UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM
For the quarterly period ended
For the transition period from __________ to __________
Commission File number
(Exact name of registrant as specified in charter)
| 001-38605 | ||
| (State or other jurisdiction of | (I.R.S. Employer | |
| United States | ||
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐
As of November 12, 2021, there were
INDEX
i
FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, Financial Statements and Notes to Financial Statements contain forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations and financial conditions. Forward-looking statements may appear throughout this report and other documents we file with the Securities and Exchange Commission (SEC), including without limitation, the following sections: Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q.
Forward-looking statements generally can be identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “will be,” “will continue,” “may,” “could,” “will likely result,” and similar expressions. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. In addition, there is uncertainty about the future development of the COVID-19 pandemic and the impact it may have on the Company’s operations, the demand for the Company’s products or services, global supply chains and economic activity in general. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
ii
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GREENLAND TECHNOLOGIES HOLDING CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2021
TABLE OF CONTENTS
1
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2021 AND DECEMBER 31, 2020
(IN U.S. DOLLARS)
| September 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Short term investment | - | |||||||
| Notes receivables | ||||||||
| Accounts receivable, net of allowance for doubtful accounts of $ | ||||||||
| Inventories | ||||||||
| Due from related parties-current | ||||||||
| Advance to suppliers | ||||||||
| Prepayments and other current assets | ||||||||
| Total Current Assets | $ | $ | ||||||
| Non-current asset | ||||||||
| Property, plant, equipment and construction in progress, net | ||||||||
| Land use rights, net | ||||||||
| Other intangible assets | ||||||||
| Due from related parties – non-current | ||||||||
| Deferred tax assets | ||||||||
| Goodwill | ||||||||
| Operating lease right-of-use assets | ||||||||
| Other non-current assets | ||||||||
| Total non-current assets | $ | $ | ||||||
| TOTAL ASSETS | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
F-1
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2021 AND DECEMBER 31, 2020 (Continued)
(IN U.S. DOLLARS)
| September 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| (Unaudited) | ||||||||
| Current Liabilities | ||||||||
| Short-term bank loans | $ | $ | ||||||
| Notes payable-bank acceptance notes | ||||||||
| Accounts payable | ||||||||
| Customer deposits | ||||||||
| Due to related parties | ||||||||
| Other current liabilities | ||||||||
| Current portion of operating lease liabilities | - | |||||||
| Long-term payable- current portion | ||||||||
| Total current liabilities | $ | $ | ||||||
| Long-term liabilities | ||||||||
| Long term operating lease liabilities | - | |||||||
| Long-term payables | ||||||||
| Other long-term liabilities | ||||||||
| Total long-term liabilities | $ | $ | ||||||
| TOTAL LIABILITIES | $ | $ | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| EQUITY | ||||||||
| Additional paid-in capital | ||||||||
| Statutory reserves | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss | ( | ) | ||||||
| Total shareholders’ equity | $ | $ | ||||||
| Non-controlling interest | ||||||||
| TOTAL EQUITY | $ | $ | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
F-2
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(UNAUDITED, IN U.S. DOLLARS)
For
the three months ended | For
the nine months ended | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| REVENUES | $ | $ | $ | $ | ||||||||||||
| COST OF GOODS SOLD | ||||||||||||||||
| GROSS PROFIT | ||||||||||||||||
| Selling expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Research and development expenses | ||||||||||||||||
| Total operating expenses | $ | $ | $ | $ | ||||||||||||
| INCOME FROM OPERATIONS | $ | $ | $ | $ | ||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income | ( | ) | ( | ) | ||||||||||||
| INCOME BEFORE INCOME TAX | $ | $ | $ | $ | ||||||||||||
| INCOME TAX | ||||||||||||||||
| NET INCOME | $ | $ | $ | $ | ||||||||||||
| LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST | ||||||||||||||||
| NET INCOME ATTRIBUTABLE TO GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES | $ | $ | $ | $ | ||||||||||||
| OTHER COMPREHENSIVE INCOME (LOSS): | ( | ) | ( | ) | ||||||||||||
| Unrealized foreign currency translation income (loss) attributable to Greenland technologies holding corporation and subsidiaries | ( | ) | ( | ) | ||||||||||||
| Unrealized foreign currency translation income (loss) attributable to Noncontrolling interest | ( | ) | ||||||||||||||
| Comprehensive income | ||||||||||||||||
| Noncontrolling interest | ||||||||||||||||
| WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING: | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
| NET INCOME PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY: | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
F-3
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(UNAUDITED, IN U.S. DOLLARS, EXCEPT FOR SHARE DATA)
| Ordinary Shares | Additional | Accumulated Other | Non- | |||||||||||||||||||||||||||||
| No Par Value | Paid-in | Comprehensive | Statutory | Retained | controlling | |||||||||||||||||||||||||||
| Shares | Amount | Capital | Income/(loss) | Reserve | Earnings | Interest | Total | |||||||||||||||||||||||||
| Balance at December 31, 2019 | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Restricted stock grants | ||||||||||||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||||||||||
| Transfer to statutory reserve | - | ( | ) | |||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance at March 31, 2020 | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||||||||||
| Transfer to statutory reserve | - | ( | ) | |||||||||||||||||||||||||||||
| Dividend | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||||||
| Balance at June 30, 2020 | ( | ) | ||||||||||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||||||||||
| Transfer to statutory reserve | - | ( | ) | - | ||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||||||
| Balance at September 30, 2020 | ||||||||||||||||||||||||||||||||
| Balance at December 31, 2020 | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Restricted stock grants | ||||||||||||||||||||||||||||||||
| Sale of stock and warrants | ||||||||||||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance at March 31, 2021 | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Sale of stock and warrants | ||||||||||||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||||||||||
| Transfer to statutory reserve | - | ( | ) | |||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||||||
| Balance at June 30, 2021 | ||||||||||||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||||||
| Balance at September 30, 2021 | ||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
F-4
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(UNAUDITED, IN U.S. DOLLARS)
For
the nine months ended | ||||||||
| 2021 | 2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Loss on disposal of property and equipment | ( | ) | ||||||
| Increase in allowance for doubtful accounts | ||||||||
| Increase (Decrease) in allowance for notes receivable | ( | ) | ||||||
| Increase (Decrease) in provision for inventory | ( | ) | ||||||
| Deferred tax assets | ( | ) | ||||||
| Stock based compensation expense | ||||||||
| Loss on prepayment of financing lease obligations | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease (Increase) In: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Notes receivable | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ( | ) | ||||
| Advance to suppliers | ( | ) | ||||||
| Other current and noncurrent assets | ||||||||
| Increase (Decrease) In: | ||||||||
| Accounts payable | ||||||||
| Customer deposits | ( | ) | ||||||
| Other current liabilities | ( | ) | ( | ) | ||||
| Income tax payable | ||||||||
| Due to related parties | ( | ) | ||||||
| Long-term payables-unamortized deferred financing costs | ( | ) | ||||||
| Other long-term liabilities | ( | ) | ( | ) | ||||
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | $ | ( | ) | $ | ||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
F-5
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020 (Continued)
(UNAUDITED, IN U.S. DOLLARS)
For
the nine months ended | ||||||||
| 2021 | 2020 | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of Long term assets | $ | ( | ) | $ | ( | ) | ||
| Proceeds from government grants for construction | ||||||||
| NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | $ | ( | ) | $ | ( | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from short-term bank loans | $ | $ | ||||||
| Repayments of short-term bank loans | ( | ) | ( | ) | ||||
| Notes payable | ||||||||
| Proceeds from related parties | ( | ) | ||||||
| Repayment of loans from related parties | ( | ) | ||||||
| Repayment of loans from third parties | ( | ) | ( | ) | ||||
| Proceeds from third parties | ( | ) | ||||||
| Dividend paid | ||||||||
| Proceeds received from financing lease obligation | ( | ) | ||||||
| Prepayment of lease-financing obligations | ||||||||
| Payment of principal on financing lease obligation | ( | ) | ( | ) | ||||
| Proceeds from equity and debt finaning | ( | ) | ||||||
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | $ | $ | ||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | $ | $ | ||||||
| Effect of exchange rate changes on cash | ) | |||||||
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR | ||||||||
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $ | $ | ||||||
| Bank balances and cash | ||||||||
| Bank balances and cash included in assets classified as restricted cash | ||||||||
| Supplemental Disclosure of Cash Flow Information | ||||||||
| Income taxes paid | ||||||||
| Interest paid | ||||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
F-6
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES
Greenland Technologies Holding Corporation, formerly known as Greenland Acquisition Corporation (“Greenland” or the “Company”), was incorporated on December 28, 2017 as a British Virgin Islands Company with limited liability. The Company was incorporated as a blank check Company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more target businesses. On October 24, 2019, the Company acquired all of the outstanding shares of Zhongchai Holding (Hong Kong) Limited via a reverse capitalization and changed its name from Greenland Acquisition Corporation to Greenland Technologies Holding Corporation.
Greenland serves as the parent Company for the primary operating Company, Zhongchai Holding (Hong Kong) Limited, a holding Company formed under the laws of Hong Kong on April 23, 2009 (“Zhongchai Holding”). Through Zhongchai Holding and other subsidiaries, Greenland develops and manufactures traditional transmission products for material handling machineries in PRC.
Greenland, through its subsidiaries, is:
| ● | a leading developer and manufacturer of transmission products for material handling machineries in China; and |
| ● | a developer of electric industrial vehicles. |
Greenland’s transmission products are key components for forklift trucks, used in manufacturing and logistic applications such as factories, workshops, warehouses, fulfilment centers, shipyards, and seaports. Greenland’s transmission products are used in 1-ton to 15-tons forklift trucks, some with mechanical shift and some with automatic shift. Greenland sells these transmission products directly to forklift-truck manufacturers. Forklifts play an important role in logistics for many enterprises across different industries in the PRC and around the globe. Generally, industries with the largest demand for forklifts are transportation, warehousing logistics, electrical machinery, and automobile.
Greenland has experienced increased demand for
forklifts in the manufacturing industry in the PRC, as its revenue increased from approximately $
In December 2020, Greenland launched a new division
that focuses on the production and sale of electric industrial vehicles; a market that Greenland intends to develop to diversify its
product offerings.
The COVID-19 pandemic has significantly affected business and manufacturing activities within China, including travel restrictions, widespread mandatory quarantines, and suspension of business activities within China. Effective February 3, 2020, the Company announced the temporary closure of its operating offices in Zhejiang Province, including suspension of its manufacturing activities in response to the emergency measures imposed by the local government. The Company’s operating subsidiaries were temporary shut down until the end of February 2020. Moreover, the pandemic has significantly limited suppliers’ ability to provide low-cost, high-quality parts and materials to the Company on a timely basis. Zhejiang Province, where we conduct a substantial part of our business, is one of the most affected areas in China. As of the date of this report, Chinese industries have gradually resumed businesses as government officials started to ease the restrictive measures since April 2020. However, we remain cautious and prudent when assessing the future impact of COVID-19 on our business due to the current ongoing global pandemic.
The Company’s Shareholders
As
of September 30, 2021, Cenntro Holding Limited owns
The Company’s Subsidiaries
Zhongchai
Holding, the
Zhejiang
Zhongchai, the subsidiary of the Company, is the sole shareholder of Zhejiang Shengte Transmission Co., Ltd. (“Shengte”).
It also owned
F-7
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)
Zhejiang Zhongchai
Zhejiang
Zhongchai, a limited liability
Through Zhejiang Zhongchai, the Company has been engaging in the manufacture and sale of transmission systems mainly for forklift trucks since 2006. These forklift trucks are used in manufacturing and logistics applications, such as factory, workshop, warehouse, fulfilment centers, shipyards and seaports. The transmission systems are the key components for the forklift trucks. The Company supplies transmission systems to forklift truck manufacturers. Its transmission systems fit for forklift trucks ranging from 1 to 15 tons, with either mechanical shift or automatic shift. All the products are currently manufactured at the Company’s facility in Xinchang, Zhejiang Province, PRC and are sold to both domestic and oversea markets. The Company has moved to its new factory in Meizhu, Xinchang, Zhejiang Province, PRC, in October of 2019.
Hengyu
Hengyu is a limited liability Company registered on September 10, 2015 in Shanghai Free Trade Zone, Shanghai, and PRC. Hengyu holds no assets other than an account receivable owed by Cenntro Holding Limited. Main business of Hengyu are investment management and consulting services.
