0001213900-17-001391.txt : 20170214 0001213900-17-001391.hdr.sgml : 20170214 20170214173246 ACCESSION NUMBER: 0001213900-17-001391 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 84 CONFORMED PERIOD OF REPORT: 20161231 FILED AS OF DATE: 20170214 DATE AS OF CHANGE: 20170214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: China Green Agriculture, Inc. CENTRAL INDEX KEY: 0000857949 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE CHEMICALS [2870] IRS NUMBER: 363526027 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-34260 FILM NUMBER: 17610782 BUSINESS ADDRESS: STREET 1: 3RD FLOOR, BOROUGH A, BLOCK A. NO.181, STREET 2: SOUTH TAIBAI ROAD, CITY: XIAN, SHAANXI PROVINCE, STATE: F4 ZIP: 710065 BUSINESS PHONE: 3034996000 MAIL ADDRESS: STREET 1: 3RD FLOOR, BOROUGH A, BLOCK A. NO.181, STREET 2: SOUTH TAIBAI ROAD, CITY: XIAN, SHAANXI PROVINCE, STATE: F4 ZIP: 710065 FORMER COMPANY: FORMER CONFORMED NAME: DISCOVERY TECHNOLOGIES INC DATE OF NAME CHANGE: 20071114 FORMER COMPANY: FORMER CONFORMED NAME: DISCOVERY TECHNOLOGIES INC /KS/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: DISCOVERY SYSTEMS INC DATE OF NAME CHANGE: 19900613 10-Q 1 f10q1216_chinagreenagri.htm QUARTERLY REPORT

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For the quarterly period ended December 31, 2016

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For the transition period from ____________ to ____________

 

Commission File Number 001-34260

 

CHINA GREEN AGRICULTURE, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   36-3526027
(State or other jurisdiction of   (IRS Employer
incorporation or organization)   Identification No.)

 

  3rd floor, Borough A, Block A. No. 181, South TaibaiRoad,Xi’an, Shaanxi province, PRC 710065  
  (Address of principal executive offices) (Zip Code)  

 

  +86-29-88266368  
  (Issuer's telephone number, including area code)  

 

Indicate by check mark whether the issuer (1) 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. Yes ☒   No ☐

 

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

 

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

 

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☐

( Do not check if a smaller reporting company )

Smaller reporting company ☒

 

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

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 38,535,161 shares of common stock, $0.001 par value, as of February 7, 2017.

 

 

 

 

 

 

TABLE OF CONTENTS

 

    Page
     
PART I FINANCIAL INFORMATION 1
     
Item 1. Financial Statements 1
     
  Consolidated Condensed Balance Sheets As of December 31, 2016 and June 30, 2016 (Unaudited) 1
     
  Consolidated Condensed Statements of Income and Comprehensive Income (Loss) For the Three and Six Months Ended December 31, 2016 and 2015 (Unaudited) 2
     
  Consolidated Condensed Statements of Cash Flows For the Six Months Ended December 31, 2016 and 2015 (Unaudited) 3
     
  Notes to Consolidated Condensed Financial Statements As of December 31, 2016 (Unaudited) 4
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 36
     
Item 4. Controls and Procedures 37
     
PART II OTHER INFORMATION 37
     
Item 6. Exhibits 37
     
Signatures 38
   
Exhibits/Certifications 39

 

 

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

CHINA GREEN AGRICULTURE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
         
   December 31, 2016   June 30,
2016
 
         
ASSETS
Current Assets        
Cash and cash equivalents  $116,574,852   $102,896,486 
Accounts receivable, net   125,035,022    117,055,376 
Inventories   64,255,981    87,436,315 
Prepaid expenses and other current assets   1,725,644    1,329,098 
Advances to suppliers, net   28,707,243    26,863,959 
Total Current Assets   336,298,742    335,581,234 
           
Plant, Property and Equipment, Net   34,201,866    37,569,739 
Deferred Asset, Net   3,536,984    13,431,621 
Other Assets   309,495    379,047 
Intangible Assets, Net   21,993,441    23,840,048 
Goodwill   7,635,779    7,980,838 
Total Assets  $403,976,307   $418,782,527 
           
