Quarterly Report (10-q)

Date : 05/14/2019 @ 10:12PM
Source : Edgar (US Regulatory)
Stock : Planet Green Holdings Corp. (PLAG)
Quote : 4.3  -0.0718 (-1.64%) @ 2:30PM

Quarterly Report (10-q)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: March 31, 2019

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File No. 001-34449

 

PLANET GREEN HOLDINGS CORP.

(Exact name of registrant as specified in its charter)

 

Nevada   87-0430320
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)

 

Suite 901, Building 6
No. 1678 Jinshajiang Road
Putuo District, Shanghai, China
(Address, including zip code, of principal executive offices)

 

(86) 21-3258 3578
(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒     No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒    No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging Growth Company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐     No ☒

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered

Common stock, par value $0.001 per share 

  PLAG   NYSE American

 

The number of outstanding shares of the issuer’s common stock as of May 13, 2019 was 5,497,765.

 

 

 

 

 

 

TABLE OF CONTENTS

 

  PAGE
   
PART I - FINANCIAL INFORMATION  
   
ITEM 1 FINANCIAL STATEMENTS 1
   
ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 2
   
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 5
   
ITEM 4 CONTROLS AND PROCEDURES 5
   
PART II - OTHER INFORMATION  
   
ITEM 1 LEGAL PROCEEDINGS 7
   
ITEM 1A RISK FACTORS 7
   
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 7
   
ITEM 3 DEFAULTS UPON SENIOR SECURITIES 7
   
ITEM 4 MINE SAFETY DISCLOSURES . 7
   
ITEM 5 OTHER INFORMATION 7
   
ITEM 6 EXHIBITS 7
   
SIGNATURES 8

 

Caution Regarding Forward-Looking Statements

 

This quarterly report on Form 10-Q contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to the factors described in the section captioned “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission.

 

In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” or the negative of such terms or other similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report completely and with the understanding that our actual future results may be materially different from what we expect.

 

Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

 

i

 

 

Use of Certain Defined Terms

 

Except where the context otherwise requires and for the purposes of this report only:

 

1. “We,” “us” and “our” refer to PLAG, and except where the context requires otherwise, our wholly-owned subsidiaries and VIEs.

 

2. “Beijing Lorain” refers to Beijing Green Foodstuff Co., Ltd.

 

3. “China” and “PRC” refer to the People’s Republic of China (excluding Hong Kong and Macau).

 

4. “ILH” refers to International Lorain Holding, Inc., a Cayman Islands company that was a wholly-owned by PLAG until September 2018 and owns all the capital stock of Dongguan Green Foodstuff Co., Ltd. and Junan Hongrun Foodstuff Co., Ltd.

 

5. “Jianshi HK” refers to Jianshi Technology Holding Limited

 

6. “Luotian Lorain” refers to Luotian Green Foodstuff Co., Ltd.

 

7. “PLAG” refers to Planet Green Holdings Corp., a Nevada corporation.

 

8. “Taishan Muren” refers to Taishan Muren Agriculture Co. Ltd., a limited liability company registered in China.

 

9. “Shandong Lorain” refers to Shandong Green Foodstuff Co., Ltd.

 

10. “Shandong Greenpia” refers to Shandong Greenpia Foodstuff Co., Ltd.

 

11. “Shanghai Xunyang” refers to Shanghai Xunyang Internet Technology Co., Ltd.

 

12. “Shenzhen Lorain” refers to Lorain Food Stuff (Shenzhen) Co., Ltd.

 

13. “RMB” refers to Renminbi, the legal currency of China.

 

14. “U.S. dollar”, “$” and “US$” refer to the legal currency of the United States.

 

15. “VIE” refers to variable interest entity.

 

ii

 

 

ITEM 1. Financial Statements
 
PLANET GREEN HOLDINGS CORP.
 
