ITEM
1. FINANCIAL STATEMENTS
|
|
PLANET
GREEN HOLDINGS CORP.
|
|
UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
|
SEPTEMBER
30, 2019 AND DECEMBER 31, 2018
|
|
(Stated
in US Dollars)
|
PLANET
GREEN HOLDINGS CORP.
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
AT
SEPTEMBER 30, 2019 AND DECEMBER 31, 2018
|
(Stated
in US Dollars)
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,697,878
|
|
|
$
|
1,062,643
|
|
Trade receivables, net
|
|
|
1,260,381
|
|
|
|
6,528,072
|
|
Inventories
|
|
|
1,810,489
|
|
|
|
-
|
|
Advances and prepayments to suppliers
|
|
|
8,486,399
|
|
|
|
7,381,785
|
|
Other receivables and other current assets
|
|
|
265,346
|
|
|
|
16,316
|
|
Related party receivable
|
|
|
2,114
|
|
|
|
2,208
|
|
Discontinued operations - current assets held for sale
|
|
|
-
|
|
|
|
-
|
|
Total current assets
|
|
$
|
14,522,607
|
|
|
$
|
14,991,024
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Plant and equipment, net
|
|
|
4,818,733
|
|
|
|
1,371,518
|
|
Construction in progress, net
|
|
|
815,653
|
|
|
|
846,441
|
|
Intangible assets, net
|
|
|
1,319,090
|
|
|
|
|
|
Deposits
|
|
|
1,808
|
|
|
|
1,477
|
|
Total Non-Current Assets
|
|
$
|
6,955,284
|
|
|
$
|
2,219,436
|
|
Total Assets
|
|
$
|
21,477,891
|
|
|
$
|
17,210,460
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
1,233,255
|
|
|
$
|
579,228
|
|
Taxes payable
|
|
|
59,626
|
|
|
|
155,135
|
|
Accrued liabilities and other payables
|
|
|
1,813,202
|
|
|
|
496,799
|
|
Customers deposits
|
|
|
396,102
|
|
|
|
3,499
|
|
Related party payable
|
|
|
92,386
|
|
|
|
78,656
|
|
Discontinued operations - liabilities
|
|
|
3,438,198
|
|
|
|
8,607,813
|
|
Total current liabilities
|
|
$
|
7,032,769
|
|
|
$
|
9,921,130
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
Preferred Stock, $0.001 par value, 5,000,000 shares authorized; 0 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively
|
|
$
|
-
|
|
|
$
|
-
|
|
Common Stock, $0.001 par value, 200,000,000 shares authorized; 7,877,765 and 5,497,765 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively
|
|
|
7,878
|
|
|
|
5,498
|
|
Additional paid-in capital
|
|
|
85,785,003
|
|
|
|
74,739,031
|
|
Statutory reserves
|
|
|
2,810,953
|
|
|
|
2,810,953
|
|
Accumulated deficit
|
|
|
(82,305,001
|
)
|
|
|
(79,038,883
|
)
|
Accumulated other comprehensive income
|
|
|
9,165,841
|
|
|
|
9,792,283
|
|
Non-controlling interests
|
|
|
(1,019,552
|
)
|
|
|
(1,019,552
|
)
|
Total Stockholders’ Equity
|
|
$
|
14,445,122
|
|
|
$
|
7,289,330
|
|
Total Liabilities and Stockholders’ Equity
|
|
$
|
21,477,891
|
|
|
$
|
17,210,460
|
|
See
Accompanying Notes to the Financial Statements
PLANET
GREEN HOLDINGS CORP.
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
AND
COMPREHENSIVE INCOME (LOSS)
|
FOR
THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER
30,
2019 AND 2018
|
(Stated
in US Dollars)
|
|
|
For the three months ended
|
|
|
For the nine months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
669,906
|
|
|
$
|
744,131
|
|
|
$
|
2,600,160
|
|
|
$
|
2,461,448
|
|
Cost of revenues
|
|
|
625,982
|
|
|
|
574,278
|
|
|
|
2,177,428
|
|
|
|
1,617,308
|
|
Gross profit
|
|
|
43,924
|
|
|
|
169,853
|
|
|
|
422,732
|
|
|
|
844,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing expenses
|
|
|
8,325
|
|
|
|
8,953
|
|
|
|
27,715
|
|
|
|
61,945
|
|
General and administrative expenses
|
|
|
3,033,573
|
|
|
|
743,200
|
|
|
|
3,621,514
|
|
|
|
1,483,803
|
|
Total operating expenses
|
|
|
3,041,898
|
|
|
|
752,153
|
|
|
|
3,649,229
|
|
|
|
1,545,748
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(2,997,974
|
)
|
|
|
(582,300
|
)
|
|
|
(3,226,497
|
)
|
|
|
(701,608
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
2
|
|
|
|
-
|
|
|
|
172
|
|
|
|
245
|
|
Interest expense
|
|
|
4,583
|
|
|
|
(712,686
|
)
|
|
|
(11,406
|
)
|
|
|
(713,409
|
)
|
Other income
|
|
|
30,867
|
|
|
|
|
|
|
|
29,260
|
|
|
|
9,089
|
|
Other expenses
|
|
|
81
|
|
|
|
(8,618,204
|
)
|
|
|
(5,685
|
)
|
|
|
(8,634,106
|
)
|
Loss from investment
|
|
|
|
|
|
|
56,703,834
|
|
|
|
|
|
|
|
56,714,094
|
|
|
|
|
35,533
|
|
|
|
47,372,944
|
|
|
|
12,341
|
|
|
|
47,375,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) Loss before taxes from continuing operations
|
|
|
(2,962,441
|
)
|
|
|
46,790,644
|
|
|
|
(3,214,156
|
)
|
|
|
46,674,305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
(4,133
|
)
|
|
|
(49,336
|
)
|
|
|
51,962
|
|
|
|
(49,336
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
(2,958,308
|
)
|
|
|
46,839,980
|
|
|
|
(3,266,118
|
)
|
|
|
46,723,641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Income (loss) from discontinued operations, net of taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(2,958,308
|
)
|
|
$
|
46,839,980
|
|
|
$
|
(3,266,118
|
)
|
|
$
|
46,723,641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Common shareholders
|
|
|
(2,958,308
|
)
|
|
|
46,839,980
|
|
|
|
(3,266,118
|
)
|
|
|
46,723,641
|
|
- Non-controlling interests
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation gain (loss)
|
|
|
(564,619
|
)
|
|
|
5,839,990
|
|
|
|
(626,442
|
)
|
|
|
(5,700,817
|
)
|
Comprehensive income (loss)
|
|
$
|
(3,522,927
|
)
|
|
$
|
52,679,970
|
|
|
$
|
(3,892,560
|
)
|
|
$
|
41,022,824
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and diluted
|
|
|
(0.38
|
)
|
|
|
17.26
|
|
|
|
(0.46
|
)
|
|
|
20.39
|
|
Income (loss) per share from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and diluted
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and diluted
|
|
|
(0.38
|
)
|
|
|
17.26
|
|
|
|
(0.46
|
)
|
|
|
20.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding
|
|
|
7,877,765
|
|
|
|
2,713,632
|
|
|
|
7,111,136
|
|
|
|
2,291,075
|
|
See
Accompanying Notes to the Financial Statements
PLANET
GREEN HOLDINGS CORP.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’
EQUITY/(DEFICIENCY)
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(Stated
in US Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
Other
|
|
|
Non-
|
|
|
|
|
|
|
of
|
|
|
Common
|
|
|
