ALN [Planet Green] 10-Q:

Ticker: ALN, Company: Planet Green Holdings Corp., Type: 10-Q, Date: 2019-08-12, XBRL Interactive Financials
Original SEC Filing: Click here


Webplus: ALN/20190812/10-Q/1/000.htm SEC Original: f10q0619_planetgreen.htm



10-Q 1 f10q0619_planetgreen.htm QUARTERLY REPORT






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 the 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐     No ☒

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

The number of outstanding shares of the issuer’s common stock as of August 12, 2019 was 7,877,765.

TABLE OF CONTENTS

PAGE
PART I - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS 1
ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 2
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 6
ITEM 4 CONTROLS AND PROCEDURES 6
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS 8
ITEM 1A RISK FACTORS 8
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 8
ITEM 3 DEFAULTS UPON SENIOR SECURITIES 8
ITEM 4 MINE SAFETY DISCLOSURES 8
ITEM 5 OTHER INFORMATION 8
ITEM 6 EXHIBITS 9
SIGNATURES 10

Caution Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to the factors described in the section captioned “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission.

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

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

i

Use of Certain Defined Terms

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

1. “Beijing Lorain” refers to Beijing Green Foodstuff Co., Ltd.

2. “China” and “PRC” refer to the People’s Republic of China (excluding Hong Kong, Macau and Taiwan for the purposes of this report only).

3. “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.

4. “Lucky Sky Petrochemical” refers to Lucky Sky Petrochemical Technology (Xianning) Co., Ltd., a PRC limited liability company.

5. “Luotian Lorain” refers to Luotian Green Foodstuff Co., Ltd., a PRC limited liability company.

6. “PLAG,” “we,” “us” and “our” refer to Planet Green Holdings Corp., a Nevada corporation, and except where the context requires otherwise, our wholly-owned subsidiaries and VIEs.

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

8. “Shandong Greenpia” refers to Shandong Greenpia Foodstuff Co., Ltd., a PRC limited liability company.

9. “Shandong Lorain” refers to Shandong Green Foodstuff Co., Ltd., a PRC limited liability company.

10. “Shanghai Xunyang” refers to Shanghai Xunyang Internet Technology Co., Ltd., a PRC limited liability company.

11. “Shenzhen Lorain” refers to Lorain Food Stuff (Shenzhen) Co., Ltd., a PRC limited liability company.

12. “Taishan Muren” refers to Taishan Muren Agriculture Co. Ltd., a PRC limited liability company.

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

14. “VIE” refers to variable interest entity.

15. “Xianning Bozhuang” refers to Xianning Bozhuang Tea Products Co., Ltd., a PRC limited liability company.

ii

ITEM 1. FINANCIAL STATEMENTS
PLANET GREEN HOLDINGS CORP.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2019 AND DECEMBER 31, 2018
(Stated in US Dollars)

1

CONTENTS PAGES
Unaudited Condensed Consolidated Balance Sheets F-2
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) F-3
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity/(Deficiency)  F-4
Unaudited Condensed Consolidated Statements of Cash Flows F-5
Notes to Financial Statements F-6 to F-18

F-1

PLANET GREEN HOLDINGS CORP.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
AT JUNE 30, 2019 AND DECEMBER 31, 2018
(Stated in US Dollars)

June 30, December 31,
2019 2018
Assets
Current assets
Cash and cash equivalents $ 7,035,669 $ 1,062,643
Trade receivables, net 1,893,962 6,528,072
Inventories 1,525,779 -
Advances and prepayments to suppliers 6,721,263 7,381,785
Other receivables and other current assets 352,057 16,316
Related party receivable 2,197 2,208
Discontinued operations - current assets held for sale -
Total current assets $ 17,530,927 $ 14,991,024
Non-current assets
Plant and equipment, net 5,139,073 1,371,518
Construction in progress, net 847,777 846,441
Intangible assets, net 2,205,109
Deposits 1,478 1,477
Total Non-Current Assets $ 8,193,437 $ 2,219,435
Total Assets $ 25,724,364 $ 17,210,460
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable $ 1,122,827 $ 579,228
Taxes payable 54,774 155,135
Accrued liabilities and other payables 2,453,852 496,799
Customers deposits 411,703 3,499
Related party payable 88,742 78,656
Discontinued operations - liabilities 3,573,611 8,607,813
Total current liabilities $ 7,705,509 $ 9,921,130
Stockholders’ Equity
Preferred Stock, $0.001 par value, 5,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively $ - $ -
Common Stock, $0.001 par value, 200,000,000 shares authorized; 7,877,765 and 5,497,765 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively 7,878 5,498
Additional paid-in capital 85,835,809 74,739,031
Statutory reserves 2,810,953 2,810,953
Accumulated deficit (79,346,693 ) (79,038,883 )
Accumulated other comprehensive income 9,730,460 9,792,283
Non-controlling interests (1,019,552 ) (1,019,552 )
Total Stockholders’ Equity $ 18,018,855 $ 7,289,330
Total Liabilities and Stockholders’ Equity $ 25,724,364 $ 17,210,460

See Accompanying Notes to the Financial Statements

F-2

PLANET GREEN HOLDINGS CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(Stated in US Dollars)