Hangzhou Greenland
Hangzhou Greenland is a limited liability Company registered on August 9, 2019 in Hangzhou Sunking Plaza, Zhejiang, PRC. Hangzhou Greenland engages in the business of trading.
Greenland Tech
Greenland Technologies Corporation was incorporated in the state of Delaware on January 14, 2020 as a wholly owned subsidiary of Greenland (“Greenland Tech”). The Company uses Greenland Tech as its U.S. operation site for the assembly, marketing and sales of electric industrial vehicles for the North American market.
Details of the Company’s subsidiaries, which are included in these unaudited consolidated financial statements as of September 30, 2021, are as follows:
Domicile and Date of Formation | Percentage of Effective Ownership | |||||||||||
April 23, 2009 | ||||||||||||
November 21, 2005 | ||||||||||||
September 10, 2015 | ||||||||||||
August 9, 2019 | ||||||||||||
January 14, 2020 | ||||||||||||
F-8
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries. All significant inter-company transactions and balances between the Company and its subsidiaries are eliminated upon consolidation.
Principles of Consolidation
The consolidated financial statements include the accounts of Greenland Technologies Holding Corporation and its subsidiaries and have been prepared in accordance with U.S. GAAP. Intercompany accounts and transactions have been eliminated upon consolidation. Certain reclassifications to previously reported financial information have been made to conform to the current period presentation.
The Business Combination was accounted for as a reverse recapitalization (the “Recapitalization Transaction”) in accordance with Accounting Standard Codification (“ASC”) 805, Business Combinations. For accounting and financial reporting purposes, Zhongchai Holding is considered the acquirer based on facts and circumstances, including the following:
| ● | Zhongchai Holding’s operations comprise the ongoing operations of the combined entity; |
| ● | The officers of the newly combined company consist of Zhongchai Holding’s executives, including the Chief Executive Officer, Chief Financial Officer and General Counsel; and, |
| ● | The former shareholders of Zhongchai Holding own a majority voting interests in the combined entity. |
As
a result of Zhongchai Holding being the accounting acquirer, the financial reports filed with the SEC by the Company subsequent to the
Business Combination are prepared “as if” Zhongchai Holding is the predecessor and legal successor to the Company. The historical
operations of Zhongchai Holding are deemed to be those of the Company. Thus, the financial statements included in this report reflect
(i) the historical operating results of Zhongchai Holding prior to the Business Combination; (ii) the combined results of the Company
and Zhongchai Holding following the Business Combination in October 24, 2019; (iii) the assets and liabilities of Zhongchai Holding
at their historical cost, and (iv) Greenland’s equity structure for all periods presented. Zhongchai Holding received
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. Actual results could differ from those estimates. Significant estimates in the nine months ended September 30, 2021 and 2020 include allowance for doubtful accounts, reserve for inventories, useful life of property, plant and equipment, assumptions used in assessing impairment of long-term assets and valuation of deferred tax assets and accruals for taxes due.
Non-controlling Interest
Non-controlling interests in the Company’s subsidiaries are recorded in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 810 Consolidation (“ASC 810”) and are reported as a component of equity, separate from the parent’s equity. Purchase or sale of equity interests that do not result in a change of control are accounted for as equity transactions. Results of operations attributable to the non-controlling interest are included in our consolidated results of operations and, upon loss of control, the interest sold, as well as interest retained, if any, will be reported at fair value with any gain or loss recognized in earnings.
F-9
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Foreign Currency Translation
The accompanying consolidated financial statements are presented in United States dollars (“US$” or “$”). The functional currency of the Company is Renminbi (“RMB”). Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of operations.
For the nine months ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| Period end RMB: US$ exchange rate | ||||||||
| Period average RMB: US$ exchange rate | ||||||||
The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. The PRC government imposes significant exchange restrictions on fund transfers out of the PRC that are not related to business operations.
Cash and Cash Equivalents
For financial reporting purposes, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company maintains its bank accounts in USA, PRC and Hong Kong Special Administrative Region (“SAR”). Balances at financial institutions or state-owned banks within PRC and Hong Kong SAR are not covered by insurance.
Restricted Cash
Restricted cash represents amounts held by a bank as security for bank acceptance bills, as well as the financial product secured for the short-term bank loan and therefore is not available for the Company’s use until such time as the bank acceptance notes and bank loans have been fulfilled or expired, normally within a twelve-month period.
Fair Value of Financial Instruments
The Company applies the provisions of ASC 820, Fair Value Measurements and Disclosures, to the financial instruments that are required to be carried at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company uses a three-tier fair value hierarchy based upon observable and non-observable inputs that prioritizes the information used to develop our assumptions regarding fair value. Fair value measurements are separately disclosed by level within the fair value hierarchy.
| ● | Level 1—defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; |
| ● | Level 2—defined as inputs other than quoted prices in active markets, that are either directly or indirectly observable; and |
| ● | Level 3—defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. |
F-10
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company’s financial instruments primarily consist of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, accounts payable, other payables and accrued liabilities, short-term bank loans, and notes payable.
The carrying value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and other current assets and liabilities approximate fair value because of the short-term nature of these items. The estimated fair values of short-term bank loans were not materially different from their carrying value as presented due to the short maturities and that the interest rates on the borrowing approximate those that would have been available for loans of similar remaining maturity and risk profile. As the carrying amounts are reasonable estimates of the fair value, these financial instruments are classified within Level 1 of the fair value hierarchy.
Accounts Receivable
Accounts
receivable are carried at net realizable value. The Company reviews its accounts receivable on a periodic basis and makes general and
specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual
receivable balances, the Company considers many factors, including the age of the balance, customer’s historical payment history,
its current creditworthiness and current economic trends. Accounts are written off after exhaustive efforts at collection. The Company
only grants credit terms to established customers who are deemed to be financially responsible. Credit periods to customers are within
60 days after customers received the purchased goods. If accounts receivable are to be provided for, or written off, they would be recognized
in the consolidated statement of operations within operating expenses. Balance of allowance of doubtful accounts was $
Inventories
Inventories
are stated at the lower of cost or net realizable value, which is based on estimated selling prices less any further costs expected to
be incurred for completion and disposal. Cost of raw materials is calculated using the weighted average method and is based on purchase
cost. Work-in-progress and finished goods costs are determined using the weighted average method and comprise direct materials, direct
labor and an appropriate proportion of overhead. As of September 30, 2021 and December 31, 2020, the Company had reserves for inventories
of $
Advance to Suppliers
Advance
to suppliers represents interest-free cash paid in advance to suppliers for purchases of parts and/or raw materials. The balance of advance
to suppliers was $
Property, Plant, and Equipment
Property, plant, and equipment are stated at cost less accumulated depreciation, and include expenditure that substantially increases the useful lives of existing assets. Expenditures for repairs and maintenance, which do not extend the useful life of the assets, are expensed as incurred.
Depreciation is provided over their estimated useful lives, using the straight-line method. Estimated useful lives are as follows:
| Plant, buildings and improvements | ||||
| Machinery and equipment | ||||
| Motor vehicles | ||||
| Office equipment | ||||
| Fixtures and decorations |
F-11
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
When assets are sold or retired, their costs and accumulated depreciation are eliminated from the consolidated financial statements and any gain or loss resulting from their disposal is recognized in the period of disposition as an element of other income. The cost of maintenance and repairs is charged to income as incurred, whereas significant renewals and betterments are capitalized.
Land Use Rights
According to the PRC laws, the government owns all the land in the PRC. Companies or individuals are authorized to possess and use the land only through land use rights granted by the Chinese government. The land use rights granted to the Company are being amortized using the straight-line method over the lease term of fifty years.
Impairment of Long-Lived Assets
Long-lived assets are evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying amounts may not be recoverable in accordance with FASB ASC 360, “Property, Plant and Equipment”.
In evaluating long-lived assets for recoverability, the Company uses its best estimate of future cash flows expected to result from the use of the asset and eventual disposition in accordance with FASB ASC 360-10-15. To the extent that estimated future, undiscounted cash inflows attributable to the asset, less estimated future, undiscounted cash outflows, are less than the carrying amount, an impairment loss is recognized in an amount equal to the difference between the carrying value of such asset and its fair value. Assets to be disposed of and for which there is a committed plan of disposal, whether through sale or abandonment, are reported at the lower of carrying value or fair value less costs to sell.
There was no impairment loss recognized for the nine months ended September 30, 2021 and 2020.
Lease
ASC 842 supersedes the lease requirements in ASC 840 “Leases”, and generally requires lessees to recognize operating and finance lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. Leases that transfer substantially all of the benefits and risks incidental to the ownership of assets are accounted for as finance leases as if there was an acquisition of an asset and incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases.
A sale-leaseback transaction occurs when an entity sells an asset it owns and immediately leases the asset back from the buyer. The seller then becomes the lessee and the buyer becomes the lessor. under ASC 842, both parties must assess whether the buyer-lessor has obtained control of the asset and a sale has occurred.
The Company has determined that the leaseback
transaction that it entered in 2019 fails to qualify as a sale because control is not transferred to the buyer-lessor. Therefore, the
Company has classified the lease portion of the transaction as a finance lease whereby the Company continues to depreciate the assets
and recorded a financing obligation for the consideration received from the buyer-lessor, with an implicit interest rate of
F-12
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Statutory Reserve
In
accordance with the PRC Regulations on Enterprises with Foreign Investment, an enterprise established in the PRC with foreign investment
is required to provide for certain statutory reserves, namely (i) General Reserve Fund, (ii) Enterprise Expansion Fund and (iii) Staff
Welfare and Bonus Fund, which are appropriated from net profit as reported in the enterprise’s PRC statutory accounts. A wholly-owned
foreign enterprise is required to allocate at least
Revenue Recognition
In
accordance with ASC Topic 606, “Revenue from Contracts with Customers”, the Company recognizes revenues when goods or services
are transferred to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those
goods or services. In determining when and how revenues are recognized from contracts with customers, the Company performs the following
five-step analysis: (i) identification of contract with customer; (ii) determination of performance obligations; (iii) measurement
of the transaction price; (iv) allocation of the transaction price to the performance obligations and (v) recognition of revenues
when (or as) the Company satisfies each performance obligation.
Revenues are recognized at a point in time once the Company has determined that the customer has obtained control over the product. Control is typically deemed to have been transferred to the customer when the performance obligation is fulfilled, usually at the time of customers’ acceptance or consumption, at the net sales price (transaction price) and each of the criteria under ASC 606 have been met. Contract terms may require the Company to deliver the finished goods to the customers’ location or the customer may pick up the finished goods at the Company’s factory. International sales are recognized when shipment clears customs and leaves the port.
The Company has adopted ASC 606 on January 1, 2018, using the transition method of Modified-Retrospective Method (“MRM”). The adoption of ASC 606 had no impact on the Company’s beginning balance of retained earnings.
The Company’s contracts are all short-term in nature with a contract term of one year or less. Receivables are recorded when the Company has an unconditional right to consideration.
Contracts
do not offer any price protection, but allow for the return of certain goods if quality problem, which is standard warranty. The Company
product returns and recorded reserve for sales returns were minimal for the nine months ended September 30, 2021 and 2020. The total
rebates amount is accounting for around
The following table sets forth disaggregation of revenue:
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| Major Product | 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Transmission boxes for Forklift | ||||||||||||||||
| Transmission boxes for Non-Forklift (EV, etc.) and parts of transmission boxes | ||||||||||||||||
| Total | ||||||||||||||||
F-13
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cost of Goods Sold
Cost of goods sold consists primarily of material costs, freight charges, purchasing and receiving costs, inspection costs, internal transfer costs, wages, employee compensation, amortization, depreciation and related costs, which are directly attributable to the production of products. Write-down of inventory to lower of cost or net realizable value is also recorded in cost of goods sold.
Selling Expenses
Selling expenses include operating expenses such as payroll and traveling and transportation expenses.
General and Administrative Expenses
General and administrative expenses include management and office salaries and employee benefits, depreciation for office facility and office equipment, travel and entertainment, legal and accounting, consulting fees and other office expenses.
Research and Development
Research
and development costs are expensed as incurred and totaled approximately $
Government subsidies
Government
subsidies are recognized when there is reasonable assurance that the subsidy will be received and all attaching conditions will be complied
with. When the subsidy relates to an expense item, it is recognized as income over the periods necessary to match the subsidy on a systematic
basis to the costs that it is intended to compensate. Where the subsidy relates to an asset, it is recognized as other long-term liabilities
and is released to the statement of operations over the expected useful life in a consistent manner with the depreciation method for
the relevant asset. Total government subsidies recorded in the other long-term liabilities were $
Income Taxes
The Company accounts for income taxes following the liability method pursuant to FASB ASC 740 “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in income in the period that includes the enactment date.