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
MARCH 31, 2019 AND DECEMBER 31, 2018
 
(Stated in US Dollars)

 

1

 

 

CONTENTS   PAGES
     
Unaudited Condensed Consolidated Balance Sheets   F-2
     
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss   F-3
     
Unaudited Condensed Consolidated Statements of Cash Flows   F-4
     
Notes to Financial Statements   F-5 to F-17

 

F- 1

 

 

PLANET GREEN HOLDINGS CORP.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
AT MARCH 31, 2019 AND DECEMBER 31, 2018
(Stated in US Dollars)

 

    March 31,     December 31,  
    2019     2018  
Assets                
Current assets                
Cash and cash equivalents   $ 1,367,758     $ 1,062,643  
Trade receivables, net     1,044,381       6,528,072  
Inventories     10,265       -  
Advances and prepayments to suppliers     7,609,439       7,381,785  
Other receivables and other current assets     297       16,316  
Related party receivable     1,944       2,208  
Discontinued operations - current assets held for sale             -  
Total current assets   $ 10,034,084     $ 14,991,024  
                 
Non-current assets                
Plant and equipment, net     1,330,474       1,371,518  
Construction in progress, net     864,409       846,441  
Deposits     1,507       1,477  
Discontinued operations - long term assets held for sale             -  
Total Assets   $ 12,230,474     $ 17,210,460  
                 
Liabilities and Stockholders’ Equity                
Current liabilities                
Accounts payable   $ 475,147     $ 579,228  
Taxes payable     60,571       155,135  
Accrued liabilities and other payables     492,528       496,799  
Customers deposits     -       3,499  
Related party payable     90,483       78,656  
Discontinued operations - liabilities     3,643,696       8,607,813  
Total current liabilities   $ 4,762,425     $ 9,921,130  
                 
Stockholders’ Equity/(Deficiency)                
Preferred Stock, $0.001 par value, 5,000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2019 and December 31,2018, respectively   $               $ -  
Common Stock, $0.001 par value, 200,000,000 shares authorized; 5,497,765 shares issued and outstanding as of March 31, 2019  and December 31,2018, respectively     5,498       5,498  
Additional paid-in capital     74,739,031       74,739,031  
Statutory reserves     2,810,953       2,810,953  
Accumulated deficit     (79,031,187 )     (79,038,883 )
Accumulated other comprehensive income     9,984,943       9,792,283  
Non-controlling interests     (1,041,189 )     (1,019,552 )
Total Stockholders’ Equity/(Deficiency)   $ 7,468,049     $ 7,289,330  
Total Liabilities and Stockholders’ Equity   $ 12,230,474     $ 17,210,460  

 

See Accompanying Notes to the Financial Statements

 

F- 2

 

 

PLANET GREEN HOLDINGS CORP.
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018
(Stated in US Dollars)

 

    For the Three months ended  
    March 31,  
    2019     2018  
             
Net revenues   $ 1,078,245     $ 1,017,528  
Cost of revenues     779,988       901,491  
Gross profit     298,257       116,037  
                 
Operating expenses:                
Selling and marketing expenses     110       21,947  
General and administrative expenses     234,569       162,387  
Total operating expenses     234,679       184,334  
                 
Operating income (loss)     63,578       (68,297 )
                 
Other income (expenses):                
Interest income     161       486  
Other income     -       730  
Other expenses     -       (3,482 )
      161       (2,266 )
                 
Income (loss) Loss before taxes from continuing operations     63,739       (70,563 )
                 
Provision for income taxes     56,043       -  
                 
Income (loss) from continuing operations     7,696       (70,563 )
                 
Discontinued operations:                
Income (loss) from discontinued operations     -       13,046  
Provision for income taxes     -       -  
Income (loss) from discontinued operations, net of taxes     -       13,046  
                 
Net income (loss)   $ 7,696     $ (57,517 )
                 
Net (loss) income attributable to:                
- Common shareholders     7,696       (60,100 )
- Non-controlling interests     -       2,583  
                 
Other comprehensive income:                
Foreign currency translation gain (loss)     192,662       (446,052 )
Comprehensive income (loss)   $ 200,358     $ (503,569 )
                 
