fixed interest rate of 3.45 % per annum.

The loan will be due by June 28, 2024 .

of September 30, 2023, there were guaranteed short-term borrowings of $ nil 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 September 30, 2023 and 2022 were approximately 4.52 % and 4.28 %.

short-term borrowing rates for the nine months ended September 30, 2023 and 2022 were approximately 4.66 % and 4.6 %.

of September 30, 2023 and December 31, 2022, long-term loans were $ 11,270,053 and $ 9,040,002 , respectively.

September 30,

Rural Credit Union of Xushui District

The loan will be due by September 21, 2024 .

On September 22, 2023, the Company

entered into a working capital loan agreement with the ICBC, with a balance of $ 349,542 and $ 350,149 as of March 31, 2024 and December

31, 2023, respectively.

The loan bears a fixed interest rate of 3.45 % per annum.

The loan will be due by September 21, 2024 .

As of March 31, 2024, there were

guaranteed short-term borrowings of $ nil and unsecured bank loans of $ 704,722 .

As of December 31, 2023, there were guaranteed short-term

borrowings of $ nil and unsecured bank loans of $ 423,567 .

The average short-term borrowing rates

for the three months ended March 31, 2024 and 2023 were approximately 4.48 % and 4.72 %.

Long-term loans

As of March 31, 2024 and December 31,

2023, long-term loans were $ 11,358,704 and $ 11,378,429 , respectively.

Rural Credit Union of Xushui District Loan 1

2 unchanged sentences

Rural Credit Union of Xushui District Loan 4

Current portion

of long-term loans

Rural Credit Union of Xushui District Loan 5

Current portion of long-term loans

( 8,116,984 )

( 6,874,497 )

As of September

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

Long-term loans

As of March 31, 2024, the Company’s

long-term debt repayments for the next coming years were as follows:

Remainder of 2024

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.

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 was due and payable

in various installments from December 21, 2018 to June 20, 2023.

On August 24, 2023, the loan was extended for another 3 years and will

be due and payable on August 24, 2026 .

The loan is secured by certain of the Company’s manufacturing equipment with net book value

of $ nil as of March 31, 2024 and December 31, 2023.

Interest payment is due monthly and bore a rate of 7.68 % per annum.

Effective from

November 15, 2022, the interest rate was reduced to 7 % per annum.

As of March 31, 2024 and December 31, 2023, the total outstanding loan

balance was $ 3,522,200 and $ 3,528,315 .

Out of the total outstanding loan balance, current portion amounted was $ 1,267,090 and $ 1,269,290 ,

which is presented as current liabilities in the consolidated balance sheet and the remaining balance of $ 2,255,110 and $ 2,259,025 is

presented as non-current liabilities in the consolidated balance sheet as of March 31, 2024 and December 31, 2023, 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 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 was reduced

to 7 % per annum.

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, 2023 and December 31, 2022, total outstanding loan balance was $ 1,197,805

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

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 was 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 $ 29,713 and $ 280,466 as of September 30, 2023 and December 31, 2022, respectively.

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

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

As of September 30, 2023 and December 31, 2022, the total outstanding loan balance was $ 3,481,536 and $ 3,589,582 , which are presented

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

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 was reduced to 7 % per annum.

As of September

30, 2023 and December 31, 2022, the total outstanding loan balance was $ 2,228,474 and $ 2,297,332 , respectively, which are presented as

current liabilities and non-current liabilities in the consolidated balance sheet as of September 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

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 was reduced to 7 % per

As of September 30, 2023 and December 31, 2022, the total outstanding loan balance was $ 1,810,635 and $ 1,866,582 ,

respectively, which are presented as non-current liabilities in the consolidated balance sheet as of September 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

is due and payable in various installments from August 21, 2023 to February 24, 2025.

The loan is secured by Dongfang Paper with its

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

As of March 31, 2024 and December 31, 2023, the total outstanding

loan balance was $ 2,255,109 and $ 2,259,026 , respectively, which are presented as current liabilities in the consolidated balance sheet

as of March 31, 2024 and December 31, 2023.

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 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.

of September 30, 2023, the total outstanding loan balance was $ 2,507,034 .

