Workflow
Greenland Technologies (GTEC)
icon
Search documents
Greenland Technologies (GTEC) - 2021 Q3 - Quarterly Report
2021-11-11 16:00
Financial Performance - Revenues for the three months ended September 30, 2021, were $23,084,793, representing a 39.8% increase from $16,520,598 in the same period of 2020[20]. - Gross profit for the nine months ended September 30, 2021, was $15,906,986, up 93.8% from $8,204,274 in the same period of 2020[20]. - Net income for the three months ended September 30, 2021, was $1,253,529, compared to $460,001 for the same period in 2020, marking a 172.5% increase[20]. - Total revenues for the nine months ended September 30, 2021, were $75,899,994, up from $42,969,010 for the same period in 2020, representing an increase of approximately 76.7%[88]. - The company reported a basic and diluted net income per ordinary share of $0.09 for the three months ended September 30, 2021, compared to $0.02 for the same period in 2020[21]. - The Company recorded net income attributable to shareholders of $528,348 for the three months ended September 30, 2021, compared to $207,933 for the same period in 2020[190]. Assets and Liabilities - Total current assets as of September 30, 2021, were $134,442,643, an increase of 24.8% from $107,643,434 as of December 31, 2020[13]. - Total liabilities as of September 30, 2021, were $91,582,750, compared to $81,317,275 as of December 31, 2020, reflecting a 12.4% increase[17]. - Total shareholders' equity increased to $66,476,608 as of September 30, 2021, from $50,661,462 as of December 31, 2020, representing a 31.3% growth[17]. - Accounts receivable, net, increased to $21,321,082 as of September 30, 2021, from $12,408,548 as of December 31, 2020[126]. - Total inventories, net, rose to $20,608,956 as of September 30, 2021, up from $15,380,063 as of December 31, 2020[129]. - Accounts payable increased to $28,288,161 as of September 30, 2021, from $22,005,260 as of December 31, 2020[145]. Cash Flow and Financing - The company reported a net cash used in operating activities of $(5,864,423) for the nine months ended September 30, 2021, compared to $2,201,537 for the same period in 2020, indicating a decline in cash flow from operations[31]. - The net cash provided by financing activities was $12,669,108 for the nine months ended September 30, 2021, compared to $2,196,111 for the same period in 2020, showing a substantial increase[34]. - Cash and cash equivalents increased to $9,020,787 as of September 30, 2021, from $7,159,015 as of December 31, 2020, indicating a 25.9% rise[13]. - The total cash and cash equivalents at the end of the period was $15,656,356, compared to $11,194,616 at the end of September 30, 2020, reflecting a year-over-year increase of about 40.5%[34]. Research and Development - Research and development expenses for the nine months ended September 30, 2021, were $3,337,056, up 108.5% from $1,604,151 in the same period of 2020[20]. - Research and development costs totaled approximately $3,337,056 for the nine months ended September 30, 2021, compared to $1,604,151 for the same period in 2020, reflecting an increase of approximately 108.3%[93]. Market and Product Development - The company anticipates continued growth in revenues and profitability, driven by market expansion and new product development initiatives[8]. - Greenland launched a new division for electric industrial vehicles in December 2020, with the first batch of GEF-series electric forklifts beginning commercial sales in the U.S. market in November 2021[41]. - The company plans to establish assembly sites and experience centers in the United States in 2022 to support local sales, assembly, and distribution of electric vehicles[41]. - Greenland Technologies reported revenue growth from approximately $42.97 million for the nine months ended September 30, 2020, to approximately $75.90 million for the same period in 2021, representing an increase of 76.6%[40]. - The company sold 110,082 sets of transmission products to more than 100 forklift manufacturers in China during the nine months ended September 30, 2021, compared to 71,749 sets in the same period of 2020, marking a 53.3% increase in sales volume[40]. Shareholder Information - As of September 30, 2021, Cenntro Holding Limited owned 59.20% of Greenland's outstanding ordinary shares, indicating a significant shareholder concentration[43]. - The number of ordinary shares issued and outstanding increased from 10,225,142 as of December 31, 2020, to 11,371,171 as of September 30, 2021, reflecting an increase of about 11.2%[168]. Legal and Regulatory Matters - The Company has evaluated all legal proceedings and claims as of September 30, 2021, and December 31, 2020, related to contingencies[110]. - The Company has settled a class action lawsuit related to its Business Combination, resulting in a payment of $65,000 as of January 25, 2021[203]. Economic and Political Risks - The Company is subject to economic and political risks associated with operating in the PRC, which may affect its financial condition and results[112].
Greenland Technologies (GTEC) - 2021 Q3 - Earnings Call Transcript
2021-11-11 14:35
Financial Data and Key Metrics Changes - The company achieved gross revenue of $23.1 million in Q3 2021, representing a 39.7% year-over-year growth [7][15] - Gross profit increased to $5.1 million, a 50% rise from $3.4 million in Q3 2020, with gross margin improving to 22.1% [10][17] - Net income surged 172.5% year-over-year to $1.3 million [12][19] - Cash, restricted cash, and cash equivalents reached $15.7 million at the end of September, down from $20.5 million at the end of June [19] Business Line Data and Key Metrics Changes - The number of transmission products sold increased by 11.6% to 33,478 units from 29,985 units in Q3 2020 [15] - Operating expenses rose to $3 million, a 162% increase from $1.2 million in Q3 2020, primarily due to increased sales, consultancy, and R&D expenses [18] Market Data and Key Metrics Changes - The company noted a cooling down of the China market, with GDP falling from 18.3% in Q1 to 4.9% in Q3 2021 [7][8] - Despite the challenges in the China market, global warehousing and manufacturing demand remains strong [8] Company Strategy and Development Direction - The company is expanding into global markets with a new line of electric industrial vehicles, which is a key part of its strategy to mitigate risks and develop long-term value [8][9] - The first assembly plant location is being considered in Maryland, Virginia, or New Jersey, with plans to continue manufacturing in existing facilities [9][10] - The company is developing experience centers to allow potential customers to learn about and operate its industrial vehicles [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving year-end gross revenue guidance of $90 million to $100 million, despite challenges such as material shortages and freight delays [7][8] - The company is confident in its ability to adapt to supply chain challenges and maintain production levels [33] Other Important Information - The first batch of GEF-Series Electric Lithium Forklifts has arrived in the U.S. and is available for commercial sale, with strong demand already noted [10][11] - The company is also preparing for the arrival of its GEL-1800 electric loader and GEX-8000 excavator, with expectations for strong demand [11][12] Q&A Session Summary Question: Update on market share growth and drivers - Management highlighted robust manufacturing capabilities and established supply chains as key factors driving market share growth despite global constraints [23] Question: Design of Greenland forklifts and battery compatibility - The forklifts are designed around specific batteries and integrated drive trains, catering to lithium-powered forklifts [27] Question: Targeting upcoming demonstrations of the GEL-1800 - The company plans to market the GEL-1800 in industries suited for its charging needs, focusing on indoor facilities and urban settings [30] Question: Challenges in component sourcing for electric vehicles - Management acknowledged material shortages and supply chain challenges but emphasized their ability to adapt and procure necessary components [33] Question: Role of built-in chargers in forklift sales - The built-in charger is seen as a significant value add, simplifying logistics for customers transitioning to electric forklifts [36]
Greenland Technologies (GTEC) - 2021 Q2 - Earnings Call Transcript
2021-08-10 17:09
