UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
or
For the transition period from_____________ to____________
Commission
File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification Number) |
Office:
(Address, including zip code, and telephone number, including area code,
of Registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
| None | None | Not Applicable |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☐ | Smaller reporting company | |||
| Emerging growth company | ||||
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12 b-2 of the Act). Yes ☐ No
APPLICABLE
ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As
of the date of filing of this report, there were outstanding
TABLE OF CONTENTS
| Page | ||
| PART I—FINANCIAL INFORMATION | ||
| Item 1 | Financial Statements. | F-1 – F-18 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 1 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 4 |
| Item 4. | Controls and Procedures. | 5 |
| PART II—OTHER INFORMATION | ||
| Item 1. | Legal Proceedings. | 6 |
| Item 1A. | Risk Factors | 6 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 7 |
| Item 3. | Defaults Upon Senior Securities. | 7 |
| Item 4. | Mine Safety Disclosure | 7 |
| Item 5. | Other Information. | 7 |
| Item 6. | Exhibits. | 7 |
i
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
ORGANIC AGRICULTURAL COMPANY LIMITED AND SUBSIDIARIES
F-1
ORGANIC AGRICULTURAL COMPANY LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2021 AND MARCH 31, 2021
(EXPRESSED IN US DOLLARS)
| September 30, | March 31, | |||||||
| 2021 | 2021 | |||||||
| Unaudited | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Prepaid expenses | ||||||||
| Inventories | ||||||||
| Other receivables | ||||||||
| Total current assets | ||||||||
| Operating lease right-of-use asset | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and shareholders’ equity (deficit) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Customer deposits | ||||||||
| Due to related parties | ||||||||
| Operating lease liabilities | ||||||||
| Other payables | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Shareholders’ equity (deficit): | ||||||||
| Preferred stock; $ | ||||||||
| Common stock; $ | ||||||||
| Additional paid-in capital | ||||||||
| (Deficit) | ( | ) | ( | ) | ||||
| Other comprehensive (loss) | ( | ) | ( | ) | ||||
| Total shareholders’ equity (deficit) of the Company | ( | ) | ||||||
| Non-controlling interest | ( | ) | - | |||||
| Total shareholders’ equity (deficit) | ( | ) | ||||||
| Total liabilities and shareholders’ equity (deficit) | $ | $ | ||||||
| * | After giving effect to a 5.16 for 1 forward stock split effective October 21, 2021. |
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-2
ORGANIC AGRICULTURAL COMPANY LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(UNAUDITED) (EXPRESSED IN US DOLLARS)
| For the Three Months Ended September 30, | For the Six Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||
| Operating (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (loss) income | ( | ) | ||||||||||||||
| (Loss) before provision for income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Net (loss) from continuing operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| (Loss) on the sale of discontinued operations, net of income taxes | ( | ) | ||||||||||||||
| Income from discontinued operations, net of income taxes (Note 3) | ||||||||||||||||
| Net (loss) from discontinued operations | ( | ) | ||||||||||||||
| Net (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: net income from discontinued operations attributable to non-controlling interests | ||||||||||||||||
| Less: net (loss) from continuing operations attributable to non-controlling interests | ( | ) | ( | ) | ||||||||||||
| Net (loss) attributable to common shareholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Amounts attributable to common shareholders: | ||||||||||||||||
| Net (loss) from continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net (loss) from discontinued operations | ( | ) | ||||||||||||||
| Net (loss) attributable to common shareholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| (Loss) per share continuing operations – basic and diluted | $ | $ | $ | ( | ) | $ | ||||||||||
| (Loss) per share discontinued operations – basic and diluted | ( | ) | ||||||||||||||
| Basic and diluted (loss) per share | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
| Weighted average number of shares outstanding- basic and diluted, retroactively adjusted to reflect the 5.16-for-1 stock split effected on October 21, 2021 | ||||||||||||||||
| Other comprehensive (loss): | ||||||||||||||||
| Net (loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: comprehensive (loss) income attributable to non-controlling interests | ( | ) | ( | ) | ||||||||||||
| Comprehensive (loss) attributable to the common shareholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| * | After giving effect to a 5.16 for 1 forward stock split effective October 21, 2021. |
The accompanying notes are an integral part of these condensed consolidated financial statements
F-3
ORGANIC AGRICULTURAL COMPANY LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ (DEFICIT) EQUITY
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(UNAUDITED) (EXPRESSED IN US DOLLARS, EXCEPT SHARES)
| Common stock | Additional Paid-in |
Other Comprehensive Income |
Total Shareholders’ Equity |
Non- controlling |
Total Shareholders’ Equity (Deficit) |
|||||||||||||||||||||||||||
| Quantity | Amount | Capital | (Deficit) | (Loss) | (Deficit) | Interest | and NCI | |||||||||||||||||||||||||
| Balance at March 31, 2020 | $ | $ | $ | ( |
) | $ | $ | $ | $ | |||||||||||||||||||||||
| Net (loss) | - | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||
| Sale of common shares | ||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||
| Balance at June 30, 2020 (unaudited) | ( |
) | ||||||||||||||||||||||||||||||
| Net (loss) | - | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||
| Balance at September 30, 2020, (unaudited) | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||
| Balance at March 31, 2021 | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | |||||||||||||||||
| Net (loss) | - | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||
| Sale of common shares | ||||||||||||||||||||||||||||||||
| Shares issued as compensation | ||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||
| Balance at June 30, 2021 (unaudited) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Net (loss) | - | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||
| Balance at September 30, 2021 (unaudited) | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | $ | |||||||||||||||||||
| * | After giving effect to a 5.16 for 1 forward stock split effective October 21, 2021. |
The accompanying notes are an integral part of these condensed consolidated financial statements
F-4
ORGANIC AGRICULTURAL COMPANY LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(UNAUDITED) (EXPRESSED IN US DOLLARS)
| For the Six Months Ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net (loss) from continuing operations | $ | ( | ) | $ | ( | ) | ||
| Net (loss) from discontinued operations | ( | ) | ||||||
| Shares issued as compensation | ||||||||
| Depreciation and amortization | ||||||||
| Changes in operating assets and liabilities, discontinued operations | ||||||||
| Changes in operating assets and liabilities, continuing operations: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Prepaid and deferred expenses | ( | ) | ||||||
| Inventories | ( | ) | ||||||
| Other receivables | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ( | ) | ||||
| Customer deposits | ||||||||
| Due to related parties | ( | ) | ( | ) | ||||
| Lease liability | ( | ) | ||||||
| Other payables | ( | ) | ( | ) | ||||
| Net cash (used in) operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Cash disbursed on divestment of Lvxin | ( | ) | ||||||
| Net cash (used in) investing activities | ( | ) | ||||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from sale of common stock | ||||||||
| Proceeds from advances for purchase of shares | - | |||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate fluctuations on cash | ( | ) | ||||||
| Net increase in cash | ||||||||
| Cash, beginning of year-continuing operations | ||||||||
| Cash, beginning of year-discontinued operations | ||||||||
| Cash, beginning of year | ||||||||
| Cash, end of year-continuing operations | ||||||||
| Cash, end of year-discontinued operations | ||||||||
| Cash, end of year | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for income taxes | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| Supplemental disclosure of non-cash activities: | ||||||||
| Divestment of Lvxin | $ | $ | ||||||
| Operating ROU assets obtained in exchange for lease liabilities | $ | $ | ||||||
| Shares issued for compensation | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-5
ORGANIC AGRICULTURAL COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN US DOLLARS)
NOTE 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Organic Agricultural Company Limited (“Organic Agricultural”, the “Company”, “we” or “us”) was incorporated in the State of Nevada on April 17, 2018.
The Company, through its subsidiaries with headquarters in Harbin, China, sells selenium-enriched products and other agricultural products. At September 30, 2021, the Company’s subsidiaries were:
| ● | Organic Agricultural (Samoa) Co., Ltd. (“Organic Agricultural Samoa”), a limited company incorporated in Samoa on December 15, 2017, is wholly owned by Organic Agricultural. Organic Agricultural Samoa owns all of the outstanding shares of capital stock of Organic Agricultural Company Limited (Hong Kong). |
| ● | Organic Agricultural Company Limited (Hong Kong) (“Organic Agricultural HK”), which was established on December 6, 2017 under the laws of Hong Kong, is wholly owned by Organic Agricultural Samoa. Organic Agricultural HK owns all of the registered equity of Heilongjiang Tianci Liangtian Agricultural Technology Development Company Limited. |
| ● | Heilongjiang Tianci Liangtian Agricultural Technology Development Company Limited. (“Tianci Liangtian”), a company incorporated in Heilongjiang, China on November 2, 2017, is wholly owned by Organic Agricultural HK. Tianci Liangtian owns all of the registered equity of Heilongjiang Yuxinqi Agricultural Technology Development Company Limited. |
| ● | Heilongjiang Yuxinqi Agricultural Technology Development Company Limited (“Yuxinqi”), a company incorporated in Heilongjiang, China on February 5, 2018, is wholly owned by Tianci Liangtian. Yuxinqi sells agricultural products, including paddy and other crops, to customers. |
| ● | Tianci Wanguan (Xiamen) Digital Technology Company Limited (“Tianci Wanguan”), a company incorporated in Xiamen, China on November 5, 2020, is |
Reorganization
On May 16, 2018, the Company completed a corporate reorganization to combine several controlled entities (now referred to as the “subsidiaries”) into Organic Agricultural. The specific transactions related to this reorganization are as follows:
On
March 31, 2017, Hao Shuping and the shareholders of Baoqing County Lvxin Paddy Rice Plant Specialized Cooperative (“Lvxin”)
signed an Equity Transfer Agreement, whereby shareholders of Lvxin transferred
On
January 1, 2018, pursuant to the Equity Transfer Agreement between Hao Shuping and Tianci Liangtian, Hao Shuping transferred his
On January 8, 2018, the shareholders of Tianci Liangtian transferred ownership of Tianci Liangtian to Organic Agricultural HK, which is wholly owned by Organic Agricultural Samoa.
On
May 16, 2018, the Company issued
As
a result of the Share Exchange, Hao Shuping acquired
F-6
ORGANIC AGRICULTURAL COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN US DOLLARS)
NOTE 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION (Continued)
On
April 24, 2020 Tianci Liangtian entered into an Equity Transfer Agreement providing for the transfer to Lou Zhengui of Tianci’s
In exchange for the 51% interest in Lvxin, Lou Zhengui assumed the obligation to satisfy a debt of 300,000 RMB (approx. US$42,350) owed by Tianci Liangtian to Hao Shuping, a member of the Company’s Board of Directors.
The business of Lvxin was growing paddy rice. The divestment of Lvxin by Tianci will enable Tianci to focus on its other business: processing and marketing food stuffs.
In accordance with U.S. GAAP, the financial position and results of operations of Lvxin are presented as discontinued operations and, as such, have been excluded from continuing operations for all periods presented. The comprehensive income related to Lvxin has not been segregated and is included in the Condensed Consolidated Statements of Comprehensive Income for all periods presented. With the exception of Note 3, the Notes to the Unaudited Condensed Consolidated Financial Statements reflect the continuing operations of the Company. See Note 3 - Discontinued Operations below for additional information regarding discontinued operations.
