Cautionary Notice Regarding Forward-Looking Statements

The following discussion of the financial condition and results of operations of the Company for the periods ended March 31, 2022 and 2021 should be read in conjunction with the financial statements and the notes to the financial statements that are included elsewhere in this quarterly report.

In this quarterly report, references to "the Company," "we," "our" and "us" refer to IT Tech Packaging, Inc. and its PRC subsidiary and variable interest entity unless the context requires otherwise.

Impact of COVID-19 on Our Operations and Financial Performance

Comparison of the Three months ended March 31, 2022 and 2021

Revenue of Offset Printing Paper, Corrugating Medium Paper and Tissue Paper Products

$ 20,711,771 (12,210 ) $ (5,685,137 ) -29.57 % -27.45 % Offset Printing Paper

Monthly sales revenue for the 24 months ended March 31, 2022, are summarized below:

The Average Selling Prices (ASPs) for our main products in the three months ended March 31, 2022 and 2021 are summarized as follows:

We sold 29,086 tonnes of CMP in the three months ended March 31, 2022 as compared to 41,296 tonnes for the same period in 2021, representing a 29.57% decrease in quantity sold.

Quantities sold for regular CMP that was produced by the PM6 production line from April 2020 to March 2022 are as follows:

Cost of sales for offset printing paper was $nil for the quarter ended March 31, 2022, as compared to $1,705,938 for the comparable period in 2021.

Changes in cost of sales and cost per tonne by product for the quarters ended March 31, 2022 and 2021 are summarized below:

$ 457 $ (4,689,846 ) $ 30 -24.87 % 6.56 % Offset Printing Paper $ - $ - $ 1,705,938

$ 543 $ (1,705,938 ) $ (543 ) -100.00 % -100.00 % Tissue Paper Products $ 962,165 $ 2,424 1,707,623

The pricing trends of our major raw materials for the 24-month period from April 2020 to March 2022 are shown below:

Offset Printing Paper, CMP and Tissue Paper Products

Monthly gross profit margins on the sales of our CMP and offset printing paper for the 24-month period ended March 31, 2022 are as follows:

Gross profit for face mask for the three months ended March 31, 2022 and 2021 were $16,677 and $24,531, representing a gross margin of 29.47% and 18.80%, respectively.

Selling, General and Administrative Expenses

A summary of changes in major inventory items is as follows:

Capital Expenditure Commitment as of March 31, 2022

Amortization of the Leased Equipment was $42,006 and $40,997 for the three months ended March 31, 2022 and 2021. Total interest expenses for the sale-leaseback arrangement was $13,507 and $20,418 for the three months ended March 31, 2022 and 2021.

As a result of the sale and leaseback, a deferred gain in the amount of $430,695 was recorded. The deferred gain is amortized over the lease term and as an offset to amortization of the Leased Equipment.

Our cash, cash equivalents and restricted cash as of March 31, 2022 was $15,358,443, an increase of $4,156,831, from $11,201,612 as of December 31, 2021. The increase of cash and cash equivalents for the three months ended March 31, 2022 was attributable to a number of factors:

i. Net cash provided by (used in) operating activities

ii. Net cash used in investing activities

iii. Net cash provided by financing activities

Industrial and Commercial Bank of China ("ICBC") Loan $ 5,984,374

The average short-term borrowing rates for the three months ended March 31, 2022 and 2021 were approximately 4.79%.

Long-term loans from credit union

As of March 31, 2022 and December 31, 2021, loans payable to Rural Credit Union of Xushui District, amounted to $9,861,063 and $9,818,530, respectively.

Total interest expenses for the short-term bank loans and long-term loans for the three months ended March 31, 2022 and 2021 were $257,306 and $258,483, respectively.

As of March 31, 2022 and December 31, 2021, amount due to shareholder was$727,433, which represents funds from shareholders to pay for various expenses incurred in the U.S. The amount is due on demand with interest free.

Critical Accounting Policies and Estimates

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