Nevada
|
20-3348253
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification Number)
|
1562 Jie Fang Great Road
16 FL Zhongji Building, Suite 1062-1063
Nanguan District, Changchun City, China
|
130022
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Registrant’s telephone (01186) 43188952022
|
Large accelerated filer
|
o
|
Accelerated filer
|
o
|
Non-accelerated file
|
o
|
Smaller Reporting Company
|
x
|
PART I — FINANCIAL INFORMATION
|
|
Item 1. Financial Statements
|
F-1
|
Item 2. Management’s Discussion and Analysis or Plan of Operation.
|
3
|
Item 3. Quantitative and Qualitative Disclosure about Market Risk
|
19
|
Item 4. Controls and Procedures.
|
19
|
PART II — OTHER INFORMATION
|
|
Item 1. Legal Proceedings.
|
20
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
|
20
|
Item 3. Defaults Upon Senior Securities
|
20
|
Item 4 Mine Safety Disclosures
|
20
|
Item 5. Other Information.
|
20
|
Item 6. Exhibits.
|
21
|
Contents
|
|
Consolidated Balance Sheets as of March 31, 2013 (Unaudited) and June 30, 2012
|
F-2
|
Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended March 31, 2013 and 2012 (Unaudited)
|
F-3
|
Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2013 and 2012 (Unaudited)
|
F-4
|
Notes to Consolidated Financial Statements, March 31, 2013 (Unaudited)
|
F-6
|
March 31,
2013
|
June 30,
2012
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
CURRENT ASSETS
|
||||||||
Cash
|
$
|
88,066
|
$
|
24,183
|
||||
Accounts receivable- net
|
2,492,833
|
1,332,043
|
||||||
Inventory
|
412,552
|
1,819,905
|
||||||
Ginseng crops, current portion
|
-
|
909,665
|
||||||
Due from related parties
|
189,285
|
152,394
|
||||||
Prepaid expenses
|
438,595
|
311,251
|
||||||
Total Current Assets
|
3,621,331
|
4,549,441
|
||||||
PROPERTY AND EQUIPMENT, net
|
1,504,494
|
1,629,664
|
||||||
OTHER ASSETS
|
||||||||
Ginseng crops, non-current portion
|
807,958
|
1,585,878
|
||||||
Intangible assets-patents, net
|
-
|
6,447
|
||||||
Receivable from farmers
|
331,330
|
191,794
|
||||||
Investment in unconsolidated subsidiaries
|
24,406
|
40,001
|
||||||
Deferred income tax asset
|
-
|
170,044
|
||||||
Total Assets
|
$
|
6,289,519
|
$
|
8,173,269
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
||||||||
CURRENT LIABILITIES
|
||||||||
Loan payable to financial institution
|
$
|
319,035
|
$
|
316,211
|
||||
Note payable – building purchase
|
478,553
|
1,264,842
|
||||||
Notes payable – related parties
|
1,728,467
|
1,667,047
|
||||||
Accounts payable
|
1,781,551
|
1,068,765
|
||||||
Accrued expenses
|
376,755
|
288,873
|
||||||
Taxes payable
|
111,574
|
291,760
|
||||||
Payments received in advance
|
348,865
|
199,423
|
||||||
Total Current Liabilities
|
5,144,800
|
5,096,921
|
||||||
OTHER LIABILITIES
|
||||||||
Note payable – building purchase, net of current portion
|
797,588
|
-
|
||||||
Payable to farmers
|
809,279
|
549,841
|
||||||
Total Liabilities
|
6,751,667
|
5,646,762
|
||||||
STOCKHOLDERS’ EQUITY (DEFICIT)
|
||||||||
Common Stock, $0.001 par value, 50,000,000 shares authorized; 44,397,297 shares issued and outstanding at March 31, 2013 and June 30, 2012, respectively
|
44,398
|
44,398
|
||||||
Additional paid-in capital
|
7,488,237
|
7,370,043
|
||||||
Accumulated deficit
|
(8,830,981
|
)
|
(5,761,409
|
)
|
||||
Accumulated other comprehensive income
|
836,198
|
873,475
|
||||||
Total Stockholders’ Equity (Deficit)
|
(462,148)
|
2,526,507
|
||||||
Total Liabilities and Stockholders’ Equity (Deficit)
|
$
|
6,289,519
|
$
|
8,173,269
|
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
March 31,
|
March 31,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
REVENUES
|
$
|
497,943
|
$
|
902,807
|
$
|
2,690,662
|
$
|
3,147,262
|
||||||||
COSTS AND EXPENSES
|
||||||||||||||||
Cost of goods sold
|
247,837
|
724,217
|
2,188,237
|
2,478,869
|
||||||||||||
Selling, general and administrative expenses
|
144,161
|
346,013
|
846,554
|
1,498,073
|
||||||||||||
Impairment of ginseng crops and inventory
|
1,406,457
|
-
|
2,327,297
|
-
|
||||||||||||
Depreciation and amortization
|
45,791
|
15,806
|
150,803
|
46,338
|
||||||||||||
Total Costs and Expenses
|
1,844,246
|
1,086,036
|
5,512,891
|
4,023,280
|
||||||||||||
LOSS FROM OPERATIONS
|
(1,346,303
|
)
|
(183,229
|
)
|
(2,822,229
|
)
|
(876,018
|
)
|
||||||||
NON OPERATING INCOME (EXPENSE)
|
||||||||||||||||
Foreign exchange
|
-
|
4,992
|
-
|
30,236
|
||||||||||||
Interest expense
|
(73,207
|
)
|
(100,635
|
)
|
(247,343
|
)
|
(248,579
|
)
|
||||||||
Net Other Expense
|
(73,207
|
)
|
(95,643
|
)
|
(247,343
|
)
|
(218,343
|
)
|
||||||||
LOSS BEFORE INCOME TAXES
|
(1,419,510
|
)
|
(278,872
|
)
|
(3,069,572
|
)
|
(1,094,361
|
)
|
||||||||
