UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: September 30, 2022

 

TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ___________ to ____________

 

Commission File Number: 001-34449

 

PLANET GREEN HOLDINGS CORP.
(Exact name of registrant as specified in its charter)

 

Nevada   87-0430320
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification Number)

 

36-10 Union St. 2nd Floor

Flushing, NY 11354
(Address of principal executive office and zip code)

 

(718) 799-0380
(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, par value $0.001 per share   PLAG   NYSE American

 

Securities registered pursuant to Section 12(g) of the Act: None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
  Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 

The number of outstanding shares of the registrant’s common stock as of November 14, 2022 was 72,081,930.

 

 

 

 

 

TABLE OF CONTENT

 

    PAGE
     
PART I - FINANCIAL INFORMATION 1
     
ITEM 1 FINANCIAL STATEMENTS F-1
     
ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 2
     
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  6
     
ITEM 4 CONTROLS AND PROCEDURES  6
     
PART II - OTHER INFORMATION 6
     
ITEM 1 LEGAL PROCEEDINGS 6
     
ITEM 1A RISK FACTORS 6
     
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 6
     
ITEM 3 DEFAULTS UPON SENIOR SECURITIES 6
     
ITEM 4 MINE SAFETY DISCLOSURES 6
     
ITEM 5 OTHER INFORMATION 6
     
ITEM 6 EXHIBITS 7
     
SIGNATURES 8

 

i

 

 

Caution Regarding Forward-Looking Statements

 

This quarterly report on Form 10-Q contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to the factors described in the section captioned “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (the “SEC”).

 

In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” or the negative of such terms or other similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report completely and with the understanding that our actual future results may be materially different from what we expect.

 

Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

 

ii

 

 

PART I

 

Use of Certain Defined Terms

 

Except where the context otherwise requires and for the purposes of this report only: 

 

 

“Anhui Ansheng” refers to Anhui Ansheng Petrochemical Equipment Co., Ltd., a company incorporated in China.

 

  “Allinyson” refers to Allinyson Ltd., a company incorporated in the State of Colorado.
     
  “Bless Chemical” refers to Bless Chemical Co., Ltd., a company incorporated in Hong Kong.
     
  “Baokuan Hong Kong” refers to Baokuan Technology (Hong Kong) Limited, a company incorporated in Hong Kong.
     
  “China” and “PRC” refer to the People’s Republic of China (excluding Hong Kong, Macau and Taiwan for the purposes of this report only).

 

  “Fast Approach” refers to Fast Approach Inc., a corporation incorporated under the laws of Canada.
     
 

“Hubei Bulaisi” Refers to Hubei Bulaisi Technology Co., Ltd., a PRC limited liability company.

 

  “Guangzhou Haishi” refers to Guangzhou Haishi Technology Co., Ltd., a PRC limited liability company.
     
  “Jiayi Technologies” or “WFOE” refers to Jiayi Technologies (Xianning) Co., Ltd., a PRC limited liability company and a wholly foreign-owned enterprise, formerly known as Lucky Sky Petrochemical Technology (Xianning) Co. Ltd.

 

  “Jilin Chuangyuan” refers to Jilin Chuangyuan Chemical Co., Ltd., a PRC limited liability company.

 

  “Jingshan Sanhe” refers to Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd., a PRC limited company.

 

 

“Promising Prospect HK” refers to Promising Prospect HK Limited, formerly known as Lucky Sky Planet Green Holdings Co., Limited, a company incorporated in Hong Kong.

 

  “PLAG,” “we,” “us”, “our,” “Planet Green” and the “Company” refer to Planet Green Holdings Corp., a Nevada corporation, and except where the context requires otherwise, our wholly-owned subsidiaries and VIEs.
     
  “Promising Prospect BVI” refers to Promising Prospect Limited, formerly known as Planet Green Holdings Corporation, a British Virgin Islands company.

 

  “RMB” refers to Renminbi, the legal currency of China.

 

  “Shanghai Shuning” refers to Shanghai Shuning Advertising Co., Ltd, a PRC limited liability company.

  

  ●  “Shandong Yunchu” Refers to Shandong Yunchu Supply Chain Co., Ltd., a PRC limited liability company.

 

  “U.S. dollar”, “$” and “US$” refer to the legal currency of the United States.

 

  “VIE” refers to variable interest entity.

 

  “Xianning Bozhuang” refers to Xianning Bozhuang Tea Products Co., Ltd., a PRC limited liability company.
     
  “Shine Chemical” refers to Shine Chemical Co., Ltd., a company incorporated in British Islands.

 

1

 

 

ITEM 1 FINANCIAL STATEMENTS

 

Planet Green Holdings Corp.

Unaudited Condensed Consolidated Balance Sheets

As of September 30, 2022 and December 31, 2021

(Stated in US Dollars)

 

    September 30,     December 31,  
    2022     2021  
Assets            
Current assets            
Cash and cash equivalents   $ 226,507     $ 750,658  
Restricted cash     84,588       380,750  
Accounts and notes receivable, net     2,311,340       3,819,073  
Inventories     8,208,172       7,816,432  
Advances to suppliers     6,229,449       5,681,083  
Other receivables     979,435       1,185,136  
Other receivables-related parties     6,733,185       7,670,434  
Total current assets     24,772,676       27,303,566  
                 
Non-current assets                
Plant and equipment, net     25,993,864       20,485,449  
Intangible assets, net     3,618,205       4,199,651  
Construction in progress, net     25,584       2,475,874  
Prepayment investments     -       705,805  
Long-term investments     16,516,981       3,136,910  
Investment in real estates     -       7,770,943  
Deferred tax assets     1,052,514       1,172,050  
Goodwill     25,374,497       18,180,532  
Right-of-use assets     233,671       584,802  
Total non-current assets     72,815,316       58,712,016  
                 
Total assets   $ 97,587,992     $ 86,015,582  
                 
Liabilities and Stockholders’ Equity                
Current liabilities                
Short-term bank loans     6,002,354       6,822,054  
Accounts payable     7,358,750       6,237,810  
Advance from customers     4,738,457       6,190,091  
Taxes payable     958,957       787,593  
Other payables and accrued liabilities     4,773,715       8,635,189  
Other payables-related parties     10,412,765       5,196,227  
Lease liabilities-current portion     200,436       436,191  
Deferred income     55,166       73,732  
Total current liabilities     34,500,600       34,378,887  
                 
Non-current liabilities                
Long-term bank loans     281,698       -  
Long-term payables     287,795       380,345  
Total non-current liabilities     569,493       380,345  
                 
Total liabilities   $ 35,070,093     $ 34,759,232  
                 
Commitments and contingencies     -       -  
                 
Stockholders’ equity                
Preferred stock: $0.001 par value, 5,000,000 shares authorized; none issued and outstanding as of September 30, 2022 and December 31, 2021     -       -  
Common stock: $0.001 par value, 200,000,000 shares authorized; 72,081,930 and 35,581,930 shares issued and outstanding as of September 30,2022 and December 31, 2021     72,082       35,582  
Additional paid-in capital     155,702,975       133,232,224  
Accumulated deficit     (98,943,143 )     (94,072,383 )
Accumulated other comprehensive income     4,196,698       7,711,057  
Non-controlling interests     1,489,287       4,349,870  
                 
Total stockholders’ equity   $ 62,517,899     $ 51,256,350  
                 
Total liabilities and stockholders’ equity   $ 97,587,992     $ 86,015,582  

 

See Accompanying Notes to the Financial Statements

 

F-1

 

 

Planet Green Holdings Corp.

Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income

For the Three Months And Nine Months Ended September 30, 2022 and 2021

(Stated in US Dollars)

 

   

For the

Three Months Ended

   

For the

Nine Months Ended

 
    September 30,     September 30,  
    2022     2021     2022     2021  
Net revenues   $ 10,264,434     $ 8,484,401     $ 37,788,044     $ 15,597,048  
Cost of revenues     9,566,309       7,133,389       35,184,898       13,750,406  
Gross profit     698,125       1,351,012       2,603,146       1,846,642  
                                 
Operating expenses                                
Selling and marketing expenses     562,313       453,657       1,497,194       974,273  
General and administrative expenses     2,166,074       3,223,939       5,656,922       5,869,473  
Research & Developing expenses     79,031       12,654       150,977       34,875  
Total operating expenses     2,807,418       3,690,250       7,305,093       6,878,621  
                                 
Operating (loss) income     (2,109,293 )     (2,339,238 )     (4,701,947 )     (5,031,979 )
                                 
Other (expenses) income                                
Interest income     108       71,945       9,231       102,870  
Interest expenses     (160,636 )     (211,554 )     (488,331 )     (445,602 )
Other income     20,230       118,317       339,518       357,246  
Other expenses     (8,796 )     (39,089 )     (35,858 )     (40,764 )
Total other (expenses) income     (149,094 )     (60,380 )     (175,440 )     (26,250 )
                                 
(Loss) income before income taxes     (2,258,387 )     (2,399,618 )     (4,877,387 )     (5,058,229 )
                                 
Income tax expenses     (37,644 )    
-
      (175,101 )     (147 )
                                 
Net (loss) income     (2,296,031 )     (2,399,618 )     (5,052,488 )     (5,058,376 )
                                 
Less: Net (loss) income attributable to non-controlling interest     (139,895 )     (129,685 )     (181,728 )     (325,964 )
                                 
Net (loss) income attributable to common shareholders   $ (2,156,136 )   $ (2,269,934 )   $ (4,870,760 )   $ (4,732,412 )
                                 
Net (loss) income     (2,296,031 )     (2,399,618 )     (5,052,488 )     (5,058,376 )
                                 
Foreign currency translation adjustment     (1,713,581 )     (139,703 )     (3,565,463 )     553,251  
                                 
Total comprehensive (loss) income     (4,009,612 )     (2,539,321 )     (8,617,951 )     (4,505,125 )
                                 
Less: Comprehensive (loss) income attribute to non-controlling interest     (161,138 )     (137,559 )     (232,832 )     (308,771 )
Comprehensive (loss) income attribute to common share holders   $ (3,848,474 )   $ (2,401,762 )   $ (8,385,119 )   $ (4,196,354 )
                                 
(Loss) income per common shareholders - Basic and diluted
  $ (0.03 )   $ (0.08 )   $ (0.09 )   $ (0.21 )
Basic and diluted weighted average shares outstanding
    69,708,304       28,667,147       55,335,606       23,082,956  

 

See Accompanying Notes to the Financial Statements

 

F-2

 

 

Planet Green Holdings Corp.

