UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM
10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2021
☐ 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 shares and aggregate market value of common stock
held by non-affiliates as of the last business day of the
registrant’s most recently completed second fiscal quarter were
24,009,930 and 40,576,781.7 respectively.
There were 42,581,930 shares of common stock outstanding as of
March 29, 2022.
Documents Incorporated by Reference: None.
TABLE OF CONTENT
PART I
Use of Certain Defined Terms
In this annual report on Form 10-K/A:
| |
● |
“Anhui
Ansheng” refers to Anhui Ansheng Petrochemical Equipment Co., Ltd.,
a PRC limited liability company. |
| |
|
|
| |
● |
“Bless
Chemical” refers to Bless Chemical Co., Ltd., a company
incorporated in Hong Kong. |
| |
|
|
| |
● |
“China”
and “PRC” refer to the People’s Republic of China including Hong
Kong and Macau. |
| |
● |
“Fast
Approach” refers to Fast Approach Inc., a corporation incorporated
under the laws of Canada. |
| |
|
|
| |
● |
“Hubei
Bulaisi” or “WFOE” Refers to Hubei Bulaisi 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 liability company. |
| |
● |
“Lucky
Sky HK” refers to Lucky Sky Holdings Corporations (HK) Limited, a
company incorporated in Hong Kong and formerly known as JianShi
Technology Holding Limited. |
| |
● |
“Lucky
Sky Planet Green” refers to Lucky Sky Planet Green Holdings Co.,
Limited, a company incorporated in Hong Kong. |
| |
● |
“Planet
Green” refers to Planet Green Holdings Corp., a Nevada holding
company. |
| |
|
|
| |
● |
“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. |
| |
● |
“Shanghai
Xunyang” refers to Shanghai Xunyang Internet Technology Co., Ltd.,
a PRC limited liability company. |
| |
● |
“Shandong
Yunchu” Refers to Shandong Yunchu Supply Chain Co., Ltd., PRC
limited liability company. |
| |
● |
“U.S.
dollar”, “$” and “US$” refer to the legal currency of the United
States. |
| |
● |
“VIEs”
refers to our variable interest entities including Jilin Chuanyuan
and Anhui Ansheng. |
| |
● |
“We,”
“us”, “our,” 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. |
| |
● |
“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 Virgin Islands. |
This report contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 (“Exchange Act”), including,
without limitation, statements regarding our expectations, beliefs,
intentions or future strategies that are signified by the words
“expect,” “anticipate,” “intend,” “believe,” or similar language.
All forward-looking statements included in this document are based
on information available to us on the date hereof, and we assume no
obligation to update any such forward-looking statements. Our
business and financial performance are subject to substantial risks
and uncertainties. Actual results could differ materially from
those projected in the forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking
statements.
ITEM 1. BUSINESS
Overview of Our Business
Planet Green Holdings Corp. (the “Planet Green”) is not an
operating company in the PRC but a Nevada holding company with its
operations conducted through its subsidiaries in the PRC, U.S.,
Hong Kong and Canada (the “Subsidiaries”) and through contractual
arrangements with its variable interest entities, or VIEs,
including Jilin Chuanyuan and Anhui Ansheng (the “VIEs”), which are
companies incorporated in the PRC. The VIEs are consolidated for
accounting purpose only and Planet Green does not own any equity
interest in the VIE. Investors may never directly hold equity
interests in the VIEs. The VIE structure is used to provide
investors with exposure to foreign investment in China-based
companies where Chinese law prohibits or limits direct foreign
investment in the operating companies. However, our contractual
arrangements with the VIEs are not equivalent of an investment in
the VIEs. Investors of our securities thus are not purchasing
equity interest in the VIEs and their subsidiaries in China but
instead are purchasing equity interest in a Nevada holding company.
Such VIE arrangement is not identical to owning such entities
directly, and investors will own shares in a holding company with
contracts with the VIEs and will not have any equity ownership of
such VIEs themselves. The VIE arrangement may not be as effective
as direct ownership in providing us with control over the VIEs.
Direct ownership would allow us, for example, to directly or
indirectly exercise our rights as a shareholder to effect changes
in the boards of directors, which, in turn, could affect changes,
subject to any applicable fiduciary obligations at the management
level. However, under the VIE arrangement, as a legal matter, if
the VIEs or its shareholders fail to perform their respective
obligations under the VIE arrangement, we may have to incur
substantial costs and expend significant resources to enforce those
arrangements and resort to litigation or arbitration and rely on
legal remedies under PRC laws. These remedies may include seeking
specific performance or injunctive relief and claiming damages, any
of which may not be effective. In the event we are unable to
enforce these VIE Agreements or we experience significant delays or
other obstacles in the process of enforcing the VIE arrangement, we
may lose control over the assets owned by the VIE.
Our corporate structure is subject to risks relating to our
contractual arrangements with our VIEs and their shareholders. Such
contractual arrangements have not been tested in any of the PRC
courts. There are substantial uncertainties regarding the
interpretation and application of current and future PRC laws,
regulations, and rules relating to these contractual arrangements.
If the PRC government finds these contractual arrangements
non-compliant with the restrictions on direct foreign investment in
the relevant industries, or if the relevant PRC laws, regulations,
and rules or the interpretation thereof change in the future, we
could be subject to severe penalties or be forced to relinquish our
interests in the VIEs or forfeit our rights under the contractual
arrangements. We and investors face uncertainty about potential
future actions by the PRC government, which could affect the
enforceability of our contractual arrangements with our VIEs and
consequently, significantly affect the financial condition and
results of operations of us. If we are unable to claim our right to
control the assets of the VIEs, our common stock may decline in
value or become worthless. The PRC government could even disallow
the VIE structure completely, which would likely result in a
material adverse change in our operations and our common stock may
significantly decline in value or become worthless.
Under our corporate structure, our ability to pay dividends and to
service any debt we may incur and pay our operating expenses
principally depends on dividends paid by our PRC subsidiaries and
VIEs. Cash is transferred through our organization in the manner as
follows: (1) we may transfer funds to our WFOEs through our Hong
Kong subsidiaries, Lucky Sky Planet Green Holdings Co., Limited
(HK), and Bless Chemical Co., Ltd. (HK) by additional capital
contributions or shareholder loans, as the case may be; (2) the
VIEs may pay service fees to our PRC subsidiaries for services
rendered by our PRC subsidiaries; (3) our PRC subsidiaries may pay
service fees to the VIEs for services rendered by the VIEs; and (4)
our PRC subsidiaries may make dividends or other distributions to
the Planet Green. We do not have cash management policies dictating
how funds are transferred throughout our organization. We may
encounter difficulties in our ability to transfer cash between PRC
subsidiaries and non-PRC subsidiaries largely due to various PRC
laws and regulations imposed on foreign exchange. If we intend to
distribute dividends to the Planet Green, our WFOEs will transfer
the dividends to our Hong Kong subsidiaries in accordance with the
laws and regulations of the PRC, and then our Hong Kong
subsidiaries will transfer the dividends to the Planet Green, and
the dividends can be distributed from the Planet Green to all
shareholders respectively in proportion to the shares they hold,
regardless of whether the shareholders are U.S. investors or
investors in other countries or regions. However, there can be no
assurance that the PRC government will not intervene or impose
restrictions on the Company’s ability to transfer cash out of
China. In 2021, our PRC subsidiaries did not receive any cash
benefits from the VIEs for services rendered to the VIEs and their
subsidiaries. As of December 31, 2021, our WFOE owns [ ] to the
VIEs. As of December 31, 2021, we were not subject to any actual
foreign exchange restrictions. The foregoing cash flows include all
distributions and transfers between Planet Green, our PRC
subsidiaries and the VIEs as of the date of this annual report. As
of the date of this annual report, none of our subsidiaries have
ever issued any dividends or made other distributions to the Planet
Green nor have Planet Green ever paid dividends or made other
distributions to U.S. investors. We currently intend to retain all
future earnings to finance the VIEs’ and our subsidiaries’
operations and to expand their business. As a result, we do not
expect to pay any cash dividends in the foreseeable future. Any
limitation on the ability of our subsidiaries to distribute
dividends to us or on the ability of the VIEs to make payments to
us may restrict our ability to satisfy our liquidity requirements.
To the extent cash or assets in the business is in the PRC or Hong
Kong or in a PRC or Hong Kong entity, and may need to be used to
fund operations outside of the PRC or Hong Kong, the funds and
assets may not be available to fund operations or for other uses
outside of the PRC or Hong Kong due to interventions in or the
imposition of restrictions and limitations by the government on our
subsidiaries’ or the VIEs’ ability to transfer cash and assets.
We face various legal and operational risks and uncertainties
related to being based in and having significant operations in
mainland China. The PRC government has significant authority to
exert influence on the ability of a China-based company, such as
us, to conduct its business, accept foreign investments or list on
U.S. or other foreign exchanges. For example, we face risks
associated with regulatory approvals of offshore offerings,
oversight on cybersecurity and data privacy, as well as the lack of
inspection by the Public Company Accounting Oversight Board (the
“PCAOB”) on our auditors. Such risks could result in a material
change in our operations and/or the value of the common stock or
could significantly limit or completely hinder our ability to offer
common stock and/or other securities to investors and cause the
value of such securities to significantly decline or be worthless.
These regulatory risks and uncertainties could become applicable to
our Hong Kong subsidiary if regulatory authorities in Hong Kong
adopt similar rules and/or regulatory actions.
Because our operations are primarily located in the PRC and Hong
Kong through our subsidiaries and VIEs, we are subject to certain
legal and operational risks associated with our operations in China
and Hong Kong, including changes in the legal, political and
economic policies of the Chinese government, the relations between
China and the United States, or Chinese or United States
regulations may materially and adversely affect our business,
financial condition and results of operations. PRC laws and
regulations governing our current business operations are sometimes
vague and uncertain, and therefore, these risks may result in a
material change in our operations and the value of our common
stock, or could significantly limit or completely hinder our
ability to offer or continue to offer our securities to investors
and cause the value of such securities to significantly decline or
be worthless. Recently, the PRC government initiated a series of
regulatory actions and statements to regulate business operations
in China with little advance notice, including cracking down on
illegal activities in the securities market, enhancing supervision
over China-based companies listed overseas using a variable
interest entity structure, adopting new measures to extend the
scope of cybersecurity reviews, and expanding the efforts in
anti-monopoly enforcement. We do not believe that our subsidiaries
and VIEs are directly subject to these regulatory actions or
statements, as we have not implemented any monopolistic behavior
and our business does not involve the collection of user data or
implicate cybersecurity. As of the date of this annual report, no
relevant laws or regulations in the PRC explicitly require us to
seek approval from the China Securities Regulatory Commission (the
“CSRC”), Cyberspace Administration of China (the “CAC”) or any
other PRC governmental authorities for our offering, nor has our
Nevada holding company or any of our subsidiaries or our VIEs
received any inquiry, notice, warning or sanctions regarding our
offering from the CSRC or any other PRC governmental authorities.
However, since these statements and regulatory actions by the PRC
government are newly published and official guidance and related
implementation rules have not been issued, it is highly uncertain
how soon legislative or administrative regulation making bodies
will respond and what existing or new laws or regulations or
detailed implementations and interpretations will be modified or
promulgated, if any, and the potential impact such modified or new
laws and regulations will have on our daily business operation, the
ability to accept foreign investments and list on an U.S. or other
foreign exchange. The Standing Committee of the National People’s
Congress, or the SCNPC, or other PRC regulatory authorities may in
the future promulgate laws, regulations or implementing rules that
requires our company or any of our subsidiaries to obtain
regulatory approval from Chinese authorities before offering in the
U.S. In other words, although the Company is currently not required
to obtain permission from any of the PRC central or local
government to obtain such permission and has not received any
denial to list on the U.S. exchange, our operations could be
adversely affected, directly or indirectly; our ability to offer,
or continue to offer, securities to investors would be potentially
hindered and the value of our securities might significantly
decline or be worthless, by existing or future laws and regulations
relating to its business or industry or by intervene or
interruption by PRC governmental authorities, if we or our
subsidiaries (i) do not receive or maintain such permissions or
approvals, (ii) inadvertently conclude that such permissions or
approvals are not required, (iii) applicable laws, regulations, or
interpretations change and we are required to obtain such
permissions or approvals in the future, or (iv) any intervention or
interruption by PRC governmental with little advance notice.
As of the date of this annual report, the two Hong Kong
subsidiaries of Planet Green do not have any material operation in
Hong Kong and they have not collected, stored, or managed any
personal information in Hong Kong. Therefore, we have concluded
that currently it does not expect that laws and regulations in
Mainland China on data security, data protection, cybersecurity or
anti-monopoly to be applied to its Hong Kong subsidiaries or that
the oversight of the Cyberspace Administration of China will be
extended to its operations outside of Mainland China.
In order to operate our business, in addition to the required
regular business licenses, Anhui Ansheng is required to obtain
Production License of Special Equipment, Jingshan Sanhe is required
to obtain Permit for Hazardous Chemical Products, Jilin Chuangyuan
is required to obtain Safe Production License, and Shandong Yunchu
is required to obtain Permit for Food Products. As of the date of
this annual report, our subsidiaries, WFOEs and VIEs have received
from PRC authorities all requisite licenses, permissions, and
approvals needed to engage in the businesses currently conducted in
the PRC, and no permission or approval has been denied.
However, we cannot assure you that any of these entities will
be able to receive clearance of such compliance requirements in a
timely manner, or at all in the future. Any failure of these
entities to fully comply with such compliance requirements may
cause our PRC subsidiaries or the PRC operating entities to be
unable to begin their new businesses or operations in the PRC,
subject them to fines, relevant new businesses or operations
suspension for rectification, or other sanctions.
As advised by our PRC counsel, Hubei Kaicheng Law Offices, as of
the date of this annual report, our subsidiaries, WFOEs and VIEs,
(i) are not required to obtain additional permissions or
approvals to operate their current business, (ii) are not
required to obtain permission from the CSRC, the CAC, or any other
Chinese authorities to issue our securities to foreign investors
based on PRC laws and regulations currently in effect, and
(iii) have not received or were denied such permission by any
Chinese authorities. However, we cannot assure you that the PRC
regulatory agencies, including the CAC or the CSRC, would take the
same view as we do, and there is no assurance that the VIE and its
subsidiaries are always able to successfully update or renew the
licenses or permits required for the relevant business in a timely
manner or that these licenses or permits are sufficient to conduct
all of their present or future business. If the VIEs, WFOEs or any
of its subsidiaries (i) does not receive or maintain required
permissions or approvals, (ii) inadvertently concludes that
such permissions or approvals are not required, or
(iii) applicable laws, regulations, or interpretations change
and the VIE or any of its subsidiaries is required to obtain such
permissions or approvals in the future, it could be subject to
fines, legal sanctions, or an order to suspend their relevant
services, which may materially and adversely affect our financial
condition and results of operations and cause our securities to
significantly decline in value or become worthless.
In light of the recent statements and regulatory actions by the PRC
government, such as those related to the use of variable interest
entities, data security, and anti-monopoly concerns, Planet Green
may be subject to the risks of uncertainty of any future actions of
the PRC government in this regard, and if Chinese regulatory
authorities disallow the VIE structure, that may result in a
material change in our operations and/or value of our securities,
including that the value of our securities to significantly decline
or become worthless. Planet Green may also be subject to penalties
and sanctions imposed by the PRC regulatory agencies, including the
CSRC, if it fails to comply with such rules and regulations, which
could adversely affect the ability of Planet Green to continue to
be listed for trading on NYSE American or another foreign exchange,
which may cause the value of Planet Green’s securities to
significantly decline or become worthless. The Holding Foreign
Companies Accountable Act (the “HFCA Act”) and related regulations
call for additional and more stringent criteria to be applied to
emerging market companies upon assessing the qualification of their
auditors and could add uncertainties to Planet Green’s offering
that trading in Planet Green’s securities may be prohibited under
the HFCA Act. Planet Green’s auditor, WWC, P.C., is headquartered
in California and has been inspected by the Public Company
Accounting Oversight Board (United States) (the “PCAOB”) on a
regular basis. Our auditor is not included in the list of PCAOB
Identified Firms of having been unable to be inspected or
investigated completely by the PCAOB in the PCAOB Determination
Report issued in December 2021. On June 22, 2021, the U.S. Senate
passed the Accelerating Holding Foreign Companies Accountable Act,
which, if enacted, would reduce the number of consecutive
non-inspection years required for triggering the prohibitions under
the HFCA Act from three years to two. On February 4, 2022, the U.S.
House of Representatives passed a bill, which contained, among
other things, an identical provision. If this provision is enacted
into law and the number of consecutive non-inspection years
required for triggering the prohibitions under the HFCAA is reduced
from three years to two, then the common stock could be prohibited
from trading in the United States as early as 2024. Although we
believe that the HFCA Act and the related regulations do not
currently affect us, we cannot assure you that there will not be
any further implementations and interpretations of the Holding
Foreign Companies Accountable Act or the related regulations, which
might pose regulatory risks to and impose restrictions on us
because of our operations in mainland China.
We are a diversified technology, chemical and chemical equipment
and consumer products company with presence in North America and
China with the follow business lines:
| |
● |
to
provide food and beverage products such as Cyan brick tea, black
tea and green tea as well as beef products in China;
and |
| |
● |
to
research, develop, manufacture and sell products of formaldehyde,
urea formaldehyde adhesive, methylal, ethanol fuel, fuel additives
and clean fuel in China; and |
| |
|
|
| |
● |
to
develops and manufactures skid-mounted refueling equipment, LNG
cryogenic equipment and oil storage tank, and sells such products
in China; and |
| |
|
|
| |
● |
to
develop and operate a demand side platform which empowers buyers of
advertising to manage and optimize their digital advertising across
different real-time bidding networks in North America. |
Organizational Structure
Planet Green was incorporated in Nevada on February 4, 1986 and
effective on November 12, 2009, Planet Green reincorporated in
Nevada from Delaware. Planet Green was formerly known as American
Lorain Corporation.
The following diagram illustrates our corporate structure including
our subsidiaries and our VIEs.
Subsidiaries
On May 9, 2019, the Company and Shanghai Xunyang Internet
Technology Co., Ltd. (the “Shanghai Xunyang”), a subsidiary of the
Company, entered into a Share Exchange Agreement with Xianning
Bozhuang, and each of the shareholders of Xianning Bozhuang,
pursuant to which, among other things and subject to the terms and
conditions contained therein, Shanghai Xunyang agreed to effect an
acquisition of Xianning Bozhuang by acquiring from the Sellers all
of the outstanding equity interests of Xianning Bozhuang. On May
14, 2019, the Company closed the acquisition transaction and
Shanghai Xunyang entered into a series of VIE agreements with
Xianning Bozhuang and its shareholders. For company internal
restructure purpose, on December 20, 2019, Xianning Bozhuang
terminated the VIE agreements with Shanghai Xunyang and entered
into similar series of VIE agreements with Jiayi Technologies on
the same day. On August 2, 2021, as part of the internal
restructure efforts to remove VIE arrangement, the Company and its
subsidiary terminated series of VIE agreements and acquired 100%
equity ownership of Xianning Bozhuang.
On June 5, 2020, the Company entered into a share exchange
agreement with Fast Approach to acquire all outstanding shares of
Fast Approach, a corporation incorporated under the laws of Canada
and in the business of operating a demand side platform. Upon
completing the transaction, Fast Approach became a wholly owned
subsidiary of the Company. Fast Approach owns 100% equity of
Shanghai Shuning.
On January 4, 2021, through Jiayi Technologies, the Company entered
into a series of VIE agreements with Jingshan Sanhe as well as its
shareholders, which gives the Company the ultimate control of
Jingshan Sanhe and its shareholders, making it operate in
accordance with the will of the Company. The Company is considered
the primary beneficiary of Jingshan Sanhe and it consolidates its
accounts as VIEs. On September 10, 2021, as part of the internal
restructure efforts to remove VIE arrangement, Hubei Bulaisi
acquired 85% equity ownership of Jingshan Sanhe and Jiayi
Technologies terminated the VIE agreements with Jingshan Sanhe on
the same date.
On December 9, 2021, the Company and Jiayi Technologies, a
subsidiary of the Company, entered into a Share Exchange Agreement
with Shandong Yunchu and each of shareholders of Shandong Yunchu.
Upon closing of the transaction, Jiayi Technologies acquired 100%
equity ownership of Shandong Yunchu.
VIE Arrangements
We currently have two VIEs under its structure: (1) Jilin
Chuangyuan, and (2) Anhui Ansheng, which are business entities
incorporated in China. The Company is considered the beneficiary of
the two VIEs only for accounting purpose.
On March 9, 2021, through Jiayi Technologies, the Company entered
into a series of VIE agreements with Jilin Chuangyuan as well as
its shareholders. The ordinary shares of Jilin Chuangyuan are
currently owned by Yongsheng Chen and Xiaodong Cai.
On July 15, 2021, through Jiayi Technologies, the Company entered
into a series of VIE agreements with Anhui Ansheng, as well as its
shareholders. The ordinary shares of Anhui Ansheng are currently
owned by Xiaodong Cai.
Each of the VIE Agreements is described in detail below:
Consultation and Service
Agreement. Pursuant to the Consultation and Service
Agreement, WFOE has the exclusive right to provide consultation and
services to the operating entities in China in the area of 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 amount of service fees and payment term can be
amended by the WFOE and operating companies’ consultation and the
implementation. The term 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 technical 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 terminate 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. Pursuant to the Equity Pledge Agreements among
WFOE, operating entities and each of operating entities’
shareholder, shareholders of the operating entities pledge all of
their equity interests in the operating entities to WFOE to
guarantee their performance of relevant obligations and
indebtedness under the Technical Consultation and Service Agreement
and other control agreements. In addition, shareholders of the
operating entities are in the process of registering the equity
pledge with the competent local authority.
Equity Option
Agreements. Pursuant 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 purchase, 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 entities shareholder has been legally transferred to WFOE
or its designee(s).
Voting Rights Proxy
Agreements. Pursuant 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 with respect to all matters to be
discussed and voted in the shareholders’ meeting. The term of each
Voting Rights Proxy Agreement is 20 years. WFOE has the right to
extend each Voting Proxy Agreement by giving written
notification.
As discussed above, we operate a portion of business in China
through the VIEs and their subsidiaries, and rely on contractual
arrangements among our WFOEs, the VIEs, and their respective
shareholders to exert influence on the business operations of the
VIEs. The VIE structure provides our business operations in China
with contractual exposure to foreign investment. However, our
contractual arrangements with the VIEs are not equivalent of an
investment in the VIEs. Investors are purchasing equity securities
of our ultimate Nevada holding company rather than purchasing
equity securities of the VIEs. Chinese regulatory authorities could
disallow this structure, which would likely result in a material
change in our and/or the VIE’s operations and/or a material change
in the value of the securities we are registering for sale,
including that it could cause the value of such securities to
significantly decline or become worthless. If the PRC government
deems that the contractual arrangements with the consolidated VIEs
domiciled in China do not comply with PRC regulatory restrictions
on foreign investment in the relevant industries, or if these
regulations or the interpretation of existing regulations change or
are interpreted differently in the future, we, our subsidiaries and
the VIEs could be subject to severe penalties or be forced to
relinquish their interests in those operations. It is uncertain
whether any new PRC laws or regulations relating to variable
interest entity structures will be adopted or if adopted, what they
would provide. In addition, to the extent cash is located in the
PRC or within a PRC domiciled entity and may need to be used to
fund operations outside of the PRC, the funds may not be available
due to limitations placed on us, our subsidiaries and the VIEs by
the PRC government. To the extent cash or assets in the business is
in the PRC or Hong Kong or in a PRC or Hong Kong entity, and may
need to be used to fund operations outside of the PRC or Hong Kong,
the funds and assets may not be available to fund operations or for
other uses outside of the PRC or Hong Kong due to interventions in
or the imposition of restrictions and limitations by the government
on us, our subsidiaries’ or the VIEs’ ability to transfer cash and
assets.