PROVISION FOR INCOME TAXES
|
-
|
3,090
|
-
|
21,803
|
||||||||||||
NET LOSS
|
$
|
(1,419,510
|
)
|
$
|
(281,962
|
)
|
$
|
(3,069,572
|
)
|
$
|
(1,116,164
|
)
|
||||
OTHER COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||
Translation Adjustment
|
12,615
|
37,614
|
(14,660
|
)
|
102,017
|
|||||||||||
COMPREHENSIVE LOSS
|
$
|
(1,406,895
|
)
|
$
|
(244,348
|
)
|
$
|
(3,084,232
|
)
|
$
|
(1,014,147
|
)
|
||||
NET LOSS PER COMMON SHARE
|
||||||||||||||||
Basic
|
$
|
(0.03
|
)
|
$
|
(0.01
|
)
|
$
|
(0.07
|
)
|
$
|
(0.03
|
)
|
||||
Diluted
|
$
|
(0.03
|
)
|
$
|
(0.01
|
)
|
$
|
(0.07
|
)
|
$
|
(0.03
|
)
|
||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING –
|
||||||||||||||||
Basic
|
44,397,297
|
44,397,297
|
44,397,297
|
44,397,297
|
||||||||||||
Diluted
|
44,397,297
|
44,397,297
|
44,397,297
|
44,397,297
|
For the Nine Months Ended
|
||||||||
March 31,
|
||||||||
2013
|
2012
|
|||||||
Cash Flows from Operating Activities:
|
||||||||
Net loss
|
$
|
(3,069,572
|
)
|
$
|
(1,116,164
|
)
|
||
Adjustments to reconcile net loss to
|
||||||||
net cash from operating activities:
|
||||||||
Depreciation and amortization
|
150,803
|
46,338
|
||||||
Impairment of ginseng crops
|
2,327,297
|
-
|
||||||
Imputed interest
|
118,194
|
115,676
|
||||||
Changes in assets and liabilities:
|
||||||||
(Increase) decrease in accounts receivable
|
(1,160,790
|
)
|
(784,646
|
)
|
||||
(Increase) decrease in inventory
|
765,652
|
159,632
|
||||||
(Increase) decrease in prepaid expense
|
(127,344
|
)
|
313,259
|
|||||
(Increase) decrease in due from related parties
|
(36,891
|
)
|
92,880
|
|||||
(Increase) decrease in amounts due from farmers
|
(139,536
|
)
|
(131,243
|
)
|
||||
Increase (decrease) in accounts payable
|
712,786
|
425,623
|
||||||
Increase (decrease) in taxes payable
|
-
|
43,826
|
||||||
Increase (decrease) in receivables in advance
|
149,442
|
178,868
|
||||||
Increase (decrease) in accrued expenses
|
87,882
|
1,205
|
||||||
Increase (decrease) in payable to farmers
|
259,438
|
52,497
|
||||||
Net cash provided by (used in) operating activities
|
37,361
|
(602,249
|
)
|
|||||
Cash Flows from Investing Activities:
|
||||||||
Return of investment in unconsolidated businesses
|
15,862
|
(15,871
|
)
|
|||||
Purchase of property and equipment
|
(272
|
)
|
(64,730
|
)
|
||||
Net cash provided by (used in) investing activities
|
15,590
|
(80,601
|
)
|
|||||
Cash Flows from Financing Activities:
|
||||||||
Sales of common stock for cash
|
-
|
49,940
|
||||||
Proceeds from loans payable to related parties
|
61,420
|
626,533
|
||||||
Net cash provided by (used in) financing activities
|
61,420
|
676,473
|
||||||
Effect of exchange rate on cash
|
(50,488)
|
60,345
|
||||||
Increase (decrease) in cash
|
63,883
|
53,968
|
||||||
Cash at beginning of period
|
24,183
|
69,094
|
||||||
Cash at end of period
|
$
|
88,066
|
$
|
123,062
|
For the Nine Months Ended
|
||||||||
March 31,
|
||||||||
2013
|
2012
|
|||||||
Supplemental Disclosure of Cash Flow
|
||||||||
Information:
|
||||||||
Cash paid for:
|
||||||||
Interest
|
$
|
34,777
|
$
|
-
|
||||
Income taxes
|
-
|
-
|
March 31,
|
June 30,
|
|||||||
2013
|
2012
|
|||||||
Buildings and improvements
|
$
|
1,521,543
|
$
|
1,508,071
|
||||
Machinery and equipment
|
823,657
|
816,365
|
||||||
Motor vehicles
|
31,110
|
30,635
|
||||||
Office equipment
|
77,311
|
76,626
|
||||||
2,453,621
|
2,431,697
|
|||||||
Less accumulated depreciation
|
949,127
|
802,033
|
||||||
$
|
1,504,494
|
$
|
1,629,664
|
Nine Months Ended
|
||||||||
March 31,
|
||||||||
2013
|
2012
|
|||||||
Depreciation Expense
|
$
|
136,893
|
$
|
40,111
|
||||
Capitalized Inventory
|
-
|
69,005
|
||||||
Capitalized Ginseng Crops
|
2,286
|
51,594
|
||||||
$
|
139,179
|
$
|
160,710
|
March 31,
|
June 30,
|
|||||||
2013
|
2012
|
|||||||
Raw materials
|
$
|
185,785
|
$
|
1,590,531
|
||||
Finished goods
|
221,265
|
225,122
|
||||||
Operating supplies
|
5,502
|
4,252
|
||||||
$
|
412,552
|
$
|
1,819,905
|
March 31,
2013
|
June 30,
2012
|
|||||||
Beginning Crop Costs
|
$
|
2,495,543
|
$
|
2,930,278
|
||||
Currency Conversion Adjustment to Beginning Balance
|
-
|
47,603
|
||||||
Capitalized Costs During Year:
|
||||||||
Wages
|
-
|
59,747
|
||||||
Fertilizer
|
-
|
463
|
||||||
Field clearing and cultivation
|
98,379
|
-
|
||||||
Farmer lease fee net of management fee
|
(82,014
|
)
|
(95,515
|
)
|
||||
Labor
|
371,725
|
-
|
||||||
Irrigation
|
35,649
|
-
|
||||||
Depreciation
|
2,286
|
5,025
|
||||||
Other
|
1,459
|
-
|
||||||
Total Capitalized Costs
|
427,484
|
(30,280
|
)
|
|||||
Less:
|
||||||||
Cost of crops harvested
|
(1,192,374
|
)
|
(452,058
|
)
|
||||
Impairment adjustment relating to typhoon. See Note F.
