IT Tech Packaging, Inc. Announces Fourth Quarter and Fiscal Year 2021 Financial Results

BAODING,China,March 15,2022 -- IT Tech Packaging,Inc. (NYSE American: ITP) ("IT Tech Packaging" or the "Company"),a leading manufacturer and distributor of diversified paper products inNorth China,today announced its unaudited financial results for the fourthquarterand audited financial results for the fiscal yearendedDecember 31,2021.

Mr. Zhenyong Liu,Chairman and Chief Executive Officer of the Company,commented,"We are pleased with our performance for the fiscal year 2021,as we demonstrated excellent revenue growth and improved business efficiencies. In fiscal year 2021,our business execution was reflected as we reached approximately $160.88 million in revenue with an increase of59% year-over-year and approximately $11.02 million in gross profit with an increase of 93% year-over-year. In fiscal year 2021,we launched a series of initiatives to optimize our revenue structure and diversify our business,which led to a very encouraging results. We significantly improved our operating and cost efficiency,reducing our sell,general and administrative expense by 14.3%,while maintaining the solid growth of overall sales volume and average selling prices of CMP products and offset printing paper products. Looking forward,with our dedicated effort and commitment,we believe our business fundamentals will continue to support our leading position in the industry and grow in the foreseeable future."

Fourth Quarter 2021 Financial Results

For the Three Months Ended December 31,

($ millions)

2021

2020

% Change

Revenues

45.05

32.48

38.7%

Regular Corrugating Medium Paper ("CMP")*

32.66

19.68

66.0%

Light-Weight CMP**

7.00

5.24

33.5%

Offset Printing Paper

2.97

4.88

-39.2%

Tissue Paper Products

2.28

2.65

-14.0%

Face Masks

0.15

0.04

314.5%

Gross profit

4.34

0.75

481.8%

Gross profit (loss) margin

9.6%

2.3%

7.3 pp****

Regular Corrugating Medium Paper ("CMP")*

9.6%

1.4%

8.2 pp****

Light-Weight CMP**

12.2%

3.9%

8.3 pp****

Offset Printing Paper

21.5%

13.6%

7.9 pp****

Tissue Paper Products***

-13.9%

-15.0%

1.1 pp****

Face Masks

25.2%

5.8%

19.4 pp****

Operating income (loss)

1.95

-1.97

199.0%

Net income

4.16

-1.62

357.0%

EBITDA

8.66

2.63

229.3%

Basic and Diluted earnings (loss) per share

0.07

-0.06

216.7%

* Products from PM6

** Products from PM1

*** Products from PM8 and PM9

**** pp represents percentage points

Revenue increased by 38.7% toapproximately $45.05 million,primarily attributable to an increase in sales volume of CMP products.

Gross profit increased by 481.8% toapproximately $4.34 million. Total gross margin increased by 7.3 percentage point to 9.6%.

Income from operations wasapproximately $1.95 million,compared to loss from operations ofapproximately $1.97 millionfor the same period of last year.

Net income wasapproximately $4.16 million,or $0.07per basic and diluted share,compared to net loss ofapproximately $1.62 million,or loss of$0.06per basic and diluted share,for the same period of last year.

Earnings before interest,taxes,depreciation and amortization ("EBITDA") increased by 229.3% toapproximately $8.66 million.

Revenue

For the fourth quarter of 2021,total revenue increased byapproximately $12.6 million,or 38.7%,toapproximately $45.0 millionfromapproximately $32.5 millionfor the same period of last year. The increase in total revenue was mainly due to the increase in sales volume of CMP.

The following table summarizes revenue,volume and ASP by product for the fourth quarter of 2021 and 2020,respectively:

For the Three Months Ended December 31,

2021

2020

Revenue

($'000)

Volume

(tonne)

ASP

($/tonne)

Revenue

($'000)

Volume

(tonne)

ASP

($/tonne)

Regular CMP

32,662

57,410

569

19,677

45,210

435

Light-Weight CMP

6,996

12,543

558

5,242

12,417

422

Offset Printing Paper

2,967

3,911

759

4,877

7,895

618

Tissue Paper Products

2,278

2,292

994

2,648

3,165

837

Total

44,903

76,156

590

32,444

68,687

472

Revenue

($'000)

