PART I. FINANCIAL INFORMATION Financial Statements (unaudited) This section presents Greenland Technologies Holding Corporation's unaudited consolidated financial statements for the periods ended June 30, 2022 Consolidated Balance Sheets Total assets decreased to $150.39 million as of June 30, 2022, from $162.57 million at year-end 2021, while total liabilities also decreased and equity slightly increased Consolidated Balance Sheet Highlights (in U.S. Dollars) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Current Assets | $129,313,092 | $139,305,403 | | Cash and cash equivalents | $3,217,925 | $11,062,590 | | Notes receivable | $33,019,721 | $37,551,121 | | Inventories | $23,948,131 | $25,803,474 | | Total Assets | $150,385,658 | $162,568,442 | | Total Current Liabilities | $71,857,967 | $85,463,224 | | Notes payable-bank acceptance notes | $33,752,065 | $42,093,061 | | Accounts payable | $25,843,583 | $29,064,132 | | Total Liabilities | $73,871,241 | $87,723,776 | | Total Equity | $76,514,417 | $74,844,666 | Consolidated Statements of Operations and Comprehensive Income (Loss) Revenues for the six months ended June 30, 2022, decreased to $49.91 million, while gross profit increased and net income slightly declined Statement of Operations Summary (in U.S. Dollars) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Revenues | $49,909,462 | $52,815,201 | | Gross Profit | $11,207,135 | $10,809,556 | | Income from Operations | $5,579,891 | $6,306,672 | | Net Income | $5,294,224 | $5,595,562 | | Net Income Attributable to Greenland | $3,274,316 | $4,909,321 | | Basic and Diluted EPS | $0.29 | $0.46 | Statement of Operations Summary (in U.S. Dollars) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | Revenues | $20,602,505 | $28,204,307 | | Gross Profit | $4,839,161 | $5,705,169 | | Income from Operations | $2,213,904 | $3,452,199 | | Net Income | $2,379,426 | $3,152,323 | | Net Income Attributable to Greenland | $1,487,264 | $2,780,753 | | Basic and Diluted EPS | $0.13 | $0.26 | Consolidated Statements of Shareholders' Equity Total shareholders' equity increased to $76.51 million as of June 30, 2022, primarily due to net income, offset by negative foreign currency translation - Total equity increased to $76.51 million as of June 30, 2022, up from $74.84 million at the end of 2021. This change was influenced by net income, partially offset by a significant negative foreign currency translation adjustment27 Consolidated Statements of Cash Flows Net cash outflow for the six months ended June 30, 2022, was $9.27 million, primarily due to cash used in operating and financing activities Cash Flow Summary (Six Months Ended June 30) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net Cash Provided By (Used In) Operating Activities | $(1,665,025) | $(778,421) | | Net Cash Provided By (Used In) Investing Activities | $178,127 | $(303,375) | | Net Cash Provided By (Used In) Financing Activities | $(7,784,753) | $12,068,922 | | Net (Decrease) Increase in Cash | $(9,271,651) | $10,987,126 | | Cash at End of Period | $8,037,704 | $20,524,178 | Notes to Consolidated Financial Statements The notes provide detailed information on the company's business, accounting policies, customer concentration, related party transactions, and commitments and contingencies - The company's primary business is developing and manufacturing transmission products for material handling machinery in the PRC. It has launched a new division to produce and sell electric industrial vehicles in the North American market, including electric forklifts, loaders, and excavators373941 - For the six months ended June 30, 2022, two major customers accounted for 21.04% and 12.95% of total revenues, respectively, indicating significant customer concentration123 - As of June 30, 2022, the company had a significant receivable of $37.54 million from its controlling shareholder, Cenntro Holding Limited. The repayment deadline has been extended to June 30, 2024212213 - The company has pledged significant assets, including land use rights, buildings, and notes receivable, as collateral for short-term bank loans and notes payable132137140 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and results for the first six months of 2022, highlighting revenue decline, improved gross margin, and liquidity challenges Overview The company manufactures transmission products in the PRC and is expanding into electric industrial vehicles for North America, operating as a 'controlled company' - The company's core business is manufacturing transmission products for forklifts in the PRC, serving over 100 manufacturers227228 - A new division was launched in December 2020 to focus on electric industrial vehicles, including forklifts, loaders, and excavators, for the U.S. market. A new 54,000 sq ft assembly site in Baltimore, MD is planned for Q3 2022229 - The company is a 'controlled company' under Nasdaq rules, as Chairman Peter Zuguang Wang controls 59.42% of the outstanding ordinary shares through Cenntro Holding Limited230 Results of Operations For the six months ended June 30, 2022, revenue decreased to $49.91 million, gross margin improved, operating expenses rose, and net income declined Financial Performance Summary (Six Months Ended June 30) | Metric | 2022 | 2021 | Change | Variance | | :--- | :--- | :--- | :--- | :--- | | Revenues | $49,909,462 | $52,815,201 | $(2,905,739) | (5.5)% | | Gross Profit | $11,207,135 | $10,809,556 | $397,579 | 3.7% | | Total Operating Expenses | $5,627,244 | $4,502,884 | $1,124,360 | 25.0% | | Income from operations | $5,579,891 | $6,306,672 | $(726,781) | (11.5)% | | Net income | $5,294,224 | $5,595,562 | $(301,338) | (5.4)% | - The decrease in revenue was primarily due to a decrease in sales volume, driven by lower market demand257 - Gross margin increased from 20.5% to 22.5% year-over-year, attributed to a product mix shift towards higher value hydraulic transmission