0001615774-16-005551.txt : 20160523 0001615774-16-005551.hdr.sgml : 20160523 20160520174236 ACCESSION NUMBER: 0001615774-16-005551 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 66 CONFORMED PERIOD OF REPORT: 20160331 FILED AS OF DATE: 20160523 DATE AS OF CHANGE: 20160520 FILER: COMPANY DATA: COMPANY CONFORMED NAME: China Ginseng Holdings Inc CENTRAL INDEX KEY: 0001338460 STANDARD INDUSTRIAL CLASSIFICATION: BEVERAGES [2080] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-54072 FILM NUMBER: 161667399 BUSINESS ADDRESS: STREET 1: 1562 JIE FANG GREAT RD 16FL ZHONGJI BLDG STREET 2: SUITE 1062-1063 NANGUAN DISTRICT CITY: CHANGCHUN CITY STATE: F4 ZIP: 130022 BUSINESS PHONE: 0118643185790039 MAIL ADDRESS: STREET 1: 1562 JIE FANG GREAT RD 16FL ZHONGJI BLDG STREET 2: SUITE 1062-1063 NANGUAN DISTRICT CITY: CHANGCHUN CITY STATE: F4 ZIP: 130022 10-Q 1 s103289_10q.htm FORM 10-Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

¨ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2016

 

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

  

For the transition period from ______________ to ______________

 

China Ginseng Holdings, Inc.

(Exact name of registrant as specified in its charter)

 

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
   
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone (01186) 43188952022

 

SEC File Number:  000-54072

 

N/A

(Former name, former address and former three months, if changed since last report)

 

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x No  ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interative Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x No  ¨

 

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

 

Large accelerated filer ¨ Accelerated filer ¨
Non-accelerated file ¨ Smaller Reporting Company x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

 

As of May 23, 2016, there were 44,397,297 shares issued and outstanding of the registrant’s common stock.

 

 

 

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION  
   
Item 1.     Financial Statements F-1
   
Item 2.     Management’s Discussion and Analysis or Plan of Operation. 2
   
Item 3.     Quantitative and Qualitative Disclosure about Market Risk 9
   
Item 4.     Controls and Procedures. 9
   
PART II - OTHER INFORMATION  
   
Item 6.     Exhibits. 11
   
PART I - FINANCIAL INFORMATION  
   
Contents  
   
Consolidated Balance Sheets as of March 31, 2016 and June 30, 2015 (Unaudited) F-2
   
Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended March 31, 2016 and 2015 (Unaudited)  F-3
   
Consolidated Statements of Cash Flows for the Nine Months Ended  March 31, 2016 and 2015 (Unaudited) F-4
   
Notes to Consolidated Financial Statements, March 31, 2016 (Unaudited) F-5

 

 F-1 

 

 

China Ginseng Holdings, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited) 

 

   March 31, 
2016
   June 30, 
2015
 
         
ASSETS          
CURRENT ASSETS          
Cash  $61,890   $10,016 
Accounts receivable, net   542,770    579,752 
Advances to third parties   552,323    93,254 
Inventory   586,966    285,981 
Due from related parties   26,289    7,703 
Prepaid expenses   1,466    1,549 
Total Current Assets   1,771,704    978,255 
           
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $567,153 and $525,199 at March 31,2016 and June 30, 2015, respectively   1,251,423    1,398,425 
           
OTHER ASSET          
Deposit on equipment   5,646,442    5,967,480 
           
Total Assets  $8,669,569   $8,344,160 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
CURRENT LIABILITIES          
Loan payable- equipment purchase  $5,645,090   $5,966,052 
Loan payable- building purchase   1,197,920    1,308,558 
Loans payable- other   3,124,239    3,997,629 
Notes payable - related parties   1,650,292    1,593,996 
Convertible debenture   1,600,000    - 
Accounts payable   2,244,996    951,068 
Accrued expenses   4,371,269    2,486,436 
Taxes payable   66,873    71,034 
Payable to farmers   832,248    879,567 
Payments received in advance   186,038    247,663 
Total Current Liabilities   20,918,965    17,502,003 
           
OTHER LIABILITIES          
           
Liabilities of discontinued operations   486,120    513,760 
Total Liabilities   21,405,085    18,015,763 
           
COMMITMENTS AND CONTINGENCIES (NOTE O)   -    - 
           
STOCKHOLDERS’ DEFICIT          
Common Stock, $0.001 par value; 50,000,000 shares authorized; 44,397,297 shares issued and outstanding at March 31,2016 and 44,397,297 at June 30, 2015, respectively   44,398    44,398 
Additional paid-in capital   7,826,365    7,738,746 
Accumulated deficit   (21,222,105)   (18,073,829)
Accumulated other comprehensive income   615,826    619,082 
Total Stockholders’ Deficit   (12,735,516)   (9,671,603)
Total Liabilities and Stockholders’ Deficit  $8,669,569   $8,344,160 

 

See accompanying notes to consolidated financial statements.

 

 F-2 

 

 

China Ginseng Holdings, Inc. and Subsidiaries

 

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)

 

   For the Three Months Ended   For the Nine Months Ended 
   March 31,   March 31, 
   2016   2015   2016   2015 
                 
REVENUES  $253,619   $15,148   $315,365   $167,362 
                     
COSTS AND EXPENSES                    
Cost of goods sold   220,580    60    251,341    115,878 
Selling, general and administrative expenses   58,817    381,055    1,664,593    1,198,082 
Bad debt expense (recovered)   (117,885)   (22)   (161,263)   (42,272)
Depreciation and amortization   14,743    21,342    67,789    67,276 
Total Costs and Expenses   176,255    402,435    1,822,460    1,338,964 
                     
OTHER EXPENSE                    
Foreign Exchange   (2,014)        87,045      
Interest expense   699,695    182,346    1,554,136    715,578 
Net Other Expense   697,681    182,346    1,641,181    715,578 
                     
LOSS BEFORE INCOME TAXES   (620,317)   (569,633)   (3,148,276)   (1,887,180)
                     
PROVISION FOR INCOME TAXES   -    -    -    - 
                     
NET LOSS   (620,317)   (569,633)   (3,148,276)   (1,887,180)
                     
OTHER COMPREHENSIVE INCOME (LOSS)                    
Translation Adjustment   (169,633)   18,374    (3,256)   167,547 
                     
COMPREHENSIVE LOSS  $(789,950)  $(551,259)  $(3,151,532)  $(1,719,633)
                     
NET LOSS PER COMMON SHARE (Basic and diluted)  $(0.02)  $(0.01)  $(0.07)  $(0.04)
                     
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - Basic and diluted   45,397,297    44,397,297    45,397,297    44,397,297 

 

See accompanying notes to consolidated financial statements.

 

 F-3 

 

 

China Ginseng Holdings, Inc. and Subsidiaries

 

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

   For the Nine Months Ended 
   March 31, 
   2016   2015 
         
Cash Flows from Operating Activities:          
Net loss  $(3,148,276)  $(1,887,180)
Adjustments to reconcile net loss to net cash from operating activities:          
Depreciation and amortization   

67,789

    67,276 
Imputed interest   72,629    75,132 
Changes in assets and liabilities:          
Decrease in accounts receivable   5,854    60,319 
Increase in inventory   (320,054)   (176,704)
Increase in advances to third party   (461,332)   - 
Increase in prepaid expense   -    (127)
Increase in due from related parties   (18,772)   (16,991)
Increase in accounts payable   

1,164,550

    1,017,127 
Decrease in taxes payable   (343)   (2,270)
Increase (decrease) in receivables in advance   (48,810)   452 
Increase in accrued expenses   1,795,898    441,324 
Net cash provided by (used in) operating activities   (890,867)   (421,642)
           
Cash Flows from Investing Activities:          
Purchase of property and equipment   (9,277)   (7,881)
Net cash provided by (used in) investing activities   (9,277)   (7,881)
           
Cash Flows from Financing Activities:          
Proceeds from loans   -    3,424 
Proceeds from loans payable to related parties   91,345    271,424 
Proceeds from Series A Convertible Debenture   1,600,000    - 
Repayments of Loans Payable   (738,971)   - 
Net cash provided by (used in) financing activities   952,374    274,848 
           
Effect of exchange rate on cash   (356)   167,259 
           
Increase in cash   51,874    12,584 
           
Cash at beginning of period   10,016    24,782 
           
Cash at end of period  $61,890   $37,366 

 

See accompanying notes to consolidated financial statements.

 

 F-4 

 

 

China Ginseng Holdings, Inc. and Subsidiaries

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2016 (UNAUDITED)

 

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 10-K for the year ended June 30, 2015.  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, 2016, are not necessarily indicative of the results that may be expected for the year ending June 30, 2016.

 

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 August 2005, the Company acquired the remaining 45% of Yanbian Huaxing. From 2010, the Company ceased to sell ginseng in the market. The harvest of ginseng is primarily self-used as raw material in the production of ginseng beverage.    

 

Yanbian Huaxing controls, through 20 year leases granted by the Chinese Government, approximately 1,500 hectares (3,705 acres) of land exclusively used to grow ginseng. The Company had no operations prior to November 24, 2004. These leases expire through 2024. During the year ended June 30, 2014, the Forestry Bureau governing one of the farms withdrew approximating 700 hectares (1,730 acres) of land leased and notified the Company that this lease is no longer recognized. As a result, the Company is prevented from developing and planting ginseng in undeveloped areas of the farm.

 

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 was the growing, cultivation and harvesting of a grape vineyard. The Company produced wine and grape juice using the grapes planted on the land Tonghua Linyuan leased, but in June 2012, the Company decided to abandon the growing and harvesting of grapes due to the poor quality of grape harvests which were not suitable for the production of wine or grape juice. Accordingly, the Company has abandoned the vineyard and also decided not to renew its leases with the Chinese Government. On June 30, 2013, the Company sold the assets and liabilities of Tonghua Linyuan to a third party. (see Note N.)

 

 F-5 

 

 

NOTE A - PRESENTATION, NATURE OF BUSINESS, AND GOING CONCERN (Continued)

 

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 such as cosmetics and health supplements. Hong Kong Huaxia was incorporated in Hong Kong on March 18, 2012, and began operations in April 2012. Hong Kong Huaxia has registered 880,000,000 shares of 1 HKD par value per share stock in Hong Kong. None of the $113,443,000 (880,000,000 HKD) registered capital of Hong Kong Huaxia has been funded as of March 31, 2016.

 

On September 27, 2013, the Company established a new wholly owned subsidiary of Hong Kong Huaxia, Jilin Huaxia Ginseng Co., Ltd (“Jilin Huaxia”) in order to open an online store through Taobao Marketplace, the biggest online Business to Consumer and Consumer to Consumer platform in Asia, a subsidiary company of Alibaba Group. Hong Kong Huaxia registered capital of $6,000,000 in Jilin Huaxia, none of which was funded at March 31, 2016.

 

Substantially all of the Company’s operations are in the People’s Republic of China and Hong Kong.

 

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, Mudanjiang Huaxing Ginseng Co..Limited and Hong Kong Huaxia International Industrial, Co. Limited and its subsidiary Jilin Huaxia. All intercompany transactions have been eliminated in consolidation.

 

Reclassifications

 

Certain reclassifications have been made to the consolidated financial statements for the three and nine months ended March 31, 2015 to make then comparable to the presentation for the three and nine months ended March 31, 2016.

 

Uncertainty in Income Taxes

 

The Company’s policy is to recognize interest related to income tax matters as interest expense. The Company’s policy is to recognize penalties related to income tax matters as selling, general and administrative expenses. The Company's income tax returns are subject to examination by the IRS and State tax authorities, generally for three years after they are filed.

 

Going Concern

 

As indicated in the accompanying financial statements, the Company had net losses of $3,148,276 and $1,887,180 for the nine months ended March 31, 2016 and 2015, respectively, and an accumulated deficit of $21,222,105 as of March 31, 2016 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 debt and 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 positive cash flows from operations.  These matters raise substantial doubt about the Company’s ability to continue as a going concern.  However, the accompanying 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. 

 

 F-6 

 

 

NOTE B - PROPERTY AND EQUIPMENT

 

Property and equipment is comprised of the following at:

 

   March 31,   June 30, 
   2016   2015 
Buildings and improvements  $1,387,535   $1,472,128 
Machinery and equipment   354,963    393,100 
Motor vehicles   23,830    30,501 
Office equipment   52,248    27,895 
    1,818,576    1,923,624 
Less accumulated depreciation   (567,153)   (525,199)
   $1,251,423   $1,398,425 

 

Substantially all of the property and equipment is located in China.

 

Total depreciation was $67,789 and $67,276 for the nine months ended March 31, 2016 and 2015, respectively.

 

NOTE C -DEPOSIT FOR EQUIPMENT PURCHASE

 

In November of 2013, the Company made a deposit of RMB 36,474,054 ($5,645,090) with a supplier for the purchase of equipment for its ginseng farms. Prior to delivery of the equipment, the Company determined that this equipment was not best suited for its’ farms and cancelled the purchase. The deposit remains on hand with the supplier. The Company and supplier are negotiating for the delivery of different equipment for the Company’s new eye care centers or the return of the deposit.

 

NOTE D - INVENTORY

 

Inventory is comprised of the following at:

 

   March 31,   June 30, 
   2016   2015 
Raw materials  $449,625   $126,006 
Finished goods   133,179    67,787 
Packaging supplies   -    87,789 
Operating supplies   4,162    4,399 
   $586,966   $285,981 

 

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 land to plant ginseng needs to be rotated. The Company tracks the costs expended each year by planting area. The Chinese government owns all of the land in China.

 

Currently, the Company has obtained leases from the Chinese government for approximately 800 hectares of land (approximately 1,975 acres) to grow ginseng, which were awarded in April and May 2005.  These rights are valid for 20 years and the management of the Company believes that the leases will be renewed.  However, there are no assurances that the Chinese government will continue to renew these leases 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 has planted approximately 287,984 square meters (28.80 hectares or 71.16 acres) of land. The Company has no plan to expand ginseng planting at the moment. The Company can purchase raw ginseng from farmers, or the open market directly.

 

 F-7 

 

 

NOTE F - AGREEMENTS WITH FARMERS

 

The Company has executed agreements with a number of local farmers to grow, cultivate and harvest Ginseng utilizing the Company’s land grants. The farming contracts commenced in January 2008 and ended in 2013. In connection with these agreements, the Company (1) leases sections of the Ginseng land grants to the farmers at approximately $1.50 (10 RMB) per square meter per year, (2) provides the seeds and fertilizer to the farmers and clears the land of large debris, (3) pays the farmers a management fee of approximately $0.50 (4.00 RMB) per square meter per year and (4) the farmers are required to produce 2kg of Ginseng for each square meter that they manage. The costs of the seeds and fertilizers provided to the farmers are capitalized and included in the Ginseng Crop inventory. The Company pays the farmers market price for their Ginseng. 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. The Company records these agreements on a net basis by individual farmers. The Company has also recorded a payable to the farmers for the net management fee due to the farmers. The liability at March 31, 2016 and June 30, 2015 was $832,248 and $879,567 respectively.

