Liquidity and Capital Resources
General
Management anticipates that our existing capital resources and cash flows from operations are adequate to satisfy our liquidity requirements through 2019. 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 short-term loans from banks in China.
As of December 31, 2018 and 2017, cash and cash equivalents (including restricted cash) were $1.1 million and $0.09 million, respectively. The debt to assets ratio was 57.7% and 113.3% as of December 31, 2018 and 2017, 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 Flows Data:
|
|
For year ended December 31
,
|
|
|
(In thousands of U.S. dollars)
|
|
2018
|
|
|
2017
|
|
|
Net cash flows (used in)/provided by operating activities
|
|
(14,153
|
)
|
|
(360
|
)
|
|
Net cash flows used in investing activities
|
|
(492
|
)
|
|
751
|
|
|
Net cash flows (used in)/provided by financing activities
|
|
15,487
|
|
|
(754
|
)
|
Operating Activities
Net cash used in operating activities for 2018 and 2017 was approximately $14.1 million and $0.4 million respectively. The increase of approximately $17.9 million in net cash flows used in operating activities resulted primarily from net gain of approximately $13.7 million, the gain and adjustment to retained earnings as a result of disposal of subsidies of approximately negative $41.1 million and $24 million respectively in 2018.
Investing Activities
Net cash used in investing activities for 2018 and 2017 were $0.5 million and $0.8 million, respectively, with the
decrease of approximately $0.3 million cash provided in investing activities primarily from a decrease in restricted cash of $1.0 million, and the purchase of plant and equipment, the sale of intangible assets and the payment for deposits all for $0.5 million in 2018.
Financing Activities
Net cash provided by (used in) financing activities for 2018 and 2017 were approximately $15.5 million and negative $0.8 million, respectively, with the decrease of $16.2 million cash provided by financing activities from proceeds from issuance of common stock and the increase in additional paid in capital for approximately $6.0 million and $9.5 million respectively in 2018.
Critical Accounting Policies
The preparation of financial statements in conformity with United States generally accepted accounting principles requires our management to make assumptions, estimates and judgments that affect the amounts reported in the financial statements, including the notes thereto, and related disclosures of commitments and contingencies, if any.
14
We consider our critical accounting policies to be those that require the more significant judgments and estimates in the preparation of financial statements, including those set forth in Note 2 to the financial statements included herein.
The Company has evaluated the timing and the impact of the aforesaid guidance on the financial statements.
As of December 31, 2018, there were no other recently issued accounting standards not yet adopted that would or could have a material effect on the Company's consolidated financial statements.
Off Balance Sheet Arrangements
We do not have any off balance arrangements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL DATA
The full text of our audited consolidated financial statements As of December 31, 2018 begins on page F-1 of this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934 ("Exchange Act")) that are designed to ensure that information required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including to our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As required by Rule 13a-15 under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2018. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2018, our disclosure controls and procedures were not effective due to the material weakness in our internal control over financial reporting described below.
Internal Controls over Financial Reporting
Management's Annual Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management concluded that, As of December 31, 2018, our internal controls over financial reporting are not effective.
15
The material weakness and significant deficiency identified by our management As of December 31, 2018 relates to the ability of the Company to record transactions and provide disclosures in accordance with U.S. GAAP. We did not have sufficient and skilled accounting personnel with an appropriate level of experience in the application of U.S. GAAP commensurate with our financial reporting requirements. For example, our staff members do not hold licenses such as Certified Public Accountant or Certified Management Accountant in the U.S., have not attended U.S. institutions for training as accountants, and have not attended extended educational programs that would provide sufficient relevant education relating to U.S. GAAP. Our staff will require substantial training to meet the demands of a U.S. public company and our staff's understanding of the requirements of U.S. GAAP-based reporting are inadequate.
Remediation Initiative
We plan to provide U.S. GAAP training sessions to our accounting team. The training sessions will be organized to help our corporate accounting team gain experience in U.S. GAAP reporting and to enhance their awareness of new and emerging pronouncements with potential impact over our financial reporting. We plan to continue to recruit experienced and professional accounting and financial personnel and participate in educational seminars, tutorials, and conferences and employ more qualified accounting staff in future.
Changes in Internal Controls over Financial Reporting.
Other than as described above, during the fiscal year ended December 31, 2017, there were no material changes in our internal control over financial reporting identified in connection with the evaluation performed during the fiscal year covered by this Annual Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations over Internal Controls.
Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.
Management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our internal controls will prevent or detect all misstatements. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of such controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of misstatements, if any, have been detected or prevented. Also, projections of any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
ITEM 9B. OTHER INFORMATION.
None.
16
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors
The following table sets forth the name, age and position of each of our current directors as well as the date they began their service as a director.
|
Name
|
Age
|
Position
|
Director Since
|
|
Hongxiang Yu
|
38
|
President, Chief Executive Officer and Chairman
|
2016
|
|
Yimin Jin
|
47
|
Chief Strategy Officer and
Director
|
2017
|
|
Yuguo Zhang
|
61
|
Director
|
2017
|
|
Yilei Shao
|
41
|
Director
|
2018
|
|
Guangming Fang
|
54
|
Director
|
2018
|
MR. HONGXIANG YU.
Mr. Yu has served as a director of the Company since August 2016 and the Chief Executive Officer and President of the Company since September 2018. Mr. Yu has served as the head of the internal auditing department of Hongrun Construction Group Co., Ltd., a company listed on the Shenzhen Stock Exchange, and as general manager for Hongrun's foundation engineering subsidiary, since August 2006. In September 2015, Mr. Yu established, and has been the Chairman of, Shanghai Highlights Asset Management Co., Ltd., a company engaged in assets management and private equity investment in China. Since April 2016, Mr. Yu has also served as the Vice Chairman of Tianjin Dragon Film Limited, a company engaged in investment in film industry including the both upstream and downstream chain of film production business in China. Mr. Yu received his Bachelor degree in International Trade in 2004 from University of Portsmouth in the United Kingdom and his Master degree in International Human Resources Management in 2006 from University of Portsmouth. Mr. Yu is well qualified to serve on the Board because of his extensive management experience.
MR. YIMIN JIN
. Mr. Jin became our Chief Strategy Officer and a director in November 2017. From 1995 to 2001, Mr. Jin served as the General Manager in Shanghai Pudong Development Bank, and from 2001-2017, Mr. Jin served as the Managing Director of Shanghai Xiefeng Science and Technology Investment Co., Ltd. Mr. Jin received his college diploma from Shanghai Shanda College in 1993 and received his Bachelor of Finance degree from Shanghai Television University in 1998. Mr. Jin obtained his MSBA degree from Madonna University in 2001.
MR. YUGUO ZHANG.
Mr. Zhang was appointed as one of our directors of the Board and as a member of the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee on November 8, 2017. He has served as the president of Jiangsu Siyuan Port Co, Ltd. from 2014 to 2016. From 2012 to 2014, Mr. Zhang served as the president of Jiangsu Xinmin Port Co., Ltd., and from 2008 to 2012, Mr. Zhang served as the president of Rugao Port Group. Mr. Zhang received his Bachelor of Chinese Language degree from Huadong Normal University in 1991 and obtained his MSBA degree from Madonna University in 1999.
MR. YILEI SHAO.
Ms. Shao became a director of the Company in September 2018. She has served as founder and chief executive officer of Shanghai Jianshi Management Consulting Limited, focusing on cross-border advisory services for Chinese companies and strategic consulting, since 2011. Ms. Shao served as Vice President in the Credit Derivatives Department of Goldman Sachs in New York from 2005 to 2010. Ms. Shao received a bachelor degree in computer science from Shanghai Jiao Tong University and a Ph.D. in Computer Science from Princeton University. We believe that Ms. Shao is well qualified to serve on our Board of Directors because of her extensive experience with strategic corporate matters.
MR. GUANGMING FANG
. Mr. Fang was appointed as one of our directors of the Board in September 2018. He has served as a director of Hongkong Zhuangyuanlou Food Co., Ltd. since September 2014. He served as chief executive officer of Yueyuxing International Trade Company in Thailand from 1986 to 1999. He served as chief executive officer of Beijing Zhongqiao Culture Development Company from 1999 to August 2014, Mr. Fang received his bachelor of accounting degree from Payap University of Thailand in 1986. We believe Mr. Fang is well qualified to serve on our Board of Directors because of his extensive management experience in the food industry.
17
There are no arrangements or understandings between any of our directors and any other person pursuant to which any director was selected to serve as a director of our company. Directors are elected until their successors are duly elected and qualified. There are no family relationships among our directors or officers.
Executive Officers
Our executive officers are appointed by our Board and serve at their discretion. The following table sets forth the name, age and position of each of our current executive officers as well as the date they began their service as an executive officer.
|
Name
|
Age
|
Position
|
Executive Officer Since
|
|
Hongxiang Yu
|
38
|
President, Chief Executive Officer and Chairman
|
2018
|
|
Yu Li
|
26
|
Chief Financial Officer
|
2018
|
|
Yimin Jin
|
47
|
Chief Strategy Officer and Director
|
2017
|
See "Directors" above for information on Mr. Yu and Mr. Jin.
MS. YU LI.
Ms. Li was appointed to serve as the Chief Financial Officer of the Company in September 2018. She has been as an asset management intern at Shenwan Hongyuan Securities since December 2017. In August and September 2017, she was an associate intern at China Investment Consulting. From November 2014 to June 2015, she was a part time assistant at McKinsey & Company. She received her Bachelor degree in Accounting and Financial Studies in 2014 from University of Central Lancashire in the UK and her Master degree in Management in 2017 from Warwick University.
