Variable Interest Entity (“VIE”)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Variable Interest Entity (“VIE”)

3. Variable Interest Entity (“VIE”)

A VIE is an entity that has either a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support or whose equity investors lack the characteristics of a controlling financial interest, such as through voting rights, right to receive the expected residual returns of the entity or obligation to absorb the expected losses of the entity. If any, the variable interest holder with a controlling financial interest in a VIE is deemed the primary beneficiary and must consolidate the VIE. PLAG WOFE is deemed to have the controlling financial interest and be the primary beneficiary of Anhui Ansheng Petrochemical Equipment Co., Ltd. and Jilin Chuangyuan Chemical Co., Ltd. because it has both of the following characteristics:

1) The power to direct activities at Anhui Ansheng Petrochemical Equipment Co., Ltd. and Jilin Chuangyuan Chemical Co., Ltd. that most significantly impact such entity’s economic performance, and

2) The obligation to absorb losses and the right to receive benefits from Anhui Ansheng Petrochemical Equipment Co., Ltd. and Jilin Chuangyuan Chemical Co., Ltd. that could potentially be significant to such entity. Under the Contractual Arrangements, Anhui Ansheng Petrochemical Equipment Co., Ltd and Jilin Chuangyuan Chemical Co., Ltd. pay service fees equal to all of its net income to PLAG WFOE. At the same time, PLAG WFOE is obligated to absorb all of the Anhui Ansheng Petrochemical Equipment Co., Ltd.’s and Jilin Chuangyuan Chemical Co., Ltd.’s losses. The Contractual Arrangements are designed to operate Anhui Ansheng Petrochemical Equipment Co., Ltd and Jilin Chuangyuan Chemical Co., Ltd. for the benefit of PLAG WFOE and ultimately, the Company. Accordingly, the accounts of Anhui Ansheng Petrochemical Equipment Co., Ltd. and Jilin Chuangyuan Chemical Co., Ltd. are consolidated in the accompanying consolidated financial statements. In addition, those financial positions and results of operations are included in the Company’s consolidated financial statements.

The carrying amount of VIE’s consolidated assets and liabilities are as follows：

	06/30/2022			12/31/2021
Cash and cash equivalents	$	16,435		$	67,966
Accounts receivable, net		1,210,601			2,660,566
Restricted cash		79,043			380,750
Inter-company Receivable		1,639,002			1,725,302
Other receivables		234,839			118,708
Inventories		4,765,264			4,244,869
Advances to suppliers		768,471			310,769
Other receivables-related parties		7,002,242			7,650,042
TOTAL CURRENT ASSETS		15,715,897			17,158,972
Plant and equipment, net		13,601,527			12,554,727
Intangible assets, net		2,623,954			2,795,048
Construction in progress, net		21,754			2,475,874
Deferred tax assets		404,097			425,374
Total Non-Current Assets		16,651,332			18,251,023
TOTAL ASSETS	$	32,367,229		$	35,409,995
Short-term bank loans	$	6,349,720		$	6,822,054
Accounts payable		3,406,835			3,558,827
Advance from customers		2,252,031			3,476,585
Other payables and accrued liabilities		3,107,250			3,305,395
Taxes payable		190,708			212,658
Deferred income		46,935			58,033
Long term payable-current portion		-			126,261
Other payables-related parties		4,013,939			3,958,409
Intercompany Payable		6,569,509			7,131,860
TOTAL CURRENT LIABILITIES		25,936,927			28,650,082
Long-term payables		591,060			222,687
TOTAL LIABILITIES	$	26,527,987		$	28,872,769
Paid-in capital		12,326,270			12,326,270
Statutory reserve		29,006			29,006
Accumulated deficit		(5,741,943	)		(5,357,908	)
Accumulated other comprehensive income		(774,091	)		(460,142	)
Total Equity		5,839,242			6,537,226
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	32,367,229		$	35,409,995

The summarized operating results of the VIE’s are as follows:

	06/30/2022			06/30/2021
Operating revenues	$	8,091,841		$	5,887,045
Gross profit		1,483,992			561,291
Income (loss) from operations		(194,189	)		(1,340,274	)
Net income (loss)		(384,035	)		(1,385,211	)