IT Tech Packaging, Inc. Announces First Quarter 2022 Unaudited Financial Results

BAODING,China,May 10 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 firstquarterendedMarch 11,2022.

Mr. Zhenyong Liu,Chairman and Chief Executive Officer of the Company,commented,"In the first quarter of 2022,our business was significantly affected by the dynamic and challenging macro environment and resurgence of COVID-19. We have resumed our business operation,and we expect toactively improve our business plans andlaunch a series of initiatives to optimize our revenue structure and diversify our business to counter the adverse effects of COVID-19 and the governmental policy developments on our operations and financial results.Looking forward,we believe our business fundamentals will defend our leading position in the industry and we remain intently focused on ramping production,broadeningthe market,and driving long-term value for shareholders in 2022 and beyond."

First Quarter 2022Unaudited Financial Results

For the Three Months Ended March 31,

($ millions)

2022

2021

% Change

Revenues

15.48

24.21

-36.1%

Regular Corrugating Medium Paper ("CMP")*

13.10

16.96

-22.8%

Light-Weight CMP**

1.93

3.75

-48.6%

Offset Printing Paper

-

2.12

-100.0%

Tissue Paper Products

0.40

1.25

-68.2%

Face Masks

0.06

0.13

-56.6%

Gross profit

0.31

1.83

-83.0%

Gross profit (loss) margin

2.0%

7.6%

-5.6 pp****

Regular Corrugating Medium Paper ("CMP")*

5.4%

8.5%

-3.1 pp****

Light-Weight CMP**

8.2%

10.9%

-2.7 pp****

Offset Printing Paper

-

19.4%

-19.4 pp****

Tissue Paper Products***

-141.5%

-36.5%

-105.0 pp****

Face Masks

29.5%

18.8%

10.7pp****

Operating loss

-2.96

-0.72

-308.2%

Net loss

-2.49

-4.34

42.7%

EBITDA

1.20

-0.07

1,814.3%

Basic and Diluted lossper share

-0.03

-0.12

75.0%

* Products from PM6

** Products from PM1

*** Products from PM8 and PM9

**** pp represents percentage points

Revenue decreased by 36.1% toapproximately $15.48 million,mainly due to the decrease in sales volume of regular CMP,offset printing paperand tissue paper products.

Gross profit decreased by 83.0% toapproximately $0.31 million. Total gross margin decreased by 5.6 percentage point to 2.0%.

Loss from operations wasapproximately $2.96million,compared to loss from operations ofapproximately $0.72 millionfor the same period of last year.

Net loss wasapproximately $2.49 million,or loss per share of $0.03,compared to net loss ofapproximately $4.34 million,or loss per share of $0.12,for the same period of last year.

Earnings before interest,taxes,depreciation and amortization ("EBITDA") was approximately $1.20 million,compared to negative $0.07 million for the same period of last year.

Revenue

For the first quarter of 2022,total revenue decreased by 36.1%,toapproximately $15.48 millionfromapproximately $24.21 millionfor the same period of last year. The decrease in total revenue was mainly due to the decrease in sales volume of regular CMP,offset printing paperand tissue paper products.

The following table summarizes revenue,volume and ASP by product for the first quarter of 2022 and 2021,respectively:

For the Three Months Ended March 31,

2022

2021

Revenue

($'000)

Volume

(tonne)

ASP

($/tonne)

Revenue

($'000)

Volume

(tonne)

ASP

($/tonne)

Regular CMP

13,099

25,245

519

16,964

33,626

504

Light-Weight CMP

1,927

3,841

502

3,748

7,670

489

Offset Printing Paper

-

-

-

2,116

3,142

673

Tissue Paper Products

398

397

1,003

1,251

1,120

1,117

Total

15,425

29,483

523

24,079

45,558

529

Revenue

($'000)

Volume

(thousand

pieces)

ASP

($/thousand

pieces)

Revenue

($'000)

Volume

(thousand

pieces)

ASP

($/thousand

pieces)

Face Masks

57

3,014

19

130

3,836

34

Revenue from CMP,including both regular CMP and light-Weight CMP,decreased by 27.5%,toapproximately $15.03 millionand accounted for 97.1% of total revenue for the first quarter of 2022,compared toapproximately $20.71million,or 85.6% of total revenue for the same period of last year. The Company sold 29,086tonnes of CMP at an ASP of$517/tonne in the first quarter of 2022,compared to 41,296tonnes at an ASP of$502/tonne in the same period of last year.

Of the total CMP sales,revenue from regular CMPdecreased by 22.8%,toapproximately $13.10 million for the first quarter of 2022,compared to revenue ofapproximately $16.96 million for the same period of last year. The Company sold 25,245tonnesof regular CMPat an ASP of$519/tonne during the first quarter of 2022,compared to 33,626 tonnes at an ASP of$504/tonne for the same period of last year. Revenue from light-weight CMPdecreased by 48.6%,toapproximately $1.93 million for the first quarter of 2022,compared to revenue ofapproximately $3.75 million for the same period of last year. The Company sold3,841tonnesof light-weight CMPat an ASP of$502/tonne for the first quarter of 2022,compared to 7,670tonnes at an ASP of$489/tonne for the same period of last year.