|
(922,695
|
)
|
-
|
|||||
(2,115,069
|
)
|
(452,058
|
)
|
|||||
Ending Crop Costs
|
807,958
|
2,495,543
|
||||||
Less: Current portion
|
-
|
909,665
|
||||||
Non-Current Portion of Crop Costs
|
$
|
807,958
|
$
|
1,585,878
|
March 31,
|
June 30,
|
|||||||
2013
|
2012
|
|||||||
Cost
|
$
|
17,923
|
$
|
17,362
|
||||
Less accumulated amortization
|
(17,923
|
)
|
(10,915
|
)
|
||||
$
|
-
|
$
|
6,447
|
March 31,
|
June 30,
|
|||||||
2013
|
2012
|
|||||||
Timing difference related to inventory provisions
|
$
|
-
|
$
|
170,044
|
||||
Net operating losses
|
1,232,750
|
1,126,540
|
||||||
Valuation allowance
|
(1,232,750
|
)
|
(1,126,540
|
)
|
||||
Deferred tax asset
|
$
|
-
|
$
|
170,044
|
March 31,
|
June 30,
|
|||||||
2013
|
2012
|
|||||||
International (China)
|
$
|
3,597,000
|
$
|
748,142
|
||||
United States
|
1,334,000
|
1,112,938
|
||||||
$
|
4,931,000
|
$
|
1,861,080
|
For the Nine Months Ended
March 31,
|
||||||||
2013
|
2012
|
|||||||
International (China)
|
$
|
(2,848,121
|
)
|
$
|
(710,874
|
)
|
||
United States
|
(221,451
|
)
|
(383,487
|
)
|
||||
$
|
(3,069,572
|
)
|
$
|
(1,094,361
|
)
|
2013
|
2012
|
|||||||
Federal statutory rate
|
34.0
|
%
|
34.0
|
%
|
||||
State income taxes, net of federal benefit
|
(3.3
|
)
|
(3.3
|
)
|
||||
Valuation allowance
|
(30.7
|
)
|
(30.7
|
)
|
||||
Effective tax rate
|
-
|
%
|
-
|
%
|
Parent
Company
|
Ginseng
|
Wine
|
Total
|
|||||||||||||
Revenues
|
$
|
-
|
$
|
2,690,662
|
$
|
-
|
$
|
2,690,662
|
||||||||
Net loss
|
(221,451
|
)
|
(1,377,907
|
)
|
(1,470,214
|
)
|
(3,069,572
|
)
|
||||||||
Total assets
|
210,096
|
6,066,093
|
13,330
|
6,289,519
|
||||||||||||
Other significant items:
|
||||||||||||||||
Depreciation and amortization
|
1,703
|
102,498
|
46,602
|
150,803
|
||||||||||||
Interest expense
|
38,351
|
188,910
|
20,082
|
247,343
|
||||||||||||
Expenditures for fixed assets
|
-
|
272
|
-
|
272
|
||||||||||||
Impairment of ginseng crops and inventory
|
-
|
922,695
|
1,404,602
|
2,327,297
|
Parent
Company
|
Ginseng
|
Wine
|
Total
|
|||||||||||||
Revenues
|
$
|
-
|
$
|
3,147,262
|
$
|
-
|
$
|
3,147,262
|
||||||||
Net loss
|
(335,487
|
)
|
(759,686
|
)
|
(20,991
|
)
|
(1,116,164
|
)
|
||||||||
Total assets
|
159,110
|
7,649,219
|
2,470,177
|
10,278,506
|
||||||||||||
Other significant items:
|
||||||||||||||||
Depreciation and amortization
|
911
|
44,765
|
662
|
46,338
|
||||||||||||
Interest expense
|
50,821
|
183,192
|
14,566
|
248,579
|
||||||||||||
Expenditures for fixed assets
|
-
|
64,730
|
-
|
64,730
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
●
|
On September 8, 2003, we and Jilin Dunhua Huaxing Ginseng Industry Co, Ltd. (“Dunghua Huaxing ”, a PRC company) jointly and legally established Yanbian Huaxing as a joint venture company, in which we held 25% equity interest and Dunhua Huaxing held 75% equity interest. We received a certificate of approval issued by the competent local approval authority on September 8, 2003 and a business license issued by the competent local registration authority on September 16, 2003. On November 24, 2004, we and Dunhua Huaxing adjusted the registered capital of Yanbian Huaxing and our respective shareholding percentage in Yanbian Huaxing, and, as a result, we then held 55% equity interest in Yanbian Huaxing. Subsequently in August, 2005, we acquired the remaining 45% equity interest from Dunhua Huaxing at a purchase of $164,000, and then we hold 100% equity interest in Yanbian Huaxing and changed Yanbian Huaxing from a joint venture into a wholly foreign owned enterprise (“ WFOE ”). The purchase prices were determined based upon the registered capital of Yanbian Huaxing of $364,000. In October 2005, we increased the registered capital of Yanbian Huaxing by putting in an additional $250,000 in order to meet the requirement for foreign owned enterprise requirement for tax purpose. Now the registered capital of Yanbian Huaxing is $614,000. We have applied with the relevant PRC approval and registration authorities for each of the aforesaid changes and have obtained all applicable approvals and registrations for such changes, including a certificate of approval issued by the local approval authority and a renewed business license issued by the local registration authority certifying Yanbian Huaxing as a WFOE lawfully owned by us. Yanbian Huaxing is operated to plant ginseng and our revenue in the past was mainly from the sales of ginseng produced and sold by Yanbian Huaxing. With the shift of business focus to canned ginseng juice, we have started to reserve the high quality grown ginseng for ginseng beverage production and sold only those not qualified to make ginseng juice. However, due to excessive rain in the year ended June 30, 2011, 90% of our grown ginseng was oxidized and sold to the market. During the year ended June 30, 2012, we were able to reserve 20% of our grown ginseng for ginseng juice production.
|
●
|
On May 31, 2006, we acquired 100% equity interest in Jilin Ganzhi at a price of $95,691. We received a certificate of approval issued by the competent local approval authority on May 31, 2006 and a business license issued by the competent local registration authority on June 19, 2006. Subsequently, on September 26, 2007 and August 31, 2008, we increased Jilin Ganzhi’s registered capital by $50,000 and $20,000, respectively. Now the registered capital of Jilin Ganzhi is $100,000. We applied with the relevant PRC approval and registration authorities for each of the aforesaid capital increases and have obtained all applicable approvals and registrations for such changes, including a renewed certificate of approval issued by the local approval authority and a renewed business license issued by the local registration authority certifying Jilin Ganzhi as a WFOE lawfully owned by us. Jilin Ganzhi is operated to process ginseng and produce canned ginseng juice. Jilin Ganzhi started production of canned ginseng juice in the three months ended December 31, 2010.
|
●
|
On January 15, 2008, we acquired 100% equity interest in Tonghua Linyuan from two PRC individual shareholders at a price of $1,000,000. The price was determined by arm’s-length negotiations based upon the appraised net asset value of Tonghua Linyuan at the time of acquisition which was approximately $1,332,248. We received a certificate of approval issued by the competent local approval authority on January 15, 2008 and a business license issued by the competent local registration authority on April 1, 2008 certifying Tonghua Linyuan as a WFOE lawfully owned by us with a registered capital of RMB 10,330,000. However, the WFOE certificate is conditioned on us injecting the registered capital into Tonghua Linyuan on or before June 15, 2012. Because we failed to satisfy this condtion, Tonghua Linyuan lost its status as a WFOE beginning June 15, 2012. Tonghua Linyuan is operated to plant grapes and produce wine. However, recent harvests from Tonghua Linyuan showed poor quality for wine production, which indicates that the vineyard is no longer suitable to grow grapes for grape juice and wine production. Therefore, we have decided not to renew our lease with the Chinese government when it expires in 2013 and, going forward, we will purchase grapes from the open market. In addition, Tonghua Linyuan has contracted for the production of wine with a winery producer whereby Tonghua Linyuan provides the producer with grape juice and supplies and producer charges processing fee per bottle. Tonghua Linyuan started wine production through a winery producer in March 2011 and the sale of wine is conducted through Jilin Huamei and Hong Kong Huaxia.
|
●
|
We incorporated Jilin Huamei as a WFOE on October 17, 2005. We received a certificate of approval issued by the competent local approval authority on October 17, 2005 and a business license issued by the competent local registration authority on October 19, 2005 certifying Jilin Huamei as a WFOE lawfully owned by us. The registered capital of Jilin Huamei is $200,000. Jilin Huamei operates as a sales department for our canned ginseng juice and wine, which are produced by our other subsidiaries. We plan to recruit one general distributor for our canned ginseng juice and one general distributor for our wine in each big city in China through Jilin Huamei. As of the date of this filing, Jilin Huamei has signed 20 general distributors for our ginseng beverage and one general distributor for our wine, as well as established one sales branch office in Jiangsu Province. We commenced sales of ginseng beverage in October 2010 and Jilin Huamei started generating revenue in November 2010.
