GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
AS
OF JUNE 30, 2021 AND DECEMBER 31, 2020 (Continued)
(IN
U.S. DOLLARS)
|
|
June
30,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
Short-term
bank loans
|
|
$
|
11,899,452
|
|
|
$
|
18,487,356
|
|
Notes
payable-bank acceptance notes
|
|
|
38,202,952
|
|
|
|
25,889,067
|
|
Accounts
payable
|
|
|
28,300,234
|
|
|
|
22,005,260
|
|
Customer
deposits
|
|
|
163,435
|
|
|
|
366,029
|
|
Due
to related parties
|
|
|
7,904,430
|
|
|
|
9,051,119
|
|
Other
current liabilities
|
|
|
1,475,090
|
|
|
|
2,212,325
|
|
Long-term
payable- current portion
|
|
|
584,003
|
|
|
|
797,179
|
|
Total
current liabilities
|
|
$
|
88,529,596
|
|
|
$
|
78,808,335
|
|
|
|
|
|
|
|
|
|
|
Long-term
liabilities
|
|
|
|
|
|
|
|
|
Long-term
payables
|
|
|
-
|
|
|
|
166,292
|
|
Other
long-term liabilities
|
|
|
2,240,949
|
|
|
|
2,342,648
|
|
Total
long-term liabilities
|
|
$
|
2,240,949
|
|
|
$
|
2,508,940
|
|
TOTAL
LIABILITIES
|
|
$
|
90,770,545
|
|
|
$
|
81,317,275
|
|
COMMITMENTS
AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
Ordinary shares, no par value, unlimited shares authorized; 11,448,327 and 10,225,142 shares issued and outstanding as of June 30, 2021 and December 31, 2020.
|
|
|
-
|
|
|
|
-
|
|
Additional
paid-in capital
|
|
|
21,983,495
|
|
|
|
13,707,39
|
|
Statutory
reserves
|
|
|
3,842,331
|
|
|
|
4,517,117
|
|
Retained
earnings
|
|
|
32,312,439
|
|
|
|
26,728,332
|
|
Accumulated
other comprehensive loss
|
|
|
339,456
|
|
|
|
(62,925
|
)
|
Total
shareholders’ equity
|
|
$
|
58,477,721
|
|
|
$
|
44,889,922
|
|
Non-controlling
interest
|
|
|
6,631,134
|
|
|
|
5,771,540
|
|
TOTAL
EQUITY
|
|
$
|
65,108,855
|
|
|
$
|
50,661,462
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
$
|
155,879,400
|
|
|
$
|
131,978,737
|
|
The
accompanying notes are an integral part of the unaudited consolidated financial statements.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020
(UNAUDITED,
IN U.S. DOLLARS)
|
|
For
the three months ended
June 30,
|
|
|
For
the six months ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
REVENUES
|
|
$
|
28,204,307
|
|
|
$
|
16,576,345
|
|
|
$
|
52,815,201
|
|
|
$
|
26,448,412
|
|
COST
OF GOODS SOLD
|
|
|
22,499,138
|
|
|
|
13,694,235
|
|
|
|
42,005,645
|
|
|
|
21,642,354
|
|
GROSS
PROFIT
|
|
|
5,705,169
|
|
|
|
2,882,110
|
|
|
|
10,809,556
|
|
|
|
4,806,058
|
|
Selling
expenses
|
|
|
495,462
|
|
|
|
304,535
|
|
|
|
874,692
|
|
|
|
521,376
|
|
General
and administrative expenses
|
|
|
752,212
|
|
|
|
443,476
|
|
|
|
1,663,351
|
|
|
|
1,517,885
|
|
Research
and development expenses
|
|
|
1,005,296
|
|
|
|
475,649
|
|
|
|
1,964,841
|
|
|
|
1,039,947
|
|
Total
operating expenses
|
|
$
|
2,252,970
|
|
|
$
|
1,223,660
|
|
|
$
|
4,502,884
|
|
|
$
|
3,079,208
|
|
INCOME
FROM OPERATIONS
|
|
$
|
3,452,199
|
|
|
$
|
1,658,450
|
|
|
$
|
6,306,672
|
|
|
$
|
1,726,850
|
|
Interest
income
|
|
|
4,833
|
|
|
|
42,521
|
|
|
|
9,428
|
|
|
|
75,831
|
|
Interest
expense
|
|
|
(221,664
|
)
|
|
|
(389,072
|
)
|
|
|
(401,853
|
)
|
|
|
(710,764
|
)
|
Other
income
|
|
|
311,114
|
|
|
|
255,580
|
|
|
|
598,090
|
|
|
|
852,832
|
|
INCOME
BEFORE INCOME TAX
|
|
$
|
3,546,482
|
|
|
$
|
1,567,479
|
|
|
$
|
6,512,337
|
|
|
$
|
1,944,749
|
|
INCOME
TAX
|
|
|
394,159
|
|
|
|
95,971
|
|
|
|
916,775
|
|
|
|
145,158
|
|
NET
INCOME
|
|
$
|
3,152,323
|
|
|
$
|
1,471,508
|
|
|
$
|
5,595,562
|
|
|
$
|
1,799,591
|
|
LESS:
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST
|
|
|
371,570
|
|
|
|
212,411
|
|
|
|
686,241
|
|
|
|
283,830
|
|
NET
INCOME ATTRIBUTABLE TO GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
|
|
$
|
2,780,753
|
|
|
$
|
1,259,097
|
|
|
$
|
4,909,321
|
|
|
$
|
1,515,761
|
|
OTHER
COMPREHENSIVE INCOME (LOSS):
|
|
|
833,963
|
|
|
|
58,835
|
|
|
|
575,734
|
|
|
|
(1,246,925
|
)
|
Unrealized
foreign currency translation income (loss) attributable to Greenland technologies holding corporation and subsidiaries
|
|
|
591,484
|
|
|
|
45,180
|
|
|
|
402,381
|
|
|
|
(559,814
|
)
|
Unrealized
foreign currency translation income (loss) attributable to Noncontrolling interest
|
|
|
242,479
|
|
|
|
13,655
|
|
|
|
173,353
|
|
|
|
(687,111
|
)
|
Comprehensive
income
|
|
|
3,372,237
|
|
|
|
1,304,277
|
|
|
|
5,311,702
|
|
|
|
955,947
|
|
Noncontrolling
interest
|
|
|
614,049
|
|
|
|
226,066
|
|
|
|
859,594
|
|
|
|
(403,281
|
)
|
WEIGHTED
AVERAGE ORDINARY SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted
|
|
|
10,814,479
|
|
|
|
10,021,142
|
|
|
|
10,574,223
|
|
|
|
10,015,203
|
|
NET
INCOME PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted
|
|
|
0.26
|
|
|
|
0.13
|
|
|
|
0.46
|
|
|
|
0.15
|
|
The
accompanying notes are an integral part of the unaudited consolidated financial statements.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY
FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020
(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, 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2020
|
|
|
10,225,142
|
|
|
|
-
|
|
|
$
|
13,707,398
|
|
|
$
|
(62,925
|
)
|
|
|
4,517,117
|
|
|
$
|
26,728,332
|
|
|
$
|
5,771,540
|
|
|
$
|
50,661,462
|
|
Restricted
stock grants
|
|
|
51,000
|
|
|
|
-
|
|
|
|
51,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
51,000
|
|
Sale
of stock and warrants
|
|
|
221,985
|
|
|
|
-
|
|
|
|
1,858,841
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,858,841
|
|
Net
income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,128,568
|
|
|
|
314,671
|
|
|
|
2,443,239
|
|
