Exhibit 99.3
Planet Green Holdings Corp.
Unaudited Pro Forma Condensed Combined Financial Statements
September 30, 2020
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Unaudited Pro Forma Condensed Combined Balance Sheet
As of September 30, 2020
(Stated in US Dollars)
PLAG | JSSH | Adjustments | Combined | |||||||||||||
Assets | ||||||||||||||||
Current assets | ||||||||||||||||
Cash and cash equivalents | $ | 5,593,680 | $ | 114,162 | $ | - | $ | 5,707,842 | ||||||||
Accounts receivable | 968,163 | - | - | 968,163 | ||||||||||||
Inventory | 2,478,446 | 584,119 | - | 3,062,565 | ||||||||||||
Advances and prepayments to suppliers | 2,692,302 | 1,104,705 | - | 3,797,007 | ||||||||||||
Other receivables and other current assets | 1,025,904 | 44,628 | - | 1,070,532 | ||||||||||||
Due from related parties | - | 6,881 | - | 6,881 | ||||||||||||
Prepaid expenses | 683 | - | - | 683 | ||||||||||||
Prepaid taxes | 21 | 484,581 | - | 484,602 | ||||||||||||
Total current assets | $ | 12,759,199 | $ | 2,339,076 | $ | - | $ | 15,098,275 | ||||||||
Non-current assets | ||||||||||||||||
Property, plant and equipment, net | 4,539,516 | 3,852,391 | - | 8,391,907 | ||||||||||||
Construction in progress, net | - | 15,515 | - | 15,515 | ||||||||||||
Intangible assets, net | 1,492,216 | - | - | 1,492,216 | ||||||||||||
Deposits | 14,684 | - | - | 14,684 | ||||||||||||
Deferred Tax Asset | - | 281,243 | - | 281,243 | ||||||||||||
Right- of-use assets | - | 1,044,933 | - | 1,044,933 | ||||||||||||
Goodwill | 4,958,870 | - | 272,147 | 5,245,701 | ||||||||||||
Total Non-Current Assets | 11,005,286 | 5,194,082 | 272,147 | 16,471,515 | ||||||||||||
Total Assets | $ | 23,764,485 | $ | 7,533,158 | $ | 272,147 | $ | 31,569,790 | ||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||
Current liabilities | ||||||||||||||||
Short term bank loans | $ | 35,259 | $ | 440,522 | $ | - | $ | 475,781 | ||||||||
Accounts payable | 1,245,921 | 715,019 | - | 1,960,940 | ||||||||||||
Taxes payable | 99,721 | 217 | - | 99,938 | ||||||||||||
Accrued liabilities and other payables | 1,471,649 | 67,595 | - | 1,539,244 | ||||||||||||
Due to related parties | 280,243 | - | - | 280,243 | ||||||||||||
Lease Payable-current | - | 406,376 | - | 406,376 | ||||||||||||
Customer deposits | 69,800 | 627,128 | - | 696,928 | ||||||||||||
Total current liabilities | 3,202,593 | 2,256,857 | - | 5,459,450 | ||||||||||||
Lease Payable- non-current | - | 818,446 | - | 818,446 | ||||||||||||
Total Liabilities | $ | 3,202,593 | $ | 3,075,303 | $ | - | $ | 6,277,896 | ||||||||
Stockholders’ Equity | ||||||||||||||||
Preferred Stock, $0.001 par value, 5,000,000 shares authorized; 0 shares issued and outstanding at March 31, 2020 | $ | - | $ | - | $ | - | $ | - | ||||||||
Common Stock, $0.001 par value, 200,000,000 shares authorized; 13,227,765 shares issued as of September 30, 2020 | 11,028 | - | 2,200 | 13,228 | ||||||||||||
Registered capital | - | 4,710,254 | (4,710,254 | ) | - | |||||||||||
Additional paid in capital | 93,900,271 | - | 4,311,523 | 98,211,794 | ||||||||||||
Accumulated deficit | (82,183,657 | ) | 135,363 | - | (82,048,294 | ) | ||||||||||
Accumulated other comprehensive income | 8,834,250 | (387,762 | ) | - | 8,446,488 | |||||||||||
Non-controlling interests | - | - | 668,678 | 668,678 | ||||||||||||
Total Stockholders’ Equity | 20,561,892 | 4,457,855 | 272,147 | 25,291,894 | ||||||||||||
Total Liabilities & Stockholders’ Equity | $ | 23,764,485 | $ | 7,533,158 | $ | 272,147 | $ | 31,569,790 |
See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements
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Unaudited Pro Forma Condensed Combined Statement of Operations
For the nine months ended September 30, 2020
(Stated in US Dollars)
PLAG | JSSH | Adjustments | Combined | |||||||||||||
Net revenues | $ | 2,471,652 | $ | 924,833 | $ | - | $ | 3,396,485 | ||||||||
