GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
AS
OF SEPTEMBER 30, 2020 AND DECEMBER 31, 2019 (UNAUDITED) (Continued)
(IN
U.S. DOLLARS)
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Short-term bank loans
|
|
$
|
20,712,560
|
|
|
$
|
16,861,615
|
|
Notes payable - bank acceptance notes
|
|
|
17,671,375
|
|
|
|
15,050,902
|
|
Accounts payable
|
|
|
21,573,305
|
|
|
|
14,713,008
|
|
Taxes payables
|
|
|
268,861
|
|
|
|
12,529
|
|
Customer deposits
|
|
|
338,892
|
|
|
|
132,194
|
|
Due to related parties
|
|
|
4,076,314
|
|
|
|
3,481,984
|
|
Other current liabilities
|
|
|
1,513,260
|
|
|
|
3,086,859
|
|
Long-term payable - current-portion
|
|
|
741,215
|
|
|
|
2,654,230
|
|
Total current liabilities
|
|
$
|
66,895,782
|
|
|
$
|
55,993,321
|
|
|
|
|
|
|
|
|
|
|
Long-term liabilities
|
|
|
|
|
|
|
|
|
Long-term payables
|
|
|
370,392
|
|
|
|
1,349,850
|
|
Other long-term liabilities
|
|
|
2,310,894
|
|
|
|
2,178,548
|
|
Total long-term liabilities
|
|
$
|
2,681,286
|
|
|
$
|
3,528,398
|
|
TOTAL LIABILITIES
|
|
$
|
69,577,068
|
|
|
$
|
59,521,719
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
Ordinary shares, no par value: 10,021,142 and 10,006,142 shares issued and outstanding as of September 30, 2020 and December 31, 2019
|
|
|
-
|
|
|
|
-
|
|
Additional paid-in capital
|
|
|
15,269,485
|
|
|
|
15,226,685
|
|
Statutory reserves
|
|
|
4,338,618
|
|
|
|
3,866,574
|
|
Retained earnings
|
|
|
21,101,803
|
|
|
|
19,863,600
|
|
Accumulated other comprehensive income (loss)
|
|
|
1,942,237
|
|
|
|
(360,981
|
)
|
Total shareholders’ equity
|
|
$
|
42,652,143
|
|
|
$
|
38,595,878
|
|
Non-controlling interest
|
|
|
9,009,193
|
|
|
|
8,366,246
|
|
TOTAL EQUITY
|
|
$
|
51,661,336
|
|
|
$
|
46,962,124
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
$
|
121,238,404
|
|
|
$
|
106,483,843
|
|
The accompanying notes are an integral part
of the unaudited condensed consolidated financial statements.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME AND COMPREHENSIVE INCOME (LOSS)
FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)
(IN
U.S. DOLLARS)
|
|
For the three months ended
September 30,
|
|
|
For the nine months ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
REVENUES
|
|
$
|
16,520,598
|
|
|
$
|
11,951,535
|
|
|
$
|
42,969,010
|
|
|
$
|
40,502,305
|
|
COST OF GOODS SOLD
|
|
|
13,122,382
|
|
|
|
9,949,895
|
|
|
|
34,764,736
|
|
|
|
31,875,891
|
|
GROSS PROFIT
|
|
|
3,398,216
|
|
|
|
2,001,640
|
|
|
|
8,204,274
|
|
|
|
8,626,414
|
|
Selling expenses
|
|
|
270,654
|
|
|
|
180,252
|
|
|
|
792,030
|
|
|
|
778,348
|
|
General and administrative expenses
|
|
|
324,073
|
|
|
|
363,353
|
|
|
|
1,841,958
|
|
|
|
1,253,646
|
|
Research and development expenses
|
|
|
564,204
|
|
|
|
450,111
|
|
|
|
1,604,151
|
|
|
|
1,600,890
|
|
Total operating expenses
|
|
$
|
1,158,931
|
|
|
$
|
993,716
|
|
|
$
|
4,238,139
|
|
|
$
|
3,632,884
|
|
INCOME FROM OPERATIONS
|
|
$
|
2,239,285
|
|
|
$
|
1,007,924
|
|
|
$
|
3,966,135
|
|
|
$
|
4,993,530
|
|
Interest income
|
|
|
66,960
|
|
|
|
6,111
|
|
|
|
142,791
|
|
|
|
132,141
|
|
Interest expense
|
|
|
(231,760
|
)
|
|
|
(415,203
|
)
|
|
|
(942,524
|
)
|
|
|
(1,292,746
|
)
|
Other income (loss)
|
|
|
(1,267,982
|
)
|
|
|
(309,018
|
)
|
|
|
(415,150
|
)
|
|
|
40,092
|
|
INCOME BEFORE INCOME TAX
|
|
$
|
806,503
|
|
|
$
|
289,814
|
|
|
$
|
2,751,252
|
|
|
$
|
3,873,017
|
|
INCOME TAX
|
|
|
346,502
|
|
|
|
47,784
|
|
|
|
491,660
|
|
|
|
624,735
|
|
NET INCOME
|
|
$
|
460,001
|
|
|
$
|
242,030
|
|
|
$
|
2,259,592
|
|
|
$
|
3,248,282
|
|
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST
|
|
|
252,068
|
|
|
|
86,346
|
|
|
|
535,898
|
|
|
|
420,650
|
|
NET INCOME ATTRIBUTABLE TO GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
|
|
$
|
207,933
|
|
|
$
|
155,684
|
|
|
$
|
1,723,694
|
|
|
$
|
2,827,632
|
|
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
3,657,192
|
|
|
|
(1,613,847
|
)
|
|
|
2,410,267
|
|
|
|
(1,725,902
|
)
|
Unrealized foreign currency translation income (loss) attributable to Greenland technologies holding corporation and subsidiaries
|
|
|
2,863,032
|
|
|
|
(1,662,531
|
)
|
|
|
2,303,218
|
|
|
|
(1,740,796
|
)
|
Unrealized foreign currency translation income attributable to Noncontrolling interest
|
|
|
794,160
|
|
|
|
48,684
|
|
|
|
107,049
|
|
|
|
14,894
|
|
Comprehensive income (loss)
|
|
|
3,070,965
|
|
|
|
(1,506,847
|
)
|
|
|
4,026,912
|
|
|
|
1,086,836
|
|
Noncontrolling interest
|
|
|
1,046,228
|
|
|
|
135,030
|
|
|
|
642,947
|
|
|
|
435,544
|
|
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
10,021,142
|
|
|
|
7,500,000
|
|
|
|
10,017,204
|
|
|
|
7,500,000
|
|
NET INCOME PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.17
|
|
|
$
|
0.38
|
|
The accompanying notes are an integral part
of the unaudited condensed consolidated financial statements.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF SHAREREHOLDERS’ EQUITY
FOR
THE THREE MONTHS ENDED MARCH 31, JUNE 30, SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)
(IN
U.S. DOLLARS, EXCEPT FOR SHARE DATA)
|
|
Ordinary Shares
|
|
|
Additional
|
|
|
Accumulated
Other
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
No Par Value
|
|
|
Paid-in
|
|
|
Comprehensive
|
|
|
Statutory
|
|
|
Retained
|
|
|
controlling
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Income/(loss)
|
|
|
Reserve
|
|
|
Earnings
|
|
|
Interest
|
|
|
Total
|
|
Balance at December 31, 2018
|
|
|
7,500,000
|
|
|
|
-
|
|
|
|
12,301,305
|
|
|
|
173,881
|
|
|
|
3,334,322
|
|
|
|
15,931,296
|
|
|
|
7,898,064
|
|
|
|
39,638,868
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,542,194
|
|
|
|
186,358
|
|
|
|
1,728,552
|
|
Transfer to statutory reserve
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
164,296
|
|
|
|
(164,296
|
)
|
|
|
-
|
|
|
|
-
|
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
782,078
|
|
|
|
-
|
|
|
|
-
|
|
|
|
101,010
|
|
|
|
883,088
|
|
Balance at March 31, 2019
|
|
|
7,500,000
|
|
|
|
-
|
|
|
|
12,301,305
|
|
|
|
955,959
|
|
|
|
3,498,618
|
|
|
|
17,309,194
|
|
|
|
8,185,432
|
|
|
|
42,250,508
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,129,754
|
|
|
|
147,946
|
|
|
|
1,277,700
|
|
Transfer to statutory reserve
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
134,261
|
|
|
|
(134,261
|
)
|
|
|
-
|
|
|
|
-
|
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(860,343
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(134,800
|
)
|
|
|
(995,143
|
)
|
Balance at June 30, 2019
|
|
|
7,500,000
|
|
|
|
-
|
|
|
|
12,301,305
|
|
|
|
95,616
|
|
|
|
3,632,879
|
|
|
|
18,304,687
|
|
|
|
8,198,578
|
|
|
|
42,533,065
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
155,684
|
|
|
|
86,346
|
|
|
|
242,030
|
|
Transfer to statutory reserve
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16,721
|
|
|
|
(16,721
|
)
|
|
|
-
|
|
|
|
-
|
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,662,531
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
48,684
|
|
|
|
(1,613,847
|
)
|
Balance at September 30, 2019
|
|
|
7,500,000
|
|
|
|
-
|
|
|
|
12,301,305
|
|
|
|
(1,566,915
|
)
|
|
|
3,649,600
|
|
|
|
18,443,650
|
|
|
|
8,333,608
|
|
|
|
41,161,248
|
|
Balance at December 31, 2019
|
|
|
10,006,142
|
|
|
|
-
|
|
|
$
|
15,226,685
|
|
|
$
|
(360,981
|
)
|
|
|
3,866,574
|
|
|
$
|
19,863,600
|
|
|
$
|
8,366,246
|
|
|
$
|
46,962,124
|
|
Restricted stock grants
|
|
|
15,000
|
|
|
|
-
|
|
|
|
42,800
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
42,800
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
256,664
|
|
|
|
71,419
|
|
|
|
328,083
|
|
Transfer to statutory reserve
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60,253
|
|
|
|
(60,253
|
)
|
|
|
-
|
|
|
|
-
|
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(604,994
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(700,766
|
)
|
|
|
(1,305,760
|
)
|
Balance at March 31, 2020
|
|
|
10,021,142
|
|
|
|
-
|
|
|
$
|
15,269,485
|
|
|
$
|
(965,975
|
)
|
|
|
3,926,827
|
|
|
$
|
20,060,011
|
|
|
$
|
7,736,899
|
|
|
$
|
46,027,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,259,097
|
|
|
|
212,411
|
|
|
|
1,471,508
|
|
Transfer to statutory reserve
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
195,723
|
|
|
|
(195,723
|
)
|
|
|
-
|
|
|
|
-
|
|
Dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,447
|
)
|
|
|
-
|
|
|
|
(13,447
|
)
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
45,180
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13,655
|
|
|
|
58,835
|
|
Balance at June 30, 2020
|
|
|
10,021,142
|
|
|
|
-
|
|
|
|
15,269,485
|
|
|
|
(920,795
|
)
|
|
|
4,122,550
|
|
|
|
21,109,938
|
|
|
|
7,962,965
|
|
|
|
47,544,143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
207,933
|
|
|
|
252,068
|
|
|
|
460,001
|
|
Transfer to statutory reserve
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
216,068
|
|
|
|
(216,068
|
)
|
|
|
-
|
|
|
|
-
|
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,863,032
|
|
|
|
-
|
|
|
|
-
|
|
|
|
794,160
|
|
|
|
3,657,192
|
|
Balance at September 30, 2020
|
|
|
10,021,142
|
|
|
|
-
|
|
|
|
15,269,485
|
|
|
|
1,942,237
|
|
|
|
4,338,618
|
|
|
|
21,101,803
|
|
|
|
9,009,193
|
|
|
|
51,661,336
|
|
The accompanying notes are an integral part
of the unaudited condensed consolidated financial statements.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)
(IN
U.S. DOLLARS)
|
|
For the nine months ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
2,259,592
|
|
|
$
|
3,248,282
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
1,751,084
|
|
|
|
1,723,564
|
|
Loss on disposal of property and equipment
|
|
|
-
|
|
|
|
(253,869
|
)
|
Increase in allowance for doubtful accounts
|
|
|
114,108
|
|
|
|
74,858
|
|
Decrease in allowance for notes receivable
|
|
|
(8,166
|
)
|
|
|
(29,070
|
)
|
(Decrease) increase in inventory impairment
|
|
|
(59,565
|
)
|
|
|
29,795
|
|
Deferred tax assets
|
|
|
(17,139
|
)
|
|
|
55,645
|
|
Stock based compensation expense
|
|
|
42,800
|
|
|
|
-
|
|
Loss on prepayment of financing lease obligations
|
|
|
53,130
|
|
|
|
-
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Decrease (Increase) In:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(3,410,247
|
)
|
|
|
(2,368,390
|
)
|
Notes receivable
|
|
|
(3,311,935
|
)
|
|
|
1,141,089
|
|
Inventories
|
|
|
(2,201,159
|
)
|
|
