What changed in this filing

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Item 1. Financial Statements

2024-11-15 compared with 2024-08-12 · 737 added, 837 removed, 418 unchanged (79% of the section changed)

Financial Statements

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2024 AND DECEMBER 31, 2023

TECH PACKAGING, INC.

CONSOLIDATED BALANCE SHEETS

OF SEPTEMBER 30, 2024 AND DECEMBER 31, 2023

September 30,

Current Assets

1 unchanged sentence

Restricted cash

Accounts receivable (net of allowance for doubtful accounts of $ 61,000 and $ 11,745 as of June 30, 2024 and December 31, 2023, respectively)

Accounts receivable (net of allowance for doubtful accounts of $ 42,533 and $ 11,745 as of September 30, 2024 and December 31, 2023, respectively)

Prepayments and other current assets

4 unchanged sentences

Value-added tax recoverable

Deferred tax asset non-current

$ 190,018,239

7 unchanged sentences

Advance from customers

Notes payable

Due to related parties

6 unchanged sentences

Derivative liability

Total liabilities (including amounts of the consolidated VIE without recourse to the Company of $ 21,006,676 and $ 20,084,995 as of June 30, 2024 and December 31, 2023, respectively)

Total liabilities (including amounts of the consolidated VIE without

recourse to the Company of $ 19,074,627 and $ 20,084,995 as of September 30, 2024 and December 31, 2023, respectively)

Commitments and Contingencies

Stockholders’ Equity

Common stock, 50,000,000 shares authorized, $ 0.001 par value per share, 10,065,920 shares issued and outstanding as of June 30, 2024 and December, 31, 2023.

Common stock, 50,000,000 shares authorized, $ 0.001 par value per share, 10,065,920 shares issued and outstanding as of September 30, 2024 and December, 31, 2023.

Additional paid-in capital

8 unchanged sentences

$ 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 AND SIX MONTHS ENDED JUNE 30,

2024 AND 2023

accompanying notes to condensed consolidated financial statements.

TECH PACKAGING, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Cost of sales

3 unchanged sentences

( 64,832,715 )

Gross Profit (Loss)

Selling, general and administrative expenses

4 unchanged sentences

Loss on impairment of assets

Income (Loss) from Operations

Loss from Operations

( 1,464,121 )

( 2,484,513 )

( 4,418,039 )

( 5,775,557 )

Other Income (Expense):

1 unchanged sentence

Interest expense

Gain (Loss) on derivative liability

Income (Loss) before Income Taxes

Gain on derivative liability

Loss before Income Taxes

( 1,628,236 )

( 1,978,604 )

Provision for Income Taxes

( 4,998,956 )

( 5,614,002 )

Income Tax (Expenses) Benefits

( 1,973,946 )

Other Comprehensive Loss

Foreign currency translation adjustment

( 1,975,368 )

1 unchanged sentence

( 5,962,026 )

Total Comprehensive Loss

Other Comprehensive Income (Loss)

Foreign currency translation adjustment

( 5,417,331 )

Total Comprehensive Income (Loss)

$ ( 831,760 )

4 unchanged sentences

Outstanding – Basic and Diluted

See accompanying notes to condensed

consolidated financial statements.

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

Six Months Ended

accompanying notes to condensed consolidated financial statements.

TECH PACKAGING, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

Nine Months Ended

September 30,

Cash Flows from Operating Activities:

4 unchanged sentences

(Gain) Loss on derivative liability

Loss from disposal and impairment of property, plant and equipment

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

(Recovery from) Allowance for bad debts

9 unchanged sentences

Advance from customers

Notes payable

Related parties

6 unchanged sentences

( 9,211,711 )

Proceeds from sale of property, plant and equipment

Acquisition of land

Net Cash Used in Investing Activities

1 unchanged sentence

Cash Flows from Financing Activities:

Proceeds from issuance of shares and warrants, net

Proceeds from short term bank loans

1 unchanged sentence

Repayment of bank loans

( 2,957,788 )

( 5,549,150 )

Payment of capital lease obligation

Loan to a related party (net)

Net Cash Provided by Financing Activities

Net Cash (Used in) Provided by Financing Activities

( 2,112,706 )

Effect of Exchange Rate Changes on Cash and Cash Equivalents

Net Increase in Cash and Cash Equivalents

Net Increase (Decrease) in Cash and Cash Equivalents

Cash, Cash Equivalents and Restricted Cash - Beginning of Period

6 unchanged sentences

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 SIX MONTHS ENDED JUNE 30, 2024 AND 2023

accompanying notes to condensed consolidated financial statements.

TECH PACKAGING, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

Comprehensive

8 unchanged sentences

( 5,962,026 )

Balance at June 30, 2023

Balance at September 30, 2023

$ ( 12,931,871 )

6 unchanged sentences

( 5,798,229 )

( 3,824,283 )

Balance at June 30, 2024

Balance at September 30, 2024

$ ( 8,770,123 )

$ 164,324,045

See accompanying notes to condensed consolidated

financial statements.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

accompanying notes to condensed consolidated financial statements.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 us.