On
November 6, 2020 Organic Agricultural entered into a Cooperation Agreement with Unbounded IOT Block Chain Limited (“Unbounded”),
an entity with offices in Xiamen City, Fujian Province. The purpose of the Cooperation Agreement was to promote the use of blockchain
technology in agriculture, specifically the development of tracing systems for agricultural products, the development of a blockchain-based
shopping mall for agricultural products, and related improvements to the agricultural sector of the economy. To accomplish those purposes,
Tianci Wanguan (Xiamen) Digital Technology Co., Ltd. was incorporated in Xiamen, China on November 5, 2020. Tianci Wanguan is
On July 19, 2021 the parties executed a supplement
to the Cooperation Agreement. The Supplementary Agreement sets forth performance criteria for Unbounded’s management of Tianci Wanguan:
specifically that within 12 months after the shares mentioned below are issued to Unbounded, Tianci Wanguan must have made a profit of
five million Renminbi (approximately US$
F-7
ORGANIC AGRICULTURAL COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN US DOLLARS)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Going concern
Management has determined there is substantial doubt about our ability to continue as a going concern as a result of our lack of significant revenues and recurring losses. If we are unable to generate significant revenue or secure additional financing, we may be required to cease or curtail our operations. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The
Company’s operations have been financed primarily by proceeds from sales of shares. The Company received $
Management intends to expand product offerings to include value-added products, both products based on rice and products based on other food stuffs, such as organic red beans and millet. The marketing personnel of the Company are opening new marketing channels and hope to build a stable base of customers. In this manner, Management hopes to generate sufficient operating cash inflow to support its future operations and development of the Company in addition to capital raised from sales of shares and shareholders’ support based on need.
Basis of presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments of a normal and recurring nature considered necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements. The results of operations for the interim period are not necessarily indicative of the results that will be realized for the entire fiscal year. These condensed consolidated financial statements should be read in conjunction with Organic Agricultural Company’s audited financial statements and accompanying notes thereto as of and for the year ended March 31, 2021 included in Company’s current report on Form 10-K as filed with the SEC on June 29, 2021.
The Company’s condensed consolidated financial statements are expressed in U.S. Dollars and are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Principles of consolidation
The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements include the assets, liabilities, and net income or loss of these subsidiaries.
The Company’s subsidiaries as of September 30, 2021 are listed as follows:
| Name | Place of Incorporation | Attributable equity interest % | ||||
| Organic Agricultural (Samoa) Co., Ltd. | ||||||
| Organic Agricultural Company Limited (Hong Kong) | ||||||
| Heilongjiang Tianci Liangtian Agricultural Technology Development Company Limited | ||||||
| Heilongjiang Yuxinqi Agricultural Technology Development Company Limited | ||||||
| Tianci Wanguan (Xiamen) Digital Technology Company Limited | ||||||
F-8
ORGANIC AGRICULTURAL COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN US DOLLARS)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however, actual results could differ from those estimates. One significant item subject to such estimates and assumptions is the inventory valuation allowance. These estimates are often based on complex judgments and assumptions that management believes to be reasonable but are inherently uncertain and unpredictable. Actual results could differ from these estimates.
Cash
Cash consists of cash on hand and bank deposits, which are unrestricted as to withdrawal and use in the PRC. All highly liquid investments with original stated maturities of three months or less are classified as cash. The Company’s cash consist of cash on hand and cash in bank, as of September 30, 2021 and March 31 2021.
Revenue recognition
Effective April 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products and contracts by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that economic benefits will flow to the entity, and specific criteria have been met for each of the Company’s activities as described below.
The Company sells paddy and selenium-enriched paddy products, rice and other agricultural products. All revenue is recognized when it is both earned and realized. The Company’s policy is to recognize the sale when the products, ownership and risk of loss have transferred to the purchasers, and collection of the sales proceeds, if not prepaid, is reasonably assured, all of which generally occur when the customer receives the products. Accordingly, revenue is recognized at the point in time when delivery is made.
Given the nature of this revenue generated by the Company’s business and the applicable rules guiding revenue recognition, the Company’s revenue recognition practices do not include estimates that materially affect results of operations nor does the Company have any policy for return of products.
Fair value measurements
The Company applies the provisions of FASB ASC 820, Fair Value Measurements for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.
Fair value is defined as the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining the fair value for the assets and liabilities required or permitted to be recorded, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability.
F-9
ORGANIC AGRICULTURAL COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN US DOLLARS)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that are to be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2: Quoted prices, other than those in Level 1, in markets that are not active or for similar assets and liabilities, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).
Financial assets and liabilities of the Company primarily consists of cash, accounts receivable, prepaid expenses, inventories, other receivables, accounts payable and accrued liabilities, operating lease liability, customer deposits, due to related parties, and other payables. As at September 30, 2021 and March 31, 2021, the carrying values of these financial instruments approximated their fair values due to the short-term nature of these instruments.
Functional currency and foreign currency translation
An entity’s functional currency is the currency of the primary economic environment in which it operates. Normally that is the currency of the environment in which the entity primarily generates and expends cash. Management’s judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements. The functional currency of the Company is the Chinese Renminbi (“RMB’), except the functional currency of Organic Agricultural HK is the Hong Kong Dollar (“HKD”), and the functional currency of Organic Agricultural Samoa and Organic Agricultural is the United States dollar (“US Dollars” “USD” or “$”). The reporting currency of these condensed consolidated financial statements is in US Dollars.
The financial statements of the Company, which are prepared using the RMB and the HKD, are translated into the Company’s reporting currency, the US Dollar. Assets and liabilities are translated using the exchange rate at each reporting period end date. Revenue and expenses are translated using average rates prevailing during each reporting period, and shareholders’ equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income or loss.
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. Foreign currency exchange gains and losses resulting from these transactions are included in operations.
The exchange rates used for foreign currency translation are as follows:
| For the three months ended September 30, | September 30, | |||||
| 2021 | 2020 | 2021 | ||||
| (USD to RMB/USD to HKD) | (USD to RMB/USD to HKD) | (USD to RMB/USD to HKD) | ||||
| Assets and liabilities period end exchange rate | | | | |||
| Revenue and expenses period average | | | ||||
| For the six months ended September 30, | March 31, | |||||
| 2021 | 2020 | 2021 | ||||
| (USD to RMB/USD to HKD) | (USD to RMB/USD to HKD) | (USD to RMB/USD to HKD) | ||||
| Assets and liabilities period end exchange rate | | |||||
| Revenue and expenses period average | ||||||
F-10
ORGANIC AGRICULTURAL COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN US DOLLARS)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income taxes
The Company follows FASB ASC Topic 740, Income Taxes, which requires the recognition of deferred income taxes for the differences between the basis of assets and liabilities for financial statements and income tax purposes. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Deferred tax assets are also recognized for operating losses and for tax credit carryforwards. Valuation allowances are established, when necessary, to reduce net deferred tax assets to the amount expected to be realized.
ASC 740-10-30 requires income tax positions to meet a more-likely-than-not recognition threshold to be recognized in the financial statements. Under ASC 740-10-40, previously recognized tax positions that no longer meet the more-likely-than-not threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met.
The application of tax laws and regulations is subject to legal and factual interpretations, judgments and uncertainties. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policies, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability may be materially different from our estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities or the deferred tax asset valuation allowance.
China
According
to the “PRC Income Tax Law”, Tianci Liantian, Tianci Wanguan and Yuxinqi are subject to the
United States
The
Company is subject to the U.S. corporation tax rate of
Samoa
Organic Agricultural (Samoa) Co., Ltd was incorporated in Samoa and, under the current laws of Samoa, it is not subject to income tax.
Hong Kong
Organic
Agricultural Company Limited (Hong Kong) was incorporated in Hong Kong and is subject to Hong Kong profits tax. Organic Agricultural
Company Limited (Hong Kong) is subject to Hong Kong taxation on its activities conducted in Hong Kong and income arising in or derived
from Hong Kong. The applicable statutory tax rate is
Earnings (loss) per share
The Company computes earnings (loss) per share (“EPS”) in accordance with FASB ASC 260, Earnings Per Share. ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding during the period. Stock splits are given retroactive recognition for earnings (loss) per share.
Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of contracts to issue ordinary common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. The computation of diluted EPS includes the estimated impact of the exercise of contracts to purchase common stock using the treasury stock method and the potential common shares associated with convertible debt using the if-converted method. Potential common shares that have an anti-dilutive effect (i.e., those that increase earnings per share or decrease loss per share) are excluded from the calculation of diluted EPS.
F-11
ORGANIC AGRICULTURAL COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN US DOLLARS)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Share-based compensation
The
Company follows the provisions of FASB ASC 718 requiring employee equity awards to be accounted for under the fair value method. Accordingly,
share-based compensation is measured at grant date, based on the fair value of the award and recognized over its vesting period. During
the six months ended September 30, 2021, specifically on April 12, 2021, the Company granted a total of
Segment information and geographic data
The
Company is operating in
Concentration of credit and customer risks
The Company maintains cash balances in two banks
in China. In China, the insurance coverage of each bank is RMB
During
the three months ended September 30, 2021,
During
the six months ended September 30, 2021,
Risks and uncertainties
The COVID-19 pandemic has had a significant adverse impact and created many uncertainties related to our business, and we expect that it will continue to do so. The Company is experiencing challenges in sales and which has increased the Company’s financial uncertainty. Our future business outlook and expectations are very uncertain due to the impact of the COVID-19 pandemic and are very difficult to quantify. It is difficult to assess or predict the impact of this unprecedented event on our business, financial results or financial condition. Factors that will impact the extent to which the COVID-19 affects our business, financial results and financial condition include: the duration, spread and severity of the pandemic; the actions taken to contain the virus or treat its impact, including government actions to mitigate the economic impact of the pandemic; and how quickly and to what extent normal economic and operating conditions can resume, including whether any future outbreak interrupts the economic recovery.
Recently adopted accounting standards
We do not believe any recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the condensed consolidated financial position, statements of operations and cash flows.
Retroactive adjustment for stock split
On October 21, 2021,
the Company implemented a 5.16-for-1 forward split of its outstanding common stock. The Distribution Date will be the date on which
FINRA posts a notice of the forward split on its Daily List, at which time Organic Agricultural will issue an additional
The stock split increased the number of shares
outstanding and the par value per share remained $
F-12
ORGANIC AGRICULTURAL COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN US DOLLARS)
NOTE 3. DISCONTINUED OPERATIONS
As discussed in Note 1. Basis of Presentation above, on April 30, 2020, the Company completed the divestment of Lvxin and the requirements for the presentation of Lvxin as a discontinued operation were met on that date. Accordingly, Lvxin’s historical financial information and results are reflected in the Company’s consolidated financial statements as discontinued operations. The Company did not allocate any general corporate overhead or interest expense to discontinued operations.
The financial results of Lvxin are presented as income (loss) from discontinued operations, net of income taxes, in the Condensed Consolidated Statements of Operations. The following table presents the financial results of Lvxin for the reporting periods prior to April 30, 2020.
| For the Three
and six Months ended September 30, 2020 | |||||
| (Unaudited) | |||||
| Net sales | $ | ||||
| Cost of sales | |||||
| Gross profit | |||||
| Selling, general and administrative expenses | - | ||||
| Operating income | |||||
| Other income (loss) | - | ||||
| Income before income taxes | |||||
| Income tax (expense) benefit | - | ||||
| Income from discontinued operations, net of income taxes | |||||
| Less: net income attributable to non-controlling interest | ( | ) | |||
| Net income from discontinued operations attributable to controlling interest | $ | ||||
F-13
ORGANIC AGRICULTURAL COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN US DOLLARS)
NOTE 4. INVENTORIES
The Company’s inventories are all non-perishable products. There is no reserve. The Company values inventory on its balance sheet at the lower of cost or net realizable value. Inventories consisted of the following:
| September 30, 2021 | March 31, 2020 | |||||||
| (Unaudited) | ||||||||
| Rice and other products | $ | $ | ||||||
| Packing and other materials | ||||||||
| Total inventories at cost | $ | $ | ||||||
F-14
ORGANIC AGRICULTURAL COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN US DOLLARS)
NOTE 5. INCOME TAXES
A reconciliation of income (loss) before income taxes for domestic and foreign locations for the three and six months ended September 30, 2021 and 2020 is as follows:
| For the three months ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| United States | $ | ( | ) | $ | ( | ) | ||
| Foreign | ( | ) | ) | |||||
| (Loss) before income taxes | $ | ( | ) | $ | ( | ) | ||
| For the six months ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| United States | $ | ( | ) | $ | ( | ) | ||
| Foreign | ( | ) | ||||||
| (Loss) before income taxes | $ | ( | ) | $ | ( | ) | ||
The difference between the U.S. federal statutory income tax rate and the Company’s effective tax rate was as follows:
| September 30, 2021 | September 30, 2020 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| U.S. federal statutory income tax rate | % | % | ||||||
| U.S. Valuation allowance | ( | )% | ( | )% | ||||
| Rates for Tianci Liangtian, Tianci Wanguan and Yuxinqi, net | % | % | ||||||
| PRC Valuation allowance | ( | )% | ( | )% | ||||
| The Company’s effective tax rate | ( | )% | ( | )% | ||||
The Company did not recognize deferred tax assets since it is not likely to incur taxes against which such deferred tax assets may be offset. The deferred tax assets would apply to the Company in the U.S. and to Yuxinqi, Tianci Liangtian and Tianci Wanguan in China.
