ITP's Net Loss Widens Despite Revenue Growth, VIEs Remain Critical

TL;DR

**ITP's widening net loss and heavy reliance on its Chinese VIEs make it a risky bet, despite revenue growth.**

AI Summary

IT Tech Packaging, Inc. (ITP) reported a net loss of $6,903,858 for the nine months ended September 30, 2025, an increase from the $5,798,229 net loss in the prior year period. Revenues, however, saw a modest increase to $61,293,251 for the nine months ended September 30, 2025, up from $58,195,129 in the same period of 2024, representing a 5.3% growth. Gross profit declined significantly by 39.4% to $3,379,677 from $5,581,794, primarily due to a higher cost of sales, which rose to $57,913,574 from $52,613,335. The company's total assets decreased slightly to $175,698,192 as of September 30, 2025, from $177,546,786 at December 31, 2024. Cash and bank balances increased to $8,072,936 from $5,916,373, while accounts receivable surged to $2,079,190 from $287,576. A significant strategic move was the issuance of 6,899,500 shares to an institutional investor, raising $1,063,124, which increased outstanding shares to 16,965,420. The company continues to rely heavily on its Variable Interest Entities (VIEs), Dongfang Paper and Tengsheng Paper, which accounted for 100% of total revenue and over 96% of total assets.

Why It Matters

ITP's continued reliance on its Variable Interest Entities (VIEs) in China, Dongfang Paper and Tengsheng Paper, for 100% of its revenue and over 96% of its assets, introduces significant regulatory and operational risks for investors. The widening net loss, despite revenue growth, signals potential profitability challenges and cost control issues, which could erode investor confidence. For employees and customers, the stability of the VIE structure is paramount, as any disruption due to PRC legal uncertainties could severely impact operations. In a competitive market, ITP's inability to translate revenue growth into net income could hinder its long-term viability and market position.

Risk Assessment

Risk Level: high — The company's high risk level stems from its complete reliance on Variable Interest Entities (VIEs), Dongfang Paper and Tengsheng Paper, for 100% of its total revenue and 96.09% of its total assets as of September 30, 2025. This structure is subject to significant uncertainties in the PRC legal system, which could lead to penalties, operational restructuring, or even deconsolidation of the VIEs, as explicitly stated in the filing.

Analyst Insight

Investors should exercise extreme caution and consider the significant regulatory and operational risks associated with ITP's VIE structure in China. Given the widening net loss and the inherent uncertainties, a 'wait and see' approach or divestment might be prudent until the company demonstrates consistent profitability and a more robust, less risky operational framework.

Financial Highlights

debt To Equity

0.15

revenue

$61,293,251

operating Margin

-9.9%

total Assets

$175,698,192

total Debt

$23,648,656

net Income

-$6,903,858

eps

-$0.51

gross Margin

5.5%

cash Position

$8,072,936

revenue Growth

+5.3%

Revenue Breakdown

Key Numbers

• $6,903,858 — Net Loss (for the nine months ended September 30, 2025, increased from $5,798,229 in 2024)
• $61,293,251 — Revenues (for the nine months ended September 30, 2025, up from $58,195,129 in 2024)
• $3,379,677 — Gross Profit (for the nine months ended September 30, 2025, a decrease from $5,581,794 in 2024)
• $175,698,192 — Total Assets (as of September 30, 2025, a slight decrease from $177,546,786 at December 31, 2024)
• $8,072,936 — Cash and bank balances (as of September 30, 2025, increased from $5,916,373 at December 31, 2024)
• $2,079,190 — Accounts receivable (as of September 30, 2025, significantly increased from $287,576 at December 31, 2024)
• 16,965,420 — Shares Outstanding (as of November 13, 2025, increased from 10,065,920 at December 31, 2024)
• $1,063,124 — Proceeds from issuance of shares (for the nine months ended September 30, 2025)
• 100% — Revenue from VIEs (Dongfang Paper and Tengsheng Paper accounted for all of the Company's total revenue)
• 96.09% — Assets from VIEs (Dongfang Paper and Tengsheng Paper accounted for this percentage of total assets as of September 30, 2025)