For the three months ended For the six months ended
June 30, June 30,
2019 2018 2019 2018
Net revenues $ 852,009 $ 636,387 $ 1,930,254 $ 1,653,915
Cost of revenues 771,458 70,918 1,551,446 972,409
Gross profit 80,551 565,469 378,808 681,506
Operating expenses:
Selling and marketing expenses 19,280 31,045 19,390 52,992
General and administrative expenses 353,372 578,216 587,941 740,603
Total operating expenses 372,652 609,261 607,331 793,595
Operating income (loss) (292,101 ) (43,792 ) (228,523 ) (112,089 )
Other income (expenses):
Interest income 9 (238 ) 170 248
Interest expense (15,989 ) (15,989 )
Other income (1,607 ) 77,053 (1,607 ) 77,783
Other expenses (5,766 ) (83,764 ) (5,766 ) (87,246 )
Loss from investment - 4,965 4,965
(23,353 ) (1,984 ) (23,192 ) (4,250 )
Income (loss) Loss before taxes from continuing operations (315,454 ) (45,776 ) (251,715 ) (116,339 )
Provision for income taxes 52 - 56,095 -
Income (loss) from continuing operations (315,506 ) (45,776 ) (307,810 ) (116,339 )
Discontinued operations:
Income (loss) from discontinued operations - (665,658 ) - (652,612 )
Provision for income taxes - - -
Income (loss) from discontinued operations, net of taxes - (665,658 ) - (652,612 )
Net income (loss) $ (315,506 ) $ (711,434 ) $ (307,810 ) $ (768,951 )
Net (loss) income attributable to:
- Common shareholders (315,506 ) (709,277 ) (307,810 ) (769,377 )
- Non-controlling interests - (2,157 ) - 426
Other comprehensive income:
Foreign currency translation gain (loss) (254,483 ) 585,224 (61,823 ) 139,173
Comprehensive income (loss) $ (569,989 ) $ (126,210 ) $ (369,633 ) $ (629,778 )
Loss per share from continuing operations
- Basic and diluted (0.05 ) (0.03 ) (0.05 ) (0.06 )
Income (loss) per share from discontinued operations
- Basic and diluted - (0.40 ) - (0.36 )
Loss per share
- Basic and diluted (0.05 ) (0.43 ) (0.05 ) (0.42 )
Basic and diluted weighted average shares outstanding 5,901,411 1,662,686 5,901,411 1,803,239

See Accompanying Notes to the Financial Statements

F-3

PLANET GREEN HOLDINGS CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

STOCKHOLDERS’ EQUITY/(DEFICIENCY)

FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018

(Stated in US Dollars)

Accumulated
Number Additional Other Non-
of Common Paid-in Subscription Statutory Accumulated Comprehensive Controlling
Shares Stock Capital receivable Reserves Deficit Income Interests Total
Balance, January 1, 2018 1,532,823 $ 1,533 $ 57,888,991 (2,142,000 ) $ 25,103,354 $ (99,628,547 ) $ 13,588,726 $ (7,745,353 ) $ (10,791,296 )
Net loss - - - - (768,951 ) - - (768,951 )
Issuance of common stock for cash 1,062,000 1,062 4,702,938 - - - - 4,704,000
Subscription receivable (2,142,000 ) (2,142,000 )
Allocation to non-controlling interests - - - - (426 ) - 426 -
Foreign currency translation adjustment - - - - - 139,172 - 139,172
Balance, June 30, 2018 2,594,823 $ 2,595 $ 62,591,929 (2,142,000 ) $ 25,103,354 $ (100,397,924 ) $ 13,727,898 (7,744,927 ) $ (8,859,075 )
Balance, January 1, 2019 5,497,765 $ 5,498 $ 74,739,031 $ 2,810,953 $ (79,038,883 ) $ 9,792,283 $ (1,019,552 ) $ 7,289,330
Net income - - - - - (307,810 ) - - (307,810 )
Issuance of shares for acquisition 1,080,000 1,080 4,783,212 4,784,292
Issuance of common stock for cash 1,300,000 1,300 5,458,700 - - - - 5,460,000
Allocation to non-controlling interests - - - - - - - -
Acquiring corporation 854,866 854,866
Foreign currency translation adjustment - - - - - (61,823 ) - (61,823 )
Balance, June 30, 2019 7,877,765 $ 7,878 $ 85,835,809 $ 2,810,953 $ (79,346,693 ) $ 9,730,460 $ (1,019,552 ) $ 18,018,855

See Accompanying Notes to the Financial Statements

F-4

PLANET GREEN HOLDINGS CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(STATED IN US DOLLARS)

For the six months ended
June 30,
2019 2018
Cash flows from operating activities
Net loss $ (307,810 ) $ (116,339 )
Amortization (47,780 ) 137,904
Depreciation 205,027 295,981
Increase in accounts and other receivables (342,060 ) (690,408 )
Decrease/(increase) in inventory 4,971 (524,090 )
Decrease/(increase) in prepayments and other current assets 761,580 (489,926 )
(Decrease)/increase in payables and other current liabilities (2,435,442 ) 5,622,821
Net cash used in operating activities $ (2,161,514 ) $ (7,009,699 )
Cash flows from investing activities
Purchase of plant and equipment and construction in progress (131,786 ) (4,836 )
Purchase of intangible assets (525,943 ) -
Net cash used in investing activities $ (657,729 ) $ (4,836 )
Cash flows from financing activities
Proceeds from issuance of common stock 9,943,564 2,562,000
Receiving bank loans
Repayment of borrowings (1,128,867 ) -
Changes in related party balances, net - -
Net cash provided by financing activities $ 8,814,697 $ 2,562,000
Net increase (decrease) in cash and cash equivalents 5,995,454 (4,452,535 )
Effect of foreign currency translation on cash and cash equivalents (39,315 ) 4,752,366
Cash and cash equivalents–beginning of year 1,079,530 85,493
Cash and cash equivalents–end of year $ 7,035,669 $ 385,324
Supplementary cash flow information:
Interest received $ 170 $ 248
Interest paid $ 15,989 $ -
Income taxes paid $ - $ -

See Accompanying Notes to the Financial Statements

F-5

PLANET GREEN HOLDINGS CORP.
(F/K/A AMERICAN LORAIN CORPORATION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated in US Dollars)

1. Organization and Principal Activities

Planet Green Holdings Corp. (the “Company” or “PLAG”), a Nevada corporation, engages in the business of growing, developing, manufacturing, and marketing fresh foods, spices, convenience foods and tea products through its subsidiaries and VIEs in China.

