UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X]☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended:JuneSeptember 30, 20172021
[_]
☐ TRANSITION REPORT PURSUANT TO SECTION 13 ORor 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File No.Number: 001-34449
AMERICAN LORAIN CORPORATIONPLANET GREEN HOLDINGS CORP.
(Exact name of registrant as specified in its charter)
| Nevada | 87-0430320 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification |
BeihuanZhong Road36-10 Union St. 2nd Floor
Junan CountyFlushing, NY 11345Shandong, People’s Republic of China, 276600
(Address including zip code, of principal executive offices)office and zip code)
(86) 539-7317959(718) 799-0380
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock, par value $0.001 per share | PLAG | NYSE American |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant:registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrantissuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X]☒ No [ ]☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).
Yes [X]☒ No [ ]☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)
| 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 [X]☒
The numbersnumber of outstanding shares outstanding of the issuer’s class ofregistrant’s common stock as of August 20, 2016October 29, 2021 was 38,259,490.29,681,930.
1
FORM 10-QFor the Quarterly Period Ended June 30, 2017
TABLE OF CONTENTS
i
Caution Regarding Forward-Looking Statements
This quarterly report on Form 10-Q contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to the factors described in the section captioned “Risk Factors” in our Annual Report on Form 10-K for the year ended DECEMBERDecember 31, 20162020 filed with the Securities and Exchange Commission.Commission (the “SEC”).
In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” or the negative of such terms or other similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report completely and with the understanding that our actual future results may be materially different from what we expect.
Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.
2
ii
PART I
Use of Certain Defined Terms
Except where the context otherwise requires and for the purposes of this report only:
1. “We,” “us” and “our” refer to ALN, and except where the context requires otherwise, our wholly-owned and majority-owned direct and indirect operating subsidiaries.
| ● | “Anhui Ansheng” refers to Anhui Ansheng Equitpment Co., Ltd., a PRC limited liability company. | |
| ● | “Bless Chemical” refers to Bless Chemical Co., Ltd., a company incorporated in Hong Kong. | |
● | “China” and “PRC” refer to the People’s Republic of China (excluding Hong Kong, Macau and Taiwan for the purposes of this report only). | |
| ● | “CAD” refers to Canadian dollar, the legal currency of Canada. | |
| ● | “Fast Approach” refers to Fast Approach Inc., a corporation incorporated under the laws of Canada. |
2. “ALN” refers to American Lorain Corporation, a Nevada corporation (formerly known as Millennium Quest, Inc.).
3. “Minerve” refers to Minerve*, a limited liability company organized under the laws of France that is majority- owned by JunanHongrun.
| ● | “Hubei Bulaisi” Refers to Hubei Bulaisi Technology Co., Ltd., a company incorporated in China. | |
| ● | “Jiayi Technologies” or “WFOE” refers to Jiayi Technologies (Xianning) Co., Ltd, a PRC limited liability company and a wholly foreign-owned enterprise, formerly known as Lucky Sky Petrochemical Technology (Xianning) Co. Ltd. | |
| ● | “Jilin Chuangyuan” refers to Jilin Chuangyuan Chemical Co., Ltd., a PRC limited liability company. | |
| ● | “Jinshan Sanhe Luckysky” refers to Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd., a PRC limited company. | |
| ● | “Lucky Sky Planet Green HK” refers to Lucky Sky Planet Green Holdings Co., Limited, a company incorporated in Hong Kong. | |
| ● | “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. | |
● | “PLAG,” “Planet Green,” “we,” “us”, “our” and the “Company” refer to Planet Green Holdings Corp., a Nevada corporation, and except where the context requires otherwise, our wholly-owned subsidiaries and VIEs. | |
| ● | “Planet Green BVI” refers to Planet Green Holdings Corporation, a company incorporated in British Virgin Islands. |
4. “ILH” refers to International Lorain Holding, Inc., a Cayman Islands company that is wholly owned by ALN.
5. “Junan Hongrun” refers to Junan Hongrun Foodstuff Co., Ltd.
6. “Luotian Lorain” refers to Luotian Green Foodstuff Co., Ltd.
| ● | “RMB” refers to Renminbi, the legal currency of China. | |
| ● | “Shine Chemical BVI” refers to Shine Chemical Co., Ltd., a company incorporated in British Virgin Islands. | |
| ● | “Shanghai Shuning” refers to Shanghai Shuning Advertising Co., Ltd, a PRC limited liability company. | |
| ● | “U.S. dollar”, “$” and “US$” refer to the legal currency of the United States. |
7. “Beijing Lorain” refers to Beijing Green Foodstuff Co., Ltd.
| ● | “VIE” refers to variable interest entity. | |
| ● | “Xianning Bozhuang” refers to Xianning Bozhuang Tea Products Co., Ltd., a PRC limited liability company. |
8. “Shandong Lorain” refers to Shandong Green Foodstuff Co., Ltd.
9. “Dongguan Lorain” refers to Dongguan Green Foodstuff Co., Ltd.
10. “Shandong Greenpia” refers to Shandong Greenpia Foodstuff Co., Ltd.1
11. “RMB” refers to Renminbi, the legal currency of China.
12. “U.S. dollar”, “$” and “US$” refer to the legal currency of the United States.
13. “China” and “PRC” refer to the People’s Republic of China (excluding Hong Kong and Macau).
*On August 8, 2015, the Company re-organized its French operations by merging the operations of Conserverie Minerve into its immediate parent and 100% shareholder Athena, and concurrently, Athena wound up and dissolved Conserverie Minerve. Athena subsequently changed its own legal name to Conservie Minerve to continue its business.
3
ITEM 1. Financial StatementsFINANCIAL STATEMENTS
PLANET GREEN HOLDINGS CORP.
AMERICAN LORAIN CORPORATION
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNESEPTEMBER 30, 20172021 AND DECEMBER 31, 20162020
(Stated in US Dollars)
4
F-1
ReportUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
AT SEPTEMBER 30, 2021 AND DECEMBER 31, 2020
(Stated in US Dollars)
| 30 September, | 31 December, | |||||||
| 2021 | 2020 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 755,023 | $ | 3,415,751 | ||||
| Trade receivables, net | 2,947,635 | 835,384 | ||||||
| Note receivable | 10,509 | - | ||||||
| Inventories | 7,891,349 | 2,251,628 | ||||||
| Advances and prepayments to suppliers | 6,988,312 | 5,922,562 | ||||||
| Other receivables and other current assets | 1,755,797 | 1,091,815 | ||||||
| Related party receivable | 8,337,546 | - | ||||||
| Total current assets | $ | 28,686,171 | $ | 13,517,140 | ||||
| Non-current assets | ||||||||
| Plant and equipment, net | 20,654,268 | 4,596,637 | ||||||
| Intangible assets, net | 4,176,033 | 1,516,467 | ||||||
| Construction in progress, net | 2,210,466 | - | ||||||
| Prepayment for real-estates investments | 7,308,724 | - | ||||||
| Deferred tax assets | 1,152,225 | - | ||||||
| Goodwill | 16,719,258 | 2,340,111 | ||||||
| Right-of-use assets | 679,110 | - | ||||||
| Total non-current assets | $ | 52,900,084 | $ | 8,453,215 | ||||
| Total Assets | $ | 81,586,255 | $ | 21,970,355 | ||||
| Liabilities and Stockholders | ||||||||
| Current liabilities | ||||||||
| Short-term bank loans | $ | 7,255,095 | $ | - | ||||
| Accounts payable | 4,281,778 | 1,302,850 | ||||||
| Taxes payable | 159,578 | 198,683 | ||||||
| Accrued liabilities and other payables | 5,678,455 | 1,848,598 | ||||||
| Customers deposits | 4,293,920 | 241,893 | ||||||
| Related party payable | 4,048,288 | 19,850 | ||||||
| Lease payable-current portion | 170,110 | - | ||||||
| Deferred income | 61,291 | 15,682 | ||||||
| Total current liabilities | $ | 25,948,515 | $ | 3,627,556 | ||||
| Lease payable- non-current | $ | 439,700 | $ | - | ||||
| Long-term payables | 362,489 | 31,364 | ||||||
| Total current liabilities | $ | 802,189 | $ | 3,627,556 | ||||
| Total Liabilities | $ | 26,750,704 | $ | 7,255,112 | ||||
| Stockholders | ||||||||
| Preferred Stock, $0.001 par value, 5,000,000 shares authorized; 0 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively | $ | - | $ | - | ||||
| Common Stock, $0.001 par value, 200,000,000 shares authorized; 29,681,930 and 11,809,930 shares issued and outstanding as of September 30, 2021 and December 31, 2020 respectively | 29,682 | 11,810 | ||||||
| Additional paid-in capital | 130,651,697 | 95,659,360 | ||||||
| Accumulated deficit | (89,064,309 | ) | (84,331,897 | ) | ||||
| Accumulated other comprehensive income | 7,508,221 | 6,972,163 | ||||||
| Non-controlling interests | 5,710,260 | - | ||||||
| Total Stockholders | $ | 54,835,551 | $ | 18,311,436 | ||||
| Total Liabilities and Stockholders | $ | 81,586,255 | $ | 21,970,355 | ||||
See Accompanying Notes to the Financial Statements
F-2
PLANET GREEN HOLDINGS CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Stated in US Dollars)
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net revenues | $ | 8,484,401 | $ | 1,204,248 | $ | 15,597,048 | $ | 2,471,652 | ||||||||
