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Item 1. Financial Statements

2025-05-09 compared with 2024-11-15 · 621 added, 655 removed, 500 unchanged (72% of the section changed)

Financial Statements

TECH PACKAGING, INC.

CONSOLIDATED BALANCE SHEETS

OF SEPTEMBER 30, 2024 AND DECEMBER 31, 2023

September 30,

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2025 AND DECEMBER 31, 2024

Current Assets

1 unchanged sentence

Restricted cash

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

Accounts receivable (net of allowance for doubtful accounts of $ 90,730 and $ 53,111 as of March 31, 2025 and December 31, 2024, respectively)

Prepayments and other current assets

1 unchanged sentence

Total current assets

Prepayment on property, plant and equipment

Operating lease right-of-use assets, net

1 unchanged sentence

Value-added tax recoverable

Deferred tax asset non-current

$ 175,204,130

15 unchanged sentences

Derivative liability

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)

Total liabilities (including amounts of the consolidated VIE without recourse to the Company of $ 17,753,460 and $ 16,976,765 as of March 31, 2025 and December 31, 2024, 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 September 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 March 31, 2025 and December, 31, 2024.

Additional paid-in capital

8 unchanged sentences

$ 177,546,786

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

See accompanying notes to condensed consolidated

financial statements.

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND

Three Months Ended

Nine Months Ended

September 30,

Cost of sales

1 unchanged sentence

( 6,464,728 )

( 52,613,335 )

( 64,832,715 )

Gross Profit (Loss)

Selling, general and administrative expenses

1 unchanged sentence

( 3,900,783 )

( 9,999,833 )

( 6,153,513 )

Loss on impairment of assets

Loss from Operations

1 unchanged sentence

( 3,501,670 )

( 4,418,039 )

( 5,775,557 )

Other Income (Expense):

5 unchanged sentences

( 3,709,743 )

( 4,998,956 )

( 5,614,002 )

Income Tax (Expenses) Benefits

1 unchanged sentence

( 3,746,536 )

( 5,798,229 )

( 5,962,026 )

Other Comprehensive Income (Loss)

Foreign currency translation adjustment

( 5,417,331 )

Total Comprehensive Income (Loss)

$ ( 831,760 )

Total Comprehensive Loss

$ ( 3,273,337 )

3 unchanged sentences

Outstanding – Basic and Diluted

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,

See accompanying notes to condensed

consolidated financial statements.

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND

Three Months Ended

Cash Flows from Operating Activities:

4 unchanged sentences

(Gain) Loss on derivative liability

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

(Recovery from) Allowance for bad debts

Allowance for bad debts

Allowances for inventories, net

5 unchanged sentences

( 2,256,756 )

( 2,631,661 )

Accounts payable

Advance from customers

Notes payable

Related parties

2 unchanged sentences

Income taxes payable

Net Cash Provided by Operating Activities

Net Cash (Used in) Provided by Operating Activities

( 2,474,978 )

Cash Flows from Investing Activities:

Purchases of property, plant and equipment

( 9,211,711 )

Net Cash Used in Investing Activities

( 9,211,711 )

Cash Flows from Financing Activities:

Proceeds from short term bank loans

Proceeds from long term loans

Repayment of bank loans

( 2,957,788 )

( 5,549,150 )

Payment of capital lease obligation

Loan to a related party (net)

Net Cash (Used in) Provided by Financing Activities

( 2,112,706 )

Net Cash Provided by Financing Activities

Effect of Exchange Rate Changes on Cash and Cash Equivalents

Net Increase (Decrease) in Cash and Cash Equivalents

Net (Decrease) Increase in Cash and Cash Equivalents

( 1,880,216 )

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

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

See accompanying notes to condensed consolidated

financial statements.

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND

Comprehensive

6 unchanged sentences

( 3,746,536 )

( 5,962,026 )

Balance at September 30, 2023

Balance at March 31, 2024

$ ( 10,857,153 )

6 unchanged sentences

( 3,503,785 )

Balance at September 30, 2024

Balance at March 31, 2025

$ ( 12,768,538 )

$ 152,776,980

accompanying notes to condensed consolidated financial statements.

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

See accompanying notes to condensed consolidated

financial statements.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) Organization and Business Background

Tech Packaging, Inc.

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

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

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

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

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.