2. Summary of Significant Accounting Policies

Method of accounting

Management has prepared the accompanying financial statements and these notes in accordance 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 include the assets, liabilities, and results of operations of the Company, and its subsidiaries, which are listed below:

Place of Attributable equity Registered
Name of company incorporation interest % capital
Planet Green Holdings Corporation British Virgin Islands 100 $ 10,000
Lucky Sky Holdings Corporations (HK) Limited Hong Kong 100 1,277
Shanghai Xunyang Internet Technology Co., Ltd. PRC 100 669,919
Lucky Sky Petrochemical Technology (Xianning) Co., Ltd.

PRC

100

14,242,782

Beijing Green Foodstuff Co., Ltd. PRC VIE 1,540,666
Luotian Green Foodstuff Co., Ltd. PRC VIE 3,797,774
Shandong Greenpia Foodstuff Co., Ltd. PRC VIE 2,303,063
Taishan Muren Agriculture Co., Ltd. PRC VIE 1,913,049
Lorain Food Stuff (Shenzhen) Co., Ltd. PRC VIE 80,000
Xianning Bozhuang Tea Products Co., Ltd. PRC VIE 6,277,922

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, the Company acquired Lucky Sky HK and Shanghai Xunyang, a wholly foreign-owned enterprise incorporated in Shanghai, China. The formation and acquisition of these companies was to implement the Company’s restructuring plans.

F-6

Planet Green Holdings Corp.
Notes to Financial Statements

In December 2018, the Company was no longer able to exercise significant influence over Beijing Lorain, and management did not believe that the Company would be able recover the value of its investment; accordingly, the Company recognized full impairment of its investment in Beijing Lorain.

Consolidation of Variable Interest Entity

VIEs are entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision-making ability. Any VIE with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. Management makes ongoing reassessments of whether the Company is the primary beneficiary of its VIEs.

On September 28, 2018, the Company entered into a series of VIE agreements with Shandong Greenpia, Luotian Lorain, Taishan Muren, and Shenzhen Lorain and their shareholders, pursuant to which, Company obtained substantial control over these entities’ daily operations and financial affairs.

On September 27, 2018, the Company entered into exclusive arrangements with Beijing Lorain. However, the Company does not have significant influence over Beijing Lorain and Beijing Lorain was accounted for as equity method investment.

In December 2018, the Company’s management determined that it would discontinue the operations of Shandong Greenpia and Luotian Lorain. Accordingly, the Company has recorded full impairment related to the value of those assets.

On May 14, 2019, the Company entered into a series of VIE agreements with Xianning Bozhuang and its equity holders to obtain control and become the primary beneficiary of Xianning Bozhuang. The Company consolidated Xianning Bozhuang’s accounts as its VIE.

On August 12, 2019, through Lucky Sky HK, the Company established Lucky Sky Petrochemical, a wholly foreign-owned enterprise incorporated in Xianning City, Hubei Province, China.

Discontinued operations

In the first quarter of 2018, the Company’s board of directors (the “Board”) resolved to discontinue the operations of Junan Hongrun Foodstuff Co. Ltd.

In the fourth quarter of 2018, the Board resolved to discontinue the operations of Beijing Lorain, Luotian Lorain, and Shandong Greenpia.

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 at the time the estimates are made; however, actual results could differ materially from those estimates.

F-7

Planet Green Holdings Corp.
Notes to Financial Statements

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 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 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 considers 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 collection of the full amount is no longer probable. Bad debts are written off as incurred.

Inventories

Inventories consist of raw materials and finished goods which are 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 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.

F-8

Planet Green Holdings Corp.
Notes to Financial Statements

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 to expenses 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 40-50 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 costs of acquisition 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 results of operations will be recognized during the period. 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 be the result of becoming obsolete from a change in the industry, introduction of new technologies, or if the Company has inadequate working capital to utilize the long-lived assets to generate the 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 are reported at the lower of the carrying amount or fair value less costs to sell.

Statutory reserves

Statutory reserves are referring to the amount appropriated from the net income in accordance with 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.

F-9

Planet Green Holdings Corp.
Notes to Financial Statements

Foreign currency translation

The accompanying financial statements are presented in United States dollars. The functional currencies of the Company are the Renminbi (“RMB”). The Company’s assets and liabilities are translated into United States dollars from RMB at year-end exchange rates, and 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.

6/30/2019 12/31/2018 6/30/2018
Period/year end RMB: US$ exchange rate 6.7801 6.8764 6.6166
Period/annual average RMB: US$ exchange rate 6.8656 6.5137 6.4568

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 recognizes revenue when persuasive evidence of arrangement exists, the price has been fixed or is determinable, the delivery has been completed and no other significant obligations of the Company exists, and collectability of payment is reasonably assured. Payments received prior to all of the foregoing criteria are recorded as customer deposits. Recorded revenue is derived from the value of goods invoiced less value-added tax (VAT).

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 the either expenses as incurred or allocated to inventory as part of overhead.