Volume

(thousand

pieces)

ASP

($/thousand

pieces)

Revenue

($'000)

Volume

($/thousand

pieces)

ASP

($/thousand

pieces)

Face Masks

146

3,014

49

35

445

79

Revenue from CMP,including both regular CMP and light-Weight CMP,increased by$14.7 million,or 59.1%,toapproximately $39.7 millionand accounted for 88.0% of total revenue for the fourth quarter of 2021,compared toapproximately $24.9 million,or 76.7% of total revenue,for the same period of last year. The Company sold 69,953tonnes of CMP at an ASP of$567/tonne in the fourth quarter of 2021,compared to 57,627tonnes at an ASP of$432/tonne in the same period of last year.

Of the total CMP sales,revenue from regular CMP increased byapproximately $13.0million,or 66.0%,toapproximately $32.7 million,resulting from sales of 57,410tonnes at an ASP of$569/tonne,during the fourth quarter of 2021,compared to revenue ofapproximately $19.7 million,resulting from sales of 45,210 tonnes at an ASP of$435/tonne,for the same period of last year. Revenue from light-weight CMP increased byapproximately $1.8 million,or 33.5%,toapproximately $7.0 million,resulting from sales of 12,543tonnes at an ASP of$558/tonne for the fourth quarter of 2021,compared to revenue ofapproximately $5.2 million,417 tonnes at an ASP of$422/tonne for the same period of last year.

Revenue from offset printing paper decreased by$1.9million,or 39.2%,toapproximately $3.0 millionfor the fourth quarter of 2021,fromapproximately$4.9 millionfor the same period of last year. The Company sold 3,911tonnes of offset printing paper at an ASP of$759/tonne in the fourth quarter of 2021,compared to 7,895 tonnes at an ASP of$618/tonne in the same period of last year.

Revenue from tissue paper products decreased by$0.4 million,or 14.0%,toapproximately $2.3 million,resulting from sales of 2,292tonnes at an ASP of$994/tonne,for the fourth quarter of 2021,compared to revenue ofapproximately $2.6million,resulting from sales of 3,165tonnes at an ASP of$837/tonne for the same period of last year.

Revenue from face masks increased by$110,993,or 314.5%,toapproximately $146,282for the fourth quarter endedDecember 31,2021,from $35,289 for the same period of 2020. The Company sold 3,014 thousand pieces of face masks for the fourth quarter endedDecember 31,compared to 445 thousand pieces of face masks for the same period of2020.

Gross Profit and Gross Margin

Total cost of sales increased by$9.0 million,or 28.3%,toapproximately $40.7 millionfor the fourth quarter of 2021 fromapproximately $31.7 millionfor the same period of last year. For paper products,overall cost of sales per tonne was$533for the fourth quarter of 2021,compared to$462for the same period of last year. The increase in overall cost of sales was mainly due to the increased manufacturing overhead costs and increased material costs,specifically higher average unit purchase costs of recycled paper board and recycled white scrap paper in the fourth quarter of 2021. Costs of sales per tonne for regular CMP,light-weight CMP,offset printing paper,and tissue paper products were$514,$490,$596 and$1,132,respectively,compared to$429,$406,$534,and$962,for the same period of last year.

Total gross profit wasapproximately $4.3millionfor the fourth quarter of 2021,compare to the gross profit ofapproximately $0.7 millionfor the same period of last year as a result of factors described above. Overall gross margin was 9.6% for the fourth quarter of 2021,compared to 2.3% for the same period of last year. Gross profit (loss) margins for regular CMP,tissue paper products and face mask products were 9.6%,12.2%,21.5%,-13.9% and 25.2%,compared to 1.4%,3.9%,13.6%,-15.0% and 5.8%,for the same period of last year.

Selling,General and Administrative Expenses

Selling,general and administrative expenses ("SG&A") decreased by$0.3 million,or 12.0%,toapproximately $2.4 millionfor the fourth quarter of 2021 fromapproximately $2.7 millionfor the same period of last year.

Income (Loss) from Operations

Income from operations wasapproximately $2.0 millionfor the fourth quarter of 2021,an increase of $4.0 million,or 199.0%,from loss from operations ofapproximately $2.0 millionfor the same period of last year. Operating margin was 4.3% for the fourth quarter of 2021,compared to operating margin of -6.1% for the same period of last year.