As
of September 30, 2021, Yuxinqi, Tianci Liangtian and Tianci Wanguan have total net operating loss carry forwards of approximately $
The
Company has incurred losses from its United States operations during all periods presented of approximately $
The Company is subject to examination by the Internal Revenue Service (IRS) in the United States as well as by the taxing authorities in China, where the Company has its operations. The tax years subject to examination vary by jurisdiction. The table below presents the earliest tax years that remain subject to examination by jurisdiction.
| The year as of | ||||
| U.S. Federal | ||||
| China |
F-15
ORGANIC AGRICULTURAL COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN US DOLLARS)
NOTE 6. RELATED PARTY TRANSACTIONS
Amounts due to related parties consisted of the following as of the periods indicated:
September 30, 2021 | March 31, 2021 | |||||||
| (Unaudited) | ||||||||
| Shen Zhenai | ||||||||
| Xun Jianjun | ||||||||
| $ | $ | |||||||
Shen Zhenai is the President, Chairman of the Board, director and a shareholder of the Company, and Xun Jianjun is the CEO and a shareholder of the Company. These advances represent temporary borrowings for operating costs between the Company and management. They are non-interest bearing and due on demand.
During
the six months ended September 30, 2021 and 2020, Hao Shuping, a member of the Company's Board of Directors, purchased agricultural products
from the Company totaling $
NOTE 7. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
On April 1, 2019, the Company adopted FASB ASC 842, “Leases” (“new lease standard”). The new lease standard was adopted using the optional transition method approach that allows for the cumulative effect adjustment to be recorded without restating prior periods. The Company has elected the practical expedient package related to the identification, classification and accounting for initial direct costs whereby prior conclusions do not have to be reassessed for leases that commenced before the effective date. As the Company will not reassess such conclusions, the Company has not adopted the practical expedient to use hindsight to determine the likelihood of whether a lease will be extended or terminated or whether a purchase option will be exercised.
Operating leases are reflected on our balance sheet within ROU assets and the related operating lease liabilities. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease agreement. ROU assets and liabilities are recognized at the commencement date, or the date on which the lessor makes the underlying asset available for use, based upon the present value of the lease payments over the respective lease term. Lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectation regarding the terms.
F-16
ORGANIC AGRICULTURAL COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN US DOLLARS)
NOTE 7. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Continued)
Tianci Liangtian has an operating lease for office
space (approximately
The Company’s adoption of the new lease
standard included new processes and controls regarding asset financing transactions, financial reporting and a system-related implementation
required for the new lease standard. The impact of the adoption of the new lease standard included the recognition of right-of-use (“ROU”)
asset and lease liabilities. For the six months ended September 30, 2021 and 2020, the amortization was US$
As of September 30, 2021, the Company has the following amounts recorded on the Company’s consolidated balance sheet:
| As of September 30, | ||||
| 2021 | ||||
| (Unaudited) | ||||
| Assets | ||||
| Right-of-use asset (non-current) | $ | |||
| Total | $ | |||
| Liabilities | ||||
| Lease liability (current) | $ | |||
| Total | $ | |||
| Office lease: | |||
| 1 year, renewal option |
|||
| Remaining Lease Term | |||
| Incremental borrowing rate | % | ||
Future annual minimum lease payments for non-cancellable operating leases are as follows:
| Year Ending March 31 | ||||
| 2022 | $ | |||
| Thereafter | ||||
| Total | ||||
| Less: imputed interest | ||||
| Total | $ | |||
| Reconciliation to lease liabilities: | ||||
| Lease liabilities - current | $ | |||
| Lease Liabilities | $ | |||
F-17
ORGANIC AGRICULTURAL COMPANY LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN US DOLLARS)
NOTE 8. CONTINGENCIES
Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.
The Company was not subject to any material loss contingencies as of September 30, 2021 and March 31, 2021 and through the date of this report.
NOTE 9. SUBSEQUENT EVENTS
The Management of the Company determined that there were no reportable subsequent events to be adjusted for and/or disclosed as of November 18, 2021 except as follows:
The COVID-19 pandemic has had a significant adverse impact and created many uncertainties related to our business, and we expect that it will continue to do so. The Company is experiencing challenges in sales and which has increased the Company’s financial uncertainty. Our future business outlook and expectations are very uncertain due to the impact of the COVID-19 pandemic and are very difficult to quantify. It is difficult to assess or predict the impact of this unprecedented event on our business, financial results or financial condition.
On October 6, 2021 Organic Agricultural Company Limited (“Organic Agricultural”) filed a Certificate of Amendment to Articles of Incorporation with the Nevada Secretary of State. The Certificate of Amendment:
| ● | increased the authorized shares of stock to | |
| ● | implemented a 5.16-for-1 forward split of the outstanding common stock. |
The Effective Time of
the increase in authorized shares and forward split was at 6:00 P.M. on October 21, 2021.
F-18
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of such financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. On an ongoing basis, we evaluate these estimates, including those related to useful lives of real estate assets, bad debts, impairment, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There can be no assurance that actual results will not differ from those estimates.
Application of Critical Accounting Policies
In preparing our financial statements, we are required to formulate working policies regarding valuation of our assets and liabilities and to develop estimates of those values. In our preparation of the financial statements for the three and six months ended September 30, 2021 and 2020, there was no estimate made which was (a) subject to a high degree of uncertainty and (b) material to our results.
Results of Operations
The following table shows key components of the unaudited results of operations during the three and six months ended September 30, 2021 and 2020:
| For
the Three Months Ended September 30, | Change | |||||||||||||||
| 2021 | 2020 | $ | % | |||||||||||||
| Revenue | $ | 47,955 | $ | 30,988 | $ | 16,967 | 55 | % | ||||||||
| Cost of Sales | 31,575 | 28,441 | 3,134 | 11 | % | |||||||||||
| Gross Profit | 16,380 | 2,547 | 13,833 | 543 | % | |||||||||||
| Total operating costs and expenses | 114,242 | 18,730 | 95,512 | 510 | % | |||||||||||
| (Loss) from operations before other income and income taxes | (97,862 | ) | (16,183 | ) | (81,679 | ) | 505 | % | ||||||||
| Other (loss) income | (11 | ) | 1,032 | (1,043 | ) | (101 | %) | |||||||||
| (Loss) from operations before income taxes | (97,873 | ) | (15,151 | ) | (82,722 | ) | 546 | % | ||||||||
| Income taxes | - | - | - | N/A | ||||||||||||
| Net (loss) from continuing operations | (97,873 | ) | (15,151 | ) | (82,722 | ) | 546 | % | ||||||||
| Less: net (loss) attributable to non-controlling interests | (14,762 | ) | - | (14,762 | ) | N/A | ||||||||||
| Net (loss) attributable to common shareholders’ | $ | (83,111 | ) | $ | (15,151 | ) | $ | (67,960 | ) | 449 | % | |||||
| For
the Six Months Ended September 30, | Change | |||||||||||||||
| 2021 | 2020 | $ | % | |||||||||||||
| Revenue | $ | 78,046 | $ | 99,516 | $ | (21,470 | ) | (22 | %) | |||||||
| Cost of Sales | 52,255 | 67,790 | (15,535 | ) | (23 | %) | ||||||||||
| Gross Profit | 25,791 | 31,726 | (5,935 | ) | (19 | %) | ||||||||||
| Total operating costs and expenses | 914,365 | 80,584 | 833,781 | 1,035 | % | |||||||||||
| (Loss) from operations before other income and income taxes | (888,574 | ) | (48,858 | ) | (839,716 | ) | 1,719 | % | ||||||||
| Other income | 2 | 1,414 | (1,412 | ) | (100 | %) | ||||||||||
| (Loss) from operations before income taxes | (888,572 | ) | (47,444 | ) | (841,128 | ) | 1,773 | % | ||||||||
| Income taxes | - | - | - | - | ||||||||||||
| Net (loss) from continuing operations | (888,572 | ) | (47,444 | ) | (841,128 | ) | 1,773 | % | ||||||||
| (Loss) on the sale of discontinued operations, net of income taxes | - | (713,722 | ) | 713,722 | (100 | %) | ||||||||||
| Net income from discontinued operations, net of income taxes | - | 743 | (743 | ) | (100 | %) | ||||||||||
| Total net (loss) from discontinued operations | - | (712,979 | ) | 712,979 | (100 | %) | ||||||||||
| Net (loss) | (888,572 | ) | (760,423 | ) | (128,149 | ) | 17 | % | ||||||||
| Less: net (loss) income attributable to non-controlling interests | (14,762 | ) | 364 | (15,126 | ) | (4,155 | %) | |||||||||
| Net (loss) attributable to common shareholders’ | $ | (873,810 | ) | $ | (760,787 | ) | $ | 113,023 | 15 | % | ||||||
1
All of the Company’s operations are currently carried out by its subsidiary, Yuxinqi. Yuxinqi is a marketing enterprise with a focus on milled rice and other agricultural products. Incorporated on February 5, 2018, with a short operating history, Yuxinqi’s sales are erratic, since a stable customer base has not been established yet. Sales by Yuxinqi during the three months ended September 30, 2021 were 55% greater than during the three months ended September 30, 2020. The increase in revenue occurred primarily because our principal customer, Jiufu Zhenyuan, increased its orders. However, sales by Yuxinqi during the six months ended September 30, 2021 were lower than during the six months ended September 30, 2020. The decrease in revenue occurred primarily because our principal customers, such as Huiye and Shouhang Commerce, reduced their orders.
For the periods ended September 30, 2021 and 2020, the cost of sales of $31,575 and $28,441 for the three months, and $52,255 and $67,790 for the six months, respectively, was attributable to the sales of milled rice and other foodstuffs. Those operations yielded a gross profit for the three months periods of $16,380 and $2,547 with a gross margin of 34.2% and 8.2%, and a gross profit for the six months periods of $25,791 and $ 37,726 with a gross margin of 33.0% and 31.9%, respectively. The increase in gross margin during the three months ended September 30, 2021, compared to the same period of the previous year was primarily attributable to changes in customers and the changes in products.
To focus on the sale of value-added processed products, the Company’s subsidiary, Tianci Liangtian, completed the spin-off of its ownership interest in Lvxin on April 30, 2020. During the three months ended September 30, 2020, the Company incurred $713,722 of investment loss due to the divestment of Lvxin.
