UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

or

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-34577

IT TECH PACKAGING, INC.

(Exact name of registrant as specified in its charter)

Nevada |  | 20-4158835
(State or other jurisdiction of |  | (IRS Employer
incorporation or organization) |  | identification No.)

Science Park, Juli Rd, Xushui District, Baoding City

Hebei Province, The People’s Republic of China 072550

(Address of principal executive offices and Zip Code)

011 - (86) 312-8698215

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Common Stock, par value $0.001 |  | ITP |  | NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☐ | Accelerated filer | ☐
Non-accelerated filer | ☒ | Smaller reporting company | ☒
|  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ☐ No ☒

As of November 13, 2025, there were 16,965,420 shares of the registrant’s common stock, par value $0.001, outstanding.

TABLE OF CONTENTS

Part I. - FINANCIAL INFORMATION | 1
Item 1. | Financial Statements | 1
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 31
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 46
Item 4. | Controls and Procedures | 46
Part II. - OTHER INFORMATION | 47
Item 1. | Legal Proceedings | 47
Item 1A. | Risk Factors | 47
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 47
Item 3. | Defaults Upon Senior Securities | 47
Item 4. | Mine Safety Disclosures | 47
Item 5. | Other Information | 48
Item 6. | Exhibits | 48
SIGNATURES | 49

i

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2025 AND DECEMBER 31, 2024

|  | September 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
|  | (Unaudited) |  |  |  |
ASSETS |  |  |  |  |  |
Current Assets |  |  |  |  |  |
Cash and bank balances |  | $ | 8,072,936 |  |  | $ | 5,916,373 |
Restricted cash |  |  | 1,046,771 |  |  |  | 1,034,203 |
Accounts receivable (net of allowance for doubtful accounts of $90,225 and $53,111 as of September 30, 2025 and December 31, 2024, respectively) |  |  | 2,079,190 |  |  |  | 287,576 |
Inventories |  |  | 3,899,571 |  |  |  | 2,351,876 |
Prepayments and other current assets |  |  | 19,650,854 |  |  |  | 17,951,267 |
Due from related parties |  |  | 1,015,043 |  |  |  | 920,008 |
Total current assets |  |  | 35,764,365 |  |  |  | 28,461,303 |
Prepayment on property, plant and equipment |  |  | 8,444 |  |  |  | - |
Operating lease right-of-use assets, net |  |  | 347,477 |  |  |  | 421,868 |
Property, plant, and equipment, net |  |  | 137,903,414 |  |  |  | 146,911,883 |
Value-added tax recoverable |  |  | 1,674,492 |  |  |  | 1,751,732 |
Deferred tax asset non-current |  |  | - |  |  |  | - |
Total Assets |  | $ | 175,698,192 |  |  | $ | 177,546,786 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  |  |  |  |  |  |
Current Liabilities |  |  |  |  |  |  |  |
Short-term bank loans |  | $ | 5,094,645 |  |  | $ | 4,451,616 |
Current portion of long-term loans |  |  | - |  |  |  | 3,559,902 |
Lease liability |  |  | 113,786 |  |  |  | 245,604 |
Accounts payable |  |  | - |  |  |  | 1 |
Advance from customers |  |  | 11,911 |  |  |  | 11,773 |
Due to related parties |  |  | 374,565 |  |  |  | 43,468 |
Accrued payroll and employee benefits |  |  | 369,886 |  |  |  | 207,508 |
Other payables and accrued liabilities |  |  | 12,393,873 |  |  |  | 11,545,990 |
Income taxes payable |  |  | 308,636 |  |  |  | 80,905 |
Total current liabilities |  |  | 18,667,302 |  |  |  | 20,146,767 |
Long-term loans |  |  | 4,727,324 |  |  |  | 1,112,904 |
Lease liability - non-current |  |  | 254,030 |  |  |  | 231,147 |
Derivative liability |  |  | - |  |  |  | 5,651 |
Total liabilities (including amounts of the consolidated VIE without recourse to the Company of $18,629,300 and $16,976,765 as of September 30, 2025 and December 31, 2024, respectively) |  |  | 23,648,656 |  |  |  | 21,496,469 |
Commitments and Contingencies |  |  |  |  |  |  |  |
Stockholders’ Equity |  |  |  |  |  |  |  |
Common stock $0.001 par value per share; Authorized: 50,000,000 shares; Issued and outstanding: 16,965,420 shares as of September 30, 2025 and 10,065,920 shares as of December 31, 2024, respectively. |  |  | 16,965 |  |  |  | 10,066 |
Additional paid-in capital |  |  | 90,228,996 |  |  |  | 89,172,771 |
Statutory earnings reserve |  |  | 6,080,574 |  |  |  | 6,080,574 |
Accumulated other comprehensive loss |  |  | (11,159,033 | ) |  |  | (12,998,986 | )
Retained earnings |  |  | 66,882,034 |  |  |  | 73,785,892 |
Total stockholders’ equity |  |  | 152,049,536 |  |  |  | 156,050,317 |
Total Liabilities and Stockholders’ Equity |  | $ | 175,698,192 |  |  | $ | 177,546,786 |

See accompanying notes to condensed consolidated financial statements.

1

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

(Unaudited)

|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Revenues |  | $ | 25,601,344 |  |  | $ | 25,081,500 |  |  | $ | 61,293,251 |  |  | $ | 58,195,129 |
Cost of sales |  |  | (23,579,498 | ) |  |  | (23,164,119 | ) |  |  | (57,913,574 | ) |  |  | (52,613,335 | )
Gross Profit |  |  | 2,021,846 |  |  |  | 1,917,381 |  |  |  | 3,379,677 |  |  |  | 5,581,794 |
Selling, general and administrative expenses |  |  | (3,018,187 | ) |  |  | (3,381,502 | ) |  |  | (9,516,283 | ) |  |  | (9,999,833 | )
Gain on impairment of assets |  |  | 3,709 |  |  |  | - |  |  |  | 3,709 |  |  |  | - |
Loss from Operations |  |  | (992,632 | ) |  |  | (1,464,121 | ) |  |  | (6,132,897 | ) |  |  | (4,418,039 | )
Other Income (Expense): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest income |  |  | 1,146 |  |  |  | 7,313 |  |  |  | 4,098 |  |  |  | 12,303 |
Interest expense |  |  | (150,702 | ) |  |  | (171,430 | ) |  |  | (427,520 | ) |  |  | (593,271 | )
Gain on derivative liability |  |  | 303 |  |  |  | 2 |  |  |  | 5,651 |  |  |  | 51 |
Loss before Income Taxes |  |  | (1,141,885 | ) |  |  | (1,628,236 | ) |  |  | (6,550,668 | ) |  |  | (4,998,956 | )
Income Tax Expenses |  |  | (306,362 | ) |  |  | (345,710 | ) |  |  | (353,190 | ) |  |  | (799,273 | )
Net Loss |  |  | (1,448,247 | ) |  |  | (1,973,946 | ) |  |  | (6,903,858 | ) |  |  | (5,798,229 | )
Other Comprehensive Income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustment |  |  | 1,180,212 |  |  |  | 2,843,180 |  |  |  | 1,839,953 |  |  |  | 1,785,411 |
Total Comprehensive (Loss) Income |  | $ | (268,035 | ) |  | $ | 869,234 |  |  | $ | (5,063,905 | ) |  | $ | (4,012,818 | )
Losses Per Share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic and Diluted Losses per Share |  | $ | (0.11 | ) |  | $ | (0.20 | ) |  | $ | (0.51 | ) |  | $ | (0.58 | )
Outstanding – Basic and Diluted |  |  | 13,617,133 |  |  |  | 10,065,920 |  |  |  | 13,617,133 |  |  |  | 10,065,920 |

See accompanying notes to condensed consolidated financial statements.

2

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

(Unaudited)

|  | Nine Months Ended |
|  | September 30, |
|  | 2025 |  |  | 2024 |
Cash Flows from Operating Activities: |  |  |  |  |  |
Net income |  | $ | (6,903,858 | ) |  | $ | (5,798,229 | )
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 10,664,999 |  |  |  | 10,346,181 |
Gain on derivative liability |  |  | (5,651 | ) |  |  | (51 | )
Gain from disposal and impairment of property, plant and equipment |  |  | (3,709 | ) |  |  | - |
(Recovery from) Allowance for bad debts |  |  | (26,677 | ) |  |  | 30,262 |
Allowances for inventories, net |  |  | (31,522 | ) |  |  | (2,951 | )
Deferred tax |  |  | - |  |  |  | - |
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |
Accounts receivable |  |  | (1,811,293 | ) |  |  | (1,160,996 | )
Prepayments and other current assets |  |  | (1,319,298 | ) |  |  | (122,747 | )
Inventories |  |  | (1,477,521 | ) |  |  | (2,108,280 | )
Accounts payable |  |  | (1 | ) |  |  | (4,979 | )
Advance from customers |  |  | - |  |  |  | (99,219 | )
Related parties |  |  | 245,948 |  |  |  | (365,452 | )
Accrued payroll and employee benefits |  |  | 158,777 |  |  |  | 121,000 |
Other payables and accrued liabilities |  |  | 673,142 |  |  |  | 1,651,302 |
Income taxes payable |  |  | 225,114 |  |  |  | 345,270 |
Net Cash Provided by Operating Activities |  |  | 388,450 |  |  |  | 2,831,111 |
Cash Flows from Investing Activities: |  |  |  |  |  |  |  |
Purchases of property, plant and equipment |  |  | (29,977 | ) |  |  | (315,152 | )
Proceeds from sale of property, plant and equipment |  |  | 4,191 |  |  |  | - |
Net Cash Used in Investing Activities |  |  | (25,786 | ) |  |  | (315,152 | )
Cash Flows from Financing Activities: |  |  |  |  |  |  |  |
Proceeds from issuance of shares and warrants, net |  |  | 1,063,124 |  |  |  | - |
Proceeds from short term bank loans |  |  | 5,057,067 |  |  |  | 845,082 |
Proceeds from long term loans |  |  | 4,692,455 |  |  |  | - |
Repayment of bank loans |  |  | (9,162,791 | ) |  |  | (2,957,788 | )
Net Cash Provided by (Used in) Financing Activities |  |  | 1,649,855 |  |  |  | (2,112,706 | )
Effect of Exchange Rate Changes on Cash and Cash Equivalents |  |  | 156,612 |  |  |  | 97,740 |
Net Increase in Cash and Cash Equivalents |  |  | 2,169,131 |  |  |  | 500,993 |
Cash, Cash Equivalents and Restricted Cash - Beginning of Period |  |  | 6,950,576 |  |  |  | 4,391,921 |
Cash, Cash Equivalents and Restricted Cash - End of Period |  | $ | 9,119,707 |  |  | $ | 4,892,914 |
Supplemental Disclosure of Cash Flow Information: |  |  |  |  |  |  |  |
Cash paid for interest, net of capitalized interest cost |  | $ | 434,714 |  |  | $ | 382,493 |
Cash paid for income taxes |  | $ | 128,076 |  |  | $ | 454,003 |
Cash and bank balances |  |  | 8,072,936 |  |  |  | 4,414,848 |
Restricted cash |  |  | 1,046,771 |  |  |  | 478,066 |
Total cash, cash equivalents and restricted cash shown in the statement of cash flows |  |  | 9,119,707 |  |  |  | 4,892,914 |

See accompanying notes to condensed consolidated financial statements.

3

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

(Unaudited)

|  |  |  |  |  |  |  |  |  |  |  |  |  | Accumulated |  |  |  |  |  |  |
|  |  |  |  |  |  |  | Additional |  |  | Statutory |  |  | Other |  |  |  |  |  |  |
|  | Common Stock |  |  | Paid-in |  |  | Earnings |  |  | Comprehensive |  |  | Retained |  |  |  |
|  | Shares |  |  | Amount |  |  | Capital |  |  | Reserve |  |  | Income (loss) |  |  | Earnings |  |  | Total |
Balance at December 31, 2023 |  |  | 10,065,920 |  |  | $ | 10,066 |  |  | $ | 89,172,771 |  |  | $ | 6,080,574 |  |  | $ | (10,555,534 | ) |  | $ | 83,628,986 |  |  | $ | 168,336,863 |
Foreign currency translation adjustment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,785,411 |  |  |  |  |  |  |  | 1,785,411 |
Net loss |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (5,798,229 | ) |  |  | (5,798,229 | )
Balance at September 30, 2024 |  |  | 10,065,920 |  |  | $ | 10,066 |  |  | $ | 89,172,771 |  |  | $ | 6,080,574 |  |  | $ | (8,770,123 | ) |  | $ | 77,830,757 |  |  | $ | 164,324,045 |
Balance at December 31, 2024 |  |  | 10,065,920 |  |  | $ | 10,066 |  |  | $ | 89,172,771 |  |  | $ | 6,080,574 |  |  | $ | (12,998,986 | ) |  | $ | 73,785,892 |  |  | $ | 156,050,317 |
Issuance of shares to institutional investor |  |  | 6,899,500 |  |  |  | 6,899 |  |  |  | 1,056,225 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,063,124 |
Foreign currency translation adjustment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,839,953 |  |  |  |  |  |  |  | 1,839,953 |
Net loss |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (6,903,858 | ) |  |  | (6,903,858 | )
Balance at September 30, 2025 |  |  | 16,965,420 |  |  | $ | 16,965 |  |  | $ | 90,228,996 |  |  | $ | 6,080,574 |  |  | $ | (11,159,033 | ) |  | $ | 66,882,034 |  |  | $ | 152,049,536 |

See accompanying notes to condensed consolidated financial statements.

4

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Organization and Business Background

IT Tech Packaging, Inc. (the “Company”) was incorporated in the State of Nevada on December 9, 2005, under the name “Carlateral, Inc.” Through the steps described immediately below, we became the holding company for Hebei Baoding Dongfang Paper Milling Company Limited (“Dongfang Paper”), a producer and distributor of paper products in China, on October 29, 2007.

Effective on August 1, 2018, we changed our corporate name to IT Tech Packaging, Inc.. The name change was effected through a parent/subsidiary short-form merger of IT Tech Packaging, Inc., our wholly-owned Nevada subsidiary formed solely for the purpose of the name change, with and into 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.

On June 9, 2022, the Board of Directors of the Company approved a reverse stock split of the Company’s issued and outstanding shares of common stock, par value $0.001 per share (the “Common Stock”), at a ratio of 1-for-10 (the “Reverse Stock Split”). The Reverse Stock Split become effective on July 7, 2022 (the “Effective Date”), and the shares began trading on the split-adjusted basis on the NYSE American under the Company’s existing trading symbol “ITP” at market open on July 8, 2022. The new CUSIP number following the Reverse Stock Split is 46527C 209. All references made to share or per share amounts in the accompanying consolidated financial statements and applicable disclosures have been retroactively adjusted to reflect the effects of the Reverse Stock Split.