Consolidating Statements of Income Information
The following is the tabular form condensed consolidating schedule
depicting the financial position, cash flows and results of
operations for the parent, the subsidiaries, the consolidated
variable interest entities, and any eliminating adjustments
separately - as of and for the year ended December 31, 2021.
Financial Information Related to the VIEs:
Audited Consolidated Balance Sheets
Planet Green Holdings Corp.
Audited Consolidated Balance Sheets
As of December 31, 2021
(Stated in US Dollars)
| |
|
Parent |
|
|
Subsidiaries |
|
|
WFOE |
|
|
VIE |
|
|
Eliminations |
|
|
Consolidated |
|
| Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
233,384 |
|
|
$ |
195,489 |
|
|
$ |
253,819 |
|
|
$ |
67,966 |
|
|
|
|
|
|
|
750,658 |
|
|
Restricted cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
380,750 |
|
|
|
|
|
|
|
380,750 |
|
|
Accounts receivable, net |
|
|
|
|
|
|
1,158,507 |
|
|
|
|
|
|
|
2,660,566 |
|
|
|
|
|
|
|
3,819,073 |
|
|
Inventories |
|
|
|
|
|
|
3,571,563 |
|
|
|
|
|
|
|
4,244,869 |
|
|
|
|
|
|
|
7,816,432 |
|
|
Advances to suppliers |
|
|
|
|
|
|
5,309,942 |
|
|
|
60,372 |
|
|
|
310,769 |
|
|
|
|
|
|
|
5,681,083 |
|
|
Other receivables |
|
|
|
|
|
|
1,025,648 |
|
|
|
40,780 |
|
|
|
118,708 |
|
|
|
|
|
|
|
1,185,136 |
|
|
Inter-company receivable |
|
|
23,912,000 |
|
|
|
7,616,486 |
|
|
|
8,803,615 |
|
|
|
1,725,302 |
|
|
|
(42,057,403 |
) |
|
|
- |
|
|
Other receivables-related parties |
|
|
|
|
|
|
1,570 |
|
|
|
18,822 |
|
|
|
7,650,042 |
|
|
|
|
|
|
|
7,670,434 |
|
|
Total current assets |
|
|
24,145,384 |
|
|
|
18,879,205 |
|
|
|
9,177,408 |
|
|
|
17,158,972 |
|
|
|
(42,057,403 |
) |
|
|
27,303,566 |
|
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
Plant and equipment, net |
|
|
|
|
|
|
7,930,722 |
|
|
|
0 |
|
|
|
12,554,727 |
|
|
|
|
|
|
|
20,485,449 |
|
|
Intangible assets, net |
|
|
|
|
|
|
1,404,603 |
|
|
|
|
|
|
|
2,795,048 |
|
|
|
|
|
|
|
4,199,651 |
|
|
Construction in progress, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,475,874 |
|
|
|
|
|
|
|
2,475,874 |
|
|
Prepayment investments |
|
|
|
|
|
|
0 |
|
|
|
705,805 |
|
|
|
|
|
|
|
|
|
|
|
705,805 |
|
|
Long-term investments |
|
|
39,656,213 |
|
|
|
2,000,496 |
|
|
|
3,136,910 |
|
|
|
- |
|
|
|
(41,656,709) |
|
|
|
3,136,910 |
|
|
Investment in real estates |
|
|
- |
|
|
|
0 |
|
|
|
7,770,943 |
|
|
|
- |
|
|
|
|
|
|
|
7,770,943 |
|
|
Deferred tax assets |
|
|
|
|
|
|
355,980 |
|
|
|
390,696 |
|
|
|
425,374 |
|
|
|
|
|
|
|
1,172,050 |
|
|
Goodwill |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,180,532 |
|
|
|
18,180,532 |
|
|
Right-of-use assets |
|
|
|
|
|
|
584,802 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
584,802 |
|
|
Total non-current assets |
|
|
39,656,213 |
|
|
|
12,276,603 |
|
|
|
12,004,354 |
|
|
|
18,251,023 |
|
|
|
(23,476,177 |
) |
|
|
58,712,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
63,801,597 |
|
|
$ |
31,155,808 |
|
|
$ |
21,181,762 |
|
|
$ |
35,409,995 |
|
|
|
(65,533,580 |
) |
|
$ |
86,015,582 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term bank loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,822,054 |
|
|
|
|
|
|
|
6,822,054 |
|
|
Accounts payable |
|
|
279,186 |
|
|
|
2,399,554 |
|
|
|
243 |
|
|
|
3,558,827 |
|
|
|
|
|
|
|
6,237,810 |
|
|
Advance from customers |
|
|
|
|
|
|
2,713,506 |
|
|
|
|
|
|
|
3,476,585 |
|
|
|
|
|
|
|
6,190,091 |
|
|
Taxes payable |
|
|
|
|
|
|
574,935 |
|
|
|
|
|
|
|
212,658 |
|
|
|
|
|
|
|
787,593 |
|
|
Other payables and accrued liabilities |
|
|
3,511,210 |
|
|
|
1,096,206 |
|
|
|
722,378 |
|
|
|
3,305,395 |
|
|
|
|
|
|
|
8,635,189 |
|
|
Intercompany payable |
|
|
1,726,764 |
|
|
|
16,962,121 |
|
|
|
19,765,712 |
|
|
|
7,131,860 |
|
|
|
(45,586,457 |
) |
|
|
- |
|
|
Other payables-related parties |
|
|
440,000 |
|
|
|
797,818 |
|
|
|
|
|
|
|
3,958,409 |
|
|
|
|
|
|
|
5,196,227 |
|
|
Lease liabilities-current portion |
|
|
|
|
|
|
436,191 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
436,191 |
|
|
Deferred income |
|
|
|
|
|
|
15,699 |
|
|
|
|
|
|
|
58,033 |
|
|
|
|
|
|
|
73,732 |
|
|
Total current liabilities |
|
|
5,957,160 |
|
|
|
24,996,030 |
|
|
|
20,488,333 |
|
|
|
28,523,821 |
|
|
|
(45,586,457 |
) |
|
|
34,378,887 |
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease liabilities - non-current |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
Long-term payables |
|
|
|
|
|
|
31,398 |
|
|
|
|
|
|
|
348,947 |
|
|
|
|
|
|
|
380,345 |
|
|
Total non-current liabilities |
|
|
|
|
|
|
31,398 |
|
|
|
|
|
|
|
348,947 |
|
|
|
|
|
|
|
380,345 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
$ |
5,957,160 |
|
|
$ |
25,027,427 |
|
|
$ |
20,488,333 |
|
|
$ |
28,872,769 |
|
|
|
(45,586,457 |
) |
|
$ |
34,759,232 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Issued and
outstanding as of December 31, 2021 |
|
|
35,582 |
|
|
|
11,025,241 |
|
|
|
2,000,000 |
|
|
|
12,326,270 |
|
|
|
(25,351,511 |
) |
|
|
35,582 |
|
|
Additional paid-in capital |
|
|
130,727,596 |
|
|
|
5,127,194 |
|
|
|
|
|
|
|
|
|
|
|
(2,622,566 |
) |
|
|
133,232,224 |
|
|
Statutory reserve |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,006 |
|
|
|
(29,006 |
) |
|
|
- |
|
|
Accumulated deficit |
|
|
(72,918,741 |
) |
|
|
-21,928,831 |
|
|
|
(1,306,571 |
) |
|
|
(5,357,908 |
) |
|
|
7,439,668 |
|
|
|
(94,072,383 |
) |
|
Accumulated other comprehensive income |
|
|
|
|
|
|
11,904,777 |
|
|
|
|
|
|
|
(460,142 |
) |
|
|
(3,733,578 |
) |
|
|
7,711,057 |
|
|
Non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,349,870 |
|
|
|
4,349,870 |
|
|
Total stockholders’ equity |
|
|
57,844,437 |
|
|
|
6,128,381 |
|
|
|
693,429 |
|
|
|
6,537,226 |
|
|
|
(19,947,123 |
) |
|
|
51,256,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
|
$ |
63,801,597 |
|
|
$ |
31,155,808 |
|
|
$ |
21,181,762 |
|
|
$ |
35,409,995 |
|
|
|
(65,533,580 |
) |
|
$ |
86,015,582 |
|
Audited Consolidated Statements of Operations and Comprehensive
(Loss) Income:
Planet Green Holdings Corp.
Audited Consolidated Statements of Operations and Comprehensive
(Loss) Income
For the Years Ende December 31, 2021
(Stated in US Dollars)
| |
|
Parent |
|
|
Subsidiaries |
|
|
WFOE |
|
|
VIE |
|
|
Eliminations |
|
|
Consolidated |
|
|
Net revenues |
|
$ |
|
|
|
$ |
4,082,296 |
|
|
$ |
|
|
|
$ |
9,694,499 |
|
|
|
23,991,169 |
|
|
$ |
37,767,964 |
|
|
Cost of revenues |
|
|
|
|
|
|
4,014,104 |
|
|
|
|
|
|
|
7,486,996 |
|
|
|
22,420,609 |
|
|
|
33,921,709 |
|
|
Gross profit |
|
|
|
|
|
|
68,192 |
|
|
|
|
|
|
|
2,207,503 |
|
|
|
1,570,560 |
|
|
|
3,846,255 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
Selling and marketing
expenses |
|
|
|
|
|
|
139,732 |
|
|
|
|
|
|
|
1,908,188 |
|
|
|
5,532 |
|
|
|
2,053,452 |
|
|
General and administrative
expenses |
|
|
1,751,428 |
|
|
|
2,808,522 |
|
|
|
1,384,590 |
|
|
|
575,880 |
|
|
|
700,349 |
|
|
|
7,220,769 |
|
|
Research & developing
expenses |
|
|
|
|
|
|
56,119 |
|
|
|
|
|
|
|
250,701 |
|
|
|
501,563 |
|
|
|
808,383 |
|
|
Total operating expenses |
|
|
1,751,428 |
|
|
|
3,004,373 |
|
|
|
1,384,590 |
|
|
|
2,734,769 |
|
|
|
1,207,444 |
|
|
|
10,082,604 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
|
(1,751,428 |
) |
|
|
(2,936,181 |
) |
|
|
(1,384,590 |
) |
|
|
(527,266 |
) |
|
|
363,116 |
|
|
|
(6,236,349 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
Other (expenses) income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
Interest income |
|
|
|
|
|
|
1,385 |
|
|
|
|
|
|
|
70 |
|
|
|
|
|
|
|
1,455 |
|
|
Interest expenses |
|
|
|
|
|
|
(19,045 |
) |
|
|
(7,413 |
) |
|
|
(468,332 |
) |
|
|
(151,782 |
) |
|
|
(646,572 |
) |
|
Other income |
|
|
|
|
|
|
156,965 |
|
|
|
|
|
|
|
143,920 |
|
|
|
|
|
|
|
300,885 |
|
|
Other expenses |
|
|
|
|
|
|
(3,064 |
) |
|
|
|
|
|
|
(126 |
) |
|
|
(87,456 |
) |
|
|
(90,646 |
) |
|
Impairment of goodwill |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,263,424 |
) |
|
|
(3,263,424 |
) |
|
Total other (expenses)
income |
|
|
|
|
|
|
136,241 |
|
|
|
(7,413 |
) |
|
|
(324,469 |
) |
|
|
(3,502,661 |
) |
|
|
(3,698,302 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income
taxes |
|
|
(1,751,428 |
) |
|
|
(2,799,940 |
) |
|
|
(1,392,003 |
) |
|
|
(851,735 |
) |
|
|
(3,139,545 |
) |
|
|
(9,934,651 |
) |
|
Income tax expenses |
|
|
|
|
|
|
(147 |
) |
|
|
|
|
|
|
|
|
|
|
(56,303 |
) |
|
|
(56,450 |
) |
|
Net (loss) income |
|
|
(1,751,428 |
) |
|
|
(2,800,087 |
) |
|
|
(1,392,003 |
) |
|
|
(851,735 |
) |
|
|
(3,195,848 |
) |
|
|
(9,991,101 |
) |
|
Less: Net (loss) income attributable
to non-controlling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,616 |
|
|
|
250,616 |
|
|
Net (loss) income attributable to
common shareholders |
|
$ |
(1,751,428 |
) |
|
$ |
(2,800,087 |
) |
|
$ |
(1,392,003 |
) |
|
$ |
(851,735 |
) |
|
$ |
(2,945,232 |
) |
|
$ |
(9,740,485 |
) |
Audited Consolidated cash flow information:
Planet Green Holdings Corp.
Audited Consolidated Statements of Cash Flows
For the Years Ended December 31, 2021
(Stated in US Dollars)
| |
|
Parent |
|
|
Subsidiaries |
|
|
WFOE |
|
|
VIE |
|
|
Consolidated |
|
| Net cash used in operating
activities |
|
$ |
(291,668 |
) |
|
$ |
(7,947,439 |
) |
|
$ |
5,765,621 |
|
|
$ |
1,954,090 |
|
|
$ |
(519,396 |
) |
| Net cash used in investing
activities |
|
|
|
|
|
|
(3,957,144 |
) |
|
|
(7,458,005 |
) |
|
|
(399,253 |
) |
|
|
(11,814,402 |
) |
| Net cash
provided by financing activities |
|
|
|
|
|
|
10,660,383 |
|
|
|
|
|
|
|
(1,728,675 |
) |
|
|
8,931,708 |
|
| Net decrease in
cash and cash equivalents |
|
|
(291,668 |
) |
|
|
(1,244,200 |
) |
|
|
(1,692,383 |
) |
|
|
(173,839 |
) |
|
|
(3,402,090 |
) |
| Effect of exchange rate on cash |
|
|
|
|
|
|
1,079,030 |
|
|
|
38,717 |
|
|
|
0 |
|
|
|
1,117,747 |
|
| Cash and cash
equivalents at beginning of year |
|
|
525,051 |
|
|
|
360,659 |
|
|
|
1,907,486 |
|
|
|
622,555 |
|
|
|
3,415,751 |
|
| Cash and cash
equivalents at end of year |
|
|
233,384 |
|
|
|
195,489 |
|
|
|
253,819 |
|
|
|
448,716 |
|
|
|
1,131,408 |
|
Cash Flows through Our Organization:
Planet Green is a holding company with no material operations of
its own. We currently conduct our operations through our
subsidiaries including our WFOEs, the VIEs and their respective
subsidiaries. Cash is transferred through our organization in the
manner as follows: (1) we may transfer funds to our WFOEs through
our Hong Kong subsidiaries, Lucky Sky Planet Green Holdings Co.,
Limited (HK), and Bless Chemical Co., Ltd. (HK) by additional
capital contributions or shareholder loans, as the case may be; (2)
the VIEs may pay service fees to our PRC subsidiaries for services
rendered by our PRC subsidiaries; (3) our PRC subsidiaries may pay
service fees to the VIEs for services rendered by the VIEs; and (4)
our PRC subsidiaries may make dividends or other distributions to
Planet Green. We do not have cash management policies dictating how
funds are transferred throughout our organization. We may encounter
difficulties in our ability to transfer cash between PRC
subsidiaries and non-PRC subsidiaries largely due to various PRC
laws and regulations imposed on foreign exchange. If we intend to
distribute dividends through Planet Green, our WFOEs will transfer
the dividends to our Hong Kong subsidiaries in accordance with the
laws and regulations of the PRC, and then our Hong Kong
subsidiaries will transfer the dividends to the Planet Green, and
the dividends will be distributed from the Planet Green to all
shareholders respectively in proportion to the shares they hold,
regardless of whether the shareholders are U.S. investors or
investors in other countries or regions. There can be no assurance
the PRC government will not intervene or impose restrictions on the
Company’s ability to transfer cash out of China. In 2021, our PRC
subsidiaries did not receive any cash benefits from the VIEs for
services rendered to the VIEs and their subsidiaries. As of
December 31, 2021, our VIEs owned $[ 6,901,203 ] to our
WOEFs as loan. As of December 31, 2021, we were not subject to any
actual foreign exchange restrictions.
We have no present plans to distribute earnings or settle amounts
owed under the VIE agreements which it plans to retain the retained
earnings to continue to grow the business. No dividends or
distribution has been declared to paid to Planet Green from
subsidiaries or its VIEs and no dividends or distribution was made
to any U.S. investors.
Effects of PRC foreign exchange regulations on our ability to
transfer assets within our organization
Current foreign exchange and other regulations in the PRC may
restrict our PRC subsidiaries and VIEs in their ability to transfer
their net assets to Planet Green and its subsidiaries and to
investors. The PRC government imposes controls on the
convertibility of the Renminbi into foreign currencies and, in
certain cases, the remittance of currency out of China. Under our
current corporate structure, Planet Green as the holding company
may rely on dividend payments from its subsidiaries to fund any
cash and financing requirements Planet Green may have. Under
existing PRC foreign exchange regulations, payments of current
account items, including profit distributions, interest payments
and trade and service-related foreign exchange transactions, can be
made in foreign currencies without prior approval of the State
Administration of Foreign Exchange (the “SAFE”) by complying with
certain procedural requirements. Specifically, under the existing
exchange restrictions, without prior approval of SAFE, cash
generated from the operations of our PRC subsidiaries in China may
be used to pay dividends to Planet Green. However, approval from or
registration with appropriate government authorities is required
where Renminbi is to be converted into foreign currency and
remitted out of China to pay capital expenses such as the repayment
of loans denominated in foreign currencies. As a result, we need to
obtain SAFE approval to use cash generated from the operations of
our PRC subsidiaries and VIEs to pay off their respective debt in a
currency other than Renminbi owed to entities outside China, or to
make other capital expenditure payments outside China in a currency
other than Renminbi.
In light of the flood of capital outflows of China in 2016 due to
the weakening Renminbi, the PRC government has imposed more
restrictive foreign exchange policies and stepped up scrutiny of
major outbound capital movement including overseas direct
investment. More restrictions and substantial vetting process are
put in place by SAFE to regulate cross-border transactions falling
under the capital account. If any of Planet Green’s shareholders
regulated by such policies fail to satisfy the applicable overseas
direct investment filing or approval requirement timely or at all,
it may be subject to penalties from the relevant PRC authorities.
The PRC government may at its discretion further restrict access in
the future to foreign currencies for current account transactions.
If the foreign exchange control system prevents Planet Green from
obtaining sufficient foreign currencies to satisfy Planet Green’s
foreign currency demands, Planet Green may not be able to pay
dividends in foreign currencies to its shareholders.
Recent Regulatory Development
As we conduct substantially all of our operations in China, we are
subject to legal and operational risks associated with having
substantially all of our operations in China, including changes in
the legal, political and economic policies of the Chinese
government, the relations between China and the United States, or
Chinese or United States regulations may materially and adversely
affect our business, financial condition and results of operations.
PRC laws and regulations governing our current business operations
are sometimes vague and uncertain, and therefore, these risks may
result in a material change in our operations and the value of our
common stock or could significantly limit or completely hinder our
ability to offer or continue to offer our securities to investors
and cause the value of such securities to significantly decline or
be worthless. Recently, the PRC government initiated a series of
regulatory actions and made a number of public statements on the
regulation of business operations in China with little advance
notice, including cracking down on illegal activities in the
securities market, enhancing supervision over China-based companies
listed overseas, adopting new measures to extend the scope of
cybersecurity reviews, and expanding efforts in anti-monopoly
enforcement. We have relied on the opinion of our PRC counsel,
Hubei Kaicheng Law Office, that as of the date of this prospectus,
we are not directly subject to these regulatory actions or
statements, as we have not implemented any monopolistic behavior
and our business does not involve large-scale collection of user
data, implicate cybersecurity, or involve any other type of
restricted industry. As further advised by our PRC counsel, Hubei
Kaicheng Law Office, as of the date of this prospectus, no relevant
laws or regulations in the PRC explicitly require us to seek
approval from the China Securities Regulatory Commission (the
“CSRC”) or any other PRC governmental authorities for our overseas
listing or securities offering plans, nor has our company or any of
our subsidiaries received any inquiry, notice, warning or sanctions
regarding our offering of securities from the CSRC or any other PRC
governmental authorities. However, since these statements and
regulatory actions by the PRC government are newly published and
official guidance and related implementation rules have not been
issued, it is highly uncertain what potential impact such modified
or new laws and regulations will have on our daily business
operations, or ability to accept foreign investments and list on a
U.S. or other foreign exchange. The Standing Committee of the
National People’s Congress (the “SCNPC”) or other PRC regulatory
authorities may in the future promulgate laws, regulations or
implementing rules that require our company or any of our
subsidiaries to obtain regulatory approval from Chinese authorities
before offering securities in the U.S. In other words, although the
Company is currently not required to obtain permission from any of
the PRC central or local government and has not received any denial
to list on the U.S. exchange, our operations could be adversely
affected, directly or indirectly; our ability to offer, or continue
to offer, securities to investors would be potentially hindered and
the value of our securities might significantly decline or be
worthless, by existing or future laws and regulations relating to
its business or industry or by intervene or interruption by PRC
governmental authorities, if we or our subsidiaries (i) do not
receive or maintain such permissions or approvals, (ii)
inadvertently conclude that such permissions or approvals are not
required, (iii) applicable laws, regulations, or interpretations
change and we are required to obtain such permissions or approvals
in the future, or (iv) any intervention or interruption by PRC
governmental with little advance notice. See “Risk Factors -
Risks Related to Doing Business in China” beginning on page 30
for a detailed description of various risks related to doing
business in China and other information that should be considered
before making a decision to purchase any of our securities.
Enforcement of Civil Liabilities
Currently all our directors and majority of senior executive
officers either are physically reside in China for a significant
portion of each year, and/or are PRC nationals. As a result, it may
be difficult for you to effect service of process upon us or those
persons inside mainland China. In addition, there is uncertainty as
to whether the PRC courts would recognize or enforce judgments of
U.S. courts against us or such persons predicated upon the civil
liability provisions of U.S. securities laws or those of any U.S.
state.
The recognition and enforcement of foreign judgments are provided
for under the PRC Civil Procedures Law. PRC courts may
recognize and enforce foreign judgments in accordance with the
requirements of the PRC Civil Procedures Law based either
on treaties between China and the country where the judgment is
made or on principles of reciprocity between jurisdictions. China
does not have any treaties or other forms of written arrangement
with the U.S. that provide for the reciprocal recognition and
enforcement of foreign judgments. In addition, according to
the PRC Civil Procedures Law, the PRC courts will not enforce
a foreign judgment against us or our directors and officers if they
decide that the judgment violates the basic principles of PRC laws
or national sovereignty, security, or public interest. As a result,
it is uncertain whether and on what basis a PRC court would enforce
a judgment rendered by a court in the U.S.
It may also be difficult for you or overseas regulators to conduct
investigations or collect evidence within China. For example, in
China, there are significant legal and other obstacles to obtaining
information needed for shareholder investigations or litigation
outside China or otherwise with respect to foreign entities.
Although the authorities in China may establish a regulatory
cooperation mechanism with its counterparts of another country or
region to monitor and oversee cross-border securities activities,
such regulatory cooperation with the securities regulatory
authorities in the U.S. may not be efficient in the absence of a
practical cooperation mechanism. Furthermore, according to Article
177 of the PRC Securities Law, or “Article 177,” which became
effective in March 2020, no overseas securities regulator is
allowed to directly conduct investigations or evidence collection
activities within the territory of the PRC. Article 177 further
provides that Chinese entities and individuals are not allowed to
provide documents or materials related to securities business
activities to foreign agencies without prior consent from the
securities regulatory authority of the PRC State Council and the
competent departments of the PRC State Council. While detailed
interpretation of or implementing rules under Article 177 have yet
to be promulgated, the inability for an overseas securities
regulator to directly conduct an investigation or evidence
collection activities within China may further increase
difficulties faced by you in protecting your interests.
Products
We grow, produce and distribute Cyan brick tea, black tea and green
tea in China through our wholly owned subsidiary Xianning
Bozhuang.
We import and distribute beef products in China through our wholly
owned subsidiary Shandong Yunchu.
We research, develop, manufacture and sell products of clean fuel,
liquid wax, arene and biomass fuel through Jingshan Sanhe and we
research, develop, manufacture and sell formaldehyde, urea
formaldehyde adhesive, methylal, and clean fuel products through
Jilin Chuangyuan.