| Cost of revenues | 7,133,389 | 515,196 | 13,750,406 | 1,622,061 | ||||||||||||
| Gross profit | 1,351,012 | 689,052 | 1,846,642 | 849,591 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling and marketing expenses | 453,657 | 56,891 | 974,273 | 83,664 | ||||||||||||
| General and administrative expenses | 3,223,939 | 705,492 | 5,869,473 | 1,252,719 | ||||||||||||
| Research & Developing Expenses | 12,654 | - | 34,875 | - | ||||||||||||
| Total operating expenses | 3,690,250 | 762,383 | 6,878,621 | 1,336,383 | ||||||||||||
| Operating loss | (2,339,238 | ) | (73,331 | ) | (5,031,979 | ) | (486,792 | ) | ||||||||
| Other income (expenses): | ||||||||||||||||
| Interest income (expense), net | (139,608 | ) | 2,848 | (342,732 | ) | 6,884 | ||||||||||
| Other income | 118,317 | 78,918 | 357,246 | 81,162 | ||||||||||||
| Other expenses | (39,089 | ) | (34,152 | ) | (40,764 | ) | (183,529 | ) | ||||||||
| Total other (expenses) income | (60,380 | ) | 47,614 | (26,250 | ) | (95,483 | ) | |||||||||
| Loss before income taxes | (2,399,618 | ) | (25,717 | ) | (5,058,229 | ) | (582,275 | ) | ||||||||
| Discontinued operations: | ||||||||||||||||
| Loss from discontinued operations | - | - | - | (150,911 | ) | |||||||||||
| Loss on disposal | - | (8,169,737 | ) | - | (8,169,737 | ) | ||||||||||
| Income tax expenses | - | - | 147 | - | ||||||||||||
| Net loss | (2,399,618 | ) | (8,195,454 | ) | (5,058,376 | ) | (8,902,923 | ) | ||||||||
| Less: Net loss attributable to non-controlling interest | (129,685 | ) | - | (325,964 | ) | - | ||||||||||
| Net loss attributable to common shareholders | (2,269,934 | ) | - | (4,732,412 | ) | - | ||||||||||
| Net loss | $ | (2,399,618 | ) | $ | (8,195,454 | ) | $ | (5,058,376 | ) | $ | (8,902,923 | ) | ||||
| Foreign currency translation adjustment | (139,703 | ) | 922,133 | 553,251 | 630,309 | |||||||||||
| Total comprehensive loss | $ | (2,539,321 | ) | $ | (7,273,321 | ) | $ | (4,505,125 | ) | $ | (8,272,614 | ) | ||||
| Less: Comprehensive loss attribute to non-controlling interest | (137,559 | ) | - | (308,771 | ) | - | ||||||||||
| Comprehensive loss attribute to common share holders | (2,401,762 | ) | (7,273,321 | ) | (4,196,354 | ) | (8,272,614 | ) | ||||||||
| Loss per common shareholders - Basic and diluted | $ | (0.08 | ) | $ | (0.85 | ) | $ | (0.21 | ) | $ | (0.97 | ) | ||||
| Basic and diluted weighted average shares outstanding | 28,667,147 | 9,666,669 | 23,082,956 | 9,111,874 | ||||||||||||
See Accompanying Notes to the Financial Statements
F-3
PLANET GREEN HOLDINGS CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Stated in US Dollars)
| Accumulated | ||||||||||||||||||||||||||||
| Additional | Other | Non- | ||||||||||||||||||||||||||
| Number of | Common | Paid-in | Accumulated | Comprehensive | Controlling | |||||||||||||||||||||||
| Shares | Stock | Capital | Deficit | Income | Interests | Total | ||||||||||||||||||||||
| Balance, January 1, 2020 | 7,877,765 | $ | 7,878 | $ | 85,803,421 | $ | (73,280,734 | ) | $ | 8,203,941 | $ | - | $ | 20,734,506 | ||||||||||||||
| Net income | - | - | - | (8,902,923 | ) | - | - | (8,902,923 | ) | |||||||||||||||||||
| Issuance of shares for acquisition | 1,800,000 | 1,800 | 4,588,200 | 4,590,000 | ||||||||||||||||||||||||
| Issuance of common stock for cash | 1,350,000 | 1,350 | 3,508,650 | - | - | - | 3,510,000 | |||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | 630,309 | - | 630,309 | |||||||||||||||||||||
| Balance, September 30, 2020 | 11,027,765 | $ | 11,028 | $ | 93,900,271 | $ | (82,183,657 | ) | $ | 8,834,250 | $ | - | $ | 20,561,892 | ||||||||||||||
| Balance, January 1, 2021 | 11,809,930 | $ | 11,810 | $ | 95,659,360 | $ | (84,331,897 | ) | $ | 6,972,163 | $ | - | $ | 18,311,436 | ||||||||||||||
| Net income | - | - | - | (4,732,412 | ) | - | (325,964 | ) | (5,058,376 | ) | ||||||||||||||||||
| Issuance of shares for acquisition | 10,300,000 | 10,300 | 20,100,700 | - | - | - | 20,111,000 | |||||||||||||||||||||
| Issuance of common stock for cash | 6,700,000 | 6,700 | 13,732,749 | - | - | - | 13,739,449 | |||||||||||||||||||||
| Stock-based compensation and issue of employee benefit plan stock | 872,000 | 872 | 1,158,888 | 1,159,760 | ||||||||||||||||||||||||
| Acquiring subsidiaries | - | - | - | - | - | 6,019,031 | 6,019,031 | |||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | 536,058 | 17,193 | 553,251 | |||||||||||||||||||||
| Balance, September 30, 2021 | 29,681,930 | $ | 29,682 | $ | 130,651,697 | $ | (89,064,309 | ) | $ | 7,508,221 | $ | 5,710,260 | $ | 54,835,551 | ||||||||||||||
See Accompanying Notes to the Financial Statements
F-4
PLANET GREEN HOLDINGS CORP.
Unaudited Condensed Statements of Independent Registered Public Accounting FirmCash Flows
We have reviewedFor the accompanying interim consolidated balance sheets of American Lorain Corporation (“the Company”) as of June 30, 2017 and December 31, 2016, and the related statements of income and cash flows for the sixnine months ended JuneSeptember 30, 20172021 and 2016. These interim consolidated financial statements2020
(Stated in US Dollars)
| 2021 | 2020 | |||||||
| CASH FLOWS FROM OPFRATING ACTIVITIFS: | ||||||||
| Net loss | $ | (5,058,376 | ) | $ | (8,902,923 | ) | ||
| Adjustments to reconcile net loss to cash (used in) provided by operating activities: | ||||||||
| Depreciation | 1,543,332 | 249,342 | ||||||
| Amortization | 180,930 | 119,837 | ||||||
| Bad debt expenses | - | 2,093 | ||||||
| Loss on disposal of discontinued operations | - | 8,169,737 | ||||||
| Note and account receivables | 1,251,554 | (3,861,255 | ) | |||||
| Inventory | (4,415,071 | ) | (474,090 | ) | ||||
| Prepayments and deposit | (7,290,071 | ) | (1,167,840 | ) | ||||
| Other receivables | 510,824 | - | ||||||
| Other receivables-Related party | - | (103,178 | ) | |||||
| Accounts payables | (108,627 | ) | 824,367 | |||||
| Advance from customer | 167,670 | - | ||||||
| Other payables and accruals | 145,045 | - | ||||||
| Related party payable | 141,485 | - | ||||||
| Taxes payable | (74,881 | ) | - | |||||
| Net cash used in operating activities | (13,006,187 | ) | (5,143,910 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of plant and equipment | (42,350 | ) | (407,296 | ) | ||||
| Decrease in cash from disposal of discontinued operations | - | (8,900 | ) | |||||
| Net cash used in investing activities | (42,350 | ) | (416,196 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Payments of short-term loan - bank | - | 147,539 | ||||||
| Proceeds from issuance of common stock | 9,812,118 | 3,513,936 | ||||||
| Net cash provided by financing activities | 9,812,118 | 3,661,475 | ||||||
| Net decrease in cash and cash equivalents | (3,236,419 | ) | (1,898,631 | ) | ||||
| EFFECT OF EXCHANGE RATE ON CASH | 575,690 | 88,988 | ||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 3,415,751 | 7,403,323 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF YEAR | $ | 755,023 | $ | 5,593,680 | ||||
| SUPPLEMENTARY OF CASH FLOW INFORMATION | ||||||||
| Interest received | $ | 102,870 | $ | 6,952 | ||||
| Interest paid | $ | 445,602 | $ | 4,512 | ||||
| NON-CASH TRANSACTIONS OF INVESTMENT AND FINANCING ACTIVITIES | ||||||||
| Issuance of shares for acquisition | $ | 24,038,331 | $ | 3,936 | ||||
| Issuance of common stock for employee compensation | $ | 1,159,760 | $ | - | ||||
F-5
PLANET GREEN HOLDINGS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021 AND DECEMBER 31, 2020
(Stated in U.S. Dollars)
1. Organization and Principal Activities
Planet Green Holdings Corp. (the “Company” or “PLAG” or “Planet Green”) is a holding company incorporated in Nevada. We are the responsibility of the Company's management.engaged in various businesses through our subsidiaries and VIE entities in China and subsidiary in Canada.
We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Going Concern
Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim consolidated financial statements for them to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with auditing standards of the Public Company Accounting Oversight Board (United States), the balance sheets of American Lorain Corporation as of December 31, 2016, and the related statements of income, comprehensive income, retained earnings, and cash flows for the year then ended (not presented herein); and in our report dated October 30, 2017, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed balance sheet as of December 31, 2016, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.
The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern.concern; however, the Company has incurred a net loss of $5,058,376 for the nine months ended September 30, 2021. As discussed in Note 3 to the financial statements,of September 30, 2021, the Company had incurred substantial losses duringan accumulated deficit of $89,064,309; its net cash used in operating activities for the year and had working capital deficit, which raisesnine months ended September 30, 2021 was $13,006,187.
These factors raise substantial doubt about itson the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3. TheseThe 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.