Tech Packaging, Inc.

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

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

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

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

The name change was effected through a parent/subsidiary

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

We were the surviving entity.

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

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

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

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

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

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

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

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

Dongfang Holding, as the 100 % owner of Dongfang

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

under PRC law.

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

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

agreements with Baoding Shengde Paper Co., Ltd.

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

On June 24, 2009, the Company consummated a number

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

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.

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.

Shengde Holdings Inc.

1 unchanged sentence

On June 1, 2009, Shengde Holdings Inc.

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

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company has no direct equity interest in Dongfang Paper.

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 June

30, 2024 and 2023 was accounted for 100 % and 99.72 % of the Company’s total revenue, respectively.

The revenue generated from Dongfang

Paper and Tengsheng Paper for the six months ended June 30, 2024 and 2023 was accounted for 100 % and 99.84 % of the Company’s total

revenue, respectively.

Dongfang Paper and Tengsheng Paper also accounted for 95.13 % and 94.93 % of the total assets of the Company as

of June 30, 2024 and December 31, 2023, respectively.

As of June 30, 2024 and December 31, 2023, details of the Company’s

subsidiaries and variable interest entities are as follows:

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.

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.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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”).

generated from Dongfang Paper and Tengsheng Paper for the three months ended September 30, 2024 and 2023 was accounted for 100 % and 99.90 %

of the Company’s total revenue, respectively.

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

ended September 30, 2024 and 2023 was accounted for 100 % and 99.86 % of the Company’s total revenue, respectively.

Dongfang Paper

and Tengsheng Paper also accounted for 95.31 % and 94.93 % of the total assets of the Company as of September 30, 2024 and December 31,

2023, respectively.

of September 30, 2024 and December 31, 2023, details of the Company’s subsidiaries and variable interest entities are as follows:

Incorporation or

11 unchanged sentences

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

However, uncertainties in the PRC legal system

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

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

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

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

In addition, if the current structure or any of

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

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

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

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

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

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

risks and uncertainties is remote.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company has aggregated the financial information

of Dongfang Paper in the table below.

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

of intercompany transactions and balances) in the Company’s condensed consolidated balance sheets as of June 30, 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.

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.

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

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

under these contractual arrangements.

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

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

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

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

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

operating activities.

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

ability to conduct its operations.

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

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

of the aforementioned risks and uncertainties is remote.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The aggregate carrying value of Dongfang Paper’s

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

sheets as of September 30, 2024 and December 31, 2023 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.

September 30,

Current Assets

7 unchanged sentences

Property, plant, and equipment, net

Deferred tax asset non-current

$ 181,108,896

13 unchanged sentences

Total liabilities

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 June 30,

2024 and the results of operations for the six months ended June 30, 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

Valuation of long-lived asset

The Company reviews the carrying value of long-lived

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

The carrying value of a long-lived asset is considered

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

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

and intangible assets.

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

the risk involved.

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

market values are reduced for the cost to dispose.

Fair Value Measurements

The Company has adopted ASC Topic 820, Fair Value

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

about fair value measurements.

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

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

It establishes a three-level valuation hierarchy of

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

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

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

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

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”).

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, 2024 and the results of operations for the nine months ended September 30, 2024 are not

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

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

These accounting principles require us to

make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent

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

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

Actual results could differ materially from those estimates.

of long-lived asset

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

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

identifiable and is less than its carrying value.

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

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

Fair market value is determined primarily using the anticipated

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

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

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

Value Measurements

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

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

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

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

It establishes

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

value and include the following:

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

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

quoted prices in markets that are not active;

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

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

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

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Classification within the hierarchy is determined based on the lowest

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

The Company estimates the fair value of financial

instruments using the available market information and valuation methods.

Considerable judgment is required in estimating fair value.

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

As of June 30, 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 period.

The Company also applies the provisions of ASC

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

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

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

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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, 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.

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

Non-Recurring

Fair Value Measurements

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

of impairment.

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

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

For discontinued operations, long-lived assets

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

The fair value of these assets were determined using models

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

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

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

such instruments over the vesting period.

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

awards issued to non-employees for services.

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

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

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Restricted Cash

Out of the restricted cash, $ 429,451 as of June 30, 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 (10)).

The restriction

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

Restricted cash of $ 470,057 and $ 472,983 as of June 30, 2024 and

December 31, 2023 was presented for the cash deposited at the Industrial and Commercial Bank of China of Tengsheng Paper.

was restricted due to the personal legal proceeding of Mr.

Ping, the Legal Representative of Tengsheng Paper.

(4) Inventories

Raw materials inventory includes mainly recycled paper board and recycled

white scrap paper.

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

Inventories consisted of the following as of June 30, 2024 and December 31, 2023:

cash of $ 478,066 and $ 472,983 as of September 30, 2024 and December 31, 2023 was presented for the cash deposited at the Industrial and

Commercial Bank of China of Tengsheng Paper.

The deposit was restricted due to the legal proceeding against Tengsheng Paper and Jie Ping,

who served as the executive director and the legal representative of Tengsheng Paper.

