SEC Form 10-K/A filed by Greenland Technologies Holding Corporation (Amendment)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
FOR THE FISCAL YEAR ENDED
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was approximately $
As of March 31, 2023, there were
Explanatory Note
Greenland Technologies Holding Corporation (the “Company”) is filing this Amendment No. 1 to the Annual Report on Form 10-K (this “Amendment”) to amend the disclosure in (i) Management’s Discussion and Analysis of Financial Condition and Results of Operations under Item 7, (ii) financial statements and footnotes under Item 8, (iii) related party transactions under Item 13, (iv) exhibit index under Item 15, to reflect certain revisions to the Company’s financials as of December 31, 2022 and for the year then ended contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “Original Form 10-K”), filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2023. Based on the Company’s reassessment of certain transactions, the effect of the restatement resulted in an increase in total long-term liabilities, a decrease in net loss, a decrease in shareholders’ equity, to the Company’s financials as of December 31, 2022 and for the year then ended.
The Company also updated the cover page of this Amendment to reflect that it is no longer an emerging growth company since the fiscal year ending December 31, 2024.
Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), this Amendment also contains new certifications of the Company’s principal executive officer and principal financial officer.
Except as described above, no other changes have been made to the Original Form 10-K and this Amendment does not reflect events occurring after the filing of the Original Form 10-K, and no attempt has been made in this Amendment to modify or update other disclosures as presented in the Original Form 10-K. Accordingly, this Amendment should be read in conjunction with the Original Form 10-K and the Company’s filings made with the SEC subsequent to the Original Form 10-K.
TABLE OF CONTENTS
i
PART II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF GREENLAND TECHNOLOGIES HOLDING CORPORATION
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 Amendment,, and should be read in conjunction with such financial statements and related notes included in this Amendment.. Except for the historical information contained herein, the following discussion, as well as other information in the Original Form 10-K, contain “forward-looking statements,” within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act, 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 “Cautionary Note Regarding Forward-Looking Statements” set forth elsewhere in the Original Form 10-K.
Overview
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. Following the Business Combination (as described below) in October 2019, the Company changed its name from Greenland Acquisition Corporation to Greenland Technologies Holding Corporation.
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 the Sponsor and Chardan, which generated $2,820,000 in gross proceeds. We also sold to Chardan (and its designees), for $100, an option to purchase up to 240,000 units exercisable at $11.50 per unit (or an aggregate exercise price of $2,760,000) commencing on consummation of the Business Combination. The unit purchase option may be exercised for cash or on a cashless basis, at the holder’s option, and expires on July 24, 2023. On February 18, 2021, Chardan exercised its option to purchase 120,000 units. As of the date of the Original Form 10-K, an option exercisable by Chardan for 120,000 units is outstanding.
On October 24, 2019, we consummated our Business Combination with Zhongchai Holding 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 that allowed Greenland to acquire from the Seller 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.
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.
1
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, HEVI was incorporated under the laws of the State of Delaware. HEVI is a 100% owned subsidiary of Greenland. HEVI focuses on the production and sale of electric industrial equipment, including electric industrial vehicles, for the North American market.
Greenland serves as the parent company to Zhongchai Holding. Through Zhongchai Holding and its subsidiaries, Greenland develops and manufactures traditional transmission products for material handling machineries and electric industrial heavy equipment, including electric industrial vehicles.
Through its PRC subsidiaries, Greenland offers transmission products, which 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 the logistic systems of many companies across different industries in China and globally. Generally, industries with the largest demand for forklifts include the transportation, warehousing logistics, electrical machinery, and automobile industries. Greenland’s revenue decreased from approximately $98.84 million in the fiscal year 2021 to $90.83 million in the fiscal year 2022. The decrease in revenue was primarily the result of a decrease in the Company’s sales volume resulting from COVID-19 related lockdowns in China for the year ended December 31, 2022. Based on our revenues in the fiscal years ended December 31, 2022 and 2021, we believe that Greenland is one of the major developers and manufacturers of transmission products for small and medium-sized forklift trucks in China.
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. In the fiscal years ended December 31, 2022 and 2021, Greenland sold an aggregate of 129,686 and 141,431 sets of transmission products, respectively, to more than 100 forklift manufacturers in the PRC.
There is increasing demand for electric industrial heavy equipment powered by sustainable energy in order to reduce air pollution and lower carbon emissions. Utilizing Greenland’s expertise in manufacturing and R&D, it established HEVI in January 2020 to create clean and sustainable products and services in the heavy industrial equipment industry that help organizations pursue a carbon neutral operation. HEVI designs, develops, and manufactures electric heavy industrial equipment and accessories and sells them directly to the end consumers in various markets in the United States. HEVI’s product line available for purchase includes the GEL-5000 all-electric lithium 5.0-ton rated load wheeled front loader, GEL-1800 all-electric lithium 1.8-ton rated load wheeled front loader, the GEX-8000 all-electric lithium 8.0-ton rated load excavator, and the GEF-series of electric lithium forklifts. In August 2022, HEVI launched a 54,000 square foot industrial electric vehicle assembly site in Baltimore, Maryland to support local assembly, services and distribution of its product line.
Impact of COVID-19 Pandemic on Our Operations and Financial Performance
The COVID-19 pandemic has severely affected global economy. In an effort to contain the spread of the COVID-19 pandemic, in the fiscal years ended December 31, 2021 and 2022, China and many other countries took 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.
In 2021 and 2022, a few waves of COVID-19 infections emerged in various regions of China, and in response, the Chinese government implemented certain anti-COVID measures and protocols. However, these scattered outbreaks were brought under control in a relatively short period of time, and the COVID-19 had limited impact on our financial condition and results of operations in the fiscal years ended December 31, 2022 and 2021. In the fiscal years ended December 31, 2022 and 2021, we experienced rising raw material costs, which we believe to be short term as China lifted its COVID-19 protocols and measures in December 2022.
The extent to which the COVID-19 pandemic may continue to affect our operations and financial performance in the future will depend on future developments, which are highly uncertain and cannot be predicted at this time.
