Planet Green Holdings Corp. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Financial statements are unaudited and stated in U.S. dollars. The company operates through subsidiaries and VIEs in chemical and fuel products, tea and food products, supply-chain distribution, online advertising and mobile games.
Financial performance and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $4.18 million | $10.26 million | $17.29 million | $37.79 million |
| Gross profit / margin | $0.35 million / 8.4% | $0.70 million / 6.8% | $0.64 million / 3.7% | $2.60 million / 6.9% |
| Operating loss | $1.13 million | $2.11 million | $3.54 million | $4.70 million |
| Net loss | $1.28 million | $2.30 million | $14.76 million | $5.05 million |
| Operating cash flow | — | $(4.24) million | $(10.21) million |
- Cash and current position: Cash was $313,500 at September 30, versus $93,487 at year-end 2022. Current assets were $18.57 million and current liabilities $23.73 million, implying a working-capital deficit of approximately $5.16 million. The going-concern note separately states a $4.77 million deficit; the filing does not reconcile the difference.
- Debt: Current bank loans were $3.48 million, including a $3.48 million loan due November 2023 at a weighted average 7.83% interest rate. Noncurrent loans were $278,559, with an 8.00% rate and June 2025 maturity. The short-term loan is secured by buildings and land-use rights valued at $10.18 million.
- Cash flows: Investing activities provided $2.70 million, primarily reflecting $2.77 million proceeds from investment disposals. Financing provided $1.53 million, including a net increase in related-party balances of $1.59 million. Cash declined by $13,872 before a positive $233,885 exchange-rate effect.
- Other balance-sheet items: Total assets were $49.42 million, total liabilities $24.22 million, and stockholders’ equity $25.20 million. Advances to suppliers were $8.31 million; related-party payables were $6.36 million. Shares outstanding were 72,081,930 at September 30 and November 14, 2023.
Material changes versus comparable periods
- Q3 revenue declined 59% year over year; nine-month revenue fell 54%. Management attributed lower revenue partly to lingering COVID-19 effects and the December 2022 disposal of Anhui Ansheng.
- Nine-month gross profit fell 75%, despite lower selling, marketing and general and administrative expenses. Research and development expense increased 30% to $195,892.
- Nine-month net loss widened to $14.76 million, primarily because of a $10.85 million loss on disposal of an equity-method investment. The company disposed of its 40% Xianning Xiangtian investment in June 2023 for $2.77 million; the reported investment balance fell to $2.79 million from $16.49 million at year-end.
- Nine-month operating cash use improved from $10.21 million to $4.24 million, which management attributed mainly to increased customer advances and other payables. The company reported no common-share issuance in the first nine months of 2023.
Outlook, risks and unusual items
- Going concern: The filing states that substantial doubt exists about the company’s ability to continue as a going concern, citing the nine-month net loss, accumulated deficit, low cash and operating cash outflow. Management expects to rely on operating cash generation and, if needed, private financing or related-party support; it gives no assurance that financing will be available.
- Concentration: Three customers accounted for 20%, 13% and 10% of nine-month revenue. Four suppliers accounted for 30%, 16%, 13% and 11% of purchases, respectively.
- Related parties: Amounts due from related parties were $769,427, including $455,117 due from the CEO/chairman. Amounts due to related parties were $6.36 million; disclosed balances include $959,839 due to the CEO/chairman. Certain disclosed related-party loans are unsecured, non-interest-bearing and due on demand.
- Legal matter: A former employee filed a claim seeking $609,145.05 plus fees and costs. The company filed a motion on November 6, 2023 seeking transfer of the case and dismissal with prejudice. Management’s general contingency disclosure says it does not expect existing claims to have a material adverse impact.
- Controls: Management concluded disclosure controls and procedures were ineffective, based on an evaluation stated to be as of June 30, 2023. It reported no material change in internal control over financial reporting during the most recently completed fiscal quarter.
- Subsequent event: On October 10, 2023, the company announced a one-year strategic partnership between subsidiary Allinyson and MetaMind AI Limited. The filing provides no financial terms or quantified expected impact.
- The company provided no specific financial guidance. It cites PRC operating and regulatory risks, foreign-exchange constraints, bank-deposit risk and refinancing risk.
Key facts for investors to verify
- Reconcile the working-capital deficit: $5.16 million calculated from the balance sheet versus $4.77 million in the going-concern note.
- Review the accounting and recoverability of the $10.85 million investment-disposal loss and the remaining $2.79 million long-term investment.
- Assess the refinancing and repayment plan for the $3.48 million loan due November 2023, including collateral and any subsequent repayment or renewal disclosures.
- Check the apparent equity-statement inconsistency: accumulated deficit is shown as $(134.25) million in the equity statement and $(134.64) million on the balance sheet; the nine-month equity roll-forward also does not clearly reconcile to the reported net loss.
- Monitor related-party balances, supplier/customer concentration, progress on control remediation, the employee lawsuit and any measurable outcomes from the AI partnership.