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, 2024 and December

September 30,

Raw Materials

8 unchanged sentences

Prepayments and other current assets

Prepayments and other current assets consisted of the following as

of June 30, 2024 and December 31, 2023:

and other current assets consisted of the following as of September 30, 2024 and December 31, 2023:

September 30,

Prepaid land lease

Prepayment for purchase of materials

1 unchanged sentence

Property, plant and equipment, net

As of June 30, 2024 and December 31, 2023, property, plant and equipment

consisted of the following:

of September 30, 2024 and December 31, 2023, property, plant and equipment consisted of the following:

September 30,

Land use rights

8 unchanged sentences

$ 163,974,022

As of June 30, 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,

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 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 $ 4,822,130 and $ 4,910,034 ,

respectively, as of June 30, 2024 and December 31, 2023 was pledged for a long-term loan from credit union of Baoding Shengde.

land use right of Tengsheng Paper with net value of $ 3,707,411 and $ 3,781,366 , respectively, as of June 30, 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 $ 5,036,790

and $ 5,135,132 , respectively, as of June 30, 2024 and December 31, 2023 was pledged for a long-term loan from credit union of Tengsheng

Certain property, plant and equipment of Dongfang Paper with net values of $ 276,269 was pledged for a short-term loan from Bank

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

Depreciation and amortization of property, plant and equipment was

$ 3,381,095 and $ 3,463,814 for the three months ended June 30, 2024 and 2023, respectively.

and amortization of property, plant and equipment was $ 6,862,883 and $ 7,150,057 for the six months ended June 30, 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).

Under the 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 .

At 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

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 as of June 30, 2024 and December 31, 2023.

Amortization of the Leased Equipment was

$ nil and $ 37,661 for the three months ended June 30, 2024 and 2023.

Amortization of the Leased Equipment was $ nil and $ 76,526 for the

six months ended June 30, 2024 and 2023.

Total interest expenses for the sale-leaseback arrangement was $ nil and $ 2,182 for the three

months ended June 30, 2024 and 2023.

Total interest expenses for the sale-leaseback arrangement was $ nil and $ 6,671 for the six months

ended June 30, 2024 and 2023.

Operating lease

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.

of September 30, 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.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of September 30, 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 $ 4,875,045

and $ 4,910,034 , respectively, as of September 30, 2024 and December 31, 2023 was pledged for a long-term loan from credit union of Baoding

In addition, land use right of Tengsheng Paper with net value of $ 3,744,874 and $ 3,781,366 , respectively, as of September 30,

2024 and December 31, 2023 was pledged for another long-term loan from credit union of Baoding Shengde.

Certain property, plant and equipment

of Dongfang Paper with net values of $ 251,593 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 $ 3,483,298 and $ 3,423,231 for the three months ended September 30, 2024 and 2023,

respectively.

Depreciation and amortization of property, plant and equipment was $ 10,346,181 and $ 10,573,288 for the nine months ended

September 30, 2024 and 2023, respectively.

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

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.

The lease include

option to renew in condition that it is agreed by the landlord before expiry.

Therefore, the majority of renewals to extend the lease

terms are not included in its right-of-use assets and lease liabilities as they are not reasonably certain of exercise.

The Company regularly

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

As the Company’s

leases do not provide an implicit rate, it uses its incremental borrowing rate based on the information available at the lease commencement

date in determining the present value of the lease payments.

lease as lessee

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.

lease 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:

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

September 30, 2024

Operating lease cost

Short-term lease cost

Supplemental cash flow information related

to its operating leases was as follows for the period ended June 30, 2024:

Cash paid for amounts included in the measurement

of lease liabilities:

cash flow information related to its operating leases was as follows for the period ended September 30, 2024:

paid for amounts included in the measurement of lease liabilities:

September 30, 2024

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

Operating cash outflow from operating leases

Maturities of its lease liabilities for

all operating leases are as follows as of June 30, 2024:

of its lease liabilities for all operating leases are as follows as of September 30, 2024:

September 30,

2028 & thereafter

Total operating lease payments

2 unchanged sentences

Present value of lease liabilities

The weighted average remaining lease terms

and discount rates for all of its operating leases were as follows as of June 30, 2024:

weighted average remaining lease terms and discount rates for all of its operating leases were as follows as of September 30, 2024:

September 30,

Remaining lease term and discount rate:

4 unchanged sentences

Loans Payable

Short-term bank loans

September 30,

Bank of Cangzhou 1

2 unchanged sentences

Total short-term bank loans

On December 31, 2023,

the Company entered into a working capital loan agreement with the Bank of Cangzhou, to borrow $ 140,315 at a fixed interest rate of 5.5 %

The loan is secured by certain of the Company’s manufacturing equipment with net book value of $ 276,269 as of June 30,

December 31, 2023, the Company entered into a working capital loan agreement with the Bank of Cangzhou, to borrow $ 142,706 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

$ 251,593 as of September 30, 2024.

The 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 $ 280,631 at a fixed interest rate of 5.5 %

December 31, 2023, the Company entered into a working capital loan agreement with the Bank of Cangzhou, to borrow $ 285,413 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 $ nil and $ 2,824 as of June 30, 2024 and December

31, 2023, respectively.