We were the surviving entity.

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.

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

Shengde Holdings Inc.

1 unchanged sentence

On June 1, 2009, Shengde Holdings Inc.

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

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

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

(“Shengde Holdings”)

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

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

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

Baoding Shengde is mainly engaged

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

Prior to February

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

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

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

(ii) Loan Agreement, which provides

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

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

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

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

The exercise price for the options shall be

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:

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

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

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

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

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

the FinancialAccounting Standard Board (the “FASB”).

The revenue generated from Dongfang Paper and Tengsheng Paper for the

three months ended March 31, 2025 and 2024 was accounted for 100 % of the Company’s total revenue.

Dongfang Paper and Tengsheng Paper

also accounted for 96.27 % and 96.07 % of the total assets of the Company as of March 31, 2025 and December 31, 2024, respectively.

As of March 31, 2025 and December 31, 2024, 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.

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,

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 March 31, 2025 and December

31, 2024 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.

Current Assets

5 unchanged sentences

Total current assets

Prepayment on property, plant and equipment

Operating lease right-of-use assets, net

Property, plant, and equipment, net

Deferred tax asset non-current

$ 168,666,227

4 unchanged sentences

Lease liability

Accounts payable

Advance from customers

Due to related parties

Accrued payroll and employee benefits

5 unchanged sentences

Total liabilities

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(2) Basis of Presentation and Significant Accounting Policies

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

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

Accordingly, certain information and notes required

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

included herein.

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

included in the Annual Report on Form 10-K for the year ended December 31, 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 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

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,

2024 of the Company, and its subsidiaries and variable interest entity (which we sometimes refer to collectively as “the Company”,

“we”, “us” or “our”).

Principles of Consolidation

Our unaudited condensed consolidated financial

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

and results of operations.

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

The balance sheet as of March 31,

2025 and the results of operations for the three months ended March 31, 2025 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

Liquidity and Going Concern

As of March 31, 2025, the Company had current

assets of $ 29,499,038 (including a VAT （“Value Added Tax”）recoverable of Tengsheng Paper in amount of $ 13,173,067 ),

and current liabilities of $ 20,933,963 , resulting in a working capital of $ 8,565,075 .

However, production of Baoding Shende has been suspended

in 2024 and the first quarter of 2025, rendering related VAT unrecoverable in the short term.

Net working capital excluding VAT recoverable

as of March 31, 2025 was a working capital deficit of $ 4,607,992 .

Baoding Shengde and Tengsheng Paper have incurred loss that there is

doubt about these subsidiaries ability to continue as going concerns.

The main reason of losses was due to high depreciation costs, decreased

market demand, and elevated material costs.

Therefore, there was a substantial doubt about the ability of the Company to continue as a

going concern that it may be unable to realize its assets and discharge its liabilities in the normal course of business as of March 31,

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

To address these challenges, the Company plans

to optimize its raw material structure and stabilize manufacturing capacity utilization, which will help to reduce procurement costs.

Additionally, the Company is actively exploring new products and adjusting pricing strategies in a timely manner to secure a larger market

Furthermore, the Company will maintain rigorous

control over inventory, working capital, and cash flow to mitigate financial risks.

The Company will also strategically utilize financing

quotas from the capital market to ensure the smooth and healthy operation of the company.

The Company’s continued existence as a going

concern depends on the successful implementation of its business plan.

This includes increasing market acceptance of its products to boost

sales volume and achieve economies of scale, while deploying more effective marketing strategies and cost control measures to better manage

the operating cash flow position.

Valuation of long-lived asset

The Company reviews the carrying value of long-lived

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

The carrying value of a long-lived asset is considered

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

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

and intangible assets.

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

the risk involved.

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

market values are reduced for the cost to dispose.

Fair Value Measurements

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

of impairment.

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

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

For discontinued operations, long-lived assets

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

The fair value of these assets were determined using models

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

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

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

such instruments over the vesting period.

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

awards issued to non-employees for services.

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

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

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company has adopted ASC Topic 820, Fair Value

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

about fair value measurements.

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

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

It establishes a three-level valuation hierarchy of

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

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

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

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

quoted prices in markets that are not active;

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

Level 3 - Unobservable inputs that are supported

by little or no market activity and that are significant to the fair value of the assets or liabilities.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Classification within the hierarchy is determined based on the lowest

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

The Company estimates the fair value of financial

instruments using the available market information and valuation methods.