On October 29, 2007, pursuant to an agreement and plan of merger (the “Merger Agreement”), the Company acquired DongfangZhiye Holding Limited (“Dongfang Holding”), a corporation formed on November 13, 2006 under the laws of the British Virgin Islands, and issued the shareholders of Dongfang Holding an aggregate of 7,450,497 (as adjusted for a four-for-one reverse stock split effected in November 2009) shares of our common stock, which shares were distributed pro-rata to the shareholders of Dongfang Holding in accordance with their respective ownership interests in Dongfang Holding. At the time of the Merger Agreement, Dongfang Holding owned all of the issued and outstanding stock and ownership of Dongfang Paper and such shares of Dongfang Paper were held in trust with Zhenyong Liu, Xiaodong Liu and Shuangxi Zhao, for Mr. Liu, Mr. Liu and 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 Shengde.

On June 24, 2009, the Company consummated a number of restructuring transactions pursuant to which it acquired all of the issued and outstanding shares of Shengde Holdings Inc., a Nevada corporation. Shengde Holdings Inc. was incorporated in the State of Nevada on February 25, 2009. On June 1, 2009, Shengde Holdings Inc. incorporated Baoding Shengde, a limited liability company organized under the laws of the 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.

5

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 RMB1 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 RMB320 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.

6

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The Company has no direct equity interest in Dongfang Paper. However, through the Contractual Agreements described above, the Company is found to be the primary beneficiary (the “Primary Beneficiary”) of Dongfang Paper and is deemed to have the effective control over Dongfang Paper’s activities that most significantly affect its economic performance, resulting in Dongfang Paper and its subsidiary, being treated as a controlled variable interest entity of the Company in accordance with Topic 810 - Consolidation of the Accounting Standards Codification (the “ASC”) issued by the Financial Accounting Standard Board (the “FASB”). The revenue generated from Dongfang Paper and Tengsheng Paper for the three and nine months ended September 30, 2025 and 2024 was accounted for 100% of the Company’s total revenue. Dongfang Paper and Tengsheng Paper also accounted for 96.09% and 96.07% of the total assets of the Company as of September 30, 2025 and December 31, 2024, respectively.

As of September 30, 2025 and December 31, 2024, details of the Company’s subsidiaries and variable interest entities are as follows:

Name |  | Date of Incorporation or Establishment |  | Place of Incorporation or Establishment |  | Percentage of Ownership |  | Principal Activity
Subsidiary: |  |  |  |  |  |  |  |
Dongfang Holding |  | November 13, 2006 |  | BVI |  | 100% |  | Inactive investment holding
Shengde Holdings |  | February 25, 2009 |  | State of Nevada |  | 100% |  | Investment holding
Baoding Shengde |  | June 1, 2009 |  | PRC |  | 100% |  | Paper production and distribution
Qianrong |  | July 15, 2021 |  | PRC |  | 100% |  | New material technology service
Variable interest entity (“VIE”): |  |  |  |  |  |  |  |
Dongfang Paper |  | March 10, 1996 |  | PRC |  | Control* |  | Paper production and distribution
Tengsheng Paper |  | April 07, 2011 |  | PRC |  | Control** |  | Paper production and distribution

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

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

However, uncertainties in the PRC legal system could cause the Company’s current ownership structure to be found to be in violation of any existing and/or future PRC laws or regulations and could limit the Company’s ability, through its subsidiary, to enforce its rights under these contractual arrangements. Furthermore, shareholders of the VIE may have interests that are different than those of the Company, which could potentially increase the risk that they would seek to act contrary to the terms of the aforementioned agreements.

In addition, if the current structure or any of the contractual arrangements were found to be in violation of any existing or future PRC law, the Company may be subject to penalties, which may include, but not be limited to, the cancellation or revocation of the Company’s business and operating licenses, being required to restructure the Company’s operations or being required to discontinue the Company’s operating activities. The imposition of any of these or other penalties may result in a material and adverse effect on the Company’s ability to conduct its operations. In such case, the Company may not be able to operate or control the VIE, which may result in deconsolidation of the VIE. The Company believes the possibility that it will no longer be able to control and consolidate its VIE will occur as a result of the aforementioned risks and uncertainties is remote.

7

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 September 30, 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.

|  | September 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
|  | (Unaudited) |  |  |  |
ASSETS |  |  |  |  |  |
Current Assets |  |  |  |  |  |
Cash and bank balances |  | $ | 7,049,454 |  |  | $ | 5,850,910 |
Restricted cash |  |  | 1,046,771 |  |  |  | 1,034,203 |
Accounts receivable |  |  | 2,079,190 |  |  |  | 287,576 |
Inventories |  |  | 3,899,571 |  |  |  | 2,351,876 |
Prepayments and other current assets |  |  | 19,590,642 |  |  |  | 17,922,229 |
Due from related parties |  |  |  |  |  |  | - |
Total current assets |  |  | 33,665,628 |  |  |  | 27,446,794 |
Prepayment on property, plant and equipment |  |  | 8,444 |  |  |  | - |
Operating lease right-of-use assets, net |  |  | 347,477 |  |  |  | 421,868 |
Property, plant, and equipment, net |  |  | 134,800,288 |  |  |  | 142,702,663 |
Deferred tax asset non-current |  |  | - |  |  |  | - |
Total Assets |  | $ | 168,821,837 |  |  | $ | 170,571,325 |
LIABILITIES |  |  |  |  |  |  |  |
Current Liabilities |  |  |  |  |  |  |  |
Short-term bank loans |  | $ | 591,091 |  |  | $ | - |
Current portion of long-term loans |  |  | - |  |  |  | 3,559,902 |
Lease liability |  |  | 113,786 |  |  |  | 245,604 |
Accounts payable |  |  | - |  |  |  | - |
Advance from customers |  |  | 11,911 |  |  |  | 11,773 |
Due to related parties |  |  | 26,550 |  |  |  | 26,244 |
Accrued payroll and employee benefits |  |  | 315,006 |  |  |  | 172,239 |
Other payables and accrued liabilities |  |  | 12,280,966 |  |  |  | 11,536,047 |
Income taxes payable |  |  | 308,636 |  |  |  | 80,905 |
Total current liabilities |  |  | 13,647,946 |  |  |  | 15,632,714 |
Long-term loans |  |  | 4,727,324 |  |  |  | 1,112,904 |
Lease liability - non-current |  |  | 254,030 |  |  |  | 231,147 |
Total liabilities |  | $ | 18,629,300 |  |  | $ | 16,976,765 |

8

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(2) Basis of Presentation and Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for reporting on Form 10-Q. Accordingly, certain information and notes required by the United States of America generally accepted accounting principles (“GAAP”) for annual financial statements are not included herein. These interim statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 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 September 30, 2025 and the results of operations for the nine months ended September 30, 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 estimates.

Liquidity and Going Concern

As of September 30, 2025, the Company had current assets of $35,764,365 (including a VAT （“Value Added Tax”）recoverable of Tengsheng Paper in amount of $13,307,848), and current liabilities of $18,667,302, resulting in a working capital of $17,097,063. However, production of Tengsheng Paper has been suspended in 2024 and the nine months ended September 30, 2025, rendering related VAT unrecoverable in the short term. Net working capital excluding VAT recoverable as of September 30, 2025 was a working capital of $3,789,215. 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 September 30, 2025.

9

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

To address these challenges, the Company plans to optimize its raw material structure and stabilize manufacturing capacity utilization, which will help to reduce procurement and production costs. Additionally, the Company is actively exploring new products and adjusting pricing strategies in a timely manner to secure a larger market share.

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. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset and intangible assets. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets and intangible assets to be disposed are determined in a similar manner, except that fair market values are reduced for the cost to dispose.

Fair Value Measurements

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 liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

10

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 September 30, 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 short-term bank loans and balance due to a related party, 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 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.

11

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(3) Restricted Cash

Restricted cash of $1,046,771 and $1,034,203 as of September 30, 2025 and December 31, 2024 was presented for the cash deposited mainly at the Industrial and Commercial Bank of China of Tengsheng Paper. The deposits were 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 September 30, 2025 and December 31, 2024:

|  | September 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Raw Materials |  |  |  |  |  |
Recycled paper board |  | $ | 2,630,267 |  |  | $ | 1,353,543 |
Recycled white scrap paper |  |  | 10,613 |  |  |  | 10,491 |
Gas |  |  | 50,683 |  |  |  | 16,334 |
Base paper and other raw materials |  |  | 177,095 |  |  |  | 132,348 |
|  |  | 2,868,658 |  |  |  | 1,512,716 |
Semi-finished Goods |  |  | 299,243 |  |  |  | 295,792 |
Finished Goods |  |  | 1,434,505 |  |  |  | 1,269,487 |
Total inventory, gross |  |  | 4,602,406 |  |  |  | 3,077,995 |
Inventory reserve |  |  | (702,835 | ) |  |  | (726,119 | )
Total inventory, net |  | $ | 3,899,571 |  |  | $ | 2,351,876 |

The movement of inventory reserve was as follows:

|  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |
Balance at beginning of year |  | $ | 726,119 |  |  | $ | 2,959 |
Additional charge (written off), net |  |  | (31,522 | ) |  |  | (2,951 | )
Foreign currency translation difference |  |  | 8,238 |  |  |  | (8 | )
Balance at the end of year |  | $ | 702,835 |  |  | $ | - |

12

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(5) Prepayments and other current assets

Prepayments and other current assets consisted of the following as of September 30, 2025 and December 31, 2024:

|  | September 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Prepayment for purchase of materials |  | $ | 6,839,665 |  |  | $ | 5,634,870 |
Value-added tax recoverable |  |  | 13,307,848 |  |  |  | 13,154,375 |
Prepayment for utilities |  |  | 237,187 |  |  |  | 14,096 |
Prepaid land lease |  |  | 62,973 |  |  |  | - |
Others |  |  | 10,453 |  |  |  | 8,527 |
Allowance for doubtful accounts |  |  | (807,272 | ) |  |  | (860,601 | )
|  | $ | 19,650,854 |  |  | $ | 17,951,267 |

The movement of allowance for doubtful accounts was as follows:

|  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |
Balance at beginning of year |  | $ | 860,601 |  |  | $ | - |
Additional charge (written off), net |  |  | (62,903 | ) |  |  | 7,042 |
Foreign currency translation difference |  |  | 9,574 |  |  |  | 93 |
Balance at the end of year |  | $ | 807,272 |  |  | $ | 7,135 |

(6) Property, plant and equipment, net

As of September 30, 2025 and December 31, 2024, property, plant and equipment consisted of the following:

|  | September 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Land use rights |  | $ | 81,243,077 |  |  | $ | 80,306,144 |
Building and improvements |  |  | 67,357,592 |  |  |  | 66,580,793 |
Machinery and equipment |  |  | 158,001,509 |  |  |  | 156,179,361 |
Vehicles |  |  | 334,878 |  |  |  | 343,088 |
Totals |  |  | 306,937,056 |  |  |  | 303,409,386 |
Less: accumulated depreciation and amortization |  |  | (169,033,642 | ) |  |  | (156,497,503 | )
Property, Plant and Equipment, net |  | $ | 137,903,414 |  |  | $ | 146,911,883 |

As of September 30, 2025 and December 31, 2024, land use rights represented twenty four 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.

13

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As of September 30, 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 $2,282,024 and $3,407,848, respectively, as of September 30, 2025 and December 31, 2024, have been pledged pursuant two short-term loans from credit union of Baoding Shengde. Certain property, plant and equipment of Dongfang Paper with net values of $132,208 was pledged for a short-term loan from Bank of Cangzhou. Certain property, plant and equipment of Dongfang Paper with net values of $222,500 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 $3,574,417 and $3,483,298 for the three months ended September 30, 2025 and 2024, respectively. Depreciation and amortization of property, plant and equipment was $10,664,999 and $10,346,181 for the nine months ended September 30, 2025 and 2024, respectively.

(7) Leases

Operating lease lessor

The Company had a non-cancellable agreement to lease plant to tenant under operating lease for 1 year from November 2023 to November 2024. The lease did not contain contingent payments. The rental income of the year was paid in advance by the tenant in December 2023.

Operating lease as lessee

The Company leases space under non-cancelable operating leases for plant and production equipment. The lease does not have significant rent escalation holidays, concessions, leasehold improvement incentives, or other build-out clauses. Further, the lease does not contain contingent rent provisions.

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.

14

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

|  | Nine Months Ended |
|  | September 30, 2025 |
|  | RMB |
Operating lease cost |  |  | 78,728 |
Short-term lease cost |  |  | - |
Lease cost |  |  | 78,728 |

Supplemental cash flow information related to its operating leases was as follows for the period ended September 30, 2025:

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

|  | Nine Months Ended |
|  | September 30, 2025 |
|  | RMB |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |
Operating cash outflow from operating leases |  |  | 139,698 |

Maturities of its lease liabilities for all operating leases are as follows as of September 30, 2025:

September 30, |  | Amount |
2026 |  |  | 140,736 |
2027 |  |  | 140,736 |
2028 |  |  | 140,736 |
Thereafter |  |  | - |
Total operating lease payments |  | $ | 422,208 |
Less: Interest |  |  | (54,392 | )
Present value of lease liabilities |  |  | 367,816 |
Less: current portion, record in current liabilities |  |  | (113,786 | )
Present value of lease liabilities |  |  | 254,030 |

The weighted average remaining lease terms and discount rates for all of its operating leases were as follows as of September 30, 2025:

|  | September 30, |
|  | 2025 |
Remaining lease term and discount rate: |  | RMB |
Weighted average remaining lease term (years) |  |  | 2.9 |
Weighted average discount rate |  |  | 7.56 | %

15

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(8) Loans Payable

Short-term bank loans

|  | September 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Rural Credit Union of Xushui District Loan 1 |  | $ | - |  |  | $ | 1,808,469 |
Rural Credit Union of Xushui District Loan 2 |  |  | - |  |  |  | 2,225,808 |
Rural Credit Union of Xushui District Loan 3 |  |  | 1,829,569 |  |  |  | - |
Rural Credit Union of Xushui District Loan 4 |  |  | 2,251,777 |  |  |  | - |
Bank of Cangzhou Loan 1 |  |  | 309,619 |  |  |  | - |
Bank of Cangzhou Loan 2 |  |  | 70,368 |  |  |  | - |
Bank of Cangzhou Loan 3 |  |  | 211,104 |  |  |  | - |
Industrial and Commercial Bank of China (“ICBC”) Loan 1 |  |  | - |  |  |  | 2,782 |
ICBC Loan 2 |  |  | - |  |  |  | 139,113 |
ICBC Loan 3 |  |  | - |  |  |  | 139,113 |
ICBC Loan 4 |  |  | - |  |  |  | 136,331 |
ICBC Loan 5 |  |  | 2,815 |  |  |  | - |
ICBC Loan 6 |  |  | 140,736 |  |  |  | - |
ICBC Loan 7 |  |  | 140,736 |  |  |  | - |
ICBC Loan 8 |  |  | 137,921 |  |  |  | - |
Total short-term bank loans |  | $ | 5,094,645 |  |  | $ | 4,451,616 |

On December 24, 2024, the Company entered into a loan agreement with the Rural Credit Union of Xushui District, with a balance of $nil and $1,808,469 as of September 30, 2025 and December 31, 2024, respectively. The loan was secured by the equipment of Baoding Shengde as collateral for the benefit of the bank. The loan bore a fixed rate of 6%. The loan was repaid on September 30, 2025.

