ITEM
1. FINANCIAL STATEMENTS
|
|
PLANET
GREEN HOLDINGS CORP.
|
|
UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
|
JUNE
30, 2019 AND DECEMBER 31, 2018
|
|
(Stated
in US Dollars)
|
CONTENTS
|
|
PAGES
|
|
|
|
Unaudited Condensed
Consolidated Balance Sheets
|
|
F-2
|
|
|
|
Unaudited Condensed
Consolidated Statements of Operations and Comprehensive Income (Loss)
|
|
F-3
|
|
|
|
Unaudited Condensed Consolidated Statements
of Changes in Stockholders’ Equity/(Deficiency)
|
|
F-4
|
|
|
|
Unaudited Condensed
Consolidated Statements of Cash Flows
|
|
F-5
|
|
|
|
Notes to Financial
Statements
|
|
F-6 to F-18
|
PLANET
GREEN HOLDINGS CORP.
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
AT
JUNE 30, 2019 AND DECEMBER 31, 2018
|
(Stated
in US Dollars)
|
|
|
June
30,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
7,035,669
|
|
|
$
|
1,062,643
|
|
Trade
receivables, net
|
|
|
1,893,962
|
|
|
|
6,528,072
|
|
Inventories
|
|
|
1,525,779
|
|
|
|
-
|
|
Advances
and prepayments to suppliers
|
|
|
6,721,263
|
|
|
|
7,381,785
|
|
Other
receivables and other current assets
|
|
|
352,057
|
|
|
|
16,316
|
|
Related
party receivable
|
|
|
2,197
|
|
|
|
2,208
|
|
Discontinued
operations - current assets held for sale
|
|
|
|
|
|
|
-
|
|
Total
current assets
|
|
$
|
17,530,927
|
|
|
$
|
14,991,024
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
|
|
Plant
and equipment, net
|
|
|
5,139,073
|
|
|
|
1,371,518
|
|
Construction
in progress, net
|
|
|
847,777
|
|
|
|
846,441
|
|
Intangible
assets, net
|
|
|
2,205,109
|
|
|
|
|
|
Deposits
|
|
|
1,478
|
|
|
|
1,477
|
|
Total
Non-Current Assets
|
|
$
|
8,193,437
|
|
|
$
|
2,219,435
|
|
Total
Assets
|
|
$
|
25,724,364
|
|
|
$
|
17,210,460
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
1,122,827
|
|
|
$
|
579,228
|
|
Taxes
payable
|
|
|
54,774
|
|
|
|
155,135
|
|
Accrued
liabilities and other payables
|
|
|
2,453,852
|
|
|
|
496,799
|
|
Customers
deposits
|
|
|
411,703
|
|
|
|
3,499
|
|
Related
party payable
|
|
|
88,742
|
|
|
|
78,656
|
|
Discontinued
operations - liabilities
|
|
|
3,573,611
|
|
|
|
8,607,813
|
|
Total
current liabilities
|
|
$
|
7,705,509
|
|
|
$
|
9,921,130
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
Equity
|
|
|
|
|
|
|
|
|
Preferred Stock,
$0.001 par value, 5,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2019 and December 31, 2018,
respectively
|
|
$
|
-
|
|
|
$
|
-
|
|
Common Stock,
$0.001 par value, 200,000,000 shares authorized; 7,877,765 and 5,497,765 shares issued and outstanding as of June 30, 2019
and December 31, 2018, respectively
|
|
|
7,878
|
|
|
|
5,498
|
|
Additional
paid-in capital
|
|
|
85,835,809
|
|
|
|
74,739,031
|
|
Statutory
reserves
|
|
|
2,810,953
|
|
|
|
2,810,953
|
|
Accumulated
deficit
|
|
|
(79,346,693
|
)
|
|
|
(79,038,883
|
)
|
Accumulated
other comprehensive income
|
|
|
9,730,460
|
|
|
|
9,792,283
|
|
Non-controlling
interests
|
|
|
(1,019,552
|
)
|
|
|
(1,019,552
|
)
|
Total
Stockholders’ Equity
|
|
$
|
18,018,855
|
|
|
$
|
7,289,330
|
|
Total
Liabilities and Stockholders’ Equity
|
|
$
|
25,724,364
|
|
|
$
|
17,210,460
|
|
See
Accompanying Notes to the Financial Statements
PLANET
GREEN HOLDINGS CORP.
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
AND
COMPREHENSIVE INCOME (LOSS)
|
FOR
THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018
|
(Stated
in US Dollars)
|
|
|
For
the three months ended
|
|
|
For
the six months ended
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
|
$
|
852,009
|
|
|
$
|
636,387
|
|
|
$
|
1,930,254
|
|
|
$
|
1,653,915
|
|
Cost
of revenues
|
|
|
771,458
|
|
|
|
70,918
|
|
|
|
1,551,446
|
|
|
|
972,409
|
|
Gross
profit
|
|
|
80,551
|
|
|
|
565,469
|
|
|
|
378,808
|
|
|
|
681,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
and marketing expenses
|
|
|
19,280
|
|
|
|
31,045
|
|
|
|
19,390
|
|
|
|
52,992
|
|
General
and administrative expenses
|
|
|
353,372
|
|
|
|
578,216
|
|
|
|
587,941
|
|
|
|
740,603
|
|
Total
operating expenses
|
|
|
372,652
|
|
|
|
609,261
|
|
|
|
607,331
|
|
|
|
793,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss)
|
|
|
(292,101
|
)
|
|
|
(43,792
|
)
|
|
|
(228,523
|
)
|
|
|
(112,089
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expenses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
9
|
|
|
|
(238
|
)
|
|
|
170
|
|
|
|
248
|
|
Interest
expense
|
|
|
(15,989
|
)
|
|
|
|
|
|
|
(15,989
|
)
|
|
|
|
|
Other
income
|
|
|
(1,607
|
)
|
|
|
77,053
|
|
|
|
(1,607
|
)
|
|
|
77,783
|
|
Other
expenses
|
|
|
(5,766
|
)
|
|
|
(83,764
|
)
|
|
|
(5,766
|
)
|
|
|
(87,246
|
)
|
Loss
from investment
|
|
|
-
|
|
|
|
4,965
|
|
|
|
|
|
|
|
4,965
|
|
|
|
|
(23,353
|
)
|
|
|
(1,984
|
)
|
|
|
(23,192
|
)
|
|
|
(4,250
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) Loss before taxes from continuing operations
|
|
|
(315,454
|
)
|
|
|
(45,776
|
)
|
|
|
(251,715
|
)
|
|
|
(116,339
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
52
|
|
|
|
-
|
|
|
|
56,095
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations
|
|
|
(315,506
|
)
|
|
|
(45,776
|
)
|
|
|
(307,810
|
)
|
|
|
(116,339
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from discontinued operations
|
|
|
-
|
|
|
|
(665,658
|
)
|
|
|
-
|
|
|
|
(652,612
|
)
|
Provision
for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
Income
(loss) from discontinued operations, net of taxes
|
|
|
-
|
|
|
|
(665,658
|
)
|
|
|
-
|
|
|
|
(652,612
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
(315,506
|
)
|
|
$
|
(711,434
|
)
|
|
$
|
(307,810
|
)
|
|
$
|
(768,951
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) income attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Common shareholders
|
|
|
(315,506
|
)
|
|
|
(709,277
|
)
|
|
|
(307,810
|
)
|
|
|
(769,377
|
)
|
-
Non-controlling interests
|
|
|
-
|
|
|
|
(2,157
|
)
|
|
|
-
|
|
|
|
426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation gain (loss)
|
|
|
(254,483
|
)
|
|
|
585,224
|
|
|
|
(61,823
|
)
|
|
|
139,173
|
|
Comprehensive
income (loss)
|
|
$
|
(569,989
|
)
|
|
$
|
(126,210
|
)
|
|
$
|
(369,633
|
)
|
|
$
|
(629,778
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per share from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Basic and diluted
|
|
|
(0.05
|
)
|
|
|
(0.03
|
)
|
|
|
(0.05
|
)
|
|
|
(0.06
|
)
|
Income
