Except where the context otherwise requires and for the purposes of
this report only:
ITEM
1 FINANCIAL STATEMENTS
Planet Green Holdings Corp.
Unaudited Condensed Consolidated Balance Sheets
As of September 30, 2022 and December 31, 2021
(Stated in US Dollars)
| |
September 30, | | |
December 31, | |
| |
2022 | | |
2021 | |
Assets | |
| | |
| |
Current assets | |
| | |
| |
Cash and cash equivalents | |
$ | 226,507 | | |
$ | 750,658 | |
Restricted cash | |
| 84,588 | | |
| 380,750 | |
Accounts and notes receivable, net | |
| 2,311,340 | | |
| 3,819,073 | |
Inventories | |
| 8,208,172 | | |
| 7,816,432 | |
Advances to suppliers | |
| 6,229,449 | | |
| 5,681,083 | |
Other receivables | |
| 979,435 | | |
| 1,185,136 | |
Other receivables-related parties | |
| 6,733,185 | | |
| 7,670,434 | |
Total current assets | |
| 24,772,676 | | |
| 27,303,566 | |
| |
| | | |
| | |
Non-current assets | |
| | | |
| | |
Plant and equipment, net | |
| 25,993,864 | | |
| 20,485,449 | |
Intangible assets, net | |
| 3,618,205 | | |
| 4,199,651 | |
Construction in progress, net | |
| 25,584 | | |
| 2,475,874 | |
Prepayment investments | |
| - | | |
| 705,805 | |
Long-term investments | |
| 16,516,981 | | |
| 3,136,910 | |
Investment in real estates | |
| - | | |
| 7,770,943 | |
Deferred tax assets | |
| 1,052,514 | | |
| 1,172,050 | |
Goodwill | |
| 25,374,497 | | |
| 18,180,532 | |
Right-of-use assets | |
| 233,671 | | |
| 584,802 | |
Total non-current assets | |
| 72,815,316 | | |
| 58,712,016 | |
| |
| | | |
| | |
Total assets | |
$ | 97,587,992 | | |
$ | 86,015,582 | |
| |
| | | |
| | |
Liabilities and Stockholders’ Equity | |
| | | |
| | |
Current liabilities | |
| | | |
| | |
Short-term bank loans | |
| 6,002,354 | | |
| 6,822,054 | |
Accounts payable | |
| 7,358,750 | | |
| 6,237,810 | |
Advance from customers | |
| 4,738,457 | | |
| 6,190,091 | |
Taxes payable | |
| 958,957 | | |
| 787,593 | |
Other payables and accrued liabilities | |
| 4,773,715 | | |
| 8,635,189 | |
Other payables-related parties | |
| 10,412,765 | | |
| 5,196,227 | |
Lease liabilities-current portion | |
| 200,436 | | |
| 436,191 | |
Deferred income | |
| 55,166 | | |
| 73,732 | |
Total current liabilities | |
| 34,500,600 | | |
| 34,378,887 | |
| |
| | | |
| | |
Non-current liabilities | |
| | | |
| | |
Long-term bank loans | |
| 281,698 | | |
| - | |
Long-term payables | |
| 287,795 | | |
| 380,345 | |
Total non-current liabilities | |
| 569,493 | | |
| 380,345 | |
| |
| | | |
| | |
Total liabilities | |
$ | 35,070,093 | | |
$ | 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 September 30, 2022 and December 31, 2021 | |
| - | | |
| - | |
Common stock: $0.001 par value, 200,000,000 shares authorized; 72,081,930 and 35,581,930 shares issued and outstanding as of September 30,2022 and December 31, 2021 | |
| 72,082 | | |
| 35,582 | |
Additional paid-in capital | |
| 155,702,975 | | |
| 133,232,224 | |
Accumulated deficit | |
| (98,943,143 | ) | |
| (94,072,383 | ) |
Accumulated other comprehensive income | |
| 4,196,698 | | |
| 7,711,057 | |
Non-controlling interests | |
| 1,489,287 | | |
| 4,349,870 | |
| |
| | | |
| | |
Total stockholders’ equity | |
$ | 62,517,899 | | |
$ | 51,256,350 | |
| |
| | | |
| | |
Total liabilities and stockholders’
equity | |
$ | 97,587,992 | | |
$ | 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 And Nine Months Ended September 30, 2022 and 2021
(Stated in US Dollars)
| |
For the
Three Months Ended | | |
For the
Nine Months Ended | |
| |
September 30, | | |
September 30, | |
| |
2022 | | |
2021 | | |
2022 | | |
2021 | |
Net revenues | |
$ | 10,264,434 | | |
$ | 8,484,401 | | |
$ | 37,788,044 | | |
$ | 15,597,048 | |
Cost of revenues | |
| 9,566,309 | | |
| 7,133,389 | | |
| 35,184,898 | | |
| 13,750,406 | |
Gross profit | |
| 698,125 | | |
| 1,351,012 | | |
| 2,603,146 | | |
| 1,846,642 | |
| |
| | | |
| | | |
| | | |
| | |
Operating expenses | |
| | | |
| | | |
| | | |
| | |
Selling and marketing expenses | |
| 562,313 | | |
| 453,657 | | |
| 1,497,194 | | |
| 974,273 | |
General and administrative expenses | |
| 2,166,074 | | |
| 3,223,939 | | |
| 5,656,922 | | |
| 5,869,473 | |
Research & Developing expenses | |
| 79,031 | | |
| 12,654 | | |
| 150,977 | | |
| 34,875 | |
Total operating expenses | |
