ITEM 1. FINANCIAL
STATEMENTS
PLANET GREEN HOLDINGS CORP.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022 AND DECEMBER 31, 2021
(Stated in US Dollars)
Planet Green Holdings Corp.
Unaudited Condensed Consolidated Balance Sheets
At March 31, 2022 and December 31, 2021
(Stated in US Dollars)
| |
March 31,
2022 | | |
December 31,
2021 | |
Assets | |
| | |
| |
Current assets | |
| | |
| |
Cash and cash equivalents | |
$ | 354,289 | | |
$ | 750,658 | |
Restricted cash | |
| 958,714 | | |
| 380,750 | |
Accounts receivable, net | |
| 3,348,199 | | |
| 3,819,073 | |
Inventories | |
| 8,041,578 | | |
| 7,816,432 | |
Advances to suppliers | |
| 6,359,651 | | |
| 5,681,083 | |
Other receivables | |
| 1,255,891 | | |
| 1,185,136 | |
Other receivables-related parties | |
| 7,625,906 | | |
| 7,670,434 | |
Total current assets | |
| 27,944,228 | | |
| 27,303,566 | |
| |
| | | |
| | |
Non-current assets | |
| | | |
| | |
Plant and equipment, net | |
| 22,459,894 | | |
| 20,485,449 | |
Intangible assets, net | |
| 4,160,861 | | |
| 4,199,651 | |
Construction in progress, net | |
| 42,054 | | |
| 2,475,874 | |
Prepayment investments | |
| 2,740,934 | | |
| 705,805 | |
Long-term investments | |
| 3,150,499 | | |
| 3,136,910 | |
Investment in real estates | |
| 7,804,606 | | |
| 7,770,943 | |
Deferred tax assets | |
| 1,177,127 | | |
| 1,172,050 | |
Goodwill | |
| 18,180,532 | | |
| 18,180,532 | |
Right-of-use assets | |
| 480,074 | | |
| 584,802 | |
Total non-current assets | |
| 60,196,581 | | |
| 58,712,016 | |
| |
| | | |
| | |
Total assets | |
$ | 88,140,809 | | |
$ | 86,015,582 | |
| |
| | | |
| | |
Liabilities and Stockholders’ Equity | |
| | | |
| | |
Current liabilities | |
| | | |
| | |
Short-term bank loans | |
| 6,713,007 | | |
| 6,822,054 | |
Accounts payable | |
| 6,285,729 | | |
| 6,237,810 | |
Advance from customers | |
| 7,362,280 | | |
| 6,190,091 | |
Taxes payable | |
| 871,823 | | |
| 787,593 | |
Other payables and accrued liabilities | |
| 5,049,640 | | |
| 8,635,189 | |
Other payables-related parties | |
| 9,071,764 | | |
| 5,196,227 | |
Lease liabilities-current portion | |
| 443,193 | | |
| 436,191 | |
Deferred income | |
| 69,972 | | |
| 73,732 | |
Total current liabilities | |
| 35,867,408 | | |
| 34,378,887 | |
| |
| | | |
| | |
Non-current liabilities | |
| | | |
| | |
Long-term payables | |
| 362,335 | | |
| 380,345 | |
Total non-current liabilities | |
| 362,335 | | |
| 380,345 | |
| |
| | | |
| | |
Total liabilities | |
$ | 36,229,743 | | |
$ | 34,759,232 | |
| |
| | | |
| | |
Commitments and contingencies | |
| - | | |
| - | |
| |
| | | |
| | |
Stockholders’ equity | |
| | | |
| | |
Preferred stock: $0.001 par value, 5,000,000 shares authorized; none issued and outstanding as of December 31, 2021 and 2020 | |
| - | | |
| - | |
Common stock: $0.001 par value, 200,000,000 shares authorized; 42,581,930 and 35,581,930 shares issued and outstanding as of March 31,2022 and December 31, 2021, respectively | |
| 42,582 | | |
| 35,582 | |
Additional paid-in capital | |
| 137,324,482 | | |
| 133,232,224 | |
Accumulated deficit | |
| (95,302,160 | ) | |
| (94,072,383 | ) |
Accumulated other comprehensive income | |
| 7,872,118 | | |
| 7,711,057 | |
Non-controlling interests | |
| 1,974,044 | | |
| 4,349,870 | |
| |
| | | |
| | |
Total stockholders’ equity | |
$ | 51,911,066 | | |
$ | 51,256,350 | |
| |
| | | |
| | |
Total liabilities and stockholders’ equity | |
$ | 88,140,809 | | |
$ | 86,015,582 | |
See
Accompanying Notes to the Financial Statements
Planet Green Holdings Corp.
Unaudited Condensed Consolidated Statements
of Operations and Comprehensive (Loss) Income
For the Three Months Ended March 31,
2022 and 2021
(Stated in US Dollars)
| |
For the
Three Months
Ended
March 31, | |
| |
2022 | | |
2021 | |
Net revenues | |
$ | 11,979,355 | | |
$ | 2,236,143 | |
Cost of revenues | |
| 10,816,396 | | |
| 2,030,575 | |
Gross profit | |
| 1,162,959 | | |
| 205,568 | |
| |
| | | |
| | |
Operating expenses | |
| | | |
| | |
Selling and marketing expenses | |
| 451,242 | | |
| 224,519 | |
General and administrative expenses | |
| 1,802,809 | | |
| 1,562,213 | |
Research & Developing expenses | |
| 8,925 | | |
| - | |
Total operating expenses | |
| 2,262,976 | | |
| 1,786,732 | |
| |
| | | |
| | |
Operating (loss) income | |
| (1,100,017 | ) | |
| (1,581,164 | ) |
| |
| | | |
| | |
Other (expenses) income | |
| | | |
| | |
Interest income | |
| 8,541 | | |
| (109,502 | ) |
Interest expenses | |
| (165,767 | ) | |
| - | |
Other income | |
| 99,511 | | |
| 199,475 | |
Other expenses | |
| (14,304 | ) | |
| (126 | ) |
Total other (expenses) income | |
| (72,019 | ) | |
| 89,847 | |
| |
| | | |
| | |
(Loss) income before income taxes | |
| (1,172,036 | ) | |
| (1,491,317 | ) |
| |
| | | |
| | |
Income tax expenses | |
| (89,403 | ) | |
| - | |
| |
| | | |
| | |
Net (loss) income | |
| (1,261,439 | ) | |
| (1,491,317 | ) |
| |
| | | |
| | |
Less: Net (loss) income attributable to non-controlling interest | |
| (31,662 | ) | |
| (102,853 | ) |
| |
| | | |
| | |
Net (loss) income attributable to common shareholders | |
$ | (1,229,777 | ) | |
$ | (1,388,464 | ) |
| |
| | | |
| | |
Net (loss) income | |
| (1,261,439 | ) | |
| (1,491,317 | ) |
| |
| | | |
| | |
Foreign currency translation adjustment | |
| 166,157 | | |
| 155,543 | |
| |
| | | |
| | |
Total comprehensive (loss) income | |
| (1,095,282 | ) | |
| (1,335,774 | ) |
| |
| | | |
| | |
Less: Comprehensive (loss) income attribute to non-controlling interest | |
| (26,568 | ) | |
| (112,379 | ) |
Comprehensive (loss) income attribute to common share holders | |
$ | (1,068,714 | ) | |
$ | (1,223,395 | ) |
| |
| | | |
| | |
Loss per share attributable to common shareholders - Basic and diluted | |
$ | (0.03 | ) | |
$ | (0.08 | ) |
Basic and diluted weighted average shares outstanding | |
| 41,648,597 | | |
| 16,729,930 | |
See Accompanying Notes to the Financial Statements
Planet Green Holdings Corp.