 

NOTE G - LOAN PAYABLE TO FINANCIAL INSTITUTION

 

In 2002, the Company’s subsidiary, Tonghua Linyuan, borrowed 2,000,000 RMB from Ji’an Qingshi Credit Corporation at an interest rate of 6.325% per annum with a maturity date of April 4, 2003. The loan is currently in default. In March 2008, the lender verbally agreed that no principal or interest need be paid until the Company is generating profits. Interest was paid on the loan through June 30, 2009 and has been accrued in subsequent periods. The loan is secured by the Company’s inventory and equipment. The loan balance at March 31, 2016 and June 30, 2015 was $309,540 and $327,139, respectively. The loan balance is included in Liabilities of Discontinued Operations on the accompanying consolidated Balance Sheets.

 

NOTE H - LOAN PAYABLE - BUILDING PURCHASE

 

On March 2, 2011, the Company entered into an agreement with Meihekou Hang Yilk Tax Warehousing Logistics, an auctioneer, to purchase office and warehouse facilities. The purchase price was $1,385,980 (RMB 9,000,000). On June 24, 2011, the Company made a payment of $76,990 (RMB 500,000) leaving a balance of $1,308,981 (RMB 8,500,000). On September 10, 2011, the Company paid 8,000,000 RMB through the proceeds of a loan with Meihekou City Rural Credit Union. The remaining 500,000 RMB was paid as follows: (a) $15,400 (RMB 100,000) in December 2010 and (b) $61,599 (RMB 400,000) in June 2011.

 

The loan from Meihekou City Rural Credit Union was due on August 12, 2012. Interest accrues on the loan at a floating rate based on the Central Bank Rate. At March 31, 2016, the floating rate was 18.43%. The loan is secured by the building. On August 30, 2012, the loan was renegotiated extending the maturity date to August 29, 2014 with principal payments of 1,000,000 RMB (USD $153,998) in September 2012; 1,000,000 RMB (USD $153,998) on August 29, 2013; 1,000,000 RMB (USD $153,998) on December 20, 2013 and 5,000,000 RMB (USD $769,988) on August 29, 2014. None of these payments were made by the Company and the note is thus in default.

 

NOTE I - LOAN PAYABLE - EQUIPMENT PURCHASE

 

On October 29, 2013, the Company borrowed $5,616,923 (RMB 36,474,054) in order to fund the acquisition of machinery and equipment by the Company. The loan was due on February 28, 2014, and the Company was to pay $211,606 (RMB 1,300,000) in interest over the life of the loan. The loan is secured by the assets of Jilin Huaxia. On July 1, 2015, the loan term was extended to December 31, 2015. On January 3, 2016, the creditor agreed to negotiate with the Company for a new term on the loan. The Company is still in negotiation with creditor currently.

 

NOTE J - LOANS PAYABLE - OTHER

 

The Company has loans with various individuals and finance companies totaling $3,124,239 at March 31, 2016 and $3,997,629 at June 30, 2015. These loans are payable on demand and bear interest at 3% per month.

 

NOTE K- CONVERTIBLE DEBENTURE

 

On July 21, 2015, the Company closed a private placement to sell a Series A Convertible Debenture for a price of $1,600,000. The Series A Convertible Debenture is repayable at July 20, 2018 and is convertible into 4,000,000 shares of the Company’s common stock at a price of $0.40 per share. During the period that the conversion right exists, the Company covenants that it will reserve, from its authorized and unissued common stock, shares equal to 110% of the number of shares of common stock upon the full conversion of the Series A Convertible Debenture. At the conversion price of $.40 per share, this will be 4,400,000 shares. When combined with the current shares issued and outstanding of 44,397,297, the total of issued, outstanding and reserved shares is 48,797,297. As the authorized shares are 50,000,000, the Company will breach the covenant if it issues 1,202,703 shares absent an increase to the number of authorized shares. The Series A Convertible Debenture carries no interest and matures in 36 months. The Series A Convertible Debenture also has a prepayment clause pursuant to which the Company may repurchase all or a portion of the outstanding Convertible Debenture in cash for 100% of the face value on ten business days’ notice at any time after the twelve month anniversary of the closing; provided that the Investor shall have the right to convert the Convertible Debenture within five business days after written notice of such prepayment.

 

 F-8 

 

 

The funds received from the convertible debenture were used to pay down accounts payable, to provide advances to third parties to support the Company’s future operations and to increase the Company’s cash available to fund future operations.

 

NOTE L - RELATED PARTY TRANSACTIONS

 

The Company had been financing its operations from loans from individuals, principally residents of China, who are deemed to be related parties because of their ownership interest in the Company (shareholders). The individuals have loaned the Company funds which are interest free, have no specific repayment date, and are unsecured. The funds received are evidenced by receipt of cash acknowledgments. At March 31, 2016 and June 30, 2015, funds borrowed to fund the current operations of the Company were $1,650,292 and $1,593,996, respectively. The Company has imputed an interest charge of $72,629 and $75,132 which has been recorded in the financial statements for the nine months ended March 31, 2016 and 2015, respectively. 

 

At March 31, 2016 and June 30, 2015, the Company had receivables from related parties amounting to $26,289 and $7,703, respectively.

 

NOTE M - PROVISION FOR INCOME TAXES

 

Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting bases and income tax bases 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:

 

   March 31,   June 30, 
   2016   2015 
    -   $- 
Net operating losses  $4,159,027   $3,371,958 
Valuation allowance   (4,159,027)   (3,371,958)
Deferred tax asset  $-   $- 

 

The deferred tax asset is the result of an inventory provision and related reserve. Under Chinese tax laws, the Company is not entitled to a deduction for the provision until the inventory is completely discarded. Accordingly, the liability has been recorded as an offset by a deferred tax asset representing a timing difference.

 

The Company has a net operating loss carry forward as follows:

 

   March 31,   June 30, 
   2016   2015 
International (China)  $11,204,424   $9,290,901 
United States   5,431,684    4,196,931 
   $16,636,108   $13,487,832 

 

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 commenced expiring in 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 2027.

 

At March 31, 2016, the Company determined that it had approximately $540,000 in penalties related to past due information returns from 2005 through 2015, which is included in accrued expense and selling, general and administrative expenses. The Company plans to seek abatement with the Internal Revenue Service relating to these amounts, the outcome of which is uncertain.

 

The components of income before taxes are as follows:

 

   For the Nine Months
Ended
March 31,
 
   2016   2015 
International (China)  $(1,913,523)  $(1,012,948)
United States   (1,234,753)   (874,232)
   $(3,148,276)  $(1,887,180)

 

 F-9 

 

 

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, 2016 and 2015, respectively, are as follows:

 

   For the Nine Months
Ended
March 31,
 
   2016   2015 
Federal statutory rate   (34.0)%   (34.0)%
State income taxes, net of federal benefit   3.3    3.3 
Valuation allowance   30.7    30.7 
Earnings taxed at other than US statutory rate   -    - 
Effective tax rate   -%   -%

 

NOTE N - DISCONTINUED OPERATIONS

 

On June 30, 2013, the Company discontinued its’ grape production operations. The Company sold the assets and liabilities of Tonghua Linyuan, and closed Tonghua Linyuan.

 

The Company has retained $486,120 and $513,760 in contingent liabilities of Tonghua Linyuan at March 31, 2016 and June 30, 2015, respectively. These liabilities are included in Liabilities of Discontinued Operations on the consolidated Balance Sheet. These liabilities consisted of a loan payable to a financial institution of $309,540 and accounts payable and accrued expenses of $176,580 at March 31, 2016 and a loan payable to a financial institution of $327,139 and accounts payable and accrued expenses of $186,321 at June 30, 2015.

 

NOTE O - COMMITMENTS AND CONTINGENCIES

 

The Company has employment agreements with various individuals in China. The following summarizes the contractual commitments under these agreements:

 

March 31,  Commitment 
2017  $33,909 

 

The Company has one year leases for its corporate offices in China aggregating RMB 220,190 per year (USD 33,909) expiring May 21, 2016. The lease is renewable each year.

 

The Chinese government owns all the land in China. Currently, the Company has grants from the Chinese government for approximately 800 hectares of land (1,975 acres) to grow Ginseng. These grants are for 20 years. There is no assurance that the Chinese government will continue to renew these grants in the future.

 

The Company has a lease to refrigerate and store fresh Ginseng, which operates on a month to month basis until terminated by the parties. The annual lease fee approximates $15,500 per year.

 

NOTE P - OPERATING SEGMENTS

 

The Company currently has two operating segments, (1) the cultivation and harvest of Ginseng for the production of Ginseng beverages and (2) the retail sales of cosmetics and health supplements.

 

The Company’s reportable business segments are strategic business units that offer different products.  Each segment is managed separately because they require different production techniques and market to different classes of customers.

 

 F-10 

 

 

Nine months ended March 31, 2016:

 

   Parent 
Company
   Ginseng   Cosmetics/
Supplements
   Total 
Revenues  $-   $248,972   $66,393   $315,365 
Net loss   (1,234,753)   (1,906,304)   (7,219)   (3,148,276)
Total assets   421,704    8,165,785    82,080    8,669,569 
                     
Other significant items:                    
Depreciation and amortization   1,299    65,680    810    67,789 
Interest expense   173,898    1,378,763    1,475    1,554,136 
Expenditures for fixed assets        9,277    -    9,277 

 

Three Months Ended March 31, 2016

 

   Parent 
Company
   Ginseng   Cosmetics /
Supplements
   Total 
Revenues  $-   $210,690   $42,929   $253,619 
Net Loss   (119,235)   (486,057)   (13,011)   (618,303)
Total Assets   421,704    8,165,785    82,080    8,669,569 
                     
Other Significant Items:                    
Depreciation and amortization   430    14,049    264    14,743 
Interest expense   42,256    655,305    120    697,681 
Expenditures for fixed assets   -    1,380    -    1,380 

 

Nine months ended March 31, 2015:

 

   Parent 
Company
   Ginseng   Cosmetics/
Supplements
   Total 
Revenues  $-   $-   $167,362   $167,362 
Net loss   (874,232)   (996,982)   (15,966)   (1,887,180)
Total assets   19,830    8,653,904    248,400    8,922,134 
                     
Other significant items:                    
Depreciation and amortization   961    65,716    599    67,276 
Interest expense   39,585    674,969    1,024    715,578 
Expenditures for fixed assets   5,439    2,442    -    7,881 

 

Three Months Ended March 31, 2015

 

   Parent 
Company
   Ginseng   Cosmetics /
Supplements
   Total 
Revenues  $-   $-   $15,148   $15,148 
Net (Loss) Income   (410,539)   (160,721)   1,627    (569,633)
                     
Other Significant Items:                    
Depreciation and amortization   319    20,823    200    21,342 
Interest expense   14,241    168,105         182,346 
Expenditures for fixed assets   4,400    2    -    4,402 

 

 F-11 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

This Form 10−Q contains forward-looking statements. Our actual results could differ materially from those set forth as a result of general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of financial condition and results of operations relates to the operations and financial condition reported in the financial statements of China Ginseng Holdings Inc. for the nine months ended March 31, 2016 and 2015 and should be read in conjunction with such financial statements and related notes included in this report and the Company’s Annual Report on Form 10-K for the year ended June 30, 2015. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events.

 

Company Overview

 

Our company, China Ginseng Holdings Inc., was incorporated on June 24, 2004 in the State of Nevada.  

 

Since our inception in 2004, we have been engaged in the business of farming, processing, distribution and marketing of fresh ginseng, dry ginseng, ginseng seeds, and seedlings. Starting in August 2010, we have gradually shifted the focus of our business from direct sales of ginseng to canned ginseng juice and have started to store our raw material and sell very limited self-produced ginseng. We also purchase ginseng from outside sources, and then resell it to generate revenue and those sales are based on the order from the market. Currently, we are granted 20-year land use rights to approximately 1,975 acres of lands by the Chinese government for ginseng planting.

  

In recent years, due to the global recession and local market conditions, demand for ginseng exports declined, which created a significant oversupply from 2008. In addition, our ginseng beverage business was limited due to lack of capital to expand operation and promote our products. All those factors caused us to have losses in recent years.

 

As of March 31, 2016 and June 30, 2015, the cash balance on hand for the Company was $61,890 and $10,016, respectively, and our working capital deficit was $19,147,261 and $16,523,748 respectively. Due to the insufficiency of cash and working capital and recurring operating losses, there is substantial doubt about our ability to continue as a going concern.

 

In order to meet the challenge, we are taking the following actions:

 

On July 21, 2015, we raised 1.6 million dollars through a private placement. With this capital, the Company resumed ginseng beverage production in October 2015, and developed a new small size ginseng beverage (40 ML) in January 2016. The sale of small sized (40 ML) ginseng beverage is waiting for the approval from the State Food and Drug Administration (SFDA) currently.

  

On January 26, 2016, our Board of Directors appointed Mr. Long He as Chairman, Director and Chief Executive Officer. Mr. He has extensive experience in green and organic agriculture and the food and restaurant industry. Under this new management, we have updated our business plan to include opening of eye care centers in China. These eye care centers will also resell our ginseng juice products. Meanwhile, we will continue our focus on the ginseng beverage business in 2016 and might bring more health and organic products to the Company’s business in 2017.  We believe that it is the right time to make the Company a diversified health products company because healthcare and wellness is a growing industry in China which, we believe, will bring us opportunities to become a long term growth company and a benchmarking enterprise in ginseng beverage industry.

 

Focus of Our Business

 

Canned Ginseng Juice

 

Currently, there are about 10 kinds of ginseng drinks on the market in China; all of them are imported from Korea.  The price range for those products is 10 -30 RMB per can (about USD $1.50-$4.51).

 

The most important component of ginseng is ginsenoside. Based upon reading competitor labels, all of their ginseng drinks are produced by blending after extracting ginsenosides through chemical methods. The extraction for ginsenosides will cause damage to its nutritional components. Our technology is different from that traditional method used by our competitors.  We squeeze out the natural juice from fresh ginseng as the main material plus natural extracts like xylitol, citric acid and steviosides as subsidiary ingredients. We have farming technicians periodically inspect farmers to ensure they follow our growing guidelines to control the quality of the fresh ginseng. We use low residue pesticide and biodegradable fertilizer for ginseng planting. And we use xylitol instead of sugar to lower calories.  Further, products made with xylitol do not cause a sour taste. 