AERICAN LORAIN CORPORATION2. Summary of Significant Accounting Policies
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETSMethod of accountingAT JUNE 30, 2017 AND DECEMBER 31, 2016(Stated
Management has prepared the accompanying financial statements and these notes according to generally accepted accounting principles in US Dollars)
| 6/30/2017 | 12/31/2016 | |||||
| (Audited) | ||||||
| Assets | ||||||
| Current assets | ||||||
| Cash and cash equivalents | $ | 203,778 | $ | 426,054 | ||
| Restricted cash | 829,623 | 971,471 | ||||
| Trade receivables, net | 1,370,835 | 3,253,333 | ||||
| Inventories | 23,596,047 | 11,840,748 | ||||
| Advances and prepayments to suppliers | 12,476,063 | 29,873,479 | ||||
| Other receivables and other current assets | 81,949 | 708,892 | ||||
| Discontinued operations – assets held for sale | 15,663,385 | 19,745,847 | ||||
| Total current assets | $ | 54,221,680 | $ | 66,819,824 | ||
| Non-current assets | ||||||
| Investment | - | 118,471 | ||||
| Plant and equipment, net | 54,135,431 | 51,897,283 | ||||
| Intangible assets, net | 12,700,888 | 12,586,515 | ||||
| Construction in progress, net | 9,626,834 | 468,501 | ||||
| Other assets and goodwill | 651,323 | - | ||||
| Discontinued operations – long term assets held for sale | 13,365,560 | 16,362,855 | ||||
| Total Assets | $ | 144,701,716 | $ | 148,253,449 | ||
| Liabilities and Stockholders’ Equity | ||||||
| Current liabilities | ||||||
| Short-term bank loans | $ | 23,238,372 | $ | 22,667,482 | ||
| Long-term debt – current portion | 29,895,631 | 28,948,300 | ||||
| Capital lease – current portion | 1,031,990 | 1,007,185 | ||||
| Accounts payable | 4,871,248 | 5,514,477 | ||||
| Taxes payable | 522,779 | 248,807 | ||||
| Accrued liabilities and other payables | 13,708,499 | 8,611,816 | ||||
| Customers deposits | 6,139,865 | 1,347,136 | ||||
| Discontinued operations - liabilities | 14,118,477 | 13,811,908 | ||||
| Total current liabilities | $ | 93,526,861 | $ | 82,157,111 | ||
| Stockholders’ Equity | ||||||
| Preferred Stock, $0.001 par value, 5,000,000 shares authorized; 0 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively | $ | - | $ | - | ||
| Common Stock, $0.001 par value, 200,000,000 shares authorized; 38,274,490 and 38,274,490 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | 38,275 | 38,275 | ||||
| Additional paid-in capital | 57,852,249 | 57,852,249 | ||||
| Statutory reserves | 25,103,354 | 25,103,354 | ||||
| Retained earnings | (54,195,627 | ) | (36,396,455 | ) | ||
| Accumulated other comprehensive income | 16,488,544 | 12,171,006 | ||||
| Non-controlling interests | 5,888,060 | 7,327,909 | ||||
| Total Stockholders’ Equity | $ | 51,174,855 | $ | 66,096,338 | ||
| Total Liabilities and Stockholders’ Equity | $ | 144,701,716 | $ | 148,253,449 |
See Accompanying Notes to the Financial StatementsUnited States of America; the Company maintains its general ledger and journals with the accrual method accounting.
F-3
AMERICAN LORAIN CORPORATIONPrinciples of consolidationUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSAND COMPREHENSIVE INCOME (LOSS)FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND 2016(Stated in US Dollars)
| Three months ended June 30, | For the six months ended June 30, | |||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||
| Net revenues | $ | 1,278,053 | $ | 23,425,239 | $ | 3,184,525 | $ | 45,713,821 | ||||
| Cost of revenues | 1,567,246 | 19,003,705 | 3,228,490 | 37,134,871 | ||||||||
| Gross (loss) profit | (289,193 | ) | 4,421,534 | (43,965 | ) | 8,578,950 | ||||||
| Operating expenses: | ||||||||||||
| Selling and marketing expenses | - | 1,019,343 | 2,224,717 | 2,228,725 | ||||||||
| General and administrative expenses | 262,072 | 629,746 | 6,177,278 | 1,221,057 | ||||||||
| Total operating expenses | 262,072 | 1,649,089 | 8,401,995 | 3,449,782 | ||||||||
| Operating (loss) income | (551,265 | ) | 2,772,445 | (8,445,960 | ) | 5,129,168 | ||||||
| Other income (expenses): | ||||||||||||
| Government subsidy | - | 359,399 | 580,705 | 864,106 | ||||||||
| Interest income | 32 | 5,165 | 70 | 18,184 | ||||||||
| Interest expense | (920,970 | ) | (828,245 | ) | (1,643,164 | ) | (1,909,107 | ) | ||||
| Other income | 777,542 | 374,958 | 428,580 | 744,749 | ||||||||
| Other expenses | (135,120 | ) | (2,894,596 | ) | (2,004,235 | ) | (6,900,419 | ) | ||||
| (278,516 | ) | (2,983,319 | ) | (2,638,044 | ) | (7,182,487 | ) | |||||
| (Loss) income before taxes from continuing operations | (829,781 | ) | (210,874 | ) | (11,084,004 | ) | (2,053,319 | ) | ||||
| Provision for income taxes | - | - | - | 1,373,320 | ||||||||
| Loss from continuing operations | (829,781 | ) | (210,874 | ) | (11,084,004 | ) | (3,426,639 | ) | ||||
| Discontinued operations: | ||||||||||||
| (Loss) income from discontinued operations | (1,200,173 | ) | 354,271 | (6,715,168 | ) | 836,068 | ||||||
| Provision for income taxes | - | - | - | 209,127 | ||||||||
| (Loss) income from discontinued operations, net of taxes | (1,200,173 | ) | 354,271 | (6,715,168 | ) | 626,941 | ||||||
| Net (loss) income | $ | (2,029,954 | ) | $ | 143,397 | $ | (17,799,172 | ) | $ | (2,799,698 | ) | |
| Net (loss attributable) income available to: | ||||||||||||
| - Common shareholders | (1,763,776 | ) | 7,816 | (16,359,323 | ) | (3,067,153 | ) | |||||
| - Non-controlling interests | (266,178 | ) | 135,581 | (1,439,849 | ) | 267,455 | ||||||
| Other comprehensive income: | ||||||||||||
| Foreign currency translation gain (loss) | 739,838 | (6,663,309 | ) | 3,069,946 | 6,334,063 | |||||||
| Comprehensive (loss) income | $ | (1,290,116 | ) | $ | (6,519,912 | ) | $ | (14,729,226 | ) | $ | 3,534,365 | |
| Loss per share from continuing operations | ||||||||||||
| - Basic and diluted | (0.02 | ) | (0.01 | ) | (0.29 | ) | (0.09 | ) | ||||
| (Loss) income per share from discontinued operations | ||||||||||||
| - Basic and diluted | (0.02 | ) | 0.01 | (0.14 | ) | 0.01 | ||||||
| (Loss) income per share | ||||||||||||
| - Basic and diluted | (0.05 | ) | 0.00 | (0.43 | ) | (0.07 | ) | |||||
| Basic and diluted weighted average shares outstanding | 38,274,490 | 38,259,490 | 38,274,490 | 38,259,490 | ||||||||
See Accompanying Notes to the Financial Statements
F-4
AMERICAN LORAIN CORPORATIONUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE SIX MONTHS ENDED JUNE 30, 2017 AND 2016(Stated in US Dollars)
| For the six months ended June | ||||||
| 30, | ||||||
| 2017 | 2016 | |||||
| Cash flows from operating activities | ||||||
| Net income | $ | (11,084,004 | ) | $ | (2,799,697 | ) |
| Depreciation of fixed assets | 1,390,539 | 1,848,602 | ||||
| Amortization of intangible assets | 775,799 | 183,662 | ||||
| Write down of assets from investment loss from deconsolidation | - | (13,279,243 | ) | |||
| Increase in accounts and other receivables | 2,015,742 | 36,360,661 | ||||
| Increase in inventories | (11,642,795 | ) | (10,147,552 | ) | ||
| Decrease (increase) in advance to suppliers | 19,710,592 | (1,342,812 | ) | |||
| Increase in prepayment | (1,110,935 | ) | (606,312 | ) | ||
| Increase in deferred tax asset | - | (171,261 | ) | |||
| Increase (decrease) in accounts and other payables | 6,421,792 | (18,520,860 | ) | |||
| Increase in taxes payable | 273,241 | - | ||||
| Increase in customer deposits | 4,808,727 | - | ||||
| Decrease in related party payable | - | (1,755,216 | ) | |||
| Net cash provided by (used in) operating activities | 11,558,698 | (10,230,028 | ) | |||
| Cash flows from investing activities | ||||||
| Increase in restricted cash | 182,447 | 6,835,147 | ||||
| Purchase of plant and equipment | (2,292,600 | ) | (190,027 | ) | ||
| Payment of construction in progress | (9,306,821 | ) | - | |||
| Purchase of intangible assets | (561,114 | ) | - | |||
| Increase in deposits | - | 6,119,983 | ||||
| Net cash (used in) provided by investing activities | (11,978,088 | ) | 12,765,103 | |||
| Cash flows from financing activities | ||||||
| Repayment of bank borrowings | - | (6,256,305 | ) | |||
| Proceeds from bank borrowings and debentures | 162,874 | 9,777,579 | ||||
| Repayment of capital lease | - | (58,993 | ) | |||
| Net cash provided by financing activities | $ | 162,874 | $ | 3,462,281 | ||
| Net (decrease) increase of Cash and Cash Equivalents | (256,516 | ) | 5,997,356 | |||
| Effect of foreign currency translation on cash and cash equivalents | 34,239 | 11,862,397 | ||||
| Cash and cash equivalents–beginning of year | 426,054 | 20,664,487 | ||||
| Cash and cash equivalents–end of year | $ | 203,777 | $ | 38,524,240 | ||
| Supplementary cash flow information: | ||||||
| Interest received | $ | 70 | $ | 18,519 | ||
| Interest paid | $ | 513,825 | $ | 914,911 | ||
| Income taxes paid | $ | 310,820 | $ | 2,857,667 | ||
See Accompanying Notes to the Financial Statements
F-4
AMERICAN LORAIN CORPORATIONNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2017 AND DECEMBER 31, 2016(Stated in US Dollars)
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The accompanying consolidated financial statements include the assets, liabilities, |
| Place of | Attributable equity | Registered | ||
| Name of Company | incorporation | interest % | capital | |
| International Lorain Holding Inc. | Cayman Islands | 100.0 | $ 46,659,135 | |
| Junan Hongrun Foodstuff Co., Ltd. | PRC | 100.0 | 44,861,741 | |
| Shandong Lorain Co., Ltd. | PRC | 80.2 | 12,123,985 | |
| Beijing Lorain Co., Ltd. | PRC | 100.0 | 1,540,666 | |
| Luotian Lorain Co., Ltd. | PRC | 100.0 | 3,797,774 | |
| Shandong Greenpia Foodstuff Co., Ltd. | PRC | 100.0 | 2,303,063 | |
| Dongguan Lorain Co., Ltd. | PRC | 100.0 | 149,939 |
In 2014, the Company invested $2,100,000 in Athena/Minerve Group whereby the Company controlling shareholder of Minerve. Minerve conducted operations in manufacturing, packaging and sales activities in France and import and storage operations in Portugal. During the years ended December 31, 2015, the financial position and results of operations of Minerve were accounted for as subsidiaries in the Company’s financial statements; however, during the year ended December 31, 2016, Minerve became insolvent and compelled into bankruptcy by creditors, and, ultimately liquidation. Accordingly, the Company, lost controland its subsidiaries, which are listed below:
The accompanying consolidated financial statements reflect the activities of MinervePlanet Green Holdings Corp. and writteneach of the value of its investment in Minerve. All receivables due by Minerve to subsidiaries still controlled by the Company have been written off.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 Co., Limited (HK) | ||
| Fast Approach Inc. | Canada | 100% owned by Planet Green Holdings Corp. (Nevada) | ||
| Shanghai Shuning Advertising Co., Ltd. | PRC | 100% owned by Fast Approach Inc. | ||
| Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. | PRC | 85% owned by Hubei Bulaisi Technology Co., Ltd. | ||
| Jilin Chuangyuan Chemical Co., Ltd. | PRC | VIE of Jiayi Technologies (Xianning) Co., Ltd. | ||
| Xianning Bozhuang Tea Products Co., Ltd. | PRC | 100% owned by Jiayi Technologies (Xianning) Co., Ltd. | ||
| Shine Chemical Co., Ltd. | British Virgin Islands | 100% owned by Planet Green Holdings Corp. (Nevada). | ||
| Bless Chemical Co., Ltd. | Hong Kong | 100% owned by of Shine Chemical Co., Ltd. (BVI) | ||
| Hubei Bulaisi Technology Co., Ltd. | PRC | 100% owned by Bless Chemical Co., Ltd. (HK) | ||
| Anhui Ansheng Petrochemical Equipment Co., Ltd. | PRC | VIE of Jiayi Technologies (Xianning) Co., Ltd. |
F-6
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-ownwholly own are accounted for as non-controlling interests.
