UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended SeptemberJune 30, 20202021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File number 000-26731001-38605

GREENLAND TECHNOLOGIES HOLDING CORPORATION

(Exact name of registrant as specified in charter)

British Virgin Islands001-38605
(State or other jurisdiction of

incorporation or organization)		(I.R.S. Employer

Identification No.)

11-F,50 Millstone Road, Building #12, Sunking Plaza, Gaojiao Road,400 Suite 130

Hangzhou, Zhejiang
People’s Republic of ChinaEast Windsor, NJ

United States

31112208512
(Address of principal executive offices)(Zip Code)

(86) 010-536070821 (888) 827-4832

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Ordinary shares, no par valueGTECThe NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer☐Accelerated filer☐
Non-accelerated filer☒Smaller reporting company☒
Emerging growth company☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

As of November 10, 2020,August 11, 2021, there were 10,156,14211,371,171 ordinary shares, no par value, issued and outstanding.

 

 

 

INDEX

Page
Number
PART I.FINANCIAL INFORMATION1
ITEM 1.Financial Statements (unaudited)1
ITEM 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations2
ITEM 3.Quantitative and Qualitative Disclosures About Market Risk15
ITEM 4.Controls and Procedures1615
PART II.OTHER INFORMATION17
ITEM 1.Legal Proceedings17
ITEM 1A.Risk Factors17
ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds17
ITEM 3.Defaults Upon Senior SecuritiesSecurities.17
ITEM 4.Mine Safety DisclosuresDisclosures.17
ITEM 5.Other InformationInformation.17
ITEM 6.Exhibits18
Signatures19

i

 

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, Financial Statements and Notes to Financial Statements contain forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations and financial conditions. Forward-looking statements may appear throughout this report and other documents we file with the Securities and Exchange Commission (SEC), including without limitation, the following sections: Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q.

Forward-looking statements generally can be identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “will be,” “will continue,” “may,” “could,” “will likely result,” and similar expressions. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. In addition, there is uncertainty about the spreadfuture development of the COVID-19 viruspandemic and the impact it may have on the Company’s operations, the demand for the Company’s products or services, global supply chains and economic activity in general. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

ii

 

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GREENLAND TECHNOLOGIES HOLDING CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20202021

TABLE OF CONTENTS

PAGEF-1-F-2PAGEF-1-F-2CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBERJUNE 30, 20202021 (UNAUDITED) AND DECEMBER 31, 2019 (UNAUDITED)2020
PAGEF-3PAGEF-3CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE THREE AND NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 2021 AND 2020 AND 2019 (UNAUDITED)
PAGEF-4PAGEF-4CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY FOR THE THREE AND SIX  MONTHS ENDED MARCH 31, JUNE 30, SEPTEMBER 30,2021 AND 2020 AND 2019 (UNAUDITED)
PAGEF-5-F-6PAGEF-5-F-6CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 2021 AND 2020 AND 2019 (UNAUDITED)
PAGEF-7-F-34PAGEF-7-F-33NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 1


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBERJUNE 30, 20202021 AND DECEMBER 31, 2019 (UNAUDITED)2020

(IN U.S. DOLLARS)

  September 30,  December 31, 
  2020  2019 
ASSETS        
Current assets        
Cash and cash equivalents $10,418,741  $2,123,485 
Restricted cash  775,875   3,593,722 
Notes receivables, net of allowance for notes receivables of $7,354 and $15,338, respectively  20,018,092   16,156,692 
Accounts receivable, net of allowance for doubtful accounts of $1,183,770 and $1,037,797, respectively  15,693,614   11,971,889 
Inventories  12,573,915   9,972,877 
Due from related parties-current  1,104   36,042,829 
Advance to suppliers  104,872   50,664 
Prepayments and Other current assets  125,151   327,555 
Total Current Assets $59,711,364  $80,239,713 
         
Non-current asset        
Property, plant, equipment and construction in progress, net  19,861,333   20,630,251 
Land use rights, net  3,888,621   3,862,547 
Other intangible assets  12,031   5,174 
Due from related parties-non-current  37,210,144   430,034 
Deferred tax assets  545,567   513,805 
Goodwill  3,890   3,890 
Other non-current assets  5,454   798,429 
Total non-current assets $61,527,040  $26,244,130 
TOTAL ASSETS $121,238,404  $106,483,843 
  June 30,  December 31, 
  2021  2020 
  (Unaudited)    
ASSETS      
Current assets      
Cash and cash equivalents $10,756,968  $7,159,015 
Restricted cash  9,767,210   2,244,038 
Notes receivables  33,113,729   30,803,772 
Accounts receivable, net of allowance for doubtful accounts of $996,984 and $986,532, respectively  20,519,818   12,408,548 
Inventories  17,731,415   15,380,063 
Due from related parties-current  38,946,503   38,535,171 
Advance to suppliers  732,019   447,901 
Prepayments and other current assets  542,882   664,926 
Total Current Assets $132,110,544  $107,643,434 
         
Non-current asset        
Property, plant, equipment and construction in progress, net  19,534,056   20,135,339 
Land use rights, net  4,030,352   4,035,254 
Other intangible assets  -   - 
Due from related parties – non-current  -   - 
Deferred tax assets  158,698   158,455 
Goodwill  3,890   3,890 
Other non-current assets  41,860   158,455 
Total non-current assets $23,768,856  $24,335,303 
TOTAL ASSETS $155,879,400  $131,978,737 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

F-1


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBERJUNE 30, 20202021 AND DECEMBER 31, 2019 (UNAUDITED)2020 (Continued)

(IN U.S. DOLLARS)

  September 30,  December 31, 
  2020  2019 
Current Liabilities        
Short-term bank loans $20,712,560  $16,861,615 

Notes payable - bank acceptance notes

  17,671,375   15,050,902 
Accounts payable  21,573,305   14,713,008 
Taxes payables  268,861   12,529 
Customer deposits  338,892   132,194 
Due to related parties  4,076,314   3,481,984 
Other current liabilities  1,513,260   3,086,859 

Long-term payable - current-portion

  741,215   2,654,230 
Total current liabilities $66,895,782  $55,993,321 
         
Long-term liabilities        
Long-term payables  370,392   1,349,850 
Other long-term liabilities  2,310,894   2,178,548 
Total long-term liabilities $2,681,286  $3,528,398 
TOTAL LIABILITIES $69,577,068  $59,521,719 
COMMITMENTS AND CONTINGENCIES        
EQUITY        
Ordinary shares, no par value: 10,021,142 and 10,006,142 shares issued and outstanding as of September 30, 2020 and December 31, 2019  -   - 
Additional paid-in capital  15,269,485   15,226,685 
Statutory reserves  4,338,618   3,866,574 
Retained earnings  21,101,803   19,863,600 
Accumulated other comprehensive income (loss)  1,942,237   (360,981)
Total shareholders’ equity $42,652,143  $38,595,878 
Non-controlling interest  9,009,193   8,366,246 
TOTAL EQUITY $51,661,336  $46,962,124 
         
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $121,238,404  $106,483,843 
  June 30,  December 31, 
  2021  2020 
  (Unaudited)    
Current Liabilities      
Short-term bank loans $11,899,452  $18,487,356 
Notes payable-bank acceptance notes  38,202,952   25,889,067 
Accounts payable  28,300,234   22,005,260 
Customer deposits  163,435   366,029 
Due to related parties  7,904,430   9,051,119 
Other current liabilities  1,475,090   2,212,325 
Long-term payable- current portion  584,003   797,179 
Total current liabilities $88,529,596  $78,808,335 
         
Long-term liabilities        
Long-term payables  -   166,292 
Other long-term liabilities  2,240,949   2,342,648 
Total long-term liabilities $2,240,949  $2,508,940 
TOTAL LIABILITIES $90,770,545  $81,317,275 
COMMITMENTS AND CONTINGENCIES        
EQUITY        
Ordinary shares, no par value, unlimited shares authorized; 11,448,327 and 10,225,142 shares issued and outstanding as of June 30, 2021 and December 31, 2020.  -   - 
Additional paid-in capital  21,983,495   13,707,39 
Statutory reserves  3,842,331   4,517,117 
Retained earnings  32,312,439   26,728,332 
Accumulated other comprehensive loss  339,456   (62,925)
Total shareholders’ equity $58,477,721  $44,889,922 
Non-controlling interest  6,631,134   5,771,540 
TOTAL EQUITY $65,108,855  $50,661,462 
         
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $155,879,400  $131,978,737 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

F-2


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOMEOPERATIONS AND COMPREHENSIVE INCOME (LOSS)

FOR THE THREE AND NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20202021 AND 2019 (UNAUDITED)2020

(UNAUDITED, IN U.S. DOLLARS)

  For the three months ended
September 30,		  For the nine months ended
September 30,		 
  2020  2019  2020  2019 
REVENUES $16,520,598  $11,951,535  $42,969,010  $40,502,305 
COST OF GOODS SOLD  13,122,382   9,949,895   34,764,736   31,875,891 
GROSS PROFIT  3,398,216   2,001,640   8,204,274   8,626,414 
Selling expenses  270,654   180,252   792,030   778,348 
General and administrative expenses  324,073   363,353   1,841,958   1,253,646 
Research and development expenses  564,204   450,111   1,604,151   1,600,890 
Total operating expenses $1,158,931  $993,716  $4,238,139  $3,632,884 
INCOME FROM OPERATIONS $2,239,285  $1,007,924  $3,966,135  $4,993,530 
Interest income  66,960   6,111   142,791   132,141 
Interest expense  (231,760)  (415,203)  (942,524)  (1,292,746)
Other income (loss)  (1,267,982)  (309,018)  (415,150)  40,092 
INCOME BEFORE INCOME TAX $806,503  $289,814  $2,751,252  $3,873,017 
INCOME TAX  346,502   47,784   491,660   624,735 
NET INCOME $460,001  $242,030  $2,259,592  $3,248,282 
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST  252,068   86,346   535,898   420,650 
NET INCOME ATTRIBUTABLE TO GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES $207,933  $155,684  $1,723,694  $2,827,632 
OTHER COMPREHENSIVE INCOME (LOSS):  3,657,192   (1,613,847)  2,410,267   (1,725,902)
Unrealized foreign currency translation income (loss) attributable to Greenland technologies holding corporation and subsidiaries  2,863,032   (1,662,531)  2,303,218   (1,740,796)
Unrealized foreign currency translation income attributable to Noncontrolling interest  794,160   48,684   107,049   14,894 
Comprehensive income (loss)  3,070,965   (1,506,847)  4,026,912   1,086,836 
Noncontrolling interest  1,046,228   135,030   642,947   435,544 
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING:                
Basic and diluted  10,021,142   7,500,000   10,017,204   7,500,000 
NET INCOME PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY:                
Basic and diluted $0.02  $0.02  $0.17  $0.38 
  For the three months ended
June 30,		  For the six months ended
June 30,		 
  2021  2020  2021  2020 
REVENUES $28,204,307  $16,576,345  $52,815,201  $26,448,412 
COST OF GOODS SOLD  22,499,138   13,694,235   42,005,645   21,642,354 
GROSS PROFIT  5,705,169   2,882,110   10,809,556   4,806,058 
Selling expenses  495,462   304,535   874,692   521,376 
General and administrative expenses  752,212   443,476   1,663,351   1,517,885 
Research and development expenses  1,005,296   475,649   1,964,841   1,039,947 
Total operating expenses $2,252,970  $1,223,660  $4,502,884  $3,079,208 
INCOME FROM OPERATIONS $3,452,199  $1,658,450  $6,306,672  $1,726,850 
Interest income  4,833   42,521   9,428   75,831 
Interest expense  (221,664)  (389,072)  (401,853)  (710,764)
Other income  311,114   255,580   598,090   852,832 
INCOME BEFORE INCOME TAX $3,546,482  $1,567,479  $6,512,337  $1,944,749 
INCOME TAX  394,159   95,971   916,775   145,158 
NET INCOME $3,152,323  $1,471,508  $5,595,562  $1,799,591 
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST  371,570   212,411   686,241   283,830 
NET INCOME ATTRIBUTABLE TO GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES $2,780,753  $1,259,097  $4,909,321  $1,515,761 
OTHER COMPREHENSIVE INCOME (LOSS):  833,963   58,835   575,734   (1,246,925)
Unrealized foreign currency translation income (loss) attributable to Greenland technologies holding corporation and subsidiaries  591,484   45,180   402,381   (559,814)
Unrealized foreign currency translation income (loss) attributable to Noncontrolling interest  242,479   13,655   173,353   (687,111)
Comprehensive income  3,372,237   1,304,277   5,311,702   955,947 
Noncontrolling interest  614,049   226,066   859,594   (403,281)
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING:                
Basic and diluted  10,814,479   10,021,142   10,574,223   10,015,203 
NET INCOME PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY:                
Basic and diluted  0.26   0.13   0.46   0.15 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

F-3


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREREHOLDERS’SHAREHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, JUNE 30, SEPTEMBER 30,2021 AND 2020 AND 2019 (UNAUDITED)

(UNAUDITED, IN U.S. DOLLARS, EXCEPT FOR SHARE DATA)

  Ordinary Shares  Additional  Accumulated
Other		        Non-    
  No Par Value  Paid-in  Comprehensive  Statutory  Retained  controlling    
  Shares  Amount  Capital  Income/(loss)  Reserve  Earnings  Interest  Total 
Balance at December 31, 2018  7,500,000   -   12,301,305   173,881   3,334,322   15,931,296   7,898,064   39,638,868 
Net income  -   -   -   -   -   1,542,194   186,358   1,728,552 
Transfer to statutory reserve  -   -   -   -   164,296   (164,296)  -   - 
Foreign currency translation adjustment  -   -   -   782,078   -   -   101,010   883,088 
Balance at March 31, 2019  7,500,000   -   12,301,305   955,959   3,498,618   17,309,194   8,185,432   42,250,508 
Net income  -   -   -   -   -   1,129,754   147,946   1,277,700 
Transfer to statutory reserve  -   -   -   -   134,261   (134,261)  -   - 
Foreign currency translation adjustment  -   -   -   (860,343)  -   -   (134,800)  (995,143)
Balance at June 30, 2019  7,500,000   -   12,301,305   95,616   3,632,879   18,304,687   8,198,578   42,533,065 
Net income  -   -   -   -   -   155,684   86,346   242,030 
Transfer to statutory reserve  -   -   -   -   16,721   (16,721)  -   - 
Foreign currency translation adjustment  -   -   -   (1,662,531)  -   -   48,684   (1,613,847)
Balance at September 30, 2019  7,500,000   -   12,301,305   (1,566,915)  3,649,600   18,443,650   8,333,608   41,161,248 
Balance at December 31, 2019  10,006,142   -  $15,226,685  $(360,981)  3,866,574  $19,863,600  $8,366,246  $46,962,124 
Restricted stock grants  15,000   -   42,800   -   -   -   -   42,800 
Net income  -   -   -   -   -   256,664   71,419   328,083 
Transfer to statutory reserve  -   -   -   -   60,253   (60,253)  -   - 
Foreign currency translation adjustment  -   -   -   (604,994)  -   -   (700,766)  (1,305,760)
Balance at March 31, 2020  10,021,142   -  $15,269,485  $(965,975)  3,926,827  $20,060,011  $7,736,899  $46,027,247 
                                 
Net income  -   -   -   -   -   1,259,097   212,411   1,471,508 
Transfer to statutory reserve  -   -   -   -   195,723   (195,723)  -   - 
Dividend  -   -   -   -   -   (13,447)  -   (13,447)
Foreign currency translation adjustment  -   -   -   45,180   -   -   13,655   58,835 
Balance at June 30, 2020  10,021,142   -   15,269,485   (920,795)  4,122,550   21,109,938   7,962,965   47,544,143 
                                 
Net income  -   -   -   -   -   207,933   252,068   460,001 
Transfer to statutory reserve  -   -   -   -   216,068   (216,068)  -   - 
Foreign currency translation adjustment  -   -   -   2,863,032   -   -   794,160   3,657,192 
Balance at September 30, 2020  10,021,142   -   15,269,485   1,942,237   4,338,618   21,101,803   9,009,193   51,661,336 

  Ordinary Shares  Additional  Accumulated
Other		          Non-        
  No Par Value  Paid-in  Comprehensive  Statutory  Retained  controlling    
  Shares  Amount  Capital  Income/(loss)  Reserve  Earnings  Interest  Total 
Balance at December 31, 2019  10,006,142        -  $15,226,685  $(360,981)  3,866,574  $19,863,600  $8,366,246  $46,962,124 
Restricted stock grants  15,000   -   42,800   -   -   -   -   42,800 
Net income  -   -   -   -   -   256,664   71,419   328,083 
Transfer to statutory reserve  -   -   -   -   60,253   (60,253)  -   - 
Foreign currency translation adjustment  -   -   -   (604,994)  -   -   (700,766)  (1,305,760)
Balance at March 31, 2020  10,021,142   -  $15,269,485  $(965,975)  3,926,827  $20,060,011  $7,736,899  $46,027,247 
Net income  -   -   -   -   -   1,259,097   212,411   1,471,508 
Transfer to statutory reserve  -   -   -   -   195,723   (195,723)  -   - 
Dividend  -   -   -   -   -   (13,447)  -   (13,447)
Foreign currency translation adjustment  -   -   -   45,180   -   -   13,655   58,835 
Balance at June 30, 2020  10,021,142   -   15,269,485   (920,795)  4,122,550   21,109,938   7,962,965   47,544,143 
                                 
Balance at December 31, 2020  10,225,142   -  $13,707,398  $(62,925)  4,517,117  $26,728,332  $5,771,540  $50,661,462 
Restricted stock grants  51,000   -   51,000   -   -   -   -   51,000 
Sale of stock and warrants  221,985   -   1,858,841   -   -   -   -   1,858,841 
Net income  -   -   -   -   -   2,128,568   314,671   2,443,239 
Foreign currency translation adjustment  -   -   -   (189,103)  -   -   (69,126)  (258,229)
Balance at March 31, 2021  10,498,127   -  $15,617,239  $(252,028)  4,517,117  $28,856,900  $6,017,085  $54,756,313 
Sale of stock and warrants  950,200   -   6,366,256   -   -   -   -   6,366,256 
Net income  -   -   -   -   -   2,780,753   371,570   3,152,323 
Transfer to statutory reserve  -   -   -   -   (674,786)  674,786   -   - 
Foreign currency translation adjustment  -   -   -   591,484   -   -   242,479   833,963 
Balance at June 30, 2021  11,448,327   -   21,983,495   339,456   3,842,331   32,312,439   6,631,134   65,108,855 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

F-4


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20202021 AND 2019 (UNAUDITED)2020

(UNAUDITED, IN U.S. DOLLARS)

  For the nine months ended
September 30,		 
  2020  2019 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income $2,259,592  $3,248,282 
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization  1,751,084   1,723,564 
Loss on disposal of property and equipment  -   (253,869)
Increase in allowance for doubtful accounts  114,108   74,858 
Decrease in allowance for notes receivable  (8,166)  (29,070)

(Decrease) increase in inventory impairment

  (59,565)  29,795 
Deferred tax assets  (17,139)  55,645 
Stock based compensation expense  42,800   - 
Loss on prepayment of financing lease obligations  53,130   - 
Changes in operating assets and liabilities:        
Decrease (Increase) In:        
Accounts receivable  (3,410,247)  (2,368,390)
Notes receivable  (3,311,935)  1,141,089 
Inventories  (2,201,159)  2,387,499 
Advance to suppliers  (51,312)  (101,111)
Other current and noncurrent assets  205,389   (38,977)
Increase (Decrease) In:        
Accounts payable  6,324,278   1,751,031 
Customer deposits  197,285   17,713 
Other current liabilities  (263,813)  563,942 
Income tax payable  248,702   (57,544)
Due to related parties  312,785   (418,668)
Long-term payables-unamortized deferred financing costs  199,742   334,609 
Other long-term liabilities  (184,022)  (163,223)
         