Net Income (Loss)

Net income wasapproximately $4.2 million,or$0.07per basic and diluted share for the fourth quarter of 2021,representing an increase of $5.8 million,or 357.0%,from net loss ofapproximately $1.6 million,or$0.06 lossper basic and diluted share,for the same period of last year.

EBITDA

EBITDA wasapproximately $8.7 millionfor the fourth quarter of 2021,compared toapproximately $2.6 millionfor the same period of last 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.

Reconciliation of Net Income to EBITDA

(Amounts expressed in US$)

For the Three Months Ended December 31,

($ millions)

2021

2020

Net income (loss)

4.16

-1.62

Add: Income tax

0.60

-0.52

Net interest expense

0.28

0.28

Depreciation and amortization

3.62

4.49

EBITDA

8.66

2.63

Full Year EndedDecember 31,2021Financial Results

For the Twelve Months Ended December 31,

($ millions)

2021

2020

% Change

Revenues

160.88

100.94

59.4%

Regular Corrugating Medium Paper ("CMP")*

111.08

62.32

78.2%

Light-Weight CMP**

23.43

16.84

39.2%

Offset Printing Paper

17.06

12.27

39.1%

Tissue Paper Products

8.77

8.41

4.2%

Face Masks

0.54

1.10

-51.2%

Gross profit

11.02

5.70

93.2%

Gross profit (loss) margin

6.9%

5.7%

1.2 pp****

Regular Corrugating Medium Paper ("CMP")*

6.3%

5.4%

1.0 pp****

Light-Weight CMP**

8.7%

8.9%

-0.2 pp****

Offset Printing Paper

18.2%

17.3%

0.9 pp****

Tissue Paper Products***

-14.3%

-21.7%

7.4 pp****

Face Masks

19.2 %

48.1%

-28.9 pp****

Operating income (loss)

1.46

-5.46

126.8%

Net income

0.91

-5.55

116.3%

EBITDA

22.94

10.16

125.6%

Basic and Diluted earnings (loss) per share

0.02

-0.21

109.5%

* Products from PM6

** Products from PM1

*** Products from PM8 and PM9

**** pp represents percentage points

Revenue

For the year endedDecember 31,total revenue increased by$59.9 million,or 59.4%,toapproximately $160.9 millionfromapproximately $100.9 millionfor 2020. The increase in total revenue was mainly due to an increase in sales volume of CMP and offset printing paper and increase in ASPs of CMP,offset printing paper and tissue paper products,partially offset by the decrease in sales volume of tissue paper products.

The following table summarizes revenue,volume and ASP by product for the years endedDecember 31,2021and 2020,respectively:

For the Twelve Months Ended December 31,

2021

2020

Revenue

($'000)

Volume

(tonne)

ASP

($/tonne)

Revenue

($'000)

Volume

(tonne)

ASP

($/tonne)

Regular CMP

111,079

213,490

520

62,325

154,084

404

Light-Weight CMP

23,432

46,201

507

16,836

42,801

393

Offset Printing Paper

17,063

24,513

696

12,266

20,358

603

Tissue Paper Products

8,770

8,255

1,062

8,415

10,088

834

Total

160,344

292,459

548

99,841

227,331

439

Revenue

($'000)

Volume

(thousand

pieces)

ASP

($/thousand

pieces)

Revenue

($'000)

Volume

($/thousand

pieces)

ASP

($/thousand

pieces)

Face Masks

538

12,664

42

1,102

10,301

107

Revenue from CMP,including both regular CMP and light-Weight CMP increased by$55.4 million,or69.9%,toapproximately $134.5 million,and accounted for 83.6% of total revenue for the year endedDecember 31,compared toapproximately $79.2 million,or 78.4% of total revenue for 2020. The Company sold 259,691tonnes of CMP at an ASP of$518/tonne in the year endedDecember 31,compared to 196,885tonnes at an ASP of$402/tonne in 2020.