Revenue from offset printing paper was nil for the first quarter of 2022,compared to revenue ofapproximately$2.12 millionfor the same period of last year. The Company sold 3,142tonnes of offset printing paper at an ASP of$673/tonnein the first quarter of 2021.

Revenue from tissue paper products decreased by 68.2%,toapproximately $0.40million for the first quarter of 2022,fromapproximately$1.25 millionfor the same period of last year. The Company sold 397 tonnesof tissue paper products at an ASP of$1,003/tonne for the first quarter of 2022,compared to 1,120tonnes at an ASP of$1,117/tonne for the same period of last year.

Revenue from face masks decreased by 56.6%,toapproximately $56,596for the first quarter endedMarch 31,2022,from $130,458 for the same period of last year. The Company sold 3,014 thousand pieces of face masks for the first quarter of2022,compared to 3,836 thousand pieces of face masks for the same period oflast year.

Gross Profit and Gross Margin

Total cost of sales decreased by 32.2%,toapproximately $15.17 millionfor the first quarter of 2022 fromapproximately $22.38 millionfor the same period of last year. The decrease in overall cost of sales was mainly due to the decrease in sales quantity of regular CMP,offset printing paper and tissue paper products. Costs of sales per tonne for regular CMP,light-weight CMP,offset printing paper,and tissue paper products were$491,$461,$nil and$2,424,respectively,for the first quarter of 2022,compared to $462,$435,$543and$1,525,for the same period of last year.

Total gross profit wasapproximately $0.31 millionfor the first quarter of 2022,compare to the gross profit ofapproximately $1.83 millionfor the same period of last year as a result of factors described above. Overall gross margin was 2.0% for the first quarter of 2022,compared to 7.6% for the same period of last year. Gross profit(loss) margins for regular CMP,tissue paper products and face mask products were 5.4%,8.2%,nil%,-141.5% and 29.5%,compared to 8.5%,10.9%,19.4%,-36.5% and 18.8%,for the same period of last year.

Selling,General and Administrative Expenses

Selling,general and administrative expenses ("SG&A") increased by 29.2%,toapproximately $3.30 millionfor the first quarter of 2022 fromapproximately $2.56 millionfor the same period of last year.

Loss from Operations

Loss from operations wasapproximately $2.96 millionfor the first quarter of 2022,a decrease of 308.2%,from loss from operations ofapproximately $0.72 millionfor the same period of last year. Operating loss margin was 19.1% for the first quarter of 2022,compared to operating loss margin of 3.0% for the same period of last year.

Net Loss

Net loss wasapproximately $2.49 million,for the same period of last year.

EBITDA

EBITDA wasapproximately $1.20 millionfor the first quarter of 2022,compared toapproximately negative $0.07 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 March 31,

($ millions)

2022

2021

Net loss

-2.49

-4.34

Add: Income tax

-0.35

-0.10

Net interest expense

0.27

0.28

Depreciation and amortization

3.77

4.09

EBITDA

1.20

-0.07

Cash,Liquidity and Financial Position

As ofMarch 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 related party loans) ofapproximately $15.36million,$13.58 million and$2.99 million,comparedto approximately$11.20million,$13.52million and$2.98 million,as ofDecember 31,2021.

Net accounts receivable wasapproximately $4.98million as ofMarch 31,compared to approximately$4.87million as ofDecember 31,2021. Net inventory was approximately$4.35million as ofMarch 31,compared toapproximately$5.84million as ofDecember 31,2021. As ofMarch 31,the Company had current assets ofapproximately$48.62million and current liabilities ofapproximately$19.94million,resulting in a working capital ofapproximately$28.68million. This was compared to current assets of approximately $55.52 million and current liabilities of approximately $20.43 million,resulting in a working capital of approximately $35.09 millionas ofDecember 31,2021.

Net cash provided by operating activities wasapproximately$4.41millionfor the first quarter of 2022,compared to net cash used in operating activities of approximately$8.28 millionfor the same period of last year. Net cash used in investing activities wasapproximately$7.18 millionfor the first quarter of 2022,compared toapproximately$0.04 millionfor the same period of last year. Net cash provided by financing activities wasapproximately$6.89 millionfor the first quarter of 2022,compared to approximately$41.79 million for the same period of last year.