Loss per share from continuing operations                
- Basic and diluted     0.00       (0.04 )
Income (loss) per share from discontinued operations                
- Basic and diluted     0.00       0.01  
                 
Loss per share                
- Basic and diluted     0.00       (0.03 )
                 
Basic and diluted weighted average shares outstanding     5,497,765       1,754,313  

 

See Accompanying Notes to the Financial Statements

  

F- 3

 

 

PLANET GREEN HOLDINGS CORP.
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018
(STATED IN US DOLLARS)

 

    For the Three months ended  
    March 31,  
    2019     2018  
Cash flows from operating activities            
Net income/(loss)   $ 7,696     $ (70,563 )
Adjustments to reconcile net income to net cash sourced (used) in operating activities:                
Gain from disposal of investment and subsidiaries                
Adjustment to retained earnings as a result of disposal of subsidiaries                
Depreciation and amortization expense     109,528       152,379  
Amortization of intangible assets     -       88,204  
Decrease in accounts and other receivables     459,873       1,485,391  
Decrease in related party receivables     264       -  
Decrease /(increase) in inventories     (10,265 )     517,677  
Decrease/(increase) in advance to suppliers     -       (40,950 )
Decrease/(increase) in prepayment     (227,654 )     308,598  
Increase/(decrease) in accounts and other payables     38,271       (3,739,511 )
Increase/(decrease) in taxes payable     (92,968 )     (193,615 )
Increase in customer deposits     -       17,666  
Net cash provided by (used in) operating activities     284,745       (1,474,724 )
                 
Cash flows from investing activities                
Purchase of plant and equipment     -       (2,799 )
Net cash (used in) provided by investing activities   $     $ (2,799 )
                 
Cash flows from financing activities                
Proceeds from issuance of common stock     -       1,275,000  
Repayment of bank borrowings     -       -  
Net cash provided by financing activities   $ -     $ 1,275,000  
                 
Net increase (decrease) in cash and cash equivalents     284,745       (202,523 )
                 
Effect of foreign currency translation on cash and cash equivalents     20,370       416,907  
                 
Cash and cash equivalents–beginning of year     1,062,643       85,493  
                 
Cash and cash equivalents–end of year   $ 1,367,758     $ 299,877  
                 
Supplementary cash flow information:                
Interest received   $ 161     $ 486  
Interest paid   $ -     $ -  
Income taxes paid   $ -     $ -  

 

See Accompanying Notes to the Financial Statements

  

F- 4

 

 

PLANET GREEN HOLDINGS CORP.
(F/K/A AMERICAN LORAIN CORPORATION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2019 AND DECEMBER 31, 2018
(Stated in US Dollars)

 

1. Organization and Principal Activities

 

Planet Green Holdings Corp. (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 operating subsidiary Taishan Muren Agriculture Co. Ltd. Through its subsidiaries, the Company 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 food service businesses.

 

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 Technology 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.

 

F- 5

 

 

Planet Green Holdings Corporation
 
Notes to Financial Statements

 

In December 2018, the Company was no longer able to exercise significant influence over Beijing Lorain, and management did not believe that the Company would be able recover the value of its investment; accordingly, the Company recognized full impairment of its investment in Beijing Lorain.

 

Consolidation of Variable Interest Entity

 

VIEs are entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision-making ability. Any VIE with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. Management makes ongoing reassessments of whether the Company is the primary beneficiary.

 

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.

 

As of March 31, 2019, 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.

 

F- 6

 

 

Planet Green Holdings Corporation
 
Notes to Financial Statements

 

Cash and cash equivalents

 

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

 

Investment securities

 

The Company classifies securities it holds for investment purposes into trading or available-for-sale. Trading securities are bought and held principally for the purpose of selling them in the near term. All securities not included in trading securities are classified as available-for-sale.