Income taxes

The Company accounts for income tax using an asset and liability approach and allows for recognition of 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 is able to 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”) in accordance with 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 effects of potentially convertible securities are calculated using the as-if method; the potentially dilutive effect of options or warrants are calculated 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 the calculation of diluted EPS.

F-10

Planet Green Holdings Corp.
Notes to Financial Statements

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 disclosure of 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 of time 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 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
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.

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.

Unaudited interim financial information

These unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial reporting and the rules and regulations of the SEC that permit reduced disclosure for interim periods. Therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been made. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the year ending December 31, 2019.

The consolidated balance sheets and certain comparative information as of December 31, 2018 are derived from the audited consolidated financial statements and related notes for the year ended December 31, 2018 (“2018 Annual Financial Statements”), included in the Company’s 2018 Annual Report on Form 10-K. These unaudited interim condensed consolidated financial statements should be read in conjunction with the 2018 Annual Financial Statements.

Recent accounting pronouncements

In January 2017, the FASB issued guidance which simplifies the accounting for goodwill impairment. The updated guidance eliminates Step 2 of the impairment test, which requires entities to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value, determined in Step 1. The Company is currently evaluating the impact on the financial statements of this guidance.

In January 2017, the FASB amended the existing accounting standards for business combinations. The amendments clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.

The Company is evaluating the timing and the impact of the aforesaid guidance on the financial statements.

F-11

Planet Green Holdings Corp.
Notes to Financial Statements

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. 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.

6/30/2019 12/31/2018
Trade accounts receivable $ 1,893,962 $ 6,528,072
Less: Allowance for doubtful accounts - -
$ 1,893,962 $ 6,528,072
Allowance for doubtful accounts:
Beginning balance $ - $ (804,937 )
Reclassified to discontinued operations - 804,937
Additions to allowance - -
Bad debt written-off - -
Ending balance $ - $ -

5. Inventories

Inventories consisted of the following as of June 30, 2019 and December 31, 2018

6/30/2019 12/31/2018
Raw material $ 311,946 $             -
Inventory of Supplies 5,812
Work in progress 870,865 -
Finished goods 337,156 -
$ 1,525,779 $ -

6. Plant and Equipment

Property, plant, and equipment consisted of the following as of June 30, 2019 and December 31, 2018:

6/30/2019 12/31/2018
At Cost:
Buildings $ 4,137,665 $ 1,116,940
Machinery and equipment 995,082 31,066
Office Equipment 48,227
Vehicle 152,835
Biological assets 2,081,420 2,078,012
$ 7,415,229 $ 3,226,018
Less:Accumulated depreciation (2,276,156 ) (1,854,500 )
$ 5,139,073 $ 1,371,518

Depreciation expense for the six months ended June 30, 2019 and 2018 was $205,027 and $295,981, respectively.

F-12

Planet Green Holdings Corp.
Notes to Financial Statements

7. Intangible Assets

6/30/2019 12/31/2018
At Cost:
Land use rights $ 1,347,839 $                -
Software licenses 2,593 -
Trademark 909,606 -
$ 2,260,038 $ -
Less: Accumulated depreciation (54,929 ) -
$ 2,205,109 $ -

Amortization expense for the six months ended June 30, 2019 and 2018 was $47,780 and $137,904, respectively.

8. Equity

On May 9, 2019, the Company and Shanghai Xunyang, a subsidiary of the Company, entered into a share exchange agreement with Xianning Bozhuang, and its shareholders, 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 Xianning Bozhuang’s shareholders all of the outstanding equity interests of Xianning Bozhuang. On May 14, 2019, the Company closed the acquisition.

Pursuant to the share exchange agreement, in exchange for the acquisition of all of the outstanding equity interests of Xianning Bozhuang by the Shanghai Xunyang, the Company issued an aggregate of 1,080,000 shares of common stock, par value $0.001 per share, of the Company to Xianning Bozhuang’s shareholders. At the closing of the acquisition, the Company entered into a lock-up agreement with the Sellers with respect to the Exchange Shares, pursuant to which Xianning Bozhuang’s shareholders agreed, subject to certain exceptions, not to transfer the exchange shares, or publicly disclose the intention to do so, from the closing of the acquisition until the first anniversary of the closing.

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 purchase agreement contains customary representations and warranties by the Company and customary closing conditions. The financing closed on June 19, 2019.

F-13

Planet Green Holdings Corp.
Notes to Financial Statements

9. 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 six months ended June 30, 2019 and 2018:

6/30/2019 6/30/2018
Income/(loss) attributed to PRC continuing operations $ (251,715 ) $ (116,339 )
Income/(loss) attributed to U.S. operations
Income/(loss) before tax $ (251,715 ) $ (116,339 )
PRC Statutory Tax at 25% Rate 56,095 -
Effect of tax exemption granted
Income tax $ 56,095 $ -

Per Share Effect of Tax Exemption

6/30/2019 6/30/2018
Effect of tax exemption granted $     - $ -
Weighted-Average Shares Outstanding Basic 5,901,411 1,803,239
Per share effect $ - $ -

The difference between the U.S. federal statutory income tax rate and the Company’s effective tax rate was as follows for the six months ended June 30, 2019 and 2018:

6/30/2019 6/30/2018
U.S. federal statutory income tax rate 21 % 21 %
Higher (lower) rates in PRC, net 4 % 4 %
Expenses not deductible to taxable income (47.3 )% (25 )%
The Company’s effective tax rate (22.3 )% 0 %