|
●
|
Hong Kong Huaxia was incorporated in Hong Kong on March 18, 2012 to sell health and specialized local products and it began operations in April 2012. The registered capital of Hong Kong Huaxia is 1 million Hong Kong dollars (approximately $128,838), 1% of which is payable and paid upon registration. Hong Kong Huaxia is focused on recruiting distributors exporting our ginseng juice products and wine to other countries in Southeast Asia. As a part of our adjusted marketing strategy, Hong Kong Huaxia is focused on sales of our ginseng juice and wine in the Asia Market while Jinlin Huamei is focused on domestic sales. In addition, Hong Kong Huaxia sells other famous local products from Northeast China such as ginseng, deer antler velvet, deer products, black fungus, mushroom, pine seeds, pine flower powder. It is currently recruiting distributors for the Asia Market in addition to its online shopping platform for direct sales of our ginseng juice and wine.
|
o
|
Fresh Ginseng: For pharmaceutical, health supplement, cosmetic industry and fresh consumption.
|
|
o
|
Dry Ginseng: Dried form for pharmaceutical and health supplement consumption.
|
o
|
Ginseng Seeds: Selling of ginseng seeds.
|
o
|
Ginseng Seedling: Selling of ginseng seedling.
|
o
|
Ganzhi Asian Ginseng Beverage
|
o
|
Ganzhi American Ginseng Beverage
|
o
|
Bingqing Ice Wine
|
o
|
Pearl in the Snow (Red)
|
o
|
Linyuan Hong Wine (Red)
|
For the three months Ended March 31,
|
Year to Year Comparison
|
For the nine months Ended March 31,
|
Year to Year Comparison
|
|||||||||||||||||||||||||||||
2013
|
2012
|
Increase /(Decrease)
|
Percentage
change
|
2013
|
2012
|
Increase /(Decrease)
|
Percentage
change
|
|||||||||||||||||||||||||
Revenues
|
$
|
497,943
|
$
|
902,807
|
$
|
(404,864
|
)
|
(44.85
|
)%
|
$
|
2,690,662
|
$
|
3,147,262
|
$
|
(456,600
|
)
|
(14.51
|
)%
|
||||||||||||||
Cost of Goods Sold
|
247,837
|
724,217
|
(476,380
|
)
|
(67.78
|
)%
|
2,188,237
|
2,478,869
|
(290,632
|
)
|
(11.72
|
)%
|
||||||||||||||||||||
Selling, general and administrative expenses
|
144,161
|
346,013
|
(201,852
|
)
|
(58.34
|
)%
|
846,554
|
1,498,073
|
(651,519
|
)
|
(43.49
|
)%
|
||||||||||||||||||||
Impairment of ginseng crops and inventory
|
1,406,457
|
-
|
1,406,457
|
100
|
%
|
2,327,297
|
-
|
2,327,297
|
100
|
%
|
||||||||||||||||||||||
Depreciation and amortization
|
45,791
|
15,806
|
29,985
|
189.71
|
%
|
150,803
|
46,338
|
(104,465
|
)
|
225.44
|
%
|
|||||||||||||||||||||
Interest expense
|
73,207
|
100,635
|
(27,428
|
)
|
(27.25
|
)%
|
247,343
|
248,579
|
(1,236
|
)
|
(0.50
|
)%
|
||||||||||||||||||||
Foreign exchange
|
-
|
4,992
|
4,992
|
(100.00
|
)%
|
-
|
(30,236
|
)
|
30,236
|
(100.00
|
)%
|
|||||||||||||||||||||
Provision for income taxes
|
0
|
3,090
|
(3,090
|
)
|
(100.00
|
)%
|
-
|
21,803
|
(21,803
|
)
|
(100.00
|
)%
|
||||||||||||||||||||
Net Loss
|
$
|
(1,419,510
|
)
|
$
|
(281,962
|
)
|
$
|
1,137,548
|
(403.44
|
)%
|
$
|
(3,069,572
|
)
|
$
|
(1,116,164
|
)
|
$
|
1,953,408
|
175.01
|
%
|
March 31,
|
March 31,
|
2013-2012
|
||||||||||||||||||||||
2013
|
% of total
|
2012
|
% of total
|
Dollar
|
||||||||||||||||||||
Products
|
Revenue
|
revenue
|
Revenue
|
Revenue
|
Variance
|
% change
|
||||||||||||||||||
Ginseng (production)
|
$
|
339,458
|
68
|
%
|
0
|
-
|
$
|
339,458
|
-
|
|||||||||||||||
Ginseng (purchase)
|
$
|
139,576
|
28
|
%
|
821,938
|
91
|
%
|
$
|
(682,362
|
)
|
(83
|
%)
|
||||||||||||
Wine
|
$
|
2,631
|
1
|
%
|
9,337
|
1
|
%
|
$
|
(6,706
|
)
|
(72
|
%)
|
||||||||||||
Ginseng Beverage Production
|
$
|
2,066
|
0
|
%
|
71,532
|
8
|
%
|
$
|
(69,466
|
)
|
(97
|
%)
|
||||||||||||
Aoweisi Cosmetic Products
|
$
|
14,212
|
3
|
%
|
0
|
-
|
$
|
14,212
|
-
|
|||||||||||||||
Total
|
$
|
497,943
|
100
|
$
|
902,807
|
100
|
%
|
$
|
(404,864
|
)
|
(45
|
%)
|
March 31,
|
March 31,
|
2013-2012
|
||||||||||||||||||||||
2013
|
% of
|
2012
|
% of
|
Dollar
|
||||||||||||||||||||
Revenue
|
total revenue
|
Revenue
|
total Revenue
|
Variance
|
% change
|
|||||||||||||||||||
Ginseng (production)
|
$
|
1,407,398
|
52
|
%
|
$
|
858,202
|
27
|
$
|
549,196
|
64
|
%
|
|||||||||||||
Ginseng (purchase)
|
1,184,274
|
44
|
%
|
2,130,843
|
68
|
$
|
(946,569
|
)
|
(44
|
%)
|
||||||||||||||
Wine
|
2,609
|
0
|
%
|
10,613
|
0
|
$
|
(8,004
|
)
|
(75
|
%)
|
||||||||||||||
Ginseng Beverage Production
|
14,280
|
1
|
%
|
147,604
|
5
|
$
|
(133,324
|
)
|
(90
|
%)
|
||||||||||||||
Aoweisi Cosmetic Products
|
82,101
|
3
|
%
|
0
|
82,101
|
-
|
||||||||||||||||||
Total
|
$
|
2,690,662
|
100
|
3,147,262
|
100
|
$
|
(456,600
|
)
|
(15
|
%)
|
March 31, 2013
|
% of total
|
March 31, 2012
|
% of total
|
2103-2012
|
||||||||||||||||||||
Cost of
goods sold
|
cost of
goods sold
|
Cost of
goods sold
|
cost of
goods sold
|
Dollar
Variance
|
% change
|
|||||||||||||||||||
Ginseng (production)
|
$
|
137,176
|
55
|
%
|
0
|
0
|
137,176
|
-
|
||||||||||||||||
Ginseng (purchase)
|
107,436
|
43
|
%
|
673,503
|
93
|
$
|
(566,067
|
)
|
(84
|
)%
|
||||||||||||||
Wine
|
1,092
|
1
|
%
|
5,445
|
1
|
$
|
(4,353
|
)
|
(80
|
)%
|
||||||||||||||
Ginseng Beverage Production
|
926
|
0
|
%
|
45,269
|
6
|
$
|
(44,343
|
)
|
(98
|
)%
|
||||||||||||||
Aoweisi Cosmetic Products
|
1,207
|
1
|
%
|
-
|
-
|
$
|
1,207
|
0
|
%
|
|||||||||||||||
Total
|
$
|
247,837
|
100
|
724,217
|
100
|
$
|
(476,830
|
)
|
(66
|
)%
|
March 31, 2013
|
% of total
|
March 31, 2012
|
% of total
|
2013-2012
|
||||||||||||||||||||
Cost of
goods sold
|
cost of
goods sold
|
Cost of
goods sold
|
cost of
goods sold
|
Dollar
Variance
|
% change
|
|||||||||||||||||||
Ginseng (production)
|
$
|
1,104,052
|
50
|
$
|
554,756
|
22
|
$
|
549,296
|
99
|
%
|