Unaudited Condensed Consolidated Statements
of Changes in Stockholders’ Equity
For the Three Months Ended March 31, 2022 and 2021
(Stated in US Dollars)
| |
| | |
| | |
| | |
| | |
Accumulated | | |
| | |
| |
| |
| | |
| | |
Additional | | |
| | |
Other | | |
Non- | | |
| |
| |
Number of | | |
Common | | |
Paid-in | | |
Accumulated | | |
Comprehensive | | |
Controlling | | |
| |
| |
Shares | | |
Stock | | |
Capital | | |
Deficit | | |
Income | | |
Interests | | |
Total | |
Balance, January 1, 2021 | |
| 11,809,930 | | |
$ | 11,810 | | |
$ | 95,659,360 | | |
$ | (84,331,897 | ) | |
$ | 6,972,163 | | |
$ | - | | |
$ | 18,311,436 | |
Net (loss) income | |
| - | | |
| - | | |
| - | | |
| (1,388,463 | ) | |
| - | | |
| (102,853 | ) | |
| (1,491,316 | ) |
Issuance of shares for acquisition | |
| 5,500,000 | | |
| 5,500 | | |
| 12,809,500 | | |
| - | | |
| - | | |
| - | | |
| 12,815,000 | |
Issuance of common stock for cash | |
| 2,700,000 | | |
| 2,700 | | |
| 6,747,300 | | |
| - | | |
| - | | |
| - | | |
| 6,750,000 | |
Stock-based compensation and issue of employee benefit plan stock | |
| - | | |
| - | | |
| - | | |
| - | | |
| (445,483 | ) | |
| 2,257,118 | | |
| 1,811,635 | |
Foreign currency translation adjustment | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (9,526 | ) | |
| (9,526 | ) |
Balance, March 31, 2021 | |
| 20,009,930 | | |
$ | 20,010 | | |
$ | 115,216,160 | | |
$ | (85,720,360 | ) | |
$ | 6,526,680 | | |
$ | 2,144,739 | | |
$ | 38,187,229 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, January 1, 2022 | |
| 35,581,930 | | |
$ | 35,582 | | |
$ | 133,232,224 | | |
$ | (94,072,383 | ) | |
$ | 7,711,057 | | |
$ | 4,349,870 | | |
$ | 51,256,350 | |
Net (loss) income | |
| - | | |
| - | | |
| - | | |
| (1,229,777 | ) | |
| - | | |
| (31,662 | ) | |
| (1,261,439 | ) |
Issuance of common stock for cash | |
| 7,000,000 | | |
| 7,000 | | |
| 6,993,000 | | |
| - | | |
| - | | |
| - | | |
| 7,000,000 | |
Acquiring additional shares from shareholder of Anhui Ansheng Petrochemical Equipment Co., Ltd. | |
| - | | |
| - | | |
| (2,900,742 | ) | |
| - | | |
| - | | |
| (2,349,258 | ) | |
| (5,250,000 | ) |
Foreign currency translation adjustment | |
| - | | |
| - | | |
| - | | |
| - | | |
| 161,062 | | |
| 5,094 | | |
| 166,156 | |
Balance, March 31, 2022 | |
| 42,581,930 | | |
$ | 42,582 | | |
$ | 137,324,482 | | |
$ | (95,302,160 | ) | |
$ | 7,872,119 | | |
$ | 1,974,044 | | |
$ | 51,911,066 | |
See
Accompanying Notes to the Financial Statements
Planet Green Holdings Corp.
Unaudited Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2022 and 2021
(Stated in US Dollars)
|
|
March 31, |
|
|
March 31, |
|
|
|
2022 |
|
|
2021 |
|
CASH FLOWS FROM OPFRATING ACTIVITIES: |
|
|
|
|
|
|
Net (loss) income |
|
$ |
(1,261,439 |
) |
|
$ |
(1,491,316 |
) |
Adjustments to reconcile net loss to cash (used in) provided by operating activities: |
|
|
|
|
|
|
|
|
Acquisition of subsidiaries |
|
|
- |
|
|
|
(4,587,400 |
) |
Depreciation |
|
|
580,306 |
|
|
|
515,439 |
|
Amortization |
|
|
62,176 |
|
|
|
47,566 |
|
Amortization of operating lease right-of-use assets |
|
|
104,692 |
|
|
|
- |
|
Bad debt expenses |
|
|
- |
|
|
|
79,558 |
|
Impairment of equipment |
|
|
3,591 |
|
|
|
- |
|
Account receivables,net |
|
|
470,712 |
|
|
|
(3,722,118 |
) |
Inventories |
|
|
(225,068 |
) |
|
|
(303,125 |
) |
Prepayments and deposit |
|
|
(2,712,763 |
) |
|
|
(343,097 |
) |
Other receivables |
|
|
(70,731 |
) |
|
|
- |
|
Accounts payables |
|
|
47,902 |
|
|
|
- |
|
Advance from customer |
|
|
1,171,786 |
|
|
|
- |
|
Other payables and accruals |
|
|
(3,584,314 |
) |
|
|
118,354 |
|
Taxes payable |
|
|
84,201 |
|
|
|
- |
|
Deferred income |
|
|
(3,758 |
) |
|
|
- |
|
Lease liability |
|
|
7,000 |
|
|
|
- |
|
Net cash used in operating activities |
|
|
(5,325,707 |
) |
|
|
(9,686,139 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Purchase of plant and equipment |
|
|
(124,681 |
) |
|
|
(121,053 |
) |
Purchase of intangible assets |
|
|
(23,398 |
) |
|
|
(47,566 |
) |
Net cash used in investing activities |
|
|
(148,079 |
) |
|
|
(168,619 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Payments of short-term loan - bank |
|
|
(127,014 |
) |
|
|
- |
|
Changes in related party balances, net |
|
|
(1,327,669 |
) |
|
|
1,633,888 |
|
Proceeds from issuance of common stock |
|
|
7,000,000 |
|
|
|
6,750,000 |
|
Net cash provided by financing activities |
|
|
5,545,317 |
|
|
|
8,383,888 |
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
71,531 |
|
|
|
(1,470,870 |
) |
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE ON CASH |
|
|
110,064 |
|
|
|
(477,857 |
) |
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR |
|
|
1,131,408 |
|
|
|
3,415,751 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF YEAR |
|
$ |
1,313,003 |
|
|
$ |
1,467,024 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTARY OF CASH FLOW INFORMATION |
|
|
|
|
|
|
|
|
Interest received |
|
$ |
8,541 |
|
|
$ |
- |
|
Interest paid |
|
$ |
165,767 |
|
|
$ |
109,502 |
|
|
|
|
|
|
|
|
|
|
NON-CASH TRANSACTIONS |
|
|
|
|
|
|
|
|
Operating lease right-of-use assets |
|
$ |
480,074 |
|
|
$ |
584,802 |
|
Issuance of shares for acquisition |
|
$ |
- |
|
|
$ |
12,815,000 |
|
Issuance of common stock for employee compensation |
|
$ |
- |
|
|
$ |
1,811,635 |
|
See
Accompanying Notes to the Financial Statements
PLANET GREEN HOLDINGS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022 AND DECEMBER 31, 2021
(Stated in US Dollars)
1.
Organization and Principal Activities
Planet Green Holdings Corp. (the “Company”
or “PLAG”) is a holding company incorporated in Nevada. We are engaged in various businesses through our subsidiaries and
controlled entities in China.
Going Concern
The accompanying unaudited condensed consolidated
financial statements have been prepared assuming that the Company will continue as a going concern; however, the Company has incurred
a net loss of $1,261,439 for the three months ended March 31, 2022. As of March 31, 2022, the Company had an accumulated deficit of $95,302,160,
a working capital deficit of $7,923,180; its net cash used in operating activities for the three months ended March 31, 2022 was $5,325,707.
These factors raise substantial doubt on the Company’s
ability to continue as a going concern. The accompanying unaudited condensed consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty. Management’s plan for the Company’s continued existence is dependent
upon management’s ability to execute the business plan, develop the plan to generate profit; additionally, Management may need to
continue to rely on private placements or certain related parties to provide funding for investment, for working capital and general corporate
purposes. If management is unable to execute its plan, the Company may become insolvent.
2.
Summary of Significant Accounting Policies
Method of Accounting
Management has prepared the accompanying financial
statements and these notes according to generally accepted accounting principles in the United States (“GAAP”). The Company
maintains its general ledger and journals with the accrual method accounting.