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the Nine Months Ended September 30, 2022 and 2021

(Stated in US Dollars)

 

                            Accumulated              
                Additional           Other     Non-        
    Number of     Common     Paid-in     Accumulated     Comprehensive     Controlling        
    Shares     Stock     Capital     Deficit     Income     Interests     Total  
Balance, January 1, 2021     11,809,930     $ 11,810     $ 95,659,360     $ (84,331,897 )   $ 6,972,163     $
-
    $ 18,311,436  
Net (loss) income     -      
-
     
-
      (4,732,412 )    
-
      (325,964 )     (5,058,376 )
Issuance of shares for acquisition     10,300,000       10,300       20,100,700      
-
     
-
     
-
      20,111,000  
Issuance of common stock for cash     6,700,000       6,700       13,732,749      
-
     
-
     
-
      13,739,449  
Stock-based compensation and issue of employee benefit plan stock     872,000       872       1,158,888      
-
     
-
     
-
      1,159,760  
Acquiring subsidiaries     -      
-
     
-
     
-
     
-
      6,019,031       6,019,031  
Foreign currency translation adjustment     -      
-
     
-
     
-
      536,058       17,193       553,251  
Balance, September 30, 2021     29,681,930     $ 29,682     $ 130,651,697     $ (89,064,309 )   $ 7,508,221     $ 5,710,260     $ 54,835,551  
                                                         
Balance, January 1, 2022     35,581,930     $ 35,582     $ 133,232,224     $ (94,072,383 )   $ 7,711,057     $ 4,349,870     $ 51,256,350  
Net (loss) income     -      
-
     
-
      (4,870,760 )    
-
      (181,728 )     (5,052,488 )
Issuance of common stock for cash     17,000,000       17,000       11,083,000      
-
     
-
     
-
      11,100,000  
Issuance of shares for acquisition     7,500,000       7,500       7,422,000      
-
     
-
     
-
      7,429,500  
Issuance of shares for long-term investment     12,000,000       12,000       9,588,000      
-
     
-
     
-
      9,600,000  
Acquiring additional shares from
shareholder of Anhui Ansheng
Petrochemical Equipment Co., Ltd.
    -      
-
      (2,900,742 )    
-
     
-
      (2,349,258 )     (5,250,000 )
Acquiring additional shares from
shareholder of Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd.
                    (2,721,507 )                     (278,493 )     (3,000,000 )
Foreign currency translation adjustment     -      
-
     
-
     
-
      (3,514,359 )     (51,104 )     (3,565,463 )
Balance, September 30, 2022     72,081,930     $ 72,082     $ 155,702,975     $ (98,943,143 )   $ 4,196,698     $ 1,489,287     $ 62,517,899  

 

See Accompanying Notes to the Financial Statements

 

F-3

 

 

Planet Green Holdings Corp.

Unaudited Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2022 and 2021

(Stated in US Dollars)

 

    September 30,   September 30,
    2022   2021
CASH FLOWS FROM OPFRATING ACTIVITIFS:        
Net (loss) income   $ (5,052,488 )   $ (5,058,376 )
Adjustments to reconcile net loss to cash (used in) provided by operating activities:                
Depreciation     716,964       1,543,332  
Amortization     56,931       180,930  
Amortization of operating lease right-of-use assets     377,332      
-
 
Impairment of equipment     (90,894 )    
-
 
Note and account receivables, net     2,020,575       1,251,554  
Inventories     (420,971 )     (4,415,071 )
Prepayments and deposit     169,187       (7,290,071 )
Other receivables     221,050       510,824  
Accounts payables     880,486       (108,627 )
Advance from customer     (1,559,954 )     167,670  
Other payables and accruals     (7,437,104 )     145,045  
Taxes payable     184,151       (74,881 )
Deferred income     (19,951 )    
-
 
Lease liability     (253,347 )    
-
 
Net cash used in operating activities     (10,208,033 )     (13,147,672 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
Purchase of plant and equipment    
-
      (42,350 )
Purchase of long-term investment     (3,517,590 )    
-
 
Net increase in cash from acquisition subsidiaries     246,322      
-
 
Net cash used in investing activities     (3,271,268 )     (42,350 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Payments of short-term loan - bank     (677,604 )    
-
 
Changes in related party balances, net     892,112       141,485  
Proceeds from issuance of common stock     11,100,000       9,812,118  
Net cash provided by financing activities     11,314,508       9,953,603  
                 
Net increase (decrease) in cash and cash equivalents     (2,164,792 )     (3,236,419 )
                 
EFFECT OF EXCHANGE RATE ON CASH     1,344,480       575,690  
                 
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR     1,131,408       3,415,751  
                 
CASH AND CASH EQUIVALENTS AT END OF YEAR   $ 311,095     $ 755,023  
                 
SUPPLEMENTARY OF CASH FLOW INFORMATION                
Interest received   $ 9,231     $ 102,870  
Interest paid   $ 488,331     $ 445,602  
                 
NON-CASH TRANSACTIONS                
Operating lease right-of-use assets   $ 233,671     $
-
 
Issuance of shares for acquisition   $ 7,429,500     $ 24,038,331  
Issuance of common stock for employee compensation   $
-
    $ 1,159,760  

 

See Accompanying Notes to the Financial Statements

 

F-4

 

 

PLANET GREEN HOLDINGS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 AND DECEMBER 31, 2021
(Stated in US Dollars)

 

1. Organization and Principal Activities

 

Planet Green Holdings Corp. (the “Company” or “PLAG”) is a holding company incorporated in Nevada. We are engaged in various businesses through our subsidiaries and variable interest entities in China.

 

Going Concern

 

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern; however, the Company has incurred a net loss of $5,052,488 for the nine months ended September 30, 2022. As of September 30, 2022, the Company had an accumulated deficit of $98,943,143, a working capital deficit of $9,727,924; its net cash used in operating activities for the nine months ended September 30, 2022 was $10,208,033.

 

These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management’s plan for the Company’s continued existence is dependent upon Management’s ability to execute the business plan and develop the plan to generate profit; additionally, Management may need to continue to rely on private placements or certain related parties to provide funding for investment, for working capital and general corporate purposes. If Management cannot execute its plan, the Company may become insolvent.

 

2. Summary of Significant Accounting Policies

 

Method of Accounting

 

Management has prepared the accompanying financial statements and these notes according to generally accepted accounting principles in the United States (“GAAP”). The Company maintains its general ledger and journals with the accrual method accounting.

 

    Place of   Attributable equity     Registered  
Name of Company   incorporation   interest %     capital  
Promising Prospect Limited   The British Virgin Islands     100     $ 10,000  
Promising Prospect HK Limited   Hong Kong     100       1  
Jiayi Technologies (Xianning) Co., Ltd.   PRC     100       2,000,000  
Fast Approach Inc.   Canada     100       79  
Shanghai Shuning Advertising Co., Ltd. (a subsidiary of FAST)   PRC     100      
-
 
Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd.   PRC     100       4,710,254  
Xianning Bozhuang Tea Products Co., Ltd.   PRC     100       6,277,922  
Jilin Chuangyuan Chemical Co., Ltd.   PRC     VIE       9,280,493  
Anhui Ansheng Petrochemical Equipment Co., Ltd.   PRC     VIE       3,045,776  
Shine Chemical Co., Ltd.   The British Virgin Islands     100       8,000  
Bless Chemical Co., Ltd. (a subsidiary of Shine Chemical)   Hong Kong     100       10,000  
Hubei Bulaisi Technology Co., Ltd. (a subsidiary of Bless Chemical)   PRC     100       30,000,000  
Shandong Yunchu Supply Chain Co., Ltd.   PRC     100       5,000,000  
Allinyson Ltd.   The United States     100       100,000  
Guangzhou Haishi Technology Co., Ltd.   PRC     100       156,250  
Baokuan Technology (Hongkong) Limited   Hong Kong     100       1,250  

 

F-5

 

 

Principles of Consolidation

 

The accompanying consolidated financial statements reflect the activities of Planet Green Holdings Corp. and each of the following entities:

 

Management has eliminated all significant inter-company balances and transactions in preparing the accompanying consolidated financial statements. Ownership interests of subsidiaries that the Company does not wholly-own are accounted for as non-controlling interests.

 

On May 29, 2020, the Planet Green Holdings Corporation (BVI) incorporated Lucky Sky Planet Green Holdings Co., Limited, a limited company incorporated in Hong Kong.

 

On June 5, 2020, the Planet Green Holdings Corporation (BVI) acquired all of the outstanding equity interests of Fast Approach Inc. It was incorporated under Canada’s laws and the business of operation of a demand-side platform targeting the Chinese education market in North America.

 

On June 16, 2020, Lucky Sky Holdings Corporations (H.K.) transferred its 100% equity interest in Lucky Sky Petrochemical to Lucky Sky Planet Green Holdings Co., Limited (H.K.).

 

On August 10, 2020, Planet Green Holdings Corporation (BVI) transferred its 100% equity interest in Lucky Sky Holdings Corporations (H.K.) Limited to Rui Tang.

 

On December 9, 2020, Lucky Sky Petrochemical Technology (Xianning) Co., Ltd. changed its name to Jiayi Technologies (Xianning) Co., Ltd.

 

On August 3, 2021, the Planet Green Holding Corp has acquired 8,000,000 ordinary shares of the Shine Chemical Co., Ltd. As a result, Shine Chemical Co., Ltd., Bless Chemical Co., Ltd and Hubei Bulaisi Technology Co., Ltd has been wholly-owned subsidiaries of the Planet Green Holding Corp.

 

On September 1st, 2021, Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. has changed its major shareholder from Mr. Feng Chao to Hubei Bulaisi Technology Co., Ltd. and Hubei Bulaisi Technology Co., Ltd. has held 85% shares of Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. after the alteration of shareholders.

 

On December 9, 2021, Planet Green Holdings Corporation (Nevada) issued an aggregate of 5,900,000 shares of common stock to the equity holders of Shandong Yunchu Supply Chain Co., Ltd. for the transfer to 100% of the equity interest of Shandong Yunchu Supply Chain Co., Ltd. to the Jiayi Technologies (Xianning) Co., Ltd.