Board of Directors
Our Board met on five occasions during fiscal year 2018. Each of the members of our Board attended more than 75% of the total number of meetings held by our Board and the committees on which each director served during fiscal year 2018.
Committees of the Board
Audit Committee
The Audit Committee assists our Board in monitoring:
|
|
-
|
our accounting, auditing, and financial reporting processes;
|
|
|
|
|
|
|
-
|
the integrity of our financial statements;
|
|
|
|
|
|
|
-
|
internal controls and procedures designed to promote our compliance with accounting standards and applicable laws and regulations; and
|
|
|
|
|
|
|
-
|
the appointment and evaluation of the qualifications and independence of our independent auditors.
|
18
Yuguo Zhang, Yilei Shao, and Guangmig Fang, all of whom are independent directors under SEC rules and the rules of NYSE American, are currently serving as members of the Audit Committee. Ms. Shao is the chairman of the Audit Committee and is our audit committee financial expert.
The Audit Committee has adopted a written charter, a printed copy of which is available to any shareholder requesting a copy by writing to: Planet Green Holdings Corp., c/o Board of Director Office, Suite 901, Building 6, No. 1678 Jinshajiang Road, Putuo District, Shanghai, China 200333. During the fiscal year 2018, our Audit Committee held five meetings.
Compensation Committee
The functions of the Compensation Committee are as follows:
• to assist our Board in discharging its responsibilities with respect to compensation of our executive officers and directors;
• to evaluate the performance of our executive officers;
• to assist our Board in developing succession plans for executive officers; and
• to administer our stock and incentive compensation plans and recommend changes in such plans to our Board as needed.
The current members of the Compensation Committee are Messrs. Zhang, Shao and Fang. Mr. Zhang is the chairman of the Compensation Committee. All current members of the Compensation Committee are independent directors, and all past members were independent directors at all times during their service on such Committee. None of the past or present members of our Compensation Committee are present or past employees or officers of the Company or any of our subsidiaries. No member of the Compensation Committee has had any relationship with us requiring disclosure under Item 404 of Regulation S-K. None of our executive officers serves on the Board of Directors or compensation committee of a company that has an executive officer that serves on our Board of Directors or Compensation Committee.
The Compensation Committee may not delegate its responsibilities to another committee, individual director or member of management.
The Compensation Committee meets on an annual basis and holds special meetings as needed. The Compensation Committee meetings may be called by the Committee chairman, the Chairman of the Board of Directors or a majority of Committee members. The Chief Executive Officer and Chief Financial Officer also provide recommendations to the Compensation Committee relating to compensation of other executive officers. The Compensation Committee held five meetings in fiscal year 2018.
Nominating and Corporate Governance
The Nominating and Corporate Governance assists the Board of Directors in identifying individuals qualified to become our directors and in determining the composition of the Board of Directors and its committees. The Nominating and Corporate Governance is responsible for, among other things:
• to make recommendations to the Board of Directors with respect to the size and composition of the Board of Directors;
• to make recommendations to the Board of Directors on the minimum qualifications and standards for director nominees and the selection criteria for the Board members;
19
• to review the qualifications of potential candidates for the Board of Directors;
• to make recommendations to the Board of Directors on nominees to be elected at the Annual Meeting of Shareholders; and
• to seek and identify a qualified director nominee, in the event that a director vacancy occurs, to be recommended to the Board of Directors for either appointment by the Board of Directors to serve the remainder of the term of a director position that is vacant or election at the Annual Meeting of the Shareholders.
The current members of the Nominating and Corporate Governance are Messrs. Zhang, Shao and Fang. Mr. Fang is the chairman of the Compensation Committee. During the fiscal year 2018, our Nominating and Corporate Governance Committee held five meetings.
Shareholder Nominations for Director
Shareholders may propose candidates for board membership by writing to Planet Green Holdings Corp., c/o Board of Director Office, Suite 901, Building 6, No. 1678 Jinshajiang Road, Putuo District, Shanghai, China 200333. Any such proposal shall contain the name, holdings of our securities and contact information of the person making the nomination; the candidate's name, address and other contact information; any direct or indirect holdings of our securities by the nominee; any information required to be disclosed about directors under applicable securities laws and/or stock exchange requirements; information regarding related party transactions with our company and/or the shareholder submitting the nomination; any actual or potential conflicts of interest; the nominee's biographical data, current public and private company affiliations, employment history and qualifications and status as "independent" under applicable securities laws and stock exchange requirements. Nominees proposed by shareholders will receive the same consideration as other nominees.
Compensation Committee Interlocks and Insider Participation
None of our officers currently serves, or in the past year has served, as a member of the Board of Directors or compensation committee of any entity that has one or more officers serving on our Board of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive officers, directors and persons who beneficially own more than 10% of our common stock to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission, which we also refer to throughout this report as the SEC. Based solely on our review of the copies of such forms furnished to us and written representations from our executive officers, directors and such beneficial owners, we believe that all filing requirements of Section 16(a) of the Exchange Act were timely complied with during the fiscal year ended December 31, 2018.
Code of Ethics
Our Board adopted a Code of Ethics that applies to all of our directors, executive officers, including our principal executive officer, principal financial officer and principal accounting officer, and employees. The Code of Ethics addresses, among other things, honesty and ethical conduct, conflicts of interest, compliance with laws, regulations and policies, including disclosure requirements under the federal securities laws, confidentiality, trading on inside information, and reporting of violations of the code. The Code of Ethics is available on the Corporate Governance page of our website under the Investor link at http://www.planetgreenholdings.com, and a copy of the Code of Ethics is available to any shareholder requesting a copy by writing to: Planet Green Holdings Corp., c/o Board of Director Office, Suite 901, Building 6, No. 1678 Jinshajiang Road, Putuo District, Shanghai, China 200333. We intend to disclose on our website, in accordance with all applicable laws and regulations, amendments to, or waivers from, our Code of Ethics.
20
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning all forms of compensation earned by our named executive officers during the fiscal years ended December 31, 2018 and 2017 for services provided to us and our subsidiaries and VIEs. None of our current executive officers earned compensation that exceeded $100,000 during the fiscal years ended December 31, 2018 or 2017.
|
Name and Principal
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
All Other
|
|
|
|
|
|
Position
|
|
Year
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Total
|
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
Hongxiang Yu,
|
|
2018
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President, Chief Executive Officer and Chairman
|
|
2017
|
|
$
|
16,154
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yu Li,
|
|
2018
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer
|
|
2017
|
|
$
|
16,164
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yimin Jin,
|
|
2018
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Strategic Officer and Director
|
|
2017
|
|
$
|
16,154
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
16,154
|
|
On September 27, 2018, the Board appointed Hongxiang Yu to serve as the Chief Executive Officer and President of the Company and Yu Li as the Chief Financial Officer. Pursuant to Mr. Yu's engagement letter, we are obligated to pay Mr. Yu a compensation of $16,154 per year. Pursuant to Ms. Li's engagement letter, we are obligated to pay Ms. Li a compensation of $16,154 per year.
On November 8, 2017, the Board appointed Yimin Jin as a member of the Board and the Chief strategic officer. Pursuant to Mr. Jin's engagement letter, we are obligated to pay Mr. Jin a compensation of $16,154 per year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
The following table sets forth information regarding beneficial ownership of our common stock as of April 11, 2019 (i) by each person who is known by us to beneficially own more than 5% of our common stock; (ii) by each of our named executive officers and directors and (iii) by all of our officers and directors as a group. Beneficial ownership is determined in accordance with the rules of the SEC that deem shares to be beneficially owned by any person who has voting or investment power with respect to such shares. Except as otherwise indicated, the persons listed below have advised us that they have direct sole voting and investment power with respect to the shares listed as owned by them.
Unless otherwise specified, the address of each of the persons set forth below is c/o Planet Green Holdings Corp., Suite 901, Building 6, No. 1678 Jinshajiang Road, Putuo District, Shanghai, China 200333.
In the table below, percentage ownership is based on 5,497,765 shares of our common stock outstanding as of April 11, 2019.
21
|
|
Amount and nature
|
|
|
Percent
|
|
|
|
of
|
|
|
of
|
|
|
Name and title of beneficial owner
|
|
beneficial ownership
|
|
|
class
|
|
|
|
|
|
|
|
|
|
|
5% or Greater Shareholders
|
|
|
|
|
|
|
|
DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH
(1)
|
|
431,763
|
|
|
7.85%
|
|
|
Xiuping Cai
|
|
400,000
|
|
|
7.28%
|
|
|
Shenzhen Jiamingrui New Agriculture Co Ltd.
|
|
400,000
|
|
|
7.28%
|
|
|
|
|
|
|
|
|
|
|
Executive Officers, Directors and Director Nominees
|
|
|
|
|
|
|
|
Hongxiang Yu, President, Chief Executive Officer and Chairman
(2)
|
|
1,176,471
|
|
|
21.4%
|
|
|
Yu Li, Chief Financial Officer
|
|
-
|
|
|
-
|
|
|
Yimin Jin, Chief Strategic Officer and Director
(2)
|
|
1,176,471
|
|
|
21.4%
|
|
|
Yuguo Zhang, Director
|
|
-
|
|
|
-
|
|
|
Yilei Shao, Director
|
|
-
|
|
|
-
|
|
|
Guangming Fang, Director
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
All directors, director nominees and executive officers as a group (six individuals)
|
|
2,352,942
|
|
|
42.8%
|
|
|
(1)
|
Deutsche Investitions- und Entwicklungsgesellschaft mbH ("DEG") is a German limited liability company located at Kaemmergasse 22, 50676 Koeln, Germany.