2
Results of Operations
For the fiscal years ended December 31, 2022 and 2021
Overview
| For
the Fiscal Years Ended December 31, | ||||||||||||||||
| 2022 | 2021 | $ Change | % Variance | |||||||||||||
| Revenues | $ | 90,830,674 | $ | 98,839,900 | $ | (8,009,226 | ) | (8.1 | ) | |||||||
| Cost of Goods Sold | 70,995,940 | 79,246,280 | (8,250,340 | ) | (10.4 | ) | ||||||||||
| Gross Profit | 19,834,734 | 19,593,620 | 241,114 | 1.2 | ||||||||||||
| Selling expenses | 2,630,226 | 1,868,156 | 762,070 | 40.8 | ||||||||||||
| General and administrative expenses | 5,459,020 | 3,948,850 | 1,510,170 | 38.2 | ||||||||||||
| Research and development expenses | 5,786,946 | 5,526,546 | 260,400 | 4.7 | ||||||||||||
| Total Operating Expenses | 13,876,192 | 11,343,552 | 2,532,640 | 22.3 | ||||||||||||
| Income from operations | 5,958,542 | 8,250,068 | (2,291,526 | ) | (27.8 | ) | ||||||||||
| Interest income | 56,817 | 68,295 | (11,478 | ) | (16.8 | ) | ||||||||||
| Interest expenses | (402,968 | ) | (587,264 | ) | 184,296 | (31.4 | ) | |||||||||
| Loss on disposal of property and equipment | (1,511 | ) | 1,785 | (3,296 | ) | (184.6 | ) | |||||||||
| Change in fair value of the warrant liability | (2,814,012 | ) | - | (2,814,012 | ) | (100.0 | ) | |||||||||
| Other income | 1,705,506 | 1,378,597 | 326,909 | 23.7 | ||||||||||||
| Income before income tax | 4,502,374 | 9,111,481 | (4,609,107 | ) | (50.6 | ) | ||||||||||
| Income tax | 699,691 | 1,843,260 | (1,143,569 | ) | (62.0 | ) | ||||||||||
| Net income | $ | 3,802,683 | $ | 7,268,221 | $ | (3,465,538 | ) | (47.7 | ) | |||||||
Components of Results of Operations
| For
the Fiscal Years ended December 31, |
||||||||
| Component of Results of Operations | 2022 | 2021 | ||||||
| Revenues | $ | 90,830,674 | $ | 98,839,900 | ||||
| Cost of Goods Sold | 70,995,940 | 79,246,280 | ||||||
| Gross Profit | 19,834,734 | 19,593,620 | ||||||
| Operating Expenses | 13,876,192 | 11,343,552 | ||||||
| Net Income | $ | 3,802,683 | $ | 7,268,221 | ||||
Revenue
Greenland’s revenue decreased by approximately $8.01 million, or approximately 8.1%, to approximately $90.83 million for the fiscal year ended December 31, 2022, from approximately $98.84 million for the fiscal year ended December 31, 2021. The decrease in revenue was primarily the result of a decrease in the Company’s sales volume resulting from COVID-19 related lockdowns in China for the year ended December 31, 2022. On an RMB basis, our revenue for the fiscal year ended December 31, 2022 decreased by approximately 3.7% compared to the fiscal year ended December 31, 2021.
3
Cost of Goods Sold
Greenland’s cost of goods sold consists primarily of material costs, freight charges, purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs, wages, employee compensation, amortization, depreciation and related costs, which are directly attributable to Greenland’s production activities. The write down of inventory using net realizable value impairment test is also recorded in cost of goods sold. The total cost of goods sold decreased by approximately $8.25 million, or approximately 10.4%, to approximately $71.00 million for the fiscal year ended December 31, 2022, from approximately $79.25 million for the fiscal year ended December 31, 2021. Cost of goods sold decreased in fiscal year 2022 compared to fiscal year 2021 due to a decrease in our sales volume.
Gross Profit
Greenland’s gross profit increased by approximately $0.24 million, or 1.2%, to approximately $19.83 million for the fiscal year ended December 31, 2022, from approximately $19.59 million for the fiscal year ended December 31, 2021. For the fiscal years ended December 31, 2022 and 2021, Greenland’s gross margin was approximately 21.84% and 19.82%, respectively. The increase in gross margin in fiscal year 2022 compared to fiscal year 2021 was primarily due to a shift in Greenland’s product mix towards higher value and more sophisticated products, such as hydraulic transmission products.
Operating Expense
Greenland’s operating expenses consist of selling expenses, general and administrative expenses and research and development expenses. Greenland’s operating expenses were $13.88 million for the fiscal year ended December 31, 2022, representing an increase of 22.3% from $11.34 million for the fiscal year ended December 31, 2021. The increase in operating expenses was primarily due to the increase in after-sales service fees, advertising and marketing expenses, consultancy fees, lease cost, and research and development expenses in fiscal year 2022.
Selling Expenses
Greenland’s selling expenses mainly include operating expenses such as sales staff payroll, traveling expenses and transportation expenses. Selling expenses increased by $0.76 million, or 40.8%, to approximately $2.63 million for the fiscal year ended December 31, 2022, from approximately $1.87 million for the fiscal year ended December 31, 2021. The increase in selling expenses was mainly due to an increase in the after-sales service fees and advertising and marketing expenses for the year ended December 31, 2022.
General and Administrative Expenses
Greenland’s general and administrative expenses include management and office staff salaries and employee benefits, depreciation for office facility and office furniture and equipment, travel and entertainment, legal and accounting, consulting fees and other office expenses. General and administrative expenses increased by approximately $1.51 million, or approximately 38.2%, to approximately $5.46 million for the fiscal year ended December 31, 2022, from approximately $3.95 million for the fiscal year ended December 31, 2021. The fundamental reasons for the rise in the general and administrative expenses were the following: (i) increased legal fees and consultancy fees on the Company’s business planning and projects for the fiscal year ended December 31, 2022 as the Company expanded its operations, compared to the fiscal year ended December 31, 2021; (ii) increase in staff salary; and (iii) increase in lease cost.
Research and Development 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 increased by approximately $0.26 million, or 4.7%, to approximately $5.79 million for the fiscal year ended December 31, 2022, from approximately $5.53 million for the fiscal year ended December 31, 2021. Such increase was primarily attributable to an increase in the Company’s R&D investment in higher value and more sophisticated products and the electrification of machinery products.
Income from Operations
As a result of the foregoing, income from operations for the fiscal year ended December 31, 2022 was approximately $5.96 million, representing a decrease of approximately $2.29 million, from approximately $8.25 million for the fiscal year ended December 31, 2021.
4
Interest Income and Interest Expenses
Greenland’s interest income was approximately $0.06 million for the fiscal year ended December 31, 2022, representing a decrease of approximately $0.01 million, or 16.8%, from approximately $0.07 million for the fiscal year ended December 31, 2021. The decrease in interest income was because less cash was deposited in banks during the fiscal year ended December 31, 2022 as compared to the fiscal year ended December 31, 2021.
Greenland’s interest expenses were approximately $0.40 million for the fiscal year ended December 31, 2022, a decrease of approximately $0.19 million, or 31.4%, as compared to approximately $0.59 million for the fiscal year ended December 31, 2021. The decrease was primarily due to a reduction of our short-term loans for the year ended December 31, 2022, as compared to the year ended December 31, 2021.
Change in fair value of the warrant liability
For the year ended December 31, 2023, the Company recognized a loss of $2,814,012 for the investor warrant from the change in fair value of the warrant liability.
Other Income
Greenland’s other income was approximately $1.71 million for the fiscal year ended December 31, 2022, an increase of approximately $0.33 million, or 23.7%, as compared to approximately $1.38 million of other income for the fiscal year ended December 31, 2021. The increase was primarily due to an increase in grant income and an increase in industry research services offered by Zhongchai Holding for the fiscal year ended December 31, 2022 as compared to the fiscal year ended December 31, 2021.
Income Taxes
Greenland’s income tax was approximately $0.70 million for the fiscal year ended December 31, 2022, compared to approximately $1.84 million for the fiscal year ended December 31, 2021.
Zhejiang Zhongchai obtained a “high-tech enterprise” status near the end of the fiscal year of 2022. Such status allows Zhejiang Zhongchai to enjoy a reduced statutory income tax rate of 15%, rather than the standard PRC corporate income 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 2025.
