The accompanying notes are
an integral part of these consolidated financial statements.
The accompanying notes are
an integral part of these consolidated financial statements.
The accompanying notes are
an integral part of these consolidated financial statements.
The consolidated statements of cash flows are presented with the combined
cash flows from discontinued operations with cash flows from continuing operations within each cash flow statement category.
The accompanying notes are
an integral part of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1 – ORGANIZATION AND DESCRIPTION
OF BUSINESS
China Green Agriculture, Inc. (the “Company”,
“Parent Company” or “Green Nevada”), through its subsidiaries, is engaged in the research, development, production,
distribution and sale of humic acid-based compound fertilizer, compound fertilizer, blended fertilizer, organic compound fertilizer,
slow-release fertilizers, highly-concentrated water-soluble fertilizers and mixed organic-inorganic compound fertilizer and the development,
production and distribution of agricultural products.
Unless the context indicates otherwise, as used
in this Report, the following are the references herein of all the subsidiaries of the Company (i) Green Agriculture Holding Corporation
(“Green New Jersey”), a wholly-owned subsidiary of Green Nevada, incorporated in the State of New Jersey; (ii) Shaanxi TechTeam
Jinong Humic Acid Product Co., Ltd. (“Jinong”), a wholly-owned subsidiary of Green New Jersey organized under the laws of
the PRC; (iii) Xi’an Hu County Yuxing Agriculture Technology Development Co., Ltd. (“Yuxing”), a Variable Interest
Entity (“VIE”) in the in the PRC controlled by Jinong through a series of contractual agreements; (iv) Beijing Gufeng Chemical
Products Co., Ltd., a wholly-owned subsidiary of Jinong in the PRC (“Gufeng”), and (v) Beijing Tianjuyuan Fertilizer Co.,
Ltd., Gufeng’s wholly-owned subsidiary in the PRC (“Tianjuyuan”).
On June 30, 2016 the Company, through its wholly-owned
subsidiary Jinong, entered into strategic acquisition agreements and a series of contractual agreements with the shareholders of the
following six companies that are organized under the laws of the PRC and would be deemed VIEs: Shaanxi Lishijie Agrochemical Co., Ltd.
(“Lishijie”), Songyuan Jinyangguang Sannong Service Co., Ltd. (“Jinyangguang”), Shenqiu County Zhenbai Agriculture
Co., Ltd. (“Zhenbai”), Weinan City Linwei District Wangtian Agricultural Materials Co., Ltd. (“Wangtian”), Aksu
Xindeguo Agricultural Materials Co., Ltd. (“Xindeguo”), and Xinjiang Xinyulei Eco-agriculture Science and Technology co.,
Ltd. (“Xinyulei”). On January 1, 2017, the Company, through its wholly-owned subsidiary Jinong, entered into strategic acquisition
agreements and a series of contractual agreements with the shareholders of the following two companies that are organized under the laws
of the PRC and would be deemed VIEs, Sunwu County Xiangrong Agricultural Materials Co., Ltd. (“Xiangrong”), and Anhui Fengnong
Seed Co., Ltd. (“Fengnong”).
On November 30, 2017, the Company, through its
wholly-owned subsidiary Jinong, discontinued the strategic acquisition agreements and the series of contractual agreements with the shareholders
of Zhenbai.
On June 2, 2021, the Company, through its wholly-owned
subsidiary Jinong, discontinued the strategic acquisition agreements and the series of contractual agreements with the shareholders of
Xindeguo, Xinyulei and Xiangrong.
Yuxing, Lishijie, Jinyangguang, Wangtian and
Fengnong may also collectively be referred to as the “the VIE Companies”; Lishijie, Jinyangguang, Wangtian and Fengnong may
also collectively be referred to as “the sales VIEs” or “the sales VIE companies”.
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
The Company’s current corporate structure as of is set forth
in the diagram below:
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Principle of consolidation
The accompanying consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries, Green New Jersey, Jinong, Gufeng, Tianjuyuan, and the VIE Companies.
All significant inter-company accounts and transactions have been eliminated in consolidation.
For purposes of comparability, certain prior period
amounts have been reclassified to conform to the current year presentation in accordance with accounting principles generally accepted
in the United States of America (“GAAP”). The Company’s consolidated financial statements have been presented with its
former VIEs Xindeguo, Xinyulei and Xiangrong as a discontinued operation. See Note 21, “Discontinued Operations,” for more
information.
Effective June 16, 2013, Yuxing was converted
from being a wholly-owned foreign enterprise 100% owned by Jinong to a domestic enterprise 100% owned one natural person, who is not
affiliated to the Company (“Yuxing’s Owner”). Effective the same day, Yuxing’s Owner entered into a series of
contractual agreements with Jinong pursuant to which Yuxing became the VIE of Jinong.
VIE assessment
A VIE is an entity (1) that has total equity
at risk that is not sufficient to finance its activities without additional subordinated financial support from other entities, (2) where
the group of equity holders does not have the power to direct the activities of the entity that most significantly impact the entity’s
economic performance, or the obligation to absorb the entity’s expected losses or the right to receive the entity’s expected
residual returns, or both, or (3) where the voting rights of some investors are not proportional to their obligations to absorb the expected
losses of the entity, their rights to receive the expected residual returns of the entity, or both, and substantially all of the entity’s
activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. In order to determine
if an entity is considered a VIE, the Company first performs a qualitative analysis, which requires certain subjective decisions regarding
its assessments, including, but not limited to, the design of the entity, the variability that the entity was designed to create and
pass along to its interest holders, the rights of the parties, and the purpose of the arrangement. If the Company cannot conclude after
a qualitative analysis whether an entity is a VIE, it performs a quantitative analysis. The qualitative analysis considered the design
of the entity, the risks that cause variability, the purpose for which the entity was created, and the variability that the entity was
designed to pass along to its variable interest holders. When the primary beneficiary could not be identified through a qualitative analysis,
we used internal cash flow models to compute and allocate expected losses or expected residual returns to each variable interest holder
based upon the relative contractual rights and preferences of each interest holder in the VIE’s capital structure.
CHINA
GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
Use of estimates
The preparation of consolidated financial statements
in conformity with accounting principles generally accepted in the United States of America 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 amount of revenues and expenses during the reporting periods. Management makes these
estimates using the best information available at the time the estimates are made. However, actual results and outcomes may differ from
management’s estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment
due to the recent outbreak of a novel strain of the COVID-19.
Leases
The Company determines if an arrangement is a
lease or contains a lease at inception. Operating lease right-of-use assets and lease liabilities are recognized at commencement based
on the present value of lease payments over the lease term. As the implicit rate is typically not readily determinable in the Company’s
lease agreements, the Company uses its incremental borrowing rate as of the lease commencement date to determine the present value of
the lease payments. The incremental borrowing rate is based on the Company’s specific rate of interest to borrow on a collateralized
basis, over a similar term and in a similar economic environment as the lease. Lease expense is recognized on a straight-line basis over
the lease term. Leases with an initial term of 12 months or less are not recognized on the balance sheet; the Company recognizes lease
expense for these leases on a straight-line basis over the lease term. Additionally, the Company accounts for lease and non-lease components
as a single lease component for its identified asset classes. As of June 30, 2021, the Company does not have any material leases for
the implementation of ASC 842.
Cash and cash equivalents and concentration of cash
For statement of cash flows purposes, the Company
considers all cash on hand and in banks, certificates of deposit with state owned banks in the PRC and banks in the United States, and
other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. The Company
maintains large sums of cash in three major banks in China. The aggregate cash in such accounts and on hand as of June 30, 2021 and 2020
was $18,515,829 and $11,770,123, respectively. There is no insurance securing these deposits in China. In addition, the Company also had
$78,115 and $68,470 in cash in two banks in the United States as of June 30, 2021 and 2020, respectively. Cash overdraft as of balance
sheet date will be reflected as liabilities in the balance sheet. The Company has not experienced any losses in such accounts and believes
it is not exposed to any significant risks on its cash in bank accounts.
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
Accounts receivable
Management regularly reviews the composition of
accounts receivable and analyzes customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate
the collectability of accounts receivable at each year-end. Accounts considered uncollectible are provisioned for written off based upon
management’s assessment. As of June 30, 2021, and 2020, the Company had accounts receivable of $102,783,004 and $99,052,071, net
of allowance for doubtful accounts of $23,738,987 and $30,943,875, respectively. The impact of COVID-19 caused the difficulty of accounts
receivable collection in the fiscal year 2020 as numerous distributors encountered significant difficulties and/or hardships in their
businesses amid the pandemic. The company recorded bad debt expense in the amount of $ 81 million and $118 million for the fiscal year
ended June 30, 2021 and the fiscal year ended June 30, 2020, respectively. The Company adopts no policy to accept product returns post
to the sales delivery.
Inventories
Inventory is valued at the lower of cost (determined
on a weighted average basis) or market. Inventories consist of raw materials, work in process, finished goods and packaging materials.
The Company reviews its inventories regularly for possible obsolete goods and establishes reserves when determined necessary. As of June
30, 2021, and 2020 the Company had no reserve for obsolete goods.
Property, plant and equipment
Property, plant and equipment are recorded at
cost. Gains or losses on disposals are reflected as gain or loss in the year of disposal. The cost of improvements that extend the life
of plant, property, and equipment are capitalized. These capitalized costs may include structural improvements, equipment, and fixtures.
All ordinary repair and maintenance costs are expensed as incurred.
Depreciation for financial reporting purposes
is provided using the straight-line method over the estimated useful lives of the assets:
|
|
Estimated
Useful Life
|
Building
|
|
10-25 years
|
Agricultural assets
|
|
8 years
|
Machinery and equipment
|
|
5-15 years
|
Vehicles
|
|
3-5 years
|
Construction in Progress
Construction in progress represents the costs
incurred relating to the construction of buildings or new additions to the Company’s plant facilities. Costs classified to construction
in progress include all costs of obtaining the asset and bringing it to the location and condition necessary for its intended use. No
depreciation is provided for construction in progress until the assets are completed and are placed into service. Interest incurred during
construction is capitalized into construction in progress.
Long-Lived Assets
The Company tests long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated
undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists,
an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. As of June 30, 2021, and 2020
the Company determined that there were no impairments of its long-lived assets.
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
Intangible Assets
The Company records intangible assets acquired
individually or as part of a group at fair value. Intangible assets with definitive lives are amortized over the useful life of the intangible
asset, which is the period over which the asset is expected to contribute directly or indirectly to the entity’s future cash flows.
The Company evaluates intangible assets for impairment at least annually and more often whenever events or changes in circumstances indicate
that the carrying value may not be recoverable. Whenever any such impairment exists, an impairment loss will be recognized for the amount
by which the carrying value exceeds the fair value. The Company has not recorded impairment of intangible assets as of June 30, 2021
and 2020, respectively.
Goodwill
We test goodwill for impairment annually, or
when events and circumstances change that would indicate the carrying amount may not be recoverable. ASC 350, “Intangibles –
Goodwill and Other,” permits the assessment of qualitative factors to determine whether events and circumstances lead to the conclusion
that it is necessary to perform the two-step quantitative goodwill impairment test required under ASC 350. ASC 350 also allows the option
to skip the qualitative assessment and proceed directly to a quantitative assessment.