Shandong Economic Development Investment
On May 18, 2018, the Company incorporated Planet Green Holdings Corporation, which is 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, state-owned entity, holds 19.8%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 Shandong Lorain.Shanghai Xunyang.
Discontinued operations
On May 29, 2020, the Planet Green BVI incorporated Lucky Sky Planet Green Holdings Co., Limited, a limited company incorporated in Hong Kong.
In 2017,
On June 5, 2020, the Planet Green BVI acquired all of the outstanding equity interests of Fast Approach Inc. It was incorporated under Canada’s laws and runs the operation of a demand-side platform and online advertising business.
On June 16, 2020, Lucky Sky Holdings Corporations (H.K.) transferred its 100% equity interest in Lucky Sky Petrochemical to Lucky Sky Planet Green HK.
On September 15, 2020, Lucky Sky Petrochemical terminated the VIE agreements with Shenzhen Lorain and Taishan Muren.
On August 10, 2020, Planet Green 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 issued an aggregate of 2,200,000 shares of common stock of the Company discontinuedto the operationsequity holders of Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. in Shandong Lorainexchange 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 issued an aggregate of 3,300,000 shares of common stock of the Company to the equity holders of Jilin Chuangyuan Chemical Co., Ltd. in exchange for the transfer of 75% of the equity interest of Jilin Chuangyuan Chemical Co., Ltd. to the Jiayi Technologies (Xianning) Co., Ltd.
On July 15, 2021, Planet Green issued an aggregate of 3,300,000 shares of common stock of the Company to the equity holders of Anhui Ansheng Petrochemical Equipment Co., Ltd. for the transfer to 66% of the equity interest if Anhui Ansheng Petrochemical Equipment Co., Ltd. to the Jiayi Technologies (Xianning) Co., Ltd.
On August 1, 2021, Jiayi Technologies (Xianning) Co., Ltd terminated the VIE agreements with Xianning Bozhuang Tea Products Co., Ltd. and Dongguan Lorain.acquired 100% equity of Xianning Bozhuang Tea Products Co., Ltd. As a result, Xianning Bozhuang Tea Products Co., Ltd. became the wholly-owned subsidiaries of the Jiayi Technologies (Xianning) Co., Ltd.
On August 3, 2021, the Planet Green acquired 8,000,000 ordinary shares of the Shine ChemicalBVI. As a result, Shine ChemicalBVI, Bless Chemical Co., Ltd. and Hubei Bulaisi Technology Co., Ltd. become the wholly-owned subsidiaries of the Planet Green.
On September 1, 2021, Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. has changed its major shareholder from Mr. Feng Chao to Hubei Bulaisi Technology Co., Ltd. and Hubei Bulaisi Technology Co., Ltd. became hold 85% shares of Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. after the change of shareholders.
F-7
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 resultsaffairs and appoint their senior executives. The Company is considered the primary beneficiary of these two subsidiariesoperating 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 with Taishan Muren, Xianning Bozhuang, and Shenzhen Lorain, as well as their shareholders, which give the Company the ability to substantially influence those companies’ daily operations and financial affairs and appoint their senior executives. The Company is considered the primary beneficiary of these operating companies, and it consolidates their accounts as VIEs.
On September 6, 2020, it terminated its VIE agreements with Shenzhen Lorain and Taishan Muren.
On March 9, 2021, through Jiayi Technologies (Xianning) Co., Ltd., formerly known as Lucky Sky Petrochemical Technology (Xianning) Co., Ltd., the Company entered into exclusive VIE agreements with Jilin Chuangyuan Chemical Co., Ltd., as well as their shareholders, which give the Company the ability to substantially influence those companies’ daily operations and financial affairs and appoint their senior executives. The Company is considered the primary beneficiary of these operating companies, and it consolidates their accounts as VIEs.
On July 15, 2021, through Jiayi Technologies (Xianning) Co., Ltd., formerly known as Lucky Sky Petrochemical Technology (Xianning) Co., Ltd., the Company entered into exclusive VIE agreements with Anhui Ansheng Petrochemical Equipment Co., Ltd., as well as their shareholders, which give the Company the ability to substantially influence those companies’ daily operations and financial affairs and appoint their senior executives. The Company is considered the primary beneficiary of these operating companies, and it consolidates their accounts as VIEs.
On August 1, 2021, Jiayi Technologies (Xianning) Co., Ltd. terminated the VIE agreements with Xianning Bozhuang Tea Products Co., Ltd.
Each of the VIE Agreements is described in detail below
Consultation and Service Agreement
Under the Consultation and Service Agreement, WFOE has the exclusive right to provide consultation and services to the operating entities in China in business management, human resource, technology, and intellectual property rights. WFOE exclusively owns any intellectual property rights arising from the performance of this Consultation and Service Agreement. The number of service fees and payment terms can be amended by the WFOE and operating companies’ consultation and implementation. The duration of the Consultation and Service Agreement is 20 years. WFOE may terminate this agreement at any time by giving 30 day’s prior written notice. Under the Consultation and Service Agreement, WFOE has the exclusive right to provide consultation and services to the operating entities in China in business management, human resource, technology, and intellectual property rights. WFOE exclusively owns any intellectual property rights arising from the performance of this Consultation and Service Agreement. The service fees and payment terms can be amended by the WFOE and operating companies’ consultation and implementation. The duration of the Consultation and Service Agreement is 20 years. WFOE may terminate this agreement at any time by giving 30 day’s prior written notice.
Business Cooperation Agreement
Pursuant to the Business Cooperation Agreement, WFOE has the exclusive right to provide complete technical support, business support, and related consulting services, including but not limited to specialized services, business consultations, equipment or property leasing, marketing consultancy, system integration, product research and development, and system maintenance. WFOE exclusively owns any intellectual property rights arising from the performance of this Business Cooperation Agreement. The rate of service fees may be adjusted based on the services rendered by WFOE in that month and the operational needs of the operating entities. The Business Cooperation Agreement shall maintain effective unless it was terminated or was compelled to release under applicable PRC laws and regulations. WFOE may terminate this Business Cooperation Agreement at any time by giving 30 day’s prior written notice.
F-8
Equity Pledge Agreements
According to the Equity Pledge Agreements among WFOE, operating entities, and each of operating entities’ shareholders, shareholders of the operating entities pledge all of their equity interests in the functional entities to WFOE to guarantee their performance of relevant obligations and indebtedness under the Technical Consultation and Service Agreement and other control agreements. Besides, shareholders of the operating entities are presentedin the process of registering the equity pledge with the competent local authority.
Equity Option Agreements
According to the Equity Option Agreements, WFOE has the exclusive right to require each shareholder of the operating companies to fulfill and complete all approval and registration procedures required under PRC laws for WFOE to purchase or designate one or more persons to buy, each shareholder’s equity interests in the operating companies, once or at multiple times at any time in part or in whole at WFOE’s sole and absolute discretion. The purchase price shall be the lowest price allowed by PRC laws. The Equity Option Agreements shall remain effective until all the equity interest owned by each operating entity shareholder has been legally transferred to WFOE or its designee(s).
Voting Rights Proxy Agreements
According to the Voting Rights Proxy Agreements, each shareholder irrevocably appointed WFOE or WFOE’s designee to exercise all his or her rights as discontinued operations.the shareholders of the operating entities under the Articles of Association of each operating entity, including but not limited to the power to exercise all shareholder’s voting rights concerning all matters to be discussed and voted in the shareholders’ meeting. The term of each Voting Rights Proxy Agreement is 20 years. WOFE has the right to extend each Voting Proxy Agreement by giving written notification.
F-6
American Lorain CorporationNotes to Financial StatementsBased on the foregoing contractual arrangements, The Company consolidates the accounts of Xianning Bozhuang Tea Products Co., Ltd., Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. and Jilin Chuangyuan Chemical Co., Ltd. in accordance with Regulation S-X-3A-02 promulgated by the Securities Exchange Commission (“SEC”), and Accounting Standards Codification (“ASC”) 810-10, Consolidation.
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 ofdisclose the 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 timewhen 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 original maturities 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 sellingto 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-saleavailable for sale securities are determined on a specific-identificationspecific 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 considersbelieves 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,after year-end, and forecasted performance of the investee.
Premiums and discounts are amortized or accreted over the life of the related available-for-sale security as an adjustment to yield using the effective-interest method. Dividend and interest income are recognized when earned.
F-9
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 fulltotal 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 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’sCompany typically applies a salvage value of 0% to 10%. The estimated useful lives of the plant and equipment are as follows:
F-7
American Lorain CorporationNotes to Financial Statements
| 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 | 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 costsfees of acquisitionpurchase 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.