|
2,387,499
|
|
Advance to suppliers
|
|
|
(51,312
|
)
|
|
|
(101,111
|
)
|
Other current and noncurrent assets
|
|
|
205,389
|
|
|
|
(38,977
|
)
|
Increase (Decrease) In:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
6,324,278
|
|
|
|
1,751,031
|
|
Customer deposits
|
|
|
197,285
|
|
|
|
17,713
|
|
Other current liabilities
|
|
|
(263,813
|
)
|
|
|
563,942
|
|
Income tax payable
|
|
|
248,702
|
|
|
|
(57,544
|
)
|
Due to related parties
|
|
|
312,785
|
|
|
|
(418,668
|
)
|
Long-term payables-unamortized deferred financing costs
|
|
|
199,742
|
|
|
|
334,609
|
|
Other long-term liabilities
|
|
|
(184,022
|
)
|
|
|
(163,223
|
)
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
|
$
|
2,201,537
|
|
|
$
|
7,897,175
|
|
The accompanying notes are an integral part
of the unaudited condensed consolidated financial statements.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) (Continued)
(IN
U.S. DOLLARS)
|
|
For the nine months ended
September 30
|
|
|
|
2020
|
|
|
2019
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchases of long term assets
|
|
$
|
(436,446
|
)
|
|
$
|
(1,011,941
|
)
|
Proceeds from sale of property, plant and equipment
|
|
|
-
|
|
|
|
91,176
|
|
Proceeds from government grants for construction
|
|
|
253,329
|
|
|
|
324,193
|
|
NET CASH USED IN INVESTING ACTIVITIES
|
|
$
|
(183,117
|
)
|
|
$
|
(596,572
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from short-term bank loans
|
|
$
|
20,838,520
|
|
|
$
|
21,725,658
|
|
Repayments of short-term bank loans
|
|
|
(17,547,399
|
)
|
|
|
(22,184,928
|
)
|
Repayments of long-term bank loans
|
|
|
-
|
|
|
|
(4,738,500
|
)
|
Issuance of notes payable
|
|
|
20,646,974
|
|
|
|
18,252,962
|
|
Repayment of notes payable
|
|
|
(18,502,957
|
)
|
|
|
(23,285,548
|
)
|
Proceeds from related parties
|
|
|
1,018,437
|
|
|
|
2,298,514
|
|
Repayment of loans from related parties
|
|
|
(520,823
|
)
|
|
|
(3,336,757
|
)
|
Repayment of loans from third parties
|
|
|
(5,723,689
|
)
|
|
|
(2,916,000
|
)
|
Proceeds from third parties
|
|
|
4,376,267
|
|
|
|
145,800
|
|
Dividend paid
|
|
|
(13,447
|
)
|
|
|
(164,257
|
)
|
Proceeds received from financing lease obligation
|
|
|
1,430,922
|
|
|
|
6,094,440
|
|
Prepayment of lease-financing obligations
|
|
|
(2,295,833
|
)
|
|
|
-
|
|
Payment of principal on financing lease obligation
|
|
|
(1,510,861
|
)
|
|
|
(1,771,595
|
)
|
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
$
|
2,196,111
|
|
|
$
|
(9,880,211
|
)
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
|
|
$
|
4,214,531
|
|
|
$
|
(2,579,608
|
)
|
Effect of exchange rate changes on cash
|
|
|
1,262,878
|
|
|
|
(398,717
|
)
|
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR
|
|
|
5,717,207
|
|
|
|
8,968,177
|
|
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD
|
|
$
|
11,194,616
|
|
|
$
|
5,989,852
|
|
Cash and cash equivalents
|
|
|
10,418,741
|
|
|
|
3,858,305
|
|
Restricted cash
|
|
|
775,875
|
|
|
|
2,131,547
|
|
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
|
|
|
|
Income taxes paid
|
|
|
417,549
|
|
|
|
654,779
|
|
Interest paid
|
|
|
946,589
|
|
|
|
1,302,629
|
|
The accompanying notes are an integral part
of the unaudited condensed consolidated financial statements.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1 – ORGANIZATION AND PRINCIPAL ACTIVITIES
Greenland
Technologies Holding Corporation, formerly known as Greenland Acquisition Corporation (“Greenland” or the “Company”),
was incorporated on December 28, 2017 as a British Virgin Islands Company with limited liability. The Company was incorporated
as a blank check Company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization,
reorganization or similar business combination with one or more target businesses. On October 24 2019, the Company acquired all
of the outstanding shares of Zhongchai Holding (Hong Kong) Limited via a reverse capitalization and changed its name from Greenland
Acquisition Corporation to Greenland Technologies Holding Corporation.
Greenland
serves as the parent Company for the primary operating Company, Zhongchai Holding (Hong Kong) Limited, a holding Company formed
under the laws of Hong Kong on April 23, 2009 (“Zhongchai Holding”). Through Zhongchai Holding and other subsidiaries,
Greenland develops and manufactures traditional transmission products for material handling machineries in PRC, as well as develop
models for robotic cargo carriers, which are expected to be produced in the near future in PRC.
The
outbreak of the novel coronavirus, commonly referred to as “COVID-19”, first found in mainland China, then in Asia
and eventually throughout the world, has significantly affected business and manufacturing activities within China. The government
implemented a series of measures to constrain the spread of virus, including travel restrictions, widespread mandatory quarantines,
and suspension of business activities within China. Effective February 3, 2020, the Company announced the temporary closure of
its operating offices in Zhejiang Province, including suspension of its manufacturing activities in response to the emergency
measures imposed by the local government. The Company’s operating subsidiaries were temporarily shut down until the end
of February 2020. The Company expects to delay its launch of robotic cargo carriers due to uncertainties of the market demand.
Moreover, the outbreak has significantly limited suppliers’ ability to provide low-cost, high-quality parts and materials
to the Company on a timely basis. Zhejiang Province, where we conduct a substantial part of our business, is one of the most affected
areas in China. As of the date of this report, Chinese industries have gradually resumed businesses as government officials started
to ease the restrictive measures since April 2020. However, we remain cautious and prudent when assessing the future impact of
COVID-19 on our business due to the current ongoing global pandemic.
The
Company’s Shareholders
As
of September 30, 2020, Cenntro Holding Limited owns 74.842% of Greenland’s outstanding ordinary shares. Cenntro Holding
Limited is controlled and beneficially owned by Mr. Peter Zuguang Wang, chairman of the Company.
The
Company’s Subsidiaries
Zhongchai
Holding, the wholly-owned subsidiary of the Company, owned 89.47% of Zhejiang Zhongchai Machinery Co., Ltd. (“Zhejiang Zhongchai”),
62.5% of Shanghai Hengyu Enterprise Management Consulting Co., Ltd. (“Hengyu”), and 100% of Hangzhou Greenland Robotic
Co., Ltd (“Hangzhou Greenland”).
Zhejiang
Zhongchai, the subsidiary of the Company, is the sole shareholder of Zhejiang Shengte Transmission Co., Ltd. (“Shengte”).
It also owned 62.5% of Hengyu until transferred its ownership to Zhongchai Holding on July 15, 2019.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND PRINCIPAL
ACTIVITIES (CONTINUED)
Zhejiang
Zhongchai
Zhejiang
Zhongchai, a limited liability Company registered on November 21, 2005, is the direct operating subsidiary of Zhongchai Holding
in PRC. On April 5, 2007, Usunco Automotive Limited (“Usunco”), a British Virgin Islands limited liability Company,
invested $8,000,000 USD for purchasing approximately 75.47% equity interest of Zhejiang Zhongchai. On December 16, 2009, Usunco
agreed to transfer its 75.47% interest in Zhejiang Zhongchai to Zhongchai Holding. On April 26, 2010, Xinchang County Keyi Machinery
Co., Ltd. transferred 24.528% equity interest it owned in Zhejiang Zhongchai to Zhongchai Holding in exchange for a consideration
of US$2.6 million. On November 1, 2017, Xinchang County Jiuxin Investment Management Partnership (LP) (“Jiuxin”),
an entity controlled and beneficially owned by Mr. He Mengxing, president of Zhejiang Zhongchai, closed its investment of approximately
RMB31,590,000 in Zhejiang Zhongchai for 10.53% of its interest. As of September 30, 2020, Zhongchai Holding owns approximately
89.47% of Zhejiang Zhongchai and Jiuxin owns approximately 10.53% of Zhejiang Zhongchai.
Through
Zhejiang Zhongchai, the Company has been engaging in the manufacture and sale of transmission systems mainly for forklift trucks
since 2006. These forklift trucks are used in manufacturing and logistics applications, such as factory, workshop, warehouse,
fulfilment centers, shipyards and seaports. The transmission systems are the key components for forklift trucks. The Company supplies
transmission systems to forklift truck manufacturers. Its transmission systems fit for forklift trucks ranging from 1 to 15 tons,
with either mechanical shift or automatic shift. All the products are currently manufactured at the Company’s facility in
Xinchang, Zhejiang Province, PRC and are sold to both domestic and oversea markets. The Company has moved to its new factory in
Meizhu, Xinchang, Zhejiang Province, PRC, in October of 2019.
Shengte
Shengte
is a limited liability Company incorporated in Zhejiang, PRC on February 24, 2006.
Shengte
manufactures transmission box parts for Zhejiang Zhongchai. All parts were manufactured in the Company’s Xinchang facility
and were sold internally to Zhejiang Zhongchai. In January 2019 Shengte has stopped its business and transferred its most assets
to Zhejiang Zhongchai and only maintain its employee social benefit function in the local region.
Hengyu
Hengyu
is a limited liability Company incorporated in Shanghai, PRC on September 10, 2015. Hengyu holds no assets other than an account
receivable owed by Cenntro Holding Limited. Hengyu’s business operations are providing investment management and consulting
services.
Hangzhou
Greenland
Hangzhou
Greenland is a limited liability Company incorporated in Zhejiang, PRC on August 9, 2019. Hangzhou Greenland’s operation
focuses on designing and manufacturing robotic cargo carriers based on a conceptual prototype developed by our R&D team in
2018.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND PRINCIPAL
ACTIVITIES (CONTINUED)
Greenland
Tech
On
January 14, 2020, Greenland established its wholly owned subsidiary in the state of Delaware named Greenland Technologies Corporation
(“Greenland Tech”). The Company aims to use it as the US operation site of the Company and promotes sales of robotic
products for the North American market in the near future. Greenland Tech currently does not conduct any business activities.