We research, develop and manufacture skid-mounted refueling
equipment, LNG cryogenic equipment and oil storage tank, and sells
such products in China through our VIE, Anhui Ansheng.
Service
We provide a demand-side platform for online advertising which
allows buyers of digital advertising inventory to manage multiple
advertising exchange and data exchange through one interface. Our
online advertising service is provided by Fast Approach.
Our Manufacturing Facilities
General
We currently manufacture our products and provide services in
Meihekou City of Jilin Province, Jingshan City and Xianning City of
Hubei Province, Qingdao City of Shandong Province, Xuancheng City
of Anhui Province in China, and Toronto in Canada.
The following table indicates the year that operations commenced at
each of the facilities and the size of the facilities.
|
Facility |
|
Year
Operations
Commenced |
|
|
Facility Size
(square
meters) |
|
| Xianning Bozhuang* |
|
|
2013 |
|
|
|
33,333 |
|
| Jingshan Sanhe** |
|
|
2018 |
|
|
|
11,018 |
|
| Jilin Chuangyuan*** |
|
|
2013 |
|
|
|
59,690 |
|
| Anhui Ansheng**** |
|
|
2012 |
|
|
|
51,367 |
|
|
* |
Became a VIE in May 2019 and a
subsidiary in August 2021. |
|
** |
Became a subsidiary in September
2021. |
|
*** |
Became a VIE in March 2021. |
|
**** |
Became a VIE in July, 2021 |
Production Lines
We currently manufacture our products using production lines.
The production process for our cyan brick tea products involves,
primary processing of fresh leaves, piling and fermenting, storing
and aging, picking, pressing, and baking. The production process
for our black tea products involves selecting and sorting the fresh
leaves, withering, rolling, fermenting, baking and drying, grading
according to color, prompting fragrance, packing and warehousing.
The production process for our green tea products involves
selecting and sorting the fresh leaves, airing, fixating, cooling,
rolling, stir drying, selecting and grading, prompting fragrance,
packing and warehousing.
The production process for our formaldehyde products is illustrated
as follows. The raw material methanol, after being injected into
the high position tank, enters the methanol evaporator through the
filter, mixes with the air from the roots blower to form the binary
mixture, and then adds steam to form the ternary mixture, which is
heated by the superheater to 120 ℃ and enters the oxidizer, carries
out oxidation and dehydrogenation reaction through the silver
catalyst to form the formaldehyde gas, and then absorbs the
formaldehyde solution through the first absorption tower and the
second absorption tower. The excess waste gas is burned out by the
exhaust gas boiler.
The production process for our methyl starting with the raw
materials methanol and formaldehyde are pumped into the reaction
distillation tower according to the proportion. At the bottom of
the tower, formaldehyde and methanol are indirectly heated by
steam. The reaction liquid vapor from the tower upwards through the
catalyst reaction to produce methyl acetal, and then through the
distillation tower separation, cooling, the final product methyl
acetal.
The production process for our urea-formaldehyde glue is
demonstrated as follows. Formaldehyde is pumped from the
formaldehyde workshop into the tank of formaldehyde storage, and
then pumped into the metering tank through the feed pump of
formaldehyde. After the PH value is adjusted by adding alkali, it
is sent into the reaction kettle. At the same time, urea is also
added into the kettle according to the corresponding proportion,
heating the reaction kettle. After heating up the kettle, melamine
is added, so that the material can undergo addition reaction in the
kettle. After the PH value is adjusted by dropping formic acid in
the kettle, the material is sent into the condensation kettle
through the transfer pump. Urea and additives are added into the
condensation kettle according to a certain proportion for
condensation reaction, and the finished product is formed after
cooling treatment.
The production process for our clean fuel oil is illustrated as
follows. The self-control design of the facilities for storage of
raw materials and addition of additives shall, in accordance with
the requirements of the process, conduct centralized indication and
adjustment of the temperature, flow rate and liquid level of the
raw oil tanks, raw oil metering tanks, product oil allocation tanks
and finished oil tanks during the fuel blending process; realize
remote monitoring of the whole fuel production process, and conduct
on-the-spot indication of pressure and partial flow rate.
The production process for our construction rubber powder
(re-dispersible latex powder) is demonstrated as follows. Using
polymer emulsion (VAE emulsion) as raw material, all kinds of
additives are added, and then transported to the reaction kettle
through diaphragm pump to warm up and mix evenly, and then
transported to the mixing kettle with additives through diaphragm
pump to mix evenly, then transported to the high-speed reactor
through diaphragm pump to emulsify, emulsified and then transported
to the spare material tank through the diaphragm pump, and then
transported to the spray drying tower through the spare material
tank through the diaphragm pump to form polymer powder after spray
drying, and the polymer powder and various additives are mixed and
screened through the mixer to be packed into the warehouse.
The following table shows the number and types of production lines,
the types of products produced and the production capacity as of
the date of this report:
|
Facility |
|
Production Lines |
|
Product
Portfolio |
|
Capacity |
| Xianning
Bozhuang |
|
There are six production lines: the
production line of cyan brick tea with traditional handicraft; the
production line of cyan brick tea; the production line of teabag;
the production line of green tea and the production line of black
tea |
|
Cyan brick tea,
black tea and green tea |
|
Production line
with 5,020 tons of production capacity |
|
|
|
|
|
|
|
|
| Jingshan
Sanhe |
|
There are two
production lines: the production line of ethanol fuel and the
production line of fuel additive |
|
Alcohol based
clean fuel, liquid wax, arene and biomass fuel |
|
Two production
lines with a total production capacity of 300,000 tons/year for
ethanol fuel, and 3000 tons/year for fuel additive |
|
|
|
|
|
|
|
|
| Jilin
Chuangyuan |
|
The company has two formaldehyde
production lines, eight rubber production units, one methylal
production line and one clean fuel oil production line |
|
Formaldehyde,
urea formaldehyde adhesive, methylal and clean fuel oil |
|
Annual production
capacity of 120,000 tons of formaldehyde, 100,000 tons of urea
formaldehyde glue, 3,0000 tons of methylal and 20,000 tons of clean
fuel oil |
|
|
|
|
|
|
|
|
| Anhui
Ansheng |
|
Cryogenic Liquid Storage Tank,
Microbulk Solutions for IG –Pama, Medical oxygen integrated air
supply station, Microbulk Solutions for LNG -Pama, Integrated LNG
Supply Staion-AYS, Vaporizer for industrial gases and LNGL-CNG
filling station, Container LNG filling station, Gas supply station
design and installation |
|
|
|
Provided more
than 1,000 sets of IG and LNG equipment’s and installation services
for customers |
We operate our production lines year-round.
Raw Materials
Our Supply
Sources
Our business depends on obtaining a reliable supply of various
products, including tea, refined methanol, methanol, formaldehyde,
polymer emulsion and beef products. Because of the diversity of
available sources of these raw materials, we believe that our raw
materials are currently in adequate supply.
We obtain our raw materials primarily from domestic procurement for
our tea production, formaldehyde and methanol products. When it
comes to our beef products, we rely on overseas suppliers to import
the raw materials.
Shandong Yunchu carries out our beef products business. It mainly
purchased frozen beef from six countries: Uruguay, Brazil, Chile,
Argentina, Australia and New Zealand and 25 factories are involved.
The top ten suppliers include: Marrig, Minerva S.A., G & K
O’Connor Pty Ltd, Frigorifico matadero Pando ontilcor S.A., Las
Moras, Frigorifico de Osorno S.A., Ersinal S.A. ecoparks S.A.,
lorsinal S.A., and Minerva S.A. The Company has established a
stable long term cooperative relationship with these beef and
mutton manufacturers. The stable supply provides competitive
advantage for Company to procure various beef products with high
quality and low price to meet the needs of domestic customers.
We select suppliers based on price and product quality. We
typically rely on numerous domestic suppliers, including some with
whom we have a long-term relationship. Our suppliers generally
include wholesale agricultural product companies, food production
companies, tea bag processing companies and chemical products
wholesale company.
Our Customers
Our products are sold both in Chinese domestic market and overseas
market.
We sell our agricultural products in first-tier cities in China,
including Beijing, Shanghai, Tianjin and Guangzhou. Our sales team
sells our products directly to supermarket chains, mass
merchandisers, large wholesalers, restaurants and others in these
markets. In second-tier and third-tier cities, we currently sell
our products to third-party distributors, such as food companies or
trading companies with established distribution channels in such
regions, rather than through our own sales team. The terms of a
typical sales contract between us and our distributors provide that
we are responsible for transportation costs and the distributors
are responsible for storage costs. Furthermore, the distributors
have the right to return products that fail to satisfy specified
quality standards, at our cost. The majority of such contracts
require the distributors to pay us in cash in full upon delivery,
and the remaining contracts provide for short-term credit, usually
two to three weeks. We also operate an online store on Tmall, an
open business-to-consumer (B2C) platform in China, to sell tea
products to consumers directly.
As to our formaldehyde products, vehicles gasoline and diesel
products, we are a leading regional chemical products provider in
north eastern China area, and we are the sole provider of
formaldehyde in Jilin Province, China.
When it comes to manufacturing and sales of synthetic fuel
products, we do business through direct sales, constructing refuel
facilities and conducting technical cooperation with other
companies.
Anhui Ansheng’s Insulation type explosion-proof skid-mounted
refueling equipment and SF double-layer buried type storage tank
are the leading brands in the industry. The company is China
National Petroleum Corporation’s Top 5 supplier for SF double layer
buried storage tanks. The production scale and market share of the
Explosion-proof skid-mounted refueling equipment are both ranking
No.1 in China and such product is a success in overseas markets as
well.
Shandong Yunchu distributes beef products in China including
several major beef products providers and distributors in China,
such as: Henan Hengdu Food Co., Ltd, Shanxi Pingyao Beef Group,
Shandong Delis Food Co., Ltd and Heilongjiang Binxi Group.
Our Sales and Marketing Efforts
We have not spent a significant amount of capital on advertising in
the past, and our advertising budget continues to be limited. In
2021, our marketing and branding efforts mainly focus on internet
advertising and long-term customers.
Competition and Market Position
Black tea is produced in Guangxi, Sichuan, Yunnan, Hunan, Hubei,
Shanxi and Anhui provinces in China. Our black tea products are
processed in our factory in Hubei province and distributed
nationwide. There are few large players on the market but we face
fierce competition from numerous small black tea manufactures and
distributors. However, as our brand has over hundreds of year’s
history, we have accumulated loyal consumers and gained favorable
market reputation over years.
Competitive factors in our industry include product innovation,
product quality, price, brand recognition and loyalty, product
variety and ingredients, product packaging and package design,
effectiveness of marketing and promotional activity, and our
ability to identify and satisfy consumer tastes and
preferences.
Since its inception, the company has developed rapidly relying on
advanced enterprise management and safe, effective, exclusive
patented products and strong marketing strength. The production
scale of formaldehyde is ranking top three among provinces in
northeast China. The production scale of urea-formaldehyde glue
attains the first place in China. Our enterprise comprehensive
strength is considered first tier among all companies in northeast
China.
Jingshan Sanhe is one of the top ten private enterprises in the
region of Jingshan with 12 patents, 17 sets of professional
laboratory equipment and 2 advanced and complete production
lines.
Anhui Ansheng was established in May 2012, with a registered
capital of RMB 30 million and an area of approximately 100,000
square meters. It is equipped with advanced manufacturing and
testing equipment, and has first-class R&D, manufacturing and
management team in the industry. Anhui Ansheng has three business
divisions: Insulation type explosion-proof skid-mounted refueling
equipment business division, LNG cryogenic equipment business
division and SF double deck oil storage tank business division.
Anhui Ansheng has the national pressure vessel manufacturing
certificate, pressure pipeline installation license, ASME U
certificate and T certificate, national industrial production
license, ISO9001 quality management system certificate, ISO14001
environmental management system certificate, QHSAS18001
occupational health and safety management system certificate, as
well as UL certificate, etc. It’s Insulation type explosion-proof
skid-mounted refueling equipment and SF double-layer buried type
storage tank are the leading brands in the industry. Anhui Ansheng
is China National Petroleum Corporation’s Top 5 supplier for SF
double layer buried storage tanks. The production scale and market
share of the Explosion-proof skid-mounted refueling equipment are
both ranking No.1 in China and such product is a success in
overseas markets as well.
Jilin Chuangyuan is a leading chemical enterprise integrating R
& D, production and sales. Its main products and annual
production capacity are 120,000 tons of formaldehyde, 100,000 tons
of urea formaldehyde glue, 3,0000 tons of methylal and 20,000 tons
of clean fuel oil respectively. It is a large-scale enterprise in
the production of formaldehyde and urea formaldehyde glue in
Chinese northeast provinces and is the only enterprise in Jilin
province to produce and sell formaldehyde. The main products are
sold to wood-based panel, chemical, pharmaceutical and construction
enterprises in Jilin and Liaoning provinces.
Shandong Yunchu mainly purchased frozen beef from six countries:
Uruguay, Brazil, Chile, Argentina, Australia and New Zealand and 25
factories are involved. The top ten suppliers include: Marrig,
Minerva S.A., G & K O’Connor Pty Ltd, Frigorifico matadero
Pando ontilcor S.A., Las Moras, Frigorifico de Osorno S.A., Ersinal
S.A. ecoparks S.A., lorsinal S.A., and Minerva S.A. The Company has
established a stable long term cooperative relationship with these
beef and mutton manufacturers. The stable supply provides
competitive advantage for Company to procure various various beef
products with high quality and low price to meet the needs of
domestic customers.
Intellectual Property
Patents
The company vigorously implements scientific and technological
innovation. Jingshan Sanhe obtains 12 practical patent certificates
from the State Intellectual Property Office of the PRC, which
includes a diesel exhaust cleaner and its preparation method, a
kind of automobile exhaust cleaner and preparation method, a kind
of filtering device for exhaust port of cleaning liquid production
plant, a kind of automobile cleaner dispensing device, a kind of
liquid dispensing equipment, a kind of mixing and stirring tank, a
kind of cleaning brush for cleaning agent storage tank, a kind of
reactor for producing auto cleaner, a kind of cleaning brush for
cleaning agent mixing kettle, a kind of mixing tank, a cleaning
tool for cleaning the reactor for detergent production and a kind
of mixing and defoaming tank. The company will give full play to
the advantages of independent intellectual property rights,
continue to innovate, maintain the leading technology and enhance
the core competitiveness of the company.
Anhui Ansheng obtains 1 invention patent and 23 utility patents
from the State Intellectual Property Office of the PRC, which
includes a LNG tank container with self-balancing lifting
mechanism, a LNG tank type container type with intermediate moving
positioning mechanism, a LNG tank container with new vehicle
mounted support frame, a LNG tank type container type with
integrated fixed frame, Self-drying gas station canopy, fuel
dispenser, a constant temperature and pressure unloading device for
gasification station, integrated mobile LNG gasification station,
an integrated skid type LNG filling station, fuel dispenser with
automatic coordination position, a LNG tank type container type
with self-balancing lifting mechanism, an anti-breaking mechanism
at the inlet and a outlet of pump pool in LNG integrated gas
filling device.
We take reasonable steps to protect our proprietary information and
trade secrets, such as limiting disclosure of proprietary plans,
methods and other similar information on a need-to-know basis and
requiring employees with access to our proprietary technology to
enter into confidentiality arrangements. We believe that our
proprietary technology and trade secrets are adequately
protected.
Our Employees
As of December 31, 2021, we had a total of 185 employees.
Approximately 185 of our full-time employees are directly employed
by our subsidiaries and VIEs.
The following table sets forth the allocation of employees, both
direct and leased, by job function.
| |
|
Number of |
|
|
Department |
|
Employees |
|
| Production |
|
|
108 |
|
| Purchasing |
|
|
2 |
|
| Research and Development |
|
|
4 |
|
| Quality Control |
|
|
8 |
|
| Sales |
|
|
15 |
|
| Finance |
|
|
7 |
|
| Management |
|
|
14 |
|
| Administration |
|
|
27 |
|
| Total |
|
|
185 |
|
We have not experienced any significant problems or disruption to
our operations due to labor disputes, nor have we experienced any
difficulties in recruitment and retention of experienced staff.
We compensate our production line employees by unit produced (piece
work) and compensate other employees with a base salary and bonus
based on performance. We also provide training for our staffs from
time to time to enhance their technical and product knowledge,
including knowledge of industry quality standards.
Our employees participate in state pension scheme and various types
of social insurance organized by municipal and provincial
governments. Outsourcing agents are responsible for contributions
on behalf of the leased employees.
Our Research and Development Activities
We have research and development staffs at each of our facilities.
In total, 4 employees are dedicated to research and
development.
Jingshan Sanhe owns a professional laboratory which includes 17
sets of professional experimental equipment operated by 6 high-end
scientific research experts to ensure the high quality of raw
materials and products.
Jilin Chuanyuan was jointly awarded by Jilin Provincial Department
of education and Jilin Provincial Department of industry and
information technology as Jilin University enterprise joint
technology innovation laboratory. The company currently carries out
a project of transformation of scientific and technological
achievements with Beihua University. Specifically, it is a kind of
urea formaldehyde resin adhesive with ultra-low formaldehyde
emission and its preparation process, ZL 201510055885x. At the same
time, as a participant, the project is applying for the national
science and technology progress award. Beihua University has set up
a teaching and research practice base in our company. On top of
that, the company also successfully developed the urea formaldehyde
resin for E1 grade waterproof particleboard, E0 grade and F grade
particleboard, as well as the UF resin for E0 grade and F grade
particleboard with UFC.
We rely heavily on customer feedback to assist us in the
modification and development of our products. We also utilize
customer feedback to assist us in the development of new
products.
The amount we spent on research and development activities during
the years ended December 31, 2021 and 2020 was not a material
portion of our total expenses for those years.
Government Regulation
As a company that continuously strives to create new value, we have
been doing business in five areas: tea product cultivation,
packaging, and sales; manufacturing and sales of synthetic fuel
products, formaldehyde products, vehicles gasoline and diesel
products; manufacturing of insulation type explosion-proof
skid-mounted refueling equipment and SF double-layer buried type
storage tank products business; importing and distribution of beef
products and multimedia design, advertising business.
Our tea product cultivation, packaging, and sales business is
subject to regulations of China’s Agricultural Ministry and
Ministry of Health. This regulatory scheme governs the manufacture
(including composition and ingredients), labeling, packaging and
safety of food. It also regulates manufacturing practices,
including quality assurance programs, for foods through its current
manufacturing practice regulations, and specifies the standards of
identity for certain foods. We have obtained approvals from Chinese
authorities for products that requires the approval under
regulations, including quality safety approval from government.
Our manufacturing and sales of chemical products business is
subject to multiple regulations under PRC law. We have complete
certificates, including the work safety license, production license
and emission license. We have passed the environmental assessment
acceptance and currently works on the promotion to the second level
of work safety standardization from the third level. Our operation
meets the requirements of relevant national laws, regulations,
standards and specifications, as well as other the requirements of
national management departments at all levels.
Our manufacturing of insulation type explosion-proof skid-mounted
refueling equipment and SF double-layer buried type storage tank
products business, carried out by Anhui Ansheng, is subject to
multiple regulations under PRC law. We have obtained required
certificates, including the national industrial product production
license, Manufacture License of Special Equipment (pressure
vessels), installation, alteration, repair & maintenance
license of special equipment (pressure tunnel), the American
Society of Mechanical Engineers certificate of authorization,
environmental management system certification and quality
management system certification.
Our importing and distribution of beef products business is carried
out by Shandong Yunchu and we have obtained relevant certifications
including the record registration form of foreign trade operators
and food business license.
As to our multimedia design and advertising business, we are
licensed to operate data related business in China through our
subsidiary, Shanghai Shuning.
ITEM 1A. RISK FACTORS
As a smaller reporting company, we are not required to include risk
factors in this Annual Report. Investment in our securities
involves a high degree of risk. You should consider carefully all
of the risks described on the Registration Statement on Form S-3
filed by the Company on September 17, 2021, and as subsequently
amended, together with the other information contained in this
report, before making a decision to invest in our units. If any of
the events descripted in the risk factors occur, our business,
financial condition and operating results may be materially
adversely affected. In that event, the trading price of our
securities could decline, and you could lose all or part of your
investment.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Our primary facilities, which are owned except where otherwise
indicated, are as follows:
|
Facility |
|
Location |
|
Approximate Size
(Square Meters) |
|
|
Owned or Leased |
|
Xianning Bozhuang * |
|
Xianning City, Hubei Province, PRC |
|
|
33,333 |
|
|
Land Use Rights
Obtained |
| Jingshan Sanhe
** |
|
Jingshan
City, Hubei Province, PRC |
|
|
11,018 |
|
|
Leased |
| Jilin Chuangyuan
*** |
|
Meihekou City,
Jilin Province, PRC |
|
|
59,690 |
|
|
Land Use Rights Obtained |
| Anhui
Ansheng*** |
|
Xuan City,
Anhui Province, PRC |
|
|
51,367 |
|
|
Land Use Rights Obtained |
| Shandong
Yunchu**** |
|
Qingdao City,
Shandong Province |
|
|
178.16 |
|
|
Leased
|
|
* |
Became
a VIE in May 2019 and became a subsidiary in August
2021. |
|
** |
Became
a subsidiary in September 2021. |
|
*** |
Became a VIE in July 2021. |
|
**** |
Become a subsidiary in December
2021 |
In the aggregate, we currently have land use rights to, or lease, 5
properties with approximately 155,586.16 square meters, consisting
of manufacturing facilities and office buildings for future
expansion. We believe our current facilities provide adequate
capacity for our current and projected needs.
All land in China is owned by the government. Individuals and
companies are permitted to acquire land use rights for specific
purposes. In the case of land used for industrial purposes, the
land use rights are granted for a period of up to 50 years. This
period may be renewed at the expiration of the initial and any
subsequent terms. Granted land use rights are transferable and may
be used as security for borrowings and other obligations.
ITEM 3. LEGAL PROCEEDINGS
Not Applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES.
Market for our Common
Stock
Our common stock is quoted on the NYSE American under the symbol
“PLAG”.
Approximate Number of
Holders of Our Common Stock
As of March 29, 2022, there were 346 stockholders of record of our
common stock. This does not include the holders whose shares are
held in a depository trust in “street” name.
Dividend
We have not declared or paid cash dividends other than the payment
of a dividend in April 2007 in connection with our reverse merger.
Any future decisions regarding dividends will be made by our Board
of Directors. We currently intend to retain and use any future
earnings for the development and expansion of our business and do
not anticipate paying any cash dividends in the foreseeable
future.
Issuances of
Unregistered Securities
On May 9, 2019, we and Shanghai Xunyang entered into a share
exchange agreement with Xianning Bozhuang and each of the original
shareholders of Xianning Bozhuang. Such transaction closed on May
14, 2019. Pursuant to the share exchange agreement, we 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 Xianning Bozhuang to Shanghai Xunyang.
On June 17, 2019, the Company entered into a securities purchase
agreement, pursuant to which five individuals residing in the PRC
agreed to purchase an aggregate of 1,300,000 shares of the
Company’s common stock, par value $0.001 per share, for an
aggregate purchase price of $5,460,000, representing a purchase
price of $4.20 per share. The transaction closed on June 19,
2019.
On January 26, 2021, the Company entered into a securities purchase
agreement, pursuant to which three individuals residing in the PRC
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. The transaction closed on January 29,
2021.
On March 9, 2021, the Company entered into a share exchange
agreement with Jilin Chuangyuan and each of the original
shareholders of Jilin Chuangyuan. Pursuant to the share exchange
agreement, we issued an aggregate of 3,300,000 shares of common
stock of the Company to the Sellers in exchange for the transfer of
75% of the equity interest of Jilin Chuangyuan.
On April 24, 2021, the Company entered into a securities purchase
agreement, pursuant to which three individuals residing in the PRC
agreed to purchase an aggregate of 4,000,000 shares of the
Company’s common stock, par value $0.001 per share, for an
aggregate purchase price of $7,600,000, representing a purchase
price of $1.90 per share. The transaction closed on May 20,
2021.