(loss) per share from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Basic and diluted
|
|
|
-
|
|
|
|
(0.40
|
)
|
|
|
-
|
|
|
|
(0.36
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Basic and diluted
|
|
|
(0.05
|
)
|
|
|
(0.43
|
)
|
|
|
(0.05
|
)
|
|
|
(0.42
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted weighted average shares outstanding
|
|
|
5,901,411
|
|
|
|
1,662,686
|
|
|
|
5,901,411
|
|
|
|
1,803,239
|
|
See Accompanying
Notes to the Financial Statements
PLANET
GREEN HOLDINGS CORP.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ EQUITY/(DEFICIENCY)
FOR
THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(Stated
in US Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
Non-
|
|
|
|
|
|
|
of
|
|
|
Common
|
|
|
Paid-in
|
|
|
Subscription
|
|
|
Statutory
|
|
|
Accumulated
|
|
|
Comprehensive
|
|
|
Controlling
|
|
|
|
|
|
|
Shares
|
|
|
Stock
|
|
|
Capital
|
|
|
receivable
|
|
|
Reserves
|
|
|
Deficit
|
|
|
Income
|
|
|
Interests
|
|
|
Total
|
|
Balance,
January 1, 2018
|
|
|
1,532,823
|
|
|
$
|
1,533
|
|
|
$
|
57,888,991
|
|
|
|
(2,142,000
|
)
|
|
$
|
25,103,354
|
|
|
$
|
(99,628,547
|
)
|
|
$
|
13,588,726
|
|
|
$
|
(7,745,353
|
)
|
|
$
|
(10,791,296
|
)
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
(768,951
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(768,951
|
)
|
Issuance
of common stock for cash
|
|
|
1,062,000
|
|
|
|
1,062
|
|
|
|
4,702,938
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,704,000
|
|
Subscription
receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,142,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,142,000
|
)
|
Allocation
to non-controlling interests
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
(426
|
)
|
|
|
-
|
|
|
|
426
|
|
|
|
-
|
|
Foreign
currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
139,172
|
|
|
|
-
|
|
|
|
139,172
|
|
Balance,
June 30, 2018
|
|
|
2,594,823
|
|
|
$
|
2,595
|
|
|
$
|
62,591,929
|
|
|
|
(2,142,000
|
)
|
|
$
|
25,103,354
|
|
|
$
|
(100,397,924
|
)
|
|
$
|
13,727,898
|
|
|
|
(7,744,927
|
)
|
|
$
|
(8,859,075
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
January 1, 2019
|
|
|
5,497,765
|
|
|
$
|
5,498
|
|
|
$
|
74,739,031
|
|
|
|
|
|
|
$
|
2,810,953
|
|
|
$
|
(79,038,883
|
)
|
|
$
|
9,792,283
|
|
|
$
|
(1,019,552
|
)
|
|
$
|
7,289,330
|
|
Net
income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(307,810
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(307,810
|
)
|
Issuance
of shares for acquisition
|
|
|
1,080,000
|
|
|
|
1,080
|
|
|
|
4,783,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,784,292
|
|
Issuance
of common stock for cash
|
|
|
1,300,000
|
|
|
|
1,300
|
|
|
|
5,458,700
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,460,000
|
|
Allocation
to non-controlling interests
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Acquiring
corporation
|
|
|
|
|
|
|
|
|
|
|
854,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
854,866
|
|
Foreign
currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(61,823
|
)
|
|
|
-
|
|
|
|
(61,823
|
)
|
Balance,
June 30, 2019
|
|
|
7,877,765
|
|
|
$
|
7,878
|
|
|
$
|
85,835,809
|
|
|
|
|
|
|
$
|
2,810,953
|
|
|
$
|
(79,346,693
|
)
|
|
$
|
9,730,460
|
|
|
$
|
(1,019,552
|
)
|
|
$
|
18,018,855
|
|
See
Accompanying Notes to the Financial Statements
PLANET
GREEN HOLDINGS CORP.
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
FOR
THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018
|
(STATED
IN US DOLLARS)
|
|
|
For
the six months ended
|
|
|
|
June
30,
|
|
|
|
2019
|
|
|
2018
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(307,810
|
)
|
|
$
|
(116,339
|
)
|
Amortization
|
|
|
(47,780
|
)
|
|
|
137,904
|
|
Depreciation
|
|
|
205,027
|
|
|
|
295,981
|
|
Increase in accounts and other receivables
|
|
|
(342,060
|
)
|
|
|
(690,408
|
)
|
Decrease/(increase) in inventory
|
|
|
4,971
|
|
|
|
(524,090
|
)
|
Decrease/(increase) in prepayments and
other current assets
|
|
|
761,580
|
|
|
|
(489,926
|
)
|
(Decrease)/increase in payables and
other current liabilities
|
|
|
(2,435,442
|
)
|
|
|
5,622,821
|
|
Net cash used
in operating activities
|
|
$
|
(2,161,514
|
)
|
|
$
|
(7,009,699
|
)
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
|
|
|
Purchase of plant and equipment and
construction in progress
|
|
|
(131,786
|
)
|
|
|
(4,836
|
)
|
Purchase of intangible assets
|
|
|
(525,943
|
)
|
|
|
-
|
|
Net
cash used in investing activities
|
|
$
|
(657,729
|
)
|
|
$
|
(4,836
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
9,943,564
|
|
|
|
2,562,000
|
|
Receiving bank loans
|
|
|
|
|
|
|
|
|
Repayment of borrowings
|
|
|
(1,128,867
|
)
|
|
|
-
|
|
Changes in related party balances, net
|
|
|
-
|
|
|
|
-
|
|
Net cash provided
by financing activities
|
|
$
|
8,814,697
|
|
|
$
|
2,562,000
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and
cash equivalents
|
|
|
5,995,454
|
|
|
|
(4,452,535
|
)
|
|
|
|
|
|
|
|
|
|
Effect of foreign currency translation
on cash and cash equivalents
|
|
|
(39,315
|
)
|
|
|
4,752,366
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents–beginning of year
|
|
|
1,079,530
|
|
|
|
85,493
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents–end
of year
|
|
$
|
7,035,669
|
|
|
$
|
385,324
|
|
|
|
|
|
|
|
|
|
|
Supplementary cash
flow information:
|
|
|
|
|
|
|
|
|
Interest received
|
|
$
|
170
|
|
|
$
|
248
|
|
Interest paid
|
|
$
|
15,989
|
|
|
$
|
-
|
|
Income taxes paid
|
|
$
|
-
|
|
|
$
|
-
|
|
See
Accompanying Notes to the Financial Statements
PLANET
GREEN HOLDINGS CORP.
|
(F/K/A
AMERICAN LORAIN CORPORATION)
|
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(Stated
in US Dollars)
|
|
1.
|
Organization
and Principal Activities
|
Planet
Green Holdings Corp. (the “Company” or “PLAG”), a Nevada corporation, engages in the business of growing,
developing, manufacturing, and marketing fresh foods, spices, convenience foods and tea products through its subsidiaries and
VIEs in China.
|
2.
|
Summary of Significant
Accounting Policies
|
Method
of accounting
Management
has prepared the accompanying financial statements and these notes in accordance to generally accepted accounting principles in
the United States (“GAAP”). The Company maintains its general ledger and journals with the accrual method accounting.