Under the first step, the fair value of the reporting
unit is compared with its carrying value including goodwill. If the fair value of the reporting unit exceeds its carrying value, step
two does not need to be performed. If the fair value of the reporting unit is less than its carrying value, an indication of goodwill
impairment exists for the reporting unit and the enterprise must perform step two of the impairment test. Under step two, an impairment
loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill.
The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner comparable to a purchase
price allocation. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill. As of June 30,
2021, and 2020, the Company performed the required impairment review which resulted in impairment adjustment with amount of $5,984,611
in 2021 and impairment adjustment with amount of $607,677 in 2020. The impairment is reported in General and administrative expenses.
The COVID-19 pandemic events will continue to
evolve and the effects on our businesses may differ from what we currently estimate. If the effects prove to be worse than is reflected
in our current estimates, additional goodwill or indefinite-lived intangible asset impairment charges could be required.
Summary of changes in goodwill by reporting segments is as follows:
|
|
Balance at
|
|
|
|
|
|
Balance at
|
|
|
|
June 30,
|
|
|
|
|
|
June 30,
|
|
Segment
|
|
2020
|
|
|
Impairment
|
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
Gufeng
|
|
$
|
4,534,261
|
|
|
|
(4,534,261
|
)
|
|
|
-
|
|
Acquisition of VIE Companies
|
|
|
1,071,993
|
|
|
|
(1,071,993
|
)
|
|
|
-
|
|
|
|
$
|
5,606,254
|
|
|
$
|
(5,606,254
|
)
|
|
$
|
-
|
|
Fair Value Measurement and Disclosures
Our accounting for Fair Value Measurement and
Disclosures, defines fair value as the exchange price that would be received for 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 on the
measurement date. This topic also establishes a fair value hierarchy which requires classification based on observable and unobservable
inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs)
and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:
Level
one — Quoted market prices in active markets for identical assets or liabilities;
Level
two — Inputs other than level one inputs that are either directly or indirectly observable; and
Level
three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect
those assumptions that a market participant would use.
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
Determining which category an asset or liability
falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter.
The carrying values of cash and cash equivalents,
trade and other receivables, trade and other payables approximate their fair values due to the short maturities of these instruments.
Derivative financial instruments
The Company evaluates its financial instruments
to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments
that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at
each reporting date, with changes in the fair value reported in the statements of operations. The Company uses a binomial option pricing
model to value the derivative instruments. The classification of derivative instruments, including whether such instruments should be
recorded as liabilities or as equity, is evaluated at the end of each reporting period.
As of June 30, 2021, there is no derivative financial
instruments.
As of June 30, 2020, the only derivative financial
instrument is the variable conversion feature embedded in the convertible notes payable (See Note 11). As of June 30, 2020, all convertible
notes are matured and paid. Therefore, the fair value of derivative liability is 0 as of June 30, 2020.
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
Revenue recognition
The Company adopted Accounting Standards Codification
(“ASC”) 606. ASC 606, Revenue from Contracts with Customers, establishes principles for reporting information about the nature,
amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers.
The core principle requires an entity to recognize revenue to depict the transfer of services to customers in an amount that reflects
the consideration that it expects to be entitled to receive in exchange for those services recognized as performance obligations are
satisfied.
The Company has assessed the impact of the guidance
by performing the following five steps analysis:
Step 1: Identify
the contract
Step 2: Identify
the performance obligations
Step 3: Determine
the transaction price
Step 4: Allocate
the transaction price
Step 5: Recognize
revenue
Based on the assessment, the Company concluded
that there was no change to the timing and pattern of revenue recognition for its current revenue streams in scope of Topic 606 and therefore
there were no material changes to the Company’s consolidated financial statements upon adoption of ASC 606.
Sales revenue is recognized on the date of shipment
to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations
of the Company exist, and collectability is reasonably assured.
The Company’s revenue consists of invoiced
value of goods, net of a value-added tax (VAT). No product return or sales discount allowance are made as products delivered and accepted
by customers are not returnable and sales discounts are not granted after products are delivered.
Customer deposits
Payments received before all the relevant criteria
for revenue recognition are satisfied are recorded as customer deposits. When all revenue recognition criteria are met, the customer deposits
are recognized as revenue. As of June 30, 2021, and 2020, the Company had customer deposits of $6,257,215 and $7,326,889, respectively.
Stock-Based Compensation
The costs of all employee stock option, as well
as other equity-based compensation arrangements, are reflected in the consolidated financial statements based on the estimated fair value
of the awards on the grant date. That cost is recognized over the period during which an employee is required to provide service in exchange
for the award—the requisite service period (usually the vesting period). Stock compensation for stock granted to non-employees
is determined as the fair value of the consideration received or the fair value of equity instruments issued, whichever is more reliably
measured.
Income taxes
We account for uncertain tax positions in accordance
with Accounting Standards Codification, or ASC, 740, “Income Taxes.” The application of income tax law is inherently
complex. Laws and regulations in this area are voluminous and are often ambiguous. As such, we are required to make many subjective assumptions
and judgments regarding our income tax exposures. Interpretations of, and guidance surrounding, income tax laws and regulations change
over time. Changes in our subjective assumptions and judgments can materially affect amounts recognized in the consolidated balance sheets
and statements of income. See Note 12, “Taxes Payable,” of the Notes to Consolidated Financial Statements for additional
detail on our uncertain tax positions and further information regarding ASC 740.
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
Foreign currency translation
The reporting currency of the Company is the US
dollar. The functional currency of the Company and Green New Jersey is the US dollar. The functional currency of the Chinese subsidiaries
is the Chinese Yuan or Renminbi (“RMB”). For the subsidiaries whose functional currencies are other than the US dollar, all
asset and liability accounts were translated at the exchange rate on the balance sheet date; stockholders’ equity is translated
at the historical rates and items in the income statement and cash flow statements are translated at the average rate in each applicable
period. Translation adjustments resulting from this process are included in accumulated other comprehensive income (loss) in the statement
of shareholders’ equity. The resulting translation gains and losses that arise from exchange rate fluctuations on transactions denominated
in a currency other than the functional currency is included in the results of operations as incurred.
Segment reporting
The Company utilizes the “management approach”
model for segment reporting. The management approach model is based on the way a company’s management organizes segments within
the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography,
legal structure, management structure, or any other way management disaggregates a company.
As of June 30, 2021, the Company, through its
subsidiaries is engaged into four main business segments based on location and product: Jinong (fertilizer production), Gufeng (fertilizer
production) and Yuxing (agricultural products production) and the four sales VIEs that the Company acquired on June 30, 2016 and January
1, 2017. As of June 30, 2021, the Company maintained four main business segments.
Fair values of financial instruments
Fair value is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets
and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree that the
inputs are observable. The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest
level of input that is significant to the fair value measurement.
The Company’s financial instruments primarily
consist of cash and cash equivalents, accounts receivable, other receivables, advances to suppliers, accounts payable, other payables,
tax payable, and related party advances and borrowings.
As of the balance sheet dates, the estimated
fair values of the financial instruments were not materially different from their carrying values as presented on the balance sheets.
This is attributed to the short maturities of the instruments and that interest rates on the borrowings approximate those that would
have been available for loans of similar remaining maturity and risk profile at respective balance sheet dates.
Statement of cash flows
The Company’s cash flows from operations
are calculated based on the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash
flows may not necessarily agree with changes in the corresponding balances on the balance sheets.
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
Earnings per share
Basic earnings per share is computed based on
the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed based on
the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period
using the treasury stock method. Dilutive potential common shares include outstanding stock options and stock awards.
The components of basic and diluted earnings
per share consist of the following:
|
|
Years Ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
(Loss) from continuing operations for Basic Earnings Per Share
|
|
$
|
(118,571,119
|
)
|
|
$
|
(140,260,884
|
)
|
(Loss) Income from discontinued operations for Basic Earnings Per Share
|
|
|
(1,176,498
|
)
|
|
|
3,508,748
|
|
(Loss) for Basic Earnings Per Share
|
|
|
(119,747,617
|
)
|
|
|
(136,752,136
|
)
|
Basic Weighted Average Number of Shares
|
|
|
6,847,732
|
|
|
|
5,619,788
|
|
(Loss) from continuing operations Per Share – Basic
|
|
$
|
(17.32
|
)
|
|
$
|
(24.96
|
)
|
(Loss) Income from discontinued operations Per Share – Basic
|
|
$
|
(0.17
|
)
|
|
$
|
0.62
|
|
Net (Loss) Per Share – Basic
|
|
$
|
(17.49
|
)
|
|
$
|
(24.33
|
)
|
(Loss) from continuing operations for Diluted Earnings Per Share
|
|
$
|
(118,571,119
|
)
|
|
$
|
(140,260,884
|
)
|
(Loss) Income from discontinued operations for Diluted Earnings Per Share
|
|
$
|
(1,176,498
|
)
|
|
$
|
3,508,748
|
|
(Loss) for Diluted Earnings Per Share
|
|
$
|
(119,747,617
|
)
|
|
$
|
(136,752,136
|
)
|
Diluted Weighted Average Number of Shares
|
|
|
6,847,732
|
|
|
|
5,619,788
|
|
(Loss) from continuing operations Per Share – Diluted
|
|
$
|
(17.32
|
)
|
|
|
$(24. 96)
|
|
(Loss) Income from discontinued operations Per Share – Diluted
|
|
$
|
(0.17
|
)
|
|
$
|
0.62
|
|
Net (Loss) Per Share – Diluted
|
|
$
|
(17.49
|
)
|
|
$
|
(24.33
|
)
|
Reclassification
Certain reclassifications have been made to the
prior year consolidated financial statements to conform to the 2021 consolidated financial statement presentation. Such reclassifications
did not affect total revenues, operating income or net income or cash flows as previously reported.
Recent accounting pronouncements
In December 2019, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”), ASU 2019-12, “Simplifying the Accounting
for Income Taxes.” ASU 2019-12 eliminates certain exceptions within ASC 740, “Income Taxes,” and clarifies
certain aspects of ASC 740 to promote consistency among reporting entities. ASU 2019-12 is effective for interim and annual reporting
periods beginning after December 15, 2020, with early adoption permitted. Most amendments within the standard are required to be applied
on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company evaluated
the impact that with the adoption of ASU 2019-12, and it did not have any impact on its consolidated financial statements.
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with
Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic
815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for
convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions
that are required for equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share calculation
in certain areas. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2023, although
early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its financial statements.
NOTE 3 – GOING CERCERN
The Company’s financial statements are
prepared assuming that the Company will continue as a going concern. The Company has incurred operating losses and had negative operating
cash flows in the fiscal year 2021 and may continue to incur operating losses and generate negative cash flows as the Company implements
its future business plan. If the situation exists, there could be substantial doubt about the Company’s ability to continue as going
concern.
To meet its working capital needs through the
next twelve months and to fund the growth of the Company, the Company may consider plans to raise additional funds through the issuance
of equity or borrow loan from local bank. The ability of the Company to continue as a going concern is dependent upon its ability to
successfully execute its new business strategy and eventually attain profitable operations.
The accompanying financial statements do not
include any adjustments to reflect the recoverability and classification of recorded asset amounts and classification of liabilities
that might be necessary should the Company be unable to continue as going concern.