Principles of Consolidation
The accompanying consolidated financial statements
reflect the activities of Planet Green Holdings Corp. and each of the following entities:
|
|
Place of |
|
Attributable
equity |
|
|
Registered |
|
Name of Company |
|
incorporation |
|
interest % |
|
|
capital |
|
Planet Green Holdings Corporation |
|
The British Virgin Islands |
|
|
100 |
|
|
$ |
10,000 |
|
Lucky Sky Planet Green Holdings Co., Limited (H.K.) |
|
Hong Kong |
|
|
100 |
|
|
|
1 |
|
Jiayi Technologies (Xianning) Co., Ltd. |
|
PRC |
|
|
100 |
|
|
|
2,000,000 |
|
Fast Approach Inc. |
|
Canada |
|
|
100 |
|
|
|
79 |
|
Shanghai Shuning Advertising Co., Ltd. (a subsidiary of FAST) |
|
PRC |
|
|
100 |
|
|
|
- |
|
Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. |
|
PRC |
|
|
85 |
|
|
|
4,710,254 |
|
Xianning Bozhuang Tea Products Co., Ltd. |
|
PRC |
|
|
100 |
|
|
|
6,277,922 |
|
Jilin Chuangyuan Chemical Co., Ltd. |
|
PRC |
|
|
VIE |
|
|
|
9,280,493 |
|
Anhui Ansheng Petrochemical Equipment Co., Ltd. |
|
PRC |
|
|
VIE |
|
|
|
3,045,776 |
|
Shine Chemical Co., Ltd. |
|
The British Virgin Islands |
|
|
100 |
|
|
|
8,000 |
|
Bless Chemical Co., Ltd. (a subsidiary of Shine Chemical) |
|
Hong Kong |
|
|
100 |
|
|
|
10,000 |
|
Hubei Bryce Technology Co., Ltd. (a subsidiary of Bless Chemical) |
|
PRC |
|
|
100 |
|
|
|
30,000,000 |
|
Shandong Yunchu Supply Chain Co., Ltd. |
|
PRC |
|
|
100 |
|
|
|
5,000,000 |
|
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 29, 2020, the Planet Green Holdings Corporation
(BVI) incorporated Lucky Sky Planet Green Holdings Co., Limited, a limited company incorporated in Hong Kong.
On June 5, 2020, the Planet Green Holdings Corporation (BVI) acquired
all of the outstanding equity interests of Fast Approach Inc. It was incorporated under Canada’s laws and the operation of a demand-side
platform targeting the Chinese education market in North America.
On June 16, 2020, Lucky Sky Holdings Corporations
(H.K.) transferred its 100% equity interest in Lucky Sky Petrochemical to Lucky Sky Planet Green Holdings Co., Limited (H.K.).
On December 9, 2020, Lucky Sky Petrochemical Technology
(Xianning) Co., Ltd. changed its name to Jiayi Technologies (Xianning) Co., Ltd.
On January 6, 2021, Planet Green Holdings Corporation
(Nevada) issued an aggregate of 2,200,000 shares of common stock of the Company to the equity holders of Jingshan Sanhe Luckysky New Energy
Technologies Co., Ltd in exchange for the transfer of 85% of the equity interest of Jingshan Sanhe Luckysky New Energy Technologies Co.,
Ltd. to the Jiayi Technologies (Xianning) Co., Ltd.
On March 9, 2021, Planet Green Holdings Corporation (Nevada) issued
an aggregate of 3,300,000 shares of common stock of the Company to the equity holders of Jilin Chuangyuan Chemical Co., Ltd in exchange
for the transfer of 75% of the equity interest of Jilin Chuangyuan Chemical Co., Ltd to the Jiayi Technologies (Xianning) Co., Ltd.
On August 1, 2021, Jiayi Technologies (Xianning)
Co., Ltd has terminated the VIE agreements with Xianning Bozhuang Tea Products Co., Ltd and acquired 100% equity of Xianning Bozhuang
Tea Products Co., Ltd. As a result, Xianning Bozhuang Tea Products Co., Ltd has been wholly-owned subsidiaries of the Jiayi Technologies
(Xianning) Co., Ltd.
On August 3, 2021, the Planet Green Holding Corp
has acquired 8,000,000 ordinary shares of the Shine Chemical Co., Ltd. As a result, Shine Chemical Co., Ltd., Bless Chemical Co., Ltd.
and Hubei Bryce Technology Co., Ltd. have been wholly-owned subsidiaries of the Planet Green Holding Corp.
On September 1st, 2021, Jingshan Sanhe Luckysky
New Energy Technologies Co., Ltd. has changed its major shareholder from Mr. Feng Chao to Hubei Bryce Technology Co., Ltd. and Hubei Bryce
Technology Co., Ltd. has hold 85% shares of Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. after the alteration of shareholders.
On December 9, 2021, Planet
Green Holdings Corporation (Nevada) issued an aggregate of 5,900,000 shares of common stock
to the equity holders of A Shandong Yunchu Supply Chain Co., Ltd. for the transfer to 100%
of the equity interest of Shandong Yunchu Supply Chain Co., Ltd. to the Jiayi Technologies
(Xianning) Co., Ltd.
Consolidation of Variable Interest Entity
On March 9, 2021, through Jiayi Technologies (Xianning)
Co., Ltd., formerly known as Lucky Sky Petrochemical Technology (Xianning) Co., Ltd., the Company entered into exclusive VIE agreements
(“VIE Agreements”) with Jilin Chuangyuan Chemical Co., Ltd., as well as their shareholders, which give the Company the ability
to substantially influence those companies’ daily operations and financial affairs and appoint their senior executives. The Company
is considered the primary beneficiary of these operating companies, and it consolidates their accounts as VIEs.
On July 15, through Jiayi Technologies (Xianning)
Co., Ltd., formerly known as Lucky Sky Petrochemical Technology (Xianning) Co., Ltd., the Company entered into exclusive VIE agreements
(“VIE Agreements”) with Anhui Ansheng Petrochemical Equipment Co., Ltd, as well as their shareholders, which give the Company
the ability to substantially influence those companies’ daily operations and financial affairs and appoint their senior executives.
The Company is considered the primary beneficiary of these operating companies, and it consolidates their accounts as VIEs.
On August 1, 2021, Jiayi Technologies (Xianning)
Co., Ltd. has terminated the VIE agreements with Xianning Bozhuang Tea Products Co., Ltd.
On February 11, 2022, Planet Green Holdings Corp. (Nevada) and Jiayi
Technologies (Xianning) Co., Ltd., a subsidiary of the Company, entered into a Share Purchase Agreement with Xiaodong Cai, a shareholder
of Anhui Ansheng Petrochemical Equipment Co., Ltd., pursuant to which, among other things and subject to the terms and conditions contained
therein, the Purchaser agreed to effect share purchase from the Seller of 20.58% of the outstanding equity interests of Ansheng, and the
Company shall pay to the Seller an aggregate of U.S. $5,250,000 in exchange for 20.58% of the issued and outstanding shares. Before the
closing of this Share Purchase transaction, the Company owned 66% equity interest of Ansheng through the Purchaser. On February 11, 2022,
the Company closed the Share Purchase transaction. In connection with the closing of the share purchase transaction, the Company entered
into a number of amended agreements with the Ansheng and the Seller which are customary for variable interest entities. The industrial
and commercial modification procedures, as well as the shareholders registration process in the local government agencies, are in progress.
Each of the VIE Agreements is described in
detail below
Consultation and Service Agreement
Under the Consultation and Service Agreement,
WFOE has the exclusive right to provide consultation and services to the operating entities in China in business management, human resource,
technology, and intellectual property rights. WFOE exclusively owns any intellectual property rights arising from the performance of this
Consultation and Service Agreement. The number of service fees and payment terms can be amended by the WFOE and operating companies’
consultation and implementation. The duration of the Consultation and Service Agreement is 20 years. WFOE may terminate this agreement
at any time by giving 30 day’s prior written notice. Under the Consultation and Service Agreement, WFOE has the exclusive right
to provide consultation and services to the operating entities in China in business management, human resource, technology, and intellectual
property rights. WFOE exclusively owns any intellectual property rights arising from the performance of this Consultation and Service
Agreement. The number of service fees and payment terms can be amended by the WFOE and operating companies’ consultation and implementation.
The duration of the Consultation and Service Agreement is 20 years. WFOE may terminate this agreement at any time by giving 30 day’s
prior written notice.