F-14
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company also follows FASB ASC 740, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of September 30, 2021 and December 31, 2020, the Company did not have a liability for unrecognized tax benefits. It is the Company’s policy to include penalties and interest expense related to income taxes as a component of other expense and interest expense, respectively, as necessary. The Company’s historical tax years will remain open for examination by the local authorities until the statute of limitations has passed.
Value-Added Tax
Statutory Reserve
In
accordance with the PRC Regulations on Enterprises with Foreign Investment, an enterprise established in the PRC with foreign investment
is required to provide for certain statutory reserves, namely (i) General Reserve Fund, (ii) Enterprise Expansion Fund and (iii) Staff
Welfare and Bonus Fund, which are appropriated from net profit as reported in the enterprise’s PRC statutory accounts. A wholly-owned
foreign enterprise is required to allocate at least 10% of its annual after-tax profit to the General Reserve Fund until the balance
of such fund has reached
F-15
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Comprehensive Income (Loss)
Comprehensive income (loss) is defined as the change in equity during the year from transactions and other events, excluding the changes resulting from investments by owners and distributions to owners, and is not included in the computation of income tax expense or benefit. Accumulated comprehensive income consists of foreign currency translation. The Company presents comprehensive income (loss) consists in accordance with ASC Topic 220, “Comprehensive Income”.
Earnings per share
The
Company calculates earnings per share in accordance with ASC Topic 260 “Earnings per Share.” Basic earnings per share is
computed by dividing the net income by the weighted average number of ordinary shares outstanding during the period. Diluted
earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of
additional ordinary shares that would have been outstanding if the potential ordinary shares equivalents had been issued and if the
additional ordinary shares were dilutive. On October 24, 2019, the Company completed a reverse merger with Greenland Acquisition
Corporation whereby the Company received
Pursuant
to the Service Agreement entered into and by the Company and Chineseinvestors.com, Inc., an Indiana corporation (“CIIX”)
on August 21, 2019 (the “Service Agreement”), CIIX were to provide certain investor relations services to the Company for
a period of three months beginning on August 21, 2019. On February 24, 2020, the Company and CIIX entered into a termination
agreement (the “CIIX Termination Agreement”) to terminate their respective obligations under the Service Agreement. Pursuant
to the CIIX Termination Agreement, the Company agreed to issue
Pursuant
to the Investor Relations Consulting Agreement entered into and by the Company and Skyline Corporate Communication Group, LLC, a Massachusetts
limited liability Company (“SCCG”) on August 15, 2019 (the “Consulting Agreement”), SCCG were to provide certain
investor relations services to the Company for a period of twelve months beginning on August 15, 2019. On February 25, 2020,
the Company and SCCG entered into a termination agreement (the “SCCG Termination Agreement”) to terminate their respective
obligations under the Consulting Agreement. Pursuant to the SCCG Termination Agreement, the Company agreed to issue
Pursuant
to the CIIX Termination Agreement and the SCCG Termination Agreement,
Segments and Related Information
ASC 280 “Segment reporting” establishes standards for reporting information on operating segments in interim and annual financial statements. All of the Company’s operations are considered by the chief operating decision maker to be aggregated in one reportable operating segment.
The Company is engaged in the business of manufacturing and selling various transmission boxes. The Company’s manufacturing process is essentially the same for the entire Company and is performed in-house at the Company’s facilities in PRC. The Company’s customers primarily consist of entities in the automotive, construction machinery or warehousing equipment industries. The distribution of the Company’s products is consistent across the entire Company. In addition, the economic characteristics of each customer arrangement are similar in that the Company maintains policies at the corporate level.
F-16
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Commitments and contingencies
In the normal course of business, the Company is subject to contingencies, including legal proceedings and environmental claims arising out of the normal course of businesses that relate to a wide range of matters, including among others, contracts breach liability. The Company records accruals for such contingencies based upon the assessment of the probability of occurrence and, where determinable, an estimate of the liability. Management may consider many factors in making these assessments including past history, scientific evidence and the specifics of each matter. The Company’s management has evaluated all such proceedings and claims that existed as of September 30, 2021 and December 31, 2020. Normal course of businesses that relate to a wide range of matters, including among others, contracts breach liability. The Company records accruals for such contingencies based upon the assessment of the probability of occurrence and, where determinable, an estimate of the liability. Management may consider many factors in making these assessments including past history, scientific evidence and the specifics of each matter. The Company’s management has evaluated all such proceedings and claims that existed as of September 30, 2021 and December 31, 2020.
Related Party
In
general, related parties exist when there is a relationship that offers the potential for transactions at less than arm’s-length,
favorable treatment, or the ability to influence the outcome of events different from that which might result in the absence of that
relationship. A related party may be any of the following: a) an affiliate, which is a party that directly or indirectly controls, is
controlled by, or is under common control with another party; b) a principle owner, owner of record or known beneficial owner of more
than
Economic and Political Risks
The Company’s operations are conducted in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy.
The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. All of the Company’s cash is maintained with state-owned banks within the PRC, and none of these deposits are covered by insurance. The Company has not experienced any losses in such accounts. A portion of the Company’s sales are credit sales which are primarily to customers whose abilities to pay are dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables is limited due to generally short payment terms. The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk
Exchange Risk
The Company cannot guarantee that the current exchange rate will remain steady. Therefore, there is a possibility that the Company could post the same amount of profit for two comparable periods and yet, because of the fluctuating exchange rates, record higher or lower profit depending on exchange rate of PRC Renminbi (RMB) converted to U.S. dollars on the relevant dates. The exchange rate could fluctuate depending on changes in the political and economic environment without notice.
F-17
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recently Issued Accounting Pronouncements
Recent accounting pronouncements that the Company has adopted or may be required to adopt in the future are summarized below:
In June 2016, the FASB issued ASU 2016-13,” Measurement of Credit Losses on Financial Instruments”, to require financial assets carried at amortized cost to be presented at the net amount expected to be collected based on historical experience, current conditions and forecasts. Subsequently, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, in April 2019. To clarify that receivables arising from operating leases are within the scope of lease accounting standards. In October 2019, the FASB issued ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842), which defers the effective date for public filers that are considered small reporting companies as defined by the Securities and Exchange Commission to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Since the Company is a smaller reporting company, implementation is not needed until January 1, 2023. Adoption of the standard requires using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date to align existing credit loss methodology with the new standard. The Company is evaluating the impact of this standard on its consolidated financial statements, including accounting policies, processes, and systems, and expects the standard will have a minor impact on its consolidated financial statements.
In January 2017, the FASB issued ASU No. 2017-04 (Topic 350) Intangibles—Goodwill and Other: Simplifying the Test for Goodwill Impairment, which removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Under the amended guidance, a goodwill impairment charge will now be recognized for the amount by which the carrying value of a reporting unit exceeds its fair value, not to exceed the carrying amount of goodwill. As amended by ASU 2019-10, this ASU will be applied on a prospective basis and is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted for any impairment tests performed after January 1, 2017. The Company is evaluating the impact of the application of this standard and does not expect that the adoption of the ASU 2017-04 will have a material impact on the Company’s consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13 Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds, and modifies certain disclosure requirements for fair value measurements under ASC 820. This ASU is to be applied on a prospective basis for certain modified or new disclosure requirements, and all other amendments in the standard are to be applied on a retrospective basis. The new standard is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. The Company adopted Topic 820 on January 1, 2020. The adoption of the ASU 2018-13 did not have a material impact on the Company’s consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes” (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 will simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company does not expect that the requirements of ASU 2019-12 will have a material impact on its consolidated financial statements.
F-18
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 – CONCENTRATION ON REVENUES AND COST OF GOODS SOLD
Concentration of major customers and suppliers:
| For the nine months ended September 30, | ||||||||||||||||
| 2021 | 2020 | |||||||||||||||
| Major customers representing more than 10% of the Company’s revenues | ||||||||||||||||
| Company A | $ | % | $ | % | ||||||||||||
| Company B | % | |||||||||||||||
| Total Revenues | $ | % | $ | % | ||||||||||||
| As of | ||||||||||||||||
September 30, 2021 | December 31, 2020 | |||||||||||||||
| Major customers of the Company’s accounts receivable | ||||||||||||||||
| Company A | % | % | ||||||||||||||
| Company B | % | % | ||||||||||||||
| Company C | % | % | ||||||||||||||
| Total | $ | % | $ | % | ||||||||||||
Accounts
receivable from the Company’s major customers accounted for
There
were no suppliers representing more than
NOTE 4 – ACCOUNTS RECEIVABLE
Accounts receivable is net of allowance for doubtful accounts.
| As of | ||||||||
September 30, 2021 | December 31, 2020 | |||||||
| Accounts receivable | $ | $ | ||||||
| Less: allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Accounts receivable, net | $ | $ | ||||||
Changes in the allowance for doubtful accounts are as follows:
For the three months ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| Beginning balance | $ | $ | ||||||
| Provision for doubtful accounts | ||||||||
| Effect of FX change | ||||||||
| Ending balance | $ | $ | ||||||
F-19
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 – INVENTORIES
| As of | ||||||||
September 30, 2021 | December 31, 2020 | |||||||
| Raw materials | $ | $ | ||||||
| Revolving material | ||||||||
| Consigned processing material | ||||||||
| Work-in-progress | ||||||||
| Finished goods | ||||||||
| Inventories, net | $ | $ | ||||||
NOTE 6 – NOTES RECEIVABLE
| As of | ||||||||
September 30, 2021 | December 31, 2020 | |||||||
| Bank notes receivable: | $ | $ | ||||||
| Commercial notes receivable | ||||||||
| Total | $ | $ | ||||||
Bank
notes and commercial notes are means of payment from customers for the purchase of the Company’s products and are issued by financial
institutions or business entities, respectively, that entitle the Company to receive the full nominal amount from the issuer at maturity,
which bears no interest and generally ranges from three to nine months from the date of issuance. As of September 30, 2021, the
Company pledged notes receivable for an aggregate amount of $
NOTE 7 – PROPERTY, PLANT AND EQUIPMENT AND CONSTRUCTION IN PROGRESS
(a) At September 30, 2021 and December 31, 2020, property, plant and equipment consisted of the following:
| As of | ||||||||
September 30, 2021 | December 31, 2020 | |||||||
| Buildings | $ | $ | ||||||
| Machinery | ||||||||
| Motor vehicles | ||||||||
| Electronic equipment | ||||||||
| Total property plant and equipment, at cost | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant and equipment, net | $ | $ | ||||||
| Construction in process | ||||||||
| Total | $ | $ | ||||||
For
the nine months ended September 30, 2021 and 2020, depreciation expense amounted to $
For
the nine months ended September 30, 2021 and 2020, $
F-20
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 – PROPERTY, PLANT AND EQUIPMENT AND CONSTRUCTION IN PROGRESS (CONTINUED)
Restricted assets consist of the following:
| As of | ||||||||
September 30, 2021 | December 31, 2020 | |||||||
| Buildings, net | $ | $ | ||||||
| Machinery, net | ||||||||
| Total | ||||||||
As of September 30, 2021, the Company pledged
its ownership of buildings for net book value of RMB
As of December 31, 2020, the Company pledged its ownership of buildings for net book value of RMB
On January 3, 2019, the Company sold a set of
manufacturing equipment to third parties for aggregate proceeds of $
On April 26, 2019, the Company sold various
equipment including the general assembly line and the differential assembly line to third parties for aggregate proceeds of $
On May 27, 2020, the Company sold various equipment
including the general assembly line and the differential assembly line to third parties for aggregate proceeds of $
The Company determined that it did not relinquish control of the assets to the buyer-lessor. Therefore, the Company accounted for the transactions as failed sale-leaseback whereby the Company continues to depreciate the assets and recorded a financing obligation for the consideration received from the buyer-lessor.