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 4 – INVENTORIES
Inventories consisted of the following:
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Raw materials
|
|
$
|
18,023,063
|
|
|
$
|
43,177,071
|
|
Supplies and packing materials
|
|
$
|
431,076
|
|
|
$
|
465,746
|
|
Work in progress
|
|
$
|
252,873
|
|
|
$
|
374,756
|
|
Finished goods
|
|
$
|
45,608,891
|
|
|
$
|
54,391,066
|
|
Total
|
|
$
|
64,315,903
|
|
|
$
|
98,408,639
|
|
During the year ended June 30, 2021, the Company
sold compound fertilizers (finished goods) to certain parties at market price, and purchased equivalent amount of simple fertilizers
(raw material) from the same parties also at market price. The simple fertilizers purchased, along with other materials were used in
the Company’s production facility to manufacture compound fertilizers. While nonmonetary, the sales and purchase transactions were
consummated independently under separate agreements at different times, and measured at the prevailing market value. The total amount
of nonmonetary sales and purchases amounted to $43,763,144 during the year ended June 30, 2021. No gain or loss incurred as the result
of the nonmonetary transactions.
For the fiscal year ended June 30, 2021, total
inventories decreased $34,092,736, or 34.6%, to $64,315,903 from $98,408,639 for the fiscal year ended June 30, 2020.
NOTE 5 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Building and improvements
|
|
$
|
41,429,653
|
|
|
$
|
37,799,650
|
|
Auto
|
|
|
3,472,838
|
|
|
|
3,126,905
|
|
Machinery and equipment
|
|
|
19,369,913
|
|
|
|
17,601,852
|
|
Total property, plant and equipment
|
|
|
64,272,403
|
|
|
|
58,528,407
|
|
Less: accumulated depreciation
|
|
|
(42,051,387
|
)
|
|
|
(35,614,852
|
)
|
Total
|
|
$
|
22,221,016
|
|
|
$
|
22,913,555
|
|
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 6 – INTANGIBLE ASSETS
Intangible assets consisted of the following:
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Land use rights, net
|
|
$
|
9,330,109
|
|
|
$
|
8,755,869
|
|
Technology patent, net
|
|
|
-
|
|
|
|
-
|
|
Customer relationships, net
|
|
|
656,625
|
|
|
|
875,904
|
|
Non-compete agreement
|
|
|
16,589
|
|
|
|
153,190
|
|
Trademarks
|
|
|
6,404,328
|
|
|
|
5,854,087
|
|
Total
|
|
$
|
16,407,651
|
|
|
$
|
15,639,051
|
|
LAND USE RIGHT
On September 25, 2009, Yuxing was granted a land
use right for approximately 88 acres (353,000 square meters or 3.8 million square feet) by the People’s Government and Land &
Resources Bureau of Hu County, Xi’an, Shaanxi Province. The fair value of the related intangible asset was determined to be the
respective cost of RMB73,184,895 (or $11,329,022). The intangible asset is being amortized over the grant period of 50 years using the
straight-line method.
On August 13, 2003, Tianjuyuan was granted a
certificate of Land Use Right for a parcel of land of approximately 11 acres (42,726 square meters or 459,898 square feet) at Ping Gu
District, Beijing. The purchase cost was recorded at RMB1,045,950 (or $161,913). The intangible asset is being amortized over the grant
period of 50 years.
On August 16, 2001, Jinong received a land use
right as a contribution from a shareholder, which was granted by the People’s Government and Land& Resources Bureau of Yangling
District, Shaanxi Province. The fair value of the related intangible asset at the time of the contribution was determined to be RMB7,285,099
(or $1,127,733). The intangible asset is being amortized over the grant period of 50 years.
The Land Use Rights consisted of the following:
|
|
June 30, 2020
|
|
|
Foreign Currency
Adjustment
|
|
|
Amortization/
Subtraction
|
|
|
June 30, 2021
|
|
Land use rights
|
|
$
|
11,386,504
|
|
|
|
1,070,249
|
|
|
|
|
|
|
|
12,456,753
|
|
Less: accumulated amortization
|
|
|
(2,630,635
|
)
|
|
|
|
|
|
|
(496,009
|
)
|
|
|
(3,126,644
|
)
|
Total land use rights, net
|
|
$
|
8,755,869
|
|
|
|
1,070,249
|
|
|
|
(496,009
|
)
|
|
|
9,330,109
|
|
TECHNOLOGY PATENT
On August 16, 2001, Jinong was issued a technology
patent related to a proprietary formula used in the production of humid acid. The fair value of the related intangible asset was determined
to be the respective cost of RMB 5,875,068 (or $909,461) and is being amortized over the patent period of 10 years using the straight-line
method. This technology patent has been fully amortized.
On July 2, 2010, the Company acquired Gufeng
and its wholly-owned subsidiary Tianjuyuan. The fair value on the acquired technology patent was estimated to be RMB9,200,000 (or $1,424,160)
and is amortized over the remaining useful life of six years using the straight-line method. As of June 30, 2021, this technology patent
is fully amortized.
The technology know-how consisted of the following:
|
|
June 30,
|
|
|
Foreign Currency
|
|
|
June 30,
|
|
|
|
2020
|
|
|
Adjustment
|
|
|
2021
|
|
Technology know-how
|
|
$
|
2,133,122
|
|
|
|
200,498
|
|
|
$
|
2,333,621
|
|
Less: accumulated amortization
|
|
|
(2,133,122
|
)
|
|
|
(200,498
|
)
|
|
|
(2,333,621
|
)
|
Total technology know-how, net
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
CUSTOMER RELATIONSHIP
On July 2, 2010, the Company acquired Gufeng
and its wholly-owned subsidiary Tianjuyuan. The fair value on the acquired customer relationships was estimated to be RMB65,000,000 (or
$10,062,000) and is amortized over the remaining useful life of ten years. On June 30, 2016, and January 1, 2017 the Company acquired
the VIE Companies. The fair value of the acquired customer relationships was estimated to be RMB12,701,403 (or $1,966,177) and is amortized
over the remaining useful life of seven to ten years.
|
|
June 30,
|
|
|
Foreign Currency
|
|
|
Amortization/
|
|
|
June 30,
|
|
|
|
2020
|
|
|
Adjustment
|
|
|
Subtraction
|
|
|
2021
|
|
Customer relationships
|
|
$
|
10,994,749
|
|
|
|
1,033,429
|
|
|
|
-
|
|
|
$
|
12,028,177
|
|
Less: accumulated amortization
|
|
|
(10,118,844
|
)
|
|
|
|
|
|
|
(1,252,708
|
)
|
|
|
(11,371,552
|
)
|
Total customer relationships, net
|
|
$
|
875,904
|
|
|
|
1,033,429
|
|
|
|
(1,252,708
|
)
|
|
$
|
656,625
|
|
NON-COMPETE AGREEMENT
On July 2, 2010, the Company acquired Gufeng
and its wholly-owned subsidiary Tianjuyuan. The fair value on the acquired non-compete agreement was estimated to be RMB1,320,000 (or
$204,336) and is amortized over the remaining useful life of five years using the straight-line method. On June 30, 2016, and January
1, 2017 the Company acquired the VIE Companies. The fair value of the acquired non-compete agreements was estimated to be RMB4,877,316
(or $755,009) and is amortized over the remaining useful life of five years using the straight-line method.
|
|
June 30,
|
|
|
Foreign Currency
|
|
|
Amortization/
|
|
|
June 30,
|
|
|
|
2020
|
|
|
Adjustment
|
|
|
Subtraction
|
|
|
2021
|
|
Non-compete agreement
|
|
$
|
876,920
|
|
|
|
82,425
|
|
|
|
|
|
|
$
|
959,345
|
|
Less: accumulated amortization
|
|
|
(723,730
|
)
|
|
|
|
|
|
|
(219,026
|
)
|
|
|
(942,756
|
)
|
Total non-compete agreement, net
|
|
$
|
153,190
|
|
|
|
82,425
|
|
|
|
(219,026
|
)
|
|
$
|
16,589
|
|
TRADEMARKS
On July 2, 2010, the Company acquired Gufeng and
its wholly-owned subsidiary Tianjuyuan. The preliminary fair value on the acquired trademarks and brand names was estimated to be RMB41,371,630
(or $6,404,328) and is subject to an annual impairment test.
AMORTIZATION EXPENSE
Estimated amortization expenses of intangible
assets for the next five twelve months periods ended June 30, are as follows:
Years Ending June 30,
|
|
Expense
($)
|
|
2022
|
|
|
526,688
|
|
2023
|
|
|
510,099
|
|
2024
|
|
|
345,780
|
|
2025
|
|
|
279,227
|
|
2026
|
|
|
279,227
|
|
NOTE 7 – OTHER NON-CURRENT ASSETS
Other non-current assets mainly include advance
payments related to rent the land use for the Company. As of June 30, 2021, the balance of other non-current assets was $9,888,518, which
was the rental fee advances for agriculture lands that the Company engaged in Shiquan County from 2020 to 2027.
In March 2017, Jinong entered into the rental
agreement for approximately 3,400 mu, and 2600-hectare agriculture lands in Shiquan County, Shaanxi Province. The rental agreement was
from April 2017 and was renewable for every ten-year period up to 2066. The aggregate rental fee was approximately RMB 13 million per
annum, The Company had made 10-year advances of rental fee per rental terms. The Company has amortized $2.1 million as expenses for the
year ended June 30, 2021 and $1.9 million as expenses for the year ended June 30, 2020.
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
Estimated amortization expenses of the rental
advance payments herein for the next four twelve-month periods ended June 30 and thereafter are as follows:
Years ending June 30,
|
|
|
|
2022
|
|
$
|
2,078,190
|
|
2023
|
|
$
|
2,078,190
|
|
2024
|
|
$
|
2,078,190
|
|
2025
|
|
$
|
2,078,190
|
|
2026 and thereafter
|
|
$
|
3,653,948
|
|
NOTE 8 – ACCRUED EXPENSES AND OTHER
PAYABLES
Accrued expenses and other payables consisted of the following:
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Payroll and welfare payable
|
|
|
184,910
|
|
|
|
168,705
|
|
Accrued expenses
|
|
|
7,957,290
|
|
|
|
7,640,130
|
|
Other payables
|
|
|
5,326,796
|
|
|
|
3,227,913
|
|
Other levy payable
|
|
|
129,825
|
|
|
|
118,671
|
|
Total
|
|
$
|
13,598,821
|
|
|
$
|
11,155,419
|
|
NOTE 9 – AMOUNT DUE TO RELATED PARTIES
At the end of December 2015, Yuxing entered into
a sales agreement with the Company’s affiliate, 900LH.com Food Co., Ltd. (“900LH.com”, previously announced as Xi’an
Gem Grain Co., Ltd) pursuant to which Yuxing is to supply various vegetables to 900LH.com for its incoming seasonal sales at the holidays
and year ends (the “Sales Agreement”). The contingent contracted value of the Sales Agreement is RMB25,500,000 (approximately
$3,947,400). During the year ended June 30, 2021 and 2020 Yuxing has sold approximately $178,484 and $1,200,090 products to 900LH.com.