LIABILITIES AND STOCKHOLDERS' EQUITY 
Current Liabilities          
Accounts payable  $5,577,064   $5,246,153 
Customer deposits   5,413,319    8,578,341 
Accrued expenses and other payables   9,067,827    16,414,392 
Amount due to related parties   2,726,125    2,473,004 
Taxes payable   1,841,182    4,104,218 
Short term loans   4,463,783    4,665,500 
Interest payable   110,155    - 
Derivative liability   64,780    144,818 
Total Current Liabilities   29,264,235    41,626,426 
           

Long-term Liabilities

          

Convertible notes payable

   

6,534,263

    

6,671,769

 

Total Liabilities

   35,798,498    48,298,195 
           
Stockholders' Equity          
Preferred Stock, $.001 par value,  20,000,000 shares authorized, zero shares issued and outstanding   -    - 
Common stock, $.001 par value, 115,197,165 shares authorized, 38,518,605 and 36,978,605 shares issued and outstanding as of December 31, 2016 and June 30, 2016, respectively   38,518    37,648 
Additional paid-in capital   128,876,011    127,593,932 
Statutory reserve   28,317,770    27,203,861 
Retained earnings   233,088,961    221,345,279 
Accumulated other comprehensive loss   (22,143,451)   (5,696,388)
Total Stockholders' Equity   368,177,809    370,484,332 
           
Total Liabilities and Stockholders' Equity  $403,976,307   $418,782,527 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 1 

 

 

CHINA GREEN AGRICULTURE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF  INCOME AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
                 
   Three Months Ended
December 31,
   Six Months Ended
December 31,
 
   2016   2015   2016   2015 
Sales                
 Jinong  $26,825,674   $31,302,561   $58,253,394   $66,010,365 
 Gufeng   21,066,559    23,579,674    36,876,073    41,814,506 
 Yuxing   2,454,314    2,083,765    3,809,725    3,325,400 
 VIEs   8,398,466    -    21,690,443    - 
 Net sales   58,745,013    56,966,000    120,629,635    111,150,271 
 Cost of goods sold                    
 Jinong   12,332,360    13,434,686    25,601,590    27,975,071 
 Gufeng   18,138,659    19,712,848    31,523,736    34,458,522 
 Yuxing   1,934,046    1,182,898    2,979,654    1,892,948 
 VIEs   7,159,707    -    17,913,386    - 
 Cost of goods sold   39,564,772    34,330,432    78,018,366    64,326,541 
 Gross profit   19,180,241    22,635,568    42,611,269    46,823,730 
 Operating expenses                    
 Selling expenses   3,965,382    5,285,103    8,977,450    7,628,858 
 Selling expenses - amortization of deferred asset   3,475,438    8,664,752    9,584,220    18,377,467 
 General and administrative expenses   4,633,905    2,905,982    7,865,392    5,659,624 
 Total operating expenses   12,074,725    16,855,837    26,427,062    31,665,949 
 Income from operations   7,105,516    5,779,731    16,184,207    15,157,781 
 Other income (expense)                    
 Other income (expense)   (114,115)   729    (155,172)   (3,834)
 Interest income   76,494    74,270    153,116    152,932 
 Interest expense   (93,246)   (302,644)   (231,791)   (731,679)
 Total other income (expense)   (130,867)   (227,645)   (233,847)   (582,581)
 Income before income taxes   6,974,649    5,552,086    15,950,360    14,575,200 
 Provision for income taxes   1,468,638    1,284,551    3,092,769    3,061,993 
 Net income   5,506,011    4,267,535    12,857,591    11,513,207 
 Other comprehensive income (loss)                    
 Foreign currency translation gain (loss)   (1,205,884)   (7,616,129)   (16,447,063)   (22,728,368)
 Comprehensive income (loss)  $4,300,127   $(3,348,594)  $(3,589,472)  $(11,215,161)
                     
Basic weighted average shares outstanding   37,658,062    36,933,002    37,653,333    36,436,026 
Basic net earnings per share  $0.15   $0.12   $0.34   $0.32 
Diluted weighted average shares outstanding   37,658,062    36,933,002    37,653,333    36,436,026 
Diluted net earnings per share   0.15    0.12    0.34    0.32 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 2 

 

 

CHINA GREEN AGRICULTURE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
   Six Months Ended
December 31,
 