September 15, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ nil and $ 2,824 as of

September 30, 2024 and December 31, 2023, respectively.

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

The loan was repaid in June 2024.

On September 22, 2023,

the Company entered into a working capital loan agreement with the ICBC, with a balance of $ nil and $ 70,594 as of June 30, 2024 and December

31, 2023, respectively.

The loan was repaid in

September 22, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ nil and $ 70,594 as of

September 30, 2024 and December 31, 2023, respectively.

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

The loan was repaid in June 2024.

On September 22, 2023,

the Company entered into a working capital loan agreement with the ICBC, with a balance of $ nil and $ 350,149 as of June 30, 2024 and

December 31, 2023, respectively.

The loan was repaid in

September 22, 2023, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ nil and $ 350,149 as of

September 30, 2024 and December 31, 2023, respectively.

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

The loan was repaid in June 2024.

On June 11, 2024,

the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 2,806 as of June 30, 2024.

The loan bears

a fixed interest rate of 3.45 % per annum.

The loan was repaid in

June 11, 2024, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 2,854 as of September 30,

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

The loan will be due by June 11, 2025 .

On June 21, 2024,

the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 140,316 as of June 30, 2024.

The loan bears

a fixed interest rate of 3.45 % per annum.

June 21, 2024, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 142,706 as of September 30,

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

The loan will be due by June 21, 2025 .

On June 22, 2024,

the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 140,316 as of June 30, 2024.

The loan bears

a fixed interest rate of 3.45 % per annum.

June 22, 2024, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 142,706 as of September 30,

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

The loan will be due by June 22, 2025 .

1 unchanged sentence

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On June 24, 2024,

the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 137,509 as of June 30, 2024.

The loan bears

a fixed interest rate of 3.45 % per annum.

June 24, 2024, the Company entered into a working capital loan agreement with the ICBC, with a balance of $ 139,852 as of September 30,

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

The loan will be due by June 24, 2025 .

As of June 30, 2024,

of September 30, 2024, there were guaranteed short-term borrowings of $ 142,707 and unsecured bank loans of $ 713,531 .

As of December 31,

2023, there were guaranteed short-term borrowings of $ nil and unsecured bank loans of $ 423,567 .

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 June 30, 2024 and 2023 were approximately 4.45 % and 4.83 %.

The average short-term borrowing

rates for the six months ended June 30, 2024 and 2023 were approximately 4.46 % and 4.77 %.

Long-term loans

As of June 30, 2024

and December 31, 2023, long-term loans were $ 11,308,021 and $ 11,378,429 , respectively.

average short-term borrowing rates for the three months ended September 30, 2024 and 2023 were approximately 4.47 % and 4.52 %.

short-term borrowing rates for the nine months ended September 30, 2024 and 2023 were approximately 4.47 % and 4.66 %.

of September 30, 2024 and December 31, 2023, long-term loans were $ 8,931,986 and $ 11,378,429 , respectively.

September 30,

Rural Credit Union of Xushui District Loan 1

7 unchanged sentences

Long-term loans

As of June 30, 2024,

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

of September 30, 2024, the Company’s long-term debt repayments for the next coming years were as follows:

Remainder of 2024

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 June 30, 2024 and December 31, 2023.

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

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 September 30, 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 June 30, 2024 and December 31, 2023,

the total outstanding loan balance was $ 3,506,482 and $ 3,528,315 .

Out of the total outstanding loan balance, current portion amounted

was $ 1,963,012 and $ 1,269,290 , which is presented as current liabilities in the consolidated balance sheet and the remaining balance

of $ 1,543,470 and $ 2,259,025 is presented as non-current liabilities in the consolidated balance sheet as of June 30, 2024 and December

31, 2023, respectively.

IT TECH PACKAGING,

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,December 24, 2021 and April 16,

2024 and extended for additional 5 years in total, which is due on April 15, 2026 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.

As of September 30,

2024 and December 31, 2023, the total outstanding loan balance was $ 3,566,229 and $ 3,528,315 .

Out of the total outstanding loan balance,

current portion amounted was $ 1,996,460 and $ 1,269,290 , which is presented as current liabilities in the consolidated balance sheet and

the remaining balance of $ 1,569,769 and $ 2,259,025 is presented as non-current liabilities in the consolidated balance sheet as of September

30, 2024 and December 31, 2023, respectively.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

The loan was renewed on March 22, 2021, December

24, 2021 and April 16, 2024 and extended for additional 5 years in total, which is due on April 15, 2026 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.

As of June 30, 2024 and December

31, 2023, the total outstanding loan balance was $ 2,245,047 and $ 2,259,026 , respectively, which are presented as non-current liabilities

and current liabilities, respectively, in the consolidated balance sheet as of June 30, 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 %

of September 30, 2024 and December 31, 2023, the total outstanding loan balance was $ 2,283,301 and $ 2,259,026 , respectively, which are

presented as non-current liabilities and current liabilities, respectively, in the consolidated balance sheet as of September 30, 2024

and December 31, 2023.