Foreign
currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(189,103
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(69,126
|
)
|
|
|
(258,229
|
)
|
Balance
at March 31, 2021
|
|
|
10,498,127
|
|
|
|
-
|
|
|
$
|
15,617,239
|
|
|
$
|
(252,028
|
)
|
|
|
4,517,117
|
|
|
$
|
28,856,900
|
|
|
$
|
6,017,085
|
|
|
$
|
54,756,313
|
|
Sale
of stock and warrants
|
|
|
950,200
|
|
|
|
-
|
|
|
|
6,366,256
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,366,256
|
|
Net
income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,780,753
|
|
|
|
371,570
|
|
|
|
3,152,323
|
|
Transfer
to statutory reserve
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(674,786
|
)
|
|
|
674,786
|
|
|
|
-
|
|
|
|
-
|
|
Foreign
currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
591,484
|
|
|
|
-
|
|
|
|
-
|
|
|
|
242,479
|
|
|
|
833,963
|
|
Balance
at June 30, 2021
|
|
|
11,448,327
|
|
|
|
-
|
|
|
|
21,983,495
|
|
|
|
339,456
|
|
|
|
3,842,331
|
|
|
|
32,312,439
|
|
|
|
6,631,134
|
|
|
|
65,108,855
|
|
The
accompanying notes are an integral part of the unaudited consolidated financial statements.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR
THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020
(UNAUDITED,
IN U.S. DOLLARS)
|
|
For
the six months ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net
income
|
|
$
|
5,595,562
|
|
|
$
|
1,799,591
|
|
Adjustments to reconcile
net income to net cash provided by operating activities:
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
1,248,256
|
|
|
|
1,163,894
|
|
Loss
on disposal of property and equipment
|
|
|
(959
|
)
|
|
|
-
|
|
Increase
in allowance for doubtful accounts
|
|
|
-
|
|
|
|
127,667
|
|
Increase
(Decrease) in allowance for notes receivable
|
|
|
-
|
|
|
|
(11,226
|
)
|
Increase
(Decrease) in provision for inventory
|
|
|
-
|
|
|
|
(44,440
|
)
|
Deferred
tax assets
|
|
|
1,433
|
|
|
|
(27,502
|
)
|
Stock
based compensation expense
|
|
|
51,000
|
|
|
|
42,800
|
|
Loss
on prepayment of financing lease obligations
|
|
|
-
|
|
|
|
52,684
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Decrease
(Increase) In:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(7,966,860
|
)
|
|
|
(2,869,276
|
)
|
Notes
receivable
|
|
|
(1,980,407
|
)
|
|
|
(76,376
|
)
|
Inventories
|
|
|
(2,184,865
|
)
|
|
|
(33,550
|
)
|
Advance
to suppliers
|
|
|
(278,919
|
)
|
|
|
(15,617
|
)
|
Other
current and noncurrent assets
|
|
|
128,879
|
|
|
|
105,609
|
|
Increase
(Decrease) In:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
6,052,012
|
|
|
|
3,738,130
|
|
Customer
deposits
|
|
|
(206,136
|
)
|
|
|
248,949
|
|
Other
current liabilities
|
|
|
(604,808
|
)
|
|
|
121,777
|
|
Income
tax payable
|
|
|
-
|
|
|
|
118,934
|
|
Due
to related parties
|
|
|
(391,343
|
)
|
|
|
316,779
|
|
Long-term
payables-unamortized deferred financing costs
|
|
|
(2,470
|
)
|
|
|
185,556
|
|
Other
long-term liabilities
|
|
|
(248,796
|
)
|
|
|
(116,086
|
)
|
NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
|
$
|
(778,421
|
)
|
|
$
|
4,828,297
|
|
The
accompanying notes are an integral part of the unaudited consolidated financial statements.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR
THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020 (Continued)
(UNAUDITED,
IN U.S. DOLLARS)
|
|
For
the six months ended
June 30
|
|
|
|
2021
|
|
|
2020
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Purchases
of Long term assets
|
|
$
|
(425,860
|
)
|
|
$
|
(439,871
|
)
|
Proceeds
from government grants for construction
|
|
|
122,485
|
|
|
|
242,955
|
|
NET
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|
$
|
(303,375
|
)
|
|
$
|
(196,916
|
)
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds
from short-term bank loans
|
|
$
|
773,144
|
|
|
$
|
3,263,569
|
|
Repayments
of short-term bank loans
|
|
|
(7,545,885
|
)
|
|
|
-
|
|
Repayments
of long-term bank loans
|
|
|
-
|
|
|
|
-
|
|
Notes
payable
|
|
|
12,020,074
|
|
|
|
(3,641,089
|
)
|
Proceeds
from related parties
|
|
|
422,324
|
|
|
|
625,719
|
|
Repayment
of loans from related parties
|
|
|
(1,284,631
|
)
|
|
|
(496,630
|
)
|
Repayment
of loans from third parties
|
|
|
(309,258
|
)
|
|
|
(4,965,961
|
)
|
Proceeds
from third parties
|
|
|
154,629
|
|
|
|
4,331,829
|
|
Dividend
paid
|
|
|
-
|
|
|
|
(13,447
|
)
|
Proceeds
received from financing lease obligation
|
|
|
-
|
|
|
|
1,418,943
|
|
Prepayment
of lease-financing obligations
|
|
|
-
|
|
|
|
(2,276,612
|
)
|
Payment
of principal on financing lease obligation
|
|
|
(386,572
|
)
|
|
|
(1,306,408
|
)
|
Proceeds
from equity and debt finaning
|
|
|
8,225,097
|
|
|
|
|
|
NET
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
$
|
12,068,922
|
|
|
$
|
(3,060,087
|
)
|
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
|
|
$
|
10,987,126
|
|
|
$
|
1,571,294
|
|
Effect
of exchange rate changes on cash
|
|
|
133,999
|
|
|
|
(574,058
|
)
|
CASH
AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR
|
|
|
9,403,053
|
|
|
|
5,717,207
|
|
CASH
AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD
|
|
$
|
20,524,178
|
|
|
$
|
6,714,443
|
|
Bank
balances and cash
|
|
|
10,756,968
|
|
|
|
4,527,402
|
|
Bank
balances and cash included in assets classified as restricted cash
|
|
|
9,767,210
|
|
|
|
2,187,041
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosure of Cash Flow Information
|
|
|
|
|
|
|
|
|
Income
taxes paid
|
|
|
782,596
|
|
|
|
209,777
|
|
Interest
paid
|
|
|
408,582
|
|
|
|
638,213
|
|
The