 

On April 8, 2022, Planet Green Holdings Corporation (Nevada) issued an aggregate of 7,500,000 shares of common stock to the equity holders of Allinyson Ltd. for the acquisition of 100% of the equity interest of Allinyson Ltd.

 

On September 14, 2022, Planet Green Holdings Corp. and Hubei Bulaisi Technology Co., Ltd. a subsidiary of the Company, entered into a Share Purchase Agreement with Xue Wang, a shareholder of Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd., pursuant to which, among other things and subject to the terms and conditions contained therein, the Purchaser agreed to effect share purchase from the Seller of 15% of the outstanding equity interests of Jingshan, and the Company shall pay to the Seller an aggregate of U.S. $3,000,000 in exchange for 15% of the issued and outstanding shares. Before the closing of this Share Purchase transaction, the Company owns 85% equity interest of Jingshan through the Purchaser. On September 14, 2022, the Company closed the Share Purchase transaction. As of September 30, 2022, Hubei Bryce Technology Co., Ltd. has hold 100% shares of Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. after the alteration of shareholders.

 

F-6

 

 

Consolidation of Variable Interest Entity

 

Variable Interest Entities (“VIEs”) lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision-making ability. Any VIE with which the Company is involved must be evaluated to determine the primary beneficiary of the VIE’s risks and rewards. Management makes ongoing reassessments of whether the Company is the primary beneficiary.

 

On May 9, 2019, the Company entered into a Share Purchase Agreement (the “Purchase Agreement”) with Xianning Bozhuang Tea Products Co., Ltd. (“Xianning Bozhuang”), a company incorporated in China engaging in the sale of tea products, and its shareholders (“Bozhuang Shareholders”). Under the Purchase Agreement, the Company issued an aggregate of 1,080,000 shares of its common stock to the Bozhuang Shareholders in exchange for Bozhuang Shareholders’ agreement to enter into. Their agreement to cause Xianning Bozhuang to enter into certain VIE Agreements with Shanghai Xunyang, through which Shanghai Xunyang shall have the right to control, manage and operate Xianning Bozhuang in return for a service fee approximately equal to 100% of Xianning Bozhuang’s net income (“Bozhuang Acquisition”). On May 14, 2019, Shanghai Xunyang entered into a series of VIE Agreements with Xianning Bozhuang and Bozhuang Shareholders. The VIE Agreements are designed to provide Shanghai Xunyang with the power, rights, and obligations equivalent in all material respects to those it would possess as the sole equity holder of Xianning Bozhuang, including absolute rights to control the management, operations, assets, property, and revenue of Xianning Bozhuang. The Bozhuang Acquisition closed on May 14, 2019. Starting on May 14, 2019, the Company’s business activities added the production line of green tea and black tea and sales of tea products, of which business activities are carried out in Xianning City, Hubei Province, China. The Company consolidated Xianning Bozhuang’s accounts as its VIE.

 

On December 20, 2019, through Lucky Sky Petrochemical Technology (Xianning) Co., Ltd. (“WFOE”), the Company entered into exclusive VIE agreements with Taishan Muren, Xianning Bozhuang and Shenzhen Lorain and their shareholders that give the Company the ability to substantially influence those companies’ daily operations and financial affairs and appoint their senior executives. On September 8, 2020, the Company’s Board of Directors resolved to discontinue the operation of Shenzhen Lorain and Taishan Muren due to the continued loss of such two subsidiaries. On September 15, 2020, Lucky Sky Petrochemical terminated the VIE agreements with Shenzhen Lorain and Taishan Muren. The Company has been considered the primary beneficiary of these operating companies and it consolidates their accounts as VIEs.

 

On January 4, 2021, the Company and Jiayi Technologies (Xianning) Co., Ltd. (the “Subsidiary”), a subsidiary of the Company, entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. (“Target”), and each of shareholders of the Target (collectively, the “Sellers”), pursuant to which, among other things and subject to the terms and conditions contained therein, the Subsidiary agreed to effect an acquisition of the Target by acquiring from the Sellers 85% of the outstanding equity interests of the Target (the “Acquisition”). The target is engaged in researching, developing, manufacturing and selling products of ethanol fuel and fuel additives in China. On January 4, 2021, the Company closed the Acquisition.

 

On March 9, 2021, Planet Green Holdings Corp. (the “Company”) and Jiayi Technologies (Xianning) Co., Ltd. (the “Subsidiary”), a subsidiary of the Company, entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Jilin Chuangyuan Chemical Co., Ltd. (“Target”). Each of shareholders of the Target (collectively, the “Sellers”), under which, among other things and subject to the terms and conditions contained therein, the subsidiary agreed to effect an acquisition of the Target by acquiring from the Sellers 75% of the outstanding equity interests of the Target (the “Acquisition”). The target is researching, developing, manufacturing formaldehyde, urea-formaldehyde adhesive, methylal, and clean fuel products and selling such products in China. On March 9, 2021, the Company closed the acquisition.

 

On July 15, 2021, Planet Green Holdings Corp. (the “Company”) and Jiayi Technologies (Xianning) Co., Ltd. (the “Subsidiary”), a subsidiary of the Company, entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Anhui Ansheng Petrochemical Equipment Co., Ltd. (“Target”), and each of shareholders of the Target (collectively, the “Sellers”), pursuant to which, among other things and subject to the terms and conditions contained therein, the Subsidiary agreed to effect an acquisition of the Target by acquiring from the Sellers 66% of the outstanding equity interests of the Target (the “Acquisition”). The target is engaged in researching, developing and manufacturing insulation type explosion-proof skid-mounted refueling equipment, LNG cryogenic equipment and SF double deck oil storage tank and selling such products in China. On July 16, 2021, the Company closed the Acquisition.

 

F-7

 

 

Each of the VIE Agreements is described in detail below

 

Consultation and Service Agreement

 

Under the Consultation and Service Agreement, WFOE has the exclusive right to provide consultation and services to the operating entities in China in business management, human resource, technology, and intellectual property rights. WFOE exclusively owns any intellectual property rights arising from the performance of this Consultation and Service Agreement. The number of service fees and payment terms can be amended by the WFOE and operating companies’ consultation and implementation. The duration of the Consultation and Service Agreement is 20 years. WFOE may terminate this agreement at any time by giving 30 day’s prior written notice. Under the Consultation and Service Agreement, WFOE has the exclusive right to provide consultation and services to the operating entities in China in business management, human resource, technology, and intellectual property rights. WFOE exclusively owns any intellectual property rights arising from the performance of this Consultation and Service Agreement. The number of service fees and payment terms can be amended by the WFOE and operating companies’ consultation and implementation. The duration of the Consultation and Service Agreement is 20 years. WFOE may terminate this agreement at any time by giving 30 day’s prior written notice.

 

Business Cooperation Agreement

 

Pursuant to the Business Cooperation Agreement, WFOE has the exclusive right to provide complete technical support, business support, and related consulting services, including but not limited to specialized services, business consultations, equipment or property leasing, marketing consultancy, system integration, product research and development, and system maintenance. WFOE exclusively owns any intellectual property rights arising from the performance of this Business Cooperation Agreement. The rate of service fees may be adjusted based on the services rendered by WFOE in that month and the operational needs of the operating entities. The Business Cooperation Agreement shall maintain effective unless it was terminated or was compelled to release under applicable PRC laws and regulations. WFOE may terminate this Business Cooperation Agreement at any time by giving 30 day’s prior written notice.

 

Equity Pledge Agreements

 

According to the Equity Pledge Agreements among WFOE, operating entities, and each of operating entities’ shareholders, shareholders of the operating entities pledge all of their equity interests in the functional entities to WFOE to guarantee their performance of relevant obligations and indebtedness under the Technical Consultation and Service Agreement and other control agreements. Besides, shareholders of the operating entities are in the process of registering the equity pledge with the competent local authority.

 

Equity Option Agreements

 

According to the Equity Option Agreements, WFOE has the exclusive right to require each shareholder of the operating companies to fulfill and complete all approval and registration procedures required under PRC laws for WFOE to purchase or designate one or more persons to buy, each shareholder’s equity interests in the operating companies, once or at multiple times at any time in part or in whole at WFOE’s sole and absolute discretion. The purchase price shall be the lowest price allowed by PRC laws. The Equity Option Agreements shall remain effective until all the equity interest owned by each operating entity shareholder has been legally transferred to WFOE or its designee(s).

 

Voting Rights Proxy Agreements

 

According to the Voting Rights Proxy Agreements, each shareholder irrevocably appointed WFOE or WFOE’s designee to exercise all his or her rights as the shareholders of the operating entities under the Articles of Association of each operating entity, including but not limited to the power to exercise all shareholder’s voting rights concerning all matters to be discussed and voted in the shareholders’ meeting. The term of each Voting Rights Proxy Agreement is 20 years. WOFE has the right to extend each Voting Proxy Agreement by giving written notification.

 

Based on the foregoing contractual arrangements, The Company consolidates the accounts of Anhui Ansheng Petrochemical Equipment Co., Ltd and Jilin Chuangyuan Chemical Co., Ltd. in accordance with Regulation S-X-3A-02 promulgated by the Securities Exchange Commission (“SEC”), and Accounting Standards Codification (“ASC”) 810-10, Consolidation.

 

Use of Estimates

 

The financial statements preparation requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available when the calculations are made; however, actual results could differ materially from those estimates.

 

F-8

 

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

 

Investment Securities

 

The Company classifies securities it holds for investment purposes into trading or available-for-sale. Trading securities are bought and held principally for the purpose of selling them in the near term. All deposits not included in trading securities are classified as available for sale.

 

Trading and available-for-sale securities are recorded at fair value. Unrealized holding gains and losses on trading securities are included in the net income. Unrealized holding gains and losses, net of the related tax effect, on available for sale securities are excluded from net income. They are reported as a separate component of other comprehensive income until realized. Realized gains and losses from the sale of available-for-sale securities are determined on a specific identification basis.

 

A decline in the market value of any available-for-sale security below cost that is deemed to be other-than-temporary results in a reduction in carrying amount to fair value. The impairment is charged as an expense to the statement of income and comprehensive income, and a new cost basis for the security is established. To determine whether the impairment is other-than-temporary, the Company considers whether it has the ability and intent to hold the investment until a market price recovery and believes whether evidence indicating the cost of the asset is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the severity and duration of the impairment, changes in value after year-end, and forecasted performance of the investee.