Cost of revenues | 1,622,061 | 610,069 | - | 2,232,130 | ||||||||||||
Gross profit (loss) | 849,591 | 314,764 | - | 1,164,355 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | - | 24,596 | - | 24,596 | ||||||||||||
Selling and marketing expenses | 83,664 | 102,639 | - | 186,303 | ||||||||||||
General and administrative expenses | 1,252,719 | 1,051,967 | - | 2,304,686 | ||||||||||||
Total operating expenses | 1,336,383 | 1,179,202 | - | 2,515,585 | ||||||||||||
Operating loss | (486,792 | ) | (864,438 | ) | - | (1,351,230 | ) | |||||||||
Other income (expenses): | ||||||||||||||||
Interest income | 6,870 | 244 | - | 7,114 | ||||||||||||
Interest expense | 14 | (6,791 | ) | - | (6,777 | ) | ||||||||||
Other income | 81,162 | 11,915 | - | 93,077 | ||||||||||||
Other expenses | (183,529 | ) | - | - | (183,529 | ) | ||||||||||
Total other income and (expenses) | (95,483 | ) | 5,368 | - | (90,115 | ) | ||||||||||
Loss before taxes from continuing operations | (582,275 | ) | (859,070 | ) | - | (1,441,345 | ) | |||||||||
Provision for income tax | - | - | - | - | ||||||||||||
Loss from continuing operations | $ | (582,275 | ) | $ | (859,070 | ) | $ | - | $ | (1,441,345 | ) | |||||
Loss per share from continuing operations | ||||||||||||||||
- Basic and diluted | - | - | - | (0.13 | ) | |||||||||||
Basic and diluted weighted average shares outstanding | - | - | - | 11,311,874 |
See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements
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Planet Green Holdings Corp.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the years ended December 31, 2019
(Stated in US Dollars)
PLAG | JSSH | Adjustments | Combined | |||||||||||||
Net revenues | $ | 4,113,077 | $ | 4,024,949 | $ | - | $ | 8,138,026 | ||||||||
Cost of revenues | 2,979,728 | 2,434,806 | - | 5,414,534 | ||||||||||||
Gross profit (loss) | 1,133,349 | 1,590,143 | - | 2,723,492 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 67,997 | - | 67,997 | |||||||||||||
Selling and marketing expenses | 40,293 | 609,771 | - | 650,064 | ||||||||||||
General and administrative expenses | 1,918,455 | 1,311,863 | - | 3,230,318 | ||||||||||||
Total operating expenses | 1,958,748 | 1,989,631 | - | 3,948,379 | ||||||||||||
Operating loss | (825,399 | ) | (399,488 | ) | - | (1,224,887 | ) | |||||||||
Other income (expenses): | ||||||||||||||||
Interest income | 186 | 1,519 | - | 1,705 | ||||||||||||
Interest expense | (9,742 | ) | - | - | (9,742 | ) | ||||||||||
Other income | 29,145 | 13,819 | - | 42,964 | ||||||||||||
Other expenses | (5,808 | ) | (499 | ) | - | (6,307 | ) | |||||||||
Write off receivables from disposal of former subsidiaries | (5,025,034 | ) | (5,025,034 | ) | ||||||||||||
Total other income and (expenses) | (5,011,253 | ) | 14,839 | - | (4,996,414 | ) | ||||||||||
Loss before taxes from continuing operations | (5,836,652 | ) | (384,649 | ) | - | (6,221,301 | ) | |||||||||
Provision for income tax | - | (92,482 | ) | - | (92,482 | ) | ||||||||||
Loss from continuing operations | $ | (5,836,652 | ) | $ | (292,167 | ) | $ | - | $ | (6,128,819 | ) | |||||
Loss per share from continuing operations | ||||||||||||||||
- Basic and diluted | - | - | - | (0.89 | ) | |||||||||||
Basic and diluted weighted average shares outstanding | - | - | - | 6,897,710 |
See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements
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Notes to the Unaudited Pro Forma Condensed Combined Financial Statements
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Planet Green Holdings Corp., a Nevada corporation (the “Company” or “PLAG”), conducts its primary business activities through its subsidiaries located in the People’s Republic of China, including its new acquired operating subsidiary, Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. (“JSSH”). JSSH was a company incorporated in the People’s Republic of China (“PRC”) on April 17, 2018. JSSH researches, develops and manufactures ethanol fuel and fuel additive products and sells such products in China.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