In April 2021, in order to boost sales, the Company granted a total of 345,000 fully vested shares with a fair value on the grant date of $2.20 per share to 25 individuals for sales promotion services. As a result, $759,000 in compensation expense was recognized as advertising and promotion expenses for the three and six months ended September 30, 2021. Therefore, for the periods ended September 30, 2021 and 2020, the Company incurred operating expenses total $114,242 and $18,730 during the three months ended September 30, 2021 and 2020, and $914,365 and $80,584 during the six months ended September 30, 2021 and 2020, respectively. The components of operating expenses were:
| Three Months Ended Sept. 30 | Six Months Ended Sept. 30 | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Salaries and benefits | $ | 82,268 | $ | 22,356 | $ | 115,282 | $ | 46,636 | ||||||||
| Office Expense | 16,977 | 15,812 | 31,279 | 20,055 | ||||||||||||
| Rentals and leases | 6,190 | 9,882 | 12,392 | 19,534 | ||||||||||||
| Professional fees | 18,310 | 50,788 | 36,420 | 67,331 | ||||||||||||
| Exchange (gain) loss | (12,553 | ) | (81,254 | ) | (45,898 | ) | (81,254 | ) | ||||||||
| Advertising and promotion expenses | 3,050 | 423 | 764,890 | 6,854 | ||||||||||||
| Depreciation and amortization | - | 723 | - | 1,428 | ||||||||||||
| Total operating expenses | $ | 114,242 | $ | 18,730 | $ | 914,365 | $ | 80,584 | ||||||||
The Company’s operating expenses were partially offset by $45,898 and $81,254 of gain on exchange realized during the six months ended September 30, 2021 and 2020, and $12,553 and $81,254 of gain on exchange realized during the six months ended September 30, 2021 and 2020. This represented the increase in the USD value of Tianci’s debt to Organic Agricultural as a result of the decline in the USD to CNY exchange rate from 6.5565 to 6.4580.
The Company’s continuing operations produced a net loss of $97,873 and $15,151 for the three months ended September 30, 2021 and 2020, and $888,572 and $47,444 for the six months ended September 30, 2021 and 2020, respectively.
Liquidity and Capital Resources
The Company’s operations have been financed primarily by proceeds from the sale of shares. The Company received $920,000 from the sale of 4,119,500 shares to a single investor during the six months ended September 30, 2021. As of September 30, 2021, our working capital was $632,249, an increase of $776,721 during the six months ended September 30, 2021, primarily due to the cash received from the sale of the 4,119,500 shares.
The largest components of working capital at September 30, 2021 were cash of $741,882 and inventories of $134,604, which were offset by $178,006 in customer deposits against future sales.
2
Cash Flows
The following table summarizes our cash flows for the six months ended September 30, 2021 and 2020.
For the Six Months Ended September 30, | Change | |||||||||||
| 2021 | 2020 | $ | ||||||||||
| Net cash (used in) operating activities | $ | (226,204 | ) | $ | (136,213 | ) | $ | (89,991 | ) | |||
| Net cash (used in) investing activities | - | (1,343 | ) | 1,343 | ||||||||
| Net cash provided by financing activities | 920,000 | 152,900 | 767,100 | |||||||||
| Effect of exchange rate fluctuation on cash and cash equivalents | (22,420 | ) | 9,783 | (171,668 | ) | |||||||
| Net increase in cash and cash equivalents | 671,376 | 25,127 | 646,249 | |||||||||
| Cash and cash equivalents, beginning of year | 70,506 | 242,174 | (171,668 | ) | ||||||||
| Cash and cash equivalents, end of year | $ | 741,882 | $ | 267,301 | $ | 474,581 | ||||||
During the six months ended September 30, 2021, our operations used net cash of $226,204. The Company incurred a cash use from operations primarily because it recorded a net loss of $117,180 after adding back our non-cash expenses of $759,000 for stock issues as compensation and depreciation and amortization of $12,392. In addition, we reduced the balance due to related parties by $63,967, decreased accounts payable and accrued expenses by $29,192 and increased inventories by $11,009. During the six months ended September 30, 2020, the Company recorded $136,213 of cash used in operating activities, primarily because it recorded an increase in prepayments and deferred expenses of $104,577 and a decrease in due to related parties of $82,076.
The Company had no investing activity during the six months ended September 30, 2021. The Company’s only investing activity during the six months ended September 30, 2020 was the distribution of $1,343 of cash in connection with the sale of the discontinued operations.
Our financing activities during the six months ended September 30, 2021 generated $920,000 from the sale of common stock. During the six months ended September 30, 2020, our financing activities generated $46,400 from the sale of common stock and the receipt of $106,500 for future shares to be issued.
Trends, Events and Uncertainties
The Company intends to expand its product offerings to include value-added products, both products based on rice and products based on other food stuffs, such as organic red beans and millet. Our marketing personnel will endeavor to expand awareness of our brand, open new marketing channels, and educate the nation about the health benefits of selenium-enriched rice. In this manner, the Company hopes to increase sales to support the future operations and development of the Company. There is no guarantee that the Company’s new strategy will be successful.
On November 6, 2020 Organic Agricultural entered into a Cooperation Agreement with Unbounded IOT Block Chain Limited (“Unbounded”), an entity with offices in Xiamen City, Fujian Province. The purpose of the Cooperation Agreement was to promote the use of blockchain technology in agriculture, specifically the development of tracing systems for agricultural products, the development of a blockchain-based shopping mall for agricultural products, and related improvements to the agricultural sector of the economy. To accomplish those purposes, Tianci Wanguan (Xiamen) Digital Technology Co., Ltd. was incorporated in Xiamen, China on November 5, 2020. Tianci Wanguan is 51% owned by Organic Agricultural HK and 49% owned by Chen Zewu for the behalf of Unbounded. Each party committed to provide capital resources to Tianci Wanguan in proportion to its ownership percentage. On July 19, 2021 the parties executed a supplement to the Cooperation Agreement. The Supplementary Agreement sets forth performance criteria for Unbounded’s management of Tianci Wanguan: specifically, that within 12 months after the shares mentioned below are issued to Unbounded, Tianci Wanguan must have made a profit of five million Renminbi from the business described in the Cooperation Agreement or any other business approved by Organic Agricultural. Any profits generated by Tianci Wanguan will be held for use by that company. The Supplementary Agreement further provides that, after implementing a 5.16 -for-1 stock split contemplated by the Cooperation Agreement and the supplement, Organic Agricultural will issue 10 million shares of its common stock to Unbounded. The certificate for the shares will be held by Chen Zewu, who will vote the shares in accordance with the direction he receives from Hao Shuping, a member of the Organic Agricultural Board of Directors. If Unbounded fails to satisfy the criteria described above, the 10 million shares must be returned to Organic Agricultural. If Unbounded does satisfy the criteria, then it will have unrestricted ownership of the 10 million shares, and Organic Agricultural will issue an additional 10 million shares to Unbounded.
3
The COVID-19 outbreak has had a significant adverse impact and created many uncertainties related to our business, and we expect that it will continue to do so. The Company is experiencing challenges in sales and which has increased the Company’s financial uncertainty. Our future business outlook and expectations are very uncertain due to the impact of the COVID-19 pandemic and is very difficult to quantify. It is difficult to assess or predict the impact of this unprecedented event on our business, financial results or financial condition. Factors that will impact the extent to which the COVID-19 pandemic affects our business, financial results and financial condition include: the duration, spread and severity of the pandemic; the actions taken to contain the virus or treat its impact, including government actions to mitigate the economic impact of the pandemic; and how quickly and to what extent normal economic and operating conditions can resume, including whether any future outbreaks interrupt the economic recovery.
The U.S. government, including the SEC, has made statements and taken actions that have led to changes in relations between the U.S. and China, and will impact companies with connections to the United States or China. Those actions by the U.S. government included imposing several rounds of tariffs affecting certain products manufactured in China and imposing sanctions and restrictions in relation to China. Actions by the SEC included issuing statements indicating that it would make enhanced review of companies with significant China-based operations. It is unknown whether and to what extent new legislation, executive orders, tariffs, laws or regulations will be adopted, or the effect that any such actions would have on companies with significant connections to the U.S. or to China, our industry or on us. Any unfavorable government policies on cross-border relations, including increased scrutiny on companies with significant China-based operations, capital controls or tariffs, may affect our ability to raise capital and the market price of our shares. If any new legislation, executive orders, tariffs, laws and/or regulations are implemented, if existing trade agreements are renegotiated or if the U.S. or Chinese governments take retaliatory actions due to the recent U.S.-China tensions, such changes could have an adverse effect on our business, financial condition and results of operations, our ability to raise capital and the market price of our shares. Changes in United States and China relations and/or regulations may adversely impact our business, our operating results, our ability to raise capital and the market price of our shares.
Other than the factors listed above we do not know of any trends, events or uncertainties that have had or are reasonably expected to have a material impact on our net sales or revenues or income from continuing operations.
Off-Balance Sheet Arrangements
We do not currently have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations.
Recent Accounting Pronouncements
New accounting rules and disclosure requirements can significantly impact the comparability of our financial statements. Please refer to Note 2 of our condensed consolidated financial statements included in this quarterly report.
There were no recent accounting pronouncements that we expect to have a material effect on the Company’s financial position or results of operations.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
4
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management maintains disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to provide reasonable assurance that the material information required to be disclosed by us in our periodic reports filed or submitted under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management team, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of September 30, 2021. Based on this evaluation, we concluded that our disclosure controls and procedures have the following material weaknesses:
| ● | The relatively small number of employees who are responsible for accounting functions prevents us from segregating duties within our internal control system. |
| ● | Our internal financial staff lack expertise in identifying and addressing complex accounting issues under U.S. Generally Accepted Accounting Principles. |
| ● | Our Chief Financial Officer is not familiar with the accounting and reporting requirements of a U.S. public company. |
| ● | We have not developed sufficient documentation concerning our existing financial processes, risk assessment and internal controls. |
Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s system of disclosure controls and procedures were not effective as of September 30, 2021 for the purposes described in this paragraph.
Changes in Internal Control over Financial Reporting
No changes in the Company’s internal control over financial reporting has come to management’s attention during the quarter ended September 30, 2021 that have materially affected, or are likely to materially affect, the Company’s internal control over financial reporting.
5
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
Item 1A. Risk Factors.
There have been no material changes from the risk factors included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2021, as filed with the SEC on June 29, 2021, except as follows:
Changes in relations between the United States and China and/or regulations may adversely impact our business, our operating results, our ability to raise capital and the market price of our shares.
The U.S. government, including the SEC, has made statements and taken actions that led to changes in United States relations with China, and will impact companies with connections to the United States or China. Actions by the U.S. government included imposing several rounds of tariffs affecting certain products manufactured in China and imposing certain sanctions and restrictions in relation to China. Actions by the SEC included issuing statements indicating its intent to make enhanced review of companies with significant China-based operations. It is unknown whether and to what extent new legislation, executive orders, tariffs, laws or regulations will be adopted, or the effect that any such actions would have on companies with significant connections to the U.S. or to China, our industry or on us. Any unfavorable government policies on cross-border relations, including increased scrutiny of companies with significant China-based operations, capital controls or tariffs, may affect our ability to raise capital and the market price of our shares.
Furthermore, the SEC has issued statements primarily focused on companies with significant China-based operations, such as us. For example, on July 30, 2021, Gary Gensler, Chairman of the SEC, issued a Statement on Investor Protection Related to Recent Developments in China, in which Chairman Gensler stated that he has asked the SEC staff to engage in targeted additional reviews of filings for companies with significant China-based operations. The statement also addressed risks inherent in companies with a Variable Interest Entity, or a VIE structure. We do not have a VIE structure and are not in an industry that is subject to foreign ownership limitations by China. Further, we believe that we have robust disclosures relating to our operations in China, including the relevant risks noted in Chairman Gensler’s statement. However, it is possible that the Company’s periodic reports and other filings with the SEC may be subject to enhanced review by the SEC and this additional scrutiny could affect our ability to effectively raise capital in the United States.