On December 24, 2024, the Company entered into a loan agreement with the Rural Credit Union of Xushui District, with a balance of $nil and $2,225,808 as of September 30, 2025 and December 31, 2024, respectively. The loan was secured by the equipment of Baoding Shengde as collateral for the benefit of the bank and guaranteed by a third party company. The loan bore a fixed rate of 6%. The loan was repaid on September 30, 2025.

On September 30, 2025, the Company entered into a loan agreement with the Rural Credit Union of Xushui District, with a balance of $1,829,569 as of September 30, 2025. The loan is guaranteed by Mr. Liu Zhenyong and 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 September 29, 2026.

On September 30, 2025, the Company entered into a loan agreement with the Rural Credit Union of Xushui District, with a balance of $2,251,777 as of September 30, 2025. 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 September 29, 2026.

On December 28, 2024, the Company entered into a working capital loan agreement with the Bank of Cangzhou, to borrow $309,619 at a fixed interest rate of 5.5% per annum. The loan is guaranteed by Mr. Liu Zhenyong. The loan will be due by December 27, 2025.

On December 28, 2024, the Company entered into a working capital loan agreement with the Bank of Cangzhou, to borrow $70,368 at a fixed interest rate of 5.5% per annum. The loan is secured by the Company’s manufacturing equipment and guaranteed by Mr. Liu Zhenyong. The loan will be due by December 27, 2025.

On March 10, 2025, the Company entered into a working capital loan agreement with the Bank of Cangzhou, to borrow $211,104 at a fixed interest rate of 5.5% per annum. The loan is secured by the Company’s manufacturing equipment and guaranteed by Mr. Liu Zhenyong. 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 $nil and $2,782 as of September 30, 2025 and December 31, 2024, respectively. The loan bore a fixed interest rate of 3.45% per annum. The loan was repaid on June 10, 2025.

On June 21, 2024, the Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $139,113 as of September 30, 2025 and December 31, 2024, respectively. The loan bore a fixed interest rate of 3.45% per annum. The loan was repaid on June 3, 2025.

On June 22, 2024, the Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $139,113 as of September 30, 2025 and December 31, 2024, respectively. The loan bore a fixed interest rate of 3.45% per annum. The loan was repaid on June 10, 2025.

16

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

On June 24, 2024, the Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $136,331 as of as of September 30, 2025 and December 31, 2024, respectively. The loan bore a fixed interest rate of 3.45% per annum. The loan was repaid on June 9, 2025.

On June 10, 2025, the Company entered into a working capital loan agreement with the ICBC, with a balance of $2,815 as of September 30, 2025. The loan bears a fixed interest rate of 3.00% per annum. The loan is due for repayment by June 10, 2026.

On June 3, 2025, the Company entered into a working capital loan agreement with the ICBC, with a balance of $140,736 as of September 30, 2025. The loan bears a fixed interest rate of 3.00% per annum. The loan is due for repayment by June 3, 2026.

On June 10, 2025, the Company entered into a working capital loan agreement with the ICBC, with a balance of $140,736 as of September 30, 2025. The loan bears a fixed interest rate of 3.00% per annum. The loan is due for repayment by June 10, 2026.

On June 9, 2025, the Company entered into a working capital loan agreement with the ICBC, with a balance of $137,921 as of September 30, 2025. The loan bears a fixed interest rate of 3.00% per annum. The loan is due for repayment by June 9, 2026.

As of September 30, 2025, there were guaranteed short-term borrowings of $4,672,437 and unsecured bank loans of $422,208. 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 September 30, 2025 and 2024 were approximately 5.71% and 4.47%, respectively. The average short-term borrowing rates for the nine months ended September 30, 2025 and 2024 were approximately 5.72% and 4.47%, respectively.

Long-term loans

As of September 30, 2025 and December 31, 2024, long-term loans were $4,727,324 and $4,672,806, respectively.

|  | September 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Rural Credit Union of Xushui District Loan 1 |  | $ | - |  |  | $ | 3,476,434 |
Rural Credit Union of Xushui District Loan 2 |  |  | - |  |  |  | 1,196,372 |
Rural Credit Union of Xushui District Loan 3 |  |  | 3,516,994 |  |  |  | - |
Rural Credit Union of Xushui District Loan 4 |  |  | 1,210,330 |  |  |  | - |
Total |  |  | 4,727,324 |  |  |  | 4,672,806 |
Less: Current portion of long-term loans |  |  | - |  |  |  | (3,559,902 | )
Long-term loans |  | $ | 4,727,324 |  |  | $ | 1,112,904 |

As of September 30, 2025, the Company’s long-term debt repayments for the next coming years were as follows:

|  | Amount |
Fiscal year |  |  |
Remainder of 2025 |  | $ | - |
2026 & after |  |  | 4,727,324 |
Total |  |  | 4,727,324 |

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 September 30, 2025 and December 31, 2024. 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. Effective from December 3, 2024, the interest rate was reduced to 6% per annum. The loan was fully repaid on August 15, 2025. As of September 30, 2025 and December 31, 2024, the total outstanding loan balance was $nil and $3,476,434. Out of the total outstanding loan balance, current portion amounted was $nil and $2,641,756, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of $nil and $834,678 is presented as non-current liabilities in the consolidated balance sheet as of September 30, 2025 and December 31, 2024, respectively.

17

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 is 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. Effective from December 3, 2024, the interest rate was reduced to 6% per annum. The loan was fully repaid on August 15, 2025. As of September 30, 2025 and December 31, 2024, total outstanding loan balance was $nil and $1,196,372, respectively. Out of the total outstanding loan balance, current portion amounted $nil and $918,146, which is presented as current liabilities and the remaining balance of $nil and $278,226 is presented as non-current liabilities in the consolidated balance sheet as of September 30, 2025 and December 31, 2024, respectively.

On August 15, 2025, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 3 years, which is due and payable on August 14, 2028. The loan is secured by certain of the Company’s manufacturing equipment with net book value of $nil as of September 30, 2025. Interest payment is due monthly and bore a rate of 6% per annum. As of September 30, 2025, the total outstanding loan balance was $3,516,994, which is presented as non-current liabilities in the consolidated balance sheet as of September 30, 2025.

On August 15, 2025, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 3 years, which is due and payable on August 14, 2028. The loan is guaranteed by an independent third party. Interest payment is due monthly and bore a rate of 6% per annum. As of September 30, 2025, the total outstanding loan balance was $1,210,330, which is presented as non-current liabilities in the consolidated balance sheet as of September 30, 2025.

Total interest expenses for the short-term bank loans and long-term loans for the three months ended September 30, 2025 and 2024 were $150,701 and $171,430, respectively. Total interest expenses for the short-term bank loans and long-term loans for the nine months ended September 30, 2025 and 2024 were $427,520 and $593,271, respectively.

(9) Related Party Transactions

Name |  | Relationship with the Company
Mr. Liu Zhenyong |  | Controlling shareholder and Chief Executive Officer of the Company
Mr. Ma Yundong |  | Shareholder of Tengsheng Paper and general manager of QianrongQianhui Hebei Technology Co., Ltd
Mr. Liu Xiaodong |  | Vice general manager of Dongfang Paper
Mr. Liu Zhenhui |  | Vice general manager of Dongfang Paper
Baoding Longping Waste Materials Recycling Co., Ltd (“Bao Ding Long Ping”) |  | 30% owned by Mr. Liu Zhenhui
Baoding XuanKang Renewable resources recycling Co., Ltd (“Bao Ding Xuan Kang”) |  | 100% owned by Mr. Liu Zhenhui
Baoding Yuehao Trading Co., Ltd. (“Bao Ding Yue Hao”) |  | 100% owned by Mr. Liu Zhenhui

Due from related parties

|  | September 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Bao Ding Long Ping |  | $ | 923,705 |  |  | $ | 920,008 |
Bao Ding Xuan Kang |  |  | 91,338 |  |  |  | - |
|  | $ | 1,015,043 |  |  | $ | 920,008 |

Amount due from Bao Ding Long Ping and Bao Ding Xuan Kang represent interest-free loans extended to these related parties.

18

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Due to related parties

|  | September 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Mr. Liu Zhenyong |  | $ | 189,948 |  |  | $ | 1,242 |
Mr. Ma Yundong |  |  | 47,955 |  |  |  | 40,835 |
Mr. Liu Xiaodong |  |  | 10,000 |  |  |  | - |
Bao Ding Xuan Kang |  |  | - |  |  |  | 1,391 |
Bao Ding Yue Hao |  |  | 126,662 |  |  |  |  |
|  | $ | 374,565 |  |  | $ | 43,468 |

Mr. Liu Zhenyong had loaned money to Dongfang Paper for working capital purposes over a period of time. On January 1, 2013, Dongfang Paper and Mr. Liu Zhenyong 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 $360,754 and $356,594 of interest were outstanding to Mr. Liu Zhenyong, which were recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet as of September 30, 2025 and December 31, 2024, respectively.

On December 10, 2014, Mr. Liu Zhenyong 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. Liu Zhenyong, 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, 2025 and December 31, 2024, approximately $42,221 and $41,734 of interest were outstanding to Mr. Liu Zhenyong, which was recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet.

On March 1, 2015, the Company entered an agreement with Mr. Liu Zhenyong which allows Dongfang Paper to borrow from the CEO an amount up to $17,201,342 (RMB120,000,000) for working capital purposes. The advances or funding under the agreement are due three years from the date each amount is funded. The loan is unsecured and carries an annual interest rate set on the basis of the primary lending rate of the People’s Bank of China at the time of the borrowing. On July 13, 2015, an unsecured amount of $4,324,636 was drawn from the facility. On October 14, 2016 an unsecured amount of $2,883,091 was drawn from the facility. In February 2018, the company repaid $1,507,432 to Mr. Liu Zhenyong. The loan would be originally due on July 12, 2018. Mr. Liu Zhenyong 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. Liu Zhenyong, 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, 2025 and December 31, 2024, the outstanding interest was $193,424 and $191,193, respectively, which was recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet.

In October 2022 and November 2022, the Company entered into two agreements with Mr. Zhenyong Liu, which allowed Mr. Liu Zhenyong to borrow from the Company an amount of $7,059,455 (RMB50,000,000) in total. The loans were unsecured and carried a fixed interest rate of 4.35% per annum. $4,235,673 (RMB30,000,000) was repaid by Mr. Liu Zhengyong in August 2023 and the remaining balance was repaid in December 2023. Interest income of the loan for the three and nine months ended September 30, 2025 and 2024 were $nil.

As of September 30, 2025 and December 31, 2024, total amount of loans due to Mr. Liu Zhenyong were $nil. The interest expense incurred for such related party loans were $nil for the three and nine months ended September 30, 2025 and 2024. The net interest owed to Mr. Liu Zhenyong was approximately $308,154 and $304,600, as of September 30, 2025 and December 31, 2024, respectively, which was recorded in other payables and accrued liabilities.

As of September 30, 2025 and December 31, 2024, amount due to Mr. Liu Zhenyong was $189,948 and $1,242, respectively, which mainly represents funds from Mr. Liu Zhenyong to pay for various expenses incurred in the U.S. The amount is due on demand with interest free.

As of September 30, 2025 and December 31, 2024, amount due to Mr. Ma Yundong was $47,955 and $40,835, respectively, which mainly represents funds from Mr. Ma Yundong to pay for various expenses incurred in Tengsheng Paper and Qianrong. The amount is due on demand with interest free.

As of September 30, 2025 and December 31, 2024, amount due to Mr. Liu Xiaodong was $10,000 and $nil, respectively, which represents fund from Mr. Liu Xiaodong to pay for expenses incurred in in the U.S. The amount is due on demand with interest free.

Amount due to Bao Ding Yue Hao represents an interest-free loan from this related party.

19

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(10) Other payables and accrued liabilities

|  | September 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Accrued electricity |  | $ | 117,945 |  |  | $ | 2,964 |
Accrued litigation costs |  |  | 498,439 |  |  |  | 461,855 |
Value-added tax payable |  |  | 414,459 |  |  |  | 21,868 |
Accrued interest to a related party |  |  | 308,154 |  |  |  | 304,600 |
Payable for purchase of property, plant and equipment |  |  | 10,836,652 |  |  |  | 10,711,678 |
Accrued commission to salesmen |  |  | 15,180 |  |  |  | 3,877 |
Accrued bank loan interest |  |  | 7,881 |  |  |  | 14,955 |
Others |  |  | 195,163 |  |  |  | 24,193 |
Totals |  | $ | 12,393,873 |  |  | $ | 11,545,990 |

(11) Derivative Liabilities

The Company analyzed the warrant for derivative accounting consideration under ASC 815, “Derivatives and Hedging, and hedging,” and determined that the instrument should be classified as a liability since the warrant becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.

The Company determined its derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of September 30, 2025. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each warrant is estimated using the Black-Scholes valuation model. The following weighted-average assumptions were used in the September 30, 2025:

|  | Nine months ended
|  | September 30, 2025
Expected term |  | 0.15 - 2.5
Expected average volatility |  | 94% - 132%
Expected dividend yield |  | -
Risk-free interest rate |  | 0.45% - 3.98%

The following table summarizes the changes in the derivative liabilities during the nine months ended September 30, 2025: Fair Value Measurements Using Significant Observable Inputs (Level 3)

Balance at December 31, 2024 |  | $ | 5,651 |
Change in fair value of derivative liability |  |  | (5,651 | )
Balance at September 30, 2025 |  | $ | - |

20

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(12) Common Stock

Issuance of common stock to investors

On May 13, 2025, the Company entered into a securities purchase agreement with an institutional investor (the “Purchaser”), pursuant to which the Company agreed to sell and issue to the Purchaser, in a public offering that included certain additional other purchasers, an aggregate of 6,899,500 shares of common stock, par value $0.001, at a purchase price of $0.20 per share, for aggregate gross proceeds to the Company of approximately $1.4 million, before deducting the placement agent fees and estimated offering expenses payable by the Company.