   2016   2015 
Cash flows from operating activities        
Net income  $12,857,591   $11,513,207 
Adjustments to reconcile net income to net cash provided by operating activities          
Issuance of common stock and stock options for compensation   1,282,949    2,378,736 
Depreciation and amortization   12,115,909    21,445,891 
Loss on disposal of property, plant and equipment   109,304    345 
Amortization of debt discount   155,335    -  
Change in fair value of derivative liability   (75,918)   -  
Changes in operating assets          
Accounts receivable   (13,419,107)   (1,295,393)
Amount due from related parties   -    (154,303)
Other current assets   (467,184)   88,817 
Inventories   19,962,979    (23,618,284)
Advances to suppliers   (3,091,976)   (9,078,019)
Other assets   121,719    40,385 
Changes in operating liabilities          
Accounts payable   564,376    130,081 
Customer deposits   (2,875,222)   16,653,368 
Tax payables   (2,146,115)   (2,646,182)
Accrued expenses and other payables   (7,029,002)   228,171 
Interest payable   113,352    - 
Net cash provided by operating activities   18,178,990    15,686,820 
           
Cash flows from investing activities          
Purchase of plant, property, and equipment   (74,353)   (15,665)
Net cash used in investing activities   (74,353)   (15,665)
           
Cash flows from financing activities          
Proceeds from the sale of common stock   -    - 
Proceeds from loans   -    4,424,000 
Repayment of loans   -    (7,900,000)
Advance from related party   300,000    200,000 
Net cash provided by financing activities   300,000    (3,276,000)
           
Effect of exchange rate change on cash and cash equivalents   (4,726,271)   (5,810,344)
Net increase in cash and cash equivalents   13,678,366    6,584,811 
           
Cash and cash equivalents, beginning balance   102,896,486    92,982,564 
Cash and cash equivalents, ending balance  $116,574,852   $99,567,375 
           
Supplement disclosure of cash flow information          
Interest expense paid  $231,791   $731,679 
Income taxes paid  $7,047,713   $2,763,253 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 3 

 

 

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

 

China Green Agriculture, Inc. (the “Company”, “Parent Company” or “Green Nevada”), through its subsidiaries, is engaged in the research, development, production, distribution and sale of humic acid-based compound fertilizer, compound fertilizer, blended fertilizer, organic compound fertilizer, slow-release fertilizers, highly-concentrated water-soluble fertilizers and mixed organic-inorganic compound fertilizer and the development, production and distribution of agricultural products.

 

Unless the context indicates otherwise, as used in the notes to the financial statements of the Company, the following are the references herein of all the subsidiaries of the Company (i) Green Agriculture Holding Corporation (“Green New Jersey”), a wholly-owned subsidiary of Green Nevada, incorporated in the State of New Jersey; (ii) Shaanxi TechTeamJinongHumic Acid Product Co., Ltd. (“Jinong”), a wholly-owned subsidiary of Green New Jersey organized under the laws of the PRC; (iii) Xi’an Hu County Yuxing Agriculture Technology Development Co., Ltd. (“Yuxing”), a Variable Interest Entity (“VIE”) in the in the People’s Republic of China (the “PRC”) controlled by Jinong through a series of contractual agreements; (iv) Beijing Gufeng Chemical Products Co., Ltd., a wholly-owned subsidiary of Jinong in the PRC (“Gufeng”), and (v) Beijing Tianjuyuan Fertilizer Co., Ltd., Gufeng’s wholly-owned subsidiary in the PRC (“Tianjuyuan”). 

 

On June 30, 2016 the Company, through its wholly-owned subsidiary Jinong, entered into strategic acquisition agreements and a series of contractual agreements with the shareholders of the following six companies that are organized under the laws of the PRC and would be deemed VIEs: Shaanxi Lishijie Agrochemical Co., Ltd. (“Lishijie”), SongyuanJinyangguangSannong Service Co., Ltd. (“Jinyangguang”), Shenqiu County Zhenbai Agriculture Co., Ltd. (“Zhenbai”), Weinan City Linwei District Wangtian Agricultural Materials Co., Ltd. (“Wangtian”), AksuXindeguo Agricultural Materials Co., Ltd. (“Xindeguo”), and Xinjiang Xinyulei Eco-agriculture Science and Technology co., Ltd. (“Xinyulei”). On January 1, 2017, the Company, through its wholly-owned subsidiary Jinong, entered into strategic acquisition agreements and a series of contractual agreements with the shareholders of the following two companies that are organized under the laws of the PRC and would be deemed VIEs Sunwu County Xiangrong Agricultural Materials Co., Ltd. (“Xiangrong”), and Anhui Fengnong Seed Co., Ltd. (“Fengnong”). Please refer to Subsequent event in Note 17.