Greenland’s other PRC subsidiaries are subject to different income tax rates. Greenland’s other PRC subsidiaries are subject to different income tax rates. Shanghai 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 payment of dividends to its shareholders, the Company will not be subject to any British Virgin Islands withholding tax.
On January 14, 2020, Greenland established HEVI, its wholly owned subsidiary in the state of Delaware. HEVI promotes sales of sustainable alternative products for the heavy industrial equipment industry, including electric industrial vehicles, in the North American market. 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, and 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 HEVI was established in 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 December 31, 2022.
5
Net Income
As a result of the foregoing, Greenland’s net income was approximately $3.80 million for the fiscal year ended December 31, 2022, representing a decrease of approximately $3.47 million, from the net income of approximately $7.27 million for the fiscal year ended December 31, 2021.
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.
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 required primarily to purchase raw materials, repay debts and pay salaries, office expenses, income taxes and other operating expenses.
For the fiscal year ended December 31, 2022, our PRC subsidiary, Zhejiang Zhongchai, paid off approximately $10.79 million in bank loan, approximately $2.16 million in related parties loan, and maintained $19.73 million cash on hand. For the fiscal year ended December 31, 2021, our PRC subsidiary, Zhejiang Zhongchai, paid off approximately $18.72 million in bank loan, approximately $4.05 million in related parties loan, approximately $0.31 million in third parties loan, and maintained $17.80 million cash on hand. We plan to maintain the current debt structure and rely on governmentally supported loans with lower cost, if necessary.
Government subsidies mainly consist of an incentive granted by the Chinese government to encourage transformation of fixed assets in China and other miscellaneous subsidies 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 $1.81 million and $2.21 million as of December 31, 2022 and 2021, 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 heavy equipment in the future and decline on sale of transmission products. However, our capital contribution from existing funding sources, to operate for the next 12 months will be sufficient. We remain confident and expect to continue 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 of directors 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 fiscal year 2023. More specifically, Zhejiang Zhongchai has completed the construction of a new factory, and our PRC subsidiaries have received COVID-19 related government subsidies. Furthermore, Zhejiang Zhongchai pledged the deed of its new factory as a collateral to banks in order to obtain additional loans, refinance expiring loans, restructure short-term loans, and fund other working capital needs upon acceptable terms to Greenland.
6
Cash and Cash Equivalents
Cash equivalents refers to all highly liquid investments purchased with original maturity of three months or less. As of December 31, 2022, Greenland had approximately $16.30 million of cash and cash equivalents, an increase of approximately $5.24 million, or 47.30%, as compared to approximately $11.06 million as of December 31, 2021. The increase of cash and cash equivalents was mainly due to a decrease in accounts receivable and notes receivable, as compared to that as of December 31, 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 December 31, 2022, Greenland had approximately $3.43 million of restricted cash, a decrease of approximately $3.31 million, or 49.05%, as compared to approximately $6.74 million as of December 31, 2021. The decrease of restricted cash was due to a decrease in mortgaged assets.
Accounts Receivable
As of December 31, 2022, Greenland had approximately $14.34 million of accounts receivables, a decrease of approximately $1.58 million, or 9.91%, as compared to approximately $15.92 million as of December 31, 2021. The decrease in accounts receivables was due to our accelerated efforts in receivables collections and a decrease in our sales volume.
Greenland recorded approximately $0.76 million and $0.86 million of provision for doubtful accounts as of December 31, 2022 and 2021, respectively. 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 the PRC.
Due from Related Party
Due from related party was $36.67 million and $39.68 million as of December 31, 2022 and December 31, 2021, respectively. The balance of due from related parties as of December 31, 2022 and December 31, 2021 consisted primarily of other receivables from Cenntro Holding Limited in the amount of $36.46 million and $39.46 million as of December 31, 2022 and December 31, 2021, respectively.
Notes Receivable
As of December 31, 2022, Greenland had approximately $28.75 million of notes receivables, which will be collected by us within twelve months. The decrease was approximately $8.80 million, or 23.44%, as compared to approximately $37.55 million as of December 31, 2021.
Working Capital
Our working capital was approximately $59.70 million as of December 31, 2022, as compared to $53.84 million as of December 31, 2021. The increase in working capital of $5.86 million in the fiscal year 2022 as compared with the fiscal year 2021 was primarily contributed to a decrease in notes payable and accounts payable.
7
Cash Flow
| For
the Fiscal Year Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Net cash provided by(used in) operating activities | $ | 7,313,245 | $ | (5,755,940 | ) | |||
| Net cash provided by(used in) investing activities | $ | 33,693 | $ | (638,980 | ) | |||
| Net cash provided by(used in) financing activities | $ | (4,284,479 | ) | $ | 14,462,981 | |||
| Net increase (decrease) in cash and cash equivalents and restricted cash | $ | 3,062,459 | $ | 8,068,063 | ||||
| Effect of exchange rate changes on cash and cash equivalents | $ | (1,134,295 | ) | $ | 329,778 | |||
| Cash and cash equivalents and restricted cash at beginning of year | $ | 17,800,892 | $ | 9,403,053 | ||||
| Cash and cash equivalents and restricted cash at end of year | $ | 19,729,056 | $ | 17,800,892 | ||||
Operating Activities
Greenland’s net cash provided by/(used in) operating activities was approximately $7.31 and $(5.76) million for the fiscal years ended December 31, 2022 and 2021, respectively.
In the fiscal year ended December 31, 2022, the main sources of cash inflow from operating activities were net income of $3.80 million, changes in notes receivable of $6.07 million, and depreciation and amortization of $2.44 million. The main causes of changes in cash outflow were changes in other current and noncurrent assets of approximately $7.80 million and changes in accounts payable of $2.08 million.
In the fiscal year ended December 31, 2021, the main sources of cash inflow from operating activities were net income of $7.27 million, changes in accounts payable of $6.46 million, and depreciation and amortization of $2.51 million. The main causes of changes in cash outflow were changes in notes receivable of approximately $5.95 million and changes in inventories of $9.97 million.
Investing Activities
Investing activities resulted a cash inflow of approximately $0.03 million for the fiscal year ended December 31, 2022. Cash provided by investing activities for the fiscal year ended December 31, 2022 was mainly due to $0.81 million in proceeds from government subsidies for Zhejiang Zhongchai’s construction activities, offset by approximately $0.53 million used for purchases of long-term assets and approximately $0.25 million used for investment in a joint venture.
Investing activities resulted a cash outflow of approximately $0.64 million for the fiscal year ended December 31, 2021. Cash used in investing activities for the fiscal year ended December 31, 2021 was mainly due to $0.26 million in proceeds from government subsidies for Zhejiang Zhongchai’s construction activities, offset by approximately $0.90 million used for purchases of long-term assets.
Financing Activities
Financing activities resulted a cash outflow of approximately $4.28 million for the fiscal year ended December 31, 2022, which was mainly attributable to repayment of loans due to third parties in the amount of approximately $2.16 million, repayment of notes payable in the amount of approximately $10.85 million and repayment of short-term bank loans in the amount of approximately $10.79 million. Such amounts were further offset by approximately $11.70 million in proceeds from short-term bank loans and approximately $9.20 million in proceeds from equity and debt financing.