The amount due from 900LH.com to Yuxing was $92,800 and 0 as of June
30, 2021 and 2020, respectively.
As of June 30, 2021, and June 30, 2020, the amount
due to related parties was $4,976,689 and $4,212,407, respectively. As of June 30, 2021, and June 30, 2020, $1,083,600 and $990,500,
respectively were amounts that Gufeng borrowed from a related party, Xi’an Techteam Science & Technology Industry (Group) Co.
Ltd., a company controlled by Mr. Zhuoyu Li, Chairman and CEO of the Company, representing unsecured, non-interest-bearing loans that
are due on demand. These loans are not subject to written agreements. As of June 30, 2021, and June 30, 2020, $3,861,449 and $3,192,986, respectively were advances from Mr. Zhuoyu
Li, Chairman and CEO of the Company. The advances were unsecured and non-interest-bearing.
As of June 30, 2021, the Company’s subsidiary, Jinong, owed
900LH.com. $12,870. As of June 30, 2020, the Company’s subsidiary, Jinong, owed 900LH.com. $11,819.
On July 1, 2020, Jinong signed an office rental
agreement with Kingtone Information Technology Co., Ltd. (“Kingtone Information”), of which Mr. Zhuoyu Li, Chairman and CEO
of the Company, served as Chairman. Pursuant to the rental agreement, Jinong rented 612 square meters (approximately 6,588 square feet)
of office space from Kingtone Information. The rental agreement provides for a two-year term effective as of July 1, 2020 with monthly
rent of RMB24,480 (approximately $3,790).
NOTE 10 – LOAN PAYABLES
As of June 30, 2021, the short-term loan payables
consisted of three loans which mature on dates ranging from May 25, 2021 through May 27, 2021 with interest rates ranging from 5.22%
to 5.66%. No. 1, 2 and 3 below are collateralized by Tianjuyuan’s land use right and building ownership right. Loan No. 3 is also
guaranteed by the cash deposit.
No.
|
|
Payee
|
|
Loan
period per agreement
|
|
Interest
Rate
|
|
|
June
30,
2021
|
|
1
|
|
Postal Saving Bank of China - Pinggu
Branch
|
|
May 27, 2021-May 26, 2022
|
|
|
5.66
|
%
|
|
|
2,322,000
|
|
2
|
|
Postal Saving Bank of China - Pinggu Branch
|
|
May 27, 2021-May 26, 2022
|
|
|
5.66
|
%
|
|
|
309,600
|
|
3
|
|
Beijing Bank -Pinggu Branch
|
|
May 25, 2021-May 21, 2022
|
|
|
5.22
|
%
|
|
|
1,548,000
|
|
|
|
Total
|
|
|
|
|
|
|
|
$
|
4,179,600
|
|
The interest expense from short-term loans was
$266,304 and $278,328 for the year ended June 30, 2021 and 2020, respectively.
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 11 – CONVERTIBLE NOTES PAYABLE
Relating to the acquisition of the VIE Companies,
the Company subsidiary, Jinong, issued to the VIE Companies shareholders convertible notes payable twice, in the aggregate notional amount
of RMB 51,000,000 ($7,894,800) with a term of three years and an annual interest rate of 3%.
No.
|
|
Related
Acquisitions of Sales VIEs
|
|
Issuance
Date
|
|
Maturity
Date
|
|
Notional
Interest Rate
|
|
|
Conversion
Price
|
|
|
Notional
Amount
(in RMB)
|
|
1
|
|
Wangtian, Lishijie, Xindeguo, Xinyulei,
Jinyangguang
|
|
June 30, 2016
|
|
June 30, 2019
|
|
|
3
|
%
|
|
$
|
5.00
|
|
|
|
39,000,000
|
|
2
|
|
Fengnong, Xiangrong
|
|
January 1, 2017
|
|
December 31, 2019
|
|
|
3
|
%
|
|
$
|
5.00
|
|
|
|
12,000,000
|
|
The convertible notes take priority over the
preferred stock and common stock of Jinong, and any other class or series of capital stocks Jinong issues in the future in terms of interests
and payments in the event of any liquidation, dissolution or winding up of Jinong. On or after the third anniversary of the issuance
date of the note, noteholders may request Jinong to process the note conversion to convert the note into shares of the Company’s
common stock. The notes cannot be converted prior to the mature date. The per share conversion price of the notes is the higher of the
following: (i) $5.00 per share or (ii) 75% of the closing price of the Company’s common stock on the date the noteholder delivers
the conversion notice. Due to the discontinuation of VIE agreements with Zhenbai’s shareholders, certain convertible notes issued
on June 30, 2016 with a face amount of RMB 12,000,000 ($1,857,600) were tendered back to the Company. All outstanding balance of unpaid
principal and accrued interest in the tendered convertible notes were forfeited.
On November 15, 2019, the Company issued 995,000
shares of common stock at the price of $5.00 per share for the total amount of $4,975,000 to the holders of the Company’s convertible
notes payable in connection with the payment of the convertible notes’ principal and interests. The convertible notes were issued
on June 30, 2016 and matured on June 30, 2020.
On February 14, 2020, the Company issued 377,650
shares of common stock at the price of $5.00 per share for the total amount of $1,888,250 to the holders of the Company’s convertible
notes payable in connection with the payment of the convertible notes’ principal and interests. The convertible notes were issued
on January 1, 2017 and matured on January 1, 2020.
The Company determined that the fair value of
the convertible notes payable was 0 as of June 30, 2021 and June 30, 2020, respectively. Aside from the forfeiture of the convertible
notes previously issued to Zhenbai’s shareholders, the difference between the fair value of the notes and the face amount of the
notes is being amortized to accretion implied interest expense over the three-year life of the notes. As of June 30, 2021, the accumulated
amortization of this discount into accretion expenses was 0. As of June 30, 2020, the accumulated amortization of this discount
into accretion expense was $1,375,499.
NOTE 12 – TAXES PAYABLE
Enterprise Income Tax
Effective January 1, 2008, the Enterprise Income
Tax (“EIT”) law of the PRC replaced the tax laws for Domestic Enterprises (“DEs”) and Foreign Invested Enterprises
(“FIEs”). The EIT rate of 25% replaced the 33% rate that was applicable to both DEs and FIEs. The two-year tax exemption and
three-year 50% tax reduction tax holiday for production-oriented FIEs was eliminated. Since January 1, 2008, Jinong became subject to
income tax in China at a rate of 15% as a high-tech company, because of the expiration of its tax exemption on December 31, 2007. Accordingly,
it made provision for income taxes for the years ended June 30, 2021 and 2020 of $5,107,095 and $2,103,987, respectively, which is mainly
due to the operating income from VIEs. VIEs is subject to 25% EIT rate and thus it made provision for income taxes of $2,217,543 and $651,778
for the years ended June 30, 2021 and 2020, respectively.
Value-Added Tax
All the Company’s fertilizer products that
are produced and sold in the PRC were subject to a Chinese Value-Added Tax (VAT) of 13% of the gross sales price. On April 29, 2008,
the PRC State of Administration of Taxation (SAT) released Notice #56, “Exemption of VAT for Organic Fertilizer Products”,
which allows certain fertilizer products to be exempt from VAT beginning June 1, 2008. The Company submitted the application for exemption
in May 2009, which was granted effective September 1, 2009, continuing through December 31, 2015. On August 10, 2015 and August 28, 2015,
the SAT released Notice #90. “Reinstatement of VAT for Fertilizer Products”, and Notice #97, “Supplementary
Reinstatement of VAT for Fertilizer Products”, which restore the VAT of 13% of the gross sales price on certain fertilizer
products includes non-organic fertilizer products starting from September 1, 2015, but granted taxpayers a reduced rate of 3% from September
1, 2015 through June 30, 2016.
On April 28, 2017, the PRC State of Administration
of Taxation (SAT) released Notice 2017 #37, “Notice on Policy of Reduced Value Added Tax Rate,” under which, effective
July 1, 2017, all of the Company’s fertilizer products that are produced and sold in the PRC are subject to a Chinese Value-Added
Tax (VAT) of 11% of the gross sales price. The tax rate was reduced 2% from 13%.
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
On April 4, 2018, the PRC State of Administration
of Taxation (SAT) released Notice 2018 #32, “Notice on Adjustment of VAT Tax Rate,” under which, effective May 1,
2018, all of the Company’s fertilizer products that are produced and sold in the PRC are subject to a Chinese Value-Added Tax (VAT)
of 10% of the gross sales price. The tax rate was reduced 1% from 11%.
On March 20, 2019, the PRC State of Administration
of Taxation (SAT) released Notice 2019 #39, “Announcement on Policies Concerning Deepening the Reform of Value Added Tax,”
under which, Effective April 1, 2019, all of the Company’s fertilizer products that are produced and sold in the PRC are subject
to a Chinese Value-Added Tax (VAT) of 9% of the gross sales price. The tax rate was reduced 1% from 10%.
Income Taxes and Related Payables
Taxes payable consisted of the following:
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
VAT provision
|
|
$
|
(284,940
|
)
|
|
$
|
(257,068
|
)
|
Income tax payable
|
|
|
1,136,929
|
|
|
|
297,973
|
|
Other levies
|
|
|
2,679,970
|
|
|
|
1,187,442
|
|
Repatriation tax
|
|
|
29,010,535
|
|
|
|
29,010,535
|
|
Total
|
|
$
|
32,542,494
|
|
|
$
|
30,238,882
|
|
The provision for income taxes consists of the following:
|
|
Years Ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Current tax – foreign
|
|
$
|
5,107,095
|
|
|
$
|
2,103,987
|
|
Total
|
|
$
|
5,107,095
|
|
|
$
|
2,103,987
|
|
Significant components of deferred tax assets were as follows:
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Deferred tax assets
|
|
|
|
|
|
|
Deferred Tax Benefit
|
|
|
36,359,106
|
|
|
|
33,743,546
|
|
Valuation allowance
|
|
|
(36,359,106
|
)
|
|
|
(33,743,546
|
)
|
Total deferred tax assets
|
|
$
|
-
|
|
|
|
-
|
|
The change in valuation allowance for the year
ended June 30, 2021 was an increase of $2,615,560 which was resulted from foreign exchange rates.
The Company periodically evaluates the likelihood
of the realization of deferred tax assets, and adjusts the carrying amount of the deferred tax assets by the valuation allowance to the
extent the future realization of the deferred tax assets is not judged to be more likely than not. The Company considers many factors
when assessing the likelihood of future realization of its deferred tax assets, including its recent cumulative earnings experience by
taxing jurisdiction, expectations of future taxable income or loss, the carryforward periods available to the Company for tax reporting
purposes, and other relevant factors.
As of June 30, 2021, based on the weight of available
evidence, including cumulative losses in recent years and expectations of future taxable income, the Company determined that it was more
likely than not that its deferred tax assets would not be realized and the total deferred tax assets is 0.