Principles
of consolidation
The
accompanying consolidated financial statements include the assets, liabilities, and results of operations of the Company, and
its subsidiaries, which are listed below:
|
|
Place of
|
|
Attributable equity
|
|
Registered
|
|
Name
of company
|
|
incorporation
|
|
interest
%
|
|
capital
|
|
Planet Green Holdings Corporation
|
|
British
Virgin Islands
|
|
100
|
|
$
|
10,000
|
|
Lucky Sky Holdings Corporations (HK) Limited
|
|
Hong Kong
|
|
100
|
|
|
1,277
|
|
Shanghai Xunyang Internet Technology Co., Ltd.
|
|
PRC
|
|
100
|
|
|
669,919
|
|
Lucky Sky Petrochemical Technology (Xianning) Co., Ltd.
|
|
PRC
|
|
100
|
|
|
14,242,782
|
|
Beijing Green Foodstuff Co., Ltd.
|
|
PRC
|
|
VIE
|
|
|
1,540,666
|
|
Luotian Green Foodstuff Co., Ltd.
|
|
PRC
|
|
VIE
|
|
|
3,797,774
|
|
Shandong Greenpia Foodstuff Co., Ltd.
|
|
PRC
|
|
VIE
|
|
|
2,303,063
|
|
Taishan Muren Agriculture Co., Ltd.
|
|
PRC
|
|
VIE
|
|
|
1,913,049
|
|
Lorain Food Stuff (Shenzhen) Co., Ltd.
|
|
PRC
|
|
VIE
|
|
|
80,000
|
|
Xianning Bozhuang Tea Products Co., Ltd.
|
|
PRC
|
|
VIE
|
|
|
6,277,922
|
|
Management
has eliminated all significant inter-company balances and transactions in preparing the accompanying consolidated financial statements.
Ownership interests of subsidiaries that the Company does not wholly own are accounted for as non-controlling interests.
On
May 18, 2018, the Company incorporated Planet Green Holdings Corporation, a limited company incorporated in the British
Virgin Islands. On September 28, 2018, the Company acquired Lucky Sky HK and Shanghai Xunyang, a wholly foreign-owned
enterprise incorporated in Shanghai, China. The formation and acquisition of these companies was to implement the
Company’s restructuring plans.
Planet
Green Holdings Corp.
|
|
Notes to Financial
Statements
|
In
December 2018, the Company was no longer able to exercise significant influence over Beijing Lorain, and management did not believe
that the Company would be able recover the value of its investment; accordingly, the Company recognized full impairment of its
investment in Beijing Lorain.
Consolidation
of Variable Interest Entity
VIEs
are entities that lack sufficient equity to finance their activities without additional financial support from other parties or
whose equity holders lack adequate decision-making ability. Any VIE with which the Company is involved must be evaluated to determine
the primary beneficiary of the risks and rewards of the VIE. Management makes ongoing reassessments of whether the Company is
the primary beneficiary of its VIEs.
On
September 28, 2018, the Company entered into a series of VIE agreements with Shandong Greenpia, Luotian Lorain, Taishan Muren,
and Shenzhen Lorain and their shareholders, pursuant to which, Company obtained substantial control over these entities’
daily operations and financial affairs.
On
September 27, 2018, the Company entered into exclusive arrangements with Beijing Lorain. However, the Company does not have significant
influence over Beijing Lorain and Beijing Lorain was accounted for as equity method investment.
In
December 2018, the Company’s management determined that it would discontinue the operations of Shandong Greenpia and Luotian
Lorain. Accordingly, the Company has recorded full impairment related to the value of those assets.
On
May 14, 2019, the Company entered into a series of VIE agreements with Xianning Bozhuang and its equity holders to obtain control
and become the primary beneficiary of Xianning Bozhuang. The Company consolidated Xianning Bozhuang’s accounts as its VIE.
On August 12, 2019, through Lucky
Sky HK, the Company established Lucky Sky Petrochemical, a wholly foreign-owned enterprise incorporated in Xianning City, Hubei
Province, China.
Discontinued
operations
In
the first quarter of 2018, the Company’s board of directors (the “Board”) resolved to discontinue the operations
of Junan Hongrun Foodstuff Co. Ltd.
In
the fourth quarter of 2018, the Board resolved to discontinue the operations of Beijing Lorain, Luotian Lorain, and Shandong Greenpia.
Use
of estimates
The
preparation of the financial statements requires management 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.
Planet
Green Holdings Corp.
|
|
Notes to Financial
Statements
|
Cash
and cash equivalents
The
Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.
Investment
securities
The
Company classifies securities it holds for investment purposes into trading or available-for-sale. Trading securities are bought
and held principally for the purpose of selling them in the near term. All securities not included in trading securities are classified
as available-for-sale.
Trading
and available-for-sale securities are recorded at fair value. Unrealized holding gains and losses on trading securities are included
in the net income. Unrealized holding gains and losses, net of the related tax effect, on available for sale securities are excluded
from net income and are reported as a separate component of other comprehensive income until realized. Realized gains and losses
from the sale of available-for-sale securities are determined on a specific-identification basis.
A
decline in the market value of any available-for-sale security below cost that is deemed to be other-than-temporary results in
a reduction in carrying amount to fair value. The impairment is charged as an expense to the statement of income and comprehensive
income and a new cost basis for the security is established. To determine whether impairment is other-than-temporary, the Company
considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether evidence
indicating the cost of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment
includes the reasons for the impairment, the severity and duration of the impairment, changes in value subsequent to year end,
and forecasted performance of the investee.
Premiums
and discounts are amortized or accreted over the life of the related available-for-sale security as an adjustment to yield using
the effective-interest method. Dividend and interest income are recognized when earned.
Trade
receivables
Trade
receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An estimate
for doubtful accounts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.
Inventories
Inventories
consist of raw materials and finished goods which are stated at the lower of cost or market value. Finished goods are comprised
of direct materials, direct labor, inbound shipping costs, and allocated overhead. The Company applies the weighted average cost
method to its inventory.
Advances
and prepayments to suppliers
The
Company makes advance payment to suppliers and vendors for the procurement of raw materials. Upon physical receipt and inspection
of the raw materials from suppliers the applicable amount is reclassified from advances and prepayments to suppliers to inventory.