Key Players & Entities

• IT TECH PACKAGING, INC. (company) — registrant
• Dongfang Paper (company) — primary Variable Interest Entity (VIE)
• Tengsheng Paper Co., Ltd. (company) — subsidiary of Dongfang Paper and VIE
• Baoding Shengde Paper Co., Ltd. (company) — wholly foreign-owned enterprise in PRC, controls Dongfang Paper via contractual agreements
• Shengde Holdings Inc. (company) — wholly owned subsidiary of IT Tech Packaging, Inc.
• Zhenyong Liu (person) — original shareholder of Dongfang Paper
• Xiaodong Liu (person) — original shareholder of Dongfang Paper
• Shuangxi Zhao (person) — original shareholder of Dongfang Paper
• NYSE American (regulator) — exchange where ITP common stock is registered
• SEC (regulator) — Securities and Exchange Commission

FAQ

Risk Factors

• Increasing Net Loss Despite Revenue Growth [high — financial]: The company reported a net loss of $6,903,858 for the nine months ended September 30, 2025, an increase from $5,798,229 in the prior year period. This widening loss occurred despite a 5.3% increase in revenues to $61,293,251, indicating significant cost pressures or inefficiencies.
• Declining Gross Profit Margin [high — financial]: Gross profit decreased by 39.4% to $3,379,677 for the nine months ended September 30, 2025, from $5,581,794 in the prior year. This was primarily due to a substantial rise in the cost of sales, which increased to $57,913,574 from $52,613,335, eroding profitability.
• Heavy Reliance on VIEs [high — financial]: The company's operations are entirely dependent on its Variable Interest Entities (VIEs), Dongfang Paper and Tengsheng Paper, which accounted for 100% of total revenue and over 96% of total assets as of September 30, 2025. Any disruption or adverse change in these VIEs could severely impact the company's financial health.
• Significant Increase in Accounts Receivable [medium — financial]: Accounts receivable surged to $2,079,190 as of September 30, 2025, from $287,576 at December 31, 2024. While this could indicate increased sales, it also raises concerns about collection efficiency and potential bad debts.
• Dilution from Share Issuance [medium — financial]: The company issued 6,899,500 shares to an institutional investor, raising $1,063,124. This increased the outstanding shares to 16,965,420 from 10,065,920, leading to significant dilution for existing shareholders.
• Dependence on Specific Entities [high — operational]: The company's business model relies entirely on its VIEs, Dongfang Paper and Tengsheng Paper. This concentration creates a significant operational risk, as any issues with these entities, such as regulatory changes in China, operational disruptions, or financial distress, would directly and severely impact IT Tech Packaging.
• VIE Structure Risks [high — regulatory]: The use of Variable Interest Entities (VIEs) to consolidate operations in China carries inherent regulatory risks. Changes in Chinese laws or enforcement regarding VIE structures could impact the company's ability to control and consolidate these entities, potentially affecting its financial reporting and operations.
• Decreasing Total Assets [low — financial]: Total assets decreased slightly to $175,698,192 as of September 30, 2025, from $177,546,786 at December 31, 2024. While not a drastic drop, combined with the increasing net loss, it suggests a potential contraction or inefficient asset utilization.

Industry Context

The paper packaging industry is characterized by cyclical demand, raw material price volatility, and increasing competition, particularly from Asian manufacturers. Companies in this sector often face pressure to innovate with sustainable materials and efficient production processes. IT Tech Packaging operates within this environment, heavily reliant on its Chinese-based VIEs for production and sales.

Regulatory Implications

The company's reliance on VIEs for its operations in China exposes it to significant regulatory risks. Changes in Chinese foreign investment laws, accounting standards, or enforcement of existing regulations could impact the company's ability to consolidate its VIEs or even its right to operate in the market.

What Investors Should Do

1. Monitor cost of sales and gross margin trends closely.
2. Investigate the increase in accounts receivable.
3. Assess the long-term viability of the VIE structure.
4. Evaluate the impact of share dilution.
5. Analyze the company's path to profitability.

Key Dates

• 2025-09-30: Nine months ended reporting period — Period shows increased net loss and revenue growth, with a significant decline in gross profit and a surge in accounts receivable.
• 2025-09-30: Balance sheet date — Total assets slightly decreased, while cash increased and accounts receivable surged. Outstanding shares increased due to a recent issuance.
• 2024-12-31: Prior year-end reporting date — Provides a baseline for comparison of asset changes and share count.
• 2024-09-30: Prior year nine months ended reporting period — Shows a smaller net loss and higher gross profit compared to the current period, highlighting deteriorating profitability.
• 2025-11-13: Date of share count disclosure — Confirms the increased number of outstanding shares following the recent equity issuance.