10,794,066 shares of common stock (without taking into account of the reverse stock split subsequently effected by the Company) that has been pledged under the Share Pledge Agreement, dated October 19, 2010 and amended on November 15, 2012, for the benefit of DEG in order to secure the obligations of the Company and Junan Hongrun under a Loan Agreement, dated May 31, 2010, among the Company, DEG and Mr. Si Chen (the "Loan Agreement"). On September 7, 2016, DEG notified the agent under the Pledge Agreement that the Company was in default under the Loan Agreement. As of October 19, 2018, DEG entered into a Stock Purchase Agreement with Mr. Yimin Jin and agreed to sell and Mr. Jin agreed to purchase all of DEG's 10,794,066 shares of common stock of the Company in consideration for the purchase price of Eight Hundred and Sixty Thousand United States Dollars ($860,000.00) (the "Purchase Price"). Mr. Jin is obligated to pay a down payment of $86,000 within five business days and the remainder of the purchase price within three weeks of October 19, 2018, after which DEG is obligated to ship the stock certificates with stock powers to Mr. Jin for transfer. The transfer of share of common stock of the Company has not been closed as of the date of this report.
It should be noted that the number of 10,794,066 shares of common stock of the Company being sold from DEG to Mr. Jin reflect the number of shares prior to the conversion of shares in accordance with the amendment to the Company's articles of incorporation dated September 28, 2018, pursuant to which every 25 shares of common stock of Planet Green Holdings Corp. that were issued and outstanding as of October 1, 2018 shall be automatically combined and converted into one share of common stock of the Company.
|
|
|
|
|
(2)
|
On August 8, 2018, the Company entered into an amended and restated securities purchase agreement with Hongxiang Yu and Yimin Jin, pursuant to which Mr. Yu and Mr. Jin agreed to invest an aggregate of $10 million in the Company in exchange for an aggregate of 2,352,942 shares of common stock, representing a purchase price of approximately $4.25 per share (taking into account the reverse stock split subsequently effected by the Company). On October 16, 2018, the Company closed the transaction. Mr. Jin disclaims beneficial ownership of any shares held by Mr. Yu. Mr. Yu disclaims beneficial ownership of any shares held by Mr. Jin.
|
22
Changes in Control
There are currently no arrangements which would result in a change in control of us.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
.
Related Party Transactions
On August 8, 2018, the Company entered into an amended and restated securities purchase agreement with Hongxiang Yu, the President, Chief Executive Officer and Chairman of the Company, and Yimin Jin, the Chief Strategic Officer and Director of the Company, pursuant to which Mr. Yu and Mr. Jin agreed to invest an aggregate of $10 million in the Company in exchange for an aggregate of 2,352,942 shares of common stock, representing a purchase price of approximately $4.25 per share (taking into account the reverse stock split subsequently effected by the Company). On October 16, 2018, the Company closed the transaction and received gross proceeds of $10,000,000 in the aggregate.
On September 28, we sold 100% of equity interest in ILH to Si Chen, our former President, Chief Executive Officer and Chairman. We have included discussions of the transaction in our Current Report on Form 8-K, filed on October 2, 2018.
Policy for Approval of Related Party Transactions
Our Audit Committee Charter provides that all related party transactions required to be disclosed under SEC rules are to be reviewed by the Audit Committee.
Director Independence
NYSE American listing standards require that a majority of our Board of Directors be independent. An "independent director" is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company's board of directors, would interfere with the director's exercise of independent judgment in carrying out the responsibilities of a director. Our Board of Directors has determined that Messrs. Zhang, Shao, Fang are "independent directors" as defined in the NYSE American listing standards and applicable SEC rules.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
WWC, P.C. is the Company's independent registered public accounting firm for the fiscal years ended December 31, 2017 and 2018 and the accounting fees in each such period were $170,000 and $140,000. Such fees related to audit services provided by WWC, P.C. No audit-related or tax services were provided by WWC, P.C. during such periods.
23
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) (1 and 2)
Financial Statement and Schedules
The financial statements contained in the "Audited Financial Statements" beginning on page F-1 of this Annual Report on Form 10-K.
(b)
Exhibits
|
Exhibit
|
Description
|
|
No.
|
|
|
|
|
3.1
|
Articles of Incorporation of the registrant, as filed with the Nevada Secretary of State on June 15, 2009. Incorporated by reference to Exhibit 3.1 to the registrant's registration statement on Form S-3 filed on January 29, 2010.
|
|
|
|
|
3.2
|
Certificate of Amendment of the registrant, as filed with the Nevada Secretary of State on September 28, 2018. Incorporated by reference to Exhibit 3.1 to the registrant's current report on Form 8-K filed on October 2, 2018.
|
|
|
|
|
3.3
|
Bylaws of the registrant. Incorporated by reference to Exhibit 3.2 to the registrant's registration statement on Form S-3 filed on January 29, 2010.
|
|
|
|
|
10.1
|
Securities Purchase Agreement, dated December 28, 2017, by and among American Lorain Corporation and Yi Li and Beili Zhu. Incorporated by reference to Exhibit 10.1 to registrant's Form 8-K filed on May 21, 2018.
|
|
|
|
|
10.2
|
Securities Purchase Agreement, dated April 14, 2018, by and among American Lorain Corporation and the investors named therein. Incorporated by reference to Exhibit 10.2 to registrant's Form 8-K filed on May 21, 2018.
|
|
|
|
|
10.3
|
Securities Purchase Agreement, dated April 24, 2018, by and between American Lorain Corporation and Xiuping Cai.
Incorporated by reference to Exhibit 10.3 to registrant's Form 8-K filed on May 21, 2018.
|
|
|
|
|
10.4
|
Securities Purchase Agreement, dated July 12, 2018, by and among American Lorain Corporation, Yunpeng Zhang and Zhongquan Sun. Incorporated by reference to Exhibit 10.1 to registrant's Form 10-Q filed on August 14, 2018.
|
|
|
|
|
10.5
|
Amended and Restated Securities Purchase Agreement, dated August 8, 2018, by and among American Lorain Corporation, Yimin Jin and Hongxiang Yu.
Incorporated by reference to Exhibit 10.2 to registrant's Form 10-Q filed on August 14, 2018.
|
|
|
|
|
10.6
|
S
hare Exchange Agreement, dated August 8, 2018, by and among American Lorain Corporation, Si Chen, Planet Green Holdings Corp.,Junan Hongrun Foodstuff Co., Ltd., Shandong Lorain Co., Ltd., International Lorain Holdings, Inc., Shandong Greenpia Foodstuff Co., Ltd., Beijing Lorain Co., Ltd. and Luotian Lorain Co., Ltd. Incorporated by reference to Exhibit 10.3 to registrant's Form 10-Q filed on August 14, 2018.
|
|
|
|
|
10.7
|
Share Exchange Agreement, dated as of September 25, 2018, by and among American Lorain Corporation, Shanghai Xunyang Internet Technology Co., Ltd., Taishan Muren Agriculture Co. Ltd. and Shenzhen Jiamingrui New Agriculture Co., Ltd. Incorporated by reference to Exhibit 10.1 to registrant's Form 8-K filed on September 26, 2018.
|
24
|
10.8
|
Form of Lock-Up Agreement, by and between American Lorain Corporation and Shenzhen Jiamingrui New Agriculture Co., Ltd. Incorporated by reference to Exhibit 10.2 to registrant's Form 8-K filed on September 26, 2018.
|
|
|
|
|
10.9
|
Consultation and Service Agreement, dated September 27, 2018, by and between Shanghai Xunyang Interment Technology Co., Ltd. and Taishan Muren Farming Co., Ltd. *
|
|
|
|
|
10.10
|
Business Cooperation Agreement, dated September 27, 2018, by and between Shanghai Xunyang Interment Technology Co., Ltd. and Taishan Muren Farming Co., Ltd. *
|
|
|
|
|
10.11
|
Equity Pledge Agreement, dated September 27, 2018, by and among Shanghai Xunyang Interment Technology Co., Ltd., Shenzhen Jiamingrui Xinnong Co., Ltd. and Taishan Muren Farming Co., Ltd. *
|
|
|
|
|
10.12
|
Equity Option Agreement, dated September 27, 2018, by and among Shanghai Xunyang Interment Technology Co., Ltd., Shenzhen Jiamingrui Xinnong Co., Ltd. and Taishan Muren Farming Co., Ltd. *
|
|
|
|
|
10.13
|
Voting Rights Proxy and Financial Supporting Agreement, dated September 27, 2018, by and among Shenzhen Jiamingrui Xinnong Co., Ltd., Shanghai Xunyang Interment Technology Co., Ltd. and Taishan Muren Farming Co., Ltd. *
|
|
|
|
10.14
|
Form of Non-Competition and Non-Solicitation Agreement, by and among American Lorain Corporation, Taishan Muren Agriculture Co. Ltd., Shenzhen Jiamingrui New Agriculture Co., Ltd., and the persons named therein. Incorporated by reference to Exhibit 10.3 to registrant's Form 8-K filed on September 26, 2018.
|
|
|
|
|
14.1
|
Business Ethics Policy and Code of Conduct, adopted on April 30, 2007. Incorporated by reference to Exhibit 14 to the registrant's current report on Form 8-K filed on May 9, 2007.
|
|
|
|
|
21.1
|
List of subsidiaries of the registrant *
|
|
|
|
|
31.1
|
Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
|
|
|
|
|
31.2
|
Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
|
|
|
|
|
32.1
|
Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **
|
|
|
|
|
32.2
|
Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **
|
|
|
|
|
101.INS
|
XBRL Instance Document*
|
|
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema*
|
|
|
|
|
101.CAL
|
XBRL Taxonomy Calculation Linkbase*
|
|
101.LAB
|
XBRL Taxonomy Label Linkbase*
|
|
|
|
|
101.PRE
|
XBRL Definition Linkbase Document*
|
|
|
|
|
101.DEF
|
XBRL Definition Linkbase Document*
|
|
*
|
Filed herewith
|
|
|
|
|
**
|
Furnished herewith
|
|
|
|
|
†
|
Management contract, compensatory plan or arrangement.
|
ITEM 16. FORM 10-K SUMMARY
Not applicable.