On July 15, 2021, the Company entered into a share exchange
agreement with Anhui Ansheng and each of the original shareholders
of Anhui Ansheng. Pursuant to the share exchange agreement, we
issued an aggregate of 4,800,000 shares of common stock of the
Company to the Sellers in exchange for the transfer of 66% of the
equity interest of Anhui Ansheng.
On December 9, 2021, the Company entered into a share exchange
agreement with Shandong Yunchu and each of the original
shareholders of Shandong Yunchu. Pursuant to the share exchange
agreement, we issued an aggregate of 5,800,000 shares of common
stock of the Company to the Sellers in exchange for the transfer of
all of the equity interest of Shandong Yunchu.
Securities Authorized
for Issuance under Equity Compensation Plans
We have issue 870,000 shares under our equity compensation plan in
the fiscal year of 2021.
ITEM 6. RESERVED
Not applicable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
We are headquartered in Flushing, New York. After a series of
acquisitions and dispositions in 2021 and 2020, our primary
business, which is carried out by Shandong Yunchu, Jingshan Sanhe,
Jilin Chuangyuan, Anhui Ansheng, Fast Approach Inc and Xianning
Bozhuang, includes:
|
● |
Tea
product cultivation, packaging, and sales; |
|
● |
To
sell high-grade synthetic fuel products; |
|
● |
To import beef products and sell such products in
China;
|
|
● |
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; |
|
● |
Online advertising services; |
Going
Concern
The accompanying audited 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 $9,740,486
attributable to common shareholders for the year ended December 31,
2021. As of December 31, 2021, the Company had an accumulated
deficit of $94,072,383, a working capital deficit of $7,075,320,
and its net cash used in operating activities for the year ended
December 31, 2021 was $519,396
The
Company plans to continue its expansion and investments, which will
require continued improvements in revenue, net income and cash
flows.
Results
of Operations
The
following discussion should be read in conjunction with the
company’s audited consolidated financial statement for the years
ended December 31, 2021, and 2020 and related notes to
that.
| |
|
Twelve months ended |
|
|
Increase / |
|
|
Increase / |
|
| |
|
December 31, |
|
|
Decrease |
|
|
Decrease |
|
|
(In Thousands of USD) |
|
2021 |
|
|
2020 |
|
|
($) |
|
|
(%) |
|
| Net revenues |
|
|
37,768 |
|
|
|
3,639 |
|
|
|
34,129 |
|
|
|
938 |
|
| Cost of revenues |
|
|
33,922 |
|
|
|
2,370 |
|
|
|
31,552 |
|
|
|
1,331 |
|
| Gross profit |
|
|
3,846 |
|
|
|
1,269 |
|
|
|
2,577 |
|
|
|
203 |
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling and marketing expenses |
|
|
2,053 |
|
|
|
160 |
|
|
|
1,893 |
|
|
|
1,183 |
|
| General and administrative
expenses |
|
|
7,221 |
|
|
|
3,896 |
|
|
|
3,325 |
|
|
|
85 |
|
| Research & Developing
expenses |
|
|
808 |
|
|
|
- |
|
|
|
808 |
|
|
|
N/A |
|
| Operating income (loss) |
|
|
(6,236 |
) |
|
|
(2,787 |
) |
|
|
(3,449 |
) |
|
|
124 |
|
| Interest income (expense) |
|
|
(645 |
) |
|
|
(23 |
) |
|
|
(622 |
) |
|
|
2,656 |
|
| Other income (expense) |
|
|
210 |
|
|
|
27 |
|
|
|
183 |
|
|
|
670 |
|
| Impairment of goodwill |
|
|
(3,263 |
) |
|
|
(2,340 |
) |
|
|
(923 |
) |
|
|
39 |
|
| Write off receivables from disposal
of former subsidiaries |
|
|
- |
|
|
|
(6,079 |
) |
|
|
6,079 |
|
|
|
(100 |
) |
| (Loss) income before tax |
|
|
(9,934 |
) |
|
|
(11,202 |
) |
|
|
1,268 |
|
|
|
(11 |
) |
| Loss on disposal |
|
|
- |
|
|
|
151 |
|
|
|
(151 |
) |
|
|
(100 |
) |
| Income tax expense/(income) |
|
|
(56 |
) |
|
|
- |
|
|
|
(56 |
) |
|
|
N/A |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) from continuing
operations |
|
|
- |
|
|
|
(11,202 |
) |
|
|
11,202 |
|
|
|
(100 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income(loss)from discontinuing
operations |
|
|
- |
|
|
|
151 |
|
|
|
(151 |
) |
|
|
N/A |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net (loss) income |
|
|
(9,990 |
) |
|
|
(11,051 |
) |
|
|
1,061 |
|
|
|
(10 |
) |
Net
Revenues. Our net revenues for the twelve months ended December
31, 2021 amounted to $37.77 million, which represents an increase
of approximately $34.13 million, or 938%, from $3.64 million for
the twelve months ended December 31, 2020. This increase was
attributable to the acquisition of certain subsidiaries and
VIEs.
Cost
of Revenues. During the twelve months ended December 31, 2021,
we experienced an increase in cost of revenue of $31.6 million or
1331%, in comparison to the twelve months ended December 31, 2020,
from approximately $2.37 million to $33.9 million. This increase
was mainly due to the acquisition of certain subsidiaries and
VIEs.
Gross Profit. Our gross profit increased by $2.58 million,
or 203% to $3.85 million for the twelve months ended December 31,
2021 from $1.27 million for the twelve months ended December 31,
2020. This increase was mainly attributable to the acquisition of
certain subsidiaries and VIEs.
Operating Expenses
Selling
and Marketing Expenses. Our selling and marketing expenses
increased by $1.89 million, or 1183%, to $2.05 million for the
twelve months ended December 31, 2021 from $0.16 million for the
twelve months ended December 31, 2020. This increase was mainly due
to our effort to expand our business.
General and Administrative Expenses. We experienced an
increase in general and administrative expense of $3.33 million
from $3.90 million to approximately $7.22 million for the twelve
months ended December 31, 2021, compared to the twelve months ended
December 31, 2020. This cost increase was mainly due to the
increase of the professional service fees and expenses incurred by
the newly acquired business operation.
Net Loss
Our
net loss decreased by $1.06 million, or 10%, to a net loss of $9.99
million for the twelve months ended December 31, 2021 from $11.05
million in net loss for the twelve months ended December 31, 2020.
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 year 2021, our primary sources of financing have been cash
generated from operations and private placements.
As of
December 31, 2021, we had cash and cash equivalents (including
restricted cash) of $1.13 million compared to $3.42 million as of
December 31, 2020. The debt to assets ratio was 40.41% and 16.65%
as of December 31, 2021 and December 31, 2020, respectively. We
expect to continue to finance our operations and working capital
needs in 2021 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.
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 twelve months ended
December 31 |
|
|
(In thousands of U.S. dollars) |
|
2021 |
|
|
2020 |
|
| Net cash flows used in
operating activities |
|
|
(519 |
) |
|
|
(3,499 |
) |
| Net cash flows used in investing
activities |
|
|
(11,814 |
) |
|
|
(853 |
) |
| Net cash flows provided by
financing activities |
|
|
8,932 |
|
|
|
238 |
|
Operating Activities
For
the year ended December 31, 2021, net cash used in operating
activities was $0.52 million, which consisted primarily of net loss
of $9.99 million, and was adjusted by depreciation and amortization
of $2.45 million, impairment of goodwill of $3.23 million and share
based compensation expense of $1.16 million.
The
Company had an increase of $4.81 million in other receivables from
related parties, an increase of $1.33 million in inventories and an
increase of $4.31 million in payables and other current
liabilities.
For
the year ended December 31, 2020, net cash used in operating
activities was $3.50 million, which consisted primarily of net loss
of $11.10 million, and was adjusted by depreciation and
amortization of $0.45 million, write off receivables of $6.08
million, impairment of goodwill of $2.34 million and exchange loss
of $1.83 million.
The
Company had an increase of $1.53 million in accounts and other
receivables, an increase of $4.07 million in prepayments and other
current assets and an increase of $0.88 million in payables and
other current liabilities.
Investing Activities
Net
cash used in investing activities for the twelve months ended
December 31, 2021 was $11.81 million, representing an increase of
$10.96 million in net cash used in investing activities from $0.85
million for the same period of 2020. This is mainly due to the
recent acquisition activities.
Financing Activities
Net
cash provided by financing activities for the twelve months ended
December 31, 2021, was $8.93 million, representing an increase of
$8.69 million in net cash provided by financing activities from
$0.24 million for the same period of 2020. This is mainly due to
the proceeds from the private placement transactions.
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
December 31, 2021, there were no other recently issued accounting
standards not yet adopted that would or could have a material
effect on the Company’s consolidated financial
statements.
Off-Balance
Sheet Arrangements
We do
not have any off-balance arrangements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL
DATA
The full text of our audited consolidated financial statements as
of December 31, 2021, begins on page F-1 of this annual report on
Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule
13a-15(e) under the Exchange Act) that are designed to ensure that
information required to be disclosed in Exchange Act reports is
recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms, and that such
information is accumulated and communicated to our management,
including to our Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding
required disclosure.
As required by Rule 13a-15 under the Exchange Act, our management,
including our Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of our disclosure controls and
procedures as of December 31, 2021. Based on that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that
as of December 31, 2021, our disclosure controls and procedures
were not effective due to the material weakness in our internal
control over financial reporting described below.
Internal Controls over Financial Reporting
Management’s Annual Report on Internal Control over Financial
Reporting.
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is
defined in Rule 13a-15(f) of the Exchange Act. Under the
supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, we
conducted an evaluation of the effectiveness of our internal
control over financial reporting based upon the framework in
Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Based
on that evaluation, our management concluded that, as of December
31, 2021, our internal controls over financial reporting were not
effective.
The material weakness and significant deficiency identified by our
management as of December 31, 2021, relates to the ability of the
Company to record transactions and provide disclosures in
accordance with generally accepted accounting principles in the
United States (“U.S. GAAP”). We did not have sufficient and skilled
accounting personnel with an appropriate level of experience in the
application of U.S. GAAP commensurate with our financial reporting
requirements. For example, our staff members do not hold licenses
such as Certified Public Accountant or Certified Management
Accountant in the U.S., have not attended U.S. institutions for
training as accountants, and have not attended extended educational
programs that would provide sufficient relevant education relating
to U.S. GAAP. Our staff will require substantial training to meet
the demands of a U.S. public company and our staff’s understanding
of the requirements of U.S. GAAP-based reporting are
inadequate.
Remediation Initiative
We plan to provide U.S. GAAP training sessions to our accounting
team. The training sessions will be organized to help our corporate
accounting team gain experience in U.S. GAAP reporting and to
enhance their awareness of new and emerging pronouncements with
potential impact on our financial reporting. We plan to continue to
recruit experienced and professional accounting and financial
personnel and participate in educational seminars, tutorials, and
conferences and employ more qualified accounting staff in the
future.
Changes in Internal Controls over Financial Reporting
Other than as described above, during the fiscal year ended
December 31, 2021, there were no material changes in our internal
control over financial reporting identified in connection with the
evaluation performed during the fiscal year covered by this annual
report that has materially affected or is reasonably likely to
materially affect, our internal control over financial
reporting.
Inherent Limitations over Internal Controls.
Our internal control over financial reporting is designed to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes under U.S. GAAP. Our internal control over financial
reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and
dispositions of our assets;
(ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements under U.S.
GAAP, and that our receipts and expenditures are being made only
under authorizations of our management and directors; and
(iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of our
assets that could affect the financial statements.
Management, including our Chief Executive Officer and Chief
Financial Officer, does not expect our internal controls to prevent
or detect all misstatements. No matter how well designed and
operated, a control system can provide only reasonable, not
absolute, assurance that the objectives of the control system are
met. Further, the design of a control system must reflect the fact
that there are resource constraints, and the benefits of such
controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of
internal controls can provide absolute assurance that all control
issues and instances of misstatements, if any, have been detected
or prevented. Also, projections of any evaluation of the
effectiveness of controls in future periods are subject to the risk
that those internal controls may become inadequate because of
changes in conditions or that the degree of compliance with the
policies or procedures may deteriorate.
ITEM 9B. OTHER INFORMATION.
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS.
Not Applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
Directors and Officers
The following table sets forth the name, age and position of each
of our current directors and officers.
|
Name |
|
Age |
|
Position |
| Bin
Zhou |
|
32 |
|
Chairman
and Chief Executive Officer |
| Lili
Hu |
|
44 |
|
Chief
Financial Officer |
| Chao
Chen |
|
35 |
|
Director |
| King
Fai Leung |
|
49 |
|
Director |
| Yang
Cao |
|
29 |
|
Director |
Mr. Bin Zhou has served as a director of the Company since
May 2019 and served as our Chief Executive Officer and Chairman
since October 2020. He has served as chairman of the board of
directors of Xianning Bozhuang since March 2019. Mr. Zhou was the
general manager and legal representative of Hubei Qianding
Equipment Manufacturing Co., Ltd., a mechanical equipment
manufacturing company, from March 2016 to March 2019. He also
served as supervisor of Hubei Henghao Real Estate Development Co.,
Ltd., a real estate development company, from April 2014 to June
2018. Mr. Zhou received his Bachelor of Law degree from National
Judges College in Beijing, China.
Ms. Lili Hu has served as the Chief Financial Officer of the
Company since June 2019. She has over ten years of accounting
experiences. Ms. Hu has served as the financial director of
Xianning Bozhuang Tea Products Co., Ltd., a wholly-owned subsidiary
of the Company, since July 2018. From June 2016 to June 2018, Ms.
Hu worked as an audit project manager with Hubei Puhua Lixin LLP,
an audit firm in Hubei, China. From May 2014 to May 2016, Ms. Hu
was a financial manager of Houfu Medical Device Co., Ltd., a
medical device company in China. From January 2009 to December
2013, Ms. Hu served as the financial director of Hebei Rentian
Gaopeng Mechanical Co., Ltd., a manufacturing company in China.
From January 2006 to June 2008, Ms. Hu was the Chief Financial
Officer of Hubei Hongfa Telecommunications Co., Ltd., a
telecommunications company in China. Ms. Hu graduated from Hubei
University of Science and Technology with a major in accounting.
Ms. Hu is a Certified Public Accountant in China.
Ms. Chao Chen has served as a director of the Company since
April 2019. She has been an attorney at Beijing QianCheng law firm
since August 2019. Prior to that, she was an attorney at Beijing
Lanpeng Law Firm from May 2015 to August 2019. Her practice
includes litigation, mergers and acquisitions and general corporate
representation. Ms. Chen served as the legal manager of
LightInTheBox Holding Co., Ltd., an international online retail
company that is listed on New York Stock Exchange, from November
2018 to January 2019. From September 2013 to May 2015, Ms. Chen
served as the senior project manager of China Aviation Supplies
Holding Company, a company that provides aircraft procurement and
support services on aviation supplies, and was responsible for the
planning, procurement and execution of cross-border projects. Ms.
Chen received her Master of Law degree from Beijing Institute of
Technology and her Bachelor of Law degree from Southwest University
for Nationalities.
Mr. King Fai Leung has served as a director of the Company
since July 2019. He has over 20 years’ experience in finance and
accounting. He has been the executive director of Maxima Energy
Limited, an energy company in Hong Kong, since December 2018. Mr.
Leung has also served as an independent director since November
2017 and was re-designated in March 2019 as an executive director
and Chief Financial Officer of Chineseinvestors.com, Inc., a
financial information website for Chinese-speaking investors
(OTCQB: CIIX). He has also served as an independent director,
chairman of the audit committee and a member of the remuneration
and nomination committee of Daisho Microline Holdings Ltd., a Hong
Kong-based investment holding company principally engaged in the
manufacture and sales of printed circuit boards (HKG: 0567), since
June 2015. In addition, Mr. Leung served as directors in various
public companies, including Kirin Group Holdings Limited, an
investment holding company principally engaged in the financial
related business (HKG: 8109), Biostar Pharmaceuticals, Inc., a
pharmaceutical and medical nutrient products company (OTC Pink:
BSPM), and Hao Wen Holdings Limited, an investment holding company
principally engaged in the manufacture and trading of biomass fuel
in China (HKG: 8019). Mr. Leung earned his Bachelor of Commerce in
Accounting and Finance from Deakin University in Victoria,
Australia. He is a Certified Public Account in both Hong Kong and
Australia.
Ms. Yang Cao has served as a director of the Company since
March 2020. She has been practicing commercial law as an attorney
with Hubei Kaicheng Law Office since November 2019. Prior to that,
she served as a legal counsel to Xianning High-Tech Industrial
Zone, a municipal government authority providing infrastructure and
resources to high-tech companies, from November 2016 to November
2019. From October 2015 to November 2016, Ms. Cao worked as a
compliance officer at Qingdao Inter-Credit Group Wuhan Branch, a
business consulting company. Ms. Cao received her LL.B. degree from
Hankou College and an LL.M. degree from Central China Normal
University
There are no arrangements or understandings between any of our
directors, officers and any other person pursuant to which any
director was selected to serve as a director or officers of our
company. Directors are elected until their successors are duly
elected and qualified. Our executive officers are appointed by our
Board and serve at their discretion. There are no family
relationships among our directors or officers.
Board of Directors
Our Board met on twelve occasions during fiscal year 2021. Each of
the members of our Board attended more than 75% of the total number
of meetings held by our Board and the committees on which each
director served during fiscal year 2021.
Committees of the Board
Audit Committee
The Audit Committee assists our Board in monitoring:
| |
- |
our
accounting, auditing, and financial reporting
processes; |
| |
|
|
| |
- |
the
integrity of our financial statements; |
| |
|
|
| |
- |
internal
controls and procedures designed to promote our compliance with
accounting standards and applicable laws and regulations;
and |
| |
|
|
| |
- |
the
appointment and evaluation of the qualifications and independence
of our independent auditors. |
King Fai Leung, Yang Cao and Chao Chen, all of whom are independent
directors under SEC rules and the rules of NYSE American, are
currently serving as members of the Audit Committee. Mr. Leung is
the chairman of the Audit Committee and is our audit committee
financial expert.
The Audit Committee has adopted a written charter, a copy of which
is available on our website at www.planetgreenholdings.com, and a
printed copy of which is available to any stockholder requesting a
copy by writing to: Planet Green Holdings Corp., c/o Board of
Director Office, 36-10 Union St. 2nd Floor, Flushing,
NY, 11345. During the fiscal year ended December 31, 2021, our
Audit Committee held four meetings.
Compensation Committee
The functions of the Compensation Committee are as follows:
| |
● |
to
assist our Board in discharging its responsibilities with respect
to compensation of our executive officers and
directors; |
| |
● |
to
evaluate the performance of our executive officers; |
| |
● |
to
assist our Board in developing succession plans for executive
officers; and |
| |
● |
to
administer our stock and incentive compensation plans and recommend
changes in such plans to our Board as needed. |
The current members of the Compensation Committee are Chao Chen,
King Fai Leung and Yang Cao. Ms. Chen is the chairman of the
Compensation Committee. All current members of the Compensation
Committee are independent directors, and all past members were
independent directors at all times during their service on such
Committee. None of the past or present members of our Compensation
Committee are present or past employees or officers of the Company
or any of our subsidiaries. No member of the Compensation Committee
has had any relationship with us requiring disclosure under Item
404 of Regulation S-K. None of our executive officers serves on the
Board of Directors or compensation committee of a company that has
an executive officer that serves on our Board of Directors or
Compensation Committee.
The Compensation Committee may not delegate its responsibilities to
another committee, individual director or member of management.
The Compensation Committee meets on an annual basis and holds
special meetings as needed. The Compensation Committee meetings may
be called by the Committee chairman, the Chairman of the Board of
Directors or a majority of Committee members. The Chief Executive
Officer and Chief Financial Officer also provide recommendations to
the Compensation Committee relating to compensation of other
executive officers. The Compensation Committee held one meeting in
fiscal year 2021.
Nominating and Corporate Governance
The Nominating and Corporate Governance assists the Board of
Directors in identifying individuals qualified to become our
directors and in determining the composition of the Board of
Directors and its committees. The Nominating and Corporate
Governance is responsible for, among other things:
| |
● |
to
make recommendations to the Board of Directors with respect to the
size and composition of the Board of Directors; |
| |
● |
to
make recommendations to the Board of Directors on the minimum
qualifications and standards for director nominees and the
selection criteria for the Board members; |
| |
● |
to
review the qualifications of potential candidates for the Board of
Directors; |
| |
● |
to
make recommendations to the Board of Directors on nominees to be
elected at the annual meeting of stockholders; and |
| |
● |
to
seek and identify a qualified director nominee, in the event that a
director vacancy occurs, to be recommended to the Board of
Directors for either appointment by the Board of Directors to serve
the remainder of the term of a director position that is vacant or
election at the annual meeting of the stockholders. |
The current members of the Nominating and Corporate Governance are
Yang Cao, Chao Chen and King Fai Leung. Ms. Cao is the chairman of
the Compensation Committee. During the fiscal year 2021, our
Nominating and Corporate Governance Committee held one meeting.
Stockholder Nominations for Director
Stockholders may propose candidates for board membership by writing
to: Planet Green Holdings Corp., c/o Board of Director Office,
36-10 Union St. 2nd Floor, Flushing, NY, 11354. Any such
proposal shall contain the name, holdings of our securities and
contact information of the person making the nomination; the
candidate’s name, address and other contact information; any direct
or indirect holdings of our securities by the nominee; any
information required to be disclosed about directors under
applicable securities laws and/or stock exchange requirements;
information regarding related party transactions with our company
and/or the stockholder submitting the nomination; any actual or
potential conflicts of interest; the nominee’s biographical data,
current public and private company affiliations, employment history
and qualifications and status as “independent” under applicable
securities laws and stock exchange requirements. Nominees proposed
by stockholders will receive the same consideration as other
nominees.
Compensation Committee Interlocks and Insider
Participation
None of our officers currently serves, or in the past year has
served, as a member of the Board of Directors or compensation
committee of any entity that has one or more officers serving on
our Board of Directors.
Code of Ethics
Our Board adopted a Code of Ethics that applies to all of our
directors, executive officers, including our principal executive
officer, principal financial officer and principal accounting
officer, and employees. The Code of Ethics addresses, among other
things, honesty and ethical conduct, conflicts of interest,
compliance with laws, regulations and policies, including
disclosure requirements under the federal securities laws,
confidentiality, trading on inside information, and reporting of
violations of the code. The Code of Ethics is available on our
website at http://www.planetgreenholdings.com, and a copy of the
Code of Ethics is available to any stockholder requesting a copy by
writing to: Planet Green Holdings Corp., c/o Board of Director
Office, 36-10 Union St. 2nd Floor, Flushing, NY, 11345. We intend
to disclose on our website, in accordance with all applicable laws
and regulations, amendments to, or waivers from, our Code of
Ethics.
Legal Proceedings
To the Company’s knowledge, there are no material proceedings to
which any of our directors and officers or affiliates of the
Company is a party adverse to the Company or has a material
interest adverse to the Company.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning all forms of
compensation earned by our named executive officers during the
fiscal years ended December 31, 2020 and 2021 for services provided
to us and our subsidiaries and VIEs. None of our current executive
officers earned compensation that exceeded $100,000 during the
fiscal years ended December 31, 2020 or 2021.
| Name and |
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Option |
|
|
All
Other |
|
|
|
|
|
Principal Position |
|
Year |
|
|
Salary |
|
|
Bonus |
|
|
Awards |
|
|
Awards |
|
|
Compensation |
|
|
Total |
|
| (a) |
|
(b) |
|
|
(c) |
|
|
(d) |
|
|
(e) |
|
|
(f) |
|
|
(g) |
|
|
(h) |
|
| Bin Zhou, |
|
|
2021 |
|
|
$ |
96,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
96,000 |
|
| Chairman, Chief
Executive Officer and Director |
|
|
2020 |
|
|
$ |
96,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
96,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
| Lili Hu, |
|
|
2021 |
|
|
$ |
84,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
84,000 |
|
Chief Financial
Officer
Director |
|
|
2020 |
|
|
$ |
84,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
84,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
| Chao Chen, |
|
|
2021 |
|
|
$ |
24,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
24,000 |
|
| Director |
|
|
2020 |
|
|
$ |
24,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
24,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| King Fai Leung, |
|
|
2021 |
|
|
$ |
21,600 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
21,600 |
|
| Director |
|
|
2020 |
|
|
$ |
21,600 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
21,600 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Yang Cao, |
|
|
2021 |
|
|
$ |
24,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
24,000 |
|
| Director |
|
|
2020 |
|
|
$ |
24,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
24,000 |
|
In October 2020, the Board appointed Bin Zhou as a member of the
Board and the Chief Executive Officer. Pursuant to the employment
agreement with Mr. Zhou, we are obligated to pay Mr. Zhou a
compensation of $96,000 per year.