Financing activities resulted a cash inflow of approximately $14.46 million for the fiscal year ended December 31, 2021, which was mainly attributable to approximately $8.67 million in proceeds from short-term bank loans, approximately $5.39 million in investment proceeds from an entity with non-controlling interests, and approximately $8.21 million in proceeds from equity and debt financing. Such amounts were further offset by repayment of loans due to third parties in the amount of approximately $4.05 million, and repayment of short-term bank loans in the amount of approximately $18.72 million.
8
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 under “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.
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 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.
9
Business Combination
On October 24, 2019, we consummated our Business Combination with Zhongchai Holding 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, dated as of July 12, 2019, among (i) Greenland, (ii) Zhongchai Holding, (iii) the Sponsor in the capacity as the Purchaser Representative, and (iv) Cenntro Holding Limited, the sole member of Zhongchai Holding.
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 7,500,000 newly issued ordinary shares, no par value of Greenland, 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.
Pursuant to the Finder Agreement, 50,000 newly issued ordinary shares issued to Zhou Hanyi is the 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.
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 December 31, 2021, 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.
Emerging Growth Company
Pursuant to the Jumpstart Our Business Startups Act (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.
10
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
GREENLAND TECHNOLOGIES HOLDING CORPORATION
AMENDED AND RESTATED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021
INDEX
F-1
Report of Independent Registered Public Accounting Firm
| To: | Shareholders and Board of Directors |
Greenland Technologies Holding Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Greenland Technologies Holding Corporation and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of income and comprehensive incomes, changes in shareholders’ equity, and cash flows for the two-year period ended December 31, 2022 and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the two-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Restatement of Financial Statements
As discussed in Note 2 to the financial statements, the financial statements have been restated to correct certain misstatements.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
| /s/ WWC, P.C. | |
| Certified Public Accountants |
We have served as the Company’s auditor since November 16, 2020.
(PCAOB ID #
March 31, 2023, except for Note 2, 3, 18, 20,22 and 24 as to which the date is April 17, 2024
F-2
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2022 AND 2021
(IN U.S. DOLLARS)
| (As restated) | ||||||||
| (note 2) | ||||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Short Term Investment | ||||||||
| Notes receivable | ||||||||
| 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 | ||||||||
| Long term investment | ||||||||
| 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 | $ | $ | ||||||
F-3
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2022 AND 2021 (Continued)
(IN U.S. DOLLARS)
| (As restated) | ||||||||
| (note 2) | ||||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Current Liabilities | ||||||||
| Short-term bank loans | $ | $ | ||||||
| Notes payable-bank acceptance notes | ||||||||
| Accounts payable | ||||||||
| Taxes payables | ||||||||
| Customer deposits | ||||||||
| Due to related parties | ||||||||
| Other current liabilities | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Lease obligations - current | ||||||||
| Total current liabilities | $ | $ | ||||||
| Long-term liabilities | ||||||||
| Long term operating lease liabilities | ||||||||
| Other long-term liabilities | ||||||||
| Warrant liability | ||||||||
| Total long-term liabilities | $ | $ | ||||||
| TOTAL LIABILITIES | $ | $ | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| EQUITY | ||||||||
| Ordinary shares, par value, | ||||||||
| Additional paid-in capital | ||||||||
| Statutory reserves | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive income (loss) | ( | ) | ||||||
| Total shareholders’ equity | $ | $ | ||||||
| Non-controlling interest | ||||||||
| TOTAL EQUITY | $ | $ | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
See accompanying notes to the amended and restated consolidated financial statements.
F-4
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED CONSOLIDATED STATEMENTS OF
INCOME AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(IN U.S. DOLLARS)
| (As restated) | ||||||||
| (note 2) | ||||||||
| Year ended | Year ended | |||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| 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 | ( | ) | ( | ) | ||||
| Loss on disposal of property and equipment | ( | ) | ||||||
| Change in fair value of the warrant liability | ( | ) | - | |||||
| Other income/(loss) | ||||||||
| 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) attribute to Greenland technologies holding corporation and subsidiaries | ( | ) | ||||||
| Unrealized foreign currency translation income (loss) attribute to non-controlling interest | ( | ) | ||||||
| Comprehensive income (loss) | ( | ) | ||||||
| Noncontrolling interest | ||||||||
| WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING: | ||||||||
| NET INCOME PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY: | ||||||||
See accompanying notes to the amended and restated consolidated financial statements.
F-5
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED CONSOLIDATED STATEMENTS OF SHARE HOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(IN U.S. DOLLARS)
| 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 as of December 31, 2020 | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Restricted stock grant | ||||||||||||||||||||||||||||||||
| Sale of stock and warrants | ||||||||||||||||||||||||||||||||
| Debt of the cancelled company | - | |||||||||||||||||||||||||||||||
| Proceeds from NCI's Investment | - | |||||||||||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||||||||||
| Transfer to statutory reserve | - | ( | ) | |||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||||||
| Balance as of December 31, 2021 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Sale of stock and warrants | ||||||||||||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance as of December 31, 2022 | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
See accompanying notes to the amended and restated consolidated financial statements.
F-6
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(IN U.S. DOLLARS)
| (As restated) | ||||||||
| (note 2) | ||||||||
| Year ended | Year ended | |||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| 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 in provision for inventory | ||||||||
| Change in fair value of the warrant liability | ||||||||
| Deferred tax assets | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Increase (Decrease) 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 payables | ||||||||
| Due to related parties | ( | ) | ||||||
| Long-term payables - unamortized deferred financing costs | ( | ) | ( | ) | ||||
| Other long-term liabilities | ( | ) | ( | ) | ||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | $ | $ | ( | ) | ||||
See accompanying notes to the amended and restated consolidated financial statements.
F-7
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (Continued)
(AUDITED, IN U.S. DOLLARS)
| (As restated) | ||||||||
| (note 2) | ||||||||
| Year ended | Year ended | |||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of Long-term assets | $ | ( | ) | $ | ( | ) | ||
| Proceeds from government grants for construction | ||||||||
| Proceeds from sale of property, plant and equipment | ||||||||
| Investment in a joint venture | ( | ) | ||||||
| NET CASH USED BY INVESTING ACTIVITES | $ | $ | ( | ) | ||||
| 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 | ||||||||
| Payment of principal on financing lease obligation | ( | ) | ( | ) | ||||
| Proceeds from equity and debt financing | ||||||||
| Proceeds from NCI's Investment | ||||||||
| Restricted stock grant | ||||||||
| NET CASH PROVIDED/(USED) IN FINANCING ACTIVITES | $ | ( | ) | $ | ||||
| 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 | ||||||||
See accompanying notes to the amended and restated consolidated financial statements.
F-8
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES
Greenland Technologies Holding Corporation (the “Company” or “Greenland”) 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. Following the Business Combination (as described and defined below) in October 2019, the Company changed its name from Greenland Acquisition Corporation to Greenland Technologies Holding Corporation.