Paid-in
|
|
|
Statutory
|
|
|
Accumulated
|
|
|
Comprehensive
|
|
|
Controlling
|
|
|
|
|
|
|
Shares
|
|
|
Stock
|
|
|
Capital
|
|
|
Reserves
|
|
|
Deficit
|
|
|
Income
|
|
|
Interests
|
|
|
Total
|
|
Balance, January 1, 2018
|
|
|
1,530,980
|
|
|
$
|
1,531
|
|
|
$
|
57,888,993
|
|
|
$
|
25,103,354
|
|
|
$
|
(99,628,547
|
)
|
|
$
|
13,588,726
|
|
|
$
|
(7,745,353
|
)
|
|
$
|
(10,791,296
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
46,723,641
|
|
|
|
-
|
|
|
|
-
|
|
|
|
46,723,641
|
|
Issuance of shares for acquisition
|
|
|
400,000
|
|
|
|
400
|
|
|
|
1,399,600
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,400,000
|
|
Issuance of common stock for cash
|
|
|
1,212,000
|
|
|
|
1,212
|
|
|
|
5,536,293
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,537,505
|
|
Disposition
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(22,292,401
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
7,745,353
|
|
|
|
(14,547,048
|
)
|
Reorganization
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,591,566
|
|
|
|
2,591,566
|
|
Allocation to non-controlling interests
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(484
|
)
|
|
|
-
|
|
|
|
484
|
|
|
|
-
|
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,700,817
|
)
|
|
|
-
|
|
|
|
(5,700,817
|
)
|
Balance, September 30, 2018
|
|
|
3,142,980
|
|
|
|
3,143
|
|
|
|
64,824,886
|
|
|
|
2,810,953
|
|
|
|
(52,905,390
|
)
|
|
|
7,887,909
|
|
|
|
2,592,050
|
|
|
|
25,213,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2019
|
|
|
5,497,765
|
|
|
$
|
5,498
|
|
|
$
|
74,739,031
|
|
|
$
|
2,810,953
|
|
|
$
|
(79,038,883
|
)
|
|
$
|
9,792,283
|
|
|
$
|
(1,019,552
|
)
|
|
$
|
7,289,330
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,266,118
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,266,118
|
)
|
Issuance of shares for acquisition
|
|
|
1,080,000
|
|
|
|
1,080
|
|
|
|
4,783,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,784,292
|
|
Issuance of common stock for cash
|
|
|
1,300,000
|
|
|
|
1,300
|
|
|
|
5,458,700
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,460,000
|
|
Allocation to non-controlling interests
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Acquiring corporation
|
|
|
|
|
|
|
|
|
|
|
804,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
804,060
|
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(626,442
|
)
|
|
|
-
|
|
|
|
(626,442
|
)
|
Balance, September 30, 2019
|
|
|
7,877,765
|
|
|
$
|
7,878
|
|
|
$
|
85,785,003
|
|
|
$
|
2,810,953
|
|
|
$
|
(82,305,001
|
)
|
|
$
|
9,165,841
|
|
|
$
|
(1,019,552
|
)
|
|
$
|
14,445,122
|
|
See
Accompanying Notes to the Financial Statements
PLANET
GREEN HOLDINGS CORP.
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
|
(STATED
IN US DOLLARS)
|
|
|
For the nine months ended
|
|
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
Net loss (income)
|
|
$
|
(3,266,118
|
)
|
|
$
|
46,723,641
|
|
Gain from disposal of investment and subsidiaries
|
|
|
-
|
|
|
|
(61,185,851
|
)
|
Adjustment to retained earnings as a result of disposal of subsidiaries
|
|
|
-
|
|
|
|
(97,172
|
)
|
Amortization
|
|
|
199,532
|
|
|
|
24,291
|
|
Depreciation
|
|
|
339,549
|
|
|
|
31,204
|
|
Increase in accounts and other receivables
|
|
|
321,349
|
|
|
|
(1,211,552
|
)
|
Decrease in related party receivables
|
|
|
14
|
|
|
|
33,654,245
|
|
Increase in inventory
|
|
|
(348,417
|
)
|
|
|
(340,243
|
)
|
(Increase) / decrease
in prepayments and other current assets
|
|
|
(1,328,065
|
)
|
|
|
111,290
|
|
(Decrease) / increase in payables and other current liabilities
|
|
|
(2,917,687
|
)
|
|
|
1,891,650
|
|
Increase / (decrease) in related party payable
|
|
|
96,078
|
|
|
|
(28,028,524
|
)
|
Net cash used in operating activities
|
|
$
|
(6,903,765
|
)
|
|
$
|
(8,427,021
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
Decrease / (increase) in restricted cash
|
|
|
-
|
|
|
|
(460,569
|
)
|
Purchase of short-term investments
|
|
|
-
|
|
|
|
(3,815,541
|
)
|
Purchase of plant and equipment and construction in progress
|
|
|
(136,915
|
)
|
|
|
(2,401
|
)
|
Sale of intangible assets
|
|
|
62,520
|
|
|
|
1,068,320
|
|
Payment for deposits
|
|
|
-
|
|
|
|
(2,216,906
|
)
|
Net cash used in investing activities
|
|
$
|
(74,395
|
)
|
|
$
|
(5,427,097
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
9,803,433
|
|
|
|
15,521,655
|
|
Repayment of borrowings
|
|
|
(1,112,958
|
)
|
|
|
-
|
|
Proceeds from related party receivables
|
|
|
-
|
|
|
|
(1,593,387
|
)
|
Net cash provided by financing activities
|
|
$
|
8,690,475
|
|
|
$
|
13,928,268
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
1,712,315
|
|
|
|
74,150
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign currency translation on cash and cash equivalents
|
|
|
(93,967
|
)
|
|
|
(50,288
|
)
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents–beginning of year
|
|
|
1,079,530
|
|
|
|
85,493
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents–end of year
|
|
$
|
2,697,878
|
|
|
$
|
109,355
|
|
|
|
|
|
|
|
|
|
|
Supplementary cash flow information:
|
|
|
|
|
|
|
|
|
Interest received
|
|
$
|
172
|
|
|
$
|
245
|
|
Interest paid
|
|
$
|
11,406
|
|
|
$
|
-
|
|
Income taxes paid
|
|
$
|
-
|
|
|
$
|
-
|
|
See
Accompanying Notes to the Financial Statements
PLANET
GREEN HOLDINGS CORP.
|
(F/K/A
AMERICAN LORAIN CORPORATION)
|
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(Stated
in US Dollars)
|
|
1.
|
Organization
and Principal Activities
|
Planet
Green Holdings Corp. (the “Company” or “PLAG”), a Nevada corporation, engages in the business of growing,
developing, manufacturing, and marketing fresh foods, spices, convenience foods and tea products through its subsidiaries and
VIEs in China.
|
2.
|
Summary
of Significant Accounting Policies
|
Method
of accounting
Management
has prepared the accompanying financial statements and these notes in accordance to generally accepted accounting principles in
the United States (“GAAP”). The Company maintains its general ledger and journals with the accrual method accounting.