U.S. Tax Cuts and Jobs Act and Provisional Estimates
On December 22, 2017, the TCJA was enacted into
law, which significantly changes existing U.S. tax law and includes numerous provisions that affect our business, such as imposing a
one-time transition tax on deemed repatriation of deferred foreign income, reducing the U.S. federal statutory tax rate, and adopting
a territorial tax system. The TCJA required us to incur a one-time transition tax on deferred foreign income not previously subject to
U.S. income tax at a rate of 15.5% for foreign cash and certain other net current assets, and 8% on the remaining income. The TCJA also
reduced the U.S. federal statutory tax rate from 35% to 21% effective January 1, 2018. For fiscal year 2018, our blended U.S. federal
statutory tax rate is 27.5%. This is the result of using the tax rate of 34% for the first and second quarter of fiscal year 2018 and
the reduced tax rate of 21% for the third and fourth quarter of fiscal year 2018. For fiscal year 2019, 2020 and 2021, our U.S. federal
statutory tax rate is 21%.
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
Tax Rate Reconciliation
Our effective tax rates were approximately -4.5%
and -1.5% for years ended June 30, 2021 and 2020, respectively. Substantially all the Company’s income before income taxes and related
tax expense are from PRC sources. Actual income tax benefit reported in the consolidated statements of operations and comprehensive income
differ from the amounts computed by applying the US statutory income tax rate of 21.0% and 21.0% to income before income taxes for the
years ended June 30, 2021 and 2020 for the following reasons:
June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China
15% - 25%
|
|
|
United States
21%
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pretax (loss)
|
|
$
|
(111,633,655
|
)
|
|
|
|
|
|
|
(1,830,369
|
)
|
|
|
|
|
|
$
|
(113,464,024
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected income tax expense (benefit)
|
|
|
(27,908,414
|
)
|
|
|
25.0
|
%
|
|
|
(384,377
|
)
|
|
|
21.0
|
%
|
|
|
(28,292,791
|
)
|
|
|
|
|
High-tech income benefits on Jinong
|
|
|
5,330,679
|
|
|
|
-4.8
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
5,330,679
|
|
|
|
|
|
Loss from subsidiaries in which no benefit is recognized
|
|
|
24,985,260
|
|
|
|
-22.4
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
24,985,260
|
|
|
|
|
|
Change in valuation allowance on deferred tax asset from US tax benefit
|
|
|
2,699,570
|
|
|
|
-2.4
|
%
|
|
|
384,377
|
|
|
|
(21.0
|
)%
|
|
|
3,083,947
|
|
|
|
|
|
Actual tax expense
|
|
$
|
5,107,095
|
|
|
|
-4.6
|
%
|
|
$
|
-
|
|
|
|
|
%
|
|
$
|
5,107,095
|
|
|
|
-4.5
|
%
|
June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China
15% - 25%
|
|
|
United States
21%
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pretax (loss)
|
|
$
|
(136,601,646
|
)
|
|
|
|
|
|
|
(1,555,249
|
)
|
|
|
|
|
|
$
|
(138,156,897
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected income tax expense (benefit)
|
|
|
(34,150,412
|
)
|
|
|
25.0
|
%
|
|
|
(326,602
|
)
|
|
|
21.0
|
%
|
|
|
(34,477,014
|
)
|
|
|
|
|
High-tech income benefits on Jinong
|
|
|
1,814,372
|
|
|
|
-1.3
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
1,814,372
|
|
|
|
|
|
Losses from subsidiaries in which no benefit is recognized
|
|
|
34,440,026
|
|
|
|
-25.2
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
34,440,026
|
|
|
|
|
|
Change in valuation allowance on deferred tax asset from US tax benefit
|
|
|
-
|
|
|
|
|
|
|
|
326,602
|
|
|
|
(21.0
|
)%
|
|
|
326,602
|
|
|
|
|
|
Actual tax expense
|
|
$
|
2,103,987
|
|
|
|
-1.5
|
%
|
|
$
|
-
|
|
|
|
|
%
|
|
$
|
2,103,987
|
|
|
|
-1.5
|
%
|
CHINA GREEN AGRICULTURE,
INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 13 – STOCKHOLDERS’ EQUITY
Common Stock
On July 2, 2019, the Company issued 59,567 shares
of common stock to pay off consulting services under the 2009 Plan. The value of the stock was $330,000 and was based on the fair value
of the Company’s common stock on the grant date.
On August 13, 2019, the Company sold 212,000
shares of common stock at the price of $10.00 per share for total proceeds of $2,120,000 to certain third-party individuals. The issuances
were completed pursuant to the exemption from registration provided by Regulation S promulgated under the Securities Act of 1933, as
amended.
On August 15, 2019, Shaanxi Baoyu Science and
Technology Investment Company, a limited liability investment company incorporated in the People’s Republic of China (“Shaanxi
Baoyu”), entered into a certain Stock Purchase Agreement (the “SPA”) pursuant to Regulation S promulgated under the
Securities Act of 1933 with the Company in connection with a private placement offering of 471,000 shares of Common Stock, par value
$0.001 per share, of the Company. The purchase price per share of the offering was $12.00 for total proceeds of $5,652,000. On August
16, 2019, the Company issued 471,000 Shares of the Company’s Common Stock, par value $0.001 per share, to Shaanxi Baoyu, pursuant
to the SPA.
On August 19, 2019, the Company sold 248,000
shares of common stock at the price of $10.00 per share for total proceeds of $2,480,000 to certain unrelated individuals. The issuances
were completed pursuant to the exemption from registration provided by Regulation S promulgated under the Securities Act of 1933, as
amended.
On November 15, 2019, the Company issued 995,000
shares of common stock at the price of $5.00 per share for the total amount of $4,975,000 to the holders of the Company’s convertible
notes payable in connection with the payment of the convertible notes’ principal and interests. The convertible notes were issued
on June 30, 2016 and matured on June 30, 2020.
On February 14, 2020, the Company issued 377,650
shares of common stock at the price of $5.00 per share to the holders of the Company’s convertible notes payable in connection
with the payment of the convertible notes’ principal and interests. The convertible notes were issued on January 1, 2017 with amount
of RMB12,000,000 ($1,726,619) and matured on January 1, 2020 with total amount of RMB13,112,723 ($1,888,250) included interests.
On April 5, 2021, the Company entered into certain
Security Purchase Agreement (the “SPA”) with certain “non-US persons” as defined in Regulation S promulgated
under Securities Act of 1933, in connection with a private placement offering of 2,000,000 shares of common stock, par value $0.001 per
share, of the Company. The purchase price per share of the Offering is $7.00. The transaction contemplated in the SPA closed simultaneously
with the execution of the SPA.
On April 7, 2021, the Company granted and issued
137,500 shares of common stock to settle the payable of consulting services under the 2009 Plan. The value of the stock was $770,000
and was based on the fair value of the Company’s common stock on the grant date.
On August 30, 2021, the Company held its annual shareholder
meeting for fiscal year 2020 and a proposal for issuance of shares of the Company’s Common Stock was approved during the meeting.
The proposal includes offerings up to 13,142,857 shares of Common Stock, par value $0.001 per share, to a
group of ten non-US investors in a private placement. The proposed purchase price per share of the offering was $15.00 for the
total proceeds up to $197,142,855.
As of June 30, 2021, and June 30, 2020, there
were 8,487,629 and 6,350,129 shares of common stock issued and outstanding, respectively.
Preferred Stock
Under the Company’s Articles of Incorporation,
the Board has the authority, without further action by stockholders, to designate up to 20,000,000 shares of preferred stock in one or
more series and to fix the rights, preferences, privileges, qualifications and restrictions granted to or imposed upon the preferred
stock, including dividend rights, conversion rights, voting rights, rights and terms of redemption, liquidation preference and sinking
fund terms, any or all of which may be greater than the rights of the common stock. If the Company sells preferred stock under its registration
statement on Form S-3, it will fix the rights, preferences, privileges, qualifications and restrictions of the preferred stock of each
series in the certificate of designation relating to that series and will file the certificate of designation that describes the terms
of the series of preferred stock the Company offers before the issuance of the related series of preferred stock.
As of June 30, 2021, the Company has 20,000,000
shares of preferred stock authorized, with a par value of $.001 per share, of which no shares are issued or outstanding.
NOTE 14 – STOCK OPTIONS
There were no issuances of stock options during the years ended June
30, 2021 and 2020.
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 15 – CONCENTRATIONS AND LITIGATION
Market Concentration
All the Company’s revenue-generating 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 environments in the PRC, and by the general state of the PRC’s economy.
The Company’s operations in the PRC are
subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe.
These include risks associated with, among other things, the political, economic and legal environment and foreign currency exchange.
The Company’s results may be adversely affected by, among other things, changes in governmental policies with respect to laws and
regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation.
Vendor and Customer Concentration
There was no vendor that the Company purchased
over 10% of its raw materials for fertilizer manufacturing during the year ended June 30, 2021.
There was no vendor that the Company purchased
over 10% of its raw materials for fertilizer manufacturing during the year ended June 30, 2020.
There was no customer that the Company sold over
10% of its sales for manufactured fertilizer during the year ended June 30, 2021.
Two customers accounted for an aggregate amount
of $42,091,565, or 10.5% and 10.4%, respectively, of the Company’s manufactured fertilizer sales for the year ended June 30, 2020.
Litigation
On June 5, 2020, an individual filed suit pro
se (as in, representing oneself without an attorney) in the Southern District of Florida federal court alleging violations of the Securities
Exchange Act. The Company believes the action is without merit and vigorously opposed it. The company moved to dismiss the litigation
and for attorney’s fees from the plaintiff. On November 2, 2020, the case was transferred to the United States
District Court for The Southern District Of New York. On September 30, 2021, the Southern District of New York federal court presiding
over the case dismissed all claims against the company, its executives, and its independent directors. The dismissal was without
prejudice and the plaintiff can appeal or amend within 30 days, or by October 29, 2021.
NOTE 16 – SEGMENT REPORTING
As of June 30, 2021, the Company was organized
into four main business segments based on location and product: Jinong (fertilizer production), Gufeng (fertilizer production), Yuxing
(agricultural products production) and the sales VIEs. Each of the four operating segments referenced above has separate and distinct
general ledgers. The chief operating decision maker (“CODM”) receives financial information, including revenue, gross margin,
operating income and net income produced from the various general ledger systems to make decisions about allocating resources and assessing
performance; however, the principal measure of segment profitability or loss used by the CODM is net income by segment.