25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
PLANET GREEN HOLDINGS CORP.
|
|
|
|
Date: April 16, 2019
|
By:
/s/ Hongxiang Yu
|
|
Hongxiang Yu, Chief Executive Officer, President and Chairman
(Principal Executive Officer)
|
|
|
|
|
|
By:
/s/ Yu Li
|
|
|
Yu Li, Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed by the following persons in the capacities and on the dates indicated.
|
Signature
|
Title
|
Date
|
|
Chief Executive Officer, President
|
|
|
and Chairman
|
|
|
/s/ Hongxiang Yu
|
(Principal Executive Officer)
|
April 16, 2019
|
|
Hongxiang Yu
|
|
|
|
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer and
|
|
|
/s/ Yu Li
|
Principal Accounting Officer)
|
April 16, 2019
|
|
Yu Li
|
|
|
|
|
|
|
|
/s/ Yimin Jin
|
Chief Strategy Officer and Director
|
April 16, 2019
|
|
Yimin Jin
|
|
|
|
|
|
|
|
/s/ Yuguo Zhang
|
Director
|
April 16, 2019
|
|
Yuguo Zhang
|
|
|
|
|
|
|
|
/s/ Yilei Shao
|
Director
|
April 16, 2019
|
|
Yilei Shao
|
|
|
|
|
|
|
|
/s/ Guangming Fang
|
Director
|
April 16, 2019
|
|
Guangming Fang
|
|
|
26
ITEM 1. Financial Statements
PLANET GREEN HOLDINGS CORP.
(FORMERLY KNOWN AS AMERICAN LORAIN CORPORATION)
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2018 AND 2017
(Stated in US Dollars)
F-1
|
To:
|
The Board of Directors and
Stockholders of
|
|
|
Planet Green Holdings Corp.
|
|
|
(f/k/a American
Lorain Corporation)
|
Report of Independent Registered Public Accounting Firm
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of
Planet Green Holdings Corp. (formerly known as American Lorain Corporation) (the
Company) as of December 31, 2018 and 2017, and the related consolidated
statements of operations and comprehensive loss, stockholders’ equity/(deficit),
and cash flows for each of the years in the two-year period ended December 31,
2018, and the related notes (collectively referred to as the financial
statements). In our opinion, the financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2018
and 2017, and the results of its operations and its cash flows for each of the
years in the two-year period ended December 31, 2018, in conformity with
accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting
firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting, but not for the
purpose of expressing an opinion on the effectiveness of the Company’s internal
control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.
/s/ WWC, P.C.
WWC, P.C.
Certified Public Accountants
San Mateo, California
April 15, 2019
We have served as the Company’s auditor since 2007.
F-2
PLANET GREEN HOLDINGS CORP.
(F/K/A AMERICAN LORAIN
CORPORATION)
AUDITED CONSOLIDATED BALANCE SHEETS
AS OF
DECEMBER 31, 2018 AND 2017
(Stated in US Dollars)
|
|
2018
|
|
|
2017
|
|
|
Assets
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
1,062,643
|
|
$
|
85,493
|
|
|
Trade receivables, net
|
|
6,528,072
|
|
|
729,919
|
|
|
Inventories
|
|
-
|
|
|
10,593,403
|
|
|
Advances and prepayments to suppliers
|
|
7,381,785
|
|
|
3,129,435
|
|
|
Other receivables and other current assets
|
|
16,316
|
|
|
1,612,682
|
|
|
Related party receivable
|
|
2,208
|
|
|
-
|
|
|
Discontinued operations - current assets held for sale
|
|
-
|
|
|
790,550
|
|
|
Total current assets
|
$
|
14,991,024
|
|
$
|
16,941,482
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
Investments
|
|
-
|
|
|
-
|
|
|
Plant and equipment, net
|
|
1,371,518
|
|
|
36,663,290
|
|
|
Intangible assets, net
|
|
-
|
|
|
13,167,870
|
|
|
Construction in progress, net
|
|
846,441
|
|
|
819,301
|
|
|
Deposits
|
|
1,477
|
|
|
|
|
|
Discontinued operations - long term assets held for sale
|
|
-
|
|
|
896,099
|
|
|
Total Assets
|
$
|
17,210,460
|
|
$
|
68,488,042
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Short-term bank loans
|
$
|
-
|
|
$
|
23,773,780
|
|
|
Long-term debt - current portion
|
|
-
|
|
|
30,511,656
|
|
|
Capital lease - current portion
|
|
-
|
|
|
1,074,829
|
|
|
Accounts payable
|
|
579,228
|
|
|
4,150,604
|
|
|
Taxes payable
|
|
155,135
|
|
|
355,142
|
|
|
Accrued liabilities and other payables
|
|
496,799
|
|
|
9,317,038
|
|
|
Customers deposits
|
|
3,499
|
|
|
485,295
|
|
|
Related party payable
|
|
78,656
|
|
|
-
|
|
|
Discontinued operations - liabilities
|
|
8,607,813
|
|
|
9,610,994
|
|
|
Total current liabilities
|
$
|
9,921,130
|
|
$
|
79,279,338
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity/(Deficiency)
|
|
|
|
|
|
|
|
Preferred Stock, $0.001 par value, 5,000,000 shares authorized; 0 shares issued and outstanding at December 31, 2018 and 2017, respectively
|
$
|
-
|
|
$
|
-
|
|
|
Common Stock, $0.001 par value, 200,000,000 shares authorized; 5,497,765 and 1,530,980 shares issued and outstanding as of December 31, 2018 and 2017, respectively
|
|
5,498
|
|
|
1,531
|
|
|
Additional paid-in capital
|
|
74,739,031
|
|
|
57,888,993
|
|
|
Statutory reserves
|
|
2,810,953
|
|
|
25,103,354
|
|
|
Accumulated deficit
|
|
(79,038,883
|
)
|
|
(99,628,547
|
)
|
|
Accumulated other comprehensive income
|
|
9,792,283
|
|
|
13,588,726
|
|
|
Non-controlling interests
|
|
(1,019,552
|
)
|
|
(7,745,353
|
)
|
|
Total Stockholders' Equity/(Deficiency)
|
$
|
7,289,330
|
|
$
|
(10,791,296
|
)
|
|
Total Liabilities and Stockholders' Equity
|
$
|
17,210,460
|
|
$
|
68,488,042
|
|
See Accompanying Notes to the Financial Statements
F-3
PLANET GREEN HOLDINGS CORP.
(F/K/A AMERICAN LORAIN
CORPORATION)
AUDITED CONSOLIDATED STATEMENTS OF
OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS
ENDED DECEMBER 31, 2018 AND 2017
(Stated in US Dollars)
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$ 6,828,887
|
|
|
$ 5,109,998
|
|
|
Cost of revenues
|
|
6,524,228
|
|
|
5,464,979
|
|
|
Gross profit
|
|
304,659
|
|
|
(354,981
|
)
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
Selling and marketing expenses
|
|
14,409
|
|
|
431,921
|
|
|
General and administrative expenses
|
|
874,675
|
|
|
40,566,439
|
|
|
Total operating expenses
|
|
889,084
|
|
|
40,998,360
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
(584,425)
|
|
|
(41,353,341)
|
|
|
|
|
|
|
|
|
|
Other income (expenses):
|
|
|
|
|
|
|
|
Interest income
|
|
369
|
|
|
-
|
|
|
Interest expense
|
|
(13)
|
|
|
(4,076,495)
|
|
|
Other income
|
|
11,877
|
|
|
739,725
|
|
|
Other expenses
|
|
(227)
|
|
|
(2,500,799)
|
|
|
Gain on acquisition
|
|
423,338
|
|
|
-
|
|
|
|
435,344
|
|
|
(5,837,569)
|
|
|
|
|
|
|
|
|
|
Loss before taxes from continuing operations
|
|
(149,081)
|
|
|
(47,190,910)
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
164,384
|
|
|
161,192
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
(313,465)
|
|
|
(47,352,102)
|
|
|
|
|
|
|
|
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
Loss from discontinued operations
|
|
(24,049,343)
|
|
|
(30,953,252)
|
|
|
Gain on disposal, net of taxes
|
|
41,194,029
|
|
|
-
|
|
|
Income/(loss) from discontinued operations, net of taxes
|
|
17,144,686
|
|
|
(30,953,252)
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$16,831,221
|
|
|
$ (78,305,354)
|
|
|
|
|
|
|
|
|
|
Net income available (loss attributable) to:
|
|
|
|
|
|
|
|
- Common shareholders
|
|
20,589,664
|
|
|
(63,232,092)
|
|
|
- Non-controlling interests
|
|
(3,758,443)
|
|
|
(15,073,262)
|
|
|
|
|
|
|
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
Foreign currency translation gain (loss)
|
|
(3,796,445)
|
|
|
1,417,720
|
|
|
Comprehensive income (loss)
|
|
$ 13,034,776
|
|
|
$ (76,887,634)
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) per share from continuing operations
|
|
|
|
|
|
|
|
- Basic and diluted
|
|
$ (0.11)
|
|
|
(30.93)
|
|
|
|
|
|
|
|
|
|
Income (loss) per share from discontinued operations
|
|
|
|
|
|
|
|
- Basic and diluted
|
|
$ 7.02
|
|
|
$ (20.22)
|
|
|
|
|
|
|
|
|
|
Income (loss) per share available to common shareholders
|
|
|
|
|
|
|
|
- Basic and diluted
|
|
$ 6.91
|
|
|
$ (41.30)
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding
|
|
2,978,233
|
|
|
1,530,980
|
|
See Accompanying Notes to the Financial Statements
F-4
American
Lorain
Corporation
Consolidated
Statements
of
Stockholders’
Equity/(Deficiency)
For the years
ended
December
31, 2018 and 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
Other
|
|
|
Non-
|
|
|
|
|
|
|
|
of
|
|
|
Common
|
|
|
Paid-in
|
|
|
Statutory
|
|
|
Accumulated
|
|
|
Comprehensive
|
|
|
Controlling
|
|
|
|
|
|
|
|
Shares
|
|
|
Stock
|
|
|
Capital
|
|
|