Principles
of consolidation
The
accompanying consolidated financial statements include the assets, liabilities, and results of operations of the Company, and
its subsidiaries, which are listed below:
|
|
Place of
|
|
Attributable equity
|
|
|
Registered
|
|
Name of company
|
|
incorporation
|
|
interest %
|
|
|
capital
|
|
Planet Green Holdings Corporation
|
|
British Virgin Islands
|
|
|
100
|
|
|
$
|
10,000
|
|
Lucky Sky Holdings Corporations (HK) Limited
|
|
Hong Kong
|
|
|
100
|
|
|
|
1,277
|
|
Shanghai Xunyang Internet Technology Co., Ltd.
|
|
PRC
|
|
|
100
|
|
|
|
669,919
|
|
Lucky Sky Petrochemical Technology (Xianning) Co., Ltd.
|
|
PRC
|
|
|
100
|
|
|
|
14,242,782
|
|
Beijing Green Foodstuff Co., Ltd.
|
|
PRC
|
|
|
VIE
|
|
|
|
1,540,666
|
|
Luotian Green Foodstuff Co., Ltd.
|
|
PRC
|
|
|
VIE
|
|
|
|
3,797,774
|
|
Shandong Greenpia Foodstuff Co., Ltd.
|
|
PRC
|
|
|
VIE
|
|
|
|
2,303,063
|
|
Taishan Muren Agriculture Co., Ltd.
|
|
PRC
|
|
|
VIE
|
|
|
|
1,913,049
|
|
Lorain Food Stuff (Shenzhen) Co., Ltd.
|
|
PRC
|
|
|
VIE
|
|
|
|
80,000
|
|
Xianning Bozhuang Tea Products Co., Ltd.
|
|
PRC
|
|
|
VIE
|
|
|
|
6,277,922
|
|
Planet
Green Holdings Corp.
|
|
Notes to Financial
Statements
|
Management
has eliminated all significant inter-company balances and transactions in preparing the accompanying consolidated financial statements.
Ownership interests of subsidiaries that the Company does not wholly own are accounted for as non-controlling interests.
On
May 18, 2018, the Company incorporated Planet Green Holdings Corporation, a limited company incorporated in the British Virgin
Islands. On September 28, 2018, the Company acquired Lucky Sky HK and Shanghai Xunyang, a wholly foreign-owned enterprise incorporated
in Shanghai, China. The formation and acquisition of these companies was to implement the Company’s restructuring plans.
In
December 2018, the Company was no longer able to exercise significant influence over Beijing Lorain, and management did not believe
that the Company would be able recover the value of its investment; accordingly, the Company recognized full impairment of its
investment in Beijing Lorain.
Consolidation
of Variable Interest Entity
VIEs
are entities that lack sufficient equity to finance their activities without additional financial support from other parties or
whose equity holders lack adequate decision-making ability. Any VIE with which the Company is involved must be evaluated to determine
the primary beneficiary of the risks and rewards of the VIE. Management makes ongoing reassessments of whether the Company is
the primary beneficiary of its VIEs.
On
September 28, 2018, the Company entered into a series of VIE agreements with Shandong Greenpia, Luotian Lorain, Taishan Muren,
and Shenzhen Lorain and their shareholders, pursuant to which, Company obtained substantial control over these entities’
daily operations and financial affairs.
On
September 27, 2018, the Company entered into exclusive arrangements with Beijing Lorain. However, the Company does not have significant
influence over Beijing Lorain and Beijing Lorain was accounted for as equity method investment.
In
December 2018, the Company’s management determined that it would discontinue the operations of Shandong Greenpia and Luotian
Lorain. Accordingly, the Company has recorded full impairment related to the value of those assets.
On
May 14, 2019, the Company entered into a series of VIE agreements with Xianning Bozhuang and its equity holders to obtain control
and become the primary beneficiary of Xianning Bozhuang. The Company consolidated Xianning Bozhuang’s accounts as its VIE.
On
August 12, 2019, through Lucky Sky HK, the Company established Lucky Sky Petrochemical, a wholly foreign-owned enterprise incorporated
in Xianning City, Hubei Province, China.
Discontinued
operations
In
the first quarter of 2018, the Company’s board of directors (the “Board”) resolved to discontinue the operations
of Junan Hongrun Foodstuff Co. Ltd.
In
the fourth quarter of 2018, the Board resolved to discontinue the operations of Beijing Lorain, Luotian Lorain, and Shandong Greenpia.
Use
of estimates
The
preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information
available at the time the estimates are made; however, actual results could differ materially from those estimates.
Planet
Green Holdings Corp.
|
|
Notes to Financial
Statements
|
Cash
and cash equivalents
The
Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.
Investment
securities
The
Company classifies securities it holds for investment purposes into trading or available-for-sale. Trading securities are bought
and held principally for the purpose of selling them in the near term. All securities not included in trading securities are classified
as available-for-sale.
Trading
and available-for-sale securities are recorded at fair value. Unrealized holding gains and losses on trading securities are included
in the net income. Unrealized holding gains and losses, net of the related tax effect, on available for sale securities are excluded
from net income and are reported as a separate component of other comprehensive income until realized. Realized gains and losses
from the sale of available-for-sale securities are determined on a specific-identification basis.
A
decline in the market value of any available-for-sale security below cost that is deemed to be other-than-temporary results in
a reduction in carrying amount to fair value. The impairment is charged as an expense to the statement of income and comprehensive
income and a new cost basis for the security is established. To determine whether impairment is other-than-temporary, the Company
considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether evidence
indicating the cost of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment
includes the reasons for the impairment, the severity and duration of the impairment, changes in value subsequent to year end,
and forecasted performance of the investee.
Premiums
and discounts are amortized or accreted over the life of the related available-for-sale security as an adjustment to yield using
the effective-interest method. Dividend and interest income are recognized when earned.
Trade
receivables
Trade
receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An estimate
for doubtful accounts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.
Inventories
Inventories
consist of raw materials and finished goods which are stated at the lower of cost or market value. Finished goods are comprised
of direct materials, direct labor, inbound shipping costs, and allocated overhead. The Company applies the weighted average cost
method to its inventory.
Advances
and prepayments to suppliers
The
Company makes advance payment to suppliers and vendors for the procurement of raw materials. Upon physical receipt and inspection
of the raw materials from suppliers the applicable amount is reclassified from advances and prepayments to suppliers to inventory.