Out of the total outstanding loan balance, current portion

amounted was $ 1,267,445 , which is presented as current liabilities in the consolidated balance sheet and the remaining balance of $ 1,239,589

is presented as non-current liabilities in the consolidated balance sheet as of September 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 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

As of September 30, 2023 and December 31, 2022, the total outstanding loan balance was $ 44,569 and $ 51,690 , respectively.

the total outstanding loan balance, current portion amounted $ 11,072 and $ 13,928 , respectively, which are presented as current liabilities

and the remaining balance of $ 30,641 and $ 40,204 are presented as non-current liabilities in the consolidated balance sheet as of September

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

As of March 31, 2024 and December 31, 2023, the total

outstanding loan balance was $ 1,832,276 and $ 1,835,458 , respectively, which are presented as current liabilities in the consolidated balance

sheet as of March 31, 2024 and December 31, 2023.

On 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 is due and payable in various

installments from August 21, 2023 to February 24, 2025.

The loan is secured by Dongfang 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 % per annum.

As of March 31, 2024 and December 31,

2023, the total outstanding loan balance was $ 2,536,998 and $ 2,541,404 .

Out of the total outstanding loan balance, current portion amounted

was $ 2,536,998 and $ 1,284,820 , which is presented as current liabilities in the consolidated balance sheet and the remaining balance of

$ nil and $ 1,256,584 is presented as non-current liabilities in the consolidated balance sheet as of March 31, 2024 and December 31, 2023,

respectively.

On December 5, 2023, the Company entered

into a loan agreement with the Rural Credit Union of Xushui District for a term of 3 years, which was due in various installments from

June 21, 2024 to December 5, 2026 .

The loan was guaranteed by an independent third party.

Interest payment was due monthly and bore a

rate of 7 % per annum.

As of March 31, 2024 and December 31, 2023, total outstanding loan balance was $ 1,212,121 and $ 1,214,226 , respectively.

Out of the total outstanding loan balance, current portion amounted $ 225,511 and $ 225,903 , which is presented as current liabilities and

the remaining balance of $ 986,610 and $ 988,323 is presented as non-current liabilities in the consolidated balance sheet as of March 31,

2024 and December 31, 2023, respectively.

interest expenses for the short-term bank loans and long-term loans for the three months ended September 30, 2023 and 2022 were $ 247,628

and $ 248,239 , respectively.

Total interest expenses for the short-term bank loans and long-term loans for the nine months ended September

30, 2023 and 2022 were $ 760,807 and $ 753,789 , respectively.

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.

Total interest expenses for the short-term

bank loans and long-term loans for the three months ended March 31, 2024 and 2023 were $ 209,586 and $ 244,679 , 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.

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 $ 361,289 and $ 361,915 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, 2023 and December 31, 2022, 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

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 31, 2024 and December 31, 2023, respectively.

On December 10, 2014, Mr.

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 .

As of September 30, 2023 and December 31, 2022, approximately $ 41,784 and $ 43,075 of interest, respectively

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

31, 2024 and December 31, 2023, approximately $ 42,283 and $ 42,357 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.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Zhenyong Liu, which

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

On March 1, 2015, the Company entered

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.

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.

The loan would

be originally due on July 12, 2018 .

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

due on July 12, 2021.

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

Zhenyong Liu, together

with interest of $ 158,651 .

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

As of September

30, 2023 and December 31, 2022, the outstanding interest was $ 191,422 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 September 30, 2023 and December 31, 2022, total amount of loans due to Mr.

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

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

As of March 31, 2024 and December 31, 2023,

the outstanding interest was $ 193,710 and $ 194,047 , respectively, which was recorded in other payables and accrued liabilities as part

of the current liabilities in the consolidated balance sheet.

As of March 31, 2024 and December

31, 2023, 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 nine months ended September 30, 2023 and 2022.

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

for the three months ended March 31, 2024 and 2023.

The accrued interest owing to Mr.

Zhenyong Liu was approximately $ 590,227 and $ 608,465 , as of September 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.

Zhenyong Liu, which allows Mr.

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

Zhenyong Liu in February 2022.