Land use rights
Goodwill
Land use rights are carried at cost and amortized on a straight-line basis over a specified period. Amortization is provided using the straight-line method over 40-50 years.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. The Company conducts an annual assessment of its goodwill for impairment. If the carrying value of its goodwill exceeds its fair value, then impairment has been incurred; accordingly, a charge to the Company’s operations results of operations 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.
F-10
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 becomingbecome obsolete from a changedifference 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 of are reported at the lower of the carrying amount or fair value lessfewer costs to sell.selling.
F-8
American Lorain CorporationNotes to Financial Statements
Statutory reserves
Statutory reserves are referring to the amount appropriated from the net income in accordance withfollowing 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 currencies of the Company are the Renminbi (RMB) and the Euro (EUR)Canadian dollar (CAD). The Company’s assets and liabilities are translated into United States dollars from RMB and EUR at year-end exchange rates, and itsrates. 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.
| 6/30/2017 | 12/31/2016 | 6/30/2016 | |||
| Period/year end RMB: US$ exchange rate | 6.7768 | 6.9437 | 6.4479 | ||
| Period/annual average RMB: US$ exchange rate | 6.8743 | 6.6430 | 6.5395 |
| 09/30/2021 | 12/31/2020 | 09/30/2020 | ||||||||||
| Period-end US$: CAD$ exchange rate | 1.2753 | 1.2754 | 1.3389 | |||||||||
| Period-end US$: RMB exchange rate | 6.4854 | 6.5326 | 6.8101 | |||||||||
| Period average US$: CAD$ exchange rate | 1.2431 | 1.3409 | 1.3571 | |||||||||
| Period average US$: RMB exchange rate | 6.4714 | 6.8996 | 6.9926 | |||||||||
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 recognizesadopted ASC 606 “Revenue Recognition.” It recognized revenue in accordance to guidance found in Staff Accounting Bulletin (SAB) 104, where persuasive evidence of arrangement exists, the price has been fixed or is determinable, the delivery has been completed and no other significant obligationswhen 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 exists,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 collectabilitytea products. The Company applies the following five steps to determine the appropriate amount of payment is reasonably assured. Payments received priorrevenue to allbe recognized as it fulfills its obligations under each of the foregoing criteria are recorded as customer deposits. Recorded revenue is derived from the value of goods invoiced less value-added tax (VAT).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.
F-11
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 sponsoredgovernment-sponsored defined contribution plans are charged to the either expensesexpense 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 allows for recognition ofrecognizes 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 ifassets. If it is more likely than not, these items will either expire before the Company is able tocan realize their benefits or thatuncertain future realization is uncertain.realization.
F-9
American Lorain CorporationNotes to Financial Statements
Comprehensive income
The Company uses FASBFinancial Accounting Standards Board (“FASB”) ASC Topic 220, “Reporting Comprehensive Income”.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 withfollowing ASC Topic 260, “Earnings per share”.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 shareper-share basis from the potential conversion of convertible securities or the exercise of options and or warrants; the dilutive effectsimpacts of potentially convertible securities are calculated using the as-if method; the potentially dilutive effect of options or warrantswarranties are calculatedcomputed using the treasury stock method. Securities that are potentially anPotentially anti-dilutive effectsecurities (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.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 disclosure ofdisclosing the Company’s fair value of financial instruments held by the Company.instruments. ASC Topic 825, “Financial Instruments,” defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities 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 | |
| ● | Level 3 - | inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.
F-12
Lease
Effective December 31, 2018, Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. adopted ASU 2016-02, “Leases” (Topic 842), and elected the practical expedients that do not require us to reassess: (1) whether any expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. For lease terms of twelve months or fewer, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. The Company also adopted the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component.
Lease terms used to calculate the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as the Company does not have reasonable certainty at lease inception that these options will be exercised. The Company generally considers the economic life of its operating lease ROU assets to be comparable to the useful life of similar owned assets. The Company has elected the short-term lease exception, therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Its leases generally do not provide a residual guarantee. The operating lease ROU asset also excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term.
The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of operating lease liabilities in any tested asset group and it includes the associated operating lease payments in the undiscounted future pre-tax cash flows.
As of September 30, 2021, there were approximately $0.68 million right of use (“ROU”) assets and approximately $0.61 million lease liabilities based on the present value of the future minimum rental payments of leases, using an incremental borrowing rate of 4.75% and 4.90% based on the duration of lease terms.
Commitments and contingencies
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
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 financial information
These unauditedperiods within those fiscal years. Early adoption of the amendments in this Update is permitted, including adoption in any interim condensed consolidatedperiod, (1) for public business entities for reporting periods for which financial statements have not yet been preparedissued, and (2) for all other entities for reporting periods for which financial statements have not however been made available for issuance. The amendments in accordance with GAAP for interim financial reporting andthis Update should be applied either in the rules and regulationsperiod of adoption or retrospectively to each period (or periods) in which the effect of the Securitieschange in the U.S. federal corporate income tax rate in the Tax Cuts and Exchange Commission that permit reducedJobs 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 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, 2017.
F-10
American Lorain Corporation
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 the settlement of loans or notes when they become due.
F-13
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 with a controlling financial interest in a VIE is deemed the primary beneficiary and must consolidate the VIE. WOFE is deemed to have the controlling financial interest and be the primary beneficiary of Anhui Ansheng Petrochemical Equipment Co., Ltd. and Jilin Chuangyuan Chemical Co., Ltd. because it has both of the following characteristics:
1) | The power to direct activities at Anhui Ansheng Petrochemical Equipment Co., Ltd. and Jilin Chuangyuan Chemical Co., Ltd. that most significantly impact such entity’s economic performance, and |
| 2) | The obligation to absorb losses and the right to receive benefits from Anhui Ansheng Petrochemical Equipment Co., Ltd. and Jilin Chuangyuan Chemical Co., Ltd. that could potentially be significant to such entity. Under the Contractual Arrangements, Anhui Ansheng Petrochemical Equipment Co., Ltd. and Jilin Chuangyuan Chemical Co., Ltd. pay service fees equal to all of its net income to WFOE. At the same time, WFOE is obligated to absorb all of the Anhui Ansheng Petrochemical Equipment Co., Ltd.’s and Jilin Chuangyuan Chemical Co., Ltd.’s losses. The Contractual Arrangements are designed to operate Anhui Ansheng Petrochemical Equipment Co., Ltd. and Jilin Chuangyuan Chemical Co., Ltd. for the benefit of PLAG WFOE and ultimately, the Company. Accordingly, the accounts of Anhui Ansheng Petrochemical Equipment Co., Ltd. and Jilin Chuangyuan Chemical Co., Ltd. are consolidated |
The carrying amount of VIE’s consolidated assets and liabilities are as follows:
| 09/30/2021 | 12/31/2020 | |||||||
| Cash and cash equivalents | $ | 243,041 | $ | 528,048 | ||||
| Note and Accounts receivable, net | 2,094,567 | 835,384 | ||||||
| Other receivables - third party | 1,098,153 | 7,726,607 | ||||||
| Inventories, net | 4,815,483 | 2,251,628 | ||||||
| Prepayments | 839,237 | 1,215,089 | ||||||
| Related party receivable | 8,337,546 | - | ||||||
| TOTAL CURRENT ASSETS | 17,428,026 | 12,556,756 | ||||||
| Plan and equipment, net | 12,642,638 | 4,592,615 | ||||||
| Intangible assets, net | 2,755,156 | 1,491,614 | ||||||
| Construction in progress, net | 2,196,106 | - | ||||||
| Deferred tax assets | 418,178 | - | ||||||
| Total Non-Current Assets | 18,012,079 | 6,084,229 | ||||||
| TOTAL ASSETS | $ | 35,440,105 | $ | 18,640,985 | ||||
| Short-term bank loans | $ | 6,745,472 | $ | - | ||||
| Accounts payable | 2,966,986 | 1,017,373 | ||||||
| Advance from customer | 3,843,993 | 213,469 | ||||||
| Other payables and accrued liabilities | 10,634,672 | 8,951,117 | ||||||
| Other payables - related party | 3,887,258 | 2,716,537 | ||||||
| Taxes payable | 35,512 | 171,231 | ||||||
| Deferred income | 61,291 | - | ||||||
| TOTAL CURRENT LIABILITIES | 28,175,184 | 13,069,727 | ||||||
| Long term payable | 362,489 | - | ||||||
| TOTAL LIABILITIES | $ | 28,537,673 | $ | 13,069,727 | ||||
| Paid-in capital | 12,326,270 | 6,314,908 | ||||||
| Retained earnings | (4,849,907 | ) | (793,600 | ) | ||||
| Accumulated other comprehensive income | (573,931 | ) | 49,950 | |||||
| Total Equity | 6,902,432 | 5,571,258 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 35,440,105 | $ | 18,640,985 | ||||
F-14
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.’s 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.:
| |||||
| $ | 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.
F-15
Acquisition of Jilin Chuangyuan Chemical Co., Ltd.
On March 9, 2021, the Company and its wholly-owned subsidiary Jiayi Technologies (Xianning) Co., Ltd. formerly known as Lucky Sky Petrochemical Technology (Xianning) Co., Ltd., entered into a series of VIE agreements with Jilin Chuangyuan Chemical Co., Ltd. and its equity holders to obtain control and become the primary beneficiary of Jilin Chuangyuan Chemical Co., Ltd. The Company consolidated Jilin Chuangyuan Chemical Co., Ltd.’s accounts as its VIE. Under the VIE agreements, the Company issued an aggregate of 3,300,000 shares of common stock of the Company to the equity holders of Jilin Chuangyuan Chemical Co., Ltd. in exchange for the transfer of 75% of the equity interest of Jilin Chuangyuan Chemical Co., Ltd. to the Jiayi Technologies (Xianning) Co., Ltd. The significant terms of these VIE agreements are summarized in “Note 2 - Summary of Significant Accounting Policies” above.