Planet
Green Holdings Corp.
|
|
Notes to Financial
Statements
|
Plant
and equipment
Plant
and equipment are carried at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives, using
the straight-line method. The Company typically applies a salvage value of 0% to 10%. The estimated useful lives of the plant
and equipment are as follows:
Buildings
|
|
20-40 years
|
Landscaping, plant and tree
|
|
30 years
|
Machinery and equipment
|
|
1-10 years
|
Motor vehicles
|
|
5-10 years
|
Office equipment
|
|
5-20 years
|
The
cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts, and any gain or
loss are included in the Company’s results of operations. The costs of maintenance and repairs are recognized to expenses
as incurred; significant renewals and betterments are capitalized.
Intangible
assets
Intangible
assets are carried at cost less accumulated amortization. Amortization is provided over their useful lives, using the straight-line
method. The estimated useful lives of the intangible assets are as follows:
Land use rights
|
|
40-50 years
|
Software licenses
|
|
2 years
|
Trademarks
|
|
10 years
|
Construction
in progress and prepayments for equipment
Construction
in progress and prepayments for equipment represent direct and indirect acquisition and construction costs for plants, and costs
of acquisition and installation of related equipment. Amounts classified as construction in progress and prepayments for equipment
are transferred to plant and equipment when substantially all the activities necessary to prepare the assets for their intended
use are completed. Depreciation is not provided for assets classified in this account.
Goodwill
Goodwill
represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination.
The Company conducts an annual assessment of its goodwill for impairment. If the carrying value of its goodwill exceeds its fair
value, then impairment has incurred; accordingly, a charge to the Company’s results of operations will be recognized during
the period. Fair value is generally determined using a discounted expected future cash flow analysis.
Accounting
for the impairment of long-lived assets
The
Company annually reviews its long-lived assets for impairment or whenever events or changes in circumstances indicate that the
carrying amount of assets may not be recoverable. Impairment may be the result of becoming obsolete from a change in the industry,
introduction of new technologies, or if the Company has inadequate working capital to utilize the long-lived assets to generate
the adequate profits. Impairment is present if the carrying amount of an asset is less than its expected future undiscounted cash
flows.
If
an asset is considered impaired, a loss is recognized based on the amount by which the carrying amount exceeds the fair market
value of the asset. Assets to be disposed are reported at the lower of the carrying amount or fair value less costs to sell.
Statutory
reserves
Statutory
reserves are referring to the amount appropriated from the net income in accordance with laws or regulations, which can be used
to recover losses and increase capital, as approved, and are to be used to expand production or operations. PRC laws prescribe
that an enterprise operating at a profit must appropriate and reserve, on an annual basis, an amount equal to 10% of its profit.
Such an appropriation is necessary until the reserve reaches a maximum that is equal to 50% of the enterprise’s PRC registered
capital.
Planet
Green Holdings Corp.
|
|
Notes to Financial
Statements
|
Foreign
currency translation
The
accompanying financial statements are presented in United States dollars. The functional currencies of the Company are the Renminbi
(“RMB”). The Company’s assets and liabilities are translated into United States dollars from RMB at year-end
exchange rates, and its revenues and expenses are translated at the average exchange rate during the period. Capital accounts
are translated at their historical exchange rates when the capital transactions occurred.
|
|
9/30/2019
|
|
|
12/31/2018
|
|
|
9/30/2018
|
|
Period/year end RMB: US$ exchange rate
|
|
|
7.1360
|
|
|
|
6.8764
|
|
|
|
6.8665
|
|
Period/annual average RMB: US$ exchange rate
|
|
|
6.8618
|
|
|
|
6.5137
|
|
|
|
6.5137
|
|
The
RMB is not freely convertible into foreign currencies and all foreign exchange transactions must be conducted through authorized
financial institutions.
Revenue
recognition
The
Company recognizes revenue when persuasive evidence of arrangement exists, the price has been fixed or is determinable, the delivery
has been completed and no other significant obligations of the Company exists, and collectability of payment is reasonably assured.
Payments received prior to all of the foregoing criteria are recorded as customer deposits. Recorded revenue is derived from the
value of goods invoiced less value-added tax (VAT).
Advertising
All
advertising costs are expensed as incurred.
Shipping
and handling
All
outbound shipping and handling costs are expensed as incurred.
Research
and development
All
research and development costs are expensed as incurred.
Retirement
benefits
Retirement
benefits in the form of mandatory government sponsored defined contribution plans are charged to the either expenses as incurred
or allocated to inventory as part of overhead.
Income
taxes
The
Company accounts for income tax using an asset and liability approach and allows for recognition of deferred tax benefits in future
years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before
the Company is able to realize their benefits, or that future realization is uncertain.
Comprehensive
income
The
Company uses Financial Accounting Standards Board (“FASB”) ASC Topic 220, “Reporting Comprehensive Income.”
Comprehensive income is comprised of net income and all changes to the statements of stockholders’ equity, except the changes
in paid-in capital and distributions to stockholders due to investments by stockholders.
Earnings
per share
The
Company computes earnings per share (“EPS”) in accordance with ASC Topic 260, “Earnings per share”. Basic
EPS is measured as the income or loss available to common shareholders divided by the weighted average common shares outstanding
for the period. Diluted EPS presents the dilutive effect on a per share basis from the potential conversion of convertible securities
or the exercise of options and or warrants; the dilutive effects of potentially convertible securities are calculated using the
as-if method; the potentially dilutive effect of options or warrants are calculated using the treasury stock method. Securities
that are potentially an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) are excluded
from the calculation of diluted EPS.
Planet
Green Holdings Corp.
|
|
Notes to Financial
Statements
|
Financial
instruments
The
Company’s financial instruments, including cash and equivalents, accounts and other receivables, accounts and other payables,
accrued liabilities and short-term debt, have carrying amounts that approximate their fair values due to their short maturities.
ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments
held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation
hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying
amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments
and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments
and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined
as follows:
|
●
|
Level 1 - inputs
to the valuation methodology used quoted prices for identical assets or liabilities in active markets.
|
|
|
|
|
●
|
Level
2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs
that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial
instrument.
|
|
|
|
|
●
|
Level 3 - inputs
to the valuation methodology are unobservable and significant to the fair value measurement.
|
The
Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities
from Equity,” and ASC 815.
Commitments
and contingencies
Liabilities
for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it
is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
Unaudited
interim financial information
These
unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial
reporting and the rules and regulations of the SEC that permit reduced disclosure for interim periods. Therefore, certain information
and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.
In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation of the financial
position, results of operations and cash flows for the periods presented have been made. The results of operations for the interim
periods presented are not necessarily indicative of the results to be expected for the year ending December 31, 2019.
The
consolidated balance sheets and certain comparative information as of December 31, 2018 are derived from the audited consolidated
financial statements and related notes for the year ended December 31, 2018 (“2018 Annual Financial Statements”),
included in the Company’s 2018 Annual Report on Form 10-K. These unaudited interim condensed consolidated financial statements
should be read in conjunction with the 2018 Annual Financial Statements.