Business Cooperation Agreement
Pursuant to the Business Cooperation Agreement,
WFOE has the exclusive right to provide complete technical support, business support, and related consulting services, including but not
limited to specialized services, business consultations, equipment or property leasing, marketing consultancy, system integration, product
research and development, and system maintenance. WFOE exclusively owns any intellectual property rights arising from the performance
of this Business Cooperation Agreement. The rate of service fees may be adjusted based on the services rendered by WFOE in that month
and the operational needs of the operating entities. The Business Cooperation Agreement shall maintain effective unless it was terminated
or was compelled to release under applicable PRC laws and regulations. WFOE may terminate this Business Cooperation Agreement at any time
by giving 30 day’s prior written notice.
Equity Pledge Agreements
According to the Equity Pledge Agreements among
WFOE, operating entities, and each of operating entities’ shareholders, shareholders of the operating entities pledge all of their
equity interests in the functional entities to WFOE to guarantee their performance of relevant obligations and indebtedness under the
Technical Consultation and Service Agreement and other control agreements. Besides, shareholders of the operating entities are in the
process of registering the equity pledge with the competent local authority.
Equity Option Agreements
According to the Equity Option Agreements, WFOE
has the exclusive right to require each shareholder of the operating companies to fulfill and complete all approval and registration
procedures required under PRC laws for WFOE to purchase or designate one or more persons to buy, each shareholder’s equity interests
in the operating companies, once or at multiple times at any time in part or in whole at WFOE’s sole and absolute discretion. The
purchase price shall be the lowest price allowed by PRC laws. The Equity Option Agreements shall remain effective until all the equity
interest owned by each operating entity shareholder has been legally transferred to WFOE or its designee(s).
Voting Rights Proxy Agreements
According to the Voting Rights Proxy Agreements,
each shareholder irrevocably appointed WFOE or WFOE’s designee to exercise all his or her rights as the shareholders of the operating
entities under the Articles of Association of each operating entity, including but not limited to the power to exercise all shareholder’s
voting rights concerning all matters to be discussed and voted in the shareholders’ meeting. The term of each Voting Rights Proxy
Agreement is 20 years. WOFE has the right to extend each Voting Proxy Agreement by giving written notification.
Based on the foregoing contractual arrangements, The Company consolidates
the accounts of Anhui Ansheng Petrochemical Equipment Co., Ltd and Jilin Chuangyuan Chemical Co., Ltd. in accordance with Regulation S-X-3A-02
promulgated by the Securities Exchange Commission (“SEC”), and Accounting Standards Codification (“ASC”) 810-10,
Consolidation.
Use of Estimates
The financial statements preparation requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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 when the calculations 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 deposits 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. They 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 the 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 believes whether evidence indicating the cost of the asset 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 after 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.
Accounts Receivables
Accounts receivables are recognized and carried
at the original invoice amount less allowance for any uncollectible amounts. An estimate for doubtful accounts is made when the collection
of the total amount is no longer probable. Bad debts are written off as incurred.
Inventories
Inventories consist of raw materials and finished
goods, 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 an 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 | |
| 5-10 years | |
Office equipment | |
| 5-20 years | |
The cost and related accumulated depreciation
of assets sold or otherwise retired are eliminated from the accounts, and any gain or loss is included in the Company’s results of operations.
The costs of maintenance and repairs are recognized as incurred; significant renewals and betterments are capitalized.
Intangible Assets
Intangible assets are carried at cost less accumulated
amortization. Amortization is provided over their useful lives, using the straight-line method. The estimated useful lives of the intangible
assets are as follows:
Land use rights | |
| 50 years | |
Software licenses | |
| 2 years | |
Trademarks | |
| 10 years | |
Construction in Progress and Prepayments for
Equipment
Construction in progress and prepayments for
equipment represent direct and indirect acquisition and construction costs for plants and fees of purchase and installation of related
equipment. Amounts classified as construction in progress and prepayments for equipment are transferred to plant and equipment when substantially
all the activities necessary to prepare the assets for their intended use are completed. Depreciation is not provided for assets classified
in this account.
Goodwill
Goodwill represents the excess of the purchase
price over the fair value of the net identifiable assets acquired in a business combination. The Company conducts an annual assessment
of its goodwill for impairment. If the carrying value of its goodwill exceeds its fair value, then impairment has been incurred; accordingly,
a charge to the Company’s operations results will be recognized during the period. Impairment losses on goodwill are not reversed. 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 become obsolete from a difference in the industry, introduction of new technologies, or if the Company has inadequate working capital
to utilize the long-lived assets to generate 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 of are
reported lower the carrying amount or fair value fewer costs to selling.
Statutory Reserves
Statutory reserves refer to the amount appropriated
from the net income following 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 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. 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.
| |
03/31/2022 | | |
12/31/2021 | | |
03/31/2021 | |
Period-end US$: CAD$ exchange rate | |
| 1.2484 | | |
| 1.2740 | | |
| 1.2624 | |
Period-end US$: RMB exchange rate | |
| 6.3482 | | |
| 6.3757 | | |
| 6.5713 | |
Period-end US$: HK$ exchange rate | |
| 7.8275 | | |
| 7.7981 | | |
| 7.7742 | |
Period average US$: CAD$ exchange rate | |
| 1.2668 | | |
| 1.2531 | | |
| 1.2658 | |
Period average US$: RMB exchange rate | |
| 6.3504 | | |
| 6.4515 | | |
| 6.4844 | |
Period average US$: HK$ exchange rate | |
| 7.8062 | | |
| 7.7729 | | |
| 7.7569 | |
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 adopted ASC 606 “Revenue Recognition.”
It recognizes revenue when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration
we expect to be entitled to in exchange for those goods or services.
The Company derives its revenues from selling
explosion-proof skid-mounted refueling device, SF double-layer buried oil storage tank, high-grade synthetic fuel products, industrial
formaldehyde solution, urea-formaldehyde pre-condensate (UFC), methylal, urea-formaldehyde glue for environment-friendly artificial board
chemicals, food products like frozen fruits, beef & mutton products and vegetables and tea products. The Company applies the following
five steps to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
| ● | identify the contract with a customer; |
| ● | identify the performance obligations in the contract; |
| ● | determine the transaction price; |
| ● | allocate the transaction price to performance obligations
in the contract; and; |
| ● | Recognize revenue as the performance obligation is satisfied. |
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 either expense as incurred or allocated to inventory as part of overhead.
Stock-Based Compensation
The Company records stock compensation expense
for employees at fair value on the grant date and recognizes the expense one time because there is no employee’s requisite service period
requirement.
Income Taxes
The Company accounts for income tax using an
asset and liability approach and recognizes 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 can realize their benefits or uncertain future realization.
Comprehensive Income
The Company uses Financial Accounting Standards
Board (“FASB”) ASC Topic 220, “Reporting Comprehensive Income.” Comprehensive income is comprised of net income and
all changes to the statements of stockholders’ equity, except the changes in paid-in capital and distributions to stockholders due to
investments by stockholders.
Earnings Per Share
The Company computes earnings per share (“EPS”)
following 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 impacts of potentially
convertible securities are calculated using the as-if method; the potentially dilutive effect of options or warranties are computed using
the treasury stock method. Potentially anti-dilutive securities (i.e., those that increase income per share or decrease loss per share)
are excluded from diluted EPS calculation.
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 disclosing the Company’s fair value of financial instruments. 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 qualify
as financial instruments and are a reasonable estimate of their fair values because of the short period 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 information that are observable for the asset or liability, either directly
or indirectly, for substantially the financial instrument’s full term. |
| ● | 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.
Lease
Effective December 31, 2018, Jingshan Sanhe Luckysky
New Energy Technologies Co., Ltd. adopted ASU 2016-02, “Leases” (Topic 842), and elected the practical expedients that
do not require us to reassess: (1) whether any expired or existing contracts are, or contain, leases, (2) lease classification for any
expired or existing leases and (3) initial direct costs for any expired or existing leases. For lease terms of twelve months or fewer,
a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. The Company also adopted the
practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component.
Lease terms used to calculate the present value
of lease payments generally do not include any options to extend, renew, or terminate the lease, as the Company does not have reasonable
certainty at lease inception that these options will be exercised. The Company generally considers the economic life of its operating
lease ROU assets to be comparable to the useful life of similar owned assets. The Company has elected the short-term lease exception,
therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Its leases generally
do not provide a residual guarantee. The operating lease ROU asset also excludes lease incentives. Lease expense is recognized on a straight-line
basis over the lease term.