||||||||||||||
Ginseng (purchase)
|
1,062,739
|
49
|
1,820,432
|
73
|
$
|
(757,693
|
)
|
(42
|
)%
|
|||||||||||||||
Wine
|
1,396
|
0
|
6,624
|
0
|
$
|
(5,228
|
)
|
(79
|
)%
|
|||||||||||||||
Ginseng Beverage Production
|
6,344
|
0
|
97,057
|
5
|
$
|
(90,713
|
)
|
(93
|
)%
|
|||||||||||||||
Aoweisi Cosmetic Products
|
13,706
|
1
|
0
|
0
|
$
|
13,706
|
0
|
%
|
||||||||||||||||
Total
|
$
|
2,188,237
|
100
|
2,478,869
|
100
|
$
|
(290,632
|
)
|
(12
|
)%
|
March 31,
2013
|
March 31,
2012
|
|||||||
Net cash provided by(used in) operating activities
|
$
|
37,361
|
$
|
(602,249
|
)
|
|||
Net cash provided by(used )in investing activities
|
$
|
15,590
|
$
|
(80,601
|
)
|
|||
Net cash provided by financial activities
|
$
|
61,420
|
$
|
676,473
|
1.
|
Type of Loan: Short Term Agriculture Loan;
|
2.
|
Loan Purpose: Planting;
|
3.
|
Loan Amount: Principal of 2,000,000 RMB (approximately USD $317,748) with an annual interest of 6.325%;
|
|
4.
|
Loan Period: From February 4, 2002 to February 4, 2003; Repayment due date was February 4, 2003;
|
5.
|
Security: The loan is secured by the assets of Tonghua Linyuan including 14 carbon-steel storage cans; 16 high-speed steel storage cans and 150 tons of grape juice.
|
●
|
Parties: Jilin Ganzhi Ginseng Products Co., Ltd (“Jilin Ganzhi”) and Meihekou City Rural Credit Union (“Meihekou Credit Union”);
|
●
|
Meihekou Credit Union granted a loan of 8 million RMB (approximately USD $ 1,264,842 ) to Jilin Ganzhi to be used to pay off the previous 8 million RMB bank loan and to generate a new 8 million RMB bank loan
|
●
|
The term of the new loan is 24 months from August 30, 2012 to August 29, 2014.
|
●
|
The loan carries a benchmark interest rate is the rate announced by the People’s Bank of China as an interest rate of same type and class of loans at the date of the loan and changes with the adjustment of national bank rate. Meihekou Credit Union calculates the interest on a monthly basis applying this annual floating rate which is payable on the 21st day of each month. We paid interest of 94,127 RMB (about USD $ 14,838) on August 21, 2012. However, from September to March 31, 2012, we have not paid interest and we plan to pay all outstanding interest when we have sufficient cash.
|
●
|
Repay the principal by installments according to the following repayment plan: principal payment of RMB1M (approximately USD $159,096) on September 20, 2012, RMB 1M (approximately USD $159,096) on August 29, 2013, RMB 1M (approximately USD $159,096) on December 20, 2013 and RMB 5M (approximately USD $795,481) on August 29, 2014. The payment due in September 2012 was not made by the Company and the note was thus in default. In order to remedy the default, the Company applied for an extension of payment with Meihekou Credit Union. On April 8, 2013, Meihekou Credit Union and the Company entered into an oral agreement to extend the due date of the payment of RMB1M to December 20, 2013.
|
●
|
RMB 1M is a relatively small portion of the new 8 million RMB bank loan, which the Company plans to pay off on December 20, 2013. Even if the Company is not able to pay off the note payable of RMB 1M, the Company plans to apply for further extension or refinance a new loan of RMB 1M with Meihekou Credit Union.
|
●
|
In addition to obtaining and refinancing bank loans, the Company is exploring other possible ways to raise capital in the future, including but not limited to: 1) obtaining loans from shareholders or other individuals; 2) applying for an agriculture grant of up to RMB 5,000,000 (approximately $800,000) from Jilin province, which is a governmental reward to support qualified agriculture companies; and/or 3) pursuing additional financing in the form of debt, equity or convertible security offerings based on the evaluation of the Company’s intangible assets such as its registered patent on the drink formula of its ginseng beverage. However, there is no assurance that we will successfully obtain the agriculture grant, or obtain enough capital from shareholders or other individuals, or obtain such additional financing through the debt and equity markets at acceptable terms to us, or at all.
|
Item 3.
|
Quantitative and Qualitative Disclosure about Market Risk
|
Item 4.
|
Controls and Procedures.
|
(a)
|
Evaluation of disclosure controls and procedures
|
(b)
|
Management’s assessment of internal control over financial reporting
|
–
|
As of June 30, 2012, there was a lack of accounting personnel with the requisite knowledge of Generally Accepted Accounting Principles (“GAAP”) in the U.S. and financial reporting requirements of the Securities and Exchange Commission;
|
–
|
As of June 30, 2012, there were insufficient written polities and procedures to ensure the correct application of accounting and financial reporting with respect to the current requirements of GAAP and SEC disclosure requirements.
|
–
|
As of June 30, 2012, there was a lack of segregation of duties, in that we only had one person performing all accounting related duties;
|
–
|
As of June 30, 2012, there was no independent audit committee.
|
(c)
|
Changes in internal control over financial reporting
|
Item 1.
|
Legal Proceedings.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
(a)
|
Unregistered Sales of Equity Securities.
|
(b)
|
Use of Proceeds.
|
Item 3.
|
Defaults Upon Senior Securities.
|
Item 4.
|
Mine Safety Disclosures.
|
Item 5.
|
Other Information.
|
Item 6.
|
Exhibits.
|
(a)
|
Exhibits.
|
Exhibit No.
|
Document Description
|
|
10.1
|
Description of the oral agreement between Jilin Ganzhi and Meihekou Credit Union dated April 8, 2013.