 

Trading and available-for-sale securities are recorded at fair value. Unrealized holding gains and losses on trading securities are included in the net income. Unrealized holding gains and losses, net of the related tax effect, on available for sale securities are excluded from net income and are reported as a separate component of other comprehensive income until realized. Realized gains and losses from the sale of available-for-sale securities are determined on a specific-identification basis.

 

A decline in the market value of any available-for-sale security below cost that is deemed to be other-than-temporary results in a reduction in carrying amount to fair value. The impairment is charged as an expense to the statement of income and comprehensive income and a new cost basis for the security is established. To determine whether impairment is other-than-temporary, the Company considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the severity and duration of the impairment, changes in value subsequent to year end, and forecasted performance of the investee.

 

Premiums and discounts are amortized or accreted over the life of the related available-for-sale security as an adjustment to yield using the effective-interest method. Dividend and interest income are recognized when earned.

 

Trade receivables

 

Trade receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.

 

Inventories

 

Inventories consist of raw materials and finished goods which are stated at the lower of cost or market value. Finished goods are comprised of direct materials, direct labor, inbound shipping costs, and allocated overhead. The Company applies the weighted average cost method to its inventory.

 

Advances and prepayments to suppliers

 

The Company makes advance payment to suppliers and vendors for the procurement of raw materials. Upon physical receipt and inspection of the raw materials from suppliers the applicable amount is reclassified from advances and prepayments to suppliers to inventory.

 

F- 7

 

 

Planet Green Holdings Corporation
 
Notes to Financial Statements

 

Plant and equipment

 

Plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives, using the straight-line method. The Company typically applies a salvage value of 0% to 10%. The estimated useful lives of the plant and equipment are as follows:

 

Buildings   20-40 years  
Landscaping, plant and tree   30 years  
Machinery and equipment   1-10 years  
Motor vehicles   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.

 

F- 8

 

 

Planet Green Holdings Corporation
 
Notes to Financial Statements

 

Foreign currency translation

 

The accompanying financial statements are presented in United States dollars. The functional currencies of the Company are the Renminbi (RMB). The Company’s assets and liabilities are translated into United States dollars from RMB at year-end exchange rates, and its revenues and expenses are translated at the average exchange rate during the period. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.

 

    3/31/2019     12/31/2018     3/31/2018  
Period/year end RMB: US$ exchange rate     6.7335       6.8764       6.2881  
Period/annual average RMB: US$ exchange rate     6.7087       6.5137       6.3171  

 

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.

 

F- 9

 

 

Planet Green Holdings Corporation
 
Notes to Financial Statements

 

Financial instruments

 

The Company’s financial instruments, including cash and equivalents, accounts and other receivables, accounts and other payables, accrued liabilities and short-term debt, have carrying amounts that approximate their fair values due to their short maturities. ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

 

  Level 1 - inputs to the valuation methodology used quoted prices for identical assets or liabilities in active markets.
     
  Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
     
  Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.

 

Commitments and contingencies

 

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

 

Unaudited interim financial information

 

These unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial reporting and the rules and regulations of the Securities and Exchange Commission that permit reduced disclosure for interim periods. Therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been made. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the year ending December 31, 2019.

 

The consolidated balance sheets and certain comparative information as of December 31, 2018 are derived from the audited consolidated financial statements and related notes for the year ended December 31, 2018 (“2018 Annual Financial Statements”), included in the Company’s 2018 Annual Report on Form 10-K. These unaudited interim condensed consolidated financial statements should be read in conjunction with the 2018 Annual Financial Statements.

 

Recent accounting pronouncements

 

In January 2017, the FASB issued guidance which simplifies the accounting for goodwill impairment. The updated guidance eliminates Step 2 of the impairment test, which requires entities to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value, determined in Step 1. The Company is currently evaluating the impact on the financial statements of this guidance.

 

In January 2017, the FASB amended the existing accounting standards for business combinations. The amendments clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.

 

The Company is evaluated the timing and the impact of the aforesaid guidance on the financial statements.

 

F- 10

 

 

Planet Green Holdings Corporation
 
Notes to 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.