NET CASH PROVIDED BY OPERATING ACTIVITIES $2,201,537  $7,897,175 
  For the six months ended
June 30,		 
  2021  2020 
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net income $5,595,562  $1,799,591 
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization  1,248,256   1,163,894 
Loss on disposal of property and equipment  (959)  - 
Increase  in allowance for doubtful accounts  -   127,667 
Increase (Decrease) in allowance for notes receivable  -   (11,226)
Increase (Decrease) in provision for inventory  -   (44,440)
Deferred tax assets  1,433   (27,502)
Stock based compensation expense  51,000   42,800 
Loss on prepayment of financing lease obligations  -   52,684 
Changes in operating assets and liabilities:        
Decrease (Increase) In:        
Accounts receivable  (7,966,860)  (2,869,276)
Notes receivable  (1,980,407)  (76,376)
Inventories  (2,184,865)  (33,550)
Advance to suppliers  (278,919)  (15,617)
Other current and noncurrent assets  128,879   105,609 
Increase (Decrease) In:        
Accounts payable  6,052,012   3,738,130 
Customer deposits  (206,136)  248,949 
Other current liabilities  (604,808)  121,777 
Income tax payable  -   118,934 
Due to related parties  (391,343)  316,779 
Long-term payables-unamortized deferred financing costs  (2,470)  185,556 
Other long-term liabilities  (248,796)  (116,086)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $(778,421) $4,828,297 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

F-5


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 2021 AND 2020 AND 2019 (UNAUDITED) (Continued)

(UNAUDITED, IN U.S. DOLLARS)

  For the nine months ended
September 30		 
  2020  2019 
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchases of long term assets $(436,446) $(1,011,941)
Proceeds from sale of property, plant and equipment  -   91,176 
Proceeds from government grants for construction  253,329   324,193 
NET CASH USED IN INVESTING ACTIVITIES $(183,117) $(596,572)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from short-term bank loans $20,838,520  $21,725,658 
Repayments of short-term bank loans  (17,547,399)  (22,184,928)
Repayments of long-term bank loans  -   (4,738,500)
Issuance of notes payable  20,646,974   18,252,962 
Repayment of notes payable  (18,502,957)  (23,285,548)
Proceeds from related parties  1,018,437   2,298,514 
Repayment of loans from related parties  (520,823)  (3,336,757)
Repayment of loans from third parties  (5,723,689)  (2,916,000)
Proceeds from third parties  4,376,267   145,800 
Dividend paid  (13,447)  (164,257)
Proceeds received from financing lease obligation  1,430,922   6,094,440 
Prepayment of lease-financing obligations  (2,295,833)  - 
Payment of principal on financing lease obligation  (1,510,861)  (1,771,595)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES $2,196,111  $(9,880,211)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH $4,214,531  $(2,579,608)
Effect of exchange rate changes on cash  1,262,878   (398,717)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR  5,717,207   8,968,177 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD $11,194,616  $5,989,852 
Cash and cash equivalents  10,418,741   3,858,305 
Restricted cash  775,875   2,131,547 
Supplemental Disclosure of Cash Flow Information        
Income taxes paid  417,549   654,779 
Interest paid  946,589   1,302,629 
  For the six months ended
June 30		 
  2021  2020 
CASH FLOWS FROM INVESTING ACTIVITIES:      
Purchases of Long term assets $(425,860) $(439,871)
Proceeds from government grants for construction  122,485   242,955 
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES $(303,375) $(196,916)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from short-term bank loans $773,144  $3,263,569 
Repayments of short-term bank loans  (7,545,885)  - 
Repayments of long-term bank loans  -   - 
Notes payable  12,020,074   (3,641,089)
Proceeds from related parties  422,324   625,719 
Repayment of loans from related parties  (1,284,631)  (496,630)
Repayment of loans from third parties  (309,258)  (4,965,961)
Proceeds from third parties  154,629   4,331,829 
Dividend paid  -   (13,447)
Proceeds received from financing lease obligation  -   1,418,943 
Prepayment of lease-financing obligations  -   (2,276,612)
Payment of principal on financing lease obligation  (386,572)  (1,306,408)
Proceeds from equity and debt finaning  8,225,097     
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES $12,068,922  $(3,060,087)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH $10,987,126  $1,571,294 
Effect of exchange rate changes on cash  133,999   (574,058)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR  9,403,053   5,717,207 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD $20,524,178  $6,714,443 
Bank balances and cash  10,756,968   4,527,402 
Bank balances and cash included in assets classified as restricted cash  9,767,210   2,187,041 
         
Supplemental Disclosure of Cash Flow Information        
Income taxes paid  782,596   209,777 
Interest paid  408,582   638,213 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

F-6


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES

Greenland Technologies Holding Corporation, formerly known as Greenland Acquisition Corporation (“Greenland” or the “Company”), was incorporated on December 28, 2017 as a British Virgin Islands Company with limited liability. The Company was incorporated as a blank check Company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more target businesses. On October 24, 2019, the Company acquired all of the outstanding shares of Zhongchai Holding (Hong Kong) Limited via a reverse capitalization and changed its name from Greenland Acquisition Corporation to Greenland Technologies Holding Corporation.

Greenland serves as the parent Company for the primary operating Company, Zhongchai Holding (Hong Kong) Limited, a holding Company formed under the laws of Hong Kong on April 23, 2009 (“Zhongchai Holding”). Through Zhongchai Holding and other subsidiaries, Greenland develops and manufactures traditional transmission products for material handling machineries in PRC.

Greenland, through its subsidiaries, is:

●a leading developer and manufacturer of transmission products for material handling machineries in China; and

●since December 2020, a developer of electric industrial vehicles, and has launched its 1.8 tons electric loader vehicle (GEL1800), GEX-8000 electric excavator and GEF-series lithium powered electric vehicle forklift truck.

Greenland’s transmission products are key components for forklift trucks, used in manufacturing and logistic applications such as factories, workshops, warehouses, fulfilment centers, shipyards, and seaports. Forklifts play an important role in logistics for many enterprises across different industries in the PRC and around the globe. Generally, industries with the largest demand for forklifts are transportation, warehousing logistics, electrical machinery, and automobile.

Greenland has experienced increased demand for forklifts in the manufacturing industry in the PRC, as wellits revenue increased from approximately $26.45 million for the six months ended June 30, 2020 to approximately $52.82 million for the six months ended June 30, 2021. Since late March 2020, the Company’s business operations have gradually recovered from the negative impacts due to the lockdown as develop modelsa result of the COVID-19 pandemic, and part of the Company’s backlogged orders were processed during the six months ended June 30, 2021, which contributed to an increase in its revenues for robotic cargo carriers, whichthe six months ended June 30, 2021.

Greenland’s transmission products are expectedused in 1-ton to be produced15-tons forklift trucks, some with mechanical shift and some with automatic shift. Greenland sells these transmission products directly to forklift-truck manufacturers. For the six months ended June 30, 2021 and 2020, Greenland sold 79,032 and 45,380 sets of transmission products, respectively, to more than 100 forklift manufacturers in the near futureaggregate in PRC.

The outbreak

In December 2020, Greenland launched a new division to focus on the electric industrial vehicle market, a market that Greenland intends to develop to diversify its product offerings. Greenland has setup an assembly facility on the East Coast of the novel coronavirus, commonly referredUnited States for final assembly of its newly developed electric vehicle. Greenland’s teams have completed full beta versions of the 1.8 tons electric loader vehicle (GEL1800), its first electric industry vehicle product, and its GEX-8000 electric excavator. Greenland expects to start deliveries of GEL 1800 and GEX-8000 electric excavator in the fourth quarter of 2021. Other models, such as “COVID-19”,electric loader vehicles with loading capacity of one and a half tons or five tons are currently under development. In July 2021, Greenland also launched an innovative new GEF-series lithium powered electric vehicle forklift truck, one of the industry’s first found in mainland China, then in Asiaelectric vehicle forklift trucks to use lithium power. Greenland will cooperate with global parts suppliers to utilize their matured supply chain, which will enable it to shorten its development cycle and eventually throughout the world,make quicker market entrance.


GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)

The COVID-19 pandemic has significantly affected business and manufacturing activities within China. The government implemented a series of measures to constrain the spread of virus,China, including travel restrictions, widespread mandatory quarantines, and suspension of business activities within China. Effective February 3, 2020, the Company announced the temporary closure of its operating offices in Zhejiang Province, including suspension of its manufacturing activities in response to the emergency measures imposed by the local government. The Company’s operating subsidiaries were temporarilytemporary shut down until the end of February 2020. The Company expects to delay its launch of robotic cargo carriers due to uncertainties of the market demand. Moreover, the outbreakpandemic has significantly limited suppliers’ ability to provide low-cost, high-quality parts and materials to the Company on a timely basis. Zhejiang Province, where we conduct a substantial part of our business, is one of the most affected areas in China. As of the date of this report, Chinese industries have gradually resumed businesses as government officials started to ease the restrictive measures since April 2020. However, we remain cautious and prudent when assessing the future impact of COVID-19 on our business due to the current ongoing global pandemic.

The Company’s Shareholders

As of SeptemberJune 30, 2020,2021, Cenntro Holding Limited owns 74.842%69.60% of Greenland’s outstanding ordinary shares. Cenntro Holding Limited is controlled and beneficially owned by Mr. Peter Zuguang Wang, chairman of the board of directors of the Company.

The Company’s Subsidiaries

Zhongchai Holding, the wholly-owned100% owned subsidiary of the Company, ownedowns 89.47% of Zhejiang Zhongchai Machinery Co., Ltd. (“Zhejiang Zhongchai”), 62.5% of Shanghai Hengyu Enterprise Management Consulting Co., Ltd. (“Hengyu”), and 100% of Hangzhou Greenland RoboticEnergy Technologies Co., LtdLtd. (“Hangzhou Greenland”).

Zhejiang Zhongchai, the subsidiary of the Company, is the sole shareholder of Zhejiang Shengte Transmission Co., Ltd. (“Shengte”). It also owned 62.5% of Hengyu until transferred its ownership to Zhongchai Holding on July 15, 2019.

F-7

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)

Zhejiang Zhongchai

Zhejiang Zhongchai, a limited liability Company registered on November 21, 2005, is the direct operating subsidiary of Zhongchai Holding in PRC. On April 5, 2007, Usunco Automotive Limited (“Usunco”), a British Virgin Islands limited liability Company incorporated on April 24, 2006, invested $8,000,000 USD into Zhejiang Zhongchai for purchasingits approximately 75.47% equity interest of Zhejiang Zhongchai.interest. On December 16, 2009, Usunco agreed to transfer its 75.47% interest in Zhejiang Zhongchai to Zhongchai Holding. On April 26, 2010, Xinchang County Keyi Machinery Co., Ltd. transferred all its 24.528% equity interest it owned in Zhejiang Zhongchai to Zhongchai Holding in exchange for a consideration of US$2.6 million. On November 1, 2017, Xinchang County Jiuxin Investment Management Partnership (LP) (“Jiuxin”), an entity controlled and beneficially owned by Mr. He Mengxing, president of Zhejiang Zhongchai, closed its investment of approximately RMB31,590,000 in Zhejiang Zhongchai for 10.53% of its interest. As of SeptemberJune 30, 2020,2021, Zhongchai Holding owns approximately 89.47% of Zhejiang Zhongchai and Jiuxin owns approximately 10.53% of Zhejiang Zhongchai.

Through Zhejiang Zhongchai, the Company has been engaging in the manufacture and sale of transmission systems mainly for forklift trucks since 2006. These forklift trucks are used in manufacturing and logistics applications, such as factory, workshop, warehouse, fulfilment centers, shipyards and seaports. The transmission systems are the key components for the forklift trucks. The Company supplies transmission systems to forklift truck manufacturers. Its transmission systems fit for forklift trucks ranging from 1 to 15 tons, with either mechanical shift or automatic shift. All the products are currently manufactured at the Company’s facility in Xinchang, Zhejiang Province, PRC and are sold to both domestic and oversea markets. The Company has moved to its new factory in Meizhu, Xinchang, Zhejiang Province, PRC, in October of 2019.


 

Shengte

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

Shengte is a limited liability Company incorporated in Zhejiang, PRC on February 24, 2006.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Shengte manufactures transmission box parts for Zhejiang Zhongchai. All parts were manufactured in the Company’s Xinchang facility and were sold internally to Zhejiang Zhongchai. In January 2019 Shengte has stopped its business and transferred its most assets to Zhejiang Zhongchai and only maintain its employee social benefit function in the local region.

NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)

Hengyu

Hengyu is a limited liability Company incorporated in Shanghai, PRCregistered on September 10, 2015.2015 in Shanghai Free Trade Zone, Shanghai, and PRC. Hengyu holds no assets other than an account receivable owed by Cenntro Holding Limited. Hengyu’sMain business operationsof Hengyu are providing investment management and consulting services.

Hangzhou Greenland

Hangzhou Greenland is a limited liability Company incorporated in Zhejiang, PRCregistered on August 9, 2019.2019 in Hangzhou Greenland’s operation focuses on designing and manufacturing robotic cargo carriers based on a conceptual prototype developed by our R&D teamSunking Plaza, Zhejiang, PRC. Hangzhou Greenland engages in 2018.the business of trading.

F-8

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)

Greenland Tech

On January 14, 2020, Greenland established its wholly owned subsidiaryTechnologies Corporation was incorporated in the state of Delaware namedon January 14, 2020 as a wholly owned subsidiary of Greenland Technologies Corporation (“Greenland Tech”). The Company aims to use it as the USits U.S. operation site offor the Companyassembly, marketing and promotes sales of robotic productselectric industrial vehicles for the North American market in the near future. Greenland Tech currently does not conduct any business activities.market.

Details of the Company’s subsidiaries, which are included in these unaudited consolidated financial statements as of SeptemberJune 30, 2020,2021, are as follows:

Name Domicile and Date
of Incorporation		 Paid-in Capital Percentage of
Effective
Ownership		  Principal Activities
Zhongchai Holding (Hong Kong) Limited Hong Kong
April 23, 2009		 HKD10,000  100% Holding
Zhejiang Zhongchai Machinery Co., Ltd. PRC
November 21, 2005		 RMB20,000,000  89.47% Manufacture, sale of various transmission boxes.
Shanghai Hengyu Enterprise Management Consulting Co., Ltd. PRC
September 10, 2015		 RMB251,500,000  62.5% Investment management and consulting services.
Hangzhou Greenland Energy Technologies Co., Ltd. PRC
August 9, 2019		 RMB4,794,242  100% Trading.
Greenland Technologies Corporation Delaware, USA
January 14, 2020		  USD6,363,557  100% US operation and distribution of electric industrial vehicles for North American market


 

Name Domicile and Date
of Incorporation		 Paid-in Capital Percentage of
Effective
Ownership		  Principal Activities
Zhongchai Holding (Hong Kong) Limited Hong Kong
April 23, 2009		 HKD10,000   100% Holding
Zhejiang Zhongchai Machinery Co., Ltd. PRC
November 21, 2005		 USD28,612,943   89.47% Manufacture, sale of various transmission boxes
Zhejiang Shengte Transmission Co., Ltd. PRC
February 24, 2006		 RMB5,000,000   89.47% Manufacture and sale of parts of transmission box
Shanghai Hengyu Enterprise Management Consulting Co., Ltd. PRC
September 10, 2015		 RMB251,500,000   62.5% Investment management and consulting services.
Hangzhou Greenland Robotic Technologies Co., Ltd. PRC
August 9, 2019		 RMB252,862   100% Manufactures and sales carrier cargo robotics.
Greenland Technologies Corporation Delaware, USA
January 14, 2020		 USD0   100% US operation and promote robotic enabled automated warehouse system for North American market

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.US GAAP”) for interim financial information and with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and footnote disclosures normally included in the annual audited. The consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The accompanying condensed consolidated balance sheet as of December 31, 2019 is derived frominclude the Company’s audited financial statements as of that date. Because certain information and footnote disclosures have been condensed or omitted, these consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2019 contained in the Company’s 2019 Annual Report on Form 10-K (the “2019 Form 10-K”). In management’s opinion, all normal and recurring adjustments considered necessary for a fair presentation of the financial position, results of operationsCompany and cash flows forits wholly-owned subsidiaries. All significant inter-company transactions and balances between the periods presented have been included. When necessary, certain prior year amounts have been reclassified to conform to the current period presentation. Interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. The Company believes that the disclosures made in these condensed consolidated financial statementsand its subsidiaries are adequate to make the information not misleading.eliminated upon consolidation.

F-9

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Greenland Technologies Holding Corporation and its subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Intercompany accounts and transactions have been eliminated upon consolidation. Certain reclassifications to previously reported financial information have been made to conform to the current period presentation.

The Business Combination was accounted for as a reverse recapitalization (the “Recapitalization Transaction”) in accordance with Accounting Standard Codification (“ASC”) 805, Business Combinations. For accounting and financial reporting purposes, Zhongchai Holding is considered the acquirer based on facts and circumstances, including the following:

●Zhongchai Holding’s operations comprise the ongoing operations of the combined entity;

●The officers of the newly combined company consist of Zhongchai Holding’s executives, including the Chief Executive Officer, Chief Financial Officer and General Counsel; and,

●The former shareholders of Zhongchai Holding own a majority voting interests in the combined entity.

As a result of Zhongchai Holding being the accounting acquirer, the financial reports filed with the SEC by the Company subsequent to the Business Combination are prepared “as if” Zhongchai Holding is the predecessor and legal successor to the Company. The historical operations of Zhongchai Holding are deemed to be those of the Company. Thus, the financial statements included in this report reflect (i) the historical operating results of Zhongchai Holding prior to the Business Combination; (ii) the combined results of the Company and Zhongchai Holding following the Business Combination in October 24, 2019; (iii) the assets and liabilities of Zhongchai Holding at their historical cost, and (iv) Greenland’s equity structure for all periods presented. Zhongchai Holding received 7,500,000 shares of Greenland in exchange for all the share capital, which is reflected retroactively to December 31, 2017 and will be utilized for calculating earnings per share in all prior periods. No step-up basis of intangible assets or goodwill was recorded in the Business Combination transaction consistent with the treatment of the transaction as a reverse capitalization of Zhongchai Holding.

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 three and ninesix months ended SeptemberJune 30, 20202021 and 20192020 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-10


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Foreign Currency Translation

The accompanying consolidated financial statements are presented in United States dollars (“US$” or “$”). The functional currency of the Company is Renminbi (“RMB”).  Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of operations.

  For the nine months ended
September 30,		 
  2020  2019 
Period end RMB: US$ exchange rate  6.7896   7.1477 
Period average RMB: US$ exchange rate  6.9885   6.8587 
  For the six months ended
June 30,		 
  2021  2020 
Period end RMB: US$ exchange rate  6.4566   7.0851 
Period average RMB: US$ exchange rate  6.4671   7.0307 

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutionsinstitutions. 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 original maturity of three months or less to be cash equivalents. The Company maintains no bank account in the United States of America. The Company maintains its bank accounts in PRC and Hong Kong Special Administrative Region (“SAR”). Balances at financial institutions or state-owned banks within PRC and Hong Kong SAR are not covered by insurance. 

Restricted Cash

Restricted cash represents amounts held by a bank as security for bank acceptance bills, as well as the financial product secured for the short-term bank loan and therefore is not available for the Company’s use until such time as the bank acceptance notes and bank loans have been fulfilled or expired, normally within a twelve-month period.

Fair Value of Financial Instruments

The Company applies the provisions of ASC 820, Fair Value Measurements and Disclosures, to the financial instruments that are required to be carried at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company uses a three-tier fair value hierarchy based upon observable and non-observable inputs that prioritizes the information used to develop our assumptions regarding fair value. Fair value measurements are separately disclosed by level within the fair value hierarchy.

●Level 1—defined as observable inputs such as quoted prices in active markets for identical assets or liabilities;

●Level 2—defined as inputs other than quoted prices in active markets, that are either directly or indirectly observable; and

●Level 3—defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Company’s financial instruments primarily consist of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, accounts payable, other payables and accrued liabilities, short-term bank loans, and notes payable.

The carrying value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and other current assets and liabilities approximate fair value because of the short-term nature of these items. The estimated fair values of short-term bank loans were not materially different from their carrying value as presented due to the short maturities and that the interest rates on the borrowing approximate those that would have been available for loans of similar remaining maturity and risk profile. As the carrying amounts are reasonable estimates of the fair value, these financial instruments are classified within Level 1 of the fair value hierarchy.