Planet
Green Holdings Corp.
|
|
Notes to Financial
Statements
|
Plant
and equipment
Plant
and equipment are carried at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives, using
the straight-line method. The Company typically applies a salvage value of 0% to 10%. The estimated useful lives of the plant
and equipment are as follows:
Buildings
|
|
|
20-40
years
|
|
Landscaping, plant and tree
|
|
|
30
years
|
|
Machinery and equipment
|
|
|
1-10
years
|
|
Motor vehicles
|
|
|
5-10
years
|
|
Office equipment
|
|
|
5-20
years
|
|
The
cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts, and any gain or
loss are included in the Company’s results of operations. The costs of maintenance and repairs are recognized to expenses
as incurred; significant renewals and betterments are capitalized.
Intangible
assets
Intangible
assets are carried at cost less accumulated amortization. Amortization is provided over their useful lives, using the straight-line
method. The estimated useful lives of the intangible assets are as follows:
Land use rights
|
|
|
40-50
years
|
|
Software licenses
|
|
|
2
years
|
|
Trademarks
|
|
|
10
years
|
|
Construction
in progress and prepayments for equipment
Construction
in progress and prepayments for equipment represent direct and indirect acquisition and construction costs for plants, and costs
of acquisition and installation of related equipment. Amounts classified as construction in progress and prepayments for equipment
are transferred to plant and equipment when substantially all the activities necessary to prepare the assets for their intended
use are completed. Depreciation is not provided for assets classified in this account.
Goodwill
Goodwill
represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination.
The Company conducts an annual assessment of its goodwill for impairment. If the carrying value of its goodwill exceeds its fair
value, then impairment has incurred; accordingly, a charge to the Company’s results of operations will be recognized during
the period. Fair value is generally determined using a discounted expected future cash flow analysis.
Accounting
for the impairment of long-lived assets
The
Company annually reviews its long-lived assets for impairment or whenever events or changes in circumstances indicate that the
carrying amount of assets may not be recoverable. Impairment may be the result of becoming obsolete from a change in the industry,
introduction of new technologies, or if the Company has inadequate working capital to utilize the long-lived assets to generate
the adequate profits. Impairment is present if the carrying amount of an asset is less than its expected future undiscounted cash
flows.
If
an asset is considered impaired, a loss is recognized based on the amount by which the carrying amount exceeds the fair market
value of the asset. Assets to be disposed are reported at the lower of the carrying amount or fair value less costs to sell.
Statutory
reserves
Statutory
reserves are referring to the amount appropriated from the net income in accordance with laws or regulations, which can be used
to recover losses and increase capital, as approved, and are to be used to expand production or operations. PRC laws prescribe
that an enterprise operating at a profit must appropriate and reserve, on an annual basis, an amount equal to 10% of its profit.
Such an appropriation is necessary until the reserve reaches a maximum that is equal to 50% of the enterprise’s PRC registered
capital.
Planet Green Holdings Corp.
|
|
Notes to Financial Statements
|
Foreign currency translation
The accompanying financial statements
are presented in United States dollars. The functional currencies of the Company are the Renminbi (“RMB”). The Company’s
assets and liabilities are translated into United States dollars from RMB at year-end exchange rates, and its revenues and expenses
are translated at the average exchange rate during the period. Capital accounts are translated at their historical exchange rates
when the capital transactions occurred.
|
|
6/30/2019
|
|
|
12/31/2018
|
|
|
6/30/2018
|
|
Period/year end RMB: US$ exchange rate
|
|
|
6.7801
|
|
|
|
6.8764
|
|
|
|
6.6166
|
|
Period/annual average RMB: US$ exchange rate
|
|
|
6.8656
|
|
|
|
6.5137
|
|
|
|
6.4568
|
|
The RMB is not freely convertible
into foreign currencies and all foreign exchange transactions must be conducted through authorized financial institutions.
Revenue recognition
The Company recognizes revenue
when persuasive evidence of arrangement exists, the price has been fixed or is determinable, the delivery has been completed and
no other significant obligations of the Company exists, and collectability of payment is reasonably assured. Payments received
prior to all of the foregoing criteria are recorded as customer deposits. Recorded revenue is derived from the value of goods invoiced
less value-added tax (VAT).
Advertising
All advertising costs are expensed
as incurred.
Shipping and handling
All outbound shipping and handling
costs are expensed as incurred.
Research and development
All research and development
costs are expensed as incurred.
Retirement benefits
Retirement benefits in the form
of mandatory government sponsored defined contribution plans are charged to the either expenses as incurred or allocated to inventory
as part of overhead.
Income taxes
The Company accounts for income
tax using an asset and liability approach and allows for recognition of deferred tax benefits in future years. Under the asset
and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance
is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to
realize their benefits, or that future realization is uncertain.
Comprehensive income
The Company uses Financial Accounting
Standards Board (“FASB”) ASC Topic 220, “Reporting Comprehensive Income.” Comprehensive income is comprised
of net income and all changes to the statements of stockholders’ equity, except the changes in paid-in capital and distributions
to stockholders due to investments by stockholders.
Earnings per share
The Company computes earnings
per share (“EPS”) in accordance with ASC Topic 260, “Earnings per share”. Basic EPS is measured as the
income or loss available to common shareholders divided by the weighted average common shares outstanding for the period. Diluted
EPS presents the dilutive effect on a per share basis from the potential conversion of convertible securities or the exercise of
options and or warrants; the dilutive effects of potentially convertible securities are calculated using the as-if method; the
potentially dilutive effect of options or warrants are calculated using the treasury stock method. Securities that are potentially
an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) are excluded from the calculation
of diluted EPS.
Planet Green Holdings Corp.
|
|
Notes to Financial Statements
|
Financial instruments
The Company’s financial
instruments, including cash and equivalents, accounts and other receivables, accounts and other payables, accrued liabilities and
short-term debt, have carrying amounts that approximate their fair values due to their short maturities. ASC Topic 820, “Fair
Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company.
ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures
of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated
balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their
fair values because of the short period of time between the origination of such instruments and their expected realization and
their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
|
●
|
Level 1 - inputs to the valuation methodology used quoted prices for identical assets or liabilities in active markets.
|
|
|
|
|
●
|
Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
|
|
|
|
|
●
|
Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement.
|
The Company analyzes all financial
instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and
ASC 815.
Commitments and contingencies
Liabilities for loss contingencies
arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability
has been incurred and the amount of the assessment can be reasonably estimated.
Unaudited interim financial
information
These unaudited interim condensed
consolidated financial statements have been prepared in accordance with GAAP for interim financial reporting and the rules and
regulations of the SEC that permit reduced disclosure for interim periods. Therefore, certain information and footnote disclosures
normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. In the opinion of management,
all adjustments of a normal recurring nature necessary for a fair presentation of the financial position, results of operations
and cash flows for the periods presented have been made. The results of operations for the interim periods presented are not necessarily
indicative of the results to be expected for the year ending December 31, 2019.
The consolidated balance sheets
and certain comparative information as of December 31, 2018 are derived from the audited consolidated financial statements and
related notes for the year ended December 31, 2018 (“2018 Annual Financial Statements”), included in the Company’s
2018 Annual Report on Form 10-K. These unaudited interim condensed consolidated financial statements should be read in conjunction
with the 2018 Annual Financial Statements.