|
|
31.1
|
CERTIFICATION of CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.
|
|
31.2
|
CERTIFICATION of CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.
|
|
32.1
|
CERTIFICATION of CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEYACT OF 2002.
|
|
32.2
|
CERTIFICATION of CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEYACT OF 2002.
|
Title
|
Name
|
Date
|
Signature
|
|||
Principal Executive Officer
|
Changzhen Liu
|
June 25, 2013
|
/s/ Changzhen Liu
|
SIGNATURE
|
NAME
|
TITLE
|
DATE
|
|||
/s/ Changzhen Liu
|
Changzhen Liu
|
Principal Executive Officer and Director
|
June 25, 2013
|
|||
/s/ Ren Ying
|
Ren Ying
|
Principal Financial Officer and
Principal Accounting Officer
|
June 25, 2013
|
China Ginseng Holdings, Inc.
|
|||
Dated: June 25, 2013
|
By:
|
/s/ Changzhen Liu
|
|
Changzhen Liu
|
|||
Principal Executive Officer
|
Dated: June 25, 2013
|
By:
|
/s/ Ren Ying
|
|
Ren Ying
|
|||
Principal Financial Officer and
Principal Accounting Officer
|
China Ginseng Holdings, Inc.
|
|||
Dated: June 25, 2013
|
By:
|
/s/ Changzhen Liu
|
|
Changzhen Liu
|
|||
Principal Executive Officer
|
Dated: June 25, 2013
|
By:
|
/s/ Ren Ying
|
|
Ren Ying
|
|||
Principal Financial Officer and
Principal Accounting Officer
|
Provision for Income Taxes
|
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2013
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Provision For Income Taxes [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROVISION FOR INCOME TAXES | NOTE L – PROVISION FOR INCOME TAXES
Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.
Deferred tax assets consist of the following at:
The deferred tax asset was the result of an inventory provision and related reserve of $171,110 (RMB 1,075,510). Under Chinese tax laws, the Company is not entitled to a deduction for the provision until the inventory is completely discarded. This deferred tax asset was utilized by the Company in 2013 as the inventory was sold by the Company.
The Company has a net operating loss carry forward as follows:
The operating losses are available to offset future taxable income. The China net operating loss carryforwards can only be carried forward for five years and will commence expiring in the year 2013. The Company does not file a consolidated tax return in China. Therefore, the profitability of the individual Chinese companies will determine the utilization of the carryforward losses. The U.S. carryforward losses are available to offset future taxable income for the succeeding 20 years and commence expiring in the year 2027.
The components of income (loss) before taxes are as follows:
A reconciliation of the Company’s effective tax rate as a percentage of income before taxes and Federal statutory rate for the nine months ended March 31, 2013 and 2012, respectively, are as follows:
|
Subsequent Events (Details)
|
9 Months Ended | 0 Months Ended | |
---|---|---|---|
Mar. 31, 2013
USD ($)
|
Mar. 31, 2013
CNY
|
Apr. 08, 2013
Subsequent Event [Member]
|
|
Subsequent Events (Textual) | |||
Loan amount for purchase of office and warehouse facilities | $ 1,276,141 | 8,000,000 | |
Office and warehouse loan to be repay in September 2012 | $ 159,517 | 1,000,000 | |
Extended payment date for loan installment | Dec. 20, 2013 |
Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (USD $)
|
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
Mar. 31, 2013
|
Mar. 31, 2012
|
|
Statements Of Operations and Comprehensive Loss [Abstract] | ||||
REVENUES | $ 497,943 | $ 902,807 | $ 2,690,662 | $ 3,147,262 |
COSTS AND EXPENSES | ||||
Cost of goods sold | 247,837 | 724,217 | 2,188,237 | 2,478,869 |
Selling, general and administrative expenses | 144,161 | 346,013 | 846,554 | 1,498,073 |
Impairment of ginseng crops | 1,406,457 | 2,327,297 | ||
Depreciation and amortization | 45,791 | 15,806 | 150,803 | 46,338 |
Total Costs and Expenses | 1,844,246 | 1,086,036 | 5,512,891 | 4,023,280 |
LOSS FROM OPERATIONS | (1,346,303) | (183,229) | (2,822,229) | (876,018) |
NON OPERATING INCOME (EXPENSE) | ||||
Foreign exchange | 4,992 | 30,236 | ||
Interest expense | (73,207) | (100,635) | (247,343) | (248,579) |
Net Other Expense | (73,207) | (95,643) | (247,343) | (218,343) |
LOSS BEFORE INCOME TAXES | (1,419,510) | (278,872) | (3,069,572) | (1,094,361) |
PROVISION FOR INCOME TAXES | 3,090 | 21,803 | ||
NET LOSS | (1,419,510) | (281,962) | (3,069,572) | (1,116,164) |
OTHER COMPREHENSIVE INCOME (LOSS) | ||||
Translation Adjustment | 12,615 | 37,614 | (14,660) | 102,017 |
COMPREHENSIVE LOSS | $ (1,406,895) | $ (244,348) | $ (3,084,232) | $ (1,014,147) |
NET LOSS PER COMMON SHARE | ||||
Basic | $ (0.03) | $ (0.01) | $ (0.07) | $ (0.03) |
Diluted | $ (0.03) | $ (0.01) | $ (0.07) | $ (0.03) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - | ||||
Basic | 44,397,297 | 44,397,297 | 44,397,297 | 44,397,297 |
Diluted | 44,397,297 | 44,397,297 | 44,397,297 | 44,397,297 |
Ginseng Crops
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2013
|
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Ginseng Crops [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GINSENG CROPS | NOTE E – GINSENG CROPS
The Company’s business, prior to June 30, 2009, was primarily to harvest and sell fresh and dried Ginseng. The growth period takes approximately 5 to 6 years before harvest can commence and up to 8 years for improved harvest and seedling yields. The Company is changing its business model to utilize the harvested Ginseng to manufacture Ginseng juice and other Ginseng beverages. It commenced the juice operation in August 2011. The Company plants selected areas each year and tracks the costs expended each year by planting area. The Chinese government owns all the land in China.
Currently, the Company has land grants from the Chinese government for approximately 1,500 hectors of land (approximately 3,705 acres) to grow Ginseng which were awarded in April and May 2005. These grants are for 20 years and the management of the Company believes that the grants will be renewed as the grants expire in different areas. However, there are no assurances that the Chinese government will continue to renew these grants in the future. The planting of new Ginseng is dependent upon the Company’s cash flow and its ability to raise working capital.
The Company had planted at June 30, 2012 approximately 173,000 square meters of land. The Company plans to plant, over the next 5 years, 100,000 square meters, representing approximately 20,000 square meters per year. In the succeeding five years, the Company plans to harvest approximately 60,945 square meters of Ginseng. The harvest plan by year is as follows: 2014-58,281 and 2017-2,664. As discussed in Note F, in August of 2012, a typhoon damaged approximately 112,000 square meters of ginseng crops.
An analysis of ginseng crop costs for each of the applicable periods is as follows:
The cost of harvest is calculated by reference to the planting area and the detailed costs maintained for each planting area. Based upon the square meters planted by area, a square meter cost is calculated and applied to the square meters harvested, rendering a cost of harvest.