Accounts Receivable

Accounts receivable are carried at net realizable value. The Company reviews its accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, customer’s historical payment history, its current creditworthiness and current economic trends. Accounts are written off after exhaustive efforts at collection. The Company only grants credit terms to established customers who are deemed to be financially responsible. Credit periods to customers are within 60 days after customers received the purchased goods. If accounts receivable are to be provided for, or written off, they would be recognized in the consolidated statement of operations within operating expenses. Balance of allowance of doubtful accounts was $1.00 million and $1.08 million as of June 30, 2021 and December 31, 2020, respectively.

Inventories

Inventories are stated at the lower of cost or net realizable value, which is based on estimated selling prices less any further costs expected to be incurred for completion and disposal. Cost of raw materials is calculated using the weighted average method and is based on purchase cost. Work-in-progress and finished goods costs are determined using the weighted average method and comprise direct materials, direct labor and an appropriate proportion of overhead. As of June 30, 2021 and December 31, 2020, the Company had reserves for inventories of $0 million and $0 million, respectively. The Company records inventory reserves for excess or obsolete inventories based upon assumptions about our 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 $0.73 million and $0.45 million as of June 30, 2021 and December 31, 2020.

Property, Plant, and Equipment

Property, plant, and equipment are stated at cost less accumulated depreciation, and include expenditure that substantially increases the useful lives of existing assets. Expenditures for repairs and maintenance, which do not extend the useful life of the assets, are expensed as incurred.

Depreciation is provided over their estimated useful lives, using the straight-line method. Estimated useful lives are as follows:

Plant, buildings and improvements20 years
Machinery and equipment2~10 years
Motor vehicles4 years
Office equipment3~5 years
Fixtures and decorations5 years


GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

When assets are sold or retired, their costs and accumulated depreciation are eliminated from the consolidated financial statements and any gain or loss resulting from their disposal is recognized in the period of disposition as an element of other income. The cost of maintenance and repairs is charged to income as incurred, whereas significant renewals and betterments are capitalized.

Land Use Rights

According to the PRC laws, the government owns all the land in the PRC. Companies or individuals are authorized to possess and use the land only through land use rights granted by the Chinese government. The land use rights granted to the Company are being amortized using the straight-line method over the lease term of fifty years.

Impairment of Long-Lived Assets

Long-lived assets are evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying amounts may not be recoverable in accordance with FASB ASC 360, “Property, Plant and Equipment”.

In evaluating long-lived assets for recoverability, the Company uses its best estimate of future cash flows expected to result from the use of the asset and eventual disposition in accordance with FASB ASC 360-10-15. To the extent that estimated future, undiscounted cash inflows attributable to the asset, less estimated future, undiscounted cash outflows, are less than the carrying amount, an impairment loss is recognized in an amount equal to the difference between the carrying value of such asset and its fair value. Assets to be disposed of and for which there is a committed plan of disposal, whether through sale or abandonment, are reported at the lower of carrying value or fair value less costs to sell.

There was no impairment loss recognized for the six months ended June 30, 2021 and 2020.

Lease

ASC 842 supersedes the lease requirements in ASC 840 “Leases”, and generally requires lessees to recognize operating and finance lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. Leases that transfer substantially all of the benefits and risks incidental to the ownership of assets are accounted for as finance leases as if there was an acquisition of an asset and incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases.

A sale-leaseback transaction occurs when an entity sells an asset it owns and immediately leases the asset back from the buyer. The seller then becomes the lessee and the buyer becomes the lessor. under ASC 842, both parties must assess whether the buyer-lessor has obtained control of the asset and a sale has occurred.

The Company has determined that the leaseback transaction that it newly entered in current year 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 4.0038%.


GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Statutory Reserve

In accordance with the PRC Regulations on Enterprises with Foreign Investment, an enterprise established in the PRC with foreign investment is required to provide for certain statutory reserves, namely (i) General Reserve Fund, (ii) Enterprise Expansion Fund and (iii) Staff Welfare and Bonus Fund, which are appropriated from net profit as reported in the enterprise’s PRC statutory accounts. A wholly-owned foreign enterprise is required to allocate at least 10% of its annual after-tax profit to the General Reserve Fund until the balance of such fund has reached 50% of its respective registered capital. A non-wholly-owned foreign invested enterprise is permitted to provide for the above allocation at the discretion of its board of directors. Appropriations to the Enterprise Expansion Fund and Staff Welfare and Bonus Fund are at the discretion of the board of directors for all foreign invested enterprises. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends.

Revenue Recognition

In accordance with ASC Topic 606, “Revenue from Contracts with Customers”, the Company recognizes revenues when goods or services are transferred to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. In determining when and how revenues are recognized from contracts with customers, the Company performs the following five-step analysis: (i) identification of contract with customer; (ii) determination of performance obligations; (iii) measurement of the transaction price; (iv) allocation of the transaction price to the performance obligations and (v) recognition of revenues when (or as) the Company satisfies each performance obligation. The Company derives revenues from the processing, distribution and sale of its products. The Company recognizes its revenues net of value-added taxes (“VAT”). The Company is subject to VAT which had been levied at the rate of 17% on the invoiced value of sales until April 30, 2018, after which date the rate was reduced to 16%. VAT rate was further reduced to 13% starting from April 1, 2019. Output VAT is borne by customers in addition to the invoiced value of sales and input VAT is borne by the Company in addition to the invoiced value of purchases to the extent not refunded for export sales.

Revenues are recognized at a point in time once the Company has determined that the customer has obtained control over the product. Control is typically deemed to have been transferred to the customer when the performance obligation is fulfilled, usually at the time of customers’ acceptance or consumption, at the net sales price (transaction price) and each of the criteria under ASC 606 have been met. Contract terms may require the Company to deliver the finished goods to the customers’ location or the customer may pick up the finished goods at the Company’s factory. International sales are recognized when shipment clears customs and leaves the port.

The Company has adopted ASC 606 on January 1, 2018, using the transition method of Modified-Retrospective Method (“MRM”). The adoption of ASC 606 had no impact on the Company’s beginning balance of retained earnings.

The Company’s contracts are all short-term in nature with a contract term of one year or less. Receivables are recorded when the Company has an unconditional right to consideration.

F-11

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Contracts do not offer any price protection, but allow for the return of certain goods if quality problem, which is standard warranty. The Company’sCompany product returns and recorded reserve for sales returns were minimal for the ninesix months ended SeptemberJune 30, 20202021 and 2019.2020. The total sales return and warranty expendituresrebates amount areis accounting for around 0.51%0.19% and 0.56%0.43% of the total revenue of Greenland.

The following table sets forth disaggregation of revenue:

  For the three months ended
June 30,		  For the six months ended
June 30,		 
Major Product 2021  2020  2021  2020 
Transmission boxes for Forklift�� 24,844,007   14,489,369   46,393,363   24,361,426 
Transmission boxes for Non-Forklift (EV, etc.) and parts of transmission boxes  3,360,300   2,086,976   6,421,838   2,086,986 
Total  28,204,307   16,576,345   52,815,201   26,448,412 


 

  For the three months ended
September 30,		  For the nine months ended
September 30,		 
Major Product 2020  2019  2020  2019 
Transmission boxes for Forklift  14,998,460   9,985,094   39,359,886   35,763,973 
Transmission boxes for Non-Forklift (EV, etc.) and parts of transmission boxes  1,522,138   1,966,441   3,609,124   4,738,332 
Total  16,520,598   11,951,535   42,969,010   40,502,305 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Cost of Goods Sold

Cost of goods sold consists primarily of material costs, freight charges, purchasing and receiving costs, inspection costs, internal transfer costs, wages, employee compensation, amortization, depreciation and related costs, which are directly attributable to the production of products. Write-down of inventory to lower of cost or net realizable value is also recorded in cost of goods sold.

Selling Expenses

Selling expenses include operating expenses such as payroll and traveling and transportation expenses.

General and Administrative Expenses

General and administrative expenses include management and office salaries and employee benefits, depreciation for office facility and office equipment, travel and entertainment, legal and accounting, consulting fees and other office expenses.

Research and Development

Research and development costs are expensed as incurred and totaled approximately $564,204$1,005,296 and $450,111$475,649 for the three months ended SeptemberJune 30, 20202021 and 2019,2020, respectively. Research and development costs are expensed as incurred and totaled approximately $1,604,151$1,964,841 and $1,600,890$1,039,947 for the ninesix months ended SeptemberJune 30, 2021 and 2020, and 2019, respectively.

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 $2.31$2.24 million and $2.18$2.34 million at SeptemberJune 30, 20202021 and December 31, 2019,2020, respectively.

F-12

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Company also follows FASB ASC 740, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of SeptemberJune 30, 20202021 and December 31, 2019,2020, the Company did not have a liability for unrecognized tax benefits. It is the Company’s policy to include penalties and interest expense related to income taxes as a component of other expense and interest expense, respectively, as necessary. The Company’s historical tax years will remain open for examination by the local authorities until the statute of limitations has passed.

Value-Added Tax

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. The VAT standard rate had been 17% of the gross sale price 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. A credit is available whereby VAT paid on the purchases of semi-finished products or raw materials used in the production of the Company’s finished products can be used to offset the VAT due on the sales of the finished products.

Statutory Reserve

In accordance with the PRC Regulations on Enterprises with Foreign Investment, an enterprise established in the PRC with foreign investment is required to provide for certain statutory reserves, namely (i) General Reserve Fund, (ii) Enterprise Expansion Fund and (iii) Staff Welfare and Bonus Fund, which are appropriated from net profit as reported in the enterprise’s PRC statutory accounts. A wholly-owned foreign enterprise is required to allocate at least 10% of its annual after-tax profit to the General Reserve Fund until the balance of such fund has reached 50% of its respective registered capital. A non-wholly-owned foreign invested enterprise is permitted to provide for the above allocation at the discretion of its board of directors. Appropriations to the Enterprise Expansion Fund and Staff Welfare and Bonus Fund are at the discretion of the board of directors for all foreign invested enterprises. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends.


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity during the year from transactions and other events, excluding the changes resulting from investments by owners and distributions to owners, and is not included in the computation of income tax expense or benefit. Accumulated comprehensive income consists of foreign currency translation. The Company presents comprehensive income (loss) consists in accordance with ASC Topic 220, “Comprehensive Income”.

F-13

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 common 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 common shares that would have been outstanding if the potential ordinary shares equivalents had been issued and if the additional common shares were dilutive. On October 24, 2019, the Company completed a reverse merger with Greenland Acquisition Corporation whereby the Company received 7,500,000 shares in exchange for all the share capital, which is reflected retroactively to December 31, 2017 and will be utilized for calculating earnings per share in all prior periods. The per share amounts have been updated to show the effect of the exchange on earnings per share as if the exchange occurred at the beginning of both years for the annual financial statements of the Company. The impact of the stock exchange is also shown on the Company’s Statements of Shareholders’ Equity.

Pursuant to the Service Agreement entered into and by the Company and Chineseinvestors.com, Inc., an Indiana corporation (“CIIX”) on August 21, 2019 (the “Service Agreement”), CIIX were to provide certain investor relations services to the Company for a period of three months beginning on August 21, 2019.  And later on February 24, 2020, the Company and CIIX entered into a termination agreement (the “CIIX Termination Agreement”) to terminate their respective obligations under the Service Agreement. Pursuant to the CIIX Termination Agreement, the Company agreed to issue 5,000 restricted ordinary shares, no par value (the “CIIX Termination Shares”) to CIIX.

Pursuant to the Investor Relations Consulting Agreement entered into and by the Company and Skyline Corporate Communication Group, LLC, a Massachusetts limited liability Company (“SCCG”) on August 15, 2019 (the “Consulting Agreement”), SCCG were to provide certain investor relations services to the Company for a period of twelve months beginning on August 15, 2019. And later on February 25, 2020, the Company and SCCG entered into a termination agreement (the “SCCG Termination Agreement”) to terminate their respective obligations under the Consulting Agreement. Pursuant to the SCCG Termination Agreement, the Company agreed to issue 10,000 restricted ordinary shares, no par value (the “SCCG Termination Shares”) to SCCG.

Pursuant to the CIIX Termination Agreement and the SCCG Termination Agreement, 5,000 and 10,000 restricted ordinary shares, no par value, were issued to CIIX and SCCG on March 12, 2020 and March 13, 2020, respectively, and will be utilized for calculating earnings per share for the three and ninesix months ended SeptemberJune 30, 2020.2021.

Cash and Cash Equivalents

For financial reporting purposes, the Company considers all highly liquid investments purchased with original maturity of three months or less to be cash equivalents. The Company maintains no bank account in the United States of America. The Company maintains its bank accounts in PRC and Hong Kong Special Administrative Region (“SAR”). Balances at financial institutions or state-owned banks within PRC and Hong Kong SAR are not covered by insurance.

Restricted Cash

Restricted cash represents amounts held by a bank as security for bank acceptance bills, as well as the financial product secured for the short-term bank loan and therefore is not available for the Company’s use until such time as the bank acceptance notes and bank loans have been fulfilled or expired, normally within a twelve-month period.

F-14

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 instruments primarily consist of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, accounts payable, other payables and accrued liabilities, short-term bank loans, and notes payable.

The carrying value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and other current assets and liabilities approximate fair value because of the short-term nature of these items. The estimated fair values of short-term bank loans were not materially different from their carrying value as presented due to the short maturities and that the interest rates on the borrowing approximate those that would have been available for loans of similar remaining maturity and risk profile. As the carrying amounts are reasonable estimates of the fair value, these financial instruments are classified within Level 1 of the fair value hierarchy.

Accounts Receivable

Accounts receivable are carried at net realizable value. The Company reviews its accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, customer’s historical payment history, its current creditworthiness and current economic trends. Accounts are written off after exhaustive efforts at collection. The Company only grants credit terms to established customers who are deemed to be financially responsible. Credit periods to customers are within 90 days after customers received the purchased goods. If accounts receivables are to be provided for, or written off, they would be recognized in the consolidated statement of operations within operating expenses. Allowance of doubtful accounts was $1.18 million and $1.04 million as of September 30, 2020 and December 31, 2019, respectively.

Inventories

Inventories are stated at the lower of cost or net realizable value, which is based on estimated selling prices less any further costs expected to be incurred for completion and disposal. Cost of raw materials is calculated using the weighted average method and is based on purchase cost. Work-in-progress and finished goods costs are determined using the weighted average method and comprise direct materials, direct labor and an appropriate proportion of overhead. As of September 30, 2020 and December 31, 2019, the Company had recognized impairment of inventories of $0.08 million and $0.13 million, respectively. The Company records inventory reserves for excess or obsolete inventories based upon assumptions about our current and future demand forecasts.

F-15

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 $0.10 million and $0.05 million as of September 30, 2020 and December 31, 2019.

Property, Plant, and Equipment

Property, plant, and equipment are stated at cost less accumulated depreciation, and include expenditure that substantially increases the useful lives of existing assets. Expenditures for repairs and maintenance, which do not extend the useful life of the assets, are expensed as incurred.

Depreciation is provided over their estimated useful lives, using the straight-line method. Estimated useful lives are as follows:

Plant, buildings and improvements20 years
Machinery and equipment2~10 years
Motor vehicles4 years
Office Equipment3~5 years
Fixed Assets decoration5 years

When assets are sold or retired, their costs and accumulated depreciation are eliminated from the consolidated financial statements and any gain or loss resulting from their disposal is recognized in the period of disposition as an element of other income. The cost of maintenance and repairs is charged to income as incurred, whereas significant renewals and betterments are capitalized.

Land Use Rights

According to the PRC laws, the government owns all the land in the PRC. Companies or individuals are authorized to possess and use the land only through land use rights granted by the Chinese government. The land use rights granted to the Company are being amortized using the straight-line method over the lease term of fifty years.

Impairment of Long-Lived Assets

Long-lived assets are evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying amounts may not be recoverable in accordance with FASB ASC 360, “Property, Plant and Equipment”.

In evaluating long-lived assets for recoverability, the Company uses its best estimate of future cash flows expected to result from the use of the asset and eventual disposition in accordance with FASB ASC 360-10-15. To the extent that estimated future, undiscounted cash inflows attributable to the asset, less estimated future, undiscounted cash outflows, are less than the carrying amount, an impairment loss is recognized in an amount equal to the difference between the carrying value of such asset and its fair value. Assets to be disposed of and for which there is a committed plan of disposal, whether through sale or abandonment, are reported at the lower of carrying value or fair value less costs to sell.

There was no impairment loss recognized for the three and nine months ended September 30, 2020 and 2019.

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.

F-16

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Company is engaged in the business of manufacturing and selling various transmission boxes. The Company’s manufacturing process is essentially the same for the entire Company and is performed in-house at the Company’s facilities in PRC. The Company’s customers primarily consist of entities in the automotive, construction machinery or warehousing equipment industries. The distribution of the Company’s products is consistent across the entire Company. In addition, the economic characteristics of each customer arrangement are similar in that the Company maintains policies at the corporate level.


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Commitments and contingencies

In the normal course of business, the Company is subject to contingencies, including legal proceedings and environmental claims arising out of the normal course of businesses that relate to a wide range of matters, including among others, contracts breach liability. The Company records accruals for such contingencies based upon the assessment of the probability of occurrence and, where determinable, an estimate of the liability. Management may consider many factors in making these assessments including past history, scientific evidence and the specifics of each matter. The Company’s management has evaluated all such proceedings and claims that existed as of SeptemberJune 30, 20202021 and December 31, 2019.2020. Normal course of businesses that relate to a wide range of matters, including among others, contracts breach liability. The Company records accruals for such contingencies based upon the assessment of the probability of occurrence and, where determinable, an estimate of the liability. Management may consider many factors in making these assessments including past history, scientific evidence and the specifics of each matter. The Company’s management has evaluated all such proceedings and claims that existed as of SeptemberJune 30, 20202021 and December 31, 2019.2020.

Related Party

In general, related parties exist when there is a relationship that offers the potential for transactions at less than arm’s-length, favorable treatment, or the ability to influence the outcome of events different from that which might result in the absence of that relationship. A related party may be any of the following: a) an affiliate, which is a party that directly or indirectly controls, is controlled by, or is under common control with another party; b) a principle owner, owner of record or known beneficial owner of more than 10% of the voting interest of an entity; c) management, which are persons having responsibility for achieving objectives of the entity and requisite authority to make decision; d) immediate family of management or principal owners; e) a parent Company and its subsidiaries; and f) other parties that have ability to significant influence the management or operating policies of the entity. The Company discloses all significant related party transactions.

Economic and Political Risks

The Company’s operations are conducted in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy.

The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. All of the Company’s cash is maintained with state-owned banks within the PRC, and none of these deposits are covered by insurance. The Company has not experienced any losses in such accounts. A portion of the Company’s sales are credit sales which are primarily to customers whose abilities to pay are dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables is limited due to generally short payment terms. The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk

F-17

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – 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 a fluctuating exchange rates, record higher or lower profit depending on exchange rate of PRC Renminbi (RMB) converted to U.S. dollars on the relevant dates. The exchange rate could fluctuate depending on changes in the political and economic environment without notice.


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recently Issued Accounting Pronouncements

Recent accounting pronouncements that the Company has adopted or may be required to adopt in the future are summarized below:

In June 2016, the FASB issued ASU 2016-13,” Measurement of Credit Losses on Financial Instruments”, to require financial assets carried at amortized cost to be presented at the net amount expected to be collected based on historical experience, current conditions and forecasts. Subsequently, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, in April 2019. To clarify that receivables arising from operating leases are within the scope of lease accounting standards. In October 2019, the FASB issued ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842), which defers the effective date for public filers that are considered small reporting companies as defined by the Securities and Exchange Commission to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Since the Company is a smaller reporting company, implementation is not needed until January 1, 2023. Adoption of the standard requires using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date to align existing credit loss methodology with the new standard. The Company is evaluating the impact of this standard on its consolidated financial statements, including accounting policies, processes, and systems, and expects the standard will have a minor impact on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04 (Topic 350) Intangibles—Goodwill and Other: Simplifying the Test for Goodwill Impairment, which removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Under the amended guidance, a goodwill impairment charge will now be recognized for the amount by which the carrying value of a reporting unit exceeds its fair value, not to exceed the carrying amount of goodwill. As amended by ASU 2019-10, this ASU will be applied on a prospective basis and is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted for any impairment tests performed after January 1, 2017. The Company is evaluating the impact of the application of this standard and does not expect that the adoption of the ASU 2017-04 will have a material impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13 Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds, and modifies certain disclosure requirements for fair value measurements under ASC 820. This ASU is to be applied on a prospective basis for certain modified or new disclosure requirements, and all other amendments in the standard are to be applied on a retrospective basis. The new standard is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. The Company adopted Topic 820 on January 1, 2020. The adoption of the ASU 2018-13 did not have a material impact on the Company’s consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes” (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 will simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.  The Company does not expect that the requirements of ASU 2019-12 will have a material impact on its consolidated financial statements.