In response to the SEC’s July 30 statement, the China Securities Regulatory Commission (CSRC) announced on August 1, 2021 that “it is our belief that Chinese and U.S. regulators shall continue to enhance communication with the principle of mutual respect and cooperation, and properly address the issues related to the supervision of China-based companies listed in the U.S. so as to form stable policy expectations and create a benign rules framework for the market.” While the CSRC will continue to collaborate “closely with different stakeholders including investors, companies, and relevant authorities to further promote transparency and certainty of policies and implementing measures,” CSRC emphasized that it “has always been open to companies’ choices to list their securities on international or domestic markets in compliance with relevant laws and regulations.”
If any new legislation, executive orders, tariffs, laws and/or regulations are implemented, if existing trade agreements are renegotiated or if the U.S. or Chinese governments take retaliatory actions due to the recent U.S.-China tensions, such changes could have an adverse effect on our business, financial condition and results of operations, our ability to raise capital and the market price of our shares.
6
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds.
During the quarter ended September 30, 2021, the Company recorded two sales of unregistered shares:
On April 2, 2021 the Company entered into an agreement with Jilin Jiufu Zhenyuan Technology Development Co., Ltd (“Jilin Jiufu”), for the sale by the Company to Jilin Jiufu of 4,119,500 shares of the Company’s common stock. On April 15, 2021, Jilin Jiufu paid for the shares by depositing 6,000,000 Renminbi (US$ 920,000) to the account of Heilongjiang Tianci Liangtian Agricultural Technology Development Co., Ltd. The shares were sold in a private offering to an investor who was purchasing for its own account. The offering, therefore, was exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) of the Securities Act.
On April 12, 2021, the Company issued a total of 345,000 shares with a fair value on the grant date of $2.20 per share to 25 individuals in exchange for sales promotion services during the period from April 12, 2021 through December 31, 2021.
Item 3. Defaults upon Senior Securities.
Not applicable
Item 4. Mine Safety Disclosure
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits
INDEX TO EXHIBITS
7
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ORGANIC AGRICULTURAL COMPANY LIMITED
| Signature | Title | Date | ||
| /s/ Jianjun Xun | Chief Executive Officer | November 18, 2021 | ||
| Jianjun Xun | (Principal Executive Officer) | |||
| /s/ Yongmei Cao | Chief Financial Officer | November 18, 2021 | ||
| Yongmei Cao | (Principal Financial and Accounting Officer) |
8
EXHIBIT 31.1
Certification of Principal Executive Officer
Section 302 Certification
I, Jianjun Xun, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ORGANIC AGRICULTURAL COMPANY LIMITED;
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(s) 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 annual 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(s) 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 functions):
(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.
| Date: | November 18, 2021 | /s/ Jianjun Xun | |
|
Jianjun Xun, Chief Executive Officer (Principal Executive Officer) |
EXHIBIT 31.2
Certification of Principal Financial Officer
Section 302 Certification
I, Yongmei Cao, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ORGANIC AGRICULTURAL COMPANY LIMITED;
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(s) 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 annual 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(s) 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 functions):
(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.
| Date: | November 18, 2021 | /s/ Yongmei Cao | |
|
Yongmei Cao, Chief Executive Officer (Principal Financial Officer) |
EXHIBIT 32.1
CERTIFICATIONS PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of ORGANIC AGRICULTURAL COMPANY LIMITED (the “Company”) on Form 10-Q for the period ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Xun Jianjun, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| 2. | The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| By: | /s/ Jianjun Xun | Dated: | November 18, 2021 |
| Jianjun Xun | |||
| Title: |
Chief Executive Officer | ||
EXHIBIT 32.2
CERTIFICATIONS PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of ORGANIC AGRICULTURAL COMPANY LIMITED (the “Company”) on Form 10-Q for the period ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Cao Yongmei, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| By: | /s/ Yongmei Cao | Dated: | November 18, 2021 |
| Yongmei Cao | |||
| Title: |
Chief Financial Officer | ||
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares |
Sep. 30, 2021 |
Mar. 31, 2021 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
| Preferred stock, authorized | 1,000,000 | 1,000,000 |
| Preferred stock, shares issued | ||
| Preferred stock, shares outstanding | ||
| Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 274,000,000 | 274,000,000 |
| Common stock, shares issued | 83,536,974 | 60,500,154 |
| Common stock, shares outstanding | 83,536,974 | 60,500,154 |
Condensed Consolidated Statements of Changes in Shareholders’ (Deficit) Equity (Unaudited) - USD ($) |
Common stock |
Additional Paid-in Capital |
(Deficit) |
Other Comprehensive Income (Loss) |
Total Shareholders’ Equity (Deficit) |
Non- controlling Interest |
Total |
|---|---|---|---|---|---|---|---|
| Balance at Mar. 31, 2020 | $ 60,340 | $ 2,564,308 | $ (1,752,671) | $ 9,891 | $ 881,868 | $ 23,977 | $ 905,845 |
| Balance (in Shares) at Mar. 31, 2020 | 60,340,194 | ||||||
| Net (loss) | (745,636) | (745,636) | 364 | (745,272) | |||
| Sale of common shares | $ 160 | 46,340 | 46,500 | 46,500 | |||
| Sale of common shares (in Shares) | 159,960 | ||||||
| Foreign currency translation adjustment | (3,395) | (3,395) | 437 | (2,958) | |||
| Balance at Jun. 30, 2020 | $ 60,500 | 2,610,648 | (2,498,307) | 6,496 | 179,337 | 24,778 | 204,115 |
| Balance (in Shares) at Jun. 30, 2020 | 60,500,154 | ||||||
| Net (loss) | (15,151) | (15,151) | (15,151) | ||||
| Foreign currency translation adjustment | (58,591) | (58,591) | (58,591) | ||||
| Balance at Sep. 30, 2020 | $ 60,500 | 2,610,648 | (5,568,062) | (52,095) | 105,595 | 24,778 | 130,373 |
| Balance (in Shares) at Sep. 30, 2020 | 60,500,154 | ||||||
| Balance at Mar. 31, 2021 | $ 60,500 | 2,610,648 | (2,684,213) | (113,743) | (126,808) | (126,808) | |
| Balance (in Shares) at Mar. 31, 2021 | 60,500,154 | ||||||
| Net (loss) | (790,699) | (790,699) | (790,699) | ||||
| Sale of common shares | $ 21,257 | 898,743 | 920,000 | 920,000 | |||
| Sale of common shares (in Shares) | 21,256,620 | ||||||
| Shares issued as compensation | $ 1,780 | 757,220 | 759,000 | 759,000 | |||
| Shares issued as compensation (in Shares) | 1,780,200 | ||||||
| Foreign currency translation adjustment | (25,774) | (25,774) | (25,774) | ||||
| Balance at Jun. 30, 2021 | $ 83,537 | 4,266,611 | (3,474,912) | (139,517) | 735,719 | 735,719 | |
| Balance (in Shares) at Jun. 30, 2021 | 83,536,974 | ||||||
| Net (loss) | (83,111) | (83,111) | (14,762) | (97,873) | |||
| Foreign currency translation adjustment | (60) | (60) | (60) | ||||
| Balance at Sep. 30, 2021 | $ 83,537 | $ 4,266,611 | $ (3,558,023) | $ (139,577) | $ 652,548 | $ (14,762) | $ 637,786 |
| Balance (in Shares) at Sep. 30, 2021 | 83,536,974 |
Nature of Operations and Basis of Presentation |
6 Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||
| NATURE OF OPERATIONS AND BASIS OF PRESENTATION | NOTE 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Organic Agricultural Company Limited (“Organic Agricultural”, the “Company”, “we” or “us”) was incorporated in the State of Nevada on April 17, 2018.
The Company, through its subsidiaries with headquarters in Harbin, China, sells selenium-enriched products and other agricultural products. At September 30, 2021, the Company’s subsidiaries were:
Reorganization
On May 16, 2018, the Company completed a corporate reorganization to combine several controlled entities (now referred to as the “subsidiaries”) into Organic Agricultural. The specific transactions related to this reorganization are as follows:
On March 31, 2017, Hao Shuping and the shareholders of Baoqing County Lvxin Paddy Rice Plant Specialized Cooperative (“Lvxin”) signed an Equity Transfer Agreement, whereby shareholders of Lvxin transferred 51% of the controlling interest in Lvxin to Hao Shuping. Hao Shuping agreed to pay the Lvxin shareholders RMB 2,029,586 (US$305,472) in cash and cause the company that would become Organic Agricultural to issue to them 152,736 shares (valued at US$152,736). Hao Shuping and the shareholders of Lvxin also signed an irrevocable supplemental agreement that gave Hao Shuping voting and managerial control over Lvxin. By June 22, 2018, Tianci Liangtian paid all of the consideration to Lvxin’s former shareholders.
On January 1, 2018, pursuant to the Equity Transfer Agreement between Hao Shuping and Tianci Liangtian, Hao Shuping transferred his 51% controlling interest in Lvxin to Tianci Liangtian. As control of both entities resided with Hao Shuping, we accounted for the combination of Lvxin with Tianci Liangtian as a transaction between entities under common control.
On January 8, 2018, the shareholders of Tianci Liangtian transferred ownership of Tianci Liangtian to Organic Agricultural HK, which is wholly owned by Organic Agricultural Samoa.
On May 16, 2018, the Company issued 10,000,000 shares of its common stock, par value $0.001 to the shareholders of Organic Agricultural Samoa, in exchange for 100% of the outstanding shares of Organic Agricultural Samoa (the “Share Exchange”).
As a result of the Share Exchange, Hao Shuping acquired 48.8% of the Company’s outstanding shares. Prior to the Share Exchange, Hao Shuping controlled Lvxin and Tianci Liangtian. Therefore, the Share Exchange was accounted for as a business combination of entities under common control in accordance with ASC 805-50-30-5. Accordingly, the assets and liabilities of the Company and its subsidiaries are presented at their carrying values at the date of the transaction; the Company’s historical shareholders’ equity was retroactively restated to the first period presented, as the acquisition of Organic Agricultural Samoa, Organic Agricultural HK, Tianci Liangtian and Lvxin was treated as a combination of entities under common control.
On April 24, 2020 Tianci Liangtian entered into an Equity Transfer Agreement providing for the transfer to Lou Zhengui of Tianci’s 51% interest in the equity of Baoqing County Lvxin Paddy Rice Plant Specialized Cooperative. The Agreement transferred the equity to Lou Zhengui as of April 30, 2020. Tianci Liangtian retained responsibility for the liabilities incurred by Lvxin prior to April 30, 2020, including debt of 257,731 RMB (approx. US$36,380) owed by Lvxin to Yuxinqi. Tianci Liangtian also waived a repayment of 3,672,002 RMB (approx. US$518,321) owed by Lvxin to Tianci Liangtian.
In exchange for the 51% interest in Lvxin, Lou Zhengui assumed the obligation to satisfy a debt of 300,000 RMB (approx. US$42,350) owed by Tianci Liangtian to Hao Shuping, a member of the Company’s Board of Directors.
The business of Lvxin was growing paddy rice. The divestment of Lvxin by Tianci will enable Tianci to focus on its other business: processing and marketing food stuffs.
In accordance with U.S. GAAP, the financial position and results of operations of Lvxin are presented as discontinued operations and, as such, have been excluded from continuing operations for all periods presented. The comprehensive income related to Lvxin has not been segregated and is included in the Condensed Consolidated Statements of Comprehensive Income for all periods presented. With the exception of Note 3, the Notes to the Unaudited Condensed Consolidated Financial Statements reflect the continuing operations of the Company. See Note 3 - Discontinued Operations below for additional information regarding discontinued operations.
On November 6, 2020 Organic Agricultural entered into a Cooperation Agreement with Unbounded IOT Block Chain Limited (“Unbounded”), an entity with offices in Xiamen City, Fujian Province. The purpose of the Cooperation Agreement was to promote the use of blockchain technology in agriculture, specifically the development of tracing systems for agricultural products, the development of a blockchain-based shopping mall for agricultural products, and related improvements to the agricultural sector of the economy. To accomplish those purposes, Tianci Wanguan (Xiamen) Digital Technology Co., Ltd. was incorporated in Xiamen, China on November 5, 2020. Tianci Wanguan is 51% owned by Organic Agricultural HK and 49% owned by Chen Zewu on behalf of Unbounded. Each party had committed to provide capital resources to Tianci Wanguan in proportion to its ownership percentage.