F-14

Planet Green Holdings Corp.
Notes to Financial Statements

10. Earnings/(Loss) Per Share

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

For the six months ended
June 30,
2019 2018
Basic and diluted (loss) earnings per share numerator:
Income/(loss) from continuing operations (attributable) available to common stockholders $ (307,810 ) (116,339 )
(Loss) income from discontinued operations (attributable) available to common stockholders - (653,038 )
(Loss) income (attributable) available to common stockholders (307,810 ) (769,377 )
Basic and diluted (loss) earnings per share denominator:
Original Shares: 5,497,765 1,532,823
Additions from Actual Events -Issuance of Common Stock 2,380,000 270,416
Basic Weighted Average Shares Outstanding 5,901,411 1,803,239
Income/(loss) per share from continuing operations - Basic and diluted (0.05 ) (0.06 )
Income/(loss) per share from discontinued operations - Basic and diluted - (0.36 )
Income/(loss) per share - Basic and diluted (0.05 ) (0.42 )
Weighted Average Shares Outstanding - Basic and diluted 5,901,411 1,803,239

F-15

Planet Green Holdings Corp.
Notes to Financial Statements

11. Lease Commitments

During the year ended December 31, 2016, Taishan Muren entered into four operating lease agreements leasing two plots of land where biological assets are grown, two offices, and farming facilities. During the year ended December 31, 2017, Taishan Muren entered into three operating lease agreements leasing three additional plots of land where biological assets are grown.

As of the date of this report, the leases of the Company are as follows:

Lease Date Commenced Date of expiration
Lease #1 March 1, 2016 February 28, 2031
Lease #2 March 1, 2016 February 28, 2031
Lease #3 March 1, 2016 February 28, 2031
Lease #4 November 1, 2016 November 1, 2019
Lease #5 January 1, 2017 February 28, 2031
Lease #6 January 1, 2017 February 28, 2031
Lease #7 January 1, 2018 February 28, 2031

The minimum future lease payments for these properties at June 30, 2019 are as follows:

Period Lease Payable
Year 1 $ 224,896
Year 2 224,896
Year 3 224,896
Year 4 224,896
Year 5 224,896
Thereafter 1,386,853
$ 2,511,333

The outstanding lease commitments for the leases listed above as of June 30, 2019 was $2,511,333.

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842).” The new standard requires lessees to recognize lease assets (right of use) and lease obligations (lease liability) for leases previously classified as operating leases under GAAP on the balance sheet for leases with terms in excess of 12 months. The standard is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. The Company is assessing the impact of the adoption of the new standard.

F-16

Planet Green Holdings Corp.
Notes to Financial Statements

12. Other Expenses

Other expenses consisted of the following:

6/30/2019 6/30/2018
Other expense:
Impairment of property and equipment $ - $ -
Other (5,766 ) (87,246 )
$ (5,766 ) $ (87,246 )

13. Discontinued Operations

As of December 31, 2018, the Company has reclassified the results of operations and the financial position of Luotian Lorain and Shandong Greenpia as discontinued operations. Selected details regarding those discontinued operations are provided below. Selected details regarding those discontinued operations are provided below.

For the six months ended

June 30,

Results of Operations 2019 2018
Sales $            - $ 14,267
Cost of sales -
Gross profit - 14,267
Operating expenses - 666,879
Other expenses - -
Loss before Taxes - (652,612 )
Taxes - -
Net income $ - $ (652,612 )

At At
Financial Position 6/30/2019 12/31/2018
Current Assets $ - $ -
Non-Current Assets - -
Total Assets $ - $ -
Current Liabilities $ 3,573,611 $ 8,607,813
Total Long-Term Liabilities -
Total Liabilities $ 3,573,611 $ 8,607,813
Net Assets $ (3,573,611 ) $ (8,607,813 )
Total Liabilities & Net Assets $ 0.00 $ 0.00

F-17

Planet Green Holdings Corp.
Notes to Financial Statements

14. 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.

The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

D. Environmental risks

The Company has procured environmental licenses required by the PRC government. The Company has both a water treatment facility for water used in its production process and secure transportation to remove waste off site. In the event of an accident, the Company has purchased insurance to cover potential damage to employees, equipment, and local environment.

E. Inflation Risk

Management of the Company monitors changes in prices levels. Historically inflation has not materially impacted the Company’s financial statements; however, significant increases in the price of raw materials and labor that cannot be passed to the Company’s customers could adversely impact the Company’s results of operations.

15. Subsequent Events

On July 1, 2019, Yilei Shao resigned as a director of the Company. Ms. Shao’s resignation was for personal reasons and was not due to any disagreement with the Company.

On July 1, 2019, the Board appointed King Fai Leung to serve as a member of the Board and a member of each of the three independent committees of the Board (i.e., the audit committee, compensation committee and nominating and corporate governance committee) and as chairman of the audit committee of the Board, effective immediately.

On August 12, 2019, through Lucky Sky HK, the Company established Lucky Sky Petrochemical, a wholly foreign-owned enterprise incorporated in Xianning City, Hubei Province, China.

F-18

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

Overview

Our primary operations are conducted in the PRC through our VIEs:

to develop and market products, such as sauces and tea products, from herbs and spices that we grow in China; and

to sell brown rice syrup and tea bags developed using our unique recipes in China.

Results of Operations

Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018

The following table summarizes the results of our operations during the three-month periods ended June 30, 2019 and June 30, 2018, respectively, and provides information regarding the dollar and percentage increase or (decrease) from the three month period ended June 30, 2019 compared to the three month period ended June 30, 2018.