 

Premiums and discounts are amortized or accreted over the life of the related available-for-sale security as an adjustment to yield using the effective-interest method. Dividend and interest income are recognized when earned.

 

Accounts Receivables

 

Accounts receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An estimate for doubtful accounts is made when the collection of the total amount is no longer probable. Bad debts are written off as incurred.

 

Inventories

 

Inventories consist of raw materials and finished goods, stated at the lower of cost or market value. Finished goods are comprised of direct materials, direct labor, inbound shipping costs, and allocated overhead. The Company applies the weighted average cost method to its inventory.

 

Advances and Prepayments to Suppliers

 

The Company makes an advance payment to suppliers and vendors for the procurement of raw materials. Upon physical receipt and inspection of the raw materials from suppliers, the applicable amount is reclassified from advances and prepayments to suppliers to inventory.

 

Plant and Equipment

 

Plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives, using the straight-line method. The Company typically applies a salvage value of 0% to 10%. The estimated useful lives of the plant and equipment are as follows:

 

Buildings     20-40 years  
Landscaping, plant, and tree     30 years  
Machinery and equipment     1-10 years  
Motor vehicles     5-10 years  
Office equipment     5-20 years  

 

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts, and any gain or loss is included in the Company’s results of operations. The costs of maintenance and repairs are recognized as incurred; significant renewals and betterments are capitalized.

 

F-9

 

 

Intangible Assets

 

Intangible assets are carried at cost less accumulated amortization. Amortization is provided over their useful lives, using the straight-line method. The estimated useful lives of the intangible assets are as follows: 

 

Land use rights     50 years  
Software licenses     2 years  
Trademarks     10 years  

 

Construction in Progress and Prepayments for Equipment

 

Construction in progress and prepayments for equipment represent direct and indirect acquisition and construction costs for plants and fees of purchase and installation of related equipment. Amounts classified as construction in progress and prepayments for equipment are transferred to plant and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. Depreciation is not provided for assets classified in this account.

 

Goodwill

 

Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. The Company conducts an annual assessment of its goodwill for impairment. If the carrying value of its goodwill exceeds its fair value, then impairment has been incurred; accordingly, a charge to the Company’s operations results will be recognized during the period. Impairment losses on goodwill are not reversed. Fair value is generally determined using a discounted expected future cash flow analysis.

 

Accounting for the Impairment of Long-lived Assets

 

The Company annually reviews its long-lived assets for impairment or whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. Impairment may become obsolete from a difference in the industry, introduction of new technologies, or if the Company has inadequate working capital to utilize the long-lived assets to generate adequate profits. Impairment is present if the carrying amount of an asset is less than its expected future undiscounted cash flows.

 

If an asset is considered impaired, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the asset. Assets to be disposed of are reported lower the carrying amount or fair value fewer costs to selling.

 

Statutory Reserves

 

Statutory reserves refer to the amount appropriated from the net income following laws or regulations, which can be used to recover losses and increase capital, as approved, and are to be used to expand production or operations. PRC laws prescribe that an enterprise operating at a profit must appropriate and reserve, on an annual basis, an amount equal to 10% of its profit. Such an appropriation is necessary until the reserve reaches a maximum equal to 50% of the enterprise’s PRC registered capital.

 

Foreign Currency Translation

 

The accompanying financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB). The Company’s assets and liabilities are translated into United States dollars from RMB at year-end exchange rates. Its revenues and expenses are translated at the average exchange rate during the period. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.

    09/30/2022     12/31/2021     09/30/2021  
Period-end US$: CDN$ exchange rate     1.3631       1.274       1.2753  
Period-end US$: RMB exchange rate     7.0998       6.3757       6.4854  
Period-end US$: HK$ exchange rate     7.8499       7.7981       7.7834  
Period average US$: CDN$ exchange rate     1.2831       1.2531       1.2431  
Period average US$: RMB exchange rate     6.6068       6.4515       6.4714  
Period average US$: HK$ exchange rate     7.8347       7.7729       7.7823  

 

The RMB is not freely convertible into foreign currencies, and all foreign exchange transactions must be conducted through authorized financial institutions.

 

F-10

 

 

Revenue Recognition

 

The Company adopted ASC 606 “Revenue Recognition.” It recognizes revenue when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

 

The Company derives its revenues from selling explosion-proof skid-mounted refueling device, SF double-layer buried oil storage tank, high-grade synthetic fuel products, industrial formaldehyde solution, urea-formaldehyde pre-condensate (UFC), methylal, urea-formaldehyde glue for environment-friendly artificial board chemicals, food products like frozen fruits, beef & mutton products and vegetables, tea products and online game business. The Company applies the following five steps to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:

 

identify the contract with a customer;

 

identify the performance obligations in the contract;

 

determine the transaction price;

 

allocate the transaction price to performance obligations in the contract; and;

 

Recognize revenue as the performance obligation is satisfied.

 

Advertising

 

All advertising costs are expensed as incurred.

 

Shipping and Handling

 

All outbound shipping and handling costs are expensed as incurred.

 

Research and Development

 

All research and development costs are expensed as incurred.

 

Retirement Benefits

 

Retirement benefits in the form of mandatory government-sponsored defined contribution plans are charged to either expense as incurred or allocated to inventory as part of overhead.

 

Stock-Based Compensation

 

The Company records stock compensation expense for employees at fair value on the grant date and recognizes the expense one time because there is no employee’s requisite service period requirement.

 

F-11

 

 

Income Taxes

 

The Company accounts for income tax using an asset and liability approach and recognizes deferred tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets. If it is more likely than not, these items will either expire before the Company can realize their benefits or uncertain future realization.

 

Comprehensive Income

 

The Company uses Financial Accounting Standards Board (“FASB”) ASC Topic 220, “Reporting Comprehensive Income.” Comprehensive income is comprised of net income and all changes to the statements of stockholders’ equity, except the changes in paid-in capital and distributions to stockholders due to investments by stockholders.

 

Earnings Per Share

 

The Company computes earnings per share (“EPS”) following ASC Topic 260, “Earnings per share.” Basic EPS is measured as the income or loss available to common shareholders divided by the weighted average common shares outstanding for the period. Diluted EPS presents the dilutive effect on a per-share basis from the potential conversion of convertible securities or the exercise of options and or warrants; the dilutive impacts of potentially convertible securities are calculated using the as-if method; the potentially dilutive effect of options or warranties are computed using the treasury stock method. Potentially anti-dilutive securities (i.e., those that increase income per share or decrease loss per share) are excluded from diluted EPS calculation.

 

Financial Instruments

 

The Company’s financial instruments, including cash and equivalents, accounts and other receivables, accounts and other payables, accrued liabilities, and short-term debt, have carrying amounts that approximate their fair values due to their short maturities. ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosing the Company’s fair value of financial instruments. ASC Topic 825, “Financial Instruments,” defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities qualify as financial instruments and are a reasonable estimate of their fair values because of the short period between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

 

Level 1 - inputs to the valuation methodology used quoted prices for identical assets or liabilities in active markets.

 

Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and information that are observable for the asset or liability, either directly or indirectly, for substantially the financial instrument’s full term.

 

Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.

 

F-12

 

 

Lease

 

Effective December 31, 2018, Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. adopted ASU 2016-02, “Leases” (Topic 842), and elected the practical expedients that do not require us to reassess: (1) whether any expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. For lease terms of twelve months or fewer, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. The Company also adopted the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component. 

 

Lease terms used to calculate the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as the Company does not have reasonable certainty at lease inception that these options will be exercised. The Company generally considers the economic life of its operating lease ROU assets to be comparable to the useful life of similar owned assets. The Company has elected the short-term lease exception, therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Its leases generally do not provide a residual guarantee. The operating lease ROU asset also excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term.

 

The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of operating lease liabilities in any tested asset group and it includes the associated operating lease payments in the undiscounted future pre-tax cash flows.

 

As of September 30, 2022, there were approximately $0.23 million right of use (“ROU”) assets and approximately $0.20 million lease liabilities based on the present value of the future minimum rental payments of leases, using an incremental borrowing rate of 4.75% and 4.90% based on the duration of lease terms.

 

Commitments and Contingencies 

 

From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The majority of these claims and proceedings related to or arise from commercial disputes. The Company first determine whether a loss from a claim is probable, and if it is reasonable to estimate the potential loss. The Company accrues costs associated with these matters when they become probable, and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. Also, the Company disclose a range of possible losses, if a loss from a claim is probable but the amount of loss cannot be reasonably estimated, which is in line with the applicable requirements of Accounting Standard Codification 450. The Company’s management does not expect any liability from the disposition of such claims and litigation individually or in the aggregate would have a material adverse impact on the Company’s consolidated financial position, results of operations and cash flows.

 

F-13

 

 

Recent Accounting Pronouncements

 

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this Update affect any entity required to apply the provisions of Topic 220, Income Statement – Reporting Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income required by GAAP. The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this Update is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued, and (2) for all other entities for reporting periods for which financial statements have not however been made available for issuance. The amendments in this Update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company does not believe the adoption of this ASU would affect the Company’s financial statements.

 

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820), – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which makes several changes meant to add, modify or remove specific disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. The amendments in this Update modify the disclosure requirements on fair value measurements based on the concepts in FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements, including the consideration of costs and benefits. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The modifications are effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company does not believe the adoption of this ASU would have a material effect on the Company’s condensed financial statements.

 

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s balance sheets, statements of income, and comprehensive income and statements of cash flows.