NOTE 8 – LAND USE RIGHTS
Land use rights consisted of the following:
| As of | ||||||||
September 30, 2021 | December 31, 2020 | |||||||
| Land use rights, cost | $ | $ | ||||||
| Less: Accumulated amortization | ( | ) | ( | ) | ||||
| Land use rights, net | $ | $ | ||||||
As of September 30, 2021, there was land use rights
with net book value of $
Estimated future amortization expense is as follows as of September 30, 2021:
| Years ending September 30, | Amortization expense | |||
| 2022 | $ | |||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Thereafter | ||||
| Total | $ | |||
F-21
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 – NOTES PAYABLE
| As of | ||||||||
September 30, 2021 | December 31, 2020 | |||||||
| Bank acceptance notes | $ | $ | ||||||
| Total | $ | $ | ||||||
The interest-free notes payable, ranging from
nine months to one year from the date of issuance, were secured by $
All the notes payable are subject to bank charges
of
NOTE 10 – ACCOUNTS PAYABLE
Accounts payable are summarized as follow:
| As of | ||||||||
September 30, 2021 | December 31, 2020 | |||||||
| Procurement of Materials | $ | $ | ||||||
| Infrastructure & Equipment | ||||||||
| Freight fee | ||||||||
| Total | $ | $ | ||||||
NOTE 11 – SHORT TERM BANK LOANS
Short-term loans are summarized as follow:
| As of | ||||||||
September 30, 2021 | December 31, 2020 | |||||||
| Collateralized bank loans | $ | $ | ||||||
| Guaranteed bank loans | ||||||||
| Total | $ | $ | ||||||
Short-term loans as of September 30, 2021 are as follow:
| Maturity Date | Type | Bank Name | Interest Rate per Annum (%) | September 30, 2021 | ||||||||
| Operating Loans | $ | |||||||||||
| Operating Loans | $ | |||||||||||
| Operating Loans | $ | |||||||||||
| Operating Loans | $ | |||||||||||
| Operating Loans | $ | |||||||||||
| $ | ||||||||||||
F-22
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 – SHORT TERM BANK LOANS (CONTINUED)
Short-term loans as of December 31, 2020 are as follow:
| Maturity Date | Type | Bank Name | Interest Rate per Annum (%) | December 31, 2020 | ||||||||
| Operating Loans | $ | |||||||||||
| Operating Loans | $ | |||||||||||
| Operating Loans | $ | |||||||||||
| Operating Loans | $ | |||||||||||
| Operating Loans | $ | |||||||||||
| Operating Loans | ||||||||||||
| $ | ||||||||||||
All short-term bank loans are obtained from local banks in PRC and are repayable within one year.
The average annual interest rate of the short-term
bank loans was
NOTE 12 – OTHER CURRENT LIABILITIES
Other current liabilities are summarized as follow:
| As of | ||||||||
September 30, 2021 | December 31, 2020 | |||||||
| Employee payables | ||||||||
| Other tax payables | ||||||||
| Borrowing from third party | ||||||||
| Total | $ | $ | ||||||
F-23
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 – OTHER LONG-TERM LIABILITIES
Other long-term liabilities are summarized as follow:
| As of | ||||||||
September 30, 2021 | December 31, 2020 | |||||||
| Subsidy | ||||||||
| Total | $ | $ | ||||||
The subsidy mainly consists of an incentive granted
by the Chinese government to encourage transformation of fixed assets in China and other miscellaneous subsidy from the Chinese government. As
of September 30, 2021, grant income decreased by $
Note 14 – LEASES
The Company leases most of its corporate offices
under operating leases, with initial terms of
| Cash paid for amounts included in the measurement of lease liabilities: | ||||
| Operating cash flows paid for operating leases | $ | |||
| Right-of-use assets obtained in exchange for lease obligations: | ||||
| Operating leases | ||||
Supplemental balance sheet information related to leases as of September 30, 2021 is as follows:
| Operating leases: | ||||
| Operating lease right-of-use assets | $ | |||
| Current portion of operating lease liabilities | $ | |||
| Long-term operating lease liabilities | ||||
| Total operating lease liabilities | $ | |||
The following table summarizes the maturity of lease liabilities under operating leases as of September 30, 2021:
| Operating | ||||
| For the year ending September 30, | Leases | |||
| 2022 | ||||
| 2023 | ||||
| 2024 | ||||
| Total lease payments | ||||
F-24
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 – LONG TERM PAYABLES
| As of | ||||||||
|
September 30, 2021 |
December 31, 2020 |
|||||||
| Long-term payables current portion | $ | |
$ | |||||
| Long-term payables– non-current portion | ||||||||
| Total | $ | $ | ||||||
On January 3, 2019, the Company sold a set of
manufacturing equipment to third parties for aggregate proceeds of $
On April 26, 2019, the Company sold various
equipment including the general assembly line and the differential assembly line to third parties for aggregate proceeds of $
On May 27, 2020, the Company sold various equipment
including its general assembly line and the differential assembly line to third parties for aggregate proceeds of $
The Company determined that it did not relinquish control of the assets to the buyer-lessor. Therefore, the sale of the equipment does not qualify for sale-leaseback accounting. As a result, the aggregate proceeds have been recorded as a financing obligation and the assets related to the sold and leased manufacturing equipment remain on the Company’s Consolidated Balance Sheet and continue to be depreciated. The current and long-term portions of the financing obligation are included within long-term payables-current portion and long-term payables-non-current portion, respectively.
NOTE 16 – STOCKHOLDER’S EQUITY
Preferred Shares — The Company is authorized to issue an unlimited number of no par value preferred shares, divided into five classes, Class A through Class E, each with such designation, rights and preferences as may be determined by a resolution of the Company’s board of directors to amend the Memorandum and Articles of Association to create such designations, rights and preferences. The Company has five classes of preferred shares to give the Company flexibility as to the terms on which each Class is issued. All shares of a single class must be issued with the same rights and obligations. Accordingly, starting with five classes of preferred shares will allow the Company to issue shares at different times on different terms. As of September 30, 2021 and December 31, 2020, there were no preferred shares designated, issued or outstanding.
Ordinary Shares — The
Company is authorized to issue an unlimited number of no par value ordinary shares. Holders of the Company’s ordinary shares are
entitled to one vote for each share. As of September 30, 2021 and December 31, 2020, there were
On July 27, 2018, the Company consummated its
initial public offering of
F-25
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 – STOCKHOLDER’S EQUITY (CONTINUED)
Simultaneously with the consummation of its initial
public offering, the Company completed a private placement of
In 2019, in connection with the Business Combination 3,875,458 shares have been redeemed and 81,400 shares have been converted into ordinary shares, 1,906,542 ordinary shares were left outstanding upon consummation of the reverse recapitalization.
Pursuant to the Share Exchange Agreement,
Greenland acquired from Cenntro Holding Limited all of the issued and outstanding equity interests of Zhongchai Holding in exchange
for
Pursuant to certain Finder Agreement with
Hanyi Zhou, dated May 29, 2019,
In connection with the Business Combination, all the outstanding rights of the Company were converted into 468,200 ordinary shares on a one-tenth (1/10) ordinary share per right basis if holders of the rights elected to convert their rights into underlying ordinary shares.
Pursuant to the Service Agreement entered into
and by the Company and Chineseinvestors.com, Inc., an Indiana corporation (“CIIX”) on August 21, 2019 (the “Service
Agreement”), CIIX were to provide certain investor relations services to the Company for a period of three months beginning on August
21, 2019. Pursuant to the Service Agreement, the Company were to pay CIIX fees consisting of three equal monthly instalments of $
Pursuant to the Investor Relations Consulting
Agreement entered into and by the Company and Skyline Corporate Communication Group, LLC, a Massachusetts limited liability Company (“SCCG”)
on August 15, 2019 (the “Consulting Agreement”), SCCG were to provide certain investor relations services to the Company for
a period of twelve months beginning on August 15, 2019. Pursuant to the Consulting Agreement, the Company were to pay SCCG fees consisting
of $
On November 10, 2020, the Company granted a total
of
On December 30, 2020, the Company granted a total
of
On February 8, 2021, the Company granted a total
of
On June 30, 2021, the Company closed a firm
commitment offering of
F-26
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 – STOCKHOLDER’S EQUITY (CONTINUED)
Rights — Each holder of a right was entitled to receive one-tenth (1/10) of one ordinary share upon consummation of a Business Combination.
As of September 30, 2021, all of the existing
Rights were converted into
Warrants — The Company’s outstanding warrants held by CEDE & CO (“Public Warrants”) may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. No Public Warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the ordinary shares issuable upon exercise of the Public Warrants and a current prospectus relating to such ordinary shares. Notwithstanding the foregoing, the holders may, during any period when the Company shall have failed to maintain an effective registration statement, exercise the Public Warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act. If an exemption from registration is not available, holders will not be able to exercise their Public Warrants on a cashless basis. The Public Warrants will expire five years from the consummation of the Business Combination or earlier upon redemption or liquidation.
The Company may call the warrants for redemption (excluding the private warrants), in whole and not in part, at a price of $0.01 per warrant:
| ● | At any time while the Public Warrants are exercisable, |
| ● | Upon not less than 30 days’ prior written notice of redemption to each Public Warrant holder, |
| ● | If, and only if, the reported last sale price of the ordinary shares equals or exceeds $16.50 per share, for any 20 trading days within a 30-trading-day period ending on the third trading day prior to the notice of redemption to Public Warrant holders, and |
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. Accordingly, the warrants may expire worthless.
Private warrants include
As of September 30, 2021, there were total
Unit Purchase Option
On July 27, 2018, the Company sold to
Chardan (and its designees), for $
F-27
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 – EARNINGS PER SHARE
The Company reports earnings per share in
accordance with the provisions of the FASB’s related accounting standard. This standard requires presentation of basic and
diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic
earnings per share excludes dilution, but includes vested restricted stocks and is computed by dividing income available to
shareholders by the weighted average common shares outstanding during the period. Diluted earnings per share takes into account the
potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised and converted into
ordinary shares. On October 24, 2019, the Company completed a reverse merger with Zhongchai Holding. The recapitalization of the
number of ordinary shares attributable to the purchase of Zhongchai Holding in connection with the Business Combination
is reflected retroactively to December 31, 2017 and will be utilized for calculating earnings per share in all prior periods
presented. Pursuant to the CIIX Termination Agreement and the SCCG Termination Agreement,
The following is a reconciliation of the basic and diluted earnings per share computation:
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net income attributable to the Greenland Technologies Holding Corporation and subsidiaries | $ | $ | $ | $ | ||||||||||||
| Weighted average basic and diluted computation shares outstanding: | ||||||||||||||||
| Shares issued in reverse recapitalization | ||||||||||||||||
| Weighted average shares of restricted grants | ||||||||||||||||
| Weighted average shares issued for exercise of warrants | - | |||||||||||||||
| Weighted average ordinary shares | ||||||||||||||||
| Dilutive effect of stock options | ||||||||||||||||
| Restricted stock vested not issued | ||||||||||||||||
| Ordinary shares and ordinary shares equivalents | ||||||||||||||||
| Basic and diluted net income per share | $ | $ | ||||||||||||||
F-28
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 18 – GEOGRAPHICAL SALES AND SEGMENTS
All of the Company’s operations are considered by the chief operating decision maker to be aggregated in one reportable operating segment.
Information for the Company’s sales by geographical area for the three and nine months ended September 30, 2021 and 2020 are as follows:
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Domestic Sales | $ | $ | $ | $ | ||||||||||||
| International Sales | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
NOTE 19 – INCOME TAXES
Income tax expense includes a provision for federal, state and foreign taxes based on the annual estimated effective tax rate applicable to the Company and its subsidiaries, adjusted for items which are considered discrete to the period.
The effective tax rates on income before income
taxes for the nine months ended September 30, 2021 was
The effective tax rates on income before income
taxes for the nine months ended September 30, 2020 was
The Company has recorded $
F-29
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 20 – COMMITMENTS AND CONTINGENCIES
Guarantees and pledged collateral for bank loans to other parties:
(1) Pledged collateral for bank loans
On December 6, 2019,
On November 28, 2019,
On December 17, 2019,
On December 18, 2019,
F-30
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 20 – COMMITMENTS AND CONTINGENCIES (CONTINUED)
(2) Litigation
On September 19, 2019, a purported class action challenging the Business Combination was filed in the United States District Court for the District of Delaware (the “District Court”), captioned Wheby v. Greenland Acquisition Corporation, et al., Case No. 19-1758-MN (D. Del.) (the “Action”). The Action alleged certain violations of the Securities Exchange Act of 1934, as amended, and sought, among other things, to enjoin the Business Combination from closing (or, if consummated, to rescind the Business Combination or award rescissory damages), to require the Company to issue a separate proxy statement, and to receive an award of attorneys’ fees and costs.