Considerable judgment is required in estimating fair value.

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

As of March 31, 2025 and December 31, 2024, 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 (11)), 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

(3) Restricted Cash

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,

Restricted cash of $ 1,035,932 and $ 1,034,203 as

of March 31, 2025 and December 31, 2024 was presented for the cash deposited at the Industrial and Commercial Bank of China of Tengsheng

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.

(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 March 31, 2025 and December 31, 2024:

Raw Materials

7 unchanged sentences

Total inventory, net

The movement of inventory reserve was as follows:

Three Months Ended

Balance at beginning of year

Additional charge (written off), net

Foreign currency translation difference

Balance at the end of year

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(5) Prepayments and other current assets

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

September 30,

Prepaid land lease

Prepayments and other current assets consisted of the following as

of March 31, 2025 and December 31, 2024:

Prepayment for purchase of materials

Value-added tax recoverable

Prepayment for utilities

Allowance for doubtful accounts

The movement of allowance for doubtful

accounts was as follows:

Three Months Ended

Balance at beginning of year

Additional charge (written off), net

Foreign currency translation difference

Balance at the end of year

(6) Property, plant and equipment, net

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

September 30,

As of March 31, 2025 and December 31, 2024, property, plant and equipment

consisted of the following:

Land use rights

8 unchanged sentences

$ 146,911,883

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 .

As of March 31, 2025 and December 31, 2024, land

use rights represented twenty three parcels of state-owned lands located in Xushui District and Wei County of Hebei Province in China,

with lease terms of 50 years expiring in 2061 and 2068, respectively.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2025 and December 31, 2024, 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.

Certain property, plant and equipment of Baoding Shengde with net value of $ 3,028,097 and $ 3,407,848 , repectively,

as of March 31, 2025 and December 31, 2024, have been pledged pursuant two short-term loans from credit union of Baoding Shengde.

property, plant and equipment of Dongfang Paper with net values of $ 188,238 was pledged for a short-term loan from Bank of Cangzhou.

property, plant and equipment of Dongfang Paper with net values of $ 308,345 was pledged for another 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.

Depreciation and amortization of property, plant

and equipment was $ 3,547,398 and $ 3,481,788 for the three months ended March 31, 2025 and 2024, respectively.

Operating lease lessor

The Company has a non-cancellable agreement to

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

The lease does not contain contingent payments.

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

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

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

September 30, 2024

Operating lease as lessee

The Company leases space under non-cancelable

operating leases for plant and production equipment.

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

improvement incentives, or other build-out clauses.

Further, the lease does not contain contingent rent provisions.

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.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

Operating lease cost

Short-term lease cost

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

Supplemental cash flow information related to its operating leases

was as follows for the period ended March 31, 2025:

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

Three Months Ended

March 31, 2025

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

Operating cash outflow from operating leases

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

September 30,

2028 & thereafter

Maturities of its lease liabilities for all operating leases are as

follows as of March 31, 2025:

Total operating lease payments

2 unchanged sentences

Present value of lease liabilities

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

September 30,

The weighted average remaining lease terms and discount rates for all

of its operating leases were as follows as of March 31, 2025:

Remaining lease term and discount rate:

1 unchanged sentence

Weighted average discount rate 7.56 %

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(8) Loans Payable

September 30,

Bank of Cangzhou 1

Bank of Cangzhou 2

Short-term bank loans

Rural Credit Union of Xushui District Loan 1

Rural Credit Union of Xushui District Loan 2

Bank of Cangzhou Loan 1

Bank of Cangzhou Loan 2

Bank of Cangzhou Loan 3

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

Total short-term bank loans

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.

On December 24, 2024, the Company entered into a loan agreement with

the Rural Credit Union of Xushui District, with a balance of $ 1,811,039 and $ 1,808,469 as of March 31, 2025 and December 31, 2024, respectively.

The loan is secured by the equipment of Baoding Shengde as collateral for the benefit of the bank.

The loan bears a fixed rate of 6 % and

will be due by December 23, 2025 .

On December 24, 2024, the Company entered into a loan agreement with

the Rural Credit Union of Xushui District, with a balance of $ 2,228,971 and $ 2,225,808 as of March 31, 2025 and December 31, 2024, respectively.