F-18


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – CONCENTRATION ON REVENUES AND COST OF GOODS SOLD

Concentration of major customers and suppliers:

  For the nine months ended
September 30,		 
  2020  2019 
Major customers representing more than 10% of the Company’s revenues            
Company A $9,366,809   21.80% $5,576,473   13.77%
Total Revenues $9,366,809   21.80% $5,576,473   13.77%
  For the six months ended June 30, 
  2021  2020 
Major customers representing more than 10% of the Company’s revenues            
Company A $8,881,037   16.82% $6,166,754   23.32%
Company B  6,593,104   12.48%  -   - 
Total Revenues $15,474,141   29.30% $6,166,754   23.32%

  As of 
  June 30,
2021		  December 31,
2020		 
Major customers of the Company’s accounts receivable            
Company A  1,990,033   9.70%  2,002,275   14.95%
Company B  1,498,188   7.30%  1,955,113   14.60%
Company C  1,456,398   7.10%  1,359,607   10.15%
Total $4,944,619   24.10% $5,316,995   39.69%

  As of 
  September 30,
2020		  December 31,
2019		 
Major customers of the Company’s accounts receivable, net            
Company A  1,648,391   10.50%  1,662,078   13.88%
Company B  1,278,818   8.15%  1,106,955   9.25%
Company C  1,267,731   8.08%  1,061,972   8.87%
Total $4,194,940   26.73% $3,831,005   32.00%

Accounts receivable from the Company’s major customers accounted for 26.73%24.10% and 32.00%39.69% of total accounts receivable balances as of SeptemberJune 30, 20202021 and December 31, 2019,2020, respectively.

There were no suppliers representing more than 10% of the Company’s total purchases for the ninesix months ended SeptemberJune 30, 2021 and 2020, and 2019, respectively.

NOTE 4 – ACCOUNTS RECEIVABLE

Accounts receivable is net of allowance for doubtful accounts.

  As of 
  September 30,
2020		  December 31,
2019		 
Accounts receivable $16,877,384  $13,009,686 
Less: allowance for doubtful accounts  (1,183,770)  (1,037,797)
Accounts receivable, net $15,693,614  $11,971,889 
  As of 
  June 30,
2021		  December 31,
2020		 
Accounts receivable $21,516,802  $13,395,080 
Less: allowance for doubtful accounts  (996,984)  (986,532)
Accounts receivable, net $20,519,818  $12,408,548 

Changes in the allowance for doubtful accounts are as follows:

  For the nine months ended
September 30,		 
  2020  2019 
Beginning balance $1,037,797  $906,138 
Provision for doubtful accounts  145,973   35,765 
Ending balance $1,183,770  $941,903 
  For the three months ended
June 30,		 
  2021  2020 
Beginning balance $986,532  $1,037,797 
Provision for doubtful accounts  10,452   111,947 
Ending balance $996,984  $1,149,744 

F-19


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 – INVENTORIES

  As of 
  June 30,
2021		  December 31,
2020		 
Raw materials $6,789,961  $5,682,382 
Revolving material  928,567   742,437 
Consigned processing material  62,249   51,290 
Work-in-progress  2,226,541   2,015,677 
Finished goods  7,724,097   6,888,277 
Inventories, net $17,731,415  $15,380,063 

  As of 
  September 30,
2020		  December 31,
2019		 
Raw materials $4,580,193  $3,626,104 
Revolving material  653,283   744,887 
Consigned processing material  29,658   63,608 
Work-in-progress  1,629,784   1,465,767 
Finished goods  4,481,630   2,949,593 
Goods in transit  1,199,367   1,122,918 
Inventories $12,573,915  $9,972,877 

NOTE 6 – NOTES RECEIVABLE

  As of 
  September 30,
2020		  December 31,
2019		 
Bank notes receivable $19,878,365  $15,865,267 
Commercial notes receivable  147,081   306,763 
Less: allowance for notes receivable  (7,354)  (15,338)
Total $20,018,092  $16,156,692 
  As of 
  June 30,
2021		  December  31,
2020		 
Bank notes receivable: $33,088,948  $30,803,772 
Commercial notes receivable  24,781   - 
Total $33,113,729  $30,803,772 

Bank notes and commercial notes are means of payment from customers for the purchase of the Company’s products and are issued by financial institutions or business entities, respectively, that entitle the Company to receive the full nominal amount from the issuer at maturity, which bears no interest and generally ranges from three to twelvesix months from the date of issuance.  As of SeptemberJune 30, 2020,2021, the Company pledged notes receivable for an aggregate amount of $17.22$21.83 million to Bank of Communications and Bank of Hangzhou as a means of security for issuance of bank acceptance notes for an aggregate amount of $16.20$26.49 million. As of December 31, 2019,2020, the Company pledged notes receivable for an aggregate amount of $11.17$26.53 million to Bank of Communications as a means of security for issuance of bank acceptance notes for an aggregate amount of $8.98$23.70 million. Allowance forThe Company expects collection of notes receivables as of September 30, 2020 and December 31, 2019 were $7,354 and $15,338 respectively, determined according to the collectability of commercial notes receivable.receivable within 6 months.

NOTE 7 – PROPERTY, PLANT AND EQUIPMENT AND CONSTRUCTION IN PROGRESS

(a) At SeptemberAs of June 30, 20202021 and December 31, 2019,2020, property, plant and equipment consisted of the following:

  As of 
  September 30,
2019		  December 31,
2019		 
Buildings $11,893,806  $11,188,399 
Machinery  20,058,424   19,416,746 
Motor vehicles  304,027   254,456 
Electronic equipment  189,335   177,153 
Total property plant and equipment, at cost  32,445,592   31,036,754 
         
Less: accumulated depreciation  (12,672,629)  (10,650,893)
Property, plant and equipment, net $19,772,963  $20,385,861 
Construction in process  88,370   244,390 
Total $19,861,333  $20,630,251 

F-20

  As of 
  June 30,
2021		  December 31,
2020		 
Buildings $14,412,596  $12,453,285 
Machinery  19,723,416   20,907,623 
Motor vehicles  329,302   325,850 
Electronic equipment  201,991   198,955 
Total property plant and equipment, at cost  34,667,305   33,885,713 
         
Less: accumulated depreciation  (15,227,047)  (13,843,189)
Property, plant and equipment, net $19,440,258  $20,042,524 
Construction in process  93,798   92,815 
Total $19,534,056  $20,135,339 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 – PROPERTY, PLANT AND EQUIPMENT AND CONSTRUCTION IN PROGRESS (CONTINUED)

For the ninesix months ended SeptemberJune 30, 20202021 and 2019,2020, depreciation expense amounted to $1.69$1.20 million and $1.25$0.95 million, respectively, of which $1.25$0.77 million and $1.25$0.68 million, respectively, was included in cost of revenue and inventories, and the remainder was included in general and administrative expense, and research and development expenses, etc.and other expenses.

For the ninesix months ended SeptemberJune 30, 2021 and 2020, $0 and 2019, $448,966 and $1,667,389$430,581 of construction in progress were converted into fixed assets.


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 – PROPERTY, PLANT AND EQUIPMENT AND CONSTRUCTION IN PROGRESS (CONTINUED)

Restricted assets consist of the following:

  As of 
  September 30,
2020		  December 31,
2019		 
Buildings, net $10,729,798  $10,459,597 
Machinery, net  2,205,400   9,066,066 
Total  12,935,198   19,525,663 
  As of 
  June 30,
2021		  December 31,
2020		 
Buildings, net $11,167,710  $11,050,641 
Machinery, net  2,173,063   2,150,284 
Total  13,340,773   13,200,925 

As of SeptemberJune 30, 2020,2021, the Company pledged its ownership in buildings ownership offor net book value of $10.73RMB72.11 million (RMB72.85($11.01 million) as security with ABC Xinchang and Rural commercial bank, for its loan facility with maximum exposure of RMB112.63RMB94.63 million.

As of December 31, 2019,2020, the Company pledged its ownership in buildings ownership offor net book value of $10.46RMB72.11 million (RMB72.97($11.05 million) as security with ABC Xinchang and Rural commercial bank, for its loan facility with maximum exposure of RMB112.63RMB104.63 million.

On January 3, 2019, the Company sold a set of manufacturing equipment to third parties for aggregate proceeds of $3.08 million (RMB21.25 million) and the Company entered into lease agreements under which the Company agreed to lease back each of the properties for an initial term of 3 years. On May 12, 2020, the Company prepaid the financing lease obligations for aggregate payment of $1.34 million.

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 $2.12 million (RMB14.66 million) and the Company entered into lease agreements under which the Company agreed to lease back each of the properties for an initial term of 2 years. On April 30, 2020, the Company prepaid the financing lease obligations for aggregate payment of $0.94 million.

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 $1.42 million (RMB10.00 million) and the Company entered into lease agreements under which the Company agreed to lease back each of the properties for an initial term of 2 years.

The Company determined that it did not relinquish control of the assets to the buyer-lessor. Therefore, the Company accounted for the transactions as failed sale-leaseback whereby the Company continues to depreciate the assets and recorded a financing obligation for the consideration received from the buyer-lessor.

F-21

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 – LAND USE RIGHTS

Land use rights consisted of the following:

  As of 
  September 30,
2020		  December 31,
2019		 
Land use rights, cost $4,531,431  $4,410,224 
Less: Accumulated amortization  (642,810)  (547,677)
Land use rights, net $3,888,621  $3,862,547 
  As of 
  June 30,
2021		  December 31,
2020		 
Land use rights, cost $4,765,140  $4,715,188 
Less: Accumulated amortization  (734,788)  (679,934)
Land use rights, net $4,030,352  $4,035,254 

As of SeptemberJune 30, 2020,2021, there was land use rights with net book value of $3.89$4.03 million, which approximately were used as collateral for the Company’s short-term bank loans. As of December 31, 2019,2020, there was land use rights with net book value of $3.86$4.04 million, which approximately were used as collateral for the Company’s short-term bank loans.

Estimated future amortization expense is as follows as of SeptemberJune 30, 2020:2021:

Years ending June 30, Amortization expense 
2022 $95,148 
2023  95,148 
2024  95,148 
2025  95,148 
2026  95,148 
Thereafter  3,554,612 
Total $4,030,352 


 

Years ending September 30, Amortization expense 
2021 $88,049 
2022  88,049 
2023  88,049 
2024  88,049 
2025  88,049 
Thereafter  3,448,376 
Total $3,888,621 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 – NOTES PAYABLE

  As of 
  September 30,
2020		  December 31,
2019		 
Bank acceptance notes $17,671,375  $15,050,902 
Total $17,671,375  $15,050,902 
  As of 
  June 30,
2021		  December 31,
2020		 
Bank acceptance notes $38,202,952  $25,889,067 
Total $38,202,952  $25,889,067 

The interest-free notes payable, ranging from nine months to one year from the date of issuance, were secured by $0.63$9.77 million and $3.59$2.24 million restricted cash, $17.22$33.11 million and $11.17$26.53 million notes receivable, and $0$4.03 million and $1.95$4.04 million land use rights, as of SeptemberJune 30, 20202021 and December 31, 2019,2020, respectively.

All the notes payable are subject to bank charges of 0.05% of the principal amount as commission, included in the financial expenses in the statement of operations, on each loan transaction. The interest charge of notes payable is free.

F-22

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – ACCOUNTS PAYABLE

Accounts payable are summarized as follow:

  As of 
  September 30,
2020		  December 31,
2019		 
Procurement of Materials $21,035,608  $14,248,095 
Infrastructure & Equipment  414,269   381,843 
Freight fee  123,428   83,070 
Total $21,573,305  $14,713,008 
  As of 
  June 30,
2021		  December 31,
2020		 
Procurement of Materials $26,746,255  $21,140,063 
Infrastructure & Equipment  1,404,610   717,053 
Freight fee  149,369   148,144 
Total $28,300,234  $22,005,260 

NOTE 11 – SHORT TERM BANK LOANS

Short-term loans are summarized as follow:

  As of 
  June 30,
2021		  December 31,
2020		 
Collateralized bank loans $11,125,051  $17,261,302 
Guaranteed bank loans  774,401   1,226,054 
Total $11,899,452  $18,487,356 

  As of 
  September 30,
2020		  December 31,
2019		 
Collateralized bank loans $18,061,447  $16,144,892 
Guaranteed bank loans  2,651,113   716,723 
Total $20,712,560  $16,861,615 

Short-term loans as of SeptemberJune 30, 20202021 are as follow:

Maturity Date Type Bank Name Interest
Rate per
Annum
(%)		  September 30,
2020		 
Sep.01, 2021 Operating Loans Agricultural bank of PRC  4.44  $ 7,191,882 
Sep.06, 2021 Operating Loans Agricultural bank of PRC  4.44  $6,009,191 
Sep.16, 2021 Operating Loans Rural commercial bank of Xinchang  5.30  $ 1,178,273 
Sep.22, 2021 Operating Loans Rural commercial bank of Xinchang  4.35  $ 1,178,273 
Dec.16, 2020 Operating Loans Rural commercial bank of Xinchang  4.80  $736,420 
Sep.26, 2021 Operating Loans Rural commercial bank of Xinchang  4.35  $ 2,503,828 
Jan.10, 2021 Operating Loans Bank of communications  4.79  $ 736,420 
Mar.16, 2021 Operating Loans SPD Rural Bank of Xinchang  4.05  $1,178,273 
Total 　 　  　  $20,712,560 
Maturity Date Type Bank Name Interest
Rate per
Annum (%)		  June 30,
2021		 
Sep.01, 2021 Operating Loans Agricultural bank of PRC  4.44  $6,014,002 
Sep.16, 2021 Operating Loans Rural commercial bank of Xinchang  5.30  $1,239,042 
Sep.22, 2021 Operating Loans Rural commercial bank of Xinchang  4.35  $1,239,042 
Sep.26, 2021 Operating Loans Rural commercial bank of Xinchang  4.35  $2,632,965 
Jan.21, 2022 Operating Loans Rural commercial bank of Xinchang  5.30  $774,401 
Total 　 　  　  $11,899,452 

F-23


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 – SHORT TERM BANK LOANS (CONTINUED)

Short-term loans as of December 31, 20192020 are as follow:

Maturity Date Type Bank Name Interest
Rate per
Annum
(%)		  December 31,
2019		 
Nov.26, 2020 Operating Loans Agricultural bank of PRC  4.57  $5,848,455 
Dec.24, 2020 Operating Loans Agricultural bank of PRC  4.70  $6,999,513 
Dec.16, 2020 Operating Loans Rural commercial bank of Xinchang  5.45  $2,150,168 
Dec.16, 2020 Operating Loans Rural commercial bank of Xinchang  4.40  $1,146,756 
Dec.16, 2020 Operating Loans Rural commercial bank of Xinchang  4.80  $716,723 
Total 　 　  　  $16,861,615 
Maturity Date Type Bank Name Interest
Rate per
Annum (%)		  December 31,
2020		 
Sep.01, 2021 Operating Loans Agricultural bank of PRC  4.44  $5,950,958 
Sep.06, 2021 Operating Loans Agricultural bank of PRC  4.44  $6,252,874 
Sep.16, 2021 Operating Loans Rural commercial bank of Xinchang  5.30  $1,226,053 
Sep.22, 2021 Operating Loans Rural commercial bank of Xinchang  4.35  $1,226,053 
Sep.26, 2021 Operating Loans Rural commercial bank of Xinchang  4.35  $2,605,364 
Nov.11, 2021 Operating Loans SPD Rural Bank of Xinchang  5.50   1,226,054 
Total 　 　  　  $18,487,356 

All short-term bank loans are obtained from local banks in PRC and are repayable within one year.

The average annual interest rate of the short-term bank loans was 4.4739%4.5547% and 4.900%4.7467% for the ninesix months ended SeptemberJune 30, 20202021 and 2019,2020, respectively. The Company was in compliance with its loan financial covenants at SeptemberJune 30, 20202021 and December 31, 2019,2020, respectively.

NOTE 12 – OTHER CURRENT LIABILITIES

Other current liabilities are summarized as follow:

  As of 
  September 30,
2020		  December 31,
2019		 
Employee payables  277,802   476,859 
Other tax payables  379,433   439,398 
Borrowing from third party  230,784   1,576,790 
Others  625,241   593,812 
Total $1,513,260  $3,086,859 
  As of 
  June 30,
2021		  December 31,
2020		 
Employee payables  135,782   483,922 
Other tax payables  1,078,166   1,208,323 
Borrowing from third party  261,142   520,080 
Total $1,475,090  $2,212,325 

NOTE 13 – OTHER LONG-TERM LIABILITIES

Other long-term liabilities are summarized as follow:

   As of 
   September 30,
2020		  December 31,
2019		 
Subsidy   2,310,894   2,178,548 
Total  $2,310,894  $2,178,548 
  As of 
  June 30,
2021		  December 31,
2020		 
Subsidy  2,240,949   2,342,648 
Total $2,240,949  $2,342,648 

The subsidy mainly consists of an incentive granted by the Chinese government to encourage transformation of fixed assets in China and other miscellaneous subsidy from the Chinese government. As of SeptemberJune 30, 2020,2021, grant income increaseddecreased by $0.13$0.10 million, as compared to December 31, 2019.2020. The change was mainly due to timing of incurring qualifying expenses.

F-24


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 – LONG TERM PAYABLES

  As of 
  September 30,
2020		  December 31,
2019		 
Long-term payables current portion $741,215  $2,654,230 
Long-term payables– non-current portion  370,392   1,349,850 
Total $1,111,607  $4,004,080 
  As of 
  June 30,
2021		  December 31,
2020		 
Long-term payables current portion $584,003  $797,179 
Long-term payables– non-current portion  -   166,292 
Total $584,003  $963,471 

On January 3, 2019, the Company sold a set of manufacturing equipment to third parties for aggregate proceeds of $3.08 million (RMB21.25 million) and the Company entered into lease agreements under which the Company agreed to lease back each of the properties for an initial term of 3 years. On May 12, 2020, the Company prepaid the financing lease obligations for aggregate payment of $1.34 million.

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 $2.12 million (RMB14.66 million) and the Company entered into lease agreements under which the Company agreed to lease back each of the properties for an initial term of 2 years. On April 30, 2020, the Company prepaid the financing lease obligations for aggregate payment of $0.94 million.

On May 27, 2020, the Company sold various equipment including its general assembly line and the differential assembly line to third parties for aggregate proceeds of $1.42 million (RMB10.00 million). The Company also entered into lease agreements under which the Company agreed to lease back each of the properties for an initial term of 2 years.

The Company determined that it did not relinquish control of the assets to the buyer-lessor. Therefore, the sale of the equipment does not qualify for sale-leaseback accounting. As a result, the aggregate proceeds have been recorded as a financing obligation and the assets related to the sold and leased manufacturing equipment remain on the Company’s Consolidated Balance Sheet and continue to be depreciated. The current and long-term portions of the financing obligation are included within long-term payables-current portion and long-term payables-non-current portion, respectively.

NOTE 15 – STOCKHOLDER’S EQUITY

Preferred Shares — The Company is authorized to issue an unlimited number of no par value preferred shares, divided into five classes, Class A through Class E, each with such designation, rights and preferences as may be determined by a resolution of the Company’s board of directors to amend the Memorandum and Articles of Association to create such designations, rights and preferences. The Company has five classes of preferred shares to give the Company flexibility as to the terms on which each Class is issued. All shares of a single class must be issued with the same rights and obligations. Accordingly, starting with five classes of preferred shares will allow the Company to issue shares at different times on different terms. At SeptemberAs of June 30, 20202021 and December 31, 2019,2020, there were no preferred shares designated, issued or outstanding.

Ordinary Shares — The Company is authorized to issue an unlimited number of no par value ordinary shares. Holders of the Company’s ordinary shares are entitled to one vote for each share. At SeptemberAs of June 30, 20202021 and December 31, 2019,2020, there were 10,021,14211,448,327 and 10,006,14210,225,142 ordinary shares issued and outstanding.

On July 27, 2018, the Company consummated its 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 its initial business combination.