| 2,807,418 | | |
| 3,690,250 | | |
| 7,305,093 | | |
| 6,878,621 | |
| |
| | | |
| | | |
| | | |
| | |
Operating (loss) income | |
| (2,109,293 | ) | |
| (2,339,238 | ) | |
| (4,701,947 | ) | |
| (5,031,979 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other (expenses) income | |
| | | |
| | | |
| | | |
| | |
Interest income | |
| 108 | | |
| 71,945 | | |
| 9,231 | | |
| 102,870 | |
Interest expenses | |
| (160,636 | ) | |
| (211,554 | ) | |
| (488,331 | ) | |
| (445,602 | ) |
Other income | |
| 20,230 | | |
| 118,317 | | |
| 339,518 | | |
| 357,246 | |
Other expenses | |
| (8,796 | ) | |
| (39,089 | ) | |
| (35,858 | ) | |
| (40,764 | ) |
Total other (expenses) income | |
| (149,094 | ) | |
| (60,380 | ) | |
| (175,440 | ) | |
| (26,250 | ) |
| |
| | | |
| | | |
| | | |
| | |
(Loss) income before income taxes | |
| (2,258,387 | ) | |
| (2,399,618 | ) | |
| (4,877,387 | ) | |
| (5,058,229 | ) |
| |
| | | |
| | | |
| | | |
| | |
Income tax expenses | |
| (37,644 | ) | |
| - | | |
| (175,101 | ) | |
| (147 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net (loss) income | |
| (2,296,031 | ) | |
| (2,399,618 | ) | |
| (5,052,488 | ) | |
| (5,058,376 | ) |
| |
| | | |
| | | |
| | | |
| | |
Less: Net (loss) income attributable to non-controlling interest | |
| (139,895 | ) | |
| (129,685 | ) | |
| (181,728 | ) | |
| (325,964 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net (loss) income attributable to common shareholders | |
$ | (2,156,136 | ) | |
$ | (2,269,934 | ) | |
$ | (4,870,760 | ) | |
$ | (4,732,412 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net (loss) income | |
| (2,296,031 | ) | |
| (2,399,618 | ) | |
| (5,052,488 | ) | |
| (5,058,376 | ) |
| |
| | | |
| | | |
| | | |
| | |
Foreign currency translation adjustment | |
| (1,713,581 | ) | |
| (139,703 | ) | |
| (3,565,463 | ) | |
| 553,251 | |
| |
| | | |
| | | |
| | | |
| | |
Total comprehensive (loss) income | |
| (4,009,612 | ) | |
| (2,539,321 | ) | |
| (8,617,951 | ) | |
| (4,505,125 | ) |
| |
| | | |
| | | |
| | | |
| | |
Less: Comprehensive (loss) income attribute to non-controlling interest | |
| (161,138 | ) | |
| (137,559 | ) | |
| (232,832 | ) | |
| (308,771 | ) |
Comprehensive (loss) income attribute to common share holders | |
$ | (3,848,474 | ) | |
$ | (2,401,762 | ) | |
$ | (8,385,119 | ) | |
$ | (4,196,354 | ) |
| |
| | | |
| | | |
| | | |
| | |
(Loss) income per common shareholders - Basic and diluted | |
$ | (0.03 | ) | |
$ | (0.08 | ) | |
$ | (0.09 | ) | |
$ | (0.21 | ) |
Basic and diluted weighted average shares outstanding | |
| 69,708,304 | | |
| 28,667,147 | | |
| 55,335,606 | | |
| 23,082,956 | |
See Accompanying Notes to the Financial Statements
Planet Green Holdings Corp.
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity
For the Nine Months Ended September 30, 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 | |
| - | | |
| - | | |
| - | | |
| (4,732,412 | ) | |
| - | | |
| (325,964 | ) | |
| (5,058,376 | ) |
Issuance of shares for acquisition | |
| 10,300,000 | | |
| 10,300 | | |
| 20,100,700 | | |
| - | | |
| - | | |
| - | | |
| 20,111,000 | |
Issuance of common stock for cash | |
| 6,700,000 | | |
| 6,700 | | |
| 13,732,749 | | |
| - | | |
| - | | |
| - | | |
| 13,739,449 | |
Stock-based compensation and issue of employee benefit plan stock | |
| 872,000 | | |
| 872 | | |
| 1,158,888 | | |
| - | | |
| - | | |
| - | | |
| 1,159,760 | |
Acquiring subsidiaries | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 6,019,031 | | |
| 6,019,031 | |
Foreign currency translation adjustment | |
| - | | |
| - | | |
| - | | |
| - | | |
| 536,058 | | |
| 17,193 | | |
| 553,251 | |
Balance, September 30, 2021 | |
| 29,681,930 | | |
$ | 29,682 | | |
$ | 130,651,697 | | |
$ | (89,064,309 | ) | |
$ | 7,508,221 | | |
$ | 5,710,260 | | |
$ | 54,835,551 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
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 | |
| - | | |
| - | | |
| - | | |
| (4,870,760 | ) | |
| - | | |
| (181,728 | ) | |
| (5,052,488 | ) |
Issuance of common stock for cash | |
| 17,000,000 | | |
| 17,000 | | |
| 11,083,000 | | |
| - | | |
| - | | |
| - | | |
| 11,100,000 | |
Issuance of shares for acquisition | |
| 7,500,000 | | |
| 7,500 | | |
| 7,422,000 | | |
| - | | |