 

    3/31/2019     12/31/2018  
Trade accounts receivable   $ 1,044,381     $ 6,528,072  
Less: Allowance for doubtful accounts     -       -  
    $ 1,044,381     $ 6,528,072  
                 
Allowance for doubtful accounts:                
Beginning balance   $ -     $ (804,937 )
Reclassified to discontinued operations     -       804,937  
Additions to allowance     -       -  
Bad debt written-off     -       -  
Ending balance   $ -     $ -  

 

5. Inventories

 

Inventories consisted of the following as of March 31, 2019 and December 31, 2018

 

    3/31/2019     12/31/2018  
Raw material   $ -     $      -  
Work in progress     -       -  
Finished goods     10,265       -  
    $ 10,265     $ -  

 

6. Plant and Equipment

Property, plant, and equipment consisted of the following as of March 31, 2019 and December 31, 2018:

 

    3/31/2019     12/31/2018  
At Cost:                
Buildings   $ 1,140,645     $ 1,116,940  
Machinery and equipment     31,732       31,066  
Biological assets     2,122,125       2,078,012  
    $ 3,294,502     $ 3,226,018  
                 
Less: Accumulated depreciation     (1,964,028 )     (1,854,500 )
                 
    $ 1,330,474     $ 1,371,518  

 

Depreciation expense for the three months ended March 31, 2019 and 2018 was $109,528 and $152,379 respectively.

 

F- 11

 

 

Planet Green Holdings Corporation
 
Notes to Financial Statements

 

7 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 for the three months ended March 31, 2019 and 2018:

 

    3/31/2019     3/31/2018  
Income/(loss) attributed to PRC continuing operations   $ 63,739     $ (70,563 )
Income/(loss) attributed to U.S. operations                
Income/(loss) before tax   $ 63,739     $ (70,563 )
                 
PRC Statutory Tax at 25% Rate     56,043       -  
Effect of tax exemption granted                
Income tax   $ 56,043     $ -  

 

Per Share Effect of Tax Exemption

 

    3/31/2019     3/31/2018  
Effect of tax exemption granted   $ -     $ -  
Weighted-Average Shares Outstanding Basic     5,497,765       1,754,313  
Per share effect   $ -     $ -  

 

The difference between the U.S. federal statutory income tax rate and the Company’s effective tax rate was as follows for the Three months ended March 31, 2019 and 2018:

 

    3/31/2019     3/31/2018  
U.S. federal statutory income tax rate     21 %     21 %
Higher (lower) rates in PRC, net     4 %     4 %
Expenses not deductible to taxable income     62.9 %     -25 %
The Company’s effective tax rate     87.9 %     0 %

 

F- 12

 

 

Planet Green Holdings Corporation
 
Notes to Financial Statements

 

8. Earnings/(Loss) Per Share

 

Components of basic and diluted earnings per share were as follows:

 

    For the three months ended  
    March 31,  
    2019     2018  
Basic and diluted (loss) earnings per share numerator:            
Income/(loss) from continuing operations (attributable) available to common stockholders   $ 7,696       (70,563 )
(Loss) income from discontinued operations (attributable) available to common stockholders     -       13,046  
(Loss) income (attributable) available to common stockholders     7,696       (60,100 )
                 
Basic and diluted (loss) earnings per share denominator:                
Original Shares:     5,497,765       1,530,980  
Additions from Actual Events -Issuance of Common Stock     -       233,333  
Basic Weighted Average Shares Outstanding     5,497,765       1,754,313  
                 
Income/(loss) per share from continuing operations - Basic and diluted     0.00       (0.04 )
                 
Income/(loss) per share from discontinued operations - Basic and diluted     -       0.01  
                 
Income/(loss) per share - Basic and diluted     0.00       (0.03 )
                 
Weighted Average Shares Outstanding - Basic and diluted     5,497,765       1,754,313  

 

F- 13

 

 

Planet Green Holdings Corporation
 
Notes to Financial Statements

 

9. Lease Commitments

 

For the year ended December 31, 2016, 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, 2017, Taishan Muren Agriculture Co. Ltd. entered into three operating lease agreements leasing three additional plots of land where biological assets are grown. For the year ended December 31, 2018

 

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 March 31, 2019 are as follows:

 

Period   Lease Payable  
Year 1   $ 224,896  
Year 2     224,896  
Year 3     224,896  
Year 4     224,896  
Year 5     224,896  
Thereafter     1,386,853  
    $ 2,511,333  

 

The outstanding lease commitments for the leases listed above as of March 31, 2019 was $2,511,333.