(13) Warrants

On April 29, 2020, the Company and certain institutional investors entered into a securities purchase agreement, as amended on May 4, 2020 (the “2020 Purchase Agreement”), pursuant to which the Company agreed to sell to such investors an aggregate of 440,000 shares of common stock and warrants to purchase up to 440,000 shares of common stock in a concurrent private placement (the “May 2020 Warrants”). The exercise price of the May 2020 Warrant is $7.425 per share. These warrants become exercisable on July 23, 2020 and have a term of exercise equal to five years 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 nil May 2020 Warrants were outstanding as of September 30, 2025.

On January 20, 2021, the Company offered and sold to certain institutional investors an aggregate of 2,618,182 shares of common stock and 2,618,182 warrants to purchase up to 2,618,182 shares of common stock (the “January 2021 Warrants”). The January 2021 Warrants became exercisable on January 20, 2021 at an exercise price of $5.5 and will expire on January 20, 2026. 1,410,690 January 2021 Warrants were exercised in January and February of 2021 at the exercise price of $5.5 per share. 1,207,492 January 2021 Warrants were outstanding as of September 30, 2025.

On March 1, 2021, the Company offered and sold to the public investors an aggregate of 2,927,786 shares of common stock and 1,463,893 warrants to purchase up to 1,463,893 shares of common stock (the “March 2021 Warrants”). The March 2021 Warrants became exercisable on March 1, 2021 at an exercise price of $7.5 and will expire on March 1, 2026. 6,750 March 2021 Warrants were exercised in January and March 2021 at the exercise price of $7.5 per share and 1,457,143 March 2021 Warrants were outstanding as of September 30, 2025.

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

21

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A summary of stock warrant activities is as below:

|  | Nine months ended September 30, 2025 |
|  | Number |  |  | Weight average exercise price |
Outstanding and exercisable at beginning of the period |  |  | 3,016,635 |  |  | $ | 6.6907 |
Issued during the period |  |  | - |  |  |  | - |
Exercised during the period |  |  | - |  |  |  | - |
Expired during the period |  |  | (352,000 | ) |  |  | 7.425 |
Outstanding and exercisable at end of the period |  |  | 2,664,635 |  |  | $ | 6.5937 |

The following table summarizes information relating to outstanding and exercisable warrants as of September 30, 2025:

Warrants Outstanding |  |  | Warrants Exercisable |
Number of Shares |  |  | Weighted Average Remaining Contractual life (in years) |  |  | Weighted Average Exercise Price |  |  | Number of Shares |  |  | Weighted Average Exercise Price |
| 2,664,635 |  |  |  | 0.37 |  |  | $ | 6.5937 |  |  |  | 2,664,635 |  |  | $ | 6.5937 |

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, 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, 2025 and December 31, 2024 are nil.

(14) Earnings Per Share

For the three months ended September 30, 2025 and 2024, basic and diluted net loss per share are calculated as follows:

|  | Three Months Ended September 30, |
|  | 2025 |  |  | 2024 |
Basic loss per share |  |  |  |  |  |
Net loss for the period - numerator |  | $ | (1,448,247 | ) |  | $ | (1,973,946 | )
Weighted average common stock outstanding - denominator |  |  | 13,617,133 |  |  |  | 10,065,920 |
Net loss per share |  | $ | (0.11 | ) |  | $ | (0.20 | )
Diluted loss per share |  |  |  |  |  |  |  |
Net loss for the period - numerator |  | $ | (1,448,247 | ) |  | $ | (1,973,946 | )
Weighted average common stock outstanding - denominator |  |  | 13,617,133 |  |  |  | 10,065,920 |
Effect of dilution |  |  | - |  |  |  | - |
Weighted average common stock outstanding - denominator |  |  | 13,617,133 |  |  |  | 10,065,920 |
Diluted loss per share |  | $ | (0.11 | ) |  | $ | (0.20 | )

22

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the nine months ended September 30, 2025 and 2024, basic and diluted net loss per share are calculated as follows:

|  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |
Basic loss per share |  |  |  |  |  |
Net loss for the period - numerator |  | $ | (6,903,858 | ) |  | $ | (5,798,229 | )
Weighted average common stock outstanding - denominator |  |  | 13,617,133 |  |  |  | 10,065,920 |
Net loss per share |  | $ | (0.51 | ) |  | $ | (0.58 | )
Diluted loss per share |  |  |  |  |  |  |  |
Net loss for the period - numerator |  | $ | (6,903,858 | ) |  | $ | (5,798,229 | )
Weighted average common stock outstanding - denominator |  |  | 13,617,133 |  |  |  | 10,065,920 |
Effect of dilution |  |  | - |  |  |  | - |
Weighted average common stock outstanding - denominator |  |  | 13,617,133 |  |  |  | 10,065,920 |
Diluted loss per share |  | $ | (0.51 | ) |  | $ | (0.58 | )

(15) Income Taxes

United States

The Company may be subject to the United States of America Tax laws at a tax rate of 21%. No provision for the US federal income taxes has been made as the Company had no US taxable income for the third quarter ended September 30, 2025, and management believes that its earnings are permanently invested in the PRC.

PRC

Dongfang Paper and Baoding Shengde are PRC operating companies and are subject to PRC Enterprise Income Tax. Pursuant to the PRC New Enterprise Income Tax Law, Enterprise Income Tax is generally imposed at a statutory rate of 25%.

The provisions for income taxes for three months ended September 30, 2025 and 2024 were as follows:

|  | Three Months Ended |
|  | September 30, |
|  | 2025 |  |  | 2024 |
Provision for Income Taxes |  |  |  |  |  |
Current Tax Provision U.S. |  | $ | - |  |  | $ | - |
Current Tax Provision PRC |  |  | 306,362 |  |  |  | 345,710 |
Deferred Tax Provision PRC |  |  | - |  |  |  | - |
Total Income Tax Expenses (Benefits) |  | $ | 306,362 |  |  | $ | 345,710 |

23

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The provisions for income taxes for nine months ended September 30, 2025 and 2024 were as follows:

|  | Nine Months Ended |
|  | September 30, |
|  | 2025 |  |  | 2024 |
Provision for Income Taxes |  |  |  |  |  |
Current Tax Provision U.S. |  | $ | 45,991 |  |  | $ | 36,793 |
Current Tax Provision PRC |  |  | 307,199 |  |  |  | 762,480 |
Deferred Tax Provision PRC |  |  | - |  |  |  | - |
Total Income Tax Expenses (Benefits) |  | $ | 353,190 |  |  | $ | 799,273 |

In addition to the reversible future PRC income tax benefits stemming from the timing differences of items such as recognition of asset disposal gain or loss and asset depreciation, the Company was incorporated in the United States and incurred net operating losses of approximately $568,358 and $62,499 for U.S. income tax purposes for the years ended December 31, 2024 and 2023, respectively. The net operating loss carried forward may be available to reduce future years’ taxable income. These carry forwards would expire, if not utilized, during the period of 2030 through 2035. As of September 30, 2025, management believed that the realization of all the U.S. income tax benefits from these losses, which generally would generate a deferred tax asset if it can be expected to be utilized in the future, appears not more than likely due to the Company’s limited operating history and continuing losses for United States income tax purposes. Accordingly, as of September 30, 2025 and December 31, 2024, the Company provided a 100% valuation allowance on the U.S. deferred tax asset benefit to reduce the total deferred tax asset to the amount realizable for the PRC income tax purposes. Management reviews this valuation allowance periodically and will make adjustments as warranted. A summary of the otherwise deductible (or taxable) deferred tax items is as follows:

|  | September 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Deferred tax assets (liabilities) |  |  |  |  |  |
Depreciation and amortization of property, plant and equipment |  | $ | 20,206,572 |  |  | $ | 18,875,162 |
Impairment of property, plant and equipment |  |  | 583,501 |  |  |  | 602,139 |
Impairment of inventory |  |  | 175,732 |  |  |  | 181,530 |
Provision for doubtful debts |  |  | 235,367 |  |  |  | 446,064 |
Miscellaneous |  |  | 268,800 |  |  |  | 247,969 |
Net operating loss carryover of PRC company |  |  | 476,920 |  |  |  | 432,365 |
(Gain) Loss on asset disposal |  |  | (63,860 | ) |  |  | (63,123) |
Total deferred tax assets |  |  | 21,883,032 |  |  |  | 20,722,106 |
Less: Valuation allowance |  |  | (21,883,032 | ) |  |  | (20,722,106 | )
Total deferred tax assets, net |  | $ | - |  |  |  | - |

24

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

During the three months ended September 30, 2025 and 2024, the effective income tax rate was estimated by the Company to be -26.8% and -21.2%, respectively.

|  | Three Months Ended |
|  | September 30, |
|  | 2025 |  |  | 2024 |
PRC Statutory rate |  |  | 25.0 | % |  |  | 25.0 | %
Effect of different tax jurisdiction |  |  |  |  |  |  |  |
Effect of tax and book difference |  |  | (37.6 | )% |  |  | 10.9 | %
Change in valuation allowance |  |  | (14.2 | )% |  |  | (57.1 | )%
Effective income tax rate |  |  | (26.8 | )% |  |  | (21.2 | )%

During the nine months ended September 30, 2025 and 2024, the effective income tax rate was estimated by the Company to be -5.4% and -16.0%, respectively.

|  | Nine Months Ended |
|  | September 30, |
|  | 2025 |  |  | 2024 |
PRC Statutory rate |  |  | 25.0 | % |  |  | 25.0 | %
Effect of different tax jurisdiction |  |  |  |  |  |  |  |
Effect of tax and book difference |  |  | (12.7 | )% |  |  | 2.1 | %
Change in valuation allowance |  |  | (17.7 | )% |  |  | (43.1 | )%
Effective income tax rate |  |  | (5.4 | )% |  |  | (16.0 | )%

As of September 30, 2025, except for the one-time transition tax under the 2017 TCJA which imposes a U.S. tax liability on all unrepatriated foreign E&Ps, the Company does not believe that its future dividend policy and the available U.S. tax deductions and net operating losses will cause the Company to recognize any other substantial current U.S. federal or state corporate income tax liability in the near future. Nor does it believe that the amount of the repatriation of the VIE’s earnings and profits for purposes of paying dividends will change the Company’s position that its PRC subsidiary Baoding Shengde and the VIE, Dongfang Paper are considered or are expected to be indefinitely reinvested offshore to support our future capacity expansion. If these earnings are repatriated to the U.S. resulting in U.S. taxable income in the future, or if it is determined that such earnings are to be remitted in the foreseeable future, additional tax provisions would be required.

The Company has adopted ASC Topic 740-10-05, Income Taxes. To date, the adoption of this interpretation has not impacted the Company’s financial position, results of operations, or cash flows. The Company performed self-assessment and the Company’s liability for income taxes includes the liability for unrecognized tax benefits, interest and penalties which relate to tax years still subject to review by taxing authorities. Audit periods remain open for review until the statute of limitations has passed, which in the PRC is usually 5 years. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of September 30, 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 three and nine months ended September 30, 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.

25

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(16) Stock Incentive Plans

2023 Incentive Stock Plan

On October 31, 2023, the Company’s Annual General Meeting adopted and approved the 2023 Omnibus Equity Incentive Plan of IT Tech Packaging, Inc. (the”2023 ISP”). Under the 2023 ISP, the Company has reserved a total of 1,500,000 shares of common stock for issuance as or under awards to be made to the directors, officers, employees and/or consultants of the Company and its subsidiaries.

All shares of common stock under the 2023 ISP, including shares originally authorized by equity holders and shares remaining for future issuance as of September 30, 2025, have been reserved.

(17) Commitments and Contingencies

Xushui Land Lease

The Company leases 32.95 acres of land from a local government in Xushui District, Baoding City, Hebei, China through a real estate lease with a 30- year term, which expires on December 31, 2031. The lease requires an annual rental payment of approximately $16,764 (RMB120,000). This lease is renewable at the end of the 30-year term.

September 30, |  | Amount |
2026 |  |  | 16,888 |
2027 |  |  | 16,888 |
2028 |  |  | 16,888 |
2029 |  |  | 16,888 |
2030 |  |  | 16,888 |
Thereafter |  |  | 21,110 |
Total operating lease payments |  |  | 105,552 |

Sale of Headquarters Compound Real Properties

On August 7, 2013, the Company’s Audit Committee and the Board of Directors approved the sale of the land use right of the Headquarters Compound (the “LUR”), the office building and essentially all industrial-use buildings in the Headquarters Compound (the “Industrial Buildings”), and three employee dormitory buildings located within the Headquarters Compound (the “Dormitories”) to Hebei Fangsheng for cash prices of approximately $2.77 million, $1.15 million, and $4.31 million respectively. Sales of the LUR and the Industrial Buildings were completed in year 2013.

In connection with the sale of the Industrial Buildings, Hebei Fangsheng agreed to lease the Industrial Buildings back to the Company for its original use with an annual rental payment of approximately $139,698 (RMB1,000,000). The lease was recorded in lease assets and liabilities in the consolidated balance sheet as of September 30, 2025.

26

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Capital commitment

As of September 30, 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 Buildings. Total outstanding commitments under these contracts were $3,478,995 and $3,436,091 as of September 30, 2025 and December 31, 2024, respectively. The Company expected to pay off all the balances within 1-3 years.

Guarantees and Indemnities

The Company agreed with Baoding Huanrun Trading Co., a major supplier of raw materials, to guarantee certain obligations of this third party, and as of September 30, 2025 and December 31, 2024, the Company guaranteed its long-term loan from financial institutions amounting to $4,362,818 (RMB31,000,000) that will mature at various times in 2026. If Huanrun Trading Co., were to become insolvent, the Company could be materially adversely affected.

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”). In December 2023, the plaintiff sought property preservation measures, requesting the PRC Court to freeze totaling RMB3.35 million worth of bank deposits held by Jie Ping and Tengsheng Paper, which was granted by the PRC Court. On June 14, 2024, the PRC Court ordered the defendants to repay the principal of the loan in the amount of RMB3,320,000 to the plaintiff, and Tengsheng Paper was jointly liable for repayment. As of September 30, 2025, a total of RMB6.70 million worth of bank deposits of Jie Ping and Tengsheng Paper was freezed. Accrued litigation costs of $498,439 was recorded as current liabilities of consolidated balance sheet as of September 30, 2025.