| - | | |
| - | | |
| 7,429,500 | |
Issuance of shares for long-term investment | |
| 12,000,000 | | |
| 12,000 | | |
| 9,588,000 | | |
| - | | |
| - | | |
| - | | |
| 9,600,000 | |
Acquiring additional shares from shareholder of Anhui Ansheng Petrochemical Equipment Co., Ltd. | |
| - | | |
| - | | |
| (2,900,742 | ) | |
| - | | |
| - | | |
| (2,349,258 | ) | |
| (5,250,000 | ) |
Acquiring additional shares from shareholder of Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. | |
| | | |
| | | |
| (2,721,507 | ) | |
| | | |
| | | |
| (278,493 | ) | |
| (3,000,000 | ) |
Foreign currency translation adjustment | |
| - | | |
| - | | |
| - | | |
| - | | |
| (3,514,359 | ) | |
| (51,104 | ) | |
| (3,565,463 | ) |
Balance, September 30, 2022 | |
| 72,081,930 | | |
$ | 72,082 | | |
$ | 155,702,975 | | |
$ | (98,943,143 | ) | |
$ | 4,196,698 | | |
$ | 1,489,287 | | |
$ | 62,517,899 | |
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, 2022 and 2021
(Stated in US Dollars)
| |
September 30, | |
September 30, |
| |
2022 | |
2021 |
CASH FLOWS FROM OPFRATING ACTIVITIFS: | |
| |
|
Net (loss) income | |
$ | (5,052,488 | ) | |
$ | (5,058,376 | ) |
Adjustments to reconcile net loss to cash (used in) provided by operating activities: | |
| | | |
| | |
Depreciation | |
| 716,964 | | |
| 1,543,332 | |
Amortization | |
| 56,931 | | |
| 180,930 | |
Amortization of operating lease right-of-use assets | |
| 377,332 | | |
| - | |
Impairment of equipment | |
| (90,894 | ) | |
| - | |
Note and account receivables, net | |
| 2,020,575 | | |
| 1,251,554 | |
Inventories | |
| (420,971 | ) | |
| (4,415,071 | ) |
Prepayments and deposit | |
| 169,187 | | |
| (7,290,071 | ) |
Other receivables | |
| 221,050 | | |
| 510,824 | |
Accounts payables | |
| 880,486 | | |
| (108,627 | ) |
Advance from customer | |
| (1,559,954 | ) | |
| 167,670 | |
Other payables and accruals | |
| (7,437,104 | ) | |
| 145,045 | |
Taxes payable | |
| 184,151 | | |
| (74,881 | ) |
Deferred income | |
| (19,951 | ) | |
| - | |
Lease liability | |
| (253,347 | ) | |
| - | |
Net cash used in operating activities | |
| (10,208,033 | ) | |
| (13,147,672 | ) |
| |
| | | |
| | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | |
Purchase of plant and equipment | |
| - | | |
| (42,350 | ) |
Purchase of long-term investment | |
| (3,517,590 | ) | |
| - | |
Net increase in cash from acquisition subsidiaries | |
| 246,322 | | |
| - | |
Net cash used in investing activities | |
| (3,271,268 | ) | |
| (42,350 | ) |
| |
| | | |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
Payments of short-term loan - bank | |
| (677,604 | ) | |
| - | |
Changes in related party balances, net | |
| 892,112 | | |
| 141,485 | |
Proceeds from issuance of common stock | |
| 11,100,000 | | |
| 9,812,118 | |
Net cash provided by financing activities | |
| 11,314,508 | | |
| 9,953,603 | |
| |
| | | |
| | |
Net increase (decrease) in cash and cash equivalents | |
| (2,164,792 | ) | |
| (3,236,419 | ) |
| |
| | | |
| | |
EFFECT OF EXCHANGE RATE ON CASH | |
| 1,344,480 | | |
| 575,690 | |
| |
| | | |
| | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | |
| 1,131,408 | | |
| 3,415,751 | |
| |
| | | |
| | |
CASH AND CASH EQUIVALENTS AT END OF YEAR | |
$ | 311,095 | | |
$ | 755,023 | |
| |
| | | |
| | |
SUPPLEMENTARY OF CASH FLOW INFORMATION | |
| | | |
| | |
Interest received | |
$ | 9,231 | | |
$ | 102,870 | |
Interest paid | |
$ | 488,331 | | |
$ | 445,602 | |
| |
| | | |
| | |
NON-CASH TRANSACTIONS | |
| | | |
| | |
Operating lease right-of-use assets | |
$ | 233,671 | | |
$ | - | |
Issuance of shares for acquisition | |
$ | 7,429,500 | | |
$ | 24,038,331 | |
Issuance of common stock for employee compensation | |
$ | - | | |
$ | 1,159,760 | |
See Accompanying Notes to the Financial Statements
PLANET GREEN HOLDINGS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 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
variable interest 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 $5,052,488 for the nine months ended September 30, 2022. As of September 30, 2022, the Company had an accumulated deficit
of $98,943,143, a working capital deficit of $9,727,924; its net cash used in operating activities for the nine months ended September
30, 2022 was $10,208,033.