Recent accounting pronouncements
In January 2017, the FASB issued
guidance which simplifies the accounting for goodwill impairment. The updated guidance eliminates Step 2 of the impairment test,
which requires entities to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities
will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value, determined
in Step 1. The Company is currently evaluating the impact on the financial statements of this guidance.
In January 2017, the FASB amended
the existing accounting standards for business combinations. The amendments clarify the definition of a business with the objective
of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals)
of assets or businesses.
The Company is evaluating the
timing and the impact of the aforesaid guidance on the financial statements.
Planet Green Holdings Corp.
|
|
Notes to Financial Statements
|
Restricted cash represents interest
bearing deposits placed with banks to secure banking facilities in the form of loans and notes payable. The funds are restricted
from immediate use and are designated for settlement of loans or notes when they become due.
The Company extends credit terms
of 15 to 60 days to the majority of its domestic customers, which include third-party distributors, supermarkets and wholesalers.
|
|
6/30/2019
|
|
|
12/31/2018
|
|
Trade accounts receivable
|
|
$
|
1,893,962
|
|
|
$
|
6,528,072
|
|
Less:
Allowance for doubtful accounts
|
|
|
-
|
|
|
|
-
|
|
|
|
$
|
1,893,962
|
|
|
$
|
6,528,072
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
-
|
|
|
$
|
(804,937
|
)
|
Reclassified to discontinued operations
|
|
|
-
|
|
|
|
804,937
|
|
Additions to allowance
|
|
|
-
|
|
|
|
-
|
|
Bad debt written-off
|
|
|
-
|
|
|
|
-
|
|
Ending balance
|
|
$
|
-
|
|
|
$
|
-
|
|
Inventories consisted of the
following as of June 30, 2019 and December 31, 2018
|
|
6/30/2019
|
|
|
12/31/2018
|
|
Raw material
|
|
$
|
311,946
|
|
|
$
|
-
|
|
Inventory of Supplies
|
|
|
5,812
|
|
|
|
|
|
Work in progress
|
|
|
870,865
|
|
|
|
-
|
|
Finished goods
|
|
|
337,156
|
|
|
|
-
|
|
|
|
$
|
1,525,779
|
|
|
$
|
-
|
|
Property, plant, and equipment
consisted of the following as of June 30, 2019 and December 31, 2018:
|
|
6/30/2019
|
|
|
12/31/2018
|
|
At Cost:
|
|
|
|
|
|
|
Buildings
|
|
$
|
4,137,665
|
|
|
$
|
1,116,940
|
|
Machinery and equipment
|
|
|
995,082
|
|
|
|
31,066
|
|
Office Equipment
|
|
|
48,227
|
|
|
|
|
|
Vehicle
|
|
|
152,835
|
|
|
|
|
|
Biological assets
|
|
|
2,081,420
|
|
|
|
2,078,012
|
|
|
|
$
|
7,415,229
|
|
|
$
|
3,226,018
|
|
|
|
|
|
|
|
|
|
|
Less:
Accumulated
depreciation
|
|
|
(2,276,156
|
)
|
|
|
(1,854,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,139,073
|
|
|
$
|
1,371,518
|
|
Depreciation expense for the
six months ended June 30, 2019 and 2018 was $205,027 and $295,981, respectively.
Planet Green Holdings Corp.
|
|
Notes to Financial Statements
|
|
|
6/30/2019
|
|
|
12/31/2018
|
|
At Cost:
|
|
|
|
|
|
|
Land use rights
|
|
$
|
1,347,839
|
|
|
$
|
-
|
|
Software licenses
|
|
|
2,593
|
|
|
|
-
|
|
Trademark
|
|
|
909,606
|
|
|
|
-
|
|
|
|
$
|
2,260,038
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Less:
Accumulated depreciation
|
|
|
(54,929
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,205,109
|
|
|
$
|
-
|
|
Amortization expense for the
six months ended June 30, 2019 and 2018 was $47,780 and $137,904, respectively.
On May 9, 2019, the Company
and Shanghai Xunyang, a subsidiary of the Company, entered into a share exchange agreement with Xianning Bozhuang, and its shareholders,
pursuant to which, among other things and subject to the terms and conditions contained therein, Shanghai Xunyang agreed to effect
an acquisition of Xianning Bozhuang by acquiring from Xianning Bozhuang’s shareholders all of the outstanding equity interests
of Xianning Bozhuang. On May 14, 2019, the Company closed the acquisition.
Pursuant to the share exchange
agreement, in exchange for the acquisition of all of the outstanding equity interests of Xianning Bozhuang by the Shanghai Xunyang,
the Company issued an aggregate of 1,080,000 shares of common stock, par value $0.001 per share, of the Company to Xianning Bozhuang’s
shareholders. At the closing of the acquisition, the Company entered into a lock-up agreement with the Sellers with respect to
the Exchange Shares, pursuant to which Xianning Bozhuang’s shareholders agreed, subject to certain exceptions, not to transfer
the exchange shares, or publicly disclose the intention to do so, from the closing of the acquisition until the first anniversary
of the closing.
On June 17, 2019, the Company
entered into a securities purchase agreement, pursuant to which five individuals residing in the PRC agreed to purchase an aggregate
of 1,300,000 shares of the Company’s common stock, par value $0.001 per share, for an aggregate purchase price of $5,460,000,
representing a purchase price of $4.20 per share. The purchase agreement contains customary representations and warranties by the
Company and customary closing conditions. The financing closed on June 19, 2019.
Planet Green Holdings Corp.
|
|
Notes to Financial Statements
|
All of the Company’s continuing
operations are located in the PRC. The corporate income tax rate in the PRC is 25%.
The following tables provide
the reconciliation of the differences between the statutory and effective tax expenses for the six months ended June 30, 2019 and
2018:
|
|
6/30/2019
|
|
|
6/30/2018
|
|
Income/(loss) attributed to PRC continuing operations
|
|
$
|
(251,715
|
)
|
|
$
|
(116,339
|
)
|
Income/(loss) attributed to U.S. operations
|
|
|
|
|
|
|
|
|
Income/(loss) before tax
|
|
$
|
(251,715
|
)
|
|
$
|
(116,339
|
)
|
|
|
|
|
|
|
|
|
|
PRC Statutory Tax at 25% Rate
|
|
|
56,095
|
|
|
|
-
|
|
Effect of tax exemption granted
|
|
|
|
|
|
|
|
|
Income tax
|
|
$
|
56,095
|
|
|
$
|
-
|
|
Per Share Effect of Tax
Exemption
|
|
6/30/2019
|
|
|
6/30/2018
|
|
Effect of tax exemption granted
|
|
$
|
-
|
|
|
$
|
-
|
|
Weighted-Average Shares Outstanding Basic
|
|
|
5,901,411
|
|
|
|
1,803,239
|
|
Per share effect
|
|
$
|
-
|
|
|
$
|
-
|
|
The difference between the U.S.