 

3. Variable Interest Entity (“VIE”)

 

A VIE is an entity that has either a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support or whose equity investors lack the characteristics of a controlling financial interest, such as through voting rights, right to receive the expected residual returns of the entity or obligation to absorb the expected losses of the entity. If any, the variable interest holder with a controlling financial interest in a VIE is deemed the primary beneficiary and must consolidate the VIE. PLAG WOFE is deemed to have the controlling financial interest and be the primary beneficiary of Anhui Ansheng Petrochemical Equipment Co., Ltd and Jilin Chuangyuan Chemical Co., Ltd. because it has both of the following characteristics:

 

  1) The power to direct activities at Anhui Ansheng Petrochemical Equipment Co., Ltd. and Jilin Chuangyuan Chemical Co., Ltd. that most significantly impact such entity’s economic performance, and

 

  2) The obligation to absorb losses and the right to receive benefits from Anhui Ansheng Petrochemical Equipment Co., Ltd and Jilin Chuangyuan Chemical Co., Ltd. that could potentially be significant to such entity. Under the Contractual Arrangements, Anhui Ansheng Petrochemical Equipment Co., Ltd. and Jilin Chuangyuan Chemical Co., Ltd. pay service fees equal to all of its net income to PLAG WFOE. At the same time, PLAG WFOE is obligated to absorb all of the Anhui Ansheng Petrochemical Equipment Co., Ltd.’s and Jilin Chuangyuan Chemical Co., Ltd.’s losses. The Contractual Arrangements are designed to operate Anhui Ansheng Petrochemical Equipment Co., Ltd and Jilin Chuangyuan Chemical Co., Ltd. for the benefit of PLAG WFOE and ultimately, the Company. Accordingly, the accounts of Anhui Ansheng Petrochemical Equipment Co., Ltd. and Jilin Chuangyuan Chemical Co., Ltd. are consolidated in the accompanying consolidated financial statements. In addition, those financial positions and results of operations are included in the Company’s consolidated financial statements.

 

F-14

 

 

The carrying amount of VIE’s consolidated assets and liabilities are as follows:

 

    09/30/2022     12/31/2021  
Cash and cash equivalents     39,927       67,966  
Restricted cash     84,588       380,750  
Accounts and notes receivable, net     1,015,068       2,660,566  
Inventories     4,876,446       4,244,869  
Advances to suppliers     640,278       310,769  
Other receivables     109,633       118,708  
Inter-company Receivable     1,549,339       1,725,302  
Other receivables-related parties     5,965,861       7,650,042  
TOTAL CURRENT ASSETS     14,281,140       17,158,972  
                 
Plant and equipment, net     12,529,014       12,554,727  
Intangible assets, net     2,465,620       2,795,048  
Construction in progress, net     20,564       2,475,874  
Deferred tax assets     381,990       425,374  
Total Non-Current Assets     15,397,188       18,251,023  
TOTAL ASSETS   $ 29,678,328     $ 35,409,995  
                 
Short-term bank loans     6,002,354       6,822,054  
Accounts payable     3,130,143       3,558,827  
Advance from customers     2,422,964       3,476,585  
Taxes payable     192,979       212,658  
Other payables and accrued liabilities     2,936,512       3,305,395  
Intercompany Payable     6,210,118       7,131,860  
Other payables-related parties     3,634,693       3,958,409  
Long term payable-current portion     281,698       126,261  
Deferred income     40,494       58,033  
TOTAL CURRENT LIABILITIES     24,851,955       28,650,082  
                 
Long-term payables     258,451       222,687  
TOTAL LIABILITIES   $ 25,110,406     $ 28,872,769  
                 
Paid-in capital     12,326,270       12,326,270  
Statutory reserve     29,006       29,006  
Accumulated deficit     (6,757,686 )     (5,357,908 )
Accumulated other comprehensive income     (1,029,668 )     (460,142 )
Total Equity     4,567,922       6,537,226  
                 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $ 29,678,328     $ 35,409,995  

 

The summarized operating results of the VIE’s are as follows:

 

    09/30/2022     09/30/2021  
Operating revenues   $ 12,579,725     $ 8,529,079  
Gross profit     1,931,426       735,635  
Income (loss) from operations     (1,053,978 )     (2,089,459 )
Net income (loss)     (1,399,778 )     (2,231,272 )

 

F-15

 

 

4. Restricted Cash

 

As of September 30, 2022 and 2021, the balance of restricted cash was $84,588 and $380,750, respectively. The details of restricted cash refer to the contingency section.

 

5. Account Receivable, Net

 

The Company extends credit terms of 15 to 60 days to the majority of its domestic customers, which include third-party distributors, supermarkets, and wholesalers

 

    09/30/2022     12/31/2021  
Trade accounts receivable   $ 3,958,233     $ 5,481,589  
Less: Allowance for doubtful accounts     (1,646,893 )     (1,662,516 )
    $ 2,311,340     $ 3,819,073  
Allowance for doubtful accounts                
Beginning balance:     (1,662,516 )     (46,149 )
Additions to allowance     (161,113 )     (1,616,367 )
Effect of exchange rate     176,736      
-
 
Ending balance   $ (1,646,893 )   $ (1,662,516 )

 

6. Advances and Prepayments to Suppliers

 

Prepayments include advance payment to suppliers and vendors to procure raw materials. Prepayments consist of the following:

 

    09/30/2022     12/31/2021  
Payment to suppliers and vendors   $ 6,229,449     $ 5,681,083  

 

7. Inventories

 

Inventories consisted of the following as of September 30, 2022 and December 31, 2021

 

    09/30/2022     12/31/2021  
Raw materials   $ 2,839,861     $ 2,988,855  
Inventory of supplies     10,673       12,587  
Work in progress     4,085,592       3,007,039  
Finished goods     1,272,046       1,807,951  
Total   $ 8,208,172     $ 7,816,432  

  

F-16

 

 

8. Plant and Equipment

 

Plant and equipment consisted of the following as of September 30, 2022 and December 31, 2021:

 

At Cost:   09/30/2022     12/31/2021  
Buildings   $ 23,440,451     $ 17,550,376  
Machinery and equipment     11,823,022       11,681,716  
Office equipment     779,807       542,695  
Motor vehicles     1,562,711       1,740,191  
      37,605,991       31,514,978  
Less: Impairment     (744,745 )     (829,326 )
Less: Accumulated depreciation     (10,867,382 )     (10,200,203 )
      25,993,864       20,485,449  
Construction in progress     25,584       2,475,874  
Plant and Equipment   $ 26,019,448     $ 22,961,323  

 

Depreciation expense for the nine months ended September 30, 2022 and 2021 was $716,964 and $1,543,332, respectively.

 

9. Intangible Assets

 

    09/30/2022     12/31/2021  
At Cost:     3,701,142       4,121,488  
Land use rights     79,536       86,359  
Software licenses     891,947       993,248  
Trademark     4,672,625       5,201,095  
    $     $  
Less: Accumulated amortization     (1,054,420 )     (1,001,444 )
Net intangible assets   $ 3,618,205     $ 4,199,651  

 

Amortization expense for the nine months ended September 30, 2022 and 2021 was $56,931 and $180,930 respectively.

 

10. Investments

 

As of September 30, 2022, The Company has paid approximately $2,816,981 and purchased 20% of Shandong Ningwei New Energy Technology Co., Ltd.’s total equity for investments purpose. Based on ASU 2016-01, an entity will be able to elect to record equity investments without readily determinable fair values and not accounted for by the equity method at cost, less impairment, adjusted for subsequent observable price changes. Entities that elect this measurement alternative will report changes in the carrying value of the equity investments in current earnings.

 

On August 8, 2022, the Company acquired 30% equity interest of the Xianning Xiangtian Energy Holdings Group Co., Ltd. and the Company issued 12,000,000 shares of common stock to the Sellers at $0.8 per share, total consideration was $9,600,000. On July 20, 2022, the company has paid $4,100,000 and purchased 10% of Xianning Xiangtian Energy Holding Group Co., Ltd.’s total equity for investments purpose, and the industrial and commercial modification procedures, as well as the shareholders registration process in the local government agencies, are in progress. As of September 30, 2022, the Company has owned 40% equity ownership of the Xianning Xiangtian Energy Holdings Group Co., Ltd.

 

11. Other Payable

 

As of September 30, 2022 and December 31, 2021, the balance of other payable was $4,773,715 and $8,635,189. Other payables – third parties are those non-trade payables arising from transactions between the Company and certain third parties.

 

F-17

 

 

12. Related Parties Transaction

 

As of September 30, 2022 and December 31, 2021, the outstanding balance due from related parties was $6,733,185 and $7,670,434, respectively. Significant parties comprised much of the total outstanding balance as of September 30, 2022 are stated below: 

 

The outstanding balance of $3,724,276 was due from Mr. Cai Xiaodong, the shareholder of the Anhui Ansheng Petrochemical Equipment Co., Ltd.;

 

The outstanding balance of $2,123,672 was due from Wuxi Ying’anbang Chemical Machinery Factory, which has significant influence on Ansheng branch;

 

 The outstanding balance of $885,237 was due from a couple of individuals which has significant influence on Ansheng branch.

 

These above nontrade receivables arising from transactions between the Company and certain related parties, such as loans to these related parties. These loans are unsecured, non-interest bearing and due on demand.

 

As of September 30, 2022 and December 31, 2021, the outstanding balance due to related parties was $10,412,765 and $5,196,227, respectively. Significant related parties comprised much of the total outstanding balance as of September 30, 2022 are stated below:

 

The outstanding balance of $4,348,463 was due to Mr. Cai Xiaodong, the shareholder of the Anhui Ansheng Petrochemical Equipment Co., Ltd.;

 

The outstanding balance of $79,997 was due to Jilin ChuangTai New Energy Technology Co., Ltd, which has the same legal representative as Jilin Chuangyuan.

 

The outstanding balance of $316,910 was due to Wuxi Xinganbang Petrochemical Equipment Co., Ltd., which has significant influence on Ansheng branch.

 

The outstanding balance of $967,633 was due to Ms. Yan Yan, the spouse of the legal representative of Jilin Chuangyuan Chemical Co., Ltd.

 

The outstanding balance of $1,528,281 was due to Mr. Zhou Bin, the legal representative of Jiayi Technologies (Xianning) Co., Ltd., and the chief executive officer and chairman of the Company.

 

The outstanding balance of $3,171,481 was due to a couple of individuals, which has significant influence on Ansheng branch.

  

The balance was advanced for working capital of the Company, non-interest bearing, and unsecured unless further disclosed.