Of the total CMP sales,revenue from regular CMP increased by$48.8 million,or 78.2%,toapproximately $111.1 million,resulting from sales of 213,490tonnes at an ASP of$520/tonne during the year endedDecember 31,compared to revenue ofapproximately $62.3 million,resulting from sales of 154,084tonnes at an ASP of$404/tonne for 2020. Revenue from light-weight CMP increased by$6.6 million,toapproximately $23.4million,resulting from sales of 46,201tonnes at an ASP of$507/tonne for the year endedDecember 31,compared to revenue ofapproximately $16.8million,resulting from sales of 42,801tonnes at an ASP of$393/tonne for 2020.

Revenue from offset printing paper increased by$4.8 million,or 39.1%,toapproximately $17.1 millionfor the year endedDecember 31,2021fromapproximately $12.3 millionfor 2020. The Company sold 24,513tonnes of offset printing paper at an ASP of$696/tonne in the year endedDecember 31,compared to 20,358tonnes at an ASP of$603/tonne in 2020.

Revenue from tissue paper products increased by$0.4 million,or 4.2%,toapproximately $8.8 million,resulting from sales of 8,255tonnes at an ASP of$1,062/tonne,for the year endedDecember 31,compared to revenue ofapproximately $8.4 million,resulting from sales of 10,088tonnes at an ASP of$834/tonne for 2020.

Revenue from face masks decreased by$0.6 million,or 51.2%,toapproximately $0.5 millionfor the year endedDecember 31,from approximately $1.1 million for 2020. The Company sold 12,664 thousand pieces of face masks for the year endedDecember 31,compared to 10,301 thousand pieces of face masks for 2020.

Gross Profit and Gross Margin

Total cost of sales increased by $54.6 million,or 57.4%,toapproximately $149.9 millionfor the year endedDecember 31,2021fromapproximately $95.2 millionfor 2020. The increase in overall cost of sales was mainly due to the increased sales volume of CMP and offset printing paper and increased material costs in the year endedDecember 31,2021. Costs of sales per tonne for regular CMP,tissue paper products were,$487,$463,$570,and$1,214,2021compared to$383,$358,$498,015,for 2020.

Total gross profit increased by$5.3million,or 93.2%,toapproximately $11.0millionfor the year endedDecember 31,2021fromapproximately $5.7 millionfor 2020. Overall gross margin increased by 1.2percentage points to 6.9% for the year endedDecember 31,2021from 5.7% for 2020. Gross margins for regular CMP,tissue paper products and face mask products were 6.3%,8.7%,18.2%,-14.3% and 19.2%,compared to 5.4%,8.9%,17.3%,-21.7% and 48.1%,for 2020.

Selling,General and Administrative Expenses

SG&A expenses decreased by$1.6 million,or 14.3%,toapproximately $9.6 millionfor the yearendedDecember 31,2021fromapproximately $11.2 millionfor 2020. As a percentage of total revenue,SG&A expenses was 5.9% for the year endedDecember 31,compared to 11.1% for 2020.

Income (Loss) from Operations

Income from operations increased by$6.9 million,or 126.8% toapproximately $1.5 millionfor the year endedDecember 31,2021from loss from operations ofapproximately $5.5 millionfor 2020. Operating margin was 0.9% for the year endedDecember 31,compared to operating loss margin of 5.4% for 2020.

Net Income (Loss)

Net Income increased by$6.5 million,or 116.3%,toapproximately $0.9 million,or earnings per basic and diluted share of$0.02,compared to net loss ofapproximately $5.6 million,or loss per basic and diluted share of$0.21 for 2020.

EBITDA

EBITDA increased by$12.7million,or 125.6%,toapproximately $22.9 millionfor the year endedDecember 31,2021fromapproximately $10.2 millionfor 2020.

Note 1: Non-GAAP Financial Measures

In addition to our U.S. GAAP results,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.

Reconciliation of Net Income to EBITDA

(Amounts expressed in US$)

For the Twelve Months Ended December 31,

($ millions)

2021

2020

Net income (loss)

0.91

-5.55

Add: Income tax

5.55

-1.10

Net interest expense

1.12

1.03

Depreciation and amortization

15.36

15.79

EBITDA

22.94

10.16

Cash,Liquidity and Financial Position

As ofDecember 31,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 loan from credit union) ofapproximately $11.20million,$13.52million and$2.98million,compared toapproximately $4.14million,$12.16million and$4.60million,at the end of 2020.