Details
of the Company’s subsidiaries, which are included in these unaudited consolidated financial statements as of September 30,
2020, are as follows:
Name
|
|
Domicile
and Date
of Incorporation
|
|
Paid-in
Capital
|
|
Percentage
of
Effective
Ownership
|
|
|
Principal
Activities
|
Zhongchai
Holding (Hong Kong) Limited
|
|
Hong
Kong
April 23, 2009
|
|
HKD
|
10,000
|
|
|
|
100
|
%
|
|
Holding
|
Zhejiang Zhongchai
Machinery Co., Ltd.
|
|
PRC
November 21, 2005
|
|
USD
|
28,612,943
|
|
|
|
89.47
|
%
|
|
Manufacture, sale
of various transmission boxes
|
Zhejiang Shengte
Transmission Co., Ltd.
|
|
PRC
February 24, 2006
|
|
RMB
|
5,000,000
|
|
|
|
89.47
|
%
|
|
Manufacture and sale
of parts of transmission box
|
Shanghai Hengyu Enterprise
Management Consulting Co., Ltd.
|
|
PRC
September 10, 2015
|
|
RMB
|
251,500,000
|
|
|
|
62.5
|
%
|
|
Investment management
and consulting services.
|
Hangzhou Greenland
Robotic Technologies Co., Ltd.
|
|
PRC
August 9, 2019
|
|
RMB
|
252,862
|
|
|
|
100
|
%
|
|
Manufactures and
sales carrier cargo robotics.
|
Greenland Technologies
Corporation
|
|
Delaware, USA
January 14, 2020
|
|
USD
|
0
|
|
|
|
100
|
%
|
|
US operation and
promote robotic enabled automated warehouse system for North American market
|
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting
principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the
instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and
footnote disclosures normally included in the annual audited consolidated financial statements prepared in accordance with
U.S. GAAP have been condensed or omitted. The accompanying condensed consolidated balance sheet as of December 31, 2019 is
derived from the Company’s audited financial statements as of that date. Because certain information and footnote
disclosures have been condensed or omitted, these consolidated financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2019 contained in the
Company’s 2019 Annual Report on Form 10-K (the “2019 Form 10-K”). In management’s opinion, all normal
and recurring adjustments considered necessary for a fair presentation of the financial position, results of operations and
cash flows for the periods presented have been included. When necessary, certain prior year amounts have been reclassified to
conform to the current period presentation. Interim period operating results do not necessarily indicate the results that may
be expected for any other interim period or for the full fiscal year. The Company believes that the disclosures made in these
condensed consolidated financial statements are adequate to make the information not misleading.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Principles
of Consolidation
The
condensed consolidated financial statements include the accounts of Greenland Technologies Holding Corporation and its
subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S.
GAAP”). Intercompany accounts and transactions have been eliminated upon consolidation. Certain reclassifications to
previously reported financial information have been made to conform to the current period presentation.
The
Business Combination was accounted for as a reverse recapitalization (the “Recapitalization Transaction”) in accordance
with Accounting Standard Codification (“ASC”) 805, Business Combinations. For accounting and financial reporting purposes,
Zhongchai Holding is considered the acquirer based on facts and circumstances, including the following:
|
●
|
Zhongchai Holding’s
operations comprise the ongoing operations of the combined entity;
|
|
●
|
The officers of
the newly combined company consist of Zhongchai Holding’s executives, including the Chief Executive Officer, Chief Financial
Officer and General Counsel; and,
|
|
●
|
The former shareholders
of Zhongchai Holding own a majority voting interests in the combined entity.
|
As
a result of Zhongchai Holding being the accounting acquirer, the financial reports filed with the SEC by the Company subsequent
to the Business Combination are prepared “as if” Zhongchai Holding is the predecessor and legal successor to the Company.
The historical operations of Zhongchai Holding are deemed to be those of the Company. Thus, the financial statements included
in this report reflect (i) the historical operating results of Zhongchai Holding prior to the Business Combination; (ii)
the combined results of the Company and Zhongchai Holding following the Business Combination in October 24, 2019; (iii) the
assets and liabilities of Zhongchai Holding at their historical cost, and (iv) Greenland’s equity structure for all periods
presented. Zhongchai Holding received 7,500,000 shares of Greenland in exchange for all the share capital, which is reflected
retroactively to December 31, 2017 and will be utilized for calculating earnings per share in all prior periods. No step-up basis
of intangible assets or goodwill was recorded in the Business Combination transaction consistent with the treatment of the transaction
as a reverse capitalization of Zhongchai Holding.
Use
of Estimates
The
preparation of the consolidated financial statements in conformity with U.S. GAAP 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 consolidated 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. Actual results could differ from
those estimates. Significant estimates in the three and nine months ended September 30, 2020 and 2019 include allowance for doubtful
accounts, reserve for inventories, useful life of property, plant and equipment, assumptions used in assessing impairment of long-term
assets and valuation of deferred tax assets and accruals for taxes due.
Non-controlling
Interest
Non-controlling
interests in the Company’s subsidiaries are recorded in accordance with the provisions of Financial Accounting Standards
Board (“FASB”) Accounting Standards Codification 810 Consolidation (“ASC 810”) and are reported as a component
of equity, separate from the parent’s equity. Purchase or sale of equity interests that do not result in a change of control
are accounted for as equity transactions. Results of operations attributable to the non-controlling interest are included in our
consolidated results of operations and, upon loss of control, the interest sold, as well as interest retained, if any, will be
reported at fair value with any gain or loss recognized in earnings.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Foreign
Currency Translation
The
accompanying consolidated financial statements are presented in United States dollars (“US$” or “$”).
The functional currency of the Company is Renminbi (“RMB”). Transactions in foreign currencies are initially recorded
at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the
settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of operations.
|
|
For the nine months ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
Period end RMB: US$ exchange rate
|
|
|
6.7896
|
|
|
|
7.1477
|
|
Period average RMB: US$ exchange rate
|
|
|
6.9885
|
|
|
|
6.8587
|
|
The
RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions
The PRC government imposes significant exchange restrictions on fund transfers out of the PRC that are not related to business
operations.
Revenue
Recognition
In
accordance with ASC Topic 606, “Revenue from Contracts with Customers”, the Company recognizes revenues when goods
or services are transferred to customers in an amount that reflects the consideration which the Company expects to receive in
exchange for those goods or services. In determining when and how revenues are recognized from contracts with customers, the Company
performs the following five-step analysis: (i) identification of contract with customer; (ii) determination of performance
obligations; (iii) measurement of the transaction price; (iv) allocation of the transaction price to the performance
obligations and (v) recognition of revenues when (or as) the Company satisfies each performance obligation. The Company derives
revenues from the processing, distribution and sale of its products. The Company recognizes its revenues net of value-added taxes
(“VAT”). The Company is subject to VAT which had been levied at the rate of 17% on the invoiced value of sales until
April 30, 2018, after which date the rate was reduced to 16%. VAT rate was further reduced to 13% starting from April 1, 2019.
Output VAT is borne by customers in addition to the invoiced value of sales and input VAT is borne by the Company in addition
to the invoiced value of purchases to the extent not refunded for export sales.
Revenues
are recognized at a point in time once the Company has determined that the customer has obtained control over the product. Control
is typically deemed to have been transferred to the customer when the performance obligation is fulfilled, usually at the time
of customers’ acceptance or consumption, at the net sales price (transaction price) and each of the criteria under ASC 606
have been met. Contract terms may require the Company to deliver the finished goods to the customers’ location or the customer
may pick up the finished goods at the Company’s factory. International sales are recognized when shipment clears customs
and leaves the port.
The
Company has adopted ASC 606 on January 1, 2018, using the transition method of Modified-Retrospective Method (“MRM”).
The adoption of ASC 606 had no impact on the Company’s beginning balance of retained earnings.
The
Company’s contracts are all short-term in nature with a contract term of one year or less. Receivables are recorded when
the Company has an unconditional right to consideration.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Contracts
do not offer any price protection, but allow for the return of certain goods if quality problem, which is standard warranty. The
Company’s product returns and recorded reserve for sales returns were minimal for the nine months ended September 30, 2020
and 2019. The total sales return and warranty expenditures amount are accounting for around 0.51% and 0.56% of the total revenue
of Greenland.
The
following table sets forth disaggregation of revenue:
|
|
For the three months ended
September 30,
|
|
|
For the nine months ended
September 30,
|
|
Major Product
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Transmission boxes for Forklift
|
|
|
14,998,460
|
|
|
|
9,985,094
|
|
|
|
39,359,886
|
|
|
|
35,763,973
|
|
Transmission boxes for Non-Forklift (EV, etc.) and parts of transmission boxes
|
|
|
1,522,138
|
|
|
|
1,966,441
|
|
|
|
3,609,124
|
|
|
|
4,738,332
|
|
Total
|
|
|
16,520,598
|
|
|
|
11,951,535
|
|
|
|
42,969,010
|
|
|
|
40,502,305
|
|
Cost
of Goods Sold
Cost
of goods sold consists primarily of material costs, freight charges, purchasing and receiving costs, inspection costs, internal
transfer costs, wages, employee compensation, amortization, depreciation and related costs, which are directly attributable to
the production of products. Write-down of inventory to lower of cost or net realizable value is also recorded in cost of goods
sold.
Selling
Expenses
Selling
expenses include operating expenses such as payroll and traveling and transportation expenses.
General
and Administrative Expenses
General
and administrative expenses include management and office salaries and employee benefits, depreciation for office facility and
office equipment, travel and entertainment, legal and accounting, consulting fees and other office expenses.
Research
and Development
Research
and development costs are expensed as incurred and totaled approximately $564,204 and $450,111 for the three months ended September
30, 2020 and 2019, respectively. Research and development costs are expensed as incurred and totaled approximately $1,604,151
and $1,600,890 for the nine months ended September 30, 2020 and 2019, respectively.
Government
subsidies
Government
subsidies are recognized when there is reasonable assurance that the subsidy will be received and all attaching conditions will
be complied with. When the subsidy relates to an expense item, it is recognized as income over the periods necessary to match
the subsidy on a systematic basis to the costs that it is intended to compensate. Where the subsidy relates to an asset, it is
recognized as other long-term liabilities and is released to the statement of operations over the expected useful life in a consistent
manner with the depreciation method for the relevant asset. Total government subsidies recorded in the other long-term liabilities
were $2.31 million and $2.18 million at September 30, 2020 and December 31, 2019, respectively.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Income
Taxes
The
Company accounts for income taxes following the liability method pursuant to FASB ASC 740 “Income Taxes”. Under this
method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases
of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to
reverse. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence,
it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred
taxes of a change in tax rate is recognized in income in the period that includes the enactment date.
The
Company also follows FASB ASC 740, which addresses the determination of whether tax benefits claimed or expected to be claimed
on a tax return should be recorded in the financial statements. The Company may recognize the tax benefit from an uncertain tax
position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities,
based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should
be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.
ASC 740 also provides guidance on recognition, classification, interest and penalties on income taxes, accounting in interim periods
and requires increased disclosures. As of September 30, 2020 and December 31, 2019, the Company did not have a liability for unrecognized
tax benefits. It is the Company’s policy to include penalties and interest expense related to income taxes as a component
of other expense and interest expense, respectively, as necessary. The Company’s historical tax years will remain open for
examination by the local authorities until the statute of limitations has passed.
Value-Added
Tax
Enterprises
or individuals, who sell commodities, engage in repair and maintenance or import or export goods in the PRC are subject to a value
added tax in accordance with PRC Laws. The VAT standard rate had been 17% of the gross sale price until April 30, 2018, after
which date the rate was reduced to 16%. VAT rate was further reduced to 13% starting from April 1, 2019. A credit is available
whereby VAT paid on the purchases of semi-finished products or raw materials used in the production of the Company’s finished
products can be used to offset the VAT due on the sales of the finished products.