|
|
Years Ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Revenues from unaffiliated customers:
|
|
|
|
|
|
|
Jinong
|
|
$
|
59,409,169
|
|
|
$
|
57,001,659
|
|
Gufeng
|
|
|
110,834,918
|
|
|
|
119,623,964
|
|
Yuxing
|
|
|
11,038,666
|
|
|
|
9,227,113
|
|
Sales VIEs
|
|
|
50,125,904
|
|
|
|
43,575,376
|
|
Consolidated
|
|
$
|
231,408,657
|
|
|
$
|
229,428,112
|
|
|
|
|
|
|
|
|
|
|
Operating income (expense):
|
|
|
|
|
|
|
|
|
Jinong
|
|
$
|
(20,314,442
|
)
|
|
$
|
(18,249,504
|
)
|
Gufeng
|
|
|
(98,976,802
|
)
|
|
|
(117,826,339
|
)
|
Yuxing
|
|
|
622,636
|
|
|
|
413,226
|
|
Sales VIEs
|
|
|
6,751,528
|
|
|
|
(704,194
|
)
|
Reconciling item (1)
|
|
|
-
|
|
|
|
-
|
|
Reconciling item (2)
|
|
|
(1,830,382
|
)
|
|
|
(1,555,269
|
)
|
Consolidated
|
|
$
|
(113,747,462
|
)
|
|
$
|
(137,922,080
|
)
|
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
Net income (loss):
|
|
|
|
|
|
|
Jinong
|
|
$
|
(20,482,770
|
)
|
|
|
(15,422,166
|
)
|
Gufeng
|
|
|
(99,310,549
|
)
|
|
|
(88,682,298
|
)
|
Yuxing
|
|
|
639,313
|
|
|
|
425,957
|
)
|
Sales VIEs
|
|
|
4,629,663
|
|
|
|
(1,355,244
|
)
|
Reconciling item (1)
|
|
|
13
|
|
|
|
19
|
|
Reconciling item (2)
|
|
|
(4,529,952
|
)
|
|
|
(1,555,269
|
)
|
Reconciling item (3)
|
|
$
|
483,164
|
|
|
$
|
(33,671,884
|
)
|
Consolidated
|
|
$
|
(118,571,119
|
)
|
|
$
|
(140,260,884
|
)
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization:
|
|
|
|
|
|
|
|
|
Jinong
|
|
$
|
809,559
|
|
|
$
|
760,535
|
|
Gufeng
|
|
|
1,202,230
|
|
|
|
2,070,861
|
|
Yuxing
|
|
|
1,249,414
|
|
|
|
1,179,144
|
|
Sales VIEs
|
|
|
552,927
|
|
|
|
687.942
|
|
Consolidated
|
|
$
|
3,814,131
|
|
|
$
|
4,698.482
|
|
Interest expense:
|
|
|
|
|
|
|
|
|
Jinong
|
|
|
-
|
|
|
|
25,593
|
|
Gufeng
|
|
|
266,304
|
|
|
|
278,373
|
|
Yuxing
|
|
|
-
|
|
|
|
-
|
|
Sales VIEs
|
|
|
202
|
|
|
|
105
|
|
Consolidated
|
|
$
|
266,506
|
|
|
$
|
304,071
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditure:
|
|
|
|
|
|
|
|
|
Jinong
|
|
$
|
59,916
|
|
|
$
|
50,625
|
|
Gufeng
|
|
|
75,983
|
|
|
|
4,448
|
|
Yuxing
|
|
|
108,732
|
|
|
|
27,794
|
|
Sales VIEs
|
|
|
24,168
|
|
|
|
14,617
|
|
Consolidated
|
|
$
|
268,800
|
|
|
$
|
97,483
|
|
|
|
As of
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Identifiable assets:
|
|
|
|
|
|
|
Jinong
|
|
$
|
85,585,344
|
|
|
$
|
83,055,679
|
|
Gufeng
|
|
|
130,346,782
|
|
|
|
213,038,203
|
|
Yuxing
|
|
|
38,516,348
|
|
|
|
34,310,053
|
|
Sales VIEs
|
|
|
43,862,592
|
|
|
|
35,508,422
|
|
Reconciling item (1)
|
|
|
(31,748,448
|
)
|
|
|
(23,950,294
|
)
|
Reconciling item (2)
|
|
|
166,121
|
|
|
|
166,121
|
|
Consolidated
|
|
$
|
266,728,738
|
|
|
$
|
342,128,183
|
|
(1)
|
Reconciling
amounts refer to the unallocated assets or expenses of Green New Jersey.
|
(2)
|
Reconciling amounts
refer to the unallocated assets or expenses of the Parent Company.
|
(3)
|
Reconciling amounts
refer to the loss on discontinuing sales VIE of Shenqiu Zhenbai.
|
Total revenues from exported products currently
accounted for less than 1% of the Company’s total fertilizer revenues for the years ended June 30, 2021 and 2020, respectively.
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 17 – COMMITMENTS AND CONTINGENCIES
On July 1, 2020, Jinong signed an office
rental agreement with Kingtone Information Technology Co., Ltd. (“Kingtone Information”), of which Mr. Zhuoyu Li,
Chairman and CEO of the Company, served as its Chairman. Pursuant to the rental agreement, Jinong rented 612 square meters
(approximately 6,588 square feet) of office space from Kingtone Information. The rental agreement provides for a two-year term
effective as of July 1, 2020 with monthly rent of RMB24,480 (approximately $3,790).
In February 2004, Tianjuyuan signed a fifty-year
rental agreement with the village committee of Dong Gao Village and Zhen Nan Zhang Dai Village in the Beijing Ping Gu District, at a monthly
rent of RMB2,958 ($458).
On August 1, 2020, Jinyangguang signed a one-year
lease for 1,236.88 square meters (approximately 13,315 square feet) commercial space with monthly rent of RMB12,500 (approximately $1,935)
effective August 1, 2020.
On January 1, 2020, Fengnong signed a two-year
lease for warehouse space with monthly rent of RMB35,000 (approximately $5,418) effective January 1, 2020.
Accordingly, the Company recorded an aggregate
of $104,762 and $$46,815 as rent expenses for the years ended June 30, 2021 and 2020, respectively. The contingent rent expenses herein
for the next five years ended June 30, are as follows:
Years ending June 30,
|
|
|
|
2022
|
|
|
139,205
|
|
2023
|
|
|
139,205
|
|
2024
|
|
|
139,205
|
|
2025
|
|
|
139,205
|
|
2026
|
|
|
139,205
|
|
NOTE 18 – VARIABLE INTEREST ENTITIES
In accordance with accounting standards regarding
consolidation of variable interest entities, VIEs are generally entities that lack sufficient equity to finance their activities without
additional financial support from other parties or whose equity holders lack adequate decision-making ability. All VIEs with which a
company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary
is required to consolidate the VIE for financial reporting purposes.
Green Nevada through one of its subsidiaries,
Jinong, entered into a series of agreements (the “VIE Agreements”) with Yuxing for it to qualify as a VIE, effective June
16, 2013.
The Company has concluded, based on the contractual
arrangements, that Yuxing is a VIE and that the Company’s wholly-owned subsidiary, Jinong, absorbs a majority of the risk of loss
from the activities of Yuxing, thereby enabling the Company, through Jinong, to receive a majority of Yuxing expected residual returns.
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
On June 30, 2016 and January 1, 2017, the Company,
through its wholly-owned subsidiary Jinong, entered into strategic acquisition agreements and into a series of contractual agreements
to qualify as VIEs with the shareholders of the sales VIE Companies.
Jinong, the sales VIE Companies, and the shareholders
of the sales VIE Companies also entered into a series of contractual agreements for the sales VIE Companies to qualify as VIEs (the “VIE
Agreements”).
On November 30, 2017, the Company, through its
wholly-owned subsidiary Jinong, exited the VIE agreements with the shareholders of Zhenbai.
On June 2, 2021, the Company, through its wholly-owned
subsidiary Jinong, exited the VIE agreements with the shareholders of Xinjiang and Xiangrong.
As a result of these contractual arrangements,
with Yuxing and the sales VIE Companies the Company is entitled to substantially all the economic benefits of Yuxing and the VIE Companies.
The following financial statement amounts and balances of the VIEs were included in the accompanying consolidated financial statements
as of June 30, 2021 and June 30, 2020:
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
253,566
|
|
|
$
|
310,448
|
|
Accounts receivable, net
|
|
|
35,360,138
|
|
|
|
26,708,511
|
|
Inventories
|
|
|
6,681,758
|
|
|
|
5,457,860
|
|
Other current assets
|
|
|
477,693
|
|
|
|
409,754
|
|
Related party receivable
|
|
|
-
|
|
|
|
-
|
|
Advances to suppliers
|
|
|
277,563
|
|
|
|
392,282
|
|
Total Current Assets
|
|
|
43,050,718
|
|
|
|
33,278,855
|
|
|
|
|
|
|
|
|
|
|
Plant, Property and Equipment, Net
|
|
|
138,662
|
|
|
|
143,278
|
|
Other assets
|
|
|
|
|
|
|
|
|
Intangible Assets, Net
|
|
|
673,213
|
|
|
|
1,014,295
|
|
Goodwill
|
|
|
-
|
|
|
|
1,071,994
|
|
Total Assets
|
|
$
|
43,862,593
|
|
|
$
|
35,508,422
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
14,736,412
|
|
|
$
|
15,870,778
|
|
Customer deposits
|
|
|
167,059
|
|
|
|
70,729
|
|
Accrued expenses and other payables
|
|
|
9,162,742
|
|
|
|
6,416,032
|
|
Amount due to related parties
|
|
|
-
|
|
|
|
-
|
|
Total Current Liabilities
|
|
|
24,066,213
|
|
|
|
22,357,539
|
|
Total Liabilities
|
|
$
|
24,066,213
|
|
|
|
22,357,539
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity
|
|
|
19,796,380
|
|
|
|
13,150,883
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity
|
|
$
|
43,862,593
|
|
|
$
|
35,508,422
|
|
|
|
Years Ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Revenue
|
|
$
|
50,125,905
|
|
|
$
|
43,575,375
|
|
Expenses
|
|
|
45,496,242
|
|
|
|
44,930,619
|
|
Net income
|
|
$
|
4,629,663
|
|
|
$
|
(1,355,244
|
)
|
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 19 – BUSINESS COMBINATIONS
On June 30, 2016, the Company, through its wholly-owned
subsidiary Jinong, entered into strategic acquisition agreements and also into a series of contractual agreements to qualify as VIEs
with the shareholders of Shaanxi Lishijie Agrochemical Co., Ltd., Songyuan Jinyangguang Sannong Service Co., Ltd., Shenqiu County Zhenbai
Agriculture Co., Ltd., Weinan City Linwei District Wangtian Agricultural Materials Co., Ltd., Aksu Xindeguo Agricultural Materials Co.,
Ltd., and Xinjiang Xinyulei Eco-agriculture Science and Technology Co., Ltd.
Subsequently, on January 1, 2017, Jinong entered
into similar strategic acquisition agreements and a series of contractual agreements to qualify as VIEs with the shareholders of Sunwu
County Xiangrong Agricultural Materials Co., Ltd., and Anhui Fengnong Seed Co., Ltd.
On November 30, 2017, the Company, through its
wholly-owned subsidiary Jinong, discontinued the strategic acquisition agreements and the series of contractual agreements with the shareholders
of Zhenbai.
On June 2, 2021, the Company, through its wholly-owned
subsidiary Jinong, discontinued the strategic acquisition agreements and the series of contractual agreements with the shareholders of
Xindeguo, Xinyulei and Xiangrong.
The VIE Agreements are as follows:
Entrusted Management Agreements
Pursuant to the terms of certain Entrusted Management
Agreements dated June 30, 2016 and January 1, 2017, between Jinong and the shareholders of the sales VIE Companies (the “Entrusted
Management Agreements”), the sales VIE Companies and their shareholders agreed to entrust the operations and management of its
business to Jinong. According to the Entrusted Management Agreement, Jinong possesses the full and exclusive right to manage the sales
VIE Companies’ operations, assets and personnel, has the right to control all the sales VIE Companies’ cash flows through
an entrusted bank account, is entitled to the sales VIE Companies’ net profits as a management fee, is obligated to pay all the
sales VIE Companies’ payables and loan payments, and bears all losses of the sales VIE Companies. The Entrusted Management Agreements
will remain in effect until (i) the parties mutually agree to terminate the agreement; (ii) the dissolution of the sales VIE Companies;
or (iii) Jinong acquires all the assets or equity of the sales VIE Companies (as more fully described below under “Exclusive Option
Agreements”).