These factors raise substantial doubt about 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 and 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 cannot 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.
| |
Place of | |
Attributable equity | | |
Registered | |
Name of Company | |
incorporation | |
interest % | | |
capital | |
Promising Prospect Limited | |
The British Virgin Islands | |
| 100 | | |
$ | 10,000 | |
Promising Prospect HK Limited | |
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 | |
| 100 | | |
| 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 Bulaisi Technology Co., Ltd. (a subsidiary of Bless Chemical) | |
PRC | |
| 100 | | |
| 30,000,000 | |
Shandong Yunchu Supply Chain Co., Ltd. | |
PRC | |
| 100 | | |
| 5,000,000 | |
Allinyson Ltd. | |
The United States | |
| 100 | | |
| 100,000 | |
Guangzhou Haishi Technology Co., Ltd. | |
PRC | |
| 100 | | |
| 156,250 | |
Baokuan Technology (Hongkong) Limited | |
Hong Kong | |
| 100 | | |
| 1,250 | |
Principles of Consolidation
The accompanying consolidated financial statements
reflect the activities of Planet Green Holdings Corp. and each of the following entities:
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 business of 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 August 10, 2020, Planet Green Holdings Corporation (BVI) transferred
its 100% equity interest in Lucky Sky Holdings Corporations (H.K.) Limited to Rui Tang.
On December 9, 2020, Lucky Sky Petrochemical Technology
(Xianning) Co., Ltd. changed its name to 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 Bulaisi Technology
Co., Ltd has 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 Bulaisi Technology Co., Ltd. and Hubei
Bulaisi Technology Co., Ltd. has held 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 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 April 8, 2022, Planet Green Holdings Corporation (Nevada) issued
an aggregate of 7,500,000 shares of common stock to the equity holders of Allinyson Ltd. for the acquisition of 100% of the equity interest
of Allinyson Ltd.
On September 14, 2022, Planet
Green Holdings Corp. and Hubei Bulaisi Technology Co., Ltd. a subsidiary of the Company, entered into a Share Purchase Agreement with
Xue Wang, a shareholder of Jingshan Sanhe Luckysky New Energy Technologies 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 15% of the outstanding
equity interests of Jingshan, and the Company shall pay to the Seller an aggregate of U.S. $3,000,000 in exchange for 15% of the issued
and outstanding shares. Before the closing of this Share Purchase transaction, the Company owns 85% equity interest of Jingshan through
the Purchaser. On September 14, 2022, the Company closed the Share Purchase transaction. As of September 30, 2022, Hubei Bryce
Technology Co., Ltd. has hold 100% shares of Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. after the alteration of shareholders.
Consolidation of Variable Interest Entity
Variable Interest Entities (“VIEs”) 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 VIE’s
risks and rewards. Management makes ongoing reassessments of whether the Company is the primary beneficiary.
On May 9, 2019, the Company entered into a Share
Purchase Agreement (the “Purchase Agreement”) with Xianning Bozhuang Tea Products Co., Ltd. (“Xianning Bozhuang”),
a company incorporated in China engaging in the sale of tea products, and its shareholders (“Bozhuang Shareholders”). Under
the Purchase Agreement, the Company issued an aggregate of 1,080,000 shares of its common stock to the Bozhuang Shareholders in exchange
for Bozhuang Shareholders’ agreement to enter into. Their agreement to cause Xianning Bozhuang to enter into certain VIE Agreements
with Shanghai Xunyang, through which Shanghai Xunyang shall have the right to control, manage and operate Xianning Bozhuang in return
for a service fee approximately equal to 100% of Xianning Bozhuang’s net income (“Bozhuang Acquisition”). On May 14,
2019, Shanghai Xunyang entered into a series of VIE Agreements with Xianning Bozhuang and Bozhuang Shareholders. The VIE Agreements are
designed to provide Shanghai Xunyang with the power, rights, and obligations equivalent in all material respects to those it would possess
as the sole equity holder of Xianning Bozhuang, including absolute rights to control the management, operations, assets, property, and
revenue of Xianning Bozhuang. The Bozhuang Acquisition closed on May 14, 2019. Starting on May 14, 2019, the Company’s business
activities added the production line of green tea and black tea and sales of tea products, of which business activities are carried out
in Xianning City, Hubei Province, China. The Company consolidated Xianning Bozhuang’s accounts as its VIE.
On December 20, 2019, through Lucky
Sky Petrochemical Technology (Xianning) Co., Ltd. (“WFOE”), the Company entered into exclusive VIE agreements with Taishan
Muren, Xianning Bozhuang and Shenzhen Lorain and their shareholders that give the Company the ability to substantially influence those
companies’ daily operations and financial affairs and appoint their senior executives. On September 8, 2020, the Company’s
Board of Directors resolved to discontinue the operation of Shenzhen Lorain and Taishan Muren due to the continued loss of such two subsidiaries.
On September 15, 2020, Lucky Sky Petrochemical terminated the VIE agreements with Shenzhen Lorain and Taishan Muren. The Company has been
considered the primary beneficiary of these operating companies and it consolidates their accounts as VIEs.
On January 4, 2021, the Company and
Jiayi Technologies (Xianning) Co., Ltd. (the “Subsidiary”), a subsidiary of the Company, entered into a Share Exchange Agreement
(the “Share Exchange Agreement”) with Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. (“Target”), and
each of shareholders of the Target (collectively, the “Sellers”), pursuant to which, among other things and subject to the
terms and conditions contained therein, the Subsidiary agreed to effect an acquisition of the Target by acquiring from the Sellers 85%
of the outstanding equity interests of the Target (the “Acquisition”). The target is engaged in researching, developing, manufacturing
and selling products of ethanol fuel and fuel additives in China. On January 4, 2021, the Company closed the Acquisition.