Statutory
Reserve
In
accordance with the PRC Regulations on Enterprises with Foreign Investment, an enterprise established in the PRC with foreign
investment is required to provide for certain statutory reserves, namely (i) General Reserve Fund, (ii) Enterprise Expansion Fund
and (iii) Staff Welfare and Bonus Fund, which are appropriated from net profit as reported in the enterprise’s PRC statutory
accounts. A wholly-owned foreign enterprise is required to allocate at least 10% of its annual after-tax profit to the General
Reserve Fund until the balance of such fund has reached 50% of its respective registered capital. A non-wholly-owned foreign invested
enterprise is permitted to provide for the above allocation at the discretion of its board of directors. Appropriations to the
Enterprise Expansion Fund and Staff Welfare and Bonus Fund are at the discretion of the board of directors for all foreign invested
enterprises. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends.
Comprehensive
Income (Loss)
Comprehensive
income (loss) is defined as the change in equity during the year from transactions and other events, excluding the changes resulting
from investments by owners and distributions to owners, and is not included in the computation of income tax expense or benefit.
Accumulated comprehensive income consists of foreign currency translation. The Company presents comprehensive income (loss) in
accordance with ASC Topic 220, “Comprehensive Income”.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Earnings
per share
The
Company calculates earnings per share in accordance with ASC Topic 260 “Earnings per Share.” Basic earnings per share
is computed by dividing the net income by the weighted average number of common shares outstanding during the period. Diluted
earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number
of additional common shares that would have been outstanding if the potential ordinary shares equivalents had been issued and
if the additional common shares were dilutive. On October 24, 2019, the Company completed a reverse merger with Greenland Acquisition
Corporation whereby the Company received 7,500,000 shares in exchange for all the share capital, which is reflected retroactively
to December 31, 2017 and will be utilized for calculating earnings per share in all prior periods. The per share amounts have
been updated to show the effect of the exchange on earnings per share as if the exchange occurred at the beginning of both years
for the annual financial statements of the Company. The impact of the stock exchange is also shown on the Company’s Statements
of Shareholders’ Equity.
Pursuant
to the Service Agreement entered into and by the Company and Chineseinvestors.com, Inc., an Indiana corporation (“CIIX”)
on August 21, 2019 (the “Service Agreement”), CIIX were to provide certain investor relations services to the Company
for a period of three months beginning on August 21, 2019. And later on February 24, 2020, the Company and CIIX entered into a
termination agreement (the “CIIX Termination Agreement”) to terminate their respective obligations under the Service
Agreement. Pursuant to the CIIX Termination Agreement, the Company agreed to issue 5,000 restricted ordinary shares, no par value
(the “CIIX Termination Shares”) to CIIX.
Pursuant
to the Investor Relations Consulting Agreement entered into and by the Company and Skyline Corporate Communication Group, LLC,
a Massachusetts limited liability Company (“SCCG”) on August 15, 2019 (the “Consulting Agreement”), SCCG
were to provide certain investor relations services to the Company for a period of twelve months beginning on August 15, 2019.
And later on February 25, 2020, the Company and SCCG entered into a termination agreement (the “SCCG Termination Agreement”)
to terminate their respective obligations under the Consulting Agreement. Pursuant to the SCCG Termination Agreement, the Company
agreed to issue 10,000 restricted ordinary shares, no par value (the “SCCG Termination Shares”) to SCCG.
Pursuant
to the CIIX Termination Agreement and the SCCG Termination Agreement, 5,000 and 10,000 restricted ordinary shares, no par value,
were issued to CIIX and SCCG on March 12, 2020 and March 13, 2020, respectively, and will be utilized for calculating earnings
per share for the three and nine months ended September 30, 2020.
Cash
and Cash Equivalents
For
financial reporting purposes, the Company considers all highly liquid investments purchased with original maturity of three months
or less to be cash equivalents. The Company maintains no bank account in the United States of America. The Company maintains its
bank accounts in PRC and Hong Kong Special Administrative Region (“SAR”). Balances at financial institutions or state-owned
banks within PRC and Hong Kong SAR are not covered by insurance.
Restricted
Cash
Restricted
cash represents amounts held by a bank as security for bank acceptance bills, as well as the financial product secured for the
short-term bank loan and therefore is not available for the Company’s use until such time as the bank acceptance notes and
bank loans have been fulfilled or expired, normally within a twelve-month period.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Fair
Value of Financial Instruments
The
Company applies the provisions of ASC 820, Fair Value Measurements and Disclosures, to the financial instruments that are
required to be carried at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability
(an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market
participants at the measurement date. The Company uses a three-tier fair value hierarchy based upon observable and non-observable
inputs that prioritizes the information used to develop our assumptions regarding fair value. Fair value measurements are separately
disclosed by level within the fair value hierarchy.
|
●
|
Level 1—defined
as observable inputs such as quoted prices in active markets for identical assets or liabilities;
|
|
●
|
Level 2—defined
as inputs other than quoted prices in active markets, that are either directly or indirectly observable; and
|
|
●
|
Level 3—defined
as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
|
The
Company’s financial instruments primarily consist of cash and cash equivalents, restricted cash, accounts receivable, notes
receivable, accounts payable, other payables and accrued liabilities, short-term bank loans, and notes payable.
The
carrying value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and other current assets
and liabilities approximate fair value because of the short-term nature of these items. The estimated fair values of short-term
bank loans were not materially different from their carrying value as presented due to the short maturities and that the interest
rates on the borrowing approximate those that would have been available for loans of similar remaining maturity and risk profile.
As the carrying amounts are reasonable estimates of the fair value, these financial instruments are classified within Level 1
of the fair value hierarchy.
Accounts
Receivable
Accounts
receivable are carried at net realizable value. The Company reviews its accounts receivable on a periodic basis and makes general
and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability
of individual receivable balances, the Company considers many factors, including the age of the balance, customer’s historical
payment history, its current creditworthiness and current economic trends. Accounts are written off after exhaustive efforts at
collection. The Company only grants credit terms to established customers who are deemed to be financially responsible. Credit
periods to customers are within 90 days after customers received the purchased goods. If accounts receivables are to be provided
for, or written off, they would be recognized in the consolidated statement of operations within operating expenses. Allowance
of doubtful accounts was $1.18 million and $1.04 million as of September 30, 2020 and December 31, 2019, respectively.
Inventories
Inventories
are stated at the lower of cost or net realizable value, which is based on estimated selling prices less any further costs
expected to be incurred for completion and disposal. Cost of raw materials is calculated using the weighted average method
and is based on purchase cost. Work-in-progress and finished goods costs are determined using the weighted average method and
comprise direct materials, direct labor and an appropriate proportion of overhead. As of September 30, 2020 and December 31,
2019, the Company had recognized impairment of inventories of $0.08 million and $0.13 million, respectively. The Company
records inventory reserves for excess or obsolete inventories based upon assumptions about our current and future demand
forecasts.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Advance
to Suppliers
Advance
to suppliers represents interest-free cash paid in advance to suppliers for purchases of parts and/or raw materials. The balance
of advance to suppliers was $0.10 million and $0.05 million as of September 30, 2020 and December 31, 2019.
Property,
Plant, and Equipment
Property,
plant, and equipment are stated at cost less accumulated depreciation, and include expenditure that substantially increases the
useful lives of existing assets. Expenditures for repairs and maintenance, which do not extend the useful life of the assets,
are expensed as incurred.
Depreciation
is provided over their estimated useful lives, using the straight-line method. Estimated useful lives are as follows:
Plant, buildings and improvements
|
|
|
20 years
|
|
Machinery and equipment
|
|
|
2~10 years
|
|
Motor vehicles
|
|
|
4 years
|
|
Office Equipment
|
|
|
3~5 years
|
|
Fixed Assets decoration
|
|
|
5 years
|
|
When
assets are sold or retired, their costs and accumulated depreciation are eliminated from the consolidated financial statements
and any gain or loss resulting from their disposal is recognized in the period of disposition as an element of other income. The
cost of maintenance and repairs is charged to income as incurred, whereas significant renewals and betterments are capitalized.
Land
Use Rights
According
to the PRC laws, the government owns all the land in the PRC. Companies or individuals are authorized to possess and use the land
only through land use rights granted by the Chinese government. The land use rights granted to the Company are being amortized
using the straight-line method over the lease term of fifty years.
Impairment
of Long-Lived Assets
Long-lived
assets are evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying
amounts may not be recoverable in accordance with FASB ASC 360, “Property, Plant and Equipment”.
In
evaluating long-lived assets for recoverability, the Company uses its best estimate of future cash flows expected to result from
the use of the asset and eventual disposition in accordance with FASB ASC 360-10-15. To the extent that estimated future, undiscounted
cash inflows attributable to the asset, less estimated future, undiscounted cash outflows, are less than the carrying amount,
an impairment loss is recognized in an amount equal to the difference between the carrying value of such asset and its fair value.
Assets to be disposed of and for which there is a committed plan of disposal, whether through sale or abandonment, are reported
at the lower of carrying value or fair value less costs to sell.
There
was no impairment loss recognized for the three and nine months ended September 30, 2020 and 2019.
Segments
and Related Information
ASC
280 “Segment reporting” establishes standards for reporting information on operating segments in interim and annual
financial statements. All of the Company’s operations are considered by the chief operating decision maker to be aggregated
in one reportable operating segment.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
The
Company is engaged in the business of manufacturing and selling various transmission boxes. The Company’s manufacturing
process is essentially the same for the entire Company and is performed in-house at the Company’s facilities in PRC. The
Company’s customers primarily consist of entities in the automotive, construction machinery or warehousing equipment industries.
The distribution of the Company’s products is consistent across the entire Company. In addition, the economic characteristics
of each customer arrangement are similar in that the Company maintains policies at the corporate level.
Commitments
and contingencies
In
the normal course of business, the Company is subject to contingencies, including legal proceedings and environmental claims arising
out of the normal course of businesses that relate to a wide range of matters, including among others, contracts breach liability.
The Company records accruals for such contingencies based upon the assessment of the probability of occurrence and, where determinable,
an estimate of the liability. Management may consider many factors in making these assessments including past history, scientific
evidence and the specifics of each matter. The Company’s management has evaluated all such proceedings and claims that existed
as of September 30, 2020 and December 31, 2019. Normal course of businesses that relate to a wide range of matters, including
among others, contracts breach liability. The Company records accruals for such contingencies based upon the assessment of the
probability of occurrence and, where determinable, an estimate of the liability. Management may consider many factors in making
these assessments including past history, scientific evidence and the specifics of each matter. The Company’s management
has evaluated all such proceedings and claims that existed as of September 30, 2020 and December 31, 2019.
Related
Party
In
general, related parties exist when there is a relationship that offers the potential for transactions at less than arm’s-length,
favorable treatment, or the ability to influence the outcome of events different from that which might result in the absence of
that relationship. A related party may be any of the following: a) an affiliate, which is a party that directly or indirectly
controls, is controlled by, or is under common control with another party; b) a principle owner, owner of record or known beneficial
owner of more than 10% of the voting interest of an entity; c) management, which are persons having responsibility for achieving
objectives of the entity and requisite authority to make decision; d) immediate family of management or principal owners; e) a
parent Company and its subsidiaries; and f) other parties that have ability to significant influence the management or operating
policies of the entity. The Company discloses all significant related party transactions.
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 the political, economic and legal environment in the PRC, and by the general state of the PRC
economy.
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.
Financial
instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts
receivable. All of the Company’s cash is maintained with state-owned banks within the PRC, and none of these deposits are
covered by insurance. The Company has not experienced any losses in such accounts. A portion of the Company’s sales are
credit sales which are primarily to customers whose abilities to pay are dependent upon the industry economics prevailing in these
areas; however, concentrations of credit risk with respect to trade accounts receivables is limited due to generally short payment
terms. The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Exchange
Risk
The
Company cannot guarantee that the current exchange rate will remain steady. Therefore, there is a possibility that the Company
could post the same amount of profit for two comparable periods and yet, because of a fluctuating exchange rates, record higher
or lower profit depending on exchange rate of PRC Renminbi (RMB) converted to U.S. dollars on the relevant dates. The exchange
rate could fluctuate depending on changes in the political and economic environment without notice.
