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Planet Green (PLAG) - 2024 Q4 - Annual Report
Planet Green Planet Green (US:PLAG)2025-04-11 20:00

PART I Business Planet Green Holdings Corp. operates diverse consumer, chemical, and advertising businesses primarily in China, facing significant operational and legal risks - The company operates through subsidiaries in the PRC, Hong Kong, and Canada, with business segments in consumer products (beef, tea), chemical products (ethanol fuel), and online advertising1524 - The company faces significant legal and operational risks due to its substantial operations in China, including potential government intervention, regulatory changes, and restrictions on transferring cash out of the PRC. As of the report date, no PRC authority has denied permission for its U.S. listing161719 - On May 31, 2024, the company completed a 1-for-10 reverse stock split, reducing authorized common stock from 1 billion to 100 million shares4950 - On April 1, 2024, the company disposed of its 100% equity interest in Allinyson Ltd. for $1.0057 Business Segments The company's operations are divided into three main segments: consumer products (beef, tea), chemical products (ethanol fuel), and online advertising, each with distinct operational focuses - Consumer Products: Shandong Yunchu imports and distributes beef, while Xianning Bozhuang produces and sells cyan brick, black, and green tea in China262728 - Chemical Business: Jingshan Sanhe researches, manufactures, and distributes ethanol fuel products in China from its 11,000-square-meter facility33 - Advertising Business: Fast Approach operates a demand-side platform (DSP) that connects North American advertisers directly to the Chinese market37 Organizational Structure and Corporate Actions Planet Green, a Nevada holding company, has a complex subsidiary structure in PRC, Hong Kong, and Canada, marked by acquisitions, VIE removals, and a 1-for-10 reverse stock split, faces PRC cash transfer restrictions - The company executed a 1-for-10 reverse stock split effective May 31, 2024, to manage its stock structure49 - The company has actively acquired subsidiaries and restructured to remove VIE agreements, such as with Xianning Bozhuang in August 2021 and Jingshan Sanhe in September 20215254 - Cash transfers from PRC subsidiaries to the U.S. holding company are subject to PRC laws on foreign exchange, which may restrict the company's ability to distribute dividends or satisfy liquidity requirements outside of China165859 Manufacturing and Operations The company operates manufacturing facilities in China for tea and chemical fuels, with a total of 62 employees and 12 patents related to chemical production processes Production Capacity by Facility | Facility | Product Portfolio | Capacity | | :--- | :--- | :--- | | Xianning Bozhuang | Cyan brick tea, black tea, green tea | 5,020 tons/year | | Jingshan Sanhe | Alcohol based clean fuel, liquid wax, etc. | 300,000 tons/year (ethanol fuel), 3,000 tons/year (fuel additive) | - The company holds 12 practical patents through its subsidiary Jingshan Sanhe, related to diesel exhaust cleaners, production devices, and mixing tanks78 Employee Distribution (as of Dec 31, 2024) | Department | Number of Employees | | :--- | :--- | | Production | 8 | | Purchasing | 3 | | Research and Development | 2 | | Quality Control | 2 | | Sales | 14 | | Finance | 10 | | Management | 11 | | Administration | 12 | | Total | 62 | Risk Factors As a smaller reporting company, Planet Green is not required to include a detailed risk factors section in this Form 10-K, directing investors to its previously filed Form S-3 - The company, being a smaller reporting company, is not obligated to list risk factors in this annual report91 - Investors are advised to consult the Registration Statement on Form S-3 filed on September 17, 2021, for a description of investment risks91 Cybersecurity The company lacks a formal cybersecurity risk management program and dedicated personnel, relying on third-party security measures, with no material incidents reported as of the current date - The company does not have a formal cybersecurity risk management program and relies on the digital technologies and security processes of third parties93 - The board of directors is responsible for overseeing cybersecurity risks, but the company lacks dedicated personnel or sufficient resources for this purpose9394 - No cybersecurity incidents have materially affected the company's business, operations, or financial condition as of the report date94 Properties The company's primary facilities in China include owned land use rights for tea production and leased properties for chemical production and offices, noting all land in China is government-owned Company Facilities | Facility | Location | Size (Square Meters) | Ownership | | :--- | :--- | :--- | :--- | | Xianning Bozhuang | Xianning City, Hubei Province, PRC | 33,333 | Land Use Rights Obtained | | Jingshan Sanhe | Jingshan City, Hubei Province, PRC | 11,018 | Leased | | Shandong Yunchu | Qingdao City, Shandong Province | 178 | Leased | - In China, all land is owned by the government. The company holds land use rights for industrial purposes, which are granted for periods up to 50 years and are transferable97 Legal Proceedings The company and its subsidiaries face several legal disputes, including claims for breach of contract, alleged debt transfer, construction payments, and unpaid agency import fees - A former employee, Daqi Cui, filed a complaint for breach of employment contract seeking $609,145. The case is ongoing after an amended complaint was filed98 - Subsidiary Shandong Yunchu is being sued by China Supply and Marketing for an outstanding amount of RMB 7,012,335 ($960,686) related to an alleged debt transfer agreement, which Shandong Yunchu contests99 - Subsidiary Xianning Bozhuang was ordered by a court to pay RMB 867,326 ($118,823) for outstanding construction fees and is in the process of making payments100 - Jianfa Logistics sued subsidiary Shandong Yunchu for RMB 2,817,441 ($385,988) in unpaid fees. A court ruled against Shandong Yunchu, but its shareholder, Xianning Jiayi, has appealed the joint liability ruling101102 PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on NYSE American under "PLAG", with no anticipated cash dividends, and has conducted multiple unregistered stock issuances for acquisitions and capital raising - The company's common stock is listed on the NYSE American with the trading symbol "PLAG"105 - The company does not expect to pay any cash dividends in the foreseeable future, retaining earnings for business development107 - The company conducted multiple issuances of unregistered common stock between 2019 and 2022 to fund acquisitions and raise capital108119 Management's Discussion and Analysis of Financial Condition and Results of Operations In FY2024, net revenues sharply declined by 62% to $6.73 million, while net loss decreased to $7.33 million, raising substantial doubt about the company's going concern ability Results of Operations (In Thousands of USD) | | 2024 | 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net revenues | 6,730 | 17,660 | (10,930) | (62) | | Gross profit | 762 | 1,584 | (822) | (52) | | Operating loss | (6,664) | (6,563) | (101) | 2 | | Net loss | (7,330) | (20,844) | 13,514 | (65) | - Net revenues decreased by 62% in 2024, driven by a drop in food product sales from $14.32 million in 2023 to $2.04 million in 2024, attributed to the adverse effects of COVID-19123 - The company has incurred a net loss from continuing operations of $7.46 million for FY2024 and had a working capital deficit of $6.12 million, raising substantial doubt about its ability to continue as a going concern132252 Cash Flows Summary (In thousands of U.S. dollars) | | For the Year Ended Dec 31, 2024 | For the Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | 929 | (5,282) | | Net cash (used in) provided by investing activities | (5) | 2,471 | | Net cash (used in) provided by financing activities | (972) | 2,888 | Controls and Procedures Management concluded that the company's disclosure controls and procedures, as well as its internal controls over financial reporting, were ineffective as of December 31, 2024, due to insufficient skilled accounting personnel, with remediation plans underway - Management concluded that as of December 31, 2024, the company's disclosure controls and procedures were not effective148 - A material weakness was identified in internal controls over financial reporting due to not having sufficient and skilled accounting personnel with adequate experience in U.S. GAAP150 - Remediation plans include providing U.S. GAAP training to the current team and recruiting more experienced accounting and financial personnel151 PART III Directors, Executive Officers and Corporate Governance This section details the company's leadership, including CEO Bin Zhou and CFO Lili Hu, and its governance structure with three independent directors serving on key committees and a Code of Ethics in place Directors and Officers | Name | Age | Position | | :--- | :--- | :--- | | Bin Zhou | 35 | Chairman and Chief Executive Officer | | Lili Hu | 47 | Chief Financial Officer | | Luojie Pu | 37 | Director | | King Fai Leung | 52 | Director | | Yang Cao | 32 | Director | - The Board of Directors has determined that Luojie Pu, King Fai Leung, and Yang Cao are independent directors under NYSE American and SEC rules190 - The Board has established an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee, with specified memberships and responsibilities165167172 Executive Compensation Compensation for named executive officers and directors for fiscal years 2023 and 2024 is detailed, with CEO Bin Zhou earning $96,000 and CFO Lili Hu $84,000 annually, and no stock or option awards granted Summary Compensation Table (2024) | Name and Principal Position | Salary ($) | | :--- | :--- | | Bin Zhou, Chairman, CEO | 96,000 | | Lili Hu, CFO | 84,000 | | Luojie