The Company reviews the impairment of its ROU
assets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived
assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment
of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax
cash flows of the related operations. The Company has elected to include the carrying amount of operating lease liabilities in any tested
asset group and it includes the associated operating lease payments in the undiscounted future pre-tax cash flows.
As of March 31, 2022, there were approximately
$0.48 million right of use (“ROU”) assets and approximately $0.44 million lease liabilities based on the present
value of the future minimum rental payments of leases, using an incremental borrowing rate of 4.75% and 4.90% based on the
duration of lease terms.
Commitments and Contingencies
From time to time, the Company is a party to
various legal actions arising in the ordinary course of business. The majority of these claims and proceedings related to or arise from
commercial disputes. The Company first determine whether a loss from a claim is probable, and if it is reasonable to estimate the potential
loss. The Company accrues costs associated with these matters when they become probable, and the amount can be reasonably estimated.
Legal costs incurred in connection with loss contingencies are expensed as incurred. Also, the Company disclose a range of possible losses,
if a loss from a claim is probable but the amount of loss cannot be reasonably estimated, which is in line with the applicable requirements
of Accounting Standard Codification 450. The Company’s management does not expect any liability from the disposition of such claims
and litigation individually or in the aggregate would have a material adverse impact on the Company’s consolidated financial position,
results of operations and cash flows.
Recent Accounting Pronouncements
In February 2018, the FASB issued ASU 2018-02,
Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive
Income. The amendments in this Update affect any entity required to apply the provisions of Topic 220, Income Statement – Reporting
Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive
income required by GAAP. The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2018,
and interim periods within those fiscal years. Early adoption of the amendments in this Update is permitted, including adoption in any
interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued, and (2)
for all other entities for reporting periods for which financial statements have not however been made available for issuance. The amendments
in this Update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect
of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company does not believe
the adoption of this ASU would affect the Company’s financial statements.
In August 2018, the FASB issued ASU 2018-13,
“Fair Value Measurement (Topic 820), – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value
Measurement,” which makes several changes meant to add, modify or remove specific disclosure requirements associated with the
movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. The amendments in this Update modify
the disclosure requirements on fair value measurements based on the concepts in FASB Concepts Statement, Conceptual Framework for Financial
Reporting—Chapter 8: Notes to Financial Statements, including the consideration of costs and benefits. The amendments on changes
in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value
measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim
or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods
presented upon their effective date. The modifications are effective for all entities for fiscal years beginning after December 15, 2019,
and interim periods within those fiscal years, with early adoption permitted. The Company does not believe the adoption of this ASU would
have a material effect on the Company’s condensed financial statements.
The Company does not believe other recently issued
but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s balance sheets, statements
of income, and comprehensive income and statements of cash flows.
3. Variable Interest Entity (“VIE”)
A VIE is an entity that has either a total equity
investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support or whose
equity investors lack the characteristics of a controlling financial interest, such as through voting rights, right to receive the expected
residual returns of the entity or obligation to absorb the expected losses of the entity. If any, the variable interest holder with a
controlling financial interest in a VIE is deemed the primary beneficiary and must consolidate the VIE. PLAG WOFE is deemed to have the
controlling financial interest and be the primary beneficiary of Anhui Ansheng Petrochemical Equipment Co., Ltd. and Jilin Chuangyuan
Chemical Co., Ltd. because it has both of the following characteristics:
1) The power to direct activities at Anhui Ansheng
Petrochemical Equipment Co., Ltd. and Jilin Chuangyuan Chemical Co., Ltd. that most significantly impact such entity’s economic
performance, and
2) The obligation to absorb losses and the right to receive benefits
from Anhui Ansheng Petrochemical Equipment Co., Ltd and Jilin Chuangyuan Chemical Co., Ltd. that could potentially be significant to such
entity. Under the Contractual Arrangements, Anhui Ansheng Petrochemical Equipment Co., Ltd and Jilin Chuangyuan Chemical Co., Ltd. pay
service fees equal to all of its net income to PLAG WFOE. At the same time, PLAG WFOE is obligated to absorb all of the Anhui Ansheng
Petrochemical Equipment Co., Ltd.’s and Jilin Chuangyuan Chemical Co., Ltd.’s losses. The Contractual Arrangements are designed
to operate Anhui Ansheng Petrochemical Equipment Co., Ltd and Jilin Chuangyuan Chemical Co., Ltd. for the benefit of PLAG WFOE and ultimately,
the Company. Accordingly, the accounts of Anhui Ansheng Petrochemical Equipment Co., Ltd and Jilin Chuangyuan Chemical Co., Ltd. are consolidated
in the accompanying consolidated financial statements. In addition, those financial positions and results of operations are included in
the Company’s consolidated financial statements.
The
carrying amount of VIE’s consolidated assets and liabilities are as follows:
| |
03/31/2022 | | |
12/31/2021 | |
Assets | |
| | |
| |
Current assets | |
| | |
| |
Cash and cash equivalents | |
$ | 45,222 | | |
$ | 67,966 | |
Restricted cash | |
| 958,714 | | |
| 380,750 | |
Accounts receivable, net | |
| 2,050,586 | | |
| 2,660,566 | |
Inventories | |
| 4,550,063 | | |
| 4,244,869 | |
Advances to suppliers | |
| 610,460 | | |
| 310,769 | |
Other receivables | |
| 96,259 | | |
| 118,708 | |
Inter company Receivable | |
| 1,732,775 | | |
| 1,725,302 | |
Other receivables-related parties | |
| 7,491,687 | | |
| 7,650,042 | |
Total current assets | |
| 17,535,766 | | |
| 17,158,972 | |
| |
| | | |
| | |
Non-current assets | |
| | | |
| | |
Plant and equipment, net | |
| 14,719,232 | | |
| 12,554,727 | |
Intangible assets, net | |
| 2,790,618 | | |
| 2,795,048 | |
Construction in progress, net | |
| 36,439 | | |
| 2,475,874 | |
Deferred tax assets | |
| 427,216 | | |
| 425,374 | |
Total non-current assets | |
| 17,973,505 | | |
| 18,251,023 | |
| |
| | | |
| | |
Total assets | |
$ | 35,509,271 | | |
$ | 35,409,995 | |
| |
| | | |
| | |
Liabilities and Stockholders’ Equity | |
| | | |
| | |
Current liabilities | |
| | | |
| | |
Short-term bank loans | |
| 6,713,007 | | |
| 6,822,054 | |
Accounts payable | |
| 3,479,171 | | |
| 3,558,827 | |
Advance from customers | |
| 4,233,851 | | |
| 3,476,585 | |
Taxes payable | |
| 178,661 | | |
| 212,658 | |
Other payables and accrued liabilities | |
| 3,331,883 | | |
| 3,305,395 | |
Intercompany Payable | |
| 6,929,624 | | |
| 7,131,860 | |
Other payables-related parties | |
| 3,975,556 | | |
| 3,958,409 | |
Long term payable-current portion | |
| - | | |
| 126,261 | |
Deferred income | |
| 53,952 | | |
| 58,033 | |
Total current liabilities | |
| 28,895,705 | | |
| 28,650,082 | |
| |
| | | |
| | |
Non-current liabilities | |
| | | |
| | |
Long-term payables | |
| 330,295 | | |
| 222,687 | |
Total non-current liabilities | |
| 330,295 | | |
| 222,687 | |
| |
| | | |
| | |
Total Liabilities | |
$ | 29,226,000 | | |
$ | 28,872,769 | |
| |
| | | |
| | |
Paid-in capital | |
| 12,326,270 | | |
| 12,326,270 | |
Statutory Reserve | |
| 29,006 | | |
| 29,006 | |
Accumulated deficit | |
| (5,640,084 | ) | |
| (5,357,908 | ) |
Accumulated other comprehensive income | |
| (431,921 | ) | |
| (460,142 | ) |
| |
| | | |
| | |
Total stockholders’ equity | |
| 6,283,271 | | |
| 6,537,226 | |
| |
| | | |
| | |
Total liabilities and stockholders’ equity | |
$ | 35,509,271 | | |
$ | 35,409,995 | |
The summarized operating results of the VIE’s are as follows:
| |
03/31/2022 | | |
03/31/2021 | |
Operating revenues | |
$ | 3,961,230 | | |
$ | 2,236,143 | |
Gross profit | |
| 627,333 | | |
| 247,565 | |
Income (loss) from operations | |
| (143,419 | ) | |
| (690,713 | ) |
Net income (loss) | |
$ | (282,176 | ) | |
$ | (655,024 | ) |
4. Restricted Cash
As of March 31, 2022 and 2021, the balance of
restricted cash was $958,714 and $$380,750, respectively. The details of restricted cash refer to the contingency section.