federal statutory income tax rate and the Company’s effective tax rate was as follows for the six months ended June 30, 2019
and 2018:
|
|
6/30/2019
|
|
|
6/30/2018
|
|
U.S. federal statutory income tax rate
|
|
|
21
|
%
|
|
|
21
|
%
|
Higher (lower) rates in PRC, net
|
|
|
4
|
%
|
|
|
4
|
%
|
Expenses not deductible to taxable income
|
|
|
(47.3
|
)%
|
|
|
(25
|
)%
|
The Company’s effective tax rate
|
|
|
(22.3
|
)%
|
|
|
0
|
%
|
Planet Green Holdings Corp.
|
|
Notes to Financial Statements
|
|
10.
|
Earnings/(Loss) Per Share
|
Components of basic and diluted
earnings per share were as follows:
|
|
For the six months ended
|
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
Basic and diluted (loss) earnings per share numerator:
|
|
|
|
|
|
|
Income/(loss) from continuing operations (attributable) available to common stockholders
|
|
$
|
(307,810
|
)
|
|
|
(116,339
|
)
|
(Loss) income from discontinued operations (attributable) available to common stockholders
|
|
|
-
|
|
|
|
(653,038
|
)
|
(Loss) income (attributable) available to common stockholders
|
|
|
(307,810
|
)
|
|
|
(769,377
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted (loss) earnings per share denominator:
|
|
|
|
|
|
|
|
|
Original Shares:
|
|
|
5,497,765
|
|
|
|
1,532,823
|
|
Additions from Actual Events -Issuance of Common Stock
|
|
|
2,380,000
|
|
|
|
270,416
|
|
Basic Weighted Average Shares Outstanding
|
|
|
5,901,411
|
|
|
|
1,803,239
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) per share from continuing operations - Basic and diluted
|
|
|
(0.05
|
)
|
|
|
(0.06
|
)
|
|
|
|
|
|
|
|
|
|
Income/(loss) per share from discontinued operations - Basic and diluted
|
|
|
-
|
|
|
|
(0.36
|
)
|
|
|
|
|
|
|
|
|
|
Income/(loss) per share - Basic and diluted
|
|
|
(0.05
|
)
|
|
|
(0.42
|
)
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding - Basic and diluted
|
|
|
5,901,411
|
|
|
|
1,803,239
|
|
Planet Green Holdings Corp.
|
|
Notes to Financial Statements
|
During the year ended December
31, 2016, Taishan Muren entered into four operating lease agreements leasing two plots of land where biological assets are grown,
two offices, and farming facilities. During the year ended December 31, 2017, Taishan Muren entered into three operating lease
agreements leasing three additional plots of land where biological assets are grown.
As of the date of this report,
the leases of the Company are as follows:
Lease
|
|
Date Commenced
|
|
Date of expiration
|
Lease #1
|
|
March 1, 2016
|
|
February 28, 2031
|
Lease #2
|
|
March 1, 2016
|
|
February 28, 2031
|
Lease #3
|
|
March 1, 2016
|
|
February 28, 2031
|
Lease #4
|
|
November 1, 2016
|
|
November 1, 2019
|
Lease #5
|
|
January 1, 2017
|
|
February 28, 2031
|
Lease #6
|
|
January 1, 2017
|
|
February 28, 2031
|
Lease #7
|
|
January 1, 2018
|
|
February 28, 2031
|
The minimum future lease payments
for these properties at June 30, 2019 are as follows:
Period
|
|
Lease Payable
|
|
Year 1
|
|
$
|
224,896
|
|
Year 2
|
|
|
224,896
|
|
Year 3
|
|
|
224,896
|
|
Year 4
|
|
|
224,896
|
|
Year 5
|
|
|
224,896
|
|
Thereafter
|
|
|
1,386,853
|
|
|
|
$
|
2,511,333
|
|
The outstanding lease commitments
for the leases listed above as of June 30, 2019 was $2,511,333.
In February 2016, the FASB issued
ASU 2016-02 “Leases (Topic 842).” The new standard requires lessees to recognize lease assets (right of use) and lease
obligations (lease liability) for leases previously classified as operating leases under GAAP on the balance sheet for leases with
terms in excess of 12 months. The standard is effective for annual periods beginning after December 15, 2018, including interim
periods within those fiscal years. The Company is assessing the impact of the adoption of the new standard.
Planet Green Holdings Corp.
|
|
Notes to Financial Statements
|
Other expenses consisted of the following:
|
|
6/30/2019
|
|
|
6/30/2018
|
|
Other expense:
|
|
|
|
|
|
|
Impairment of property and equipment
|
|
$
|
-
|
|
|
$
|
-
|
|
Other
|
|
|
(5,766
|
)
|
|
|
(87,246
|
)
|
|
|
$
|
(5,766
|
)
|
|
$
|
(87,246
|
)
|
|
13.
|
Discontinued Operations
|
As of December 31, 2018, the
Company has reclassified the results of operations and the financial position of Luotian Lorain and Shandong Greenpia as discontinued
operations. Selected details regarding those discontinued operations are provided below. Selected details regarding those discontinued
operations are provided below.
|
|
For the six months ended
June 30,
|
|
Results of Operations
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
-
|
|
|
$
|
14,267
|
|
Cost of sales
|
|
|
-
|
|
|
|
|
|
Gross profit
|
|
|
-
|
|
|
|
14,267
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
-
|
|
|
|
666,879
|
|
|
|
|
|
|
|
|
|
|
Other expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Loss before Taxes
|
|
|
-
|
|
|
|
(652,612
|
)
|
|
|
|
|
|
|
|
|
|
Taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
-
|
|
|
$
|
(652,612
|
)
|
|
|
At
|
|
|
At
|
|
Financial Position
|
|
6/30/2019
|
|
|
12/31/2018
|
|
Current Assets
|
|
$
|
-
|
|
|
$
|
-
|
|
Non-Current Assets
|
|
|
-
|
|
|
|
-
|
|
Total Assets
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
$
|
3,573,611
|
|
|
$
|
8,607,813
|
|
Total Long-Term Liabilities
|
|
|
|
|
|
|
-
|
|
Total Liabilities
|
|
$
|
3,573,611
|
|
|
$
|
8,607,813
|
|
|
|
|
|
|
|
|
|
|
Net Assets
|
|
$
|
(3,573,611
|
)
|
|
$
|
(8,607,813
|
)
|
|
|
|
|
|
|
|
|
|
Total Liabilities & Net Assets
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
Planet Green Holdings Corp.
|
|
Notes to Financial Statements
|
The Company’s deposits
are made with banks located in the PRC. They do not carry federal deposit insurance and may be subject to loss of the banks become
insolvent.
Since the Company’s inception,
the age of account receivables has been less than one year indicating that the Company is subject to minimal risk borne from credit
extended to customers.
The Company is subject to interest
rate risk when short term loans become due and require refinancing.
|
C.
|
Economic and political risks
|
The Company’s operations
are conducted in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced
by changes in the political, economic, and legal environments in the PRC.
The Company’s operations
in the PRC are subject to special considerations and significant risks not typically associated with companies in North America
and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign
currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the
PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion,
remittances abroad, and rates and methods of taxation, among other things.
The Company has procured environmental
licenses required by the PRC government. The Company has both a water treatment facility for water used in its production process
and secure transportation to remove waste off site. In the event of an accident, the Company has purchased insurance to cover potential
damage to employees, equipment, and local environment.