Greenland serves as the parent company of Zhongchai Holding (Hong Kong) Limited, a holding company formed under the laws of Hong Kong Special Administrative Region (“Hong Kong”) on April 23, 2009 (“Zhongchai Holding”). Zhongchai Holding’s subsidiaries include Zhejiang Zhongchai Machinery Co. Ltd., an operating company formed under the laws of the People’s Republic of China (the “PRC” or “China”) in 2005, Hangzhou Greenland Energy Technologies Co., Ltd., an operating company formed under the laws of the PRC in 2019, and Shanghai Hengyu Business Management Consulting Co., Ltd., a company formed under the laws of the PRC in 2005. Through Zhongchai Holding and its subsidiaries, Greenland develops and manufactures traditional transmission products for material handling machineries in the PRC.
HEVI Corp. (“HEVI”), formerly known as Greenland Technologies Corp. prior to May 2022, was incorporated on January 14, 2020 under the laws of the State of Delaware. HEVI is a wholly-owned subsidiary of Greenland and promotes sales of sustainable alternative products for the heavy industrial equipment industry, including electric industrial vehicles, in the North American market.
Through its PRC subsidiaries, Greenland offers
transmission products, which 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 the logistic systems of many companies
across different industries in China and globally. Generally, industries with the largest demand for forklifts include the transportation,
warehousing logistics, electrical machinery, and automobile industries. Greenland’s revenue decreased from approximately $
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. In the fiscal years ended December 31, 2022 and 2021, Greenland sold an aggregate of
There is increasing demand for electric industrial
vehicles powered by sustainable energy in order to reduce air pollution and lower carbon emissions. In December 2020, Greenland launched
a new division to focus on the production and sale of electric industrial vehicles—a division 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. For the fiscal years ended December 31, 2021 and 2022, we experienced rising material costs due to the pandemic. As of the date of the Original Form 10-K, Chinese industries have gradually resumed businesses as the Chinese government lifted its COVID-19 protocols and measures since December 2022. However, we remain cautious and prudent when assessing the future impact of COVID-19 on our business due to the current ongoing global pandemic.
F-9
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)
The Company’s Shareholders
As of December 31, 2022, Cenntro Holding Limited
owned
The Company’s Subsidiaries
Zhongchai Holding, the wholly-owned subsidiary
of the Company, owned
Zhejiang Zhongchai
Zhejiang Zhongchai,
Through Zhejiang Zhongchai, the Company has been engaging in the manufacturing and sales 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 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, the PRC and are sold to both domestic and oversea markets.
Hengyu
Hengyu is a limited liability company registered on September 10, 2015 in Shanghai Free Trade Zone, Shanghai, the PRC. Hengyu holds no assets other than an account receivable owed by Cenntro Holding Limited. The main business of Hengyu is to provide investment management and consulting services.
Hangzhou Greenland
Hangzhou Greenland is a limited liability company registered on August 9, 2019 in Hangzhou Sunking Plaza, Zhejiang, the PRC. Hangzhou Greenland engages in the business of trading construction engineering machinery, electronic components, hardware, and others.
F-10
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)
HEVI
HEVI, formerly known as Greenland Technologies Corp. prior to May 2022, was incorporated on January 14, 2020 under the laws of the State of Delaware. HEVI is a wholly-owned subsidiary of Greenland and promotes sales of sustainable alternative products for the heavy industrial equipment industry, including electric industrial vehicles, in the North American market.
Hengyu Capital
Hengyu capital is a limited liability company registered on August 16, 2022 in Hong Kong. The main business of Hengyu capital is to engage in investment management and consulting services.
| Name | Domicile and Date of Incorporation | Paid-in Capital | Percentage of Effective Ownership | Principal Activities | ||||||||
| Zhongchai Holding (Hong Kong) Limited | April 23, 2009 | % | ||||||||||
| Zhejiang Zhongchai Machinery Co., Ltd. | November 21, 2005 | % | ||||||||||
| Shanghai Hengyu Business Management Consulting Co., Ltd. | September 10, 2015 | % | ||||||||||
| Hangzhou Greenland Energy Technologies Co., Ltd. | August 8, 2020 | % | ||||||||||
| HEVI Corp. | January 14, 2020 | % | ||||||||||
| Hengyu Capital, Ltd | August 16, 2022 | % | ||||||||||
NOTE 2 – RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
The restatement primarily is caused by two
issues. First, In connection with the registered direct offering closed on July 27, 2022, the Company issued to an investor a warrant
to purchase up to
Second, As of December 31, 2022, our controlling
shareholder, Cenntro Holding Limited owed us $
F-11
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (CONTINUED)
Impact of the Restatement
| As Previously Reported in 10-K | Adjustment | As Restated | ||||||||||
| Current assets | ||||||||||||
| Due from related parties-current | $ | $ | ( | ) | $ | |||||||
| Total Current Assets | ( | ) | ||||||||||
| Non-current asset | ||||||||||||
| Due from related parties-non current | ||||||||||||
| Total non-current assets | ||||||||||||
| Long-term liabilities | ||||||||||||
| Warrant liability | ||||||||||||
| Total long-term liabilities | ||||||||||||
| TOTAL LIABILITIES | ||||||||||||
| EQUITY | ||||||||||||
| Additional paid-in capital | ( | ) | ||||||||||
| Retained earnings | ( | ) | ||||||||||
| Total shareholders’ equity | ( | ) | ||||||||||
| TOTAL EQUITY | $ | ( | ) | |||||||||
| As Previously Reported 10-K | Adjustment | As Restated | ||||||||||
| Change in fair value of the warrant liability | $ | $ | ( | ) | $ | ( | ) | |||||
| INCOME BEFORE INCOME TAX | ( | ) | ||||||||||
| NET INCOME | ( | ) | ||||||||||
| NET INCOME ATTRIBUTABLE TO GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES | ( | ) | ||||||||||
| Comprehensive income (loss) | ( | ) | ( | ) | ( | ) | ||||||
| NET INCOME(LOSS) PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY: | ||||||||||||
| $ | ( | ) | ||||||||||
| As Previously Reported 10-K | Adjustment | As Restated | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | |||||||
| Change in fair value of the warrant liability | ||||||||||||
NOTE 3 – 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 (“U.S. GAAP”). The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company transactions and balances between the Company and its subsidiaries are eliminated upon consolidation.
F-12
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 interest 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 years ended December 31, 2022 and 2021 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-13
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 – 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 then in effect at the date of the transaction.
| For the years ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| 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 the U.S., the PRC and Hong Kong. Balances at financial institutions or state-owned banks within the PRC and Hong Kong 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. |
The Company’s financial assets and liabilities, which include financial instruments as defined by FASB ASC 820, include cash, cash equivalents and restricted cash, short term investment, accounts receivable, notes receivables, due from related party, fixed deposit, short term bank loans, accounts payable, other payable, notes payable and warrant liability. As of December 31, 2022 and 2021, the carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, notes receivables, notes payables, and accounts payable are approximation their fair value due to the short-term nature.
F-14
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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. The Company records inventory reserves for excess or obsolete inventories based upon assumptions about its current and future demand forecasts.
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.
| Plant, buildings and improvements | ||||
| Machinery and equipment | ||||
| Motor vehicles | ||||
| Office equipment | ||||
| Fixed assets decoration |
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.
F-15
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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
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 years ended December 31, 2022 and 2021.