On July 19, 2021 the parties executed a supplement to the Cooperation Agreement. The Supplementary Agreement sets forth performance criteria for Unbounded’s management of Tianci Wanguan: specifically that within 12 months after the shares mentioned below are issued to Unbounded, Tianci Wanguan must have made a profit of five million Renminbi (approximately US$774,000) from the business described in the Cooperation Agreement or any other business approved by Organic Agricultural. Any profits generated by Tianci Wanguan will be held for use by that company.
The Supplementary Agreement further provides that, after implementing a 5.16 -for-1 stock split contemplated by the Cooperation Agreement and the supplement, Organic Agricultural will issue 10 million shares of its common stock to Unbounded. The certificate for the shares will be held by Chen Zewu, who will vote the shares in accordance with the direction he receives from Hao Shuping, a member of the Organic Agricultural Board of Directors. If Unbounded fails to satisfy the criteria described above, the 10 million shares must be returned to Organic Agricultural. If Unbounded does satisfy the criteria, then it will have unrestricted ownership of the 10 million shares, and Organic Agricultural will issue an additional 10 million shares to Unbounded. |
Summary of Significant Accounting Policies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Going concern
Management has determined there is substantial doubt about our ability to continue as a going concern as a result of our lack of significant revenues and recurring losses. If we are unable to generate significant revenue or secure additional financing, we may be required to cease or curtail our operations. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The Company’s operations have been financed primarily by proceeds from sales of shares. The Company received $920,000 in April 2021 from sales of shares. The Company intends to use these funds for working capital.
Management intends to expand product offerings to include value-added products, both products based on rice and products based on other food stuffs, such as organic red beans and millet. The marketing personnel of the Company are opening new marketing channels and hope to build a stable base of customers. In this manner, Management hopes to generate sufficient operating cash inflow to support its future operations and development of the Company in addition to capital raised from sales of shares and shareholders’ support based on need.
Basis of presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments of a normal and recurring nature considered necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements. The results of operations for the interim period are not necessarily indicative of the results that will be realized for the entire fiscal year. These condensed consolidated financial statements should be read in conjunction with Organic Agricultural Company’s audited financial statements and accompanying notes thereto as of and for the year ended March 31, 2021 included in Company’s current report on Form 10-K as filed with the SEC on June 29, 2021.
The Company’s condensed consolidated financial statements are expressed in U.S. Dollars and are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Principles of consolidation
The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements include the assets, liabilities, and net income or loss of these subsidiaries.
The Company’s subsidiaries as of September 30, 2021 are listed as follows:
Use of estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however, actual results could differ from those estimates. One significant item subject to such estimates and assumptions is the inventory valuation allowance. These estimates are often based on complex judgments and assumptions that management believes to be reasonable but are inherently uncertain and unpredictable. Actual results could differ from these estimates.
Cash
Cash consists of cash on hand and bank deposits, which are unrestricted as to withdrawal and use in the PRC. All highly liquid investments with original stated maturities of three months or less are classified as cash. The Company’s cash consist of cash on hand and cash in bank, as of September 30, 2021 and March 31 2021.
Revenue recognition
Effective April 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products and contracts by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that economic benefits will flow to the entity, and specific criteria have been met for each of the Company’s activities as described below.
The Company sells paddy and selenium-enriched paddy products, rice and other agricultural products. All revenue is recognized when it is both earned and realized. The Company’s policy is to recognize the sale when the products, ownership and risk of loss have transferred to the purchasers, and collection of the sales proceeds, if not prepaid, is reasonably assured, all of which generally occur when the customer receives the products. Accordingly, revenue is recognized at the point in time when delivery is made.
Given the nature of this revenue generated by the Company’s business and the applicable rules guiding revenue recognition, the Company’s revenue recognition practices do not include estimates that materially affect results of operations nor does the Company have any policy for return of products.
Fair value measurements
The Company applies the provisions of FASB ASC 820, Fair Value Measurements for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.
Fair value is defined as the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining the fair value for the assets and liabilities required or permitted to be recorded, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability.
ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that are to be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2: Quoted prices, other than those in Level 1, in markets that are not active or for similar assets and liabilities, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).
Financial assets and liabilities of the Company primarily consists of cash, accounts receivable, prepaid expenses, inventories, other receivables, accounts payable and accrued liabilities, operating lease liability, customer deposits, due to related parties, and other payables. As at September 30, 2021 and March 31, 2021, the carrying values of these financial instruments approximated their fair values due to the short-term nature of these instruments.
Functional currency and foreign currency translation
An entity’s functional currency is the currency of the primary economic environment in which it operates. Normally that is the currency of the environment in which the entity primarily generates and expends cash. Management’s judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements. The functional currency of the Company is the Chinese Renminbi (“RMB’), except the functional currency of Organic Agricultural HK is the Hong Kong Dollar (“HKD”), and the functional currency of Organic Agricultural Samoa and Organic Agricultural is the United States dollar (“US Dollars” “USD” or “$”). The reporting currency of these condensed consolidated financial statements is in US Dollars.
The financial statements of the Company, which are prepared using the RMB and the HKD, are translated into the Company’s reporting currency, the US Dollar. Assets and liabilities are translated using the exchange rate at each reporting period end date. Revenue and expenses are translated using average rates prevailing during each reporting period, and shareholders’ equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income or loss.
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. Foreign currency exchange gains and losses resulting from these transactions are included in operations.
The exchange rates used for foreign currency translation are as follows:
Income taxes
The Company follows FASB ASC Topic 740, Income Taxes, which requires the recognition of deferred income taxes for the differences between the basis of assets and liabilities for financial statements and income tax purposes. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Deferred tax assets are also recognized for operating losses and for tax credit carryforwards. Valuation allowances are established, when necessary, to reduce net deferred tax assets to the amount expected to be realized.
ASC 740-10-30 requires income tax positions to meet a more-likely-than-not recognition threshold to be recognized in the financial statements. Under ASC 740-10-40, previously recognized tax positions that no longer meet the more-likely-than-not threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met.
The application of tax laws and regulations is subject to legal and factual interpretations, judgments and uncertainties. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policies, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability may be materially different from our estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities or the deferred tax asset valuation allowance.
China
According to the “PRC Income Tax Law”, Tianci Liantian, Tianci Wanguan and Yuxinqi are subject to the 25% standard enterprise income tax rate in the PRC.
United States
The Company is subject to the U.S. corporation tax rate of 21%.
Samoa
Organic Agricultural (Samoa) Co., Ltd was incorporated in Samoa and, under the current laws of Samoa, it is not subject to income tax.
Hong Kong
Organic Agricultural Company Limited (Hong Kong) was incorporated in Hong Kong and is subject to Hong Kong profits tax. Organic Agricultural Company Limited (Hong Kong) is subject to Hong Kong taxation on its activities conducted in Hong Kong and income arising in or derived from Hong Kong. The applicable statutory tax rate is 16.5%.
Earnings (loss) per share
The Company computes earnings (loss) per share (“EPS”) in accordance with FASB ASC 260, Earnings Per Share. ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding during the period. Stock splits are given retroactive recognition for earnings (loss) per share.
Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of contracts to issue ordinary common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. The computation of diluted EPS includes the estimated impact of the exercise of contracts to purchase common stock using the treasury stock method and the potential common shares associated with convertible debt using the if-converted method. Potential common shares that have an anti-dilutive effect (i.e., those that increase earnings per share or decrease loss per share) are excluded from the calculation of diluted EPS.
Share-based compensation
The Company follows the provisions of FASB ASC 718 requiring employee equity awards to be accounted for under the fair value method. Accordingly, share-based compensation is measured at grant date, based on the fair value of the award and recognized over its vesting period. During the six months ended September 30, 2021, specifically on April 12, 2021, the Company granted a total of 345,000 shares with a fair value on the grant date of $2.20 per share to 25 individuals for sales promotion services during the period from April 12, 2021 through December 31, 2021. $759,000 in compensation expense was recognized under the provisions of ASC 718. These shares were fully vested when issued.
Segment information and geographic data
The Company is operating in one segment in accordance with the accounting guidance in FASB ASC Topic 280, Segment Reporting. The Company’s revenues are from the sales of agricultural products to customers in the People’s Republic of China (“PRC”). All assets of the Company are located in the PRC.
Concentration of credit and customer risks
The Company maintains cash balances in two banks in China. In China, the insurance coverage of each bank is RMB500,000 (approximately US$77,000). As of September 30, 2021, the Company had RMB4,180,983 (approximately US$647,000) in excess of the insurance amounts.
During the three months ended September 30, 2021, one customer, Jiufu Zhenyuan, generated 90% of our revenues. During the three months ended September 30, 2020, four customers, Huiye, Qian Li, Hao Shuping and Beiqinhai, generated 32%, 22%, 21% and 17% of our revenues, respectively.
During the six months ended September 30, 2021, one customer, Jiufu Zhenyuan, generated 88% of our revenues. During the six months ended September 30, 2020, three customers, Shouhang Commerce, Jiufu Zhenyuan and Huiye generated 31%, 31% and 15% of our revenue, respectively.
Risks and uncertainties
The COVID-19 pandemic has had a significant adverse impact and created many uncertainties related to our business, and we expect that it will continue to do so. The Company is experiencing challenges in sales and which has increased the Company’s financial uncertainty. Our future business outlook and expectations are very uncertain due to the impact of the COVID-19 pandemic and are very difficult to quantify. It is difficult to assess or predict the impact of this unprecedented event on our business, financial results or financial condition. Factors that will impact the extent to which the COVID-19 affects our business, financial results and financial condition include: the duration, spread and severity of the pandemic; the actions taken to contain the virus or treat its impact, including government actions to mitigate the economic impact of the pandemic; and how quickly and to what extent normal economic and operating conditions can resume, including whether any future outbreak interrupts the economic recovery. Recently adopted accounting standards
We do not believe any recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the condensed consolidated financial position, statements of operations and cash flows.
Retroactive adjustment for stock split
On October 21, 2021, the Company implemented a 5.16-for-1 forward split of its outstanding common stock. The Distribution Date will be the date on which FINRA posts a notice of the forward split on its Daily List, at which time Organic Agricultural will issue an additional 4.16 shares of common stock to the holders of each outstanding share of common stock.
The stock split increased the number of shares outstanding and the par value per share remained $0.001. The financial statements and all share and per share amounts have been retroactively adjusted to give effect to this stock split. |
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Discontinued Operations |
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| Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DISCONTINUED OPERATIONS | NOTE 3. DISCONTINUED OPERATIONS
As discussed in Note 1. Basis of Presentation above, on April 30, 2020, the Company completed the divestment of Lvxin and the requirements for the presentation of Lvxin as a discontinued operation were met on that date. Accordingly, Lvxin’s historical financial information and results are reflected in the Company’s consolidated financial statements as discontinued operations. The Company did not allocate any general corporate overhead or interest expense to discontinued operations.
The financial results of Lvxin are presented as income (loss) from discontinued operations, net of income taxes, in the Condensed Consolidated Statements of Operations. The following table presents the financial results of Lvxin for the reporting periods prior to April 30, 2020.
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Inventories |
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| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| INVENTORIES | NOTE 4. INVENTORIES
The Company’s inventories are all non-perishable products. There is no reserve. The Company values inventory on its balance sheet at the lower of cost or net realizable value. Inventories consisted of the following:
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Income Taxes |
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| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INCOME TAXES | NOTE 5. INCOME TAXES
A reconciliation of income (loss) before income taxes for domestic and foreign locations for the three and six months ended September 30, 2021 and 2020 is as follows:
The difference between the U.S. federal statutory income tax rate and the Company’s effective tax rate was as follows:
The Company did not recognize deferred tax assets since it is not likely to incur taxes against which such deferred tax assets may be offset. The deferred tax assets would apply to the Company in the U.S. and to Yuxinqi, Tianci Liangtian and Tianci Wanguan in China.