5. Account Receivable, Net
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
| |
03/31/2022 | | |
12/31/2021 | |
Trade accounts receivable | |
$ | 5,017,697 | | |
$ | 5,481,589 | |
Less: Allowance for doubtful accounts | |
| (1,669,498 | ) | |
| (1,662,516 | ) |
| |
$ | 3,348,199 | | |
$ | 3,819,073 | |
Allowance for doubtful accounts | |
| | | |
| | |
Beginning balance: | |
| (1,662,516 | ) | |
| (46,149 | ) |
Additions to allowance | |
| (6,982 | ) | |
| (1,616,367 | ) |
Bad debt written-off | |
| - | | |
| - | |
Ending balance | |
$ | (1,669,498 | ) | |
$ | (1,662,516 | ) |
6. Advances and Prepayments to Suppliers
Prepayments include advance payment to suppliers and vendors to procure raw materials. Prepayments consist of the following:
| |
03/31/2022 | | |
12/31/2021 | |
Payment to suppliers and vendors | |
$ | 6,359,651 | | |
$ | 5,681,083 | |
7. Inventories
Inventories consisted of the following as of
March 31, 2022 and December 31, 2021
| |
03/31/2022 | | |
12/31/2021 | |
Raw materials | |
$ | 2,854,407 | | |
$ | 2,988,855 | |
Inventory of supplies | |
| 12,858 | | |
| 12,587 | |
Work in progress | |
| 3,597,312 | | |
| 3,007,039 | |
Finished goods | |
| 1,577,001 | | |
| 1,807,951 | |
Total | |
$ | 8,041,578 | | |
$ | 7,816,432 | |
8.
Plant and Equipment
Plant and equipment consisted
of the following as of March 31, 2022 and December 31, 2021:
| |
03/31/2022 | | |
12/31/2021 | |
At Cost: | |
| | |
| |
Buildings | |
$ | 17,960,110 | | |
$ | 17,550,376 | |
Machinery and equipment | |
| 13,402,631 | | |
| 11,681,716 | |
Office equipment | |
| 963,052 | | |
| 542,695 | |
Motor vehicles | |
| 1,747,729 | | |
| 1,740,191 | |
| |
| 34,073,522 | | |
| 31,514,978 | |
Less: Impairment | |
| (832,919 | ) | |
| (829,326 | ) |
Less: Accumulated depreciation | |
| (10,780,708 | ) | |
| (10,200,203 | ) |
| |
| 22,459,895 | | |
| 20,485,449 | |
Construction in progress | |
| 42,054 | | |
| 2,475,874 | |
| |
$ | 22,501,949 | | |
$ | 22,961,323 | |
Depreciation expense for the three months ended March 31, 2022 and 2021 was $580,505 and $508,625, respectively.
9. Intangible Assets
| |
03/31/2022 | | |
12/31/2021 | |
At Cost: | |
| | |
| |
Land use rights | |
| 4,139,342 | | |
| 4,121,488 | |
Software licenses | |
| 87,608 | | |
| 86,359 | |
Trademark | |
| 997,551 | | |
| 993,248 | |
| |
$ | 5,224,501 | | |
$ | 5,201,095 | |
Less: Accumulated amortization | |
| (1,063,640 | ) | |
| (1,001,444 | ) |
| |
$ | 4,160,861 | | |
$ | 4,199,651 | |
Amortization expense for the three months
ended March 31, 2022 and 2021 was $62,196 and $46,937 respectively.
10. Investments
As of March 31, 2022, The Company has paid approximately $3,150,499
and purchased 20% of Shandong Ningwei New Energy Technology Co., Ltd.’s total equity for investments purpose. Based on ASU 2016-01, an
entity will be able to elect to record equity investments without readily determinable fair values and not accounted for by the equity
method at cost, less impairment, adjusted for subsequent observable price changes. Entities that elect this measurement alternative will
report changes in the carrying value of the equity investments in current earnings
As of March 31, 2022, the Company has spent $7,804,606
to purchase real estates, a commercial complex, for the start-up of the tea trade project, which project has been included in Xianning
City government’s 13th Five-Year Development Plan. The Company plans to hold this real estate to earn rentals income.
As of March 31, 2022, the company paid $2,740,934
in advance to purchase the remaining 15% equity of Jingshan Subsidiary, and the industrial and commercial modification procedures, as
well as the shareholders registration process in the local government agencies, are in progress.
11. Other Payable
As of March 31, 2022 and December 31, 2021, the
balance of other payable was $5,049,640 and $8,635,189. Other payables – third parties are those non-trade payables arising from
transactions between the Company and certain third parties.
12. Related Parties Transaction
As of March 31, 2022 and December 31, 2021, the
outstanding balance due from related parties was $7,625,906 and $7,670,434, respectively. Significant related parties comprised much
of the total outstanding balance as of March 31, 2022 are stated below:
The outstanding balance of $4,489,462 was due
from Mr. Cai Xiaodong, the shareholder of the Anhui Ansheng Petrochemical Equipment Co., Ltd.;
The outstanding balance of $502,037 was due from
Meihekou Chuangyuan Chemical Co. Ltd., which has the same legal representative as Jilin branch.
The outstanding balance of $2,375,106 was due from Wuxi Xinganbang
Petrochemical Equipment Co., Ltd., which has significant influence on Ansheng branch.
The outstanding balance of $259,032 was due from
a couple of individuals, which has significant influence on the subsidiaries of the Company.
These above nontrade receivables arising from
transactions between the Company and certain related parties, such as loans to these related parties. These loans are unsecured, non-interest
bearing and due on demand.
As of March 31, 2022 and December 31, 2021, the
outstanding balance due to related parties was $9,071,764 and $5,196,225, respectively. Significant parties comprised much of the total
outstanding balance as of March 31, 2022 are stated below:
The outstanding balance of $1,082,197was due to
Ms. Yan Yan, the spouse of the legal representative of Jilin Chuangyuan Chemical Co., Ltd.;
The outstanding balance of $2,102,862 was due
to Mr. Su Lei, the executive of Anhui Ansheng Petrochemical Equipment Co., Ltd.;
The outstanding balance of $4,348,463 was due
to Mr.Cai Xiaodong, the shareholder of the Anhui Ansheng Petrochemical Equipment Co., Ltd.;
The outstanding balance of $354,431 was due to
Wuxi Yangchang Chemical Machinery Factory, which has significant influence on Ansheng branch;
The outstanding balance of $96,315 was due to Hubei Shuangxin Energy
Technology Co., Ltd., which has the same legal representative as Jinshangsanhe branch;
The outstanding balance of $1,087,495 was due
to a couple of executives of the subsidiaries of the Company;
The balance was advanced for working capital
of the Company, non-interest bearing, and unsecured unless further disclosed.
13. Goodwill
The changes in the carrying amount of goodwill
by reportable segment are as follows:
| |
Ansheng | | |
Fast | | |
JSSH | | |
JLCY | | |
SDYC | |
Balance as of December 31, 2020 | |
| - | | |
| 2,340,111 | | |
| - | | |
| - | | |
| - | |
Goodwill acquired through acquisition | |
$ | 10,263,937 | | |
| - | | |
| 923,313 | | |
| 3,191,897 | | |
| 4,724,698 | |
Goodwill impairment | |
| - | | |
| (2,340,111 | ) | |
| (923,313 | ) | |
| - | | |
| - | |
Balance as of December 31, 2021 | |
$ | 10,263,937 | | |
| - | | |
| - | | |
| 3,191,897 | | |
| 4,724,698 | |
Goodwill acquired through acquisition | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Goodwill impairment | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Balance as of March 31, 2022 | |
$ | 10,263,937 | | |
| - | | |
| - | | |
| 3,191,897 | | |
| 4,724,698 | |
The goodwill related to the acquisition of Fast
Approach was impaired as the result of actual financial performance being less than that originally forecasted and estimates of future
cash flows are at the time of this report, are expected to be less than previously estimated. The global COVID 19 pandemic was a significant
macroeconomic factor that contributed to the downward revisions of previous estimation and forecasts; accordingly, after management considered
different factors including COVID 19 and performed an analysis by discounting future cash flows, it determined that the fair value of
the Fast unit was less than the carrying value; therefore, the Company recorded impairment of goodwill to reflect the difference between
fair value and the then previously unimpaired carrying value. Management will continue to monitor for additional deterioration of cash
flows.