accompanying notes are an integral part of the unaudited consolidated financial statements.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED 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.
Greenland,
through its subsidiaries, is:
|
●
|
a
leading developer and manufacturer of transmission products for material handling machineries
in China; and
|
|
●
|
since
December 2020, a developer of electric industrial vehicles, and has launched its 1.8 tons electric loader vehicle (GEL1800), GEX-8000
electric excavator and GEF-series lithium powered electric vehicle forklift truck.
|
Greenland’s transmission products are key
components for forklift trucks, used in manufacturing and logistic applications such as factories, workshops, warehouses, fulfilment
centers, shipyards, and seaports. Forklifts play an important role in logistics for many enterprises across different industries in the
PRC and around the globe. Generally, industries with the largest demand for forklifts are transportation, warehousing logistics, electrical
machinery, and automobile.
Greenland
has experienced increased demand for forklifts in the manufacturing industry in the PRC, as its revenue increased from approximately
$26.45 million for the six months ended June 30, 2020 to approximately $52.82 million for the six months ended June 30, 2021. Since late
March 2020, the Company’s business operations have gradually recovered from the negative impacts due to the lockdown as a result
of the COVID-19 pandemic, and part of the Company’s backlogged orders were processed during the six months ended June 30, 2021,
which contributed to an increase in its revenues for the six months ended June 30, 2021.
Greenland’s transmission products are used
in 1-ton to 15-tons forklift trucks, some with mechanical shift and some with automatic shift. Greenland sells these transmission products
directly to forklift-truck manufacturers. For the six months ended June 30, 2021 and 2020, Greenland sold 79,032 and 45,380 sets of transmission
products, respectively, to more than 100 forklift manufacturers in aggregate in PRC.
In December 2020, Greenland launched a new division
to focus on the electric industrial vehicle market, a market that Greenland intends to develop to diversify its product offerings. Greenland
has setup an assembly facility on the East Coast of the United States for final assembly of its newly developed electric vehicle. Greenland’s
teams have completed full beta versions of the 1.8 tons electric loader vehicle (GEL1800), its first electric industry vehicle product,
and its GEX-8000 electric excavator. Greenland expects to start deliveries of GEL 1800 and GEX-8000 electric excavator in the fourth quarter
of 2021. Other models, such as electric loader vehicles with loading capacity of one and a half tons or five tons are currently under
development. In July 2021, Greenland also launched an innovative new GEF-series lithium powered electric vehicle forklift truck, one of
the industry’s first electric vehicle forklift trucks to use lithium power. Greenland will cooperate with global parts suppliers
to utilize their matured supply chain, which will enable it to shorten its development cycle and make quicker market entrance.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1 – ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)
The
COVID-19 pandemic has significantly affected business and manufacturing activities within China, 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 temporary shut down until the end of February
2020. Moreover, pandemic 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 June 30, 2021, Cenntro Holding Limited owns 69.60% of Greenland’s outstanding ordinary shares. Cenntro Holding Limited is controlled
and beneficially owned by Mr. Peter Zuguang Wang, chairman of the board of directors of the Company.
The
Company’s Subsidiaries
Zhongchai
Holding, the 100% owned subsidiary of the Company, owns 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 Energy Technologies
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.
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 incorporated on
April 24, 2006, invested $8,000,000 USD into Zhejiang Zhongchai for its approximately 75.47% interest. 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 all its 24.528% interest in Zhejiang Zhongchai to Zhongchai Holding 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 June 30, 2021, 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 the 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.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1 – ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)
Hengyu
Hengyu
is a limited liability Company registered on September 10, 2015 in Shanghai Free Trade Zone, Shanghai, and PRC. Hengyu holds no assets
other than an account receivable owed by Cenntro Holding Limited. Main business of Hengyu are investment management and consulting services.
Hangzhou
Greenland
Hangzhou
Greenland is a limited liability Company registered on August 9, 2019 in Hangzhou Sunking Plaza, Zhejiang, PRC. Hangzhou Greenland engages
in the business of trading.
Greenland
Tech
Greenland
Technologies Corporation was incorporated in the state of Delaware on January 14, 2020 as a wholly owned subsidiary of Greenland (“Greenland
Tech”). The Company aims to use it as its U.S. operation site for the assembly, marketing and sales of electric industrial vehicles
for the North American market.