  

F-18

 

 

13. Goodwill

 

The changes in the carrying amount of goodwill by reportable segment are as follows

 

    Ansheng     Fast     JSSH     JLCY     SDYC     Allinyson  
Balance as of December 31, 2020    
-
      2,340,111      
-
     
-
     
-
     
-
 
Goodwill acquired through acquisition   $ 10,263,937      
-
      923,313       3,191,897       4,724,698      
-
 
Goodwill impairment    
-
      (2,340,111 )     (923,313 )    
-
     
-
     
-
 
Balance as of December 31, 2021   $ 10,263,937      
-
     
-
      3,191,897       4,724,698      
-
 
Goodwill acquired through acquisition    
-
     
-
     
-
     
-
     
-
      7,193,965  
Goodwill impairment    
-
     
-
     
-
     
-
     
-
      -  
Balance as of September 30, 2022   $ 10,263,937      
-
     
-
      3,191,897       4,724,698       7,193,965  

 

The goodwill related to the acquisition of Fast Approach was impaired as the result of actual financial performance being less than that originally forecasted and estimates of future cash flows are at the time of this report, are expected to be less than previously estimated. The global COVID 19 pandemic was a significant macroeconomic factor that contributed to the downward revisions of previous estimation and forecasts; accordingly, after management considered different factors including COVID 19 and performed an analysis by discounting future cash flows, it determined that the fair value of the Fast unit was less than the carrying value; therefore, the Company recorded impairment of goodwill to reflect the difference between fair value and the then previously unimpaired carrying value. Management will continue to monitor for additional deterioration of cash flows.

 

Goodwill related to JSSH was written off in its entirety as the unit experienced operating losses in the years ended December 31, 2021 and 2020, and based on past performance as guidance for future performance, management determined that discounted expected future cash flows and profitability from the unit were enough to support the carrying value for synergies that were expected to be realized when the Company originally acquired the unit.

  

14. Bank Loans

 

The outstanding balances on bank loans consisted of the following:

 

Lender   Maturities   Weighted
average
interest
rate
    09/30/2022     12/31/2021  
Rural Credit Cooperatives of Jilin Province, Jilin Branch   Due in November 2023     7.83 %     3,521,226       3,921,138  
                             
Loan from Anhui Langxi Rural Commercial Bank Of China   Due in December 2021     3.85 %     2,481,128       2,900,916  
                             
Tonghua Dongchang Yuyin Village Bank   Due in June 2025     8.00 %     281,698       -  

  

Buildings and land use rights in the amount of $10,178,520 are used as collateral for Jilin Branch. The short-term bank loan which is denominated in Renminbi was primarily obtained for general working capital.

 

The loan from Anhui Langxi Rural Commercial Bank Of China, Ansheng Branch was credit line obtained for general working capital. As of September 30, 2022, the loan was overdue and the Company proposed to extend maturities on this loan. During the subsequent period, the Company is negotiating a loan extension with its banks and it is probable that the bank routinely keeps rolling over debt to keep the Company’s liquidity.

 

The loan from Tonghua Dongchang Yuyin Village Bank, as a three-year long-term debt, was denominated in Renminbi and was primarily obtained for general working capital. On June 15, 2022, Mr. Chen Yongsheng and Mr. Cai Xiaodong pledged 56,930,000 stocks of Jilin Chuangyuan Chemical Co., Ltd. to the pledgee Tonghua Dongchang Yuyin Village Bank. As the pledgee, Tonghua Dongchang Yuyin Village Bank shall have custody of these stocks, which accounted for 100% of the total share during the entire Term of Pledge set forth in this Agreement. As of September 30, 2022, the Company completed the finance with equity in pledge.

 

F-19

 

 

15. Advance from Customers

 

The proceeds which are received in advance of the delivery of goods pursuant to applicable contracts, are initially recorded as advance from customer. As of September 30, 2022 and December 31, 2021, the balance of advance from customers was approximately $4,738,457 and $6,190,091.

 

16. Equity

 

On May 9, 2019, the Company and its wholly owned subsidiary Shanghai Xunyang Internet Technology Co., Ltd. (“Subsidiary”) entered into a Share Exchange Agreement with Xianning Bozhuang Tea Products Co., Ltd. (“Target”) and each of the shareholders of Target (collectively, “Sellers”). Such transaction closed on May 14, 2019. Under the Share Exchange Agreement, the Subsidiary acquired all outstanding equity interests of Target, a company that produces tea products and sells such products in China. Pursuant to the Share Exchange Agreement, the Company issued an aggregate of 1,080,000 shares of common stock of the Company to the Sellers in exchange for the transfer of all of the equity interest of the Target to the Subsidiary.

 

On June 17, 2019, the Company entered into a securities purchase agreement, under which five individuals residing in the PRC agreed to purchase an aggregate of 1,300,000 shares of the Company’s common stock, par value $0.001 per share, for an aggregate purchase price of $5,460,000, representing a purchase price of $4.20 per share. The transaction closed on June 19, 2019.

 

On February 10, 2020, the Company entered into a securities purchase agreement with Mengru Xu and Zhichao Du, according to which Ms. Xu and Mr. Du agreed to invest an aggregate of $3.51 million in the Company in exchange for an aggregate of 1,350,000 shares of common stock, representing a purchase price of approximately $2.60 per share. On February 28, 2020, the Company closed the transaction.

 

On June 5, 2020, the Company issued an aggregate of 1,800,000 shares of its common stock to acquire all the outstanding equity interest of Fast Approach Inc., a corporation incorporated under the laws of Canada and in the business of operating a demand side platform targeting the Chinese education market in North America. 

  

On December 30, 2020, the Company issued a total of 782,165 ordinary shares to six employees of the Company. Total fair value of these ordinary shares was approximately $1.75 million and the compensation expenses are to be recognized in the fiscal year 2020 because there is no employee’s requisite service period requirement.

 

On January 4, 2021, the Company issued an aggregate of 2,200,000 shares of its common stock to the original shareholders of Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. in exchange for the transfer of 85% of the equity interests of Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. to the Company.

 

On January 26, 2021, the Company entered into a Securities Purchase Agreement, pursuant to which three individuals residing in the People’s Republic of China agreed to purchase an aggregate of 2,700,000 shares of the Company’s common stock, par value $0.001 per share, for an aggregate purchase price of $6,750,000, representing a purchase price of $2.50 per Share.

 

On March 9, 2021, the Company issued an aggregate of 3,300,000 shares of common stock of the Company to the original shareholder of Jilin Chuangyuan Chemical Co., Ltd. in exchange for the transfer of 75% of the equity interest of Jilin Chuangyuan Chemical Co., Ltd. to the Company.

 

F-20

 

 

On April 26, 2021, the Company has entered into a Share Purchase Agreement with three investors, Pursuant to the agreement, the Company will receive gross proceeds of $7,600,000 in the aggregate, in exchange for the issuance of an aggregate of 4,000,000 shares of the Company’s common stock, representing a purchase price of approximately $1.90 per share.

 

On July 15, 2021, the Company has issued an aggregate of 4,800,000 shares of common stock of the Company to the equity holders of Anhui Ansheng Petrochemical Equipment Co., Ltd. in exchange for the transfer of 66% of the equity interest of Anhui Ansheng Petrochemical Equipment Co., Ltd. to the Company.

  

On July 30, 2021, the Company issued a total of 872,000 ordinary shares to seven employees of the Company. Total fair value of these common shares was approximately $1.16 million. The compensation expenses are to be recognized in the fiscal year 2021 because there is no employee’s requisite service period requirement.

  

On December 30, 2021, The Company issued an aggregate of 5,900,000 shares of common stock to the equity holders of A Shandong Yunchu Supply Chain Co., Ltd. for the transfer to 100% of the equity interest of Shandong Yunchu Supply Chain Co., Ltd. to the Jiayi Technologies (Xianning) Co., Ltd.

  

On January 13, 2022, the Company entered into a Securities Purchase Agreement, pursuant to which three individuals residing in the People’s Republic of China agreed to purchase an aggregate of 7,000,000 shares of the Company’s common stock, par value $0.001 per share, for an aggregate purchase price of $7,000,000, representing a purchase price of $1.00 per Share.

  

On April 8, 2022, Planet Green Holdings Corporation (Nevada) issued an aggregate of 7,500,000 shares of common stock to the equity holders of Allinyson Ltd. for the acquisition of 100% of the equity interest of Allinyson Ltd.

  

On May 19, 2022, the Company entered into a Securities Purchase Agreement, pursuant to which two investors agreed to purchase an aggregate of 10,000,000 shares of the Company’s common stock, par value $0.001 per share, for an aggregate purchase price of $4,100,000, representing a purchase price of $0.41 per Share.

  

On July 20, 2022, the Company acquired 30% equity interest of the Xianning Xiangtian Energy Holdings Group Co., Ltd. and the Company issued 12,000,000 shares of common stock to the Sellers.

  

As of September 30, 2022, there were 72,081,930 shares of common stock outstanding.

  

17. Income Taxes

  

All of the Company’s continuing operations are located in the PRC. The corporate income tax rate in the PRC is 25%.

 

The following tables provide the reconciliation of the differences between the statutory and effective tax expenses for the nine months ended September 30, 2022 and 2021:

 

    09/30/2022     09/30/2021  
Loss attributed to PRC operations   $ (3,006,160 )   $ (3,279,874 )
Loss attributed to U.S. operations     (1,162,736 )     (1,360,067 )
Loss attributed to Canada operations     (277,383 )     (418,288 )
Loss attributed to Hong Kong operations     (431,108 )    
-
 
Income attributed to BVI    
-
     
-
 
Loss before tax   $ (4,877,387 )   $ (5,058,229 )
                 
PRC Statutory Tax at 25% Rate     (751,540 )     (1,264,557 )
Effect of tax exemption granted    
-
     
-
 
Valuation allowance     926,641       1,264,704  
Income tax   $ 175,101     $ 147  
Per Share Effect of Tax Exemption    
-
     
-
 
Effect of tax exemption granted   $
-
    $
-
 
Weighted-Average Shares Outstanding Basic     55,335,606       23,082,956  
Per share effect   $
-
    $
-
 

  

F-21

 

 

The difference between the U.S. federal statutory income tax rate and the Company’s effective tax rate was as follows as of September 30, 2022 and 2021:

 

    09/30/2022     09/30/2021  
U.S. federal statutory income tax rate     21 %     21 %
Higher (lower) rates in PRC, net     4 %     4 %
Non-recognized deferred tax benefits in the PRC     (21.4 )%     (25 )%
The Company’s effective tax rate     3.6 %    
-
%

  

18. Earnings/(Loss) Per Share

 

Components of basic and diluted earnings per share were as follows:

 

    For the nine months ended  
    September 30,  
    2022     2021  
Loss from operations attributable to common stockholders   $ (4,870,760 )   $ (4,732,412 )
                 
Basic and diluted (loss) earnings per share denominator:                
Original Shares at the beginning:     35,581,930       11,809,930  
Additions from Actual Events -issuance of common stock for cash     11,680,147       5,016,850  
Additions from Actual Events – issuance of common stock for acquisition     4,852,941       6,054,945  
Additions from Actual Events – issuance of common stock for investment     3,220,588      
-
 
Additions from Actual Events – issuance of common stock for stock compensation    
-
      201,231  
Basic Weighted Average Shares Outstanding     55,335,606       23,082,956  
                 
(Loss) income per common shareholders - Basic and diluted
  $ (0.09 )   $ (0.21 )
Basic and diluted weighted average shares outstanding
    55,335,606       23,082,956  

  

 19. Concentrations

 

Customers Concentrations:

 

The following table sets forth information about each customer that accounted for 10% or more of the Company’s revenues for the nine months ended September 30, 2022 and 2021.