Glossary

Variable Interest Entities (VIEs)

Entities that are consolidated by a company even though it may not have a majority voting interest, typically used to circumvent foreign ownership restrictions. (ITP's entire revenue and majority of assets are derived from its VIEs, Dongfang Paper and Tengsheng Paper, making their performance and regulatory status critical.)

Cost of Sales

The direct costs attributable to the production or purchase of the goods sold by a company. (A significant increase in cost of sales for ITP led to a sharp decline in gross profit, despite revenue growth.)

Gross Profit

Revenue minus the cost of goods sold. (ITP's gross profit declined significantly, indicating that the cost of sales is growing faster than revenue.)

Net Loss

The total expenses of a company exceed its total revenues. (ITP reported an increasing net loss for the nine-month period, signaling worsening financial performance.)

Accounts Receivable

Money owed to a company by its customers for goods or services delivered. (A substantial increase in accounts receivable for ITP raises questions about cash collection and potential credit risks.)

Additional Paid-in Capital

The amount of money an investor pays for stock above its par or stated value. (Shows the capital raised from stock issuances, including the recent $1,063,124 from an institutional investor.)

Accumulated Other Comprehensive Income (Loss)

A measure of unrealized gains and losses that have not been included in net income. (Reflects foreign currency translation adjustments, which have been positive for ITP.)

Retained Earnings

The cumulative amount of net income that a company has retained over time. (ITP's retained earnings have decreased due to ongoing net losses.)

Year-Over-Year Comparison

For the nine months ended September 30, 2025, IT Tech Packaging, Inc. reported a 5.3% increase in revenue to $61,293,251, up from $58,195,129 in the prior year. However, this revenue growth was overshadowed by a significant 39.4% decline in gross profit to $3,379,677, driven by a higher cost of sales. Consequently, the net loss widened to $6,903,858 from $5,798,229. Total assets saw a slight decrease, while cash and bank balances improved, but accounts receivable experienced a dramatic surge. The company also saw a substantial increase in outstanding shares due to a recent equity issuance.

Key Financial Figures

• $0.001 — ich registered Common Stock, par value $0.001 ITP NYSE American Indicate by check m
• $0 — he registrant's common stock, par value $0.001, outstanding. TABLE OF CONTENTS

Filing Documents

• ea0264536-10q_ittech.htm (10-Q) — 1029KB
• ea026453601ex31-1_ittech.htm (EX-31.1) — 12KB
• ea026453601ex31-2_ittech.htm (EX-31.2) — 12KB
• ea026453601ex32-1_ittech.htm (EX-32.1) — 5KB
• ea026453601ex32-2_ittech.htm (EX-32.2) — 5KB
• image_001.jpg (GRAPHIC) — 151KB
• image_002.jpg (GRAPHIC) — 161KB
• image_003.jpg (GRAPHIC) — 140KB
• image_004.jpg (GRAPHIC) — 153KB
• image_005.jpg (GRAPHIC) — 175KB
• image_006.jpg (GRAPHIC) — 158KB
• 0001213900-25-110001.txt ( ) — 9713KB
• itp-20250930.xsd (EX-101.SCH) — 76KB
• itp-20250930_cal.xml (EX-101.CAL) — 71KB
• itp-20250930_def.xml (EX-101.DEF) — 335KB
• itp-20250930_lab.xml (EX-101.LAB) — 592KB
• itp-20250930_pre.xml (EX-101.PRE) — 360KB
• ea0264536-10q_ittech_htm.xml (XML) — 953KB

- FINANCIAL INFORMATION

Part I. - FINANCIAL INFORMATION 1 Item 1.

Financial Statements

Financial Statements 1 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 31 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 46 Item 4.

Controls and Procedures

Controls and Procedures 46

- OTHER INFORMATION

Part II. - OTHER INFORMATION 47 Item 1.

Legal Proceedings

Legal Proceedings 47 Item 1A.

Risk Factors

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

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

Financial Statements

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 outsta

financial statements

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 activi

financial statements

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

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 t

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