Recent
accounting pronouncements
In
January 2017, the FASB issued guidance which simplifies the accounting for goodwill impairment. The updated guidance eliminates
Step 2 of the impairment test, which requires entities to calculate the implied fair value of goodwill to measure a goodwill impairment
charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over
its fair value, determined in Step 1. The Company is currently evaluating the impact on the financial statements of this guidance.
In
January 2017, the FASB amended the existing accounting standards for business combinations. The amendments clarify the definition
of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted
for as acquisitions (or disposals) of assets or businesses.
The
Company is evaluating the timing and the impact of the aforesaid guidance on the financial statements.
Planet
Green Holdings Corp.
|
|
Notes to Financial
Statements
|
Restricted
cash represents interest bearing deposits placed with banks to secure banking facilities in the form of loans and notes payable.
The funds are restricted from immediate use and are designated for settlement of loans or notes when they become due.
The
Company extends credit terms of 15 to 60 days to the majority of its domestic customers, which include third-party distributors,
supermarkets and wholesalers.
|
|
9/30/2019
|
|
|
12/31/2018
|
|
Trade accounts receivable
|
|
$
|
2,502,935
|
|
|
$
|
6,528,072
|
|
Less: Allowance
for doubtful accounts
|
|
|
(1,242,554
|
)
|
|
|
-
|
|
|
|
$
|
1,260,381
|
|
|
$
|
6,528,072
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
-
|
|
|
$
|
(804,937
|
)
|
Reclassified to discontinued operations
|
|
|
-
|
|
|
|
804,937
|
|
Additions to allowance
|
|
|
(1,242,554
|
)
|
|
|
-
|
|
Bad debt written-off
|
|
|
-
|
|
|
|
-
|
|
Ending balance
|
|
$
|
(1,242,554
|
)
|
|
$
|
-
|
|
Inventories
consisted of the following as of September 30, 2019 and December 31, 2018
|
|
9/30/2019
|
|
|
12/31/2018
|
|
Raw material
|
|
$
|
605,174
|
|
|
$
|
-
|
|
Inventory of Supplies
|
|
|
12,316
|
|
|
|
|
|
Work in progress
|
|
|
850,598
|
|
|
|
-
|
|
Finished goods
|
|
|
342,401
|
|
|
|
-
|
|
|
|
$
|
1,810,489
|
|
|
$
|
-
|
|
Property,
plant, and equipment consisted of the following as of September 30, 2019 and December 31, 2018:
|
|
9/30/2019
|
|
|
12/31/2018
|
|
At Cost:
|
|
|
|
|
|
|
Buildings
|
|
$
|
3,980,878
|
|
|
$
|
1,116,940
|
|
Machinery and equipment
|
|
|
958,368
|
|
|
|
31,066
|
|
Office Equipment
|
|
|
52,181
|
|
|
|
|
|
Vehicle
|
|
|
147,044
|
|
|
|
|
|
Biological assets
|
|
|
2,002,550
|
|
|
|
2,078,012
|
|
|
|
$
|
7,141,021
|
|
|
$
|
3,226,018
|
|
|
|
|
|
|
|
|
|
|
Less: Accumulated
depreciation
|
|
|
(2,322,288
|
)
|
|
|
(1,854,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,818,733
|
|
|
$
|
1,371,518
|
|
Depreciation
expense for the nine months ended September 30, 2019 and 2018 was $ 339,549 and $250,591, respectively.
Planet
Green Holdings Corp.
|
|
Notes to Financial
Statements
|
|
|
9/30/2019
|
|
|
12/31/2018
|
|
At Cost:
|
|
|
|
|
|
|
Land use rights
|
|
$
|
733,426
|
|
|
$
|
-
|
|
Software licenses
|
|
|
2,494
|
|
|
|
-
|
|
Trademark
|
|
|
875,140
|
|
|
|
-
|
|
|
|
$
|
1,611,060
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Less:
Accumulated depreciation
|
|
|
(291,970
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,319,090
|
|
|
$
|
-
|
|
Amortization
expense for the nine months ended September 30, 2019 and 2018 was $199,532 and $24,291, respectively.
On
May 9, 2019, the Company and Shanghai Xunyang, a subsidiary of the Company, entered into a share exchange agreement with Xianning
Bozhuang, and its shareholders, pursuant to which, among other things and subject to the terms and conditions contained therein,
Shanghai Xunyang agreed to effect an acquisition of Xianning Bozhuang by acquiring from Xianning Bozhuang’s shareholders
all of the outstanding equity interests of Xianning Bozhuang. On May 14, 2019, the Company closed the acquisition.
Pursuant
to the share exchange agreement, in exchange for the acquisition of all of the outstanding equity interests of Xianning Bozhuang
by the Shanghai Xunyang, the Company issued an aggregate of 1,080,000 shares of common stock, par value $0.001 per share, of the
Company to Xianning Bozhuang’s shareholders. At the closing of the acquisition, the Company entered into a lock-up agreement
with the Sellers with respect to the Exchange Shares, pursuant to which Xianning Bozhuang’s shareholders agreed, subject
to certain exceptions, not to transfer the exchange shares, or publicly disclose the intention to do so, from the closing of the
acquisition until the first anniversary of the closing.
On
June 17, 2019, the Company entered into a securities purchase agreement, pursuant to which five individuals residing in the PRC
agreed to purchase an aggregate of 1,300,000 shares of the Company’s common stock, par value $0.001 per share, for an aggregate
purchase price of $5,460,000, representing a purchase price of $4.20 per share. The purchase agreement contains customary representations
and warranties by the Company and customary closing conditions. The financing closed on June 19, 2019.
Planet
Green Holdings Corp.
|
|
Notes to Financial
Statements
|
All
of the Company’s continuing operations are located in the PRC. The corporate income tax rate in the PRC is 25%.
The
following tables provide the reconciliation of the differences between the statutory and effective tax expenses for the nine months
ended September 30, 2019 and 2018:
|
|
9/30/2019
|
|
|
9/30/2018
|
|
Income/(loss) attributed to PRC continuing operations
|
|
$
|
(3,266,118
|
)
|
|
$
|
(283,668
|
)
|
Income/(loss) attributed to U.S. operations
|
|
|
|
|
|
|
46,439,953
|
|
Income/(loss) before tax
|
|
$
|
(3,266,118
|
)
|
|
$
|
46,723,641
|
|
|
|
|
|
|
|
|
|
|
PRC Statutory Tax at 25% Rate
|
|
|
-
|
|
|
|
-
|
|
Effect of reconciling items in the PRC for tax purposes
|
|
|
51,962
|
|
|
|
(49,336
|
)
|
Effect of tax exemption granted
|
|
|
-
|
|
|
|
-
|
|
Income tax
|
|
$
|
51,962
|
|
|
$
|
(49,336
|
)
|
Per
Share Effect of Tax Exemption
|
|
9/30/2019
|
|
|
9/30/2018
|
|
Effect of tax exemption granted
|
|
$
|
-
|
|
|
$
|
-
|
|
Weighted-Average Shares Outstanding Basic
|
|
|
7,111,136
|
|
|
|
2,291,075
|
|
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
nine months ended September 30, 2019 and 2018:
|
|
9/30/2019
|
|
|
9/30/2018
|
|
U.S. federal statutory income tax rate
|
|
|
21
|
%
|
|
|
21
|
%
|
Higher (lower) rates in PRC, net
|
|
|
4
|
%
|
|
|
4
|
%
|
Expenses not deductible to taxable income
|
|
|
(23.4
|
)%
|
|
|
(25
|
)%
|
The Company’s effective tax rate
|
|
|
(1.6
|
)%
|
|
|
0
|
%
|
Planet
Green Holdings Corp.