Reserves
|
|
|
Deficit
|
|
|
Income
|
|
|
Interests
|
|
|
Total
|
|
|
Balance, January 1, 2017
|
|
1,530,980
|
|
|
1,531
|
|
|
57,888,993
|
|
|
25,103,354
|
|
|
(36,396,455
|
)
|
|
12,171,006
|
|
|
7,327,909
|
|
|
66,096,338
|
|
|
Net loss
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(78,305,354
|
)
|
|
-
|
|
|
-
|
|
|
(78,305,354
|
)
|
|
Allocation to non-controlling interests
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
15,073,262
|
|
|
-
|
|
|
(15,073,262
|
)
|
|
-
|
|
|
Foreign currency translation adjustment
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,417,720
|
|
|
-
|
|
|
1,417,720
|
|
|
Balance, December 31, 2017
|
|
1,530,980
|
|
|
1,531
|
|
|
57,888,993
|
|
|
25,103,354
|
|
|
(99,628,547
|
)
|
|
13,588,726
|
|
|
(7,745,353
|
)
|
|
(10,791,296
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2018
|
|
1,530,980
|
|
|
1,531
|
|
|
57,888,993
|
|
|
25,103,354
|
|
|
(99,628,547
|
)
|
|
13,588,726
|
|
|
(7,745,353
|
)
|
|
(10,791,296
|
)
|
|
Rounding from reverse split
|
|
1,843
|
|
|
2
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2
|
|
|
Net income
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
16,831,221
|
|
|
-
|
|
|
-
|
|
|
16,831,221
|
|
|
Issuance of common stock for cash
|
|
3,564,942
|
|
|
3,565
|
|
|
15,450,438
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
15,454,003
|
|
|
Issuance of common stock for acquisition of subsidiary
|
|
400,000
|
|
|
400
|
|
|
1,399,600
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,400,000
|
|
|
Disposition of subsidiaries
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(22,292,401
|
)
|
|
-
|
|
|
-
|
|
|
7,745,353
|
|
|
(14,547,048
|
)
|
|
Reorganization
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,738,891
|
|
|
2,738,891
|
|
|
Allocation to non-controlling interests
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,758,443
|
|
|
-
|
|
|
(3,758,443
|
)
|
|
-
|
|
|
Foreign currency translation adjustment
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(3,796,443
|
)
|
|
-
|
|
|
(3,796,443
|
)
|
|
Balance, December 31, 2018
|
|
5,497,765
|
|
|
5,498
|
|
|
74,739,031
|
|
|
2,810,953
|
|
|
(79,038,883
|
)
|
|
9,792,283
|
|
|
(1,019,552
|
)
|
|
7,289,330
|
|
See Accompanying Notes to the Financial Statements
F-5
PLANET GREEN HOLDINGS CORP.
(F/K/A AMERICAN LORAIN
CORPORATION)
AUDITED CONSOLIDATED STATEMENTS OF CASH
FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(STATED
IN US DOLLARS)
|
|
2018
|
|
|
2017
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
Net income/(loss)
|
$
|
16,831,221
|
|
$
|
(47,352,102
|
)
|
|
Adjustments to reconcile net income to net cash sourced (used) in operating activities:
|
|
|
|
|
|
|
|
Gain on disposal
|
|
(41,145,631
|
)
|
|
-
|
|
|
Write down of assets in discontinued operations
|
|
24,049,343
|
|
|
-
|
|
|
Gain on acquisition
|
|
(423,338
|
)
|
|
-
|
|
|
Write-off of fixed assets
|
|
-
|
|
|
16,567,001
|
|
|
Depreciation and amortization expense
|
|
793,191
|
|
|
2,110,403
|
|
|
Decrease in accounts and other receivables
|
|
(6,416,399
|
)
|
|
421,806
|
|
|
Decrease /(increase) in inventories
|
|
21,548
|
|
|
2,009,657
|
|
|
Decrease/(increase) in advance and prepayments to suppliers
|
|
(7,657,937
|
)
|
|
28,286,858
|
|
|
Increase/(decrease) in accounts and other payables
|
|
(287,048
|
)
|
|
(2,403,764
|
)
|
|
Increase in deferred tax asset
|
|
81,769
|
|
|
-
|
|
|
Net cash provided by (used in) operating activities
|
|
(14,153,281
|
)
|
|
(360,141
|
)
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
Decrease/(increase) in restricted cash
|
|
-
|
|
|
1,020,002
|
|
|
Purchase of short-term investments
|
|
-
|
|
|
-
|
|
|
Purchase of plant and equipment
|
|
(490,694
|
)
|
|
(314,187
|
)
|
|
Payment for deposits
|
|
(1,534
|
)
|
|
44,957
|
|
|
Net cash (used in) provided by investing activities
|
$
|
(492,228
|
)
|
$
|
750,772
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
15,454,005
|
|
|
-
|
|
|
Proceeds from bank borrowings
|
|
-
|
|
|
30,242
|
|
|
Repayment of bank borrowings
|
|
-
|
|
|
(784,093
|
)
|
|
Proceeds from related party receivables
|
|
32,977
|
|
|
-
|
|
|
Net cash provided by financing activities
|
$
|
15,486,982
|
|
$
|
(753,851
|
)
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
841,473
|
|
|
(363,220
|
)
|
|
|
|
|
|
|
|
|
Effect of foreign currency translation on cash and cash equivalents
|
|
131,958
|
|
|
22,659
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents-beginning of year
|
|
89,212
|
|
|
426,054
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents-end of year
|
$
|
1,062,643
|
|
$
|
85,493
|
|
|
|
|
|
|
|
|
|
Supplementary cash flow information:
|
|
|
|
|
|
|
|
Interest received
|
$
|
369
|
|
$
|
-
|
|
|
Interest paid
|
$
|
-
|
|
$
|
1,160,864
|
|
|
Income taxes paid
|
$
|
198
|
|
$
|
563,453
|
|
See Accompanying Notes to the Financial Statements
F-6
PLANET GREEN HOLDINGS CORP.
(F/K/A AMERICAN LORAIN
CORPORATION)
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND
2017
(Stated in US Dollars)
|
1.
|
Organization and Principal Activities
|
|
|
|
|
|
Planet Green Holdings Corp. formerly known as American
Lorain Corporation (the “Company” or “PLAG”) is registered as a
corporation in the state of Nevada. The Company conducts its primary
business activities through its subsidiaries located in the People’s
Republic of China, including its new acquired operating subsidiary Taishan
Muren Agriculture Co. Ltd. The subsidiaries grow herbs and spices, sell sauces and other products developed from these herbs and spices, and offer a variety of food and beverage products, including packaged sauce, tea and brown rice syrup, to consumers and foodservice businesses. The Company also offered convenience food products, which were discontinued in December 2018.
|
|
|
|
|
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 of America; 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
|
|
|
JianShi Technology Holding Limited
|
Hong Kong
|
100
|
1,277
|
|
|
Shanghai Xunyang Internet
Technology Co. Ltd.
|
PRC
|
100
|
669,919
|
|
|
Beijing Lorain Co., Ltd.
|
PRC
|
VIE
|
1,540,666
|
|
|
Luotian Lorain 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 Foodstuff (Shenzhen) Co., Ltd.
|
PRC
|
VIE
|
500,000
|
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 (“Planet Green BVI”), a limited
company incorporated in the British Virgin Islands. On September 28, 2018,
Planet Green BVI acquired JianShi Technology Holding Limited, a limited company,
incorporated in Hong Kong on February 21, 2012 and Shanghai Xunyang Internet
Tech Co. Ltd., a wholly-owned foreign entity incorporated in Shanghai, PRC on
August 29, 2012. The formation and acquisition of these companies was to
implement the Company’s restructuring plans.
On September 28, 2018, the Company was restructured by disposing its equity interest in International Lorain and its subsidiaries to the former Chairman, Mr. Si Chen, and re-acquiring certain equity interest in certain of these subsidiaries,; namely, Shandong Greenpia, Beijing Lorain, and Luotian Lorain, indirectly through Planet Green BVI. Please refer to Form 8-K filed on October 2, 2018. The Company entered into exclusive arrangements with Shandong Greenpia, Luotian Lorain, Taishan Muren, and Shenzhen Lorain and its shareholders that give the Company the ability to substantially influence its daily operations and financial affairs. The Company entered into exclusive arrangements with Beijing Lorain; however, the Company does not have significant influence over Beijing Lorain and Beijing Lorain is 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.
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.
On December 14, 2017, the Company formed Shenzhen Lorain as a limited company under the laws of the PRC. Through Shandong Greenpia, the Company entered into exclusive VIE agreements with Lorain Food (Shenzhen) Co., Ltd. (“Shenzhen Lorain”) and its shareholders that give the Company the ability to substantially influence Shenzhen Lorain’s daily operations and financial affairs and appoint its senior executives. The Company is considered the primary beneficiary of Shenzhen Lorain and it consolidates its accounts as a VIE. On September 27, 2018, the agreements were terminated due to the Company’s restructuring and Shenzhen Lorain was no longer a variable interest entity under Shandong Greenpia.