 

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842).” The new standard requires lessees to recognize lease assets (right of use) and lease obligations (lease liability) for leases previously classified as operating leases under generally accepted accounting principles on the balance sheet for leases with terms in excess of 12 months. The standard is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. The Company is assessing the impact of the adoption of the new standard.

 

F- 14

 

 

Planet Green Holdings Corporation
 
Notes to Financial Statements

 

10. Other Expenses

 

Other expenses consisted of the following:

 

    3/31/2019     3/31/2018  
Other expense:            
Impairment of property and equipment   $            -     $ -  
Other     -       (3,482 )
    $ -     $ (3,482 )

 

11. Discontinued Operations

 

As of December 31, 2018, the Company has reclassified the results of operations and the financial position of Luotian Lorain and Shandong Greenpia as discontinued operations. Selected details regarding those discontinued operations are provided below. Selected details regarding those discontinued operations are provided below.

 

   

For the three months ended

March 31,

 
Results of Operations   2019     2018  
             
Sales   $ -     $ 14,582  
Cost of sales     -          
Gross profit     -       14,582  
                 
Operating expenses     -       1,536  
                 
Other expenses     -       -  
                 
Loss before Taxes     -       13,046  
                      
Taxes     -       -  
                 
Net income   $ -     $ 13,046  

 

    At     At  
Financial Position   3/31/2019     12/31/2018  
Current Assets   $ -     $ -  
Non-Current Assets     -       -  
Total Assets   $ -     $ -  
                 
Current Liabilities   $ 3,643,696     $ 8,607,813  
Total Long-Term Liabilities             -  
Total Liabilities   $ 3,643,696     $ 8,607,813  
                 
Net Assets   $ (3,643,696 )   $ (8,607,813 )
                 
Total Liabilities & Net Assets   $ 0.00     $ 0.00  

 

F- 15

 

 

Planet Green Holdings Corporation
 
Notes to Financial Statements

 

12. 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.

 

F- 16

 

 

Planet Green Holdings Corporation
 
Notes to Financial Statements

 

13. 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.

 

On April 29, 2019, the Company issued a press release (the “Press Release”) announcing that on April 26, 2019, the NYSE American LLC (“NYSE American”) notified the Company that the Company had regained compliance with the NYSE American listing requirements because it has resolved the continued listing deficiency with respect to Section 1003(a)(i) and Section 1003(a)(ii) of the NYSE American Company Guide.

 

On May 9, 2019, the Company and its wholly owned subsidiary Shanghai Xunyang Internet Technology Co., Ltd. (“Subsidiary”) entered into a Share Exchange Agreement with Xianning Bozhuang Tea Products Co., Ltd. (“Target”) and each of the shareholders of Target (collectively, “Sellers”). Such transaction closed on May 14, 2019. Pursuant to the Share Exchange Agreement, the Subsidiary acquired all outstanding equity interests of Target, a company that produces tea products and sells such products in China. Pursuant to the Share Exchange Agreement, the Company issued an aggregate of 1,080,000 shares of common stock of the Company to the Sellers in exchange for the transfer of all of the equity interest of the Target to the Subsidiary.

 

F- 17

 

 

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview

 

Overview

 

We are headquartered in Shanghai, China. Since the restructuring of our company in September 2018, our primary business, which is carried out by Taishan Muren, our newly acquired business, is:

 

to develop and market products, such as sauces, from herbs and spices that we grow in China; and

 

to sell brown rice syrup and tea bags developed using our unique recipes in China.

