Except where the context otherwise requires and
for the purposes of this report only:
ITEM 1. FINANCIAL STATEMENTS
PLANET GREEN HOLDINGS CORP.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2021 AND DECEMBER 31, 2020
(Stated in US Dollars)
PLANET GREEN HOLDINGS CORP.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
AT MARCH 31, 2021AND DECEMBER 31, 2020
(Stated in US Dollars)
|
|
31 March,
2021
|
|
|
31 December, 2020
|
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,467,025
|
|
|
$
|
3,415,751
|
|
Trade receivables, net
|
|
|
1,669,689
|
|
|
|
835,384
|
|
Note receivable
|
|
|
15,218
|
|
|
|
-
|
|
Inventories
|
|
|
3,532,651
|
|
|
|
2,251,628
|
|
Advances and prepayments to suppliers
|
|
|
7,166,576
|
|
|
|
5,922,562
|
|
Other receivables and other current assets
|
|
|
5,117,028
|
|
|
|
1,091,815
|
|
Related party receivable
|
|
|
1,885,289
|
|
|
|
-
|
|
Total current assets
|
|
$
|
20,853,476
|
|
|
$
|
13,517,140
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Plant and equipment, net
|
|
|
17,067,974
|
|
|
|
4,596,637
|
|
Intangible assets, net
|
|
|
3,609,212
|
|
|
|
1,516,467
|
|
Construction in progress, net
|
|
|
2,148,130
|
|
|
|
-
|
|
Deferred tax assets
|
|
|
1,137,163
|
|
|
|
-
|
|
Goodwill
|
|
|
6,455,321
|
|
|
|
2,340,111
|
|
Right-of-use assets
|
|
|
871,949
|
|
|
|
-
|
|
Total Assets
|
|
$
|
52,143,225
|
|
|
$
|
21,970,355
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Short-term bank loans
|
|
$
|
4,260,953
|
|
|
$
|
-
|
|
Accounts payable
|
|
|
1,826,563
|
|
|
|
1,302,850
|
|
Taxes payable
|
|
|
66,866
|
|
|
|
198,683
|
|
Accrued liabilities and other payables
|
|
|
4,355,036
|
|
|
|
1,848,598
|
|
Customers deposits
|
|
|
863,687
|
|
|
|
241,893
|
|
Related party payable
|
|
|
1,380,096
|
|
|
|
19,850
|
|
Lease payable-current portion
|
|
|
408,731
|
|
|
|
-
|
|
Deferred income
|
|
|
84,702
|
|
|
|
15,682
|
|
Total current liabilities
|
|
$
|
13,246,634
|
|
|
$
|
3,627,556
|
|
|
|
|
|
|
|
|
|
|
Lease payable- non-current
|
|
$
|
428,146
|
|
|
$
|
-
|
|
Long-term payables
|
|
|
281,215
|
|
|
|
31,364
|
|
Total Liabilities
|
|
$
|
13,955,996
|
|
|
$
|
3,658,919
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
Preferred Stock, $0.001 par value, 5,000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively
|
|
$
|
-
|
|
|
$
|
-
|
|
Common Stock, $0.001 par value, 200,000,000 shares authorized; 20,009,930 and 11,809,930 shares issued and outstanding as of March 31, 2021 and December 31, 2020 respectively
|
|
|
20,010
|
|
|
|
11,810
|
|
Additional paid-in capital
|
|
|
115,216,160
|
|
|
|
95,659,360
|
|
Accumulated deficit
|
|
|
(85,720,360
|
)
|
|
|
(84,331,897
|
)
|
Accumulated other comprehensive income
|
|
|
6,526,680
|
|
|
|
6,972,163
|
|
Non-controlling interests
|
|
|
2,144,739
|
|
|
|
-
|
|
Total Stockholders’ Equity
|
|
$
|
38,187,229
|
|
|
$
|
18,311,436
|
|
Total Liabilities and Stockholders’ Equity
|
|
$
|
52,143,225
|
|
|
$
|
21,970,355
|
|
See
Accompanying Notes to the Financial Statements
PLANET GREEN HOLDINGS CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020
(Stated in US Dollars)
|
|
31 March,
|
|
|
31 March,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
2,236,143
|
|
|
$
|
834,711
|
|
Cost of revenues
|
|
|
2,030,575
|
|
|
|
852,069
|
|
Gross profit
|
|
|
205,568.87
|
|
|
|
(17,358
|
)
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Selling and marketing expenses
|
|
|
224,519
|
|
|
|
7,845
|
|
General and administrative expenses
|
|
|
1,562,213
|
|
|
|
422,579
|
|
Total operating expenses
|
|
|
1,786,732
|
|
|
|
430,424
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(1,581,163
|
)
|
|
|
(447,782
|
)
|
|
|
|
|
|
|
|
|
|
Other income (expenses):
|
|
|
|
|
|
|
|
|
Interest income (expense), net
|
|
|
(109,502
|
)
|
|
|
860
|