(18) Segment Reporting

Since March 10, 2010, Baoding Shengde started its operations and thereafter the Company manages its operations through three business operating segments: Dongfang Paper and Tengsheng Paper, which produces offset printing paper, corrugating medium paper and tissue paper, and Baoding Shengde, which produces face masks and digital photo paper. They are managed separately because each business requires different technology and marketing strategies.

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision making group, in deciding how to allocate resources and in assessing performance. The Company’s CODM is Mr. Liu Zhengyong, the CEO.

The Company evaluates performance of its operating segments based on net income. Administrative functions such as finance, treasury, and information systems are centralized. However, where applicable, portions of the administrative function expenses are allocated among the operating segments based on gross revenue generated. The operating segments do share facilities in Xushui County, Baoding City, Hebei Province, China. All sales were sold to customers located in the PRC.

27

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Summarized financial information for the three reportable segments is as follows:

|  | Three Months Ended |
|  | September 30, 2025 |
|  | Dongfang |  |  | Tengsheng |  |  | Baoding |  |  | Not Attributable |  |  | Elimination of |  |  | Enterprise-wide, |
|  | Paper |  |  | Paper |  |  | Shengde |  |  | to Segments |  |  | Inter-segment |  |  | consolidated |
Revenues |  | $ | 25,601,344 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 25,601,344 |
Gross profit |  |  | 2,021,846 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,021,846 |
Depreciation and amortization |  |  | 1,370,450 |  |  |  | 2,202,616 |  |  |  | 1,351 |  |  |  | - |  |  |  | - |  |  |  | 3,574,417 |
Gain from disposal and impairment of property, plant and equipment |  |  | (3,709 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (3,709 | )
Interest income |  |  | 872 |  |  |  | 134 |  |  |  | 70 |  |  |  | 70 |  |  |  | - |  |  |  | 1,146 |
Interest expense |  |  | 80,615 |  |  |  | - |  |  |  | 66,854 |  |  |  | 3,233 |  |  |  | - |  |  |  | 150,702 |
Income tax expense |  |  | 306,362 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 306,362 |
Net income (loss) |  |  | 1,015,264 |  |  |  | (2,207,633 | ) |  |  | (86,040 | ) |  |  | (169,838 | ) |  |  | - |  |  |  | (1,448,247 | )

|  | Three Months Ended |
|  | September 30, 2024 |
|  | Dongfang |  |  | Tengsheng |  |  | Baoding |  |  | Not Attributable |  |  | Elimination of |  |  | Enterprise-wide, |
|  | Paper |  |  | Paper |  |  | Shengde |  |  | to Segments |  |  | Inter-segment |  |  | consolidated |
Revenues |  | $ | 25,044,376 |  |  | $ | 37,124 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 25,081,500 |
Gross profit |  |  | 1,880,540 |  |  |  | 37,124 |  |  |  | - |  |  |  | (283 | ) |  |  | - |  |  |  | 1,917,381 |
Depreciation and amortization |  |  | 985,358 |  |  |  | 2,105,088 |  |  |  | 392,852 |  |  |  | - |  |  |  | - |  |  |  | 3,483,298 |
Interest income |  |  | 6,678 |  |  |  | 461 |  |  |  | 155 |  |  |  | 19 |  |  |  | - |  |  |  | 7,313 |
Interest expense |  |  | 90,058 |  |  |  | 4,440 |  |  |  | 73,252 |  |  |  | 3,680 |  |  |  | - |  |  |  | 171,430 |
Income tax expense |  |  | 345,710 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 345,710 |
Net income (loss) |  |  | 842,424 |  |  |  | (2,555,935 | ) |  |  | (90,348 | ) |  |  | (170,087 | ) |  |  | - |  |  |  | (1,973,946 | )

|  | Nine Months Ended |
|  | September 30, 2025 |
|  | Dongfang |  |  | Tengsheng |  |  | Baoding |  |  | Not Attributable |  |  | Elimination of |  |  | Enterprise-wide, |
|  | Paper |  |  | Paper |  |  | Shengde |  |  | to Segments |  |  | Inter-segment |  |  | consolidated |
Revenues |  | $ | 61,293,251 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 61,293,251 |
Gross profit |  |  | 3,379,677 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,379,677 |
Depreciation and amortization |  |  | 4,091,060 |  |  |  | 6,572,139 |  |  |  | 1,800 |  |  |  | - |  |  |  | - |  |  |  | 10,664,999 |
Gain on impairment of assets |  |  | (3,709 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (3,709 | )
Interest income |  |  | 3,287 |  |  |  | 612 |  |  |  | 114 |  |  |  | 85 |  |  |  | - |  |  |  | 4,098 |
Interest expense |  |  | 233,413 |  |  |  | - |  |  |  | 183,656 |  |  |  | 10,451 |  |  |  | - |  |  |  | 427,520 |
Income tax expense |  |  | 307,199 |  |  |  | - |  |  |  | - |  |  |  | 45,991 |  |  |  | - |  |  |  | 353,190 |
Net income (loss) |  |  | 596,493 |  |  |  | (6,621,654 | ) |  |  | (227,376 | ) |  |  | (651,321 | ) |  |  | - |  |  |  | (6,903,858 | )

28

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

|  | Nine Months Ended |
|  | September 30, 2024 |
|  | Dongfang |  |  | Tengsheng |  |  | Baoding |  |  | Not Attributable |  |  | Elimination of |  |  | Enterprise-wide, |
|  | Paper |  |  | Paper |  |  | Shengde |  |  | to Segments |  |  | Inter-segment |  |  | consolidated |
Revenues |  | $ | 58,083,990 |  |  |  | 111,139 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 58,195,129 |
Gross profit |  |  | 5,471,201 |  |  |  | 110,876 |  |  |  | - |  |  |  | (283 | ) |  |  | - |  |  |  | 5,581,794 |
Depreciation and amortization |  |  | 2,867,941 |  |  |  | 6,302,167 |  |  |  | 1,176,073 |  |  |  | - |  |  |  | - |  |  |  | 10,346,181 |
Interest income |  |  | 10,228 |  |  |  | 1,545 |  |  |  | 498 |  |  |  | 32 |  |  |  | - |  |  |  | 12,303 |
Interest expense |  |  | 269,958 |  |  |  | 94,557 |  |  |  | 217,620 |  |  |  | 11,136 |  |  |  | - |  |  |  | 593,271 |
Income tax expense |  |  | 762,480 |  |  |  | - |  |  |  | - |  |  |  | 36,793 |  |  |  | - |  |  |  | 799,273 |
Net income (loss) |  |  | 1,910,971 |  |  |  | (6,790,051 | ) |  |  | (227,256 | ) |  |  | (691,893 | ) |  |  | - |  |  |  | (5,798,229 | )

|  | As of September 30, 2025 |
|  | Dongfang |  |  | Tengsheng |  |  | Baoding |  |  | Not Attributable |  |  | Elimination of |  |  | Enterprise-wide, |
|  | Paper |  |  | Paper |  |  | Shengde |  |  | to Segments |  |  | Inter-segment |  |  | consolidated |
Total assets |  | $ | 57,685,296 |  |  |  | 111,136,543 |  |  |  | 5,322,848 |  |  |  | 1,553,505 |  |  |  | - |  |  |  | 175,698,192 |

|  | As of December 31, 2024 |
|  | Dongfang |  |  | Tengsheng |  |  | Baoding |  |  | Not Attributable |  |  | Elimination of |  |  | Enterprise- wide, |
|  | Paper |  |  | Paper |  |  | Shengde |  |  | to Segments |  |  | Inter-segment |  |  | consolidated |
Total assets |  | $ | 54,180,471 |  |  |  | 116,390,854 |  |  |  | 6,020,713 |  |  |  | 954,748 |  |  |  | - |  |  |  | 177,546,786 |

29

IT TECH PACKAGING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(19) Concentration and Major Customers and Suppliers

For the three and nine months ended September 30, 2025 and 2024, the Company had no single customer contributed over 10% of total sales.

For the three months ended September 30, 2025, the Company had three major suppliers accounted for 71%, 20% and 7% of total purchases. For the three months ended September 30, 2024, the Company had three major suppliers accounted for 73%, 18% and 7% of total purchases.

For the nine months ended September 30, 2025, the Company had three major suppliers accounted for 74%, 18% and 6% 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.

(20) Concentration of Credit Risk

Financial instruments for which the Company is potentially subject to concentration of credit risk consist principally of cash. The Company places its cash in reputable financial institutions in the PRC and the United States. Although it is generally understood that the PRC central government stands behind all of the banks in China in the event of bank failure, there is no deposit insurance system in China that is similar to the protection provided by the Federal Deposit Insurance Corporation (“FDIC”) of the United States as of as of September 30, 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 RMB500,000 ($70,368) 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, 2025 and December 31, 2024, while for the cash placed in financial institutions in the PRC, the balances exceeding the maximum coverage of RMB500,000 amounted to RMB61,962,700 ($8,720,386) as of September 30, 2025.

(21) Risks and Uncertainties

The Company is subject to substantial risks from, among other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, foreign currency exchange rates, and operating in the PRC under its various laws and restrictions.

(22) Subsequent Event

On October 31, 2025, the Company’s Annual General Meeting adopted and approved the 2025 Omnibus Equity Incentive Plan of IT Tech Packaging, Inc. (the”2025 ISP”). Under the 2025 ISP, the Company has reserved a total of 1,500,000 shares of common stock for issuance as or under awards to be made to the directors, key management employees and consultants of the Company and its subsidiaries.

30

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Cautionary Notice Regarding Forward-Looking Statements

The following discussion of the financial condition and results of operations of the Company for the periods ended September 30, 2025 and 2024 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.

We make certain forward-looking statements in this report. Statements concerning our future operations, prospects, strategies, financial condition, future economic performance (including growth and earnings), demand for our products, and other statements of our plans, beliefs, or expectations, including the statements contained under the captions “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as captions elsewhere in this document, are forward-looking statements. In some cases these statements are identifiable through the use of words such as “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan”, “project”, “target”, “can”, “could”, “may”, “should”, “will”, “would”, and similar expressions. We intend such forward-looking statements to be covered by the safe harbor provisions contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and in Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements we make are not guarantees of future performance and are subject to various assumptions, risks, and other factors that could cause actual results to differ materially from those suggested by these forward-looking statements. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. Indeed, it is likely that some of our assumptions may prove to be incorrect. Our actual results and financial position may vary from those projected or implied in the forward-looking statements and the variances may be material. You are cautioned not to place undue reliance on such forward-looking statements. These risks and uncertainties, together with the other risks described from time to time in reports and documents that we file with the Securities and Exchange Commission (the “SEC”) should be considered in evaluating forward-looking statements. In evaluating the forward-looking statements contained in this report, you should consider various factors, including, without limitation, the following: (a) those risks and uncertainties related to general economic conditions, (b) whether we are able to manage our planned growth efficiently and operate profitably, (c) whether we are able to generate sufficient revenues or obtain financing to sustain and grow our operations, and (d) whether we are able to successfully fulfill our primary requirements for cash. We assume no obligation to update forward-looking statements, except as otherwise required under federal securities laws.

Results of Operations

Comparison of the Three months ended September 30, 2025 and 2024

Revenue for the three months ended September 30, 2025 was $25,601,344, an increase of $519,844, or 2.07%, from $25,081,500 for the same period in the previous year. This was mainly due to the increase of sales volume of corrugating medium paper (“CMP”) and the increase in average selling prices (“ASP”) of CMP.

31

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

Revenue from sales of offset printing paper, CMP and tissue paper products for the three months ended September 30, 2025 was $25,601,344, representing an increase of $556,969, or 2.22%, from $25,044,375 for the third quarter of 2024. Total offset printing paper, CMP and tissue paper products sold during the three months ended September 30, 2025 amounted to 75,686 tonnes, representing an increase of 802 tonnes, or 1.07%, compared to 74,884 tonnes sold during the comparable period in the previous year. Production of offset printing paper and tissue paper products was suspended from 2024 through September 2025 and is expected to resume at the end of 2025. The changes in revenue dollar amount and in quantity sold for the three months ended September 30, 2025 and 2024 are summarized as follows:

|  | Three Months Ended |  |  | Three Months Ended |  |  |  |  |  | Percentage |
|  | September 30, 2025 |  |  | September 30, 2024 |  |  | Change in |  |  | Change |
Sales Revenue |  | Quantity (Tonne) |  |  | Amount |  |  | Quantity (Tonne) |  |  | Amount |  |  | Quantity (Tonne) |  |  | Amount |  |  | Quantity |  |  | Amount |
Regular CMP |  |  | 62,811 |  |  | $ | 21,337,110 |  |  |  | 62,121 |  |  | $ | 20,910,061 |  |  |  | 690 |  |  | $ | 427,049 |  |  |  | 1.11 | % |  |  | 2.04 | %
Light-Weight CMP |  |  | 12,875 |  |  | $ | 4,264,234 |  |  |  | 12,763 |  |  | $ | 4,134,314 |  |  |  | 112 |  |  | $ | 129,920 |  |  |  | 0.88 | % |  |  | 3.14 | %
Total CMP |  |  | 75,686 |  |  | $ | 25,601,344 |  |  |  | 74,884 |  |  | $ | 25,044,375 |  |  |  | 802 |  |  | $ | 556,969 |  |  |  | 1.07 | % |  |  | 2.22 | %
Offset Printing Paper |  |  | - |  |  | $ | - |  |  |  | - |  |  | $ | - |  |  |  | - |  |  | $ | - |  |  |  | - | % |  |  | - | %
Tissue Paper Products |  |  | - |  |  | $ | - |  |  |  | - |  |  | $ | - |  |  |  | - |  |  | $ | - |  |  |  | - | % |  |  | - | %
Total CMP, Offset Printing Paper and Tissue Paper Revenue |  |  | 75,686 |  |  | $ | 25,601,344 |  |  |  | 74,884 |  |  | $ | 25,044,375 |  |  |  | 802 |  |  | $ | 556,969 |  |  |  | 1.07 | % |  |  | 2.22 | %

Monthly sales revenue for the 24 months ended September 30, 2025, is summarized below:

32

The average selling prices (ASPs) for our main products in the three months ended September 30, 2025 and 2024 are summarized as follows:

|  | Offset Printing Paper ASP |  |  | Regular CMP ASP |  |  | Light-Weight CMP ASP |  |  | Tissue Paper Products ASP |
Three Months ended September 30, 2025 |  | $ | - |  |  | $ | 340 |  |  | $ | 331 |  |  | $ | - |
Three Months ended September 30, 2024 |  | $ | - |  |  | $ | 337 |  |  | $ | 324 |  |  | $ | - |
Increase from comparable period in the previous year |  | $ | - |  |  | $ | 3 |  |  | $ | 7 |  |  | $ | - |
Increase by percentage |  |  | - | % |  |  | 0.89 | % |  |  | 2.16 | % |  |  | - | %

The following chart shows the month-by-month ASPs for the 24-month period ended September 30, 2025:

Corrugating Medium Paper

Revenue from CMP amounted to $25,601,344 (100.00% of the total offset printing paper, CMP and tissue paper products revenues) for the three months ended September 30, 2025, representing an increase of $556,969, or 2.22%, from $25,044,375 for the comparable period in 2024.