Recently
Issued Accounting Pronouncements
Recent
accounting pronouncements that the Company has adopted or may be required to adopt in the future are summarized below:
In
June 2016, the FASB issued ASU 2016-13,” Measurement of Credit Losses on Financial Instruments”, to require financial
assets carried at amortized cost to be presented at the net amount expected to be collected based on historical experience, current
conditions and forecasts. Subsequently, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit
Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, in April 2019. To clarify that receivables arising
from operating leases are within the scope of lease accounting standards. In October 2019, the FASB issued ASU 2019-10, Financial
Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842), which defers the effective
date for public filers that are considered small reporting companies as defined by the Securities and Exchange Commission to fiscal
years beginning after December 15, 2022, including interim periods within those fiscal years. Since the Company is a smaller reporting
company, implementation is not needed until January 1, 2023. Adoption of the standard requires using a modified retrospective
approach through a cumulative-effect adjustment to retained earnings as of the effective date to align existing credit loss methodology
with the new standard. The Company is evaluating the impact of this standard on its consolidated financial statements, including
accounting policies, processes, and systems, and expects the standard will have a minor impact on its consolidated financial statements.
In
January 2017, the FASB issued ASU No. 2017-04 (Topic 350) Intangibles—Goodwill and Other: Simplifying the Test for Goodwill
Impairment, which removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Under
the amended guidance, a goodwill impairment charge will now be recognized for the amount by which the carrying value of a reporting
unit exceeds its fair value, not to exceed the carrying amount of goodwill. As amended by ASU 2019-10, this ASU will be applied
on a prospective basis and is effective for interim and annual periods beginning after December 15, 2022, with early adoption
permitted for any impairment tests performed after January 1, 2017. The Company is evaluating the impact of the application of
this standard and does not expect that the adoption of the ASU 2017-04 will have a material impact on the Company’s consolidated
financial statements.
In
August 2018, the FASB issued ASU 2018-13 Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement,
which eliminates, adds, and modifies certain disclosure requirements for fair value measurements under ASC 820. This ASU is to
be applied on a prospective basis for certain modified or new disclosure requirements, and all other amendments in the standard
are to be applied on a retrospective basis. The new standard is effective for interim and annual periods beginning after December
15, 2019, with early adoption permitted. The Company adopted Topic 820 on January 1, 2020. The adoption of the ASU 2018-13 did
not have a material impact on the Company’s consolidated financial statements.
In
December 2019, the FASB issued ASU No. 2019-12, “Income Taxes” (Topic 740): Simplifying the Accounting for Income
Taxes (“ASU 2019-12”). ASU 2019-12 will simplify the accounting for income taxes by removing certain exceptions to
the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of
Topic 740 by clarifying and amending existing guidance. For public business entities, the amendments in this Update are effective
for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company does not expect
that the requirements of ASU 2019-12 will have a material impact on its consolidated financial statements.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE
3 – CONCENTRATION ON REVENUES AND COST OF GOODS SOLD
Concentration
of major customers and suppliers:
|
|
For the nine months ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
Major customers representing more than 10% of the Company’s revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Company A
|
|
$
|
9,366,809
|
|
|
|
21.80
|
%
|
|
$
|
5,576,473
|
|
|
|
13.77
|
%
|
Total Revenues
|
|
$
|
9,366,809
|
|
|
|
21.80
|
%
|
|
$
|
5,576,473
|
|
|
|
13.77
|
%
|
|
|
As of
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Major customers of the Company’s accounts receivable, net
|
|
|
|
|
|
|
|
|
|
|
|
|
Company A
|
|
|
1,648,391
|
|
|
|
10.50
|
%
|
|
|
1,662,078
|
|
|
|
13.88
|
%
|
Company B
|
|
|
1,278,818
|
|
|
|
8.15
|
%
|
|
|
1,106,955
|
|
|
|
9.25
|
%
|
Company C
|
|
|
1,267,731
|
|
|
|
8.08
|
%
|
|
|
1,061,972
|
|
|
|
8.87
|
%
|
Total
|
|
$
|
4,194,940
|
|
|
|
26.73
|
%
|
|
$
|
3,831,005
|
|
|
|
32.00
|
%
|
Accounts
receivable from the Company’s major customers accounted for 26.73% and 32.00% of total accounts receivable balances as of
September 30, 2020 and December 31, 2019, respectively.
There
were no suppliers representing more than 10% of the Company’s total purchases for the nine months ended September 30, 2020
and 2019, respectively.
NOTE
4 – ACCOUNTS RECEIVABLE
Accounts
receivable is net of allowance for doubtful accounts.
|
|
As of
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Accounts receivable
|
|
$
|
16,877,384
|
|
|
$
|
13,009,686
|
|
Less: allowance for doubtful accounts
|
|
|
(1,183,770
|
)
|
|
|
(1,037,797
|
)
|
Accounts receivable, net
|
|
$
|
15,693,614
|
|
|
$
|
11,971,889
|
|
Changes
in the allowance for doubtful accounts are as follows:
|
|
For the nine months ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
Beginning balance
|
|
$
|
1,037,797
|
|
|
$
|
906,138
|
|
Provision for doubtful accounts
|
|
|
145,973
|
|
|
|
35,765
|
|
Ending balance
|
|
$
|
1,183,770
|
|
|
$
|
941,903
|
|
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE
5 – INVENTORIES
|
|
As of
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Raw materials
|
|
$
|
4,580,193
|
|
|
$
|
3,626,104
|
|
Revolving material
|
|
|
653,283
|
|
|
|
744,887
|
|
Consigned processing material
|
|
|
29,658
|
|
|
|
63,608
|
|
Work-in-progress
|
|
|
1,629,784
|
|
|
|
1,465,767
|
|
Finished goods
|
|
|
4,481,630
|
|
|
|
2,949,593
|
|
Goods in transit
|
|
|
1,199,367
|
|
|
|
1,122,918
|
|
Inventories
|
|
$
|
12,573,915
|
|
|
$
|
9,972,877
|
|
NOTE
6 – NOTES RECEIVABLE
|
|
As of
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Bank notes receivable
|
|
$
|
19,878,365
|
|
|
$
|
15,865,267
|
|
Commercial notes receivable
|
|
|
147,081
|
|
|
|
306,763
|
|
Less: allowance for notes receivable
|
|
|
(7,354
|
)
|
|
|
(15,338
|
)
|
Total
|
|
$
|
20,018,092
|
|
|
$
|
16,156,692
|
|
Bank
notes and commercial notes are means of payment from customers for the purchase of the Company’s products and are issued
by financial institutions or business entities, respectively, that entitle the Company to receive the full nominal amount from
the issuer at maturity, which bears no interest and generally ranges from three to twelve months from the date of issuance. As
of September 30, 2020, the Company pledged notes receivable for an aggregate amount of $17.22 million to Bank of Hangzhou as a
means of security for issuance of bank acceptance notes for an aggregate amount of $16.20 million. As of December 31, 2019, the
Company pledged notes receivable for an aggregate amount of $11.17 million to Bank of Communications as a means of security for
issuance of bank acceptance notes for an aggregate amount of $8.98 million. Allowance for notes receivables as of September 30,
2020 and December 31, 2019 were $7,354 and $15,338 respectively, determined according to the collectability of commercial notes
receivable.
NOTE
7 – PROPERTY, PLANT AND EQUIPMENT AND CONSTRUCTION IN PROGRESS
(a)
At September 30, 2020 and December 31, 2019, property, plant and equipment consisted of the following:
|
|
As of
|
|
|
|
September 30,
2019
|
|
|
December 31,
2019
|
|
Buildings
|
|
$
|
11,893,806
|
|
|
$
|
11,188,399
|
|
Machinery
|
|
|
20,058,424
|
|
|
|
19,416,746
|
|
Motor vehicles
|
|
|
304,027
|
|
|
|
254,456
|
|
Electronic equipment
|
|
|
189,335
|
|
|
|
177,153
|
|
Total property plant and equipment, at cost
|
|
|
32,445,592
|
|
|
|
31,036,754
|
|
|
|
|
|
|
|
|
|
|
Less: accumulated depreciation
|
|
|
(12,672,629
|
)
|
|
|
(10,650,893
|
)
|
Property, plant and equipment, net
|
|
$
|
19,772,963
|
|
|
$
|
20,385,861
|
|
Construction in process
|
|
|
88,370
|
|
|
|
244,390
|
|
Total
|
|
$
|
19,861,333
|
|
|
$
|
20,630,251
|
|
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE
7 – PROPERTY, PLANT AND EQUIPMENT AND CONSTRUCTION IN PROGRESS (CONTINUED)
For
the nine months ended September 30, 2020 and 2019, depreciation expense amounted to $1.69 million and $1.25 million, respectively,
of which $1.25 million and $1.25 million, respectively, was included in cost of revenue and inventories, and the remainder was
included in general and administrative expense and research and development expenses etc.
For
the nine months ended September 30, 2020 and 2019, $448,966 and $1,667,389 of construction in progress were converted into fixed
assets.
Restricted
assets consist of the following:
|
|
As of
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Buildings, net
|
|
$
|
10,729,798
|
|
|
$
|
10,459,597
|
|
Machinery, net
|
|
|
2,205,400
|
|
|
|
9,066,066
|
|
Total
|
|
|
12,935,198
|
|
|
|
19,525,663
|
|
As
of September 30, 2020, the Company pledged its buildings ownership of net book value of $10.73 million (RMB72.85 million) as security
with ABC Xinchang and Rural commercial bank, for its loan facility with maximum exposure of RMB112.63 million.
As
of December 31, 2019, the Company pledged its buildings ownership of net book value of $10.46 million (RMB72.97 million) as security
with ABC Xinchang and Rural commercial bank, for its loan facility with maximum exposure of RMB112.63 million.
On
January 3, 2019, the Company sold a set of manufacturing equipment to third parties for aggregate proceeds of $3.08 million (RMB21.25
million) and the Company entered into lease agreements under which the Company agreed to lease back each of the properties for
an initial term of 3 years. On May 12, 2020, the Company prepaid the financing lease obligations for aggregate payment of $1.34
million.
On
April 26, 2019, the Company sold various equipment including the general assembly line and the differential assembly line to third
parties for aggregate proceeds of $2.12 million (RMB14.66 million) and the Company entered into lease agreements under which the
Company agreed to lease back each of the properties for an initial term of 2 years. On April 30, 2020, the Company prepaid the
financing lease obligations for aggregate payment of $0.94 million.
On
May 27, 2020, the Company sold various equipment including the general assembly line and the differential assembly line to third
parties for aggregate proceeds of $1.42 million (RMB10.00 million) and the Company entered into lease agreements under which the
Company agreed to lease back each of the properties for an initial term of 2 years.
The
Company determined that it did not relinquish control of the assets to the buyer-lessor. Therefore, the Company accounted for
the transactions as failed sale-leaseback whereby the Company continues to depreciate the assets and recorded a financing obligation
for the consideration received from the buyer-lessor.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE
8 – LAND USE RIGHTS
Land
use rights consisted of the following:
|
|
As of
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Land use rights, cost
|
|
$
|
4,531,431
|
|
|
$
|
4,410,224
|
|
Less: Accumulated amortization
|
|
|
(642,810
|
)
|
|
|
(547,677
|
)
|
Land use rights, net
|
|
$
|
3,888,621
|
|
|
$
|
3,862,547
|
|
As
of September 30, 2020, there was land use rights with net book value of $3.89 million, which approximately were used as collateral
for the Company’s short-term bank loans. As of December 31, 2019, there was land use rights with net book value of $3.86
million, which approximately were used as collateral for the Company’s short-term bank loans.