|
Other income
|
|
|
199,475
|
|
|
|
414
|
|
Other expenses
|
|
|
(126
|
)
|
|
|
(143,287
|
)
|
Total other (expenses) income
|
|
|
89,847
|
|
|
|
(142,013
|
)
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(1,491,316
|
)
|
|
|
(589,795
|
)
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
|
(1,491,316
|
)
|
|
|
(589,795
|
)
|
|
|
|
|
|
|
|
|
|
Net loss attributable to non-controlling interest
|
|
|
(102,853
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to common shareholders
|
|
|
(1,388,463
|
)
|
|
|
(589,795
|
)
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,491,316
|
)
|
|
$
|
(589,795
|
)
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
Foreign currency translation loss attributable to non-controlling interest
|
|
|
(9,526
|
)
|
|
|
-
|
|
Foreign currency translation gain (loss) attributable to common shareholders
|
|
|
165,069
|
|
|
|
(306,027
|
)
|
Comprehensive loss
|
|
$
|
(1,335,774
|
)
|
|
$
|
(895,822
|
)
|
|
|
|
|
|
|
|
|
|
Loss per share attributable to common shareholders - Basic and diluted
|
|
$
|
(0.08
|
)
|
|
$
|
(0.07
|
)
|
Basic and diluted weighted average shares outstanding
|
|
|
16,729,930
|
|
|
|
7,996,121
|
|
See Accompanying Notes to the Financial Statements
PLANET GREEN HOLDINGS CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF CHANGES IN
STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND
2020
(Stated in US Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
Other
|
|
|
Non-
|
|
|
|
|
|
|
Number of
|
|
|
Common
|
|
|
Paid-in
|
|
|
Statutory
|
|
|
Accumulated
|
|
|
Comprehensive
|
|
|
Controlling
|
|
|
|
|
|
|
Shares
|
|
|
Stock
|
|
|
Capital
|
|
|
Reserves
|
|
|
Deficit
|
|
|
Income
|
|
|
Interests
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2020
|
|
|
7,877,765
|
|
|
|
7,878
|
|
|
|
85,803,421
|
|
|
|
-
|
|
|
|
(73,280,734
|
)
|
|
|
8,203,941
|
|
|
|
-
|
|
|
|
20,734,506
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(589,795
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(589,795
|
)
|
Issuance of common stock for cash
|
|
|
1,350,000
|
|
|
|
1,350
|
|
|
|
3,508,650
|
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,510,000
|
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(306,027
|
)
|
|
|
-
|
|
|
|
(306,027
|
)
|
Balance, March 31, 2020
|
|
|
9,227,765
|
|
|
|
9,228
|
|
|
|
89,312,071
|
|
|
|
-
|
|
|
|
(73,870,529
|
)
|
|
|
7,897,914
|
|
|
|
-
|
|
|
|
23,348,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2021
|
|
$
|
11,809,930
|
|
|
$
|
11,810
|
|
|
$
|
95,659,360
|
|
|
$
|
-
|
|
|
$
|
(84,331,897
|
)
|
|
$
|
6,972,163
|
|
|
$
|
-
|
|
|
$
|
18,311,436
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,388,463
|
)
|
|
|
-
|
|
|
|
(102,853
|
)
|
|
|
(1,491,316
|
)
|
Issuance of shares for acquisition
|
|
|
5,500,000
|
|
|
|
5,500
|
|
|
|
12,809,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,815,000
|
|
Issuance of common stock for cash
|
|
|
2,700,000
|
|
|
|
2,700
|
|
|
|
6,747,300
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,750,000
|
|
Acquiring subsidiaries
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(445,483
|
)
|
|
|
2,257,118
|
|
|
|
1,811,636
|
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(9,526
|
)
|
|
|
(9,526
|
)
|
Balance, March 31, 2021
|
|
$
|
20,009,930
|
|
|
$
|
20,010
|
|
|
$
|
115,216,160
|
|
|
$
|
-
|
|
|
$
|
(85,720,360
|
)
|
|
$
|
6,526,680
|
|
|
$
|
2,144,739
|
|
|
$
|
38,187,229
|
|
See Accompanying Notes to the Financial Statements
PLANET GREEN HOLDINGS CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020
(STATED IN US DOLLARS)
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,491,316
|
)
|
|
$
|
(589,795
|
)
|
Bad debt expenses
|
|
|
79,558
|
|
|
|
2,098
|
|
Amortization
|
|
|
47,566
|
|
|
|
34,270
|
|
Depreciation
|
|
|
515,439