Financial Data and Key Metrics Changes - The company achieved a record revenue of $28.2 million, representing a 70.1% year-over-year growth [7][16] - The number of transmissions sold increased by 43.6% to 42,046 units from 28,305 units in the second quarter of 2020 [16] - Gross profit rose to $5.7 million, an increase of 98% from $2.9 million in the same quarter last year, with gross margin improving by 280 basis points to 20.2% [18][19] - Net income reached $3.2 million, marking a 114.2% increase from the previous year [20] Business Line Data and Key Metrics Changes - The company is expanding its product line to include lithium-powered electric forklifts and industrial-sized electric front loaders and excavators, with initial models ready for shipment [11][12] - The electric industrial vehicles are expected to be commercially available by the end of the year, with strong interest already noted [56] Market Data and Key Metrics Changes - Significant growth in global logistics and warehousing industries has driven sales of forklift trucks, particularly in markets outside of China [8] - The company has seen nearly doubled vehicle exports outside of China in the second quarter, indicating strong market momentum [8] Company Strategy and Development Direction - The company plans to establish assembly sites in the United States for its electric industrial vehicles, focusing on local assembly and distribution [13][50] - A strategic research partnership was formed with Zhongcha Heavy Industry Machinery to enhance the efficiency of lithium-powered electric forklifts [14] - The company aims to capture market share in North America by offering electric forklifts at competitive prices compared to lead-acid models [32][60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, particularly with the launch of new electric industrial vehicles [15][70] - The company is navigating supply chain challenges effectively, which has contributed to its strong performance [17] - Management anticipates that reasonable sales for electric vehicles will begin in the second to third quarter of 2022 [31][58] Other Important Information - The company filed an S-3 registration for $155 million in shares to finance its expansion and product development [14] - The total operating expenses increased to $2.3 million, up 84.1% from the previous year, primarily due to increased sales and labor costs [19] Q&A Session Summary Question: What is driving the core revenue growth? - Management attributed the growth to supply chain security, manufacturing efficiencies, and increased adoption of newer products [22][23] Question: How are raw material price increases being managed? - The company has chosen not to pass raw material costs onto clients, which has helped build long-term relationships [26][27] Question: What is the outlook for the U.S. market? - Management is confident in the U.S. market's potential, especially for electric forklifts, and expects to see reasonable sales starting in 2022 [30][31] Question: How does the company plan to prevent competitors from entering the market? - The company highlighted the high skill level required for manufacturing electric industrial vehicles and the lack of incentive for current market leaders to shift from internal combustion engines [44][45] Question: What are the expected margins for electric vehicles? - Initial purchase prices for electric vehicles will be comparable to legacy combustion vehicles, with lower maintenance costs expected to enhance ROI [50][51]
Greenland Technologies (GTEC) - 2021 Q1 - Earnings Call Transcript
2021-05-12 18:44
Financial Data and Key Metrics Changes - Total revenue for Q1 2021 was $24.6 million, an increase of 149% year-over-year, primarily due to a significant increase in sales volume [15][16] - Gross profit reached $5.1 million, up 165% from $1.9 million in Q1 2020, with a gross margin of 20.7%, which is 1.2 percentage points higher than the previous year [16][17] - Net income grew by 645% from the previous quarter, reaching $2.4 million [17] Business Line Data and Key Metrics Changes - The number of transmissions sold increased nearly 130% to 36,986 units from 16,099 units in Q1 2020 [15] - R&D expenses increased by 70% to $0.96 million, reflecting the company's commitment to innovation [17] Market Data and Key Metrics Changes - Over 95% of sales are currently generated in the Chinese market, with plans to expand into the global market, particularly the United States [24] - The forklift industry in China is experiencing strong demand, with major players seeing growth of over 40% in Q1 2021 [26] Company Strategy and Development Direction - The company aims to expand operations beyond China, focusing on the U.S. market for its new line of electric industrial vehicles [12][13] - Greenland Technologies plans to launch an all-electric industrial vehicle, the GEL 1800, in Q4 2021, with pilot production already underway [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving between $80 million to $90 million in gross revenue by the end of 2021, driven by strong demand and new product launches [11][18] - The company anticipates a shift towards global sales by 2022, following its success in the Chinese market [24] Other Important Information - The company has established a state-of-the-art manufacturing facility in Shaoxing, China, capable of producing over 200,000 transmission units and 3 million precision gears annually [8][35] - The company has 108 registered patents for proprietary systems, components, and manufacturing techniques [10] Q&A Session Summary Question: Can you qualify the 35% market share number? - The 35% market share is based on forklift trucks produced and sold in the Chinese market, including both electric and internal combustion power [22] Question: What percentage of revenue is generated outside of China today? - Currently, over 95% of sales are in the Chinese market, with plans to extend sales to the global market [24] Question: What is driving the growth in the forklift industry? - The growth is driven by strong demand due to government spending on infrastructure and increased warehouse construction activity [26] Question: How much investment is needed to launch the electric vehicle product? - Initial deployment costs for pilot production are estimated at $150,000 to $250,000, with full-scale production requiring an investment of $2.5 million to $5 million [30][31] Question: What are the main reasons for entering the EV industry? - The company aims to be a pioneer in the electric industrial vehicle market, leveraging its expertise and established supply chain [46] Question: Who are the main competitors in the EV market? - In the electric forklift market, the main competitor is the Raymond Corporation, while there are currently no major players in the industrial EV market [49][50]
Greenland Technologies (GTEC) - 2021 Q1 - Quarterly Report
2021-05-11 16:00
[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited consolidated financial statements and management's discussion and analysis for the three months ended March 31, 2021 [ITEM 1. FINANCIAL STATEMENTS (Unaudited)](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20(Unaudited)) This section presents the unaudited consolidated financial statements for Greenland Technologies Holding Corporation for the three months ended March 31, 2021, and comparative periods - The financial statements are unaudited and prepared in accordance with US GAAP, covering the Company and its wholly-owned subsidiaries[53](index=53&type=chunk) - Significant estimates are made for items such as allowance for doubtful accounts, inventory reserves, useful life of property, plant and equipment, impairment of long-term assets, and deferred tax assets[56](index=56&type=chunk) [Consolidated Balance Sheets](index=6&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS%20AS%20OF%20MARCH%2031%2C%202021%20(UNAUDITED)%20AND%20DECEMBER%2031%2C%202020) The consolidated balance sheets show an increase in total assets and total equity from December 31, 2020, to March 31, 2021, driven by growth in current assets, particularly accounts receivable and inventories, while total liabilities also increased | Metric | March 31, 2021 (Unaudited) | December 31, 2020 | Change ($) | Change (%) | | :---------------------- | :------------------------- | :---------------- | :--------- | :--------- | | Total Current Assets | $121,344,448 | $107,643,434 | $13,701,014 | 12.73% | | Total Non-current Assets| $23,773,296 | $24,335,303 | $(562,007) | -2.31% | | **TOTAL ASSETS** | **$145,117,744** | **$131,978,737** | **$13,139,007** | **9.96%** | | Total Current Liabilities| $88,090,705 | $78,808,335 | $9,282,370 | 11.78% | | Total Long-term Liabilities| $2,270,726 | $2,508,940 | $(238,214) | -9.50% | | **TOTAL LIABILITIES** | **$90,361,431** | **$81,317,275** | **$9,044,156** | **11.12%** | | Total Shareholders' Equity| $48,739,228 | $44,889,922 | $3,849,306 | 8.57% | | **TOTAL EQUITY** | **$54,756,313** | **$50,661,462** | **$4,094,851** | **8.08%** | | **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY** | **$145,117,744** | **$131,978,737** | **$13,139,007** | **9.96%** | [Consolidated Statements of Operations and Comprehensive Income (Loss)](index=8&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME%20(LOSS)%20FOR%20THE%20THREE%20MONTHS%20ENDED%20MARCH%2031%2C%202021%20AND%202020) The company experienced significant growth in revenue and net income for the three months ended March 31, 2021, compared to the same period in 2020, driven by increased sales and improved gross profit margins | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change ($) | Change (%) | | :------------------------------------------------------------------ | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Revenues | $24,610,894 | $9,872,067 | $14,738,827 | 149.3% | | Cost of Goods Sold | $19,506,507 | $7,948,119 | $11,558,388 | 145.4% | | **Gross Profit** | **$5,104,387** | **$1,923,948** | **$3,180,439** | **165.3%** | | Total Operating Expenses | $2,249,914 | $1,855,548 | $394,366 | 21.3% | | **Income from Operations** | **$2,854,473** | **$68,400** | **$2,786,073** | **4073.2%** | | Income Before Income Tax | $2,965,855 | $377,270 | $2,588,585 | 686.1% | | **NET INCOME** | **$2,443,239** | **$328,083** | **$2,115,156** | **644.7%** | | NET INCOME ATTRIBUTABLE TO GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES | $2,128,568 | $256,664 | $1,871,904 | 729.3% | | Basic and Diluted EPS | $0.21 | $0.03 | $0.18 | 600.0% | [Consolidated Statements of Shareholders' Equity](index=9&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20SHAREHOLDERS'%20EQUITY%20FOR%20THE%20THREE%20MONTHS%20ENDED%20MARCH%2031%2C%202021%20AND%202020) Shareholder's equity increased significantly from March 31, 2020, to March 31, 2021, primarily due to net income, additional paid-in capital from stock and warrant sales, and a smaller accumulated other comprehensive loss | Metric | March 31, 2021 | March 31, 2020 | Change ($) | | :---------------------------------------- | :------------- | :------------- | :--------- | | Additional Paid-in Capital | $15,617,239 | $15,269,485 | $347,754 | | Accumulated Other