products259 - General and administrative expenses increased by 51.8% due to higher legal and consultancy fees for business expansion and increased staff salaries261 Liquidity and Capital Resources Liquidity is marked by cash decreasing to $3.22 million as of June 30, 2022, a $37.54 million related-party receivable, and reliance on cash flow and bank borrowings Key Liquidity Metrics (as of June 30, 2022) | Metric | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $3.22 million | $11.06 million | | Restricted Cash | $4.82 million | $6.74 million | | Accounts Receivable, net | $18.19 million | $15.92 million | | Due from Related Party | $37.65 million | $39.68 million | | Working Capital | $57.46 million | $53.84 million | - The company has a significant receivable of $37.54 million from its controlling shareholder, Cenntro Holding Limited. Failure to collect this amount could materially impact the balance sheet279 - For the six months ended June 30, 2022, net cash used in operating activities was $1.67 million, and net cash used in financing activities was $7.78 million, primarily due to loan and notes payable repayments283284289 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Greenland is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Greenland is exempt from the requirement to provide quantitative and qualitative disclosures about market risk305 Controls and Procedures Management concluded disclosure controls were ineffective as of June 30, 2022, due to a material weakness in financial reporting personnel, with remedial actions planned - Management concluded that disclosure controls and procedures were ineffective as of June 30, 2022307 - A material weakness was identified due to a lack of sufficient and competent financial reporting and accounting personnel with knowledge of U.S. GAAP and SEC reporting requirements307 - Remedial actions include formalizing policies, recruiting more qualified personnel, providing training, and establishing better oversight for complex transactions308 PART II. OTHER INFORMATION Legal Proceedings Management is not aware of any current or contemplated material legal proceedings involving the company or its affiliates - The company is not aware of any pending or threatened legal proceedings against it or its properties312 Risk Factors This section details significant investment risks, including cash-intensive operations, customer concentration, new business challenges, PRC regulatory uncertainties, and potential delisting Risks Related to our Business and Industry The company faces business risks including cash-intensive operations, significant related-party receivables, customer concentration, new electric vehicle challenges, and limited insurance - The business is cash-intensive and relies on maintaining sufficient liquidity. A significant risk is the $37.54 million owed by its controlling shareholder, Cenntro Holding Limited321349 - Revenues are highly dependent on a few major customers; in 2022, the five largest customers accounted for 48.21% of revenues329 - The new electric industrial vehicle business line presents risks, as the company has limited experience and may face difficulties in development, launch, and market acceptance332334336 - The company has limited insurance coverage in China for product liability, business interruption, or natural disasters344 Risks Related to Doing Business in China Operating in China poses risks from government influence, regulatory uncertainties for overseas listings, evolving data security laws, and potential delisting under the HFCA Act - The PRC government exerts substantial influence over business activities, and changes in laws, regulations, or policies could materially affect operations358367 - There is uncertainty regarding whether approval from the CSRC or other PRC authorities is required for overseas offerings. Failure to obtain such approval, if required, could result in sanctions371374 - Evolving PRC laws on data security, such as the Cybersecurity Review Measures and the Data Security Law, could subject the company to review, fines, or other penalties378381385 - The Holding Foreign Companies Accountable Act (HFCA Act) poses a risk of delisting from Nasdaq if the PCAOB is unable to inspect the company's auditors for two consecutive years409411413 Risks Related to Our Ordinary Shares Risks to ordinary shares include potential price declines from future sales, lack of active trading, no expected dividends, and vulnerability to short seller campaigns - Future sales of ordinary shares by the company or its shareholders could cause the trading price to decline419 - The company does not expect to pay dividends in the foreseeable future, so investors must rely on price appreciation for any return on investment422 - The company may be targeted by short sellers, which could drive down the market price of its shares and require significant resources to defend against425427 Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the six months ended June 30, 2022, that were not previously disclosed - No unregistered sales of equity securities occurred during the period428 Defaults Upon Senior Securities No senior securities were issued or outstanding during the six-month period ended June 30, 2022 - The company had no defaults upon senior securities as none were outstanding428 Mine Safety Disclosures This item is not applicable to the company - Not applicable428 Other Information There is no other information to report for this item - None428 Exhibits This section lists exhibits filed with the Form 10-Q, including articles of association, equity incentive plans, and Sarbanes-Oxley Act certifications - The report includes exhibits such as the Amended and Restated Memorandum and Articles of Association, the 2020 and 2021 Equity Incentive Plans, and CEO/CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act430
Greenland Technologies (GTEC) - 2022 Q2 - Quarterly Report