October 2022 and November 2022, the Company entered into two agreements with Mr.

Zhenyong Liu was approximately $ 597,282 and $ 598,319 ,

as of March 31, 2024 and December 31, 2023, respectively, which was recorded in other payables and accrued liabilities.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

In October 2022 and November 2022,

the Company entered into two agreements with Mr.

Zhenyong Liu, which allowed Mr.

Zhenyong Liu to borrow

from the Company an amount of $ 6,963,982 (RMB 50,000,000 ) in total.

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

$ 4,264,938 (RMB 30,000,000 ) was repaid by Mr.

Zhengyong Liu in August 2023.

The remaining balance is expected to be repaid

by the end of November 2023.

Interest income of the loan for the nine months ended September 30, 2023 was $ 263,342 .

of September 30, 2023 and December 31, 2022, amount due to shareholders was $ 727,433 , which represents funds from shareholders to pay

for various expenses incurred in the U.S.

Zhenyong Liu to borrow from the Company an amount of

$ 7,059,455 (RMB 50,000,000 ) in total.

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

$ 4,235,673 (RMB 30,000,000 )

was repaid by Mr.

Zhengyong Liu in August 2023 and the remaining balance was repaid in December 2023.

Interest income of the loan for

the three months ended March 31, 2024 an, 2023 were $ nil and $ 131,553 .

As of March 31, 2024 and December

31, 2023, amount due to shareholder was $ 727,433 , which represents funds from shareholders to pay for various expenses incurred in the

The amount is due on demand with interest free.

(10) Notes payable

As of March 31, 2024, the Company

had bank acceptance notes of $ 246,501 from the Cangzhou to third parties for settling purchases of raw materials.

The acceptance notes

are used to essentially extend the payment of accounts payable and are issued under the banking facilities obtained from bank.

acceptance notes from the bank bore interest rate at nil % per annum and 0.05 % of notes amount as handling change.

The acceptance notes

will become due and payable on July 16, 2024.

(11) Other payables and accrued liabilities

payables and accrued liabilities consist of the following:

September 30,

Accrued electricity

Accrued rental

Value-added tax payable

Accrued interest to a related party

Payable for purchase of equipment

Payable for purchase of property, plant and equipment

Accrued commission to salesmen

Accrued bank loan interest

(10) Derivative

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.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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, 2023.

(12) Derivative Liabilities

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 item.

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 March 31,

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 September 30, 2023:

September 30,

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 March 31, 2024:

Expected term

3 unchanged sentences

0.19 % - 4.4 %

following table summarizes the changes in the derivative liabilities during the nine months ended September 30, 2023:

The following table summarizes the changes in the derivative liabilities during the three months ended March 31, 2024:

Value Measurements Using Significant Observable Inputs (Level 3)

Balance at December 31, 2023

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 September,

of common stock to investors

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 $ 5.5 .

The exercise price of the warrant

was $ 5.5 per share.

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 $ 7.5 .

The exercise price of the warrant

was $ 7.5 per share.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 Split.

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.

of common stock pursuant to the 2021 Incentive Stock Plan

August 15, 2022, the Company granted an aggregate of 150,000 shares of common stock under its compensatory incentive plans to fifteen

employees, as awards under the 2021 Incentive Stock Plan.

Change in fair value of derivative liability

Balance at March 31, 2024

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(13) 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.

price for each share of common stock and the corresponding warrant was $ 5.5 .

The exercise price of the warrant was $ 5.5 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 $ 7.5 .

The exercise price of the warrant was $ 7.5 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 affected 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

On August 15, 2022, the Company

granted an aggregate of 150,000 shares of common stock under its compensatory incentive plans to fifteen employees, as awards under the

2021 Incentive Stock Plan.

Please see Note (17), Stock Incentive Plans for more details.

Total fair value

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

Total fair value of the stock was calculated

at $ 156,000 as of the date of grant.

(14) Warrants

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

The exercise price of the May 2020 Warrant is $ 7.425 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 $ 7.425 per share and 352,000 May 2020 Warrants were outstanding as of September

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 $ 5.5 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 $ 5.5 per share.

1,207,492 January 2021 Warrants were outstanding

as of September 30, 2023.