Comprehensive Income/(loss) | $(252,028) | $(965,975) | $713,947 | | Statutory Reserve | $4,517,117 | $3,926,827 | $590,290 | | Retained Earnings | $28,856,900 | $20,060,011 | $8,796,889 | | **Total Shareholders' Equity** | **$48,739,228** | **$46,027,247** | **$2,711,981** | | Non-controlling Interest | $6,017,085 | $7,736,899 | $(1,719,814) | | **TOTAL EQUITY** | **$54,756,313** | **$46,027,247** | **$8,729,066** | [Consolidated Statements of Cash Flows](index=10&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS%20FOR%20THE%20THREE%20MONTHS%20ENDED%20MARCH%2031%2C%202021%20AND%202020) For the three months ended March 31, 2021, the company experienced a net cash outflow from operating activities but a significant cash inflow from financing activities, leading to an overall net increase in cash and cash equivalents and restricted cash | Cash Flow Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change ($) | | :---------------------------------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Net Cash Provided By Operating Activities | $(3,998,147) | $4,040,995 | $(8,039,142) | | Net Cash Provided By (Used In) Investing Activities | $(65,028) | $(141,861) | $76,833 | | Net Cash Provided By (Used In) Financing Activities | $4,871,033 | $(678,495) | $5,549,528 | | **Net Increase In Cash And Cash Equivalents And Restricted Cash** | **$807,858** | **$3,220,639** | **$(2,412,781)** | | Cash And Cash Equivalents And Restricted Cash At End Of Period | $10,150,977 | $8,295,412 | $1,855,565 | [Notes to Consolidated Financial Statements](index=12&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) This section provides detailed disclosures on the company's organization, significant accounting policies, and specific financial statement line items, offering crucial context and breakdown of the reported figures - The notes are an integral part of the unaudited consolidated financial statements, providing essential context and details for understanding the financial position and performance[13](index=13&type=chunk)[17](index=17&type=chunk)[18](index=18&type=chunk) [NOTE 1 – Organization and Principal Activities](index=12&type=section&id=NOTE%201%20%E2%80%93%20ORGANIZATION%20AND%20PRINCIPAL%20ACTIVITIES) Greenland Technologies Holding Corporation, initially a blank check company, acquired Zhongchai Holding in 2019 and now operates as a developer and manufacturer of transmission products for material handling machinery in China, with a new division launched in December 2020 to develop electric industrial vehicles - Greenland Technologies Holding Corporation was incorporated on December 28, 2017, and acquired Zhongchai Holding (Hong Kong) Limited on October 24, 2019, via a reverse capitalization[36](index=36&type=chunk) - The company is a leading developer and manufacturer of transmission products for material handling machinery in China and, since December 2020, a developer of electric industrial vehicles, with the first model expected in Q3 or Q4 2021[37](index=37&type=chunk)[40](index=40&type=chunk) - Revenue increased from **$9.87 million** for Q1 2020 to **$24.61 million** for Q1 2021, driven by recovery from COVID-19 impacts and processing of backlogged orders[39](index=39&type=chunk) [NOTE 2 – Summary of Significant Accounting Policies](index=16&type=section&id=NOTE%202%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the key accounting principles and methods used in preparing the consolidated financial statements, including basis of presentation, consolidation, use of estimates, foreign currency translation, and specific policies for assets, liabilities, revenue, and expenses - The consolidated financial statements are prepared in accordance with US GAAP and include the accounts of Greenland Technologies Holding Corporation and its subsidiaries, with intercompany transactions eliminated[53](index=53&type=chunk)[54](index=54&type=chunk) - Significant estimates are made for items such as allowance for doubtful accounts, inventory reserves, useful life of property, plant and equipment, impairment of long-term assets, and deferred tax assets[56](index=56&type=chunk) [Basis of Presentation](index=16&type=section&id=Basis%20of%20Presentation) The financial statements are prepared under US GAAP, consolidating the Company and its wholly-owned subsidiaries, with all significant inter-company transactions eliminated - Consolidated financial statements are prepared in accordance with US GAAP and include the Company and its wholly-owned subsidiaries, with inter-company transactions eliminated[53](index=53&type=chunk) [Principles of Consolidation](index=16&type=section&id=Principles%20of%20Consolidation) The consolidated financial statements include Greenland Technologies Holding Corporation and its subsidiaries, with Zhongchai Holding considered the accounting acquirer in the reverse recapitalization, meaning its historical operations are deemed those of the Company - Zhongchai Holding is considered the accounting acquirer in the reverse recapitalization, and its historical operations are deemed those of Greenland Technologies Holding Corporation for financial reporting purposes[54](index=54&type=chunk)[55](index=55&type=chunk) [Use of Estimates](index=16&type=section&id=Use%20of%20Estimates) The preparation of financial statements requires management to make significant estimates and assumptions, which can affect reported asset and liability amounts, as well as revenues and expenses - Management's estimates and assumptions are crucial for financial statement preparation, impacting reported asset/liability amounts and revenues/expenses[56](index=56&type=chunk) - Significant estimates include allowance for doubtful accounts, inventory reserves, useful life of property, plant and equipment, impairment of long-term assets, and valuation of deferred tax assets[56](index=56&type=chunk) [Non-controlling Interest](index=16&type=section&id=Non-controlling%20Interest) Non-controlling interests in subsidiaries are reported as a separate component of equity, with related operations included in consolidated results, and changes in equity interests not resulting in control changes are treated as equity transactions - Non-controlling interests are reported as a component of equity, separate from parent's equity, in accordance with ASC 810[57](index=57&type=chunk) [Foreign Currency Translation](index=17&type=section&id=Foreign%20Currency%20Translation) The functional currency is Renminbi (RMB), with transactions initially recorded at the functional currency rate, and differences recognized as foreign currency transaction gains or losses. The RMB is subject to PRC government exchange restrictions - The functional currency of the Company is Renminbi (RMB), and transactions in foreign currencies are recorded at the functional currency rate[59](index=59&type=chunk) - The RMB is not freely convertible, and the PRC government imposes significant exchange restrictions on fund transfers out of the PRC[60](index=60&type=chunk) Exchange Rate Metrics | Exchange Rate Metric | March 31, 2021 | March 31, 2020 | | :------------------------ | :------------- | :------------- | | Period end RMB:US$ rate | 6.5518 | 7.0851 | | Period average RMB:US$ rate | 6.4972 | 7.0307 | [Cash and Cash Equivalents](index=17&type=section&id=Cash%20and%20Cash%20Equivalents) Cash equivalents include highly liquid investments with original maturities of three months or less. The company maintains bank accounts in the PRC and Hong Kong SAR, which are not covered by insurance - Highly liquid investments with original maturities of three months or less are considered cash equivalents[61](index=61&type=chunk) - Bank balances in PRC and Hong Kong SAR are not covered by insurance[61](index=61&type=chunk) [Restricted Cash](index=17&type=section&id=Restricted%20Cash) Restricted cash serves as security for bank acceptance bills and short-term bank loans, making it unavailable for the company's general use for typically up to twelve months - Restricted cash is held by a bank as security for bank acceptance bills and short-term bank loans, unavailable for the Company's use for up to twelve months[62](index=62&type=chunk) [Fair Value of Financial Instruments](index=17&type=section&id=Fair%20Value%20of%20Financial%20Instruments) The company applies ASC 820 for fair value measurements, classifying financial instruments into a three-tier hierarchy based on observable and non-observable inputs. Most current financial instruments approximate fair value due to their short-term nature - The Company uses a three-tier fair value hierarchy (Level 1, 2, 3) based on observable and non-observable inputs for financial instruments[63](index=63&type=chunk) - The carrying values of most short-term financial instruments (cash, receivables, payables, short-term loans) approximate their fair values and are classified within Level 1[66](index=66&type=chunk) [Accounts Receivable](index=18&type=section&id=Accounts%20Receivable) Accounts receivable are recorded at net realizable value, with allowances for doubtful accounts based on factors like age, payment history, creditworthiness, and economic trends - Accounts receivable are carried at net realizable value, with allowances for doubtful accounts based on various factors including age, payment history, and creditworthiness[67](index=67&type=chunk) Allowance for Doubtful Accounts | Metric | March 31, 2021 | December 31, 2020 | | :------------------------------------ | :------------- | :---------------- | | Allowance for doubtful accounts (USD) | $982,497 | $986,532 | [Inventories](index=18&type=section&id=Inventories) Inventories are valued at the lower of cost or net realizable value, with costs determined using the weighted average method. The company records reserves for excess or obsolete inventories based on demand forecasts - Inventories