These pro forma condensed combined financial statements, accompanying notes, and related disclosures have been prepared on an as-if basis assuming that the reverse takeover transaction between the Company and JSSH has been in effect since the beginning of the period present in the results of operations by combining the historical financial statements of the entities and eliminating any intercompany balances. The JSSH acquisition is accounted for under the acquisition method of accounting. Actual results combined results may have differed from those presented herein.
The adjustments described in the following footnotes, and are intended to reflect the impact of the JSSH acquisition on PLAG on a pro forma basis. These includes pro forma adjustments for preliminary valuations of certain tangible and intangible assets by PLAG management as of the acquisition date of January 4, 2021. The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2020 and the twelve months ended December 31, 2019 give effect to the JSSH acquisition as if it had occurred on January 1, 2019. The unaudited pro forma condensed combined balance sheet as of September 30, 2020 gives effect to the JSSH acquisition as if it had occurred on September 30, 2020. The accompanying unaudited pro forma condensed combined financial statements are presented for illustrative purposes only.
These unaudited pro forma condensed combined financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and certain footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations; however, management believes that the disclosures are adequate to make the information presented not misleading.
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Basis of pro forma condensed combined financial statements
These pro forma condensed combined financial statements include the accounts of the Company and the entities listed below. All intercompany accounts and transactions have been eliminated.
Place of | Attributable equity | Registered | ||||||||
Name of Company | incorporation | interest % | capital | |||||||
Planet Green Holdings Corporation | British Virgin Islands | 100 | $ | 10,000 | ||||||
Lucky Sky Holdings Corporations (HK) Limited | Hong Kong | 100 | 1,277 | |||||||
Jiayi Technologies (Xianning) Co., Ltd. | PRC | 100 | 14,242,782 | |||||||
Fast Approach Inc. | Canada | 100 | 79 | |||||||
Shanghai Shuning Advertising Co., Ltd. (subsidiary of FAST) | PRC | 100 | - | |||||||
Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. | PRC | VIE | 4,710,254 | |||||||
Xianning Bozhuang Tea Products Co., Ltd. | PRC | VIE | 6,277,922 |
Management has eliminated all significant inter-company balances and transactions in preparing the accompanying consolidated financial statements. Ownership interests of subsidiaries that the Company does not wholly-own are accounted for as non-controlling interests.
On May 18, 2018, the Company incorporated Planet Green Holdings Corporation (“Planet Green BVI”) in the British Virgin Islands. On September 28, 2018, Planet Green BVI acquired JianShi Technology Holding Limited, a limited company incorporated in Hong Kong on February 21, 2012 and Shanghai Xunyang Internet Tech Co., Ltd., a wholly-owned foreign entity incorporated in Shanghai, PRC on August 29, 2012 (“Shanghai Xunyang”). The formation and acquisition of these companies was to implement the Company’s restructuring plans.
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On August 12, 2019, through Lucky Sky Holdings Corporations (HK) Limited, the 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 Company sold 100% of equity interest in Shanghai Xunyang.