|
|
|
|
132,554
|
|
Acquisition of subsidiaries
|
|
|
(4,587,400
|
)
|
|
|
-
|
|
Accounts and other receivables
|
|
|
(3,722,118
|
)
|
|
|
(643,396
|
)
|
Inventory
|
|
|
(303,125
|
)
|
|
|
(361,379
|
)
|
Prepayments and other current assets
|
|
|
(343,097
|
)
|
|
|
(3,192,485
|
)
|
Payables and other current liabilities
|
|
|
118,354
|
|
|
|
(1,843,031
|
)
|
Net cash used in operating activities
|
|
$
|
(9,686,139
|
)
|
|
$
|
(6,461,158
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
Purchase of plant and equipment and construction in progress
|
|
|
(121,053
|
)
|
|
|
(287,573
|
)
|
Purchase of intangible assets
|
|
|
(47,566
|
)
|
|
|
-
|
|
Net cash used in investing activities
|
|
$
|
(168,619
|
)
|
|
$
|
(287,573
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
6,750,000
|
|
|
|
3,510,000
|
|
Changes in related party balances, net
|
|
|
1,633,888
|
|
|
|
(75,942
|
)
|
Net cash provided by financing activities
|
|
$
|
8,383,888
|
|
|
$
|
3,505,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(1,470,869
|
)
|
|
|
(3,243,632
|
)
|
|
|
|
|
|
|
|
|
|
Effect of foreign currency translation on cash and cash equivalents
|
|
|
(477,857
|
)
|
|
|
(41,718
|
)
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents–beginning of year
|
|
|
3,415,751
|
|
|
|
7,403,323
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents–end of year
|
|
$
|
1,467,025
|
|
|
$
|
4,117,973
|
|
See Accompanying Notes to the Financial Statements
PLANET GREEN HOLDINGS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021 AND DECEMBER 31, 2020
(Stated in U.S. 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 unaudited condensed consolidated
financial statements have been prepared assuming that the Company will continue as a going concern; however, the Company has incurred
a net loss of $1,491,316 for the three months ended March 31, 2021. As of March 31, 2021, the Company had an accumulated deficit of $85,720,360;
its net cash used in operating activities for the three months ended March 31, 2021 was $9,686,139.
These factors raise substantial doubt on the Company’s
ability to continue as a going concern. The accompanying unaudited condensed consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty. Management’s plan for the Company’s continued existence is dependent
upon management’s ability to execute the business plan, 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 of America; the Company maintains its general ledger
and journals with the accrual method accounting.
Principles of consolidation
The accompanying consolidated financial statements include the assets,
liabilities, and results of operations of the Company, and its subsidiaries, which are listed below:
The accompanying consolidated financial statements reflect the activities of Planet Green Holdings Corp. and each of the following entities:
Name
|
|
Place of incorporation
|
|
Ownership
|
Planet Green Holdings Corporation (BVI)
|
|
The British Virgin Islands
|
|
100% owned by Planet Green Holdings Corp (Nevada)
|
Lucky Sky Planet Green Holdings Co., Limited.
|
|
Hong Kong
|
|
100% owned by Planet Green Holdings Corp (BVI)
|
Jiayi Technologies (Xianning) Co., Ltd.
|
|
PRC
|
|
100% owned by Lucky Sky Planet Green Holdings
|
Fast Approach Inc.
|
|
Canada
|
|
100% owned by Planet Green Holdings Corp (BVI)
|
Shanghai Shuning Advertising Co., Ltd.
|
|
PRC
|
|
100% owned by Fast Approach Inc.
|
Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd
|
|
PRC
|
|
VIE of Jiayi Technologies (Xianning) Co., Ltd
|
Jilin Chuangyuan Chemical Co., Ltd
|
|
PRC
|
|
VIE of Jiayi Technologies (Xianning) Co., Ltd.
|
Xianning Bozhuang Tea Products Co., Ltd.
|
|
PRC
|
|
VIE of Jiayi Technologies (Xianning) Co., Ltd
|
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.