 

    For the period ended  
Customers   30-September-22     30-September-21  
    Amount $     %     Amount     $%  
A    
    -
     
       -
      2,218,627       11  
B    
-
     
-
      2,105,918       11  

 

Suppliers Concentrations

 

The following table sets forth information about each supplier that accounted for 10% or more of the Company’s purchase for the nine months ended September 30, 2022 and 2021.

 

    For the years ended  
Suppliers   30-September-22     30-September-21  
    Amount $     %     Amount $     %  
A     8,857,285       21       6,974,422       37  
B     6,281,237       15      
-
     
-
 
C     6,161,585       15      
-
     
-
 
D     5,752,312       14      
-
     
-
 

 

F-22

 

 

20. Lease commitment

 

Effective December 31, 2018, the Company adopted ASU 2016-02, “Leases” (Topic 842), and elected the package of practical expedients that does not require us to reassess: (1) whether any expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. The Company adopted the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component.

 

The Company had a land, facilities and factory lease agreement with a 5-year lease term starting in April 2018 until April 2023. Upon adoption of ASU 2016-02, the Company recognized lease liabilities of approximately $0.82 million, with corresponding Right-of-Use (ROU) assets of the same amount based on the present value of the future minimum rental payments of leases, using an incremental borrowing rate of 4.75% and 4.90% based on the duration of lease terms.

  

The weighted average remaining lease term of its existing leases is 0.58years.

  

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

  

For the nine months ended September 30, 2022 and 2021, rent expenses amounted to 301,432 and $329,989 respectively.

 

The five-year maturity of the Company’s lease obligations is presented below:

 

Twelve months ended December 31,   Operating
lease
amount
 
2022     100,477  
2023     133,970  
Total lease payment     234,447  
Less: interest     (34,011 )
Present value of lease liabilities   $ 200,436  

  

21. Risks

 

A. Credit risk
   
  The Company’s deposits are made with banks located in the PRC. They do not carry federal deposit insurance and may be subject to loss of the banks become insolvent.
   
  Since the Company’s inception, the age of account receivables has been less than one year, indicating that the Company is subject to the minimal risk borne from credit extended to customers.
   
B. Interest risk
   
  The Company is subject to interest rate risk when short-term loans become due and require refinancing.
   
C. Economic and political risks
   
  The Company’s operations are conducted in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by changes in the political, economic, and legal environments in the PRC.

 

22. Segment Reporting

 

The Company follows ASC 280, Segment Reporting, which requires that companies disclose segment data based on how management makes the decision about allocating resources to segments and evaluating their performance. The Company’s management assesses performance and determines resource allocations based on several factors, the primary measure being income from operations.

 

F-23

 

 

The Company’s primary business segment and operations are Shandong Yunchu, Jingshan Sanhe, Anhui Ansheng, Jilin Chuangyuan, Xianning Bozhuang, Fast Approach and Allinyson Ltd. The Company’s consolidated operations and consolidated financial position from continuing operations are almost all attributable to Shandong Yunchu, Jingshan Sanhe, Anhui Ansheng, Jilin Chuangyuan, Xianning Bozhuang, Fast Approach and Allinyson Ltd. Accordingly, management believes that the consolidated balance sheets and statement of operations provide the relevant information to assess Shandong Yunchu, Jingshan Sanhe, Anhui Ansheng, Jilin Chuangyuan, Xianning Bozhuang, Allinyson Ltd. and Fast Approach’s performance.

  

Segment reporting   09/30/2022     12/31/2021  
Fast Approach and Shanghai Shuning   $ 353,024     $ 387,145  
Xianning Bozhuang     9,706,224       10,987,674  
Jingshan Sanhe     5,152,501       6,069,282  
Anhui Ansheng     14,060,947       17,298,525  
Jilin Chuangyuan     14,068,042       16,386,168  
Jiayi Technologies (Xianning) Co., Ltd.     10,069,170       12,378,147  
Shandong Yunchu     4,829,124       4,094,723  
Allinyson     258,815      
-
 
Planet Green Holdings Corporation     37,102,869       16,413,420  
Promising Prospect HK Limited.     1,987,276       2,000,496  
Total Assets   $ 97,587,992     $ 86,015,580  

  

23. Contingencies

  

As of September 30, 2022, the loan from Anhui Langxi Rural Commercial Bank Of China was overdue and the Company proposed to extend maturities on this loan. During the subsequent period, the Company is negotiating a loan extension with its banks and it is probable that the bank routinely keeps rolling over debt to keep the Company’s liquidity.

 

Wuxi Suxin Natural Gas Utilization Co., Ltd. (The “Plaintiff”) sued Anhui Xuanneng Natural Gas Energy Equipment Co., Ltd., Anhui Ansheng Petrochemical Equipment Co., Ltd and other related individuals (the “Defendants”) that Defendants have damaged the interest of Plaintiff and the defendants should restitute the plaintiff’s damage of RMB 16,210,227 as well as the interest in total. The case has now been transferred to the Changfeng County Court of Anhui Province for processing. Meanwhile, due to the impact of this case, Anhui Ansheng’s available cash of $581,666 was temporarily frozen by the court.

 

24. Subsequent event

 

The Company evaluates subsequent events that have occurred after the balance sheet date but before the financial statements are issued. There are two types of subsequent events: (1) recognized, or those that provide additional evidence with respect to conditions that existed at the dates of the balance sheets, including the estimates inherent in the process of preparing financial statements, and (2) non-recognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date. The Company has analyzed its operations subsequent to November 14, 2022 to the date these unaudited condensed consolidated financial statements were issued, and has determined that it does not have any material events to disclose.

  

F-24

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW

  

We are headquartered in Flushing, New York, NY. After a series of acquisitions and dispositions during the past two years, our primary business, which is carried out by Shandong Yunchu, Jingshan Sanhe, Allinyson, Jilin Chuangyuan, Anhui Ansheng, Fast Approach Inc and Xianning Bozhuang, is:

 

To sell black tea product cultivation, packaging, and sales;

 

To sell high-grade synthetic fuel products

 

To sell formaldehyde, urea-formaldehyde glue, methylal, and clean fuel oil

 

To sell the barrier and explosion-proof skid-mounted refueling devices, SF double-layer buried oil storage tank

 

To conduct the online game business and online advertising business

 

Multimedia design and online advertising services;

 

Going Concern

 

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern; however, the Company has incurred a net loss of $5,052,488 for the nine months ended September 30, 2022. As of September 30, 2022, the Company had an accumulated deficit of $98,943,143, a working capital deficit of $9,727,924; its net cash used in operating activities for the nine months ended September 30, 2022 was $10,208,033.

  

The Company plans to continue its expansion and investments, which will require continued improvements in revenue, net income, and cash flows.

 

Results of Operations

  

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021.

  

The following discussion should be read in conjunction with the company’s unaudited condensed consolidated financial statement for the three months ended September 30, 2022, and 2021 and related notes to that.

 

    Three months ended     Increase /     Increase /  
    September 30,     Decrease     Decrease  
(In Thousands of USD)   2022     2021     ($)     (%)  
Net revenues     10,264       8,484       1,780       21  
Cost of revenues     9,566       7,133       2,433       34  
Gross profit     698       1,351       (653 )     (48 )
Operating expenses:                                
Selling and marketing expenses     562       454       108       24  
General and administrative expenses     2,166       3,237       (1,071 )     (33 )
Research & Developing expenses     79       -       79       N/A  
Operating income (loss)     (2,109 )     (2,340 )     231       (10 )
Interest income (expense)     (161 )     (139 )     (22 )     15  
Other income (expense)     11       79       (68 )     (86 )
(Loss) income before tax     (2,258 )     (2,400 )     142       (6 )
Income tax expense/(income)     (38 )     -       (38 )     N/A  
Net (loss) income     (2,296 )     (2,400 )     104       (4 )

  

2

 

 

Net Revenues. Our net revenues for the three months ended September 30, 2022 amounted to $10.26 million, which represents an increase of approximately $1.78 million, or 21%, from $8.5 million for the three months ended September 30, 2021. This increase was attributable to the acquisition of certain subsidiaries and VIEs.

 

Cost of Revenues. During the three months ended September 30, 2022, we experienced an increase in cost of revenue of $2.43 million or 34%, in comparison to the three months ended September 30, 2021, from approximately $7.13 million to $9.57 million. This increase was mainly due to the acquisition of certain subsidiaries and VIEs.

 

Gross Profit. Our gross profit decreased by $0.65 million, or 48% to $0.70 million for the three months ended September 30, 2022 from $1.35 million for the three months ended September 30, 2021. This decrease was mainly due to the aforementioned reasons, attributable to the acquisition of certain subsidiaries and VIEs.

 

Operating Expenses

 

Selling and Marketing Expenses. Our selling and marketing expenses increased by $0.11 million, or 24%, to $0.56 million for the three months ended September 30, 2022 from $0.45 million for the three months ended September 30, 2021 This increase was mainly due to our effort to expand our business.

 

General and Administrative Expenses. We experienced a decrease in general and administrative expense of $1.07 million from $3.24 million for the three months ended September 30, 2021 to approximately $2.17 million for the three months ended September 30, 2022. This cost decrease was mainly due to the decline in third party service fees. 