The loan is secured by the equipment of Baoding Shengde as collateral for the benefit of the bank and guaranteed by a third party company.

The loan bears a fixed rate of 6 % and will be due by December 23, 2025 .

On December 28, 2024, the Company entered into

a working capital loan agreement with the Bank of Cangzhou, to borrow $ 306,484 at a fixed interest rate of 5.5 % per annum.

guaranteed by Mr.

Zhenyong Liu.

The loan will be due by December 27, 2025.

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.

On December 28, 2024, the Company entered into

a working capital loan agreement with the Bank of Cangzhou, to borrow $ 69,655 at a fixed interest rate of 5.5 % per annum.

secured by the Company’s manufacturing equipment and guaranteed by Mr.

Zhenyong Liu.

The loan will be due by December 27, 2025.

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

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

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 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 .

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,

On March 10, 2025, the Company entered into a

working capital loan agreement with the Bank of Cangzhou, to borrow $ 208,966 at a fixed interest rate of 5.5 % per annum.

The loan is secured

by the Company’s manufacturing equipment and guaranteed by Mr.

Zhenyong Liu.

The loan will be due by March 9, 2026.

On June 11, 2024, the Company entered into a working

capital loan agreement with the ICBC, with a balance of $ 2,786 and $ 2,782 as of March 31, 2025 and December 31, 2024, respectively.

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

The loan is due for repayment by June 11, 2025.

On June 21, 2024, the Company entered into a working

capital loan agreement with the ICBC, with a balance of $ 139,311 and $ 139,113 as of March 31, 2025 and December 31, 2024, respectively.

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

The loan will be due by June 21, 2025 .

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 is due for repayment by June 21, 2025.

On June 22, 2024, the Company entered into a working

capital loan agreement with the ICBC, with a balance of $ 139,311 and $ 139,113 as of March 31, 2025 and December 31, 2024, respectively.

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

The loan will be due by June 22, 2025 .

TECH PACKAGING, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 is due for repayment by June 22, 2025.

IT TECH PACKAGING, INC.

NOTES 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 $ 136,524 and $ 136,331 as of as of March 31, 2025 and December 31, 2024, respectively.

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

The loan will be due by June 24, 2025 .

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 .

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

Rural Credit Union of Xushui District Loan 2

Rural Credit Union of Xushui District Loan 3

The loan is due for repayment by June 24, 2025.

As of March 31, 2025, there were guaranteed short-term

borrowings of $ 2,814,076 and unsecured bank loans of $ 417,932 .

As of December 31, 2024, there were guaranteed short-term borrowings of

$ 2,225,808 and unsecured bank loans of $ 417,339 .

The average short-term borrowing rates for the

three months ended March 31, 2025 and 2024 were approximately 5.74 % and 4.48 %, respectively.

Long-term loans

As of March 31, 2025 and December 31, 2024, long-term

loans were $ 4,679,447 and $ 4,672,806 , respectively.

Rural Credit Union of Xushui District Loan 1

4 unchanged sentences

Long-term loans

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

As of March 31, 2025, the Company’s long-term

debt repayments for the next coming years were as follows:

Remainder of 2025

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 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.

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 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.

On July 15, 2013, the Company entered into a

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

installments from December 21, 2013 to July 26, 2018.

On June 21, 2018, the loan was extended for additional 5 years and was due and

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

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

and will be due and payable on August 24, 2026 .

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

book value of $ nil as of March 31, 2025 and December 31, 2024.

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

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.

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.

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 September

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

As of March 31, 2025 and December 31, 2024, the total outstanding

loan balance was $ 3,481,375 and $ 3,476,434 .

Out of the total outstanding loan balance, current portion amounted was $ 2,645,510 and $ 2,641,756 ,

which is presented as current liabilities in the consolidated balance sheet and the remaining balance of $ 835,865 and $ 834,678 is presented

as non-current liabilities in the consolidated balance sheet as of March 31, 2025 and December 31, 2024, respectively.

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On December 5, 2023, the Company entered into

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

21, 2024 to December 5, 2026 .

The loan is guaranteed by an independent third party.

Interest payment is due monthly and bears a rate of

7 % per annum.

As of March 31, 2025 and December 31, 2024, total outstanding loan balance was $ 1,198,072 and $ 1,196,372 , respectively.