Management of the Company monitors
changes in prices levels. Historically inflation has not materially impacted the Company’s financial statements; however,
significant increases in the price of raw materials and labor that cannot be passed to the Company’s customers could adversely
impact the Company’s results of operations.
On July 1, 2019, Yilei Shao
resigned as a director of the Company. Ms. Shao’s resignation was for personal reasons and was not due to any disagreement
with the Company.
On July 1, 2019, the Board appointed
King Fai Leung to serve as a member of the Board and a member of each of the three independent committees of the Board (i.e., the
audit committee, compensation committee and nominating and corporate governance committee) and as chairman of the audit committee
of the Board, effective immediately.
On August 12, 2019, through Lucky
Sky HK, the Company established Lucky Sky Petrochemical, a wholly foreign-owned enterprise incorporated in Xianning City, Hubei
Province, China.
ITEM 2. MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW
Overview
Our primary operations are conducted in
the PRC through our VIEs:
|
●
|
to develop and market products, such as sauces and tea products, from herbs and spices that we grow in China; and
|
|
●
|
to sell brown rice syrup and tea bags developed using our unique recipes in China.
|
Results of Operations
Three Months Ended June 30, 2019 Compared
to Three Months Ended June 30, 2018
The following table summarizes the results
of our operations during the three-month periods ended June 30, 2019 and June 30, 2018, respectively, and provides information
regarding the dollar and percentage increase or (decrease) from the three month period ended June 30, 2019 compared to the three
month period ended June 30, 2018.
(All amounts, other than percentages,
stated in thousands of U.S. dollars)
|
|
Three months ended
|
|
|
Increase /
|
|
|
Increase /
|
|
|
|
June 30,
|
|
|
Decrease
|
|
|
Decrease
|
|
(In Thousands of USD)
|
|
2019
|
|
|
2018
|
|
|
($)
|
|
|
(%)
|
|
Net revenues
|
|
|
852
|
|
|
|
636
|
|
|
|
216
|
|
|
|
34
|
|
Cost of revenues
|
|
|
771
|
|
|
|
71
|
|
|
|
700
|
|
|
|
986
|
|
Gross profit
|
|
|
81
|
|
|
|
565
|
|
|
|
(484
|
)
|
|
|
(86
|
)
|
Operating expenses:
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
Selling and marketing expenses
|
|
|
19
|
|
|
|
31
|
|
|
|
(12
|
)
|
|
|
(39
|
)
|
General and administrative expenses
|
|
|
353
|
|
|
|
578
|
|
|
|
(225
|
)
|
|
|
(39
|
)
|
Operating loss
|
|
|
(293
|
)
|
|
|
(44
|
)
|
|
|
(249
|
)
|
|
|
566
|
|
Government subsidy income
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
Interest and other income
|
|
|
(1
|
)
|
|
|
77
|
|
|
|
(78
|
)
|
|
|
(101
|
)
|
Other expenses
|
|
|
(6
|
)
|
|
|
(84
|
)
|
|
|
78
|
|
|
|
(93
|
)
|
Interest expense
|
|
|
(16
|
)
|
|
|
5
|
|
|
|
(21
|
)
|
|
|
(420
|
)
|
Gain from investment
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
Loss before tax from continuing operations
|
|
|
(316
|
)
|
|
|
(46
|
)
|
|
|
(270
|
)
|
|
|
587
|
|
Income tax expense/(income)
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
Net loss from continuing operations
|
|
|
(316
|
)
|
|
|
(46
|
)
|
|
|
(270
|
)
|
|
|
587
|
|
Net loss from discontinued operations
|
|
|
-
|
|
|
|
(666
|
)
|
|
|
666
|
|
|
|
(100
|
)
|
Net loss
|
|
|
(316
|
)
|
|
|
(711
|
)
|
|
|
395
|
|
|
|
(56
|
)
|
Non-controlling interests
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
2
|
|
|
|
(100
|
)
|
Net loss of common stockholders
|
|
|
(316
|
)
|
|
|
(709
|
)
|
|
|
393
|
|
|
|
(55
|
)
|
Revenue
Net Revenues
. Our net revenues
for the three months ended June 30, 2019 amounted to $0.85 million, which represents an increase of approximately $0.22
million, or 34%, from the three-month period ended on June 30, 2018, in which our net revenue was $0.63 million. This
increase was attributable to the disposal of certain of our historical subsidiaries and acquisition of Taishan Muren and
Xianning Bozhuang.
Cost of Revenues.
During the three
months ended June 30, 2019, we experienced an increase in cost of revenue of $0.7 million, in comparison to the three months ended
June 30, 2018, from approximately $0.07 million to $0.77 million, reflecting an increase of 986%. This increase was related to
our new subsidiary, Taishan Muren, Xianning Bozhuang, and disposal and discontinue of certain subsidiaries.
Gross Profit
. Our gross profit decreased
by $0.48 million, or 86%, to $0.08 million for the three months ended June 30, 2019 from $0.56 million for the three months ended
June 30, 2018, attributable to the disposal of certain of our historical subsidiaries and acquisition of Taishan Muren and Xianning
Bozhuang.
Operating Expenses
Selling and Marketing Expenses
.
Our selling and marketing expenses decreased $0.01 million, or 39%, to $0.02 million during the three months ended June 30, 2019,
as compared to $0.03 million during the three months ended June 30, 2018. The decrease of our selling and marketing expenses is
mainly due to a decrease in sales activities because sales generated from our existing clients had been steady.
General and Administrative Expenses.
We experienced a decrease in general and administrative expense of $0.23 million from $0.58 million to approximately $0.35
million for the three months ended June 30, 2019, compared to the three months ended June 30, 2018. This cost decrease was caused
by discontinued operations of Luotian Lorain and Shandong Greenpia.
Net Income
Net loss decreased to $0.3 million for
the three months ended June 30, 2019 from net loss of $0.7 million for the three months ended June 30, 2018. Such decrease was
primarily the result of acquisition of Taishan Muren, Xianning Bozhuang and disposal and discontinuance of certain subsidiaries.
Six Months Ended June 30, 2019 Compared
to Six Months Ended June 30, 2018
The following table summarizes the results
of our operations during the six-month periods ended June 30, 2019 and 2018, respectively, and provides information regarding the
dollar and percentage increase or decrease from the six-month period ended June 30, 2019 compared to the six month period ended
June 30, 2018.