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

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

The loan was renewed on March 22, 2021 and December

24, 2021 and extended for additional 3 years in total, which will be due on December 11, 2024 according to the new schedule.

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

Interest payment is due monthly

and bore a rate of 7.56 % per annum.

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

As of June 30, 2024 and December 31, 2023,

the total outstanding loan balance was $ 1,824,101 and $ 1,835,458 , respectively, which are presented as current liabilities in the consolidated

balance sheet as of June 30, 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.

As of September

30, 2024 and December 31, 2023, the total outstanding loan balance was $ 1,855,182 and $ 1,835,458 , respectively, which are presented as

current liabilities in the consolidated balance sheet as of September 30, 2024 and December 31, 2023.

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 June 30, 2024 and December

31, 2023, the total outstanding loan balance was $ 2,525,678 and $ 2,541,404 .

Out of the total outstanding loan balance, current portion

amounted was $ 2,525,678 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 June 30, 2024 and December

31, 2023, respectively.

The loan was fully repaid in July 2024.

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 .

loan was repaid in July 2024.

As of September 30, 2024 and December 31, 2023, the total outstanding loan balance was $ nil and $ 2,541,404 .

Out of the total outstanding loan balance, current portion amounted was $ nil 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 September 30, 2024 and December 31, 2023, respectively.

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 June 30, 2024 and December 31, 2023, total outstanding loan balance was $ 1,206,713 and

$ 1,214,226 , respectively.

Out of the total outstanding loan balance, current portion amounted $ 505,136 and $ 225,903 , which is presented

as current liabilities and the remaining balance of $ 701,577 and $ 988,323 is presented as non-current liabilities in the consolidated

balance sheet as of June 30, 2024 and December 31, 2023, respectively.

Total interest expenses

for the short-term bank loans and long-term loans for the three months ended June 30, 2024 and 2023 were $ 211,551 and $ 268,499 , respectively.

Total interest expenses for the short-term bank loans and long-term loans for the six months ended June 30, 2024 and 2023 were $ 421,841

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

As of September 30, 2024 and December 31, 2023, total outstanding loan balance

was $ 1,227,274 and $ 1,214,226 , respectively.

Out of the total outstanding loan balance, current portion amounted $ 513,743 and $ 225,903 ,

which is presented as current liabilities and the remaining balance of $ 713,531 and $ 988,323 is presented as non-current liabilities

in the consolidated balance sheet as of September 30, 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, 2024 and 2023 were $ 171,430

and $ 247,628 , respectively.

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

30, 2024 and 2023 were $ 593,271 and $ 760,807 , respectively.

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.

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

to December 31, 2015.

On December 31, 2015, the Company paid off the loan of $ 2,249,279 , together with interest of $ 391,374 for the period

from 2013 to 2015.

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

1, 2013, Dongfang Paper and Mr.

Zhenyong Liu renewed the three-year term loan previously entered on January 1, 2010, and extended the

maturity date further to December 31, 2015.

On December 31, 2015, the Company paid off the loan of $ 2,249,279 , together with interest

of $ 391,374 for the period from 2013 to 2015.

Approximately $ 365,804 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 June 30, 2024 and December

31, 2023, respectively.

IT TECH PACKAGING,

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

On December 10, 2014,

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, which

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

30, 2024 and December 31, 2023, respectively.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 10, 2014, Mr.

Zhenyong Liu provided a loan to the Company, amounted to $ 8,742,278 to Dongfang Paper for working capital purpose

with an interest rate of 4.35 % per annum, which was based on the primary lending rate of People’s Bank of China.

The unsecured

loan was provided on December 10, 2014, and would be originally due on December 10, 2017 .

During the year of 2016, the Company repaid

$ 6,012,416 to Mr.

Zhenyong Liu, together with interest of $ 288,596 .

In February 2018, the Company paid off the remaining balance, together with interest

of $ 20,400 .

As of June 30, 2024 and December 31, 2023, approximately $ 42,095 and $ 42,357 of interest, respectively, were outstanding

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

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

Bank of China at the time of the borrowing.

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

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.

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

with interest of $ 20,400 .

As of September 30, 2024 and December 31, 2023, approximately $ 42,812 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.

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.

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.

Zhenyong Liu agreed to extend the loan for additional 3 years

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

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

Zhenyong Liu, together with interest

of $ 158,651 .

Zhenyong Liu, together

with interest of $ 158,651 .

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

As of June 30, 2024 and

December 31, 2023, the outstanding interest was $ 192,846 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 June 30, 2024

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

As of September

30, 2024 and December 31, 2023, the outstanding interest was $ 196,132 and $ 194,047 , respectively, which was recorded in other payables

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

of September 30, 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 six months ended June 30, 2024 and 2023.

The interest expense incurred for

such related party loans were $ nil for the three and nine months ended September 30, 2024 and 2023.

The accrued interest owing to Mr.

Zhenyong Liu was approximately

$ 594,617 and $ 598,319 , as of June 30, 2024 and December 31, 2023, respectively, which was recorded in other payables and accrued liabilities.