As of September 30, 2021, Yuxinqi, Tianci Liangtian and Tianci Wanguan have total net operating loss carry forwards of approximately $979,000 in the PRC that expire in 2026. Due to the uncertainty of utilizing these carry forwards, the Company provided a 100% valuation allowance on the net deferred tax assets of approximately $245,000 and $222,000 related to its operations in the PRC as of September 30 and March 31, 2021, respectively. The PRC valuation allowance has increased by approximately $22,000 and $1,000 for the six months ended September 30, 2021 and 2020, respectively.
The Company has incurred losses from its United States operations during all periods presented of approximately $1,356,000. The Company’s United States operations consist solely of ownership of its foreign subsidiaries, and the losses arise from administrative expenses. Accordingly, management provided a 100% valuation allowance of approximately $285,000 and $117,000 against the net deferred tax assets related to the Company’s United States operations as of September 30, 2021 and March 31, 2021, respectively, because the deferred tax benefits of the net operating loss carry forwards in the United States will not likely be realized. The US valuation allowance has increased by approximately $168,000 and $15,000 for the six months ended September 30, 2021 and 2020, respectively.
The Company is subject to examination by the Internal Revenue Service (IRS) in the United States as well as by the taxing authorities in China, where the Company has its operations. The tax years subject to examination vary by jurisdiction. The table below presents the earliest tax years that remain subject to examination by jurisdiction.
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Related Party Transactions |
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| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| RELATED PARTY TRANSACTIONS | NOTE 6. RELATED PARTY TRANSACTIONS
Amounts due to related parties consisted of the following as of the periods indicated:
Shen Zhenai is the President, Chairman of the Board, director and a shareholder of the Company, and Xun Jianjun is the CEO and a shareholder of the Company. These advances represent temporary borrowings for operating costs between the Company and management. They are non-interest bearing and due on demand.
During the six months ended September 30, 2021 and 2020, Hao Shuping, a member of the Company's Board of Directors, purchased agricultural products from the Company totaling $1,487 and $4,853. |
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Right-of-Use Assets and Lease Liabilities |
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| RIGHT-OF-USE ASSETS AND LEASE LIABILITIES | NOTE 7. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
On April 1, 2019, the Company adopted FASB ASC 842, “Leases” (“new lease standard”). The new lease standard was adopted using the optional transition method approach that allows for the cumulative effect adjustment to be recorded without restating prior periods. The Company has elected the practical expedient package related to the identification, classification and accounting for initial direct costs whereby prior conclusions do not have to be reassessed for leases that commenced before the effective date. As the Company will not reassess such conclusions, the Company has not adopted the practical expedient to use hindsight to determine the likelihood of whether a lease will be extended or terminated or whether a purchase option will be exercised.
Operating leases are reflected on our balance sheet within ROU assets and the related operating lease liabilities. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease agreement. ROU assets and liabilities are recognized at the commencement date, or the date on which the lessor makes the underlying asset available for use, based upon the present value of the lease payments over the respective lease term. Lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectation regarding the terms.
Tianci Liangtian has an operating lease for office space (approximately 666 square meters). Under the terms of the lease, Tianci Liangtian paid approximately US$1,549 in lease deposits and committed to make annual lease payments. On December 20, 2019, the lease was renewed. Under the renewed terms, annual lease payments are RMB290,000 (approximately US$45,000, including VAT tax) for the period from December 20, 2019 to December 19, 2020. On December 20, 2020, the contract expired. Because of the COVID-19 pandemic, the renewal was delayed. On May 14, 2021, Yuxinqi and the lessor signed a supplemental agreement which, due to a leak in the building, credited Yuxinqi with RMB62,570 (approximately US$10,000) of rental expense paid for the previous rental period. On May 14, 2021, Yuxinqi signed a new lease agreement (approximately 370 square meters). Under the terms, Yuxinqi reduced the rental area due to a leak in the building, and committed to make annual lease payments of RMB184,005 (approximately US$28,000, including VAT tax) for the period from December 20, 2020 to January 19, 2022. As of September 30, 2021 and March 31, 2021, US$27,827 and US$37,617 were accounted as lease liabilities (current), US$5,537 and US$18,330 were accounted as a lease right-of-use asset, respectively.
The Company’s adoption of the new lease standard included new processes and controls regarding asset financing transactions, financial reporting and a system-related implementation required for the new lease standard. The impact of the adoption of the new lease standard included the recognition of right-of-use (“ROU”) asset and lease liabilities. For the six months ended September 30, 2021 and 2020, the amortization was US$12,392 and US$14,139, respectively.
As of September 30, 2021, the Company has the following amounts recorded on the Company’s consolidated balance sheet:
Future annual minimum lease payments for non-cancellable operating leases are as follows:
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Contingencies |
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| Commitments and Contingencies Disclosure [Abstract] | |
| CONTINGENCIES | NOTE 8. CONTINGENCIES
Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.
The Company was not subject to any material loss contingencies as of September 30, 2021 and March 31, 2021 and through the date of this report. |
Subsequent Events |
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| Subsequent Events [Abstract] | |||||||
| SUBSEQUENT EVENTS | NOTE 9. SUBSEQUENT EVENTS
The Management of the Company determined that there were no reportable subsequent events to be adjusted for and/or disclosed as of November 18, 2021 except as follows:
The COVID-19 pandemic has had a significant adverse impact and created many uncertainties related to our business, and we expect that it will continue to do so. The Company is experiencing challenges in sales and which has increased the Company’s financial uncertainty. Our future business outlook and expectations are very uncertain due to the impact of the COVID-19 pandemic and are very difficult to quantify. It is difficult to assess or predict the impact of this unprecedented event on our business, financial results or financial condition.
On October 6, 2021 Organic Agricultural Company Limited (“Organic Agricultural”) filed a Certificate of Amendment to Articles of Incorporation with the Nevada Secretary of State. The Certificate of Amendment:
The Effective Time of the increase in authorized shares and forward split was at 6:00 P.M. on October 21, 2021. The Distribution Date will be the date on which FINRA posts a notice of the forward split on its Daily List, at which time Organic Agricultural will issue an additional 4.16 shares of common stock to the holder of each outstanding share of common stock. In the event that any shareholder owns a fractional share as a result of the forward split, Organic Agricultural will issue to that shareholder an additional fraction of a share as is necessary to increase the fractional share to a full share. |
Accounting Policies, by Policy (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Going concern | Going concern
Management has determined there is substantial doubt about our ability to continue as a going concern as a result of our lack of significant revenues and recurring losses. If we are unable to generate significant revenue or secure additional financing, we may be required to cease or curtail our operations. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The Company’s operations have been financed primarily by proceeds from sales of shares. The Company received $920,000 in April 2021 from sales of shares. The Company intends to use these funds for working capital.
Management intends to expand product offerings to include value-added products, both products based on rice and products based on other food stuffs, such as organic red beans and millet. The marketing personnel of the Company are opening new marketing channels and hope to build a stable base of customers. In this manner, Management hopes to generate sufficient operating cash inflow to support its future operations and development of the Company in addition to capital raised from sales of shares and shareholders’ support based on need.
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| Basis of presentation | Basis of presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments of a normal and recurring nature considered necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements. The results of operations for the interim period are not necessarily indicative of the results that will be realized for the entire fiscal year. These condensed consolidated financial statements should be read in conjunction with Organic Agricultural Company’s audited financial statements and accompanying notes thereto as of and for the year ended March 31, 2021 included in Company’s current report on Form 10-K as filed with the SEC on June 29, 2021.
The Company’s condensed consolidated financial statements are expressed in U.S. Dollars and are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
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| Principles of consolidation | Principles of consolidation
The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements include the assets, liabilities, and net income or loss of these subsidiaries.
The Company’s subsidiaries as of September 30, 2021 are listed as follows:
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| Use of estimates | Use of estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however, actual results could differ from those estimates. One significant item subject to such estimates and assumptions is the inventory valuation allowance. These estimates are often based on complex judgments and assumptions that management believes to be reasonable but are inherently uncertain and unpredictable. Actual results could differ from these estimates.
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| Cash | Cash
Cash consists of cash on hand and bank deposits, which are unrestricted as to withdrawal and use in the PRC. All highly liquid investments with original stated maturities of three months or less are classified as cash. The Company’s cash consist of cash on hand and cash in bank, as of September 30, 2021 and March 31 2021.
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| Revenue recognition | Revenue recognition
Effective April 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products and contracts by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that economic benefits will flow to the entity, and specific criteria have been met for each of the Company’s activities as described below.
The Company sells paddy and selenium-enriched paddy products, rice and other agricultural products. All revenue is recognized when it is both earned and realized. The Company’s policy is to recognize the sale when the products, ownership and risk of loss have transferred to the purchasers, and collection of the sales proceeds, if not prepaid, is reasonably assured, all of which generally occur when the customer receives the products. Accordingly, revenue is recognized at the point in time when delivery is made.
Given the nature of this revenue generated by the Company’s business and the applicable rules guiding revenue recognition, the Company’s revenue recognition practices do not include estimates that materially affect results of operations nor does the Company have any policy for return of products.
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| Fair value measurements | Fair value measurements
The Company applies the provisions of FASB ASC 820, Fair Value Measurements for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.
Fair value is defined as the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining the fair value for the assets and liabilities required or permitted to be recorded, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability.
ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that are to be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2: Quoted prices, other than those in Level 1, in markets that are not active or for similar assets and liabilities, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).
Financial assets and liabilities of the Company primarily consists of cash, accounts receivable, prepaid expenses, inventories, other receivables, accounts payable and accrued liabilities, operating lease liability, customer deposits, due to related parties, and other payables. As at September 30, 2021 and March 31, 2021, the carrying values of these financial instruments approximated their fair values due to the short-term nature of these instruments.
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| Functional currency and foreign currency translation | Functional currency and foreign currency translation
An entity’s functional currency is the currency of the primary economic environment in which it operates. Normally that is the currency of the environment in which the entity primarily generates and expends cash. Management’s judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements. The functional currency of the Company is the Chinese Renminbi (“RMB’), except the functional currency of Organic Agricultural HK is the Hong Kong Dollar (“HKD”), and the functional currency of Organic Agricultural Samoa and Organic Agricultural is the United States dollar (“US Dollars” “USD” or “$”). The reporting currency of these condensed consolidated financial statements is in US Dollars.
The financial statements of the Company, which are prepared using the RMB and the HKD, are translated into the Company’s reporting currency, the US Dollar. Assets and liabilities are translated using the exchange rate at each reporting period end date. Revenue and expenses are translated using average rates prevailing during each reporting period, and shareholders’ equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income or loss.
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. Foreign currency exchange gains and losses resulting from these transactions are included in operations.
The exchange rates used for foreign currency translation are as follows:
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| Income taxes | Income taxes
The Company follows FASB ASC Topic 740, Income Taxes, which requires the recognition of deferred income taxes for the differences between the basis of assets and liabilities for financial statements and income tax purposes. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Deferred tax assets are also recognized for operating losses and for tax credit carryforwards. Valuation allowances are established, when necessary, to reduce net deferred tax assets to the amount expected to be realized.
ASC 740-10-30 requires income tax positions to meet a more-likely-than-not recognition threshold to be recognized in the financial statements. Under ASC 740-10-40, previously recognized tax positions that no longer meet the more-likely-than-not threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met.
The application of tax laws and regulations is subject to legal and factual interpretations, judgments and uncertainties. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policies, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability may be materially different from our estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities or the deferred tax asset valuation allowance.