Estimated
future amortization expense is as follows as of September 30, 2020:
Years
ending September 30,
|
|
Amortization
expense
|
|
2021
|
|
$
|
88,049
|
|
2022
|
|
|
88,049
|
|
2023
|
|
|
88,049
|
|
2024
|
|
|
88,049
|
|
2025
|
|
|
88,049
|
|
Thereafter
|
|
|
3,448,376
|
|
Total
|
|
$
|
3,888,621
|
|
NOTE
9 – NOTES PAYABLE
|
|
As of
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Bank acceptance notes
|
|
$
|
17,671,375
|
|
|
$
|
15,050,902
|
|
Total
|
|
$
|
17,671,375
|
|
|
$
|
15,050,902
|
|
The
interest-free notes payable, ranging from nine months to one year from the date of issuance, were secured by $0.63 million and
$3.59 million restricted cash, $17.22 million and $11.17 million notes receivable, and $0 million and $1.95 million land use rights,
as of September 30, 2020 and December 31, 2019, respectively.
All
the notes payable are subject to bank charges of 0.05% of the principal amount as commission, included in the financial expenses
in the statement of operations, on each loan transaction. The interest charge of notes payable is free.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE
10 – ACCOUNTS PAYABLE
Accounts
payable are summarized as follow:
|
|
As of
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Procurement of Materials
|
|
$
|
21,035,608
|
|
|
$
|
14,248,095
|
|
Infrastructure & Equipment
|
|
|
414,269
|
|
|
|
381,843
|
|
Freight fee
|
|
|
123,428
|
|
|
|
83,070
|
|
Total
|
|
$
|
21,573,305
|
|
|
$
|
14,713,008
|
|
NOTE
11 – SHORT TERM BANK LOANS
Short-term
loans are summarized as follow:
|
|
As of
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Collateralized bank loans
|
|
$
|
18,061,447
|
|
|
$
|
16,144,892
|
|
Guaranteed bank loans
|
|
|
2,651,113
|
|
|
|
716,723
|
|
Total
|
|
$
|
20,712,560
|
|
|
$
|
16,861,615
|
|
Short-term
loans as of September 30, 2020 are as follow:
Maturity
Date
|
|
Type
|
|
Bank
Name
|
|
Interest
Rate per
Annum
(%)
|
|
|
September
30,
2020
|
|
Sep.01, 2021
|
|
Operating Loans
|
|
Agricultural bank of PRC
|
|
|
4.44
|
|
|
$
|
7,191,882
|
|
Sep.06, 2021
|
|
Operating Loans
|
|
Agricultural bank of PRC
|
|
|
4.44
|
|
|
$
|
6,009,191
|
|
Sep.16, 2021
|
|
Operating Loans
|
|
Rural commercial bank of Xinchang
|
|
|
5.30
|
|
|
$
|
1,178,273
|
|
Sep.22, 2021
|
|
Operating Loans
|
|
Rural commercial bank of Xinchang
|
|
|
4.35
|
|
|
$
|
1,178,273
|
|
Dec.16, 2020
|
|
Operating Loans
|
|
Rural commercial bank of Xinchang
|
|
|
4.80
|
|
|
$
|
736,420
|
|
Sep.26, 2021
|
|
Operating Loans
|
|
Rural commercial bank of Xinchang
|
|
|
4.35
|
|
|
$
|
2,503,828
|
|
Jan.10, 2021
|
|
Operating Loans
|
|
Bank of communications
|
|
|
4.79
|
|
|
$
|
736,420
|
|
Mar.16, 2021
|
|
Operating Loans
|
|
SPD Rural Bank of Xinchang
|
|
|
4.05
|
|
|
$
|
1,178,273
|
|
Total
|
|
|
|
|
|
|
|
|
|
$
|
20,712,560
|
|
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 11 – SHORT TERM BANK LOANS
(CONTINUED)
Short-term
loans as of December 31, 2019 are as follow:
Maturity
Date
|
|
Type
|
|
Bank
Name
|
|
Interest
Rate per
Annum
(%)
|
|
|
December
31,
2019
|
|
Nov.26, 2020
|
|
Operating Loans
|
|
Agricultural bank of PRC
|
|
|
4.57
|
|
|
$
|
5,848,455
|
|
Dec.24, 2020
|
|
Operating Loans
|
|
Agricultural bank of PRC
|
|
|
4.70
|
|
|
$
|
6,999,513
|
|
Dec.16, 2020
|
|
Operating Loans
|
|
Rural commercial bank of Xinchang
|
|
|
5.45
|
|
|
$
|
2,150,168
|
|
Dec.16, 2020
|
|
Operating Loans
|
|
Rural commercial bank of Xinchang
|
|
|
4.40
|
|
|
$
|
1,146,756
|
|
Dec.16, 2020
|
|
Operating Loans
|
|
Rural commercial bank of Xinchang
|
|
|
4.80
|
|
|
$
|
716,723
|
|
Total
|
|
|
|
|
|
|
|
|
|
$
|
16,861,615
|
|
All
short-term bank loans are obtained from local banks in PRC and are repayable within one year.
The
average annual interest rate of the short-term bank loans was 4.4739% and 4.900% for the nine months ended September 30, 2020
and 2019, respectively. The Company was in compliance with its loan financial covenants at September 30, 2020 and December 31,
2019, respectively.
NOTE
12 – OTHER CURRENT LIABILITIES
Other
current liabilities are summarized as follow:
|
|
As of
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Employee payables
|
|
|
277,802
|
|
|
|
476,859
|
|
Other tax payables
|
|
|
379,433
|
|
|
|
439,398
|
|
Borrowing from third party
|
|
|
230,784
|
|
|
|
1,576,790
|
|
Others
|
|
|
625,241
|
|
|
|
593,812
|
|
Total
|
|
$
|
1,513,260
|
|
|
$
|
3,086,859
|
|
NOTE
13 – OTHER LONG-TERM LIABILITIES
Other
long-term liabilities are summarized as follow:
|
|
|
As of
|
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Subsidy
|
|
|
|
2,310,894
|
|
|
|
2,178,548
|
|
Total
|
|
|
$
|
2,310,894
|
|
|
$
|
2,178,548
|
|
The
subsidy mainly consists of an incentive granted by the Chinese government to encourage transformation of fixed assets in China
and other miscellaneous subsidy from the Chinese government. As of September 30, 2020, grant income increased by $0.13 million,
as compared to December 31, 2019. The change was mainly due to timing of incurring qualifying expenses.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE
14 – LONG TERM PAYABLES
|
|
As of
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Long-term payables current portion
|
|
$
|
741,215
|
|
|
$
|
2,654,230
|
|
Long-term payables– non-current portion
|
|
|
370,392
|
|
|
|
1,349,850
|
|
Total
|
|
$
|
1,111,607
|
|
|
$
|
4,004,080
|
|
On
January 3, 2019, the Company sold a set of manufacturing equipment to third parties for aggregate proceeds of $3.08 million (RMB21.25
million) and the Company entered into lease agreements under which the Company agreed to lease back each of the properties for
an initial term of 3 years. On May 12, 2020, the Company prepaid the financing lease obligations for aggregate payment of $1.34
million.
On
April 26, 2019, the Company sold various equipment including the general assembly line and the differential assembly line to third
parties for aggregate proceeds of $2.12 million (RMB14.66 million) and the Company entered into lease agreements under which the
Company agreed to lease back each of the properties for an initial term of 2 years. On April 30, 2020, the Company prepaid the
financing lease obligations for aggregate payment of $0.94 million.
On
May 27, 2020, the Company sold various equipment including its general assembly line and the differential assembly line to third
parties for aggregate proceeds of $1.42 million (RMB10.00 million). The Company also entered into lease agreements under which
the Company agreed to lease back each of the properties for an initial term of 2 years.
The
Company determined that it did not relinquish control of the assets to the buyer-lessor. Therefore, the sale of the equipment
does not qualify for sale-leaseback accounting. As a result, the aggregate proceeds have been recorded as a financing obligation
and the assets related to the sold and leased manufacturing equipment remain on the Company’s Consolidated Balance Sheet
and continue to be depreciated. The current and long-term portions of the financing obligation are included within long-term payables-current
portion and long-term payables-non-current portion, respectively.
NOTE
15 – STOCKHOLDER’S EQUITY
Preferred
Shares — The Company is authorized to issue an unlimited number of no par value preferred shares, divided into five
classes, Class A through Class E, each with such designation, rights and preferences as may be determined by a resolution of the
Company’s board of directors to amend the Memorandum and Articles of Association to create such designations, rights and
preferences. The Company has five classes of preferred shares to give the Company flexibility as to the terms on which each Class
is issued. All shares of a single class must be issued with the same rights and obligations. Accordingly, starting with five classes
of preferred shares will allow the Company to issue shares at different times on different terms. At September 30, 2020 and December
31, 2019, there were no preferred shares designated, issued or outstanding.
Ordinary
Shares — The Company is authorized to issue an unlimited number of no par value ordinary shares. Holders of the
Company’s ordinary shares are entitled to one vote for each share. At September 30, 2020 and December 31, 2019, there were
10,021,142 and 10,006,142 ordinary shares issued and outstanding.
On
July 27, 2018, the Company consummated its initial public offering of 4,400,000 units, including a partial exercise by the underwriters
of their over-allotment option in the amount of 400,000 units. Each unit consists of one ordinary share, no par value, one warrant
to purchase one-half of one ordinary share and one right to receive one-tenth of one ordinary share upon the consummation of its
initial business combination.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 15 – STOCKHOLDER’S EQUITY
(CONTINUED)
Simultaneously
with the consummation of its initial public offering, the Company completed a private placement of 282,000 units, issued to Greenland
Asset Management Corporation (the “Sponsor”) and Chardan Capital Markets, LLC.
In
2019, in connection with the Business Combination 3,875,458 redeemable shares have been redeemed and 81,400 redeemable shares
have been converted into ordinary shares, 1,906,542 ordinary shares left upon consummation of the reverse recapitalization.
Pursuant
to the Share Exchange Agreement, Greenland acquired from the Seller all of the issued and outstanding equity interests of Zhongchai
Holding in exchange for 7,500,000 newly issued ordinary shares, no par value of Greenland, issued to the Seller (the “Exchange
Shares”). As a result, the Seller became the controlling shareholder of Greenland, and Zhongchai Holding became a directly
and wholly owned subsidiary of Greenland. The Business Combination was accounted for as a reverse merger effected by a share exchange,
wherein Zhongchai Holding is considered the acquirer for accounting and financial reporting purposes. The recapitalization of
the number of shares of common stock attributable to the purchase of Zhongchai Holding in connection with the Business Combination
is reflected retroactively to December 31, 2017 and will be utilized for calculating earnings per share in all prior periods presented.
The impact of the stock exchange is also shown on the Company’s Statements of Stockholders’ Equity
Pursuant
to certain Finder Agreement with Hanyi Zhou, dated May 29, 2019, 50,000 newly issued ordinary shares were issued to Zhou Hanyi
as the finder fee for the business combination.
In
connection with the Business Combination, all the outstanding rights of the Company were converted into 468,200 ordinary shares
on a one-tenth (1/10) ordinary share per right basis if holders of the rights elected to convert their rights into the underlying
ordinary shares.
Pursuant
to the Service Agreement entered into and by The Company and Chineseinvestors.com, Inc., an Indiana corporation (“CIIX”)
on August 21, 2019 (the “Service Agreement”), CIIX were to provide certain investor relations services to the Company
for a period of three months beginning on August 21, 2019. Pursuant to the Service Agreement, the Company were to pay CIIX fees
consisting of three equal monthly instalments of $12,000 and 5,000 restricted ordinary shares, no par value, of the Company on
a quarterly basis during the term of the Consulting Agreement. On February 24, 2020, Greenland and CIIX entered into a termination
agreement (the “CIIX Termination Agreement”) to terminate their respective obligations under the Service Agreement.