F-25


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – STOCKHOLDER’S EQUITY (CONTINUED)

Simultaneously with the consummation of its initial public offering, the Company completed a private placement of 282,000 units, issued to Greenland Asset Management Corporation (the “Sponsor”) and Chardan Capital Markets, LLC.LLC (“Chardan”).

In 2019, in connection with the Business Combination 3,875,458 redeemable shares have been redeemed and 81,400 redeemable shares have been converted into ordinary shares, 1,906,542 ordinary shares left upon consummation of the reverse recapitalization.

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, issued to the Seller (the “Exchange Shares”). As a result, the Seller became the controlling shareholder of Greenland, and Zhongchai Holding became a directly and wholly owned subsidiary of Greenland. The Business Combination was accounted for as a reverse merger effected by a share exchange, wherein Zhongchai Holding is considered the acquirer for accounting and financial reporting purposes. The recapitalization of the number of shares of common stockordinary 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. The impact of the stock exchange is also shown on the Company’s Statements of Stockholders’ EquityEquity.

Pursuant to certain Finder Agreement with Hanyi Zhou, dated May 29, 2019, 50,000 newly issued ordinary shares were issued to Zhou Hanyi as the finder fee for the business combination.

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.

Pursuant to the Service Agreement entered into and by The Company and Chineseinvestors.com, Inc., an Indiana corporation (“CIIX”) on August 21, 2019 (the “Service Agreement”), CIIX were to provide certain investor relations services to the Company for a period of three months beginning on August 21, 2019. Pursuant to the Service Agreement, the Company were to pay CIIX fees consisting of three equal monthly instalments of $12,000 and 5,000 restricted ordinary shares, no par value, of the Company on a quarterly basis during the term of the Consulting Agreement. On February 24, 2020, Greenland and CIIX entered into a termination agreement (the “CIIX Termination Agreement”) to terminate their respective obligations under the Service Agreement. Pursuant to the CIIX Termination Agreement, the Company agreed to issue 5,000 restricted ordinary shares, no par value (the “CIIX Termination Shares”) to CIIX. Upon CIIX’s receipt of the CIIX Termination Shares, the Company will have fully satisfied its payment obligations under the Service Agreement.

Pursuant to the Investor Relations Consulting Agreement entered into and by The Company and Skyline Corporate Communication Group, LLC, a Massachusetts limited liability Company (“SCCG”) on August 15, 2019 (the “Consulting Agreement”), SCCG were to provide certain investor relations services to the Company for a period of twelve months beginning on August 15, 2019. Pursuant to the Consulting Agreement, the Company were to pay SCCG fees consisting of $5,000 per month and 1,250 restricted ordinary shares, no par value, of the Company on a quarterly basis during the term of the Consulting Agreement. On February 25, 2020, Greenland and SCCG entered into a termination agreement (the “SCCG Termination Agreement”) to terminate their respective obligations under the Consulting Agreement. Pursuant to the SCCG Termination Agreement, the Company agreed to issue 10,000 restricted ordinary shares, no par value (the “SCCG Termination Shares”) to SCCG. Upon SCCG’s receipt of the SCCG Termination Shares, the Company will have fully satisfied its payment obligations under the Consulting Agreement.

On November 10, 2020, the Company granted a total of 135,000 restricted ordinary shares to JING JIN.

On December 30, 2020, the Company granted a total of 69,000 restricted ordinary shares to RAYMOND Z. WANG.

On February 8, 2021, the Company granted a total of 51,000 restricted ordinary shares to RAYMOND Z. WANG.

F-26


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – STOCKHOLDER’S EQUITY (CONTINUED)

Rights— Each holder of a right will receive one-tenth (1/10) of one ordinary share upon consummation of a Business Combination, even if the holder of such right redeemed all Public Shares held by it in connection with a Business Combination. No fractional shares will be issued upon exchange of the rights. No additional consideration will be required to be paid by a holder of rights in order to receive its additional shares upon consummation of a Business Combination as the consideration related thereto has been included in the Unit purchase price paid for by investors in the Initial Public Offering.Company’s initial public offering. If the Company enters into a definitive agreement for a Business Combination in which the Company will not be the surviving entity, the definitive agreement provides for the holders of rights to receive the same per share consideration the holders of the ordinary shares will receive in the transaction on an as-converted into ordinary share basis and each holder of a right will be required to affirmatively convert its rights in order to receive the 1/10 of one share underlying each right (without paying additional consideration). The shares issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of the Company).

If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such rights, and the rights will expire worthless. Further, there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of a Business Combination. Additionally, in no event will the Company be required to net cash settle the rights. Accordingly, the rights may expire worthless.

As of December 31, 2019,June 30, 2021, all of the existing Rights were converted into 468,200 ordinary shares as a result of the Business Combination.

Warrants —The Company’s outstanding warrants held by CEDE & CO (“Public WarrantsWarrants”) may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable on the later of (a) the consummation of a Business Combination or (b) July 24, 2019. No Public Warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the ordinary shares issuable upon exercise of the Public Warrants and a current prospectus relating to such ordinary shares. Notwithstanding the foregoing, if a registration statement covering the ordinary shares issuable upon the exercise of the Public Warrants is not effective within 90 days from the consummation of a Business Combination, the holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise the Public Warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act. If an exemption from registration is not available, holders will not be able to exercise their Public Warrants on a cashless basis. The Public Warrants will expire five years from the consummation of athe Business Combination or earlier upon redemption or liquidation.

The Company may call the warrants for redemption (excluding the Private Warrants)private warrants), in whole and not in part, at a price of $0.01 per warrant:

●At any time while the Public Warrants are exercisable,

●Upon not less than 30 days’ prior written notice of redemption to each Public Warrant holder,

●If, and only if, the reported last sale price of the ordinary shares equals or exceeds $16.50 per share, for any 20 trading days within a 30 trading day30-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.

F-27

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – STOCKHOLDER’S EQUITY (CONTINUED)

If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. Accordingly, the warrants may expire worthless.

Private warrants include (i) the 282,000 warrants underlying the units issued to the Sponsor and Chardan in a private placement in connection with our initial public offering (“Private Unit Warrants”), and (ii) 120,000 warrants held by Chardan upon the exercise of its unit purchase option to purchase 120,000 units in March 2021 (“Option Warrants”, together with Private Unit Warrants, the “Private Warrants”). The Private Warrants are identical to the Public Warrants underlying the Unitsunits sold in the Initial Public Offering, except that the Private Warrants and the ordinary shares issuable upon the exercise of the Private Warrants are not transferable, assignable or saleable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants are exercisable on a cashless basis and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – STOCKHOLDER’S EQUITY (CONTINUED)

As of SeptemberJune 30, 20202021 there were total 4,682,000 Warrants outstanding, including 4,400,0004,621,985 Public Warrants held by CEDE & CO, and 22,000 and 260,000 Private Warrants held by Chardan Capital Markets, LLC and Greenland Asset Management Corporation,the Sponsor, respectively.

Certain warrants were exercised in February of 2021 for the issuance of 221,985 newly issued ordinary shares. The Company received cash proceeds of $1,858,841 from the exercise of these warrants.

Unit Purchase Option

On July 27, 2018, the Company 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 the later of July 24, 2019 and the consummation of a Business Combination. The unit purchase option may be exercised for cash or on a cashless basis, at the holder’s option, and expires July 24, 2023. The Unitsunits issuable upon exercise of the option are identical to those offered in the Initial Public Offering.initial public offering. The Company accounted for the unit purchase option, inclusive of the receipt of $100 cash payment, as an expense of the Initial Public Offeringinitial public offering resulting in a charge directly to shareholders’ equity. The option and such units purchased pursuant to the option, as well as the ordinary shares underlying such units, the rights included in such units, the ordinary shares that are issuable for the rights included in such units, the warrants included in such units, and the shares underlying such warrants, have been deemed compensation by FINRA and are therefore subject to a 180-day lock-up pursuant to Rule 5110(g) (1) of FINRA’s Nasdaq Conduct Rules. Additionally, the option may not be sold, transferred, assigned, pledged or hypothecated for a one-year period (including the foregoing 180-day period) following the date of Initial Public Offeringinitial public offering except to any underwriter and selected dealer participating in the Initial Public Offeringinitial public offering and their bona fide officers or partners. The option grants to holders demand and “piggy back” rights for periods of five and seven years, respectively, from the effective date of the registration statement with respect to the registration under the Securities Act of 1933, as amended, of the securities directly and indirectly issuable upon exercise of the option. The Company will bear all fees and expenses attendant to registering the securities, other than underwriting commissions which will be paid for by the holders themselves. The exercise price and number of units issuable upon exercise of the option may be adjusted in certain circumstances including in the event of a stock dividend, or the Company’s recapitalization, reorganization, merger or consolidation. However, the option will not be adjusted for issuances of ordinary shares at a price below its exercise price. As of SeptemberJune 30, 2020,2021, there was noa unit purchase option outstanding.outstanding to purchase 120,000 units.

F-28

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16 – EARNINGS PER SHARE

The Company reports earnings per share in accordance with the provisions of the FASB’s related accounting standard. This standard requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings per share excludes dilution, but includes vested restricted stocks and is computed by dividing income available to shareholders by the weighted average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised and converted into ordinary shares. On October 24, 2019, the Company completed a reverse merger with Zhongchai Holding. The recapitalization of the number of shares of common stockordinary shares attributable to the purchase of Zhongchai Holding in connection with the Business Combination is reflected retroactively to December 31, 2017 and will be utilized for calculating earnings per share in all prior periods presented. Pursuant to the CIIX Termination Agreement and the SCCG Termination Agreement, 5,000 and 10,000 restricted ordinary shares, no par value, were issued to CIIX and SCCG on March 12, 2020 and March 13, 2020 respectively.


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16 – EARNINGS PER SHARE (CONTINUED)

The following is a reconciliation of the basic and diluted earnings per share computation:

  For the three months ended
September 30,		  For the nine months ended
September 30,		 
  2020  2019  2020  2019 
Net income attributable to the Greenland Corporation and subsidiaries $207,933  $155,684  $1,723,694  $2,827,632 
Weighted average basic and diluted computation shares outstanding:                
Shares issued in reverse recapitalization  10,006,142   7,500,000   10,006,142   7,500,000 
Restricted stock grants  15,000   —   15,000   — 
Weighted average shares of common stock  10,021,142   7,500,000   10,017,204   7,500,000 
Dilutive effect of stock options  —   —   —   — 
Restricted stock vested not issued  —   —   —   — 
Common stock and common stock equivalents  10,021,142   7,500,000   10,017,204   7,500,000 
Basic and diluted net income per share $0.02  $0.02   0.17   0.38 
  

For the three months

ended
June 30,

 

For the six months

ended
June 30,

  2021 2020 2021 2020
Net income attributable to the Greenland Corporation and subsidiaries $2,780,753  $1,259,097  $4,909,321  $1,515,761 
Weighted average basic and diluted computation shares outstanding:                
Shares issued in reverse recapitalization  10,498,127   10,006,142   10,225,142   10,006,142 
Weighted average shares of restricted grants  -   15,000   -   15,000 
Weighted average shares issued for exercise of warrants  950,200   -   1,223,185   - 
Weighted average ordinary shares of common stock  10,814,479   10,021,142   10,574,223   10,015,203 
Dilutive effect of stock options  —   —   —   — 
Restricted stock vested not issued  —   —   —   — 
ordinary shares and ordinary shares equivalents  10,814,479   10,021,142   10,574,223   10,015,203 
Basic and diluted net income per share $0.26  $0.13   0.46   0.15 

NOTE 17 – GEOGRAPHICAL SALES AND SEGMENTS

All of the Company’s operations are considered by the chief operating decision maker to be aggregated in one reportable operating segment.

Information for the Company’s sales by geographical area for the three and ninesix months ended SeptemberJune 30, 20202021 and 20192020 are as follows:

  For the three months ended
September 30,		  For the nine months ended
September 30,		 
  2020  2019  2020  2019 
Domestic Sales $16,426,209  $11,951,535  $42,800,357  $40,397,126 
International Sales  94,389   -   168,653   105,179 
Total $16,520,598  $11,951,535  $42,969,010  $40,502,305 

F-29

  

For the three months

ended
June 30,

 

For the six months

ended
June 30,

  2021 2020 2021 2020
Domestic Sales $28,106,861  $16,510,295  $52,607,900  $26,374,148 
International Sales  97,446   66,050   207,301   74,264 
Total $28,204,307  $16,576,345  $52,815,201  $26,448,412 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18 – INCOME TAXES

Income tax expense includes a provision for federal, state and foreign taxes based on the annual estimated effective tax rate applicable to the Company and its subsidiaries, adjusted for items which are considered discrete to the period.

The effective tax rates on income before income taxes for the ninesix months ended SeptemberJune 30, 20202021 was 17.87%14.08%. The effective tax rate for the ninesix months ended SeptemberJune 30, 2021 was lower than the PRC tax rate of 25.0% primarily due to the China Super R&D deduction.

The effective tax rates on income before income taxes for the six months ended June 30, 2020 was 7.46%. The effective tax rate for the six months ended June 30, 2020 was lower than the PRC tax rate of 25.0% primarily due to the China Super R&D deduction. The effective tax rate is based on forecasted annual results and these amounts may fluctuate significantly through the rest of the year as a result of the unpredictable impact of COVID-19 on its operating activities.

The effective tax rate on income before income taxes for the nine months ended September 30, 2019 was 16.13%. The effective tax rate for the nine months ended September 30, 2019 was lower than the PRC tax rate of 25.0% primarily due to the China Super R&D deduction.

The Company has recorded $0 unrecognized benefit as of SeptemberJune 30, 2020 and December 31, 2019, respectively.2021. On the information currently available, the Company does not anticipate a significant increase or decrease to its unrecognized benefit within the next 12 months.


GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19 – COMMITMENTS AND CONTINGENCIES

Guarantees and pledged collateral for bank loans to other parties:

(1) Pledged collateral for bank loans

On December 6, 2019, Zhejiang Zhongchai signed a Maximum Amount Pledge Contractmaximum amount pledge contract with Agricultural Bank of PRC Co., Ltd. Xinchang County Sub-Branch (ABC Xinchang)(“ABC Xinchang”), pledging its land use rights for original book value of RMB11.08 million and property ownership for original book value of RMB35.12 million as security with ABC Xinchang, for its loan facility with maximum exposure of RMB48.83 million during the period from December 6, 2019 to May 21, 2022. As of SeptemberJune 30, 20202021 and December 31, 2019,2020, outstanding amount of the short-term bank loan under this Pledge Contractpledge contract was RMB48.83RMB38.83 million and RMB48.83RMB38.83 million.

On November 28, 2019, Zhejiang Zhongchai signed a Maximum Amount Pledge Contractmaximum amount pledge contract with Agricultural Bank of PRC Co., Ltd.ABC Xinchang, County Sub-Branch (ABC Xinchang), pledging its land use rights for original book value of RMB9.84 million and property ownership for original book value of RMB27.82 million, as security with ABC Xinchang, for its loan facility with maximum exposure of RMB40.80 million during the period from November 28, 2019 to December 26, 2022. As of SeptemberJune 30, 20202021 and December 31, 2019,2020, outstanding amount of the short-term bank loan under this Pledge Contractpledge contract was RMB40.80RMB0 million and RMB40.80 million.

On December 17, 2019, Zhejiang Zhongchai signed a Maximum Amount Pledge Contractmaximum amount pledge contract with Rural Commercial Bank of PRC Co., Ltd., pledging its land use rights for original book value of RMB4.75 million and property ownership for original book value of RMB11.28 million as security, for its loan facility with maximum exposure of RMB16.95 million during the period from December 16, 2019 to December 15, 2024. As of SeptemberJune 30, 20202021 and December 31, 2019,2020, outstanding amount of the short-term bank loan under this Pledge Contractpledge contract was RMB17.00 million and RMB15.00RMB17.00 million.

On December 18, 2019, Zhejiang Zhongchai signed a Maximum Amount Pledge Contractmaximum amount pledge contract with Rural Commercial Bank of PRC Co., Ltd., pledging its land use rights for original book value of RMB4.17 million as security, for its loan facility with maximum exposure of RMB8.00 million during the period from December 16, 2019 to December 15, 2024. As of SeptemberJune 30, 20202021 and December 31, 2019,2020, outstanding amount of the short-term bank loan under this Pledge Contract was RMB8.00 million and RMB8.00 million.

F-30

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19 – COMMITMENTS AND CONTINGENCIES (CONTINUED)

(2) Litigation

On September 19, 2019, a purported class action challenging the Business Combination was filed in the United States District Court for the District of Delaware (the “District Court”), captioned Wheby v. Greenland Acquisition Corporation, et al., Case No. 19-1758-MN (D. Del.) (the “Action”). The Action alleged certain violations of the Securities Exchange Act of 1934, as amended, and sought, among other things, to enjoin the Business Combination from closing (or, if consummated, to rescind the Business Combination or award rescissory damages), to require the Company to issue a separate proxy statement, and to receive an award of attorneys’ fees and costs.

On October 14, 2019, the plaintiff, the Company and all other named defendants entered into a confidential memorandum of understanding (the “MOU”), pursuant to which a Stipulation and Order of Dismissal (“Stipulation of Dismissal”) of the Action was filed on October 14, 2019. The Stipulation of Dismissal was approved and entered by the District Court on October 15, 2019.  Among other things, the Stipulation of Dismissal acknowledged that the Definitive Proxy Statement 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 SeptemberJanuary 25, 2021, we have been settled with our counter party which paid into in total $65,000. As of June 30, 2020,2021, those discussions remain ongoing.have been completed. 


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19 – COMMITMENTS AND CONTINGENCIES (CONTINUED)

Facility Leases

The Company entered into a failed sale-leaseback transactionstransaction on January 3, 2019 and April 26, 2019 and May 27, 2020.2019. See further discussion in NOTE 14 –LONG TERM PAYABLES.

Rent expense is recognized on a straight-line basis over the terms of the operating leases accordingly and the Company records the difference between cash rent payments and the recognition of rent expense as a deferred rent liability.

The following are the aggregate non-cancellable future minimum lease payments under operating and financing leases as of SeptemberJune 30, 2020:2021: 

Years ending September 30,

  Amount 
2021   774,581 
2022   375,959 
Total  $1,150,540 

 

Years ending June 30,

 Amount 
2022  584,003 
2023  - 
Total $584,003 

NOTE 20 – RELATED PARTY TRANSACTIONS

(a) Names and Relationship of Related Parties:

Existing Relationship with the Company
Sinomachinery Holding LimitedUnder common control of Peter Zuguang Wang
Cenntro Holding LimitedControlling 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
Zhejiang Zhonggong Agricultural Equipment Co., Ltd.Under common control of Peter Zuguang Wang
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., LimitedUnder common control of Peter Zuguang Wang
Peter Zuguang WangChairman of the Company
Greenland Asset Management CorporationShareholder of the Company
Hangzhou Jiuru Economic Information Consulting Co. LtdOne of the directors of Hengyu

F-31


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20 – RELATED PARTY TRANSACTIONS (CONTINUED)

(b) Summary of Balances with Related Parties:

  As of 
  September 30,
2020		  December 31,
2019		 
Due to related parties:        
Sinomachinery Holding Limited1 $1,775,870  $1,773,365 
Zhejiang Kangchen Biotechnology Co., Ltd2  64,505   64,505 
Zhejiang Zhonggong Machinery Co., Ltd.3  526,549   207,177 
Zhejiang Zhonggong Agricultural Equipment Co., Ltd.4  12,736   - 
Cenntro Smart Manufacturing Tech. Co., Ltd.5  -   1,981 
Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership)6  110,054   95,302 
Cenntro Holding Limited7  1,511,600   1,339,654 
Peter Zuguang Wang7  25,000   - 
Greenland Asset Management Corporation7  50,000   - 
Total $4,076,314  $3,481,984 
  As of
  June 30,
2021		 December 31,
2020
Due to related parties:    
Sinomachinery Holding Limited1 $1,775,869  $1,775,869 
Zhejiang Kangchen Biotechnology Co., Ltd2  -   64,505 
Zhejiang Zhonggong Machinery Co., Ltd.3  481,915   538,166 
Zhejiang Zhonggong Agricultural Equipment Co., Ltd.4  -   - 
Cenntro Smart Manufacturing Tech. Co., Ltd.5  2,866   3,602 
Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership)6  242,508   514,365 
Cenntro Holding Limited⁷  1,591,627   1,591,627 
Peter Zuguang Wang⁷  -   25,000 
Greenland Asset Management Corporation7  -   - 
Xinchang County Jiuxin Investment Management Partnership (LP)7  3,619,645   4,347,985 
Hangzhou Jiuru Economic Information Consulting Co. Ltd7  190,000   190,000 
Total $7,904,430  $9,051,119 

The balance of Duedue to related parties as of SeptemberJune 30, 20202021 and December 31, 20192020 consisted of:

11Advance from Sinomachinery Holding Limited for certain purchase order;

22Temporary borrowings from Zhejiang Kangchen Biotechnology Co., Ltd.;

33Unpaid balances for purchasing of materials and equipment and temporary borrowing from Zhejiang Zhonggong Machinery Co., Ltd.;

44Unpaid balances for purchasing of materials from Zhejiang Zhonggong Agricultural Equipment Co., Ltd.;

55Prepayment from Cenntro Smart Manufacturing Tech. Co., Ltd.;

66Temporary borrowings from Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership); and

77Borrowings from related parties.parties

  As of 
  September 30,
2020		  December 31,
2019		 
Due from related parties-current:        
Cenntro Holding Limited  -  $36,042,829 
Cenntro Smart Manufacturing Tech. Co., Ltd. $1,104   - 
Total $1,104  $36,042,829 
         
Due from related parties-non-current:        
Cenntro Holding Limited $37,033,403   - 
Xinchang County Jiuxin Investment Management Partnership (LP)  176,741   430,034 
Total $37,210,144  $430,034 
  As of
  June 30,
2021		 December 31,
2020
Due from related parties-current:    
Cenntro Holding Limited $38,943,406  $38,535,171 
Cenntro Smart Manufacturing Tech. Co., Ltd.  3,097   - 
Total $38,946,503  $38,535,171 

The balance of Due from related parties as of SeptemberJune 30, 20202021 and December 31, 20192020 consisted of:

F-32

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20 – RELATED PARTY TRANSACTIONS (CONTINUED)

Other receivable from Cenntro Holding Limited was $37.0$38.9 million and $36.0$38.5 million as of SeptemberJune 30, 20202021 and December 31, 2019,2020, respectively.