China
According to the “PRC Income Tax Law”, Tianci Liantian, Tianci Wanguan and Yuxinqi are subject to the 25% standard enterprise income tax rate in the PRC.
United States
The Company is subject to the U.S. corporation tax rate of 21%.
Samoa
Organic Agricultural (Samoa) Co., Ltd was incorporated in Samoa and, under the current laws of Samoa, it is not subject to income tax.
Hong Kong
Organic Agricultural Company Limited (Hong Kong) was incorporated in Hong Kong and is subject to Hong Kong profits tax. Organic Agricultural Company Limited (Hong Kong) is subject to Hong Kong taxation on its activities conducted in Hong Kong and income arising in or derived from Hong Kong. The applicable statutory tax rate is 16.5%.
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| Earnings (loss) per share | Earnings (loss) per share
The Company computes earnings (loss) per share (“EPS”) in accordance with FASB ASC 260, Earnings Per Share. ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding during the period. Stock splits are given retroactive recognition for earnings (loss) per share.
Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of contracts to issue ordinary common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. The computation of diluted EPS includes the estimated impact of the exercise of contracts to purchase common stock using the treasury stock method and the potential common shares associated with convertible debt using the if-converted method. Potential common shares that have an anti-dilutive effect (i.e., those that increase earnings per share or decrease loss per share) are excluded from the calculation of diluted EPS.
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| Share-based compensation | Share-based compensation
The Company follows the provisions of FASB ASC 718 requiring employee equity awards to be accounted for under the fair value method. Accordingly, share-based compensation is measured at grant date, based on the fair value of the award and recognized over its vesting period. During the six months ended September 30, 2021, specifically on April 12, 2021, the Company granted a total of 345,000 shares with a fair value on the grant date of $2.20 per share to 25 individuals for sales promotion services during the period from April 12, 2021 through December 31, 2021. $759,000 in compensation expense was recognized under the provisions of ASC 718. These shares were fully vested when issued.
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| Segment information and geographic data | Segment information and geographic data
The Company is operating in one segment in accordance with the accounting guidance in FASB ASC Topic 280, Segment Reporting. The Company’s revenues are from the sales of agricultural products to customers in the People’s Republic of China (“PRC”). All assets of the Company are located in the PRC.
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| Concentration of credit and customer risks | Concentration of credit and customer risks
The Company maintains cash balances in two banks in China. In China, the insurance coverage of each bank is RMB500,000 (approximately US$77,000). As of September 30, 2021, the Company had RMB4,180,983 (approximately US$647,000) in excess of the insurance amounts.
During the three months ended September 30, 2021, one customer, Jiufu Zhenyuan, generated 90% of our revenues. During the three months ended September 30, 2020, four customers, Huiye, Qian Li, Hao Shuping and Beiqinhai, generated 32%, 22%, 21% and 17% of our revenues, respectively.
During the six months ended September 30, 2021, one customer, Jiufu Zhenyuan, generated 88% of our revenues. During the six months ended September 30, 2020, three customers, Shouhang Commerce, Jiufu Zhenyuan and Huiye generated 31%, 31% and 15% of our revenue, respectively.
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| Risks and uncertainties | Risks and uncertainties
The COVID-19 pandemic has had a significant adverse impact and created many uncertainties related to our business, and we expect that it will continue to do so. The Company is experiencing challenges in sales and which has increased the Company’s financial uncertainty. Our future business outlook and expectations are very uncertain due to the impact of the COVID-19 pandemic and are very difficult to quantify. It is difficult to assess or predict the impact of this unprecedented event on our business, financial results or financial condition. Factors that will impact the extent to which the COVID-19 affects our business, financial results and financial condition include: the duration, spread and severity of the pandemic; the actions taken to contain the virus or treat its impact, including government actions to mitigate the economic impact of the pandemic; and how quickly and to what extent normal economic and operating conditions can resume, including whether any future outbreak interrupts the economic recovery. |
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| Recently adopted accounting standards | Recently adopted accounting standards
We do not believe any recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the condensed consolidated financial position, statements of operations and cash flows.
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| Retroactive adjustment for stock split | Retroactive adjustment for stock split
On October 21, 2021, the Company implemented a 5.16-for-1 forward split of its outstanding common stock. The Distribution Date will be the date on which FINRA posts a notice of the forward split on its Daily List, at which time Organic Agricultural will issue an additional 4.16 shares of common stock to the holders of each outstanding share of common stock.
The stock split increased the number of shares outstanding and the par value per share remained $0.001. The financial statements and all share and per share amounts have been retroactively adjusted to give effect to this stock split. |
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Summary of Significant Accounting Policies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of company's subsidiaries |
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| Schedule of exchange rates used for foreign currency translation |
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Discontinued Operations (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of income (loss) from discontinued operations |
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Inventories (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of inventories |
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Income Taxes (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of reconciliation income (loss) before income taxes |
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| Schedule of difference between the U.S. federal statutory income tax rate and the company's effective tax rate |
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| Schedule of earliest tax year that remain subject to examination by jurisdiction |
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Related Party Transactions (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of amount due to related parties |
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Right-of-Use Assets and Lease Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Rightofuse Assets And Lease Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of consolidated balance sheet |
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| Schedule of lease term |
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| Schedule of future annual minimum lease payments for non-cancellable operating leases |
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Discontinued Operations (Details) - Schedule of income (loss) from discontinued operations - USD ($) |
3 Months Ended | 6 Months Ended |
|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2020 |
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| Schedule of income (loss) from discontinued operations [Abstract] | ||
| Net sales | $ 37,317 | $ 37,317 |
| Cost of sales | 36,574 | 36,574 |
| Gross profit | 743 | 743 |
| Operating income | 743 | 743 |
| Income before income taxes | 743 | 743 |
| Income from discontinued operations, net of income taxes | 743 | 743 |
| Less: net income attributable to non-controlling interest | (364) | (364) |
| Net income from discontinued operations attributable to controlling interest | $ 379 | $ 379 |
Inventories (Details) - Schedule of inventories - USD ($) |
Sep. 30, 2021 |
Mar. 31, 2020 |
|---|---|---|
| Inventory [Line Items] | ||
| Total inventories at cost | $ 134,604 | $ 121,726 |
| Rice and other products [Member] | ||
| Inventory [Line Items] | ||
| Total inventories at cost | 122,521 | 112,132 |
| Packing and other materials [Member] | ||
| Inventory [Line Items] | ||
| Total inventories at cost | $ 12,083 | $ 9,594 |
Income Taxes (Details) - USD ($) |
6 Months Ended | ||
|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Mar. 31, 2021 |
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| Income Taxes (Details) [Line Items] | |||
| Percentage of allowance on all deferred tax assets | 100.00% | ||
| PRC [Member] | |||
| Income Taxes (Details) [Line Items] | |||
| Operating loss carryforwards | $ 979,000 | ||
| Valuation allowance | 245,000 | $ 222,000 | |
| Valuation allowance increased | 22,000 | $ 1,000 | |
| United States [Member] | |||
| Income Taxes (Details) [Line Items] | |||
| Valuation allowance | 285,000 | $ 117,000 | |
| Valuation allowance increased | 168,000 | $ 15,000 | |
| Incurred loss | $ 1,356,000 | ||
| Percentage of valuation allowance | 100.00% | ||
Income Taxes (Details) - Schedule of reconciliation income (loss) before income taxes - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
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| Schedule of reconciliation income (loss) before income taxes [Abstract] | ||||
| United States | $ (75,411) | $ (50,788) | $ (799,614) | $ (67,368) |
| Foreign | (22,462) | 35,637 | (88,958) | 19,924 |
| (Loss) before income taxes | $ (97,873) | $ (15,151) | $ (888,572) | $ (47,444) |
Income Taxes (Details) - Schedule of difference between the U.S. federal statutory income tax rate and the company's effective tax rate |
6 Months Ended | |
|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
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| Schedule of difference between the U.S. federal statutory income tax rate and the company's effective tax rate [Abstract] | ||
| U.S. federal statutory income tax rate | 21.00% | 21.00% |
| U.S. Valuation allowance | (21.00%) | (21.00%) |
| Rates for Tianci Liangtian, Tianci Wanguan and Yuxinqi, net | 25.00% | 25.00% |
| PRC Valuation allowance | (25.00%) | (25.00%) |
| The Company’s effective tax rate | 0.00% | 0.00% |
Income Taxes (Details) - Schedule of earliest tax year that remain subject to examination by jurisdiction |
6 Months Ended |
|---|---|
Sep. 30, 2021 | |
| U.S. Federal [Member] | |
| Income Taxes (Details) - Schedule of earliest tax year that remain subject to examination by jurisdiction [Line Items] | |
| Tax examination date | Mar. 31, 2019 |
| China [Member] | |
| Income Taxes (Details) - Schedule of earliest tax year that remain subject to examination by jurisdiction [Line Items] | |
| Tax examination date | Dec. 31, 2017 |
Related Party Transactions (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Related Party Transactions [Abstract] | ||
| Purchased agricultural products | $ 1,487 | $ 4,853 |
Related Party Transactions (Details) - Schedule of amount due to related parties - USD ($) |
Sep. 30, 2021 |
Mar. 31, 2021 |
|---|---|---|
| Related Party Transactions (Details) - Schedule of amount due to related parties [Line Items] | ||
| Amount due to related parties | $ 28,209 | $ 89,739 |
| Shen Zhenai [Member] | ||
| Related Party Transactions (Details) - Schedule of amount due to related parties [Line Items] | ||
| Amount due to related parties | 19,682 | 81,341 |
| Xun Jianjun [Member] | ||
| Related Party Transactions (Details) - Schedule of amount due to related parties [Line Items] | ||
| Amount due to related parties | $ 8,527 | $ 8,398 |
Right-of-Use Assets and Lease Liabilities (Details) - Schedule of consolidated balance sheet - Parent [Member] |
Sep. 30, 2021
USD ($)
|
|---|---|
| Assets | |
| Right-of-use asset (non-current) | $ 5,537 |
| Total | 5,537 |
| Liabilities | |
| Lease liability (current) | 27,827 |
| Total | $ 27,827 |
Right-of-Use Assets and Lease Liabilities (Details) - Schedule of lease term |
6 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Office lease: [Member] | |
| Right-of-Use Assets and Lease Liabilities (Details) - Schedule of lease term [Line Items] | |
| Incremental borrowing rate | 4.90% |
Right-of-Use Assets and Lease Liabilities (Details) - Schedule of future annual minimum lease payments for non-cancellable operating leases - Operating Leases [Member] |
Mar. 31, 2021
USD ($)
|
|---|---|
| Right-of-Use Assets and Lease Liabilities (Details) - Schedule of future annual minimum lease payments for non-cancellable operating leases [Line Items] | |
| 2022 | $ 28,493 |
| Thereafter | |
| Total | 28,493 |
| Less: imputed interest | 666 |
| Total | 27,827 |
| Reconciliation to lease liabilities: | |
| Lease liabilities - current | 27,827 |
| Lease Liabilities | $ 27,827 |
Subsequent Events (Details) - Subsequent Event [Member] - shares |
1 Months Ended | |
|---|---|---|
Oct. 21, 2021 |
Oct. 06, 2021 |
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| Subsequent Events (Details) [Line Items] | ||
| Common stock outstanding, description | The Distribution Date will be the date on which FINRA posts a notice of the forward split on its Daily List, at which time Organic Agricultural will issue an additional 4.16 shares of common stock to the holder of each outstanding share of common stock. | |
| Common Stock [Member] | ||
| Subsequent Events (Details) [Line Items] | ||
| Authorized shares of stock | 275,000,000 | |
| Shares of common stock | 274,000,000 | |
| Preferred Stock [Member] | ||
| Subsequent Events (Details) [Line Items] | ||
| Shares of preferred stock | 1,000,000 |