Details of
the Company’s subsidiaries, which are included in these unaudited consolidated financial statements as of June 30, 2021, 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
|
|
RMB
|
20,000,000
|
|
|
89.47
|
%
|
|
Manufacture, sale of various transmission boxes.
|
Shanghai
Hengyu Enterprise Management Consulting Co., Ltd.
|
|
PRC
September 10, 2015
|
|
RMB
|
251,500,000
|
|
|
62.5
|
%
|
|
Investment management and consulting services.
|
Hangzhou
Greenland Energy Technologies Co., Ltd.
|
|
PRC
August 9, 2019
|
|
RMB
|
4,794,242
|
|
|
100
|
%
|
|
Trading.
|
Greenland
Technologies Corporation
|
|
Delaware, USA
January 14, 2020
|
|
USD
|
6,363,557
|
|
|
100
|
%
|
|
US operation and distribution of electric industrial vehicles for North American market
|
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2
– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United
States of America (“US GAAP”). The consolidated financial statements include the financial statements of the Company and
its wholly-owned subsidiaries. All significant inter-company transactions and balances between the Company and its subsidiaries are eliminated
upon consolidation.
Principles
of Consolidation
The
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 six months ended June 30, 2021 and 2020 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 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 “$”). The functional
currency of the Company is Renminbi (“RMB”). Transactions in foreign currencies are initially recorded at the
functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement
amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of operations.
|
|
For
the six months ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Period
end RMB: US$ exchange rate
|
|
|
6.4566
|
|
|
|
7.0851
|
|
Period
average RMB: US$ exchange rate
|
|
|
6.4671
|
|
|
|
7.0307
|
|
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.
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.
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.
|
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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
60 days after customers received the purchased goods. If accounts receivable are to be provided for, or written off, they would be recognized
in the consolidated statement of operations within operating expenses. Balance of allowance of doubtful accounts was $1.00 million and
$1.08 million as of June 30, 2021 and December 31, 2020, 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 June 30, 2021 and December 31, 2020, the Company had reserves for inventories
of $0 million and $0 million, respectively. The Company records inventory reserves for excess or obsolete inventories based upon assumptions
about our current and future demand forecasts.
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 $0.73 million and $0.45 million as of June 30, 2021 and December 31, 2020.
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
|
|
Fixtures
and decorations
|
5 years
|
|
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2
– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 six months ended June 30, 2021 and 2020.
Lease
ASC
842 supersedes the lease requirements in ASC 840 “Leases”, and generally requires lessees to recognize operating and finance
lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount,
timing and uncertainty of cash flows arising from leasing arrangements. Leases that transfer substantially all of the benefits and risks
incidental to the ownership of assets are accounted for as finance leases as if there was an acquisition of an asset and incurrence of
an obligation at the inception of the lease. All other leases are accounted for as operating leases.
A
sale-leaseback transaction occurs when an entity sells an asset it owns and immediately leases the asset back from the buyer. The seller
then becomes the lessee and the buyer becomes the lessor. under ASC 842, both parties must assess whether the buyer-lessor has obtained
control of the asset and a sale has occurred.
The
Company has determined that the leaseback transaction that it newly entered in current year fails to qualify as a sale because control
is not transferred to the buyer-lessor. Therefore, the Company has classified the lease portion of the transaction as a finance lease
whereby the Company continues to depreciate the assets and recorded a financing obligation for the consideration received from the buyer-lessor,
with an implicit interest rate of 4.0038%.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2
– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
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.
Contracts
do not offer any price protection, but allow for the return of certain goods if quality problem, which is standard warranty. The Company
product returns and recorded reserve for sales returns were minimal for the six months ended June 30, 2021 and 2020. The total rebates
amount is accounting for around 0.19% and 0.43% of the total revenue of Greenland.
The
following table sets forth disaggregation of revenue:
|
|
For
the three months ended
June 30,
|
|
|
For
the six months ended
June 30,
|
|
Major
Product
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Transmission
boxes for Forklift
|
|
|
24,844,007
|
|
|
|
14,489,369
|
|
|
|
46,393,363
|
|
|
|
24,361,426
|
|
Transmission
boxes for Non-Forklift (EV, etc.) and parts of transmission boxes
|
|
|
3,360,300
|
|
|
|
2,086,976
|
|
|
|
6,421,838
|
|
|
|
2,086,986
|
|
Total
|
|
|
28,204,307
|
|
|
|
16,576,345
|
|
|
|
52,815,201
|
|
|
|
26,448,412
|
|
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 $1,005,296 and $475,649 for the three months ended June 30,
2021 and 2020, respectively. Research and development costs are expensed as incurred and totaled approximately $1,964,841 and $1,039,947
for the six months ended June 30, 2021 and 2020, 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 $2.24 million and $2.34 million at June
30, 2021 and December 31, 2020, respectively.
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.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 June 30, 2021 and December 31, 2020, 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.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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) consists in accordance
with ASC Topic 220, “Comprehensive Income”.
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 six months ended June 30, 2021.
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.
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.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2
– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 June
30, 2021 and December 31, 2020. 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 June 30, 2021 and December 31, 2020.
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
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.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2
– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 CONSOLIDATED FINANCIAL STATEMENTS
NOTE
3 – CONCENTRATION ON REVENUES AND COST OF GOODS SOLD
Concentration
of major customers and suppliers:
|
|
For
the six months ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Major
customers representing more than 10% of the Company’s revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
A
|
|
$
|
8,881,037
|
|
|
|
16.82
|
%
|
|
$
|
6,166,754
|
|
|
|
23.32
|
%
|
Company
B
|
|
|
6,593,104
|
|
|
|
12.48
|
%
|
|
|
-
|
|
|
|
-
|
|
Total
Revenues
|
|
$
|
15,474,141
|
|
|
|
29.30
|
%
|
|
$
|
6,166,754
|
|
|
|
23.32
|
%
|
|
|
As
of
|
|
|
|
June
30,
2021
|
|
|
December
31,
2020
|
|
Major customers of
the Company’s accounts receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
A
|
|
|
1,990,033
|
|
|
|
9.70
|
%
|
|
|
2,002,275
|
|
|
|
14.95
|
%
|
Company
B
|
|
|
1,498,188
|
|
|
|
7.30
|
%
|
|
|
1,955,113
|
|
|
|
14.60
|
%
|
Company
C
|
|
|
1,456,398
|
|
|
|
7.10
|
%
|
|
|
1,359,607
|
|
|
|
10.15
|
%
|
Total
|
|
$
|
4,944,619
|
|
|
|
24.10
|
%
|
|
$
|
5,316,995
|
|
|
|
39.69
|
%
|
Accounts
receivable from the Company’s major customers accounted for 24.10% and 39.69% of total accounts receivable balances as of June
30, 2021 and December 31, 2020, respectively.