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 $ 7.5 and will expire on March 1, 2026.

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 September 30, 2023.

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

of stock warrant activities is as below:

Outstanding and exercisable at

beginning of the period

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”).

price of the May 2020 Warrant is $ 7.425 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 $ 7.425 per share and 352,000 May 2020 Warrants were outstanding as of March 31, 2024.

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 $ 5.5 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 $ 5.5 per share.

1,207,492 January 2021 Warrants were outstanding as of March 31, 2024.

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 $ 7.5 and will expire on March 1, 2026 .

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, 2024.

The Company classified warrants as liabilities and accounted

for the issuance of the warrants as a derivative.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

A summary of stock warrant activities is as below:

Three months ended

March 31, 2024

exercise price

Outstanding and exercisable at beginning of the period

Issued during the period

Exercised during the

Outstanding and exercisable

at end of the period

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following

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

Average Remaining

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, 2024.

Warrants Outstanding

Warrants Exercisable

Weighted Average Remaining

Contractual life

Weighted Average

Exercise Price

Weighted Average

Exercise Price

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 September 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 September 30, 2023 and December 31, 2022 are nil .

(13) Earnings

For the three

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

September 30,

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 March

31, 2024 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 March 31, 2024 and December 31, 2023 are nil .

(15) Earnings Per Share

For the three months ended March 31, 2024 and 2023, basic

and diluted net income per share are calculated as follows:

Three Months Ended

Basic loss per share

for the period - numerator

Net loss for the period - numerator

$ ( 3,746,536 )

$ ( 2,733,165 )

Weighted average common

stock outstanding - denominator

Weighted average common stock outstanding - denominator

Net loss per share

Diluted income per share

Net income for the period-

$ ( 1,975,368 )

$ ( 1,887,318 )

Weighted average common

stock outstanding - denominator

Effect of dilution

Weighted average common

stock outstanding - denominator

Diluted loss per share

September 30,

Basic loss per share

for the period - numerator

$ ( 5,962,026 )

$ ( 4,663,445 )

Weighted average common

stock outstanding - denominator

Net loss per share

Diluted loss per share

Net loss for the period

Net income for the period- numerator

$ ( 3,746,536 )

$ ( 2,733,165 )

Weighted average common

stock outstanding - denominator

Weighted average common stock outstanding - denominator

Effect of dilution

Weighted average common

stock outstanding - denominator

Weighted average common stock outstanding - denominator

Diluted loss per share

For the three

and nine months ended September 30, 2023 and 2022 there were no securities with dilutive effect issued and outstanding.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 nine months ended September 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.

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, 2023 and 2022 were as follows:

Provision for Income Taxes

Current Tax Provision U.S.

Current Tax Provision PRC

Deferred Tax Provision

Provision for (Deferred tax benefit)/ Income Taxes

The provisions

for income taxes for nine months ended September 30, 2023 and 2022 were as follows:

For the three months ended March 31, 2024 and 2023 there

were no securities with dilutive effect issued and outstanding.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(16) Income Taxes

United States

The 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, 2024 and 2023, and management believes that its earnings are permanently invested

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 March 31, 2024 and 2023 were as follows:

Three Months Ended

Provision for Income Taxes

1 unchanged sentence

Current Tax Provision PRC

Deferred Tax Provision

( 1,197,630 )

Provision for (Deferred tax benefit)/ Income Taxes

$ ( 160,531 )

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

approximately $ 530,581 and $ 761,881 for U.S.

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

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 September 30, 2023, 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 September 30, 2023 and December 31, 2022, the Company provided a 100 % valuation allowance on the U.S.

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

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:

September 30,

Deferred Tax Provision PRC

Total Provision for (Deferred tax benefit)/ Income Taxes

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

In addition to the reversible future

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

the Company was incorporated in the United States and incurred net operating losses of approximately $ 62,499 and $ 530,581 for U.S.

tax purposes for the years ended December 31, 2023 and 2022, respectively.

The net operating loss carried forward may be available to

reduce future years’ taxable income.