 

 2 

 

 

The reason direct squeezing is not commonly used in canned ginseng juice is that it needs fresh ginseng as a raw material and preservation of fresh ginseng is very difficult. However, our drink formula enables us to use refrigerated ginseng as raw material to produce canned ginseng juice and we are still able to preserve its freshness and nutrition in the final products.  The drink formula for our ginseng beverages is a registered patent approved by the Chinese government, patent number ZL 03111397.6.  This patent was issued on January 23, 2008 and expires 20 years after issuance.

 

In order to produce canned ginseng juice, we store our fresh ginseng in refrigerated warehouse space. We are currently renting a refrigerated warehouse (-20 C degree) to store all fresh ginseng inventory necessary for production of the ginseng beverages.   Monthly rent for the refrigerated warehouse is RMB 4,500 (USD $677).

 

We are still in the early stage of ginseng beverage business, we cannot assure the demands for our ginseng beverage will be high enough to make our business profitable in the short term and there is no guarantee that we will be able to generate the revenue from ginseng beverage business.

 

We own the production plant.  The plant is certified by the Chinese government as a Good Manufacturing Process facility, which is required for our production of these products.  Good Manufacturing Process standards cover organization and personnel, building and facilities, equipment, materials, hygiene and sanitation, validation, documentation, production management, quality management, production distribution and recall, complaints and adverse reactions report, and self-inspections.

 

Distribution

 

We intend to recruit one general distributor for our products of ginseng beverage in every city in China.  The city level distributor can recruit the second level distributors.  In addition to recruiting general distributors, in some major cities, Jilin Huamei will establish sale branch offices to facilitate the local sales. Our direct sales will target customers of high end retailers such as supermarkets, pharmacies, hotels, gift shops, entertainment centers, tourists’ attractions, airport and high speed trains, etc.

 

Furthermore, Hong Kong Huaxia was set up as a part of our adjusted marketing strategy so that we can explore the Asia Market through Hong Kong Huaxia while Jilin Huamei focuses on domestic sales.

 

Currently, due to lack of funds, we do not have any distributor.

 

Competitive environment

 

The market for ginseng products is highly competitive. Our operations may be affected by technological advances by competitors, industry consolidation, patents granted to competitors, competitive combination products, new products offered by our competitors, as well as new information provided by other marketed products and/or other post-market studies.

 

Discussion of Result of Operations

 

The following tables present certain consolidated statement of operations information. Financial information is presented for the three months and nine months ended March 31, 2016 and 2015, respectively. 

 

 3 

 

 

   For The Three Months         
   Ended March 31,   Change 
   2016   2015   Amount   % 
Revenues  $253,619    15,148   $238,471    1574%
Cost of goods sold  $220,580    60    220,520    367533%
Gross profit  $33,039    15,088   $17,951    119%
Selling, general and administrative expenses  $58,817    365,116    (306,299)   (84)%
Bad Debt Expense (Recovered)  $(117,885)  $(22)  $(117,863)   535741%
Depreciation and amortization  $14,743    21,342    (6,599)   (31)%
Interest expense  $699,695    182,346    517,349    284%
Net Loss  $(620,317)   (553,694)   (66,623)   12%

 

   For the Nine Months     
   Ended March 31,   Change 
   2016   2015   Amount   %  
Revenues  $315,365    167,362    148,003    88%
Cost of goods sold  $251,341    115,878    135,463    117%
Gross profit  $64,024    51,484    12,540    24%
Selling, general and administrative expenses  $1,664,593    1,198,082    466,511    39%
Bad Debt Expense (Recovered)  $(161,263)  $(42,272)  $(118,991)   281%
Depreciation and amortization  $67,789    67,276    513    1%
Interest expense  $1,554,136    715,578    838,558    117%
Net Loss  $(3,148,276)  $(1,887,180)  $(1,261,096)   67%

 

Revenue

 

Our total revenue increased from $15,148 to $253,619 for the three months ended March 31, 2015 and 2016, and from $167,362 to $315,365 for the nine months ended March 31, 2015 and 2016; an increase of $238,471 and $148,003, or 1574% and 88%, respectively. The primary reason for the increase was that we had new sales on ginseng juice products in addition to the sales on the rest of all type cosmetics products during the three months and nine months ended March 31, 2016.

 

We generated revenue of $252,292 from ginseng juice sales by Jilin Ganzhi in the three months and nine months ended March 31, 2016, compared to none during the three months and nine months ended March 31, 2015. Through the Company’s effort, we started to generate revenue from ginseng juice sales in the three months ended March 31, 2016.

 

We generated revenue of $1,327 and $25,057 from Hong Kong Huaxia, a wholly subsidiary, in the three months and nine months ended March 31, 2016, respectively. Hong Kong Huaxia sells health and specialized local products based on customer orders which vary from time to time.

 

We generated revenue of $38,016 from self-production sales by YanbianHuaxing in the nine months ended March 31, 2015 and will no longer have harvest ginseng sales from our self-production in the future.

 

On July 21, 2015, we raised 1.6 million dollars through a private placement. Using the proceeds of this offering, we resumed ginseng beverage production in October 2015, and produced a new reduced size ginseng beverage (40 ML) in January 2016.

 

We believe that we will be able to continue to improve our sales of ginseng juice in 2016 through 1) an online shopping platform that we have been developing since October 2015 and which will provide customers with easy and convenient access to our products; 2) rebuilding our distribution network; and 3) starting to establish our own nationwide network of stores to sell ginseng beverage. However, assuming those changes occur, there is no assurance that our sales of ginseng beverage will meet our expectation as the market conditions may change.

 

 4 

 

 

Meanwhile, in order to enhance overall revenue of the Company to generate profits, we are going to establish a new business, which is a network of eye health care centers under our subsidiary Jilin Huaxia in May, 2016 and we expect that we will generate the revenue from this business in 2016. However, there is no assurance that such sales will meet our expectation as the market conditions may change.

 

Cost of Goods Sold

 

Our cost of goods sold was $220,580 for the three months ended March 31, 2016, compared to $60 for the same period in 2015, an increase of $220,520.

 

Our total cost of goods sold increased from $115,878 for the nine months ended March 31, 2015 to $251,341for the nine months ended March 31, 2016, an increase of $135,463, or 117%.

 

The increase in cost of goods sold resulted from the increase in the production and sales of ginseng juice products during the three and nine months ended March 31, 2016. There was no ginseng production in the same period time of 2015.

 

Our cost of goods sold is comprised of costs of different products purchased through Hong Kong Huaxia for resale, which was $42,823 and $60,371; cost of self-production ginseng, which was $0 and $13,213; and the cost of ginseng beverage, which was $177,757, and $177,757 for the three months and nine months ended March 31, 2016, respectively.

 

Gross Profit

 

Gross profit was $33,039, resulting in a gross profit margin of 13%, for the three months ended March 31, 2016, compared to gross profit of $15,088 and gross profit margin of 100%, for the three months ended March 31, 2015.The decrease in gross profit margin was primarily due to an increase in ginseng juice revenue, which has a lower gross profit margin than gross profit margin of cosmetics and supplements products. For three months ended March 31, 2015, the Companyhad total revenue of $15,148 from selling cosmetics and supplements products with $60 costs of sales. 

 

Gross profit was $64,024, resulting in a gross profit margin of 20%, for the nine months ended March 31, 2016, compared to gross profit of $51,484 and gross profit margin of 31%, for the nine months ended March 31, 2015.The decrease in gross profit margin was primarily due to an increase in ginseng juice revenue, which has a lower gross profit margin than gross profit margin of cosmetics and supplements products.

 

For the nine months ended March 31, 2016, the revenue from sale of ginseng products was $248,972 and the revenue from cosmetics and supplements products was $66,393. For nine months ended March 31, 2015, the Company had zero income from ginseng products.

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses decreased from $365,116 for the three months ended March 31, 2015 to $58,817 for the three months ended March 31, 2016, a decrease of $306,299, or 84%. 

 

The decrease is because office cost decreased.

 

Selling, general expenses and administrative expenses increased from $1,198,082 for the nine months ended March 31, 2015 to $1,664,593 for the nine months ended March 31, 2016, an increase of $466,511, or 39%. 

 

The increase is mainly due to the increase in our marketing expense from Ganzhi.

 

Interest Expense

 

Our interest expense increased by $517,349, or 284%, from $182,346 for the three months ended March 31, 2015 to $699,695 for the three months ended March 31, 2016.

 

Our interest expense increased by $838,558, or117% from $715,578, for the nine months ended March 31, 2015 to $1,554,136 for the nine months ended March 31, 2016. 

 

The increase was due to an increase in loan balances during the current period as compared to the corresponding period in 2015.

 

Depreciation and amortization

 

Depreciation and amortization decreased by $6,599, or 31%, from $21,342 for the three months ended March 31, 2015 to $14,743 for the three months ended March 31, 2016.

 

Depreciation and amortization decreased by $513, or 1%, from $$67,276 for the nine months ended March 31, 2015 to $67,789 for the nine months ended March 31, 2016. This decrease is due to that certain property and equipment becoming fully depreciated.

 

 5 

 

 

Bad Debt Expense (Recovered)

 

The Company recovered accounts receivable previously written off as a bad debt. The amount recovered increased by $117,863 from $22 for the three months ended March 31, 2015 to $117,885 for the nine months ended March 31, 2016.

 

Bad debt expense recovered increased by $118,991 from $42,272 for the nine months ended March 31, 2015 to $161,263 for the nine months ended March 31, 2016, an increase of 281%. The main reason is that our uncollected debt of Huaxing and Ganzhi decreased during the three and nine months ended March 31, 2016.

 

Net Loss

 

The net loss for the three months ended March 31, 2016 was $620,317; an increase of $66,623, or 12%, compared to a net loss of $569,633 for the three months ended March 31, 2015. The decrease is primarily due to the increase in cost of goods sold, interest expense and selling, general and administrative expenses in the current quarter.

 

We had a net loss of $1,887,180 for the nine months ended March 31, 2015 and a net loss of $3,148,276 for the nine months ended March 31, 2016, an increase of $1,261,096, or 67%.  The increase is primarily due to the increase in general and administrative expenses combined with an increase in interest expense during the nine months ended March 31, 2016.

 

Other Comprehensive Income

 

We operate primarily in the PRC and the functional currency of our operating subsidiaries the Chinese Renminbi (”RMB”).  The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions.  No representation is intended to imply that the Renminbi amounts could have been, or could be, converted, realized or settled into USD at the rate on March 31, 2016 or at any other rate.

 

The value of the RMB against the U.S. dollar may fluctuate and is affected by changes in political and economic conditions. Our revenues, costs and financial assets are mostly denominated in RMB while our reporting currency is the U.S. dollar. Accordingly, this may result in gains or losses from currency translation on our financial statements.

 

Translation adjustments resulting from this process amounted to $(169,633) and $18,374 for the three months ended March 31, 2016 and 2015, respectively.  And we have comprehensive loss of $(789,950) and $(551,259) for the three months ended March 31, 2016 and 2015, respectively.  The assets and liabilities amounts for the three months ended March 31, 2016 were translated at 6.4612 RMB to 1.00 USD as compared to 6.1422 RMB to 1.00 USD for the three months ended March 31, 2015. The equity accounts were stated at their historical rate. The average translation rates applied to the income statements accounts for the three months ended March 31, 2016 and 2015 were 6.4550 RMB and 6.14369 RMB, respectively.

 

Translation adjustments resulting from this process amounted to $(3,256) and $167,547 for the nine months ended March 31, 2016 and 2015, respectively. And we have comprehensive loss of $(3,151,532) and $(1,719,633) for the nine months ended March 31, 2016 and 2015, respectively. The assets and liabilities amounts for the nine months ended March 31, 2016 were translated at 6.3938 RMB to 1.00 USD as compared to 6.1422 RMB to 1.00 USD for the nine months ended March 31, 2015. The equity accounts were stated at their historical rate. The average translation rates applied to the income statements accounts for the nine months ended March 31, 2016 and 2015 were 6.4612 RMB and 6.14369 RMB, respectively.

 

Discussion of Cash Flow

 

Cash flows results for the nine months ended March 31, 2016 and the nine months ended March 31, 2015 are summarized as follows:

 

   March 31,
2016
   March 31,
2015
 
Net cash provided by (used in) operating activities  $(890,867)  $(421,642)
Net cash provided by (used in) investing activities  $(9,277)  $(7,881)
Net cash provided by (used in) financing activities  $952,374   $274,848 

 

 6 

 

 

Operating activities

 

Cash flows used in operating activities amounted to $890,867 for the nine months ended March 31, 2016, compared to $421,642 for the same period of 2015. This change was primarily due to an increase in net losses to $3,148,276, in addition to an increase in inventory of $320,054; an increase in advances to third party of $461,332. These amounts were offset by an increase in accounts payable of $1,164,550 and an increase in accrued expenses of $1,795,898.

 

The increase in accounts payable was due to online products purchases during the nine months ended March 31, 2016. The increase in inventory was because we purchased raw material for ginseng juice production during the nine months ended March 31, 2016. The increase in accrued expenses was because of increased accrued interest.

 

Investing Activities

 

Cash flows used in investing activities amounted to $9,277 for the nine months ended March 31, 2016 which consisted of the purchase of seven computers, one printer and one capacitor.

 

Cash flows used in investing activities amounted to $7,881 for the nine months ended March 31, 2015 which consisted of the purchase of computers for $7,881.

 

Financing activities

 

Cash flows provided by financing activities for the nine months ended March 31, 2016 was $952,374 and primarily consisted of proceeds from loans payable to related parties of $91,345 and proceeds from Series A Convertible Debenture of $1,600,000, offset by repayment of loans payable of $738,971.

 

Cash flows provided by financing activities in the nine months ended March 31, 2015 was $274,848 and primarily consisted of proceeds of loans payable to related parties of $271,424 and proceeds from short term borrowings of $3,424.

 

Liquidity and Capital Resources

 

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis. We have historically financed our operations and capital expenditures through loans from related parties, including officers, directors and other shareholders of the Company and have raised capital through a Regulation S private placement as well. Our current activities are related to developing our new business strategy the sale of Ginseng juice.