 

Yuxing, Lishijie, Jinyangguang, Zhenbai, Wangtian, Xindeguo, Xinyulei, Xiangrong and Fengnong may also collectively be referred to as the “the VIE Companies”

 

 4 

 

 

The Company’s current corporate structure as of is set forth in the diagram below:

 

 

NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principle of consolidation

 

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Green New Jersey, Jinong, Gufeng, Tianjuyuan, Yuxing and the VIE Companies. All significant inter-company accounts and transactions have been eliminated in consolidation.

 

 5 

 

 

VIE assessment

 

A VIE is an entity (1) that has total equity at risk that is not sufficient to finance its activities without additional subordinated financial support from other entities, (2) where the group of equity holders does not have the power to direct the activities of the entity that most significantly impact the entity’s economic performance, or the obligation to absorb the entity’s expected losses or the right to receive the entity’s expected residual returns, or both, or (3) where the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both, and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. In order to determine if an entity is considered a VIE, the Company first perform a qualitative analysis, which requires certain subjective decisions regarding its assessments, including, but not limited to, the design of the entity, the variability that the entity was designed to create and pass along to its interest holders, the rights of the parties, and the purpose of the arrangement. If the Company cannot conclude after a qualitative analysis whether an entity is a VIE, it performs a quantitative analysis. The qualitative analysis considered the design of the entity, the risks that cause variability, the purpose for which the entity was created, and the variability that the entity was designed to pass along to its variable interest holders. When the primary beneficiary could not be identified through a qualitative analysis, we used internal cash flow models to compute and allocate expected losses or expected residual returns to each variable interest holder based upon the relative contractual rights and preferences of each interest holder in the VIE’s capital structure.

 

Use of estimates

 

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those results.

 

Cash and cash equivalents and concentration of cash

 

For statement of cash flows purposes, the Company considers all cash on hand and in banks, certificates of deposit with state owned banks in the Peoples Republic of China (“PRC”) and banks in the United States, and other highly-liquid investments with maturities of six months or less, when purchased, to be cash and cash equivalents. The Company maintains large sums of cash in three major banks in China. The aggregate cash in such accounts and on hand as of December 31, 2016 and June 30, 2016 were $116,574,852 and $102,896,486, respectively. In addition, the Company also had $20,538 and $167,495 in cash in two banks in the United States as of December 31, 2016 and June 30, 2016, respectively. Cash overdraft as of balance sheet date will be reflected as liabilities in the balance sheet. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts.

 

Accounts receivable

 

The Company's policy is to maintain reserves for potential credit losses on accounts receivable. Management regularly reviews the composition of accounts receivable and analyzes customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves at each year-end. Accounts considered uncollectible are written off through a charge to the valuation allowance. As of December 31, 2016 and June 30, 2016, the Company had accounts receivable of $125,035,022 and $117,055,376, net of allowance for doubtful accounts of $4,343,762 and $397,123, respectively. The Company adopts no policy to accept product returns post to the sales delivery.

 

Inventories

 

Inventory is valued at the lower of cost (determined on a weighted average basis) or market. Inventories consist of raw materials, work in process, finished goods and packaging materials. The Company reviews its inventories regularly for possible obsolete goods and establishes reserves when determined necessary.

 

 6 

 

 

Deferred asset

 

Deferred assets represent amounts that the distributors owed to the Company in their marketing efforts and developing standard stores to expand the Company’s products’ competitiveness and market shares. The amount owed to the Company to assist its distributors will be expensed over three years which is the term as stated in the cooperation agreement, as long as the distributors are actively selling the Company’s products. For the six months ended December 31, 2016 and 2015, the Company amortized $9,584,220 and $21,430,699, respectively, of the deferred assets. If a distributor breaches, defaults, or terminates the agreement with the Company within the three-year period, the outstanding unamortized portion of the amount owed will become payable to the Company immediately. The Company’s Chairman, Mr. Li, guaranteed to the Company of amounts remaining unpaid due from distributors.

 

The deferred assets consist of items inside the distributors’ stores such as furniture, racks, cabinets, and display units, and items outside or attached to the distributors’ stores such as signage and billboards. These types of assets would be capitalized as fixed assets if the Company actually owned the stores or utilized the assets for its own operations. These assets would also be capitalized as leasehold improvements if the Company leased these stores from the distributors. Therefore, the Company believes that under the U.S. generally accepted accounting principles, these types of assets purchases are properly capitalized. In addition, the Company believes that these assets are properly classified as deferred assets because if a distributor breaches, defaults, or terminates the agreement with the Company within a three-year period, a proportionate amount expended by the Company is to be repaid by the distributor. The Chairman of the Board of directors of the Company guaranteed to the Company of amounts remaining unpaid due from distributors.