(All amounts, other than percentages, stated in thousands of U.S. dollars)

Three months ended Increase / Increase /
June 30, Decrease Decrease
(In Thousands of USD) 2019 2018 ($) (%)
Net revenues 852 636 216 34
Cost of revenues 771 71 700 986
Gross profit 81 565 (484 ) (86 )
Operating expenses: - -
Selling and marketing expenses 19 31 (12 ) (39 )
General and administrative expenses 353 578 (225 ) (39 )
Operating loss (293 ) (44 ) (249 ) 566
Government subsidy income - -
Interest and other income (1 ) 77 (78 ) (101 )
Other expenses (6 ) (84 ) 78 (93 )
Interest expense (16 ) 5 (21 ) (420 )
Gain from investment - -
Loss before tax from continuing operations (316 ) (46 ) (270 ) 587
Income tax expense/(income) - -
Net loss from continuing operations (316 ) (46 ) (270 ) 587
Net loss from discontinued operations - (666 ) 666 (100 )
Net loss (316 ) (711 ) 395 (56 )
Non-controlling interests - (2 ) 2 (100 )
Net loss of common stockholders (316 ) (709 ) 393 (55 )

2

Revenue

Net Revenues. Our net revenues for the three months ended June 30, 2019 amounted to $0.85 million, which represents an increase of approximately $0.22 million, or 34%, from the three-month period ended on June 30, 2018, in which our net revenue was $0.63 million. This increase was attributable to the disposal of certain of our historical subsidiaries and acquisition of Taishan Muren and Xianning Bozhuang.

Cost of Revenues. During the three months ended June 30, 2019, we experienced an increase in cost of revenue of $0.7 million, in comparison to the three months ended June 30, 2018, from approximately $0.07 million to $0.77 million, reflecting an increase of 986%. This increase was related to our new subsidiary, Taishan Muren, Xianning Bozhuang, and disposal and discontinue of certain subsidiaries.

Gross Profit. Our gross profit decreased by $0.48 million, or 86%, to $0.08 million for the three months ended June 30, 2019 from $0.56 million for the three months ended June 30, 2018, attributable to the disposal of certain of our historical subsidiaries and acquisition of Taishan Muren and Xianning Bozhuang.

Operating Expenses

Selling and Marketing Expenses. Our selling and marketing expenses decreased $0.01 million, or 39%, to $0.02 million during the three months ended June 30, 2019, as compared to $0.03 million during the three months ended June 30, 2018. The decrease of our selling and marketing expenses is mainly due to a decrease in sales activities because sales generated from our existing clients had been steady.

General and Administrative Expenses.We experienced a decrease in general and administrative expense of $0.23 million from $0.58 million to approximately $0.35 million for the three months ended June 30, 2019, compared to the three months ended June 30, 2018. This cost decrease was caused by discontinued operations of Luotian Lorain and Shandong Greenpia.

Net Income

Net loss decreased to $0.3 million for the three months ended June 30, 2019 from net loss of $0.7 million for the three months ended June 30, 2018. Such decrease was primarily the result of acquisition of Taishan Muren, Xianning Bozhuang and disposal and discontinuance of certain subsidiaries.

Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018

The following table summarizes the results of our operations during the six-month periods ended June 30, 2019 and 2018, respectively, and provides information regarding the dollar and percentage increase or decrease from the six-month period ended June 30, 2019 compared to the six month period ended June 30, 2018.

(All amounts, other than percentages, stated in thousands of U.S. dollars)

Six months ended Increase / Increase /
June 30, Decrease Decrease
(In Thousands of USD) 2019 2018 ($) (%)
Net revenues 1,930 1,654 276 17
Cost of revenues 1,551 972 579 60
Gross profit 379 682 (303 ) (44 )
Operating expenses: - - -
Selling and marketing expenses 19 53 (34 ) (63 )
General and administrative expenses 588 741 (153 ) (21 )
Operating loss (229 ) (112 ) (116 ) 104
Government subsidy income - - -
Interest and other income (1 ) 78 (79 ) (102 )
Other expenses (6 ) (87 ) 81 (93 )
Interest expense (16 ) - (16 ) (100 )
Gain from investment - 5 (5 ) (100 )
Loss before tax from continuing operations (252 ) (116 ) (135 ) 116
Income tax expense/(income) 56 - 56 100
Net loss from continuing operations (308 ) (116 ) (191 ) 165
Net loss from discontinued operations - (653 ) 653 (100 )
Net loss (308 ) (769 ) 461 (60 )
Non-controlling interests - 0.4 (0.4 ) (100 )
Net loss of common stockholders (308 ) (769 ) 462 (60 )

3

Revenue

Net Revenues. Our net revenues for the six months ended June 30, 2019 amounted to $1.93 million, which represents an increase of approximately $0.28 million, or 17%, from the six-month period ended on June 30, 2018, in which our net revenue was $1.65 million. This increase was attributable to the disposal of certain of our historical subsidiaries and acquisition of Taishan Muren and Xianning Bozhuang.

Cost of Revenues. During the six months ended June 30, 2019, we experienced an increase in cost of revenue of $0.58 million, in comparison to the six months ended June 30, 2018, from approximately $0.97 million to $1.55 million, reflecting an increase of 60%. This increase was related to our new VIEs, Taishan Muren, Xianning Bozhuang, and disposal and discontinue of certain subsidiaries.

Gross Profit. Our gross profit decreased by $0.30 million, or 44%, to $0.38 million for the six months ended June 30, 2019 from $0.68 million for the six months ended June 30, 2018, attributable to the disposal of certain of our historical subsidiaries and acquisition of Taishan Muren and Xianning Bozhuang.

Operating Expenses

Selling and Marketing Expenses. Our selling and marketing expenses decreased by $0.03 million, or 63%, to $0.02 million during the six months ended June 30, 2019, as compared to $0.05 million during the six months ended June 30, 2018. The decrease of our selling and marketing expenses is mainly due to a decrease in sales activities because sales generated from our existing clients had been steady.