On March 9, 2021, Planet Green Holdings Corp.
(the “Company”) and Jiayi Technologies (Xianning) Co., Ltd. (the “Subsidiary”), a subsidiary of the Company, entered
into a Share Exchange Agreement (the “Share Exchange Agreement”) with Jilin Chuangyuan Chemical Co., Ltd. (“Target”).
Each of shareholders of the Target (collectively, the “Sellers”), under which, among other things and subject to the terms
and conditions contained therein, the subsidiary agreed to effect an acquisition of the Target by acquiring from the Sellers 75% of the
outstanding equity interests of the Target (the “Acquisition”). The target is researching, developing, manufacturing formaldehyde,
urea-formaldehyde adhesive, methylal, and clean fuel products and selling such products in China. On March 9, 2021, the Company closed
the acquisition.
On July 15, 2021, Planet Green Holdings Corp. (the
“Company”) and Jiayi Technologies (Xianning) Co., Ltd. (the “Subsidiary”), a subsidiary of the Company, entered
into a Share Exchange Agreement (the “Share Exchange Agreement”) with Anhui Ansheng Petrochemical Equipment Co., Ltd. (“Target”),
and each of shareholders of the Target (collectively, the “Sellers”), pursuant to which, among other things and subject to
the terms and conditions contained therein, the Subsidiary agreed to effect an acquisition of the Target by acquiring from the Sellers
66% of the outstanding equity interests of the Target (the “Acquisition”). The target is engaged in researching, developing
and manufacturing insulation type explosion-proof skid-mounted refueling equipment, LNG cryogenic equipment and SF double deck oil storage
tank and selling such products in China. On July 16, 2021, the Company closed the Acquisition.
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.
| |
09/30/2022 | | |
12/31/2021 | | |
09/30/2021 | |
Period-end US$: CDN$ exchange rate | |
| 1.3631 | | |
| 1.274 | | |
| 1.2753 | |
Period-end US$: RMB exchange rate | |
| 7.0998 | | |
| 6.3757 | | |
| 6.4854 | |
Period-end US$: HK$ exchange rate | |
| 7.8499 | | |
| 7.7981 | | |
| 7.7834 | |
Period average US$: CDN$ exchange rate | |
| 1.2831 | | |
| 1.2531 | | |
| 1.2431 | |
Period average US$: RMB exchange rate | |
| 6.6068 | | |
| 6.4515 | | |
| 6.4714 | |
Period average US$: HK$ exchange rate | |
| 7.8347 | | |
| 7.7729 | | |
| 7.7823 | |
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, tea products and online game business. 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 September
30, 2022, there were approximately $0.23 million right of use (“ROU”) assets and approximately $0.20 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:
| |
09/30/2022 | | |
12/31/2021 | |
Cash and cash equivalents | |
| 39,927 | | |
| 67,966 | |
Restricted cash | |
| 84,588 | | |
| 380,750 | |
Accounts and notes receivable, net | |
| 1,015,068 | | |
| 2,660,566 | |
Inventories | |
| 4,876,446 | | |
| 4,244,869 | |
Advances to suppliers | |
| 640,278 | | |
| 310,769 | |
Other receivables | |
| 109,633 | | |
| 118,708 | |
Inter-company Receivable | |
| 1,549,339 | | |
| 1,725,302 | |
Other receivables-related parties | |
| 5,965,861 | | |
| 7,650,042 | |
TOTAL CURRENT ASSETS | |
| 14,281,140 | | |
| 17,158,972 | |
| |
| | | |
| | |
Plant and equipment, net | |
| 12,529,014 | | |
| 12,554,727 | |
Intangible assets, net | |
| 2,465,620 | | |
| 2,795,048 | |
Construction in progress, net | |
| 20,564 | | |
| 2,475,874 | |
Deferred tax assets | |
| 381,990 | | |
| 425,374 | |
Total Non-Current Assets | |
| 15,397,188 | | |
| 18,251,023 | |
TOTAL ASSETS | |
$ | 29,678,328 | | |
$ | 35,409,995 | |
| |
| | | |
| | |
Short-term bank loans | |
| 6,002,354 | | |
| 6,822,054 | |
Accounts payable | |
| 3,130,143 | | |
| 3,558,827 | |
Advance from customers | |
| 2,422,964 | | |
| 3,476,585 | |
Taxes payable | |
| 192,979 | | |
| 212,658 | |
Other payables and accrued liabilities | |
| 2,936,512 | | |
| 3,305,395 | |
Intercompany Payable | |
| 6,210,118 | | |
| 7,131,860 | |
Other payables-related parties | |
| 3,634,693 | | |
| 3,958,409 | |
Long term payable-current portion | |
| 281,698 | | |
| 126,261 | |
Deferred income | |
| 40,494 | | |
| 58,033 | |
TOTAL CURRENT LIABILITIES | |
| 24,851,955 | | |
| 28,650,082 | |
| |
| | | |
| | |
Long-term payables | |
| 258,451 | | |
| 222,687 | |
TOTAL LIABILITIES | |
$ | 25,110,406 | | |
$ | 28,872,769 | |
| |
| | | |
| | |
Paid-in capital | |
| 12,326,270 | | |
| 12,326,270 | |
Statutory reserve | |
| 29,006 | | |
| 29,006 | |
Accumulated deficit | |
| (6,757,686 | ) | |
| (5,357,908 | ) |
Accumulated other comprehensive income | |
| (1,029,668 | ) | |
| (460,142 | ) |
Total Equity | |
| 4,567,922 | | |
| 6,537,226 | |
| |
