Planet Green (PLAG) - 2024 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements The company's financial statements reveal a challenging position with decreased equity, a significant net loss, and substantial doubt about its ability to continue as a going concern Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $13,118,756 | $12,510,477 | | Total Assets | $41,910,553 | $42,629,996 | | Total Current Liabilities | $22,056,871 | $19,185,697 | | Total Liabilities | $26,403,799 | $23,189,784 | | Total Stockholders' Equity | $15,506,754 | $19,440,212 | Q3 2024 vs Q3 2023 Performance (Three Months Ended Sep 30) | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net Revenues | $1,812,690 | $3,522,666 | | Gross Profit | $116,075 | $132,761 | | Operating Loss | $(1,095,400) | $(1,340,830) | | Net Loss | $(1,185,409) | $(1,279,126) | Nine Months 2024 vs 2023 Performance (Nine Months Ended Sep 30) | Metric | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | | Net Revenues | $5,288,668 | $15,443,644 | | Gross Profit | $546,185 | $471,572 | | Operating Loss | $(3,244,102) | $(3,696,529) | | Net Loss | $(3,986,907) | $(14,764,145) | | Loss per Share (Continuing Ops) | $(0.60) | $(2.05) | Cash Flow Summary (Nine Months Ended Sep 30) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $48,461 | $(4,240,629) | | Net cash (used in) provided by investing activities | $(20,317) | $2,699,069 | | Net cash (used in) provided by financing activities | $(104,628) | $1,527,688 | | Net (decrease) in cash | $(76,484) | $(13,872) | - The company's management has identified conditions that raise substantial doubt about its ability to continue as a going concern, citing a net loss of $4.3 million from continuing operations, an accumulated deficit of $144.7 million, and a working capital deficit of $8.9 million as of September 30, 2024[48][156] - On May 31, 2024, the company effected a reverse stock split where every ten shares of common stock were converted into one new share; all prior period share and per-share data have been adjusted to reflect this split[20][118] - The company consolidates Jilin Chuangyuan Chemical Co, Ltd as a Variable Interest Entity (VIE), which generated revenues of $79,000 and a net loss of $1.44 million for the nine months ended September 30, 2024[89][93] - As of September 30, 2024, the company had significant related-party balances, including $3.1 million due from related parties and $7.7 million due to related parties[105][106][108] - For the nine months ended September 30, 2024, the company had significant customer and supplier concentration, with Customer A accounting for 28% of revenues and Supplier E accounting for 24% of purchases[130][132] Management's Discussion and Analysis (MD&A) Management attributes a 66% revenue decline to stagnant sales, notes strained liquidity with an $8.9 million working capital deficit, and reiterates going concern risk Results of Operations Comparison (Nine Months Ended Sep 30) | (In Thousands of USD) | 2024 | 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net revenues | 5,289 | 15,444 | (10,155) | (66) | | Gross profit | 547 | 472 | 75 | 16 | | Selling and marketing expenses | 105 | 721 | (616) | (85) | | Operating loss | (3,243) | (3,696) | 453 | (12) | | Net loss | (3,986) | (14,764) | 10,778 | (73) | Key Liquidity Metrics | Metric | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $227,492 | $270,317 | | Working Capital Deficit | $8,938,115 | N/A | | Debt to Assets Ratio | 63.0% | 54.4% | - The decrease in nine-month revenue was attributed to stagnant sales of high-grade synthetic fuel products and a decline in food product sales[149] - The increase in nine-month gross profit was primarily due to a significant increase in high-margin advertising revenue from the Fast Approach branch[151] - The company's primary sources of financing have been cash from operations and private placements, and it may need to continue relying on these sources or reduce expenditures[154][157] Quantitative and Qualitative Disclosures About Market Risk The company is a smaller reporting company and is therefore not required to provide these disclosures - As a smaller reporting company defined in Rule 12b-2, the company is not required to provide the information for this item[165] Controls and Procedures Management concluded disclosure controls were ineffective due to a material weakness in internal control over financial reporting - Management concluded that disclosure controls and procedures were not effective as of September 30, 2024[167] - A material weakness was identified in internal control over financial reporting relating to ineffective review and approval procedures over journal entries and financial statement preparation[169] - The control failure resulted in errors not being timely identified, such as the overstatement of income from the discontinued operation related to the disposal of Allinyson Ltd[169] - Remediation plans include enhancing the system of evaluating complex accounting standards, providing better access to accounting literature, and increasing communication among personnel[170] PART II - OTHER INFORMATION Legal Proceedings The company is involved in a breach of contract lawsuit with a former employee seeking over $600,000 in damages - On July 27, 2023, former employee Daqi Cui filed a complaint against the Company for breach of employment contract, seeking $609,145.05 in damages[171] - The Company filed a motion on November 6, 2023, to move the case to the United States District Courthouse and have it dismissed with prejudice[171] Risk Factors No material changes to previously disclosed risk factors have occurred since the April 2023 filing - As of the date of this report, there have been no material changes to the risk factors disclosed in the Company's registration statement Form S3/A filed on April 18, 2023[172] Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the reporting period - Not applicable[173] Other Information There is no other information to report for this period - None[173] Exhibits Filed exhibits include officer certifications required by the Sarbanes-Oxley Act and Inline XBRL data files - Exhibits filed with the report include CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906[174] - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation) are also filed as exhibits[174] Signatures - The report was duly signed on November 14, 2024, by Bin Zhou, Chief Executive Officer, and Lili Hu, Chief Financial Officer[175][176]