For each financial reporting period, the Ginseng crop harvested is valued at net realizable value. If the net realizable value is lower than carrying value, a write down is made for the difference. |
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Inventory (Tables)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2013
|
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Inventory [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventory |
|
Concentrations
|
9 Months Ended |
---|---|
Mar. 31, 2013
|
|
Concentrations [Abstract] | |
CONCENTRATIONS | NOTE M – CONCENTRATIONS
In the nine months ended March 31, 2013, three customers accounted for 47% of revenues.
In the nine months ended March 31, 2012, two customers accounted for 48% of revenues.
At March 31, 2013, two customers accounted for 26% of the accounts receivable.
At June 30, 2012, one customer accounted for 44% of the accounts receivable. |
Provision for Income Taxes (Details Textual)
|
9 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2013
USD ($)
|
Mar. 31, 2013
CNY
|
Mar. 31, 2013
China [Member]
|
Mar. 31, 2013
U.S. [Member]
|
|
Provision for Income Taxes (Textual) | ||||
Period to carry forward net operating losses | 5 years | 20 years | ||
Operating loss expiration year | Commence expiring in the year 2013. | Commence expiring in the year 2027. | ||
Deferred tax asset inventory provision and related reserve | $ 171,110 | 1,075,510 |
Agreements with Farmers (Details)
|
1 Months Ended | |||
---|---|---|---|---|
Jan. 31, 2008
USD ($)
kg
|
Jan. 31, 2008
CNY
|
Mar. 31, 2013
USD ($)
|
Jun. 30, 2012
USD ($)
|
|
Agreements with Farmers (Textual) | ||||
Per square meter price for leases of Ginseng land | $ 1.50 | 10 | ||
Management fee paid to farmers per square meter per year | 0.50 | 4 | ||
Production of crop per square meter required in kg's | 2 | 2 | ||
Payment condition of the harvested crop to the farmers | If the harvest is below 2kg per square meter, the difference will be deducted from the total payment for Ginseng purchased. If the harvest produces more that 2kg per square meter, the Company pays approximately $3.00 for every extra kilo. | If the harvest is below 2kg per square meter, the difference will be deducted from the total payment for Ginseng purchased. If the harvest produces more that 2kg per square meter, the Company pays approximately $3.00 for every extra kilo. | ||
Price per kilo for every extra kilo production | 3.00 | |||
Receivable from the farmers for the rental income | 331,330 | 191,794 | ||
Payable to farmers | $ 809,279 | $ 549,841 |
Provision for Income Taxes (Tables)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2013
|
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Provision For Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of deferred tax assets |
|
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Schedule of net operating loss carry forward |
|
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Schedule of components of income before taxes |
|
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Schedule of effective tax rate reconciliation as a percentage of income before taxes and Federal statutory rate |
|
Intangible Assets (Tables)
|
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2013
|
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Intangible Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Schedule of cost and related amortization of Intangible assets |
|
Provision for Income Taxes (Details 2) (USD $)
|
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
Mar. 31, 2013
|
Mar. 31, 2012
|
|
Schedule of components of income before taxes | ||||
International (China) | $ (2,848,121) | $ (710,874) | ||
United States | (221,451) | (383,487) | ||
Income before taxes | $ (1,419,510) | $ (278,872) | $ (3,069,572) | $ (1,094,361) |
Investment in Unconsolidated Subsidiaries (Details)
|
1 Months Ended | 3 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2011
Company
|
Dec. 31, 2010
Changchun Zhongshen Beverage Co. Ltd. [Member]
USD ($)
|
Dec. 31, 2010
Changchun Zhongshen Beverage Co. Ltd. [Member]
CNY
|
Sep. 30, 2011
Jiliang Beverage Investment Management Co., Ltd. [Member]
USD ($)
|
Sep. 30, 2011
Jiliang Beverage Investment Management Co., Ltd. [Member]
CNY
|
Mar. 31, 2013
Jiliang Beverage Investment Management Co., Ltd. [Member]
CNY
|
|
Investment in Unconsolidated Subsidiaries (Textual) | ||||||
Amount invested in non-controlling companies | $ 24,342 | 153,000 | $ 15,952 | 100,000 | ||
Percentage of interest in non-controlling company | 17.00% | 17.00% | ||||
Amount require to invest for 10% interest | 79,759 | 500,000 | ||||
Percentage of interest to be transferred under agreement for investment | 10.00% | 10.00% | ||||
Amount of invested amount returned after termination of agreement | 100,000 | |||||
Number of companies in agreement | 3 |
Intangible Assets (Details Textual) (USD $)
|
9 Months Ended | |
---|---|---|
Mar. 31, 2013
|
Jun. 30, 2012
|
|
Intangible Assets (Textual) | ||
Amortization expense of intangible assets | $ 13,910 | $ 6,227 |
Concentrations (Details)
|
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2013
Customers
|
Mar. 31, 2012
Customers
|
Jun. 30, 2012
Customers
|
|
Concentrations (Textual) | |||
Percentage revenue accounted by major customer | 47.00% | 48.00% | |
Number of major customer accounted for revenues | 3 | 2 | |
Percentage of accounts receivable accounted by major customer | 26.00% | 44.00% | |
Number of major customer accounted for accounts receivable | 2 | 1 |
Property and Equipment (Details 1) (USD $)
|
9 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2013
|
Jun. 30, 2012
|
|
Schedule of depreciation for property and equipment | ||
Depreciation Expense | $ 136,893 | $ 40,111 |
Capitalized Inventory | 69,005 | |
Capitalized Ginseng Crops | 2,286 | 51,594 |
Depreciation | $ 139,179 | $ 160,710 |
Related Party Transactions (Details) (USD $)
|
9 Months Ended | ||
---|---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
Jun. 30, 2012
|
|
Related Party Transactions (Textual) | |||
Notes payable - related parties | $ 1,728,467 | $ 1,667,047 | |
Imputed interest | 118,194 | 115,676 | |
Receivables from related parties | $ 189,285 | $ 152,394 | |
Receivable [Member]
|
|||
Related Party Transactions (Textual) | |||
Concentration risk, percentage | 66.00% | ||
Concentration risk, number of individuals | 4 | ||
Loan Concentration Risk [Member]
|
|||
Related Party Transactions (Textual) | |||
Concentration risk, percentage | 30.00% | ||
Concentration risk, number of individuals | 2 | ||
Loan Concentration Risk [Member] | Chairman [Member]
|
|||
Related Party Transactions (Textual) | |||
Concentration risk, percentage | 18.00% |
Ginseng Crops (Tables)
|
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Mar. 31, 2013
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Ginseng Crops [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of analysis of ginseng crop costs |
|
Presentation, Nature of Business, and Going Concern
|
9 Months Ended |
---|---|
Mar. 31, 2013
|
|
Presentation, Nature Of Business, and Going Concern [Abstract] | |
PRESENTATION, NATURE OF BUSINESS, AND GOING CONCERN | NOTE A – PRESENTATION, NATURE OF BUSINESS, AND GOING CONCERN
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These consolidated financial statements should be read in conjunction with the Company’s annual report on Form 10K for the year ended June 30, 2012. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary in order to make the consolidated financial statements not misleading have been included. Results for the three and nine months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending June 30, 2013.