|
|
Notes to Financial
Statements
|
|
10.
|
Earnings/(Loss)
Per Share
|
Components
of basic and diluted earnings per share were as follows:
|
|
For the nine months ended
|
|
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
Basic and diluted (loss) earnings per share numerator:
|
|
|
|
|
|
|
Income/(loss) from continuing operations (attributable) available to common stockholders
|
|
$
|
(3,266,118
|
)
|
|
|
46,723,641
|
|
(Loss) income from discontinued operations (attributable) available to common stockholders
|
|
|
-
|
|
|
|
-
|
|
(Loss) income (attributable) available to common stockholders
|
|
|
(3,266,118
|
)
|
|
|
46,723,641
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted (loss) earnings per share denominator:
|
|
|
|
|
|
|
|
|
Original Shares:
|
|
|
5,497,765
|
|
|
|
1,530,980
|
|
Additions from Actual Events -Issuance of Common Stock
|
|
|
2,380,000
|
|
|
|
2,752,941
|
|
Basic Weighted Average Shares Outstanding
|
|
|
7,111,136
|
|
|
|
2,291,075
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) per share from continuing operations - Basic and diluted
|
|
|
(0.46
|
)
|
|
|
20.39
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) per share from discontinued operations - Basic and diluted
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) per share - Basic and diluted
|
|
|
(0.46
|
)
|
|
|
20.39
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding - Basic and diluted
|
|
|
7,111,136
|
|
|
|
2,291,075
|
|
Planet
Green Holdings Corp.
|
|
Notes to Financial
Statements
|
During
the year ended December 31, 2016, Taishan Muren entered into four operating lease agreements leasing two plots of land where biological
assets are grown, two offices, and farming facilities. During the year ended December 31, 2017, Taishan Muren entered into three
operating lease agreements leasing three additional plots of land where biological assets are grown.
As
of the date of this report, the leases of the Company are as follows:
Lease
|
|
Date Commenced
|
|
Date of expiration
|
Lease #1
|
|
March 1, 2016
|
|
February 28, 2031
|
Lease #2
|
|
March 1, 2016
|
|
February 28, 2031
|
Lease #3
|
|
March 1, 2016
|
|
February 28, 2031
|
Lease #4
|
|
November 1, 2016
|
|
November 1, 2019
|
Lease #5
|
|
January 1, 2017
|
|
February 28, 2031
|
Lease #6
|
|
January 1, 2017
|
|
February 28, 2031
|
Lease #7
|
|
January 1, 2018
|
|
February 28, 2031
|
The
minimum future lease payments for these properties at September 30, 2019 are as follows:
Period
|
|
Lease Payable
|
|
Year 1
|
|
$
|
224,896
|
|
Year 2
|
|
|
224,896
|
|
Year 3
|
|
|
224,896
|
|
Year 4
|
|
|
224,896
|
|
Year 5
|
|
|
224,896
|
|
Thereafter
|
|
|
1,386,853
|
|
|
|
$
|
2,511,333
|
|
The
outstanding lease commitments for the leases listed above as of September 30, 2019 was $2,511,333.
In
February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842).” The new standard requires lessees to recognize lease
assets (right of use) and lease obligations (lease liability) for leases previously classified as operating leases under GAAP
on the balance sheet for leases with terms in excess of 12 months. The standard is effective for annual periods beginning after
December 15, 2018, including interim periods within those fiscal years. The Company is assessing the impact of the adoption of
the new standard.
Other
expenses consisted of the following:
|
|
9/30/2019
|
|
|
9/30/2018
|
|
Other expense:
|
|
|
|
|
|
|
loss from investment
|
|
$
|
-
|
|
|
$
|
(8,634,106
|
)
|
Other
|
|
|
(5,685
|
)
|
|
|
-
|
|
|
|
$
|
(5,685
|
)
|
|
$
|
(8,634,106
|
)
|
Planet
Green Holdings Corp.
|
|
Notes to Financial
Statements
|
The
Company’s deposits are made with banks located in the PRC. They do not carry federal deposit insurance and may be subject
to loss of the banks become insolvent.
Since
the Company’s inception, the age of account receivables has been less than one year indicating that the Company is subject
to minimal risk borne from credit extended to customers.
The
Company is subject to interest rate risk when short term loans become due and require refinancing.
|
C.
|
Economic
and political risks
|
The
Company’s operations are conducted in the PRC. Accordingly, the Company’s business, financial condition, and results
of operations may be influenced by changes in the political, economic, and legal environments in the PRC.
The
Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with
companies in North America and Western Europe. These include risks associated with, among others, the political, economic and
legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political
and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.
The
Company has procured environmental licenses required by the PRC government. The Company has both a water treatment facility for
water used in its production process and secure transportation to remove waste off site. In the event of an accident, the Company
has purchased insurance to cover potential damage to employees, equipment, and local environment.
Management
of the Company monitors changes in prices levels. Historically inflation has not materially impacted the Company’s financial
statements; however, significant increases in the price of raw materials and labor that cannot be passed to the Company’s
customers could adversely impact the Company’s results of operations.
Planet
Green Holdings Corp.
|
|
Notes to Financial
Statements
|
On
October 25, 2019, Mr. Hongxiang Yu tendered his resignation as Chief Executive Officer of Planet Green Holdings Corp. (the
“Company”) to the Board of Directors (the “Board”) of the Company, effective immediately. Mr. Yu’s
resignation was for personal reasons and was not due to any disagreement with the Company. Mr. Yu will continue to serve as a
member of the Board.
To fill the vacancy created
by Mr. Yu’s resignation, the Board appointed Mr. Bin Zhou to serve as the Company’s Chief Executive Officer in addition
to his current role as a member of the Board, effective October 25, 2019.
Bin Zhou, age 29, has served
as a director of the Company since May 2019. He has served as chairman of the board of directors of Xianning Bozhuang Tea Products
Co., Ltd. since March 2019. Mr. Zhou was the general manager and legal representative of Hubei Qianding Equipment Manufacturing
Co., Ltd., a mechanical equipment manufacturing company, from March 2016 to March 2019. He also served as supervisor of Hubei Henghao
Real Estate Development Co., Ltd., a real estate development company, from April 2014 to June 2018. Mr. Zhou received his Bachelor
of Law degree from National Judges College in Beijing, China.