| | | |
| | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | |
$ | 29,678,328 | | |
$ | 35,409,995 | |
The summarized operating results of the VIE’s
are as follows:
| |
09/30/2022 | | |
09/30/2021 | |
Operating revenues | |
$ | 12,579,725 | | |
$ | 8,529,079 | |
Gross profit | |
| 1,931,426 | | |
| 735,635 | |
Income (loss) from operations | |
| (1,053,978 | ) | |
| (2,089,459 | ) |
Net income (loss) | |
| (1,399,778 | ) | |
| (2,231,272 | ) |
4. Restricted Cash
As of September 30, 2022 and 2021, the balance
of restricted cash was $84,588 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
| |
09/30/2022 | | |
12/31/2021 | |
Trade accounts receivable | |
$ | 3,958,233 | | |
$ | 5,481,589 | |
Less: Allowance for doubtful accounts | |
| (1,646,893 | ) | |
| (1,662,516 | ) |
| |
$ | 2,311,340 | | |
$ | 3,819,073 | |
Allowance for doubtful accounts | |
| | | |
| | |
Beginning balance: | |
| (1,662,516 | ) | |
| (46,149 | ) |
Additions to allowance | |
| (161,113 | ) | |
| (1,616,367 | ) |
Effect of exchange rate | |
| 176,736 | | |
| - | |
Ending balance | |
$ | (1,646,893 | ) | |
$ | (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:
| |
09/30/2022 | | |
12/31/2021 | |
Payment to suppliers and vendors | |
$ | 6,229,449 | | |
$ | 5,681,083 | |
7. Inventories
Inventories consisted of the following as of September
30, 2022 and December 31, 2021
| |
09/30/2022 | | |
12/31/2021 | |
Raw materials | |
$ | 2,839,861 | | |
$ | 2,988,855 | |
Inventory of supplies | |
| 10,673 | | |
| 12,587 | |
Work in progress | |
| 4,085,592 | | |
| 3,007,039 | |
Finished goods | |
| 1,272,046 | | |
| 1,807,951 | |
Total | |
$ | 8,208,172 | | |
$ | 7,816,432 | |
8. Plant and Equipment
Plant and equipment consisted of the following
as of September 30, 2022 and December 31, 2021:
At Cost: | |
09/30/2022 | | |
12/31/2021 | |
Buildings | |
$ | 23,440,451 | | |
$ | 17,550,376 | |
Machinery and equipment | |
| 11,823,022 | | |
| 11,681,716 | |
Office equipment | |
| 779,807 | | |
| 542,695 | |
Motor vehicles | |
| 1,562,711 | | |
| 1,740,191 | |
| |
| 37,605,991 | | |
| 31,514,978 | |
Less: Impairment | |
| (744,745 | ) | |
| (829,326 | ) |
Less: Accumulated depreciation | |
| (10,867,382 | ) | |
| (10,200,203 | ) |
| |
| 25,993,864 | | |
| 20,485,449 | |
Construction in progress | |
| 25,584 | | |
| 2,475,874 | |
Plant and Equipment | |
$ | 26,019,448 | | |
$ | 22,961,323 | |
Depreciation
expense for the nine months ended September 30, 2022 and 2021 was $716,964 and $1,543,332, respectively.
9. Intangible Assets
| |
09/30/2022 | | |
12/31/2021 | |
At Cost: | |
| 3,701,142 | | |
| 4,121,488 | |
Land use rights | |
| 79,536 | | |
| 86,359 | |
Software licenses | |
| 891,947 | | |
| 993,248 | |
Trademark | |
| 4,672,625 | | |
| 5,201,095 | |
| |
$ | | | |
$ | | |
Less: Accumulated amortization | |
| (1,054,420 | ) | |
| (1,001,444 | ) |
Net intangible assets | |
$ | 3,618,205 | | |
$ | 4,199,651 | |
Amortization expense for the nine months ended
September 30, 2022 and 2021 was $56,931 and $180,930 respectively.
10. Investments
As of September 30, 2022, The Company has paid
approximately $2,816,981 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.
On August
8, 2022, the Company acquired 30% equity interest of the Xianning Xiangtian Energy Holdings Group Co., Ltd. and the Company issued 12,000,000
shares of common stock to the Sellers at $0.8 per share, total consideration was $9,600,000. On July 20, 2022, the company has
paid $4,100,000 and purchased 10% of Xianning Xiangtian Energy Holding Group Co., Ltd.’s total equity for investments purpose, and
the industrial and commercial modification procedures, as well as the shareholders registration process in the local government agencies,
are in progress. As of September 30, 2022, the Company has owned 40% equity ownership of the Xianning
Xiangtian Energy Holdings Group Co., Ltd.
11. Other Payable
As of September 30, 2022 and December 31, 2021,
the balance of other payable was $4,773,715 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 September 30, 2022 and December 31, 2021,
the outstanding balance due from related parties was $6,733,185 and $7,670,434, respectively. Significant parties comprised much of the
total outstanding balance as of September 30, 2022 are stated below:
The outstanding balance of $3,724,276 was
due from Mr. Cai Xiaodong, the shareholder of the Anhui Ansheng Petrochemical Equipment Co., Ltd.;
The outstanding
balance of $2,123,672 was due from Wuxi Ying’anbang Chemical Machinery Factory, which has significant influence on Ansheng
branch;
The
outstanding balance of $885,237 was due from a couple of individuals which has significant influence on Ansheng branch.
