Planet Green Holdings Corp.: Form 10-Q for the period ended Mar 31, 2024

We are headquartered in Flushing, New York. After a series of acquisitions and dispositions in 2024 and 2023, our primary business, which is carried out by Shandong Yunchu, Jingshan Sanhe, Jilin Chuangyuan, Fast Approach Inc and Xianning Bozhuang, is:

• To sell black tea product cultivation, packaging, and sales;
• To sell high-grade synthetic fuel products;
• To sell formaldehyde, urea-formaldehyde glue, methylal, and clean fuel oil;
• Online advertising services.

Results of Operations

The following discussion should be read in conjunction with the company’s audited consolidated financial statement for the three months ended March 31, 2024, and 2023 and related notes to that.

(In Thousands of USD)

2

Net Revenues. As of March 31, 2024, our net revenue for the three months ended was $1.53 million, representing a decrease of approximately $7.00 million or 82% from the same period last year's $8.53 million. During the corresponding period in the previous fiscal year, over 60% of our total revenue was derived from selling various food products to restaurants. However, this segment has been significantly impacted by COVID-19 and the company management is strategically realigning new supply markets to effectively mitigate this adverse impact, resulting in sales declining from $5.28 million in 2023 to zero dollars in 2024.

Cost of Revenues. During the three months ended March 31, 2024, we experienced a decrease in cost of revenue of $7.12 million or 86%, in comparison to the three months ended March 31, 2023, from approximately $8.29 million to $1.17 million. This change was mainly due to a decrease in sales of revenue, as discussed above.

Gross Profit. Our gross profit for the three months ended March 31, 2024 increased by $0.12 million, representing a 48% increase to $0.36 million compared to $0.25 million for the same period in 2023. This significant growth is primarily attributed to the sharp increase in advertising revenue from Fast branch, which operates at approximately 100% gross profit rate.

Operating Expenses

Selling and Marketing Expenses. Our selling and marketing expenses decreased by $0.21 million, or 84%, to $0.04 million for the three months ended March 31, 2024 from $0.25 million for the three months ended March 31, 2023. This decrease was mainly due to the aforementioned reasons, attributable to a decrease in sales of revenue.

General and Administrative Expenses. Our general and administrative expenses for the three months ended March 31, 2024 increased slightly by $0.11 million, or 10%, to $1.20 million compared to the previous year's $1.09 million for the same period. The increase was primarily due to a reclassification of selling and marketing expenses to general and administrative expenses as a result of staff function realignment.

Net Loss

Our net loss for the three months ended March 31, 2024 decreased by $0.21 million, or 16%, to a net loss of $1.08 million from $1.29 million in the same period in 2023. This decrease was primarily attributed to an increase in advertising revenue sales as mentioned earlier.

Liquidity and Capital Resources

In assessing our liquidity, we monitor and analyze our cash-on-hand and operating and capital expenditure commitments. Our liquidity needs meet our working capital requirements, operating expenses, and capital expenditure obligations. In the reporting period at March 31, 2024, our primary sources of financing have been cash generated from operations and private placements.

As of March 31, 2024, we had cash and cash equivalents of $403.08 thousand compared to $436.38 thousand as of December 31, 2023. The debt to assets ratio was 57.27% and 54.40% as of March 31, 2024 and December 31, 2023, respectively. We expect to continue to finance our operations and working capital needs in 2024 from cash generated from operations and, if needed, private financings. Suppose available liquidity is insufficient to meet our operating and loan obligations as they come due. In that case, our plans include pursuing alternative financing arrangements or reducing expenditures as necessary to meet our cash requirements. However, there is no assurance that we will raise additional capital or reduce discretionary spending to provide liquidity if needed. We cannot be sure of the availability or terms of any alternative financing arrangements.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern; however, the Company has incurred a net loss of $1,108,035 attributable to common shareholders for the three months ended March 31, 2024. As of March 31, 2024, the Company had an accumulated deficit of $141,805,501, a working capital deficit of $7,267,697, its net cash provided by operating activities for the three months ended March 31, 2024 was $ 183,614.

These factors raise substantial doubt on the Company’s ability to continue as a going concern. The accompanying unaudited 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.

The following table provides detailed information about our net cash flow for all financial statement periods presented in this report.

Cash Flows Data:

(In thousands of U.S. dollars)

Operating Activities

Net cash provided by operating activities decreased by $0.31 million to $0.18 million during the three months ended March 31, 2024 from $0.50 million during the three months ended March 31, 2023. This decrease was primarily due to changes in net operating assets and liabilities of $0.31 million.

Investing Activities

Net cash provided by investing activities for the three months ended March 31, 2024 increased to $11,449 from the $23,234 used in investing activities for the same period in 2023. This increase is primarily due to a decrease in the purchase of plant and equipment compared to the three months ended March 31, 2023.

Financing Activities

Net cash used in financing activities for the three months ended March 31, 2024, amounted to $225,717, indicating a decrease of $12,577 compared to the corresponding period in 2023. This decline primarily stems from a net change of $1.34 million in related party balances as opposed to 2023, partially offset by an increase of $1.36 million attributed to proceeds from long-term loans.

Critical Accounting Policies

The preparation of financial statements in conformity with the United States generally accepted accounting principles requires our management to make assumptions, estimates, and judgments that affect the amounts reported in the financial statements, including the notes to that, and related disclosures of commitments contingencies, if any.

We consider our critical accounting policies to require the more significant judgments and estimates in preparing financial statements, including those outlined in Note 2 to the financial statements included herein.

The Company has evaluated the timing and the impact of the guidance above on the financial statements.

As of March 31, 2024, there were no other recently issued accounting standards not yet adopted that would or could have a material effect on the Company’s consolidated financial statements.

Off-Balance Sheet Arrangements

We do not have any off-balance arrangements.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2023. Based upon his evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective.

As a result, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included in this Form 10-Q present fairly in all material respects our financial position, results of operations and cash flows for the period presented.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Control Over Financial Reporting

During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Risk Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in the Company’s registration statement on Form S3/A as filed with the SEC on April 18, 2023. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in the Company’s registration statement Form S3/A as filed with the SEC on April 18, 2023.