Out of the total outstanding loan balance, current portion amounted $ 919,451 and $ 918,146 , which is presented as current liabilities and

the remaining balance of $ 278,621 and $ 278,226 is presented as non-current liabilities in the consolidated balance sheet as of March 31,

2025 and December 31, 2024, 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 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

Total interest expenses for the short-term bank

loans and long-term loans for the three months ended March 31, 2025 and 2024 were $ 132,847 and $ 209,586 , respectively.

(9) Related Party Transactions

Zhenyong Liu 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.

Approximately $ 357,100

and $ 356,594 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 March 31, 2025 and December 31, 2024, respectively.

On December 10, 2014, Mr.

Zhenyong Liu provided

a loan to the Company, amounted to $ 8,742,278 to Dongfang Paper for working capital purpose with an interest rate of 4.35 % per annum,

which was based on the primary lending rate of People’s Bank of China.

The unsecured loan was provided on December 10, 2014, and

would be originally due on December 10, 2017 .

During the year of 2016, the Company repaid $ 6,012,416 to Mr.

Zhenyong Liu, together with

interest of $ 288,596 .

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

As of March 31,

2025 and December 31, 2024, approximately $ 41,793 and $ 41,734 of interest 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.

On March 1, 2015, the Company entered an agreement

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

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

The loan is unsecured and

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

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

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

was drawn from the facility.

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

Zhenyong Liu.

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

Zhenyong Liu agreed to extend the loan for additional 3 years

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

The loan would be originally due on

July 12, 2018 .

Zhenyong Liu agreed to extend the loan for additional 3 years and the remaining balance will be due on July 12, 2021.

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

Zhenyong Liu, together

with interest of $ 158,651 .

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

As of September

30, 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, together with interest of $ 158,651 .

In December 2019, the Company

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

As of March 31, 2025 and December 31, 2024, the outstanding interest

was $ 191,465 and $ 191,193 , respectively, which was recorded in other payables and accrued liabilities as part of the current liabilities

in the consolidated balance sheet.

As of March 31, 2025 and December 31, 2024, total

amount of loans due to Mr.

Zhenyong Liu were $ nil .

The interest expense incurred for

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

The accrued interest owing to 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.

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

months ended March 31, 2025 and 2024.

The net interest owed to Mr.

Zhenyong Liu was approximately $ 305,033 and $ 304,600 , as of March 31,

2025 and December 31, 2024, 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, 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 %

Zhenyong Liu to borrow from the Company an amount of $ 7,059,455 (RMB 50,000,000 )

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

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

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

Interest income of the loan for the 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.

Interest income of the loan for the three months ended

March 31, 2025 and 2024 were $ nil .

As of March 31, 2025 and December 31, 2024, amount

due to shareholder was $ 10,000 and $ nil , respectively, which represents funds from shareholders to pay for various expenses incurred in

The amount is due on demand with interest free.

2 unchanged sentences

(10) Other payables and accrued liabilities

September 30,

Accrued electricity

Accrued litigation costs

Value-added tax payable

3 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

7 unchanged sentences

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.

Changes to these inputs could

produce a significantly higher or lower fair value measurement.

to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of March 31, 2025.

Black-Scholes model requires six basic data inputs:

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

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

Changes to these inputs could produce

a significantly higher or lower fair value measurement.

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

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

September 30,

The following weighted-average assumptions were used in the March 31, 2025:

March 31, 2025

Expected term

4 unchanged sentences

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)

the derivative liabilities during the three months ended March 31, 2025:

Fair Value Measurements Using Significant Observable Inputs (Level

Balance at December 31, 2024

Change in fair value of derivative liability

Balance at September 30, 2024

Balance at March 31, 2025

IT TECH PACKAGING, INC.

21 unchanged sentences

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.

These warrants become exercisable on July 23, 2020 and have a term of exercise equal to five years from the date

of issuance till July 23, 2025.

88,000 May 2020 Warrants were exercised in February 2021 at the exercise price of $ 7.425 per share and

352,000 May 2020 Warrants were outstanding as of March 31, 2025.

On January 20, 2021, the Company offered and sold

5 unchanged sentences

of 2021 at the exercise price of $ 5.5 per share.