Exclusive Technology Supply Agreements
Pursuant to the terms of certain Exclusive Technology
Supply Agreements dated June 30, 2016 and January 1, 2017, between Jinong and the sales VIE companies (the “Exclusive Technology
Supply Agreements”), Jinong is the exclusive technology provider to the sales VIE companies. The sales VIE companies agreed to
pay Jinong all fees payable for technology supply prior to making any payments under the Entrusted Management Agreement. The Exclusive
Technology Supply Agreements shall remain in effect until (i) the parties mutually agree to terminate the agreement; (ii) the dissolution
of the sales VIE companies; or (iii) Jinong acquires the sales VIE companies (as more fully described below under “Exclusive Option
Agreements”).
Shareholder’s Voting Proxy Agreements
Pursuant to the terms of certain Shareholder’s
Voting Proxy Agreements dated June 30, 2016 and January 1, 2017, among Jinong and the shareholders of the sales VIE companies (the “Shareholder’s
Voting Proxy Agreements”), the shareholders of the sales VIE companies irrevocably appointed Jinong as their proxy to exercise
on such shareholders’ behalf all of their voting rights as shareholders pursuant to PRC law and the Articles of Association of
the sales VIE companies, including the appointment and election of directors of the sales VIE companies. Jinong agreed that it shall
maintain a board of directors, the composition and appointment of which shall be approved by the Board of the Company. The Shareholder’s
Voting Proxy Agreements will remain in effect until Jinong acquires all the assets or equity of the sales VIE companies.
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
Exclusive Option Agreements
Pursuant to the terms of certain Exclusive Option
Agreements dated June 30, 2016 and January 1, 2017, among Jinong, the sales VIE companies, and the shareholders of the sales VIE companies
(the “Exclusive Option Agreements”), the shareholders of the sales VIE companies granted Jinong an irrevocable and exclusive
purchase option (the “Option”) to acquire the sales VIE companies’ equity interests and/or remaining assets, but only
to the extent that the acquisition does not violate limitations imposed by PRC law on such transactions. The Option is exercisable at
any time at Jinong’s discretion so long as such exercise and subsequent acquisition of the sales VIE companies does not violate
PRC law. The consideration for the exercise of the Option is to be determined by the parties and memorialized in the future by definitive
agreements setting forth the kind and value of such consideration. Jinong may transfer all rights and obligations under the Exclusive
Option Agreements to any third parties without the approval of the shareholders of the sales VIE companies so long as a written notice
is provided. The Exclusive Option Agreements may be terminated by mutual agreements or by 30 days written notice by Jinong.
Equity Pledge Agreements
Pursuant to the terms of certain Equity Pledge
Agreements dated June 30, 2016 and January 1, 2017, among Jinong and the shareholders of the sales VIE companies (the “Pledge Agreements”),
the shareholders of the sales VIE companies pledged all of their equity interests in the sales VIE companies to Jinong, including the
proceeds thereof, to guarantee all of Jinong’s rights and benefits under the Entrusted Management Agreements, the Exclusive Technology
Supply Agreements, the Shareholder’ Voting Proxy Agreements and the Exclusive Option Agreements. Prior to termination of the Pledge
Agreements, the pledged equity interests cannot be transferred without Jinong’s prior written consent. The Pledge Agreements may
be terminated only upon the written agreement of the parties.
Non-Compete Agreements
Pursuant to the terms of certain Non-Compete
Agreements dated June 30, 2016 and January 1, 2017, among Jinong and the shareholders of the sales VIE companies (the “Non-Compete
Agreements”), the shareholders of the sales VIE companies agreed that during the period beginning on the initial date of their
services with Jinong, and ending five (5) years after termination of their services with Jinong, without Jinong’s prior written
consent, they will not provide services or accept positions including but not limited to partners, directors, shareholders, managers,
proxies or consultants, provided by any profit making organizations with businesses that may compete with Jinong. They will not solicit
or interfere with any of the Jinong’s customers, or solicit, induce, recruit or encourage any person engaged or employed by Jinong
to terminate his or her service or engagement. If the shareholders of the sales VIE companies breach the non-compete obligations contained
therein, Jinong is entitled to all loss and damages; if the damages are difficult to determine, remedies bore the shareholders of the
sales VIE companies shall be no less than 50% of the salaries and other expenses Jinong provided in the past.
The Company entered these VIE Agreements as a
way for the Company to have more control over the distribution of its products. The transactions are accounted for as business combinations
in accordance with ASC 805. A summary of the purchase price allocations at fair value is below:
For acquisitions made on June 30, 2016:
Cash
|
|
$
|
708,737
|
|
Accounts receivable
|
|
|
6,422,850
|
|
Advances to suppliers
|
|
|
1,803,180
|
|
Prepaid expenses and other current assets
|
|
|
807,645
|
|
Inventories
|
|
|
7,787,043
|
|
Machinery and equipment
|
|
|
140,868
|
|
Intangible assets
|
|
|
270,900
|
|
Other assets
|
|
|
3,404,741
|
|
Goodwill
|
|
|
3,158,179
|
|
Accounts payable
|
|
|
(3,962,670
|
)
|
Customer deposits
|
|
|
(3,486,150
|
)
|
Accrued expenses and other payables
|
|
|
(4,653,324
|
)
|
Taxes payable
|
|
|
(16,912
|
)
|
Purchase price
|
|
$
|
12,385,087
|
|
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
A summary of the purchase consideration paid is below:
Cash
|
|
$
|
5,568,500
|
|
Convertible notes
|
|
|
6,671,769
|
|
Derivative liability
|
|
|
144,818
|
|
|
|
$
|
12,385,087
|
|
The cash component of the purchase price for
these acquisitions made on June 30, 2016 was paid in July and August 2016.
For acquisitions made on January 1, 2017:
Working Capital
|
|
$
|
941,192
|
|
Machinery and equipment
|
|
|
222,875
|
|
Intangible assets
|
|
|
1440
|
|
Goodwill
|
|
|
684,400
|
|
Customer Relationship
|
|
|
522,028
|
|
Non-compete Agreement
|
|
|
392,852
|
|
Purchase price
|
|
$
|
2,764,787
|
|
A summary of the purchase consideration paid is below:
Cash
|
|
$
|
1,201,888
|
|
Convertible notes
|
|
|
1,559,350
|
|
Derivative liability
|
|
|
3,549
|
|
|
|
$
|
2,764,787
|
|
The cash component of the purchase price for
these acquisitions made on January 1, 2017 was paid during March 2017.
On November 30, 2017, the Company, through its
wholly-owned subsidiary Jinong, discontinued the strategic acquisition agreements and the series of contractual agreements with the shareholders
of Zhenbai. In return, the shareholders of Zhenbai agreed to tender the whole payment consideration in the SAA back to the Company with
early termination penalties. The convertible notes paid to Zhenbai’s shareholders and the accrued interest has been forfeited.
For the discontinuation of Zhenbai made on November
30, 2017, the Company gave up the control of the following assets in Zhenbai:
Working Capital
|
|
$
|
1,179,352
|
|
Intangible assets
|
|
|
896,559
|
|
Customer Relationship
|
|
|
684,727
|
|
Non-compete Agreement
|
|
|
211,833
|
|
Goodwill
|
|
|
538,488
|
|
Total Asset
|
|
$
|
2,614,401
|
|
In return, the purchase consideration returned to the Company from
Zhenbai’s shareholders is summarized below:
Cash
|
|
$
|
461,330
|
|
Interest Payable
|
|
|
83,039
|
|
Convertible notes
|
|
|
1,724,683
|
|
Derivative liability
|
|
|
13,353
|
|
Total Payback
|
|
$
|
2,282,406
|
|
Net Loss
|
|
|
(331,995
|
)
|
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 20 – DISCONTINUED OPERATIONS
On June 10, 2021, the Company, through its wholly-owned
subsidiary Jinong, discontinued the strategic acquisition agreements and the series of contractual agreements with the shareholders of
Xindeguo and Xinyulei. In return, the shareholders of Xindeguo and Xinyulei agreed to pay cash with amount of RMB1,850,000 (approximately
$286,380) to the Company.
For the discontinuation of Xindeguo and Xinyulei
made on June 10, 2021, the Company gave up the control of the following assets in Xindeguo and Xinyulei:
Working Capital
|
|
$
|
(1,135,366
|
)
|
Intangible Assets
|
|
|
28,050
|
|
Long-term equity investment
|
|
|
139,320
|
|
Goodwill
|
|
|
1,257,784
|
|
Total Asset
|
|
|
288,898
|
|
In return, the purchase consideration returned
to the Company from Xindeguo and Xinyulei’s shareholders is summarized below:
Cash
|
|
$
|
286,380
|
|
Total Payback
|
|
$
|
286,380
|
|
Net Gain (Loss)
|
|
|
(2,518
|
)
|
On June 10, 2021, the Company, through its wholly-owned
subsidiary Jinong, discontinued the strategic acquisition agreements and the series of contractual agreements with the shareholders of
Xiangrong. In return, the shareholders of Xiangrong agreed to pay cash with amount of RMB24,430,000 (approximately $3,781,764) to the
Company.
For the discontinuation of Xiangrong made on June
10, 2021, the Company gave up the control of the following assets in Xiangrong:
Working Capital
|
|
$
|
2,930,551
|
|
Intangible assets
|
|
|
23,890
|
|
Goodwill
|
|
|
316,200
|
|
Total Asset
|
|
$
|
3,270,641
|
|
In return, the purchase consideration returned to the Company from
Xiangrong’s shareholders is summarized below:
Cash
|
|
$
|
3,781,764
|
|
Total Payback
|
|
$
|
3,781,764
|
|
Net Gain (Loss)
|
|
|
511,123
|
|
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
The following table summarizes the results of
discontinued operations for the periods presented:
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
26,426
|
|
|
$
|
96,185
|
|
Accounts receivable, net
|
|
|
4,905,066
|
|
|
|
6,641,255
|
|
Inventories
|
|
|
2,896,198
|
|
|
|
512,441
|
|
Other current assets
|
|
|
1,392,245
|
|
|
|
159,165
|
|
Related party receivable
|
|
|
0
|
|
|
|
0
|
|
Advances to suppliers
|
|
|
390,656
|
|
|
|
79,095
|
|
Total Current Assets
|
|
|
9,610,591
|
|
|
|
7,488,141
|
|
|
|
|
|
|
|
|
|
|
Plant, Property and Equipment, Net
|
|
|
0
|
|
|
|
14,780
|
|
Other assets
|
|
|
139,320
|
|
|
|
152,820
|
|
Intangible Assets, Net
|
|
|
51,940
|
|
|
|
112,575
|
|
Goodwill
|
|
|
1,573,984
|
|
|
|
1,438,751
|
|
Total Assets
|
|
$
|
11,375,835
|
|
|
$
|
9,207,067
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
1,235,297
|
|
|
$
|
445,059
|
|
Customer deposits
|
|
|
595,528
|
|
|
|
15,701
|
|
Accrued expenses and other payables
|
|
|
5,985,470
|
|
|
|
4,390,475
|
|
Amount due to related parties
|
|
|
0
|
|
|
|
0
|
|
Total Current Liabilities
|
|
|
7,816,295
|
|
|
|
4,851,235
|
|
Total Liabilities
|
|
$
|
7,816,295
|
|
|
|
4,851,235
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity
|
|
|
3,559,540
|
|
|
|
4,355,832
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity
|
|
$
|
11,375,835
|
|
|
$
|
9,207,067
|
|
|
|
Years Ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Revenue
|
|
$
|
8,519,069
|
|
|
$
|
19,815,384
|
|
Cost of goods sold
|
|
|
7,053,703
|
|
|
|
17,119,372
|
|
Selling expenses
|
|
|
297,449
|
|
|
|
344,185
|
|
General and administrative expenses
|
|
|
2,260,980
|
|
|
|
(1,397,894
|
)
|
Other income (expense)
|
|
|
125
|
|
|
|
(34
|
)
|
Income before provision (benefit) from income taxes
|
|
|
(1,092,938
|
)
|
|
|
3,749,687
|
|
Provision (benefit) for income taxes
|
|
|
83,560
|
|
|
|
240,941
|
|
(Loss) income from discontinued operations, net of taxes
|
|
$
|
(1,176,498
|
)
|
|
$
|
3,508,746
|
|
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 21 – RESTRICTED NET ASSETS
The Company’s operations are primarily
conducted through its PRC subsidiaries, which can only pay dividends out of their retained earnings determined in accordance with the
accounting standards and regulations in the PRC and after it has met the PRC requirements for appropriation to statutory reserves. In
addition, the Company’s businesses and assets are primarily denominated in RMB, which is not freely convertible into foreign currencies.