 

As of March 31, 2016, there was no change in our loan payments compared with March 31, 2015 since the loans remained constant. As of March 31, 2016, we had an outstanding loan of 2,000,000 RMB (about $325,616) to Ji’AnQingshi Credit Cooperatives (“Ji’AnQingshi”). The principal terms of the loan are as follows:

 

1.      Type of Loan: Short Term Agriculture Loan

 

2.      Loan Purpose: Planting

 

3.      Loan Amount: Principal of 2,000,000 RMB (about USD $325,616) 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 assets of Tonghua including 14 carbon-steel storage cans; 16 high-speed steel storage cans and 150 tons of grape juice

 

We have not paid any principal or interest of the loan; however, Ji’AnQingshi verbally agreed in March 2008 not to call the loan. The material terms for the verbal agreement are: No principal or interest payments are required to be made until the Company is generating profits and interest continues to accrue until we repay the loan. On June 27, 2013, the Company decided to dispose of the assets and liabilities of TonghuaLinyuan to a third party and plans to close TonghuaLinyuan. The Company has retained $511,368 in contingent liabilities of TonghuaLinyuan for the nine months ended March 31, 2016.

 

On August 30, 2012, we refinanced the 8 million RMB bank loan which we obtained from Meihekou City Rural Credit Union on November 8, 2010 by a new loan of 8 million RMB (approximately USD $1,302,465) from the same lender. The principal terms of the new 8 million RMB bank loan agreements are as follows:

 

  Parties: Jilin Ganzhi Ginseng Products Co., Ltd (“Jilin Ganzhi”) and Meihekou City Rural Credit Union (“Meihekou Credit Union”);

 

 7 

 

 

  Meihekou Credit Union granted a loan of 8 million RMB (approximately USD $ 1,302,465) to Jilin Ganzhi to be used in calling in and refunding and the term of the loan is 24 months from August 30, 2012 to August 29, 2014.

 

  The loan carries a benchmark interest rate which 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 $15,321) on August 21, 2012. And from September, 2012 to June 30, 2013, we did not pay interest and we plan to pay all outstanding interest when we have sufficient cash. For the year ended June 30, 2014, we paid $154,635 in accrued interest.

 

  Repay the principal by installments according to the following repayment plan: principal payment of RMB 1M (approximately USD $162,808) on September 20, 2012, RMB 1M (approximately USD $162,808) on August 29, 2013, RMB 1M (approximately USD $162,808) on December 20, 2013 and RMB 5M (approximately USD $814,042) on August 29, 2014. The payments due in September 2012, August 2013 and December 2013 were not made by the Company and the note is thus in default.

 

As of March 31, 2016, there was no change in our loan payments compared to June 30, 2015, since the loans remained constant. Since the lender, Ji’ An Qingshi Credit Cooperative has verbally agreed not to call the loan, we can repay this loan at our own discretion when funds are available.

 

On October 29, 2013, the Company borrowed $5,616,923 (RMB 36,474,054) in order to fund the acquisition of machinery and equipment by the Company. The loan term was to February 28, 2014 and the Company paid $211,489 (RMB 1,300,000) in interest over the life of the loan. The loan is secured by the assets of Jilin Huaxia. On March 3, 2014, the due date of the loan was extended to June 30, 2014 and on September 3, 2014 the term of the loan was extended to June 30, 2015 and on July 1, 2015 the term of the loan was extended to December 31, 2015. In Jan 3, 2016, the creditor decided to discuss with the Company about the loan and new term is being negotiated.

 

As of March 31, 2016, we have loans with various individuals and finance companies totaling $1,987,643 (RMB 12,208,500). These loans are payable on demand and bear interest at 3% per annum.

 

As of March 31, 2016 and 2015, we had notes payable of approximately $1,650,292 and $1,593,996 to related parties, respectively. These amounts are mainly due to the working capital demands of the business. Most of these related parties are our individual shareholders or immediate family members of our shareholders and friends of our shareholders. The individuals loaned us funds which are interest free with no specific repayment date and are unsecured. The funds received are evidenced by receipt of cash acknowledgments.

 

As of March 31, 2016, we had no material commitments for capital expenditures other than for those expenditures incurred in the ordinary course of business. We plan to fund operations and capital expenditures with cash from operations, as well as loans from major shareholders and management members and their affiliates. We might also pursue additional financings in the form of debt, equity or convertible security offerings. There can be no assurance that we will be able to obtain such additional financing at acceptable terms to us, or at all.

 

As indicated in the accompanying consolidated financial statements, the Company had net losses of $(3,148,276) and $(1,887,180) for the nine months ended March 31, 2016 and 2015, respectively, and an accumulated deficit of $21,222,105 at March 31, 2016 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 debt and 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.

 

 8 

 

 

Item 3. 

Quantitative and Qualitative Disclosure about Market Risk

 

Not applicable.

 

Item 4.  Controls and Procedures.

 

(a) Evaluation of disclosure controls and procedures

 

As of the end of our last fiscal year ended June 30, 2015, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, management concluded that our disclosure controls and procedures were not effective as of June 30, 2015 to cause the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods prescribed by SEC, and that such information is accumulated and communicated to management, including our chief executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.  Management conducted a similar evaluation as of the period covered by this Report and management again concluded that our disclosure controls and procedures were similarly ineffective as of March 31, 2016.

 

 9 

 

 

(b) Changes in internal control over financial reporting

 

Other than those disclosed in the Annual Report on Form 10K for the year ending June 30, 2015 that we continue to implement, there have not been any changes in our internal control over financial reporting identified in connection with the evaluation management performed at the end of the fiscal quarter covered by this Report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

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

 

None

 

 10 

 

 

Item 6.  Exhibits.

 

(a) Exhibits.

 

Exhibit No.   Document Description
     
3.1   Articles of Incorporation of China Ginseng Holdings, Inc. (incorporated by reference to Exhibit 3.1 to our Form 10-12G filled on August 6, 2010)
     
3.2   By-laws of China Ginseng Holdings, Inc. (incorporated by reference to Exhibit 3.2 to our Form 10-12G filled on August 6, 2010)
     
4.1   Form of Convertible Debenture (incorporated by reference to Exhibit 10.2 to our Form 8-K filed on July 24, 2015)
     
10.1   Loan Contract by and between Hong Kong Huaxia and Fei Zhang, dated July 1, 2015 (incorporated by reference to the Annual Report on Form 10-K filed on October 13, 2015)
     
1.02   Securities Purchase Agreement, dated July 21, 2015, by and among China Ginseng Holdings, Inc. and Investor Identified therein (incorporated by reference to Exhibit 10.1 to our Form 8-K filed on July 24, 2015)
     
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.
     
101.INS   XBRL INSTANCE DOCUMENT
     
101.SCH   XBRL TAXONOMY EXTENSION SCHEMA
     
101.CAL   XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
     
101.DEF   XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
     
101.LAB   XBRL TAXONOMY EXTENSION LABEL LINKBASE
     
101.PRE   XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

 

*  This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 of the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

 

 11 

 

 

SIGNATURES

    

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: May 16, 2016 By: /s/ Long He 
    Long He
    Principal Executive Officer and Chairman

 

Date: May 16, 2016 /s/ Ren Ying 
  Ren Ying
  Principal Financial Officer and Principal Accounting Officer

 

 12 

EX-31 2 s103289_ex31-1.htm EXHIBIT 31-1

 

Exhibit 31.1

 

CERTIFICATION

 

I, Long He, certify that:

 

1. I have reviewed this report on Form 10-Q of China Ginseng Holdings, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

 

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

  China Ginseng Holdings, Inc.    
       
Dated: May 16, 2016 By:  /s/ Long He  
    Long He  
    Chairman of the Board and Chief Executive Officer

 

 

 

EX-31.2 3 s103289_ex31-2.htm EXHIBIT 31-2

 

Exhibit 31.2

 

CERTIFICATION

 

I, Ren Ying, certify that:

 

1. I have reviewed this report on Form 10-Q of China Ginseng Holdings, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

 

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

Dated: May 16, 2016 By:  /s/ Ren Ying  
    Ren Ying  
    Chief Financial Officer and Accounting Manager  

 

 

EX-32.1 4 s103289_ex32-1.htm EXHIBIT 32-1

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned hereby certifies that the Quarterly Report on Form 10-Q for the period ended March 31, 2016 of China Ginseng Holdings, Inc. (the “Company”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

  China Ginseng Holdings, Inc.  
       
Dated: May 16, 2016 By:  /s/ Long He  
    Long He  
    Chairman of the Board and Chief Executive Officer

 

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to China Ginseng Holdings, Inc. and will be retained by China Ginseng Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 

EX-32.2 5 s103289_ex32-2.htm EXHIBIT 32-2

 

Exhibit 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned hereby certifies that the Quarterly Report on Form 10-Q for the period ended March 31, 2016 of China Ginseng Holdings, Inc. the “Company”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: May 16, 2016 By:  /s/ Ren Ying  
    Ren Ying  
    Chief Financial Officer and Accounting Manager

 

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to China Ginseng Holdings, Inc. and will be retained by China Ginseng Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 