Pursuant to the CIIX Termination Agreement, the Company agreed to issue 5,000 restricted ordinary shares, no par value (the “CIIX
Termination Shares”) to CIIX. Upon CIIX’s receipt of the CIIX Termination Shares, the Company will have fully satisfied
its payment obligations under the Service Agreement.
Pursuant
to the Investor Relations Consulting Agreement entered into and by The Company and Skyline Corporate Communication Group, LLC,
a Massachusetts limited liability Company (“SCCG”) on August 15, 2019 (the “Consulting Agreement”), SCCG
were to provide certain investor relations services to the Company for a period of twelve months beginning on August 15, 2019.
Pursuant to the Consulting Agreement, the Company were to pay SCCG fees consisting of $5,000 per month and 1,250 restricted ordinary
shares, no par value, of the Company on a quarterly basis during the term of the Consulting Agreement. On February 25, 2020, Greenland
and SCCG entered into a termination agreement (the “SCCG Termination Agreement”) to terminate their respective obligations
under the Consulting Agreement. Pursuant to the SCCG Termination Agreement, the Company agreed to issue 10,000 restricted ordinary
shares, no par value (the “SCCG Termination Shares”) to SCCG. Upon SCCG’s receipt of the SCCG Termination Shares,
the Company will have fully satisfied its payment obligations under the Consulting Agreement.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 15 – STOCKHOLDER’S EQUITY
(CONTINUED)
Rights
— Each holder of a right will receive one-tenth (1/10) of one ordinary share upon consummation of a Business Combination,
even if the holder of such right redeemed all Public Shares held by it in connection with a Business Combination. No fractional
shares will be issued upon exchange of the rights. No additional consideration will be required to be paid by a holder of rights
in order to receive its additional shares upon consummation of a Business Combination as the consideration related thereto has
been included in the Unit purchase price paid for by investors in the Initial Public Offering. If the Company enters into a definitive
agreement for a Business Combination in which the Company will not be the surviving entity, the definitive agreement provides
for the holders of rights to receive the same per share consideration the holders of the ordinary shares will receive in the transaction
on an as-converted into ordinary share basis and each holder of a right will be required to affirmatively convert its rights in
order to receive the 1/10 of one share underlying each right (without paying additional consideration). The shares issuable upon
exchange of the rights will be freely tradable (except to the extent held by affiliates of the Company).
If
the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held
in the Trust Account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive
any distribution from the Company’s assets held outside of the Trust Account with respect to such rights, and the rights
will expire worthless. Further, there are no contractual penalties for failure to deliver securities to the holders of the rights
upon consummation of a Business Combination. Additionally, in no event will the Company be required to net cash settle the rights.
Accordingly, the rights may expire worthless.
As
of December 31, 2019, all of the existing Rights were converted into 468,200 ordinary shares as a result of the Business Combination.
Warrants
— Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise
of the Public Warrants. The Public Warrants will become exercisable on the later of (a) the consummation of a Business Combination
or (b) July 24, 2019. No Public Warrants will be exercisable for cash unless the Company has an effective and current registration
statement covering the ordinary shares issuable upon exercise of the Public Warrants and a current prospectus relating to such
ordinary shares. Notwithstanding the foregoing, if a registration statement covering the ordinary shares issuable upon the exercise
of the Public Warrants is not effective within 90 days from the consummation of a Business Combination, the holders may, until
such time as there is an effective registration statement and during any period when the Company shall have failed to maintain
an effective registration statement, exercise the Public Warrants on a cashless basis pursuant to an available exemption from
registration under the Securities Act. If an exemption from registration is not available, holders will not be able to exercise
their Public Warrants on a cashless basis. The Public Warrants will expire five years from the consummation of a Business Combination
or earlier upon redemption or liquidation.
The
Company may call the warrants for redemption (excluding the Private Warrants), in whole and not in part, at a price of $0.01 per
warrant:
|
●
|
At any time while
the Public Warrants are exercisable,
|
|
●
|
Upon not less than
30 days’ prior written notice of redemption to each Public Warrant holder,
|
|
●
|
If, and only if,
the reported last sale price of the ordinary shares equals or exceeds $16.50 per share, for any 20 trading days within a 30
trading day period ending on the third trading day prior to the notice of redemption to Public Warrant holders, and
|
|
●
|
If, and only if,
there is a current registration statement in effect with respect to the ordinary shares underlying such warrants at the time
of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date
of redemption.
|
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 15 – STOCKHOLDER’S EQUITY
(CONTINUED)
If
the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise
the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and
number of ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event
of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, the warrants
will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the
Company be required to net cash settle the warrants. Accordingly, the warrants may expire worthless.
The
Private Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the
Private Warrants and the ordinary shares issuable upon the exercise of the Private Warrants are not transferable, assignable or
saleable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the
Private Warrants are exercisable on a cashless basis and are non-redeemable so long as they are held by the initial purchasers
or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted
transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public
Warrants.
As
of September 30, 2020 there were total 4,682,000 Warrants outstanding, including 4,400,000 Public Warrants held by CEDE &
CO, and 22,000 and 260,000 Private Warrants held by Chardan Capital Markets, LLC and Greenland Asset Management Corporation, respectively.
Unit
Purchase Option
On
July 27, 2018, the Company sold to Chardan (and its designees), for $100, an option to purchase up to 240,000 Units exercisable
at $11.50 per Unit (or an aggregate exercise price of $2,760,000) commencing on the later of July 24, 2019 and the consummation
of a Business Combination. The unit purchase option may be exercised for cash or on a cashless basis, at the holder’s option,
and expires July 24, 2023. The Units issuable upon exercise of the option are identical to those offered in the Initial Public
Offering. The Company accounted for the unit purchase option, inclusive of the receipt of $100 cash payment, as an expense of
the Initial Public Offering resulting in a charge directly to shareholders’ equity. The option and such units purchased
pursuant to the option, as well as the ordinary shares underlying such units, the rights included in such units, the ordinary
shares that are issuable for the rights included in such units, the warrants included in such units, and the shares underlying
such warrants, have been deemed compensation by FINRA and are therefore subject to a 180-day lock-up pursuant to Rule 5110(g)
(1) of FINRA’s Nasdaq Conduct Rules. Additionally, the option may not be sold, transferred, assigned, pledged or hypothecated
for a one-year period (including the foregoing 180-day period) following the date of Initial Public Offering except to any underwriter
and selected dealer participating in the Initial Public Offering and their bona fide officers or partners. The option grants to
holders demand and “piggy back” rights for periods of five and seven years, respectively, from the effective date
of the registration statement with respect to the registration under the Securities Act of the securities directly and indirectly
issuable upon exercise of the option. The Company will bear all fees and expenses attendant to registering the securities, other
than underwriting commissions which will be paid for by the holders themselves. The exercise price and number of units issuable
upon exercise of the option may be adjusted in certain circumstances including in the event of a stock dividend, or the Company’s
recapitalization, reorganization, merger or consolidation. However, the option will not be adjusted for issuances of ordinary
shares at a price below its exercise price. As of September 30, 2020, there was no unit purchase option outstanding.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE
16 – EARNINGS PER SHARE
The
Company reports earnings per share in accordance with the provisions of the FASB’s related accounting standard. This standard
requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing
such earnings per share. Basic earnings per share excludes dilution, but includes vested restricted stocks and is computed by
dividing income available to shareholders by the weighted average common shares outstanding during the period. Diluted earnings
per share takes into account the potential dilution that could occur if securities or other contracts to issue ordinary shares
were exercised and converted into ordinary shares. On October 24, 2019, the Company completed a reverse merger with Zhongchai
Holding. The recapitalization of the number of shares of common stock attributable to the purchase of Zhongchai Holding in connection
with the Business Combination is reflected retroactively to December 31, 2017 and will be utilized for calculating earnings per
share in all prior periods presented. Pursuant to the CIIX Termination Agreement and the SCCG Termination Agreement, 5,000 and
10,000 restricted ordinary shares, no par value, were issued to CIIX and SCCG on March 12, 2020 and March 13, 2020 respectively.
The
following is a reconciliation of the basic and diluted earnings per share computation:
|
|
For the three months ended
September 30,
|
|
|
For the nine months ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Net income attributable to the Greenland Corporation and subsidiaries
|
|
$
|
207,933
|
|
|
$
|
155,684
|
|
|
$
|
1,723,694
|
|
|
$
|
2,827,632
|
|
Weighted average basic and diluted computation shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued in reverse recapitalization
|
|
|
10,006,142
|
|
|
|
7,500,000
|
|
|
|
10,006,142
|
|
|
|
7,500,000
|
|
Restricted stock grants
|
|
|
15,000
|
|
|
|
—
|
|
|
|
15,000
|
|
|
|
—
|
|
Weighted average shares of common stock
|
|
|
10,021,142
|
|
|
|
7,500,000
|
|
|
|
10,017,204
|
|
|
|
7,500,000
|
|
Dilutive effect of stock options
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Restricted stock vested not issued
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Common stock and common stock equivalents
|
|
|
10,021,142
|
|
|
|
7,500,000
|
|
|
|
10,017,204
|
|
|
|
7,500,000
|
|
Basic and diluted net income per share
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
|
0.17
|
|
|
|
0.38
|
|
NOTE
17 – GEOGRAPHICAL SALES AND SEGMENTS
All
of the Company’s operations are considered by the chief operating decision maker to be aggregated in one reportable operating
segment.
Information
for the Company’s sales by geographical area for the three and nine months ended September 30, 2020 and 2019 are as follows:
|
|
For the three months ended
September 30,
|
|
|
For the nine months ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Domestic Sales
|
|
$
|
16,426,209
|
|
|
$
|
11,951,535
|
|
|
$
|
42,800,357
|
|
|
$
|
40,397,126
|
|
International Sales
|
|
|
94,389
|
|
|
|
-
|
|
|
|
168,653
|
|
|
|
105,179
|
|
Total
|
|
$
|
16,520,598
|
|
|
$
|
11,951,535
|
|
|
$
|
42,969,010
|
|
|
$
|
40,502,305
|
|
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE
18 – INCOME TAXES
Income
tax expense includes a provision for federal, state and foreign taxes based on the annual estimated effective tax rate applicable
to the Company and its subsidiaries, adjusted for items which are considered discrete to the period.
The
effective tax rates on income before income taxes for the nine months ended September 30, 2020 was 17.87%. The effective tax rate
for the nine months ended September 30, 2020 was lower than the PRC tax rate of 25.0% primarily due to the China Super R&D
deduction. The effective tax rate is based on forecasted annual results and these amounts may fluctuate significantly through
the rest of the year as a result of the unpredictable impact of COVID-19 on its operating activities.
The
effective tax rate on income before income taxes for the nine months ended September 30, 2019 was 16.13%. The effective tax rate
for the nine months ended September 30, 2019 was lower than the PRC tax rate of 25.0% primarily due to the China Super R&D
deduction.
The
Company has recorded $0 unrecognized benefit as of September 30, 2020 and December 31, 2019, respectively. On the information
currently available, the Company does not anticipate a significant increase or decrease to its unrecognized benefit within the
next 12 months.
NOTE
19 – COMMITMENTS AND CONTINGENCIES
Guarantees
and pledged collateral for bank loans to other parties:
(1)
Pledged collateral for bank loans
On
December 6, 2019, Zhejiang Zhongchai signed a Maximum Amount Pledge Contract with Agricultural Bank of PRC Co., Ltd. Xinchang
County Sub-Branch (ABC Xinchang), pledging its land use rights for original book value of RMB11.08 million and property ownership
for original book value of RMB35.12 million as security with ABC Xinchang, for its loan facility with maximum exposure of RMB48.83
million during the period from December 6, 2019 to May 21, 2022. As of September 30, 2020 and December 31, 2019, outstanding amount
of the short-term bank loan under this Pledge Contract was RMB48.83 million and RMB48.83 million.