On October 14, 2019, the plaintiff, the
Company and all other named defendants entered into a confidential memorandum of understanding (the “MOU”), pursuant to
which a Stipulation and Order of Dismissal (“Stipulation of Dismissal”) of the Action was filed on October 14, 2019. The
Stipulation of Dismissal was approved and entered by the District Court on October 15, 2019. Among other things, the
Stipulation of Dismissal acknowledged that the Definitive Proxy Statement on Schedule 14A, filed with the Commission on
December 1, 2020 mooted the plaintiff’s claims regarding the sufficiency of disclosures, dismissed all claims asserted in the
Action, with prejudice as to the plaintiff only, permits the plaintiff to seek an award of attorneys’ fees in connection with
the mooted claims, and reserves the defendants’ rights to oppose such an award, if appropriate. Pursuant to the MOU, the
parties have engaged in discussions regarding the amount of attorneys’ fees, if any, to which the plaintiff’s counsel is
entitled in connection with the Action. As of January 25, 2021, we have been settled with our counter party which paid into in
total $
Facility Leases
The Company entered into a failed sale-leaseback transaction on January 3, 2019 and April 26, 2019. See further discussion in NOTE 15 –LONG TERM PAYABLES.
Rent expense is recognized on a straight-line basis over the terms of the operating leases accordingly and the Company records the difference between cash rent payments and the recognition of rent expense as a deferred rent liability.
The following are the aggregate non-cancellable future minimum lease payments under operating and financing leases as of September 30, 2021:
Years ending September 30, | Amount | |||
| 2022 | ||||
| Total | $ | |||
F-31
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 21 – RELATED PARTY TRANSACTIONS
| (a) | Names and Relationship of Related Parties: |
| Existing Relationship with the Company | ||
| Sinomachinery Holding Limited | ||
| Cenntro Holding Limited | ||
| Zhejiang Kangchen Biotechnology Co., Ltd. | ||
| Cenntro Smart Manufacturing Tech. Co., Ltd. | ||
| Zhejiang Zhonggong Machinery Co., Ltd. | ||
| Zhejiang Zhonggong Agricultural Equipment Co., Ltd. | ||
| Jiuxin Investment Management Partnership (LP) | ||
| Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership) | ||
| Hangzhou Cenntro Autotech Co., Limited | ||
| Peter Zuguang Wang | ||
| Greenland Asset Management Corporation | ||
| Hangzhou Jiuru Economic Information Consulting Co. Ltd | ||
| (b) | Summary of Balances with Related Parties: |
| As of | ||||||||
September 30, 2021 | December 31, 2020 | |||||||
| Due to related parties: | ||||||||
| Sinomachinery Holding Limited1 | $ | $ | ||||||
| Zhejiang Kangchen Biotechnology Co., Ltd2 | ||||||||
| Zhejiang Zhonggong Machinery Co., Ltd.3 | ||||||||
| Zhejiang Zhonggong Agricultural Equipment Co., Ltd.4 | ||||||||
| Cenntro Smart Manufacturing Tech. Co., Ltd.5 | ||||||||
| Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership)6 | ||||||||
| Cenntro Holding Limited⁷ | ||||||||
| Peter Zuguang Wang⁷ | ||||||||
| Greenland Asset Management Corporation7 | ||||||||
| Xinchang County Jiuxin Investment Management Partnership (LP)7 | ||||||||
| Hangzhou Jiuru Economic Information Consulting Co. Ltd7 | ||||||||
| Total | $ | $ | ||||||
The balance of due to related parties as of September 30, 2021 and December 31, 2020 consisted of:
| 1 | Advance from Sinomachinery Holding Limited for certain purchase order; |
| 2 | Temporary borrowings from Zhejiang Kangchen Biotechnology Co., Ltd.; |
| 3 | Unpaid balances for purchasing of materials and equipment and temporary borrowing from Zhejiang Zhonggong Machinery Co., Ltd.; |
| 4 | Unpaid balances for purchasing of materials from Zhejiang Zhonggong Agricultural Equipment Co., Ltd.; |
| 5 | Prepayment from Cenntro Smart Manufacturing Tech. Co., Ltd.; |
| 6 | Temporary borrowings from Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership); and |
| 7 | Borrowings from related parties |
F-32
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 21 – RELATED PARTY TRANSACTIONS (CONTINUED)
| As of | ||||||||
September 30, 2021 | December 31, 2020 | |||||||
| Due from related parties-current: | ||||||||
| Cenntro Holding Limited | $ | $ | ||||||
| Cenntro Smart Manufacturing Tech. Co., Ltd. | ||||||||
| Total | $ | $ | ||||||
The balance of due from related parties as of September 30, 2021 and December 31, 2020 consisted of:
Other receivable from Cenntro Holding Limited
was $
The Company expects the amount due from its equity holder, Cenntro Holding will be paid back on April 27, 2022, as the Company and Cenntro Holding Limited mutually agreed to an extension of repayment from the end of October 2020, the original maturity date.
| (c) | Summary of Related Party Funds Lending: |
A summary of funds lending with related parties for the nine months ended September 30, 2021 and 2020 are listed below:
| Withdraw funds from related parties: | For the nine months ended September 30, | |||||||
| 2021 | 2020 | |||||||
| Zhejiang Zhonggong Machinery Co., Ltd. | ||||||||
| Cenntro Smart Manufacturing Tech. Co., Ltd. | ||||||||
| Peter Zuguang Wang | ||||||||
| Greenland Asset Management Corporation | ||||||||
| Xinchang County Jiuxin Investment Management Partnership (LP) | ||||||||
| Cenntro Holding Limited | ||||||||
| Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership) | ||||||||
| Total | ||||||||
| Deposit funds with related parties: | ||||||||
| Zhejiang Zhonggong Machinery Co., Ltd. | ||||||||
| Xinchang County Jiuxin Investment Management Partnership (LP) | ||||||||
| Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership) | ||||||||
| Cenntro Smart Manufacturing Tech. Co., Ltd. | ||||||||
| Zhejiang Kangchen Biotechnology Co., Ltd | ||||||||
| Greenland Asset Management Corporation | ||||||||
| Cenntro Holding Limited | ||||||||
| Peter Zuguang Wang | ||||||||
| Total | ||||||||
NOTE 22 – SUBSEQUENT EVENTS
The management has evaluated subsequent events through the date of the report, and there was no material subsequent event requiring adjustments to the financial statements or disclosure.
F-33
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
The following discussion and analysis of financial condition and results of operations relates to the operations and financial condition reported in the consolidated financial statements of the Company thereto, which appear elsewhere in this Report, and should be read in conjunction with such financial statements and related notes included in this Report. Except for the historical information contained herein, the following discussion, as well as other information in this Report, contain “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the “safe harbor” created by those sections. Actual results and the timing of the events may differ materially from those contained in these forward-looking statements due to many factors, including those discussed in the “Forward-Looking Statements” set forth elsewhere in this Report.
Overview
The registrant was incorporated on December 28, 2017 as a British Virgin Islands company with limited liability. The registrant was incorporated as a blank check company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more target businesses. Following the Business Combination (as described and defined below) in October 2019, the registrant changed its name from Greenland Acquisition Corporation to Greenland Technologies Holding Corporation (“Greenland”).
On July 27, 2018, we consummated our initial public offering of 4,400,000 units, including a partial exercise by the underwriters of their over-allotment option in the amount of 400,000 units. Each unit consists of one ordinary share, no par value, one warrant to purchase one-half of one ordinary share, and one right to receive one-tenth of one ordinary share upon the consummation of our initial business combination, pursuant to a registration statement on Form S-1. Warrants must be exercised in multiples of two warrants, and each two warrants are exercisable for one ordinary share at an exercise price of $11.50 per share. The units were sold in our initial public offering at an offering price of $10.00 per unit, generated $44,000,000 (before underwriting discounts and offering expenses) in gross proceeds.
Simultaneously with the consummation of our initial public offering, we completed a private placement of 282,000 units, issued to Greenland Asset Management Corporation (the “Sponsor”) and Chardan Capital Markets, LLC, generated $2,820,000 in gross proceeds.
On October 24, 2019, we consummated our business combination with Zhongchai Holding (the “Business Combination”) following a special meeting, where the shareholders of Greenland considered and approved, among other matters, a proposal to adopt and entered into the Share Exchange Agreement (as defined below) that allowed Greenland to acquire from the Seller (as defined below) all of the issued and outstanding equity interests of Zhongchai Holding in exchange for 7,500,000 newly issued ordinary shares, no par value of Greenland, issued to the Seller. As a result, the Seller became the controlling shareholder of Greenland, and Zhongchai Holding became a directly and wholly owned subsidiary of Greenland. The Business Combination was accounted for as a reverse merger effected by a share exchange, wherein Zhongchai Holding is considered the acquirer for accounting and financial reporting purposes.
2
In connection with the Business Combination, all the outstanding rights of the Company were converted into 468,200 ordinary shares on a one-tenth (1/10) ordinary share per right basis if holders of the rights elected to convert their rights into the underlying ordinary shares.
On December 17, 2019, the Company’s warrants, which were trading under the ticker symbol “GTECW,” were delisted from the Nasdaq Capital Market by the Nasdaq Listing Qualifications Staff.
On January 14, 2020, Greenland Technologies Corp. was incorporated under the laws of the State of Delaware (“Greenland Tech”). Greenland Tech is a 100% owned subsidiary of the registrant. We use it as our U.S. operation site for the assembly, marketing and sales of electric industrial vehicles for the North American market.
Greenland serves as the parent company for the primary operating company, Zhongchai Holding (Hong Kong) Limited, a holding company formed under the laws of Hong Kong on April 23, 2009 (“Zhongchai Holding”). Through Zhongchai Holding and other subsidiaries, Greenland develops and manufactures traditional transmission products for material handling machineries in the People’s Republic of China (the “PRC”), as well as develops electric industrial vehicles, which are expected to be produced in the near future.
Greenland, through its subsidiaries, is:
| ● | a leading developer and manufacturer of transmission products for material handling machineries in China; and | |
| ● | a developer of electric industrial vehicles. |
Greenland’s transmission products are key components for forklift trucks, used in manufacturing and logistic applications such as factories, workshops, warehouses, fulfilment centers, shipyards, and seaports. Forklifts play an important role in logistics for many enterprises across different industries in the PRC and around the globe. Generally, industries with the largest demand for forklifts are transportation, warehousing logistics, electrical machinery, and automobile.
Greenland has experienced increased demand for forklifts in the manufacturing industry in the PRC, as its revenue increased from approximately $42.97 million for the nine months ended September 30, 2020 to approximately $75.90 million for the nine months ended September 30, 2021. Since late March 2020, the Company’s business operations have gradually recovered from the negative impacts due to the lockdown as a result of the COVID-19 pandemic, and part of the Company’s backlogged orders were processed during the nine months ended September 30, 2021, which contributed to an increase in its revenues for the nine months ended September 30, 2021.
Greenland’s transmission products are adopted by forklift trucks with weighted capacity ranging from 1 ton to 15 tons. These forklift trucks use either mechanical or automatic shift. Greenland sells its transmission products directly to forklift truck manufacturers. For the nine months ended September 30, 2021 and 2020, Greenland sold 110,082 and 71,749 sets of transmission products, respectively, to more than 100 forklift manufacturers in aggregate in PRC.
In December 2020, Greenland launched a new division that focuses on the production and sale of electric industrial vehicles; a market that Greenland intends to develop to diversify its product offerings. Greenland’s teams have completed the first batch of GEF-series electric forklifts, a lithium powered forklift with three models ranging in size from 1.8 ton to 3.5 tons, and began commercial sales of these electric forklifts in the United States market in November 2021. In addition, Greenland has completed construction of the initial GEL-1800, a 1.8 ton rated load lithium powered electric wheeled front loader, which is expected to become available for sale beginning in November 2021. These vehicles will be followed by Greenland’s GEX-8000, an all-electric 8.0 ton rated load lithium powered wheeled excavator, whose production has completed and is scheduled for arrival in the United States in January 2022. Greenland plans to establish assembly sites and experience centers in the United States in 2022 to support local sales, assembly and distribution.