General and Administrative Expenses.We experienced a decrease in general and administrative expense of $0.15 million from $0.74 million to approximately $0.59 million for the six months ended June 30, 2019, compared to the six months ended June 30, 2018. This cost decrease was caused by the discontinued operations of Luotian Lorain and Shandong Greenpia.

Net Income

Net loss decreased to $0.3 million for the six months ended June 30, 2019 from net loss of $0.8 million for the six months ended June 30, 2018. Such decrease was primarily the result of acquisition of Taishan Muren, Xianning Bozhuang and disposal and discontinuance of certain subsidiaries.

4

Liquidity and Capital Resources

In the reporting period in 2019, our primary sources of financing have been cash generated from operations and private placements. We raised funds in the following private placement in the second quarter of 2019:

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.

General

Management anticipates that our existing capital resources and anticipated cash flows from operations are adequate to satisfy our liquidity requirements for the next 12 months. Our primary capital needs have been to fund our working capital requirements. In the past, our primary sources of financing have been cash generated from operations and financing activities.

As of June 30, 2019, we had cash and cash equivalents (including restricted cash) of $7.04 million. The debt to assets ratio was 30.0% and 57.6% as of June 30, 2019 and December 31, 2018, respectively. We expect to continue to finance our operations and working capital needs in 2019 from cash generated from operations and, if needed, private financings. If available liquidity is not sufficient to meet our operating and loan obligations as they come due, 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 be able to 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 Flow (In thousands)

For the Six Months Ended
June 30,
2019 2018
Net cash (used in)/provided by operating activities (2,162) (7,01 0)
Net cash provided by/ (used in) investing activities (658) (5 )
Net cash provided by/ (used in) financing activities 8,815 2,562
Net cash flow 5,995 (4,45 3)

Operating Activities

Net cash used in operating activities was $2.2 million and $7.0 million for the six months periods ended June 30, 2019 and 2018, respectively. Net cash used in operating activities was mainly due to decrease of $2.4 million in payables and other current liabilities, increase of $0.7 million in prepayments and other current assets, increase of $0.3 million in accounts and other receivables.

5

Investing Activities

Net cash used in investing activities for the six months period ended June 30, 2019 was $0.7 million, representing an increase of $0.7 million in net cash used in investing activities from $0.005 million for the same period of 2018. The difference was primarily a result of the new acquisition of Xianning Bozhuang which increases fixed assets.

Financing Activities

Net cash provided by financing activities for the six months period ended June 30, 2019 was $8.8 million, representing an increase of $6.2 million in net cash provided by financing activities from $2.6 million for the same period of 2018. The difference was primarily a result of investors input raised from the agreements the Company entered into on June 17, 2019.

Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires our management to make assumptions, estimates and judgments that affect the amounts reported in our financial statements, including the notes thereto, and related disclosures of commitments and contingencies, if any. We consider our critical accounting policies to be those that require significant judgments and estimates in the preparation of financial statements, including those set forth in Note 2 to the financial statements included herein.

Off-Balance Sheet Arrangements

We do not have any off-balance arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. 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 the design and operation of our disclosure controls and procedures as of June 30, 2019. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2019, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures was completed, our disclosure controls and procedures were not effective due to the continuing material weakness in our internal control over financial reporting.

The material weakness and significant deficiency identified by our management as of June 30, 2019 relates to the ability of the Company to record transactions and provide disclosures in accordance with GAAP. We did not have sufficient and skilled accounting personnel with an appropriate level of experience in the application of 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 United States, have not attended United States institutions for training as accountants, and have not attended extended educational programs that would provide sufficient relevant education relating to 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 GAAP-based reporting is inadequate.

6

We plan to provide GAAP training sessions to our accounting team. The training sessions will be organized to help our corporate accounting team gain experience in GAAP reporting and to enhance their awareness of new and emerging pronouncements with potential impact over 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 future.

Changes in Internal Controls over Financial Reporting.

During the three months ended June 30, 2019, there were no changes in our internal control over financial reporting identified in connection with the evaluation performed during the period covered by this 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 in accordance with 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 in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with 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 have a material effect on the financial statements.

Management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, 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 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 fraud, if any, have been detected. Also, 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 business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

7

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

We are a smaller reporting company and accordingly we are not required to provide information required by this Item.

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

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.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

8

ITEM 6. EXHIBITS

The following exhibits are filed as part of this report.