We sold 75,686 tonnes of CMP in the three months ended September 30, 2025 as compared to 74,884 tonnes for the same period in 2024, representing a 1.07% increase in quantity sold.

33

The ASP for regular CMP increased from $337/tonne for the three months ended September 30, 2024, to $340/tonne for the three months ended September 30, 2025, representing a 0.89% increase. ASP in RMB for regular CMP for the third quarter of 2024 and 2025 was RMB2,386 and RMB2,422, respectively, representing a 1.51% increase. The quantity of regular CMP sold increased by 690 tonnes, from 62,121 tonnes in the third quarter of 2024 to 62,811 tonnes in the third quarter of 2025.

The ASP for light-weight CMP increased from $324/tonne for the three months ended September 30, 2024 to $331/tonne for the three months ended September 30, 2025, representing a 2.16% increase. ASP in RMB for light-weight CMP for the third quarter of 2024 and 2025 was RMB2,297 and RMB2,362, respectively, representing a 2.84% increase. The quantity of light-weight CMP sold increased by 112 tonnes, from 12,763 tonnes in the third quarter of 2024, to 12,875 tonnes in the third quarter of 2025.

Our PM6 production line, which produces regular CMP, has a designated capacity of 360,000 tonnes /year. The utilization rates for the third quarter of 2025 and 2024 were 69.41% and 68.96%, respectively, representing an increase of 0.45%.

34

Cost of Sales

Total cost of sales for CMP, offset printing paper and tissue paper products for the quarter ended September 30, 2025 was $23,579,498, an increase of $415,663, or 1.79%, from $23,163,835 for the comparable period in 2024. This was mainly due to the increase in the sales quantity of CMP.

Cost of sales for CMP was $23,579,498 for the quarter ended September 30, 2025, as compared to $23,163,835 for the comparable period in 2024. The increase in the cost of sales of $415,663 for CMP was due to the increase in sales volume of CMP and slight increase in average unit cost of sales of CMP. Average cost of sales per tonne for CMP increased by 0.97%, from $309 in the third quarter of 2024 to $312 in the third quarter of 2025. The increase in average cost of sales was mainly attributable to the higher average unit gas costs in the third quarter of 2025 compared to the third quarter of 2024. Changes in cost of sales and cost per tonne by product for the quarters ended September 30, 2025 and 2024 is summarized below:

|  | Three Months Ended |  |  | Three Months Ended |  |  |  |  |  | Change in |
|  | September 30, 2025 |  |  | September 30, 2024 |  |  | Change in |  |  | percentage |
|  | Cost of Sales |  |  | Cost per Tonne |  |  | Cost of Sales |  |  | Cost per Tonne |  |  | Cost of Sales |  |  | Cost per Tonne |  |  | Cost of Sales |  |  | Cost per Tone |
Regular CMP |  | $ | 19,649,683 |  |  | $ | 313 |  |  | $ | 19,332,518 |  |  | $ | 311 |  |  | $ | 317,165 |  |  | $ | 2 |  |  |  | 1.64 | % |  |  | 0.64 | %
Light-Weight CMP |  | $ | 3,929,815 |  |  | $ | 305 |  |  | $ | 3,831,317 |  |  | $ | 300 |  |  | $ | 98,498 |  |  | $ | 5 |  |  |  | 2.57 | % |  |  | 1.67 | %
Total CMP |  | $ | 23,579,498 |  |  | $ | 312 |  |  | $ | 23,163,835 |  |  | $ | 309 |  |  | $ | 415,663 |  |  | $ | 3 |  |  |  | 1.79 | % |  |  | 0.97 | %
Offset Printing Paper |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  |  | - | % |  |  | - | %
Tissue Paper Products |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  |  | - | % |  |  | - | %
Total CMP, Offset Printing Paper and Tissue Paper |  | $ | 23,579,498 |  |  | $ | n/a |  |  | $ | 23,163,835 |  |  | $ | n/a |  |  | $ | 415,663 |  |  | $ | n/a |  |  |  | 1.79 | % |  |  | n/a |

Our average unit purchase costs (net of applicable value added tax) of recycled paper board and recycled white scrap paper in the three months ended September 30, 2025 were RMB 1,211/tonne (approximately $169/tonne), as compared to RMB 1,214/tonne (approximately $171/tonne) for the three months ended September 30, 2024. These changes (in US dollars) represent a year-over-year decrease of 1.17% for the recycled paper board. We use domestic recycled paper (sourced mainly from the Beijing-Tianjin metropolitan area) exclusively. Although we do not rely on imported recycled paper, the pricing of which tends to be more volatile than domestic recycled paper, our experience suggests that the pricing of domestic recycled paper bears some correlation to the pricing of imported recycled paper.

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The pricing trends of our major raw materials for the 24-month period from October 2023 to September 2025 are shown below:

Electricity and gas are our two main energy sources. Electricity and gas accounted for approximately 5% and 14.8% of total sales in the third quarter of 2025, respectively, compared to 5% and 14.3% of total sales in the third quarter of 2024. The monthly energy cost as a percentage of total monthly sales of our main paper products for the 24 months ended September 30, 2025 is summarized as follows:

Gross Profit

Gross profit for the three months ended September 30, 2025 was $2,021,846 (representing 7.90% of the total revenue), representing an increase of $104,465, or 5.45%, from the gross profit of $1,917,381 (representing 7.64% of the total revenue) for the three months ended September 30, 2024, as a result of the factors described above.

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Offset Printing Paper, CMP and Tissue Paper Products

Gross profit for offset printing paper, CMP and tissue paper products for the three months ended September 30, 2025 was $2,021,846, representing an increase of $141,306, or 7.51%, from the gross profit of $1,880,540 for the three months ended September 30, 2024. The increase was mainly the result of the factors discussed above.

The overall gross profit margin for offset printing paper, CMP and tissue paper products increased by 0.39 percentage points, from 7.51% for the three months ended September 30, 2024, to 7.90% for the three months ended September 30, 2025.

The gross profit margin for regular CMP for the three months ended September 30, 2025 was 7.91%, or 0.37 percentage points higher, as compared to gross profit margin of 7.54% for the three months ended September 30, 2024. Such increase was mainly due to the increase in ASP of regular CMP in the third quarter of 2025.

The gross profit margin for light-weight CMP for the three months ended September 30, 2025 was 7.84%, or 0.51 percentage points higher, as compared to gross profit margin of 7.33% for the three months ended September 30, 2024. The increase was mainly due to the increase in ASP of light-weight CMP in the third quarter of 2025.

Monthly gross profit margins on the sales of our CMP and offset printing paper for the 24-month period ended September 30, 2025 are as follows:

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended September 30, 2025 were $3,018,187, a decrease of $363,315, or 10.74% from $3,381,502 for the three months ended September 30, 2024. The decrease was mainly due to the accrued liability of $0.47 million for legal proceedings the Company was jointly liable for repayment of a loan in the third quarter of 2024.

Loss from Operations

Operating loss for the quarter ended September 30, 2025 was $992,632, a decrease of loss of $471,489, or 32.20%, from $1,464,121 for the quarter ended September 30, 2024. The decrease was primarily due to the increase in gross profit and the decrease in selling, general and administrative expenses.

Other Income and Expenses

Interest expense for the three months ended September 30, 2025 decreased by $20,728, from $171,430 for the three months ended September 30, 2024, to $150,702. The Company had short-term and long-term interest-bearing loans, related party loans and leasing obligations that aggregated $9,821,969 as of September 30, 2025, as compared to $9,788,224 as of September 30, 2024.

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Gain on Derivative Liability

The Company analyzed the warrant for derivative accounting consideration under ASC 815, “Derivatives and Hedging, and hedging,” and determined that the instrument should be classified as a liability. ASC 815 requires that we assess the fair market value of the derivative liability at the end of each reporting period and recognize any change in fair market value as other income or expense item. The change in fair value of derivative liability for the three months ended September 30, 2025 and 2024 was a gain of $303 and $2, respectively.

Net Loss

As a result of the factors discussed above, net loss was $1,448,247 for the quarter ended September 30, 2025, representing a decrease of loss of $525,699, or 26.63%, from $1,973,946 for the quarter ended September 30, 2024.

Comparison of the Nine months ended September 30, 2025 and 2024

Revenue for the nine months ended September 30, 2025 was $61,293,251, representing an increase of $3,098,122, or 5.32%, from $58,195,129 for the same period in the previous year. This was mainly due to the increase in sales volume of CMP, partially offset by the decrease in ASPs of CMP products.

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

Revenue from sales of offset printing paper, CMP and tissue paper products for the nine months ended September 30, 2025 was $61,293,251, an increase of $3,209,261, or 5.53%, from $58,083,990 for the nine months ended September 30, 2024. This was mainly due to the increase in sales volume of CMP, partially offset by the decrease in ASPs of CMP. Total quantities of offset printing paper, CMP and tissue paper products sold during the nine months ended September 30, 2025 amounted to 181,482 tonnes, an increase of 12,563 tonnes, or 7.44%, compared to 168,919 tonnes sold during the nine months ended September 30, 2024. Production of offset printing paper and tissue paper products was suspended from 2024 through September 2025 and is expected to resume at the end of 2025. The changes in revenue and quantity sold for the nine months ended September 30, 2025 and 2024 are summarized as follows:

|  | Nine Months Ended |  |  | Nine Months Ended |  |  |  |  |  | Percentage |
|  | September 30, 2025 |  |  | September 30, 2024 |  |  | Change in |  |  | Change |
Sales Revenue |  | Quantity (Tonne) |  |  | Amount |  |  | Quantity (Tonne) |  |  | Amount |  |  | Quantity (Tonne) |  |  | Amount |  |  | Quantity |  |  | Amount |
Regular CMP |  |  | 151,127 |  |  | $ | 51,267,655 |  |  |  | 140,574 |  |  | $ | 48,644,283 |  |  |  | 10,553 |  |  | $ | 2,623,372 |  |  |  | 7.51 | % |  |  | 5.39 | %
Light-Weight CMP |  |  | 30,355 |  |  | $ | 10,025,596 |  |  |  | 28,345 |  |  | $ | 9,439,707 |  |  |  | 2,010 |  |  | $ | 585,889 |  |  |  | 7.09 | % |  |  | 6.21 | %
Total CMP |  |  | 181,482 |  |  | $ | 61,293,251 |  |  |  | 168,919 |  |  | $ | 58,083,990 |  |  |  | 12,563 |  |  | $ | 3,209,261 |  |  |  | 7.44 | % |  |  | 5.53 | %
Offset Printing Paper |  |  | - |  |  | $ | - |  |  |  | - |  |  | $ | - |  |  |  | - |  |  | $ | - |  |  |  | - | % |  |  | - | %
Tissue Paper Products |  |  | - |  |  | $ | - |  |  |  | - |  |  | $ | - |  |  |  | - |  |  | $ | - |  |  |  | - | % |  |  | - | %
Total CMP, Offset Printing Paper and Tissue Paper Revenue |  |  | 181,482 |  |  | $ | 61,293,251 |  |  |  | 168,919 |  |  | $ | 58,083,990 |  |  |  | 12,563 |  |  | $ | 3,209,261 |  |  |  | 7.44 | % |  |  | 5.53 | %

ASPs for our main products in the nine-month period ended September 30, 2025 and 2024 is summarized as follows:

|  | Offset Printing Paper ASP |  |  | Regular CMP ASP |  |  | Light-Weight CMP ASP |  |  | Tissue Paper Products ASP |
Nine Months Ended September 30, 2025 |  | $ | - |  |  | $ | 339 |  |  | $ | 330 |  |  | $ | - |
Nine Months Ended September 30, 2024 |  | $ | - |  |  | $ | 346 |  |  | $ | 333 |  |  | $ | - |
Decrease from comparable period in the previous year |  | $ | - |  |  | $ | (7 | ) |  | $ | (3 | ) |  | $ | - |
Decrease by percentage |  |  | - | % |  |  | (2.02 | )% |  |  | (0.90 | )% |  |  | - | %

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Cost of Sales

Total cost of sales for CMP, offset printing paper and tissue paper products in the nine months ended September 30, 2025 was $57,913,574, an increase of $5,300,786, or 10.08%, from $52,612,788 for the nine months ended September 30, 2024. This was mainly due to the increase in sales volume and the increase in unit material costs for CMP.

The cost of sales for CMP was $57,913,574 for the nine months ended September 30, 2025, as compared to $52,612,788 in the same period of 2024. The increase in the cost of sales of $5,300,786 for CMP was mainly due to the increase in the quantities of CMP sold and the increase in average cost of sales in the nine months of 2025. The average cost of sales per tonne for CMP increased by 2.57%, from $311 for the nine months ended September 30, 2024, to $319 in the same period of 2025. Changes in cost of sales and cost per tonne by product for the nine months ended September 30, 2025 and 2024 are summarized below:

|  | Nine Months Ended |  |  | Nine Months Ended |  |  |  |  |  | Change in |
|  | September 30, 2025 |  |  | September 30, 2024 |  |  | Change in |  |  | percentage |
|  | Cost of Sales |  |  | Cost per Tonne |  |  | Cost of Sales |  |  | Cost per tonne |  |  | Cost of Sales |  |  | Cost per Tonne |  |  | Cost of Sales |  |  | Cost per Tone |
Regular CMP |  | $ | 48,391,249 |  |  | $ | 320 |  |  | $ | 44,054,200 |  |  | $ | 313 |  |  | $ | 4,337,049 |  |  | $ | 7 |  |  |  | 9.84 | % |  |  | 2.24 | %
Light-Weight CMP |  | $ | 9,522,325 |  |  | $ | 314 |  |  | $ | 8,558,588 |  |  | $ | 302 |  |  | $ | 963,737 |  |  | $ | 12 |  |  |  | 11.26 | % |  |  | 3.97 | %
Total CMP |  | $ | 57,913,574 |  |  | $ | 319 |  |  | $ | 52,612,788 |  |  | $ | 311 |  |  | $ | 5,300,786 |  |  | $ | 8 |  |  |  | 10.08 | % |  |  | 2.57 | %
Offset Printing Paper |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  |  | - | % |  |  | - | %
Tissue Paper Products |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  |  | - | % |  |  | - | %
Total CMP, Offset Printing Paper and Tissue Paper Revenue |  | $ | 57,913,574 |  |  | $ | n/a |  |  | $ | 52,612,788 |  |  | $ | n/a |  |  | $ | 5,300,786 |  |  | $ | n/a |  |  |  | 10.08 | % |  |  | n/a | %

Gross Profit

Gross profit for the nine months ended September 30, 2025 was $3,379,677 (representing 5.51% of the total revenue), representing a decrease of $2,202,117, or 39.45%, from the gross profit of $5,581,794 (representing 9.59% of the total revenue) for the nine months ended September 30, 2024. The decrease was mainly due to the decline in ASPs of CMP and the increase in unit cost of materials, partially offset by the increase in sales volume of CMP.