1,207,492 January 2021 Warrants were outstanding as of September 30, 2024.

1,207,492 January 2021 Warrants were outstanding as of March 31, 2025.

On March 1, 2021, the Company offered and sold

4 unchanged sentences

6,750 March 2021 Warrants were exercised in January and March 2021 at the exercise price of

$ 7.5 per share and 1,457,143 March 2021 Warrants were outstanding as of September 30, 2024.

$ 7.5 per share and 1,457,143 March 2021 Warrants were outstanding as of March 31, 2025.

The Company classified warrants as liabilities and accounted for the

3 unchanged sentences

A summary of stock warrant activities is as below:

Nine months ended

September 30, 2024

Three months ended

March 31, 2025

Weight average

6 unchanged sentences

The following table summarizes information relating to outstanding

and exercisable warrants as of September 30, 2024.

and exercisable warrants as of March 31, 2025:

Warrants Outstanding Warrants Exercisable

7 unchanged sentences

Aggregate intrinsic value is the sum of the amounts

by which the quoted market price of the Company’s stock exceeded the exercise price of the warrants at September 30, 2024 for those

by which the quoted market price of the Company’s stock exceeded the exercise price of the warrants at March 31, 2025 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 .

of the warrants as of March 31, 2025 and December 31, 2024 are nil .

(14) Earnings Per Share

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

For the three months ended March 31, 2025 and 2024, basic and diluted

net loss per share are calculated as follows:

Three Months Ended September 30,

Three Months Ended

Basic loss per share

4 unchanged sentences

Net loss per share

Diluted loss per share

Net loss for the period- numerator

Diluted income per share

Net income for the period- numerator

$ ( 3,503,785 )

6 unchanged sentences

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

Net loss for the period - numerator

$ ( 5,798,229 )

$ ( 5,962,026 )

Weighted average common stock outstanding - denominator

Net loss per share

Diluted loss per share

Net loss for the period - numerator

$ ( 5,798,229 )

$ ( 5,962,026 )

Weighted average common stock outstanding - denominator

Effect of dilution

Weighted average common stock outstanding - denominator

Diluted loss per share

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

3 unchanged sentences

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

income for the first quarter ended March 31, 2025, and management believes that its earnings are permanently invested in the PRC.

Dongfang Paper and Baoding Shengde are PRC operating

2 unchanged sentences

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:

ended March 31, 2025 and 2024 were as follows:

Three Months Ended

September 30,

Provision for Income Taxes

3 unchanged sentences

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

Current Tax Provision U.S.

Current Tax Provision PRC

Deferred Tax Provision PRC

Total Income Tax Expenses (Benefits)

In addition to the reversible future PRC income

5 unchanged sentences

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

As of September 30, 2024, management believed that the realization of all the U.S.

As of March 31, 2025, management believed that the realization of all the U.S.

income tax benefits from these losses, which generally

1 unchanged sentence

limited operating history and continuing losses for United States income tax purposes.

Accordingly, As of September 30, 2024 and December

Accordingly, As of March 31, 2025 and December

31, 2024, the Company provided a 100 % valuation allowance on the U.S.

4 unchanged sentences

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

September 30,

Deferred tax assets (liabilities)

1 unchanged sentence

Impairment of property, plant and equipment

Impairment of inventory

Provision for doubtful debts

Miscellaneous

8 unchanged sentences

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

During the three months ended March 31, 2025 and

2024, the effective income tax rate was estimated by the Company to be 0% and 1 %, respectively.

Three Months Ended

September 30,

PRC Statutory rate

3 unchanged sentences

Effective income tax rate

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

Effect of different tax jurisdiction

Effect of tax and book difference

Change in valuation allowance

Effective income tax rate

As of September 30, 2024, except for the one-time

As of March 31, 2025, except for the one-time

transition tax under the 2017 TCJA which imposes a U.S.

22 unchanged sentences

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.

As of March 31, 2025 and December 31, 2024, 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

consolidated financial statements for the three months ended March 31, 2025 and 2024, 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, INC.

8 unchanged sentences

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

including shares originally authorized by equity holders and shares remaining for future issuance as of March 31, 2025, have been reserved.

(17) Commitments and Contingencies

5 unchanged sentences

30 -year term.

September 30,

Total operating lease payments

10 unchanged sentences

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

of September 30, 2024.

of March 31, 2025.