There
were no suppliers representing more than 10% of the Company’s total purchases for the six months ended June 30, 2021 and 2020,
respectively.
NOTE 4
– ACCOUNTS RECEIVABLE
Accounts
receivable is net of allowance for doubtful accounts.
|
|
As
of
|
|
|
|
June
30,
2021
|
|
|
December 31,
2020
|
|
Accounts
receivable
|
|
$
|
21,516,802
|
|
|
$
|
13,395,080
|
|
Less:
allowance for doubtful accounts
|
|
|
(996,984
|
)
|
|
|
(986,532
|
)
|
Accounts
receivable, net
|
|
$
|
20,519,818
|
|
|
$
|
12,408,548
|
|
Changes in
the allowance for doubtful accounts are as follows:
|
|
For
the three months ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Beginning
balance
|
|
$
|
986,532
|
|
|
$
|
1,037,797
|
|
Provision
for doubtful accounts
|
|
|
10,452
|
|
|
|
111,947
|
|
Ending
balance
|
|
$
|
996,984
|
|
|
$
|
1,149,744
|
|
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5
– INVENTORIES
|
|
As
of
|
|
|
|
June
30,
2021
|
|
|
December 31,
2020
|
|
Raw
materials
|
|
$
|
6,789,961
|
|
|
$
|
5,682,382
|
|
Revolving
material
|
|
|
928,567
|
|
|
|
742,437
|
|
Consigned
processing material
|
|
|
62,249
|
|
|
|
51,290
|
|
Work-in-progress
|
|
|
2,226,541
|
|
|
|
2,015,677
|
|
Finished
goods
|
|
|
7,724,097
|
|
|
|
6,888,277
|
|
Inventories,
net
|
|
$
|
17,731,415
|
|
|
$
|
15,380,063
|
|
NOTE
6 – NOTES RECEIVABLE
|
|
As
of
|
|
|
|
June
30,
2021
|
|
|
December
31,
2020
|
|
Bank
notes receivable:
|
|
$
|
33,088,948
|
|
|
$
|
30,803,772
|
|
Commercial
notes receivable
|
|
|
24,781
|
|
|
|
-
|
|
Total
|
|
$
|
33,113,729
|
|
|
$
|
30,803,772
|
|
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 six months from the date of issuance. As of June 30, 2021, the Company
pledged notes receivable for an aggregate amount of $21.83 million to Bank of Communications and Bank of Hangzhou as a means of security
for issuance of bank acceptance notes for an aggregate amount of $26.49 million. As of December 31, 2020, the Company pledged notes receivable
for an aggregate amount of $26.53 million to Bank of Communications as a means of security for issuance of bank acceptance notes for
an aggregate amount of $23.70 million. The Company expects collection of notes receivable within 6 months.
NOTE 7
– PROPERTY, PLANT AND EQUIPMENT AND CONSTRUCTION IN PROGRESS
(a) As of
June 30, 2021 and December 31, 2020, property, plant and equipment consisted of the following:
|
|
As
of
|
|
|
|
June
30,
2021
|
|
|
December 31,
2020
|
|
Buildings
|
|
$
|
14,412,596
|
|
|
$
|
12,453,285
|
|
Machinery
|
|
|
19,723,416
|
|
|
|
20,907,623
|
|
Motor
vehicles
|
|
|
329,302
|
|
|
|
325,850
|
|
Electronic
equipment
|
|
|
201,991
|
|
|
|
198,955
|
|
Total
property plant and equipment, at cost
|
|
|
34,667,305
|
|
|
|
33,885,713
|
|
|
|
|
|
|
|
|
|
|
Less:
accumulated depreciation
|
|
|
(15,227,047
|
)
|
|
|
(13,843,189
|
)
|
Property,
plant and equipment, net
|
|
$
|
19,440,258
|
|
|
$
|
20,042,524
|
|
Construction
in process
|
|
|
93,798
|
|
|
|
92,815
|
|
Total
|
|
$
|
19,534,056
|
|
|
$
|
20,135,339
|
|
For
the six months ended June 30, 2021 and 2020, depreciation expense amounted to $1.20 million and $0.95 million, respectively, of which
$0.77 million and $0.68 million, respectively, was included in cost of revenue and inventories, and the remainder was included in general
and administrative expense, research and development expenses, and other expenses.
For
the six months ended June 30, 2021 and 2020, $0 and $430,581 of construction in progress were converted into fixed assets.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7
– PROPERTY, PLANT AND EQUIPMENT AND CONSTRUCTION IN PROGRESS (CONTINUED)
Restricted
assets consist of the following:
|
|
As
of
|
|
|
|
June
30,
2021
|
|
|
December 31,
2020
|
|
Buildings,
net
|
|
$
|
11,167,710
|
|
|
$
|
11,050,641
|
|
Machinery,
net
|
|
|
2,173,063
|
|
|
|
2,150,284
|
|
Total
|
|
|
13,340,773
|
|
|
|
13,200,925
|
|
As
of June 30, 2021, the Company pledged its ownership in buildings for net book value of RMB72.11 million ($11.01 million) as security
with ABC Xinchang and Rural commercial bank, for its loan facility with maximum exposure of RMB94.63 million.
As
of December 31, 2020, the Company pledged its ownership in buildings for net book value of RMB72.11 million ($11.05 million) as security
with ABC Xinchang and Rural commercial bank, for its loan facility with maximum exposure of RMB104.63 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.