On
November 28, 2019, Zhejiang Zhongchai signed a Maximum Amount Pledge Contract with Agricultural Bank of PRC Co., Ltd. Xinchang
County Sub-Branch (ABC Xinchang), pledging its land use rights for original book value of RMB9.84 million and property ownership
for original book value of RMB27.82 million, as security with ABC Xinchang, for its loan facility with maximum exposure of RMB40.80
million during the period from November 28, 2019 to December 26, 2022. As of September 30, 2020 and December 31, 2019, outstanding
amount of the short-term bank loan under this Pledge Contract was RMB40.80 million and RMB40.80 million.
On
December 17, 2019, Zhejiang Zhongchai signed a Maximum Amount Pledge Contract with Rural Commercial Bank of PRC Co., Ltd., pledging
its land use rights for original book value of RMB4.75 million and property ownership for original book value of RMB11.28 million
as security, for its loan facility with maximum exposure of RMB16.95 million during the period from December 16, 2019 to December
15, 2024. As of September 30, 2020 and December 31, 2019, outstanding amount of the short-term bank loan under this Pledge Contract
was RMB17.00 million and RMB15.00 million.
On
December 18, 2019, Zhejiang Zhongchai signed a Maximum Amount Pledge Contract with Rural Commercial Bank of PRC Co., Ltd., pledging
its land use rights for original book value of RMB4.17 million as security, for its loan facility with maximum exposure of RMB8.00
million during the period from December 16, 2019 to December 15, 2024. As of September 30, 2020 and December 31, 2019, outstanding
amount of the short-term bank loan under this Pledge Contract was RMB8.00 million and RMB8.00 million.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 19 – COMMITMENTS AND CONTINGENCIES
(CONTINUED)
(2)
Litigation
On
October 14, 2019, the plaintiff, the Company and all other named defendants entered into a confidential memorandum of understanding
(the “MOU”), pursuant to which a Stipulation and Order of Dismissal (“Stipulation of Dismissal”) of the
Action was filed on October 14, 2019. The Stipulation of Dismissal was approved and entered by the District Court on October 15,
2019. Among other things, the Stipulation of Dismissal acknowledged that the Definitive Proxy Statement mooted the plaintiff’s
claims regarding the sufficiency of disclosures, dismissed all claims asserted in the Action, with prejudice as to the plaintiff
only, permits the plaintiff to seek an award of attorneys’ fees in connection with the mooted claims, and reserves the defendants’
rights to oppose such an award, if appropriate. Pursuant to the MOU, the parties have engaged in discussions regarding the amount
of attorneys’ fees, if any, to which the plaintiff’s counsel is entitled in connection with the Action. As of September
30, 2020, those discussions remain ongoing.
Facility
Leases
The
Company entered into failed sale-leaseback transactions on January 3, 2019, April 26, 2019 and May 27, 2020. See further discussion
in NOTE 14 –LONG TERM PAYABLES.
Rent
expense is recognized on a straight-line basis over the terms of the operating leases accordingly and the Company records the
difference between cash rent payments and the recognition of rent expense as a deferred rent liability.
The
following are the aggregate non-cancellable future minimum lease payments under operating and financing leases as of September
30, 2020:
Years
ending September 30,
|
|
|
Amount
|
|
2021
|
|
|
|
774,581
|
|
2022
|
|
|
|
375,959
|
|
Total
|
|
|
$
|
1,150,540
|
|
NOTE
20 – RELATED PARTY TRANSACTIONS
(a)
Names and Relationship of Related Parties:
|
|
Existing
Relationship with the Company
|
Sinomachinery Holding Limited
|
|
Under common control of Peter
Zuguang Wang
|
Cenntro Holding Limited
|
|
Controlling shareholder of the Company
|
Zhejiang Kangchen Biotechnology Co., Ltd.
|
|
Under common control of Peter Zuguang Wang
|
Cenntro Smart Manufacturing Tech. Co., Ltd.
|
|
Under common control of Peter Zuguang Wang
|
Zhejiang Zhonggong Machinery Co., Ltd.
|
|
Under common control of Peter Zuguang Wang
|
Zhejiang Zhonggong Agricultural Equipment Co.,
Ltd.
|
|
Under common control of Peter Zuguang Wang
|
Jiuxin Investment
Management Partnership (LP)
|
|
Under
control of Mr. Mengxing He, the General Manger and one of the directors of Zhejiang Zhongchai
|
Zhuhai Hengzhong Industrial Investment Fund
(Limited Partnership)
|
|
Under common control of Peter Zuguang Wang
|
Hangzhou Cenntro Autotech Co., Limited
|
|
Under common control of Peter Zuguang Wang
|
Peter Zuguang Wang
|
|
Chairman of the Company
|
Greenland Asset Management Corporation
|
|
Shareholder of the Company
|
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 20 – RELATED PARTY TRANSACTIONS
(CONTINUED)
(b)
Summary of Balances with Related Parties:
|
|
As of
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Due to related parties:
|
|
|
|
|
|
|
|
|
Sinomachinery Holding Limited1
|
|
$
|
1,775,870
|
|
|
$
|
1,773,365
|
|
Zhejiang Kangchen Biotechnology Co., Ltd2
|
|
|
64,505
|
|
|
|
64,505
|
|
Zhejiang Zhonggong Machinery Co., Ltd.3
|
|
|
526,549
|
|
|
|
207,177
|
|
Zhejiang Zhonggong Agricultural Equipment Co., Ltd.4
|
|
|
12,736
|
|
|
|
-
|
|
Cenntro Smart Manufacturing Tech. Co., Ltd.5
|
|
|
-
|
|
|
|
1,981
|
|
Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership)6
|
|
|
110,054
|
|
|
|
95,302
|
|
Cenntro Holding Limited7
|
|
|
1,511,600
|
|
|
|
1,339,654
|
|
Peter Zuguang Wang7
|
|
|
25,000
|
|
|
|
-
|
|
Greenland Asset Management Corporation7
|
|
|
50,000
|
|
|
|
-
|
|
Total
|
|
$
|
4,076,314
|
|
|
$
|
3,481,984
|
|
The
balance of Due to related parties as of September 30, 2020 and December 31, 2019 consisted of:
1
|
Advance from Sinomachinery
Holding Limited for certain purchase order;
|
2
|
Temporary borrowings
from Zhejiang Kangchen Biotechnology Co., Ltd.;
|
3
|
Unpaid balances
for purchasing of materials and equipment and temporary borrowing from Zhejiang Zhonggong Machinery Co., Ltd.;
|
4
|
Unpaid balances
for purchasing of materials from Zhejiang Zhonggong Agricultural Equipment Co., Ltd.;
|
5
|
Prepayment from
Cenntro Smart Manufacturing Tech. Co., Ltd.;
|
6
|
Temporary borrowings
from Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership); and
|
7
|
Borrowings from
related parties.
|
|
|
As of
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Due from related parties-current:
|
|
|
|
|
|
|
|
|
Cenntro Holding Limited
|
|
|
-
|
|
|
$
|
36,042,829
|
|
Cenntro Smart Manufacturing Tech. Co., Ltd.
|
|
$
|
1,104
|
|
|
|
-
|
|
Total
|
|
$
|
1,104
|
|
|
$
|
36,042,829
|
|
|
|
|
|
|
|
|
|
|
Due from related parties-non-current:
|
|
|
|
|
|
|
|
|
Cenntro Holding Limited
|
|
$
|
37,033,403
|
|
|
|
-
|
|
Xinchang County Jiuxin Investment Management Partnership (LP)
|
|
|
176,741
|
|
|
|
430,034
|
|
Total
|
|
$
|
37,210,144
|
|
|
$
|
430,034
|
|
The
balance of Due from related parties as of September 30, 2020 and December 31, 2019 consisted of:
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 20 – RELATED PARTY TRANSACTIONS
(CONTINUED)
Other
receivable from Cenntro Holding Limited was $37.0 million and $36.0 million as of September 30, 2020 and December 31, 2019, respectively.
The Company expects the amount due from
its equity holder, Cenntro Holding will pay back on April 27, 2022, as mutually agreed by the Company and Cenntro Holding Limited,
for an extension of repayment from the end of October 2020 in accordance with the original maturity date.
(c)
Summary of Related Party Transactions:
A
summary of trade transactions with related parties for the nine months ended September 30, 2020 and 2019 are listed below:
|
|
|
|
For the nine months ended
September 30,
|
|
|
|
|
|
2020
|
|
|
2019
|
|
Purchases from related parties:
|
|
|
|
|
|
|
|
|
Zhejiang Zhonggong Machinery Co., Ltd.
|
|
Purchase of materials and equipment
|
|
|
303,463
|
|
|
|
4,232
|
|
Zhejiang Zhonggong Agricultural Equipment Co., Ltd.
|
|
Purchase of materials and equipment
|
|
|
12,374
|
|
|
|
-
|
|
Total
|
|
|
|
|
315,837
|
|
|
|
4,232
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales to related parties:
|
|
|
|
|
|
|
|
|
|
|
Cenntro Smart Manufacturing Tech. Co., Ltd.
|
|
Provide service
|
|
|
63,856
|
|
|
|
284,472
|
|
Total
|
|
|
|
|
63,856
|
|
|
|
284,472
|
|
(d)
Summary of Related Party Funds Lending:
A
summary of funds lending with related parties for the nine months ended September 30, 2020 and 2019 are listed below:
|
|
For the nine months ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
Proceeds from related parties:
|
|
|
|
|
|
|
Xinchang County Jiuxin Investment Management Partnership (LP)
|
|
|
257,566
|
|
|
|
-
|
|
Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership)
|
|
|
11,787
|
|
|
|
111,514
|
|
Zhejiang Zhonggong Machinery Co., Ltd.
|
|
|
502,111
|
|
|
|
1,968,300
|
|
Cenntro Holding Limited
|
|
|
151,973
|
|
|
|
|
|
Peter wang
|
|
|
25,000
|
|
|
|
-
|
|
Greenland Asset Management Corporation
|
|
|
70,000
|
|
|
|
-
|
|
Hangzhou Cenntro Autotech Co., Limited
|
|
|
-
|
|
|
|
218,700
|
|
Total
|
|
|
1,018,437
|
|
|
|
2,298,514
|
|
|
|
|
|
|
|
|
|
|
Repayment of loans from related parties:
|
|
|
|
|
|
|
|
|
Zhejiang Zhonggong Machinery Co., Ltd.
|
|
|
500,823
|
|
|
|
1,968,300
|
|
Cenntro Holding Limited
|
|
|
-
|
|
|
|
1,149,757
|
|
Hangzhou Cenntro Autotech Co., Limited
|
|
|
-
|
|
|
|
218,700
|
|
Greenland Asset Management Corporation
|
|
|
20,000
|
|
|
|
|
|
Total
|
|
|
520,823
|
|
|
|
3,336,757
|
|
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 20 – RELATED PARTY TRANSACTIONS
(CONTINUED)
(e)
Summary of Related Party dividend payment:
A
summary of dividend payment to related parties for the nine months ended September 30, 2020 and 2019 are listed below:
|
|
For the nine months ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
Dividend payment to related parties:
|
|
|
|
|
|
|
|
|
Xinchang County Jiuxin Investment Management Partnership (LP)
|
|
|
13,447
|
|
|
|
164,257
|
|
The
dividend payment for the nine months ended September 30, 2020 was declared and paid in May 2020;
The
dividend payment for the nine months ended September 30, 2019 was declared during the year 2018 and paid during the year 2019.
NOTE
21 – SUBSEQUENT EVENTS
On November 21, 2020, the Company entered into an agreement
with Cenntro Holding Limited to extend the due date of the outstanding balance of RMB251,444,993 (approximately $38,060,365) due
from Cenntro Holding Limited to the Company to April 27, 2022.