IT TECH PACKAGING, INC.

1 unchanged sentence

Capital commitment

As of September 30, 2024, the Company has entered

As of March 31, 2025, 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,

Total outstanding commitments under these contracts were $ 3,443,760 and $ 3,436,091 as of March 31, 2025 and December 31, 2024,

respectively.

2 unchanged sentences

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

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

31, 2025 and December 31, 2024, the Company guaranteed its long-term loan from financial institutions amounting to $ 4,318,631 (RMB 31,000,000 )

1 unchanged sentence

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

Pending legal proceeding of Jie Ping

In November 2023, an individual plaintiff involved in a civil loan

dispute filed a lawsuit against the defendants including Tengsheng Paper and Jie Ping, who served as the executive director and the legal

representative of Tengsheng Paper, at the Lianchi District People’s Court of Baoding City, China (the “PRC Court”).

From December 2023 through 2024, the plaintiff sought property preservation measures, requesting the PRC Court to freeze totaling RMB 6.70

million worth of bank deposits held by Jie Ping and Tengsheng Paper.

Following this request, on the same day, the PRC Court issued a ruling

to immediately freeze the RMB 3.35 million worth of bank deposits of Jie Ping and Tengsheng Paper.

On June 14, 2024, the PRC Court ordered

the defendants to repay the principal of the loan in the amount of RMB 3,320,000 to the plaintiff, and Tengsheng Paper was jointly liable

for repayment.

Accrued litigation costs of $ 462,511 was recorded as current liabilities of consolidated balance sheet as of March 31,

(18) Segment Reporting

16 unchanged sentences

is as follows:

Months Ended September 30, 2024

Three Months Ended

March 31, 2025

Not Attributable

6 unchanged sentences

Income tax expense (benefit)

Net income (loss)

( 1,048,107 )

( 2,195,870 )

Months Ended September 30, 2023

( 3,503,785 )

Three Months Ended

March 31, 2024

Not Attributable

3 unchanged sentences

Depreciation and amortization

Loss on impairment of assets

Interest income

Interest expense

Income tax expense (benefit)

Net income (loss)

( 2,114,896 )

( 1,975,368 )

Ended September 30, 2024

Not Attributable

Enterprise-wide,

of Inter-segment

Depreciation and amortization

Interest income

Interest expense

Income tax expense(benefit)

Net income (loss)

( 6,790,051 )

( 5,798,229 )

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Ended September 30, 2023

Not Attributable

Enterprise-wide,

of Inter-segment

Income tax expense

( 1,134,241 )

Depreciation and amortization

Loss from impairment and disposal of property, plant and equipment

Interest income

Interest expense

Income tax expense(benefit)

Net income (loss)

( 2,122,757 )

( 3,746,536 )

As of September 30, 2024

As of March 31, 2025

Not Attributable

Elimination of

Enterprise-wide,

of Inter-segment

Inter-segment

As of December 31, 2024

Not Attributable

Elimination of

Enterprise-wide,

of Inter-segment

Inter-segment

IT TECH PACKAGING, INC.

1 unchanged sentence

(19) Concentration and Major Customers and Suppliers

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 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.

For the three months ended March 31, 2025 and

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

For the three months ended March 31, 2025, the

Company had two major suppliers accounted for 77 % and 16 % of total purchases.

For the three months ended March 31, 2024, the Company had

two major suppliers accounted for 75 % and 15 % 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 September 30, 2024 and December 31, 2023.

Deposit Insurance Corporation (“FDIC”) of the United States as of as of March 31, 2025 and December 31, 2024.

On May 1, 2015,

the new “Deposit Insurance Regulations” was effective in the PRC that the maximum protection would be up to RMB 500,000 ($ 69,655 )

per depositor per insured financial intuition, including both principal and interest.

For the cash placed in financial institutions

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

bank accounts are all fully covered by the FDIC insurance as of September 30, 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.

For the cash placed in financial institutions in

the United States, the Company’s U.S.

bank accounts are all fully covered by the FDIC insurance as of March 31, 2025 and December

31, 2024, while for the cash placed in financial institutions in the PRC, the balances exceeding the maximum coverage of RMB 500,000 amounted

to RMB 34,751,252 ($ 4,841,221 ) as of March 31, 2025.

(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