 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20 – RELATED PARTY TRANSACTIONS (CONTINUED)

The Company expects the amount due from its equity holder, Cenntro Holding will paybe paid back on April 27, 2022, as mutually agreed by the Company and Cenntro Holding Limited formutually agreed to an extension of repayment from the end of October 2020, in accordance with the original maturity date.

(c) Summary of Related Party Transactions:

A summary of trade transactions with related parties for the nine months ended September 30, 2020 and 2019 are listed below:

    For the nine months ended
September 30,		 
    2020  2019 
Purchases from related parties:        
Zhejiang Zhonggong Machinery Co., Ltd. Purchase of materials and equipment  303,463   4,232 
Zhejiang Zhonggong Agricultural Equipment Co., Ltd. Purchase of materials and equipment  12,374   - 
Total    315,837   4,232 
           
Sales to related parties:          
Cenntro Smart Manufacturing Tech. Co., Ltd. Provide service  63,856   284,472 
Total    63,856   284,472 

(d) Summary of Related Party Funds Lending:

A summary of funds lending with related parties for the ninesix months ended SeptemberJune 30, 20202021 and 20192020 are listed below:

  For the nine months ended
September 30,		 
  2020  2019 
Proceeds from related parties:      
Xinchang County Jiuxin Investment Management Partnership (LP)  257,566   - 
Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership)  11,787   111,514 
Zhejiang Zhonggong Machinery Co., Ltd.  502,111   1,968,300 
Cenntro Holding Limited  151,973     
Peter wang  25,000   - 
Greenland Asset Management Corporation  70,000   - 
Hangzhou Cenntro Autotech Co., Limited  -   218,700 
Total  1,018,437   2,298,514 
         
Repayment of loans from related parties:        
Zhejiang Zhonggong Machinery Co., Ltd.  500,823   1,968,300 
Cenntro Holding Limited  -   1,149,757 
Hangzhou Cenntro Autotech Co., Limited  -   218,700 
Greenland Asset Management Corporation  20,000     
Total  520,823   3,336,757 

F-33

Withdraw funds from related parties: 

For the six months

ended
June 30,

  2021 2020
Zhejiang Zhonggong Machinery Co., Ltd.  77,314   354,736 
Cenntro Smart Manufacturing Tech. Co., Ltd.  33,091   - 
Peter Zuguang Wang  25,000   - 
Xinchang County Jiuxin Investment Management Partnership (LP)  -   255,410 
Cenntro Holding Limited  251,973   - 
Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership)  34,946   15,573 
Total  422,324   625,719 
         
Deposit funds with related parties:        
Zhejiang Zhonggong Machinery Co., Ltd.  77,314   496,630 
Xinchang County Jiuxin Investment Management Partnership (LP)  773,144   - 
Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership)  310,804   - 
Cenntro Smart Manufacturing Tech. Co., Ltd.  33,864   - 
Zhejiang Kangchen Biotechnology Co., Ltd  64,505   - 
Peter Zuguang Wang  25,000   - 
Total  1,284,631   496,630 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20 – RELATED PARTY TRANSACTIONS (CONTINUED)

(e) Summary of Related Party dividend payment:

A summary of dividend payment to related parties for the nine months ended September 30, 2020 and 2019 are listed below:

  For the nine months ended
September 30,		 
  2020  2019 
Dividend payment to related parties:        
Xinchang County Jiuxin Investment Management Partnership (LP)  13,447   164,257 

The dividend payment for the nine months ended September 30, 2020 was declared and paid in May 2020;

The dividend payment for the nine months ended September 30, 2019 was declared during the year 2018 and paid during the year 2019.

NOTE 21 – SUBSEQUENT EVENTS

On November 21, 2020,The management has evaluated subsequent events through the Company entered into an agreement with Cenntro Holding Limited to extend the due date of the outstanding balance of RMB251,444,993 (approximately $38,060,365) due from Cenntro Holding Limitedreport, and there was no material subsequent event requiring adjustments to the Company to April 27, 2022.

financial statements or disclosure.  

F-34


 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The following discussion and analysis of financial condition and results of operations relates to the operations and financial condition reported in the consolidated financial statements of the Company thereto, which appear elsewhere in this Report, and should be read in conjunction with such financial statements and related notes included in this Report. Except for the historical information contained herein, the following discussion, as well as other information in this Report, contain “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the “safe harbor” created by those sections. Actual results and the timing of the events may differ materially from those contained in these forward-looking statements due to many factors, including those discussed in the “Forward-Looking Statements” set forth elsewhere in this Report.

Impact of COVID-19Overview

The outbreak of the novel coronavirus, commonly referred to as “COVID-19”, first found in mainland China, then in Asia and eventually throughout the world, has significantly affected business and manufacturing activities within China, including travel restrictions, widespread mandatory quarantines, and suspension of business activities within China. Effective February 3, 2020, the Company announced the temporary closure of its operating offices in Zhejiang Province, including suspension of its manufacturing activities in response to the emergency measures imposed by the local government. The Company’s operating subsidiaries were temporary shut down until the end of February 2020. The Company expects to delay its launch of robotic cargo carriers due to uncertainties of the market demand. Moreover, the outbreak has significantly limited suppliers’ ability to provide low-cost, high-quality parts and materials to the Company on a timely basis. Zhejiang Province, where we conduct a substantial part of our business, is one of the most affected areas in China. As of the date of this report, Chinese industries have gradually resumed businesses as government officials started to ease the restrictive measures since April 2020. However, we remain cautious and prudent when assessing the future impact of COVID-19 on our business due to the current ongoing global pandemic.

Overview

The registrant was organizedincorporated on December 28, 2017 as a British Virgin Islands company with limited liability. The registrant was organizedincorporated as a blank check company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more target businesses. Following the Business Combination (as described and defined below) in October 2019, the registrant changed its name from Greenland Acquisition Corporation to Greenland Technologies Holding Corporation (“Greenland”).

On July 27, 2018, we consummated our initial public offering of 4,400,000 units, including a partial exercise by the underwriters of their over-allotment option in the amount of 400,000 units. Each unit consists of one ordinary share, no par value, one warrant to purchase one-half of one ordinary share, and one right to receive one-tenth of one ordinary share upon the consummation of our initial business combination, pursuant to a registration statement on Form S-1. Warrants must be exercised in multiples of two warrants, and each two warrants are exercisable for one ordinary share at an exercise price of $11.50 per share. The units were sold in our initial public offering at an offering price of $10.00 per unit, generating gross proceeds ofgenerated $44,000,000 (before underwriting discounts and offering expenses). in gross proceeds.

Simultaneously with the consummation of our initial public offering, we completed a private placement of 282,000 units, issued to Greenland Asset Management Corporation (the “Sponsor”) and Chardan Capital Markets, LLC. for aLLC, generated $2,820,000 in gross proceed of $2,820,000.proceeds.

On October 24, 2019, we consummated our business combination with Zhongchai Holding (the “Business Combination”) following a special meeting, of the shareholders where the shareholders of Greenland considered and approved, among other matters, a proposal to adopt a share exchange agreement (the “Share Exchange Agreement”), dated as of July 12, 2019 by and among (i) Greenland, (ii) Zhongchai Holding, (iii) the Sponsor in the capacity as the purchaser representative (the “Purchaser Representative”), and (iv) Cenntro Holding Limited, the sole member of Zhongchai Holding (the “Zhongchai Equity Holder” or the “Seller”).

2

Pursuant toentered into the Share Exchange Agreement (as defined below) that allowed Greenland acquiredto acquire from the Seller (as defined below) all of the issued and outstanding equity interests of Zhongchai Holding in exchange for the issuance of 7,500,000 newly issued ordinary shares, no par value of Greenland, issued to the Seller (the “Exchange Shares”).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.

On December 17, 2019, the Company��sCompany’s warrants, which were trading under the ticker symbol “GTECW,” were delisted from the Nasdaq Capital Market by the Nasdaq Listing Qualifications Staff.

On January 14, 2020, Greenland Technologies Corp. was incorporated under the laws of the stateState of Delaware (“Greenland Tech”). Greenland Tech is thea 100% owned subsidiary of the registrant. We aim to use it as the USour U.S. operation site offor the Companyassembly, marketing and promote sales of our robotic productselectric industrial vehicles for the North American market in the near future. Greenland Tech currently does not conduct any business activities.market.


 

Greenland serves as the parent Companycompany for the primary operating company, Zhongchai Holding (Hong Kong) Limited, a holding Companycompany formed under the laws of Hong Kong on April 23, 2009 (“Zhongchai Holding”). Through Zhejiang Zhongchai Machinery Co., Ltd. (“Zhejiang Zhongchai”)Holding and other subsidiaries, Greenland develops and manufactures traditional transmission products for material handling machineries in PRC. Greenland alsothe People’s Republic of China (the “PRC”), as well as develops models for robotic cargo carriers,electric industrial vehicles, which are expected to be available for commercial useproduced in the near future in PRC.future.

Greenland, through its subsidiaries, is:

 ●Aa leading developer and manufacturer of traditional transmission products for material handling machineries in PRC;China; and

 ●A
●since December 2020, a developer of robotic cargo carriers, which are expected to be available for commercial use in the near future in PRC.electric industrial vehicles, and has launched its 1.8 tons electric loader vehicle (GEL1800), GEX-8000 electric excavator, and GEF-series lithium powered electric vehicle forklift truck .

Greenland’s transmission products are key components for forklift trucks, used in manufacturing and logistic applications such as factories, workshops, warehouses, fulfilment centers, shipyards, and seaports. Forklifts play an important role in logistics systems offor many enterprises across different industries in the PRC and globally.around the globe. Generally, the industries with the largest demand for forklifts include theare transportation, warehousing logistics, electrical machinery, and automobile industries.automobile.

Greenland has experienced decreasedincreased demand for forklifts in the manufacturing industry in the PRC, due to the COVID-19 pandemic, resulting in an increase inas its revenue increased from approximately $40.50$26.45 million for the ninesix months ended SeptemberJune 30, 20192020 to approximately $42.97$52.82 million for the ninesix months ended SeptemberJune 30, 2020.2021. Since late March of 2020, the Company’s business hasoperations have gradually recovered from the negative impacts due to the lockdown as a result of the COVID-19 pandemic, and part of the Company’s backlogged orders have been mostlywere processed during the second and third quarters of year 2020,six months ended June 30, 2021, which contributed to an increase in its revenues duringfor the threesix months ended SeptemberJune 30, 2020, as compared to the same period of last year.2021.

Greenland’s transmission products are adopted by forklift trucks with weighted capacity ranging from 1 ton to 15 tons. These forklift trucks use either mechanical or automatic shift. Greenland sells its transmission products directly to forklift truck manufacturers. For the ninesix months ended SeptemberJune 30, 20202021 and 2019,2020, Greenland sold 71,74979,032 and 62,02445,380 sets of transmission products, respectively, to more than 100 forklift manufacturers in aggregate in PRC.

3

Through Zhongchai HoldingIn December 2020, Greenland launched a new division to focus on the electric industrial vehicle market, a market that Greenland intends to develop to diversify its product offerings. Greenland has setup an assembly facility on the East Coast of the United States for final assembly of its newly developed electric vehicle. Greenland’s teams have completed full beta versions of the 1.8 tons electric loader vehicle (GEL1800), its first electric industry vehicle product, and its subsidiaries, we have leveraged our industryGEX-8000 electric excavator. Greenland expects to start deliveries of GEL 1800 and market experience to develop robotic cargo carriers. Greenland completedGEX-8000 electric excavator in the fourth quarter of 2021. Other models, such as electric loader vehicles with loading capacity of one and a conceptual prototype of a robotic cargo carrier in 2018.half tons or five tons are currently under development. In July 2021, Greenland also completed a production-ready sample in January 2020,launched an innovative new GEF-series lithium powered electric vehicle forklift truck, one of the industry’s first electric vehicle forklift trucks to use lithium power. Greenland will cooperate with global parts suppliers to utilize their matured supply chain, which will enable it to shorten its development cycle and make quicker market entrance.

Impact of COVID-19 Pandemic on Our Operations and Financial Performance 

The COVID-19 pandemic has been extensively tested. Greenland expects its first robotic cargo carrierseverely affected China and the rest of the world. In an effort to be a product with payload capacitycontain the spread of approximately 500 kilograms. Greenland believes that this product will be more cost effective than existing automatic guided vehicles in the market.

Due to the COVID-19 outbreak, there are uncertainties regarding the market demandpandemic, China and many other countries have taken precautionary measures, such as imposing travel restrictions, quarantining individuals infected with or suspected of forklift trucksbeing infected with COVID-19, encouraging or requiring people to work remotely, and robotic carriers. The management believes that COVID-19 may harmcanceling public activities, among others. These ongoing measures adversely affected our overalloperations and financial performance in 2020. We have experienced declining demand of


Specifically, the COVID-19 pandemic adversely affected our transmission products from forklift truck marketrevenue in the first quarterhalf of 2020. For example, from February 3, 2020 to the end of February 2020, the Company closed all of its operating offices in Zhejiang Province, including manufactory, in response to the emergency measures imposed by local government. The Company expects a decline in transmission products’ sales. Itpandemic also expects delays in launching our new robotic cargo carriers. Further, the outbreak has significantly limited our suppliers’ ability to provide low-cost, high-quality parts and materialsmerchandise to the Company on a timely basis. As a result,

Since late March 2020, the Company’s manufacturing capability has been significantly affectedbusiness operations have gradually recovered from the negative impacts due to the lockdown, and the Company’s backlogged orders were mostly processed during the rest of fiscal year 2020 and also the first quarter of 2020. Subsequently, the Company’s business and results of operations have been significantly impacted during the period. Such conditions have also affected the Company’s liquidity and the Company has experienced a shortagefiscal year 2021 which contributed to an increase in its cash flow during the period. However, the PRC government’s tax deferral and reduction policies have eased the Company’s cash flow pressure during the period. As of the date of this report, Chinese industries have gradually resumed businesses as government officials started to ease the restrictive measures since April 2020. However, we remain cautious and prudent when assessing the future impact of COVID-19 on our business due to the current ongoing global pandemic.

During the first nine months of the fiscal year 2020, there has been no change to the Company’s capital source or costs. Thus, the COVID-19 outbreak has not substantially affected the Company’s solvency. In the long run, management expects that the market’s demand for our new robotic carrier will likely increase, which will enable our business operations to gradually achieve profitable growth.

Recent Developments

Change in independent registered public accounting firm

On November 13, 2020, the board of directors of the Company approved the dismissal of BDO China Shu Lun Pan Certified Public Accountants LLP from service as the Company’s independent registered public accounting firm, effective November 13, 2020, and approved the engagement of WWC Corporation as the Company’s independent registered public accounting firmrevenues for the fiscal year endingended December 31, 2020 effective November 16, 2020. For additional information, seeand for the six months ended June 30, 2021.

Starting from the fourth quarter of 2020, a few waves of COVID-19 infection emerged in various regions of China, and varying levels of restrictions have been reinstated. The extent to which the COVID-19 pandemic may affect our Current Reportoperations and financial performance in the future will depend on Form 8-K filed with the Securitiesfuture developments, which are highly uncertain and Exchange Commission on November 17, 2020.cannot be predicted.

Results of Operations

For the three months ended SeptemberJune 30, 20202021 and 20192020

Overview

  For the three months ended
September 30,		 
  2020  2019  Change  Variance 
Revenues $16,520,598  $11,951,535  $4,569,063   38.2%
Cost of Goods Sold  13,122,382   9,949,895   3,172,487   31.9%
Gross Profit  3,398,216   2,001,640   1,396,576   69.8%
Selling expenses  270,654   180,252   90,402   50.2%
General and administrative expenses  324,073   363,353   (39,280)  (10.8)%
Research and development expenses  564,204   450,111   114,093   25.3%
Total Operating Expenses  1,158,931   993,716   165,215   16.6%
Income from operations  2,239,285   1,007,924   1,231,361   122.2%
Interest income  66,960   6,111   60,849   995.7%
Interest expenses  (231,760)  (415,203)  183,443   (44.2)%
Other income (loss)  (1,267,982)  (309,018)  (958,964)  310.3%
Income before income tax  806,503   289,814   516,689   178.3%
Income tax  346,502   47,784   298,718   625.1%
Net income  460,001   242,030   217,971   90.1%

4

  For the three months ended June 30
  2021 2020 Change Variance
   
Revenues $28,204,307  $16,576,345  $11,627,962   70.1%
Cost of Goods Sold  22,499,138   13,694,235   8,804,903   64.3%
Gross Profit  5,705,169   2,882,110   2,823,059   98.0%
Selling expenses  495,462   304,535   190,927   62.7%
General and administrative expenses  752,212   443,476   308,736   69.6%
Research and development expenses  1,005,296   475,649   529,647   111.4%
Total Operating Expenses  2,252,970   1,223,660   1,029,310   84.1%
Income from operations  3,452,199   1,658,450   1,793,749   108.2%
Interest income  4,833   42,521   (37,688)  (88.6)%
Interest expenses  (221,664)  (389,072)  167,408   (43.0)%
Other income  311,114   255,580   55,534   21.7%
Income before income tax  3,546,482   1,567,479   1,979,003   126.3%
Income tax  394,159   95,971   298,188   310.7%
Net income  3,152,323   1,471,508   1,680,815   114.2%

Components of Results of Operations

  For the three months ended
June 30		 
Component of Results of Operations 2021  2020 
    
Revenues $28,204,307  $16,576,345 
Cost of Goods Sold  22,499,138   13,694,235 
Gross Profit  5,705,169   2,882,110 
Operating Expenses  2,252,970   1,223,660 
Net Income  3,452,199   1,471,508 


 

  For the three months ended
September 30,		 
Component of Results of Operations 2020  2019 
Revenues $16,520,598  $11,951,535 
Cost of Goods Sold  13,122,382   9,949,895 
Gross Profit  3,398,216   2,001,640 
Operating Expenses  1,158,931   993,716 
Net Income  460,001   242,030 

Revenue

Greenland’s revenue was approximately $16.52$28.20 million for the three months ended SeptemberJune 30, 2020,2021, representing an increase of approximately $4.57$11.62 million, or 38.2%70.1%, as compared to that of approximately $11.95$16.58 million for the three months ended SeptemberJune 30, 2019. The Company’s subsidiaries in the PRC were temporary shut down due to local governments’ mandate until the end of February 2020. Since late March 2020, the Company’s business hasoperations have gradually recovered from the negative impacts due to the lockdown, and part of the Company’s backlogged orders have been mostlywere processed during the second and third quarters of year 2020,three months ended June 30, 2021, which contributed to an increase in its revenues duringfor the three months ended SeptemberJune 30, 2020, as compared to the same period of last year.2021. On an RMB basis, revenue for the three months ended SeptemberJune 30, 20202021 increased by approximately 38.66%55.3%, as compared to that for the three months ended SeptemberJune 30, 2019.2020.