 

The assets inside the distributors’ stores are custom made to fit the layout of each individual store and the signage and billboards are also custom designed to fit the specific location. The assets were purchased by the Company directly from the manufacturers and installed in the distributors’ stores. The Company wants to maintain control over the quality of the items being purchased as well as making them uniform among all the distributor locations.

 

Intangible Assets

 

The Company records intangible assets acquired individually or as part of a group at fair value. Intangible assets with definitive lives are amortized over the useful life of the intangible asset, which is the period over which the asset is expected to contribute directly or indirectly to the entity’s future cash flows. The Company evaluates intangible assets for impairment at least annually and more often whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.

 

Customer deposits

 

Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as customer deposits. When all revenue recognition criteria are met, the customer deposits are recognized as revenue. As of December 31, 2016 and June 30, 2016, the Company had customer deposits of $5,413,319 and $8,578,341, respectively.

 

Earnings per share

 

Basic earnings per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and stock awards.

 

 7 

 

 

The components of basic and diluted earnings per share consist of the following:

 

   Three Months Ended
December 31,
 
   2016   2015 
Net Income for Basic Earnings Per Share  $5,506,011   $4,267,535 
Basic Weighted Average Number of Shares   37,658,062    36,933,002 
Net Income Per Share – Basic  $0.15   $0.12 
Net Income for Diluted Earnings Per Share  $5,506,011   $4,267,535 
Diluted Weighted Average Number of Shares   37,658,062    36,933,002 
Net Income Per Share – Diluted  $0.15   $0.12 

 

   Six Months Ended
December 31,
 
   2016   2015 
Net Income for Basic Earnings Per Share  $12,857,591   $11,513,207 
Basic Weighted Average Number of Shares   37,653,333    36,436,026 
Net Income Per Share – Basic  $0.34   $0.32 
Net Income for Diluted Earnings Per Share  $12,857,591   $11,513,207 
Diluted Weighted Average Number of Shares   37,653,333    36,436,026 
Net Income Per Share – Diluted  $0.34   $0.32 

 

Recent accounting pronouncements

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. This pronouncement is effective for annual reporting periods beginning after December 15, 2016, and is to be applied using one of two retrospective application methods, with early application not permitted. The Company is currently evaluating the impact of the pending adoption of ASU 2014-09 on its consolidated financial statements.

 

 8 

 

 

In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. The new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. This update is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. The Company does not anticipate the adoption of this ASU will have a significant impact on its consolidated financial position, results of operations, or cash flows.

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance in ASU No. 2016-02 supersedes the lease recognition requirements in ASC Topic 840, Leases (FAS 13). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect this standard will have on its consolidated financial statements.

 

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share Based Payment Accounting, to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance will be effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of the adoption of this newly issued guidance to its consolidated financial statements.

  

On November 17, 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. It is intended to reduce diversity in the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. The new standard requires that restricted cash and restricted cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. ASU 2016-18 is effective for annual periods beginning after December 15, 2017 including interim periods within those fiscal years. Earlier adoption is permitted. The Company maintains restricted cash balances and upon adoption of this standard, the Company will show restricted cash as part of cash and restricted cash equivalents.

 

In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Clarifying the Definition of a Business, which clarifies and provides a more robust framework to use in determining when a set of assets and activities is a business. The amendments in this update should be applied prospectively on or after the effective date. This update is effective for annual periods beginning after December 15, 2017, and interim periods within those periods. Early adoption is permitted for acquisition or deconsolidation transactions occurring before the issuance date or effective date and only when the transactions have not been reported in issued or made available for issuance financial statements. The Company does not expect the adoption to have any significant impact on its Consolidated Financial Statements.

 

In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. Under the new standard, goodwill impairment would be measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill. This ASU eliminates existing guidance that requires an entity to determine goodwill impairment by calculating the implied fair value of goodwill by hypothetically assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. This update is effective for annual periods beginning after December 15, 2019, and interim periods within those periods. Early adoption is permitted for interim or annual goodwill impairment test performed on testing dates after January 1, 2017. The Company will apply this guidance to applicable impairment tests after the adoption date.