Pu, Director | 24,000 | | King Fai Leung, Director | 21,600 | | Yang Cao, Director | 24,000 | - No stock awards, option awards, or bonuses were paid to the named executive officers in fiscal years 2023 or 2024179180 Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters As of March 31, 2024, Chairman and CEO Bin Zhou is the sole 5% or greater stockholder, holding 20.51% of outstanding shares, representing all executive officers and directors as a group Beneficial Ownership as of March 31, 2024 | Name and title of beneficial owner | Amount of beneficial ownership | Percent of class | | :--- | :--- | :--- | | Bin Zhou, Chairman, CEO and Director | 1,494,200 | 20.51% | | All executive officers and directors as a group | 1,494,200 | 20.51% | - Ownership percentages are based on 7,282,714 shares of common stock outstanding as of December 31, 2024185 Certain Relationships and Related Transactions, and Director Independence No disclosable related party transactions occurred, and the Board has determined that three of its members are independent directors according to NYSE American listing standards - No disclosable related party transactions occurred188 - The Board has identified Luojie Pu, King Fai Leung, and Yang Cao as independent directors190 Principal Accounting Fees and Services The company paid its independent registered public accounting firm, YCM CPA INC., $400,000 in total accounting fees for both FY2023 and FY2024, exclusively for audit services Accounting Fees | | 12/31/2024 | 12/31/2023 | | :--- | :--- | :--- | | Accounting fees | $400,000 | $400,000 | | Total | $400,000 | $400,000 | - The independent auditor is YCM CPA INC., and the fees were solely for audit services192 PART IV Exhibits, Financial Statement Schedules This section lists key documents filed as exhibits to the Form 10-K, including articles of incorporation, bylaws, subsidiary lists, and CEO/CFO certifications - The financial statements are referenced as beginning on page F-1 of the annual report194 - Key filed exhibits include a list of subsidiaries (21.1), CEO and CFO certifications (31.1, 31.2, 32.1, 32.2), and Inline XBRL data files195 Financial Statements Report of Independent Registered Public Accounting Firm The auditor's opinion issued a fair presentation opinion but included a "Going Concern" paragraph due to recurring losses and deficits, identifying goodwill impairment as a Critical Audit Matter - The auditor's opinion concludes that the financial statements are fairly presented in conformity with U.S. GAAP206 - A "Going Concern" paragraph was included, citing the company's accumulated deficit, working capital deficit, continued net losses, and negative cash flows from operations as factors that raise substantial doubt about its ability to continue207 - The evaluation of the carrying value of goodwill ($4.72 million) was identified as a Critical Audit Matter, requiring complex judgment regarding projections of revenue, discount rates, and EBITDA211213 Consolidated Financial Statements The consolidated financial statements show a decline in Total Assets from $42.6 million to $25.4 million and Total Liabilities from $23.2 million to $13.7 million, with a net loss of $7.33 million in 2024 Consolidated Balance Sheet Highlights (As of Dec 31) | (In thousands of USD) | 2024 | 2023 | | :--- | :--- | :--- | | Total Current Assets | 7,191 | 22,363 | | Total Assets | 25,417 | 42,630 | | Total Current Liabilities | 13,312 | 23,159 | | Total Liabilities | 13,723 | 23,190 | | Total Shareholders' Equity | 11,694 | 19,440 | Consolidated Statement of Operations Highlights (For Year Ended Dec 31) | (In thousands of USD) | 2024 | 2023 | | :--- | :--- | :--- | | Net Revenues | 6,730 | 17,660 | | Operating Loss | (6,664) | (6,563) | | Loss from Continuing Operations | (7,457) | (18,220) | | Net Loss | (7,329) | (20,844) | | Loss Per Share (Basic & Diluted) | $(1.00) | $(2.86) | Notes to Consolidated Financial Statements The notes detail the company's going concern uncertainty, accounting for discontinued operations, significant related-party balances, new bank loans, and pending legal contingencies with potential for material financial impact - The company's ability to continue as a going concern is in doubt due to a net loss from continuing operations of $7.46 million in 2024, an accumulated deficit of $148.05 million, and a working capital deficit of $6.12 million252 - In 2024, the company disposed of Allinyson Ltd. and terminated its VIE agreements with Jilin Chuangyuan. These are treated as discontinued operations, with their financial results separated from continuing operations295296 - As of Dec 31, 2024, the company had outstanding balances of $1.98 million due from related parties and $4.34 million due to related parties, primarily for working capital purposes311313 - The company is a defendant in several lawsuits, including one for an outstanding amount of RMB 7.0 million ($960,686) and another for RMB 2.8 million ($385,988), with potential for material financial impact341343