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purchase Loans payable- other Notes payable - related parties Convertible debenture Accounts payable Accrued expenses Taxes payable Payable to farmers Payments received in advance Total Current Liabilities OTHER LIABILITIES Liabilities of discontinued operations Total Liabilities COMMITMENTS AND CONTINGENCIES (NOTE O) STOCKHOLDERS' DEFICIT Common Stock, $0.001 par value; 50,000,000 shares authorized; 44,397,297 shares issued and outstanding at March 31,2016 and 44,397,297 at June 30, 2015, respectively Additional paid-in capital Accumulated deficit Accumulated other comprehensive income Total Stockholders' Deficit Total Liabilities and Stockholders' Deficit Property and equipment accumulated depreciation (in dollars) Common stock, par value (in dollars per share) Common stock, authorized Common stock, issued Common stock, outstanding Income Statement [Abstract] REVENUES COSTS AND EXPENSES Cost of goods sold Selling, general and administrative expenses Bad debt expense (recovered) Depreciation and amortization Total Costs and Expenses OTHER EXPENSE Foreign Exchange Interest expense Net Other Expense LOSS BEFORE INCOME TAXES PROVISION FOR INCOME TAXES NET LOSS OTHER COMPREHENSIVE INCOME (LOSS) Translation Adjustment COMPREHENSIVE LOSS NET LOSS PER COMMON SHARE (Basic and diluted) (in dollars per share) WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - Basic and diluted (in shares) Statement of Cash Flows [Abstract] Cash Flows from Operating Activities: Net loss Adjustments to reconcile net loss to net cash from operating activities: Depreciation and amortization Imputed interest Changes in assets and liabilities: Decrease in accounts receivable Increase in inventory Increase in advances to third party Increase in prepaid expense Increase in due from related parties Increase in accounts payable Decrease in taxes payable Increase (decrease) in receivables in advance Increase in accrued expenses Net cash provided by (used in) operating activities Cash Flows from Investing Activities: Purchase of property and equipment Net cash provided by (used in) investing activities Cash Flows from Financing Activities: Proceeds from loans Proceeds from loans payable to related parties Proceeds from Series A Convertible Debenture Repayments of Loans Payable Net cash provided by (used in) financing activities Effect of exchange rate on cash Increase in cash Cash at beginning of period Cash at end of period Organization, Consolidation and Presentation of Financial Statements [Abstract] PRESENTATION, NATURE OF BUSINESS, AND GOING CONCERN Property, Plant and Equipment [Abstract] PROPERTY AND EQUIPMENT Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] DEPOSIT FOR EQUIPMENT PURCHASE Inventory Disclosure [Abstract] INVENTORY Agriculture [Abstract] GINSENG CROPS Agreements With Farmers [Abstract] AGREEMENTS WITH FARMERS Debt Disclosure [Abstract] LOAN PAYABLE TO FINANCIAL INSTITUTION LOAN PAYABLE - BUILDING PURCHASE LOAN PAYABLE - EQUIPMENT PURCHASE LOANS PAYABLE - OTHER CONVERTIBLE DEBENTURE Related Party Transactions [Abstract] RELATED PARTY TRANSACTIONS Income Tax Disclosure [Abstract] PROVISION FOR INCOME TAXES Discontinued Operations and Disposal Groups [Abstract] DISCONTINUED OPERATIONS Commitments and Contingencies Disclosure [Abstract] COMMITMENTS AND CONTINGENCIES Segment Reporting [Abstract] OPERATING SEGMENTS Basis of Presentation Nature of Business Consolidated Financial Statements Reclassifications Uncertainty in Income Taxes Going Concern Schedule of property and equipment Schedule of inventory Schedule of deferred tax assets Schedule of net operating loss carry forward Schedule of components of income before taxes Schedule of effective tax rate reconciliation as a percentage of income before taxes and federal statutory rate Schedule of contractual commitments Schedule of business segments Schedule of Business Acquisitions, by Acquisition [Table] Business Acquisition [Line Items] Percentage of ownership acquired by company Remaining percentage acquired by company Land used to grow ginseng (hectare) Land used to grow ginseng (acres) Operating leases description Charge to operations expenses Description of leases expiration period Registered capital Registered shares Registered stock, par value (in dollars per share) Accumulated deficit Grant period of lease Property, Plant and Equipment [Table] Property, Plant and Equipment [Line Items] Property and equipment, gross Less accumulated depreciation Property and equipment, net Depreciation Statement [Table] Statement [Line Items] Deposit assets Raw materials Finished goods Packaging supplies Operating supplies Inventory, net Growth period before harvest Period for improved harvest and seedling yields Land planted (in square meters) Price for leases of ginseng land Management fee paid to farmers Production of crop per square meter required in kg's Description of payment condition of the harvested crop to the farmers Price per kilo for extra kilo production Long-term payable as a management fee due to the farmers Loans Payable Interest rate on loan Term of loan Description of interest payment terms Description of the collateral Loan payable to financial institution Purchase price of office and warehouse facilities Amount paid for office and warehouse facilities Unpaid amount for office and warehouse facilities Loan maturity date Floating interest rate adjusted upwards description Central bank rate Increase in maturity date after renegotiation of repayment of loan Remaining loan of office and warehouse facilities Office and warehouse facilities purchase price paid Office and warehouse loan to be repay in September 2012 Office and warehouse loan to be repay on August 29, 2013 Office and warehouse loan to be repay on December 20, 2013 Office and warehouse loan to be repay on August 29, 2014 Payments to acquire machinery and equipment Interest paid for loan Loan payable - other Interest rate Debt face amount Number of shares issued for debt conversion Conversion price (in dollars per share) Debt maturity term Common stock, total of issued, outstanding and reserved shares Increase in number of authorized shares Shares issued on conversion Common stock conversion Notes payable - related parties Receivables from related parties Timing difference related to inventory provisions Net operating losses Valuation allowance Deferred tax asset Net operating loss carry forward Income before taxes Federal statutory rate State income taxes, net of federal benefit Valuation allowance Earnings taxed at other than US statutory rate Effective tax rate Operating Loss Carryforwards [Table] Operating Loss Carryforwards [Line Items] Period to carry forward net operating losses Operating loss expiration date Penalties related to past due information returns from 2005 through 2015 Disposal Groups, Including Discontinued Operations [Table] Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] Contingent liabilities Loan payable Accounts payable and accrued expenses 2017 Expiration of leases Term of Lease Annual lease fee Commitments for the leases Schedule of Segment Reporting Information, by Segment [Table] Segment Reporting Information [Line Items] Summary of segments reporting information Revenues Net (loss) Income Total assets Other significant items: Expenditures for fixed assets Number of operating segments It represents the advance amount to third parties. Carrying value of amounts transferred to third parties for security purposes that are expected to be returned or applied towards payment in the future. Carrying value as of the balance sheet date of portion of long-term loans payable to equipment purchase due within one year or the operating cycle if longer. Carrying value as of the balance sheet date of portion of long-term loans payable to building purchase due within one year or the operating cycle if longer. Amount of the cost of borrowed funds accounted for as inputed interest. The increase (decrease) during the reporting period in the aggregate value of advance paid to third party by the reporting entity, associated with underlying transactions that are classified as operating activities. The entire disclosure for deposit for equipment. Agreements with farmers disclosure. The entire disclosure for loans payable. Information by business segments. Information by business segments. Represents the amount of expenditures for fixed assets incurred during the period. Information by corporate office. Information regarding legal entity. Yanbian Huaxing. Information regarding legal entity. Information regarding legal entity. Term of lease. Annual lease fee. Area of land held. Grant period of lease. Tonghua Linyuan. Amount classified as notes and loans payable attributable to disposal group held for sale or disposed of. Earnings taxed at other than United States statutory rate. Time period to carry forward net operating losses. Hong Kong Huaxia Remaining percentage acquired in the Yanbian Huaxing Ginseng Industry Co. Limited. Description of leases expiration period. Registered Capital Face amount or stated value per share of registered stock. Growth period before harvest can commence. Period for improved harvest and seedling yields. Area of land planted by the company. Refers to land grant to farmers price per square meter during the period. Refers to management fee price per square meter during the period. Production of crop per square meter. Condition for payment of crop to the farmers. Refers to price per extra kilo crop during the period. Refers to purchase price of office and warehouse facilities as on date. Amount paid for office and warehouse facilities. Unpaid amount for office and warehouse facilities. Floating interest rate adjusted upwards. Central bank rate. Debt instrument increase maturity date after renegotiation of repayment of loan. Remaining loan of office and warehouse facilities. Amount of office and warehouse facilities repaid. Office and warehouse loan repay current year. office and warehouse loan repay next one year. Office and warehouse loan repay next two year. Office and warehouse loan to be repay on maturity date. Assets, Current Liabilities, Current Liabilities Stockholders' Equity Attributable to Parent Liabilities and Equity Costs and Expenses Foreign Currency Transaction Gain (Loss), before Tax Other Nonoperating Expense Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent Depreciation, Depletion and Amortization Increase (Decrease) in Accounts Receivable Increase (Decrease) in Inventories IncreaseDecreaseInAdvancesToThirdParty Increase (Decrease) in Prepaid Expense Increase (Decrease) in Due from Related Parties Increase (Decrease) in Other Receivables Net Cash Provided by (Used in) Operating Activities, Continuing Operations Payments for (Proceeds from) Productive Assets Net Cash Provided by (Used in) Investing Activities, Continuing Operations Repayments of Debt Net Cash Provided by (Used in) Financing Activities, Continuing Operations Cash and Cash Equivalents, Period Increase (Decrease) Income Tax Disclosure [Text Block] Notes Payable, Related Parties, Current Deferred Tax Assets, Valuation Allowance Deferred Tax Assets, Net of Valuation Allowance Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent EX-101.PRE 11 csng-20160331_pre.xml XBRL PRESENTATION FILE XML 12 R1.htm IDEA: XBRL DOCUMENT v3.4.0.3
Document and Entity Information - shares
9 Months Ended
Mar. 31, 2016
May. 23, 2016
Document And Entity Information    
Entity Registrant Name China Ginseng Holdings Inc  
Entity Central Index Key 0001338460  
Document Type 10-Q  
Trading Symbol CSNG  
Document Period End Date Mar. 31, 2016  
Amendment Flag false  
Current Fiscal Year End Date --06-30  
Entity a Well-known Seasoned Issuer No  
Entity a Voluntary Filer No  
Entity's Reporting Status Current Yes  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   44,397,297
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2016  
XML 13 R2.htm IDEA: XBRL DOCUMENT v3.4.0.3
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)
Mar. 31, 2016
Jun. 30, 2015
CURRENT ASSETS    
Cash $ 61,890 $ 10,016
Accounts receivable, net 542,770 579,752
Advances to third parties 552,323 93,254
Inventory 586,966 285,981
Due from related parties 26,289 7,703
Prepaid expenses 1,466 1,549
Total Current Assets 1,771,704 978,255
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $567,153 and $525,199 at March 31,2016 and June 30, 2015, respectively 1,251,423 1,398,425
OTHER ASSET    
Deposit on equipment 5,646,442 5,967,480
Total Assets 8,669,569 8,344,160
CURRENT LIABILITIES    
Loan payable- equipment purchase 5,645,090 5,966,052
Loan payable- building purchase 1,197,920 1,308,558
Loans payable- other 3,124,239 3,997,629
Notes payable - related parties 1,650,292 $ 1,593,996
Convertible debenture 1,600,000
Accounts payable 2,244,996 $ 951,068
Accrued expenses 4,371,269 2,486,436
Taxes payable 66,873 71,034
Payable to farmers 832,248 879,567
Payments received in advance 186,038 247,663
Total Current Liabilities 20,918,965 17,502,003
OTHER LIABILITIES    
Liabilities of discontinued operations 486,120 513,760
Total Liabilities $ 21,405,085 $ 18,015,763
COMMITMENTS AND CONTINGENCIES (NOTE O)
STOCKHOLDERS' DEFICIT    
Common Stock, $0.001 par value; 50,000,000 shares authorized; 44,397,297 shares issued and outstanding at March 31,2016 and 44,397,297 at June 30, 2015, respectively $ 44,398 $ 44,398
Additional paid-in capital 7,826,365 7,738,746
Accumulated deficit (21,222,105) (18,073,829)
Accumulated other comprehensive income 615,826 619,082
Total Stockholders' Deficit (12,735,516) (9,671,603)
Total Liabilities and Stockholders' Deficit $ 8,669,569 $ 8,344,160
XML 14 R3.htm IDEA: XBRL DOCUMENT v3.4.0.3
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)
Mar. 31, 2016
Jun. 30, 2015
Statement of Financial Position [Abstract]    
Property and equipment accumulated depreciation (in dollars) $ 567,153 $ 525,199
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, authorized 50,000,000 50,000,000
Common stock, issued 44,397,297 44,397,297
Common stock, outstanding 44,397,297 44,397,297
XML 15 R4.htm IDEA: XBRL DOCUMENT v3.4.0.3
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) - USD ($)
3 Months Ended 9 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Mar. 31, 2016
Mar. 31, 2015
Income Statement [Abstract]        
REVENUES $ 253,619 $ 15,148 $ 315,365 $ 167,362
COSTS AND EXPENSES        
Cost of goods sold 220,580 60 251,341 115,878
Selling, general and administrative expenses 58,817 381,055 1,664,593 1,198,082
Bad debt expense (recovered) (117,885) (22) (161,263) (42,272)
Depreciation and amortization 14,743 21,342 67,789 67,276
Total Costs and Expenses 176,255 402,435 1,822,460 1,338,964
OTHER EXPENSE        
Foreign Exchange (2,014)   87,045  
Interest expense 699,695 182,346 1,554,136 715,578
Net Other Expense 697,681 182,346 1,641,181 715,578
LOSS BEFORE INCOME TAXES $ (620,317) $ (569,633) $ (3,148,276) $ (1,887,180)
PROVISION FOR INCOME TAXES
NET LOSS $ (620,317) $ (569,633) $ (3,148,276) $ (1,887,180)
OTHER COMPREHENSIVE INCOME (LOSS)        
Translation Adjustment (169,633) 18,374 (3,256) 167,547
COMPREHENSIVE LOSS $ (789,950) $ (551,259) $ (3,151,532) $ (1,719,633)
NET LOSS PER COMMON SHARE (Basic and diluted) (in dollars per share) $ (0.02) $ (0.01) $ (0.07) $ (0.04)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - Basic and diluted (in shares) 45,397,297 44,397,297 45,397,297 44,397,297
XML 16 R5.htm IDEA: XBRL DOCUMENT v3.4.0.3
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)
9 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Cash Flows from Operating Activities:    
Net loss $ (3,148,276) $ (1,887,180)
Adjustments to reconcile net loss to net cash from operating activities:    
Depreciation and amortization 67,789 67,276
Imputed interest 72,629 75,132
Changes in assets and liabilities:    
Decrease in accounts receivable 5,854 60,319
Increase in inventory (320,054) $ (176,704)
Increase in advances to third party $ (461,332)
Increase in prepaid expense $ (127)
Increase in due from related parties $ (18,772) (16,991)
Increase in accounts payable 1,164,550 1,017,127
Decrease in taxes payable (343) (2,270)
Increase (decrease) in receivables in advance (48,810) 452
Increase in accrued expenses 1,795,898 441,324
Net cash provided by (used in) operating activities (890,867) (421,642)
Cash Flows from Investing Activities:    
Purchase of property and equipment (9,277) (7,881)
Net cash provided by (used in) investing activities $ (9,277) (7,881)
Cash Flows from Financing Activities:    
Proceeds from loans 3,424
Proceeds from loans payable to related parties $ 91,345 $ 271,424
Proceeds from Series A Convertible Debenture 1,600,000
Repayments of Loans Payable (738,971)
Net cash provided by (used in) financing activities 952,374 $ 274,848
Effect of exchange rate on cash (356) 167,259
Increase in cash 51,874 12,584
Cash at beginning of period 10,016 24,782
Cash at end of period $ 61,890 $ 37,366
XML 17 R6.htm IDEA: XBRL DOCUMENT v3.4.0.3
PRESENTATION, NATURE OF BUSINESS, AND GOING CONCERN
9 Months Ended
Mar. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [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 10-K for the year ended June 30, 2015.  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, 2016, are not necessarily indicative of the results that may be expected for the year ending June 30, 2016.

 

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 August 2005, the Company acquired the remaining 45% of Yanbian Huaxing. From 2010, the Company ceased to sell ginseng in the market. The harvest of ginseng is primarily self-used as raw material in the production of ginseng beverage.    

 

Yanbian Huaxing controls, through 20 year leases granted by the Chinese Government, approximately 1,500 hectares (3,705 acres) of land exclusively used to grow ginseng. The Company had no operations prior to November 24, 2004. These leases expire through 2024. During the year ended June 30, 2014, the Forestry Bureau governing one of the farms withdrew approximating 700 hectares (1,730 acres) of land leased and notified the Company that this lease is no longer recognized. As a result, the Company is prevented from developing and planting ginseng in undeveloped areas of the farm.

 

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 was the growing, cultivation and harvesting of a grape vineyard. The Company produced wine and grape juice using the grapes planted on the land Tonghua Linyuan leased, but in June 2012, the Company decided to abandon the growing and harvesting of grapes due to the poor quality of grape harvests which were not suitable for the production of wine or grape juice. Accordingly, the Company has abandoned the vineyard and also decided not to renew its leases with the Chinese Government. On June 30, 2013, the Company sold the assets and liabilities of Tonghua Linyuan to a third party. (see Note N.)

 

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 such as cosmetics and health supplements. Hong Kong Huaxia was incorporated in Hong Kong on March 18, 2012, and began operations in April 2012. Hong Kong Huaxia has registered 880,000,000 shares of 1 HKD par value per share stock in Hong Kong. None of the $113,443,000 (880,000,000 HKD) registered capital of Hong Kong Huaxia has been funded as of March 31, 2016.

 

On September 27, 2013, the Company established a new wholly owned subsidiary of Hong Kong Huaxia, Jilin Huaxia Ginseng Co., Ltd (“Jilin Huaxia”) in order to open an online store through Taobao Marketplace, the biggest online Business to Consumer and Consumer to Consumer platform in Asia, a subsidiary company of Alibaba Group. Hong Kong Huaxia registered capital of $6,000,000 in Jilin Huaxia, none of which was funded at March 31, 2016.

 

Substantially all of the Company’s operations are in the People’s Republic of China and Hong Kong.

 

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, Mudanjiang Huaxing Ginseng Co..Limited and Hong Kong Huaxia International Industrial, Co. Limited and its subsidiary Jilin Huaxia. All intercompany transactions have been eliminated in consolidation.

 

Reclassifications

 

Certain reclassifications have been made to the consolidated financial statements for the three and nine months ended March 31, 2015 to make then comparable to the presentation for the three and nine months ended March 31, 2016.

 

Uncertainty in Income Taxes

 

The Company’s policy is to recognize interest related to income tax matters as interest expense. The Company’s policy is to recognize penalties related to income tax matters as selling, general and administrative expenses. The Company's income tax returns are subject to examination by the IRS and State tax authorities, generally for three years after they are filed.

 

Going Concern

 

As indicated in the accompanying financial statements, the Company had net losses of $3,148,276 and $1,887,180 for the nine months ended March 31, 2016 and 2015, respectively, and an accumulated deficit of $21,222,105 as of March 31, 2016 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 debt and 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 positive cash flows from operations.  These matters raise substantial doubt about the Company’s ability to continue as a going concern.  However, the accompanying 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.

XML 18 R7.htm IDEA: XBRL DOCUMENT v3.4.0.3
PROPERTY AND EQUIPMENT
9 Months Ended
Mar. 31, 2016
Property, Plant and Equipment [Abstract]  
PROPERTY AND EQUIPMENT

NOTE B - PROPERTY AND EQUIPMENT

 

Property and equipment is comprised of the following at:

 

    March 31,     June 30,  
    2016     2015  
Buildings and improvements   $ 1,387,535     $ 1,472,128  
Machinery and equipment     354,963       393,100  
Motor vehicles     23,830       30,501  
Office equipment     52,248       27,895  
      1,818,576       1,923,624  
Less accumulated depreciation     (567,153 )     (525,199 )
    $ 1,251,423     $ 1,398,425  

 

Substantially all of the property and equipment is located in China.