 

Results of Operations

 

Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018

 

The following table summarizes the results of our operations during the three-month periods ended March 31, 2019 and March 31, 2018, respectively, and provides information regarding the dollar and percentage increase or (decrease) from the three-month period ended March 31, 2019 compared to the three month period ended March 31, 2018.

 

(All amounts, other than percentages, stated in thousands of U.S. dollars)

 

    Three months ended     Increase /     Increase /  
    March 31,     Decrease     Decrease  
(In Thousands of USD)   2019     2018     ($)     (%)  
Net revenues     1,078       1,018       60       5.9  
Cost of revenues     780       901       (121 )     (13.4 )
Gross profit (loss)     298       116       182       156.9  
Operating expenses:     -       -       -       -  
Selling and marketing expenses     -       22       (22 )     (100.0 )
General and administrative expenses     235       162       73       45.1  
Operating (loss) Income     64       (68 )     132       (194.1 )
Government subsidy income     -       -       -       -  
Interest and other income     -       1       (1 )     (100.0 )
Other expenses     -       (3 )     3       (100.0 )
Interest expense     -       -               -  
Gain from investment     -       -       -       -  
Income before tax from continuing operations     64       (71 )     135       (190.1 )
Income tax expense/(income)     56       -       56       -  
Net income from continuing operations     8       (71 )     79       (111.3 )
Net (loss) income from discontinued operations     -       13       (13 )     (100.0 )
Net Income     8       (58 )     66       (113.8 )
Non-controlling interests     -       3       (3 )     (100.0 )
Net income of common stockholders     8       (60 )     68       (113.3 )

 

2

 

  

Revenue

 

Net Revenues . Our net revenues for the three months ended March 31, 2019 amounted to $1.07 million, which represents an increase of approximately $0.06 million, or 5.9%, from the three-month period ended on March 31, 2018, in which our net revenue was $1.01 million. This increase was attributable to the disposal of certain of our historical subsidiaries and acquisition of Taishan Muren.

 

Cost of Revenues. During the three months ended March 31, 2019, we experienced an decrease in cost of revenue of $0.12 million, in comparison to the three months ended March 31, 2018, from approximately $0.9 million to $0.78 million, reflecting a decrease of 14%. This decrease was related to our new subsidiary, Taishan Muren Agriculture Co. Ltd. and disposal and discontinue of certain subsidiaries.

 

Gross Profit . Our gross profit increased $0.18 million, or 157%, to $0.29 million for the three months ended March 31, 2019 from $0.11 million for the three months ended March 31, 2018, attributable to the disposal of certain of our historical subsidiaries and acquisition of Taishan Muren.

 

Operating Expenses

 

Selling and Marketing Expenses . Our selling and marketing expenses decreased $21,847, or 99%, to $110 during the three months ended March 31, 2019, as compared to $21,947 during the three months ended March 31, 2018. The decrease of our selling and marketing expenses is mainly due to a decrease in sales activities because sales generated from our existing clients had been steady.

 

General and Administrative Expenses. We experienced an increase in general and administrative expense of $0.07 million from $0.16 million to approximately $0.23 million for the three months ended March 31, 2019, compared to the three months ended March 31, 2018. This cost increase was caused by the cost of service providers in connection with our reporting obligation. 

 

Net Income

 

Net income increased to $8,000 for the three months ended March 31, 2019 from net loss of $58,000 for the three months ended March 31, 2018. Such gain was primarily the result of acquisition of Taishan Muren and disposal and discontinue of certain subsidiaries.

 

3

 

 

Liquidity and Capital Resources

 

In the reporting period in 2019, our primary sources of financing have been cash generated from operations. As of March 31, 2019, we had cash and cash equivalents (including restricted cash) of $1,367,758. Our cash and cash equivalents increased by approximately $ 305,115 from March 31, 2018. The following table provides detailed information about our net cash flow for all financial statement periods presented in this report.

