CONCENTRATIONS AND LITIGIATION

6 Months Ended

Dec. 31, 2011

Concentration And Litigation [Abstract]

Concentration And Litigation [Text Block]

NOTE 15 – CONCENTRATIONS AND LITIGIATION

Market Concentration

All of the Company's revenue-generating operations are conducted in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC's economy.

The Company's operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among other things, the political, economic and legal environments and foreign currency exchange. The Company's results may be adversely affected by, among other things, changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation.

Vendor and Customer Concentration

There was one vendor from which the Company purchased more than 10% of its raw materials for the fertilizer products for the six months ended December 31, 2011 and there was no vendor from which the Company purchased more than 10% of its raw materials for the fertilizer products for the six months ended December 31 2010. There is no accounts payable as of December 31, 2011.

There was one customer that accounted for over 10% of the total sales for the six months ended December 31, 2011 and there was no customer that accounted for over 10% of the total sales for the six months ended December 31, 2010.

Concentration of Cash

The Company maintains large sums of cash in three major banks in China. The aggregate balance in such accounts as of December 31, 2011 was $68,170,058. There is no insurance securing these deposits in China. In addition, the Company also had $26,339 in cash in two banks in the United States as of December 31, 2011, which is secured by the U.S. Federal Deposit Insurance Corporation as it is within the $500,000 insurance limit.

Litigation

On October 15, 2010, a class action lawsuit was filed against the Company and certain of its current and former officers in the United States District Court for the District of Nevada on behalf of purchasers of the Company’s common stock between November 12, 2009 and September 1, 2010.  On April 27, 2011, the court appointed the lead plaintiff and lead plaintiff’s counsel. On June 13, 2011, lead plaintiff filed an amended complaint, which adds several additional defendants and expands the class period to include purchasers who purchased our common stock between May 12, 2009 and January 4, 2011. The amended complaint alleges that the Company and certain of its current and former officers and directors violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, as amended, by making material misstatements and omissions in the Company’s financial statements, securities offering documents, and related disclosures during the class period..  The plaintiffs claim that such allegedly misleading financial statements inflated the price of the Company’s common stock and seek monetary damages in an amount to be determined at trial. Defendants moved to dismiss the amended complaint on September 19, 2011 and defendants’ motions are currently pending. No hearing has been set for defendants’ motions.

On December 10, 2010, a complaint was filed by one of the Company’s shareholders, derivatively on the Company’s behalf, against certain of the Company’s current and former officers and directors in the First Judicial District Court of the State of Nevada in and for Carson City. The complaint alleges, among other things, various violations of state law by such officers and directors, including breach of fiduciary duty, waste of corporate assets and unjust enrichment. The plaintiff requests, among other remedies, restitution from such officers and directors and reform the Company’s corporate governance and internal procedures.

On January 5, 2011, another complaint was filed by two of the Company’s shareholders, derivatively on the Company’s behalf, against certain of the Company’s current and former officers and directors in the United States District Court, District of Columbia. By stipulation of the parties, this case has been transferred to the District Court for the District of Nevada. The complaint alleges, among other things, that such officers and directors breached their fiduciary duties by knowingly filing inaccurate and inconsistent financial statements and other filings with the Commission and by failing to correct such allegedly inaccurate financial disclosure. The plaintiffs request, among other remedies, damages in the amount sustained by the defendants’ alleged breach of fiduciary duties and other violations of law, and other equitable relief.

On December 28, 2010 and January 7, 2011, two additional complaints were filed by different shareholders, derivatively on the Company’s behalf, against certain of the Company’s current and former officers and directors, in the Eighth Juridical District Court, Clark County, Nevada. Each of the complaints alleges, among other things, that the defendants breached their fiduciary duties by disseminating false and misleading information to shareholders via public filings and other communications, failing to maintain internal controls and procedures and failing to properly oversee and manage the company. Each of the complaints also alleges unjust enrichment, abuse of control, gross mismanagement and waste of corporate assets by the defendants. The plaintiffs request, among other remedies, damages caused by the breach of defendants’ fiduciary duties, restitution from such officers and directors and reform the Company’s corporate governance and internal procedures. By stipulation, these two derivative actions have been transferred to the First Judicial District Court of the State of Nevada in and for Carson City and consolidated with the derivative action already pending in that court. By stipulation of the parties, all of the derivative actions are currently stayed.

The individual defendants and the Company, as a nominal defendant, have reached an agreement with the plaintiffs to settle all the derivative actions. Pursuant to the terms of the settlement and subject to final court approval, certain corporate governance changes will be adopted and attorneys’ fees for the plaintiffs’ counsel will be paid by the insurers. The court preliminarily approved the settlement on February 1, 2012. The hearing for the final approval of the settlement has been set on March 30, 2012.

In addition, the Commission is conducting an investigation of the Company’s prior reported financial statements, as well as the allegations in the complaints described above. The Company is cooperating with the Commission.

The Company is currently unable to reasonably estimate the amount or range of possible losses that will result from the ultimate resolution of these matters. As such, as of December 31, 2011, the Company has not accrued any liability in connection with potential losses from legal proceedings.