Exhibit No. Description
10.1 Share Exchange Agreement, dated as of May 9, 2019, by and among Planet Green Holdings Corp., Shanghai Xunyang Internet Technology Co., Ltd., Xianning Bozhuang Tea Products Co., Ltd. and sellers named therein, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on May 15, 2019
10.2 Lock-Up Agreement, dated as of May 14, 2019, by and among Planet Green Holdings Corp. and the persons named therein, incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on May 15, 2019
10.3 Non-Competition and Non-Solicitation Agreement, dated as of May 14, 2019, by and among Planet Green Holdings Corp., Shanghai Xunyang Internet Technology Co., Ltd., Xianning Bozhuang Tea Products Co., Ltd. and the persons named therein, incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K filed with the SEC on May 15, 2019
10.4 Consultation and Service Agreement, dated as of May 14, 2019, by and between Shanghai Xunyang Internet Technology Co., Ltd. and Xianning Bozhuang Tea Products Co., Ltd., incorporated herein by reference to Exhibit 10.4 to the Current Report on Form 8-K filed with the SEC on May 15, 2019
10.5 Business Cooperation Agreement, dated as of May 14, 2019, by and between Shanghai Xunyang Internet Technology Co., Ltd. and Xianning Bozhuang Tea Products Co., Ltd., incorporated herein by reference to Exhibit 10.5 to the Current Report on Form 8-K filed with the SEC on May 15, 2019
10.6 Equity Pledge Agreement, dated as of May 14, 2019, by and among Shanghai Xunyang Internet Technology Co., Ltd., Bin Zhou, Wuyuan Zuo, Gongwei Lu and Xianning Bozhuang Tea Products Co., Ltd., incorporated herein by reference to Exhibit 10.6 to the Current Report on Form 8-K filed with the SEC on May 15, 2019
10.7 Equity Option Agreement, dated as of May 14, 2019, by and among Shanghai Xunyang Internet Technology Co., Ltd., Bin Zhou, Wuyuan Zuo, Gongwei Lu and Xianning Bozhuang Tea Products Co., Ltd., incorporated herein by reference to Exhibit 10.7 to the Current Report on Form 8-K filed with the SEC on May 15, 2019
10.8 Voting Rights Proxy and Financial Supporting Agreement, dated as of May 14, 2019, by and among Bin Zhou, Wuyuan Zuo, Gongwei Lu, Shanghai Xunyang Internet Technology Co., Ltd. and Xianning Bozhuang Tea Products Co., Ltd., incorporated herein by reference to Exhibit 10.8 to the Current Report on Form 8-K filed with the SEC on May 15, 2019
10.9 Securities Purchase Agreement, dated as of June 17, 2019, by and among Planet Green Holdings Corp. and the purchasers named therein, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on June 21, 2019
31.1 Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2 Certification of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1 Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
32.2 Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.INS XBRL Instance Document *
101.SCH XBRL Taxonomy Extension Schema *
101.CAL XBRL Taxonomy Extension Calculation Linkbase *
101.DEF XBRL Taxonomy Extension Definition Linkbase *
101.LAB XBRL Taxonomy Extension Label Linkbase *
101.PRE XBRL Taxonomy Extension Presentation Linkbase *

* Filed herewith.
** Furnished herewith.

9

SIGNATURES

Pursuant to the requirements 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.

Date: August 12, 2019
PLANET GREEN HOLDINGS CORP.
/s/ Hongxiang Yu
Hongxiang Yu
Chief Executive Officer
(Principal Executive Officer)
/s/ Lili Hu
Lili Hu
Chief Financial Officer
(Principal Financial and Accounting Officer)

10


Webplus: ALN/20190812/10-Q/2_EX-31.1/000.htm SEC Original: f10q0619ex31-1_planetgreen.htm
CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER I, Hongxiang Yu, certify that: 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by



EX-31.1 2 f10q0619ex31-1_planetgreen.htm CERTIFICATION

Exhibit 31.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302

I, Hongxiang Yu, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Planet Green Holdings Corp. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: August 12, 2019 By: /s/ Hongxiang Yu
Hongxiang Yu,
Chief Executive Officer, President
and Chairman (Principal Executive Officer)


Webplus: ALN/20190812/10-Q/3_EX-31.2/000.htm SEC Original: f10q0619ex31-2_planetgreen.htm
CERTIFICATIONS OF CHIEF FINANCIAL OFFICER I, Lili Hu, certify that: 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by



EX-31.2 3 f10q0619ex31-2_planetgreen.htm CERTIFICATION

Exhibit 31.2

CERTIFICATIONS OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302

I, Lili Hu, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Planet Green Holdings Corp. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: August 12, 2019 By: /s/ Lili Hu

Lili Hu,

Chief Financial Officer

(Principal Financial and Accounting Officer)


Webplus: ALN/20190812/10-Q/4_EX-32.1/000.htm SEC Original: f10q0619ex32-1_planetgreen.htm
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. Hongxiang Yu, EX-32.1 4 f10q0619ex32-1_planetgreen.htm CERTIFICATION



EX-32.1 4 f10q0619ex32-1_planetgreen.htm CERTIFICATION

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Planet Green Holdings Corp. (the “Company”) on Form 10-Q for the period ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date: August 12, 2019 By: /s/ Hongxiang Yu
Hongxiang Yu,
Chief Executive Officer, President and
Chairman(Principal Executive Officer)

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.


Webplus: ALN/20190812/10-Q/5_EX-32.2/000.htm SEC Original: f10q0619ex32-2_planetgreen.htm
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. Lili Hu, EX-32.2 5 f10q0619ex32-2_planetgreen.htm CERTIFICATION



EX-32.2 5 f10q0619ex32-2_planetgreen.htm CERTIFICATION

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Planet Green Holdings Corp. (the “Company”) on Form 10-Q for the period ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date: August 12, 2019 By: /s/ Lili Hu

Lili Hu,
Chief Financial Officer
(Principal Financial and Accounting Officer)

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Company Info:

Ticker: ALN, Company: Planet Green Holdings Corp., Type: 10-Q, Date: 2019-08-12, XBRL Interactive FinancialsCIK: 0001117057, Location: MD, SIC: 2030, SIC Desc: CANNED, FROZEN & PRESERVED FRUIT, VEG & FOOD SPECIALTIES
Business Phone & Address:
SUITE 200, 9841 WASHINGTONIAN BLVD
GAITHERSBURG, MD 20878

Home Page Forums

By | 2019-08-13T03:33:16+00:00 August 12th, 2019|Categories: ALN, Chinese Stocks, Webplus ver|Tags: , , , , , |0 Comments

About the Author:

Leave A Comment

Skip to toolbar