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
The Company has leased premises for its offices
under non-cancellable operating leases since May 2021 and its assembly site under non-cancellable operating leases since June 2022. Operating
lease payments are expensed over the term of lease using straight line method.
F-16
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 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’s product returns and recorded
reserve for sales returns were minimal for the years ended December 31, 2022 and 2021. The total sales return and warranty expenditures
amount are accounting for around
| For the years ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Major Product | ||||||||
| Transmission boxes for Forklift | $ | $ | ||||||
| Transmission boxes for Non-Forklift (EV, etc.) | ||||||||
| Total | $ | $ | ||||||
F-17
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 – 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.
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
F-18
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Value-Added Tax
Enterprises or individuals, who sell commodities,
engage in repair and maintenance or import or export goods in the PRC are subject to a value added tax in accordance with PRC Laws.
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) a General Reserve Fund, (ii) a Enterprise Expansion Fund and (iii) a 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
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) 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
its Business Combination whereby Zhongchai Holding received
Warrants (Restated)
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.
F-19
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 the 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.
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 December 31, 2022 and 2021. 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 December 31, 2022 and 2021.
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
A significant portion of 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. The Company’s cash is maintained with banks within the U.S., the PRC and Hong Kong, 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.
F-20
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 rate, record higher or lower profit depending on exchange rate of 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.
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-21
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 – SHORT TERM INVESTMENT
As of December 31, 2022 and 2021, the Company’s
short term investment amounted to $
NOTE 5 – CONCENTRATION ON REVENUES AND COST OF GOODS SOLD
| For the years ended December 31, | ||||||||||||||||
| 2022 | 2021 | |||||||||||||||
| Major customers representing more than 10% of the Company’s revenues | ||||||||||||||||
| Company A | $ | % | $ | % | ||||||||||||
| Company B | % | % | ||||||||||||||
| Total Revenues | $ | % | $ | % | ||||||||||||
| As of | ||||||||||||||||
| December 31, 2022 | December 31, 2021 | |||||||||||||||
| Major customers of the Company’s accounts receivable, net | ||||||||||||||||
| Company A | % | % | ||||||||||||||
| Company B | % | % | ||||||||||||||
| Company C | % | % | ||||||||||||||
| Total | $ | % | $ | % | ||||||||||||
Accounts receivable from the Company’s major
customers accounted for
There was no supplier representing more than
NOTE 6 – ACCOUNTS RECEIVABLE
| As of | ||||||||
| December 31, 2022 | December 31, 2021 | |||||||
| Accounts receivable | $ | $ | ||||||
| Less: allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Accounts receivable, net | $ | $ | ||||||
F-22
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 – ACCOUNTS RECEIVABLE (CONTINUED)
| As of | ||||||||
| December 31, 2022 | December 31, 2021 | |||||||
| Beginning balance | $ | $ | ||||||
| Provision for doubtful accounts | ( | ) | ( | ) | ||||
| Effect of FX change | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
NOTE 7 – INVENTORIES
| As of | ||||||||
| December 31, 2022 | December 31, 2021 | |||||||
| Raw materials | $ | $ | ||||||
| Revolving material | ||||||||
| Consigned processing material | ||||||||
| Work-in-progress | ||||||||
| Finished goods | ||||||||
| Less: inventory impairment | ( | ) | ( | ) | ||||
| Inventories, net | $ | $ | ||||||
| As of | ||||||||
December 31, 2022 | December 31, 2021 | |||||||
| Beginning balance | $ | $ | ||||||
| (Release of) inventory write-downs | ||||||||
| Effect of FX change | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
NOTE 8 – NOTES RECEIVABLE
| As of | ||||||||
| December 31, 2022 | December 31, 2021 | |||||||
| 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 issuers at maturity, which bear no interest and generally range from
three to six months from the date of issuance. As of December 31, 2022, the Company pledged notes receivable for an aggregate amount of
$
F-23
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 – PROPERTY, PLANT AND EQUIPMENT AND CONSTRUCTION IN PROGRESS
| As of | ||||||||
| December 31, 2022 | December 31, 2021 | |||||||
| Buildings | $ | $ | ||||||
| Machinery | ||||||||
| Motor vehicles | ||||||||
| Electronic equipment | ||||||||
| Fixed assets decoration* | ||||||||
| Total property plant and equipment, at cost | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant and equipment, net | $ | $ | ||||||
| Construction in process | ||||||||
| Total | $ | $ | ||||||
For the years ended December 31, 2022 and 2021,
depreciation expense amounted to $
For the years ended December 31, 2022 and 2021,
$
| As of | ||||||||
| December 31, 2022 | December 31, 2021 | |||||||
| Buildings, net | $ | $ | ||||||
| Machinery, net | ||||||||
| Total | ||||||||
As of December 31, 2022, 2022, the Company pledged
its ownership interests in certain buildings for the 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 transactions whereby the Company continues to depreciate the assets and recorded a financing obligation for the consideration received from the buyer-lessor.
F-24
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 – LAND USE RIGHTS
| As of | ||||||||
| December 31, 2022 | December 31, 2021 | |||||||
| Land use rights, cost | $ | $ | ||||||
| Less: Accumulated amortization | ( | ) | ( | ) | ||||
| Land use rights, net | $ | $ | ||||||
As of December 31, 2022, the Company had land
use rights with net book value of $
| Years ending December 31, | Amortization expense | |||
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total | $ | |||
NOTE 11 – NOTES PAYABLE
| As of | ||||||||
| December 31, 2022 | December 31, 2021 | |||||||
| Bank acceptance notes | $ | $ | ||||||
| Total | $ | $ | ||||||
The interest-free notes payable, ranging from
All the notes payable are subject to bank charges
of
F-25
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 – ACCOUNTS PAYABLE
| As of | ||||||||
| December 31, 2022 | December 31, 2021 | |||||||
| Procurement of Materials | $ | $ | ||||||
| Infrastructure & Equipment | ||||||||
| Freight fee | ||||||||
| Total | $ | $ | ||||||
NOTE 13 – SHORT TERM BANK LOANS
| As of | ||||||||
| December 31, 2022 | December 31, 2021 | |||||||
| Collateralized bank loans | $ | $ | ||||||
| Unsecured bank loans | ||||||||
| Total | $ | $ | ||||||
| Maturity Date | Type | Bank Name | Interest Rate per Annum (%) | December 31, 2022 | ||||||||
| Operating Loans | $ | |||||||||||
| Operating Loans | $ | |||||||||||
| Operating Loans | $ | |||||||||||
| Operating Loans | $ | |||||||||||
| Operating Loans | $ | |||||||||||
| $ | ||||||||||||
Short-term loans as of December 31, 2021 are as follow:
| Maturity Date | Type | Bank Name | Interest Rate per Annum (%) | December 31, 2021 | ||||||||
| Operating Loans | $ | |||||||||||
| Operating Loans | $ | |||||||||||
| Operating Loans | $ | |||||||||||
| Operating Loans | $ | |||||||||||
| Operating Loans | $ | |||||||||||
| $ | ||||||||||||
All short-term bank loans were obtained from local
banks in the PRC and are repayable within
The average annual interest rate of the short-term
bank loans was
F-26
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14 – OTHER CURRENT LIABILITIES
| As of | ||||||||
| December 31, 2022 | December 31, 2021 | |||||||
| Employee payables | ||||||||
| Other tax payables | ||||||||
| Other payable | ||||||||
| Accrued expenses | ||||||||
| Total | $ | $ | ||||||
NOTE 15 – OTHER LONG-TERM LIABILITIES
| As of | ||||||||
| December 31, 2022 |
December 31, 2021 |
|||||||
| Subsidy | ||||||||
| Total | $ | $ | ||||||
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 December 31, 2022, grant income decreased by $
NOTE 16 – LEASES
The Company leases its corporate offices and assembly
site 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 | ||||
| Operating leases: | ||||
| Operating lease right-of-use assets | $ | |||
| Current portion of operating lease liabilities | $ | |||
| Long-term operating lease liabilities | ||||
| Total operating lease liabilities | $ | |||
| For the years ending December 31, | Operating Leases | |||
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Thereafter | ||||
| Total lease payments | $ | |||
F-27
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 – LONG TERM PAYABLES
| As of | ||||||||
| December 31, 2022 | December 31, 2021 | |||||||
| 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 a 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 a 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.