Goodwill related to JSSH was written off in its
entirety as the unit experienced operating losses in the years ended December 31, 2021 and 2020, and based on past performance as guidance
for future performance, management determined that discounted expected future cash flows and profitability from the unit were enough
to support the carrying value for synergies that were expected to be realized when the Company originally acquired the unit.
14. Bank Loans
The outstanding balances on short-term bank loans
consisted of the following:
| |
| | |
Weighted
Average | | |
| | |
| |
Lender | |
Maturities | | |
interest rate | | |
03/31/2022 | | |
12/31/2021 | |
Rural Credit Cooperatives of Jilin Province, Jilin Branch | |
| Due in November 2023 | | |
| 7.83 | % | |
| 3,938,124 | | |
| 3,921,138 | |
| |
| | | |
| | | |
| | | |
| | |
Loan from Anhui Langxi Rural Commercial Bank Of China | |
| Due in December 2021 | | |
| 3.85 | % | |
| 2,774,883 | | |
| 2,900,916 | |
Buildings and land use rights in the amount of
$10,178,520 are used as collateral for Jilin Branch. The short-term bank loan which is denominated in Renminbi was primarily obtained
for general working capital.
The loan from Anhui Langxi Rural Commercial Bank of China, Ansheng
Branch was credit line obtained for general working capital. As of March 31, 2022, the loan was overdue and the Company proposed to extend
maturities on this loan. During the subsequent period, the Company is negotiating a loan extension with its banks and
it is probable that the bank routinely keeps rolling over debt to keep the Company’s liquidity.
Anhui Langxi Rural Commercial Bank’s bank
loan has been guaranteed by Anhui Langxi Small and Medium Enterprise Financing Guarantee Co., Ltd. to which Ansheng branch provides the
plant with book value of $3,812,106 as the collateral.
15. Advance from Customers
The proceeds which are received in advance of
the delivery of goods pursuant to applicable contracts, are initially recorded as advance from customer. As of March 31, 2022 and December
31, 2021, the balance of advance from customers was approximately $7,362,280 and $6,190,091, respectively.
16. Equity
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. Under 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.
On June 17, 2019, the Company entered into a
securities purchase agreement, under which five individuals residing in the PRC agreed to purchase an aggregate of 1,300,000 shares of
the Company’s common stock, par value $0.001 per share, for an aggregate purchase price of $5,460,000, representing a purchase
price of $4.20 per share. The transaction closed on June 19, 2019.
On February 10, 2020, the Company entered into
a securities purchase agreement with Mengru Xu and Zhichao Du, according to which Ms. Xu and Mr. Du agreed to invest an aggregate of
$3.51 million in the Company in exchange for an aggregate of 1,350,000 shares of common stock, representing a purchase price of approximately
$2.60 per share. On February 28, 2020, the Company closed the transaction.
On June 5, 2020, the Company issued an aggregate
of 1,800,000 shares of its common stock to acquire all the outstanding equity interest of Fast Approach Inc., a corporation incorporated
under the laws of Canada and in the business of operating a demand side platform targeting the Chinese education market in North America.
On December 30, 2020, the Company issued a total
of 782,165 ordinary shares to six employees of the Company. Total fair value of these ordinary shares was approximately $1.75 million
and the compensation expenses are to be recognized in the fiscal year 2020 because there is no employee’s requisite service period
requirement.
On January 4, 2021, the Company issued an aggregate
of 2,200,000 shares of its common stock to the original shareholders of Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd in exchange
for the transfer of 85% of the equity interests of Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd to the Company.
On January 26, 2021, the Company entered into
a Securities Purchase Agreement, pursuant to which three individuals residing in the People’s Republic of China agreed to purchase
an aggregate of 2,700,000 shares of the Company’s common stock, par value $0.001 per share, for an aggregate purchase price of
$6,750,000, representing a purchase price of $2.50 per Share.
On March 9, 2021, the Company issued an aggregate
of 3,300,000 shares of common stock of the Company to the original shareholder of Jilin Chuangyuan Chemical Co., Ltd. in exchange for
the transfer of 75% of the equity interest of Jilin Chuangyuan Chemical Co., Ltd. to the Company.
On April 26, 2021, the Company has entered into
a Share Purchase Agreement with three investors, Pursuant to the agreement, the Company will receive gross proceeds of $7,600,000 in the
aggregate, in exchange for the issuance of an aggregate of 4,000,000 shares of the Company’s common stock, representing a purchase
price of approximately $1.90 per share.
On July 15, 2021, the Company has issued an aggregate
of 4,800,000 shares of common stock of the Company to the equity holders of Anhui Ansheng Petrochemical Equipment Co., Ltd. in exchange
for the transfer of 66% of the equity interest of Anhui Ansheng Petrochemical Equipment Co., Ltd. to the Company.
On July 30, 2021, the Company issued a total of
872,000 ordinary shares to seven employees of the Company. Total fair value of these common shares was approximately $1.16 million. The
compensation expenses are to be recognized in the fiscal year 2021 because there is no employee’s requisite service period requirement.
On December 30, 2021, The Company issued an aggregate
of 5,900,000 shares of common stock to the equity holders of A Shandong Yunchu Supply Chain Co., Ltd. for the transfer to 100% of the
equity interest of Shandong Yunchu Supply Chain Co., Ltd. to the Jiayi Technologies (Xianning) Co., Ltd.
On January 13, 2022, the Company entered into a Securities Purchase
Agreement, pursuant to which three individuals residing in the People’s Republic of China agreed to purchase an aggregate of 7,000,000
shares of the Company’s common stock, par value $0.001 per share, for an aggregate purchase price of $7,000,000, representing a
purchase price of $1.00 per Share.
As of March 31, 2022, there were 42,581,930 shares
of common stock outstanding.
17. 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, 2022 and 2021:
| |
03/31/2022 | | |
03/31/2021 | |
Loss attributed to PRC operations | |
$ | (696,122 | ) | |
$ | (1,491,316 | ) |
Loss attributed to U.S. operations | |
| (387,369 | ) | |
| - | |
Loss attributed to Canada operations | |
| (88,545 | ) | |
| - | |
Income attributed to BVI | |
| - | | |
| - | |
Loss before tax | |
$ | (1,172,036 | ) | |
$ | (1,491,316 | ) |
| |
| | | |
| | |
PRC Statutory Tax at 25% Rate | |
| (174,031 | ) | |
| - | |
Effect of tax exemption granted | |
| - | | |
| - | |
Valuation allowance | |
| 263,434 | | |
| - | |
Income tax | |
$ | 89,403 | | |
$ | - | |
Per Share Effect of Tax Exemption | |
| | | |
| | |
Effect of tax exemption granted | |
$ | - | | |
$ | - | |
Weighted-Average Shares Outstanding Basic | |
| 41,648,597 | | |
| 16,729,930 | |
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 March 31, 2022 and 2021:
| |
03/31/2022 | | |
03/31/2021 | |
U.S. federal statutory income tax rate | |
| 21 | % | |
| 21 | % |
Higher (lower) rates in PRC, net | |
| 4 | % | |
| 4 | % |
Non-recognized deferred tax benefits in the PRC | |
| (25.08 | )% | |
| (25.00 | )% |
The Company’s effective tax rate | |
| (0.08 | )% | |
| - | % |
18. Earnings/(Loss) Per Share
Components of basic and diluted earnings per share
were as follows:
| |
For the three months ended | |
| |
March 31, | |
| |
2022 | | |
2021 | |
Loss from operations attributable to common stockholders | |
$ | (1,229,777 | ) | |
$ | (1,388,463 | ) |
| |
| | | |
| | |
Basic and diluted (loss) earnings per share denominator: | |
| | | |
| | |
Original Shares at the beginning: | |
| 35,581,930 | | |
| 11,809,930 | |
Additions from Actual Events -issuance of common stock for cash | |
| 6,066,667 | | |
| 2,126,667 | |
Additions from Actual Events – issuance of common stock for acquisition | |
| - | | |
| 1,950,000 | |
Additions from Actual Events – issuance of common stock for stock compensation | |
| - | | |
| 843,333 | |
Basic Weighted Average Shares Outstanding | |
| 41,648,597 | | |
| 16,729,930 | |
| |
| | | |
| | |
(Loss) income per share attributable to common shareholders
- Basic and diluted | |
$ | (0.03 | ) | |
$ | (0.08 | ) |
Basic and diluted weighted average shares outstanding | |
| 41,648,597 | | |
| 16,729,930 | |
19. Concentrations
Customers
Concentrations:
The following table sets forth information about
each customer that accounted for 10% or more of the Company’s revenues for the three months ended March 31, 2022 and 2021.