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 January 6, 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 Jingshan Sanhe Luckysky New Energy Technologies 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 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.
Use of estimates
The preparation of the financial statements requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent
assets and liabilities at the date of the 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 estimates 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 to sell them in the near term.
All securities 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 and 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 investment 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 subsequent to 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.
Trade receivables
Trade 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 are 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 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 are referring 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
that is 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.
|
|
03/31/2021
|
|
|
12/31/2020
|
|
|
03/31/2020
|
|
Period-end US$: CDN$ exchange rate
|
|
|
1.2624
|
|
|
|
1.2754
|
|
|
|
1.3612
|
|
Period-end US$: RMB exchange rate
|
|
|
6.5713
|
|
|
|
6.5326
|
|
|
|
7.0851
|
|
Period average US$: CDN$ exchange rate
|
|
|
1.2658
|
|
|
|
1.3409
|
|
|
|
1.3624
|
|
Period average US$: RMB exchange rate
|
|
|
6.4844
|
|
|
|
6.8996
|
|
|
|
6.9790
|
|
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 recognized 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
high-grade synthetic fuel products, industrial formaldehyde solution, urea-formaldehyde pre-condensate (UFC), methylal, urea-formaldehyde
glue for environment-friendly artificial board chemicals, 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 that future realization is uncertain.
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. Securities that are potentially an anti-dilutive effect (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 fair value of financial instruments held by the Company. 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 each
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 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. 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 includes the associated operating lease payments in the undiscounted future pre-tax cash flows.
As of March 31, 2020, there were approximately $0.87 million right
of use (“ROU”) assets and approximately $0.84 million lease liabilities,the current and non-current portion were $0.41
million and $0.43 million respectively, based on the present value of the future minimum rental payments of leases, using incremental
borrowing rate of 4.75% and 4.90% based on duration of lease terms.
Commitments and contingencies
Liabilities for loss contingencies arising from
claims, assessments, litigation, fines and penalties, and other sources are recorded when it is probable that a liability has been incurred
and the amount of the assessment can be reasonably estimated.
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. Restricted Cash
Restricted cash represents interest bearing deposits placed with banks
to secure banking facilities in the form of loans and notes payable. The funds are restricted from immediate use and are designated for
settlement of loans or notes when they become due.
4. 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 that has a controlling financial interest in a VIE is deemed to be the primary beneficiary and must
consolidate the VIE. PLAG WOFE is deemed to have the controlling financial interest and be the primary beneficiary of Xianning
Bozhuang Tea Products Co., Ltd, Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd and Jilin Chuangyuan Chemical Co., Ltd
because it has both of the following characteristics:
1)The power to direct activities at Xianning Bozhuang
Tea Products Co., Ltd, Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd and Jilin Chuangyuan Chemical Co., Ltd that most significantly
impact such entity’s economic performance, and
2)The
obligation to absorb losses of, and the right to receive benefits from Xianning Bozhuang Tea Products Co., Jingshan Sanhe Luckysky New
Energy Technologies Co., Ltd and Jilin Chuangyuan Chemical Co., Ltd Ltd that could potentially be significant to such entity. Pursuant
to the Contractual Arrangements, Xianning Bozhuang Tea Products Co., Ltd,Jingshan
Sanhe Luckysky New Energy Technologies 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 Xianning Bozhuang Tea Products Co., Ltd’s, Jingshan
Sanhe Luckysky New Energy Technologies Co., Ltd’s and Jilin Chuangyuan Chemical Co., Ltd’s losses. The Contractual Arrangements
are designed so that Xianning Bozhuang Tea Products Co., Ltd, Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd and Jilin Chuangyuan
Chemical Co., Ltd operate for the benefit of PLAG WFOE and ultimately, the Company. Accordingly, the accounts of Xianning Bozhuang Tea
Products Co., Ltd, Jingshan Sanhe Luckysky New Energy Technologies 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:
|
|
03/31/2021
|
|
|
12/31/2020
|
|
Cash and cash equivalents
|
|
$
|
183,321
|
|
|
$
|
528,048
|
|
Note and Accounts receivable, net
|
|
|
1,684,160
|
|
|
|
835,384
|
|
Other receivables - third party
|
|
|
701,426
|
|
|
|
7,726,607
|
|
Inventories, net
|
|
|
3,532,651
|
|
|
|
2,251,628
|
|
Prepayments
|
|
|
2,171,262
|
|
|
|
1,215,089
|
|
Related party receivable
|
|
|
9,592,683
|
|
|
|
-
|
|
TOTAL CURRENT ASSETS
|
|
|
17,865,503
|
|
|
|
12,556,756
|
|
|
|
|
|
|
|
|
|
|
Plan and equipment, net
|
|
|
17,062,205
|
|
|
|
4,592,615
|
|
Intangible assets, net
|
|
|
3,584,105
|
|
|
|
1,491,614
|
|
Construction in progress, net
|
|
|
2,148,130
|
|
|
|
-
|
|
Deferred tax assets
|
|
|
1,137,163
|
|
|
|
-
|
|
Right-of-use assets
|
|
|
871,949
|
|
|
|
-
|
|
Total Non-Current Assets
|
|
|
24,803,552
|
|
|
|
6,084,229
|
|
TOTAL ASSETS
|
|
$
|
42,669,054
|
|
|
$
|
18,640,985
|
|
|
|
|
|
|
|
|
|
|
Short-term bank loans
|
|
$
|
4,260,953
|
|
|
$
|
-
|
|
Accounts payable
|
|
|
1,545,812
|
|
|
|
1,017,373
|
|
Advance from customer
|
|
|
510,305
|
|
|
|
213,469
|
|
Other payables and accrued liabilities
|
|
|
3,743,454
|
|
|
|
8,951,118
|
|
Related party payable
|
|
|
15,796,213
|
|
|
|
2,716,537
|
|
Taxes payable
|
|
|
66,866
|
|
|
|
171,231
|
|
Deferred income
|
|
|
68,860
|
|
|
|
-
|
|
Lease payable-current portion
|
|
|
408,731
|
|
|
|
-
|
|
TOTAL CURRENT LIABILITIES
|
|
|
26,401,194
|
|
|
|
13,069,728
|
|
|
|
|
|
|
|
|
|
|
Lease payable- non-current
|
|
|
428,146
|
|
|
|
-
|
|
Long term payable
|
|
|
249,531
|
|
|
|
-
|
|
TOTAL LIABILITIES
|
|
$
|
27,078,871
|
|
|
$
|
13,069,728
|
|
|
|
|
|
|
|
|
|
|
Paid-in capital
|
|
|
20,305,655
|
|
|
|
6,314,908
|
|
Accumulated deficit
|
|
|
(655,024
|
)
|
|
|
(793,601
|
)
|
Accumulated other comprehensive income
|
|
|
(4,060,447
|
)
|
|
|
49,950
|
|
Total Equity
|
|
|
15,590,184
|
|
|
|
5,571,257
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
$
|
42,669,054
|
|
|
$
|
18,640,985
|
|
5. 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 considered several other available factors. Acquisition-related costs incurred
for the acquisitions are not material and expensed as incurred in general and administrative expense.
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
|
|
|
(50,080
|
)
|
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 J 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 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 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
|
|
Related party receivable
|
|
|
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
|
)
|
Related party payable
|
|
|
(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.