Offset Printing Paper, CMP and Tissue Paper Products

Gross profit for offset printing paper, CMP and tissue paper products for the nine months ended September 30, 2025 was $3,379,677, a decrease of $2,091,525, or 38.23%, from the gross profit of $5,471,202 for the nine months ended September 30, 2024. The decrease was mainly the result of the factors discussed above.

The overall gross profit margin for offset printing paper, CMP and tissue paper products decreased by 3.91 percentage points, from 9.42% for the nine months ended September 30, 2024, to 5.51% for the nine months ended September 30, 2025.

The gross profit margin for regular CMP for the nine months ended September 30, 2025 was 5.61%, or 3.83 percentage points lower, as compared to gross profit margin of 9.44% for the nine months ended September 30, 2024. This decrease was primarily due to the decrease in ASP and the increase in material costs of regular CMP.

The gross profit margin for light-weight CMP for the nine months ended September 30, 2025 was 5.02%, or 4.31 percentage points lower, as compared to gross profit margin of 9.33% for the nine months ended September 30, 2024. This decrease was primarily due to the decrease in ASP and the increase in material costs of light-weight CMP.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the nine months ended September 30, 2025 were $9,516,283, a decrease of $483,550, or 4.84% from $9,999,833 for the nine months ended September 30, 2024. The decrease was mainly due to lower manpower costs in the nine months ended September 30 2025 and accrued liability of $0.47 million for legal proceeding the Company was jointly liable for repayment of a loan in the third quarter of 2024.

Loss from Operations

Operating loss for the nine months ended September 30, 2025 was $6,132,897, an increase of loss of $1,714,858, or 38.81%, from $4,418,039 for the nine months ended September 30, 2024. The increase was primarily due to the decrease in gross profit, partially offset by the decrease in selling, general and administrative expenses.

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Other Income and Expenses

Interest expense for the nine months ended September 30, 2025 decreased by $165,751, from $593,271 for the nine months ended September 30, 2024, to $427,520. The Company had short-term and long-term interest-bearing loans and lease obligations that aggregated $9,821,969 as of September 30, 2025, as compared to $9,788,224 as of September 30, 2024.

Gain on Derivative Liability

The Company analyzed the warrant for derivative accounting consideration under ASC 815, “Derivatives and Hedging, and hedging,” and determined that the instrument should be classified as a liability. ASC 815 requires that we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item. The change in fair value of derivative liability for the nine months ended September 30, 2025 and 2024 was a gain of $5,651 and $51, respectively.

Net Loss

As a result of the above, net loss was $6,903,858 for the nine months ended September 30, 2025, representing an increase of loss of $1,105,629, or 19.07%, from $5,798,229 for the nine months ended September 30, 2024.

Liquidity and Capital Resources

As of September 30, 2025, we had current assets of $35,764,365 (including a VAT （“Value Added Tax “）recoverable of Tengsheng Paper in amount of $13,307,848), and current liabilities of $18,667,302, resulting in a working capital of $17,097,063. However, production of Tengsheng Paper has been suspended in 2024 and the nine months ended September 30, 2025, rendering related VAT unrecoverable in the short term. Net working capital excluding VAT recoverable as of September 30, 2025 was a working capital of $3,789,215. 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 us to continue as a going concern that we may be unable to realize its assets and discharge its liabilities in the normal course of business as of September 30, 2025.

To address these challenges, we plan to optimize our raw material structure and stabilize manufacturing capacity utilization, which will help to reduce procurement and production costs. Additionally, we are actively exploring new products and adjusting pricing strategies in a timely manner to secure a larger market share.

Furthermore, we will maintain rigorous control over inventory, working capital, and cash flow to mitigate financial risks. We will also strategically utilize financing quotas from the capital markets to ensure the smooth and healthy operation of the company.

Our continued existence as a going concern depends on the successful implementation of our business plan. This includes increasing market acceptance of our 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.

Accounts Receivable

Net accounts receivable increased by $1,791,614, or 623.01%, to $2,079,190 as of September 30, 2025, as compared with $287,576 as of December 31, 2024. We usually collect accounts receivable within 30 days of delivery and completion of sales.

Inventories

Inventories consist of raw materials (accounting for 70.5% of total value of inventory as of September 30, 2025), semi-finished goods and finished goods. As of September 30, 2025, the recorded value of inventory increased by 65.8% to $3,899,571 from $2,351,876 as of December 31, 2024. As of September 30, 2025, the inventory of recycled paper board, which is the main raw material for the production of CMP, was $2,630,267, approximately $1,276,724, or 94.3%, higher than the balance as of December 31, 2024. We increased our procurement volume of recycled paper board in 2025 in anticipation of rising purchase prices and preparing for expanded production output as planned.

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

|  | September 30, |  |  | December 31, |  |  |  |  |  |  |
|  | 2025 |  |  | 2024 |  |  | $ Change |  |  | % Change |
Raw Materials |  |  |  |  |  |  |  |  |  |  |  |
Recycled paper board |  | $ | 2,630,267 |  |  | $ | 1,353,543 |  |  |  | 1,276,724 |  |  |  | 94.3 | %
Recycled white scrap paper |  |  | 10,613 |  |  |  | 10,491 |  |  |  | 122 |  |  |  | 1.2 | %
Tissue base paper |  |  | 21,070 |  |  |  | 20,827 |  |  |  | 243 |  |  |  | 1.2 | %
Gas |  |  | 50,683 |  |  |  | 16,334 |  |  |  | 34,349 |  |  |  | 210.3 | %
Mask fabric and other raw materials |  |  | 156,025 |  |  |  | 111,521 |  |  |  | 44,504 |  |  |  | 39.9 | %
Total Raw Materials |  |  | 2,868,658 |  |  |  | 1,512,716 |  |  |  | 1,355,942 |  |  |  | 89.6 | %
Semi-finished Goods |  |  | 299,243 |  |  |  | 295,792 |  |  |  | 3,451 |  |  |  | 1.2 | %
Finished Goods |  |  | 1,434,505 |  |  |  | 1,269,487 |  |  |  | 165,018 |  |  |  | 13.0 | %
Total inventory, gross |  |  | 4,602,406 |  |  |  | 3,077,995 |  |  |  | 1,524,411 |  |  |  | 49.5 | %
Inventory reserve |  |  | (702,835 | ) |  |  | (726,119 | ) |  |  | 23,284 |  |  |  | (3.2 | )%
Total inventory, net |  | $ | 3,899,571 |  |  | $ | 2,351,876 |  |  |  | 1,547,695 |  |  |  | 65.8 | %

Renewal of Operating Lease

On August 7, 2013, the Company’s Audit Committee and the Board of Directors approved the sale of the land use right of the Headquarters Compound (the “LUR”), the office building, essentially all industrial-use buildings in the Headquarters Compound (the “Industrial Buildings”), and three employee dormitory buildings located within the Headquarters Compound (the “Dormitories”) to Hebei Fangsheng for cash prices of approximately $2.77 million, $1.15 million, and $4.31 million respectively. In connection with the sale, Hebei Fangsheng agreed to lease the Industrial Buildings back to the Company for their original use for a term of up to three years, with an annual rental payment of approximately $139,698 (RMB1,000,000). The lease agreement was renewed in August 2022 with a six-year term with the same rental payments as provided for in the original lease agreement.

Capital Expenditure Commitment

On May 5, 2020, the Company announced the planned commercial launch of a new tissue paper production line PM10 and signed an agreement to purchase a paper machine from a supplier. The new tissue paper production line is expected to be launched after the completion of trial runs.

As of September 30, 2025, we had approximately $3.5 million in capital expenditure commitments mainly related to the purchase of the PM 10 paper machine. The infrastructure work for PM10 is complete, while work on related ancillary facilities is ongoing. These commitments are expected to be financed by bank loans and cash flows generated from our business operations.

Cash and Cash Equivalents

Our cash, cash equivalents and restricted cash as of September 30, 2025 was $9,119,707, an increase of $2,169,131, from $6,950,576 as of December 31, 2024. The increase of cash and cash equivalents for the nine months ended September 30, 2025 was attributable to a number of factors including:

i. Net cash provided by operating activities

Net cash provided by operating activities was $388,450 for the nine months ended September 30, 2025. The balance represented a decrease of cash of $2,442,661, or 86.28%, from $2,831,111 provided for the nine months ended September 30, 2024. Net loss for the nine months ended September 30, 2025 was $6,903,85, representing an increase of loss of $1,105,629, or 19.07%, from $5,798,229 for the nine months ended September 30, 2024. Changes in various asset and liability account balances throughout the nine months ended September 30, 2025 also contributed to the net change in cash from operating activities in nine months ended September 30, 2025. Chief among such changes is the increase of accounts receivable in the amount of $1,811,293 during the nine months of 2025, an increase of $1,477,521 in the ending inventory balance as of September 30, 2025 (a decrease to net cash for the nine months ended September 30, 2025 cash flow purposes) , non-cash expenses relating to depreciation and amortization in the amount of $10,664,999, an increase of $1,319,298 in prepayment and other current assets (a decrease to net cash) and a net increase of $1,077,867 in other payables and accrued liabilities and related parties (an increase to net cash), as well as an increase in income tax payable of $225,114 (an increase to net cash) during the nine months ended September 30, 2025.

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ii. Net cash used in investing activities

We incurred $25,786 in net cash expenditures for purchases of property, plant and equipment during the nine months ended September 30, 2025, as compared to $315,152 for the same period in 2024.

iii. Net cash provided by financing activities

Net cash provided by financing activities was $1,649,855 for the nine months ended September 30, 2025, compared to net cash used in financing activities of $2,112,706 for the same period in 2024. The cash inflow was mainly attributable to proceeds from the issuance of common stock in May 2025 and from short term bank loans.

Short-term Bank Loans

|  | September 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Rural Credit Union of Xushui District Loan 1 |  | $ | - |  |  | $ | 1,808,469 |
Rural Credit Union of Xushui District Loan 2 |  |  | - |  |  |  | 2,225,808 |
Rural Credit Union of Xushui District Loan 3 |  |  | 1,829,569 |  |  |  | - |
Rural Credit Union of Xushui District Loan 4 |  |  | 2,251,777 |  |  |  | - |
Bank of Cangzhou Loan 1 |  |  | 309,619 |  |  |  | - |
Bank of Cangzhou Loan 2 |  |  | 70,368 |  |  |  | - |
Bank of Cangzhou Loan 3 |  |  | 211,104 |  |  |  | - |
Industrial and Commercial Bank of China (“ICBC”) Loan 1 |  |  | - |  |  |  | 2,782 |
ICBC Loan 2 |  |  | - |  |  |  | 139,113 |
ICBC Loan 3 |  |  | - |  |  |  | 139,113 |
ICBC Loan 4 |  |  | - |  |  |  | 136,331 |
ICBC Loan 5 |  |  | 2,815 |  |  |  | - |
ICBC Loan 6 |  |  | 140,736 |  |  |  | - |
ICBC Loan 7 |  |  | 140,736 |  |  |  | - |
ICBC Loan 8 |  |  | 137,921 |  |  |  | - |
Total short-term bank loans |  | $ | 5,094,645 |  |  | $ | 4,451,616 |

On December 24, 2024, the Company entered into a loan agreement with the Rural Credit Union of Xushui District, with a balance of $nil and $1,808,469 as of September 30, 2025 and December 31, 2024, respectively. The loan was secured by the equipment of Baoding Shengde as collateral for the benefit of the bank. The loan bore a fixed rate of 6%. The loan was repaid on September 30, 2025.

On December 24, 2024, the Company entered into a loan agreement with the Rural Credit Union of Xushui District, with a balance of $nil and $2,225,808 as of September 30, 2025 and December 31, 2024, respectively. The loan was secured by the equipment of Baoding Shengde as collateral for the benefit of the bank and guaranteed by a third-party company. The loan bore a fixed rate of 6%. The loan was repaid on September 30, 2025.

On September 30, 2025, the Company entered into a loan agreement with the Rural Credit Union of Xushui District, with a balance of $1,829,569 as of September 30, 2025. The loan is guaranteed by Mr. Liu Zhenyong and 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 September 29, 2026.

On September 30, 2025, the Company entered into a loan agreement with the Rural Credit Union of Xushui District, with a balance of $2,251,777 as of September 30, 2025. 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 September 29, 2026.

On December 28, 2024, the Company entered into a working capital loan agreement with the Bank of Cangzhou, to borrow $309,619 at a fixed interest rate of 5.5% per annum. The loan is guaranteed by Mr. Liu Zhenyong. The loan will be due by December 27, 2025.

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On December 28, 2024, the Company entered into a working capital loan agreement with the Bank of Cangzhou, to borrow $70,368 at a fixed interest rate of 5.5% per annum. The loan is secured by the Company’s manufacturing equipment and guaranteed by Mr. Liu Zhenyong. The loan will be due by December 27, 2025.

On March 10, 2025, the Company entered into a working capital loan agreement with the Bank of Cangzhou, to borrow $211,104 at a fixed interest rate of 5.5% per annum. The loan is secured by the Company’s manufacturing equipment and guaranteed by Mr. Liu Zhenyong. 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 $nil and $2,782 as of September 30, 2025 and December 31, 2024, respectively. The loan bore a fixed interest rate of 3.45% per annum. The loan was repaid on June 10, 2025.

On June 21, 2024, the Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $139,113 as of September 30, 2025 and December 31, 2024, respectively. The loan bore a fixed interest rate of 3.45% per annum. The loan is was repaid on June 3, 2025.