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

As of March 31, 2024, 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 March 31, 2024 and December

31, 2023, the Company provided a 100 % valuation allowance on the U.S.

deferred tax asset benefit to reduce the total deferred tax asset

to the amount realizable for the PRC income tax purposes.

Management reviews this valuation allowance periodically and will make adjustments

as warranted.

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

Deferred tax assets (liabilities)

Depreciation and amortization of

property, plant and equipment

Depreciation and amortization of property, plant and equipment

Impairment of property, plant and equipment

Miscellaneous

Net operating loss carryover

of PRC company

Net operating loss carryover of PRC company

(Gain) Loss on asset disposal

Total deferred tax assets

2 unchanged sentences

( 17,854,310 )

Total deferred tax assets,

PRC Statutory

Effect of tax and book difference

Change in valuation allowance

Effective income tax rate

PRC Statutory

Total deferred tax assets, net

During the three months ended March

31, 2024 and 2023, the effective income tax rate was estimated by the Company to be - 1.0 % and 0 %, respectively

Three Months Ended

PRC Statutory rate

Effect of tax and book difference

1 unchanged sentence

Effective income tax rate

the three months ended September 30, 2023 and 2022, the effective income tax rate was estimated by the Company to be 0.2 % and - 29.7 %,

respectively.

the nine months ended September 30, 2023 and 2022, the effective income tax rate was estimated by the Company to be - 6.2 % and 3.3 %, respectively.

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

tax liability on all unrepatriated

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

tax deductions and net operating

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

federal or state corporate income tax liability in the

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

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

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

As of March 31, 2024, 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.

If these earnings are repatriated to the U.S.

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

tax provisions would be required.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

financial position, results of operations, or cash flows.

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

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

review by taxing authorities.

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

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

to the Company’s liability for income taxes.

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

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

As of September 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 nine months ended September 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.

Incentive Plans

2021 Incentive

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 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.

(16) 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.

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.

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 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

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, 2024 and December 31, 2023, management considered that the

Company had no uncertain tax positions affecting its consolidated financial position and results of operations or cash flows, and will

continue to evaluate for any uncertain position in future.

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

consolidated financial statements for the three months ended March 31, 2024 and December 31, 2023, 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.

(17) Stock Incentive Plans

2021 Incentive Stock Plan

On November 12, 2021, the Company’s

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

Under the 2021 ISP, the Company has reserved a total of 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.

Total fair value of the stock was calculated

at $ 156,000 as of the date of grant.

2023 Incentive Stock Plan

On October 31, 2023, the Company’s

Annual General Meeting adopted and approved the 2023 Omnibus Equity Incentive Plan of IT Tech Packaging, Inc.(the”2023 Plan”).

Under the 2023 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.

All shares of common stock under the

2023 ISP, including shares originally authorized by equity holders and shares remaining for future issuance as of March 31, 2024, have

been reserved.

(18) Commitments and Contingencies

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 31, 2031.

The lease requires an annual rental payment of approximately $ 16,900 (RMB 120,000 ).

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

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 $ 142,165 (RMB 1,000,000 ).

The lease was recorded in lease assets and liabilities

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

See ‘ Operating lease’ under note (6).

minimum lease payments of the land lease is as follows:

Total operating lease

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of September 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 $ 3,815,502 and $ 4,329,279

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

This lease is renewable

at the end of the 30-year term.

Total operating lease payments

Sale of Headquarters Compound Real Properties

On August 7, 2013, the Company’s

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

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

and three employee dormitory buildings located within the Headquarters Compound (the “Dormitories”) to Hebei Fangsheng for

cash prices of approximately

$ 2.77 million, $ 1.15 million, and $ 4.31

million respectively.

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

In connection with the sale of

the Industrial Buildings, Hebei Fangsheng agreed to lease the Industrial Buildings back to the Company for its original use with an annual

rental payment of approximately $ 140,829 (RMB 1,000,000 ).

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

sheet as of March 31, 2024.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Capital commitment

As of March 31, 2024, 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 $ 3,481,325 and $ 3,499,936 as of March 31, 2024 and December

31, 2023, 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 September 30, 2023 and December 31, 2022, the Company guaranteed its long-term loan from financial institutions amounting to

$ 4,317,669 (RMB 31,000,000 ), that matured at various times in 2028.