6. Trade Receivables
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
|
|
03/31/2021
|
|
|
12/31/2020
|
|
Trade accounts receivable
|
|
$
|
1,795,396
|
|
|
$
|
881,533
|
|
Less: Allowance for doubtful accounts
|
|
|
(125,707
|
)
|
|
|
(46,149
|
)
|
|
|
$
|
1,669,689
|
|
|
$
|
835,384
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
(46,149
|
)
|
|
$
|
-
|
|
Additions to allowance
|
|
|
(79,558
|
)
|
|
|
(46,149
|
)
|
Bad debt written-off
|
|
|
-
|
|
|
|
-
|
|
Ending balance
|
|
$
|
(125,707
|
)
|
|
$
|
(46,149
|
)
|
7. Advances and prepayments to
suppliers
Advances and prepayments include investment deposit to guarantee its
investment contracts and advance payment to suppliers and vendors for the procurement of raw materials. Advances and prepayments consist
of the following:
|
|
03/31/2021
|
|
|
12/31/2020
|
|
Investment deposit
|
|
$
|
3,043,538
|
|
|
$
|
3,061,568
|
|
Payment to suppliers and vendors
|
|
|
4,123,038
|
|
|
|
2,860,994
|
|
Total
|
|
$
|
7,166,576
|
|
|
$
|
5,922,562
|
|
8. Inventories
Inventories consisted of the following as of March 31, 2021 and December 31, 2020
|
|
03/31/2021
|
|
|
12/31/2020
|
|
Raw materials
|
|
$
|
1,568,834
|
|
|
$
|
240,468
|
|
Inventory of supplies
|
|
|
13,134
|
|
|
|
13,873
|
|
Work in progress
|
|
|
1,462,822
|
|
|
|
1,991,749
|
|
Finished goods
|
|
|
487,862
|
|
|
|
5,538
|
|
Total
|
|
$
|
3,532,652
|
|
|
$
|
2,251,628
|
|
Plant,
and equipment consisted of the following as of March 31, 2021 and December 31, 2020:
|
|
03/31/2021
|
|
|
12/31/2020
|
|
At Cost:
|
|
|
|
|
|
|
|
|
Buildings
|
|
$
|
13,621,125
|
|
|
$
|
3,952,207
|
|
Machinery and equipment
|
|
|
9,826,494
|
|
|
|
1,103,152
|
|
Office equipment
|
|
|
390,115
|
|
|
|
82,670
|
|
Motor vehicles
|
|
|
1,310,854
|
|
|
|
161,590
|
|
|
|
|
25,148,588
|
|
|
|
5,299,619
|
|
Less: Impairment
|
|
|
(804,642
|
)
|
|
|
-
|
|
Less: Accumulated depreciation
|
|
|
(7,275,972
|
)
|
|
|
(702,982
|
)
|
|
|
|
17,067,974
|
|
|
|
4,596,637
|
|
Construction in progress
|
|
|
2,148,130
|
|
|
|
-
|
|
|
|
$
|
19,216,104
|
|
|
$
|
4,596,637
|
|
Depreciation expense for the three months ended March 31, 2021 and 2020 was $508,625 and $132,554 respectively.
10. Intangible Assets
|
|
03/31/2021
|
|
|
12/31/2020
|
|
At Cost:
|
|
|
|
|
|
|
|
|
Land use rights
|
|
|
3,234,394
|
|
|
|
801,170
|
|
Software licenses
|
|
|
72,203
|
|
|
|
56,949
|
|
Trademark
|
|
|
963,302
|
|
|
|
955,974
|
|
|
|
$
|
4,269,899
|
|
|
$
|
1,814,093
|
|
Less: Accumulated amortization
|
|
|
(660,687
|
)
|
|
|
(297,626
|
)
|
|
|
$
|
3,609,212
|
|
|
$
|
1,516,467
|
|
Amortization expense for the three months ended March 31, 2021 and 2020 was $46,937 and $34,276, respectively.
11. Related
Parties Transaction
As of March 31, 2021 and December 31, 2020, the outstanding balance
due from related parties is $1,885,289 and $Nil respectively.
As of March 31, 2021, the outstanding
balances of $211,343 were due from Meihekou Chuangyuan Chemical Co., Ltd., controlled by Yongsheng Chen, a senior management and
legal representative of Jilin Chuangyuan Chemical Co., Ltd.. The amounts are due on demand, non-interest bearing, and unsecured.
As of March 31, 2021, the outstanding balances of $1,673,946 were
due from Yongsheng Chen, a senior management and legal representative of Jilin Chuangyuan Chemical Co., Ltd.. The amounts are due on
demand, non-interest bearing, and unsecured.
As of March 31, 2021 and December 31, 2020, the outstanding balance
due to related parties is $1,380,096 and $19,850 respectively.
The outstanding balance of $913,061 as of March 31, 2021 was due to
the wife of the Yongsheng Chen, a senior management and legal representative of Chuangyuan Chemical Co., Ltd. The balance was advances
for working capital of the Company, non-interest bearing, and unsecured, unless further disclosed.