The Company’s acquisition of Jilin Chuangyuan Chemical Co., Ltd. was accounted for as a business combination following ASC 805. The Company has allocated the purchase price of Jilin Chuangyuan based upon the fair value of the identifiable assets acquired and liabilities assumed on the acquisition date. The Company estimated the fair values of the assets acquired and liabilities taken at the acquisition date following the business combination standard issued by the FASB with the valuation methodologies using level 3 inputs, except for other current assets and current liabilities were valued using the cost approach. Management of the Company is responsible for determining the fair value of assets acquired, liabilities assumed, and intangible assets identified as of the acquisition date and 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 | |||
| Other receivables-RP | 212,594 | |||
| Plant and equipment, net | 11,109,220 | |||
| Intangible assets, net | 2,149,910 | |||
| Deferred tax assets | 415,154 | |||
| Goodwill | 3,191,897 | |||
| Total assets | $ | 19,136,773 | ||
| Short-term loan - bank | (3,826,934 | ) | ||
| Long term payable | (1,162,355 | ) | ||
| Accounts payable | (575,495 | ) | ||
| Advance from customers | (291,655 | ) | ||
| Other payables and accrued liabilities | (2,815,356 | ) | ||
| Other payables-RP | (765,387 | ) | ||
| Income taxes payable | (1,073 | ) | ||
| Total liabilities | (9,438,255 | ) | ||
| Non controlling interest | (1,613,518 | ) | ||
| Net assets acquired | $ | 8,085,000 | ||
Approximately $3.19 million of goodwill arising from the acquisition consists mainly of synergies expected from combining the operations of the Company and Jilin Chuangyuan Chemical Co., Ltd. None of the goodwill is expected to be deductible for income tax purposes.
F-16
Acquisition of Anhui Ansheng Petrochemical Equipment Co., Ltd.
On July 15, 2021, the Company and its wholly-owned subsidiary Jiayi Technologies (Xianning) Co., Ltd., formerly known as Lucky Sky Petrochemical Technology (Xianning) Co., Ltd., entered into a series of VIE agreements with Anhui Ansheng Petrochemical Equipment Co., Ltd. and its equity holders to obtain control and become the primary beneficiary of Anhui Ansheng Petrochemical Equipment Co., Ltd. The Company consolidated Anhui Ansheng Petrochemical Equipment Co., Ltd.’s accounts as its VIE. Under the VIE agreements, the Company issued an aggregate of 4,800,000 shares of common stock of the Company to the equity holders of Anhui Ansheng Petrochemical Equipment Co., Ltd. in exchange for the transfer of 66% of the equity interest of Anhui Ansheng Petrochemical Equipment Co., Ltd. to the Jiayi Technologies (Xianning) Co., Ltd. The significant terms of these VIE agreements are summarized in “Note 2 - Summary of Significant Accounting Policies” above.
The Company’s acquisition of Anhui Ansheng Petrochemical Equipment Co., Ltd. was accounted for as a business combination following ASC 805. The Company has allocated the purchase price of Anhui Ansheng Petrochemical Equipment Co., Ltd. based upon the fair value of the identifiable assets acquired and liabilities assumed on the acquisition date. The Company estimated the fair values of the assets acquired and liabilities taken at the acquisition date following the business combination standard issued by the FASB with the valuation methodologies using level 3 inputs, except for other current assets and current liabilities were valued using the cost approach. Management of the Company is responsible for determining the fair value of assets acquired, liabilities assumed, and intangible assets identified as of the acquisition date and considered several other available factors. Acquisition-related costs incurred for the acquisitions are not material and expensed as incurred in general and administrative expenses.
The following table summarizes the fair value of the identifiable assets acquired and liabilities assumed at the acquisition date, which represents the net purchase price allocation at the date of the acquisition of Anhui Ansheng Petrochemical Equipment Co., Ltd.:
| |
| |
| |
| |
| |
| |
| $ | |
| 7,926,000 |
|
| |
|
F-11
| Fair Value | ||||
| Cash and cash equivalents, and Restricted Cash | $ | 288,122 | ||
| Trade receivable and Note receivable | 944,704 | |||
| Inventories | 3,236,008 | |||
| Related party receivable | 2,500,117 | |||
| Other current assets | 1,393,817 | |||
| Plant and equipment, net | 4,036,649 | |||
| Intangible assets, net | 635,738 | |||
| Goodwill | 10,263,937 | |||
| Total assets | $ | 23,299,092 | ||
| Short-term loan-bank | (3,735,614 | ) | ||
| Related party payable | (2,639,938 | ) | ||
| Accounts payable | (1,966,099 | ) | ||
| Other current liabilities | (3,902,894 | ) | ||
| Total liabilities | (12,244,545 | ) | ||
| Non controlling interest | (3,758,545 | ) | ||
| Net assets acquired | $ | 7,296,000 | ||
American Lorain CorporationNotes
Approximately $10.26 million of goodwill arising from the acquisition consists mainly of synergies expected from combining the operations of the Company and Anhui Ansheng Petrochemical Equipment Co., Ltd. None of the goodwill is expected to Financial Statements
be deductible for income tax purposes.
| |
| |
| |
| |
|
| 6/30/2017 | 12/31/2016 | |||||
| Trade accounts receivable | $ | 2,091,580 | $ | 3,948,880 | ||
| Less:Allowance for doubtful accounts | (720,745 | ) | (695,547 | ) | ||
| $ | 1,370,835 | $ | 3,253,333 | |||
| Allowance for doubtful accounts: | ||||||
| Beginning balance | $ | (695,547 | ) | $ | (5,901,810 | ) |
| Additions to allowance | (25,198 | ) | - | |||
| Bad debt written-off | - | 5,206,263 | ||||
| Ending balance | $ | (720,745 | ) | $ | (695,547 | ) |
| |
|
| 6/30/2017 | 12/31/2016 | |||||
| Raw materials | $ | 11,277,890 | $ | - | ||
| Packing material | 49,669 | - | ||||
| Inventory of supplies | 19,129 | - | ||||
| Finished goods | 12,249,359 | 11,840,748 | ||||
| $ | 23,596,047 | $ | 11,840,748 |
| |
|
| 6/30/2017 | 12/31/2016 | |||||
| At Cost: | ||||||
| Buildings | $ | 61,019,750 | $ | 58,866,129 | ||
| Machinery and equipment | 8,567,024 | 6,917,774 | ||||
| Office equipment | 399,591 | 418,048 | ||||
| Motor vehicles | 158,926 | 154,687 | ||||
| $ | 70,145,291 | $ | 66,356,368 | |||
| Less: Accumulated depreciation | (16,009,860 | ) | (14,459,355 | ) | ||
| $ | 54,135,431 | $ | 51,897,283 |
F-17
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
| 09/30/2021 | 12/31/2020 | |||||||
| Trade accounts receivable | $ | 4,279,860 | $ | 881,533 | ||||
| Less: Allowance for doubtful accounts | (1,332,224 | ) | (46,149 | ) | ||||
| $ | 2,947,635 | $ | 835,384 | |||||
| Allowance for doubtful accounts | ||||||||
| Beginning balance: | (46,149 | ) | - | |||||
| Additions to allowance | (1,286,075 | ) | (46,149 | ) | ||||
| Bad debt written-off | - | |||||||
| Ending balance | $ | (1,332,224 | ) | $ | (46,149 | ) | ||
7. Advances and prepayments to suppliers
Prepayments include investment deposit to guarantee its investment contracts and advance payment to suppliers and vendors for the procurement of raw materials. Prepayments consist of the following:
| 09/30/2021 | 12/31/2020 | |||||||
| Investment deposit | $ | - | $ | 3,061,568 | ||||
| Payment to suppliers and vendors | 6,988,312 | 2,860,994 | ||||||
| Total | $ | 6,988,312 | $ | 5,922,562 | ||||
8. Inventories
Inventories consisted of the following as of September 30, 2021 and December 31, 2020
| 9/30/2021 | 12/31/2020 | |||||||
| Raw materials | $ | 2,489,770 | $ | 240,468 | ||||
| Inventory of supplies | 14,174 | 13,873 | ||||||
| Work in progress | 3,680,726 | 1,991,749 | ||||||
| Finished goods | 1,706,679 | 5,538 | ||||||
| Total | $ | 7,891,349 | $ | 2,251,628 | ||||
9. Plant and Equipment
Plant, and equipment consisted of the following as of September 30, 2021 and December 31, 2020:
| 09/30/2021 | 12/31/2020 | |||||||
| At Cost: | ||||||||
| Buildings | $ | 17,253,512 | $ | 3,952,207 | ||||
| Machinery and equipment | 11,473,978 | 1,103,152 | ||||||
| Office equipment | 533,149 | 82,670 | ||||||
| Motor vehicles | 1,710,756 | 161,590 | ||||||
| 30,971,395 | 5,299,619 | |||||||
| Less: Impairment | (815,298 | ) | - | |||||
| Less: Accumulated depreciation | (9,501,829 | ) | (702,982 | ) | ||||
| 20,654,268 | 4,596,637 | |||||||
| Construction in progress | 2,210,466 | - | ||||||
| $ | 22,864,734 | $ | 4,596,637 | |||||
Depreciation expense for the sixnine months ended JuneSeptember 30, 20172021 and 20162020 was $1,390,539$1,540,008 and $1,848,602,$249,342 respectively.
F-18
10. Intangible Assets
F-12
| 09/30/2021 | 12/31/2020 | |||||||
| At Cost: | ||||||||
| Land use rights | 4,052,159 | 801,170 | ||||||
| Software licenses | 85,758 | 56,949 | ||||||
| Trademark | 976,061 | 955,974 | ||||||
| $ | 5,113,978 | $ | 1,814,093 | |||||
| Less: Accumulated amortization | (937,945 | ) | (297,626 | ) | ||||
| $ | 4,176,033 | $ | 1,516,467 | |||||
Amortization expense for the nine months ended September 30, 2021 and 2020 was $180,541 and $119,837, respectively.
