Planet Green Holdings Corp.: Form 10-Q for the period ended Jun 30, 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

Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023.

The following discussion should be read in conjunction with the company’s unaudited condensed consolidated financial statement for the three months ended June 30, 2024, and 2023 and related notes to that.

(In Thousands of USD)

Net Revenues. Our net revenues for the three months ended June 30, 2024 amounted to $1.95 million, which represents a decrease of approximately $2.63 million, or 57%, from $4.57 million for the three months ended June 30, 2023. The decrease in revenue can be attributed to the stagnant sales of high-grade synthetic fuel products, which decreased from $2.09 million to $0.04 million during the current period, as well as a decline in food product sales from $2.01 million to $1.00 million.

Cost of Revenues. During the three months ended June 30, 2024, we experienced a decrease in cost of revenue of $2.65 million or 59%, in comparison to the three months ended June 30, 2023, from approximately $4.53 million to $1.88 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 June 30, 2024 increased by $0.03 million, representing a 60% increase to $0.07 million compared to $0.04 million for the same period in 2023. The increase was attributed to a significant surge in advertising revenue coupled with a decline in sales of unprofitable products of high-grade synthetic fuel. 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 86%, to $0.03 million for the three months ended June 30, 2024 from $0.24 million for the three months ended June 30, 2023. This decrease was mainly due to the aforementioned reasons, attributable to a decrease in sales of revenue. The selling and marketing expenses mainly come from transportation and storage cost and the sales staff salaries cost decline.

General and Administrative Expenses. Our general and administrative expenses for the three months ended June 30, 2024 increased slightly by $0.24 million, or 24%, to $1.22 million compared to the previous year’s $0.99 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 Income

Our net income for the three months ended June 30, 2024 decreased by $17.89 million, or 147%, to a net income of $0.57 million from a net loss of $12.20 million in the same period in 2023. This increase was primarily attributed to the gain from disposal of a subsidiary, an increase in advertising revenue sales and a decline in sales of unprofitable high-grade synthetic fuel products as previously mentioned.

Six Months Ended June 30, 2024 Compared to Six months Ended June 30, 2023.

The following discussion should be read in conjunction with the company’s audited consolidated financial statement for the six months ended June 30, 2024, and 2023 and related notes to that.

(In Thousands of USD)

Net Revenues. As of June 30, 2024, our net revenue for the six months ended was $3.48 million, representing a decrease of approximately $9.63 million or 73% from the same period last year’s $13.11 million. During the corresponding period in the previous fiscal year, over 56% 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 $7.30 million in 2023 to $1.00 million dollars in 2024. The sales of high-grade synthetic fuel products have remained stagnant in the current period, decreasing from $4.28 million to $0.06 million.

Cost of Revenues. During the six months ended June 30, 2024, we experienced a decrease in cost of revenue of $9.77 million or 76%, in comparison to the six months ended June 30, 2023, from approximately $12.82 million to $3.05 million. This change was mainly due to a decrease in revenue, as discussed above.

Gross Profit. Our gross profit for the six months ended June 30, 2024 increased by $0.14 million, representing a 49% increase to $0.43 million compared to $0.29 million for the same period in 2023. The substantial growth is primarily attributed to the significant increase in advertising revenue from the Fast branch, which operates at an approximate gross profit rate of 100%.

Operating Expenses

Selling and Marketing Expenses. Our selling and marketing expenses decreased by $0.41 million, or 85%, to $0.08 million for the six months ended June 30, 2024 from $0.49 million for the six months ended June 30, 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 six months ended June 30, 2024 increased slightly by $0.35million, or 17%, to $2.43 million compared to the previous year’s $2.08 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 Income

Our net income for the six months ended June 30, 2024 increased by $18.09 million, or 134%, to a net income of $4.61million from a loss of $13.49 million in the same period in 2023. This increase was primarily attributed to the gain from disposal of a subsidiary, an increase in advertising revenue sales and a decline in sales of unprofitable high-grade synthetic fuel products as previously mentioned.

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 June 30, 2024, our primary sources of financing have been cash generated from operations and private placements.

As of June 30, 2024, we had cash and cash equivalents of $558,933 compared to $436,383 as of December 31, 2023. The debt to assets ratio was 60.86% and 54.40% as of June 30, 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 $3,156,608 from continuing operations for the six months ended June 30, 2024. As of June 30, 2024 the Company had an accumulated deficit of $136,118,828, a working capital deficit of $8,092,472, its net cash used in operating activities for the six months ended June 30, 2024 was $660,867.

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 used in operating activities decreased by $1.57 million to $0.66 million during the six months ended June 30, 2024, from $2.24 million during the six months ended June 30, 2023. This decrease was primarily due to changes in net operating assets and liabilities of $1.98 million and was partially offset by an increase in net loss excluding non-cash expenses, gains and losses of $0.40 million.

Investing Activities

Net cash provided by investing activities for the six months ended June 30, 2024 decreased to $0.16 million from the $2.74 million provided by investing activities for the same period in 2023. This decrease is primarily due to a reduction in plant and equipment purchases compared to the six months ended June 30, 2023.

Financing Activities

The net cash provided by financing activities increased by $0.91 million to $0.94 million during the six-month period ended June 30, 2024, compared to $0.03 million for the same period in 2023. This increase can be attributed to a rise in bank loans obtained for operational purposes.

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 June 30, 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.

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.