 

Total depreciation was $67,789 and $67,276 for the nine months ended March 31, 2016 and 2015, respectively.

XML 19 R8.htm IDEA: XBRL DOCUMENT v3.4.0.3
DEPOSIT FOR EQUIPMENT PURCHASE
9 Months Ended
Mar. 31, 2016
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
DEPOSIT FOR EQUIPMENT PURCHASE

NOTE C -DEPOSIT FOR EQUIPMENT PURCHASE

 

In November of 2013, the Company made a deposit of RMB 36,474,054 ($5,645,090) with a supplier for the purchase of equipment for its ginseng farms. Prior to delivery of the equipment, the Company determined that this equipment was not best suited for its’ farms and cancelled the purchase. The deposit remains on hand with the supplier. The Company and supplier are negotiating for the delivery of different equipment for the Company’s new eye care centers or the return of the deposit.

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.4.0.3
INVENTORY
9 Months Ended
Mar. 31, 2016
Inventory Disclosure [Abstract]  
INVENTORY

NOTE D - INVENTORY

 

Inventory is comprised of the following at:

 

    March 31,     June 30,  
    2016     2015  
Raw materials   $ 449,625     $ 126,006  
Finished goods     133,179       67,787  
Packaging supplies     -       87,789  
Operating supplies     4,162       4,399  
    $ 586,966     $ 285,981  

XML 21 R10.htm IDEA: XBRL DOCUMENT v3.4.0.3
GINSENG CROPS
9 Months Ended
Mar. 31, 2016
Agriculture [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 land to plant ginseng needs to be rotated. The Company tracks the costs expended each year by planting area. The Chinese government owns all of the land in China.

 

Currently, the Company has obtained leases from the Chinese government for approximately 800 hectares of land (approximately 1,975 acres) to grow ginseng, which were awarded in April and May 2005.  These rights are valid for 20 years and the management of the Company believes that the leases will be renewed.  However, there are no assurances that the Chinese government will continue to renew these leases 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 has planted approximately 287,984 square meters (28.80 hectares or 71.16 acres) of land. The Company has no plan to expand ginseng planting at the moment. The Company can purchase raw ginseng from farmers, or the open market directly.

XML 22 R11.htm IDEA: XBRL DOCUMENT v3.4.0.3
AGREEMENTS WITH FARMERS
9 Months Ended
Mar. 31, 2016
Agreements With Farmers [Abstract]  
AGREEMENTS WITH FARMERS

NOTE F - AGREEMENTS WITH FARMERS

 

The Company has executed agreements with a number of local farmers to grow, cultivate and harvest Ginseng utilizing the Company’s land grants. The farming contracts commenced in January 2008 and ended in 2013. In connection with these agreements, the Company (1) leases sections of the Ginseng land grants to the farmers at approximately $1.50 (10 RMB) per square meter per year, (2) provides the seeds and fertilizer to the farmers and clears the land of large debris, (3) pays the farmers a management fee of approximately $0.50 (4.00 RMB) per square meter per year and (4) the farmers are required to produce 2kg of Ginseng for each square meter that they manage. The costs of the seeds and fertilizers provided to the farmers are capitalized and included in the Ginseng Crop inventory. The Company pays the farmers market price for their Ginseng. 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. The Company records these agreements on a net basis by individual farmers. The Company has also recorded a payable to the farmers for the net management fee due to the farmers. The liability at March 31, 2016 and June 30, 2015 was $832,248 and $879,567 respectively.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.4.0.3
LOAN PAYABLE TO FINANCIAL INSTITUTION
9 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
LOAN PAYABLE TO FINANCIAL INSTITUTION

NOTE G - LOAN PAYABLE TO FINANCIAL INSTITUTION

 

In 2002, the Company’s subsidiary, Tonghua Linyuan, borrowed 2,000,000 RMB from Ji’an Qingshi Credit Corporation at an interest rate of 6.325% per annum with a maturity date of April 4, 2003. The loan is currently in default. In March 2008, the lender verbally agreed that no principal or interest need be paid until the Company is generating profits. Interest was paid on the loan through June 30, 2009 and has been accrued in subsequent periods. The loan is secured by the Company’s inventory and equipment. The loan balance at March 31, 2016 and June 30, 2015 was $309,540 and $327,139, respectively. The loan balance is included in Liabilities of Discontinued Operations on the accompanying consolidated Balance Sheets.

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.4.0.3
LOAN PAYABLE - BUILDING PURCHASE
9 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
LOAN PAYABLE - BUILDING PURCHASE

NOTE H - LOAN PAYABLE - BUILDING PURCHASE

 

On March 2, 2011, the Company entered into an agreement with Meihekou Hang Yilk Tax Warehousing Logistics, an auctioneer, to purchase office and warehouse facilities. The purchase price was $1,385,980 (RMB 9,000,000). On June 24, 2011, the Company made a payment of $76,990 (RMB 500,000) leaving a balance of $1,308,981 (RMB 8,500,000). On September 10, 2011, the Company paid 8,000,000 RMB through the proceeds of a loan with Meihekou City Rural Credit Union. The remaining 500,000 RMB was paid as follows: (a) $15,400 (RMB 100,000) in December 2010 and (b) $61,599 (RMB 400,000) in June 2011.

 

The loan from Meihekou City Rural Credit Union was due on August 12, 2012. The interest rate is a floating rate adjusted upwards by 90%. At June 30, 2015, the Central Bank Rate was 4.85% applying the adjustment factor yields a rate of 18.43%. The loan is secured by the building. On August 30, 2012, the loan was renegotiated extending the maturity date to August 29, 2014 with principal payments of 1,000,000 RMB (USD $153,998) in September 2012; 1,000,000 RMB (USD $153,998) on August 29, 2013; 1,000,000 RMB (USD $153,998) on December 20, 2013 and 5,000,000 RMB (USD $769,988) on August 29, 2014. None of these payments were made by the Company and the note is thus in default.

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.4.0.3
LOAN PAYABLE - EQUIPMENT PURCHASE
9 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
LOAN PAYABLE - EQUIPMENT PURCHASE

NOTE I - LOAN PAYABLE - EQUIPMENT PURCHASE

 

On October 29, 2013, the Company borrowed $5,616,923 (RMB 36,474,054) in order to fund the acquisition of machinery and equipment by the Company. The loan was due on February 28, 2014, and the Company was to pay $211,606 (RMB 1,300,000) in interest over the life of the loan. The loan is secured by the assets of Jilin Huaxia. On July 1, 2015, the loan term was extended to December 31, 2015. On January 3, 2016, the creditor agreed to negotiate with the Company for a new term on the loan. The Company is still in negotiation with creditor currently.

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.4.0.3
NOTE PAYABLE - OTHER
9 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
LOANS PAYABLE - OTHER

NOTE J - LOANS PAYABLE - OTHER

 

The Company has loans with various individuals and finance companies totaling $3,124,239 at March 31, 2016 and $3,997,629 at June 30, 2015. These loans are payable on demand and bear interest at 3% per month.

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.4.0.3
CONVERTIBLE DEBENTURE
9 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
CONVERTIBLE DEBENTURE

NOTE K- CONVERTIBLE DEBENTURE

 

On July 21, 2015, the Company closed a private placement to sell a Series A Convertible Debenture for a price of $1,600,000. The Series A Convertible Debenture is repayable at July 20, 2018 and is convertible into 4,000,000 shares of the Company’s common stock at a price of $0.40 per share. During the period that the conversion right exists, the Company covenants that it will reserve, from its authorized and unissued common stock, shares equal to 110% of the number of shares of common stock upon the full conversion of the Series A Convertible Debenture. At the conversion price of $.40 per share, this will be 4,400,000 shares. When combined with the current shares issued and outstanding of 44,397,297, the total of issued, outstanding and reserved shares is 48,797,297. As the authorized shares are 50,000,000, the Company will breach the covenant if it issues 1,202,703 shares absent an increase to the number of authorized shares. The Series A Convertible Debenture carries no interest and matures in 36 months. The Series A Convertible Debenture also has a prepayment clause pursuant to which the Company may repurchase all or a portion of the outstanding Convertible Debenture in cash for 100% of the face value on ten business days’ notice at any time after the twelve month anniversary of the closing; provided that the Investor shall have the right to convert the Convertible Debenture within five business days after written notice of such prepayment.

 

The funds received from the convertible debenture were used to pay down accounts payable, to provide advances to third parties to support the Company’s future operations and to increase the Company’s cash available to fund future operations.

XML 28 R17.htm IDEA: XBRL DOCUMENT v3.4.0.3
RELATED PARTY TRANSACTIONS
9 Months Ended
Mar. 31, 2016
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE L - RELATED PARTY TRANSACTIONS

 

The Company had been financing its operations from loans from individuals, principally residents of China, who are deemed to be related parties because of their ownership interest in the Company (shareholders). The individuals have loaned the Company funds which are interest free, have no specific repayment date, and are unsecured. The funds received are evidenced by receipt of cash acknowledgments. At March 31, 2016 and June 30, 2015, funds borrowed to fund the current operations of the Company were $1,650,292 and $1,593,996, respectively. The Company has imputed an interest charge of $72,629 and $75,132 which has been recorded in the financial statements for the nine months ended March 31, 2016 and 2015, respectively. 

 

At March 31, 2016 and June 30, 2015, the Company had receivables from related parties amounting to $26,289 and $7,703, respectively.

XML 29 R18.htm IDEA: XBRL DOCUMENT v3.4.0.3
PROVISION FOR INCOME TAXES
9 Months Ended
Mar. 31, 2016
Income Tax Disclosure [Abstract]  
PROVISION FOR INCOME TAXES

NOTE M - PROVISION FOR INCOME TAXES

 

Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting bases and income tax bases 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:

 

    March 31,     June 30,  
    2016     2015  
      -     $ -  
Net operating losses   $ 4,159,027     $ 3,371,958  
Valuation allowance     (4,159,027 )     (3,371,958 )
Deferred tax asset   $ -     $ -  

 

The deferred tax asset is the result of an inventory provision and related reserve. Under Chinese tax laws, the Company is not entitled to a deduction for the provision until the inventory is completely discarded. Accordingly, the liability has been recorded as an offset by a deferred tax asset representing a timing difference.

 

The Company has a net operating loss carry forward as follows:

 

    March 31,     June 30,  
    2016     2015  
International (China)   $ 11,204,424     $ 9,290,901  
United States     5,431,684       4,196,931  
    $ 16,636,108     $ 13,487,832  

 

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 commenced expiring in 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 2027.

 

At March 31, 2016, the Company determined that it had approximately $540,000 in penalties related to past due information returns from 2005 through 2015, which is included in accrued expense and selling, general and administrative expenses. The Company plans to seek abatement with the Internal Revenue Service relating to these amounts, the outcome of which is uncertain.

 

The components of income before taxes are as follows:

 

    For the Nine Months
Ended
March 31,
 
    2016     2015  
International (China)   $ (1,913,523 )   $ (1,012,948 )
United States     (1,234,753 )     (874,232 )
    $ (3,148,276 )   $ (1,887,180 )

  

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, 2016 and 2015, respectively, are as follows:

 

    For the Nine Months
Ended
March 31,
 
    2016     2015  
Federal statutory rate     (34.0 )%     (34.0 )%
State income taxes, net of federal benefit     3.3       3.3  
Valuation allowance     30.7       30.7  
Earnings taxed at other than US statutory rate     -       -  
Effective tax rate     - %     - %
XML 30 R19.htm IDEA: XBRL DOCUMENT v3.4.0.3
DISCONTINUED OPERATIONS
9 Months Ended
Mar. 31, 2016
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS

NOTE N - DISCONTINUED OPERATIONS

 

On June 30, 2013, the Company discontinued its’ grape production operations. The Company sold the assets and liabilities of Tonghua Linyuan, and closed Tonghua Linyuan.

 

The Company has retained $486,120 and $513,760 in contingent liabilities of Tonghua Linyuan at March 31, 2016 and June 30, 2015, respectively. These liabilities are included in Liabilities of Discontinued Operations on the consolidated Balance Sheet. These liabilities consisted of a loan payable to a financial institution of $309,540 and accounts payable and accrued expenses of $176,580 at March 31, 2016 and a loan payable to a financial institution of $327,139 and accounts payable and accrued expenses of $186,321 at June 30, 2015.

XML 31 R20.htm IDEA: XBRL DOCUMENT v3.4.0.3
COMMITMENTS AND CONTINGENCIES
9 Months Ended
Mar. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE O - COMMITMENTS AND CONTINGENCIES

 

The Company has employment agreements with various individuals in China. The following summarizes the contractual commitments under these agreements:

 

March 31,   Commitment  
2017   $ 33,909  

 

The Company has one year leases for its corporate offices in China aggregating RMB 220,190 per year (USD 33,909) expiring May 21, 2016. The lease is renewable each year.

 

The Chinese government owns all the land in China. Currently, the Company has grants from the Chinese government for approximately 800 hectares of land (1,975 acres) to grow Ginseng. These grants are for 20 years. There is no assurance that the Chinese government will continue to renew these grants in the future.

 

The Company has a lease to refrigerate and store fresh Ginseng, which operates on a month to month basis until terminated by the parties. The annual lease fee approximates $15,500 per year.

XML 32 R21.htm IDEA: XBRL DOCUMENT v3.4.0.3
OPERATING SEGMENTS
9 Months Ended
Mar. 31, 2016
Segment Reporting [Abstract]  
OPERATING SEGMENTS

NOTE P - OPERATING SEGMENTS

 

The Company currently has two operating segments, (1) the cultivation and harvest of Ginseng for the production of Ginseng beverages and (2) the retail sales of cosmetics and health supplements.

 

The Company’s reportable business segments are strategic business units that offer different products.  Each segment is managed separately because they require different production techniques and market to different classes of customers. 