American Lorain Corporation
Notes to Financial Statements11. Prepayment for real-estates investments
|
| 6/30/2017 | 12/31/2016 | |||||
| At Cost: | ||||||
| Land use rights | 15,246,440 | 14,208,013 | ||||
| Utilities rights | 45,903 | 44,800 | ||||
| $ | 15,292,343 | $ | 14,252,813 | |||
| Less: Accumulated amortization | (2,591,455 | ) | (1,666,298 | ) | ||
| $ | 12,700,888 | $ | 12,586,515 |
| |
| |
| |
| |
|
| Short-term Bank Loans | 6/30/2017 | 6/30/2016 | |||||
| Loan from Industrial and Commercial Bank of China, | �� | ||||||
| • Interest rate at 6.955% per annum; due 4/20/2016* | 3,685,036 | 3,596,461 | |||||
| • Interest rate at 4.30% per annum; due 4/30/2017* | 1,106,717 | 1,080,116 | |||||
| • Interest rate at 4.30% per annum; due 6/29/2017* | 1,162,791 | 1,134,842 | |||||
| • Interest rate at 4.30% per annum; due 6/29/2017* | 1,106,717 | 1,080,116 | |||||
| • Interest rate at 4.30% per annum; due 8/2/2017 | 973,911 | 950,502 | |||||
| Loan from China Minsheng Bank Corporation, Linyi Branch | |||||||
| •Interest rate at 5.98% per annum due 9/22/2016* | 1,474,147 | 1,440,154 | |||||
| Loan from Agricultural Bank of China, Luotian Branch | |||||||
| • Interest rate at 5.65% per annum due 4/22/2017* | 1,499,390 | 1,440,154 | |||||
| Luotian Sanliqiao Credit Union, | |||||||
| • Interest rate at 9.72% per annum due 1/14/2017* | 1,499,390 | 1,440,154 | |||||
| • Interest rate at 9.72% per annum due 2/4/2017* | 449,817 | 432,046 | |||||
| • Interest rate at 9.72% per annum due 9/7/2017 | 449,817 | 432,046 |
F-13
American Lorain CorporationNotes to Financial Statements
| • Interest rate at 9.72% per annum due 12/7/2017 | 89,963 | - | |||||
| Bank of Ningbo, | |||||||
| • Interest rate at 7.80% per annum due 10/27/2016* | 1,180,498 | 1,152,124 | |||||
| Hankou Bank, Guanggu Branch, | |||||||
| • Interest rate at 6.85% per annum due 10/24/2016* | 1,537,797 | 1,347,047 | |||||
| Postal Savings Bank of China, | |||||||
| • Interest rate at 9.72% per annum due 7/27/2016* | 383,662 | 374,440 | |||||
| China Construction Bank, | |||||||
| • Interest rate at 6.18% per annum due 11/29/2016* | 737,811 | 720,077 | |||||
| Huaxia Bank, | |||||||
| • Interest rate at 5.66% per annum due 5/19/2017* | 1,475,623 | 1,440,154 | |||||
| City of Linyi Commercial Bank, Junan Branch, | |||||||
| • Interest rate at 8.4% per annum due 2/16/2016* | 1,474,140 | 1,438,707 | |||||
| • Interest rate at 8.4% per annum due 11/24/2016* | 2,951,245 | 2,880,310 | |||||
| Hubei Jincai Credit and Financial Services Co. Ltd. | |||||||
| • Interest rate at 9.00% per annum due 1/12/2017* | - | 288,032 | |||||
| $ | 23,238,472 | $ | 22,667,482 |
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| 6/30/2017 | 12/31/2016 | ||||||
| Debenture issued by 5 private placement holders underwritten byGuoyuan Securities Co., Ltd. | |||||||
| • Interest rate at 10% per annum due 8/28/2016 | $ | 9,138,531 | $ | 8,921,756 | |||
| Debenture issued by 2 private placement holders underwritten byDaiwa SSC Securities Co. Ltd. | |||||||
| • Interest rate at 9.5% per annum due 11/8/2015 | 15,132,100 | 14,401,544 | |||||
| Loans from Deutsche Investitions-und EntwicklungsgesellschaftmbH (“DEG”) | |||||||
| • Interest rate at 5.510% per annum due 3/15/2015 | 1,875,000 | 1,875,000 | |||||
| • Interest rate at 5.510% per annum due 9/15/2015 | 1,875,000 | 1,875,000 | |||||
| • Interest rate at 5.510% per annum due 3/15/2016 | 1,875,000 | 1,875,000 | |||||
| $ | 29,895,631 | $ | $28,948,300 |
The Company began repaying its loan with DEG in semi-annual installmentspurchased a real-estates, a commercial complex, for investments purpose. The company paid $7,308,724 for the commercial complex to the seller, Lucky Sky, on December 15, 2012. April 22, 2021.
12. Other payable
As of September 30, 2021, the balance of other payable was $5,678,455 in which $2,570,409 are payable to the former related party of Jilin Chuangyuan Chemical Co., Ltd. Other payables are those nontrade payables arising from transactions between the Company and certain third parties.
13. Related Parties Transaction
As of September 30, 2021 and December 31, 2016,2020, the outstanding balance due from related parties was $8,337,546 and 2015,$0 respectively. The outstanding balance of $3,854,812 was due from Mr. Cai Xiaodong, the shareholder of the Anhui Ansheng Petrochemical Equipment Co., Ltd. The outstanding balance of $1,696,117 was due from Mr. Chen Yongsheng, the legal representative of Jilin Chuangyuan Chemical Co., Ltd. The outstanding balance of $2,324,860 was due from Wuxi Xinganbang Petrochemical Equipment Co., Ltd. These above nontrade receivables arising from transactions between the Company had not repaid any principal.and certain related parties, such as loans to these related parties. These loans are unsecured, non-interest bearing and due on demand.
As of September 30, 2021 and December 31, 2020, the outstanding balance due to related parties was $4,048,288 and $19,850 respectively. The outstanding balance of $1,059,302 as of September 30, 2021, was due to Ms. Yan Yan, the spouse of the legal representative of Jilin Chuangyuan Chemical Co., Ltd. The outstanding balance of $2,054,181 as of September 30, 2021, was due to Mr. Su Lei, the executive of Anhui Ansheng Petrochemical Equipment Co., Ltd. The balance was advanced for working capital of the Company, non-interest bearing, and unsecured unless further disclosed.
14. Goodwill
The changes in the carrying amount of goodwill by reportable segment are as follows:
| Balance as of December 31, 2019 | Ansheng | Fast | JSSH | JLCY | ||||||||||||
| Goodwill acquired through acquisition | $ | - | $ | 4,679,940 | $ | - | $ | - | ||||||||
| Goodwill impairment | - | (2,339,829 | ) | - | - | |||||||||||
| Balance as of December 31, 2020 | 10,263,937 | 2,340,111 | - | - | ||||||||||||
| Goodwill acquired through acquisition | - | - | 923,313 | 3,191,897 | ||||||||||||
| Balance as of September, 2021 | $ | 10,263,937 | $ | 2,340,111 | $ | 923,313 | 3,191,897 | |||||||||
F-19
15. Bank Loans
The outstanding balances on short-term bank loans consisted of the following:
| Lender | Maturities | Weighted average interest rate | 09/30/2021 | 12/31/2020 | ||||||||||
| Rural Credit Cooperatives of Jilin Province, Jilin Branch | Due in November 2021 | 7.83 | % | 3,854,813 | - | |||||||||
| Anhui Langxi Rural Commercial Bank Co., Ltd. | Due in December 2021 | 3.85 | % | 2,852,561 | - | |||||||||
| Langxi County Sichuang Science and Technology Pioneer Park Development Co., Ltd. | Due in December 2021 | 10 | % | 38,098 | - | |||||||||
| Industrial and Commercial Bank Of China, Jingshan Branch | Due in December 2021 | 4.45 | % | 462,577 | - | |||||||||
| Fast-Government of Canada | Due in December 2021 | zero | % | 47,046 | - | |||||||||
| 7,255,095 | - | |||||||||||||
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 collateralizedprimarily obtained for general working capital.
The short-term bank loan from Anhui Langxi Rural Commercial Bank Co., Ltd., which Langxi County Sme Financing Guarantee Co., Ltd. undertook the guarantee responsibility, was a credit loan.
The production facilities and its equipment in the amount of $459,777 were used as collateral for the loan from Langxi County Sichuang Science and Technology Pioneer Park Development Co., Ltd. The total assets of the entity, Wuxi Xinganbang Petrochemical Equipment Co., Ltd., were used as collateral for the remaining amount of the loan.
Loan from Industrial and Commercial Bank Of China, Jingshan Branch was line of credit obtained for general working capital.
F-20
16. Equity
On May 9, 2019, the Company and its wholly owned subsidiary Shanghai Xunyang Internet Technology Co., Ltd. (“Subsidiary”) entered into a Share Exchange Agreement with Xianning Bozhuang Tea Products Co., Ltd. (“Target”) and each of the shareholders of Target (collectively, “Sellers”). Such transaction closed on May 14, 2019. 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 and online advertising.
On December 30, 2020, the Company issued a total of 782,165 ordinary shares to six employees of the Company. Total fair value of these ordinary shares was approximately $1.75 million and the compensation expenses are to be recognized in the fiscal year 2020 because there is no employee’s requisite service period requirement.
On January 4, 2021, the Company issued an aggregate of 2,200,000 shares of its common stock to the original shareholders of Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. in exchange for the transfer of 85% of the equity interests of Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. to the Company.
On January 26, 2021, the Company entered into a Securities Purchase Agreement, pursuant to which three individuals residing in the People’s Republic of China agreed to purchase an aggregate of 2,700,000 shares of the Company’s common stock, par value $0.001 per share, for an aggregate purchase price of $6,750,000, representing a purchase price of $2.50 per Share.
On March 9, 2021, the Company issued an aggregate of 3,300,000 shares of common stock of the Company to the original shareholder of Jilin Chuangyuan Chemical Co., Ltd. in exchange for the transfer of 75% of the equity interest of Jilin Chuangyuan Chemical Co., Ltd. to the Company.
On April 26, 2021, the Company has entered into a Share Purchase Agreement with three investors, Pursuant to the agreement, the Company will receive gross proceeds of $7,600,000 in the aggregate, in exchange for the issuance of an aggregate of 4,000,000 shares of the Company’s common stock, representing a purchase price of approximately $1.90 per share.
On July 15, 2021, the Company has issued an aggregate of 4,800,000 shares of common stock of the Company to the equity holders of Anhui Ansheng Petrochemical Equipment Co., Ltd. in exchange for the transfer of 66% of the equity interest of Anhui Ansheng Petrochemical Equipment Co., Ltd. to the Company.
On July 30, 2021, the Company issued a total of 872,000 ordinary shares to seven employees of the Company. Total fair value of these ordinary shares was approximately $1.16 million and the compensation expenses are to be recognized in the fiscal year 2021 because there is no employee’s requisite service period requirement.
As of September 30, 2021, there were 29,681,930 shares of common stock outstanding.
F-21
17. Income Taxes
All of the Company’s continuing operations are located in the PRC. The corporate income tax rate in the PRC is 25%.