On May 29, 2020, the Company incorporated Lucky Sky Planet Green Holdings Co., Limited, a limited company incorporated in the Hong Kong.
On June 5, 2020, the Company acquired all of the outstanding equity interests of Fast Approach Inc., a corporation incorporated under the laws of Canada and in the business of operation of a demand side platform targeting the Chinese education market in North America.
On December 9, 2020, Lucky Sky Petrochemical Technology (Xianning) Co., Ltd. changed its name to Jiayi Technologies (Xianning) Co., Ltd.
On June 16, 2020, Lucky Sky HK transferred its 100% equity interest in Lucky Sky Petrochemical to Lucky Sky Planet Green HK.
Consolidation of Variable Interest Entity
Variable Interest Entities (“VIEs”) are entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision-making ability. Any VIE with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. Management makes ongoing reassessments of whether the Company is the primary beneficiary.
On September 27, 2018, through Shanghai Xunyang, the Company entered into exclusive arrangements with Beijing Lorain Luotian Lorain, Shandong Greenpia, Taishan Muren, and Shenzhen Lorain and their shareholders that give the Company the ability to substantially influence their daily operations and financial affairs and appoint their senior executives. The Company is considered the primary beneficiary of these companies and it consolidates their accounts as VIEs.
On May 9, 2019, the Company entered into a Share Purchase Agreement (the “Purchase Agreement”) with Xianning Bozhuang Tea Products Co., Ltd. (“Xianning Bozhuang”), a company incorporated in China engaging in the sale of tea products, and its shareholders (“Bozhuang Shareholders”). Pursuant to the Purchase Agreement, the Company issued an aggregate of 1,080,000 shares of its common stock to the Bozhuang Shareholders, in exchange for Bozhuang Shareholders’ agreement to enter into, and their agreement to cause Xianning Bozhuang to enter into, certain VIE Agreements with Shanghai Xunyang, through which Shanghai Xunyang shall have the right to control, manage and operate Xianning Bozhuang in return for a service fee approximately equal to 100% of Xianning Bozhuang’s net income (“Bozhuang Acquisition”). On May 14, 2019, Shanghai Xunyang entered into a series of VIE Agreements with Xianning Bozhuang and Bozhuang Shareholders. The VIE Agreements are designed to provide Shanghai Xunyang with the power, rights and obligations equivalent in all material respects to those it would possess as the sole equity holder of Xianning Bozhuang, including absolute rights to control the management, operations, assets, property and revenue of Xianning Bozhuang. The Bozhuang Acquisition closed on May 14, 2019. Starting on May 14, 2019, the Company’s business activities added the production line of green tea and black tea and sales of tea products, of which business activities are carried out in Xianning City, Huibei Province, China. The Company consolidated Xianning Bozhuang’s accounts as its VIE.
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On December 20, 2019, through Lucky Sky Petrochemical Technology (Xianning) Co., Ltd. (“WFOE”), the Company entered into exclusive VIE agreements with Taishan Muren, Xianning Bozhuang and Shenzhen Lorain and their shareholders that give the Company the ability to substantially influence those companies’ daily operations and financial affairs and appoint their senior executives. On September 8, 2020, the Company’s Board of Directors resolved to discontinue the operation of Shenzhen Lorain and Taishan Muren due to the continued loss of such two subsidiaries. On September 15, 2020, Lucky Sky Petrochemical terminated the VIE agreements with Shenzhen Lorain and Taishan Muren. The Company has been considered the primary beneficiary of these operating companies and it consolidates their accounts as VIEs.
On January 4, 2021, the Company and Jiayi Technologies (Xianning) Co., Ltd. (the “Subsidiary”), a subsidiary of the Company, entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. (“Target”), and each of shareholders of the Target (collectively, the “Sellers”), pursuant to which, among other things and subject to the terms and conditions contained therein, the Subsidiary agreed to effect an acquisition of the Target by acquiring from the Sellers 85% of the outstanding equity interests of the Target (the “Acquisition”). The target is engaged in researching, developing, manufacturing and selling products of ethanol fuel and fuel additives in China. On January 4, 2021, the Company closed the Acquisition.