 

Nine months ended March 31, 2016:

 

    Parent 
Company
    Ginseng     Cosmetics/
Supplements
    Total  
Revenues   $ -     $ 248,972     $ 66,393     $ 315,365  
Net loss     (1,234,753 )     (1,906,304 )     (7,219 )     (3,148,276 )
Total assets     421,704       8,165,785       82,080       8,669,569  
                                 
Other significant items:                                
Depreciation and amortization     1,299       65,680       810       67,789  
Interest expense     173,898       1,378,763       1,475       1,554,136  
Expenditures for fixed assets             9,277       -       9,277  

 

Three Months Ended March 31, 2016

 

    Parent 
Company
    Ginseng     Cosmetics /
Supplements
    Total  
Revenues   $ -     $ 210,690     $ 42,929     $ 253,619  
Net Loss     (119,235 )     (486,057 )     (13,011 )     (618,303 )
Total Assets     421,704       8,165,785       82,080       8,669,569  
                                 
Other Significant Items:                                
Depreciation and amortization     430       14,049       264       14,743  
Interest expense     42,256       655,305       120       697,681  
Expenditures for fixed assets     -       1,380       -       1,380  

 

Nine months ended March 31, 2015:

 

    Parent 
Company
    Ginseng     Cosmetics/
Supplements
    Total  
Revenues   $ -     $ -     $ 167,362     $ 167,362  
Net loss     (874,232 )     (996,982 )     (15,966 )     (1,887,180 )
Total assets     19,830       8,653,904       248,400       8,922,134  
                                 
Other significant items:                                
Depreciation and amortization     961       65,716       599       67,276  
Interest expense     39,585       674,969       1,024       715,578  
Expenditures for fixed assets     5,439       2,442       -       7,881  

 

Three Months Ended March 31, 2015

 

    Parent 
Company
    Ginseng     Cosmetics /
Supplements
    Total  
Revenues   $ -     $ -     $ 15,148     $ 15,148  
Net (Loss) Income     (410,539 )     (160,721 )     1,627       (569,633 )
                                 
Other Significant Items:                                
Depreciation and amortization     319       20,823       200       21,342  
Interest expense     14,241       168,105               182,346  
Expenditures for fixed assets     4,400       2       -       4,402  
XML 33 R22.htm IDEA: XBRL DOCUMENT v3.4.0.3
PRESENTATION, NATURE OF BUSINESS, AND GOING CONCERN (Policies)
9 Months Ended
Mar. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation

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 10-K for the year ended June 30, 2015.  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, 2016, are not necessarily indicative of the results that may be expected for the year ending June 30, 2016.

Nature of Business

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 August 2005, the Company acquired the remaining 45% of Yanbian Huaxing. From 2010, the Company ceased to sell ginseng in the market. The harvest of ginseng is primarily self-used as raw material in the production of ginseng beverage.    

 

Yanbian Huaxing controls, through 20 year leases granted by the Chinese Government, approximately 1,500 hectares (3,705 acres) of land exclusively used to grow ginseng. The Company had no operations prior to November 24, 2004. These leases expire through 2024. During the year ended June 30, 2014, the Forestry Bureau governing one of the farms withdrew approximating 700 hectares (1,730 acres) of land leased and notified the Company that this lease is no longer recognized. As a result, the Company is prevented from developing and planting ginseng in undeveloped areas of the farm.

 

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 was the growing, cultivation and harvesting of a grape vineyard. The Company produced wine and grape juice using the grapes planted on the land Tonghua Linyuan leased, but in June 2012, the Company decided to abandon the growing and harvesting of grapes due to the poor quality of grape harvests which were not suitable for the production of wine or grape juice. Accordingly, the Company has abandoned the vineyard and also decided not to renew its leases with the Chinese Government. On June 30, 2013, the Company sold the assets and liabilities of Tonghua Linyuan to a third party. (See Note N.)

 

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 such as cosmetics and health supplements. Hong Kong Huaxia was incorporated in Hong Kong on March 18, 2012, and began operations in April 2012. Hong Kong Huaxia has registered 880,000,000 shares of 1 HKD par value per share stock in Hong Kong. None of the $113,443,000 (880,000,000 HKD) registered capital of Hong Kong Huaxia has been funded as of March 31, 2016.

 

On September 27, 2013, the Company established a new wholly owned subsidiary of Hong Kong Huaxia, Jilin Huaxia Ginseng Co., Ltd (“Jilin Huaxia”) in order to open an online store through Taobao Marketplace, the biggest online Business to Consumer and Consumer to Consumer platform in Asia, a subsidiary company of Alibaba Group. Hong Kong Huaxia registered capital of $6,000,000 in Jilin Huaxia, none of which was funded at March 31, 2016.

 

Substantially all of the Company’s operations are in the People’s Republic of China and Hong Kong.

Consolidated Financial Statements

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, Mudanjiang Huaxing Ginseng Co..Limited and Hong Kong Huaxia International Industrial, Co. Limited and its subsidiary Jilin Huaxia. All intercompany transactions have been eliminated in consolidation.

Reclassifications

Reclassifications

 

Certain reclassifications have been made to the consolidated financial statements for the three and nine months ended March 31, 2015 to make then comparable to the presentation for the three and nine months ended March 31, 2016.

Uncertainty in Income Taxes

Uncertainty in Income Taxes

 

The Company’s policy is to recognize interest related to income tax matters as interest expense. The Company’s policy is to recognize penalties related to income tax matters as selling, general and administrative expenses. The Company's income tax returns are subject to examination by the IRS and State tax authorities, generally for three years after they are filed.

Going Concern

Going Concern

 

As indicated in the accompanying financial statements, the Company had net losses of $3,148,276 and $1,887,180 for the nine months ended March 31, 2016 and 2015, respectively, and an accumulated deficit of $21,222,105 as of March 31, 2016 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 debt and 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 positive cash flows from operations.  These matters raise substantial doubt about the Company’s ability to continue as a going concern.  However, the accompanying 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. 

XML 34 R23.htm IDEA: XBRL DOCUMENT v3.4.0.3
PROPERTY AND EQUIPMENT (Tables)
9 Months Ended
Mar. 31, 2016
Property, Plant and Equipment [Abstract]  
Schedule of property and equipment

Property and equipment is comprised of the following at:

 

    March 31,     June 30,  
    2016     2015  
Buildings and improvements   $ 1,387,535     $ 1,472,128  
Machinery and equipment     354,963       393,100  
Motor vehicles     23,830       30,501  
Office equipment     52,248       27,895  
      1,818,576       1,923,624  
Less accumulated depreciation     (567,153 )     (525,199 )
    $ 1,251,423     $ 1,398,425  
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.4.0.3
INVENTORY (Tables)
9 Months Ended
Mar. 31, 2016
Inventory Disclosure [Abstract]  
Schedule of inventory

Inventory is comprised of the following at:

 

    March 31,     June 30,  
    2016     2015  
Raw materials   $ 449,625     $ 126,006  
Finished goods     133,179       67,787  
Packaging supplies     -       87,789  
Operating supplies     4,162       4,399  
    $ 586,966     $ 285,981  
XML 36 R25.htm IDEA: XBRL DOCUMENT v3.4.0.3
PROVISION FOR INCOME TAXES (Tables)
9 Months Ended
Mar. 31, 2016
Income Tax Disclosure [Abstract]  
Schedule of deferred tax assets

Deferred tax assets consist of the following at:

 

    March 31,     June 30,  
    2016     2015  
      -     $ -  
Net operating losses   $ 4,159,027     $ 3,371,958  
Valuation allowance     (4,159,027 )     (3,371,958 )
Deferred tax asset   $ -     $ -  
Schedule of net operating loss carry forward

The Company has a net operating loss carry forward as follows:

 

    March 31,     June 30,  
    2016     2015  
International (China)   $ 11,204,424     $ 9,290,901  
United States     5,431,684       4,196,931  
    $ 16,636,108     $ 13,487,832  
Schedule of components of income before taxes

The components of income before taxes are as follows:

 

    For the Nine Months
Ended
March 31,
 
    2016     2015  
International (China)   $ (1,913,523 )   $ (1,012,948 )
United States     (1,234,753 )     (874,232 )
    $ (3,148,276 )   $ (1,887,180 )
Schedule of effective tax rate reconciliation as a percentage of income before taxes and federal statutory rate

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, 2016 and 2015, respectively, are as follows:

 

    For the Nine Months
Ended
March 31,
 
    2016     2015  
Federal statutory rate     (34.0 )%     (34.0 )%
State income taxes, net of federal benefit     3.3       3.3  
Valuation allowance     30.7       30.7  
Earnings taxed at other than US statutory rate     -       -  
Effective tax rate     - %     - %
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.4.0.3
COMMITMENTS AND CONTINGENCIES (Tables)
9 Months Ended
Mar. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
Schedule of contractual commitments

The Company has employment agreements with various individuals in China. The following summarizes the contractual commitments under these agreements:

 

March 31,   Commitment  
2017   $ 33,909  

XML 38 R27.htm IDEA: XBRL DOCUMENT v3.4.0.3
OPERATING SEGMENTS (Tables)
9 Months Ended
Mar. 31, 2016
Segment Reporting [Abstract]  
Schedule of business segments

The Company’s reportable business segments are strategic business units that offer different products.  Each segment is managed separately because they require different production techniques and market to different classes of customers. 

 

Nine months ended March 31, 2016:

 

    Parent 
Company
    Ginseng     Cosmetics/
Supplements
    Total  
Revenues   $ -     $ 248,972     $ 66,393     $ 315,365  
Net loss     (1,234,753 )     (1,906,304 )     (7,219 )     (3,148,276 )
Total assets     421,704       8,165,785       82,080       8,669,569  
                                 
Other significant items:                                
Depreciation and amortization     1,299       65,680       810       67,789  
Interest expense     173,898       1,378,763       1,475       1,554,136  
Expenditures for fixed assets             9,277       -       9,277  

 

Three Months Ended March 31, 2016

 

    Parent 
Company
    Ginseng     Cosmetics /
Supplements
    Total  
Revenues   $ -     $ 210,690     $ 42,929     $ 253,619  
Net Loss     (119,235 )     (486,057 )     (13,011 )     (618,303 )
Total Assets     421,704       8,165,785       82,080       8,669,569  
                                 
Other Significant Items:                                
Depreciation and amortization     430       14,049       264       14,743  
Interest expense     42,256       655,305       120       697,681  
Expenditures for fixed assets     -       1,380       -       1,380  

 

Nine months ended March 31, 2015:

 

    Parent 
Company
    Ginseng     Cosmetics/
Supplements
    Total  
Revenues   $ -     $ -     $ 167,362     $ 167,362  
Net loss     (874,232 )     (996,982 )     (15,966 )     (1,887,180 )
Total assets     19,830       8,653,904       248,400       8,922,134  
                                 
Other significant items:                                
Depreciation and amortization     961       65,716       599       67,276  
Interest expense     39,585       674,969       1,024       715,578  
Expenditures for fixed assets     5,439       2,442       -       7,881  

 

Three Months Ended March 31, 2015

 

    Parent 
Company
    Ginseng     Cosmetics /
Supplements
    Total  
Revenues   $ -     $ -     $ 15,148     $ 15,148  
Net (Loss) Income     (410,539 )     (160,721 )     1,627       (569,633 )
                                 
Other Significant Items:                                
Depreciation and amortization     319       20,823       200       21,342  
Interest expense     14,241       168,105               182,346  
Expenditures for fixed assets     4,400       2       -       4,402  

XML 39 R28.htm IDEA: XBRL DOCUMENT v3.4.0.3
PRESENTATION, NATURE OF BUSINESS, AND GOING CONCERN (Details Narrative)
3 Months Ended 9 Months Ended 12 Months Ended
Mar. 31, 2016
USD ($)
a
ha
shares
Mar. 31, 2015
USD ($)
Mar. 31, 2016
USD ($)
a
ha
shares
Mar. 31, 2015
USD ($)
Jun. 30, 2014
a
ha
Mar. 31, 2016
HKD / shares
Jun. 30, 2015
USD ($)
shares
Sep. 27, 2014
USD ($)
Aug. 31, 2005
Nov. 24, 2004
Business Acquisition [Line Items]                    
Land used to grow ginseng (hectare) | ha 28.80   28.80              
Land used to grow ginseng (acres) | a 71.16   71.16              
Registered shares | shares 50,000,000   50,000,000       50,000,000      
Net loss | $ $ (620,317) $ (569,633) $ (3,148,276) $ (1,887,180)            
Accumulated deficit | $ 21,222,105   21,222,105       $ 18,073,829      
Yanbian Huaxing [Member]                    
Business Acquisition [Line Items]                    
Percentage of ownership acquired by company                   55.00%
Remaining percentage acquired by company                 45.00%  
Land used to grow ginseng (hectare) | ha         700          
Land used to grow ginseng (acres) | a         1,730          
Operating leases description        

The Company had no operations prior to November 24, 2004.

         
Description of leases expiration period        

These leases expire through 2024.

         
Hong Kong Huaxia [Member]                    
Business Acquisition [Line Items]                    
Registered capital | $ $ 113,443,000   $ 113,443,000         $ 6,000,000    
Registered shares | shares 880,000,000   880,000,000              
Hong Kong Huaxia [Member] | HKD [Member]                    
Business Acquisition [Line Items]                    
Registered stock, par value (in dollars per share) | HKD / shares           HKD 1        
Chinese Government [Member]                    
Business Acquisition [Line Items]                    
Land used to grow ginseng (hectare) | ha 800   800              
Land used to grow ginseng (acres) | a 1,975   1,975              
Grant period of lease     20 years              
Chinese Government [Member] | Yanbian Huaxing [Member]                    
Business Acquisition [Line Items]                    
Land used to grow ginseng (hectare) | ha 1,500   1,500              
Land used to grow ginseng (acres) | a 3,750   3,750              
Grant period of lease     20 years              
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.4.0.3
PROPERTY AND EQUIPMENT (Details) - USD ($)
Mar. 31, 2016
Jun. 30, 2015
Property, Plant and Equipment [Line Items]    
Property and equipment, gross $ 1,818,576 $ 1,923,624
Less accumulated depreciation (567,153) (525,199)
Property and equipment, net 1,251,423 1,398,425
Buildings And Improvements [Member]    
Property, Plant and Equipment [Line Items]    
Property and equipment, gross 1,387,535 1,472,128
Machinery And Equipment [Member]    
Property, Plant and Equipment [Line Items]    
Property and equipment, gross 354,963 393,100
Motor Vehicles [Member]    
Property, Plant and Equipment [Line Items]    
Property and equipment, gross 23,830 30,501
Office Equipment [Member]    
Property, Plant and Equipment [Line Items]    
Property and equipment, gross $ 52,248 $ 27,895
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.4.0.3
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)
9 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Property, Plant and Equipment [Abstract]    
Depreciation $ 67,789 $ 67,276
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.4.0.3
DEPOSIT FOR EQUIPMENT PURCHASE (Details Narrative)
Nov. 30, 2013
USD ($)
Deposit assets $ 5,645,090
CNY [Member]  
Deposit assets $ 36,474,054
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.4.0.3
INVENTORY (Details) - USD ($)
Mar. 31, 2016
Jun. 30, 2015
Inventory Disclosure [Abstract]    
Raw materials $ 449,625 $ 126,006
Finished goods $ 133,179 67,787
Packaging supplies 87,789
Operating supplies $ 4,162 4,399
Inventory, net $ 586,966 $ 285,981
XML 44 R33.htm IDEA: XBRL DOCUMENT v3.4.0.3
GINSENG CROPS (Details Narrative)
9 Months Ended
Mar. 31, 2016
a
ha
Growth period before harvest

5 to 6 years

Period for improved harvest and seedling yields 8 years
Land used to grow ginseng (hectare) | ha 28.80
Land used to grow ginseng (acres) | a 71.16
Land planted (in square meters) | m² 287,984
Chinese Government [Member]  
Land used to grow ginseng (hectare) | ha 800
Land used to grow ginseng (acres) | a 1,975
Grant period of lease 20 years
XML 45 R34.htm IDEA: XBRL DOCUMENT v3.4.0.3
AGREEMENTS WITH FARMERS (Details Narrative)
72 Months Ended
Dec. 31, 2013
kg
Mar. 31, 2016
USD ($)
Jun. 30, 2015
USD ($)
Price for leases of ginseng land 1.50    
Management fee paid to farmers 0.50    
Production of crop per square meter required in kg's | kg 2    
Description of 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.

