IT Tech Packaging, Inc. Announces First Quarter 2021 Unaudited Financial Results

BAODING,China,May 11,2021 -- IT Tech Packaging,Inc. (NYSE AMERICAN: ITP) ("IT Tech Packaging" or the "Company"),a leading manufacturer and distributor of diversified paper products in North China,todayannouncedits unaudited financial results for the first quarter ended March31,2021.

For the Three Months Ended March 31,

($ millions)

2021

2020

% Change

Revenues

24.21

8.74

176.9%

Regular Corrugating Medium Paper ("CMP")*

16.96

5.72

196.5%

Light-Weight CMP**

3.75

2.02

85.9%

Offset Printing Paper

2.12

NM

NM

Tissue Paper Products

1.25

1.01

24.4%

Face Masks

0.13

NM

NM

Gross profit

1.83

-0.17

1178.8%

Gross profit (loss) margin

7.5%

-1.9%

9.4 pp****

Regular Corrugating Medium Paper ("CMP")*

8.5%

4.9%

3.6 pp****

Light-Weight CMP**

10.9%

12.9%

-2.0 pp****

Offset Printing Paper

19.4%

NM

NM

Tissue Paper Products***

-36.5%

-70.7%

34.3 pp****

Face Masks

18.8%

NM

NM

Operating income (loss)

-0.72

-2.87

74.7%

Net income（Loss）

-4.34

-2.44

-78.1%

EBITDA

-0.07

1.04

-106.7%

Basic and Diluted earnings (loss) per share

-0.12

-0.11

-8.6%

* Products from PM6

** Products from PM1

*** Products from PM8 and PM9

**** pp represents percentage points

Revenue increased by 176.9% to $24.21 million,primarily attributable to increase in sales volume of CMP and offset printing paper,as well as the increase in Average Selling Prices ("ASPs") of CMP and tissue paper products.

Gross profit was $1.83 million,compared to gross loss of $0.17 million for the same period of last year. Gross margin was 7.5%,compared to gross loss margin of 1.9% for the same period of last year.

Loss from operations was $0.72 million,compared to the loss from operations of $2.87 million for the same period of last year.

Net loss was $4.34 million,or loss per share of$0.12,compared to net loss of $2.44 million,or loss per share of $0.11,for the same period of last year.

Earnings before interest,taxes,depreciation and amortization ("EBITDA") was negative $0.07 million,compared to $1.04 million for the same period of last year.

Mr. Zhenyong Liu,Chairman and Chief Executive Officer of the Company,commented,"We continued to making improvements in the sales volume of CMP products for this quarter. Our total revenue had an increase of 176.9% to $24.2 million,resulted from 129.4% growth of overall sales volume and a 20.7% increase in average selling prices over our main products. The average selling prices of over our main products for this quarter increased 11.9% from the fourth quarter 2020 .

We took a quick recovery from the impact of global outbreaks of COVID-19 pandemic,posting growing revenues from sales of tissue paper,offset printing paper and CMP products. Our production and sales of tissue paper products have been growing up steadily since the launch of PM8 and PM9 inDecember 2018andNovember 2019. Currently,we have completed fundamental constructions on its new tissue paper production line (the "PM10") and is working on the installation of accessory equipment. Amid robust domestic market demand for tissue paper products and improved production efficiency,we anticipate continue expanding our capacity as we expect to see strong growth from tissue paper business segment that we believe will greatly boost our overall performance. In addition,we are also expanding ourbusiness to high and new technology business such as combined heat and power generation project utilizing bio mass technology project ("Biomass CHP Project") and expect to diversify our sources of revenue and ensure our stable modes of profit-making."

First Quarter 2021 Financial Results

Revenue

For the first quarter of 2021,total revenue increased by $15.47 million,or 176.9%,to $24.21 million from $8.74 million for the same period of last year. The increase in total revenue was mainly due to the increase in both sales volume and average selling prices of CMP and offset printing paper products. The following table summarizes revenue,volume and ASPs by products for the first quarter of 2021 and 2020,respectively:

For the Three Months Ended March 31,

2021

2020

Revenue

($'000)

Volume

(tonne)

ASP

($/tonne)

Revenue

($'000)

Volume

(tonne)

ASP

($/tonne)

Regular CMP

16,964

33,626

504

5,722

13,788

415

Light-Weight CMP

3,748

7,670

489

2,016

4,889

412

Offset Printing Paper

2,116

3,142

673

NM

NM

NM

Tissue Paper Products

1,251

1,120

1,117

1,006

1,185

849

Total

24,079

45,558

529

8,744

19,862

440

Revenue

($'000)

Volume

(thousand

pieces)

ASP

($/thousand

pieces)

Revenue

($'000)

Volume

($/thousand

pieces)

ASP

($/thousand

pieces)

Face Masks

130

3,836

34

NM

NM

NM

Revenue from CMP,including both regular CMP and Light-Weight CMP,increased by $12.97 million,or 167.7%,to $20.71 million and accounted for 85.6% of total revenue for the first quarter of 2021,compared to $7.74 million,or 88.5% of total revenue,for the same period of last year. The Company sold 41,296 tonnes of CMP at an ASP of $502/tonne in the first quarter of 2021,compared to 18,677 tonnes at an ASP of $414/tonne in the same period of last year.