3
Impact of COVID-19 Pandemic on Our Operations and Financial Performance
The COVID-19 pandemic has severely affected China and the rest of the world. In an effort to contain the spread of the COVID-19 pandemic, China and many other countries have taken precautionary measures, such as imposing travel restrictions, quarantining individuals infected with or suspected of being infected with COVID-19, encouraging or requiring people to work remotely, and canceling public activities, among others. These ongoing measures adversely affected our operations and financial performance in 2020.
Specifically, the COVID-19 pandemic adversely affected our revenue in the first half of 2020. For example, from February 3, 2020 to the end of February 2020, the Company closed all of its operating offices in Zhejiang Province, including manufactory, in response to the emergency measures imposed by local government. The pandemic also significantly limited suppliers’ ability to provide low-cost, high-quality merchandise to the Company on a timely basis.
Since late March 2020, the Company’s business operations have gradually recovered from the negative impacts due to the lockdown, and the Company’s backlogged orders were mostly processed during the rest of fiscal year 2020 and also the first quarter of fiscal year 2021, which contributed to an increase in its revenues for the year ended December 31, 2020 and for the nine months ended September 30, 2021.
Starting from the fourth quarter of 2020, a few waves of COVID-19 infection emerged in various regions of China, and varying levels of restrictions have been reinstated. The extent to which the COVID-19 pandemic may affect our operations and financial performance in the future will depend on future developments, which are highly uncertain and cannot be predicted.
Results of Operations
For the three months ended September 30, 2021 and 2020
Overview
| For the three months ended September 30 | ||||||||||||||||
| 2021 | 2020 | Change | Variance | |||||||||||||
| Revenues | $ | 23,084,793 | $ | 16,520,598 | $ | 6,564,195 | 39.7 | % | ||||||||
| Cost of Goods Sold | 17,987,363 | 13,122,382 | 4,864,981 | 37.1 | % | |||||||||||
| Gross Profit | 5,097,430 | 3,398,216 | 1,699,214 | 50.0 | % | |||||||||||
| Selling expenses | 522,770 | 270,654 | 252,116 | 93.2 | % | |||||||||||
| General and administrative expenses | 1,150,769 | 324,073 | 826,696 | 255.1 | % | |||||||||||
| Research and development expenses | 1,372,215 | 564,204 | 808,011 | 143.2 | % | |||||||||||
| Total Operating Expenses | 3,045,754 | 1,158,931 | 1,886,823 | 162.8 | % | |||||||||||
| Income from operations | 2,051,676 | 2,239,285 | (187,609 | ) | (8.4 | )% | ||||||||||
| Interest income | 4,737 | 66,960 | (62,223 | ) | (92.9 | )% | ||||||||||
| Interest expenses | (106,506 | ) | (231,760 | ) | 125,254 | (54.0 | )% | |||||||||
| Other income | 231,466 | (1,267,982 | ) | 1,499,448 | (118.3 | )% | ||||||||||
| Income before income tax | 2,181,373 | 806,503 | 1,374,870 | 170.5 | % | |||||||||||
| Income tax | 927,844 | 346,502 | 581,342 | 167.8 | % | |||||||||||
| Net income | 1,253,529 | 460,001 | 793,528 | 172.5 | % | |||||||||||
4
Components of Results of Operations
For the three months ended September 30 | ||||||||
| Component of Results of Operations | 2021 | 2020 | ||||||
| Revenues | $ | 23,084,793 | $ | 16,520,598 | ||||
| Cost of Goods Sold | 17,987,363 | 13,122,382 | ||||||
| Gross Profit | 5,097,430 | 3,398,216 | ||||||
| Operating Expenses | 3,045,754 | 1,158,931 | ||||||
| Net Income | 1,253,529 | 460,001 | ||||||
Revenue
Greenland’s revenue was approximately $23.08 million for the three months ended September 30, 2021, representing an increase of approximately $6.56 million, or 39.7%, as compared to that of approximately $16.52 million for the three months ended September 30, 2020. The increase was primarily due to a significant increase in our sales volume resulting from the continuously growing market demand and the ability to boost supplies while some competitors faced challenges in handling material shortage and were unable to deliver. On an RMB basis, revenue for the three months ended September 30, 2021 increased by approximately 30.8%, as compared to that for the three months ended September 30, 2020.
Cost of Goods Sold
Greenland’s cost of goods sold consists primarily of material costs, freight charges, purchasing and receiving costs, inspection costs, internal transfer costs, wages, employee compensation, amortization, depreciation and related costs, which are directly attributable to the Company’s manufacturing activities. The write down of inventory using the net realizable value (“NRV”) impairment test is also recorded in cost of goods sold. The total cost of goods sold was approximately $17.99 million for the three months ended September 30, 2021, representing an increase by approximately $4.87 million, or 37.1%, as compared to that of approximately $13.12 million for the three months ended September 30, 2020. Cost of goods sold increased due to our increase in sales volume.
Gross Profit
Greenland’s gross profit was approximately $5.10 million for the three months ended September 30, 2021, representing an increase by approximately $1.70 million, or 50.0%, as compared to that of approximately $3.40 million for the three months ended September 30, 2020. For the three months ended September 30, 2021 and 2020, Greenland’s gross margins were approximately 22.1% and 20.6%, respectively. The increase was primarily due to a shift in the product mix towards higher value and more sophisticated products such as hydraulic transmission products.
5
Operating Expense
Greenland’s operating expenses consist of selling expenses, general and administrative expenses and research and development expenses.
Selling Expense
Selling expenses mainly comprise of operating expenses such as sales staff payroll, traveling expenses, and transportation expenses. Our selling expenses were approximately $0.52 million for the three months ended September 30, 2021, representing an increase of approximately $0.25 million, or 93.2%, as compared to approximately $0.27 million for the three months ended September 30, 2020. The increase was mainly due to the increase in the unit price of transportation expenses.
General and Administrative Expenses
General and administrative expenses comprise of management and staff salaries, employee benefits, depreciation for office facility and office furniture and equipment, travel and entertainment expenses, legal and accounting fees, financial consulting fees, and other office expenses. General and administrative expenses were approximately $1.15 million for the three months ended September 30, 2021, representing an increase by approximately $0.83 million, or 255.1%, as compared to that of approximately $0.32 million for the three months ended September 30, 2020. The fundamental reasons for the rise in the general and administrative expenses were that the Company expanded its operations with increased legal fee and consultancy fee on business planning and projects in the three months ended September 30, 2021 compared to the same period in 2020.
Research and Development (R&D) Expenses
R&D expenses consist of R&D personnel compensation, costs of materials used in R&D projects, and depreciation costs for research-related equipment. R&D expenses were approximately $1.37 million for the three months ended September 30, 2021, representing an increase by approximately $0.81 million, or 143.2%, as compared to that of approximately $0.56 million for the three months ended September 30, 2020. Such increase was primarily attributable to the increase in the R&D investment in higher value and more sophisticated products and electrification products.
Income from Operations
Income from operations for the three months ended September 30, 2021 was approximately $2.05 million, representing a decrease of approximately $0.19 million, as compared to that of approximately $2.24 million for the three months ended September 30, 2020.
Interest Income and Interest Expenses
Greenland’s interest income was approximately $0.01 million for the three months ended September 30, 2021, representing a decrease of approximately $0.06 million, or 92.9%, as compared to that of approximately $0.07 million for the three months ended September 30, 2020. The decrease in interest income was primarily due to the reason that less cash was deposited in banks during the three months ended September 30, 2021.
Greenland’s interest expenses were approximately $0.11 million for the three months ended September 30, 2021, representing a decrease of approximately $0.12 million, or 54.0%, as compared to that of approximately $0.23 million for the three months ended September 30, 2020. The decrease was primarily due to a reduction of our short-term loans for the three months ended September 30, 2021, compared to those for the three months ended September 30, 2020.
Other Income
Greenland’s other income was approximately $0.23 million for the three months ended September 30, 2021, an increase of approximately $1.50 million, or 118.3%, as compared to approximately $(1.27) million for the three months ended September 30, 2020. The increase was primarily due to a decrease in exchange loss from the devaluation of U.S. dollar over RMB for the three months ended September 30, 2021, compared to the three months ended September 30, 2020.
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Income Taxes
Greenland’s income tax was approximately $0.93 million for the three months ended September 30, 2021, as compared to that of approximately $0.35 million for the three months ended September 30, 2020.
PRC operating subsidiary, Zhejiang Zhongchai, obtained a “high-tech enterprise” status near the end of the fiscal year of 2019. Such status enables Zhejiang Zhongchai to enjoy a reduced statutory income tax rate of 15%, rather than the common PRC corporate tax rate of 25%. The “high-tech enterprise” status is reevaluated by relevant Chinese government agencies every three years. Zhejiang Zhongchai’s current “high-tech enterprise” will be reevaluated near the end of 2022.
Greenland’s other PRC subsidiaries are subject to different income tax rates. Hengyu, the 62.5% owned subsidiary of Zhongchai Holding, is subject to the 25% standard income tax rate. Hangzhou Greenland, the wholly owned subsidiary of Zhongchai Holding, is subject to the 25% standard income tax rate.
Greenland is a holding Company registered in the British Virgin Islands and is not subject to tax on income or capital gains under the current British Virgin Islands law. In addition, upon payments of dividend to its shareholders, the Company will not be subject to any British Virgin Islands withholding tax.
On January 14, 2020, Greenland established its wholly owned subsidiary in the state of Delaware named Greenland Technologies Corporation (“Greenland Tech”). We aim to use it as its U.S. operation site for the assembly, marketing and sales of electric industrial vehicles for the North American market. Greenland Tech currently does not conduct any business activities. On December 22, 2017, the U.S. federal government enacted the 2017 Tax Act. The 2017 Tax Act includes a number of changes in existing tax law impacting businesses, including the transition tax, a one-time deemed repatriation of cumulative undistributed foreign earnings and a permanent reduction in the U.S. federal statutory rate from 35% to 21%, effective on January 1, 2018. ASC 740 requires companies to recognize the effect of tax law changes in the period of enactment, accordingly, the effects must be recognized on companies’ calendar year-end financial statements, even though the effective date for most provisions is January 1, 2018. Since Greenland Tech was established in year 2020, the one-time transition tax did not have any impact on the Company’s tax provision and there was no undistributed accumulated earnings and profits as of September 30, 2021.
Net Income
Our net income was approximately $1.25 million for the three months ended September 30, 2021, representing an increase of approximately $0.79 million, as compared to that of approximately $0.46 million for the three months ended September 30, 2020.
For the nine months ended September 30, 2021 and 2020
Overview
| For the nine months ended September 30 | ||||||||||||||||
| 2021 | 2020 | Change | Variance | |||||||||||||
| Revenues | $ | 75,899,994 | $ | 42,969,010 | $ | 32,930,984 | 76.6 | % | ||||||||
| Cost of Goods Sold | 59,993,008 | 34,764,736 | 25,228,272 | 72.6 | % | |||||||||||
| Gross Profit | 15,906,986 | 8,204,274 | 7,702,712 | 93.9 | % | |||||||||||
| Selling expenses | 1,397,462 | 792,030 | 605,432 | 76.4 | % | |||||||||||
| General and administrative expenses | 2,814,120 | 1,841,958 | 972,162 | 52.8 | % | |||||||||||
| Research and development expenses | 3,337,056 | 1,604,151 | 1,732,905 | 108.0 | % | |||||||||||
| Total Operating Expenses | 7,548,638 | 4,238,139 | 3,310,499 | 78.1 | % | |||||||||||
| Income from operations | 8,358,348 | 3,966,135 | 4,392,213 | 110.7 | % | |||||||||||
| Interest income | 14,165 | 142,791 | (128,626 | ) | (90.1 | )% | ||||||||||
| Interest expenses | (508,359 | ) | (942,524 | ) | 434,165 | (46.1 | )% | |||||||||
| Other income | 829,556 | (415,150 | ) | 1,244,706 | (299.8 | )% | ||||||||||
| Income before income tax | 8,693,710 | 2,751,252 | 5,942,458 | 216.0 | % | |||||||||||
| Income tax | 1,844,619 | 491,660 | 1,352,959 | 275.2 | % | |||||||||||
| Net income | 6,849,091 | 2,259,592 | 4,589,499 | 203.1 | % | |||||||||||
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Components of Results of Operations
For the nine months ended September 30 | ||||||||
| Component of Results of Operations | 2021 | 2020 | ||||||
| Revenues | $ | 75,899,994 | $ | 42,969,010 | ||||
| Cost of Goods Sold | 59,993,008 | 34,764,736 | ||||||
| Gross Profit | 15,906,986 | 8,204,274 | ||||||
| Operating Expenses | 7,548,638 | 4,238,139 | ||||||
| Net Income | 6,849,091 | 2,259,592 | ||||||
Revenue
Greenland’s revenue was approximately $75.90 million for the nine months ended September 30, 2021, representing an increase of approximately $32.93 million, or 76.6%, as compared to approximately $42.97 million for the nine months ended September 30, 2020. The increase was primarily due to a significant increase in our sales volume resulting from the continuously growing market demand and the ability to boost supplies while some competitors faced challenges in handling material shortage and were unable to deliver. On an RMB basis, revenue for the nine months ended September 30, 2021 increased by approximately 63.36%, as compared to the nine months ended September 30, 2020.