The outstanding balance of $467,035
as of March 31, 2021 was due to the senior managements of Chuangyuan Chemical Co., Ltd. The balance was advances for working capital
of the Company, non-interest bearing, and unsecured, unless further disclosed.
The outstanding balance of $19,850 as of December 31, 2020 was due
to Yong Yang, an executive of a subsidiary, was advances for working capital of the Company, non-interest bearing, and unsecured, unless
further disclosed.
12. Goodwill
The changes in the carrying amount of goodwill by reportable segments
are as follows:
Balance as of January 1, 2020
|
|
Fast
|
|
|
JSSH
|
|
|
JLCY
|
|
Goodwill acquired through acquisition
|
|
$
|
4,679,940
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Goodwill impairment
|
|
|
(2,339,829
|
)
|
|
|
-
|
|
|
|
-
|
|
Balance as of December 31, 2020
|
|
|
2,340,111
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2021
|
|
|
2,340,111
|
|
|
|
-
|
|
|
|
-
|
|
Goodwill acquired through acquisition
|
|
|
-
|
|
|
|
923,313
|
|
|
|
3,191,897
|
|
Goodwill impairment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Balance as of March 31, 2021
|
|
$
|
2,340,111
|
|
|
$
|
923,313
|
|
|
$
|
3,191,897
|
|
13. Bank loans
The outstanding balances on short-term bank loans
consisted of the following:
Lender
|
|
Maturities
|
|
|
Weighted
average
interest rate
|
|
|
31March,2021
|
|
|
31December, 2020
|
|
Rural Credit Cooperatives of Jilin Province, Jilin Branch
|
|
|
Due in November 2021
|
|
|
|
7.83
|
%
|
|
|
3,804,422
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan from Industrial And Commercial Bank Of China, Jingshan Branch
|
|
|
Due in April 2021
|
|
|
|
3.85
|
%
|
|
|
456,531
|
|
|
|
-
|
|
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.
Loan from Industrial And Commercial Bank Of China, Jingshan Branch
was line on credit obtained for general working capital and was repaid at April 25,2021.
14. 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. Pursuant to 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,
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 February 10, 2020, the Company entered into a securities purchase
agreement with Mengru Xu and Zhichao Du, pursuant 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.
As of March 31, 2021, there were 20,009,930 shares of common stock
outstanding.
15. 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 three months ended March 31, 2021 and 2020:
|
|
03/31/2021
|
|
|
03/31/2020
|
|
Loss attributed to PRC operations
|
|
$
|
(1,491,316
|
)
|
|
$
|
(589,795
|
)
|
Income attributed to BVI
|
|
|
-
|
|
|
|
-
|
|
Loss attributed to U.S. operations
|
|
|
-
|
|
|
|
-
|
|
Loss before tax
|
|
$
|
(1,491,316
|
)
|
|
$
|
(589,795
|
)
|
|
|
|
|
|
|
|
|
|
PRC Statutory Tax at 25% Rate
|
|
|
-
|
|
|
|
-
|
|
Non-deductible GAAP expenses in the PRC
|
|
|
-
|
|
|
|
-
|
|
Income tax
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Per Share Effect of Tax Exemption
|
|
|
|
|
|
|
|
|
Effect of tax exemption granted
|
|
$
|
-
|
|
|
$
|
-
|
|
Weighted-Average Shares Outstanding Basic
|
|
|
16,729,930
|
|
|
|
7,996,121
|
|
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 March 31, 2021 and 2020:
|
|
03/31/2021
|
|
|
03/31/2020
|
|
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
|
)%
|
|
|
(25
|
)%
|
The Company’s effective tax rate
|
|
|
0
|
%
|
|
|
0
|
%
|
16. Earnings/(Loss) Per Share
Components
of basic and diluted earnings per share were as follows:
|
|
For the three months ended
|
|
|
|
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Loss from operations attributable to common stockholders
|
|
$
|
(1,388,463
|
)
|
|
$
|
(589,795
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted (loss) earnings per share denominator:
|
|
|
|
|
|
|
|
|
Original Shares:
|
|
|
11,809,930
|
|
|
|
7,877,765
|
|
Additions from Actual Events -issuance of common stock for acquisition
|
|
|
2,126,667
|
|
|
|
-
|
|
Additions from Actual Events -issuance of common stock for cash
|
|
|
1,950,000
|
|
|
|
118,356
|
|
Additions from Actual Events -issuance of common stock for
acquisition
|
|
|
843,333
|
|
|
|
-
|
|
Basic Weighted Average Shares Outstanding
|
|
|
16,729,930
|
|
|
|
7,996,121
|
|
|
|
|
|
|
|
|
|
|
Loss per share attributable to common stockholders - Basic and diluted
|
|
$
|
(0.08
|
)
|
|
$
|
(0.07
|
)
|
Weighted Average Shares Outstanding- Basic and diluted
|
|
$
|
16,729,930
|
|
|
|
7,996,121
|
|
17. Concentrations
Customers
Concentrations:
The following table sets forth information as to each customer that
accounted for 10% or more of the Company’s revenues for the three months ended March 31, 2021 and 2020.