In October 2022 and

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

Zhenyong Liu was approximately $ 604,748 and $ 598,319 , as of September 30, 2024 and December 31, 2023, respectively, which was recorded

in other payables and accrued liabilities.

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

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

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 %

$ 4,235,673 (RMB 30,000,000 ) was repaid by Mr.

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

Interest income

of the loan for the six months ended June 30, 2024 and 2023 were $ nil and $ 176,847 .

As of June 30, 2024

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

Interest income of the loan for the nine months ended September 30, 2024 and 2023 were $ nil and $ 263,342 .

of September 30, 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 U.S.

The amount is due on demand with interest free.

IT TECH PACKAGING,

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

(10) Notes payable

As of June 30, 2024,

the Company had bank acceptance notes of $ 429,451 from the Cangzhou to suppliers 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.

The 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.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(10) Other payables and accrued liabilities

September 30,

Accrued electricity

4 unchanged sentences

Accrued bank loan interest

Others mainly included $ 473,785 accrued liability for the legal proceeding

which Hebei Tengsheng was jointly liable for repayment of a loan.

For details please refer to Item 1.

Legal Proceedings .

(11) Derivative Liabilities

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

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

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

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

the fair market value as other income or expense item.

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 June 30, 2024.

The Company analyzed the

warrant for derivative accounting consideration under ASC 815, “Derivatives and Hedging, and hedging,” and determined that

the instrument should be classified as a liability since the warrant becomes effective at issuance resulting in there being no explicit

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

ASC 815 requires we assess

the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as

other income or expense 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 September 30, 2024.

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.

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

The fair value of each warrant is estimated using

the Black-Scholes valuation model.

The following weighted-average assumptions were used in the June 30, 2024:

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

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

Changes to these inputs could

produce a significantly higher or lower fair value measurement.

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

The following weighted-average assumptions were used in the September 30, 2024:

September 30,

Expected term

3 unchanged sentences

0.13 % - 3.66 %

The following table

summarizes the changes in the derivative liabilities during the six months ended June 30, 2024:

Value Measurements

Using Significant Observable Inputs (Level 3)

The following table summarizes the changes in

the derivative liabilities during the nine months ended September 30, 2024:

Value Measurements Using Significant Observable

Inputs (Level 3)

Balance at December 31, 2023

Change in fair value of derivative liability

Balance at June 30, 2024

IT TECH PACKAGING,

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

Balance at September 30, 2024

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(12) Common Stock

Issuance of common stock to investors

On January 20, 2021,

the Company offered and sold to certain institutional investors an aggregate of 2,618,182 shares of common stock and 2,618,182 warrants

to purchase up to 2,618,182 shares of common stock in a best-efforts public offering for gross proceeds of approximately $ 14.4 million.

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

The exercise price of the warrant was $ 5.5

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 .

On January 20, 2021, the Company offered and sold

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

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

The purchase price for each

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

The exercise price of the warrant was $ 5.5 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 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.

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.

(13) Warrants

On April 29, 2020,

the Company and certain institutional investors entered into a securities purchase agreement, as amended on May 4, 2020 (the “2020

Purchase Agreement”), pursuant to which the Company agreed to sell to such investors an aggregate of 440,000 shares of common stock

and warrants to purchase up to 440,000 shares of common stock in a concurrent private placement (the “May 2020 Warrants”).

The exercise price of the May 2020 Warrant is $ 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 June 30, 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 June

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 June 30, 2024.

The Company classified warrants as liabilities

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

IT TECH PACKAGING,

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

A summary of stock warrant activities is

June 30, 2024

On April 29, 2020, the Company and certain institutional

investors entered into a securities purchase agreement, as amended on May 4, 2020 (the “2020 Purchase Agreement”), pursuant

to which the Company agreed to sell to such investors an aggregate of 440,000 shares of common stock and warrants to purchase up to 440,000

shares of common stock in a concurrent private placement (the “May 2020 Warrants”).

The exercise price of the May 2020 Warrant

is $ 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 30, 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 September 30, 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 September 30, 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:

Nine months ended

September 30, 2024

Weight average

exercise price

4 unchanged sentences

Outstanding and exercisable at end of the period

The following table summarizes information

relating to outstanding and exercisable warrants as of June 30, 2024.

The following table summarizes information relating to outstanding

and exercisable warrants as of September 30, 2024.

Warrants Outstanding Warrants Exercisable

Shares Weighted Average Remaining

Shares Weighted Average

Contractual life

4 unchanged sentences

3,016,635 1.33 $ 6.6907 3,016,635 $ 6.6907

Aggregate intrinsic

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

at June 30, 2024 for those warrants for which the quoted market price was in excess of the exercise price (“in-the-money”

The intrinsic value of the warrants as of June 30, 2024 and December 31, 2023 are nil .

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 September 30, 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 September 30, 2024 and December 31, 2023 are nil .