NOTE 8
– LAND USE RIGHTS
Land use
rights consisted of the following:
|
|
As
of
|
|
|
|
June
30,
2021
|
|
|
December 31,
2020
|
|
Land
use rights, cost
|
|
$
|
4,765,140
|
|
|
$
|
4,715,188
|
|
Less:
Accumulated amortization
|
|
|
(734,788
|
)
|
|
|
(679,934
|
)
|
Land
use rights, net
|
|
$
|
4,030,352
|
|
|
$
|
4,035,254
|
|
As
of June 30, 2021, there was land use rights with net book value of $4.03 million, which approximately were used as collateral for the
Company’s short-term bank loans. As of December 31, 2020, there was land use rights with net book value of $4.04 million, which
approximately were used as collateral for the Company’s short-term bank loans.
Estimated
future amortization expense is as follows as of June 30, 2021:
Years
ending June 30,
|
|
Amortization
expense
|
|
2022
|
|
$
|
95,148
|
|
2023
|
|
|
95,148
|
|
2024
|
|
|
95,148
|
|
2025
|
|
|
95,148
|
|
2026
|
|
|
95,148
|
|
Thereafter
|
|
|
3,554,612
|
|
Total
|
|
$
|
4,030,352
|
|
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9
– NOTES PAYABLE
|
|
As
of
|
|
|
|
June
30,
2021
|
|
|
December 31,
2020
|
|
Bank
acceptance notes
|
|
$
|
38,202,952
|
|
|
$
|
25,889,067
|
|
Total
|
|
$
|
38,202,952
|
|
|
$
|
25,889,067
|
|
The
interest-free notes payable, ranging from nine months to one year from the date of issuance, were secured by $9.77 million and $2.24
million restricted cash, $33.11 million and $26.53 million notes receivable, and $4.03 million and $4.04 million land use rights, as
of June 30, 2021 and December 31, 2020, 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.
NOTE 10
– ACCOUNTS PAYABLE
Accounts
payable are summarized as follow:
|
|
As
of
|
|
|
|
June
30,
2021
|
|
|
December 31,
2020
|
|
Procurement
of Materials
|
|
$
|
26,746,255
|
|
|
$
|
21,140,063
|
|
Infrastructure
& Equipment
|
|
|
1,404,610
|
|
|
|
717,053
|
|
Freight
fee
|
|
|
149,369
|
|
|
|
148,144
|
|
Total
|
|
$
|
28,300,234
|
|
|
$
|
22,005,260
|
|
NOTE 11
– SHORT TERM BANK LOANS
Short-term
loans are summarized as follow:
|
|
As
of
|
|
|
|
June
30,
2021
|
|
|
December 31,
2020
|
|
Collateralized
bank loans
|
|
$
|
11,125,051
|
|
|
$
|
17,261,302
|
|
Guaranteed
bank loans
|
|
|
774,401
|
|
|
|
1,226,054
|
|
Total
|
|
$
|
11,899,452
|
|
|
$
|
18,487,356
|
|
Short-term
loans as of June 30, 2021 are as follow:
Maturity
Date
|
|
Type
|
|
Bank
Name
|
|
Interest
Rate per
Annum (%)
|
|
|
June
30,
2021
|
|
Sep.01, 2021
|
|
Operating
Loans
|
|
Agricultural bank of PRC
|
|
|
4.44
|
|
|
$
|
6,014,002
|
|
Sep.16, 2021
|
|
Operating
Loans
|
|
Rural commercial bank of Xinchang
|
|
|
5.30
|
|
|
$
|
1,239,042
|
|
Sep.22, 2021
|
|
Operating
Loans
|
|
Rural commercial bank of Xinchang
|
|
|
4.35
|
|
|
$
|
1,239,042
|
|
Sep.26, 2021
|
|
Operating
Loans
|
|
Rural commercial bank of Xinchang
|
|
|
4.35
|
|
|
$
|
2,632,965
|
|
Jan.21, 2022
|
|
Operating
Loans
|
|
Rural commercial bank of Xinchang
|
|
|
5.30
|
|
|
$
|
774,401
|
|
Total
|
|
|
|
|
|
|
|
|
|
$
|
11,899,452
|
|
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11
– SHORT TERM BANK LOANS (CONTINUED)
Short-term
loans as of December 31, 2020 are as follow:
Maturity
Date
|
|
Type
|
|
Bank
Name
|
|
Interest
Rate per
Annum (%)
|
|
|
December 31,
2020
|
|
Sep.01, 2021
|
|
Operating
Loans
|
|
Agricultural bank of PRC
|
|
|
4.44
|
|
|
$
|
5,950,958
|
|
Sep.06, 2021
|
|
Operating
Loans
|
|
Agricultural bank of PRC
|
|
|
4.44
|
|
|
$
|
6,252,874
|
|
Sep.16, 2021
|
|
Operating
Loans
|
|
Rural commercial bank of Xinchang
|
|
|
5.30
|
|
|
$
|
1,226,053
|
|
Sep.22, 2021
|
|
Operating
Loans
|
|
Rural commercial bank of Xinchang
|
|
|
4.35
|
|
|
$
|
1,226,053
|
|
Sep.26, 2021
|
|
Operating
Loans
|
|
Rural commercial bank of Xinchang
|
|
|
4.35
|
|
|
$
|
2,605,364
|
|
Nov.11, 2021
|
|
Operating
Loans
|
|
SPD Rural Bank of Xinchang
|
|
|
5.50
|
|
|
|
1,226,054
|
|
Total
|
|
|
|
|
|
|
|
|
|
$
|
18,487,356
|
|
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 4.5547% and 4.7467% for the six months ended June 30, 2021 and 2020, respectively.
The Company was in compliance with its loan financial covenants at June 30, 2021 and December 31, 2020, respectively.