F-28
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 18 – WARRANT LIABILITY (Restated)
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASBASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.
In connection with the registered direct offering
closed on July 27, 2022, the Company issued to an investor a warrant to purchase up to
Upon evaluation, the warrants meet the definition
of a derivative under FASB ASC 815, as the Company cannot avoid a net cash settlement under certain circumstances. The fair value of
the warrant liabilities was measured using a Black–Scholes model.
| Ordinary Share Warrants | Ordinary Share Warrants | |||||||
| December 31, 2022 | July 27, 2022 | |||||||
| Share price | $ | $ | ||||||
| Exercise price | $ | $ | ||||||
| Annual dividend yield | % | % | ||||||
| Expected term (years) | ||||||||
| Risk-free interest rate | % | % | ||||||
| Expected volatility | % | % |
| As of | ||||||||
| December 31, 2022 |
December 31, 2022 |
|||||||
| Number of ordinary share warrants | - | |||||||
| Fair value of the warrants | $ | $ | - | |||||
The fair value of the warrants was classified
as a liability of $
F-29
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19 – SHAREHOLDER’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 December 31, 2022 and December 31, 2021, the Company had 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
On July 27, 2018, the Company consummated its
initial public offering of
Simultaneously with the consummation of its initial
public offering, the Company completed a private placement of
Pursuant to 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,
and (iv) Cenntro Holding Limited, the sole member of Zhongchai Holding (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 that certain Finder Agreement with
Hanyi Zhou, dated May 29, 2019,
F-30
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19 – SHAREHOLDER’S EQUITY (CONTINUED)
On October 24, 2020,
Rights — Each holder of a right was
entitled to receive one-tenth (1/10) of
As of December 31, 2022, all of the existing Rights
were converted into
The Company may call the warrants for redemption (excluding the Private Warrants (as defined below)), 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, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption. |
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.
F-31
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19 – SHAREHOLDER’S EQUITY (CONTINUED)
As of December 31, 2022, there were a total of
Unit Purchase Option
On July 27, 2018, the Company sold to Chardan
(and its designees), for $
NOTE 20 – EARNINGS PER SHARE (Restated)
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.
F-32
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 20 – EARNINGS PER SHARE (CONTINUED) (Restated)
| Year
ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Net income attributable to the Greenland Technologies Holding Corporation and subsidiaries | $ | $ | ||||||
| Weighted average basic and diluted computation shares outstanding: | ||||||||
| Weighted average shares used in basic computation | ||||||||
| Diluted effect of stock options and warrants | ||||||||
| Weighted average shares used in diluted computation | ||||||||
| $ | $ | |||||||
NOTE 21 – 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.
| For the years ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Domestic Sales | $ | $ | ||||||
| International Sales | ||||||||
| Total | $ | $ | ||||||
NOTE 22 – INCOME TAXES (Restated)
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 year ended December 31, 2022 was
The effective tax rates on income before income
taxes for the year ended December 31, 2021 was
The Company had recorded $
F-33
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 23 – COMMITMENTS AND CONTINGENCIES
(1) Pledged collateral for bank loans
On December 23, 2020,
On September 21, 2020,
On June 27, 2022,
(3) Litigation
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, the Company settled with its counter party and paid a total of $
Facility Leases
The Company entered into a failed sale-leaseback transaction in August 2020. See further discussion in NOTE 16 –LONG TERM PAYABLES. The Company has leased premises for its offices under non-cancellable operating leases since May 2021 and its assembly site under non-cancellable operating leases since June 2022. See further discussion in NOTE 15 – LEASES.
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.
| For the years ending December 31, | Operating Leases | |||
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Thereafter | ||||
| Total lease payments | $ | |||
F-34
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 24 – RELATED PARTY TRANSACTIONS (Restated)
| 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. | ||
| Xinchang County 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 | ||
| Xinchang County Jiuhe Investment Management Partnership (LP) | ||
| Cenntro Automotive Corporation | ||
| As of | ||||||||
December 31, 2022 | December 31, 2021 | |||||||
| Due to related parties: | ||||||||
| Zhejiang Zhonggong Machinery Co., Ltd.1 | $ | $ | ||||||
| Cenntro Smart Manufacturing Tech. Co., Ltd.2 | ||||||||
| Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership)3 | ||||||||
| Cenntro Holding Limited4 | ||||||||
| Cenntro Automotive Corporation4 | ||||||||
| Xinchang County Jiuxin Investment Management Partnership (LP)4 | ||||||||
| Hangzhou Jiuru Economic Information Consulting Co. Ltd4 | ||||||||
| Total | $ | $ | ||||||
F-35
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 24 – RELATED PARTY TRANSACTIONS (CONTINUED) (Restated)
The balance of due to related parties as of December 31, 2022 and December 31, 2021 consisted of:
| 1 |
| 2 |
| 3 |
| 4 |
| As of | ||||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Due from related parties-current: | ||||||||
| Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership) | ||||||||
| Cenntro Holding Limited | $ | $ | ||||||
| Total | $ | $ | ||||||
| As of | ||||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Due from related parties-non current: | ||||||||
| Cenntro Holding Limited | $ | $ | ||||||
| Total | $ | $ | ||||||
The balance of due from related parties as of December 31, 2022 and December 31, 2021 consisted of:
Other receivable from Cenntro Holding Limited
was $
F-36
GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES
AMENDED AND RESTATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 24 – RELATED PARTY TRANSACTIONS (CONTINUED) (Restated)
(c) Summary of Related Party Funds Lending:
|
For the years ended December 31, |
||||||||
| 2022 | 2021 | |||||||
| Withdraw funds from related parties: | ||||||||
| Zhejiang Zhonggong Machinery Co., Ltd. | $ | $ | ||||||
| Cenntro Holding Limited | ||||||||
| Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership) | ||||||||
| Peter Zuguang Wang | ||||||||
| Cenntro Smart Manufacturing Tech. Co., Ltd. | ||||||||
|
For the years ended December 31, |
||||||||
| 2022 | 2021 | |||||||
| Deposit funds with related parties: | ||||||||
| Zhejiang Zhonggong Machinery Co., Ltd. | $ | $ | ||||||
| Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership) | ||||||||
| Xinchang County Jiuxin Investment Management Partnership (LP) | ||||||||
| Cenntro Smart Manufacturing Tech. Co., Ltd. | ||||||||
| Peter Zuguang Wang | ||||||||
| Cenntro Holding Limited | ||||||||
| Zhejiang Kangchen Biotechnology Co., Ltd | ||||||||
NOTE 25 – SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date that the financial statements were available to be issued, which is March 31, 2023. All subsequent events requiring recognition as of December 31, 2022 have been incorporated into these financial statements and there are no other subsequent events that require disclosure in accordance with FASB ASC Topic 855.