(All amounts, other than percentages,
stated in thousands of U.S. dollars)
|
|
Six months ended
|
|
|
Increase /
|
|
|
Increase /
|
|
|
|
June 30,
|
|
|
Decrease
|
|
|
Decrease
|
|
(In Thousands of USD)
|
|
2019
|
|
|
2018
|
|
|
($)
|
|
|
(%)
|
|
Net revenues
|
|
|
1,930
|
|
|
|
1,654
|
|
|
|
276
|
|
|
|
17
|
|
Cost of revenues
|
|
|
1,551
|
|
|
|
972
|
|
|
|
579
|
|
|
|
60
|
|
Gross profit
|
|
|
379
|
|
|
|
682
|
|
|
|
(303
|
)
|
|
|
(44
|
)
|
Operating expenses:
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Selling and marketing expenses
|
|
|
19
|
|
|
|
53
|
|
|
|
(34
|
)
|
|
|
(63
|
)
|
General and administrative expenses
|
|
|
588
|
|
|
|
741
|
|
|
|
(153
|
)
|
|
|
(21
|
)
|
Operating loss
|
|
|
(229
|
)
|
|
|
(112
|
)
|
|
|
(116
|
)
|
|
|
104
|
|
Government subsidy income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Interest and other income
|
|
|
(1
|
)
|
|
|
78
|
|
|
|
(79
|
)
|
|
|
(102
|
)
|
Other expenses
|
|
|
(6
|
)
|
|
|
(87
|
)
|
|
|
81
|
|
|
|
(93
|
)
|
Interest expense
|
|
|
(16
|
)
|
|
|
-
|
|
|
|
(16
|
)
|
|
|
(100
|
)
|
Gain from investment
|
|
|
-
|
|
|
|
5
|
|
|
|
(5
|
)
|
|
|
(100
|
)
|
Loss before tax from continuing operations
|
|
|
(252
|
)
|
|
|
(116
|
)
|
|
|
(135
|
)
|
|
|
116
|
|
Income tax expense/(income)
|
|
|
56
|
|
|
|
-
|
|
|
|
56
|
|
|
|
100
|
|
Net loss from continuing operations
|
|
|
(308
|
)
|
|
|
(116
|
)
|
|
|
(191
|
)
|
|
|
165
|
|
Net loss from discontinued operations
|
|
|
-
|
|
|
|
(653
|
)
|
|
|
653
|
|
|
|
(100
|
)
|
Net loss
|
|
|
(308
|
)
|
|
|
(769
|
)
|
|
|
461
|
|
|
|
(60
|
)
|
Non-controlling interests
|
|
|
-
|
|
|
|
0.4
|
|
|
|
(0.4
|
)
|
|
|
(100
|
)
|
Net loss of common stockholders
|
|
|
(308
|
)
|
|
|
(769
|
)
|
|
|
462
|
|
|
|
(60
|
)
|
Revenue
Net Revenues
. Our net revenues for
the six months ended June 30, 2019 amounted to $1.93 million, which represents an increase of approximately $0.28 million, or 17%,
from the six-month period ended on June 30, 2018, in which our net revenue was $1.65 million. This increase was attributable to
the disposal of certain of our historical subsidiaries and acquisition of Taishan Muren and Xianning Bozhuang.
Cost of Revenues.
During the six
months ended June 30, 2019, we experienced an increase in cost of revenue of $0.58 million, in comparison to the six months ended
June 30, 2018, from approximately $0.97 million to $1.55 million, reflecting an increase of 60%. This increase was related to our
new VIEs, Taishan Muren, Xianning Bozhuang, and disposal and discontinue of certain subsidiaries.
Gross Profit
. Our gross profit decreased
by $0.30 million, or 44%, to $0.38 million for the six months ended June 30, 2019 from $0.68 million for the six months ended June
30, 2018, attributable to the disposal of certain of our historical subsidiaries and acquisition of Taishan Muren and Xianning
Bozhuang.
Operating Expenses
Selling and Marketing Expenses
.
Our selling and marketing expenses decreased by $0.03 million, or 63%, to $0.02 million during the six months ended June 30, 2019,
as compared to $0.05 million during the six months ended June 30, 2018. The decrease of our selling and marketing expenses is mainly
due to a decrease in sales activities because sales generated from our existing clients had been steady.
General and Administrative Expenses.
We experienced a decrease in general and administrative expense of $0.15 million from $0.74 million to approximately $0.59
million for the six months ended June 30, 2019, compared to the six months ended June 30, 2018. This cost decrease was caused by
the discontinued operations of Luotian Lorain and Shandong Greenpia.
Net Income
Net loss decreased to $0.3 million
for the six months ended June 30, 2019 from net loss of $0.8 million for the six months ended June 30, 2018. Such decrease
was primarily the result of acquisition of Taishan Muren, Xianning Bozhuang and disposal and discontinuance of
certain subsidiaries.
Liquidity and Capital Resources
In the reporting period in 2019, our primary
sources of financing have been cash generated from operations and private placements. We raised funds in the following private
placement in the second quarter of 2019:
On June 17, 2019, the Company entered into
a securities purchase agreement, pursuant to which five individuals residing in the PRC agreed to purchase an aggregate of 1,300,000
shares of the Company’s common stock, par value $0.001 per share, for an aggregate purchase price of $5,460,000, representing
a purchase price of $4.20 per Share.
General
Management anticipates that our existing
capital resources and anticipated cash flows from operations are adequate to satisfy our liquidity requirements for the next 12
months. Our primary capital needs have been to fund our working capital requirements. In the past, our primary sources of financing
have been cash generated from operations and financing activities.
As of June 30, 2019, we had cash and cash
equivalents (including restricted cash) of $7.04 million. The debt to assets ratio was 30.0% and 57.6% as of June 30, 2019 and
December 31, 2018, respectively. We expect to continue to finance our operations and working capital needs in 2019 from cash generated
from operations and, if needed, private financings. If available liquidity is not sufficient to meet our operating and loan obligations
as they come due, our plans include pursuing alternative financing arrangements or reducing expenditures as necessary to meet our
cash requirements. However, there is no assurance that we will be able to raise additional capital or reduce discretionary spending
to provide liquidity, if needed. We cannot be sure of the availability or terms of any alternative financing arrangements.
The following table provides detailed information
about our net cash flow for all financial statement periods presented in this report.
Cash Flow (In thousands)
|
|
For the Six Months Ended
|
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
Net cash (used in)/provided by operating activities
|
|
|
(2,162)
|
|
|
|
(7,01
|
0)
|
Net cash provided by/ (used in) investing activities
|
|
|
(658)
|
|
|
|
(5
|
)
|
Net cash provided by/ (used in) financing activities
|
|
|
8,815
|
|
|
|
2,562
|
|
Net cash flow
|
|
|
5,995
|
|
|
|
(4,45
|
3)
|
Operating Activities
Net cash used in operating activities
was $2.2 million and $7.0 million for the six months periods ended June 30, 2019 and 2018, respectively. Net cash used in
operating activities was mainly due to decrease of $2.4 million in payables and other current liabilities, increase of $0.7
million in prepayments and other current assets, increase of $0.3 million in accounts and other receivables.
Investing Activities
Net cash used in investing activities for the six months period
ended June 30, 2019 was $0.7 million, representing an increase of $0.7 million in net cash used in investing activities from $0.005
million for the same period of 2018. The difference was primarily a result of the new acquisition of Xianning Bozhuang which increases
fixed assets.
Financing Activities
Net cash provided by financing activities
for the six months period ended June 30, 2019 was $8.8 million, representing an increase of $6.2 million in net cash provided by
financing activities from $2.6 million for the same period of 2018. The difference was primarily a result of investors input raised
from the agreements the Company entered into on June 17, 2019.
Critical Accounting Policies
The preparation of financial statements
in conformity with GAAP requires our management to make assumptions, estimates and judgments that affect the amounts reported in
our financial statements, including the notes thereto, and related disclosures of commitments and contingencies, if any. We consider
our critical accounting policies to be those that require significant judgments and estimates in the preparation of financial statements,
including those set forth in Note 2 to the financial statements included herein.
Off-Balance Sheet Arrangements
We do not have any off-balance arrangements.