Pursuant to the Share Exchange Agreement, in exchange for the acquisition of 85% of the outstanding equity interests of Target, the Company issued an aggregate of 2,200,000 shares of common stock, par value $0.001 per share, of the Company (the “Exchange Shares”) to the Sellers. At the closing of the Acquisition, the Company entered into a lock-up agreement with the Sellers with respect to the Exchange Shares, pursuant to which the Sellers agreed, subject to certain exceptions, not to transfer the Exchange Shares, or publicly disclose the intention to do so, from the closing of the Acquisition until the first anniversary of the closing (the “Lock-Up Agreement”).
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results may materially differ from these estimates.
Foreign currency translation and re-measurement
The Company translates its foreign operations to the U.S. dollar in accordance with ASC 830, “Foreign Currency Matters.”
The reporting currency for the Company and its subsidiaries is the U.S. dollar. Fast Approach Inc. uses Canadian (CDN$) as its functional currency and its subsidiary, Shanghai Shuning Advertising Co., Ltd., Jingshan Sanhe Luckysky New Energy Technologies Co., Ltd. and Xianning Bozhuang Tea Products Co., Ltd. uses the Chinese Renminbi (RMB) as its functional currency.
The Company’s subsidiaries, whose records are not maintained in that company’s functional currency, re-measure their records into their functional currency as follows:
● | Monetary assets and liabilities at exchange rates in effect at the end of each period, |
● | Nonmonetary assets and liabilities at historical rates, and |
● | Revenue and expense items at the average rate of exchange prevailing during the period. |
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Gains and losses from these re-measurements were not significant and have been included in the Company’s results of operations.
The Company’s subsidiaries, whose functional currency is not the U.S. dollar, translate their records into the U.S. dollar as follows:
● | Assets and liabilities at the rate of exchange in effect at the balance sheet date, |
● | Equities at the historical rate, and |
● | Revenue and expense items at the average rate of exchange prevailing during the period. |
Adjustments arising from such translations are included in accumulated other comprehensive income in stockholders’ equity.
9/30/2020 | 12/31/2019 | |||||||
Period-end CDN$: US$ exchange rate | 1.3389 | 1.2988 | ||||||
Period/year end RMB: US$ exchange rate | 6.8101 | 6.9762 | ||||||
Period average CDN$: US$ exchange rate | 1.3571 | 1.3269 | ||||||
Period/annual average RMB: US$ exchange rate | 6.9926 | 6.8967 |
The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US Dollars at the rates used in translation.
3. PRO FORMA ADJUSTMENTS
Pro forma adjustments are necessary to reflect the estimated purchase price and to reflect amounts related to JSSH’s net tangible and intangible assets at an amount equal to the preliminary estimate of their fair values. Pro forma adjustments are also necessary to appropriately reflect the amortization expense related to the estimated identifiable intangible assets, changes in depreciation and amortization expense resulting from the estimated fair value adjustments to net tangible assets and the income tax effect related to the pro forma adjustments.
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There were no significant intercompany balances and transactions between PLAG and JSSH at the dates and for the period of these pro forma condensed combined financial statements.
The unaudited pro forma condensed combined financial statements do not include any adjustments for liabilities that will result from integration activities related to the JSSH acquisition. Additional assets or liabilities may be recorded that could affect amounts in the unaudited pro forma condensed combined financial statements. During the measurement period, any such adjustments to provisional amounts would increase or decrease goodwill. Adjustments that occur after the end of the measurement period will be recognized in the post-combination current period operations. In addition, JSSH may incur significant expenses for business development and expansion upon consummation of the JSSH acquisition or in subsequent quarters recorded as an expense in the consolidated statement of operations in the period in which they are incurred.
Entry No. | Description | Dr. | Cr. | |||||||
1 | Registered capital | 4,710,254 | ||||||||
Additional paid in capital | 4,311,523 | |||||||||
Goodwill | 272,147 | |||||||||
Common stock | 2,200 | |||||||||
Non-controlling interest | 668,678 | |||||||||
Issuance of shares under share exchange agreement for JSSH acquisition |
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