Of the total CMP sales,revenue from regular CMP increased by $11.24 million,or 196.5%,to $16.96 million,resulting from sales of 33,626 tonnes at an ASP of $504/tonne,during the first quarter of 2021,compared to revenue of $5.72 million,resulting from sales of 13,788 tonnes at an ASP of $415/tonne,for the same period of last year. Revenue from light-weight CMP increased by $1.73 million,or 85.9%,to $3.75 million,resulting from sales of 7,670 tonnes at an ASP of $489/tonne for the first quarter of 2021,compared to revenue of $2.02 million,resulting from sales of 4,889 tonnes at an ASP of $412/tonne for the same period of last year.

Revenue from offset printing paper increased by $2.12 million,or 100.0%,to $2.12 million for the first quarter of 2021,from $nil for the same period of last year. The Company sold 3,142 tonnes of offset printing paper at an ASP of $673/tonne in the first quarter of 2021.

Revenue from tissue paper products increased by $0.24 million,or 24.4%,to $1.25 million,resulting from sales of 1,120 tonnes at an ASP of $1,117/tonne,for the first quarter of 2021,compared to revenue of $1.01 million,185 tonnes at an ASP of $849/tonne for the same period of last year.

Revenue generated from selling face masks was $0.13 million for the first quarter of 2021. The Company sold 3,836 thousand pieces of face masks in the first quarter of 2021.

Gross Profit (Loss) and Gross Profit (Loss) Margin

Total cost of sales increased by $13.47 million,or 151.1%,to $22.38 million for the first quarter of 2021,from $8.91 million for the same period of last year. The increase in total cost of sales was mainly due to the increase in sales volume of CMP and offset printing paper products,as well as increase in material costs. Costs of sales per tonne for regular CMP,light-weight CMP,offset printing paper and tissue paper products were $462,$435,$543 and $1,525,respectively,compared to $395,$359,$nil and $1,450 per tonne,for the same period of last year. Average unit purchase costs of recycled paper board,major raw material used for our production,was approximately $289/tonne for the first quarter of 2021,compared to $198/tonne for the same period of last year.

Total gross profit was $1.83 million for the first quarter of 2021,compare to the gross loss of $0.17 million for the same period of last year as a result of factors described above. Overall gross profit margin was 7.6% for the first quarter of 2021,compared to the gross loss margin of 1.9% for the same period of last year. Gross profit (loss) margins for regular CMP,offset printing paper,tissue paper and face mask productswere 8.5%,10.9%,19.4%,-36.5% and 18.8%,compared to 4.9%,12.9%,nil%,-70.7% and nil%,for the same period of last year.

Selling,General and Administrative Expenses

Selling,general and administrative expenses ("SG&A") decreased by $0.14 million,or 5.3%,to $2.56 million for the first quarter of 2021 from $2.70 million for the same period of last year. As a percentage of total revenue,SG&A was 10.6% for the first quarter of 2021,compared to 30.8% for the same period of last year.

Loss from Operations

Loss from operations was $0.72 million for the first quarter of 2021,compared to the loss from operations of $2.87 million for the same period of last year. The decrease in loss from operations was primarily due to the increase in gross profit. Operating loss margin was 3.0% for the first quarter of 2021,compared to 32.8% for the same period of last year.

Net Loss and Net Loss per Share

Net loss was$4.34 million,or $0.12 loss per basic and diluted share,for the first quarter of2021,compared to the net loss of $2.44 million,or $0.11 per basic and diluted share,for the same period of last year.

EBITDA

EBITDA was $-0.07 million for the first quarter of 2021,compared to $1.04 million for the same period of the prior year.

Note 1: Non-GAAP Financial Measures

In addition to our U.S. GAAP results,this press release includes a discussion of EBITDA,a non-GAAP financial measure as defined by the Securities and Exchange Commission ("SEC"). The Company defines EBITDA as net income before interest,income taxes,depreciation and amortization. EBITDA is a key measure used by management to evaluate our results and make strategic decisions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations,the Company's presentation of EBITDA may not be comparable to similarly titled measures of other companies,and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with the U.S. GAAP.