|
|
For the periods ended
|
|
Customers
|
|
March 31, 2021
|
|
|
March 31, 2020
|
|
|
|
Amount $
|
|
|
%
|
|
|
Amount $
|
|
|
%
|
|
A
|
|
|
466,724
|
|
|
|
21
|
|
|
|
-
|
|
|
|
-
|
|
B
|
|
|
417,102
|
|
|
|
19
|
|
|
|
-
|
|
|
|
-
|
|
C
|
|
|
336,214
|
|
|
|
15
|
|
|
|
-
|
|
|
|
-
|
|
D
|
|
|
-
|
|
|
|
-
|
|
|
|
785,012
|
|
|
|
94
|
|
Suppliers Concentrations
The following table sets forth information as to each supplier that
accounted for 10% or more of the Company’s purchase for the three months ended March 31, 2021 and 2020.
|
|
For the periods ended
|
|
Suppliers
|
|
March 31, 2021
|
|
|
March 31, 2020
|
|
|
|
Amount $
|
|
|
%
|
|
|
Amount $
|
|
|
%
|
|
A
|
|
|
1,674,677
|
|
|
|
75
|
|
|
|
-
|
|
|
|
-
|
|
B
|
|
|
-
|
|
|
|
-
|
|
|
|
165,344
|
|
|
|
16
|
|
C
|
|
|
-
|
|
|
|
-
|
|
|
|
120,075
|
|
|
|
12
|
|
18. Segment reporting
The Company follows ASC 280, Segment Reporting, which requires that
companies disclose segment data based on how management makes decision about allocating resources to segments and evaluating their performance.
The Company’s management evaluates performance and determines resource allocations based on a number of factors, the primary measure
being income from operations.
The Company’s main business segment and operations are Jingshan
Sanhe, Jilin Chuangyuan, Xianning Bozhuang and Fast Approach. The Company’s unaudited condensed consolidated results of operations
and unaudited condensed consolidated financial position from continuing operations are almost all attributable to Jingshan Sanhe, Jilin
Chuangyuan, Xianning Bozhuang and Fast Approach. Accordingly, management believes that the unaudited condensed consolidated balance sheets
and unaudited condensed statement of operations provide the relevant information to assess Jingshan Sanhe, Jilin Chuangyuan, Xianning
Bozhuang and Fast Approach’s performance.
Segment reporting
|
|
03/31/2021
|
|
|
12/31/2020
|
|
Fast Approach and Shanghai Shuning
|
|
$
|
547,956
|
|
|
$
|
572,509
|
|
Xianning Bozhuang
|
|
|
10,877,676
|
|
|
|
11,968,553
|
|
Jingshan Sanhe
|
|
|
6,428,020
|
|
|
|
-
|
|
Jilin Chuangyuan
|
|
|
17,655,964
|
|
|
|
-
|
|
Jiayi Technologies (Xianning) Co., Ltd.
|
|
|
9,892,630
|
|
|
|
6,563,580
|
|
Planet Green Holdings Corporation (BVI)
|
|
|
-
|
|
|
|
-
|
|
Planet Green Holdings Corporation
|
|
|
4,734,554
|
|
|
|
853,486
|
|
Lucky Sky Planet Green Holdings Co., Limited (H.K.).
|
|
|
2,006,423
|
|
|
|
2,012,228
|
|
Total Assets
|
|
$
|
52,143,225
|
|
|
$
|
21,970,355
|
|
19. 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 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.
|
20. Subsequent Events
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.