Net accounts receivable wasapproximately $4.87million as ofDecember 31,compared toapproximately $2.39 millionas ofDecember 31,2020. Net inventory wasapproximately $5.84million as ofDecember 31,compared toapproximately $1.23 millionat the end of 2020. As ofDecember 31,the Company had current assets ofapproximately $55.52million and current liabilities ofapproximately $20.43million,resulting in a working capital ofapproximately $35.09million. This was compared to current assets ofapproximately $14.91million and current liabilities ofapproximately $18.34million,resulting in a working capital deficit ofapproximately $3.43million at the end of 2020.

Net cash used in operating activities wasapproximately $2.44 millionfor the year endedDecember 31,compared to net cash provided by operating activities of approximately $16.14 millionfor 2020. Net cash used in investing activities wasapproximately $25.07 millionfor the year endedDecember 31,compared toapproximately $20.53 millionfor 2020. Net cash provided by financing activities wasapproximately $34.19 millionfor the year endedDecember 31,compared to net cash provided by financing activities ofapproximately $2.05 millionfor 2020.

Recent development

On December 7,the Company announced that it has officially started its surgical masks production after a month of trial production since the end ofNovember 2021. The Company's surgical masks comply withChina'spharmaceutical industry standard YY0469-2011.

Earnings Conference Call

The Company's management will host a conference call to discuss its fourth quarter and fiscal year 2021 financial results at8:30 am U.S. Eastern Time onTuesday,2022. To attend the conference call,please use the information below.

Conference Topic:IT Tech Packaging Inc. Fourth Quarter and Fiscal Year 2021 Earnings Conference Call and Webcast

Date of call:March 15,2022

Time of call:8:30 AM Eastern Time(8:30 PMBeijing/Hong Kong Time)

Conference ID:4898872

To attend the conference call,please register in advance of the conference using the link:http://apac.directeventreg.com/registration/event/4898872 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 athttps://edge.media-server.com/mmc/p/57zkixzh. 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 through11:00 am ETonMarch 15,2022to8:59 am ETonMarch 23,2022. To listen,please dial+1-855-452-5696 if calling from theUnited States,or +61-281-990-299 if calling internationally. Use the conference ID 4898872 to 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 and single-use face masks inNorth 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 inNorth China'sHebei Province,ITP is located strategically close to theBeijingandTianjinregion,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 American sinceDecember 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

Ascent Investor Relations LLC

Ms. Tina Xiao

Email: tina.xiao@ascent-ir.com

Tel: +1-917-609-0333

IT TECH PACKAGING,INC.

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31,2021 AND 2020

December 31,

December 31,

2021

2020

ASSETS

Current Assets

Cash and bank balances

$

11,201,612

$

4,142,437

Restricted cash

-

-

Accounts receivable (net of allowance for doubtful accounts of

$69,053 and $34,391 as of December 31,2021 and December 31,

2020,respectively)

4,868,934

2,389,057

Inventories

5,844,895

1,233,801

Prepayments and other current assets

25,796,640

7,051,515

Due from related parties

7,804,068

92,795

Total current assets

55,516,149

14,909,605

Prepayment on property,plant and equipment

43,446,210

21,149,749

Finance lease right-of-use assets,net

2,286,459

2,397,653

Property,plant,and equipment,net

126,587,428

145,642

Value-added tax recoverable

2,430,277

2,566,195

Deferred tax asset non-current

11,268,679

13,708,630

Total Assets

$

241,535,202

$

199,874,474

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

Short-term bank loans

$

5,958,561

$

6,435,348

Current portion of long-term loans from credit union

6,838,465

4,996,245

Lease liability

210,161

182,852

Accounts payable

10,255

592,391

Advance from customers

39,694

82,625

Due to related parties

727,433

727,433

Accrued payroll and employee benefits

291,206

224,930

Other payables and accrued liabilities

5,250,539

4,601

Income taxes payable

1,108,038

259,649

Total current liabilities

20,434,352

18,340,074

Loans from credit union

2,980,065

4,597,772

Deferred gain on sale-leaseback

155,110

387,087

Lease liability - non-current

152,233

354,107

Derivative liability

2,063,534

1,115,260

Total liabilities (including amounts of the consolidated VIE without

recourse to the Company of $17,924,475 and $17,950,224 as of

December 31,2021 and 2020,respectively)