 

Net Loss

  

Our net loss decreased by $0.1 million, or 4%, to a net loss of $2.30 million for the three months ended September 30, 2022 from $2.40 million in net loss for the three months ended September 30, 2021. This decrease was mainly due to our effort to expand our business.

 

Nine Months Ended September 30, 2022 Compared to Nine months Ended September 30, 2021.

  

The following discussion should be read in conjunction with the company’s unaudited condensed consolidated financial statement for the nine months ended September 30, 2022, and 2021 and related notes to that.

 

    Nine months ended     Increase /     Increase /  
    September 30,     Decrease     Decrease  
(In Thousands of USD)   2022     2021     ($)     (%)  
Net revenues     37,788       15,597       22,191       142  
Cost of revenues     35,185       13,750       21,435       156  
Gross profit     2,603       1,847       756       41  
Operating expenses:                                
Selling and marketing expenses     1,497       974       523       54  
General and administrative expenses     5,657       5,905       (248 )     (4 )
Research & Developing expenses     151       -       151       N/A  
Operating income (loss)     (4,702 )     (5,032 )     330       (7 )
Interest income (expense)     (479 )     (343 )     (136 )     40  
Other income (expense)     304       316       (12 )     (4 )
(Loss) income before tax     (4,877 )     (5,059 )     182       (4 )
Income tax expense/(income)     (175 )     -       (175 )     N/A  
Net (loss) income     (5,052 )     (5,059 )     7       -  

 

Net Revenues. Our net revenues for the nine months ended September 30, 2022 amounted to $37.79 million, which represents an increase of approximately $22.19 million, or 142%, from $15.60 million for the nine months ended September 30, 2021. This increase was attributable to the acquisition of certain subsidiaries and VIEs.

 

3

 

 

Cost of Revenues. During the nine months ended September 30, 2022, we experienced an increase in cost of revenue of $21.43 million or 156%, in comparison to the nine months ended September 30, 2021, from approximately $13.75 million to $35.19 million. This increase was mainly due to the acquisition of certain subsidiaries and VIEs.

 

Gross Profit. Our gross profit increased by $0.76 million, or 41% to $2.60 million for the nine months ended September 30, 2022 from $1.85 million for the nine months ended September 30, 2021. This increase was mainly due to the aforementioned reasons, attributable to the acquisition of certain subsidiaries and VIEs.

  

Operating Expenses

  

Selling and Marketing Expenses. Our selling and marketing expenses increased by $0.52 million, or 54%, to $1.50 million for the nine months ended September 30, 2022 from $0.97 million for the nine months ended September 30, 2021 This increase was mainly due to our effort to expand our business.

 

General and Administrative Expenses. We experienced a decrease in general and administrative expense of $0.25 million from $5.91 million for the nine months ended September 30, 2021 to approximately $5.66 million for the nine months ended September 30, 2022. This cost decrease was mainly due to the decline in third party service fees

  

Net Loss

 

Our net loss decreased by $7,000, or 0.13%, to a net loss of $5.05 million for the nine months ended September 30, 2022 from $5.06 million in net loss for the nine months ended September 30, 2021. This decrease was mainly due to our effort to expand our business.

  

Liquidity and Capital Resources

 

In assessing our liquidity, we monitor and analyze our cash-on-hand and operating and capital expenditure commitments. Our liquidity needs meet our working capital requirements, operating expenses, and capital expenditure obligations. In the reporting period in the fiscal period ended September 30, 2022, our primary sources of financing have been cash generated from operations and private placements.

 

As of September 30, 2022, we had cash and cash equivalents (including restricted cash) of $0.31 million compared to $1.13 million as of December 31, 2021. The debt to assets ratio was 35.94% and 40.41% as of September 30, 2022 and December 31, 2021, respectively. We expect to continue to finance our operations and working capital needs in 2022 from cash generated from operations and, if needed, private financings. Suppose available liquidity is insufficient to meet our operating and loan obligations as they come due. In that case, our plans include pursuing alternative financing arrangements or reducing expenditures as necessary to meet our cash requirements. However, there is no assurance that we will raise additional capital or reduce discretionary spending to provide liquidity if needed. We cannot be sure of the availability or terms of any alternative financing arrangements.

  

4

 

 

The following table provides detailed information about our net cash flow for all financial statement periods presented in this report.

 

Cash Flows Data:

 

   

For the nine
months ended
September 30

 
(In thousands of U.S. dollars)   2022     2021  
Net cash flows used in operating activities     (10,208 )     (13,148 )
Net cash flows used in investing activities     (3,271 )     (42 )
Net cash flows provided by financing activities     11,315       9,954  

  

Operating Activities

 

Net cash used in operating activities was $10.21 million and $13.15 million for the nine months ended September 30, 2022 and 2021, respectively. The decrease in net cash used in operating activities was mainly due to a decrease of $2.02 million in account receivables, an increase of $1.56 million in the advance from customers and an increase of $7.44 million in other payables and accruals.

 

Investing Activities

 

Net cash used in investing activities for the nine months ended September 30, 2022 was $3.27 million, representing an increase of $3.23 million in net cash used in investing activities from $42,000 for the same period of 2021. This is mainly due to the increase in long-term investment.

  

Financing Activities

 

Net cash provided by financing activities for the nine months ended September 30, 2022 was $11.31 million, representing an increase of $1.36 million in net cash provided by financing activities from $9.95 million for the same period of 2021. This is mainly due to the increased proceeds from the issuance of common stock.

  

Critical Accounting Policies

  

The preparation of financial statements in conformity with the United States generally accepted accounting principles requires our management to make assumptions, estimates, and judgments that affect the amounts reported in the financial statements, including the notes to that, and related disclosures of commitments contingencies, if any.

  

We consider our critical accounting policies to require the more significant judgments and estimates in preparing financial statements, including those outlined in Note 2 to the financial statements included herein.

  

The Company has evaluated the timing and the impact of the guidance above on the financial statements.

  

As of September 30, 2022, there were no other recently issued accounting standards not yet adopted that would or could have a material effect on the Company’s unaudited condensed consolidated financial statements.

  

Off-Balance Sheet Arrangements

 

We do not have any off-balance arrangements.

 

5

 

 

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable. 

 

Item 4. CONTROLS AND PROCEDURES  

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.

 

Evaluation of Disclosure Controls and Procedures

 

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2022. Based upon his evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective.

 

As a result, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included in this Form 10-Q present fairly in all material respects our financial position, results of operations and cash flows for the period presented.

 

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

Changes in Internal Control Over Financial Reporting

 

During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

Wuxi Suxin Natural Gas Utilization Co., Ltd. (The “Plaintiff”) sued Anhui Xuanneng Natural Gas Energy Equipment Co., Ltd., Anhui Ansheng Petrochemical Equipment Co., Ltd and other related individuals (the “Defendants”) that Defendants have damaged the interest of Plaintiff and the defendants should restitute the plaintiff’s damage of RMB 16,210,227 as well as the interest in total. The case has now been transferred to the Changfeng County Court of Anhui Province for processing. Meanwhile, due to the impact of this case, Anhui Ansheng’s available cash of $581,666 was temporarily frozen by the court.

 

ITEM 1A. RISK FACTORS

 

Risk Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in the Company’s registration statement on Form S3/A as filed with the SEC on November 3, 2022. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in the Company’s registration statement Form S3/A as filed with the SEC on November 3, 2022.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On January 13, 2022, the Company entered into a Securities Purchase Agreement, pursuant to which three individuals residing in the People’s Republic of China agreed to purchase an aggregate of 7,000,000 shares of the Company’s common stock, par value $0.001 per share, for an aggregate purchase price of $7,000,000, representing a purchase price of $1.00 per Share. On January 14, 2022, the Company closed securities purchase the transaction. At the closing, the Company received gross proceeds of $7,000,000 in the aggregate, in exchange for the issuance of Company’s common stock. Such securities were issued in connection with our organization pursuant to exemption from registration contained in section 4(a)(2) of the Securities Act. The investors are accredited investor for purposes of Rule 501 of Regulation D.

 

On April 8, 2022, the Company entered into a Share Exchange Agreement with Allinyson Ltd. (“Target”), and each of shareholders of the Target (collectively, the “Sellers”), pursuant to which, among other things and subject to the terms and conditions contained therein, the Company agreed to effect an acquisition of the Target by acquiring from the Sellers 100% of the ordinary shares issued and outstanding of the Target (the “Acquisition”). Pursuant to the Share Exchange Agreement, in exchange for the acquisition of 100% of the ordinary shares issued and outstanding of the Target, the Company issued an aggregate of 7,500,000 shares of common stock, par value $0.001 per share, of the Company to the Sellers. The Acquisition was closed on April 18, 2022. Upon the closing of the transaction, the Company acquired 100% shares issued and outstanding ordinary shares of the Target and the Company issued 7,500,000 shares of common stock to the Sellers. Such securities were issued in connection with our organization pursuant to exemption from registration contained in section 4(a)(2) of the Securities Act. The Sellers are accredited investor for purposes of Rule 501 of Regulation D.

 

Use of Proceeds

 

We intend to use the proceeds from the private placement transaction as working capital for the operation of our subsidiaries and VIEs.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

Not applicable.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

6

 

 

ITEM 6. EXHIBITS

 

The following exhibits are filed as part of this report.

  

Exhibit No.   Description
31.1   Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2   Certification of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1   Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
32.2   Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.INS   Inline XBRL Instance Document.*
101.SCH   Inline XBRL Taxonomy Extension Schema Document.*
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document.*
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document.*
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document.*
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document.*
104   Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).*

 

* Filed herewith.

** Furnished herewith.

 

7

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  PLANET GREEN HOLDINGS CORP.
   
Date: November 14, 2022 By: /s/ Bin Zhou
    Bin Zhou, Chief Executive Officer and Chairman
(Principal Executive Officer)

 

Date: November 14, 2022 By: /s/ Lili Hu
   

Lili Hu, Chief Financial Officer

(Principal Financial and Accounting Officer)

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed by the following persons in the capacities and on the dates indicated.

 

 

8

 

 

 

 

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Planet Green (AMEX:PLAG)
Graphique Historique de l'Action
De Déc 2022 à Jan 2023 Plus de graphiques de la Bourse Planet Green
Planet Green (AMEX:PLAG)
Graphique Historique de l'Action
De Jan 2022 à Jan 2023 Plus de graphiques de la Bourse Planet Green