NOTE 12
– OTHER CURRENT LIABILITIES
Other current
liabilities are summarized as follow:
|
|
As
of
|
|
|
|
June
30,
2021
|
|
|
December 31,
2020
|
|
Employee
payables
|
|
|
135,782
|
|
|
|
483,922
|
|
Other
tax payables
|
|
|
1,078,166
|
|
|
|
1,208,323
|
|
Borrowing
from third party
|
|
|
261,142
|
|
|
|
520,080
|
|
Total
|
|
$
|
1,475,090
|
|
|
$
|
2,212,325
|
|
NOTE
13 – OTHER LONG-TERM LIABILITIES
Other long-term
liabilities are summarized as follow:
|
|
As
of
|
|
|
|
June
30,
2021
|
|
|
December 31,
2020
|
|
Subsidy
|
|
|
2,240,949
|
|
|
|
2,342,648
|
|
Total
|
|
$
|
2,240,949
|
|
|
$
|
2,342,648
|
|
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 June 30, 2021, grant income decreased by $0.10 million, as compared to
December 31, 2020. The change was mainly due to timing of incurring qualifying expenses.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14
– LONG TERM PAYABLES
|
|
As
of
|
|
|
|
June
30,
2021
|
|
|
December 31,
2020
|
|
Long-term
payables current portion
|
|
$
|
584,003
|
|
|
$
|
797,179
|
|
Long-term
payables– non-current portion
|
|
|
-
|
|
|
|
166,292
|
|
Total
|
|
$
|
584,003
|
|
|
$
|
963,471
|
|
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. As of June 30, 2021 and December 31, 2020, 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. As of June 30, 2021 and December 31, 2020, there were 11,448,327 and 10,225,142
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 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 (“Chardan”).
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 ordinary
shares 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.
On
November 10, 2020, the Company granted a total of 135,000 restricted ordinary shares to JING JIN.
On
December 30, 2020, the Company granted a total of 69,000 restricted ordinary shares to RAYMOND Z. WANG.
On
February 8, 2021, the Company granted a total of 51,000 restricted ordinary shares to RAYMOND Z. WANG.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED 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 Company’s 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).
As
of June 30, 2021, all of the existing Rights were converted into 468,200 ordinary shares as a result of the Business Combination.
Warrants
—The Company’s outstanding warrants held by CEDE & CO (“Public Warrants”) may only be exercised for
a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. 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, the holders may, 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 the 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.
|
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.
Private
warrants include (i) the 282,000 warrants underlying the units issued to the Sponsor and Chardan in a private placement in connection
with our initial public offering (“Private Unit Warrants”), and (ii) 120,000 warrants held by Chardan upon the exercise of
its unit purchase option to purchase 120,000 units in March 2021 (“Option Warrants”, together with Private Unit Warrants,
the “Private Warrants”). 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.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
15 – STOCKHOLDER’S EQUITY (CONTINUED)
As
of June 30, 2021 there were total 4,682,000 Warrants outstanding, including 4,621,985 Public Warrants held by CEDE & CO, and 22,000
and 260,000 Private Warrants held by Chardan and the Sponsor, respectively.
Certain
warrants were exercised in February of 2021 for the issuance of 221,985 newly issued ordinary shares. The Company received cash proceeds
of $1,858,841 from the exercise of these warrants.
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 1933, as amended, 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 June 30, 2021, there was a unit purchase option outstanding to purchase 120,000 units.
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 ordinary shares 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.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
16 – EARNINGS PER SHARE (CONTINUED)
The
following is a reconciliation of the basic and diluted earnings per share computation:
|
|
For
the three months
ended
June 30,
|
|
For
the six months
ended
June 30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net
income attributable to the Greenland Corporation and subsidiaries
|
|
$
|
2,780,753
|
|
|
$
|
1,259,097
|
|
|
$
|
4,909,321
|
|
|
$
|
1,515,761
|
|
Weighted
average basic and diluted computation shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in reverse recapitalization
|
|
|
10,498,127
|
|
|
|
10,006,142
|
|
|
|
10,225,142
|
|
|
|
10,006,142
|
|
Weighted average
shares of restricted grants
|
|
|
-
|
|
|
|
15,000
|
|
|
|
-
|
|
|
|
15,000
|
|
Weighted average
shares issued for exercise of warrants
|
|
|
950,200
|
|
|
|
-
|
|
|
|
1,223,185
|
|
|
|
-
|
|
Weighted
average ordinary shares of common stock
|
|
|
10,814,479
|
|
|
|
10,021,142
|
|
|
|
10,574,223
|
|
|
|
10,015,203
|
|
Dilutive
effect of stock options
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Restricted
stock vested not issued
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
ordinary
shares and ordinary shares equivalents
|
|
|
10,814,479
|
|
|
|
10,021,142
|
|
|
|
10,574,223
|
|
|
|
10,015,203
|
|
Basic
and diluted net income per share
|
|
$
|
0.26
|
|
|
$
|
0.13
|
|
|
|
0.46
|
|
|
|
0.15
|
|
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 six months ended June 30, 2021 and 2020 are as follows:
|
|
For
the three months
ended
June 30,
|
|
For
the six months
ended
June 30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Domestic
Sales
|
|
$
|
28,106,861
|
|
|
$
|
16,510,295
|
|
|
$
|
52,607,900
|
|
|
$
|
26,374,148
|
|
International
Sales
|
|
|
97,446
|
|
|
|
66,050
|
|
|
|
207,301
|
|
|
|
74,264
|
|
Total
|
|
$
|
28,204,307
|
|
|
$
|
16,576,345
|
|
|
$
|
52,815,201
|
|
|
$
|
26,448,412
|
|
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 six months ended June 30, 2021 was 14.08%. The effective tax rate for the six
months ended June 30, 2021 was lower than the PRC tax rate of 25.0% primarily due to the China Super R&D deduction.
The
effective tax rates on income before income taxes for the six months ended June 30, 2020 was 7.46%. The effective tax rate for the six
months ended June 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
Company has recorded $0 unrecognized benefit as of June 30, 2021. On the information currently available, the Company does not anticipate
a significant increase or decrease to its unrecognized benefit within the next 12 months.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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 June 30, 2021 and December 31, 2020, outstanding amount of the short-term
bank loan under this pledge contract was RMB38.83 million and RMB38.83 million.
On
November 28, 2019, Zhejiang Zhongchai signed a maximum amount pledge contract with 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 June
30, 2021 and December 31, 2020, outstanding amount of the short-term bank loan under this pledge contract was RMB0 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
June 30, 2021 and December 31, 2020, outstanding amount of the short-term bank loan under this pledge contract was RMB17.00 million and
RMB17.00 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 June 30, 2021 and December 31, 2020, outstanding amount of the short-term
bank loan under this Pledge Contract was RMB8.00 million and RMB8.00 million.