All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell
foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s
Bank of China or other regulatory institutions requires submitting a payment application form together with suppliers’ invoices,
shipping documents and signed contracts. These currency exchange control procedures imposed by the PRC government authorities may restrict
the ability of the Company’s PRC subsidiaries to transfer their net assets to the Parent Company through loans, advances or cash
dividends.
The Company’s PRC subsidiaries net assets
as of June 30, 2021 and 2020 exceeded 25% of the Company’s consolidated net assets. Accordingly, condensed Parent Company financial
statements have been prepared in accordance with Rule 5-04 and Rule 12-04 of SEC Regulation S-X, and are as follows.
Parent Company Financial Statements
PARENT COMPANY FINANCIAL INFORMATION OF CHINA GREEN AGRICULTURE, INC.
Condensed Balance Sheets
|
|
As of June 30,
|
|
|
|
2021
|
|
|
2020
|
|
ASSETS
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
75,165
|
|
|
$
|
65,520
|
|
Other current assets
|
|
|
169,071
|
|
|
|
169,071
|
|
Total Current Assets
|
|
|
244,236
|
|
|
|
234,590
|
|
|
|
|
|
|
|
|
|
|
Long-term equity investment
|
|
|
199,250,069
|
|
|
|
273,573,440
|
|
Total long-term assets
|
|
|
199,250,069
|
|
|
|
273,573,440
|
|
Total Assets
|
|
$
|
199,494,305
|
|
|
$
|
273,808,030
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
214,520
|
|
|
$
|
214,520
|
|
Amount due to related parties
|
|
|
3,861,449
|
|
|
|
3,192,986
|
|
Other payables and accrued expenses
|
|
|
7,907,483
|
|
|
|
7,594,602
|
|
Total Current Liabilities
|
|
|
11,983,452
|
|
|
|
11,002,108
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
Common stock, $.001 par value, 115,197,165 shares authorized, 8,487,629 and 6,350,129 shares issued and outstanding as of June 30, 2021 and June 30, 2020, respectively
|
|
|
8,488
|
|
|
|
6,350
|
|
Additional paid in capital
|
|
|
170,223,195
|
|
|
|
155,455,332
|
|
Accumulated other comprehensive income (loss)
|
|
|
(4,581,541
|
)
|
|
|
(34,264,089
|
)
|
Retained earnings
|
|
|
14,980,428
|
|
|
|
141,608,329
|
|
Total Stockholders’ Equity
|
|
|
187,510,853
|
|
|
|
262,805,922
|
|
Total Liabilities and Stockholders’ Equity
|
|
$
|
199,494,305
|
|
|
$
|
273,808,030
|
|
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
Condensed Statements of Operations
|
|
Year ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
General and administrative expenses
|
|
|
1,830,382
|
|
|
|
1,555,269
|
|
Interest income
|
|
|
13
|
|
|
|
19
|
|
Provision for tax
|
|
|
2,699,570
|
|
|
|
-
|
|
Equity investment in subsidiaries
|
|
|
(115,217,678
|
)
|
|
|
(135,196,887
|
)
|
Net income
|
|
$
|
(119,747,617
|
)
|
|
$
|
(136,752,136
|
)
|
Condensed Statements of Cash Flows
|
|
Year Ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Net cash provided by (used in) operating activities
|
|
$
|
(13,990,355
|
)
|
|
$
|
(10,864,886
|
)
|
Net cash provided by (used in) investing activities
|
|
|
-
|
|
|
|
-
|
|
Net cash provided by (used in) financing activities
|
|
|
14,000,000
|
|
|
|
10,852,000
|
|
Cash and cash equivalents, beginning balance
|
|
|
65,520
|
|
|
|
78,405
|
|
Cash and cash equivalents, ending balance
|
|
$
|
75,165
|
|
|
$
|
65,520
|
|
Notes to Condensed Parent Company Financial Information
As of June 30, 2021, and 2020, there were no
material contingencies, significant provisions for long-term obligations, or guarantees of the Company, except as separately disclosed
in the Consolidated Financial Statements, if any. Certain information and footnote disclosures normally included in financial statements
prepared in accordance with U.S. GAAP have been condensed or omitted.
NOTE 22 – OTHER EVENTS
In December 2019, a novel strain of coronavirus
was reported to have surfaced in Wuhan, China, which was continuing to spread throughout China and other parts of the world, including
the United States. On January 30, 2020, the World Health Organization declared the outbreak of the COVID-19 a “Public Health Emergency
of International Concern,” and on March 11, 2020, the World Health Organization characterized the outbreak as a “pandemic”.
The epidemic has resulted in quarantines, travel restrictions, and the temporary closure of office buildings and facilities in China
and in the U.S.
Xi’an City, where our headquarters are
located, is one of the most affected areas in China. The Company has been following the orders of local government and health authorities
to minimize exposure risk for its employees, including the closures of its offices and having employees work remotely from January of
2020 until March of 2020. An occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations
and financial results.
Substantially all our revenues are generated
in China. Consequently, our results of operations were adversely and materially affected by COVID-19. Any potential impact to our results
will depend on, to a large extent, future developments and new information that may emerge regarding the duration and severity of COVID-19
and the actions taken by government authorities and other entities to contain COVID-19 or treat its impact, almost all of which are beyond
our control. Potential impacts include, but are not limited to, the following:
|
●
|
temporary closure of offices,
travel restrictions or suspension of transportation of our products to our customers and our suppliers have been negatively affected,
and could continue to be negatively affected, on their ability to supply our demands;
|
|
●
|
our customers that are
negatively impacted by the outbreak of COVID-19 may reduce their budgets to purchase our products and services, which may materially
adversely impact our revenue;
|
|
●
|
we may have to provide
significant sales incentives to our customers in response to the outbreak, which may in turn materially adversely affect our financial
condition and operating results;
|
|
●
|
the business operations
of our customers and suppliers have been and could continue to be negatively impacted by the outbreak, result in loss of customers
or disruption of our services, which may in turn materially adversely affect our financial condition and operating results;
|
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
|
●
|
any disruption of our supply
chain, logistics providers or customers could adversely impact our business and results of operations, including causing our suppliers
to cease manufacturing products for a period of time or materially delay delivery to customers, which may also lead to loss of customers,
as well as reputational, competitive and business harm to us;
|
|
●
|
many of our customers,
distributors, suppliers and other partners are individuals and small and medium-sized enterprises (SMEs), which may not have strong
cash flows or be well capitalized, and may be vulnerable to an epidemic outbreak and slowing macroeconomic conditions. If the SMEs
that we work with cannot weather COVID-19 and the resulting economic impact, or cannot resume business as usual after a prolonged
outbreak, our revenues and business operations may be materially and adversely impacted;
|
|
●
|
the global stock markets
have experienced, and may continue to experience, significant decline from the COVID-19 outbreak, which could materially adversely
affect our stock price;
|
Because of the uncertainty surrounding the COVID-19
outbreak, the financial impact related to the outbreak of and response to the COVID-19 cannot be reasonably estimated at this time, but
our results for the full fiscal year of 2021 had been adversely affected.
In general, our business could be adversely affected
by the effects of epidemics, including, but not limited to, the COVID-19, avian influenza, severe acute respiratory syndrome (SARS),
the influenza A virus, the Ebola virus, or other outbreaks. In response to an epidemic or other outbreaks, government and other organizations
may adopt regulations and policies that could lead to severe disruption to our daily operations, including temporary closure of our offices
and other facilities. These severe conditions may cause us and/or our partners to make internal adjustments, including but not limited
to, temporarily closing down business, limiting business hours, and setting restrictions on travel and/or visits with clients and partners
for a prolonged period of time. Various impacts arising from severe conditions may cause business disruption, resulting in material,
adverse effects to our financial condition and results of operations.
We are taking significant measures to mitigate
the financial and operational impacts of COVID-19 as well as additional actions to improve our liquidity through cost reduction and conservation
measures.
NOTE 23 – SUBSEQUENT EVENTS
In accordance with ASC 855-10, the Company has
analyzed its operations subsequent to June 30, 2021 to the date these consolidated financial statements were available to be issued and
has determined that there were below significant subsequent events or transactions that would require recognition or disclosure in the
consolidated financial statements.
On August 30, 2021, at
the Company’s annual shareholder meeting for fiscal year 2020, a majority of the Company’s shareholders approved a proposal
for the issuance of the Company’s common stock to ten non-US investors in a private placement. The proposal includes offerings
up to 13,142,857 shares of Common Stock with par value $0.001 per share. The proposed purchase price per share of the offering was $15.00
for total proceeds up to $197,142,855. The purpose of the stock issuance was to raise fund for expanding the Company’s business
into that of blockchain applications including cryptocurrency mining.
At the meeting, the Company’s majority shareholder also approved
the nomination of Mr. Jian Huang and Mr. Xiaolai Li, who have extensive knowledge and experience within the blockchain and cryptocurrency
industries, to the Company’s Board of Directors. Messrs. Zhuoyu Li, Jian Huang, Xiaolai Li, Shiyu Zhang, Daqing Zhu, Lianfu Liu,
and Jinjun Lu were elected to serve as directors until the next annual shareholders meeting or until their successors are duly elected
or appointed.
F-36
2021
CN
24.96
Reconciling amounts refer to the unallocated assets or expenses of Green New Jersey.
Reconciling amounts refer to the loss on discontinuing sales VIE of Shenqiu Zhenbai.
Reconciling amounts refer to the unallocated assets or expenses of the Parent Company.
false
N/A
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