F-37
PART III
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Certain Relationships and Related Transactions
Names and Relationship of Related Parties:
| Existing Relationship with the Company | ||
| Sinomachinery Holding Limited | Under common control of Peter Zuguang Wang | |
| Cenntro Holding Limited | Controlling shareholder of the Company | |
| Zhejiang Kangchen Biotechnology Co., Ltd. | Under common control of Peter Zuguang Wang | |
| Cenntro Smart Manufacturing Tech. Co., Ltd. | Under common control of Peter Zuguang Wang | |
| Zhejiang Zhonggong Machinery Co., Ltd. | Under common control of Peter Zuguang Wang | |
| Xinchang County Jiuxin Investment Management Partnership (LP) | Under control of Mr. Mengxing He, the General Manger and one of the directors of Zhejiang Zhongchai | |
| Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership) | Under common control of Peter Zuguang Wang | |
| Hangzhou Cenntro Autotech Co., Limited | Under common control of Peter Zuguang Wang | |
| Peter Zuguang Wang | Chairman of the Company | |
| Greenland Asset Management Corporation | Shareholder of the Company | |
| Hangzhou Jiuru Economic Information Consulting Co. Ltd | One of the directors of Hengyu | |
| Xinchang County Jiuhe Investment Management Partnership (LP) | Under control of Mr. Mengxing He, the General Manger and one of the directors of Zhejiang Zhongchai/NCI of Zhejiang Zhongchai | |
| Cenntro Automotive Corporation | Under common control of Peter Zuguang Wang | |
Summary of Balances with Related Parties:
| As of | ||||||||
December 31, 2022 | December 31, 2021 | |||||||
| Due to related parties: | ||||||||
| Zhejiang Zhonggong Machinery Co., Ltd.1 | $ | 64,563 | $ | 409,807 | ||||
| Cenntro Smart Manufacturing Tech. Co., Ltd.2 | 2,683 | 2,903 | ||||||
| Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership)3 | 94,442 | 94,442 | ||||||
| Cenntro Holding Limited4 | 1,341,627 | 1,341,627 | ||||||
| Cenntro Automotive Corporation4 | - | 11,462 | ||||||
| Xinchang County Jiuxin Investment Management Partnership (LP)4 | - | 1,569,218 | ||||||
| Hangzhou Jiuru Economic Information Consulting Co. Ltd4 | 190,000 | 190,000 | ||||||
| Total | $ | 1,693,315 | $ | 3,619,459 | ||||
The balance of due to related parties as of December 31, 2022 and December 31, 2021 consisted of:
| 1 | Unpaid balances for purchasing of materials and equipment and temporary borrowing from Zhejiang Zhonggong Machinery Co., Ltd.; |
| 2 | Prepayment from Cenntro Smart Manufacturing Tech. Co., Ltd. |
| 3 | Temporary borrowings from Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership); and |
| 4 | Borrowings from related parties. |
11
| As of | ||||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Due from related parties-current: | ||||||||
| Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership) | 214,245 | 219,691 | ||||||
| Cenntro Holding Limited | $ | 30,000,000 | $ | 39,459,874 | ||||
| Total | $ | 30,214,245 | $ | 39,679,565 | ||||
| As of | ||||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Due from related parties-non current: | ||||||||
| Cenntro Holding Limited | $ | 6,455,662 | $ | - | ||||
| Total | $ | 6,455,662 | $ | - | ||||
The balance of due from related parties as of December 31, 2022 and December 31, 2021 consisted of:
Other receivable from Cenntro Holding Limited was $36.46 million and $39.46 million as of December 31, 2022 and December 31, 2021, respectively.
Summary of Related Party Funds Lending
A summary of funds lending with related parties for the years ended December 31, 2022 and 2021 are listed below:
For the years ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Withdraw funds from related parties: | ||||||||
| Zhejiang Zhonggong Machinery Co., Ltd. | $ | - | $ | 77,611 | ||||
| Cenntro Holding Limited | - | 251,973 | ||||||
| Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership) | 207,352 | 35,080 | ||||||
| Peter Zuguang Wang | - | 25,000 | ||||||
| Cenntro Smart Manufacturing Tech. Co., Ltd. | 74,054 | 29,647 | ||||||
For the years ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Deposit funds with related parties: | ||||||||
| Zhejiang Zhonggong Machinery Co., Ltd. | $ | 394,892 | $ | 139,699 | ||||
| Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership) | 209,383 | 677,697 | ||||||
| Xinchang County Jiuxin Investment Management Partnership (LP) | 1,481,087 | 2,851,515 | ||||||
| Cenntro Smart Manufacturing Tech. Co., Ltd. | 74,054 | 36,632 | ||||||
| Peter Zuguang Wang | - | 25,000 | ||||||
| Cenntro Holding Limited | - | 250,000 | ||||||
| Zhejiang Kangchen Biotechnology Co., Ltd | - | 64,505 | ||||||
Director Independence
See “Item 10. Directors, Executive Officers and Corporate Governance—Director Independence” for details.
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PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements
We have filed the financial statements in Item 8. Financial Statements and Supplementary Data as a part of this Annual Report on Form 10-K.
(b) Exhibits
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| * | Filed herewith. |
| ** | Furnished herewith. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on April 17, 2024.
| GREENLAND TECHNOLOGIES HOLDING CORPORATION | ||
| By: | /s/ Raymond Z. Wang | |
| Name: | Raymond Z. Wang | |
| Title: | Chief Executive Officer | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
| Signatures | Title | Date | ||
| /s/ Raymond Z. Wang | Chief Executive Officer and President | April 17, 2024 | ||
| Raymond Z. Wang | (Principal Executive Officer) | |||
| /s/ Jing Jin | Chief Financial Officer and Corporate Secretary | April 17, 2024 | ||
| Jing Jin | (Principal Financial Officer and Principal Accounting Officer) | |||
| /s/ Peter Zuguang Wang | Chairman of the Board and Director | April 17, 2024 | ||
| Peter Zuguang Wang | ||||
| /s/ Everett Xiaolin Wang | Director | April 17, 2024 | ||
| Everett Xiaolin Wang | ||||
| /s/ Ming Zhao | Director | April 17, 2024 | ||
| Ming Zhao | ||||
| /s/ Charles Athle Nelson | Director | April 17, 2024 | ||
| Charles Athle Nelson | ||||
| /s/ Frank Shen | Director | April 17, 2024 | ||
| Frank Shen |
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