The following terms:tables provide the reconciliation of the differences between the statutory and effective tax expenses for the nine months ended September 30, 2021 and 2020:
F-14
| 09/30/2021 | 09/30/2020 | |||||||
| Loss attributed to PRC operations | $ | (3,279,874 | ) | $ | (187,799 | ) | ||
| Loss attributed to U.S. operations | (1,360,067 | ) | (248,155 | ) | ||||
| Income attributed to Canada operations | (418,288 | ) | (297,232 | ) | ||||
| Loss before tax | $ | (5,058,229 | ) | $ | (733,186 | ) | ||
| PRC Statutory Tax at 25% Rate | (1,264,557 | ) | (183,296 | ) | ||||
| Effect of tax exemption granted | - | - | ||||||
| Valuation allowance | 1,264,704 | 183,296 | ||||||
| Income tax | $ | 147 | $ | - | ||||
| Per Share Effect of Tax Exemption | ||||||||
| Effect of tax exemption granted | $ | - | $ | - | ||||
| Weighted-Average Shares Outstanding Basic | 23,082,956 | 8,332,697 | ||||||
| Per share effect | $ | - | $ | - | ||||
American Lorain CorporationNotes to Financial Statements
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| 6/30/2017 | 12/31/2016 | ||||||
| Value added tax | $ | 242,866 | $ | 10,562 | |||
| Corporate income tax | 16,549 | 16,151 | |||||
| Employee payroll tax withholdings | 14,597 | 13,684 | |||||
| Property tax | 88,638 | 72,245 | |||||
| Stamp duty | 165 | 161 | |||||
| Land use tax | 158,761 | 134,827 | |||||
| Local tax | 1,203 | 1,176 | |||||
| $ | 522,779 | $ | 248,807 |
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| 6/30/2017 | 6/30/2016 | |||||
| Loss attributed to PRC continuing operations | $ | (9,251,090 | ) | $ | (1,805,155 | ) |
| Loss attributed to U.S. operations | (1,832,914 | ) | (48,000 | ) | ||
| Income before tax | (11,084,004 | ) | (1,853,155 | ) | ||
| PRC Statutory Tax at 25% Rate | - | 558,135 | ||||
| Effect of tax exemption granted | - | - | ||||
| Income tax | $ | - | $ | 558,135 | ||
| Per Share Effect of Tax Exemption | ||||||
| 6/30/2017 | 6/30/2016 | |||||
| Effect of tax exemption granted | $ | $ | - | |||
| Weighted-Average Shares Outstanding Basic | 38,274,490 | 38,259,490 | ||||
| Per share effect | $ | $ | - |
F-15
American Lorain CorporationNotes to Financial Statements
The difference between the U.S. federal statutory income tax rate and the Company’s effective tax rate was as follows as of JuneSeptember 30, 20172021 and 2016:2020:
| 6/30/2017 | 6/30/2016 | |||||
| U.S. federal statutory income tax rate | 35% | 35% | ||||
| Lower rates in PRC, net | -10% | -10% | ||||
| Non-deductible GAAP expenses in the PRC | -27.22% | -55% | ||||
| The Company’s effective tax rate | -2.22% | -30% |
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18. Earnings/(Loss) Per Share Components of basic and diluted earnings per share were | ||||||||||||||||||||||||||||||||||||||||||||||
| For the six months ended | ||||||
| June 30, | ||||||
| 2017 | 2016 | |||||
| Basic and diluted (loss) earnings per share numerator: | ||||||
| (Loss) income from continuing operations (attributable) available to common stockholders | $ | (11,084,004 | ) | (3,119,155 | ) | |
| (Loss) income from discontinued operations (attributable) available to common stockholders | (5,275,319 | ) | 176,056 | |||
| (Loss) income (attributable) available to common stockholders | (16,359,323 | ) | (2,943,095 | ) | ||
| Basic and diluted (loss) earnings per share denominator: | ||||||
| Original Shares: | 38,274,490 | 38,259,490 | ||||
| Additions from Actual Events | ||||||
| -Issuance of Common Stock | ||||||
| Basic Weighted Average Shares Outstanding | 38,274,490 | 38,259,490 | ||||
| (Loss) income per share from continuing operations - Basic and diluted | (0.29 | ) | (0.09 | ) | ||
| Loss per share from discontinued operations - Basic and diluted | (0.14 | ) | 0.01 | |||
| Loss per share - Basic and diluted | (0.43 | ) | (0.07 | ) | ||
| Weighted Average Shares Outstanding - Basic and diluted | 38,274,490 | 38,259,490 | ||||
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The minimum future lease payments for these properties at June 30, 2017 are as follows:
F-16
| For the nine months ended | ||||||||
| September 30, | ||||||||
| 2021 | 2020 | |||||||
| Loss from operations attributable to common stockholders | $ | (4,732,412 | ) | (8,902,923 | ) | |||
| 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 | 2,175,824 | |||||||
| Additions from Actual Events -issuance of common stock for cash | 2,452,747 | 795,205 | ||||||
| Additions from Actual Events -issuance of common stock for acquisition | 2,490,110 | 438,904 | ||||||
| Additions from Actual Events -issuance of common stock for cash | 2,564,103 | |||||||
| Additions from Actual Events -issuance of common stock for acquisition | 1,389,011 | |||||||
| Additions from Actual Events -issuance of common stock for employee compensation | 201,231 | |||||||
| Basic Weighted Average Shares Outstanding | 23,082,956 | 9,111,874 | ||||||
| Income/(loss) per share - Basic and diluted | $ | (0.21 | ) | (0.98 | ) | |||
| Weighted Average Shares Outstanding- Basic and diluted | 23,082,956 | 9,111,874 | ||||||
American Lorain Corporation
F-22
Notes
19. Concentrations
Customers Concentrations:
The following table sets forth information as to Financial Statements
| Period | Greenhouse 1 | Greenhouse 2 | Greenhouse 3 | |||||||
| Year 1 | $ | 74,420 | $ | 89,258 | $ | 10,711 | ||||
| Year 2 | 74,420 | 89,258 | 10,711 | |||||||
| Year 3 | 74,420 | 89,258 | 10,711 | |||||||
| Year 4 | 74,420 | 89,258 | 10,711 | |||||||
| Year 5 | 74,420 | 89,258 | 10,711 | |||||||
| Year 5 and thereafter | 843,427 | 1,019,029 | 123,177 | |||||||
| $ | 1,215,527 | $ | 1,465,319 | $ | 176,732 |
The outstanding lease commitmentseach customer that accounted for 10% or more of the Company’s revenues for the three greenhousesnine months ended September 30, 2021 and 2020.
| For the periods ended | ||||||||||||||||
| Customers | September 30, 2021 | September 30, 2020 | ||||||||||||||
| Amount $ | % | Amount $ | % | |||||||||||||
| A | 2,218,627 | 11 | - | - | ||||||||||||
| B | 2,105,918 | 11 | - | - | ||||||||||||
| C | - | - | 1,580,671 | 64 | ||||||||||||
| D | - | - | 591,282 | 24 | ||||||||||||
| E | - | - | 281,786 | 11 | ||||||||||||
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 nine months ended September 30, 2021 and 2020.
| For the periods ended | ||||||||||||||||
| Suppliers | September 30, 2021 | September 30, 2020 | ||||||||||||||
| Amount $ | % | Amount $ | % | |||||||||||||
| A | 6,974,422 | 37 | - | - | ||||||||||||
| B | - | - | 332,361 | 46 | ||||||||||||
| C | - | - | 230,050 | 32 | ||||||||||||
| D | - | - | 181,356 | 25 | ||||||||||||
20. Lease commitments
Effective December 31, 2017 was $2,857,577.
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The following isCompany adopted the practical expedient that allows lessees to treat the lease and non-lease components of a schedule showinglease as a single lease component. The impact of the future minimumadoption on December 31, 2018 increased the right-of-uses and lease payments under capital leases togetherliabilities by approximately $1.65 million.
The Company had a land, facilities and factory lease agreement with a 5-year lease term starting in April 2018 until April 2023. Upon adoption of ASU 2016-02, the Company recognized lease liabilities of approximately $1.65 million, with corresponding Right-of-Use (ROU) assets of the same amount based on the present value of the netfuture minimum rental payments of the new lease, payments asusing an effective interest rate of June4.75%, which is determined using an incremental borrowing rate.
The weighted average remaining lease term of its existing leases is 1.58 years.
The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
For the three months ended September 30, 2017:2021 and 2020, rent expenses amounted to $109,996 and $109,202, respectively.
For the nine months ended September 30, 2021 and 2020, rent expenses amounted to $329,989 and $327,605, respectively.
The five-year maturity of the Company’s lease obligations is presented below:
| Twelve months ended December 31, | Operating lease amount | |||
| 2021 | $ | 109,996 | ||
| 2022 | 439,985 | |||
| 2023 | 146,662 | |||
| Total lease payment | 696,643 | |||
| Less: interest | (86,833 | ) | ||
| Present value of lease liabilities | $ | 609,810 | ||
F-23
21. 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, Anhui Ansheng, Jilin Chuangyuan, Xianning Bozhuang and Fast Approach. The Company’s consolidated results of operations and consolidated financial position from continuing operations are almost all attributable to Jingshan Sanhe, Anhui Ansheng, Jilin Chuangyuan, Xianning Bozhuang and Fast Approach. Accordingly, management believes that the consolidated balance sheets and statement of operations provide the relevant information to assess Jingshan Sanhe, Anhui Ansheng, Jilin Chuangyuan, Xianning Bozhuang and Fast Approach’s performance.
| Segment reporting | 09/30/2021 | 12/31/2020 | ||||||
| Fast Approach and Shanghai Shuning | $ | 285,564 | $ | 572,509 | ||||
| Xianning Bozhuang | 10,856,503 | 11,968,553 | ||||||
| Jingshan Sanhe | 6,255,511 | - | ||||||
| Anhui Ansheng | 17,142,943 | |||||||
| Jilin Chuangyuan | 18,297,162 | - | ||||||
| Jiayi Technologies (Xianning) Co., Ltd. | 11,975,453 | 6,563,580 | ||||||
| Planet Green Holdings Corporation (BVI) | - | - | ||||||
| Planet Green Holdings Corporation (Nevada) | 14,769,274 | 853,486 | ||||||
| Lucky Sky Planet Green Holdings Co., Limited (H.K.). | 2,003,845 | 2,012,228 | ||||||
| Total Assets | $ | 81,586,255 | $ | 21,970,355 | ||||
22. Risks
| Credit risk | |||