Cost of Goods Sold
Greenland’s cost of goods sold consists primarily of material costs, freight charges, purchasing and receiving costs, inspection costs, internal transfer costs, wages, employee compensation, amortization, depreciation and related costs, which are directly attributable to the Company’s manufacturing activities. The write down of inventory using the net realizable value (“NRV”) impairment test is also recorded in cost of goods sold. The total cost of goods sold was approximately $60.00 million for the nine months ended September 30, 2021, representing an increase by approximately $25.23 million, or 72.6%, as compared to approximately $34.76 million for the nine months ended September 30, 2020. Cost of goods sold increased due to our increase in sales volume.
Gross Profit
Greenland’s gross profit was approximately $15.91 million for the nine months ended September 30, 2021, representing an increase by approximately 7.70 million, or 93.9%, as compared to approximately $8.20 million for the nine months ended September 30, 2020. For the nine months ended September 30, 2021 and 2020, Greenland’s gross margins were approximately 21.0% and 19.1%, respectively. The increase was primarily due to a shift in the product mix towards higher value and more sophisticated products such as hydraulic transmission products.
Selling Expense
Selling expenses mainly comprise of operating expenses (such as sales staff payroll), traveling expenses, and transportation expenses. Our selling expenses were approximately $1.40 million for the nine months ended September 30, 2021, representing an increase of approximately $0.61 million, or 76.4%, as compared to approximately $0.79 million for the nine months ended September 30, 2020. The increase was mainly due to an increase in the unit price of transportation expenses.
General and Administrative Expenses
General and administrative expenses comprise of management and staff salaries, employee benefits, depreciation for office facility and office furniture and equipment, travel and entertainment expenses, legal and accounting fees, financial consulting fees, and other office expenses. General and administrative expenses were approximately $2.81 million for the nine months ended September 30, 2021, representing an increase by approximately $0.97 million, or 52.8%, as compared to approximately $1.84 million for the nine months ended September 30, 2020. The fundamental reasons for the rise in the general and administrative expenses were that the company expanded its operations with increased legal fee and consultancy fee on business planning and projects in the nine months ended September 30, 2021 compared with the same period in 2020.
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Research and Development (R&D) Expenses
R&D expenses consist of R&D personnel compensation, costs of materials used in R&D projects, and depreciation costs for research-related equipment. R&D expenses were approximately $3.34 million for the nine months ended September 30, 2021, representing an increase by approximately $1.74 million, or 108.0%, as compared to approximately $1.60 million for the nine months ended September 30, 2020. Such increase was primarily attributable to the increase in the R&D investment in higher value and more sophisticated products and electrification products.
Income from Operations
Income from operations for the nine months ended September 30, 2021 was approximately $8.36 million, representing an increase of approximately $4.39 million, as compared to approximately $3.97 million for the nine months ended September 30, 2020. Such increase was primarily attributable to the increase of gross profit.
Interest Income and Interest Expenses
Greenland’s interest income was approximately $0.01 million for the nine months ended September 30, 2020, representing a decrease of approximately $0.13 million, or 90.1%, as compared to approximately $0.14 million for the nine months ended September 30, 2019. The decrease in interest income was primarily due to the reason that less cash was deposited in banks during the nine months ended September 30, 2021.
Greenland’s interest expenses were approximately $0.51 million for the nine months ended September 30, 2021, representing a decrease of approximately $0.43 million, or 46.1%, as compared to approximately $0.94 million for the nine months ended September 30, 2020. The decrease was primarily due to a reduction of our short-term loans for the nine months ended September 30, 2021, compared to those for the three months ended September 30, 2020.
Other Income
Greenland’s other income was approximately $0.83 million for the nine months ended September 30, 2021, representing an increase of approximately $1.25 million, or 299.8%, as compared to approximately $(0.42) million for the nine months ended September 30, 2020. The increase was primarily due to a decrease in exchange loss from the devaluation of U.S. dollar over RMB for the nine months ended September 30, 2021, compared to those for the nine months ended September 30, 2020.
Income Taxes
Greenland’s income tax was approximately $1.84 million for the nine months ended September 30, 2021, as compared to approximately $0.49 million for the nine months ended September 30, 2020. Our income tax expense increased due to an increase in overall profit during the nine months ended September 30, 2021.
Net Income
Our net income was approximately $6.85 million for the nine months ended September 30, 2021, representing an increase of approximately $4.59 million, as compared to approximately $2.26 million for the nine months ended September 30, 2020.
Liquidity and Capital Resources
Greenland is a holding company incorporated in the British Virgin Islands. Current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, our PRC subsidiaries are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of their respective registered capital. Our PRC subsidiaries may also allocate a portion of their after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion. These reserves are not distributable as cash dividends.
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We have funded working capital and other capital requirements primarily by equity contributions, cash flow from operations, short-term bank loans and bank acceptance notes, and long-term bank loans. Cash is primarily used to purchase raw materials, repay debts and pay salaries, office expenses, income taxes, and other operating expenses.
For the nine months ended September 30, 2021, our PRC subsidiary, Zhejiang Zhongchai, paid off approximately $18.65 million in bank loan, approximately $1.75 million in related parties loan, approximately $0.31 million in third parties loan, and maintained $15.66 million cash on hand. We plan to maintain the current debt structure and rely on governmentally supported loans with lower costs, if necessary.
The government subsidy mainly consists of an incentive granted by the Chinese government to encourage transformation of fixed assets in China and other miscellaneous subsidy from the Chinese government. Government subsidies are recognized when there is reasonable assurance that the subsidy will be received and all conditions be completed. Total government subsidies recorded under long-term liabilities were $2.18 million and $2.34 million on September 30, 2021 and December 31, 2020, respectively.
The Company currently plans to fund its operations mainly through cash flow from its operations, renewal of bank borrowings, additional equity financing, and continuation of financial support from its shareholders and affiliates controlled by its principal shareholders, if necessary. The Company might implement a stricter policy on sales to less creditworthy customers and plans to continue to improve its collection efforts on accounts with outstanding balances. The Company is actively working with customers and suppliers and expects to fully collect the remaining balance.
We believe that the Company has sufficient cash, even with uncertainty in the Company’s manufacturing and sale of electric industrial vehicles in the future and decline on sale of transmission products. We expect that our capital contribution from existing funding sources will be sufficient for us to operate for the next 12 months. We remain confident and are expected to generate positive cash flow from our operations.
We may need additional cash resources in the future, if the Company experiences failure in collecting account receivables, changes in business condition, changes in financial condition, or other developments. We may also need additional cash resources, if the Company wishes to pursue opportunities for investment, acquisition, strategic cooperation, or other similar actions. If the Company’s management and its Board determine that the cash required for specific corporate activities exceed Greenland’s cash and cash equivalents on hand, the Company may issue debt or equity securities to raise cash.
Historically, we have expended considerable resources on building a new factory and paid off a considerable amount of debt, resulting in less available cash. However, we anticipate that our cash flow will continue to improve for the fiscal year 2021. We have completed Zhejiang Zhongchai’s new factory construction and the PRC government has provided subsidies to ease the local business-related financing conditions caused by the COVID-19 outbreak. Furthermore, we pledged the deed of our new factory as a collateral to banks to obtain additional loans, refinance expiring loans, restructure short-term loans, and fund other working capital needs upon acceptable terms to Greenland.
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Cash and Cash Equivalents
Cash equivalents refers to all highly liquid investments purchased with original maturity of three months or less. As of September 30, 2021, Greenland had approximately $9.02 million of cash and cash equivalents, representing an increase of approximately $1.86 million, or 26.01%, as compared to that of approximately $7.16 million as of December 31, 2020. The increase of cash was mainly attributable to proceeds from equity and debt financing during the nine months ended September 30, 2021.
Restricted Cash
Restricted cash represents the amount held by a bank as security for bank acceptance notes and therefore is not available for use until the bank acceptance notes are fulfilled or expired, which typically takes less than twelve months. As of September 30, 2021, Greenland had approximately $6.64 million of restricted cash, representing an increase of approximately $4.39 million, or 195.70%, as compared to that of approximately $2.24 million as of December 31, 2020. The increase of restricted cash was due to the increase in the deposit for bank acceptance notes.
Accounts Receivable
As of September 30, 2021, Greenland had approximately $21.32 million of accounts receivables, representing an increase of approximately $8.91 million, or 71.83%, as compared to those of approximately $12.41 million as of December 31, 2020. The increase in accounts receivable was due to our slowed-down effort in receivables collections due to the COVID-19 pandemic and our increase in sales volume.
Greenland recorded approximately $1.00 million of provision for doubtful accounts as of September 30, 2021. Greenland conducted an aging analysis of each customer’s delinquent payments to determine whether allowance for doubtful accounts is adequate. In establishing the allowance for doubtful accounts, Greenland considers historical experience, economic environment, and expected collectability of past due receivables. An estimate of doubtful accounts is recorded when collection of the full amount is no longer probable. When bad debts are identified, such debts are written off against the allowance for doubtful accounts. Greenland will continuously assess its potential losses based on the credit history of and relationships with its customers on a regular basis to determine whether its bad debt allowance on its accounts receivables is adequate. Greenland believes that its collection policies are generally in line with the transmissions industry’s standard in PRC.
Due from Related Party
Due from related party was $39.03 million and $38.54 million as of September 30, 2021 and December 31, 2020, respectively. The current portion of due from related party was $39.03 million as of September 30, 2021, and the current portion of due from related party was $38.54 million as of December 31, 2020. We expect the amount due from our controlling shareholder, Cenntro Holding Limited, to be paid back on April 27, 2022, as mutually agreed by the Company and Cenntro Holding Limited, for an extension of repayment from the end of October 2020 in accordance with the original maturity date.
However, there is no guarantee that such amount will be repaid in whole or in part before the end of April 2022, if at all. Such failure to pay back by Cenntro Holding Limited could have a material negative impact on our balance sheet.
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Notes Receivable
As of September 30, 2021, Greenland had approximately $37.03 million of notes receivables, which will be collected by us within nine month. The increase of our notes receivables was approximately $6.22 million, or 20.21%, from that of approximately $30.80 million as of December 31, 2020.
Working Capital
Our working capital was approximately $45.10 million as of September 30, 2021, as compared to that of $28.84 million as of December 31, 2020, representing an increase of $16.26 million during the nine months ended September 30, 2021
Cash Flow
For the nine months Ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| Net cash provided by operating activities | $ | (5,864,423 | ) | $ | 2,201,537 | |||
| Net cash provided by (used in) investing activities | $ | (685,761 | ) | $ | (183,117 | ) | ||
| Net cash provided by (used in) financing activities | $ | 12,669,108 | $ | 2,196,111 | ||||
| Net increase in cash and cash equivalents and restricted cash | $ | 6,118,924 | $ | 4,214,531 | ||||
| Effect of exchange rate changes on cash and cash equivalents | $ | 134,379 | $ | 1,262,878 | ||||
| Cash and cash equivalents and restricted cash at beginning of year | $ | 9,403,053 | $ | 5,717,207 | ||||
| Cash and cash equivalents and restricted cash at end of year | $ | 15,656,356 | $ | 11,194,616 | ||||
Operating Activities
Greenland’s net cash provided by operating activities were approximately $(5.86) million and $2.20 million for the nine months ended September 30, 2021 and 2020, respectively.
For the nine months ended September 30, 2021, the main sources of cash inflow from operating activities were net income, change in accounts payable, and depreciation and amortization, with each amounted to approximately $6.85 million, $5.98 million and $1.87 million. respectively. The main causes of cash outflow were changes in notes receivable and accounts receivables, representing increases of approximately $5.81 million and $8.72 million, respectively.