are stated at the lower of cost or net realizable value, with costs calculated using the weighted average method[68](index=68&type=chunk) - Inventory reserves for excess or obsolete items are based on current and future demand forecasts[68](index=68&type=chunk) [Advance to Suppliers](index=18&type=section&id=Advance%20to%20Suppliers) Advance to suppliers represents interest-free cash payments made in advance for parts and raw materials - Advance to suppliers represents interest-free cash paid in advance for purchases of parts and/or raw materials[69](index=69&type=chunk) Advance to Suppliers | Metric | March 31, 2021 | December 31, 2020 | | :-------------------------- | :------------- | :---------------- | | Advance to suppliers (USD) | $541,251 | $447,901 | [Property, Plant, and Equipment](index=18&type=section&id=Property%2C%20Plant%2C%20and%20Equipment) Property, plant, and equipment are recorded at cost less accumulated depreciation, with depreciation calculated using the straight-line method over estimated useful lives - Property, plant, and equipment are stated at cost less accumulated depreciation, using the straight-line method over estimated useful lives[70](index=70&type=chunk) Asset Category Estimated Useful Life | Asset Category | Estimated Useful Life | | :------------------------------ | :-------------------- | | Plant, buildings and improvements | 20 years | | Machinery and equipment | 2~10 years | | Motor vehicles | 4 years | | Office equipment | 3~5 years | | Fixtures and decorations | 5 years | [Land Use Rights](index=19&type=section&id=Land%20Use%20Rights) Land use rights, granted by the Chinese government, are amortized using the straight-line method over a fifty-year lease term - Land use rights are amortized using the straight-line method over a fifty-year lease term, reflecting the government ownership of land in the PRC[75](index=75&type=chunk) [Impairment of Long-Lived Assets](index=19&type=section&id=Impairment%20of%20Long-Lived%20Assets) Long-lived assets are periodically evaluated for impairment when circumstances indicate their carrying amounts may not be recoverable, with losses recognized if estimated future undiscounted cash flows are less than the carrying amount - Long-lived assets are evaluated for impairment when circumstances suggest carrying amounts may not be recoverable, recognizing a loss if estimated future undiscounted cash flows are less than the carrying value[76](index=76&type=chunk) - No impairment loss was recognized for the years ended December 31, 2020 and 2019[77](index=77&type=chunk) [Lease](index=19&type=section&id=Lease) The company applies ASC 842, recognizing operating and finance lease liabilities and right-of-use assets. A recent sale-leaseback transaction was classified as a failed sale and accounted for as a finance lease, with the company continuing to depreciate the assets and recording a financing obligation - The Company applies ASC 842, requiring recognition of operating and finance lease liabilities and right-of-use assets on the balance sheet[78](index=78&type=chunk) - A recent sale-leaseback transaction was classified as a failed sale and accounted for as a finance lease, with the Company continuing to depreciate assets and recording a financing obligation[79](index=79&type=chunk) [Statutory Reserve](index=20&type=section&id=Statutory%20Reserve) PRC regulations require foreign-invested enterprises to appropriate a portion of their net profit to statutory reserves (General Reserve Fund, Enterprise Expansion Fund, Staff Welfare and Bonus Fund), which are for specific purposes and not distributable as cash dividends - PRC regulations require foreign-invested enterprises to allocate at least **10%** of annual after-tax profit to the General Reserve Fund until it reaches **50%** of registered capital[81](index=81&type=chunk)[94](index=94&type=chunk) - These statutory reserves are for specific purposes and are not distributable as cash dividends[81](index=81&type=chunk)[94](index=94&type=chunk) [Revenue Recognition](index=20&type=section&id=Revenue%20Recognition) Revenue is recognized in accordance with ASC Topic 606 when goods or services are transferred to customers, reflecting the expected consideration. The company recognizes revenue net of VAT, which has seen rate reductions - Revenue is recognized when goods or services are transferred to customers, reflecting the expected consideration, in accordance with ASC Topic 606[82](index=82&type=chunk)[273](index=273&type=chunk) - Revenue is recognized net of Value-Added Taxes (VAT), with rates reduced from **17%** to **16%** (April 2018) and then to **13%** (April 2019)[82](index=82&type=chunk)[273](index=273&type=chunk) Major Product Revenue | Major Product | March 31, 2021 | March 31, 2020 | | :--------------------------------- | :------------- | :------------- | | Transmission boxes for Forklift | $21,549,356 | $9,872,057 | | Transmission boxes for Non-Forklift (EV, etc.) | $3,061,538 | $10 | | **Total** | **$24,610,894** | **$9,872,067** | [Cost of Goods Sold](index=21&type=section&id=Cost%20of%20Goods%20Sold) Cost of goods sold primarily includes material, freight, purchasing, labor, and depreciation costs directly attributable to production, as well as inventory write-downs - Cost of goods sold primarily includes material costs, freight, purchasing, labor, amortization, and depreciation directly attributable to production[87](index=87&type=chunk)[230](index=230&type=chunk) - Write-downs of inventory to the lower of cost or net realizable value are also recorded in cost of goods sold[87](index=87&type=chunk)[230](index=230&type=chunk) [Selling Expenses](index=21&type=section&id=Selling%20Expenses) Selling expenses consist mainly of sales staff payroll, traveling, and transportation expenses - Selling expenses primarily include sales staff payroll, traveling expenses, and transportation expenses[87](index=87&type=chunk)[234](index=234&type=chunk) [General and Administrative Expenses](index=21&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses cover management and office salaries, employee benefits, office depreciation, travel, legal, accounting, and consulting fees - General and administrative expenses include management and office salaries, employee benefits, office depreciation, travel, legal, accounting, and consulting fees[87](index=87&type=chunk)[235](index=235&type=chunk) [Research and Development](index=21&type=section&id=Research%20and%20Development) Research and development costs, expensed as incurred, include personnel compensation, material costs, and depreciation for research-related equipment - Research and development costs are expensed as incurred, totaling **$959,545** for Q1 2021 and **$564,298** for Q1 2020[88](index=88&type=chunk) [Government subsidies](index=21&type=section&id=Government%20subsidies) Government subsidies are recognized when receipt is reasonably assured and conditions are met, either as income matched to expenses or as other long-term liabilities released to the statement of operations over an asset's useful life - Government subsidies are recognized when receipt is reasonably assured and conditions are met[89](index=89&type=chunk) - Subsidies related to assets are recognized as other long-term liabilities and released to the statement of operations over the asset's useful life[89](index=89&type=chunk) Total Government Subsidies | Metric | March 31, 2021 | December 31, 2020 | | :------------------------------------ | :------------- | :---------------- | | Total government subsidies (USD) | $2,270,726 | $2,342,648 | [Income Taxes](index=21&type=section&id=Income%20Taxes) Income taxes are accounted for using the liability method, determining deferred tax assets and liabilities based on financial reporting and tax bases differences. A valuation allowance is recorded if realization of deferred tax assets is not more-likely-than-not - Income taxes are accounted for using the liability method (FASB ASC 740), determining deferred tax assets and liabilities based on differences between financial reporting and tax bases[90](index=90&type=chunk)[280](index=280&type=chunk) - A valuation allowance is recorded if it's not more-likely-than-not that deferred tax assets will be realized[90](index=90&type=chunk)[280](index=280&type=chunk) [Value-Added Tax](index=22&type=section&id=Value-Added%20Tax) Enterprises in the PRC are subject to VAT on sales, with a credit available for VAT paid on purchases. The standard VAT rate has been reduced over time, most recently to 13% from April 1, 2019 - Enterprises in the PRC are subject to VAT on sales, with a credit for VAT paid on purchases of raw materials[93](index=93&type=chunk) - The VAT standard rate was reduced to **13%** starting from April 1, 2019[93](index=93&type=chunk) [Comprehensive Income (Loss)](index=23&type=section&id=Comprehensive%20Income%20(Loss)) Comprehensive income (loss) represents the change in equity from non-owner transactions and events, with accumulated comprehensive income consisting of foreign currency translation adjustments - Comprehensive income (loss) is defined as the change in equity from transactions and other events, excluding owner investments and distributions[97](index=97&type=chunk) - Accumulated comprehensive income consists of foreign currency translation adjustments[97](index=97&type=chunk) [Earnings per share](index=23&type=section&id=Earnings%20per%20share) Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding, while diluted EPS includes potential ordinary share equivalents. The share count was retroactively adjusted due to a reverse merger - Basic EPS is computed by dividing net income by the weighted average number of common shares outstanding, while diluted EPS includes potential ordinary share equivalents[98](index=98&type=chunk)[181](index=181&type=chunk) - The