On June 22, 2024, the Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $139,113 as of September 30, 2025 and December 31, 2024, respectively. The loan bore a fixed interest rate of 3.45% per annum. The loan was repaid on June 10, 2025.

On June 24, 2024, the Company entered into a working capital loan agreement with the ICBC, with a balance of $nil and $136,331 as of as of September 30, 2025 and December 31, 2024, respectively. The loan bore a fixed interest rate of 3.45% per annum. The loan was repaid on June 9, 2025.

On June 10, 2025, the Company entered into a working capital loan agreement with the ICBC, with a balance of $2,815 as of September 30, 2025. The loan bears a fixed interest rate of 3.00% per annum. The loan is due for repayment by June 10, 2026.

On June 3, 2025, the Company entered into a working capital loan agreement with the ICBC, with a balance of $140,736 as of September 30, 2025. The loan bears a fixed interest rate of 3.00% per annum. The loan is due for repayment by June 3, 2026.

On June 10, 2025, the Company entered into a working capital loan agreement with the ICBC, with a balance of $140,736 as of September 30, 2025. The loan bears a fixed interest rate of 3.00% per annum. The loan is due for repayment by June 10, 2026.

On June 9, 2025, the Company entered into a working capital loan agreement with the ICBC, with a balance of $137,921 as of September 30, 2025. The loan bears a fixed interest rate of 3.00% per annum. The loan is due for repayment by June 9, 2026.

As of September 30, 2025, there were guaranteed short-term borrowings of $4,672,437 and unsecured bank loans of $422,208. 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 September 30, 2025 and 2024 were approximately 5.71% and 4.47%, respectively. The average short-term borrowing rates for the nine months ended September 30, 2025 and 2024 were approximately 5.72% and 4.47%, respectively.

Long-term Loans

As of September 30, 2025 and December 31, 2024, long-term loans were $4,727,324 and $4,672,806, respectively.

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 September 30, 2025 and December 31, 2024. 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. Effective from December 3, 2024, the interest rate was reduced to 6% per annum. The loan was fully repaid on August 15, 2025. As of September 30, 2025 and December 31, 2024, the total outstanding loan balance was $nil and $3,476,434. Out of the total outstanding loan balance, current portion amounted was $nil and $2,641,756, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of $nil and $834,678 is presented as non-current liabilities in the consolidated balance sheet as of September 30, 2025 and December 31, 2024, respectively.

On December 5, 2023, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 3 years, which is 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. Effective from December 3, 2024, the interest rate was reduced to 6% per annum. The loan was fully repaid on August 15, 2025. As of September 30, 2025 and December 31, 2024, total outstanding loan balance was $nil and $1,196,372, respectively. Out of the total outstanding loan balance, current portion amounted $nil and $918,146, which is presented as current liabilities and the remaining balance of $nil and $278,226 is presented as non-current liabilities in the consolidated balance sheet as of September 30, 2025 and December 31, 2024, respectively.

43

On August 15, 2025, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 3 years, which is due and payable on August 14, 2028. The loan is secured by certain of the Company’s manufacturing equipment with net book value of $nil as of September 30, 2025. Interest payment is due monthly and bore a rate of 6% per annum. As of September 30, 2025, the total outstanding loan balance was $3,516,994, which is presented as non-current liabilities in the consolidated balance sheet as of September 30, 2025.

On August 15, 2025, the Company entered into a loan agreement with the Rural Credit Union of Xushui District for a term of 3 years, which is due and payable on August 14, 2028. The loan is guaranteed by an independent third party. Interest payment is due monthly and bore a rate of 6% per annum. As of September 30, 2025, the total outstanding loan balance was $1,210,330, which is presented as non-current liabilities in the consolidated balance sheet as of September 30, 2025.

Total interest expenses for the short-term bank loans and long-term loans for the three months ended September 30, 2025 and 2024 were $150,701 and $171,430, respectively. Total interest expenses for the short-term bank loans and long-term loans for the nine months ended September 30, 2025 and 2024 were $427,520 and $593,271, respectively.

Shareholder Loans

Mr. Liu Zhenyong had loaned money to Dongfang Paper for working capital purposes over a period of time. On January 1, 2013, Dongfang Paper and Mr. Liu Zhenyong 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 $360,754 and $356,594 of interest were outstanding to Mr. Liu Zhenyong, which were recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet as of September 30, 2025 and December 31, 2024, respectively.

On December 10, 2014, Mr. Liu Zhenyong 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 2016, the Company repaid $6,012,416 to Mr. Liu Zhenyong, 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, 2025 and December 31, 2024, approximately $42,221 and $41,734 of interest were outstanding to Mr. Liu Zhenyong, which was recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet.

On March 1, 2015, the Company entered an agreement with Mr. Liu Zhenyong which allows Dongfang Paper to borrow from the CEO an amount up to $17,201,342 (RMB120,000,000) for working capital purposes. The advances or funding under the agreement are due three years from the date each amount is funded. The loan is unsecured and carries an annual interest rate set on the basis of the primary lending rate of the People’s Bank of China at the time of the borrowing. On July 13, 2015, an unsecured amount of $4,324,636 was drawn from the facility. On October 14, 2016 an unsecured amount of $2,883,091 was drawn from the facility. In February 2018, the company repaid $1,507,432 to Mr. Liu Zhenyong. The loan would be originally due on July 12, 2018. Mr. Liu Zhenyong 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. Liu Zhenyong, 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, 2025 and December 31, 2024, the outstanding interest was $193,424 and $191,193, respectively, which was recorded in other payables and accrued liabilities as part of the current liabilities in the consolidated balance sheet.

In October 2022 and November 2022, the Company entered into two agreements with Mr. Zhenyong Liu, which allowed Mr. Liu Zhenyong to borrow from the Company an amount of $7,059,455 (RMB50,000,000) in total. The loans were unsecured and carried a fixed interest rate of 4.35% per annum. $4,235,673 (RMB30,000,000) was repaid by Mr. Liu Zhengyong in August 2023 and the remaining balance was repaid in December 2023. Interest income of the loan for the three and nine months ended September 30, 2025 and 2024 were $nil.

As of September 30, 2025 and December 31, 2024, total amount of loans due to Mr. Liu Zhenyong was $nil. The interest expense incurred for such related party loans were $nil for the three and nine months ended September 30, 2025 and 2024. The net interest owed to Mr. Liu Zhenyong was approximately $308,154 and $304,600, as of September 30, 2025 and December 31, 2024, respectively, which was recorded in other payables and accrued liabilities.

44

As of September 30, 2025 and December 31, 2024, amount due to Mr. Liu Zhenyong was $189,948 and $1,242, respectively, which mainly represents funds from Mr. Liu Zhenyong to pay for various expenses incurred in the U.S. The amount is due on demand with interest free.

Critical Accounting Policies and Estimates

The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require us to make estimates 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 periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those estimates. The most critical accounting policies are listed below:

Revenue Recognition Policy

The Company recognizes revenue when goods are delivered and a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist, and collectability is reasonably assured. Goods are considered delivered when the customer’s truck picks up goods at our finished goods inventory warehouse.

Long-Lived Assets

The Company evaluates the recoverability of long-lived assets and the related estimated remaining useful lives when events or circumstances lead management to believe that the carrying value of an asset may not be recoverable and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. In such circumstances, those assets are written down to estimated fair value. Our judgments regarding the existence of impairment indicators are based on market conditions, assumptions for operational performance of our businesses, and possible government policy toward operating efficiency of the Chinese paper manufacturing industry. For the nine months ended September 30, 2025 and 2024, no events or circumstances occurred for which an evaluation of the recoverability of long-lived assets was required. We are currently not aware of any events or circumstances that may indicate any need to record such impairment in the future.

Foreign Currency Translation

The functional currency of Dongfang Paper and Baoding Shengde is the Chinese Yuan Renminbi (“RMB”). Under ASC Topic 830-30, all assets and liabilities are translated into United States dollars using the current exchange rate at the end of each fiscal period. The current exchange rates used by the Company as of September 30, 2025 and December 31, 2024 to translate the Chinese RMB to the U.S. Dollars are 7.1055:1 and 7.1884:1, respectively. Revenues and expenses are translated using the prevailing average exchange rates at 7.1583:1 and 7.0999:1 for the nine months ended September 30, 2025 and 2024, respectively. Translation adjustments are included in other comprehensive income (loss).

Off-Balance Sheet Arrangements

We were the guarantor for Baoding Huanrun Trading Co., for its long-term bank loans in an amount of $4,362,818 (RMB31,000,000), which matures at various times in 2026. Baoding Huanrun Trading Co. is one of our major suppliers of raw materials. This helps us to maintain a good relationship with the supplier and negotiate better terms in payment for materials. If Huanrun Trading Co. were to become insolvent, the Company could be materially adversely affected. Except as aforesaid, we have no material off-balance sheet transactions.

45

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. Under this ASU, public entities must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). This ASU’s amendments are effective for all entities that are subject to Topic 740, Income Taxes, for annual periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact of this pronouncement on our disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures, which emphasizes the importance of providing more granular and detailed expense information in financial statements. The update requires entities to disaggregate expenses by nature and function on the income statement, offering a clearer picture of an entity’s cost structure and operational efficiency. This enhanced disclosure is intended to improve the transparency and comparability of financial reporting. Entities must apply the new guidance retrospectively to all periods presented in the financial statements. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is in the process of assessing the impact of these changes on its financial reporting and will implement the necessary adjustments to comply with the updated standards.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Foreign Exchange Risk

While our reporting currency is the US dollar, almost all of our consolidated revenues and consolidated costs and expenses are denominated in RMB. All of our assets are denominated in RMB except for some cash and cash equivalents and accounts receivables. As a result, we are exposed to foreign exchange risks as our revenues and results of operations may be affected by fluctuations in the exchange rate between US dollar and RMB. If the RMB depreciates against the US dollar, the value of our RMB revenues, earnings and assets as expressed in our US dollar financial statements will decline. We have not entered into any hedging transactions in an effort to reduce our exposure to foreign exchange risk.

Inflation

Although we are generally able to pass along minor incremental cost inflation to our customers, inflation such as increases in the costs of our products and overhead costs may adversely affect our operating results. We do not believe that inflation in China has had a material impact on our financial position or results of operations to date, however, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and selling and distribution, general and administrative expenses as a percentage of net revenues if the selling prices of our products do not increase in line with the increased costs.

Item 4. Controls and Procedures.

As required by Rule 13a-15 of the Securities Exchange Act, as amended (the “Exchange Act”), we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures, which were designed to provide reasonable assurance of achieving their objectives. This evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer and principal financial officer. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of September 30, 2025, our disclosure controls and procedures were effective at the reasonable assurance level to ensure (1) that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and (2) information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes with respect to our internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act) that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting in the quarterly period ended September 30, 2025.

46

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

We may from time to time become a party to various legal or administrative proceedings arising in the ordinary course of our business. We are currently not a party to any legal or administrative proceedings and are not aware of any pending or threatened legal or administrative proceedings against us in all material aspects other than the following:

On February 17, 2022, FT Global Capital, Inc. (“FTG”), filed a lawsuit against the Company in the Commercial Division of New York Supreme Court (the “Court”). FTG has brought a breach of contract action against the Company to recover fees in connection with an agreement that the parties entered into in April 2019 (the “Agreement”). The Company has answered FTG’s complaint and has denied the allegations because it is the Company’s position that FTG did not fulfill its obligations under the terms of the Agreement. Discovery is continuing. The Court issued a Status Conference Order (the “Order”) dated April 15, 2024. According to the Order, the Court ordered that the Company has failed to appear and is in default, and that pursuant to the warning given in the Court’s order dated March 22, 2024, the Company’s default renders its answer subject to being stricken, and accordingly the answer of the Company was stricken. On April 18, 2024, FT Global filed a notice of motion for default judgment against the Company. By an order dated August 20, 2024, the Court granted the plaintiff’s default motion on the issue of liability, with damages to be determined by a referee. The Company then moved to vacate the order dated August 20, 2024, but the Court denied the Company’s motion on November 1, 2024, stating that the excuse proffered by the Company as to the reason it did not retain counsel in a timely fashion was not sufficient.

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”). In December 2023, the plaintiff sought property preservation measures, requesting the PRC Court to freeze totaling RMB3.35 million worth of bank deposits held by Jie Ping and Tengsheng Paper, which was granted by the PRC Court. On June 14, 2024, the PRC Court ordered the defendants to repay the principal of the loan in the amount of RMB3,320,000 to the plaintiff, and Tengsheng Paper was jointly liable for repayment. As of September 30, 2025, a total of RMB6.70 million worth of bank deposits of Jie Ping and Tengsheng Paper was freezed.

On April 29, 2025, due to a labor dispute, Tengsheng Paper was designated as a dishonest judgment debtor by the PRC Court, with the case involving an amount of RMB 72,333.

On July 4, 2025, Tengsheng Paper was listed as person subject to enforcement by the PRC Court in connection with a sales contract dispute, with the case involving an amount of RMB149,325.

The ultimate resolution of the proceedings may have a material adverse impact on our business, financial condition, results of operations or cash flows. Failure to settle the proceedings or other unfavorable outcomes in these proceedings could result in significant damages, additional penalties or other remedies imposed against the Company. Litigation of this kind could result in substantial costs and a diversion of our management’s attention and resources. It could also result in our reputation being harmed and our stock price could decline as a result of allegations made in the course of the proceedings, regardless of the truthfulness of the allegations.

Item 1A. Risk Factors.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

47

Item 5. Other Information.

During our fiscal quarter ended September 30, 2025, none of our directors or officers informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” as those terms are defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits.

(a) Exhibits

31.1 |  | Certification of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.
31.2 |  | Certification of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.
32.1 |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS |  | Inline XBRL Instance Document
101.SCH |  | Inline XBRL Schema Document
101.CAL |  | Inline XBRL Calculation Linkbase Document
101.DEF |  | Inline XBRL Definition Linkbase Document
101.LAB |  | Inline XBRL Label Linkbase Document
101.PRE |  | Inline XBRL Presentation Linkbase Document
104 |  | Cover Page Interactive Data File The cover page iXBRL tags are embedded within the inline

48

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

| IT TECH PACKAGING, INC.
Date: November 13, 2025 | /s/ Zhenyong Liu
| Name: | Zhenyong Liu
| Title: | Chief Executive Officer
|  | (Principal Executive Officer)
Date: November 13, 2025 | /s/ Jing Hao
| Name: | Jing Hao
| Title: | Chief Financial Officer (Principal Financial Officer)

49

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