   
Price per kilo for extra kilo production 3.00    
Long-term payable as a management fee due to the farmers | $   $ 832,248 $ 879,567
CNY [Member]      
Price for leases of ginseng land 10    
Management fee paid to farmers 4.00    
XML 46 R35.htm IDEA: XBRL DOCUMENT v3.4.0.3
LOAN PAYABLE TO FINANCIAL INSTITUTION (Details Narrative)
9 Months Ended 12 Months Ended
Oct. 29, 2013
Sep. 10, 2011
Mar. 31, 2016
USD ($)
Jun. 30, 2002
CNY (¥)
Jun. 30, 2015
USD ($)
Interest rate on loan     3.00% 6.325%  
Term of loan Feb. 28, 2014   Aug. 12, 2012 Apr. 04, 2003  
Description of interest payment terms    

Interest was paid on the loan through June 30, 2009 and has been accrued in subsequent periods.

   
Description of the collateral

The loan is secured by the assets of Jilin Huaxia.

The loan is secured by the building.

The loan is secured by the Company’s inventory and equipment.

   
Loan payable to financial institution | $     $ 309,540   $ 327,139
CNY [Member]          
Loans Payable | ¥       ¥ 2,000,000  
XML 47 R36.htm IDEA: XBRL DOCUMENT v3.4.0.3
LOAN PAYABLE - BUILDING PURCHASE (Details Narrative)
1 Months Ended 9 Months Ended 12 Months Ended
Oct. 29, 2013
Sep. 10, 2011
CNY (¥)
Jun. 30, 2011
USD ($)
Jun. 30, 2011
CNY (¥)
Dec. 31, 2010
USD ($)
Dec. 31, 2010
CNY (¥)
Mar. 31, 2016
USD ($)
Mar. 31, 2016
CNY (¥)
Jun. 30, 2002
Jun. 30, 2015
Jun. 24, 2011
USD ($)
Jun. 24, 2011
CNY (¥)
Mar. 02, 2011
USD ($)
Mar. 02, 2011
CNY (¥)
Purchase price of office and warehouse facilities | $                         $ 1,385,980  
Amount paid for office and warehouse facilities | $                     $ 76,990      
Unpaid amount for office and warehouse facilities | $                     $ 1,308,981      
Loan maturity date Feb. 28, 2014           Aug. 12, 2012 Aug. 12, 2012 Apr. 04, 2003          
Floating interest rate adjusted upwards description            

The floating rate was 18.43%.

The floating rate was 18.43%.

           
Description of the collateral

The loan is secured by the assets of Jilin Huaxia.

The loan is secured by the building.

       

The loan is secured by the Company’s inventory and equipment.

The loan is secured by the Company’s inventory and equipment.

           
Central bank rate                   18.43%        
Office and warehouse facilities purchase price paid | $     $ 61,599   $ 15,400                  
Office and warehouse loan to be repay in September 2012 | $             $ 153,998              
Office and warehouse loan to be repay on August 29, 2013 | $             153,998              
Office and warehouse loan to be repay on December 20, 2013 | $             153,998              
Office and warehouse loan to be repay on August 29, 2014 | $             $ 769,988              
CNY [Member]                            
Purchase price of office and warehouse facilities                           ¥ 9,000,000
Amount paid for office and warehouse facilities   ¥ 8,000,000                   ¥ 500,000    
Unpaid amount for office and warehouse facilities                       ¥ 8,500,000    
Remaining loan of office and warehouse facilities       ¥ 500,000                    
Office and warehouse facilities purchase price paid       ¥ 400,000   ¥ 100,000                
Office and warehouse loan to be repay in September 2012               ¥ 1,000,000            
Office and warehouse loan to be repay on August 29, 2013               1,000,000            
Office and warehouse loan to be repay on December 20, 2013               1,000,000            
Office and warehouse loan to be repay on August 29, 2014               ¥ 5,000,000            
XML 48 R37.htm IDEA: XBRL DOCUMENT v3.4.0.3
LOAN PAYABLE - EQUIPMENT PURCHASE (Details Narrative)
9 Months Ended 12 Months Ended
Oct. 29, 2013
USD ($)
Oct. 29, 2013
CNY (¥)
Sep. 10, 2011
Mar. 31, 2016
Jun. 30, 2002
Payments to acquire machinery and equipment | $ $ 5,616,923        
Loan maturity date Feb. 28, 2014 Feb. 28, 2014   Aug. 12, 2012 Apr. 04, 2003
Interest paid for loan | $ $ 211,606        
Description of the collateral

The loan is secured by the assets of Jilin Huaxia.

The loan is secured by the assets of Jilin Huaxia.

The loan is secured by the building.

The loan is secured by the Company’s inventory and equipment.

 
CNY [Member]          
Payments to acquire machinery and equipment | ¥   ¥ 36,474,054      
Interest paid for loan | ¥   ¥ 1,300,000      
XML 49 R38.htm IDEA: XBRL DOCUMENT v3.4.0.3
NOTE PAYABLE - OTHER (Details Narrative) - USD ($)
Mar. 31, 2016
Jun. 30, 2015
Jun. 30, 2002
Debt Disclosure [Abstract]      
Loan payable - other $ 3,124,239 $ 3,997,629  
Interest rate 3.00%   6.325%
XML 50 R39.htm IDEA: XBRL DOCUMENT v3.4.0.3
CONVERTIBLE DEBENTURE (Details Narrative)
3 Months Ended
Jul. 21, 2015
USD ($)
Number
$ / shares
Mar. 31, 2016
shares
Jun. 30, 2015
shares
Mar. 31, 2015
HKD / shares
shares
Common stock, authorized   50,000,000 50,000,000  
Common stock, issued   44,397,297 44,397,297  
Common stock, outstanding   44,397,297 44,397,297  
Series A Convertible Debt [Member]        
Conversion price (in dollars per share) | HKD / shares       HKD 0.40
Common stock, authorized       50,000,000
Common stock, issued       44,397,297
Common stock, outstanding       44,397,297
Common stock, total of issued, outstanding and reserved shares       48,797,297
Increase in number of authorized shares       1,202,703
Shares issued on conversion   4,400,000    
Common stock conversion  

The Series A Convertible Debenture is repayable at July 20, 2018 and is convertible into 4,000,000 shares of the Company’s common stock at a price of $0.40 per share. During the period that the conversion right exists, the Company covenants that it will reserve, from its authorized and unissued common stock, shares equal to 110% of the number of shares of common stock upon the full conversion of the Series A Convertible Debenture. At the conversion price of $.40 per share, this will be 4,400,000 shares.

   
Private Placement [Member] | Series A Convertible Debt [Member]        
Debt face amount | $ $ 1,600,000      
Number of shares issued for debt conversion | Number 4,000,000      
Conversion price (in dollars per share) | $ / shares $ 0.40      
Debt maturity term 36 months      
XML 51 R40.htm IDEA: XBRL DOCUMENT v3.4.0.3
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)
9 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Jun. 30, 2015
Related Party Transactions [Abstract]      
Notes payable - related parties $ 1,650,292   $ 1,593,996
Imputed interest 72,629 $ 75,132  
Receivables from related parties $ 26,289   $ 7,703
XML 52 R41.htm IDEA: XBRL DOCUMENT v3.4.0.3
PROVISION FOR INCOME TAXES (Details) - USD ($)
Mar. 31, 2016
Jun. 30, 2015
Income Tax Disclosure [Abstract]    
Timing difference related to inventory provisions
Net operating losses $ 4,159,027 $ 3,371,958
Valuation allowance $ (4,159,027) $ (3,371,958)
Deferred tax asset
XML 53 R42.htm IDEA: XBRL DOCUMENT v3.4.0.3
PROVISION FOR INCOME TAXES (Details 1) - USD ($)
Mar. 31, 2016
Jun. 30, 2015
Net operating loss carry forward $ 16,636,108 $ 13,487,832
China [Member]    
Net operating loss carry forward 11,204,424 9,290,901
United States [Member]    
Net operating loss carry forward $ 5,431,684 $ 4,196,931
XML 54 R43.htm IDEA: XBRL DOCUMENT v3.4.0.3
PROVISION FOR INCOME TAXES (Details 2) - USD ($)
9 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Income before taxes $ (3,148,276) $ (1,887,180)
China [Member]    
Income before taxes (1,913,523) (1,012,948)
United States [Member]    
Income before taxes $ (1,234,753) $ (874,232)
XML 55 R44.htm IDEA: XBRL DOCUMENT v3.4.0.3
PROVISION FOR INCOME TAXES (Details 3)
9 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Income Tax Disclosure [Abstract]    
Federal statutory rate (34.00%) (34.00%)
State income taxes, net of federal benefit 3.30% 3.30%
Valuation allowance 30.70% 30.70%
Earnings taxed at other than US statutory rate
Effective tax rate
XML 56 R45.htm IDEA: XBRL DOCUMENT v3.4.0.3
PROVISION FOR INCOME TAXES (Details Narrative)
9 Months Ended
Mar. 31, 2016
USD ($)
Operating Loss Carryforwards [Line Items]  
Penalties related to past due information returns from 2005 through 2015 $ 540,000
Foreign Tax Authority [Member]  
Operating Loss Carryforwards [Line Items]  
Period to carry forward net operating losses 5 years
Operating loss expiration date Jun. 30, 2013
Domestic Tax Authority [Member]  
Operating Loss Carryforwards [Line Items]  
Period to carry forward net operating losses 20 years
Operating loss expiration date Jun. 30, 2027
XML 57 R46.htm IDEA: XBRL DOCUMENT v3.4.0.3
DISCONTINUED OPERATIONS (Details Narrative) - USD ($)
Mar. 31, 2016
Jun. 30, 2015
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]    
Contingent liabilities $ 486,120 $ 513,760
Tonghua Linyuan [Member]    
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]    
Contingent liabilities 486,120 513,760
Loan payable 309,540 327,139
Accounts payable and accrued expenses $ 176,580 $ 186,321
XML 58 R47.htm IDEA: XBRL DOCUMENT v3.4.0.3
COMMITMENTS AND CONTINGENCIES (Details)
Mar. 31, 2016
USD ($)
Commitments and Contingencies Disclosure [Abstract]  
2017 $ 33,909
XML 59 R48.htm IDEA: XBRL DOCUMENT v3.4.0.3
COMMITMENTS AND CONTINGENCIES (Details Narrative) - 9 months ended Mar. 31, 2016
USD ($)
a
ha
CNY (¥)
a
ha
Land used to grow ginseng (hectare) | ha 28.80 28.80
Land used to grow ginseng (acres) | a 71.16 71.16
Chinese Government [Member]    
Land used to grow ginseng (hectare) | ha 800 800
Land used to grow ginseng (acres) | a 1,975 1,975
Grant period of lease 20 years  
Refrigeration And Storage [Member]    
Annual lease fee | $ $ 15,500  
Corporate Offices [Member]    
Expiration of leases May 21, 2016  
Term of Lease 1 year  
Commitments for the leases | $ $ 33,909  
Corporate Offices [Member] | CNY [Member]    
Commitments for the leases | ¥   ¥ 220,190
XML 60 R49.htm IDEA: XBRL DOCUMENT v3.4.0.3
OPERATING SEGMENTS (Details) - USD ($)
3 Months Ended 9 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Mar. 31, 2016
Mar. 31, 2015
Jun. 30, 2015
Summary of segments reporting information          
Revenues $ 253,619 $ 15,148 $ 315,365 $ 167,362  
Net (loss) Income (620,317) (569,633) (3,148,276) (1,887,180)  
Total assets 8,669,569 8,922,134 8,669,569 8,922,134 $ 8,344,160
Other significant items:          
Depreciation and amortization 14,743 21,342 67,789 67,276  
Interest expense 699,695 182,346 1,554,136 715,578  
Expenditures for fixed assets $ 1,380 $ 4,402 $ 9,277 $ 7,881  
Parent Company [Member]          
Summary of segments reporting information          
Revenues  
Net (loss) Income $ (119,235) $ (410,539) $ (1,234,753) $ (874,232)  
Total assets 421,704 19,830 421,704 19,830  
Other significant items:          
Depreciation and amortization 430 319 1,299 961  
Interest expense $ 42,256 14,241 173,898 39,585  
Expenditures for fixed assets $ 4,400   $ 5,439  
Ginseng [Member]          
Summary of segments reporting information          
Revenues $ 210,690 248,972  
Net (loss) Income (486,057) $ (160,721) (1,906,304) $ (996,982)  
Total assets 8,165,785 8,653,904 8,165,785 8,653,904  
Other significant items:          
Depreciation and amortization 14,049 20,823 65,680 65,716  
Interest expense 655,305 168,105 1,378,763 674,969  
Expenditures for fixed assets 1,380 2 9,277 2,442  
Cosmetics/Supplements [Member]          
Summary of segments reporting information          
Revenues 42,929 15,148 66,393 167,362  
Net (loss) Income (13,011) 1,627 (7,219) (15,966)  
Total assets 82,080 248,400 82,080 248,400  
Other significant items:          
Depreciation and amortization 264 $ 200 810 599  
Interest expense $ 120   $ 1,475 $ 1,024  
Expenditures for fixed assets  
XML 61 R50.htm IDEA: XBRL DOCUMENT v3.4.0.3
OPERATING SEGMENTS (Details Narrative)
9 Months Ended
Mar. 31, 2016
Number
Segment Reporting [Abstract]  
Number of operating segments 2
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