share count was retroactively adjusted to December 31, 2017, due to the reverse merger with Zhongchai Holding for EPS calculation[98](index=98&type=chunk)[181](index=181&type=chunk) [Segments and Related Information](index=23&type=section&id=Segments%20and%20Related%20Information) The company's operations are aggregated into one reportable operating segment, as determined by the chief operating decision maker, due to similar manufacturing processes, customer types, and product distribution - All of the Company's operations are aggregated into one reportable operating segment[102](index=102&type=chunk)[184](index=184&type=chunk) - This aggregation is based on similar manufacturing processes, customer types (automotive, construction, warehousing), and consistent product distribution[102](index=102&type=chunk) [Commitments and contingencies](index=24&type=section&id=Commitments%20and%20contingencies) The company is subject to contingencies, including legal proceedings and environmental claims, and accrues for them based on probability and estimable liability. Management evaluates all such claims periodically - The Company is subject to contingencies, including legal proceedings and environmental claims, arising from normal business operations[104](index=104&type=chunk) - Accruals for contingencies are recorded based on the assessment of occurrence probability and estimable liability[104](index=104&type=chunk) [Related Party](index=24&type=section&id=Related%20Party) Related parties are defined as entities or individuals with relationships that could lead to non-arm's-length transactions or influence, and all significant related party transactions are disclosed - Related parties are defined by relationships that offer potential for non-arm's-length transactions or influence[105](index=105&type=chunk) - All significant related party transactions are disclosed[105](index=105&type=chunk) [Economic and Political Risks](index=24&type=section&id=Economic%20and%20Political%20Risks) The company's operations in the PRC expose it to significant political, economic, and legal risks, including potential adverse effects from changes in governmental policies, anti-inflationary measures, and currency conversion - The Company's PRC operations are subject to political, economic, and legal risks, including changes in governmental policies and currency conversion[106](index=106&type=chunk) - Concentrations of credit risk exist with cash held in state-owned PRC banks (uninsured) and trade accounts receivable, though credit risk is managed by short payment terms and ongoing evaluations[107](index=107&type=chunk) [Exchange Risk](index=24&type=section&id=Exchange%20Risk) The company is exposed to exchange rate fluctuations between RMB and US dollars, which can impact reported profits despite consistent operational performance - The Company is exposed to exchange rate fluctuations between PRC Renminbi (RMB) and U.S. dollars, which can affect reported profits[108](index=108&type=chunk) [Recently Issued Accounting Pronouncements](index=25&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) The company is evaluating the impact of several recently issued accounting pronouncements, including ASU 2016-13 (Credit Losses), ASU 2017-04 (Goodwill Impairment), ASU 2018-13 (Fair Value Measurement disclosures), and ASU 2019-12 (Income Taxes), with most expected to have a minor or no material impact - The Company is evaluating ASU 2016-13 (Credit Losses), ASU 2017-04 (Goodwill Impairment), ASU 2018-13 (Fair Value Measurement disclosures), and ASU 2019-12 (Income Taxes)[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) - As a smaller reporting company, the implementation date for ASU 2016-13 is deferred until January 1, 2023[110](index=110&type=chunk) [NOTE 3 – Concentration on Revenues and Cost of Goods Sold](index=26&type=section&id=NOTE%203%20%E2%80%93%20CONCENTRATION%20ON%20REVENUES%20AND%20COST%20OF%20GOODS%20SOLD) This note details the concentration of the company's revenues and accounts receivable among major customers, noting that no single supplier accounted for more than 10% of total purchases Major Customer Revenue Concentration | Major Customer | Q1 2021 Revenue ($) | Q1 2021 Revenue (%) | Q1 2020 Revenue ($) | Q1 2020 Revenue (%) | | :------------- | :------------------ | :------------------ | :------------------ | :------------------ | | Company A | $3,993,750 | 16.23% | $15,311,874 | 22.90% | | Company B | $2,573,399 | 10.46% | $7,699,161 | 11.51% | | **Total** | **$6,567,149** | **26.69%** | **$23,011,035** | **34.41%** | Major Customer Accounts Receivable Concentration | Major Customer | March 31, 2021 A/R ($) | March 31, 2021 A/R (%) | December 31, 2020 A/R ($) | December 31, 2020 A/R (%) | | :------------- | :--------------------- | :--------------------- | :------------------------ | :------------------------ | | Company A | $3,993,750 | 16.17% | $2,002,275 | 14.95% | | Company B | $2,573,399 | 7.31% | $1,955,113 | 14.60% | | Company C | $1,666,458 | 7.50% | $1,359,607 | 10.15% | | **Total** | **$8,233,607** | **30.99%** | **$5,316,995** | **39.69%** | - No single supplier represented more than **10%** of the Company's total purchases for the three months ended March 31, 2021 and 2020[118](index=118&type=chunk) [NOTE 4 – Accounts Receivable](index=26&type=section&id=NOTE%204%20%E2%80%93%20ACCOUNTS%20RECEIVABLE) Accounts receivable, net of allowance for doubtful accounts, increased significantly from December 31, 2020, to March 31, 2021, while the allowance for doubtful accounts slightly decreased Accounts Receivable, Net | Metric | March 31, 2021 | December 31, 2020 | Change ($) | Change (%) | | :------------------------------------ | :------------- | :---------------- | :--------- | :--------- | | Accounts receivable | $22,049,725 | $13,395,080 | $8,654,645 | 64.61% | | Less: allowance for doubtful accounts | $(982,497) | $(986,532) | $4,035 | -0.41% | | **Accounts receivable, net** | **$21,067,228** | **$12,408,548** | **$8,658,680** | **69.78%** | Allowance for Doubtful Accounts Movement | Allowance for Doubtful Accounts | Q1 2021 | Q1 2020 | | :------------------------------ | :----------- | :----------- | | Beginning balance | $986,532 | $1,037,797 | | Provision for doubtful accounts | $(4,035) | $40,867 | | **Ending balance** | **$982,497** | **$1,078,664** | [NOTE 5 – Inventories](index=27&type=section&id=NOTE%205%20%E2%80%93%20INVENTORIES) Total inventories, net, increased from December 31, 2020, to March 31, 2021, with increases across raw materials, revolving material, work-in-progress, and finished goods Inventories, Net | Inventory Category | March 31, 2021 | December 31, 2020 | Change ($) | Change (%) | | :-------------------------- | :------------- | :---------------- | :--------- | :--------- | | Raw materials | $7,228,655 | $5,682,382 | $1,546,273 | 27.21% | | Revolving material | $893,687 | $742,437 | $151,250 | 20.37% | | Consigned processing material | $51,045 | $51,290 | $(245) | -0.48% | | Work-in-progress | $2,057,704 | $2,015,677 | $42,027 | 2.08% | | Finished goods | $7,723,323 | $6,888,277 | $835,046 | 12.12% | | **Inventories, net** | **$17,954,414** | **$15,380,063** | **$2,574,351** | **16.74%** | [NOTE 6 – Notes Receivable](index=27&type=section&id=NOTE%206%20%E2%80%93%20NOTES%20RECEIVABLE) Notes receivable, primarily bank notes, increased from December 31, 2020, to March 31, 2021. These notes are interest-free, mature within three to six months, and are pledged as security for bank acceptance notes Notes Receivable | Metric | March 31, 2021 | December 31, 2020 | Change ($) | Change (%) | | :---------------------- | :------------- | :---------------- | :--------- | :--------- | | Bank notes receivable | $32,579,066 | $30,803,772 | $1,775,294 | 5.76% | | **Total Notes Receivable** | **$32,579,066** | **$30,803,772** | **$1,775,294** | **5.76%** | - Notes receivable are interest-free, mature within three to six months, and are pledged as security for bank acceptance notes[125](index=125&type=chunk) [NOTE 7 – Property, Plant and Equipment and Construction in Progress](index=27&type=section&id=NOTE%207%20%E2%80%93%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT%20AND%20CONSTRUCTION%20IN%20PROGRESS) The net value of property, plant, and equipment, including construction in progress, slightly decreased from December 31, 2020, to March 31, 2021. Depreciation expense for Q1 2021 was $0.62 million, with a portion included in cost of revenue and inventories Property, Plant and Equipment and Construction in Process, Net | Metric | March 31, 2021 | December 31, 2020 | Change ($) | Change (%) | | :------------------------------------------ | :------------- | :---------------- | :--------- | :--------- | | Total property plant and equipment, at cost | $33,868,951 | $33,885,713 | $(16,762) | -0.05% | | Less: accumulated depreciation | $(14,367,871) | $(13,843,189) | $(524,682) | 3.79% | | **Property, plant and equipment, net** | **$19,501,080** | **$20,042,524** | **$(541,444)** | **-2.70%** | | Construction in process | $92,435 | $92,815 | $(380) | -0.41% | | **Total** | **$19,593,515** | **$20,135,339** | **$(541,824)** | **-2.69%** | - Depreciation expense for the three months ended March 31, 2021, was **$0.62 million**, with **$0.38 million** included in cost of revenue and inventories[127](index=127&type=chunk) - The Company pledged buildings and machinery with a net book value of **$13.15 million** as security for loan facilities as of March 31, 2021[131](index=131&type=chunk) [NOTE 8 – Land Use Rights](index=29&type=section&id=NOTE%208%20%E2%80%93%20LAND%20USE%20RIGHTS) The net book value of land use rights slightly decreased from December 31, 2020, to March 31, 2021, and these rights are used as collateral for short-term bank loans Land Use Rights, Net | Metric | March 31, 2021 | December 