| |
For the periods ended | |
| |
31-Mar-22 | | |
31-Mar-21 | |
Customers | |
Amount $ | | |
% | | |
Amount $ | | |
% | |
A | |
| - | | |
| - | | |
| 466,724 | | |
| 21 | |
B | |
| - | | |
| - | | |
| 417,102 | | |
| 19 | |
C | |
| - | | |
| - | | |
| 336,214 | | |
| 15 | |
D | |
| 1,441,054 | | |
| 12 | | |
| - | | |
| - | |
Suppliers Concentrations
The following table sets forth information about
each supplier that accounted for 10% or more of the Company’s purchase for the three months ended March 31, 2022 and 2021.
| |
For the years ended | |
| |
31-Mar-22 | | |
31-Mar-21 | |
Suppliers | |
Amount $ | | |
% | | |
Amount $ | | |
% | |
A | |
| 1,612,681 | | |
| 12 | | |
| 1,674,677 | | |
| 75 | |
B | |
| 4,205,805 | | |
| 32 | | |
| - | | |
| - | |
C | |
| 1,516,012 | | |
| 12 | | |
| - | | |
| - | |
20. Lease commitment
Effective December 31, 2018, the Company adopted ASU 2016-02, “Leases”
(Topic 842), and elected the package of practical expedients that does not require us to reassess: (1) whether any expired or existing
contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired
or existing leases. The Company adopted the practical expedient that allows lessees to treat the lease and non-lease components of a
lease as a single lease component.
The Company had a land, facilities and factory
lease agreement with a 5-year lease term starting in April 2018 until April 2023. Upon adoption of ASU 2016-02, the Company recognized
lease liabilities of approximately $0.82 million, with corresponding Right-of-Use (ROU) assets of the same amount based on the present
value of the future minimum rental payments of the new lease, using an effective interest rate of 4.75%, which is determined using an
incremental borrowing rate.
The weighted average remaining lease term of its existing leases is 1.08 years.
The Company’s lease agreements do not contain
any material residual value guarantees or material restrictive covenants.
For the three months ended March 31, 2022 and 2021, rent expenses
amounted to $112,335 and $ 110,013 respectively.
The five-year maturity of the Company’s lease obligations is
presented below:
Twelve months ended December 31, | |
Operating lease amount | |
2022 | |
| 337,005 | |
2023 | |
| 149,780 | |
Total lease payment | |
| 486,785 | |
Less: interest | |
| (43,592 | ) |
Present value of lease liabilities | |
$ | 443,193 | |
21. 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 the 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. |
22. Segment Reporting
The Company follows ASC 280, Segment Reporting,
which requires that companies disclose segment data based on how management makes the decision about allocating resources to segments
and evaluating their performance. The Company’s management assesses performance and determines resource allocations based on several
factors, the primary measure being income from operations.
The Company’s primary business segment
and operations are Shandong Yunchu, Jingshan Sanhe, Anhui Ansheng, Jilin Chuangyuan, Xianning Bozhuang and Fast Approach. The Company’s
consolidated operations and consolidated financial position from continuing operations are almost all attributable to Shandong Yunchu,
Jingshan Sanhe, Anhui Ansheng, Jilin Chuangyuan, Xianning Bozhuang and Fast Approach. Accordingly, management believes that the consolidated
balance sheets and statement of operations provide the relevant information to assess Shandong Yunchu, Jingshan Sanhe, Anhui Ansheng,
Jilin Chuangyuan, Xianning Bozhuang and Fast Approach’s performance.
Segment reporting | |
03/31/2022 | | |
12/31/2021 | |
Fast Approach and Shanghai Shuning | |
$ | 271,814 | | |
$ | 387,145 | |
Xianning Bozhuang | |
| 10,997,825 | | |
| 10,987,674 | |
Jingshan Sanhe | |
| 5,797,902 | | |
| 6,069,282 | |
Anhui Ansheng | |
| 17,766,087 | | |
| 17,298,525 | |
Jilin Chuangyuan | |
| 16,010,409 | | |
| 16,386,168 | |
Jiayi Technologies (Xianning) Co., Ltd. | |
| 14,317,087 | | |
| 12,378,147 | |
Shandong Yunchu | |
| 4,713,139 | | |
| 4,094,723 | |
Planet Green Holdings Corporation | |
| 16,273,579 | | |
| 16,413,420 | |
Lucky Sky Planet Green Holdings Co., Limited (H.K.). | |
| 1,992,967 | | |
| 2,000,496 | |
Total Assets | |
$ | 88,140,809 | | |
$ | 86,015,580 | |
23. Contingencies
From time to time, the Company is a party to various
legal actions arising in the ordinary course of business. In November 2021, the claim occurred between Ansheng and Beijing Aerospace Star
Technology Co., Ltd. due to the dispute over the commercial contracts. On November 16, 2021, Beijing Aerospace Star Technology Co., Ltd.
applied for pre-litigation custody of property preservation with the local people’s Court of Langxi County, freezing Ansheng’s
available cash of $418,056 before filing the action. The liabilities amounts have been accrued in the accompanying consolidated financial
statements as of March 31, 2022.
As of March 31, 2022, the loan from Anhui Langxi
Rural Commercial Bank of China was overdue and the Company proposed to extend maturities on this loan. During the subsequent period, the
Company is negotiating a loan extension with its banks and it is probable that the bank routinely keeps
rolling over debt to keep the Company’s liquidity.
The Plaintiff (Wuxi Suxin Natural Gas Utilization Co., Ltd.) sued for
that the defendants (Anhui Xuanneng Natural Gas Energy Equipment Co., Ltd, Anhui Ansheng Petrochemical Equipment Co., Ltd and other related
individuals) have damaged the interest of creditors and the defendant should restitute the plaintiff’s mortgage loan principal as
well as the interest. The case has now been transferred to the Changfeng County Court of Anhui Province for processing. Meanwhile, due
to the impact of this case, Ansheng Company’s available cash of $540,658 was temporarily frozen by the court. There was a few solid
evidence proves that Anhui Ansheng Petrochemical Equipment Co., Ltd. and Anhui Xuanneng Natural Gas Energy Equipment Co., Ltd. are independent
entities, management believes the possibility of unfavorable outcome occur is remote and there was not any negative or any contingence
or commitment impact on this quarter Financial statements.
24. Subsequent Events
The Company has assessed all events from March
31, 2022 up through May 13, 2022, which is the date that these unaudited condensed consolidated financial statements are available to
be issued, unless as disclosed below, there are not any material subsequent events that require disclosure in these unaudited condensed
consolidated financial statements.
On April 8, 2022, Planet Green Holdings Corp
and Jiayi Technologies (Xianning) Co., Ltd., a subsidiary of the Company, entered into a Share Exchange Agreement with Allinyson Ltd.,
and each of shareholders of the Allinyson Ltd., pursuant to which, among other things and subject to the terms and conditions contained
therein, the Subsidiary agreed to effect an acquisition of the Allinyson Ltd. by acquiring from the Sellers 100% of the outstanding equity
interests of the Allinyson Ltd. The Allinyson Ltd. develops and operates online games, and sells advertising placements. On April 18,
2022, the parties completed the transaction.