On September 27, 2018, through Shanghai
Xunyang Internet Technology Co. Ltd., the Company entered into exclusive
arrangements with Beijing Lorain Co., Ltd., Luotian Lorain Co., Ltd., Shandong
Greenpia Foodstuff Co., Ltd., Taishan Muren Agriculture Co. Ltd., and Lorain
Foodstuff (Shenzhen) Co., Ltd. and its shareholders that give the Company the
ability to substantially influence Shenzhen Lorain’s daily operations and
financial affairs and appoint its senior executives. The Company is considered
the primary beneficiary of these companies and it consolidates its accounts as a
VIE.
As of December 31, 2018, the following
entities were de-consolidated from the structure as a result of the sale
agreement executed on September 28, 2018:
|
|
|
Place of
|
Attributable equity
|
Registered
|
|
|
Name of Company
|
incorporation
|
interest %
|
capital
|
|
|
International Lorain Holding
Inc.
|
Cayman Islands
|
100.0
|
$ 46,659,135
|
|
|
Junan Hongrun Foodstuff Co., Ltd.
|
PRC
|
100.0
|
44,861,741
|
|
|
Shandong Lorain Co., Ltd.
|
PRC
|
80.2
|
12,123,985
|
|
|
Dongguan Lorain Co., Ltd.
|
PRC
|
100.0
|
149,939
|
Discontinued operations
In 2017, the Company discontinued the
operations in Shandong Lorain Co. Ltd. and Dongguan Lorain Co., Ltd. As a
result, the financial results of these two subsidiaries are presented as
discontinued operations.
In the first quarter of 2018, the
Company’s board of directors resolved to discontinue the operations of Junan
Hongrun Foodstuff Co. Ltd.
As of September 30, 2018, the Company
disposed International Lorain Holding Inc. and its subsidiaries: Junan Hongrun
Foodstuff Co., Ltd., Shandong Lorain Co., Ltd., Dongguan Lorain Co., Ltd. as a
result of the sale agreement.
In the fourth quarter of 2018, the
Company’s board of directors resolved to discontinue the operations of Beijing
Lorain Co, Ltd., Luotian Lorain Co., Ltd., and Shandong Greenpia Foodstuff Co.,
Ltd.
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.
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.
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
|
10 years
|
|
Office equipment
|
5 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.
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.
Land use rights
Land use rights are carried at cost and
amortized on a straight-line basis over a specified period. Amortization is
provided using the straight-line method over 40-50 years.
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.
Foreign currency translation
The accompanying financial statements are presented in United States dollars. The functional currency of the Company is 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.
|
|
|
12/31/2018
|
12/31/2017
|
|
|
Period/year end RMB: US$ exchange rate
|
6.8764
|
6.5067
|
|
|
Period/annual average RMB: US$ exchange rate
|
6.5137
|
6.6133
|
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 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.
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.
|
|
|
|
|
|
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 has evaluated the timing and the impact of
the aforesaid guidance on the financial statements.
|
|
|
|
|
3.
|
Restricted Cash
|
|
|
|
|
|
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.
|
|
4.
|
Trade Receivables
|
|
|
|
|
|
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; international customers are
typically extended 90 days credit.
|
|
|
|
|
12/31/2018
|
|
|
12/31/2017
|
|
|
|
Trade accounts receivable
|
$
|
6,528,072
|
|
$
|
1,534,856
|
|
|
|
Less
:
Allowance for doubtful accounts
|
|
-
|
|
|
(804,937
|
)
|
|
|
|
$
|
6,528,072
|
|
$
|
729,919
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
(804,937
|
)
|
$
|
(695,547
|
)
|
|
|
Reclassified to discontinued operations
|
|
804,937
|
|
|
-
|
|
|
|
Additions to allowance
|
|
-
|
|
|
109,390
|
|
|
|
Bad debt written-off
|
|
-
|
|
|
-
|
|
|
|
Ending balance
|
$
|
-
|
|
$
|
(804,937
|
)
|
|
5.
|
Inventories
|
|
|
|
|
|
Inventories consisted of the following as of December 31,
2018 and 2017.
|
|
|
|
|
12/31/2018
|
|
|
12/31/2017
|
|
|
|
Raw materials
|
$
|
-
|
|
$
|
2,846,507
|
|
|
|
Finished goods
|
|
-
|
|
|
7,746,896
|
|
|
|
|
$
|
-
|
|
$
|
10,593,403
|
|
|
6.
|
Investment
|
|
|
|
|
|
As of December 31, 2018, the Company has provided provision to impairment of the investment of 30% of equity interest in Beijing Lorain as a result of management’s determination that there will be no economic return or benefit from such investment.
The amount impaired was approximately $975,164.
|
|
|
|
|
7.
|
Plant and Equipment
|
|
|
|
|
|
Property, plant, and equipment consisted of the following
as of December 31, 2018 and 2017:
|
|
|
|
|
12/31/2018
|
|
|
12/31/2017
|
|
|
|
At Cost:
|
|
|
|
|
|
|
|
|
Buildings
|
$
|
1,116,941
|
|
$
|
47,004,352
|
|
|
|
Machinery and equipment
|
|
31,066
|
|
|
6,096,099
|
|
|
|
Office equipment
|
|
-
|
|
|
433,451
|
|
|
|
Motor vehicles
|
|
-
|
|
|
162,330
|
|
|
|
Biological assets
|
|
2,078,012
|
|
|
-
|
|
|
|
|
$
|
3,226,018
|
|
$
|
53,696,232
|
|
|
|
|
|
|
|
|
|
|
|
|
Less
: Accumulated
depreciation
|
|
(1,854,500
|
)
|
|
(17,032,942
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,371,518
|
|
$
|
36,663,290
|
|
|
|
Depreciation expense for the years ended December 31,
2018 and 2017 was $59,821 and $1,850,685, respectively.
|
|
|
|
|
12/31/2018
|
|
|
12/31/2017
|
|
|
|
At Cost:
|
|
|
|
|
|
|
|
|
Land use rights
|
|
-
|
|
|
15,366,444
|
|
|
|
Utilities rights
|
|
-
|
|
|
-
|
|
|
|
|
$
|
-
|
|
$
|
15,366,444
|
|
|
|
|
|
|
|
|
|
|
|
|
Less
: Accumulated amortization
|
|
-
|
|
|
(2,198,574
|
)
|
|
|
|
$
|
-
|
|
$
|
13,167,870
|
|
|
|
All land is owned by the government in China. Land use
rights represent the Company’s purchase of usage rights for a parcel of
land for a specified duration of time, typically 50 years.
|
|
|
|
|
|
As of December 31, 2018, the Company did not have any
land use rights. Amortization expense for the years ended December 31,
2018 and 2017 was $0 and $259,718, respectively.
|
|
9.
|
Bank Loans
|
|
|
|
|
|
Bank loans include bank overdrafts, short-term bank
loans, and current portion of long-term loan, which consisted of the
following as of December 31, 2018 and 2017:
|
|
|
Short-term Bank Loans
|
|
12/31/2018
|
|
|
12/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan from Industrial and Commercial Bank
of China,
|
|
|
|
|
|
|
|
|
• Interest rate at
6.955% per annum; due 4/20/2016
|
|
-
|
|
|
3,838,005
|
|
|
|
•
Interest rate at 4.30% per annum; due 4/30/2017
|
|
-
|
|
|
1,152,658
|
|
|
|
• Interest rate at
4.30% per annum; due 5/30//2017
|
|
-
|
|
|
1,211,059
|
|
|
|
•
Interest rate at 4.30% per annum; due 6/29/2017
|
|
-
|
|
|
1,152,658
|
|
|
|
• Interest rate at
4.30% per annum; due 8/2/2017
|
|
-
|
|
|
1,014,339
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan from China Minsheng Bank Corporation, Linyi
Branch
|
|
|
|
|
|
|
|
|
•Interest rate at 5.98% per annum due 9/22/2016
|
|
-
|
|
|
1,535,340
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan from Agricultural Bank of China,
Luotian Branch
|
|
|
|
|
|
|
|
|
• Interest rate at
5.65% per annum due 4/22/2017
|
|
-
|
|
|
1,536,877
|
|
|
|
|
|
|
|
|
|
|
|
|
Luotian Sanliqiao Credit Union,
|
|
|
|
|
|
|
|
|
•
Interest rate at 9.72% per annum due 1/14/2017
|
|
-
|
|
|
1,536,877
|
|
|
|
• Interest rate at
9.72% per annum due 2/4/2017
|
|
-
|
|
|
461,063
|
|
|
|
•
Interest rate at 9.72% per annum due 9/7/2017
|
|
-
|
|
|
92,213
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank of Ningbo,
|
|
|
|
|
|
|
|
|
• Interest rate at
7.80% per annum due 10/27/2016
|
|
-
|
|
|
1,229,502
|
|
|
|
|
|
|
|
|
|
|
|
|
Hankou Bank, Guanggu Branch,
|
|
|
|
|
|
|
|
|
•
Interest rate at 6.85% per annum due 10/24/2016
|
|
-
|
|
|
1,391,820
|
|
|
|
|
|
|
|
|
|
|
|
|
Postal Savings Bank of China,
|
|
|
|
|
|
|
|
|
• Interest rate at
9.72% per annum due 7/27/2016
|
|
-
|
|
|
399,588
|
|
|
|
|
|
|
|
|
|
|
|
|
China Construction Bank,
|
|
|
|
|
|
|
|
|
•
Interest rate at 6.18% per annum due 11/29/2016
|
|
-
|
|
|
768,439
|
|
|
|
|
|
|
|
|
|
|
|
|
Huaxia Bank,
|
|
|
|
|
|
|
|
|
• Interest rate at
5.66% per annum due 5/19/2017
|
|
-
|
|
|
1,536,877
|
|
|
|
|
|
|
|
|
|
|
|
|
City of Linyi Commercial Bank, Junan Branch,
|
|
|
|
|
|
|
|
|
•
Interest rate at 8.4% per annum due 2/16/2016
|
|
-
|
|
|
1,535,334
|
|
|
|
• Interest rate at
8.4% per annum due 11/24/2016
|
|
-
|
|
|
3,073,756
|
|
|
|
|
|
|
|
|
|
|
|
|
Hubei Jincai Credit and Financial Services Co. Ltd.