For the nine months ended September 30, 2020, the main sources of cash inflow from operating activities were net income, change in accounts payable, and depreciation and amortization, with each amounted to approximately $2.26 million, $6.32 million and $1.75 million, respectively. The main causes of changes in cash outflow were changes in accounts receivables, notes receivable, inventories, representing increases of approximately $3.41 million, $3.31 million and $2.20 million, respectively.
Investing Activities
Net cash used in investing activities resulted a cash outflow of approximately $0.69 million for the nine months ended September 30, 2021. Cash used in investing activities for the nine months ended September 30, 2021 was mainly due to $0.17 million proceeds from government grants for construction, offset by approximately $0.85 million used for purchases of long-term assets.
Net cash used in investing activities resulted a cash outflow of approximately $0.18 million for the nine months ended September 30, 2020. Cash used in investing activities for the nine months ended September 30, 2020 was mainly due to $0.25 million proceeds from government grants for construction offset by approximately $ 0.44 million used for purchases of long-term assets.
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Financing Activities
Net cash used in financing activities resulted a cash inflow of approximately $12.67 million for the nine months ended September 30, 2021, which was mainly attributable to approximately $8.21 million proceeds from equity and debt financing and approximately $16.35 million proceeds from notes payable. Such amounts were further offset by repayment of short-term bank loans for approximately $18.65 million, and repayment of loans from related parties for approximately $1.75 million.
Net cash used in financing activities resulted a cash outflow of approximately $2.20 million for the nine months ended September 30, 2020, which was mainly attributable to approximately $20.84 million proceeds from short-term bank loans and approximately $20.56 million proceeds from note payable. Such amounts were further offset by proceed from related party for approximately $18.50 million, and repayment of short-term bank loans for approximately $17.55 million.
Credit Risk
Credit risk is one of the most significant risks for Greenland’s business. Accounts receivable are typically unsecured and derived from revenues earned from customers, thereby exposing Greenland to credit risk. Credit risk is controlled by the application of credit approvals, limits, and monitoring procedures. Greenland identifies credit risk collectively based on industry, geography, and customer type. This information is monitored regularly by the Company’s management. In measuring the credit risk of sales to customers, Greenland mainly reflects the “probability of default” by the customer on its contractual obligations and considers the current financial position of the customer and the exposures to the customer and its future development.
Liquidity Risk
Greenland is exposed to liquidity risk when it is unable to provide sufficient capital resources and liquidity to meet its commitments and/or business needs. Liquidity risk is managed by the application of financial position analysis to test if Greenland is in danger of liquidity issues and also by application of monitoring procedures to constantly monitor its conditions and movements. When necessary, Greenland resorts to other financial institutions to obtain additional short-term funding to meet the liquidity shortage.
Inflation Risk
Greenland is also exposed to inflation risk. Inflationary factors, such as increases in raw material and overhead costs, could impair Greenland’s operating results. Although Greenland does not believe that inflation has had a material impact on its financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on its ability to maintain current levels of gross margin and operating expenses as a percentage of sales revenues if the selling prices of its products do not increase with such increased costs.
Critical Accounting Policies and Estimates
We prepare our consolidated financial statements in accordance with U.S. GAAP. In applying accounting principles, it is often required to use estimates. These estimates consider the facts, circumstances and information available, and may be based on subjective inputs, assumptions and information known and unknown to us. Material changes in certain of the estimates that we use could potentially affect, by a material amount, our consolidated financial position and results of operations. Although results may vary, we believe our estimates are reasonable and appropriate. See Note 2 to our consolidated financial statements included in “Item 8 - Financial Statements and Supplementary Data” for a summary of our significant accounting policies. The following describes certain of our significant accounting policies that involve more subjective and complex judgments where the effect on our consolidated financial position and operating performance could be material.
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Revenue Recognition
In accordance with ASC Topic 606, “Revenue from Contracts with Customers”, the Company recognizes revenues when goods or services are transferred to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. In determining when and how revenues are recognized from contracts with customers, the Company performs the following five-step analysis: (i) identification of contract with customer; (ii) determination of performance obligations; (iii) measurement of the transaction price; (iv) allocation of the transaction price to the performance obligations, and (v) recognition of revenues when (or as) the Company satisfies each performance obligation. The Company derives revenues from the processing, distribution and sale of its products. The Company recognizes its revenues net of value-added taxes (“VAT”). The Company is subject to VAT which had been levied at the rate of 17% on the invoiced value of sales until April 30, 2018, after which date the rate was reduced to 16%. VAT rate was further reduced to 13% starting from April 1, 2019. Output VAT is borne by customers in addition to the invoiced value of sales and input VAT is borne by the Company in addition to the invoiced value of purchases to the extent not refunded for export sales.
Revenues are recognized at a point in time once the Company has determined that the customer has obtained control over the product. Control is typically deemed to have been transferred to the customer when the performance obligation is fulfilled, usually at the time of customers’ acceptance or consumption, at the net sales price (transaction price) and each of the criteria under ASC 606 have been met. Contract terms may require the Company to deliver the finished goods to the customers’ location or the customer may pick up the finished goods at the Company’s factory. International sales are recognized when shipment clears customs and leaves the port.
The Company has adopted ASC 606 on January 1, 2018, using the transition method of Modified-Retrospective Method (“MRM”). The adoption of ASC 606 had no impact on the Company’s beginning balance of retained earnings.
The Company’s contracts are all short-term in nature with a contract term of one year or less. Receivables are recorded when the Company has an unconditional right to consideration.
Business Combination
On October 24, 2019, we consummated our business combination with Zhongchai Holding (the “Business Combination”) following a special meeting of the shareholders where the shareholders of Greenland considered and approved, among other matters, a proposal to adopt an share exchange agreement (the “Share Exchange Agreement”), dated as of July 12, 2019 by and among (i) Greenland, (ii) Zhongchai Holding, (iii) the Sponsor in the capacity as the purchaser representative (the “Purchaser Representative”), and (iv) Cenntro Holding Limited, the sole member of Zhongchai Holding (the “Zhongchai Equity Holder” or the “Seller”).
Pursuant to the Share Exchange Agreement, Greenland acquired from the Seller all of the issued and outstanding equity interests of Zhongchai Holding in exchange for the issuance of 7,500,000 ordinary shares, no par value of Greenland, to the Seller (the “Exchange Shares”). As a result, the Seller became the controlling shareholder of Greenland, and Zhongchai Holding became a directly and wholly owned subsidiary of Greenland. The Business Combination was accounted for as a reverse merger effected by a share exchange, wherein Zhongchai Holding is considered the acquirer for accounting and financial reporting purposes.
Pursuant to certain Finder Agreement with Hanyi Zhou, dated May 29, 2019, 50,000 newly issued ordinary shares were issued to Zhou Hanyi as finder fee for the Business Combination.
Inventories
Inventories are stated at the lower of cost or net realizable value, which is based on estimated selling prices less any further costs expected to be incurred for completion and disposal. Cost of raw materials is calculated using the weighted average method and is based on purchase cost. Work-in-progress and finished goods costs are determined using the weighted average method and comprise direct materials, direct labor and an appropriate proportion of overhead.
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Income Taxes
The Company accounts for income taxes following the liability method pursuant to FASB ASC 740 “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in income in the period that includes the enactment date.
The Company also follows FASB ASC 740, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of September 30, 2021, the Company did not have any liability for unrecognized tax benefits. It is the Company’s policy to include penalties and interest expense related to income taxes as a component of other expense and interest expense, respectively, as necessary. The Company’s historical tax years will remain open for examination by the local authorities until the statute of limitations has passed.
Emerging growth Company
Pursuant to the JOBS Act, an emerging growth Company is provided the option to adopt new or revised accounting standards that may be issued by FASB or the SEC either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods as private companies. We intend to continue to take advantage of the exemption for complying with new or revised accounting standards within the same time periods as private companies. Accordingly, the information contained herein may be different than the information you receive from other public companies. We also intend to continue to take advantage of some of the reduced regulatory and reporting requirements of emerging growth companies pursuant to the JOBS Act so long as we qualify as an emerging growth Company, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments.
Off Balance Sheet Arrangements
None.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is not required to provide the information required by this Item as it is a smaller reporting company.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
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Evaluation of Disclosure Controls and Procedures
As of September 30, 2021, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon such evaluation, our chief executive officer and chief financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were ineffective. Such conclusion is based on the presence of the following material weakness in internal control over financial reporting for the nine months ended September 30, 2021:
Accounting and Financial Reporting Personnel Material Weakness - As noted in Item 9A of our annual report on Form 10-K for the preceding fiscal year, management concluded that in light of the inexperience of our accounting staff with respect to the requirements of US GAAP-based reporting and SEC rules and regulations, we did not maintain effective controls and did not implement adequate and proper supervisory review to ensure that significant internal control deficiencies can be detected or prevented.
As a result, the Company has developed a remedial plan to strengthen its accounting and financial reporting functions. To strengthen the Company’s internal control over financial reporting, the Company is currently implementing the following remedial actions:
| ● | Developing and formalizing of key accounting and financial reporting policies and procedures; |
| ● | Recruiting more financial reporting and accounting personnel who have adequate U.S. GAAP knowledge; |
| ● | Training key position staff by U.S. accountant with U.S. corporate accounting experiences, and gaining additional knowledge and professional skills about SEC regulations and U.S. GAAP; |
| ● | Planning to acquire additional resources to strengthen the financial reporting function and set up a financial and system control framework; and |
| ● | Establishing effective oversight and clarifying reporting requirements for non-recurring and complex transactions to ensure consolidated financial statements and related disclosures are accurate, complete and in compliance with U.S. GAAP and SEC reporting requirements. |
Inherent limitation on the effectiveness of internal control
The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.
Notwithstanding the material weakness in our internal control over financial reporting, the consolidated unaudited financial statements included in this Quarter Report on Form 10Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America.
Changes in Internal Control Over Financial Reporting
During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.
ITEM 1A. RISK FACTORS.
Not applicable to a smaller reporting company.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
There were no unregistered sales of the Company’s equity securities during the nine months ended September 30, 2021 that were not previously disclosed in reports filed with the SEC.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
No senior securities were issued and outstanding during the nine-month period ended September 30, 2021.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
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ITEM 6. EXHIBITS
(a) Exhibits
| (1) | Incorporated by reference to the Company’s Form 8-K, filed with the Commission on July 30, 2018. |
| (2) | Incorporated by reference to the Company’s Form S-1/A, filed with the Commission on July 16, 2018. |
| (3) | Incorporated by reference to the Company’s Form 8-K, filed with the Commission on October 30, 2019. |
| (4) | Incorporated by reference to the Company’s Definitive Proxy Statement on Schedule 14A, filed with the Commission on December 1, 2020. |
| * | Filed herewith. |
| ** | In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 herewith are deemed to accompany this Form 10-Q and will not be deemed filed for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Greenland Technologies Holding Corp. | |
| Date: November 12, 2021 | /s/ Raymond Z. Wang |
|
Raymond Z. Wang Chief Executive Officer and President |
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Exhibit 31.1
Certification by the Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Raymond Z. Wang, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Greenland Technologies Holding Corporation; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; | |
| 4. | The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c. | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and |
| 5. | The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
| Date: | November 12, 2021 | |
| /s/ Raymond Z. Wang | ||
| Name: | Raymond Z. Wang | |
| Title: | Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
Certification by the Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Jing Jin, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Greenland Technologies Holding Corporation; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; | |
| 4. | The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c. | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and |
| 5. | The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
| Date: | November 12, 2021 | |
| /s/ Jing Jin | ||
| Name: | Jing Jin | |
| Title: |
Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
Certification by the Principal Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to U.S.C. Section 1350 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), I, Raymond Z. Wang, Chief Executive Officer of Greenland Technologies Holding Corporation (the “Company”), hereby certify to my knowledge that:
The quarterly report on Form 10-Q for the quarter ended September 30, 2021 of the Company fully complies, in all material respects, with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: November 12, 2021
| /s/ Raymond Z. Wang | |
| Raymond Z. Wang | |
| Chief Executive Officer (Principal Executive Officer) |
Exhibit 32.2
Certification by the Principal Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to U.S.C. Section 1350 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), I, Jing Jin, Chief Financial Officer of Greenland Technologies Holding Corporation (the “Company”), hereby certify to my knowledge that:
The quarterly report on Form 10-Q for the quarter ended September 30, 2021 of the Company fully complies, in all material respects, with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: November 12, 2021
| /s/ Jing Jin | |
| Jing Jin | |
| Chief Financial Officer (Principal Financial Officer) |