31, 2020 | Change ($) | Change (%) | | :-------------------------- | :------------- | :---------------- | :--------- | :--------- | | Land use rights, cost | $4,695,901 | $4,715,188 | $(19,287) | -0.41% | | Less: Accumulated amortization | $(699,921) | $(679,934) | $(19,987) | 2.94% | | **Land use rights, net** | **$3,995,980** | **$4,035,254** | **$(39,274)** | **-0.97%** | - Land use rights with a net book value of **$4.00 million** were used as collateral for the Company's short-term bank loans as of March 31, 2021[134](index=134&type=chunk) Amortization Expense for Land Use Rights | Years ending March 31, | Amortization expense (USD) | | :--------------------- | :------------------- | | 2022 | $91,840 | | 2023 | $91,840 | | 2024 | $91,840 | | 2025 | $91,840 | | 2026 | $91,840 | | Thereafter | $3,536,780 | | **Total** | **$3,995,980** | [NOTE 9 – Notes Payable](index=31&type=section&id=NOTE%209%20%E2%80%93%20NOTES%20PAYABLE) Notes payable, consisting of bank acceptance notes, increased from December 31, 2020, to March 31, 2021. These interest-free notes are secured by restricted cash, notes receivable, and land use rights Notes Payable | Metric | March 31, 2021 | December 31, 2020 | Change ($) | Change (%) | | :---------------------- | :------------- | :---------------- | :--------- | :--------- | | Bank acceptance notes | $30,539,541 | $25,889,067 | $4,650,474 | 17.96% | | **Total Notes Payable** | **$30,539,541** | **$25,889,067** | **$4,650,474** | **17.96%** | - The interest-free notes payable are secured by restricted cash (**$2.06 million**), notes receivable (**$27.45 million**), and land use rights (**$4.00 million**) as of March 31, 2021[139](index=139&type=chunk) [NOTE 10 – Accounts Payable](index=31&type=section&id=NOTE%2010%20%E2%80%93%20ACCOUNTS%20PAYABLE) Accounts payable significantly increased from December 31, 2020, to March 31, 2021, primarily driven by an increase in procurement of materials Accounts Payable by Category | Accounts Payable Category | March 31, 2021 | December 31, 2020 | Change ($) | Change (%) | | :------------------------ | :------------- | :---------------- | :--------- | :--------- | | Procurement of Materials | $26,997,424 | $21,140,063 | $5,857,361 | 27.71% | | Infrastructure & Equipment| $1,387,032 | $717,053 | $669,979 | 93.44% | | Freight fee | $145,739 | $148,144 | $(2,405) | -1.62% | | **Total** | **$28,530,195** | **$22,005,260** | **$6,524,935** | **29.65%** | [NOTE 11 – Short Term Bank Loans](index=31&type=section&id=NOTE%2011%20%E2%80%93%20SHORT%20TERM%20BANK%20LOANS) Short-term bank loans slightly decreased from December 31, 2020, to March 31, 2021, with an average annual interest rate of 4.597% for Q1 2021. All loans are from PRC banks and repayable within one year Short-Term Bank Loans | Loan Type | March 31, 2021 | December 31, 2020 | Change ($) | Change (%) | | :-------------------- | :------------- | :---------------- | :--------- | :--------- | | Collateralized bank loans | $15,664,397 | $17,261,302 | $(1,596,905) | -9.25% | | Guaranteed bank loans | $1,984,188 | $1,226,054 | $758,134 | 61.83% | | **Total** | **$17,648,585** | **$18,487,356** | **$(838,771)** | **-4.54%** | - The average annual interest rate for short-term bank loans was **4.597%** for the three months ended March 31, 2021[147](index=147&type=chunk) - All short-term bank loans are obtained from local banks in PRC and are repayable within one year[146](index=146&type=chunk) [NOTE 12 – Other Current Liabilities](index=33&type=section&id=NOTE%2012%20%E2%80%93%20OTHER%20CURRENT%20LIABILITIES) Other current liabilities slightly decreased from December 31, 2020, to March 31, 2021, primarily due to a reduction in employee payables and borrowings from third parties, partially offset by an increase in other tax payables Other Current Liabilities | Liability Category | March 31, 2021 | December 31, 2020 | Change ($) | Change (%) | | :------------------------ | :------------- | :---------------- | :--------- | :--------- | | Employee payables | $111,537 | $483,922 | $(372,385) | -76.94% | | Other tax payables | $1,752,713 | $1,208,323 | $544,390 | 45.05% | | Borrowing from third party| $266,831 | $520,080 | $(253,249) | -48.69% | | **Total** | **$2,131,081** | **$2,212,325** | **$(81,244)** | **-3.67%** | [NOTE 13 – Other Long-Term Liabilities](index=34&type=section&id=NOTE%2013%20%E2%80%93%20OTHER%20LONG-TERM%20LIABILITIES) Other long-term liabilities, primarily government subsidies, slightly decreased from December 31, 2020, to March 31, 2021 Other Long-Term Liabilities | Liability Category | March 31, 2021 | December 31, 2020 | Change ($) | Change (%) | | :----------------- | :------------- | :---------------- | :--------- | :--------- | | Subsidy | $2,270,726 | $2,342,648 | $(71,922) | -3.07% | | **Total** | **$2,270,726** | **$2,342,648** | **$(71,922)** | **-3.07%** | - The subsidy mainly consists of an incentive from the Chinese government to encourage fixed asset transformation and other miscellaneous subsidies[152](index=152&type=chunk) [NOTE 14 – Long Term Payables](index=34&type=section&id=NOTE%2014%20%E2%80%93%20LONG%20TERM%20PAYABLES) Long-term payables, current portion, slightly decreased from December 31, 2020, to March 31, 2021, while the non-current portion was eliminated. These payables relate to failed sale-leaseback transactions accounted for as financing obligations Long-Term Payables | Metric | March 31, 2021 | December 31, 2020 | Change ($) | Change (%) | | :------------------------------------ | :------------- | :---------------- | :--------- | :--------- | | Long-term payables current portion | $767,496 | $797,179 | $(29,683) | -3.72% | | Long-term payables– non-current portion | - | $166,292 | $(166,292) | -100.00% | | **Total** | **$767,496** | **$963,471** | **$(195,975)** | **-20.34%** | - These payables represent financing obligations from failed sale-leaseback transactions where the Company did not relinquish control of the assets[155](index=155&type=chunk) [NOTE 15 – Stockholder's Equity](index=34&type=section&id=NOTE%2015%20%E2%80%93%20STOCKHOLDER'S%20EQUITY) This note details the company's equity structure, including authorized and outstanding ordinary shares, preferred shares, and the history of share issuances related to the business combination, restricted stock grants, and warrant exercises - As of March 31, 2021, there were **10,498,127** ordinary shares issued and outstanding, an increase from **10,225,142** as of December 31, 2020[158](index=158&type=chunk) - The company is authorized to issue an unlimited number of no par value preferred shares across five classes, but none were issued or outstanding as of March 31, 2021[156](index=156&type=chunk) - The business combination in October 2019 resulted in the issuance of **7,500,000** ordinary shares to the seller, making Cenntro Holding Limited the controlling shareholder[162](index=162&type=chunk) [NOTE 16 – Earnings Per Share](index=40&type=section&id=NOTE%2016%20%E2%80%93%20EARNINGS%20PER%20SHARE) Basic and diluted earnings per share for Q1 2021 significantly increased compared to Q1 2020, reflecting higher net income and a slightly increased weighted average number of shares outstanding Earnings Per Share | Metric | Q1 2021 | Q1 2020 | Change ($) | Change (%) | | :------------------------------------------------------------------ | :----------- | :----------- | :--------- | :--------- | | Net income attributable to Greenland Corporation and subsidiaries | $2,128,568 | $256,664 | $1,871,904 | 729.3% | | Weighted average shares of common stock | 10,333,968 | 10,009,198 | 324,770 | 3.24% | | **Basic and diluted net income per share** | **$0.21** | **$0.03** | **$0.18** | **600.0%** | [NOTE 17 – Geographical Sales and Segments](index=40&type=section&id=NOTE%2017%20%E2%80%93%20GEOGRAPHICAL%20SALES%20AND%20SEGMENTS) The company's sales are primarily domestic within the PRC, which saw a substantial increase in Q1 2021 compared to Q1 2020, while international sales also grew but remain a small portion of total revenue. All operations are considered one reportable segment Geographical Sales | Sales Type | Q1 2021 | Q1 2020 | Change ($) | Change (%) | | :------------------ | :------------- | :----------- | :--------- | :--------- | | Domestic Sales | $24,501,039 | $9,863,853 | $14,637,186 | 148.4% | | International Sales | $109,855 | $8,214 | $101,641 | 1237.4% | | **Total** | **$24,610,894** | **$9,872,067** | **$14,738,827** | **149.3%** | - All of the Company's operations are aggregated into one reportable operating segment[184](index=184&type=chunk) [NOTE 18 – Income Taxes](index=40&type=section&id=NOTE%2018%20%E2%80%93%20INCOME%20TAXES) Income tax expense significantly increased in Q1 2021 compared to Q1 2020, with effective tax rates lower than the PRC statutory rate due to the China Super R&D deduction and a reduced rate for a "high-tech enterprise" subsidiary Income Tax Expense and Effective Tax Rate | Metric | Q1 2021 | Q1 2020 | Change ($) | Change (%) | | :---------------- | :----------- | :----------- | :--------- | :--------- | | Income tax expense| $522,616 | $49,187 | $473,429 | 962.5% | | Effective tax rate| 17.62% | 13.04% | 4.58% | 35.12% | - The lower effective tax rates are primarily due to the China Super R&D deduction and Zhejiang Zhongchai's "high-tech enterprise" status, which grants a reduced statutory income tax rate of **15%**[186](index=186&type=chunk)[187](index=187&type=chunk)[241](index=241&type=chunk) [NOTE 19 – Commitments and Contingencies](index=42&type=section&id=NOTE%2019%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) The company has various commitments, including pledged collateral for bank loans using land use rights and property ownership, and facility lease obligations. A prior litigation regarding disclosure sufficiency was settled - The Company has