(14) Earnings Per Share

For the three months ended June 30, 2024

and 2023, basic and diluted net loss per share are calculated as follows:

Three Months Ended

For the three months ended September 30, 2024 and 2023, basic and diluted

net loss per share are calculated as follows:

Three Months Ended September 30,

Basic loss per share

loss for the period - numerator

Net loss for the period - numerator

$ ( 1,973,946 )

average common stock outstanding - denominator

$ ( 1,975,368 )

Weighted average common stock outstanding - denominator

Net loss per share

Diluted income per share

income for the period - numerator

Diluted loss per share

Net loss for the period- numerator

$ ( 1,973,946 )

average common stock outstanding - denominator

$ ( 1,975,368 )

Weighted average common stock outstanding - denominator

Effect of dilution

average common stock outstanding - denominator

Weighted average common stock outstanding - denominator

Diluted loss per share

IT TECH PACKAGING,

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended June 30, 2024

and 2023, basic and diluted net loss per share are calculated as follows:

Six Months Ended

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended September 30, 2024 and 2023, basic and diluted

net loss per share are calculated as follows:

Nine Months Ended

September 30,

Basic loss per share

loss for the period - numerator

Net loss for the period - numerator

$ ( 5,798,229 )

$ ( 5,962,026 )

average common stock outstanding - denominator

Weighted average common stock outstanding - denominator

Net loss per share

Diluted loss per share

loss for the period - numerator

Net loss for the period - numerator

$ ( 5,798,229 )

$ ( 5,962,026 )

average common stock outstanding - denominator

Weighted average common stock outstanding - denominator

Effect of dilution

average common stock outstanding - denominator

Weighted average common stock outstanding - denominator

Diluted loss per share

For the three and six months ended June

30, 2024 and 2023 there were no securities with dilutive effect issued and outstanding.

For the three and nine months ended September 30, 2024 and 2023 there

were no securities with dilutive effect issued and outstanding.

(15) 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 second quarter ended June 30, 2024 and 2023, and management believes that its earnings are

permanently invested in the PRC.

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 %.

IT TECH PACKAGING,

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

The provisions for

income taxes for three months ended June 30, 2024 and 2023 were as follows:

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 second quarter ended September 30, 2024 and 2023, and management believes that its earnings are permanently invested in

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 %.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The provisions for income taxes for three months

ended September 30, 2024 and 2023 were as follows:

Three Months Ended

September 30,

Provision for Income Taxes

2 unchanged sentences

Deferred Tax Provision PRC

Total Provision for (Deferred tax

benefit)/ Income Taxes

The provisions for income taxes for six

months ended June 30, 2024 and 2023 were as follows:

Six Months Ended

Total Income Tax Expenses (Benefits)

The provisions for income taxes for nine months ended September 30,

2024 and 2023 were as follows:

Nine Months Ended

September 30,

Provision for Income Taxes

2 unchanged sentences

Deferred Tax Provision PRC

Total Provision for (Deferred tax benefit)/ Income Taxes

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.

income 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 June 30, 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.

As of June 30, 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.

Total Income Tax Expenses (Benefits)

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 September 30, 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 September 30, 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:

September 30,

Deferred tax assets (liabilities)

9 unchanged sentences

Total deferred tax assets, net

IT TECH PACKAGING,

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

During the three months ended June 30, 2024 and

2023, the effective income tax rate was estimated by the Company to be 122.9 % and - 38.9 %, respectively

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

During the three months ended September 30, 2024

and 2023, the effective income tax rate was estimated by the Company to be - 21.2 % and 0.2 %, respectively

Three Months Ended

September 30,

PRC Statutory rate

3 unchanged sentences

Effective income tax rate

During the six months ended June 30, 2024 and

2023, the effective income tax rate was estimated by the Company to be - 13.5 % and - 9.7 %, respectively

Six Months Ended

During the nine months ended September 30, 2024

and 2023, the effective income tax rate was estimated by the Company to be - 16.0 % and - 6.2 %, respectively

Nine Months Ended

September 30,

PRC Statutory rate

3 unchanged sentences

Effective income tax rate

As of June 30, 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.

As of September 30, 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.

it believe that the amount of the repatriation of the VIE’s earnings and profits for purposes of paying dividends will change the

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

reinvested offshore to support our future capacity expansion.

Nor does it believe that the amount

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

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

to support our future capacity expansion.

If these earnings are repatriated to the U.S.

resulting in U.S.

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.

The Company has adopted

ASC Topic 740-10-05, Income Taxes.

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

results of operations, or cash flows.

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

the liability for unrecognized tax benefits, interest and penalties which relate to tax years still subject to review by taxing authorities.

Audit periods remain open for review until the statute of limitations has passed, which in the PRC is usually 5 years.

The completion

of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s

liability for income taxes.

Any such adjustment could be material to the Company’s results of operations for any given quarterly

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

As of June 30, 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 six months ended June 30, 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.

IT TECH PACKAGING,

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

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.

The Company has adopted ASC Topic 740-10-05, Income

To date, the adoption of this interpretation has not impacted the Company’s financial position, results of operations, or

The Company performed self-assessment and the Company’s liability for income taxes includes the liability for unrecognized

tax benefits, interest and penalties which relate to tax years still subject to review by taxing authorities.