Cost of Goods Sold

Greenland’s cost of goods sold consists primarily of material costs, freight charges, purchasing and receiving costs, inspection costs, internal transfer costs, wages, employee compensation, amortization, depreciation and related costs, which are directly attributable to the Company’s manufacturing activities. The write down of inventory using the net realizable value (“NRV”) impairment test is also recorded in cost of goods sold. The total cost of goods sold was approximately $13.12$22.50 million for the three months ended SeptemberJune 30, 2020,2021, representing an increase by approximately $3.17$8.81 million, or 31.9%64.3%, as compared to that of approximately $9.95$13.69 million for the three months ended SeptemberJune 30, 2019.2020. Cost of goods sold increased due to our increase in sales volume.

Gross Profit

Greenland’s gross profit was approximately $3.40$5.71 million for the three months ended SeptemberJune 30, 2020,2021, representing an increase by approximately $1.40$2.83 million, or 69.8%98.0%, as compared to that of approximately $2.00$2.88 million for the three months ended SeptemberJune 30, 2019.2020. For the three months ended SeptemberJune 30, 20202021 and 2019,2020, Greenland’s gross margins were approximately 20.6%20.2% and 16.7%17.4%, respectively. The increase in gross profit was mainly due to ana decrease in procurement costs.

Operating Expense

Greenland’s operating expenses consist of selling expenses, general and administrative expenses and research and development expenses.

Selling Expense

Selling expenses mainly comprisedcomprise of operating expenses (suchsuch as sales staff payroll),payroll, traveling expenses, and transportation expenses. Our selling expenses were approximately $0.27$0.50 million for the three months ended SeptemberJune 30, 2020,2021, representing an increase of approximately $0.09$0.20 million, or 50.2%62.7%, as compared to approximately $0.18$0.30 million for the three months ended SeptemberJune 30, 2019. Our2020. The increase of selling expense increasedwas primarily due to the increase in sales.

5

General and Administrative Expenses

General and administrative expenses comprisedcomprise of management and staff salaries, employee benefits, depreciation for office facility and office furniture and equipment, travel and entertainment expenses, legal and accounting fees, financial consulting fees, and other office expenses. General and administrative expenses were approximately $0.32$0.75 million for the three months ended SeptemberJune 30, 2020,2021, representing a decreasean increase by approximately $0.04$0.31 million, or 10.8%69.6%, as compared to that of approximately $0.36$0.44 million for the three months ended SeptemberJune 30, 2019.2020. The increase in general and administrative expenses was primarily attributable to the increase in administrative expenditure incurred.

Research and Development (R&D) Expenses

R&D expenses consist of R&D personnel compensation, costs of materials used in R&D projects, and depreciation costs for research-related equipment. R&D expenses were approximately $0.56$1.01 million for the three months ended SeptemberJune 30, 2020,2021, representing an increase by approximately $0.11$0.53 million, or 25.3%111.4%, as compared to that of approximately $0.45$0.48 million for the three months ended SeptemberJune 30, 2019.2020. Such increase was primarily attributable to a significant increase in the Company’s R&D activities during the three months ended SeptemberJune 30, 2020.2021.


 

Income from Operations

Income from operations for the three months ended SeptemberJune 30, 20202021 was approximately $2.24$3.45 million, representing an increase of approximately $1.23$1.79 million, as compared to that of approximately $1.01$1.66 million for the three months ended SeptemberJune 30, 2019.2020.

Interest Income and Interest Expenses

Greenland’s interest income was approximately $0.07$0 million for the three months ended SeptemberJune 30, 2020,2021, representing an increasea decrease of approximately $0.06$0.04 million, or 995.7%88.6%, as compared to that of approximately $0.01$0.04 million for the three months ended SeptemberJune 30, 2019.2020. The increasedecrease in interest income was primarily due to the reason that moreless cash was deposited in banks during the three months ended SeptemberJune 30, 2020.2021.

Greenland’s interest expenses were approximately $0.23$0.22 million for the three months ended SeptemberJune 30, 2020,2021, representing a decrease of approximately $0.18$0.17 million, or 44.2%43.0%, as compared to that of approximately $0.42$0.39 million for the three months ended SeptemberJune 30, 2019.2020. The decrease was primarily due to a reduction of our long-termshort-term loans by approximately $1.84 million for the three months ended SeptemberJune 30, 2020,2021, compared to those for the three months ended SeptemberJune 30, 2019.2020.

Other Income (Loss)

Greenland’s other income (loss) was approximately $(1.27)$0.31 million for the three months ended SeptemberJune 30, 2020, a decrease2021, an increase of approximately $0.96$0.05 million, or 310.3%21.7%, as compared to approximately $(0.31)$0.26 million for the three months ended SeptemberJune 30, 2019.2020. The decrease was primarily due to exchange loss incurred from the devaluation of U.S. dollar over RMBincrease in other operating income for the three months ended SeptemberJune 30, 2020,2021, compared to those for the three months ended SeptemberJune 30, 2019.2020.


 

Income Taxes

Greenland’s income tax was approximately $0.35$0.39 million for the three months ended SeptemberJune 30, 2020,2021, as compared to that of approximately $0.05$0.10 million for the three months ended SeptemberJune 30, 2019.2020.

PRC operating subsidiary, Zhejiang Zhongchai, obtained a “high-tech enterprise” status near the end of the fiscal year of 2019. Such status enables Zhejiang Zhongchai to enjoy a reduced statutory income tax rate of 15%, rather than the common PRC corporate tax rate of 25%. The “high-tech enterprise” status is reevaluated by relevant Chinese government agencies every three years. Zhejiang Zhongchai’s current “high-tech enterprise” will be reevaluated near the end of 2022.

6

Greenland’s other PRC subsidiaries are subject to different income tax rates. Shengte, the wholly owned subsidiary of Zhejiang Zhongchai, is subject to the 10% income tax rate for small and micro size businesses. Hengyu, the 62.5% owned subsidiary of Zhongchai Holding, is subject to the 25% standard income tax rate. Hangzhou Greenland, the wholly owned subsidiary of Zhongchai Holding, is subject to the 25% standard income tax rate.

Greenland is a holding Company registered in the British Virgin Islands and is not subject to tax on income or capital gains under the current British Virgin Islands law. In addition, upon payments of dividend to its shareholders, the Company will not be subject to any British Virgin Islands withholding tax.

On January 14, 2020, Greenland established its wholly owned subsidiary in the state of Delaware named Greenland Technologies Corporation (“Greenland Tech”). We aim to use it as, which is the USCompany’s U.S. operation site offor the Companyassembly, marketing and promote sales of our robotic productselectric industrial vehicles for the North American market in the near future. Greenland Tech currently does not conduct any business activities.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, accordingly, the effects must be recognized on companies’ calendar year-end financial statements, even though the effective date for most provisions is January 1, 2018. Since Greenland Tech was established in year 2020, the one-time transition tax did not have any impact on the Company’s tax provision and there was no undistributed accumulated earnings and profits as of SeptemberJune 30, 2020.2021. 

Net Income

Our net income was approximately $0.46$3.15 million for the three months ended SeptemberJune 30, 2020,2021, representing an increase of approximately $0.22$1.68 million, as compared to that of approximately $0.24$1.47 million for the three months ended SeptemberJune 30, 2019.2020.

For the ninesix months ended SeptemberJune 30, 20202021 and 20192020

Overview

  For the nine months ended
September 30,		 
  2020  2019  Change  Variance 
Revenues $42,969,010  $40,502,305  $2,466,705   6.1%
Cost of Goods Sold  34,764,736   31,875,891   2,888,845   9.1%
Gross Profit  8,204,274   8,626,414   (422,140)  (4.9)%
Selling expenses  792,030   778,348   13,682   1.8%
General and administrative expenses  1,841,958   1,253,646   588,312   46.9%
Research and development expenses  1,604,151   1,600,890   3,261   0.2%
Total Operating Expenses  4,238,139   3,632,884   605,255   16.7%
Income from operations  3,966,135   4,993,530   (1,027,395)  (20.6)%
Interest income  142,791   132,141   10,650   8.1%
Interest expenses  (942,524)  (1,292,746)  350,222   (27.1)%
Other income  (415,150)  40,092   (455,242)  (1,135.5)%
Income before income tax  2,751,252   3,873,017   (1,121,765)  (29.0)%
Income tax  491,660   624,735   (133,075)  (21.3)%
Net income  2,259,592   3,248,282   (988,690)  (30.4)%
  For the six months ended June 30 
  2021  2020  Change  Variance 
    
Revenues $52,815,201  $26,448,412  $26,366,789   99.7%
Cost of Goods Sold  42,005,645   21,642,354   20,363,291   94.1%
Gross Profit  10,809,556   4,806,058   6,003,498   124.9%
Selling expenses  874,692   521,376   353,316   67.8%
General and administrative expenses  1,663,351   1,517,885   145,466   9.6%
Research and development expenses  1,964,841   1,039,947   924,894   88.9%
Total Operating Expenses  4,502,884   3,079,208   1,423,676   46.2%
Income from operations  6,306,672   1,726,850   4,579,822   265.2%
Interest income  9,428   75,831   (66,043)  (87.6)%
Interest expenses  (401,853)  (710,764)  308,911   (43.5)%
Other income  598,090   852,832   (254,742)  (29.9)%
Income before income tax  6,512,337   1,944,749   4,567,588   234.9%
Income tax  916,775   145,158   771,617   531.6%
Net income  5,595,562   1,799,591   3,795,971   210.9%

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Components of Results of Operations

  For the nine months ended
September 30,		 
Component of Results of Operations 2020  2019 
Revenues $42,969,010  $40,502,305 
Cost of Goods Sold  34,764,736   31,875,891 
Gross Profit  8,204,274   8,626,414 
Operating Expenses  4,238,139   3,632,884 
Net Income  2,259,592   3,248,282 
  For the six months ended
June 30		 
Component of Results of Operations 2021  2021 
    
Revenues $52,815,201  $26,448,412 
Cost of Goods Sold  42,005,645   21,642,354 
Gross Profit  10,809,556   4,806,058 
Operating Expenses  4,502,884   3,079,208 
Net Income  5,595,562   1,799,591 

Revenue

Greenland’s revenue was approximately $42.97$52.82 million for the ninesix months ended SeptemberJune 30, 2020,2021, representing an increase of approximately $2.47$26.37 million, or 6.1%99.7%, as compared to approximately $40.50$26.45 million for the ninesix months ended SeptemberJune 30, 2019.2020. Since late March of 2020, the Company’s business hasoperations have gradually recovered from the negative impacts due to the lockdown, and part of the Company’s backlogged orders have been mostlywere processed during the second and third quarters of year 2020,three months ended June 30, 2021, which contributed to an increase in its revenues duringfor the three months ended SeptemberJune 30, 2020, as compared to the same period of last year.2021. On an RMB basis, revenue for the ninesix months ended SeptemberJune 30, 2020 decreased2021 increased by approximately 10.4%83.25%, as compared to the ninesix months ended SeptemberJune 30, 2019.2020.

Cost of Goods Sold

Greenland’s cost of goods sold consists primarily of material costs, freight charges, purchasing and receiving costs, inspection costs, internal transfer costs, wages, employee compensation, amortization, depreciation and related costs, which are directly attributable to the Company’s manufacturing activities. The write down of inventory using the net realizable value (“NRV”) impairment test is also recorded in cost of goods sold. The total cost of goods sold was approximately $34.76$42.01 million for the ninesix months ended SeptemberJune 30, 2020,2021, representing an increase by approximately $2.88$20.36 million, or 9.1%94.1%, as compared to approximately $31.88$21.64 million for the ninesix months ended SeptemberJune 30, 2019.2020. Cost of goods sold increased due to our increase in sales volume.

Gross Profit

Greenland’s gross profit was approximately $8.20$10.81 million for the ninesix months ended SeptemberJune 30, 2020,2021, representing a decreasean increase by approximately $0.42$6.00 million, or 4.9%124.9%, as compared to approximately $8.63$4.81 million for the ninesix months ended SeptemberJune 30, 2019.2020. For the ninesix months ended SeptemberJune 30, 20202021 and 2019,2020, Greenland’s gross margins were approximately 19.1%20.5% and 21.3%18.2%, respectively. The decreaseincrease in gross profit was mainly due to the increase ofa decrease in procurement cost and cut down on selling price based on the annual sales contract for year 2020.costs.

Selling Expense

Selling expenses mainly comprise of operating expenses (such as sales staff payroll), traveling expenses, and transportation expenses. Our selling expenses were approximately $0.79$0.87 million for the ninesix months ended SeptemberJune 30, 2020,2021, representing a decreasean increase of approximately $0.01$0.35 million, or 1.8%67.8%, as compared to approximately $0.78$0.52 million for the ninesix months ended SeptemberJune 30, 2019.

2020. The increase of selling expense was primarily due to the increase in sales.

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General and Administrative Expenses

General and administrative expenses comprise of management and staff salaries, employee benefits, depreciation for office facility and office furniture and equipment, travel and entertainment expenses, legal and accounting fees, financial consulting fees, and other office expenses. General and administrative expenses were approximately $1.84$1.66 million for the ninesix months ended SeptemberJune 30, 2020,2021, representing an increase by approximately $0.59$0.15 million, or 46.9%9.6%, as compared to approximately $1.25$1.52 million for the ninesix months ended SeptemberJune 30, 2019.2020. Such increase was primarily attributable to the additional administrative expenditure incurred.

Research and Development (R&D) Expenses

R&D expenses consist of R&D personnel compensation, costs of materials used in R&D projects, and depreciation costs for research-related equipment. R&D expenses were approximately $1,604,151$1.96 million for the ninesix months ended SeptemberJune 30, 2020,2021, representing an increase by approximately $3,261,$0.92 million, or 0.2%88.9%, as compared to approximately $1.60$1.04 million for the ninesix months ended SeptemberJune 30, 2019.2020. Such increase was primarily attributable to a significant increase in the Company’s R&D activities during the six months ended June 30, 2021.


 

Income from Operations

Income from operations for the ninesix months ended SeptemberJune 30, 20202021 was approximately $3.97$6.31 million, representing a decreasean increase of approximately $1.03$4.58 million, as compared to approximately $4.99$1.73 million for the ninesix months ended SeptemberJune 30, 2019.2020. Such decreaseincrease was primarily attributable to the decreaseincrease of gross profit.

Interest Income and Interest Expenses

Greenland’s interest income was approximately $0.14$0.01 million for the ninesix months ended SeptemberJune 30, 2020, representing an increasea decrease of approximately $0.12$0.07 million, or 591.8%87.6%, as compared to approximately $0.02$0.08 million for the ninesix months ended SeptemberJune 30, 2019. The increasedecrease in interest income was primarily due to the reason that moreless cash was deposited in banks during the ninesix months ended SeptemberJune 30, 2020.2021.

Greenland’s interest expenses were approximately $0.94$0.40 million for the ninesix months ended SeptemberJune 30, 2020,2021, representing a decrease of approximately $0.35$0.31 million, or 27.1%43.5%, as compared to approximately $1.29$0.71 million for the ninesix months ended SeptemberJune 30, 2019.2020. The decrease was primarily due to a reduction of our long-termshort-term loans by approximately $7.73 million for the ninesix months ended SeptemberJune 30, 2020,2021, compared to those for the ninethree months ended SeptemberJune 30, 2019.2020.

Other Income (Loss)

Greenland’s other income (loss) was approximately $(0.42)$0.60 million for the ninesix months ended SeptemberJune 30, 2020,2021, representing a decreasean increase of approximately $0.46$0.25 million, or 1,135.5%29.9%, as compared to approximately $0.04$0.85 million for the ninesix months ended SeptemberJune 30, 2019.2020. The decrease was primarily due to the decrease in exchange loss incurredgain for the ninesix months ended SeptemberJune 30, 2020,2021, compared to those for the ninesix months ended SeptemberJune 30, 2019.2020.

Income Taxes

Greenland’s income tax was approximately $0.49$0.92 million for the ninesix months ended SeptemberJune 30, 2020,2021, as compared to approximately $0.62$0.15 million for the ninesix months ended SeptemberJune 30, 2019.2020. Our income tax expense decreasedincreased due to a decreasean increase in overall profit during the ninesix months ended SeptemberJune 30, 2020.2021.

Net Income

Our net income was approximately $2.26$5.60 million for the ninesix months ended SeptemberJune 30, 2020,2021, representing a decreasean increase of approximately $0.99$3.80 million, as compared to approximately $3.25$1.80 million for the ninesix months ended SeptemberJune 30, 2019.

2020.

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Liquidity and Capital Resources

Greenland is a holding Company organizedcompany 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 primarily used to purchase raw materials, repay debts and pay salaries, office expenses, income taxes, and other operating expenses.

The outbreak of COVID-19 has grown both inFor the United States and globally, and related government and private sector responsive actions have adversely affected the Company’s business operations. COVID-19 originated in Wuhan, China, in December 2019. Effective February 3, 2020, the Company announced the temporary closure of its all operating offices insix months ended June 30, 2021, our PRC subsidiary, Zhejiang Province, including the manufactory in response to the emergency measures imposed by the local government to slow down the spread of COVID-19. Since the local government has imposed pandemic prevention policy, the subsidiaries were temporary shut down until the end of February 2020. The Company’s launch on robotic cargo carriers are also expected to be delay due to the uncertainty on customer demand. Moreover, the outbreak has significantly limited suppliers’ ability to provide low-cost, high-quality parts and materials to the Company on a timely basis. Zhejiang Province, where we conduct a substantial part of our business, is one of the most affected areas in China. The World Health Organization has declared COVID-19 to be a global pandemic, resulting in an economic downturn and changes in global economic policy that will reduce demand for the Company’s products and have an adverse impact on the Company’s business, operating results and financial condition.

As of September 30, 2020, the Company hasZhongchai, paid off approximately $0.52$7.55 million related parties’in bank loan, approximately $5.72$1.28 million in related parties loan, approximately $0.31 million in third parties’parties loan, and approximately $17.55 million short-term bank loans. The Company was able to maintain $10.42maintained $20.52 million cash on hand as of September 30, 2020, which was partially due to the credit payment extension provided by certain key suppliers. The PRC government has provided financing subsidies to ease the local business-related financing conditions caused by the COVID-19 outbreak.hand. We plan to maintain ourthe current debt structure and we may adoptrely on governmentally supported loans with lower costs, if necessary.

The government sponsored subsidies if necessary.

The government’s subsidies for relieving economic strains broughtsubsidy mainly consists of an incentive granted by the COVID-19 outbreak mainly consistChinese government to encourage transformation of favorable financial policiesfixed assets in facilityChina and equipment upgradingother miscellaneous subsidy from the Chinese government. Government subsidies are recognized when there is reasonable assurance that the subsidy will be received and others. Historically, we have relied on other government subsidiaries such as industrial project subsidiaries of 2019, provincial subsidiaries for new product development, subsidiaries for product development based on new patents, incentives for economic development of 2018, and others. Our totalall conditions be completed. Total government subsidies recorded under the long-term liabilities were $2.31$2.24 million and $2.18$2.34 million on SeptemberJune 30, 20202021 and December 31, 2019,2020, respectively.

The Company currently plans to fund its operations mainly through cash flow from its operations, renewal of bank borrowings, additional equity financing, and the continuingcontinuation 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.

Due from related party was $37.03 million as of September 30, 2020. On November 21, 2020, the Company and Cenntro Holding Limited entered into an agreement to extend the due date of outstanding balance of approximately RMB251,444,993 ($38,060,36 from Cenntro Holding Limited to the Company to April 27, 2022.