pledged land use rights and property ownership as security for bank loan facilities, with outstanding amounts detailed for various contracts[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk) - A litigation regarding disclosure sufficiency was settled in October 2019, with attorneys' fees discussions completed as of January 25, 2021[194](index=194&type=chunk) Facility Lease Obligations | Years ending March 31, | Amount (USD) | | :--------------------- | :----------- | | 2022 | $767,496 | | 2023 | - | | **Total** | **$767,496** | [NOTE 20 – Related Party Transactions](index=44&type=section&id=NOTE%2020%20%E2%80%93%20RELATED%20PARTY%20TRANSACTIONS) This note details the company's related parties and summarizes balances due to and from them, as well as funds lending activities. A significant amount due from the controlling shareholder, Cenntro Holding Limited, has an extended repayment date - Cenntro Holding Limited is the controlling shareholder, and Peter Zuguang Wang is the Chairman of the Company, with other related parties under common control or management[199](index=199&type=chunk) Due to Related Parties | Due to Related Parties (USD) | March 31, 2021 | December 31, 2020 | Change ($) | Change (%) | | :--------------------------- | :------------- | :---------------- | :--------- | :--------- | | Sinomachinery Holding Limited| $1,775,869 | $1,775,869 | $0 | 0.00% | | Zhejiang Kangchen Biotechnology Co., Ltd | - | $64,505 | $(64,505) | -100.00% | | Zhejiang Zhonggong Machinery Co., Ltd. | $474,913 | $538,166 | $(63,253) | -11.75% | | Xinchang County Jiuxin Investment Management Partnership (LP) | $3,567,050 | $4,347,985 | $(780,935) | -17.96% | | **Total** | **$8,088,221** | **$9,051,119** | **$(962,898)** | **-10.64%** | Due from Related Parties-current | Due from Related Parties-current (USD) | March 31, 2021 | December 31, 2020 | Change ($) | Change (%) | | :------------------------------------- | :------------- | :---------------- | :--------- | :--------- | | Cenntro Holding Limited | $38,377,544 | $38,535,171 | $(157,627) | -0.41% | | **Total** | **$38,380,597** | **$38,535,171** | **$(154,574)** | **-0.40%** | [NOTE 21 – Subsequent Events](index=47&type=section&id=NOTE%2021%20%E2%80%93%20SUBSEQUENT%20EVENTS) Management has evaluated subsequent events through the report date and found no material events requiring adjustments or disclosure in the financial statements - No material subsequent events requiring adjustments or disclosure were identified by management through the date of the report[208](index=208&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operation](index=48&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATION) This section provides management's perspective on the company's financial condition and operational results for the three months ended March 31, 2021, highlighting significant revenue and net income growth, the impact of COVID-19, and liquidity management strategies - The discussion covers operations and financial condition for the three months ended March 31, 2021, and should be read with the consolidated financial statements[210](index=210&type=chunk) - Forward-looking statements are subject to risks and uncertainties, including the impact of COVID-19, which could cause actual results to differ materially[6](index=6&type=chunk)[210](index=210&type=chunk) [Overview](index=48&type=section&id=Overview) Greenland Technologies Holding Corporation, formed from a reverse merger with Zhongchai Holding in 2019, is a manufacturer of transmission products for material handling machinery in China and has expanded into electric industrial vehicles, with its first model expected in late 2021 - Greenland Technologies Holding Corporation was formed from a reverse merger with Zhongchai Holding in October 2019[211](index=211&type=chunk)[214](index=214&type=chunk) - The company manufactures traditional transmission products for material handling machinery in China and is developing electric industrial vehicles, with the first model anticipated in Q3 or Q4 2021[217](index=217&type=chunk)[220](index=220&type=chunk) - Revenue increased by **149.3%** to **$24.61 million** for the three months ended March 31, 2021, compared to **$9.87 million** in the prior year, driven by increased demand and processing of backlogged orders[219](index=219&type=chunk) [Impact of COVID-19 Pandemic on Our Operations and Financial Performance](index=50&type=section&id=Impact%20of%20COVID-19%20Pandemic%20on%20Our%20Operations%20and%20Financial%20Performance) The COVID-19 pandemic initially caused temporary closures and supply chain disruptions in early 2020, negatively impacting revenue. However, business operations gradually recovered from late March 2020, leading to increased revenues in Q1 2021 from processing backlogged orders - The COVID-19 pandemic led to temporary closure of operating offices and manufacturing in Zhejiang Province from February to end of February 2020, and limited supplier ability[222](index=222&type=chunk)[223](index=223&type=chunk) - Business operations gradually recovered from late March 2020, and backlogged orders contributed to increased revenues in Q1 2021[223](index=223&type=chunk) - The future impact of COVID-19 remains uncertain due to ongoing global pandemic conditions[224](index=224&type=chunk) [Results of Operations](index=50&type=section&id=Results%20of%20Operations) The company achieved substantial financial growth in Q1 2021 compared to Q1 2020, with revenues increasing by 149.3% and net income by 644.7%, driven by higher sales volume and improved gross margins Key Financial Performance Metrics | Metric | Q1 2021 | Q1 2020 | Change ($) | Change (%) | | :------------------------------------ | :----------- | :----------- | :--------- | :--------- | | Revenues | $24,610,894 | $9,872,067 | $14,738,827 | 149.3% | | Gross Profit | $5,104,387 | $1,923,948 | $3,180,439 | 165.3% | | Income from operations | $2,854,473 | $68,400 | $2,786,073 | 4073.2% | | **Net income** | **$2,443,239** | **$328,083** | **$2,115,156** | **644.7%** | [Overview](index=50&type=section&id=Overview_Results_of_Operations) The financial overview for Q1 2021 shows significant year-over-year growth across key revenue and profit metrics [Components of Results of Operations](index=51&type=section&id=Components%20of%20Results%20of%20Operations) This section breaks down the key financial components contributing to the company's performance [Revenue](index=51&type=section&id=Revenue) Revenue for Q1 2021 increased by 149.3% to $24.61 million, primarily due to the recovery from COVID-19 impacts and the processing of backlogged orders - Revenue for Q1 2021 was approximately **$24.61 million**, an increase of **149.3%** (**$14.74 million**) from Q1 2020[229](index=229&type=chunk) - The increase was attributed to the recovery from COVID-19 lockdowns and the processing of backlogged orders[229](index=229&type=chunk) [Cost of Goods Sold](index=51&type=section&id=Cost%20of%20Goods%20Sold) Cost of goods sold increased by 145.4% to $19.51 million in Q1 2021, directly correlating with the increase in sales volume - Cost of goods sold increased by **145.4%** (**$11.56 million**) to **$19.51 million** in Q1 2021, driven by increased sales volume[230](index=230&type=chunk) [Gross Profit](index=51&type=section&id=Gross%20Profit) Gross profit surged by 165.3% to $5.10 million in Q1 2021, with gross margins improving to 20.7% from 19.5% in Q1 2020, mainly due to decreased procurement costs - Gross profit increased by **165.3%** (**$3.18 million**) to **$5.10 million** in Q1 2021[231](index=231&type=chunk) - Gross margins improved from **19.5%** in Q1 2020 to **20.7%** in Q1 2021, primarily due to a decrease in procurement costs[231](index=231&type=chunk) [Operating Expense](index=52&type=section&id=Operating%20Expense) Total operating expenses increased by 21.3% to $2.25 million in Q1 2021, primarily driven by higher selling and R&D expenses, partially offset by a decrease in general and administrative expenses Operating Expense by Category | Operating Expense Category | Q1 2021 | Q1 2020 | Change ($) | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | :--------- | | Selling expenses | $379,230 | $216,841 | $162,389 | 74.9% | | General and administrative expenses | $911,139 | $1,074,409 | $(163,270) | -15.2% | | Research and development expenses | $959,545 | $564,298 | $395,247 | 70.0% | | **Total Operating Expenses** | **$2,249,914** | **$1,855,548** | **$394,366** | **21.3%** | [Selling Expense](index=52&type=section&id=Selling%20Expense) Selling expenses increased by 74.9% to $0.38 million in Q1 2021, mainly due to the increase in sales - Selling expenses increased by **74.9%** (**$0.16 million**) to **$0.38 million** in Q1 2021, primarily due to increased sales[234](index=234&type=chunk) [General and Administrative Expenses](index=52&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses decreased by 15.2% to $0.91 million in Q1 2021, mainly attributable to a reduction in administrative expenditure - General and administrative expenses decreased by **15.2%** (**$0.16 million**) to **$0.91 million** in Q1 2021, primarily due to decreased administrative expenditure[235](index=235&type=chunk) [Research and Development (R&D) Expenses](index=52&type=section&id=Research%20and%20Development%20(R%26D)%20Expenses) R&D expenses increased by 70.0% to $0.96 million in Q1 2021, reflecting a significant increase in the company's R&D activities - R&D expenses increased by **70.0%** (**$0.40 million**) to **$0.96 million** in Q1 2021, due to a significant increase in R&D activities[236](index=236&type=chunk) [Income from Operations](index=52&type=section&id=Income%20from%20Operations) Income from operations saw a dramatic increase of 4,073.2% to $2.85 million in Q1 2021, up from $0.07 million in Q1 2020 - Income from