Audit periods remain open

for review until the statute of limitations has passed, which in the PRC is usually 5 years.

The completion of review or the expiration

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

Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in

part, upon the results of operations for the given period.

As of September 30, 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 nine months ended September 30, 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

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(16) Stock Incentive Plans

2023 Incentive

On October 31, 2023,

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

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 June

30, 2024, have been reserved.

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 ISP”).

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 September 30, 2024, have been

(17) 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 Company leases 32.95 acres of land from a

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

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

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

This lease is renewable at the end of the

30-year term.

September 30,

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 $ 140,698 (RMB 1,000,000 ).

The lease was recorded in lease assets and liabilities in the

consolidated balance sheet as of June 30, 2024.

IT TECH PACKAGING,

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

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 $ 140,847 (RMB 1,000,000 ).

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

of September 30, 2024.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Capital commitment

As of June 30, 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 $ 3,465,791 and $ 3,499,936 as of June 30, 2024 and December

As of September 30, 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

Total outstanding commitments under these contracts were $ 3,524,845 and $ 3,499,936 as of September 30, 2024 and December 31,

2023, respectively.

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

Guarantees and

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

and as of June 30, 2024 and December 31, 2023, the Company guaranteed its long-term loan from financial institutions amounting to $ 4,349,778

(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.

Guarantees and Indemnities

The Company agreed with

Baoding Huanrun Trading Co., a major supplier of raw materials, to guarantee certain obligations of this third party, and as of September

30, 2024 and December 31, 2023, the Company guaranteed its long-term loan from financial institutions amounting to $ 4,423,895 (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

(18) Segment Reporting

Since March 10, 2010,

Baoding Shengde started its operations and thereafter the Company manages its operations through three business operating segments:

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

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.

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.

sales were sold to customers located in the PRC.

All sales were sold to customers located

IT TECH PACKAGING, INC.

2 unchanged sentences

is as follows:

Three Months Ended

June 30, 2024

Months Ended September 30, 2024

Not Attributable

Elimination of

Enterprise-wide,

Inter-segment

5 unchanged sentences

( 2,555,935 )

Three Months Ended

June 30, 2023

( 1,973,946 )

Months Ended September 30, 2023

Not Attributable

Elimination of

Enterprise-wide,

Inter-segment

7 unchanged sentences

( 1,975,368 )

Six Months Ended

June 30, 2024

Elimination of

Inter-segment

Ended September 30, 2024

Not Attributable

Enterprise-wide,

of Inter-segment

Depreciation and amortization

5 unchanged sentences

( 5,798,229 )

TECH PACKAGING, INC.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended

June 30, 2023

Elimination of

Inter-segment

Ended September 30, 2023

Not Attributable

Enterprise-wide,

of Inter-segment

( 2,157,381 )

7 unchanged sentences

( 5,962,026 )

As of June 30, 2024

Elimination of

Inter-segment

As of September 30, 2024

Not Attributable

Enterprise-wide,

of Inter-segment

As of December 31, 2023

Not Attributable

Elimination of

Inter-segment

Enterprise-wide,

of Inter-segment

IT TECH PACKAGING, INC.

1 unchanged sentence

(19) Concentration and Major Customers and Suppliers

For the three and six months ended June 30, 2024

For the three and nine months ended September

30, 2024 and 2023, the Company had no single customer contributed over 10% of total sales.

For the three months ended June 30, 2024, the Company had three major

suppliers accounted for 76 %, 16 % and 7 % of total purchases.

For the three months ended June 30, 2023, the Company had three major suppliers

accounted for 74 %, 16 % and 6 % of total purchases.

For the six months ended June 30, 2024, the Company

had three major suppliers accounted for 76 %, 16 % and 7 % of total purchases.

For the six months ended June 30, 2023, the Company had three

major suppliers accounted for 67 %, 13 % and 10 % of total purchases.

For the three months ended September 30, 2024,

the Company had three major suppliers accounted for 73 %, 18 % and 7 % of total purchases.

For the three months ended September 30, 2023,

the Company had three major suppliers accounted for 71 %, 18 % and 7 % of total purchases.

For the nine months ended September 30, 2024,

the Company had three major suppliers accounted for 74 %, 16 % and 7 % of total purchases.

For the nine months ended September 30, 2023,

the Company had three major suppliers accounted for 75 %, 16 % and 6 % of total purchases.

(20) Concentration of Credit Risk

5 unchanged sentences

China in the event of bank failure, there is no deposit insurance system in China that is similar to the protection provided by the Federal

Deposit Insurance Corporation (“FDIC”) of the United States as of as of June 30, 2024 and December 31, 2023.

On May 1, 2015,

Deposit Insurance Corporation (“FDIC”) of the United States as of as of September 30, 2024 and December 31, 2023.

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

($ 71,353 ) 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 June 30, 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 36,551,963 ($ 5,128,804 ) as of June 30, 2024.

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, 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 31,937,875 ($ 4,557,735 ) as of September 30, 2024.

(21) Risks and Uncertainties

4 unchanged sentences

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