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 September 30, 2022 and December 31, 2021,
the outstanding balance due to related parties was $10,412,765 and $5,196,227, respectively. Significant related parties comprised much
of the total outstanding balance as of September 30, 2022 are stated below:
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 $79,997 was
due to Jilin ChuangTai New Energy Technology Co., Ltd, which has the same legal representative as Jilin Chuangyuan.
The outstanding
balance of $316,910 was due to Wuxi Xinganbang Petrochemical Equipment Co., Ltd., which has significant influence on Ansheng branch.
The outstanding
balance of $967,633 was due to Ms. Yan Yan, the spouse of the legal representative of Jilin Chuangyuan Chemical Co., Ltd.
The outstanding
balance of $1,528,281 was due to Mr. Zhou Bin, the legal representative of Jiayi Technologies (Xianning) Co., Ltd., and the chief executive
officer and chairman of the Company.
The outstanding balance of $3,171,481 was
due to a couple of individuals, which has significant influence on Ansheng branch.
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 | | |
Allinyson | |
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 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 7,193,965 | |
Goodwill impairment | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Balance as of September 30, 2022 | |
$ | 10,263,937 | | |
| - | | |
| - | | |
| 3,191,897 | | |
| 4,724,698 | | |
| 7,193,965 | |
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 bank loans consisted
of the following:
Lender | |
Maturities | |
Weighted
average
interest
rate | | |
09/30/2022 | | |
12/31/2021 | |
Rural Credit Cooperatives of Jilin Province, Jilin Branch | |
Due in November 2023 | |
| 7.83 | % | |
| 3,521,226 | | |
| 3,921,138 | |
| |
| |
| | | |
| | | |
| | |
Loan from Anhui Langxi Rural Commercial Bank Of China | |
Due in December 2021 | |
| 3.85 | % | |
| 2,481,128 | | |
| 2,900,916 | |
| |
| |
| | | |
| | | |
| | |
Tonghua Dongchang Yuyin Village Bank | |
Due in June 2025 | |
| 8.00 | % | |
| 281,698 | | |
| - | |
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 September 30, 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.
The loan from Tonghua Dongchang Yuyin Village Bank, as a three-year
long-term debt, was denominated in Renminbi and was primarily obtained for general working capital. On June 15, 2022, Mr. Chen Yongsheng
and Mr. Cai Xiaodong pledged 56,930,000 stocks of Jilin Chuangyuan Chemical Co., Ltd. to the pledgee Tonghua Dongchang Yuyin Village Bank.
As the pledgee, Tonghua Dongchang Yuyin Village Bank shall have custody of these stocks, which accounted for 100% of the total share during
the entire Term of Pledge set forth in this Agreement. As of September 30, 2022, the Company completed the finance with equity in pledge.
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 September 30, 2022 and
December 31, 2021, the balance of advance from customers was approximately $4,738,457 and $6,190,091.
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.
On April 8, 2022, Planet Green Holdings Corporation (Nevada) issued
an aggregate of 7,500,000 shares of common stock to the equity holders of Allinyson Ltd. for the acquisition of 100% of the equity interest
of Allinyson Ltd.
On May 19,
2022, the Company entered into a Securities Purchase Agreement, pursuant to which two investors agreed to purchase an aggregate of 10,000,000
shares of the Company’s common stock, par value $0.001 per share, for an aggregate purchase price of $4,100,000, representing a
purchase price of $0.41 per Share.
On July 20, 2022, the Company
acquired 30% equity interest of the Xianning Xiangtian Energy Holdings Group Co., Ltd. and the Company issued 12,000,000 shares of common
stock to the Sellers.
As of September 30, 2022, there were 72,081,930
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 nine months ended September 30, 2022 and 2021:
| |
09/30/2022 | | |
09/30/2021 | |
Loss attributed to PRC operations | |
$ | (3,006,160 | ) | |
$ | (3,279,874 | ) |
Loss attributed to U.S. operations | |
| (1,162,736 | ) | |
| (1,360,067 | ) |
Loss attributed to Canada operations | |
| (277,383 | ) | |
| (418,288 | ) |
Loss attributed to Hong Kong operations | |
| (431,108 | ) | |
| - | |
Income attributed to BVI | |
| - | | |
| - | |
Loss before tax | |
$ | (4,877,387 | ) | |
$ | (5,058,229 | ) |
| |
| | | |
| | |
PRC Statutory Tax at 25% Rate | |
| (751,540 | ) | |
| (1,264,557 | ) |
Effect of tax exemption granted | |
| - | | |
| - | |
Valuation allowance | |
| 926,641 | | |
| 1,264,704 | |
Income tax | |
$ | 175,101 | | |
$ | 147 | |
Per Share Effect of Tax Exemption | |
| - | | |
| - | |
Effect of tax exemption granted | |
$ | - | | |
$ | - | |
Weighted-Average Shares Outstanding Basic | |
| 55,335,606 | | |
| 23,082,956 | |
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 September 30, 2022 and 2021:
| |
09/30/2022 | | |
09/30/2021 | |
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 | |
| (21.4 | )% | |
| (25 | )% |
The Company’s effective tax rate | |
| 3.6 | % | |
| - | % |
18. Earnings/(Loss) Per Share
Components of basic and diluted earnings per share
were as follows:
| |
For the nine months ended | |
| |
September 30, | |
| |
2022 | | |
2021 | |
Loss from operations attributable to common stockholders | |
$ | (4,870,760 | ) | |
$ | (4,732,412 | ) |
| |
| | | |
| | |
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 | |
| 11,680,147 | | |
| 5,016,850 | |
Additions from Actual Events – issuance of common stock for acquisition | |
| 4,852,941 | | |
| 6,054,945 | |
Additions from Actual Events – issuance of common stock for investment | |
| 3,220,588 | | |
| - | |
Additions from Actual Events – issuance of common stock for stock compensation | |
| - | | |
| 201,231 | |
Basic Weighted Average Shares Outstanding | |
| 55,335,606 | | |
| 23,082,956 | |
| |
| | | |
| | |
(Loss) income per common shareholders - Basic and diluted | |
$ | (0.09 | ) | |
$ | (0.21 | ) |
Basic and diluted weighted average shares outstanding | |
| 55,335,606 | | |
| 23,082,956 | |
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 nine months ended September 30, 2022 and 2021.