The Company and Mr. Zhou have
entered into an employment agreement (the “Employment Agreement”) setting forth the terms and conditions of Mr. Zhou's
employment as Chief Executive Officer. The principal term of his employment includes an annual base salary of $96,000. The Employment
Agreement has a duration of one year, subject to renewal. Should Mr. Zhou be terminated for cause, or by reason of death or disability,
or resign without good reason (as such terms are defined in the Employment Agreement), Mr. Zhou shall be entitled to receive his
base salary through the end of his employment and such other compensation and benefits as may be provided in applicable plans and
programs of the Company. Should Mr. Zhou be terminated without cause (other than due to death or disability) or resign for good
reason (as such terms are defined in the Employment Agreement), he shall be entitled to receive continuation of his base salary
for three months following of the end of his employment.
The foregoing summary of the
Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the Employment Agreement,
a copy of which is filed herewith as Exhibit 10.1 and incorporated by reference herein in its entirety.
There are no family relationships between Mr. Zhou and any director, executive officer, or person nominated
or chosen by the Company to become an executive officer of the Company. There are no transactions between the Company and Mr. Zhou
that are subject to disclosure under Item 404(a) of Regulation S-K.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW
Overview
Our
primary operations are conducted in the PRC through our VIEs:
|
●
|
to develop and market
products, such as sauces and tea products, from herbs and spices that we grow in China; and
|
|
●
|
to sell brown rice
syrup and tea bags developed using our unique recipes in China.
|
Results
of Operations
Three
Months Ended September 30, 2019 Compared to Three Months Ended September 30, 2018
The
following table summarizes the results of our operations during the three-month periods ended September 30, 2019 and September
30, 2018, respectively, and provides information regarding the dollar and percentage increase or (decrease) from the three month
period ended September 30, 2019 compared to the three month period ended September 30, 2018.
(All
amounts, other than percentages, stated in thousands of U.S. dollars)
|
|
Three months ended
|
|
|
Increase /
|
|
|
Increase /
|
|
|
|
September 30,
|
|
|
Decrease
|
|
|
Decrease
|
|
(In Thousands of USD)
|
|
2019
|
|
|
2018
|
|
|
($)
|
|
|
(%)
|
|
Net revenues
|
|
|
670
|
|
|
|
744
|
|
|
|
(74
|
)
|
|
|
(10
|
)
|
Cost of revenues
|
|
|
626
|
|
|
|
574
|
|
|
|
52
|
|
|
|
9
|
|
Gross profit
|
|
|
44
|
|
|
|
170
|
|
|
|
(126
|
)
|
|
|
(74
|
)
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing expenses
|
|
|
9
|
|
|
|
9
|
|
|
|
-
|
|
|
|
-
|
|
General and administrative expenses
|
|
|
3,034
|
|
|
|
743
|
|
|
|
2,291
|
|
|
|
308
|
|
Operating loss
|
|
|
(2,997
|
)
|
|
|
(582
|
)
|
|
|
(2,415
|
)
|
|
|
415
|
|
Government subsidy income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Interest and other income
|
|
|
30
|
|
|
|
-
|
|
|
|
30
|
|
|
|
100
|
|
Other expenses
|
|
|
-
|
|
|
|
(8,618
|
)
|
|
|
8,618
|
|
|
|
(100
|
)
|
Interest expense
|
|
|
5
|
|
|
|
(713
|
)
|
|
|
718
|
|
|
|
101
|
|
Gain from investment
|
|
|
-
|
|
|
|
56,704
|
|
|
|
(56,704
|
)
|
|
|
100
|
|
Loss before tax from continuing operations
|
|
|
(2,962
|
)
|
|
|
46,791
|
|
|
|
(49,753
|
)
|
|
|
(106
|
)
|
Income tax expense/(income)
|
|
|
(4
|
)
|
|
|
(49
|
)
|
|
|
45
|
|
|
|
(92
|
)
|
Net loss(income) from continuing operations
|
|
|
(2,958
|
)
|
|
|
46,840
|
|
|
|
(49,798
|
)
|
|
|
(106
|
)
|
Net loss from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net loss(income)
|
|
|
(2,958
|
)
|
|
|
46,840
|
|
|
|
(49,798
|
)
|
|
|
(106
|
)
|
Non-controlling interests
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net loss(income) of common stockholders
|
|
|
(2,958
|
)
|
|
|
46,840
|
|
|
|
(49,798
|
)
|
|
|
(106
|
)
|
Revenue
Net
Revenues. Our net revenues for the three months ended September 30, 2019 amounted to $0.67 million, which represents a decrease
of approximately $0.07 million, or 10%, from the three-month period ended on September 30, 2018, in which our net revenue was
$0.74 million. This decrease was attributable to the disposal of certain of our historical subsidiaries.
Cost
of Revenues. During the three months ended September 30, 2019, we experienced an increase in cost of revenue of $0.05 million,
in comparison to the three months ended September 30, 2018, from approximately $0.57 million to $0.63 million, reflecting an increase
of 9%.This increase was related to our new VIEs, Taishan Muren, Xianning Bozhuang, and disposal and discontinue of certain subsidiaries.
Gross
Profit. Our gross profit decreased by $0.13 million, or 74%, to $0.04 million for the three months ended September 30, 2019
from $0.17 million for the three months ended September 30, 2018, attributable to the disposal of certain of our historical subsidiaries
and acquisition of Taishan Muren and Xianning Bozhuang.
Operating
Expenses
Selling and Marketing Expenses. Our
selling and marketing expenses remained the same for the three months ended September 30, 2019 and 2018 in the amount of $0.09
million.
General and Administrative Expenses.
We experienced an increase in general and administrative expense of $2.29 million from $0.74 million to approximately $3.03
million for the three months ended September 30, 2019, compared to the three months ended September 30, 2018. This cost increase
was caused by provision for bad debts.
Net
Income
Our net income decreased by $49.80 million,
or 106%, to $2.96 million net loss for the three months ended September 30, 2019 from $46.84 million net income for the three
months ended September 30, 2018.Such decrease was primarily the result of disposal and discontinuance of certain subsidiaries
and provision for bad debts.
Nine
Months Ended September 30, 2019 Compared to Nine Months Ended September 30, 2018
The
following table summarizes the results of our operations during the nine-month periods ended September 30, 2019 and 2018, respectively,
and provides information regarding the dollar and percentage increase or decrease from the nine-month period ended September 30,
2019 compared to the nine month period ended September 30, 2018.