In June 2020, the Board appointed Lili Hu to serve as the Chief
Financial Officer. Pursuant to the employment agreement with Ms.
Hu, we are obligated to pay Ms. Hu a compensation of $84,000 per
year.
In April 2019, the Board appointed Chao Chen to serve as the
Director. Pursuant to the employment agreement with Ms. Chen, we
are obligated to pay Ms. Chen a compensation of $24,000 per
year.
In July 2019, the Board appointed King Fai Leung to serve as the
Director. Pursuant to the employment agreement with Mr. Leung, we
are obligated to pay Mr. Leung a compensation of $21,600 per
year.
In March 2020 the Board appointed Yang Cao to serve as the
Director. Pursuant to the employment agreement with Ms. Cao, we are
obligated to pay Ms. Cao a compensation of $24,000 per
year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED SHAREHOLDER MATTERS
The following table sets forth information regarding beneficial
ownership of our common stock as of May 13, 2020 (i) by each person
who is known by us to beneficially own more than 5% of our common
stock; (ii) by each of our named executive officers and directors
and (iii) by all of our officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of
the SEC that deem shares to be beneficially owned by any person who
has voting or investment power with respect to such shares. Except
as otherwise indicated, the persons listed below have advised us
that they have direct sole voting and investment power with respect
to the shares listed as owned by them.
Unless otherwise specified, the address of each of the persons set
forth below is c/o Planet Green Holdings Corp., 36-10 Union St. 2nd
Floor, Flushing, NY, 11354.
In the table below, percentage ownership is based on 42,581,930
shares of our common stock outstanding as of March 31, 2021.
|
Name and title of beneficial owner |
|
Amount and
nature of
beneficial
ownership |
|
|
Percent of
class |
|
|
5% or Greater Stockholders
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Xiaodong Cai |
|
|
4,800,000 |
|
|
|
11.27 |
% |
| Shun Liu |
|
|
2,500,000 |
|
|
|
5.87 |
% |
| Honghu Li |
|
|
2,300,000 |
|
|
|
7.0 |
% |
| Jie Yang |
|
|
2,600,000 |
|
|
|
5.40 |
% |
| Jian Zhen |
|
|
2,400,000 |
|
|
|
6.10 |
% |
| |
|
|
|
|
|
|
|
|
|
Executive Officers, Directors and Director Nominees
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Bin Zhou, Chairman, Chief Executive
Officer and Director |
|
|
4,262,000 |
|
|
|
10.00 |
% |
| Lili Hu, Chief Financial Officer |
|
|
- |
|
|
|
- |
|
| Chao Chen, Director |
|
|
- |
|
|
|
- |
|
| King Fai Leung, Director |
|
|
- |
|
|
|
- |
|
| Yang Cao, Director |
|
|
- |
|
|
|
- |
|
|
All executive officers, directors and director nominees as a
group (seven individuals)
|
|
|
4,262,000 |
|
|
|
10.00 |
% |
Changes in Control
There are currently no arrangements which would result in a change
in control of us.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE.
Related Party Transactions
None.
Policy for Approval of Related Party Transactions
Our Audit Committee Charter provides that all related party
transactions required to be disclosed under SEC rules are to be
reviewed by the Audit Committee.
Director Independence
NYSE American listing standards require that a majority of our
Board of Directors be independent. An “independent director” is
defined generally as a person other than an officer or employee of
the company or its subsidiaries or any other individual having a
relationship which in the opinion of the company’s board of
directors, would interfere with the director’s exercise of
independent judgment in carrying out the responsibilities of a
director. Our Board of Directors has determined that Chao Chen,
King Fai Leung, Yang Cao are “independent directors” as defined in
the NYSE American listing standards and applicable SEC rules.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
WWC, P.C. is the Company’s independent registered public accounting
firm for the fiscal years ended December 31, 2020 and 2021 and the
accounting fees in each such period were $180,000 and 665,000. Such
fees related to audit services provided by WWC, P.C. No
audit-related or tax services were provided by WWC, P.C. during
such periods.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) (1 and 2) Financial Statement and Schedules
The financial statements contained in the “Audited Financial
Statements” beginning on page F-1 of this annual report on Form
10-K.
(b) Exhibits
|
Exhibit No. |
|
Description |
| |
|
|
| 3.1 |
|
Articles of Incorporation of the registrant, as filed with the
Nevada Secretary of State on June 15, 2009. Incorporated by
reference to Exhibit 3.1 to the registrant’s registration statement
on Form S-3 filed on January 29, 2010. |
| 3.2 |
|
Certificate of Amendment of the registrant, as filed with the
Nevada Secretary of State on September 28, 2018. Incorporated by
reference to Exhibit 3.1 to the registrant’s current report on Form
8-K filed on October 2, 2018. |
| 3.3 |
|
Bylaws of the registrant. Incorporated by reference to Exhibit 3.2
to the registrant’s registration statement on Form S-3 filed on
January 29, 2010. |
| 4.1* |
|
Description of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended. |
| 10.1 |
|
Share Exchange Agreement, dated as of December 9, 2021, by and
among Planet Green Holdings Corp., Shandong Yunchu Supply Chain
Co., Ltd. and sellers named therein. Incorporated by reference to
Exhibit 10.1 to the registrant’s current report on Form 8-K filed
on December 10, 2021. |
| 10.2 |
|
Lock-Up Agreement, dated as of December 9, 2021. Incorporated by
reference to Exhibit.10.2 to the registrant’s current report on
Form 8-K filed on December 10, 2021. |
| 10.3 |
|
Non-Competition and Non-Solicitation Agreement, dated as of
December 9, 2021. Incorporated by reference to Exhibit 10.3 to the
registrant’s current report on Form 8-K filed on December 10,
2021. |
| 10.4 |
|
Share Purchase Agreement dated as of November 30, 2021, by and
among Planet Green Holdings Corp, Jianyi (Xianning) Technologies
Co., Ltd. and Yongsheng Chen. Incorporated by reference to Exhibit
10.1 to the registrant’s current report on Form 8-K filed on
November 30, 2021. |
| 10.5 |
|
Amended Consultation and Service Agreement dated as of November 30,
2021. Incorporated by reference to Exhibit 10.2 to registrant’s
current report on Form 8-K on November 30, 2021. |
| 10.6 |
|
Amended Business Cooperation Agreement dated as of November 30,
2021. Incorporated by reference to Exhibit 10.3 to registrant’s
current report on Form 8-K on November 30, 2021. |
| 10.7 |
|
Amended Equity Pledge Agreement dated as of November 30, 2021.
Incorporated by reference to Exhibit 10.4 to registrant’s current
report on Form 8-K on November 30, 2021. |
| 10.8 |
|
Amended Equity Option Agreement dated as of November 30, 2021.
Incorporated by reference to Exhibit 10.5 to registrant’s current
report on Form 8-K on November 30, 2021. |
| 10.9 |
|
Amended Voting Rights Proxy and Financial Supporting Agreement
dated as of November 30, 2021. Incorporated by refence to Exhibit
10.6 to registrant’s current report on Form 8-K on November 30,
2021. |
| 10.10 |
|
Share Exchange Agreement dated July 15, 2021, by and among Planet
Green Holdings Corp., Jiayi Technologies, Anhui Ansheng
Petrochemical Equipment Co., Ltd, and sellers named therein.
Incorporated by reference to Exhibit 10.1 to registrant’s current
report on Form 8-K on July 16, 2021. |
| 10.11 |
|
Lock-up Agreement dated as of July 15, 2021, by and among Planet
Green Holdings Corp. and sellers named therein. Incorporated by
reference to Exhibit 10.2 to registrant’s current report on Form
8-K on July 16, 2021. |
| 10.12 |
|
Non-competitive and Non-Solicitation Agreement dated as of July 15,
2021. Incorporated by reference to Exhibit 10.3 to registrant’s
current report on Form 8-K on July 16, 2021. |
| 10.13 |
|
Consultation and Service Agreement dated July 15, 2021.
Incorporated by reference to Exhibit 10.4 to registrant’s current
report on Form 8-K on July 16, 2021. |
| 10.14 |
|
Business Cooperation Agreement dated July 15, 2021. Incorporated by
reference to Exhibit 10.5 to registrant’s current report on Form
8-K on July 16, 2021. |
| 10.15 |
|
Equity Pledge Agreement dated July 15, 2021. Incorporated by
reference to Exhibit 10.6 to registrant’s current report on Form
8-K on July 16, 2021. |
| 10.16 |
|
Equity Option Agreement dated July 15, 2021. Incorporated by
reference to Exhibit 10.7 to registrant’s current report on Form
8-K on July 16, 2021. |
| 10.17 |
|
Voting Rights Proxy and Financial Supporting Agreement dated July
15, 2021. Incorporated by reference to Exhibit 10.8 to registrant’s
current report on Form 8-K on July 16, 2021. |
|
Exhibit No. |
|
Description |
| 10.18 |
|
Securities Purchase Agreement dated April 26, 2021, by and among
Planet Green Holdings Corp. and Purchasers name therein.
Incorporated by reference to Exhibit 10.1 to registrant’s current
report on Form 8-K on April 27, 2021. |
| 10.19 |
|
Share Exchange Agreement dated March 9, 2021, by and among Planet
Green Holdings Corp., Jiayi Technologies, Jilin Chuangyuan Chemical
Co., Ltd., and sellers named therein. Incorporated by reference to
Exhibit 10.1 to registrant’s current report on Form 8-K on March
10, 2021. |
| 10.20 |
|
Lock-up Agreement dated as of March 9, 2021. Incorporated by
reference to Exhibit 10.2 to registrant’s current report on Form
8-K on March 10, 2021. |
| 10.21 |
|
Non-competitive and Non-Solicitation Agreement dated as of March 9,
2021. Incorporated by reference to Exhibit 10.3 to registrant’s
current report on Form 8-K on March 10, 2021. |
| 10.22 |
|
Consultation and Service Agreement dated March 9, 2021.
Incorporated by reference to Exhibit 10.4 to registrant’s current
report on Form 8-K on March 10, 2021. |
| 10.23 |
|
Business Cooperation Agreement dated March 9, 2021. Incorporated by
reference to Exhibit 10.5 to registrant’s current report on Form
8-K on March 10, 2021. |
| 10.24 |
|
Equity Pledge Agreement dated March 9, 2021. Incorporated by
reference to Exhibit 10.6 to registrant’s current report on Form
8-K on March 10, 2021. |
| 10.25 |
|
Equity Option Agreement dated March 9, 2021. Incorporated by
reference to Exhibit 10.7 to registrant’s current report on Form
8-K on March 10, 2021. |
| 10.26 |
|
Voting Rights Proxy and Financial Supporting Agreement dated March
9, 2021. Incorporated by reference to Exhibit 10.8 to registrant’s
current report on Form 8-K on March 10, 2021. |
| 10.27 |
|
Securities Purchase Agreement dated January 26, 2021, by and among
Planet Green Holdings Corp. and Purchasers named therein.
Incorporated by reference to Exhibit 10.1 to registrant’s current
report on Form 8-K on January 26, 2021. |
| 14.1 |
|
Business Ethics Policy and Code of Conduct, adopted on April 30,
2007. Incorporated by reference to Exhibit 14 to the registrant’s
current report on Form 8-K filed on May 9, 2007. |
| 21.1** |
|
List of subsidiaries of the
registrant. |
| 31.1** |
|
Certification of Chief
Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. |
| 31.2** |
|
Certification of Chief
Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. |
| 32.1*** |
|
Certification of Chief
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 Chief
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). |
| * |
Previously
filed |
| ** |
Filed
herewith |
| *** |
Furnished
herewith |
ITEM 16. FORM 10-K SUMMARY
Not applicable.
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: February 6, 2023 |
By: |
/s/ Bin Zhou |
| |
|
Bin Zhou, Chief Executive Officer
and Chairman
(Principal Executive Officer) |
| |
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.
|
Signature |
|
Title |
|
Date |
| |
|
|
|
|
|
/s/
Bin Zhou |
|
Chief
Executive Officer and Chairman |
|
February
6, 2023 |
| Bin
Zhou |
|
(Principal
Executive Officer) |
|
|
| |
|
|
|
|
|
/s/
Lili Hu |
|
Chief
Financial Officer and Director |
|
February
6, 2023 |
| Lili
Hu |
|
(Principal
Financial Officer and
Principal Accounting Officer) |
|
|
| |
|
|
|
|
|
/s/
Luojie Pu |
|
Director |
|
February
6, 2023 |
| Luojie
Pu |
|
|
|
|
| |
|
|
|
|
|
/s/
King Fai Leung |
|
Director |
|
February
6, 2023 |
| King
Fai Leung |
|
|
|
|
| |
|
|
|
|
|
/s/
Yang Cao |
|
Director |
|
February
6, 2023 |
| Yang
Cao |
|
|
|
|
PLANET GREEN HOLDINGS CORP.
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
(Stated in US Dollars)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
| To: |
The
Board of Directors and Stockholders of |
| |
Planet
Green Holdings Corp. |
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of
Planet Green Holdings Corp. and its subsidiaries (the Company) as
of December 31, 2021 and 2020, and the related consolidated
statements of operations and comprehensive loss, changes in
stockholders’ equity, and cash flows for the two-year period ended
December 31, 2021, and the related notes (collectively referred to
as the financial statements). In our opinion, the financial
statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2021 and 2020, and the
results of its operations and its cash flows for the two-year
period ended December 31, 2021, in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 1 to the financial statements, the Company had incurred
substantial losses during the year, has substantial accumulated
deficit and has a working capital deficit, which raises substantial
doubt about its ability to continue as a going concern.
Management’s plan in regards to these matters are described in Note
1. These financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial
reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting, but not
for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
Critical Audit Matters
The critical audit matter communicated below is matter arising from
the current period audit of the consolidated financial statements
that were communicated or required to be communicated to the audit
committee and that: (1) relate to accounts or disclosures that are
material to the consolidated financial statements and (2) involved
our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way
our opinion on the consolidated financial statements, taken as a
whole, and we are not, by communicating the critical audit matters
below, providing separate opinions on the critical audit matters or
on the accounts or disclosures to which they relate.
Evaluation of the carrying value of goodwill in the Canadian and
Jingshan Sanhe reporting units
As discussed in Note 2 to the consolidated financial statements,
the Company performs a goodwill impairment test on an annual basis
or whenever events or changes in circumstances indicate that the
carrying value of a reporting unit might exceed its fair value. The
discount rate applied to projected cash flows is important elements
used by the Company in determining the fair value of the reporting
unit and the amount of goodwill impairment losses. In the last
quarter of 2021, the Company performed an annual goodwill
impairment test in response to the decline in current market
conditions as a result of the COVID-19 pandemic. The goodwill was
determined to be impaired, and impairment losses of $3.26 million
was recorded.
We identified the evaluation of the discount rate applied to
projected cash flows used in the assessment of the carrying value
of goodwill for the reporting unit, for which such assumptions are
used by the Company in the determination of goodwill impairment
losses, as a critical audit matter. Specifically, the evaluation of
these assumptions required the application of subjective auditor
judgment because changes to these assumptions may have a
substantial impact on the determination of fair value of the
reporting unit. We gathered data and evidence to performed
sensitivity analyses to determine the significance of the
assumptions used to determine the fair value of the reporting unit,
which required a higher degree of auditor judgment.
Addressing the matter involved evaluating the Company’s assessment
of the value of the reporting unit under the discounted cash flow
method. We gathered data and evidence, performed independent
analysis, and exercised professional judgment during our evaluation
process.
/s/ WWC, P.C.
WWC, P.C.
Certified Public Accountants
PCAOB ID: 1711
We have served as the Company’s auditor since 2007
San Mateo, California
March 30, 2022
Planet Green Holdings Corp.
Audited Consolidated Balance Sheets
As of December 31, 2021 and 2020
(Stated in US Dollars)
| |
|
December 31, |
|
| |
|
2021 |
|
|
2020 |
|
| Assets |
|
|
|
|
|
|
| Current assets |
|
|
|
|
|
|
| Cash
and cash equivalents |
|
$ |
750,658 |
|
|
$ |
3,415,751 |
|
| Restricted
cash |
|
|
380,750 |
|
|
|
- |
|
| Accounts
receivable, net |
|
|
3,819,073 |
|
|
|
835,384 |
|
| Inventories |
|
|
7,816,432 |
|
|
|
2,251,628 |
|
| Advances to
suppliers |
|
|
5,681,083 |
|
|
|
5,922,562 |
|
| Other
receivables |
|
|
1,185,136 |
|
|
|
1,091,815 |
|
| Other
receivables-related parties |
|
|
7,670,434 |
|
|
|
-
|
|
|
Total current assets |
|
|
27,303,566 |
|
|
|
13,517,140 |
|
| |
|
|
|
|
|
|
|
|
| Non-current assets |
|
|
|
|
|
|
|
|
| Plant and
equipment, net |
|
|
20,485,449 |
|
|
|
4,596,637 |
|
| Intangible assets,
net |
|
|
4,199,651 |
|
|
|
1,516,467 |
|
| Construction in
progress, net |
|
|
2,475,874 |
|
|
|
-
|
|
| Prepayment
investments |
|
|
705,805 |
|
|
|
-
|
|
| Long-term
investments |
|
|
3,136,910 |
|
|
|
- |
|
| Investment in real
estates |
|
|
7,770,943 |
|
|
|
- |
|
| Deferred tax
assets |
|
|
1,172,050 |
|
|
|
-
|
|
| Goodwill |
|
|
18,180,532 |
|
|
|
2,340,111 |
|
|
Right-of-use assets |
|
|
584,802 |
|
|
|
-
|
|
|
Total non-current assets |
|
|
58,712,016 |
|
|
|
8,453,215 |
|
| |
|
|
|
|
|
|
|
|
| Total
assets |
|
$ |
86,015,582 |
|
|
$ |
21,970,355 |
|
| |
|
|
|
|
|
|
|
|
| Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
|
|
| Short-term bank
loans |
|
|
6,822,054 |
|
|
|
-
|
|
| Accounts
payable |
|
|
6,237,810 |
|
|
|
1,302,850 |
|
| Advance from
customers |
|
|
6,190,091 |
|
|
|
241,893 |
|
| Taxes payable |
|
|
787,593 |
|
|
|
198,683 |
|
| Other payables and
accrued liabilities |
|
|
8,635,189 |
|
|
|
1,848,597 |
|
| Other
payables-related parties |
|
|
5,196,227 |
|
|
|
19,850 |
|
| Lease
liabilities-current portion |
|
|
436,191 |
|
|
|
-
|
|
|
Deferred income |
|
|
73,732 |
|
|
|
15,682 |
|
|
Total current liabilities |
|
|
34,378,887 |
|
|
|
3,627,555 |
|
| |
|
|
|
|
|
|
|
|
| Non-current liabilities |
|
|
|
|
|
|
|
|
| Lease liabilities -
non-current |
|
|
- |
|
|
|
-
|
|
|
Long-term payables |
|
|
380,345 |
|
|
|
31,364 |
|
|
Total non-current liabilities |
|
|
380,345 |
|
|
|
31,364 |
|
| |
|
|
|
|
|
|
|
|
| Total
Liabilities |
|
$ |
34,759,232 |
|
|
$ |
3,658,919 |
|
| |
|
|
|
|
|
|
|
|
| Commitments and contingencies |
|
|
-
|
|
|
|
-
|
|
| |
|
|
|
|
|
|
|
|
| Stockholders’ equity |
|
|
|
|
|
|
|
|
| Preferred
stock: $0.001 par value, 5,000,000 shares authorized; none
issued and outstanding as of December 31, 2021 and 2020 |
|
|
-
|
|
|
|
-
|
|
| Common stock:
$0.001 par value, 200,000,000 shares authorized; 35,581,930 and
11,809,930 shares Issued and outstanding as of December 31, 2021
and 2020 |
|
|
35,582 |
|
|
|
11,810 |
|
| Additional paid-in
capital |
|
|
133,232,224 |
|
|
|
95,659,360 |
|
| Accumulated
deficit |
|
|
(94,072,383 |
) |
|
|
(84,331,897 |
) |
| Accumulated other
comprehensive income |
|
|
7,711,057 |
|
|
|
6,972,163 |
|
| Non-controlling
interests |
|
|
4,349,870 |
|
|
|
-
|
|
| |
|
|
|
|
|
|
|
|
|
Total stockholders’ equity |
|
|
51,256,350 |
|
|
|
18,311,436 |
|
| Total
liabilities and stockholders’ equity |
|
$ |
86,015,582 |
|
|
$ |
21,970,355 |
|
See Accompanying Notes to the Financial Statements
Planet Green Holdings Corp.
Audited Consolidated Statements of Operations and Comprehensive
Loss
For the Years Ended December 31, 2021 and 2020
(Stated in US Dollars)
| |
|
For the Years Ended
December 31, |
|
| |
|
2021 |
|
|
2020 |
|
| Net revenues |
|
$ |
37,767,964 |
|
|
$ |
3,638,801 |
|
| Cost of revenues |
|
|
33,921,709 |
|
|
|
2,369,736 |
|
| Gross
profit |
|
|
3,846,255 |
|
|
|
1,269,065 |
|
| |
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
| Selling and
marketing expenses |
|
|
2,053,452 |
|
|
|
160,109 |
|
| General and
administrative expenses |
|
|
7,220,769 |
|
|
|
3,896,489 |
|
|
Research & Developing expenses |
|
|
808,383 |
|
|
|
-
|
|
|
Total operating expenses |
|
|
10,082,604 |
|
|
|
4,056,598 |
|
| |
|
|
|
|
|
|
|
|
| Operating
(loss) income |
|
|
(6,236,349 |
) |
|
|
(2,787,533 |
) |
| |
|
|
|
|
|
|
|
|
| Other (expenses) income |
|
|
|
|
|
|
|
|
| Interest
income |
|
|
1,455 |
|
|
|
63 |
|
| Interest
expenses |
|
|
(646,572 |
) |
|
|
(23,470 |
) |
| Other income |
|
|
300,885 |
|
|
|
213,321 |
|
| Other expenses |
|
|
(90,646 |
) |
|
|
(186,003 |
) |
| Impairment of goodwill |
|
|
(3,263,424 |
) |
|
|
(2,339,829 |
) |
| Write
off receivables from disposal of former subsidiaries |
|
|
-
|
|
|
|
(6,078,623 |
) |
|
Total other (expenses) income |
|
|
(3,698,302 |
) |
|
|
(8,414,541 |
) |
| |
|
|
|
|
|
|
|
|
| (Loss) income
before income taxes |
|
|
(9,934,651 |
) |
|
|
(11,202,074 |
) |
| |
|
|
|
|
|
|
|
|
| Discontinued operations: |
|
|
|
|
|
|
|
|
| (Loss) income from
discontinued operations |
|
|
-
|
|
|
|
150,911 |
|
| |
|
|
|
|
|
|
|
|
| Income tax
expenses |
|
|
(56,450 |
) |
|
|
-
|
|
| |
|
|
|
|
|
|
|
|
| Net loss |
|
|
(9,991,101 |
) |
|
|
(11,051,163 |
) |
| |
|
|
|
|
|
|
|
|
| Less: Net (loss) income attributable
to non-controlling interest |
|
|
(250,616 |
) |
|
|
-
|
|
| |
|
|
|
|
|
|
|
|
| Net (loss) income
attributable to common shareholders |
|
$ |
(9,740,485 |
) |
|
$ |
(11,051,163 |
) |
| |
|
|
|
|
|
|
|
|
| Net loss |
|
|
(9,991,101 |
) |
|
|
(11,051,163 |
) |
| |
|
|
|
|
|
|
|
|
| Foreign
currency translation adjustment |
|
|
761,962 |
|
|
|
(1,231,778 |
) |
| |
|
|
|
|
|
|
|
|
| Total
comprehensive loss |
|
|
(9,229,139 |
) |
|
|
(12,282,941 |
) |
| |
|
|
|
|
|
|
|
|
| Less: Comprehensive (loss) income
attribute to non-controlling interest |
|
|
(227,548 |
) |
|
|
|
|
| Comprehensive
(loss) income attribute to common share holders |
|
$ |
(9,001,591 |
) |
|
$ |
(12,282,941 |
) |
| |
|
|
|
|
|
|
|
|
|
(Loss) income per share from continuing operations - Basic and
diluted
|
|
$ |
(0.40 |
) |
|
$ |
(1.11 |
) |
|
(Loss) income per share
from discontinued operations-Basic and diluted
|
|
$ |
-
|
|
|
$ |
0.01 |
|
|
(Loss) income per common shareholders - Basic and diluted
|
|
$ |
(0.39 |
) |
|
$ |
(1.09 |
) |
|
Basic and diluted weighted average shares outstanding
|
|
|
24,778,588 |
|
|
|
10,112,648 |
|
See Accompanying Notes to the Financial Statements
Planet Green Holdings Corp.