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

be materially adversely affected.

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.

Administrative functions such as finance, treasury, and

information systems are centralized.

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

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.

financial information for the three reportable segments is as follows:

Not Attributable

Elimination of

Enterprise-wide,

Inter-segment

and amortization

on impairment of assets

tax expense(benefit)

income (loss)

( 2,114,896 )

( 1,975,368 )

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Not Attributable

Enterprise-wide,

Inter-segment

and amortization

tax expense(benefit)

income (loss)

( 1,871,128 )

( 2,101,863 )

( 1,887,318 )

Guarantees and Indemnities

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, 2024 and December 31, 2023, the Company guaranteed its long-term loan from financial institutions amounting to $ 4,369,274

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

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

adversely affected.

(19) Segment Reporting

Since 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.

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 among 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.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Summarized financial information for the three reportable

segments is as follows:

Three Months Ended

March 31, 2024

Not Attributable

Enterprise-wide,

Inter-segment

of Inter-segment

Depreciation and amortization

Interest income

Interest expense

Income tax expense(benefit)

( 1,134,241 )

and amortization

on impairment of assets

tax expense(benefit)

income (loss)

( 2,122,757 )

( 3,746,536 )

Three Months Ended

March 31, 2023

Not Attributable

Enterprise-wide,

Inter-segment

( 2,135,819 )

and amortization

tax expense(benefit)

( 1,128,442 )

income (loss)

of Inter-segment

Gross profit (loss)

Depreciation and amortization

Interest income

Interest expense

Income tax expense(benefit)

( 1,920,120 )

( 2,733,165 )

of September 30, 2023

As of March 31, 2024

Not Attributable

Enterprise-wide,

Inter-segment

of December 31, 2022

of Inter-segment

As of December 31, 2023

Not Attributable

Enterprise-wide,

Inter-segment

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(18) Concentration

and Major Customers and Suppliers

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

For the three months

ended September 30, 2022, the Company had five customers accounted for approximately 12 % of total sales.

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

the three months ended September 30, 2023, the Company had three major suppliers accounted for 71 %, 18 % and 7 % of total purchases.

the three months ended September 30, 2022, the Company had three major suppliers accounted for 77 %, 14 % and 7 % of total purchases.

the nine months ended September 30, 2023, the Company had three major suppliers accounted for 75 %, 16 % and 6 % of total purchases.

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

(19) 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

September 30, 2023 and December 31, 2022.

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 ($ 69,640 ) 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, 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 57,984,303 ($ 8,076,033 ) as of September 30, 2023.

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.

Accounting Pronouncements

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

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.

(22) Subsequent

2023 Incentive

October31, 2023, the Company’s Annual General Meeting adopted and approved the 2023 Omnibus Equity Incentive Plan of IT Tech Packaging,

Inc.(the”2023 Plan”).

Under the 2023 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.

of Inter-segment

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(20) Concentration and Major Customers and Suppliers

For the three months ended March 31, 2024 and 2023, the Company

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

For the three months ended March

31, 2024, the Company had two major suppliers accounted for 75 % and 15 % of total purchases.

For the three months ended March 31, 2023,

the Company had two major suppliers accounted for 76 % and 14 % of total purchases.

(21) Concentration of Credit Risk

Financial instruments for which

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

The Company places its cash in reputable

financial institutions in the PRC and the United States.

Although it is generally understood that the PRC central government stands behind

all of the banks in China in the event of bank failure, there is no deposit insurance system in China that is similar to the protection

provided by the Federal Deposit Insurance Corporation (“FDIC”) of the United States as of as of March 31, 2024 and December

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 ($ 70,472 ) per depositor per insured financial intuition, including both principal and interest.

For the cash placed

in financial institutions in the United States, the Company’s U.S.

bank accounts are all fully covered by the FDIC insurance as

of March 31, 2024 and December 31, 2023, while for the cash placed in financial institutions in the PRC, the balances exceeding the maximum

coverage of RMB 500,000 amounted to RMB 33,408,380 ($ 4,708,722 ) as of March 31, 2024.

(22) Risks and Uncertainties

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.

(23) 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