Planet Green Holdings Corp. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS We are headquartered in Flushing, New York City. After a series of acquisitions and dispositions in 2022 and 2021, our primary business, which is carried out by Shandong Yunchu, Jingshan Sanhe, Jilin Chuangyuan, Fast Approach Inc. and Xianning Bozhuang, is: ● Tea products cultivation, packaging, and sales; ● To sell high-grade synthetic fuel products ● To distribute beef and mutton products. ● To sell f ormaldehyde, urea-formaldehyde glue, methylal, and clean fuel oil ● Online advertising services and mobile games; Results of Operations The following discussion should be read in conjunction with the company’s audited consolidated financial statement for the years ended December 31, 2022, and 2021 and related notes to that. Twelve months ended Increase / Increase / December 31, Decrease Decrease (In Thousands of USD) 2022 2021 ($) (%) Net revenues 44,757 37,768 6,989 19 Cost of revenues 40,405 33,922 6,483 19 Gross profit 4,352 3,846 506 13 Operating expenses: Selling and marketing expenses 2,167 2,053 114 6 General and administrative expenses 7,056 7,221 (165 ) (2 ) Research & Developing expenses 403 808 (406 ) (50 ) Operating loss (5,273 ) (6,236 ) 963 (15 ) Interest expense (624 ) (645 ) 21 (3 ) Other income   1,099 210 889 423 Impairment of goodwill (10,386 ) (3,263 ) (7,122 ) 218 Loss before tax (15,184 ) (9,934 ) (5,250 ) 53 Income tax expense (1,475 ) (56 ) (1,419 ) 2513 loss from continuing operations (16,660 ) (9,990 ) (6,670 ) 67 Net loss from discontinuing operations (9,192 ) - (9,192 ) N/A Net loss (25,851 ) (9,990 ) (15,861 ) 159 Net Revenues . Our net revenues for the twelve months ended December 31, 2022 amounted to $44.76 million, which represents an increase of approximately $6.99 million, or 19%, from $37.77 million for the twelve months ended December 31, 2021. This increase was attributable to the acquisition of certain subsidiaries and VIE in 2022. Cost of Revenues. During the twelve months ended December 31, 2022, we experienced an increase in cost of revenue of $6.48 million or 19%, in comparison to the twelve months ended December 31, 2021, from approximately $33.92 million to $40.41 million. This increase was mainly due to the acquisition of certain subsidiaries and VIE in 2022. Gross Profit . Our gross profit increased by $0.51 million, or 13% to $4.35 million for the twelve months ended December 31, 2022 from $3.85 million for the twelve months ended December 31, 2021. This increase was mainly due to the aforementioned reasons, attributable to the acquisition of certain subsidiaries and VIEs in 2022. 20 Operating Expenses Selling and Marketing Expenses. Our selling and marketing expenses increased by $112,000, or 5%, to $2.17 million for the twelve months ended December 31, 2022 from $2.05 million for the twelve months ended December 31, 2021. The selling and marketing expenses mainly come from transportation and storage cost of $0.72 million; the sales staff salaries cost of $0.36 million and selling commission of $0.43 million. General and Administrative Expenses. We experienced a slight decrease in general and administrative expense of $181,000 from $7.22 million to approximately $7.01 million for the twelve months ended December 31, 2022, compared to the twelve months ended December 31, 2021. This cost decrease was mainly due to the decline in third party service fees. The General and Administrative Expenses mainly come from third party service fees of $1.96 million; administrative staff salary costs of $1.60 million and depreciation; amortization expense of $0.81 million and other daily sporadic management costs. Net Loss Our net loss increased by $15.86 million, or 159%, to a net loss of $25.85 million for the twelve months ended December 31, 2022 from $9.99 million in net loss for the twelve months ended December 31, 2021. This increase was mainly due to losses of disposal of the subsidiary, Anhui Ansheng Petrochemical Equipment Co., Ltd., impairment of goodwill and our effort to expand our business. Going Concern and Capital Resources In assessing our liquidity, we monitor and analyze our cash-on-hand and operating and capital expenditure commitments. Our liquidity needs meet our working capital requirements, operating expenses, and capital expenditure obligations. In the reporting period in the fiscal year 2022, our primary sources of financing have been cash generated from operations and private placements. As of December 31, 2022, we had cash and cash equivalents (including restricted cash) of $93,500 compared to $1.13 million as of December 31, 2021. The debt to assets ratio was 33.16% and 40.41% as of December 31, 2022 and December 31, 2021, respectively. We expect to continue to finance our operations and working capital needs in 2022 from cash generated from operations and, if needed, private financings. Suppose available liquidity is insufficient to meet our operating and loan obligations as they come due. In that case, our plans include pursuing alternative financing arrangements or reducing expenditures as necessary to meet our cash requirements. However, there is no assurance that we will raise additional capital or reduce discretionary spending to provide liquidity if needed. We cannot be sure of the availability or terms of any alternative financing arrangements. The following table provides detailed information about our net cash flow for all financial statement periods presented in this report. Cash Flows Data: For the years ended December 31 (In thousands of U.S. dollars) 2022 2021 Net cash flows used in operating activities (9,012 ) (519 ) Net cash flows used in investing activities (3,854 ) (11,814 ) Net cash flows provided by financing activities 10,841 8,932 21 Operating Activities Net cash used in operating activities from operations was approximately $9.01 million and $0.52 million for the year ended December 31, 2022, and 2021. Net Cash decrease in operating activities for the year ended December 31, 2022, was mainly comprised of non-cash effects of depreciation and amortization expense of approximately $1.48 million, impairment of inventories of approximately $0.2 million, impairment of goodwill of about $10.38 million, loss on disposal of subsidiaries of approximately $9.57 million and the decrease of account receivable of approximately $0.66 million, the reduction in accounts payable of about $0.36 million and the decrease in other payables and accrued liabilities of about $2.97 million. Investing Activities Net cash used in investing activities for the twelve months ended December 31, 2022 was $3.85 million, representing a decrease of $7.96million in net cash used in investing activities from $11.8 million for the same period of 2021. Cash used in investing activities for the year ended December 31, 2022 was mainly comprised of the partial investment payments of approximately $4.1 million that we made in relation to the Xiangtian Energy Co., Ltd. Financing Activities Net cash provided by financing activities for the twelve months ended December 31, 2022, was $10.84 million, representing an increase of $1.91 million in net cash provided by financing activities from $8.93 million for the same period of 2021. This is mainly due to the proceeds from the issuance of common stock. Critical Accounting Policies The preparation of financial statements in conformity with the United States generally accepted accounting principles requires our management to make assumptions, estimates, and judgments that affect the amounts reported in the financial statements, including the notes to that, and related disclosures of commitments contingencies, if any. We consider our critical accounting policies to require the more significant judgments and estimates in preparing financial statements, including those outlined in Note 2 to the financial statements included herein. The Company has evaluated the timing and the impact of the guidance above on the financial statements. As of December 31, 2022, there were no other recently issued accounting standards not yet adopted that would or could have a material effect on the Company’s consolidated financial statements. Off-Balance Sheet Arrangements We do not have any off-balance arrangements. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Not applicable. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL DATA The full text of our audited consolidated financial statements as of December 31, 2022, begins on page F-1 of this annual report on Form 10-K. 22 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None.