Audited Consolidated Statements of Changes in Stockholders’
Equity
for the Years Ended December 31,2021 and 2020
(Stated in US Dollars)
|
|
|
Number of
Shares |
|
|
Common
Stock |
|
|
Additional
Paid-in
Capital |
|
|
Accumulated
Deficit |
|
|
Accumulated
Other
Comprehensive
Income |
|
|
Non-
Controlling
Interests |
|
|
Total |
|
| Balance,
January 1, 2020 |
|
|
7,877,765 |
|
|
$ |
7,878 |
|
|
$ |
85,803,421 |
|
|
$ |
(73,280,734 |
) |
|
$ |
8,203,941 |
|
|
$ |
-
|
|
|
$ |
20,734,506 |
|
| Net
(loss) income |
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
(11,051,163 |
) |
|
|
-
|
|
|
|
-
|
|
|
|
(11,051,163 |
) |
| Issuance of
shares for acquisition |
|
|
1,800,000 |
|
|
|
1,800 |
|
|
|
4,588,200 |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,590,000 |
|
|
Issuance of common stock for cash |
|
|
1,350,000 |
|
|
|
1,350 |
|
|
|
3,508,650 |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,510,000 |
|
|
Stock-based compensation and issue of employee benefit plan
stock |
|
|
782,165 |
|
|
|
782 |
|
|
|
1,759,089 |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,759,871 |
|
|
Foreign currency translation adjustment |
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,231,778 |
) |
|
|
-
|
|
|
|
(1,231,778 |
) |
|
Balance, December 31, 2020 |
|
|
11,809,930 |
|
|
$ |
11,810 |
|
|
$ |
95,659,360 |
|
|
$ |
(84,331,897 |
) |
|
$ |
6,972,163 |
|
|
$ |
-
|
|
|
$ |
18,311,436 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance,
January 1, 2021 |
|
|
11,809,930 |
|
|
$ |
11,810 |
|
|
$ |
95,659,360 |
|
|
$ |
(84,331,897 |
) |
|
$ |
6,972,163 |
|
|
$ |
-
|
|
|
$ |
18,311,436 |
|
| Net
(loss) income |
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
(9,740,486 |
) |
|
|
-
|
|
|
|
(250,616 |
) |
|
|
(9,991,102 |
) |
| Issuance of
shares for acquisition |
|
|
16,200,000 |
|
|
|
16,200 |
|
|
|
22,681,227 |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
22,697,427 |
|
|
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 |
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,577,418 |
|
|
|
4,577,418 |
|
|
Foreign currency translation adjustment |
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
738,894 |
|
|
|
23,068 |
|
|
|
761,962 |
|
|
Balance, December 31, 2021 |
|
|
35,581,930 |
|
|
$ |
35,582 |
|
|
$ |
133,232,224 |
|
|
$ |
(94,072,383 |
) |
|
$ |
7,711,057 |
|
|
$ |
4,349,870 |
|
|
$ |
51,256,350 |
|
See Accompanying Notes to the Financial Statements
Planet Green Holdings Corp.
Audited Consolidated Statements of Cash Flows
For the Years Ended December 31, 2021 and 2020
(Stated in US Dollars)
| |
|
2021 |
|
|
2020 |
|
| CASH FLOWS FROM OPFRATING ACTIVITIFS: |
|
|
|
|
|
|
| Net
(loss) income |
|
$ |
(9,991,102 |
) |
|
$ |
(11,051,163 |
) |
| Adjustments to
reconcile net loss to cash (used in) provided by operating
activities: |
|
|
|
|
|
|
|
|
| Depreciation |
|
|
2,212,080 |
|
|
|
275,228 |
|
| Amortization |
|
|
241,172 |
|
|
|
173,825 |
|
| Bad debt
expenses |
|
|
-
|
|
|
|
43,694 |
|
| share-based
compensation expense |
|
|
1,159,760 |
|
|
|
1,759,871 |
|
| Loss on disposal
of discontinued operations |
|
|
-
|
|
|
|
-
|
|
| Write off
receivables |
|
|
-
|
|
|
|
6,078,623 |
|
| Exchange
loss |
|
|
-
|
|
|
|
1,830,579 |
|
| Impairment of goodwill |
|
|
3,225,079 |
|
|
|
2,339,829 |
|
| Note and account receivables，net |
|
|
(384,977 |
) |
|
|
(1,526,888 |
) |
| Inventories |
|
|
(1,331,385 |
) |
|
|
(295,975 |
) |
| Prepayments and
deposit |
|
|
4,676,936 |
|
|
|
(4,065,394 |
) |
| Other
receivables |
|
|
349,817 |
|
|
|
-
|
|
| Other
receivables-related party |
|
|
(4,814,037 |
) |
|
|
-
|
|
| Accounts
payables |
|
|
1,364,041 |
|
|
|
506,437 |
|
| Advance from
customer |
|
|
(1,540,669 |
) |
|
|
150,685 |
|
| Other payables
and accruals |
|
|
2,384,255 |
|
|
|
221,900 |
|
| Other
payables-related parties |
|
|
1,750,240 |
|
|
|
-
|
|
| Taxes
payable |
|
|
198,722 |
|
|
|
59,648 |
|
| Deferred
income |
|
|
(15,246 |
) |
|
|
-
|
|
|
Lease liability |
|
|
(4,082 |
) |
|
|
-
|
|
| Net
cash used in operating activities |
|
|
(519,396 |
) |
|
|
(3,499,103 |
) |
| |
|
|
|
|
|
|
|
|
| CASH FLOWS FROM INVESTING
ACTIVITIES: |
|
|
|
|
|
|
|
|
| Purchase of plant
and equipment |
|
|
(1,393,139 |
) |
|
|
(695,544 |
) |
| Purchase of
intangible assets |
|
|
(124,337 |
) |
|
|
(157,293 |
) |
| Purchase of
long-term investment |
|
|
(3,100,052 |
) |
|
|
-
|
|
| Purchase of real
estates |
|
|
(7,679,634 |
) |
|
|
-
|
|
| Net
increase in cash from acquisition subsidiaries |
|
|
482,760 |
|
|
|
-
|
|
| Net
cash used in investing activities |
|
|
(11,814,402 |
) |
|
|
(852,837 |
) |
| |
|
|
|
|
|
|
|
|
| CASH FLOWS FROM FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
|
| Payments of
short-term loan - bank |
|
|
(953,355 |
) |
|
|
-
|
|
| (Repayment to)
proceeds from related party |
|
|
(1,036,094 |
) |
|
|
(2,777,808 |
) |
|
Proceeds from issuance of common stock |
|
|
10,921,157 |
|
|
|
3,016,204 |
|
| Net
cash provided by financing activities |
|
|
8,931,708 |
|
|
|
238,396 |
|
| |
|
|
|
|
|
|
|
|
| Net decrease in
cash and cash equivalents |
|
|
(3,402,090 |
) |
|
|
(4,113,544 |
) |
| |
|
|
|
|
|
|
|
|
| EFFECT OF EXCHANGE RATE ON CASH |
|
|
1,117,747 |
|
|
|
256,785 |
|
| |
|
|
|
|
|
|
|
|
| CASH AND CASH
EQUIVALENTS AT BEGINNING OF YEAR |
|
|
3,415,751 |
|
|
|
7,272,510 |
|
| |
|
|
|
|
|
|
|
|
| CASH AND CASH
EQUIVALENTS AT END OF YEAR |
|
$ |
1,131,408 |
|
|
$ |
3,415,751 |
|
| |
|
|
|
|
|
|
|
|
| SUPPLEMENTARY OF CASH FLOW
INFORMATION |
|
|
|
|
|
|
|
|
| Interest
received |
|
$ |
1,455 |
|
|
$ |
-
|
|
| Interest
paid |
|
$ |
646,572 |
|
|
$ |
23,407 |
|
| |
|
|
|
|
|
|
|
|
| NON-CASH TRANSACTIONS |
|
|
|
|
|
|
|
|
|
Operating lease right-of-use assets |
|
$ |
584,802 |
|
|
$ |
-
|
|
| Issuance of
shares for acquisition |
|
$ |
22,697,427 |
|
|
$ |
4,590,000 |
|
| issuance
of common stock for employee compensation |
|
$ |
1,159,760 |
|
|
$ |
1,759,871 |
|
See Accompanying Notes to the Financial Statements
PLANET GREEN HOLDINGS CORP.
NOTES TO AUDITED
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(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 controlled entities in
China.
Going Concern
The accompanying audited 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 $9,740,486
attributable to common shareholders for the year ended December 31,
2021. As of December 31, 2021, the Company had an accumulated
deficit of $94,072,383; a working capital deficit of $7,075,320,
its net cash used in operating activities for the year ended
December 31, 2021 was $519,396
These factors raise substantial doubt on the Company’s ability to
continue as a going concern. The accompanying audited 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, 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 is unable to 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.
Principles of Consolidation
The accompanying consolidated financial statements reflect the
activities of Planet Green Holdings Corp. and each of the following
entities:
| |
|
Place
of |
|
Attributable equity |
|
|
Registered |
|
|
Name of Company |
|
incorporation |
|
interest % |
|
|
capital |
|
| Planet Green Holdings
Corporation |
|
The British Virgin
Islands |
|
|
100 |
|
|
$ |
10,000 |
|
| Lucky Sky Planet Green Holdings Co.,
Limited (H.K.) |
|
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 |
|
|
85 |
|
|
|
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 Bryce Technology Co., Ltd. (a subsidiary of Bless
Chemical) |
|
PRC |
|
|
100 |
|
|
|
30,000,000 |
|
| Shandong Yunchu Supply Chain Co.,
Ltd |
|
PRC |
|
|
100 |
|
|
|
5,000,000 |
|
Management has eliminated all significant inter-company balances
and transactions in preparing the accompanying consolidated
financial statements. Ownership interests of subsidiaries that the
Company does not wholly own are accounted for as non-controlling
interests.
On May 18, 2018, the Company incorporated Planet Green Holdings
Corporation, a limited company incorporated in the British Virgin
Islands. On September 28, 2018, Planet Green BVI acquired JianShi
Technology Holding Limited, a limited company incorporated in Hong
Kong on February 21, 2012, and Shanghai Xunyang Internet Tech Co.,
Ltd., a wholly-owned foreign entity incorporated in Shanghai, PRC,
on August 29, 2012 (“Shanghai Xunyang”).
On August 12, 2019, through Lucky Sky Holdings Corporations (H.K.)
Limited, formerly known as JianShi Technology Holding Limited,
Company established Lucky Sky Petrochemical Technology (Xianning)
Co., Ltd., a wholly foreign-owned enterprise incorporated in
Xianning City, Hubei Province, China.
On December 20, 2019, The Lucky Sky Holdings Corporations (H.K.)
Limited sold 100% of equity interest in Shanghai Xunyang.
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 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 September 15, 2020, Lucky Sky Petrochemical terminated the VIE
agreements with Shenzhen Lorain and Taishan Muren.
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 January 6, 2021, Planet Green Holdings Corporation(Nevada)
issued an aggregate of 2,200,000 shares of common stock of the
Company to the equity holders of Jingshan Sanhe Luckysky New Energy
Technologies Co., Ltd in exchange for the transfer of 85% of the
equity interest of Jingshan Sanhe Luckysky New Energy Technologies
Co., Ltd to the Jiayi Technologies (Xianning) Co., Ltd.
On March 9, 2021, Planet Green Holdings Corporation(Nevada) issued
an aggregate of 3,300,000 shares of common stock of the Company to
the equity holders 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 Jiayi Technologies (Xianning)
Co., Ltd.
On July 15, 2021, Planet Green Holdings Corporation (Nevada) 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 for the transfer to 66% of the equity interest if Anhui Ansheng
Petrochemical Equipment Co., Ltd to the Jiayi Technologies
(Xianning) Co., Ltd.
On August 1, 2021, Jiayi Technologies (Xianning) Co., Ltd has
terminated the VIE agreements with Xianning Bozhuang Tea Products
Co., Ltd and acquired 100% equity of Xianning Bozhuang Tea Products
Co., Ltd. As a result, Xianning Bozhuang Tea Products Co., Ltd has
been wholly-owned subsidiaries of the 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
Bryce Technology Co., Ltd have 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 Bryce Technology Co., Ltd and Hubei Bryce
Technology Co., Ltd has hold 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 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.
Consolidation of Variable Interest Entity
On September 27, 2018, through Shanghai Xunyang, the Company
entered into exclusive VIE agreements with Beijing Lorain, Luotian
Lorain, Shandong Greenpia, Taishan Muren, 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. The Company
is considered the primary beneficiary of these operating
companies.
On May 14, 2019, through Shanghai Xunyang, the Company entered into
a series of VIE agreements with Xianning Bozhuang and its equity
holders to obtain control. It became the primary beneficiary of
Xianning Bozhuang. The Company consolidated Xianning Bozhuang’s
accounts as its VIE.
On December 20, 2019, we sold 100% of equity interest in Shanghai
Xunyang and terminated its VIE agreements with Xianning Bozhuang,
Shenzhen Lorain, and Taishan Muren.
On December 20, 2019, through Lucky Sky Petrochemical, the Company
entered into exclusive VIE agreements (“VIE Agreements”) with
Taishan Muren, Xianning Bozhuang, and Shenzhen Lorain, as well as
their shareholders, which give the Company the ability to
substantially influence those companies’ daily operations and
financial affairs and appoint their senior executives. The Company
is considered the primary beneficiary of these operating companies,
and it consolidates their accounts as VIEs.
On September 6, 2020, it terminated its VIE agreements with
Shenzhen Lorain and Taishan Muren.
On March 9, 2021, through Jiayi Technologies (Xianning) Co., Ltd,
formerly known as Lucky Sky Petrochemical Technology (Xianning)
Co., Ltd, the Company entered into exclusive VIE agreements (“VIE
Agreements”) with Jilin Chuangyuan Chemical Co., Ltd, as well as
their shareholders, which give the Company the ability to
substantially influence those companies’ daily operations and
financial affairs and appoint their senior executives. The Company
is considered the primary beneficiary of these operating companies,
and it consolidates their accounts as VIEs.
On July 15, through Jiayi Technologies (Xianning) Co., Ltd,
formerly known as Lucky Sky Petrochemical Technology (Xianning)
Co., Ltd, the Company entered into exclusive VIE agreements (“VIE
Agreements”) with Anhui Ansheng Petrochemical Equipment Co., Ltd,
as well as their shareholders, which give the Company the ability
to substantially influence those companies’ daily operations and
financial affairs and appoint their senior executives. The Company
is considered the primary beneficiary of these operating companies,
and it consolidates their accounts as VIEs.
On August 1, 2021, Jiayi Technologies (Xianning) Co., Ltd has
terminated the VIE agreements with Xianning Bozhuang Tea Products
Co., Ltd.
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 Xianning Bozhuang Tea Products Co.,
Ltd, Jingshan Sanhe Luckysky New Energy Technologies 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.
Enterprise-wide
disclosure
The Company’s chief operating decision-makers (i.e. chief executive
officer and her direct reports) review financial information
presented on a consolidated basis, accompanied by disaggregated
information about revenues by business lines for purposes of
allocating resources and evaluating financial performance. There
are no segment managers who are held accountable for operations,
operating results and plans for levels or components below the
consolidated unit level. Based on qualitative and quantitative
criteria established by Accounting Standards Codification (“ASC”)
280, “Segment Reporting”, the Company considers itself to be
operating within one reportable segment.
Use of Estimates
The financial statements preparation requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting
periods. Management makes these estimates using the best
information available when the calculations are made; however,
actual results could differ materially from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with
original maturities of three months or less to be cash
equivalents.
Investment Securities
The Company classifies securities it holds for investment purposes
into trading or available-for-sale. Trading securities are bought
and held principally for the purpose of selling them in the near
term. All deposits not included in trading securities are
classified as available for sale.
Trading and available-for-sale securities are recorded at fair
value. Unrealized holding gains and losses on trading securities
are included in the net income. Unrealized holding gains and
losses, net of the related tax effect, on available for sale
securities are excluded from net income. They are reported as a
separate component of other comprehensive income until realized.
Realized gains and losses from the sale of available-for-sale
securities are determined on a specific identification basis.
A decline in the market value of any available-for-sale security
below cost that is deemed to be other-than-temporary results in a
reduction in carrying amount to fair value. The impairment is
charged as an expense to the statement of income and comprehensive
income, and a new cost basis for the security is established. To
determine whether the impairment is other-than-temporary, the
Company considers whether it has the ability and intent to hold the
investment until a market price recovery and believes whether
evidence indicating the cost of the asset is recoverable outweighs
evidence to the contrary. Evidence considered in this assessment
includes the reasons for the impairment, the severity and duration
of the impairment, changes in value after year-end, and forecasted
performance of the investee.
Premiums and discounts are amortized or accreted over the life of
the related available-for-sale security as an adjustment to yield
using the effective-interest method. Dividend and interest income
are recognized when earned.
Accounts Receivables
Accounts receivables are recognized and carried at the original
invoice amount less allowance for any uncollectible amounts. An
estimate for doubtful accounts is made when the collection of the
total amount is no longer probable. Bad debts are written off as
incurred.
Inventories
Inventories consist of raw materials and finished goods, stated at
the lower of cost or market value. Finished goods are comprised of
direct materials, direct labor, inbound shipping costs, and
allocated overhead. The Company applies the weighted average cost
method to its inventory.
Advances and Prepayments to Suppliers
The Company makes an advance payment to suppliers and vendors for
the procurement of raw materials. Upon physical receipt and
inspection of the raw materials from suppliers, the applicable
amount is reclassified from advances and prepayments to suppliers
to inventory.
Plant and Equipment
Plant and equipment are carried at cost less accumulated
depreciation. Depreciation is provided over their estimated useful
lives, using the straight-line method. The Company typically
applies a salvage value of 0% to 10%. The estimated useful lives of
the plant and equipment are as follows:
| Buildings |
|
20-40 years |
| Landscaping, plant, and tree |
|
30 years |
| Machinery and equipment |
|
1-10 years |
| Motor vehicles |
|
5-10 years |
| Office equipment |
|
5-20 years |
The cost and related accumulated depreciation of assets sold or
otherwise retired are eliminated from the accounts, and any gain or
loss is included in the Company’s results of operations. The costs
of maintenance and repairs are recognized as incurred; significant
renewals and betterments are capitalized.
Intangible Assets
Intangible assets are carried at cost less accumulated
amortization. Amortization is provided over their useful lives,
using the straight-line method. The estimated useful lives of the
intangible assets are as follows:
| Land use rights |
|
|
50
years |
|
| Software licenses |
|
|
2
years |
|
| Trademarks |
|
|
10
years |
|
Construction in Progress and Prepayments for Equipment
Construction in progress and prepayments for equipment represent
direct and indirect acquisition and construction costs for plants
and fees of purchase and installation of related equipment. Amounts
classified as construction in progress and prepayments for
equipment are transferred to plant and equipment when substantially
all the activities necessary to prepare the assets for their
intended use are completed. Depreciation is not provided for assets
classified in this account.
Goodwill
Goodwill represents the excess of the purchase price over the fair
value of the net identifiable assets acquired in a business
combination. The Company conducts an annual assessment of its
goodwill for impairment. If the carrying value of its goodwill
exceeds its fair value, then impairment has been incurred;
accordingly, a charge to the Company’s operations results will be
recognized during the period. Impairment losses on goodwill are not
reversed. Fair value is generally determined using a discounted
expected future cash flow analysis.
Accounting for the Impairment of Long-lived Assets
The Company annually reviews its long-lived assets for impairment
or whenever events or changes in circumstances indicate that the
carrying amount of assets may not be recoverable. Impairment may
become obsolete from a difference in the industry, introduction of
new technologies, or if the Company has inadequate working capital
to utilize the long-lived assets to generate adequate profits.
Impairment is present if the carrying amount of an asset is less
than its expected future undiscounted cash flows.
If an asset is considered impaired, a loss is recognized based on
the amount by which the carrying amount exceeds the fair market
value of the asset. Assets to be disposed of are reported lower the
carrying amount or fair value fewer costs to selling.
Statutory Reserves
Statutory reserves refer to the amount appropriated from the net
income following laws or regulations, which can be used to recover
losses and increase capital, as approved, and are to be used to
expand production or operations. PRC laws prescribe that an
enterprise operating at a profit must appropriate and reserve, on
an annual basis, an amount equal to 10% of its profit. Such an
appropriation is necessary until the reserve reaches a maximum
equal to 50% of the enterprise’s PRC registered capital.
Foreign Currency Translation
The accompanying financial statements are presented in United
States dollars. The functional currency of the Company is the
Renminbi (RMB). The Company’s assets and liabilities are translated
into United States dollars from RMB at year-end exchange rates. Its
revenues and expenses are translated at the average exchange rate
during the period. Capital accounts are translated at their
historical exchange rates when the capital transactions
occurred.
| |
|
12/31/2021 |
|
|
12/31/2020 |
|
| Period-end US$: CDN$
exchange rate |
|
|
1.274 |
|
|
|
1.2754 |
|
| Period-end US$: RMB exchange rate |
|
|
6.3757 |
|
|
|
6.5326 |
|
| Period average US$: CDN$ exchange
rate |
|
|
1.2531 |
|
|
|
1.3409 |
|
| Period average US$: RMB exchange
rate |
|
|
6.4515 |
|
|
|
6.8996 |
|
The RMB is not freely convertible into foreign currencies, and all
foreign exchange transactions must be conducted through authorized
financial institutions.
Revenue Recognition
The Company adopted ASC 606 “Revenue Recognition.” It recognizes
revenue when control of the promised goods or services is
transferred to customers, in an amount that reflects the
consideration we expect to be entitled to in exchange for those
goods or services.
The Company derives its revenues from selling explosion-proof
skid-mounted refueling device, SF double-layer buried oil storage
tank, high-grade synthetic fuel products, industrial formaldehyde
solution, urea-formaldehyde pre-condensate (UFC), methylal,
urea-formaldehyde glue for environment-friendly artificial board
chemicals, food products like frozen fruits, beef & mutton
products and vegetables and tea products. The Company applies the
following five steps to determine the appropriate amount of revenue
to be recognized as it fulfills its obligations under each of its
agreements:
|
● |
identify the contract with a
customer; |
| |
|
|
|
● |
identify the performance
obligations in the contract; |
|
● |
determine the transaction
price; |
|
● |
allocate the transaction price to
performance obligations in the contract; and; |
|
● |
Recognize revenue as the
performance obligation is satisfied. |
Advertising
All advertising costs are expensed as incurred.
Shipping and Handling
All outbound shipping and handling costs are expensed as
incurred.