25,785,294

24,794,300

Commitments and Contingencies

Stockholders' Equity

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

per share,99,049,900 and 28,816 shares issued and outstanding

as of December 31,2021 and December,31,2020,respectively

99,050

28,536

Additional paid-in capital

88,927,787

53,989,548

Statutory earnings reserve

6,080,574

6,574

Accumulated other comprehensive income

10,496,168

5,740,722

Retained earnings

110,146,329

109,240,794

Total stockholders' equity

215,749,908

175,174

Total Liabilities and Stockholders' Equity

$

241,474

IT TECH PACKAGING,INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED DECEMBER 31,2021 AND 2020

Year Ended

December 31,

2021

2020

Revenues

$

160,881,720

$

100,943,269

Cost of sales

(149,864,161)

(95,241,284)

Gross Profit

11,017,559

5,701,985

Selling,general and administrative expenses

(9,558,190)

(11,157,789)

Gain on acquisition of a subsidiary

-

-

Income (Loss) from Operations

1,459,369

(5,455,804)

Other Income (Expense):

Interest income

38,766

32,033

Subsidy income

198,530

220,478

Interest expense

(1,124,702)

(1,026,512)

Gain (Loss) on derivative liability

5,880,526

(426,055)

Income (Loss) before Income Taxes

6,452,489

(6,655,860)

Provision for Income Taxes

(5,546,954)

1,101,858

Net Income (Loss)

905,535

(5,554,002)

Other Comprehensive Income (Loss)

Foreign currency translation adjustment

4,755,446

11,798,259

Total Comprehensive Income (Loss)

$

5,660,981

$

6,244,257

Earnings (Losses) Per Share:

Basic and Diluted Earnings (Losses) per

Share

$

0.02

$

(0.21)

Outstanding – Basic and Diluted

59,849,082

26,498,298

IT TECH PACKAGING,INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,

2021

2020

Cash Flows from Operating Activities:

Net income

$

$905,535

$

(5,002)

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

15,358,452

15,793,854

(Gain) Loss on derivative liability

(5,526)

426,055

(Recovery from) Allowance for bad debts

33,480

(28,087)

Share-based compensation and expenses

-

1,256,700

Deferred tax

2,730,050

(2,364,575)

Changes in operating assets and liabilities:

Accounts receivable

(2,495)

923,429

Prepayments and other current assets

(8,350,716)

5,301,953

Inventories

(4,531,263)

458,878

Accounts payable

(589,371)

307,198

Advance from customers

(44,366)

(21,281)

Related parties

(785,097)

1,984,619

Accrued payroll and employee benefits

60,334

(82,516)

Other payables and accrued liabilities

254,966

(1,105,508)

Income taxes payable

832,946

(1,153,191)

Net Cash (Used in) Provided by Operating Activities

(2,436,071)

16,143,526

Cash Flows from Investing Activities:

Purchases of property,plant and equipment

(25,071,372)

(21,106,210)

Proceeds from sale of property,plant and equipment

-

580,206

Net Cash Used in Investing Activities

(25,372)

(20,526,004)

Cash Flows from Financing Activities:

Proceeds from issuance of shares and warrants,net

41,837,553

2,273,360

Proceeds from short term bank loans

5,892,298

6,090,715

Repayment of bank loans

(6,512,703)

(6,237,217)

Payment of capital lease obligation

(185,050)

(72,003)

Loan to a related party

(6,274)

-

Net Cash Provided by (Used in) Financing Activities

34,193,824

2,054,855

Effect of Exchange Rate Changes on Cash and Cash Equivalents

372,794

632,315

Net Increase (Decrease) in Cash and Cash Equivalents

7,059,175

(1,695,308)

Cash,Cash Equivalents and Restricted Cash - Beginning of Year

4,437

5,745

Cash,Cash Equivalents and Restricted Cash - End of Year

$

11,437

Supplemental Disclosure of Cash Flow Information:

Cash paid for interest,net of capitalized interest cost

$

577,194

$

592,140

Cash paid for income taxes

$

1,970,984

$

2,401,191

Cash and bank balances

11,612

4,437

Restricted cash

-

-

Total cash,cash equivalents and restricted cash shown in the statement of cash

flows

11,437

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