(All
amounts, other than percentages, stated in thousands of U.S. dollars)
|
|
Nine months ended
|
|
|
Increase /
|
|
|
Increase /
|
|
|
|
September 30,
|
|
|
Decrease
|
|
|
Decrease
|
|
(In Thousands of USD)
|
|
2019
|
|
|
2018
|
|
|
($)
|
|
|
(%)
|
|
Net revenues
|
|
|
2,600
|
|
|
|
2,461
|
|
|
|
139
|
|
|
|
6
|
|
Cost of revenues
|
|
|
2,177
|
|
|
|
1,617
|
|
|
|
560
|
|
|
|
35
|
|
Gross profit
|
|
|
423
|
|
|
|
844
|
|
|
|
(421
|
)
|
|
|
(50
|
)
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing expenses
|
|
|
28
|
|
|
|
62
|
|
|
|
(34
|
)
|
|
|
(55
|
)
|
General and administrative expenses
|
|
|
3,622
|
|
|
|
1,484
|
|
|
|
2,138
|
|
|
|
144
|
|
Operating loss
|
|
|
(3,226
|
)
|
|
|
(702
|
)
|
|
|
(2,524
|
)
|
|
|
360
|
|
Government subsidy income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Interest and other income
|
|
|
29
|
|
|
|
9
|
|
|
|
20
|
|
|
|
222
|
|
Other expenses
|
|
|
(6
|
)
|
|
|
(8,634
|
)
|
|
|
8,628
|
|
|
|
(100
|
)
|
Interest expense
|
|
|
(11
|
)
|
|
|
(713
|
)
|
|
|
702
|
|
|
|
(98
|
)
|
Gain from investment
|
|
|
-
|
|
|
|
56,714
|
|
|
|
(56,714
|
)
|
|
|
(100
|
)
|
Loss before tax from continuing operations
|
|
|
(3,214
|
)
|
|
|
46,674
|
|
|
|
(49,888
|
)
|
|
|
(107
|
)
|
Income tax expense/(income)
|
|
|
52
|
|
|
|
(49
|
)
|
|
|
101
|
|
|
|
(206
|
)
|
Net loss(income) from continuing operations
|
|
|
(3,266
|
)
|
|
|
46,724
|
|
|
|
(49,990
|
)
|
|
|
(107
|
)
|
Net loss from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net loss(income)
|
|
|
(3,266
|
)
|
|
|
46,724
|
|
|
|
(49,990
|
)
|
|
|
(107
|
)
|
Non-controlling interests
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net loss(income) of common stockholders
|
|
|
(3,266
|
)
|
|
|
46,724
|
|
|
|
(49,990
|
)
|
|
|
(107
|
)
|
Revenue
Net
Revenues. Our net revenues for the nine months ended September 30, 2019 amounted to $2.6 million, which represents an increase
of approximately $0.13 million, or 6%, from the nine-month period ended on September 30, 2018, in which our net revenue was $2.46
million. This increase was attributable to the disposal of certain of our historical subsidiaries and acquisition of Taishan Muren
and Xianning Bozhuang.
Cost
of Revenues. During the nine months ended September 30, 2019, we experienced an increase in cost of revenue of $0.56 million,
in comparison to the nine months ended September 30, 2018, from approximately $1.62 million to $2.18 million, reflecting an increase
of 35%. This increase was related to our new VIEs, Taishan Muren, Xianning Bozhuang, and disposal and discontinue of certain subsidiaries.
Gross
Profit. Our gross profit decreased by $0.42 million, or 50%, to $0.42 million for the nine months ended September 30, 2019
from $0.84 million for the nine months ended September 30, 2018, attributable to the disposal of certain of our historical subsidiaries
and acquisition of Taishan Muren and Xianning Bozhuang.
Operating
Expenses
Selling
and Marketing Expenses. Our selling and marketing expenses decreased by $0.34 million, or 55%, to $0.28 million during the
nine months ended September 30, 2019, as compared to $0.62 million during the nine months ended September 30, 2018. The decrease
of our selling and marketing expenses is mainly due to a decrease in sales activities because sales generated from our existing
clients had been steady.
General and Administrative Expenses.
We experienced an increase in general and administrative expense of $2.14 million from $1.48 million to approximately $3.62
million for the nine months ended September 30, 2019, compared to the nine months ended September 30, 2018. This cost increase
was caused by provision for bad debts.
Net
Income
Our net income decreased by $49.99 million,
or 107%, to $3.27 million net loss for the nine months ended September 30, 2019 from $46.72 million net income for the nine months
ended September 30, 2018.Such decrease was primarily the result of provision for bad debts and disposal and discontinuance of
certain subsidiaries.
Liquidity
and Capital Resources
In
the reporting period in 2019, our primary sources of financing have been cash generated from operations and private placements.
We raised funds in the following private placement in the second quarter of 2019:
On June 17, 2019, we entered into a securities
purchase agreement, pursuant to which five individuals residing in the PRC agreed to purchase an aggregate of 1,300,000 shares
of the our common stock, par value $0.001 per share, for an aggregate purchase price of $5,460,000, representing a purchase price
of $4.20 per Share.
General
Management anticipates that our existing
capital resources and anticipated cash flows from operations are adequate to satisfy our liquidity requirements for the next 12
months. Our primary capital needs have been to fund our working capital requirements. In the past, our primary sources of financing
have been cash generated from operations and financing activities.
As of September 30, 2019, we had cash and
cash equivalents (including restricted cash) of $2.70 million. The debt to assets ratio was 32.7% and 57.6% as of September 30,
2019 and December 31, 2018, respectively. We expect to continue to finance our operations and working capital needs in 2019 from
cash generated from operations and, if needed, private financings. If available liquidity is not sufficient to meet our operating
and loan obligations as they come due, our plans include pursuing alternative financing arrangements or reducing expenditures as
necessary to meet our cash requirements. However, there is no assurance that we will be able to raise additional capital or reduce
discretionary spending to provide liquidity, if needed. We cannot be sure of the availability or terms of any alternative financing
arrangements.
The
following table provides detailed information about our net cash flow for all financial statement periods presented in this report.
Cash
Flow (In thousands)
|
|
For the Nine Months Ended
|
|
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
Net cash (used in)/provided by operating activities
|
|
|
(6,904
|
)
|
|
|
(8,427
|
)
|
Net cash provided by/ (used in) investing activities
|
|
|
(74
|
)
|
|
|
(5,427
|
)
|
Net cash provided by/ (used in) financing activities
|
|
|
8,690
|
|
|
|
13,928
|
|
Net cash flow
|
|
|
1,712
|
|
|
|
74
|
|
Operating
Activities
Net cash used in operating
activities was $6.9 million and $8.4 million for the nine months periods ended September 30, 2019 and 2018, respectively. Net
cash used in operating activities was mainly due to increase of $0.3 million in accounts and other receivables, decrease of
$2.9 million in payables and other current liabilities, increase of $1.3 million in prepayments and other current assets.
Investing
Activities
Net
cash used in investing activities for the nine months period ended September 30, 2019 was $0.07 million, representing a decrease
of $5.4 million in net cash used in investing activities from $5.4 million for the same period of 2018. This is mainly due to
reduced investment in fixed assets.
Financing
Activities
Net
cash provided by financing activities for the nine months period ended September 30, 2019 was $8.7 million, representing a decrease
of $5.2 million in net cash provided by financing activities from $13.9 million for the same period of 2018. This is mainly due
to reduced financing.
Critical
Accounting Policies
The
preparation of financial statements in conformity with GAAP requires our management to make assumptions, estimates and judgments
that affect the amounts reported in our financial statements, including the notes thereto, and related disclosures of commitments
and contingencies, if any. We consider our critical accounting policies to be those that require significant judgments and estimates
in the preparation of financial statements, including those set forth in Note 2 to the financial statements included herein.
Off-Balance
Sheet Arrangements
We
do not have any off-balance arrangements.