Research and Development
All research and development costs are expensed as incurred.
Retirement Benefits
Retirement benefits in the form of mandatory government-sponsored
defined contribution plans are charged to either expense as
incurred or allocated to inventory as part of overhead.
Stock-Based Compensation
The Company records stock compensation expense for employees at
fair value on the grant date and recognizes the expense one time
because there is no employee’s requisite service period
requirement.
Income Taxes
The Company accounts for income tax using an asset and liability
approach and recognizes deferred tax benefits in future years.
Under the asset and liability approach, deferred taxes are provided
for the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. A valuation
allowance is provided for deferred tax assets. If it is more likely
than not, these items will either expire before the Company can
realize their benefits or uncertain future realization.
Comprehensive Income
The Company uses Financial Accounting Standards Board (“FASB”) ASC
Topic 220, “Reporting Comprehensive Income.” Comprehensive income
is comprised of net income and all changes to the statements of
stockholders’ equity, except the changes in paid-in capital and
distributions to stockholders due to investments by
stockholders.
Earnings Per Share
The Company computes earnings per share (“EPS”) following ASC Topic
260, “Earnings per share.” Basic EPS is measured as the income or
loss available to common shareholders divided by the weighted
average common shares outstanding for the period. Diluted EPS
presents the dilutive effect on a per-share basis from the
potential conversion of convertible securities or the exercise of
options and or warrants; the dilutive impacts of potentially
convertible securities are calculated using the as-if method; the
potentially dilutive effect of options or warranties are computed
using the treasury stock method. Potentially anti-dilutive
securities (i.e., those that increase income per share or decrease
loss per share) are excluded from diluted EPS calculation.
Financial Instruments
The Company’s financial instruments, including cash and
equivalents, accounts and other receivables, accounts and other
payables, accrued liabilities, and short-term debt, have carrying
amounts that approximate their fair values due to their short
maturities. ASC Topic 820, “Fair Value Measurements and
Disclosures,” requires disclosing the Company’s fair value of
financial instruments. ASC Topic 825, “Financial Instruments,”
defines fair value and establishes a three-level valuation
hierarchy for disclosures of fair value measurement that enhances
disclosure requirements for fair value measures. The carrying
amounts reported in the consolidated balance sheets for receivables
and current liabilities qualify as financial instruments and are a
reasonable estimate of their fair values because of the short
period between the origination of such instruments and their
expected realization and their current market rate of interest. The
three levels of valuation hierarchy are defined as follows:
|
● |
Level 1 - inputs to the valuation
methodology used quoted prices for identical assets or liabilities
in active markets. |
|
● |
Level 2 - inputs to the valuation
methodology include quoted prices for similar assets and
liabilities in active markets and information that are observable
for the asset or liability, either directly or indirectly, for
substantially the financial instrument’s full term. |
|
● |
Level 3 - inputs to the valuation
methodology are unobservable and significant to the fair value
measurement. |
The Company analyzes all financial instruments with features of
both liabilities and equity under ASC 480, “Distinguishing
Liabilities from Equity,” and ASC 815.
Lease
Effective December 31, 2018, Jingshan Sanhe Luckysky New
Energy Technologies Co., Ltd. adopted ASU 2016-02, “Leases”
(Topic 842), and elected the practical expedients that do not
require us to reassess: (1) whether any expired or existing
contracts are, or contain, leases, (2) lease classification for any
expired or existing leases and (3) initial direct costs for any
expired or existing leases. For lease terms of twelve months or
fewer, a lessee is permitted to make an accounting policy election
not to recognize lease assets and liabilities. The Company also
adopted the practical expedient that allows lessees to treat the
lease and non-lease components of a lease as a single lease
component.
Lease terms used to calculate the present value of lease
payments generally do not include any options to extend, renew, or
terminate the lease, as the Company does not have reasonable
certainty at lease inception that these options will be exercised.
The Company generally considers the economic life of its operating
lease ROU assets to be comparable to the useful life of similar
owned assets. The Company has elected the short-term lease
exception, therefore operating lease ROU assets and liabilities do
not include leases with a lease term of twelve months or less. Its
leases generally do not provide a residual guarantee. The operating
lease ROU asset also excludes lease incentives. Lease expense is
recognized on a straight-line basis over the lease term.
The Company reviews the impairment of its ROU assets
consistent with the approach applied for its other long-lived
assets. The Company reviews the recoverability of its long-lived
assets when events or changes in circumstances occur that indicate
that the carrying value of the asset may not be recoverable. The
assessment of possible impairment is based on its ability to
recover the carrying value of the asset from the expected
undiscounted future pre-tax cash flows of the related operations.
The Company has elected to include the carrying amount of operating
lease liabilities in any tested asset group and it includes the
associated operating lease payments in the undiscounted future
pre-tax cash flows.
As of December 31, 2021, there were approximately
$0.58 million right of use (“ROU”) assets and approximately
$0.44 million lease liabilities based on the present value of
the future minimum rental payments of leases, using an incremental
borrowing rate of 4.75% and 4.90% based on the duration
of lease terms.
Commitments and Contingencies
From time to time, the Company is a party to various legal actions
arising in the ordinary course of business. The majority of these
claims and proceedings related to or arise from commercial
disputes. The Company first determine whether a loss from a claim
is probable, and if it is reasonable to estimate the potential
loss. The Company accrues costs associated with these matters when
they become probable, and the amount can be reasonably estimated.
Legal costs incurred in connection with loss contingencies are
expensed as incurred. Also, the Company disclose a range of
possible losses, if a loss from a claim is probable but the amount
of loss cannot be reasonably estimated, which is in line with the
applicable requirements of Accounting Standard Codification 450.
The Company’s management does not expect any liability from the
disposition of such claims and litigation individually or in the
aggregate would have a material adverse impact on the Company’s
consolidated financial position, results of operations and cash
flows.
Recent Accounting Pronouncements
In February 2018, the FASB issued ASU 2018-02, Income Statement -
Reporting Comprehensive Income (Topic 220): Reclassification of
Certain Tax Effects from Accumulated Other Comprehensive Income.
The amendments in this Update affect any entity required to apply
the provisions of Topic 220, Income Statement – Reporting
Comprehensive Income, and has items of other comprehensive income
for which the related tax effects are presented in other
comprehensive income required by GAAP. The amendments in this
Update are effective for all entities for fiscal years beginning
after December 15, 2018, and interim periods within those fiscal
years. Early adoption of the amendments in this Update is
permitted, including adoption in any interim period, (1) for public
business entities for reporting periods for which financial
statements have not yet been issued, and (2) for all other entities
for reporting periods for which financial statements have not
however been made available for issuance. The amendments in this
Update should be applied either in the period of adoption or
retrospectively to each period (or periods) in which the effect of
the change in the U.S. federal corporate income tax rate in the Tax
Cuts and Jobs Act is recognized. The Company does not believe the
adoption of this ASU would affect the Company’s financial
statements.
In August 2018, the FASB issued ASU 2018-13, “Fair Value
Measurement (Topic 820), – Disclosure Framework – Changes to the
Disclosure Requirements for Fair Value Measurement,” which
makes several changes meant to add, modify or remove specific
disclosure requirements associated with the movement amongst or
hierarchy associated with Level 1, Level 2 and Level 3 fair value
measurements. The amendments in this Update modify the disclosure
requirements on fair value measurements based on the concepts in
FASB Concepts Statement, Conceptual Framework for Financial
Reporting—Chapter 8: Notes to Financial Statements, including the
consideration of costs and benefits. The amendments on changes in
unrealized gains and losses, the range and weighted average of
significant unobservable inputs used to develop Level 3 fair value
measurements, and the narrative description of measurement
uncertainty should be applied prospectively for only the most
recent interim or annual period presented in the initial fiscal
year of adoption. All other amendments should be applied
retrospectively to all periods presented upon their effective date.
The modifications are effective for all entities for fiscal years
beginning after December 15, 2019, and interim periods within those
fiscal years, with early adoption permitted. The Company does not
believe the adoption of this ASU would have a material effect on
the Company’s condensed financial statements.
The Company does not believe other recently issued but not yet
effective accounting standards, if currently adopted, would have a
material effect on the Company’s balance sheets, statements of
income, and comprehensive income and statements of cash flows.
3. Variable Interest Entity (“VIE”)
A VIE is an entity that has either a total equity investment that
is insufficient to permit the entity to finance its activities
without additional subordinated financial support or whose equity
investors lack the characteristics of a controlling financial
interest, such as through voting rights, right to receive the
expected residual returns of the entity or obligation to absorb the
expected losses of the entity. If any, the variable interest holder
with a controlling financial interest in a VIE is deemed the
primary beneficiary and must consolidate the VIE. PLAG WOFE is
deemed to have the controlling financial interest and be the
primary beneficiary of Anhui Ansheng Petrochemical Equipment Co.,
Ltd and Jilin Chuangyuan Chemical Co., Ltd because it has both of
the following characteristics:
1) The power to direct activities at Anhui Ansheng Petrochemical
Equipment Co., Ltd and Jilin Chuangyuan Chemical Co., Ltd that most
significantly impact such entity’s economic performance, and
2) The obligation to absorb losses and the right to receive
benefits from Anhui Ansheng Petrochemical Equipment Co., Ltd and
Jilin Chuangyuan Chemical Co., Ltd. that could potentially be
significant to such entity. Under the Contractual Arrangements,
Anhui Ansheng Petrochemical Equipment Co., Ltd and Jilin Chuangyuan
Chemical Co., Ltd pay service fees equal to all of its net income
to PLAG WFOE. At the same time, PLAG WFOE is obligated to absorb
all of the Anhui Ansheng Petrochemical Equipment Co., Ltd.’s and
Jilin Chuangyuan Chemical Co., Ltd.’s losses. The Contractual
Arrangements are designed to operate Anhui Ansheng Petrochemical
Equipment Co., Ltd. and Jilin Chuangyuan Chemical Co., Ltd for the
benefit of PLAG WFOE and ultimately, the Company. Accordingly, the
accounts of Anhui Ansheng Petrochemical Equipment Co., Ltd. and
Jilin Chuangyuan Chemical Co., Ltd. are consolidated in the
accompanying consolidated financial statements. In addition, those
financial positions and results of operations are included in the
Company’s consolidated financial statements.
The
carrying amount of VIE’s consolidated assets and liabilities are as
follows：
| |
|
12/31/2021 |
|
|
12/31/2020 |
|
| Cash and cash
equivalents |
|
$ |
67,966 |
|
|
$ |
528,048 |
|
| Accounts receivable, net |
|
|
2,389,796 |
|
|
|
835,384 |
|
| Restricted cash |
|
|
380,750 |
|
|
|
-
|
|
| Note Receivable |
|
|
270,770 |
|
|
|
-
|
|
| Other receivables |
|
|
118,708 |
|
|
|
7,726,607 |
|
| Inventories |
|
|
4,244,869 |
|
|
|
2,251,628 |
|
| Advances to suppliers |
|
|
310,769 |
|
|
|
1,215,089 |
|
| Intercompany receivable |
|
|
1,725,302 |
|
|
|
-
|
|
| Other
receivables-related parties |
|
|
7,650,042 |
|
|
|
-
|
|
| TOTAL CURRENT
ASSETS |
|
|
17,158,972 |
|
|
|
12,556,756 |
|
| |
|
|
|
|
|
|
|
|
| Plant and equipment, net |
|
|
12,554,727 |
|
|
|
4,592,615 |
|
| Intangible assets, net |
|
|
2,795,048 |
|
|
|
1,491,614 |
|
| Construction in progress, net |
|
|
2,475,874 |
|
|
|
-
|
|
| Deferred tax assets |
|
|
425,374 |
|
|
|
-
|
|
| Total
Non-Current Assets |
|
|
18,251,023 |
|
|
|
6,084,229 |
|
| TOTAL ASSETS |
|
$ |
35,409,995 |
|
|
$ |
18,640,985 |
|
| |
|
|
|
|
|
|
|
|
| Short-term bank loans |
|
$ |
6,822,054 |
|
|
$ |
-
|
|
| Accounts payable |
|
|
3,558,827 |
|
|
|
1,017,373 |
|
| Advance from customers |
|
|
3,476,585 |
|
|
|
213,469 |
|
| Other payables and accrued
liabilities |
|
|
3,305,395 |
|
|
|
8,951,117 |
|
| Intercompany payable |
|
|
7,131,860 |
|
|
|
-
|
|
| Other payables-related parties |
|
|
3,958,409 |
|
|
|
2,716,537 |
|
| Taxes payable |
|
|
212,658 |
|
|
|
171,231 |
|
| Deferred income |
|
|
58,033 |
|
|
|
-
|
|
| Long term
payable-current portion |
|
|
126,261 |
|
|
|
-
|
|
| TOTAL CURRENT
LIABILITIES |
|
|
28,650,082 |
|
|
|
13,069,727 |
|
| |
|
|
|
|
|
|
|
|
| Long-term
payables |
|
|
222,687 |
|
|
|
-
|
|
| TOTAL
LIABILITIES |
|
$ |
28,872,769 |
|
|
$ |
13,069,727 |
|
| |
|
|
|
|
|
|
|
|
| Paid-in capital |
|
|
12,326,270 |
|
|
|
6,314,908 |
|
| Statutory reserve |
|
|
29,006 |
|
|
|
-
|
|
| Retained earnings |
|
|
(5,357,908 |
) |
|
|
(793,600 |
) |
| Accumulated other comprehensive
income |
|
|
(460,142 |
) |
|
|
49,950 |
|
| Total
Equity |
|
|
6,537,226 |
|
|
|
5,571,258 |
|
| |
|
|
|
|
|
|
|
|
| TOTAL LIABILITIES
AND SHAREHOLDERS’ EQUITY |
|
$ |
35,409,995 |
|
|
$ |
18,640,985 |
|
The summarized operating results of the VIE’s are as follows:
| |
|
12/31/2021 |
|
|
12/31/2020 |
|
| Operating revenues |
|
$ |
9,694,499 |
|
|
$ |
3,804,595 |
|
| Gross profit |
|
|
2,207,503 |
|
|
|
1,336,228 |
|
| Income (loss) from operations |
|
|
(1,072,779 |
) |
|
|
41,392 |
|
| Net income (loss) |
|
|
(851,735 |
) |
|
|
41,392 |
|
4. Business Combination
Acquisition of Jingshan
Sanhe Luckysky New Energy Technologies Co., Ltd
On January 4, 2021, Planet Green Holdings Corporation(Nevada) and
its wholly-owned subsidiary Jiayi Technologies (Xianning) Co.,
Ltd., formerly known as Lucky Sky Petrochemical Technology
(Xianning) Co., Ltd., entered into a series of VIE agreements with
Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd and its
equity holders to obtain control and become the primary beneficiary
of Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. The
Company consolidated Jingshan Sanhe Luckysky New Energy
Technologies Co., Ltd’s accounts as its VIE. According to the VIE
agreements, Planet Green Holdings Corporation (Nevada) issued an
aggregate of 2,200,000 shares of common stock of the Company to the
equity holders of Jingshan Sanhe Luckysky New Energy Technologies
Co., Ltd in exchange for the transfer of 85% of the equity interest
of Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd to the
Jiayi Technologies (Xianning) Co., Ltd.
The Company’s acquisition of Jingshan Sanhe Luckysky New Energy
Technologies Co., Ltd was accounted for as a business combination
following ASC 805. The Company has allocated the purchase price of
Jingshan Sanhe based upon the fair value of the identifiable assets
acquired and liabilities assumed on the acquisition date. The
Company estimated the fair values of the assets acquired and
liabilities taken at the acquisition date following the business
combination standard issued by the FASB with the valuation
methodologies using level 3 inputs, except for other current assets
and current liabilities were valued using the cost approach.
Management of the Company is responsible for determining the fair
value of assets acquired, liabilities assumed, and intangible
assets identified as the acquisition date and considering several
other available factors. Acquisition-related costs incurred for the
acquisitions are not material and expensed as incurred in general
and administrative expenses.
The following table summarizes the fair value of the identifiable
assets acquired and liabilities assumed at the acquisition date,
which represents the net purchase price allocation at the date of
the acquisition of Jingshan Sanhe Luckysky New Energy Technologies
Co., Ltd.:
| Total
consideration at fair value |
|
$ |
4,730,000 |
|
| |
|
Fair Value |
|
| Cash |
|
$ |
114,162 |
|
| Accounts receivable,
net |
|
|
- |
|
| Inventories, net |
|
|
584,119 |
|
| Advances to suppliers |
|
|
1,104,705 |
|
| Other receivables |
|
|
536,090 |
|
| Right-of-use assets |
|
|
1,044,933 |
|
| Plant and equipment,
net |
|
|
3,867,906 |
|
| Deferred tax assets |
|
|
281,243 |
|
| Goodwill |
|
|
923,313 |
|
| Total assets |
|
$ |
8,456,471 |
|
| |
|
|
|
|
| Short-term loan -
bank |
|
|
(440,522 |
) |
| Lease payable-current
portion |
|
|
(406,376 |
) |
| Accounts payable |
|
|
(715,019 |
) |
| Advance from
customers |
|
|
(627,128 |
) |
| Other payables and accrued
liabilities |
|
|
(50,085 |
) |
| Lease payable-non current
portion |
|
|
(818,446 |
) |
| Income taxes payable |
|
|
(217 |
) |
| Total liabilities |
|
|
(3,057,793 |
) |
| Noncontrolling interest |
|
|
(668,678 |
) |
| Net
assets acquired |
|
$ |
4,730,000 |
|
Approximately $0.92 million of goodwill arising from the
acquisition consists mainly of synergies expected from combining
the operations of the Company and Jingshan Sanhe. None of the
goodwill is expected to be deductible for income tax purposes.
Acquisition of Jilin
Chuangyuan Chemical Co., Ltd.
On March 9, 2021, the Company and its wholly-owned subsidiary Jiayi
Technologies (Xianning) Co., Ltd., formerly known as Lucky Sky
Petrochemical Technology (Xianning) Co., Ltd., entered into a
series of VIE agreements with Jilin Chuangyuan Chemical Co., Ltd
and its equity holders to obtain control and become the primary
beneficiary of Jilin Chuangyuan Chemical Co., Ltd. The Company
consolidated Jilin Chuangyuan Chemical Co., Ltd’s accounts as its
VIE. Under the VIE agreements, the Company issued an aggregate of
3,300,000 shares of common stock of the Company to the equity
holders 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 Jiayi Technologies (Xianning) Co., Ltd. The
significant terms of these VIE agreements are summarized in “Note 2
- Summary of Significant Accounting Policies” above.
The Company’s acquisition of Jilin Chuangyuan Chemical Co., Ltd was
accounted for as a business combination following ASC 805. The
Company has allocated the purchase price of Jilin Chuangyuan based
upon the fair value of the identifiable assets acquired and
liabilities assumed on the acquisition date. The Company estimated
the fair values of the assets acquired and liabilities taken at the
acquisition date following the business combination standard issued
by the FASB with the valuation methodologies using level 3 inputs,
except for other current assets and current liabilities were valued
using the cost approach. Management of the Company is responsible
for determining the fair value of assets acquired, liabilities
assumed, and intangible assets identified as of the acquisition
date and considering several other available factors.
Acquisition-related costs incurred for the acquisitions are not
material and expensed as incurred in general and administrative
expenses.
The following table summarizes the fair value of the identifiable
assets acquired and liabilities assumed at the acquisition date,
which represents the net purchase price allocation at the date of
the acquisition of Jilin Chuangyuan Chemical Co., Ltd.:
| Total consideration at
fair value |
|
$ |
8,085,000 |
|
| |
|
Fair Value |
|
| Cash |
|
$ |
95,237 |
|
| Accounts receivable, net |
|
|
868,874 |
|
| Inventories, net |
|
|
581,569 |
|
| Advances to suppliers |
|
|
388,349 |
|
| Other receivables |
|
|
123,969 |
|
| Other receivables-RP |
|
|
212,594 |
|
| Plant and equipment, net |
|
|
11,109,220 |
|
| Intangible assets, net |
|
|
2,149,910 |
|
| Deferred tax assets |
|
|
415,154 |
|
| Goodwill |
|
|
3,191,897 |
|
| Total
assets |
|
$ |
19,136,773 |
|
| |
|
|
|
|
| Short-term loan - bank |
|
|
(3,826,934 |
) |
| Long term payable |
|
|
(1,162,355 |
) |
| Accounts payable |
|
|
(575,495 |
) |
| Advance from customers |
|
|
(291,655 |
) |
| Other payables and accrued
liabilities |
|
|
(2,815,356 |
) |
| Other payables-RP |
|
|
(765,387 |
) |
| Income taxes payable |
|
|
(1,073 |
) |
| Total liabilities |
|
|
(9,438,255 |
) |
| Non controlling
interest |
|
|
(1,613,518 |
) |
| Net assets
acquired |
|
$ |
8,085,000 |
|
Approximately $3.19 million of goodwill arising from the
acquisition consists mainly of synergies expected from combining
the operations of the Company and Jilin Chuangyuan Chemical Co.,
Ltd. None of the goodwill is expected to be deductible for income
tax purposes.
Acquisition of Anhui
Ansheng Petrochemical Equipment Co., Ltd.
On July 15, 2021, the Company and its wholly-owned subsidiary Jiayi
Technologies (Xianning) Co., Ltd., formerly known as Lucky Sky
Petrochemical Technology (Xianning) Co., Ltd., entered into a
series of VIE agreements with Anhui Ansheng Petrochemical Equipment
Co., Ltd and its equity holders to obtain control and become the
primary beneficiary of Anhui Ansheng Petrochemical Equipment Co.,
Ltd. The Company consolidated Anhui Ansheng Petrochemical Equipment
Co., Ltd ’s accounts as its VIE. Under the VIE agreements, the
Company 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 Jiayi Technologies (Xianning) Co., Ltd. The significant
terms of these VIE agreements are summarized in “Note 2 - Summary
of Significant Accounting Policies” above.
The Company’s acquisition of Anhui Ansheng Petrochemical Equipment
Co., Ltd was accounted for as a business combination following ASC
805. The Company has allocated the purchase price of Anhui Ansheng
Petrochemical Equipment Co., Ltd based upon the fair value of the
identifiable assets acquired and liabilities assumed on the
acquisition date. The Company estimated the fair values of the
assets acquired and liabilities taken at the acquisition date
following the business combination standard issued by the FASB with
the valuation methodologies using level 3 inputs, except for other
current assets and current liabilities were valued using the cost
approach. Management of the Company is responsible for determining
the fair value of assets acquired, liabilities assumed, and
intangible assets identified as of the acquisition date and
considered several other available factors. Acquisition-related
costs incurred for the acquisitions are not material and expensed
as incurred in general and administrative expenses.
The following table summarizes the fair value of the identifiable
assets acquired and liabilities assumed at the acquisition date,
which represents the net purchase price allocation at the date of
the acquisition of Anhui Ansheng Petrochemical Equipment Co.,
Ltd:
| Total consideration at
fair value |
|
$ |
7,926,000 |
|
| |
|
Fair Value |
|
| Cash and cash equivalents,
and Restricted Cash |
|
$ |
288,122 |
|
| Trade receivable and Note
receivable |
|
|
944,704 |
|
| Inventories |
|
|
3,236,008 |
|
| Related party receivable |
|
|
2,500,117 |
|
| Other current assets |
|
|
1,393,817 |
|
| Plant and equipment, net |
|
|
4,036,649 |
|
| Intangible assets, net |
|
|
635,738 |
|
| Goodwill |
|
|
10,263,937 |
|
| Total
assets |
|
$ |
23,299,092 |
|
| |
|
|
|
|
| Short-term loan-bank |
|
|
(3,735,614 |
) |
| Related party payable |
|
|
(2,639,938 |
) |
| Accounts payable |
|
|
(1,966,099 |
) |
| Other current liabilities |
|
|
(3,902,896 |
) |
| Total liabilities |
|
|
(12,244,547 |
) |
| Non controlling
interest |
|
|
(3,758,545 |
) |
| Net assets
acquired |
|
$ |
7,296,000 |
|
Approximately $10.26 million of goodwill arising from the
acquisition consists mainly of synergies expected from combining
the operations of the Company and Anhui Ansheng Petrochemical
Equipment Co., Ltd. None of the goodwill is expected to be
deductible for income tax purposes.