 

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements.

 

NOTE 3 - INVENTORIES

 

Inventories consisted of the following:

 

   December 31,   June 30, 
   2016   2016 
Raw materials  $23,724,037   $29,926,762 
Supplies and packing materials  $599,843   $444,373 
Work in progress  $422,539   $408,820 
Finished goods  $39,509,562   $56,656,360 
Total  $64,255,981   $87,436,315 

 

 9 

 

 

NOTE 4 - PROPERTY, PLANT AND EQUIPMENT

 

Property, plant and equipment consisted of the following:

 

   December 31,   June 30, 
   2016   2016 
Building and improvements  $40,614,431   $42,489,975 
Auto   899,674    937,642 
Machinery and equipment   17,993,602    19,015,420 
Agriculture assets   732,865    765,983 
Total property, plant and equipment   60,240,572    63,209,020 
Less: accumulated depreciation   (26,038,706)   (25,639,281)
Total  $34,201,866   $37,569,739 

 

NOTE 5 - INTANGIBLE ASSETS

 

Intangible assets consisted of the following:

 

   December 31,   June 30, 
   2016   2016 
Land use rights, net  $9,816,682   $10,381,215 
Technology patent, net   4,053    4,462 
Customer relationships, net   5,515,101    6,403,343 
Non-compete agreement   797,090    925,678 
Trademarks   5,860,515    6,125,350 
Total  $21,993,441   $23,840,048 

 

LAND USE RIGHT

 

On September 25, 2009, Yuxing was granted a land use right for approximately 88 acres (353,000 square meters or 3.8 million square feet) by the People’s Government and Land & Resources Bureau of Hu County, Xi’an, Shaanxi Province. The fair value of the related intangible asset was determined to be the respective cost of RMB73,184,895 (or $10,538,113). The intangible asset is being amortized over the grant period of 50 years using the straight line method.

  

On August 13, 2003, Tianjuyuan was granted a certificate of Land Use Right for a parcel of land of approximately 11 acres (42,726 square meters or 459,898 square feet) at Ping Gu District, Beijing. The purchase cost was recorded at RMB1,045,950 (or $150,609). The intangible asset is being amortized over the grant period of 50 years.

 

On August 16, 2001, Jinong received a land use right as a contribution from a shareholder, which was granted by the People’s Government and Land & Resources Bureau of Yangling District, Shaanxi Province. The fair value of the related intangible asset at the time of the contribution was determined to be RMB7,285,099 (or $1,049,003). The intangible asset is being amortized over the grant period of 50 years.

 

 10 

 

 

The Land Use Rights consisted of the following:

 

   December 31,   June 30, 
   2016   2016 
Land use rights  $11,737,725   $12,268,150 
Less: accumulated amortization   (1,921,043)   (1,886,935)
Total land use rights, net  $9,816,682   $10,381,215 

 

TECHNOLOGY PATENT

 

On August 16, 2001, Jinong was issued a technology patent related to a proprietary formula used in the production of humid acid. The fair value of the related intangible asset was determined to be the respective cost of RMB 5,875,068 (or $845,969) and is being amortized over the patent period of 10 years using the straight line method. This technology patent has been fully amortized.

 

On July 2, 2010, the Company acquired Gufeng and its wholly-owned subsidiary Tianjuyuan. The fair value on the acquired technology patent was estimated to be RMB9,200,000 (or $1,324,736) and is amortized over the remaining useful life of six years using the straight line method.

 

The technology know-how consisted of the following:

 

   December 31,   June 30, 
   2016   2016 
Technology know-how  $2,174,973   $2,273,260 
Less: accumulated amortization   (2,170,920)   (2,268,798)
Total technology know-how, net  $4,053   $4,462 

 

CUSTOMER RELATIONSHIP

 

On July 2, 2010, the Company acquired Gufeng and its wholly-owned subsidiary Tianjuyuan. The fair value on the acquired customer relationships was estimated to be RMB65,000,000 (or $9,360,000) and is amortized over the remaining useful life of ten years. On June 30, 2016, the Company acquired the VIE Companies. The fair value on the acquired customer relationships was estimated to be RMB16,442,531 (or $2,367,609) and is amortized over the remaining useful life of seven to ten years.