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: +86 312 8698215

Investor Relations

Ascent Investor Relations LLCMs. Tina Xiao

Email: tina.xiao@ascent-ir.com

Tel: +1-917-609-0333

IT TECH PACKAGING,INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31,2022 AND DECEMBER 31,2021

March 31,

December 31,

2022

2021

(Unaudited)

(Audited)

ASSETS

Current Assets

Cash and bank balances

$

15,358,443

$

11,201,612

Restricted cash

-

-

Accounts receivable (net of allowance for doubtful accounts of $73,563 and

$69,053 as of March 31,2022 and December 31,2021,respectively)

4,984,738

4,868,934

Inventories

4,354,676

5,844,895

Prepayments and other current assets

23,025,189

25,796,640

Due from related parties

892,743

7,804,068

Total current assets

48,615,789

55,516,149

Prepayment on property,plant and equipment

-

43,446,210

Finance lease right-of-use assets,net

2,254,357

2,286,459

Property,plant,and equipment,net

174,077,916

126,587,428

Value-added tax recoverable

2,396,938

2,430,277

Deferred tax asset non-current

11,666,488

11,268,679

Total Assets

$

239,011,488

$

241,535,202

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

Short-term bank loans

$

5,374

$

5,958,561

Current portion of long-term loans from credit union

6,089

6,838,465

Lease liability

228,051

210,161

Accounts payable

72,616

10,255

Advance from customers

39,866

39,694

Due to related parties

727,433

727,433

Accrued payroll and employee benefits

278,287

291,206

Other payables and accrued liabilities

5,739,631

5,250,539

Income taxes payable

-

1,108,038

Total current liabilities

19,938,347

20,434,352

Loans from credit union

2,992,974

2,980,065

Deferred gain on sale-leaseback

131,185

155,110

Lease liability - non-current

84,204

152,233

Derivative liability

1,676,946

2,063,534

Total liabilities (including amounts of the consolidated VIE without recourse to

the Company of $17,240,190 and $17,924,475 as of March 31,2022 and

December 31,respectively)

24,823,656

25,785,294

Commitments and Contingencies

Stockholders' Equity

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

99,049,900 shares issued and outstanding as of March 31,2022 and

December,31,2021.

99,050

99,050

Additional paid-in capital

88,927,787

88,787

Statutory earnings reserve

6,080,574

6,574

Accumulated other comprehensive income

11,422,306

10,496,168

Retained earnings

107,658,115

110,146,329

Total stockholders' equity

214,187,832

215,749,908

Total Liabilities and Stockholders' Equity

$

239,202

IT TECH PACKAGING,INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31,2022 AND 2021

(Unaudited)

Three Months Ended

March 31,

2022

2021

Revenues

$

15,481,618

$

24,209,427

Cost of sales

(15,171,173)

(22,378,422)

Gross Profit

310,445

1,831,005

Selling,general and administrative expenses

(3,300,881)

(2,555,318)

Gain on acquisition

34,003

-

Loss from Operations

(2,956,433)

(724,313)

Other Income (Expense):

Interest income

3,455

4,333

Subsidy income

-

196,787

Interest expense

(270,813)

(278,901)

Gain (Loss) on derivative liability

386,588

(3,636,967)

Loss before Income Taxes

(2,837,203)

(4,439,061)

Provision for Income Taxes

348,989

100,205

Net Loss

(2,488,214)

(4,338,856)

Other Comprehensive Income (Loss)

Foreign currency translation adjustment

926,138

(1,468,770)

Total Comprehensive Loss

$

(1,562,076)

$

(5,807,626)

Losses Per Share:

Basic and Diluted Losses per Share

$

(0.03)

$

(0.12)

Outstanding – Basic and Diluted

99,900

36,156,280

IT TECH PACKAGING,INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31,

2022

2021

Cash Flows from Operating Activities:

Net income

$

(2,214)

$

(4,856)

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

Depreciation and amortization

3,773,236

4,092,487

(Gain) Loss on derivative liability

(386,588)

3,967

Gain on acquisition

(34,001)

-

Allowance for bad debts

4,211

52,018

Deferred tax

(348,989)

(589,094)

Changes in operating assets and liabilities:

Accounts receivable

(98,921)

(2,920,798)

Prepayments and other current assets

3,056,189

(3,645,323)

Inventories

1,515,515

(6,270,151)

Accounts payable

62,315

1,742

Related parties

-

(311,679)

Accrued payroll and employee benefits

(14,181)

86,375

Other payables and accrued liabilities

483,666

(84,719)

Income taxes payable

(1,112,820)

226,699

Net Cash Provided by (Used in) Operating Activities

4,411,418

(8,280,332)

Cash Flows from Investing Activities:

Purchases of property,plant and equipment

(368,504)

(44,599)

Acquisition of land

(6,468)

-

Net Cash Used in Investing Activities

(7,175,972)

(44,599)

Cash Flows from Financing Activities:

Proceeds from issuance of shares and warrants,net

-

41,553

Payment of capital lease obligation

(51,708)

(43,230)

Loan repaid by a related party

6,945,022

-

Net Cash Provided by Financing Activities

6,893,314

41,794,323

Effect of Exchange Rate Changes on Cash and Cash Equivalents

28,071

(170,838)

Net Increase in Cash and Cash Equivalents

4,831

33,298,554

Cash,Cash Equivalents and Restricted Cash - Beginning of Period

11,612

4,142,437

Cash,Cash Equivalents and Restricted Cash - End of Period

$

15,443

$

37,440,991

Supplemental Disclosure of Cash Flow Information:

Cash paid for interest,net of capitalized interest cost

$

85,094

$

97,642

Cash paid for income taxes

$

1,820

$

262,191

Cash and bank balances

15,443

37,991

Restricted cash

-

-

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

flows

15,991

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