For the Three Months Ended March 31,

($ millions)

2021

2020

Net income (loss)

-4.34

-2.44

Add: Income tax

-0.10

-0.53

Net interest expense

0.28

0.24

Depreciation and amortization

4.09

3.77

EBITDA

-0.07

1.04

Cash,Liquidity and Financial Position

As of March 12,2021,the Company had cash and bank balances,short-term debt (including bank loans,current portion of long-term loans from credit union and related party loans),and long-term debt (including related party loans) of $37.44million,$12.08million and $4.57million,compared to $4.14million,$12.16million and $4.60million,as of December 31,2020.

Net accounts receivable was $5.21million as of March 31,compared to $2.39million as of December 31,2020. Net inventory was $7.43million as of March 31,compared to $1.23million as of December 31,2020. As of March 31,the Company had current assets of $61.14million and current liabilities of $20.21million,resulting in a working capital of $40.93million. This was compared to current assets of $14.91million and current liabilities of $18.34million,resulting in a working capital deficit of $3.43million as of December 31,2020.

Net cash used in operating activities was $8.28 million for the first quarter of 2021,compared to net cash provided by operating activities of $6.86 million for the same period of last year. Net cash used in investing activities was $0.04 million for the first quarter of 2021,compared to $0.76 million for the same period of last year. Net cash provided by financing activities was $41.79 million for the first quarter of 2021,compared to net cash from financing activities of $nil for the same period of last year.

Recent development

On April 7,the Company announced it has obtained qualification to supply central heating in industrial parks after month-long review process for its combined heat and power generation project utilizing bio mass technology ("Biomass CHP Project").

On April 20,the Company announced it has completed fundamental constructions on its new tissue paper production line (the "PM10") and is working on the installation of accessory equipment.

Earnings Conference Call

The Company's management will host a conference call to discuss its first quarter 2021 unaudited financial results at8:00 am US Eastern Time onWednesday,May 12,2021. To attend the conference call,please use the information below.

Date/Time: 8:00 am US Eastern Time (8:00 PM Beijing/Hong Kong Time)onWednesday,2021

Conference Title: IT Tech Packaging,Inc. First Quarter 2021 Earnings Conference Call

Conference ID: 8863957

To attend the conference call,please register in advance of the conference using the link:http://apac.directeventreg.com/registration/event/8863957 to complete the online registration at least 15 minutes prior to the start of the call. Upon registering,the conference access information including participant dial-in numbers,a Direct Event passcode and a registrant ID will be provided to you via an email.

This conference call will be broadcast live on the Internet and can be accessed by all interested parties at https://edge.media-server.com/mmc/p/4vc6vupv. Please access the link at least 15 minutes prior to the start of the call to register,download,and install any necessary audio software.

A playback will be available through 11:00 am ET on May 12,2021 to 9:59 am ET on May 20,2021. To listen,please dial+1-855-452-5696 if calling from the United States,or +61-281-990-299 if calling internationally. Use the conference ID 8863957to access the replay.

About IT Tech Packaging,Inc.

Founded in 1996,IT Tech Packaging,Inc. is a leading manufacturer and distributor of diversified paper products in North China. Using recycled paper as its primary raw material (with the exception of its tissue paper products),ITP produces and distributes three categories of paper products: corrugating medium paper,offset printing paper and tissue paper products. With production based in Baoding and Xingtai in North China's Hebei Province,ITP is located strategically close to the Beijing and Tianjin region,home to a growing base of industrial and manufacturing activities and one of the largest markets for paper products consumption in the country. ITP has been listed on the NYSE MKT since December 2009. For more information,please visit: http://www.itpackaging.cn/ .

Safe Harbor Statements

This press release may contain forward-looking statements. These forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those projected or anticipated,including risks outlined in the Company's public filings with the Securities and Exchange Commission,including the Company's latest annual report on Form 10-K. All information provided in this press release speaks as of the date hereof. Except as otherwise required by law,the Company undertakes no obligation to update or revise its forward-looking statements.

For more information,please contact:

At the Company Email:

ir@itpackaging.cn

Tel: +86 0312 8698215

Investor Relations:

Janice Wang

EverGreen Consulting Inc.

Email: ir@changqingconsulting.com

IT TECH PACKAGING,INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31,2021 AND DECEMBER 31,2020

(Unaudited)

March 31,

December 31,

2021

2020

ASSETS

Current Assets

Cash and bank balances

$

37,440,991

$

4,142,437

Restricted cash

-

-

Accounts receivable (net of allowance for doubtful accounts of

$85,637 and $34,391 as of March 31,2021 and December 2020,

respectively)