 

   December 31,   June 30, 
   2016   2016 
Customer relationships  $11,727,154   $12,257,100 
Less: accumulated amortization   (6,212,053)   (5,853,757)
Total customer relationships, net  $5,515,101   $6,403,343 

  

NON-COMPETE AGREEMENT

 

On July 2, 2010, the Company acquired Gufeng and its wholly-owned subsidiary Tianjuyuan. The fair value on the acquired non-compete agreement was estimated to be RMB1,320,000 (or $190,080) and is amortized over the remaining useful life of five years using the straight line method.  On June 30, 2016, the Company acquired the VIE Companies. The fair value on the acquired non-compete agreements were estimated to be RMB6,150,683 (or $885,698) and is amortized over the remaining useful life of five years using the straight line method.

 

   December 31,   June 30, 
   2016   2016 
Non-compete agreement  $1,075,726   $1,124,338 
Less: accumulated amortization   (278,636)   (198,660)
Total non-compete agreement, net  $797,090   $925,678 

 

 11 

 

 

TRADEMARKS

 

On July 2, 2010, the Company acquired Gufeng and its wholly-owned subsidiary Tianjuyuan. The preliminary fair value on the acquired trademarks was estimated to be RMB40,700,000 (or $5,860,515) and is subject to an annual impairment test.

 

AMORTIZATION EXPENSE

 

Estimated amortization expenses of intangible assets for the next five twelve months periods ended December 31, 2016, are as follows:

 

Years Ending December 31,  Expense ($) 
2017   1,635,094 
2018   1,635,094 
2019   1,635,094 
2020   1,635,094 
2021   1,078,551 

 

NOTE 6 - ACCRUED EXPENSES AND OTHER PAYABLES

 

Accrued expenses and other payables consisted of the following:

 

   December 31,   June 30, 
   2016   2016 
Payroll payable  $77,039   $58,704 
Welfare payable   147,829    154,510 
Accrued expenses   4,574,577    4,450,306 
Other payables   4,147,620    11,624,653 
Other levy payable   120,762    126,219 
Total  $9,067,827   $16,414,392 

 

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NOTE 7 - AMOUNT DUE TO RELATED PARTIES

 

As of December 31, 2016 and June 30, 2016, the amount due to related parties was $2,726,125 and $2,473,004, respectively.  As of December 31, 2016 and June 30, 2016, $1,007,951 and $1,092,243, respectively were amounts that Gufeng borrowed from a related party, Xi’an Techteam Science & Technology Industry (Group) Co. Ltd., a company controlled by Mr. Tao Li, Chairman and CEO of the Company, representing unsecured, non-interest bearing loans that are due on demand.  These loans are not subject to written agreements.

 

At the end of December 2015, Yuxing entered into a sales agreement with the Company’s affiliate, 900LH.com Food Co., Ltd. ("900LH.com", previously announced as Xi'an Gem Grain Co., Ltd) pursuant to which Yuxing is to supply various vegetables to 900LH.com for its incoming seasonal sales at the holidays and year ends (the “Sales Agreement”). The contingent contracted value of the Sales Agreement is RMB 25,500,000 (approximately $3,671,822). For the six months ended December 31, 2016, Yuxing has sold approximately $839,562 products to 900LH.com.

  

On June 29, 2016, Jinong signed an office lease with Kingtone Information Technology Co., Ltd. (“Kingtone Information”), where Mr. Tao Li, Chairman and CEO of the Company, serves as its Chairman. Pursuant to the lease, Jinong rented 612 square meters (approximately 6,588 square feet) of office space from Kingtone Information. The lease provided for a two-year term effective as of July 1, 2016 with monthly rent of RMB26,684 (approximately $3,842).

 

NOTE 8 - LOAN PAYABLES

 

As of December 31, 2016, the short-term loan payables consisted of three loans which mature on dates ranging from January 19, 2016 through July 28, 2017 with interest rates ranging from 4.87% to 5.22%. The loans No. 1 and 2 below are collateralized by Tianjuyan’s land use right and building ownership right. The loans No. 3 is guaranteed by Jinong’s credit.

 

No.  Payee  Loan period per agreement  Interest Rate   December 31,
2016
 
1  Agriculture Bank of China-Pinggu Branch  May 18, 2016 – Mar. 17, 2017   4.87%  $1,871,909 
2  Agriculture Bank of China-Pinggu Branch  Jan. 19, 2016 – Jan. 17, 2017   5.00%   1,151,944 
3  Beijing Bank-Pinggu Branch  July 28, 2016 – July 28, 2017   5.22%   1,439,930 
   Total          $4,463,783 

 

As of June 30, 2016, the short-term loan payables consisted of three loans which mature on dates ranging from May 18, 2016 through March 17, 2017 with interest rates ranging from 4.87% to 5.82%. The loans No. 1 and 3 below are collateralized by Tianjuyan’s land use right and building ownership right. The loans No. 2 is guaranteed by Jinong’s credit.