Nature of Business
China Ginseng Holdings, Inc. and Subsidiaries (the “Company”), was incorporated under the laws of Nevada on June 24, 2004.
On November 24, 2004, the Company acquired 55% of Yanbian Huaxing Ginseng Industry Co. Limited (“Yanbian Huaxing”), which is located in China and, is in the business of farming, processing, distribution, and marketing of Asian Ginseng products. In 2010, the Company ceased marketing ginseng and is presently utilizing the harvest to produce a ginseng beverage. However, it continues to buy ginseng for the resale market. On November 24, 2005, the Company acquired the remaining 45% of Yanbian Huaxing.
Yanbian Huaxing controls, through 20 year leases granted by the Chinese Government, approximately 1,500 hectors (3,705 acres) of land used to grow ginseng. The Company had no operations prior to November 24, 2004. These leases expire through 2024.
On August 24, 2005, the Company acquired Jilin Ganzhi Ginseng Produce Co. Limited, whose principal business is the manufacture of ginseng drinks.
On October 19, 2005, the Company incorporated a new company, Jilin Huamei Beverage Co. Limited (“Jilin Huamei”), which operates as a sales department for the Company’s canned ginseng juice and wine, which are produced by other subsidiaries of the Company.
On March 31, 2008 the Company acquired Tonghua Linyuan Grape Planting Co. Limited (“Tonghua Linyuan”) whose principal activity is the growing, cultivation and harvesting of a grape vineyard. The Company plans to produce wine and grape juice but to date has not commenced production. In June 2012, the Company decided to abandon the growing and harvesting of grapes due to the poor quality of recent harvests which were not suitable for the production of wine or grape juice. The Company has also decided not to renew its leases with the Chinese Government. The Company will now purchase grapes in the open market to produce wine and grape juice.
On March 2, 2012, the Company approved the incorporation of a new subsidiary, Hong Kong Huaxia International Industrial Co., Limited (“Hong Kong Huaxia”) in Hong Kong in order to sell health and specialized local products. Hong Kong Huaxia was incorporated in Hong Kong on March 18, 2012 and began operations in April 2012.
Consolidated Financial Statements
The consolidated financial statements
include the accounts and activities of China Ginseng Holdings, Inc. and its wholly-owned subsidiaries, Yanbian Huaxing Ginseng Co. Limited, Jilin Huamei Beverage Co. Limited, Jilin Ganzhi Ginseng Products Co. Limited, Tonghua Linyuan Grape Planting Co. Limited and Hong Kong Huaxia International Industrial, Co. Limited. All intercompany transactions have been eliminated in consolidation.
Going Concern
As indicated in the accompanying consolidated financial statements, the Company had an accumulated deficit of $8,830,981 as of March 31, 2013 and there are existing uncertain conditions the Company foresees relating to its ability to obtain working capital and operate successfully. Management’s plans include the raising of capital through the equity markets to fund future operations and the generating of revenue through its businesses. Failure to raise adequate capital and generate adequate sales revenues could result in the Company having to curtail or cease operations.
Additionally, even if the Company does raise sufficient capital to support its operating expenses and generate adequate revenues, there can be no assurances that the revenues will be sufficient to enable it to develop business to a level where it will generate profits and cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. However, the accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. These consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern. |
Inventory
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORY | NOTE C –INVENTORY
Inventory is comprised of the following at:
At March 31, 2013 and June 30, 2012, there were no shipments of Ginseng at customer locations awaiting inspection and approval that may be subject to invoicing. |
Impairment of Ginseng Crops and Inventory
|
9 Months Ended |
---|---|
Mar. 31, 2013
|
|
Impairment Of Ginseng Crops and Inventory [Abstract] | |
IMPAIRMENT OF GINSENG CROPS AND INVENTORY | NOTE F – IMPAIRMENT OF GINSENG CROPS AND INVENTORY
In August 2012, a typhoon struck the Mudanjiang Ginseng farm destroying approximately 112,000 square meters of planted ginseng having an approximate value of RMB 5,817,110 (US$ 922,695). This loss was charged to operations during the first quarter of 2013.
In March of 2013, the Company determined that the grape juice inventory held at Tonghua is no longer saleable. As such, the Company wrote off inventory with a value of 8,855,284 RMD (US$ 1,404,602) at March 31, 2013.
|
Investment in Unconsolidated Subsidiaries
|
9 Months Ended |
---|---|
Mar. 31, 2013
|
|
Investment In Unconsolidated Subsidiaries [Abstract] | |
INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES | NOTE D – INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES
In December 2010, the Company invested $24,342 (RMB 153,000) in Changchun Zhongshen Beverage Co. Ltd. (“Zhongshen”). This investment represented a 17% interest in Zhonghsen. Zhongshen is a retailer of ginseng juice and wine. The Company accounts for this investment utilizing the cost method.
In September 2011, the Company entered into an agreement with three other companies to establish a new entity, Jilin Province Jiliang Beverage Investment Management Co., Ltd (“Jilin Jiliang”). The purpose of Jilin Jiliang is to provide investment and project consultation. Under the agreement, the Company was required to invest a total of $79,759 (RMB 500,000) for a 10% interest in Jilin Jiliang by September 25, 2012. In September 2011, the Company invested $15,952 (RMB 100,000) in Jilin Jiliang. During the three months ended March 31, 2013, the Company terminated its’ investment in Jilin Jiliang and was returned its’ 100,000 RMB investment. |
Loan Payable to Financial Institution (Details)
|
0 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 10, 2011
|
Mar. 31, 2013
USD ($)
|
Jun. 30, 2012
USD ($)
|
Jun. 30, 2002
CNY
|
|
Loan Payable to Financial Institution (Textual) | ||||
Loans Payable | 2,000,000 | |||
Interest rate on loan | 6.325% | |||
Loan payable, maturity date | Aug. 12, 2012 | |||
Debt instrument, interest payment terms | Interest has been paid on the loan through June 30, 2009 and will be accrued in subsequent periods. | |||
Loan payable to financial institution | $ 319,035 | $ 316,211 |
Operating Segments (Tables)
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9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2013
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Operating Segments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of business segments | Nine months ended March 31, 2013:
Nine months ended March 31, 2012:
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Property and Equipment (Details Textual) (USD $)
|
9 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2013
|
Jun. 30, 2012
|
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Property and Equipment (Textual) | ||
Depreciation and amortization | $ 139,179 | $ 160,710 |
Impairment of Ginseng Crops and Inventory (Details)
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1 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2012
USD ($)
sqm
|
Aug. 31, 2012
CNY
|
Mar. 31, 2013
USD ($)
|
Mar. 31, 2013
CNY
|
|
Impairment of Ginseng Crops and Inventory (Textual) | ||||
Area of Ginseng crops farm land damaged by typhoon (in square meters) | 112,000 | 112,000 | ||
Value of planted ginseng destroyed by typhoon | $ 922,695 | 5,817,110 | ||
Inventory Write-down | $ 1,404,602 | 8,855,284 |