|
|
|
|
|
|
|
|
|
•
Interest rate at 9.00% per annum due 1/12/2017
|
|
-
|
|
|
307,375
|
|
|
|
|
$
|
-
|
|
$
|
23,773,780
|
|
The short-term loans, which are
denominated in Renminbi, were primarily obtained for general working
capital. If not otherwise specifically indicated above, short-term bank loans
are guaranteed either by other companies within the group, or by personnel in
senior management positions within the group. As of December 31, 2018, all
short-term loans have been in default and have not been repaid. The Company is
in negotiations to renew these loans or modify the repayment terms and principal
amount due. The short-term loans, which are denominated in Renminbi, were
primarily obtained for general working capital. If not otherwise specifically
indicated above, short-term bank loans are guaranteed either by other companies
within the group, or by personnel in senior management positions within the
group.
As of December 31, 2018, as a result of
the disposal of International Lorain Holding Inc. and its subsidiaries: Junan
Hongrun Foodstuff Co., Ltd., Shandong Lorain Co., Ltd., Dongguan Lorain Co.,
Ltd., the Company is no longer liable for all bank loans as they have been
transferred to Mr. Si Chen, the former chairman.
|
10.
|
Current Portion – Long Term Debt
|
|
|
|
|
|
Current portions of notes payable, debentures, and
long-term debt consisted of the following as of December 31, 2018 and
2017:
|
|
|
|
|
12/31/2018
|
|
|
12/31/2017
|
|
|
|
Debenture issued by 5 private placement
holders underwritten by
Guoyuan Securities Co., Ltd.
|
|
|
|
|
|
|
|
|
• Interest rate at 10% per annum due 8/28/2016
|
$
|
-
|
|
$
|
9,517,882
|
|
|
|
|
|
|
|
|
|
|
|
|
Debenture issued by 2
private placement holders underwritten by Daiwa
SSC Securities Co.
Ltd.
|
|
|
|
|
|
|
|
|
•
Interest rate at 9.5% per annum due 11/8/2015
|
|
-
|
|
|
15,368,774
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans from Deutsche Investitions-und
Entwicklungsgesellschaft mbH
(“DEG”)
|
|
|
|
|
|
|
|
|
• Interest rate at 5.510% per annum due 3/15/2015
|
|
-
|
|
|
1,875,000
|
|
|
|
•
Interest rate at 5.510% per annum due 9/15/2015
|
|
-
|
|
|
1,875,000
|
|
|
|
• Interest rate at 5.510% per annum due 3/15/2016
|
|
-
|
|
|
1,875,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
-
|
|
$
|
30,511,656
|
|
The Company began repaying principal
and interest on the loan with DEG in semi-annual installments on December 15,
2012. As of December 31, 2018 and 2017, the Company had not repaid any principal
nor interest. The loan was collateralized with the following terms:
|
|
(a.)
|
A first ranking mortgage in the amount of about USD
$12,000,000 on the Company’s land and building in favor of DEG.
|
|
|
(b.)
|
A share pledge, by Mr. Si Chen (a major shareholder, and
Chairman and CEO of the Company) as the sponsor of the loan, to secure
approximately USD $12,000,000 of the loan. The Company defaulted on its
loan with DEG; accordingly, on December 7, 2016, DEG exercised its rights
to foreclose on 10,794,066 shares pledged by Mr. Si Chen. The loan remains
outstanding.
|
|
|
(c.)
|
The total amount of the first ranking mortgage as
indicated in the Loan Agreement (Article 12(1)(a)) and the value of the
pledged shares by Mr. Si Chen (Loan Agreement (Article 12(1)(a))) should
be at least USD 24,000,000 in aggregate.
|
|
|
(d.)
|
A personal guarantee by Mr. Si Chen in form and substance
satisfactory to DEG.
|
|
|
As of December 31, 2018, as a result of the disposal of
International Lorain Holding Inc. and its subsidiaries: Junan Hongrun
Foodstuff Co., Ltd., Shandong Lorain Co., Ltd., Dongguan Lorain Co., Ltd.,
the Company is no longer liable for all bank loans as they have been
transferred to Mr. Si Chen, the former chairman.
|
|
|
|
|
11.
|
Equity
|
|
|
|
|
|
On December 28, 2017, the Company entered into a
securities purchase agreement, pursuant to which Yi Li and Beili Zhu, each
an individual residing in the People’s Republic of China, agreed to invest
an aggregate of $1.275 million in the Company in exchange for an aggregate
of 300,000 shares of the Company’s common stock, representing a
pre-reverse stock split purchase price of $0.17 per share. The transaction
closed on January 23, 2018.
|
|
|
|
|
|
On April 14, 2018, the Company entered into a securities
purchase agreement, pursuant to which Zongqi Shi, Aidi Zhang, Qiong Chen,
Yi Li, Beili Zhu, Yanbo Wang, Jinhui Chen and Guoyang Zeng, each an
individual residing in the People’s Republic of China, agreed to invest an
aggregate of $1.629 million in the Company in exchange for an aggregate of
362,000 shares of the Company’s common stock, representing a pre-reverse
stock split purchase price of $0.18 per share. The transaction closed on
August 10, 2018.
|
|
|
|
|
|
On April 24, 2018, the Company entered into a securities
purchase agreement, pursuant to which Xiupin Cai, an individual residing
in the People’s Republic of China, agreed to invest an aggregate of
$1,800,000 million in the Company in exchange for an aggregate of 400,000 shares of the Company’s
common stock, representing a pre-reverse stock split purchase price of
$0.18 per share. The transaction closed on August 10, 2018.
|
|
|
On July 12, 2018, the Company entered into a securities
purchase agreement, pursuant to which Yunpeng Zhang and Zhongquan Sun,
individuals residing in the People’s Republic of China, agreed to invest
an aggregate of $750,000 in the Company in exchange for an aggregate of
150,000 shares of the Company’s common stock, par value $0.001 per share,
representing a pre-reverse stock split purchase price of $0.20 per share.
The transaction closed on August 2, 2018.
|
|
|
|
|
|
On September 25, 2018, the Company and Shanghai Xunyang
Internet Technology Co., Ltd., a subsidiary of the Company, entered into a
Share Exchange Agreement with Taishan Muren Agriculture Co. Ltd., a
limited liability company registered in China, and Shenzhen Jiamingrui New
Agriculture Co., Ltd., a limited liability company registered in China,
the sole shareholder of the Taishan Muren Agriculture Co. Ltd., pursuant
to which, among other things and subject to the terms and conditions
contained therein, the Subsidiary agreed to effect an acquisition of
Taishan Muren Agriculture Co. Ltd. by acquiring from Shenzhen Jiamingrui
New Agriculture Co., Ltd. all outstanding equity interests of Taishan
Muren Agriculture Co. Ltd.
|
|
|
|
|
|
Pursuant to the Share Exchange Agreement, in exchange for
the transfer of all of the outstanding shares of Taishan Muren Agriculture
Co. Ltd, the Company agreed to issue 400,000 shares, a post-reverse stock
split amount, of the Company’s common stock to Shenzhen Jiamingrui New
Agriculture Co., Ltd. The share issuance was accounted for as of September
30, 2018 although the shares for subsequently issued on October 1, 2018.
|
|
|
|
|
|
On September 28, 2018, the Company filed a Certificate of
Amendment with the Secretary of State of the State of Nevada to effect a
reverse stock split of its common stock at a ratio of twenty-five-for-one
(25-for-1). The financing transactions listed above are presented as of
the reverse stock split had already taken place.
|
|
|
|
|
|
On August 8, 2018, the Company entered into an amended
and restated securities purchase agreement with Yimin Jin, the Company’s
chief strategy officer and director, and Hongxiang Yu, the Company’s
chairman (collectively, the “Purchasers”), pursuant to which the
Purchasers agreed to invest an aggregate of $10 million in the Company in
exchange for an aggregate of 14,705,883 shares, a post-reverse stock split
amount, of the Company’s common stock, representing a purchase price of
$0.17 per share. The transaction closed on October 19, 2018.
|
|
|
|
|
|
As of December 31, 2018, there were 5,497,765 shares of common stock outstanding.
|
|
|
|
|
|
For the years ended December 31, 2018 and 2017, the Company did not issued shares as stock compensation to employees.
|
|
|
|
|
12.