| |
For the period ended | |
Customers | |
30-September-22 | | |
30-September-21 | |
| |
Amount $ | | |
% | | |
Amount | | |
$% | |
A | |
| - | | |
| - | | |
| 2,218,627 | | |
| 11 | |
B | |
| - | | |
| - | | |
| 2,105,918 | | |
| 11 | |
Suppliers Concentrations
The following table sets forth information about
each supplier that accounted for 10% or more of the Company’s purchase for the nine months ended September 30, 2022 and 2021.
| |
For the years ended | |
Suppliers | |
30-September-22 | | |
30-September-21 | |
| |
Amount $ | | |
% | | |
Amount $ | | |
% | |
A | |
| 8,857,285 | | |
| 21 | | |
| 6,974,422 | | |
| 37 | |
B | |
| 6,281,237 | | |
| 15 | | |
| - | | |
| - | |
C | |
| 6,161,585 | | |
| 15 | | |
| - | | |
| - | |
D | |
| 5,752,312 | | |
| 14 | | |
| - | | |
| - | |
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 leases, using an incremental borrowing rate of 4.75% and 4.90% based on the duration of lease terms.
The weighted average remaining
lease term of its existing leases is 0.58years.
The Company’s lease agreements
do not contain any material residual value guarantees or material restrictive covenants.
For the nine months ended September
30, 2022 and 2021, rent expenses amounted to 301,432 and $329,989 respectively.
The five-year maturity of the
Company’s lease obligations is presented below:
Twelve months ended December 31, | |
Operating
lease
amount | |
2022 | |
| 100,477 | |
2023 | |
| 133,970 | |
Total lease payment | |
| 234,447 | |
Less: interest | |
| (34,011 | ) |
Present value of lease liabilities | |
$ | 200,436 | |
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, Fast Approach and Allinyson Ltd. 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, Fast Approach and Allinyson Ltd. 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, Allinyson Ltd. and Fast Approach’s performance.
Segment reporting | |
09/30/2022 | | |
12/31/2021 | |
Fast Approach and Shanghai Shuning | |
$ | 353,024 | | |
$ | 387,145 | |
Xianning Bozhuang | |
| 9,706,224 | | |
| 10,987,674 | |
Jingshan Sanhe | |
| 5,152,501 | | |
| 6,069,282 | |
Anhui Ansheng | |
| 14,060,947 | | |
| 17,298,525 | |
Jilin Chuangyuan | |
| 14,068,042 | | |
| 16,386,168 | |
Jiayi Technologies (Xianning) Co., Ltd. | |
| 10,069,170 | | |
| 12,378,147 | |
Shandong Yunchu | |
| 4,829,124 | | |
| 4,094,723 | |
Allinyson | |
| 258,815 | | |
| - | |
Planet Green Holdings Corporation | |
| 37,102,869 | | |
| 16,413,420 | |
Promising Prospect HK Limited. | |
| 1,987,276 | | |
| 2,000,496 | |
Total Assets | |
$ | 97,587,992 | | |
$ | 86,015,580 | |
23. Contingencies
As of September 30, 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.
Wuxi Suxin Natural Gas Utilization Co., Ltd. (The
“Plaintiff”) sued Anhui Xuanneng Natural Gas Energy Equipment Co., Ltd., Anhui Ansheng Petrochemical Equipment Co., Ltd and
other related individuals (the “Defendants”) that Defendants have damaged the interest of Plaintiff and the defendants should
restitute the plaintiff’s damage of RMB 16,210,227 as well as the interest in total. The case has now been transferred to the Changfeng
County Court of Anhui Province for processing. Meanwhile, due to the impact of this case, Anhui Ansheng’s available cash of $581,666
was temporarily frozen by the court.
24. Subsequent event
The Company evaluates subsequent events that have
occurred after the balance sheet date but before the financial statements are issued. There are two types of subsequent events: (1) recognized,
or those that provide additional evidence with respect to conditions that existed at the dates of the balance sheets, including the estimates
inherent in the process of preparing financial statements, and (2) non-recognized, or those that provide evidence with respect to conditions
that did not exist at the date of the balance sheet but arose subsequent to that date. The Company has analyzed its operations subsequent
to November 14, 2022 to the date these unaudited condensed consolidated financial statements
were issued, and has determined that it does not have any material events to disclose.