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We believe that the Company has sufficient cash, even though we expect that our revenue will decline due towith uncertainty in the Company’s anticipated robotic carriers’manufacturing and sale of electric industrial vehicles in the future and decline in saleson sale of our transmission products. However, we believeWe expect that our capital contribution from existing funding sources iswill be sufficient for us to operate for the next 12 months. We remain confident about our capabilityand are expected to generate positive cash flow from our operations for the rest of 2020.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 unexpected developments. We may also need additional cash resources, in the future if the Company wishes to pursue opportunities for investment, acquisition, strategic cooperation, or other similar actions. If the Company’s management and its Board determine that the cash required for specific corporate activities exceed Greenland’s cash and cash equivalents on hand, the Company may issue debt or equity securities to raise cash.


 

Historically, we have expended considerable resources on building a new factory and paid off a considerable amount of debt, resulting in less available cash. However, we anticipate that our cash flow will continue to improve for the rest of the fiscal year 2020.2021. We have completed Zhejiang Zhongchai’s new factory construction and the PRC government has provided subsidies to ease the local business-related financing conditions caused by the COVID-19 outbreak. Furthermore, we pledged the deed of our new factory as a collateral to banks to obtain additional loans, refinance expiring loans, restructure short-term loans, and fund other working capital needs upon acceptable terms to Greenland.

Cash and Cash Equivalents

Cash equivalents refers to all highly liquid investments purchased with original maturity of three months or less. As of SeptemberJune 30, 2020,2021, Greenland had approximately $10.42$10.76 million of cash and cash equivalents, representing an increase of approximately $8.30$3.60 million, or 390.6%50.26%, as compared to that of approximately $2.12$7.16 million as of December 31, 2019. Such2020. The increase of cash was mainly attributable to proceeds from equity and debt financing during the increase of accounts payable and short-term bank loans, as compared to that as of December 31, 2019.six months ended June 30, 2021.

Restricted Cash

Restricted cash represents the amount held by a bank as security for bank acceptance notes and therefore is not available for use until the bank acceptance notes are fulfilled or expired, which typically takes less than twelve months. As of SeptemberJune 30, 2020,2021, Greenland had approximately $0.78$9.77 million of restricted cash, representing a decreasean increase of approximately $2.82$7.52 million, or 78.4%335.25%, as compared to that of approximately $3.59$2.24 million as of December 31, 2019.2020. The decreaseincrease of restricted cash was due to the decrease ofincrease in the deposit for bank acceptance notes, as compared to their balance as of December 31, 2019.notes.

Accounts Receivable

As of SeptemberJune 30, 2020,2021, Greenland had approximately $15.69$20.52 million of accounts receivables, representing an increase of approximately $3.72$8.11 million, or 31.1%65.37%, as compared to those of approximately $11.97$12.41 million for the same periodas of December 31, 2020. The increase in 2019. Such increaseaccounts receivable was due to our slowed-down effort in receivables collections due to the COVID-19 outbreak.

Greenland recorded approximately $1.18$1.00 million of provision for doubtful accounts as of SeptemberJune 30, 2020.2021. Greenland conducted an aging analysis of each customer’s delinquent payments to determine whether allowance for doubtful accounts is adequate. In establishing the allowance for doubtful accounts, Greenland considers historical experience, economic environment, and expected collectability of past due receivables. An estimate of doubtful accounts is recorded when collection of the full amount is no longer probable. When bad debts are identified, such debts are written off against the allowance for doubtful accounts. Greenland will continuously assess its potential losses based on the credit history of and relationships with its customers on a regular basis to determine whether its bad debt allowance on its accounts receivables is adequate. Greenland believes that its collection policies are generally in line with the transmissions industry’s standard in PRC.

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Due from Related Party

Due from related party was $37.21$38.95 million and $36.47$38.54 million as of SeptemberJune 30, 20202021 and December 31, 2019,2020, respectively. The current portion of due from related party was $1,104$38.95 million as of SeptemberJune 30, 2020,2021, and the current portion of due from related party was $36.04$38.54 million as of December 31, 2019.2020. We expect the amount due from our equity holder,controlling shareholder, Cenntro Holding Limited, to be paid back on April 27, 2022, as mutually agreed by the Company and Cenntro Holding Limited, for an extension of repayment from the end of October 2020 in accordance with the original maturity date.

However, there is no guarantee that such amount will be repaid in whole or in part before the end of April 2022, if at all. Such failure to pay back by Cenntro Holding Limited could have a material negative impact on our balance sheet.


 

Notes Receivable

As of SeptemberJune 30, 2020,2021, Greenland had approximately $20.02$33.11 million of notes receivables, which will be collected by us within twelvesix months. There is no guarantee that we will be able to collect these amounts in full. The increase of our notes receivables was approximately $3.86$2.31 million, or 23.9%7.50%, from that of approximately $16.16$30.80 million as of December 31, 2019.2020. 

Working Capital

Our working capital was approximately $(7.18)$43.58 million as of SeptemberJune 30, 2020,2021, as compared to $24.25that of $28.84 million as of December 31, 2019,2020, representing a decreasean increase of $31.43million$14.75 million during the ninesix months ended SeptemberJune 30, 2020, which was mainly attributed to the extension of due from related parties.2021

Cash Flow

  For the nine months Ended
September 30,		 
  2020  2019 
Net cash provided by (used in) operating activities $2,201,537  $7,897,175 
Net cash provided by (used in) investing activities $(183,117) $(596,572)
Net cash provided by (used in) financing activities $2,196,111  $(9,880,211)
Net increase (decrease) in cash and cash equivalents and restricted cash $4,214,531  $(2,579,608)
Effect of exchange rate changes on cash and cash equivalents $1,262,878  $(398,717)
Cash and cash equivalents and restricted cash at beginning of year $5,717,207  $8,968,177 
Cash and cash equivalents and restricted cash at end of year $11,194,616  $5,989,852 
  

For the Six Months

Ended
June 30,

 
  2021  2020 
    
Net cash provided by operating activities $(778,421) $4,828,297 
Net cash provided by (used in) investing activities $(303,375) $(196,916)
Net cash provided by (used in) financing activities $12,068,922  $(3,060,087)
Net increase in cash and cash equivalents and restricted cash $10,987,126  $1,571,294 
Effect of exchange rate changes on cash and cash equivalents $133,999  $(574,058)
Cash and cash equivalents and restricted cash at beginning of year $9,403,053  $5,717,207 
Cash and cash equivalents and restricted cash at end of year $20,524,178  $6,714,443 

Operating Activities

Greenland’s net cash provided by operating activities waswere approximately $2.20$(0.78) million and $7.90$4.83 million for the ninesix months ended SeptemberJune 30, 2021 and 2020, and 2019, respectively.

For the ninesix months ended SeptemberJune 30, 2021, the main sources of cash inflow from operating activities were net income, change in accounts payable, and depreciation and amortization, with each amounted to approximately $5.60 million, $6.05 million and $1.25 million. respectively. The main causes of cash outflow were changes in inventories and accounts receivables, representing increases of approximately $2.18 million and $7.97 million, respectively.

For the six months ended June 30, 2020, the main sources of cash inflow from operating activities were net income, change in accounts payable, and depreciation and amortization, with each amounted to approximately $2.26$1.80 million, $6.32$3.74 million and $1.75$1.16 million, respectively. The main causes of changes in cash outflow were changes in accounts receivables, notes receivable, inventories, representing increases of approximately $3.41 million,$3.31 million and $2.20$2.87 million, respectively.

For the nine months ended September 30, 2019, the main sources of cash inflow from operating activities were net income, accounts payable, and inventories, with each amounted to approximately $3.25 million, $1.75 million, and $2.39 million, respectively. The main causes of cash outflow were change in accounts receivables, representing increases of approximately $2.37 million.

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Investing Activities

Net cash used in investing activities resulted a cash outflow of approximately $0.18$0.30 million for the ninesix months ended SeptemberJune 30, 2021. Cash used in investing activities for the six months ended June 30, 2021 was mainly due to $0.12 million proceeds from government grants for construction, offset by approximately $0.43 million used for purchases of long-term assets.


Net cash used in investing activities resulted a cash outflow of approximately $0.20 million for the six months ended June 30, 2020. Cash used in investing activities for the ninesix months ended SeptemberJune 30, 2020 was mainly due to $0.25$0.24 million proceeds from government grants for construction offset by approximately $ 0.44 million used for purchases of long-term assets.

Financing Activities

Net cash used in investingfinancing activities wasresulted a cash inflow of approximately $0.60$12.07 million for the ninesix months ended SeptemberJune 30, 2019. Cash used in investing activities for the nine months ended September 30, 20192021, which was mainly attributable to approximately $0.32$8.23 million proceeds from government grants for construction, which wasequity and debt financing and approximately $12.02 million proceeds from notes payable. Such amounts were further offset by repayment of short-term bank loans for approximately $1.01$7.55 million, and repayment of cash usedloans from related parties for purchasing long-term assets.approximately $1.28 million.

Financing Activities

Net cash used in financing activities resulted a cash outflow of approximately $2.20$3.06 million for the ninesix months ended SeptemberJune 30, 2020, which was mainly attributable to approximately $20.84$3.26 million proceeds from short-term bank loans and approximately $4.38$4.33 million proceeds from third parties. Such amounts were further offset by repayment of loans lent by third parties for approximately $5.72$4.97 million, and repayment of short-term bank loansnotes payable for approximately $17.55$3.64 million.

Net cash used in financing activities was approximately $(9.88) million for the nine months ended September 30, 2019, which was mainly attributable to repayment of short-term bank loans for approximately $22.18 million, repayment of long-term bank loans for approximately $4.74 million and repayment of loans lent by related parties for approximately $3.34 million. Such amounts were further offset by additional proceeds from short-term bank loans of approximately $21.73 million and proceeds from financing lease obligation of approximately $6.09 million.

Credit Risk

Credit risk is one of the most significant risks for Greenland’s business. Accounts receivable are typically unsecured and derived from revenues earned from customers, thereby exposing Greenland to credit risk. Credit risk is controlled by the application of credit approvals, limits, and monitoring procedures. Greenland identifies credit risk collectively based on industry, geography, and customer type. This information is monitored regularly by the Company’s management. In measuring the credit risk of sales to customers, Greenland mainly reflects the “probability of default” by the customer on its contractual obligations and considers the current financial position of the customer and the exposures to the customer and its future development.

Liquidity Risk

Greenland is exposed to liquidity risk when it is unable to provide sufficient capital resources and liquidity to meet its commitments and/or business needs. Liquidity risk is managed by the application of financial position analysis to test if Greenland is in danger of liquidity issues and also by application of monitoring procedures to constantly monitor its conditions and movements. When necessary, Greenland resorts to other financial institutions to obtain additional short-term funding to meet the liquidity shortage.

Inflation Risk

Greenland is also exposed to inflation risk. Inflationary factors, such as increases in raw material and overhead costs, could impair Greenland’s operating results. Although Greenland does not believe that inflation has had a material impact on its financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on its ability to maintain current levels of gross margin and operating expenses as a percentage of sales revenues if the selling prices of its products do not increase with such increased costs.

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Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in accordance with U.S. GAAP. In applying accounting principles, it is often required to use estimates. These estimates consider the facts, circumstances and information available, and may be based on subjective inputs, assumptions and information known and unknown to us. Material changes in certain of the estimates that we use could potentially affect, by a material amount, our consolidated financial position and results of operations. Although results may vary, we believe our estimates are reasonable and appropriate. See Note 2 to our consolidated financial statements included in “Item 8 - Financial Statements and Supplementary Data” for a summary of our significant accounting policies. The following describes certain of our significant accounting policies that involve more subjective and complex judgments where the effect on our consolidated financial position and operating performance could be material.


 

Revenue Recognition

In accordance with ASC Topic 606, “Revenue from Contracts with Customers”, the Company recognizes revenues when goods or services are transferred to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. In determining when and how revenues are recognized from contracts with customers, the Company performs the following five-step analysis: (i) identification of contract with customer; (ii) determination of performance obligations; (iii) measurement of the transaction price; (iv) allocation of the transaction price to the performance obligations, and (v) recognition of revenues when (or as) the Company satisfies each performance obligation. The Company derives revenues from the processing, distribution and sale of its products. The Company recognizes its revenues net of value-added taxes (“VAT”). The Company is subject to VAT which had been levied at the rate of 17% on the invoiced value of sales until April 30, 2018, after which date the rate was reduced to 16%. VAT rate was further reduced to 13% starting from April 1, 2019. Output VAT is borne by customers in addition to the invoiced value of sales and input VAT is borne by the Company in addition to the invoiced value of purchases to the extent not refunded for export sales.

Revenues are recognized at a point in time once the Company has determined that the customer has obtained control over the product. Control is typically deemed to have been transferred to the customer when the performance obligation is fulfilled, usually at the time of customers’ acceptance or consumption, at the net sales price (transaction price) and each of the criteria under ASC 606 have been met. Contract terms may require the Company to deliver the finished goods to the customers’ location or the customer may pick up the finished goods at the Company’s factory. International sales are recognized when shipment clears customs and leaves the port.

The Company has adopted ASC 606 on January 1, 2018, using the transition method of Modified-Retrospective Method (“MRM”). The adoption of ASC 606 had no impact on the Company’s beginning balance of retained earnings.

The Company’s contracts are all short-term in nature with a contract term of one year or less. Receivables are recorded when the Company has an unconditional right to consideration.

Business Combination

On October 24, 2019, we consummated our business combination with Zhongchai Holding (the “Business Combination”) following a special meeting of the shareholders where the shareholders of Greenland considered and approved, among other matters, a proposal to adopt an share exchange agreement (the “Share Exchange Agreement”), dated as of July 12, 2019 by and among (i) Greenland, (ii) Zhongchai Holding, (iii) the Sponsor in the capacity as the purchaser representative (the “Purchaser Representative”), and (iv) Cenntro Holding Limited, the sole member of Zhongchai Holding (the “Zhongchai Equity Holder” or the “Seller”).

Pursuant to the Share Exchange Agreement, Greenland acquired from the Seller all of the issued and outstanding equity interests of Zhongchai Holding in exchange for the issuance of 7,500,000 ordinary shares, no par value of Greenland, to the Seller (the “Exchange Shares”). As a result, the Seller became the controlling shareholder of Greenland, and Zhongchai Holding became a directly and wholly owned subsidiary of Greenland. The Business Combination was accounted for as a reverse merger effected by a share exchange, wherein Zhongchai Holding is considered the acquirer for accounting and financial reporting purposes.

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Pursuant to certain Finder Agreement with Hanyi Zhou, dated May 29, 2019, 50,000 newly issued ordinary shares were issued to Zhou Hanyi as 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 SeptemberJune 30, 2020 and December 31, 2019,2021, the Company did not have any liability for unrecognized tax benefits. It is the Company’s policy to include penalties and interest expense related to income taxes as a component of other expense and interest expense, respectively, as necessary. The Company’s historical tax years will remain open for examination by the local authorities until the statute of limitations has passed.

Emerging growth Company

Pursuant to the JOBS Act, an emerging growth Company is provided the option to adopt new or revised accounting standards that may be issued by FASB or the SEC either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods as private companies. We intend to continue to take advantage of the exemption for complying with new or revised accounting standards within the same time periods as private companies. Accordingly, the information contained herein may be different than the information you receive from other public companies. We also intend to continue to take advantage of some of the reduced regulatory and reporting requirements of emerging growth companies pursuant to the JOBS Act so long as we qualify as an emerging growth Company, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments.

Off Balance Sheet Arrangements

None.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company is not required to provide the information required by this Item as it is a smaller reporting company.

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ITEM 4. CONTROLS AND PROCEDURES

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.


 

Evaluation of Disclosure Controls and Procedures

As of SeptemberJune 30, 2020,2021, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon such evaluation, our chief executive officer and chief financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were ineffective. Such conclusion is based on the presence of the following material weakness in internal control over financial reporting for the ninesix months ended SeptemberJune 30, 2020:2021:

Accounting and FinanceFinancial Reporting Personnel Material Weakness - As noted in Item 9A of our annual reports on Form 10-K for the preceding fiscal year, management concluded that in light of the inexperience of our accounting staff with respect to the requirements of US GAAP-based reporting and SEC rules and regulations, we did not maintain effective controls and did not implement adequate and proper supervisory review to ensure that significant internal control deficiencies can be detected or prevented.

As a result, the Company has developed a remedial plan to strengthen its accounting and financial reporting functions. To strengthen the Company’s internal control over financial reporting, the Company is currently implementing the following remedial actions:

●TrainedDeveloping and formalizing of key accounting and financial reporting policies and procedures;

●Recruiting more financial reporting and accounting personnel who have adequate U.S. GAAP knowledge;

●Training key position staff by USU.S. accountant with USU.S. corporate accounting experiences, and gaining additional knowledge and professional skills about SEC regulations and U.S. GAAP;

●Reviewed documented policies, proceduresPlanning to acquire additional resources to strengthen the financial reporting function and controls related to the key processes we use to identify material information, prepare regulatory filingsset up a financial and other public documents,system control framework; and communicate information to external parties

●Establishing effective oversight and clarifying reporting requirements for non-recurring and complex transactions to ensure theyconsolidated financial statements and related disclosures are accurate, complete and effective;in compliance with U.S. GAAP and SEC reporting requirements.

●Reviewed documented controls and procedures to ensure they are properly implemented and effective to enhance the overall completeness, accuracy, consistency and timeliness of our disclosures;

Inherent limitation on the effectiveness of internal control

The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.

Notwithstanding the material weakness in our internal control over financial reporting, the consolidated unaudited financial statements included in this Quarter Report on Form 10Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America.

Changes in Internal Control Over Financial Reporting

During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.

ITEM 1A. RISK FACTORS.

Not applicable to a smaller reporting company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

There were no unregistered sales of the Company’s equity securities during the ninesix months ended SeptemberJune 30, 20202021 that were not previously disclosed in reports filed with the SEC.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

No senior securities were issued and outstanding during the nine monthssix-month period ended SeptemberJune 30, 2020.2021.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

On November 21, 2020,April 16, 2021, the Company entered into an agreement with Cenntro Holding Limitedgranted 2,700 restricted ordinary shares to extendXiaqing Yang, our Head of Administration, under the due date of the outstanding balance of RMB251,444,993 (approximately $38,060,365) due from Cenntro Holding Limited toCompany’s 2020 Equity Incentive Plan.

On April 19, 2021, the Company granted 2,500 restricted ordinary shares to April 27, 2022.

each of Bo Shen, Ming Zhao, Everett Xiaolin Wang, Charles Athle Nelson and Peter Zuguang Wang, respectively. The aforementioned individuals are our directors.

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ITEM 6. EXHIBITS

(a) Exhibits

ExhibitExhibit Description
3.1(2)Memorandum and Articles of Association.
3.2(2)Amended and Restated Articles of Association.
3.3(1)Second Amended and Restated Articles of Association.
3.4(3)Amended and Restated Memorandum and Articles of Association, effective on October 24, 2019.
10.1*10.1(4)

Extension Agreement entered into by and between the Company and Cenntro Holding Limited on November 21, 2020.2020 Equity Incentive Plan

31.1*Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS101.INS*Inline XBRL Instance Document **(the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH101.SCH*Document,Inline XBRL Taxonomy Extension **Schema Document.
101.CAL101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*Inline XBRL Taxonomy Extension Definition **Linkbase Document.
101.DEF101.LAB*Linkbase,Inline XBRL Taxonomy Extension Labels **Label Linkbase Document.
101.LAB101.PRE*Linkbase,Inline XBRL Taxonomy Extension **Presentation Linkbase Document.
101.PRE104*Presentation Linkbase **Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

(1)Incorporated by reference to the Company’s Form 8-K, filed with the Commission on July 30, 2018.

(2)Incorporated by reference to the Company’s Form S-1/A, filed with the Commission on July 16, 2018.

(3)Incorporated by reference to the Company’s Form 8-K, filed with the Commission on October 30, 2019.
(4)Incorporated by reference to the Company’s Definitive Proxy Statement on Schedule 14A, filed with the Commission on December 1, 2020.

*Filed herewith.

**In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 herewith are deemed to accompany this Form 10-Q and will not be deemed filed for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Greenland Technologies Holding Corp.
Date: November 23, 2020August 11, 2021/s/ Raymond Z. Wang

Raymond Z. Wang

Chief Executive Officer and President

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0001735041 srt:MinimumMember us-gaap:OfficeEquipmentMember 2021-01-01 2021-06-30