|
Income Taxes
|
|
|
|
|
|
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 following as
of December 31, 2018 and 2017:
|
|
|
|
|
12/31/2018
|
|
|
12/31/2017
|
|
|
|
Loss attributed to PRC continuing operations
|
$
|
(492,419
|
)
|
$
|
(46,791,320
|
)
|
|
|
Income attributed to BVI
|
|
423,338
|
|
|
-
|
|
|
|
Loss attributed to U.S. operations
|
|
(80,000
|
)
|
|
(399,590
|
)
|
|
|
Loss before tax
|
$
|
(149,081
|
)
|
$
|
(47,190,910
|
)
|
|
|
|
|
|
|
|
|
|
|
|
PRC Statutory Tax at 25% Rate
|
|
(123,105)
|
|
|
(11,697,830)
|
|
|
|
Non-deductible GAAP expenses in the PRC
|
|
287,489
|
|
|
11,859,022
|
|
|
|
Income tax
|
$
|
164,384
|
|
$
|
161,192
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Effect of Tax
Exemption
|
|
|
|
|
|
|
|
|
|
|
12/31/2018
|
|
|
12/31/2017
|
|
|
|
Effect of tax exemption granted
|
$
|
-
|
|
$
|
-
|
|
|
|
Weighted-Average Shares Outstanding Basic
|
|
2,978,233
|
|
|
1,530,980
|
|
|
|
Per share effect
|
$
|
-
|
|
$
|
-
|
|
The difference between the U.S. federal
statutory income tax rate and the Company’s effective tax rate was as follows as
of December 31, 2018 and 2017:
|
|
|
|
12/31/2018
|
|
|
12/31/2017
|
|
|
|
U.S. federal statutory income tax rate
|
|
21.00%
|
|
|
35%
|
|
|
|
Higher (lower) rates in PRC, net
|
|
4.00%
|
|
|
-10%
|
|
|
|
Non-recognized deferred tax benefits in the
PRC
|
|
-25.00%
|
|
|
-25.21%
|
|
|
|
The Company’s effective tax rate
|
|
0.00%
|
|
|
-0.21%
|
|
F-14
|
13.
|
Earnings/(Loss) Per Share
|
|
|
|
|
|
Components of basic and diluted earnings per share were
as follows:
|
|
|
|
|
For the years ended
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
Basic and diluted (loss) earnings per share numerator:
|
|
|
|
|
|
|
|
|
Loss from continuing operations attributable to common stockholders
|
$
|
(313,465)
|
|
$
|
(47,352,102
|
)
|
|
|
Income/(loss) from discontinued operations available to (attributable to) common stockholders
|
$
|
20,903,129
|
|
$
|
(30,953,252
|
)
|
|
|
Income/(loss) available to (attributable to) common stockholders
|
$
|
20,589,664
|
|
$
|
(63,232,092
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted (loss) earnings per share denominator:
|
|
|
|
|
|
|
|
|
Original Shares:
|
|
1,530,980
|
|
|
1,530,980
|
|
|
|
Additions from Actual Events
-Issuance of Common Stock
|
|
3,964,942
|
|
|
-
|
|
|
|
Basic Weighted Average Shares Outstanding
|
|
2,978,233
|
|
|
1,530,980
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share from continuing operations - Basic and diluted
|
$
|
(0.11
|
)
|
$
|
(30.93
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) per share from discontinued operations - Basic and diluted
|
$
|
7.02
|
|
$
|
(20.22
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) per share - Basic and diluted
|
$
|
6.91
|
|
$
|
(41.30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding - Basic and diluted
|
|
2,978,233
|
|
|
1,530,980
|
|
F-15
Planet Green Holdings Corporation
(f/k/a American
Lorain Corporation)
Notes to Financial Statements
|
14.
|
Lease Commitments
|
|
|
|
|
|
For the year ended December 31, 2017, Taishan Muren Agriculture Co. Ltd. entered into four operating lease agreements leasing two plots of land where biological assets are grown, two offices, and farming facilities. For the year ended December 31, 2018, Taishan Muren Agriculture Co. Ltd. entered into three operating lease agreements leasing three additional plots of land where biological assets are grown.
|
|
|
|
|
|
The leases entered and expires 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 December 31, 2018 are as follows:
|
Period
|
|
Lease Payable
|
|
|
Year 1
|
$
|
220,382
|
|
|
Year 2
|
|
220,222
|
|
|
Year 3
|
|
220,222
|
|
|
Year 4
|
|
220,222
|
|
|
Year 5
|
|
220,222
|
|
|
Thereafter
|
|
1,578,255
|
|
|
|
$
|
2,679,524
|
|
The outstanding lease commitments for
the leases listed above as of December 31, 2018 was $2,679,524.
Other expenses consisted of the following:
|
|
|
|
12/31/2018
|
|
|
12/31/2017
|
|
|
|
Other expense:
|
|
|
|
|
|
|
|
|
Impairment of property and equipment
|
$
|
-
|
|
$
|
2,229,451
|
|
|
|
Other
|
|
227
|
|
|
271,348
|
|
|
|
|
$
|
227
|
|
$
|
2,500,799
|
|
|
|
|
|
16.
|
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. As of December 31, 2017, the Company has reclassified the results of operations and the financial position of Shandong Lorain, Dongguan Lorain, and the Minerve Group as discontinued operations. Selected details regarding those discontinued operations are provided below.
|
|
|
|
For the years ended December
31,
|
|
|
|
Results of Operations
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
2,072,253
|
|
$
|
331,050
|
|
|
|
Cost of sales
|
|
1,305,382
|
|
|
382,788
|
|
|
|
Gross profit
|
|
475,177
|
|
|
(51,738
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
632,640
|
|
|
28,829,757
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses
|
|
(24,232,157)
|
|
|
(2,071,757
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Loss before Taxes
|
|
(24,097,926)
|
|
|
(30,953,252
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Taxes
|
|
(48,583)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(24,049,343)
|
|
$
|
(30,953,252
|
)
|
|
|
|
|
|
|
|
|
|
|
For the years ended December
31，
|
|
|
|
Other Income (Expenses)
|
|
2018
|
|
|
2017
|
|
|
|
Other income
|
$
|
-
|
|
$
|
608,198
|
|
|
|
Write-off of accounts receivable and other current assets
|
|
(1,266,022)
|
|
|
-
|
|
|
|
Write-off of inventory
|
|
(6,338,588)
|
|
|
-
|
|
|
|
Impairment of property and equipment and land use rights
|
|
(9,877,127)
|
|
|
(2,127,694
|
)
|
|
|
Other
|
|
(6,750,420)
|
|
|
(552,261
|
)
|
|
|
|
$
|
(24,232,157)
|
|
$
|
(2,071,757
|
)
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
Financial Position
|
|
2018
|
|
|
2017
|
|
|
|
Current Assets
|
$
|
-
|
|
$
|
790,550
|
|
|
|
Non-Current Assets
|
|
-
|
|
|
896,099
|
|
|
|
Total Assets
|
$
|
-
|
|
$
|
1,686,649
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
$
|
8,607,813
|
|
$
|
9,610,994
|
|
|
|
Total Long-Term Liabilities
|
|
-
|
|
|
-
|
|
|
|
Total Liabilities
|
$
|
8,607,813
|
|
$
|
9,610,994
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Assets
|
$
|
(8,607,813
|
)
|
$
|
(7,924,345
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities & Net Assets
|
$
|
(8,607,813
|
)
|
$
|
1,686,649
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
Financial Position
|
|
2018
|
|
|
2017
|
|
|
|
Current Assets
|
$
|
-
|
|
$
|
790,550
|
|
|
|
Non-Current Assets
|
|
-
|
|
|
896,099
|
|
|
|
Total Assets
|
$
|
-
|
|
$
|
1,686,649
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
$
|
8,607,813
|
|
$
|
9,610,994
|
|
|
|
Total Long-Term Liabilities
|
|
-
|
|
|
-
|
|
|
|
Total Liabilities
|
$
|
8,607,813
|
|
$
|
9,610,994
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Assets
|
$
|
(8,607,813
|
)
|
$
|
(7,924,345
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities & Net Assets
|
$
|
(8,607,813
|
)
|
$
|
1,686,649
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant and equipment
|
|
2018
|
|
|
2017
|
|
|
|
At Cost:
|
|
|
|
|
|
|
|
|
Buildings
|
$
|
-
|
|
$
|
2,537,134
|
|
|
|
Machinery and equipment
|
|
-
|
|
|
4,721,021
|
|
|
|
Office equipment
|
|
-
|
|
|
-
|
|
|
|
Motor vehicles
|
|
-
|
|
|
300,916
|
|
|
|
|
$
|
-
|
|
$
|
7,559,071
|
|
|
|
|
|
|
|
|
|
|
|
|
Less
:
Accumulated depreciation
|
|
-
|
|
|
(7,559,071
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
-
|
|
$
|
-
|
|
|
|
Intangible assets
|
|
2018
|
|
|
2017
|
|
|
|
At Cost:
|
|
|
|
|
|
|
|
|
Land use rights
|
|
-
|
|
|
1,210,297
|
|
|
|
Software
|
|
-
|
|
|
109,664
|
|
|
|
Patent
|
|
-
|
|
|
1,449
|
|
|
|
|
$
|
-
|
|
$
|
1,321,410
|
|
|
|
|
|
|
|
|
|
|
|
|
Less
: Accumulated amortization
|
|
-
|
|
|
(425,311
|
)
|
|
|
|
$
|
-
|
|
$
|
896,099
|
|
|
17.
|
Risks
|
|
|
|
|
|
|
A.
|
Credit risk
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
|
B.
|
Interest risk
|
|
|
|
|
|
|
|
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.
|
|
|
D.
|
Environmental risks
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
|
E.
|
Inflation Risk
|
|
|
|
|
|
|
|
Management 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.
|
|
|
|
|
|
18.
|
Subsequent Events
|
|
|
|
|
|
|
On April 10, 2019, the
Company's executive officers determined to
dispose the discontinued
subsidiaries,
Luotian Green
Foodstuff Co.,
Ltd. and
Shandong Greenpia Foodstuff
Co.,
Ltd. for the interests of the
Company and its stockholders.
|
F-18
Planet Green (AMEX:PLAG)
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