5,211,806

2,389,057

Inventories

7,431,502

1,233,801

Prepayments and other current assets

10,655,539

7,051,515

Due from related parties

400,650

92,795

Total current assets

61,140,488

14,909,605

Prepayment on property,plant and equipment

21,000,411

21,149,749

Finance lease right-of-use assets,net

2,340,142

2,397,653

Property,plant,and equipment,net

140,109,827

145,642

Value-added tax recoverable

2,502,526

2,566,195

Deferred tax asset non-current

14,194,939

13,708,630

Total Assets

$

241,288,333

$

199,874,474

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

Short-term bank loans

$

6,908

$

6,435,348

Current portion of long-term loans from credit union

4,960,967

4,996,245

Lease liability

188,723

182,852

Accounts payable

2,355,798

592,391

Advance from customers

82,042

82,625

Due to related parties

727,433

727,433

Accrued payroll and employee benefits

308,838

224,930

Other payables and accrued liabilities

4,715,970

4,838,601

Income taxes payable

482,209

259,649

Total current liabilities

20,888

18,074

Loans from credit union

4,565,307

4,597,772

Deferred gain on sale-leaseback

347,158

387,087

Lease liability - non-current

301,654

354,107

Derivative liability

11,581,027

1,115,260

Total liabilities (including amounts of the consolidated VIE without

recourse to the Company of $19,683,842 and $17,950,224 as of

March 31,2021 and December 31,2020,respectively)

37,007,034

24,794,300

Commitments and Contingencies

Stockholders' Equity

Common stock,500,000 shares authorized,$0.001 par value per

share,99,049,900 and 28,535,816 shares issued and outstanding as of

March 31,2021 and December,31,respectively

99,050

28,536

Additional paid-in capital

88,927,786

53,989,548

Statutory earnings reserve

6,080,574

6,574

Accumulated other comprehensive income

4,271,952

5,740,722

Retained earnings

104,901,937

109,240,794

Total stockholders' equity

204,281,299

175,174

Total Liabilities and Stockholders' Equity

$

241,474

IT TECH PACKAGING,INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31,2021 AND 2020

(Unaudited)

Three Months Ended

March 31,

2021

2020

Revenues

$

24,209,427

$

8,743,851

Cost of sales

(22,378,422)

(8,913,570)

Gross Profit (Loss)

1,831,005

(169,719)

Selling,general and administrative expenses

(2,555,318)

(2,696,963)

Gain on acquisition of a subsidiary

-

-

Loss from Operations

(724,313)

(2,866,682)

Other Income (Expense):

Interest income

4,333

5,790

Subsidy income

196,787

142,998

Interest expense

(278,901)

(244,718)

Loss on derivative liability

(3,636,967)

-

Loss before Income Taxes

(4,439,061)

(2,962,612)

Provision for Income Taxes

100,205

526,325

Net Loss

(4,338,856)

(2,436,287)

Other Comprehensive Loss

Foreign currency translation adjustment

(1,468,770)

(2,589,754)

Total Comprehensive Loss

$

(5,807,626)

$

(5,026,041)

Losses Per Share:

Basic and Diluted Losses per Share

$

(0.12)

$

(0.11)

Outstanding – Basic and Diluted

36,156,280

22,054,816

IT TECH PACKAGING,INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31,

2021

2020

Cash Flows from Operating Activities:

Net income

$

(4,856)

$

(2,287)

Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation and amortization

4,092,487

3,774,674

Loss on derivative liability

3,967

(Recovery from) Allowance for bad debts

52,018

(22,650)

Deferred tax

(589,094)

(541,042)

Changes in operating assets and liabilities:

Accounts receivable

(2,920,798)

1,315,128

Prepayments and other current assets

(3,645,323)

5,486,216

Inventories

(6,270,151)

(373,470)

Accounts payable

1,785,742

(41,405)

Advance from customers

-

54,930

Related parties

(311,679)

1,814,228

Accrued payroll and employee benefits

86,375

(62,252)

Other payables and accrued liabilities

(84,719)

(728,633)

Income taxes payable

226,699

(1,379,130)

Net Cash (Used in) Provided by Operating Activities

(8,280,332)

6,860,307

Cash Flows from Investing Activities:

Purchases of property,plant and equipment

(44,599)

(756,514)

Net Cash Used in Investing Activities

(44,514)

Cash Flows from Financing Activities:

Proceeds from issuance of shares and warrants,net

41,837,553

-

Payment of capital lease obligation

(43,230)

-

Net Cash Provided by Financing Activities

41,323

-

Effect of Exchange Rate Changes on Cash and Cash Equivalents

(170,838)

(229,386)

Net Increase in Cash and Cash Equivalents

33,298,554

5,407

Cash,Cash Equivalents and Restricted Cash - Beginning of

Period

4,437

5,745

Cash,Cash Equivalents and Restricted Cash - End of Period

$

37,991

$

11,712,152

Supplemental Disclosure of Cash Flow Information:

Cash paid for interest,net of capitalized interest cost

$

97,642

$

116,019

Cash paid for income taxes

$

262,191

$

1,130

Cash and bank balances

37,991

11,152

Restricted cash

-

-

Total cash,cash equivalents and restricted cash shown in the

statement of cash flows

37,152

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