(2)
Litigation
On
September 19, 2019, a purported class action challenging the Business Combination was filed in the United States District Court for the
District of Delaware (the “District Court”), captioned Wheby v. Greenland Acquisition Corporation, et al., Case No. 19-1758-MN
(D. Del.) (the “Action”). The Action alleged certain violations of the Securities Exchange Act of 1934, as amended, and sought,
among other things, to enjoin the Business Combination from closing (or, if consummated, to rescind the Business Combination or award
rescissory damages), to require the Company to issue a separate proxy statement, and to receive an award of attorneys’ fees and
costs.
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 January 25, 2021, we have
been settled with our counter party which paid into in total $65,000. As of June 30, 2021, those discussions have been completed.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
19 – COMMITMENTS AND CONTINGENCIES (CONTINUED)
Facility
Leases
The
Company entered into a failed sale-leaseback transaction on January 3, 2019 and April 26, 2019. 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 June 30, 2021:
Years
ending June 30,
|
|
Amount
|
|
2022
|
|
|
584,003
|
|
2023
|
|
|
-
|
|
Total
|
|
$
|
584,003
|
|
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
|
Hangzhou
Jiuru Economic Information Consulting Co. Ltd
|
|
One of the directors of Hengyu
|
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
20 – RELATED PARTY TRANSACTIONS (CONTINUED)
(b)
Summary of Balances with Related Parties:
|
|
As
of
|
|
|
June
30,
2021
|
|
December
31,
2020
|
Due
to related parties:
|
|
|
|
|
Sinomachinery
Holding Limited1
|
|
$
|
1,775,869
|
|
|
$
|
1,775,869
|
|
Zhejiang
Kangchen Biotechnology Co., Ltd2
|
|
|
-
|
|
|
|
64,505
|
|
Zhejiang
Zhonggong Machinery Co., Ltd.3
|
|
|
481,915
|
|
|
|
538,166
|
|
Zhejiang
Zhonggong Agricultural Equipment Co., Ltd.4
|
|
|
-
|
|
|
|
-
|
|
Cenntro
Smart Manufacturing Tech. Co., Ltd.5
|
|
|
2,866
|
|
|
|
3,602
|
|
Zhuhai
Hengzhong Industrial Investment Fund (Limited Partnership)6
|
|
|
242,508
|
|
|
|
514,365
|
|
Cenntro
Holding Limited⁷
|
|
|
1,591,627
|
|
|
|
1,591,627
|
|
Peter
Zuguang Wang⁷
|
|
|
-
|
|
|
|
25,000
|
|
Greenland
Asset Management Corporation7
|
|
|
-
|
|
|
|
-
|
|
Xinchang
County Jiuxin Investment Management Partnership (LP)7
|
|
|
3,619,645
|
|
|
|
4,347,985
|
|
Hangzhou
Jiuru Economic Information Consulting Co. Ltd7
|
|
|
190,000
|
|
|
|
190,000
|
|
Total
|
|
$
|
7,904,430
|
|
|
$
|
9,051,119
|
|
The
balance of due to related parties as of June 30, 2021 and December 31, 2020 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
|
|
|
June
30,
2021
|
|
December 31,
2020
|
Due
from related parties-current:
|
|
|
|
|
Cenntro
Holding Limited
|
|
$
|
38,943,406
|
|
|
$
|
38,535,171
|
|
Cenntro
Smart Manufacturing Tech. Co., Ltd.
|
|
|
3,097
|
|
|
|
-
|
|
Total
|
|
$
|
38,946,503
|
|
|
$
|
38,535,171
|
|
The
balance of Due from related parties as of June 30, 2021 and December 31, 2020 consisted of:
Other
receivable from Cenntro Holding Limited was $38.9 million and $38.5 million as of June 30, 2021 and December 31, 2020, respectively.
GREENLAND
TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 20
– RELATED PARTY TRANSACTIONS (CONTINUED)
The
Company expects the amount due from its equity holder, Cenntro Holding will be paid back on
April 27, 2022, as the Company and Cenntro Holding Limited mutually agreed to an extension
of repayment from the end of October 2020,the original maturity date.
(c)
Summary of Related Party Funds Lending:
A
summary of funds lending with related parties for the six months ended June 30, 2021 and 2020 are listed below:
Withdraw
funds from related parties:
|
|
For
the six months
ended
June 30,
|
|
|
2021
|
|
2020
|
Zhejiang
Zhonggong Machinery Co., Ltd.
|
|
|
77,314
|
|
|
|
354,736
|
|
Cenntro
Smart Manufacturing Tech. Co., Ltd.
|
|
|
33,091
|
|
|
|
-
|
|
Peter
Zuguang Wang
|
|
|
25,000
|
|
|
|
-
|
|
Xinchang
County Jiuxin Investment Management Partnership (LP)
|
|
|
-
|
|
|
|
255,410
|
|
Cenntro
Holding Limited
|
|
|
251,973
|
|
|
|
-
|
|
Zhuhai
Hengzhong Industrial Investment Fund (Limited Partnership)
|
|
|
34,946
|
|
|
|
15,573
|
|
Total
|
|
|
422,324
|
|
|
|
625,719
|
|
|
|
|
|
|
|
|
|
|
Deposit
funds with related parties:
|
|
|
|
|
|
|
|
|
Zhejiang
Zhonggong Machinery Co., Ltd.
|
|
|
77,314
|
|
|
|
496,630
|
|
Xinchang
County Jiuxin Investment Management Partnership (LP)
|
|
|
773,144
|
|
|
|
-
|
|
Zhuhai
Hengzhong Industrial Investment Fund (Limited Partnership)
|
|
|
310,804
|
|
|
|
-
|
|
Cenntro
Smart Manufacturing Tech. Co., Ltd.
|
|
|
33,864
|
|
|
|
-
|
|
Zhejiang
Kangchen Biotechnology Co., Ltd
|
|
|
64,505
|
|
|
|
-
|
|
Peter
Zuguang Wang
|
|
|
25,000
|
|
|
|
-
|
|
Total
|
|
|
1,284,631
|
|
|
|
496,630
|
|
NOTE 21
– SUBSEQUENT EVENTS
The
management has evaluated subsequent events through the date of the report, and there was no material subsequent event requiring adjustments
to the financial statements or disclosure.