operations increased by **$2.78 million** (**4,073.2%**) to **$2.85 million** in Q1 2021[237](index=237&type=chunk) [Interest Income and Interest Expenses](index=52&type=section&id=Interest%20Income%20and%20Interest%20Expenses) Interest income decreased by 86.2% to $0 million in Q1 2021 due to less cash deposited in banks, while interest expenses decreased by 44.0% to $0.18 million due to a reduction in short-term loans - Interest income decreased by **86.2%** (**$0.03 million**) in Q1 2021 due to less cash deposited in banks[237](index=237&type=chunk) - Interest expenses decreased by **44.0%** (**$0.14 million**) to **$0.18 million** in Q1 2021, primarily due to a reduction in short-term loans[238](index=238&type=chunk) [Other Income](index=52&type=section&id=Other%20Income) Other income decreased by 51.9% to $0.29 million in Q1 2021, mainly due to a decrease in exchange gain - Other income decreased by **51.9%** (**$0.31 million**) to **$0.29 million** in Q1 2021, primarily due to a decrease in exchange gain[239](index=239&type=chunk) [Income Taxes](index=53&type=section&id=Income%20Taxes) Income tax expense increased significantly to $0.52 million in Q1 2021, compared to $0.05 million in Q1 2020, reflecting higher taxable income - Income tax expense was approximately **$0.52 million** in Q1 2021, compared to **$0.05 million** in Q1 2020[241](index=241&type=chunk) - The PRC operating subsidiary, Zhejiang Zhongchai, benefits from a reduced **15%** income tax rate due to its "high-tech enterprise" status[241](index=241&type=chunk) [Net Income](index=53&type=section&id=Net%20Income) Net income for Q1 2021 was $2.44 million, a substantial increase of $2.11 million compared to $0.33 million in Q1 2020 - Net income for Q1 2021 was approximately **$2.44 million**, an increase of **$2.11 million** from Q1 2020[244](index=244&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) The company primarily funds operations through cash flow, bank loans, and shareholder support, expecting sufficient capital for the next 12 months. It manages liquidity by improving collections and seeking lower-cost government-supported loans - The Company funds working capital primarily through equity contributions, cash flow from operations, short-term bank loans, and bank acceptance notes[247](index=247&type=chunk) - Management believes existing funding sources will be sufficient for operations for the next 12 months, expecting positive cash flow[250](index=250&type=chunk) - The Company plans to maintain its current debt structure, rely on governmentally supported loans, and improve collection efforts on accounts receivable[247](index=247&type=chunk)[249](index=249&type=chunk) [Cash and Cash Equivalents](index=55&type=section&id=Cash%20and%20Cash%20Equivalents) Cash and cash equivalents increased by 13.04% to $8.09 million as of March 31, 2021, primarily due to an increase in accounts payable - Cash and cash equivalents increased by **13.04%** (**$0.93 million**) to **$8.09 million** as of March 31, 2021[253](index=253&type=chunk) - The increase was mainly attributable to the increase of accounts payable[253](index=253&type=chunk) [Restricted Cash](index=55&type=section&id=Restricted%20Cash) Restricted cash decreased by 8.28% to $2.06 million as of March 31, 2021, due to an increase in mortgaged assets - Restricted cash decreased by **8.28%** (**$0.19 million**) to **$2.06 million** as of March 31, 2021[254](index=254&type=chunk) - The decrease was due to the increase of mortgaged assets[254](index=254&type=chunk) [Accounts Receivable](index=55&type=section&id=Accounts%20Receivable) Accounts receivable increased by 69.8% to $21.07 million as of March 31, 2021, attributed to slowed collection efforts due to the COVID-19 outbreak - Accounts receivable increased by **69.8%** (**$8.66 million**) to **$21.07 million** as of March 31, 2021[255](index=255&type=chunk) - The increase was due to slowed collection efforts caused by the COVID-19 outbreak[255](index=255&type=chunk) - A provision for doubtful accounts of **$0.98 million** was recorded as of March 31, 2021, based on aging analysis and expected collectability[256](index=256&type=chunk) [Due from Related Party](index=55&type=section&id=Due%20from%20Related%20Party) The amount due from related parties, primarily Cenntro Holding Limited, remained stable at $38.38 million as of March 31, 2021, with repayment extended to April 27, 2022 - Due from related party was **$38.38 million** as of March 31, 2021, primarily from Cenntro Holding Limited[257](index=257&type=chunk) - Repayment from Cenntro Holding Limited has been extended to April 27, 2022[257](index=257&type=chunk) - Failure of Cenntro Holding Limited to repay could have a material negative impact on the balance sheet[257](index=257&type=chunk) [Notes Receivable](index=56&type=section&id=Notes%20Receivable) Notes receivable increased by 5.76% to $32.58 million as of March 31, 2021, with expected collection within six months - Notes receivable increased by **5.76%** (**$1.78 million**) to **$32.58 million** as of March 31, 2021[259](index=259&type=chunk) - These notes are expected to be collected within six months[259](index=259&type=chunk) [Working Capital](index=56&type=section&id=Working%20Capital) Working capital decreased by $4.41 million to $33.25 million as of March 31, 2021, compared to December 31, 2020 - Working capital was approximately **$33.25 million** as of March 31, 2021, a decrease of **$4.41 million** from **$28.84 million** as of December 31, 2020[260](index=260&type=chunk) [Cash Flow](index=56&type=section&id=Cash%20Flow) The company experienced a net cash outflow from operating activities but a significant inflow from financing activities in Q1 2021, resulting in a net increase in cash and cash equivalents and restricted cash Cash Flow Summary | Cash Flow Activity | Q1 2021 | Q1 2020 | Change ($) | | :---------------------------------------------------------- | :----------- | :----------- | :--------- | | Net cash provided by operating activities | $(3,998,147) | $4,040,995 | $(8,039,142) | | Net cash provided by (used in) investing activities | $(65,028) | $(141,861) | $76,833 | | Net cash provided by (used in) financing activities | $4,871,033 | $(678,495) | $5,549,528 | | **Net increase in cash and cash equivalents and restricted cash** | **$807,858** | **$3,220,639** | **$(2,412,781)** | [Operating Activities](index=56&type=section&id=Operating%20Activities) Net cash used in operating activities was $(4.00) million in Q1 2021, a significant shift from a $4.04 million inflow in Q1 2020, primarily due to changes in accounts receivable and inventories - Net cash provided by operating activities was **$(4.00) million** in Q1 2021, compared to **$4.04 million** in Q1 2020[262](index=262&type=chunk) - Main cash outflows in Q1 2021 were increases in accounts receivable (**$8.78 million**) and inventories (**$2.66 million**)[262](index=262&type=chunk) [Investing Activities](index=56&type=section&id=Investing%20Activities) Net cash used in investing activities decreased to $(0.07) million in Q1 2021 from $(0.14) million in Q1 2020, mainly due to proceeds from government grants partially offsetting purchases of long-term assets - Net cash used in investing activities was approximately **$(0.07) million** in Q1 2021, compared to **$(0.14) million** in Q1 2020[264](index=264&type=chunk)[266](index=266&type=chunk) - Q1 2021 investing activities included **$0.08 million** from government grants for construction, offset by **$0.15 million** for long-term asset purchases[264](index=264&type=chunk) [Financing Activities](index=57&type=section&id=Financing%20Activities) Net cash provided by financing activities was $4.87 million in Q1 2021, a significant turnaround from a $0.68 million outflow in Q1 2020, driven by proceeds from short-term bank loans and notes payable, partially offset by repayments - Net cash provided by financing activities was approximately **$4.87 million** in Q1 2021, a significant increase from a **$0.68 million** outflow in Q1 2020[267](index=267&type=chunk) - Q1 2021 inflows included **$0.77 million** from short-term bank loans and **$4.80 million** from notes payable, offset by **$1.54 million** in short-term loan repayments and **$1.08 million** in related party loan repayments[267](index=267&type=chunk) [Credit Risk](index=57&type=section&id=Credit%20Risk) Greenland faces credit risk primarily from unsecured accounts receivable, managed through credit approvals, limits, and monitoring based on industry, geography, and customer type - Credit risk is significant, primarily from unsecured accounts receivable, and is managed through credit approvals, limits, and monitoring procedures[268](index=268&type=chunk) - Credit risk is evaluated based on customer's probability of default, financial position, and future development[268](index=268&type=chunk) [Liquidity Risk](index=57&type=section&id=Liquidity%20Risk) The company manages liquidity risk by analyzing its financial position and monitoring conditions to ensure sufficient capital resources, resorting to additional short-term funding from financial institutions if necessary - Liquidity risk is managed by financial position analysis and monitoring procedures to ensure sufficient capital resources[269](index=269&type=chunk) - The Company may obtain additional short-term funding from financial institutions to address liquidity shortages[269](index=269&type=chunk) [Inflation Risk](index=57&type=section&id=Inflation%20Risk) Greenland is exposed to inflation risk, where increases in raw material and overhead costs could adversely affect operating results if product selling prices do not keep pace - Inflationary factors, such as increases in raw material and overhead costs, could impair operating results if selling prices do not increase proportionally[270]