Acquisition of Shandong
Yunchu Trading Co., Ltd.
On December 9, 2021, the Company and its wholly-owned
subsidiary Jiayi Technologies (Xianning) Co., Ltd,
formerly known as Lucky Sky Petrochemical Technology (Xianning)
Co., Ltd., entered into a Share Exchange Agreement with
Shandong Yunchu Supply Chain Co., Ltd, and each of shareholders of
Shandong Yunchu Supply Chain Co., Ltd. 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.
The Company’s acquisition of Shandong Yunchu Supply Chain
Co., Ltd was accounted for as a business combination
following ASC 805. The Company has allocated the purchase price of
Shandong Yunchu Supply Chain Co., Ltd based upon the
fair value of the identifiable assets acquired and liabilities
assumed on the acquisition date. The Company estimated the fair
values of the assets acquired and liabilities taken at the
acquisition date following the business combination standard issued
by the FASB with the valuation methodologies using level 3 inputs,
except for other current assets and current liabilities were valued
using the cost approach. Management of the Company is responsible
for determining the fair value of assets acquired, liabilities
assumed, and intangible assets identified as of the acquisition
date and considered several other available factors.
Acquisition-related costs incurred for the acquisitions are not
material and expensed as incurred in general and administrative
expenses.
The following table summarizes the fair value of the identifiable
assets acquired and liabilities assumed at the acquisition date,
which represents the net purchase price allocation at the date of
the acquisition of Shandong Yunchu Supply Chain Co.,
Ltd.:
The following table summarizes the fair value of the identifiable
assets acquired and liabilities assumed at the acquisition date,
which represents the net purchase price allocation at the date of
the acquisition of Shandong Yunchu Supply Chain Co.,
Ltd.:
| Total consideration at
fair value |
|
$ |
5,420,920 |
|
| |
|
Fair Value |
|
| Cash and cash equivalents,
and Restricted Cash |
|
$ |
77,427 |
|
| Trade receivable and Note
receivable |
|
|
780,556 |
|
| Inventories |
|
|
-
|
|
| Related party receivable |
|
|
86,448 |
|
| Other current assets |
|
|
4,899,559 |
|
| Plant and equipment, net |
|
|
-
|
|
| Intangible assets, net |
|
|
-
|
|
| Goodwill |
|
|
4,724,698 |
|
| Total
assets |
|
$ |
10,568,688 |
|
| |
|
|
|
|
| Short-term loan-bank |
|
|
-
|
|
| Related party payable |
|
|
-
|
|
| Accounts payable |
|
|
(992,424 |
) |
| Other current liabilities |
|
|
(4,155,344 |
) |
| Total liabilities |
|
|
(5,147,768 |
) |
| Non controlling
interest |
|
|
-
|
|
| Net assets
acquired |
|
$ |
5,420,920 |
|
Approximately $4.72 million of goodwill arising from the
acquisition consists mainly of synergies expected from combining
the operations of the Company and Shandong Yunchu Supply
Chain Co., Ltd. None of the goodwill is expected to be
deductible for income tax purposes.
5. Restricted Cash
As of December 31, 2021 and 2020, the balance of restricted cash
was $380,750 and $0, respectively. The details of restricted cash
refer to Note 24 contingency section.
6. 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
| |
|
12/31/2021 |
|
|
12/31/2020 |
|
| Trade accounts
receivable |
|
$ |
5,481,589 |
|
|
$ |
881,533 |
|
|
Less: Allowance for doubtful accounts |
|
|
(1,662,516 |
) |
|
|
(46,149 |
) |
| |
|
$ |
3,819,073 |
|
|
$ |
835,384 |
|
| Allowance for doubtful accounts |
|
|
|
|
|
|
|
|
| Beginning balance: |
|
|
(46,149 |
) |
|
|
-
|
|
| Additions to allowance |
|
|
(1,616,367 |
) |
|
|
(46,149 |
) |
| Bad debt
written-off |
|
|
-
|
|
|
|
-
|
|
| Ending
balance |
|
$ |
(1,662,516 |
) |
|
$ |
(46,149 |
) |
7. Advances and Prepayments to Suppliers
Prepayments include investment deposits to guarantee investment
contracts and advance payment to suppliers and vendors to procure
raw materials. Prepayments consist of the following:
| |
|
12/31/2021 |
|
|
12/31/2020 |
|
| Investment deposit
|
|
$ |
- |
|
|
$ |
3,061,568 |
|
| Payment to
suppliers and vendors |
|
|
5,681,083 |
|
|
|
2,860,994 |
|
| Total
|
|
$ |
5,681,083 |
|
|
$ |
5,922,562 |
|
8. Inventories
Inventories consisted of the following as of December 31, 2021 and
December 31, 2020
| |
|
12/31/2021 |
|
|
12/31/2020 |
|
| Raw materials |
|
$ |
2,988,855 |
|
|
$ |
240,468 |
|
| Inventory of supplies |
|
|
12,587 |
|
|
|
13,873 |
|
| Work in progress |
|
|
3,007,039 |
|
|
|
1,991,749 |
|
| Finished
goods |
|
|
1,807,951 |
|
|
|
5,538 |
|
| Total
|
|
$ |
7,816,432 |
|
|
$ |
2,251,628 |
|
9.
Plant and Equipment
Plant
and equipment consisted of the following as of December 31, 2021
and December 31, 2020:
| |
|
12/31/2021 |
|
|
12/31/2020 |
|
| At Cost: |
|
|
|
|
|
|
| Buildings |
|
$ |
17,550,376 |
|
|
$ |
3,952,207 |
|
| Machinery and
equipment |
|
|
11,681,716 |
|
|
|
1,103,152 |
|
| Office
equipment |
|
|
542,695 |
|
|
|
82,670 |
|
|
Motor vehicles |
|
|
1,740,191 |
|
|
|
161,590 |
|
| |
|
|
31,514,978 |
|
|
|
5,299,619 |
|
|
Less: Impairment |
|
|
(829,326 |
) |
|
|
-
|
|
|
Less: Accumulated depreciation |
|
|
(10,200,203 |
) |
|
|
(702,982 |
) |
| |
|
|
20,485,449 |
|
|
|
4,596,637 |
|
| Construction in
progress |
|
|
2,475,874 |
|
|
|
-
|
|
| |
|
$ |
22,961,323 |
|
|
$ |
4,596,637 |
|
Depreciation
expense for the twelve months ended December 31, 2021 and 2020 was
$ 2,212,080 and $ 290,690, respectively.
10. Intangible Assets
| |
|
12/31/2021 |
|
|
12/31/2020 |
|
| At Cost: |
|
|
|
|
|
|
| Land use rights |
|
|
4,121,488 |
|
|
|
801,170 |
|
| Software licenses |
|
|
86,359 |
|
|
|
56,949 |
|
| Trademark |
|
|
993,248 |
|
|
|
955,974 |
|
| |
|
$ |
5,201,095 |
|
|
$ |
1,814,093 |
|
| |
|
|
|
|
|
|
|
|
|
Less: Accumulated amortization |
|
|
(1,001,444 |
) |
|
|
(297,626 |
) |
| |
|
$ |
4,199,651 |
|
|
$ |
1,516,467 |
|
Amortization expense for the twelve months ended December 31, 2021
and 2020 was $ 241,172 and $ 183,590 respectively.
11. Investments
As of December 31, 2021, The Company paid approximately
$3,136,910 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
As of December 31, 2021, the Company spent $7,770,943 to
purchase real estates, a commercial complex, for the start-up of
the tea trade project, which project has been included in Xianning
City government’s 13th Five-Year Development Plan. The Company
plans to hold this real estate to earn rentals income.
12. Other Payable
As of December 31, 2021 and December 31, 2020, the balance of other
payable was $8,635,189 and $1,848,598. Other payables – third
parties are those non-trade payables arising from transactions
between the Company and certain third parties.
13. Related Parties Transaction
As of December 31, 2021 and December 31, 2020, the outstanding
balance due from related parties was $7,670,434 and $0,
respectively. Significant related parties comprised much of the
total outstanding balance as of December 31, 2021 are stated
below:
The outstanding balance of $4,470,097 was due from Mr. Cai
Xiaodong, the shareholder of the Anhui Ansheng Petrochemical
Equipment Co., Ltd.;
The outstanding balance of $735,140 was due from Meihekou
Chuangyuan Chemical Co. Ltd., which has the same legal
representative as Jilin branch.
The outstanding balance of $2,364,861was due from Wuxi
Xinganbang Petrochemical Equipment Co., Ltd, which has significant
influence on Ansheng branch.
The outstanding balance of $100,336 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 December 31, 2021 and December 31, 2020, the outstanding
balance due to related parties was $5,196,225 and $19,850,
respectively. Significant parties comprised much of the total
outstanding balance as of December 31, 2021 are stated below:
The outstanding balance of $1,077,529 as of December 31, 2021, was
due to Ms. Yan Yan, the spouse of the legal representative of Jilin
Chuangyuan Chemical Co., Ltd.;
The outstanding balance of $2,093,792 as of December 31, 2021, was
due to Mr. Su Lei, the executive of Anhui Ansheng Petrochemical
Equipment Co., Ltd.;
The outstanding balance of $487,054 as of December 31, 2021, was
due to Mr. Bin Zhou, Chief Executive Officer and Chairman of the
Company;
The outstanding balance of $352,902 as of December 31, 2021, was
due to Wuxi Yangchang Chemical Machinery Factory, which has
significant influence on Ansheng branch;
The outstanding balance of $871,257 as of December 31, 2021, was
due to a couple of executives of the subsidiaries of the
Company;
The outstanding balance of $313,691 as of December 31, 2021, was
due to the senior managements of Jilin Chuangyuan Chemical Co.,
Ltd.;
The balance was advanced for working capital of the Company,
non-interest bearing, and unsecured unless further disclosed.
14. Goodwill
The changes in the carrying amount of goodwill are as
follows:
|
Balance as of December 31, 2019 |
|
Ansheng |
|
|
Fast |
|
|
JSSH |
|
|
JLCY |
|
|
SDYC |
|
| Goodwill acquired through
acquisition |
|
$ |
-
|
|
|
$ |
4,679,940 |
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
| Goodwill
impairment |
|
|
-
|
|
|
|
(2,339,829 |
) |
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
| 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 |
|
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.
15. Bank Loans
The outstanding balances on short-term bank loans consisted of the
following:
|
Lender |
|
Maturities |
|
Weighted
average
interest rate |
|
|
12/31/2021 |
|
|
12/31/2020 |
|
| Rural
Credit Cooperatives of Jilin Province, Jilin Branch |
|
Due in November
2023 |
|
|
7.83 |
% |
|
|
3,921,138 |
|
|
|
-
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loan from Anhui
Langxi Rural Commercial Bank Of China |
|
Due in December 2021 |
|
|
3.85 |
% |
|
|
2,900,916 |
|
|
|
-
|
|
Buildings and land use rights in the amount of $10,178,520 are used
as collateral for Jiling 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 December 31, 2021, 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 bankers and
it is probable that the bank routinely keeps rolling over debt to
keep the Company’s liquidity.
Anhui Langxi Rural Commercial Bank’s bank loan has been guaranteed
by Anhui Langxi Small and Medium Enterprise Financing Guarantee
Co., Ltd. to which Ansheng branch provides the plant with book
value of $3,812,106 as the collateral.
16. 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 December 31, 2021 and 2020, the balance of
advance from customers was approximately $6,190,091 and $241,893.
These advances are considered as contract liabilities.
17. Equity
On May 9, 2019, the Company and its wholly owned subsidiary
Shanghai Xunyang Internet Technology Co., Ltd. (“Subsidiary”)
entered into a Share Exchange Agreement with Xianning Bozhuang Tea
Products Co., Ltd. (“Target”) and each of the shareholders of
Target (collectively, “Sellers”). Such transaction closed on May
14, 2019. Under the Share Exchange Agreement, the Subsidiary
acquired all outstanding equity interests of Target, a company that
produces tea products and sells such products in China. Pursuant to
the Share Exchange Agreement, the Company issued an aggregate of
1,080,000 shares of common stock of the Company to the Sellers in
exchange for the transfer of all of the equity interest of the
Target to the Subsidiary.
On June 17, 2019, the Company entered into a securities purchase
agreement, under which five individuals residing in the PRC agreed
to purchase an aggregate of 1,300,000 shares of the Company’s
common stock, par value $0.001 per share, for an aggregate purchase
price of $5,460,000, representing a purchase price of $4.20 per
share. The transaction closed on June 19, 2019.
On February 10, 2020, the Company entered into a securities
purchase agreement with Mengru Xu and Zhichao Du, according to
which Ms. Xu and Mr. Du agreed to invest an aggregate of $3.51
million in the Company in exchange for an aggregate of 1,350,000
shares of common stock, representing a purchase price of
approximately $2.60 per share. On February 28, 2020, the Company
closed the transaction.
On June 5, 2020, the Company issued an aggregate of 1,800,000
shares of its common stock to acquire all the outstanding equity
interest of Fast Approach Inc., a corporation incorporated under
the laws of Canada and in the business of operating a demand side
platform targeting the Chinese education market in North
America.
On December 30, 2020, the Company issued a total of 782,165
ordinary shares to six employees of the Company. Total fair value
of these ordinary shares was approximately $1.75 million and the
compensation expenses are to be recognized in the fiscal year 2020
because there is no employee’s requisite service period
requirement.
On January 4, 2021, the Company issued an aggregate of 2,200,000
shares of its common stock to the original shareholders of Jingshan
Sanhe Luckysky New Energy Technologies Co., Ltd in exchange for the
transfer of 85% of the equity interests of Jingshan Sanhe Luckysky
New Energy Technologies Co., Ltd. to the Company.
On January 26, 2021, the Company entered into a Securities Purchase
Agreement, pursuant to which three individuals residing in the
People’s Republic of China agreed to purchase an aggregate of
2,700,000 shares of the Company’s common stock, par value $0.001
per share, for an aggregate purchase price of $6,750,000,
representing a purchase price of $2.50 per Share.
On March 9, 2021, the Company issued an aggregate of 3,300,000
shares of common stock of the Company to the original shareholder
of Jilin Chuangyuan Chemical Co., Ltd in exchange for the transfer
of 75% of the equity interest of Jilin Chuangyuan Chemical Co., Ltd
to the Company.
On April 26, 2021, the Company has entered into a Share Purchase
Agreement with three investors, Pursuant to the agreement, the
Company will receive gross proceeds of $7,600,000 in the aggregate,
in exchange for the issuance of an aggregate of 4,000,000 shares of
the Company’s common stock, representing a purchase price of
approximately $1.90 per share.
On July 15, 2021, the Company has issued an aggregate of 4,800,000
shares of common stock of the Company to the equity holders of
Anhui Ansheng Petrochemical Equipment Co., Ltd in exchange for the
transfer of 66% of the equity interest of Anhui Ansheng
Petrochemical Equipment Co., Ltd to the Company.
On July 30, 2021, the Company issued a total of 872,000 ordinary
shares to seven employees of the Company. Total fair value of these
common shares was approximately $1.16 million. The compensation
expenses are to be recognized in the fiscal year 2021 because there
is no employee’s requisite service period requirement.
On December 30, 2021, The Company issued an aggregate of
5,900,000 shares of common stock to the equity holders of A
Shandong Yunchu Supply Chain Co., Ltd for the transfer
to 100% of the equity interest of Shandong Yunchu Supply
Chain Co., Ltd to the Jiayi Technologies (Xianning) Co.,
Ltd.
As of December 31, 2021, there were 35,581,930 shares of common
stock outstanding.
18. 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 years
ended December 31, 2021 and 2020:
| |
|
12/31/2021 |
|
|
12/31/2020 |
|
| Loss attributed to PRC
operations |
|
$ |
(5,540,404 |
) |
|
$ |
(34,348 |
) |
| Loss attributed to U.S.
operations |
|
|
(1,753,427 |
) |
|
|
(20,529,997 |
) |
| Loss attributed to Canada
operations |
|
|
(2,640,821 |
) |
|
|
(417,271 |
) |
| Income
attributed to BVI |
|
|
-
|
|
|
|
9,779,542 |
|
| Loss before
tax |
|
$ |
(9,934,652 |
) |
|
$ |
(11,202,074 |
) |
| |
|
|
|
|
|
|
|
|
| PRC Statutory Tax at 25% Rate |
|
|
(1,385,101 |
) |
|
|
(8,587 |
) |
| Effect of tax exemption
granted |
|
|
-
|
|
|
|
-
|
|
| Valuation
allowance |
|
|
1,441,551 |
|
|
|
8,587 |
|
| Income tax |
|
$ |
56,450 |
|
|
$ |
-
|
|
|
Per Share Effect of Tax Exemption |
|
|
|
|
|
|
|
|
| Effect of tax exemption
granted |
|
$ |
-
|
|
|
|
$ - |
|
| Weighted-Average Shares Outstanding
Basic |
|
|
24,778,588 |
|
|
|
10,112,648 |
|
| Per share
effect |
|
$ |
-
|
|
|
$ |
-
|
|
The difference between the U.S. federal statutory income tax rate
and the Company’s effective tax rate was as follows as of December
31, 2021 and 2020:
| |
|
12/31/2021 |
|
|
12/31/2020 |
|
| 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 |
|
|
(25.57 |
)% |
|
|
(25.00 |
)% |
| The
Company’s effective tax rate |
|
|
(0.57 |
)% |
|
|
-
|
% |
19. Earnings/(Loss) Per Share
Components of basic and diluted earnings per share were as
follows:
| |
|
For
the years ended |
|
| |
|
December 31, |
|
| |
|
2021 |
|
|
2020 |
|
| Loss from operations
attributable to common stockholders |
|
$ |
(9,740,486 |
) |
|
$ |
(11,501,163 |
) |
| |
|
|
|
|
|
|
|
|
| Basic and diluted (loss) earnings per
share denominator: |
|
|
|
|
|
|
|
|
| Original Shares at the beginning: |
|
|
11,809,930 |
|
|
|
7,877,765 |
|
| Additions from Actual Events -issuance
of common stock for cash |
|
|
2,926,027 |
|
|
|
1,202,055 |
|
| Additions from Actual Events –
issuance of common stock for acquisition |
|
|
9,672,329 |
|
|
|
1,030,685 |
|
| Additions from Actual Events –
issuance of common stock for stock compensation |
|
|
370,302 |
|
|
|
2,143 |
|
| Basic Weighted
Average Shares Outstanding |
|
|
24,778,588 |
|
|
|
10,112,648 |
|
| |
|
|
|
|
|
|
|
|
|
(Loss) income per share from continuing operations - Basic and
diluted
|
|
$ |
(0.40 |
) |
|
$ |
(1.11 |
) |
|
(Loss) income per share from discontinued operations-Basic and
diluted
|
|
$ |
0.00 |
|
|
$ |
0.01 |
|
|
(Loss) income per common shareholders - Basic and diluted
|
|
$ |
(0.39 |
) |
|
$ |
(1.09 |
) |
|
Basic and diluted weighted average shares outstanding
|
|
|
24,778,588 |
|
|
|
10,112,648 |
|
20. 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 years
ended December 31, 2021 and 2020.
| |
|
For the years ended |
|
|
Customers |
|
31-Dec-21 |
|
|
31-Dec-20 |
|
| |
|
Amount $ |
|
|
% |
|
|
Amount $ |
|
|
% |
|
| A |
|
|
1,603,947 |
|
|
|
15 |
|
|
|
-
|
|
|
|
-
|
|
| B |
|
|
1,558,075 |
|
|
|
15 |
|
|
|
-
|
|
|
|
-
|
|
| C |
|
|
1,294,587 |
|
|
|
12 |
|
|
|
-
|
|
|
|
-
|
|
| D |
|
|
|
|
|
|
|
|
|
|
3,165,520 |
|
|
|
88 |
|
Suppliers Concentrations
The following table sets forth information about each supplier that
accounted for 10% or more of the Company’s purchase for the years
ended December 31, 2021 and 2020.
| |
|
For the years ended |
|
|
Suppliers |
|
31-Dec-21 |
|
|
31-Dec-20 |
|
| |
|
Amount $ |
|
|
% |
|
|
Amount $ |
|
|
% |
|
| A |
|
|
830,263 |
|
|
|
14 |
|
|
|
-
|
|
|
|
-
|
|
| B |
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
| C |
|
|
-
|
|
|
|
-
|
|
|
|
307,817 |
|
|
|
50 |
|
| D |
|
|
-
|
|
|
|
-
|
|
|
|
225,577 |
|
|
|
37 |
|
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 the new lease, using
an effective interest rate of 4.75%, which is determined using an
incremental borrowing rate.
The weighted average remaining lease term of its existing
leases is 1.33 years.
The Company’s lease agreements do not contain any material
residual value guarantees or material restrictive
covenants.
For the twelve months ended December 31, 2021 and 2020, rent
expenses amounted to $442,297 and $413,572
respectively.
The five-year maturity of the Company’s lease obligations is
presented below:
|
Twelve months ended December 31, |
|
Operating lease amount |
|
| 2022 |
|
|
442,297 |
|
| 2023 |
|
|
147,432 |
|
| Total lease payment |
|
|
589,729 |
|
| Less:
interest |
|
|
(153,538 |
) |
| Present value of
lease liabilities |
|
$ |
436,191 |
|
22. 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. |
23. Contingencies
From time to time, the Company is a party to various legal actions
arising in the ordinary course of business. In November 2021, the
claim occurred between Ansheng and Beijing Aerospace Star
Technology Co., Ltd due to the dispute over the commercial
contracts. On November 16, 2021, Beijing Aerospace Star Technology
Co., Ltd applied for pre-litigation custody of property
preservation with the local people’s Court of Langxi County,
freezing Ansheng’s available cash of $229,120 before filing the
action. The liabilities amounts have been accrued in the
accompanying consolidated financial statements for the year ended
December 31, 2021.
As of December 31, 2021, 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 bankers
and it is probable that the bank routinely keeps rolling over debt
to keep the Company’s liquidity.
The Plaintiff(Wuxi Suxin Natural Gas Utilization Co., Ltd.) sued
for that the defendants (Anhui Xuanneng Natural Gas Energy
Equipment Co., Ltd, Anhui Ansheng Petrochemical Equipment Co., Ltd
and other related individuals) have damaged the interest of
creditors and the defendant should restitute the plaintiff’s
mortgage loan principal as well as the interest. The case has now
been transferred to the Changfeng County Court of Anhui Province
for processing. Meanwhile, due to the impact of this case, Ansheng
Company’s available cash of $151,630 was temporarily frozen by the
court. There was a few solid evidence proves that Anhui Ansheng
Petrochemical Equipment Co., Ltd. and Anhui Xuanneng Natural Gas
Energy Equipment Co., Ltd. are independent entities, management
believes the possibility of unfavorable outcome occur is remote and
there was not any negative or any contingency impact on the 2021
Financial statements.
24. Subsequent Events
The Company has assessed all events from December 31, 2021 up
through March 30, 2022, which is the date that these consolidated
financial statements are available to be issued, unless as
disclosed below, there are not any material subsequent events that
require disclosure in these consolidated financial statements.
On January 13, 2022, 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 exchange for
the issuance of an aggregate of 7,000,000 shares of the Company’s
common stock, representing a purchase price of approximately $1.00
per share.
On February 11, 2022, the Company has entered into a Share Purchase
Agreement with Xiaodong Cai, the shareholders of Anhui Ansheng
Petrochemical Equipment Co., Ltd., pursuant to the Share Purchase
Agreement, the Company shall pay the Seller up to an aggregate of
U.S. $5,250,000 in exchange for 20.58% of the issued and
outstanding shares of Anhui Ansheng Petrochemical Equipment Co.,
Ltd. After execution of this agreement, the Company held Ansheng’s
86.58% issued and outstanding shares.
10-K/A 0.40 1.11 0.01 0.39 1.09 10112648
24778588 0.40 1.11 0.00 0.01 0.39 1.09 10112648 24778588 true FY
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