 

General

 

Management anticipates that our existing capital resources and cash flows from operations are adequate to satisfy our liquidity requirements for the next 12 months. Our primary capital needs have been to fund our working capital requirements. In the past, our primary sources of financing have been cash generated from operations and financing activities.

 

As of March 31, 2019 and 2018, cash and cash equivalents (including restricted cash) were $1.36 million and $1.06 million, respectively. The debt to assets ratio was 38.9% and 57.6% as of March 31, 2019 and December 31, 2018, respectively. We expect to continue to finance our operations and working capital needs in 2019 from cash generated from operations and, if needed, private financings. If available liquidity is not sufficient to meet our operating and loan obligations as they come due, our plans include pursuing alternative financing arrangements or reducing expenditures as necessary to meet our cash requirements. However, there is no assurance that we will be able to raise additional capital or reduce discretionary spending to provide liquidity, if needed. We cannot be sure of the availability or terms of any alternative financing arrangements.

 

The following table provides detailed information about our net cash flow for all financial statement periods presented in this report.

 

Cash Flow (In thousands)

 

    For the Three Months Ended  
    March 31,  
    2019     2018  
Net cash (used in)/provided by operating activities     285       (1,475 )
Net cash provided by/ (used in) investing activities     -       (3 )
Net cash provided by/ (used in) financing activities     -       1,275  
Net cash flow     285       (203 )

 

Operating Activities

 

Net cash provided by operating activities was $0.29 million and used by operating activities was $1.5 million for the three months periods ended March 31, 2019 and 2018, respectively. The increase of approximately $1.76 million in net cash flows provided by operating activities in the first three months of 2019 was primarily due to decreases of $3.8 million in accounts and other payables, decrease of $1.0 million accounts and other receivable, and increase of $0.5 million in prepayment, increase of $0.5 million in inventories.

 

4

 

 

Financing Activities

 

Net cash used in financing activities for the three months period ended March 31, 2019 was $0 million representing a decrease of $1.3 million in net cash used in financing from $1.3 million for the same period of 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 our financial statements, including the notes thereto, and related disclosures of commitments and contingencies, if any. We consider our critical accounting policies to be those that require significant judgments and estimates in the preparation of financial statements, including those set forth in Note 2 to the financial statements included herein.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance arrangements.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not required.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures (as defined in Rule 13a(15(e) under the 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 the design and operation of our disclosure controls and procedures as of March 31, 2019. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2019, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures was completed, our disclosure controls and procedures were not effective due to the continuing material weakness in our internal control over financial reporting.

 

The material weakness and significant deficiency identified by our management as of March 31, 2019 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 is inadequate.

 

5

 

 

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.

 

C hanges in Internal Controls over Financial Reporting.

 

During the three months ended March 31, 2019, there were no changes in our internal control over financial reporting identified in connection with the evaluation performed during the period covered by this 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 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 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 errors and all fraud. 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 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 fraud, if any, have been detected. Also, 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 business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

6

 

 

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

None.

 

ITEM 1A. RISK FACTORS

 

Not applicable.

  

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

 

The following exhibits are filed as part of this Report.

 

Exhibit No.   Description
     
31.1   Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes(Oxley Act of 2002.*
     
31.2   Certification of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
     
32.1   Certification of Principal 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 Principal 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 Extension Calculation Linkbase *
     
101.DEF   XBRL Taxonomy Extension Definition Linkbase *
     
101.LAB   XBRL Taxonomy Extension Label Linkbase *
     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase *

 

* Filed herewith.
   
** Furnished herewith.

 

7

 

 

SIGNATURES

 

Pursuant to the requirements 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.

 

Date: May 14, 2019  
   
  PLANET GREEN HOLDINGS CORP.
   
  /s/ Hongxiang Yu
  Hongxiang Yu
  Chief Executive Officer
  (Principal Executive Officer)
   
  /s/ Yu Li
  Yu Li
  Chief Financial Officer
  (Principal Financial and Accounting Officer)

 

 

8

 

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