 

No.  Payee  Loan period per agreement  Interest Rate   June 30,
2016
 
1  Agriculture Bank of China-Pinggu Branch  May. 18, 2016 – Mar. 17, 2017   4.87%  $1,956,500 
2  Beijing Bank-Pinggu Branch  Aug. 11, 2015 – Aug. 2, 2016   5.82%   1,505,000 
3  Agriculture Bank of China-Pinggu Branch  Jan. 19, 2016 – Jan. 17, 2017   5.00%   1,204,000 
   Total          $4,665,500 

 

The interest expense from short-term loans was $231,791 and $731,679 for the six months ended December 31, 2016 and 2015, respectively.

 

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NOTE 9 - CONVERTIBLE NOTES PAYABLE

 

In connection with the acquisition of the VIE Companies, the Company subsidiary, Jinong, issued to the VIE Companies shareholders convertible notes payable in the aggregate amount of RMB 51,000,000 ($7,344,000) with a term of three years and an annual interest rate of 3%. The convertible notes take priority over the preferred stock and common stock of Jinong, and any other class or series of capital stocks Jinong issues in the future in terms of interests and payments in the event of any liquidation, dissolution or winding up of Jinong. On or after the third anniversary of the issuance date of the note, noteholders may request Jinong to process the note conversion to convert the note into shares of the Company’s common stock. The notes cannot be converted prior to the mature date. The per share conversion price of the notes is the higher of the following: (i) $5.00 per share or (ii) 75% of the closing price of the Company’s common stock on the date the noteholder delivers the conversion notice.

 

 The Company determined that the fair value of the convertible notes payable was RMB 45,379,032 ($6,534,263) and RMB 44,330,692 ($6,383,620) as of December 31, 2016 and June 30, 2016, respectively, which was due to the lower than market interest rate and the conversion feature. The difference between the fair value of the notes and the face amount of the notes will be amortized to interest expense over the three year life of the notes. As of December 31, 2016, the amortization of this discount into interest expenses was $1,048,340.

 

NOTE 10 - TAXES PAYABLE

 

Enterprise Income Tax

 

Effective January 1, 2008, the Enterprise Income Tax (“EIT”) law of the PRC replaced the tax laws for Domestic Enterprises (“DEs”) and Foreign Invested Enterprises (“FIEs”). The EIT rate of 25% replaced the 33% rate that was applicable to both DEs and FIEs. The two year tax exemption and three year 50% tax reduction tax holiday for production-oriented FIEs was eliminated. Since January 1, 2008, Jinong became subject to income tax in China at a rate of 15% as a high-tech company, as a result of the expiration of its tax exemption on December 31, 2007. Accordingly, it made provision for income taxes for the six months ended December 31, 2016 and 2015 of $1,879,465 and $1,805,667, respectively, which is mainly due to the operating income from Jinong. Gufeng is subject to 25% EIT rate and thus it made provision for income taxes of $792,503 and $1,256,325 for the six months ended December 31, 2016 and 2015, respectively.

 

Value-Added Tax

 

All of the Company’s fertilizer products that are produced and sold in the PRC were subject to a Chinese Value-Added Tax (VAT) of 13% of the gross sales price. On April 29, 2008, the PRC State of Administration of Taxation (SAT) released Notice #56, “Exemption of VAT for Organic Fertilizer Products”, which allows certain fertilizer products to be exempt from VAT beginning June 1, 2008. The Company submitted the application for exemption in May 2009, which was granted effective September 1, 2009, continuing through December 31, 2015. On August 10, 2015 and August 28, 2015, the SAT released Notice #90. “Reinstatement of VAT for Fertilizer Products”, and Notice #97, “Supplementary Reinstatement of VAT for Fertilizer Products”, which restore the VAT of 13% of the gross sales price on certain fertilizer products includes non organic fertilizer products starting from September 1, 2015, but granted tax payers a reduced rate of 3% from September 1, 2015 through June 30, 2016.

 

Income Taxes and Related Payables

 

Taxes payable consisted of the following:

 

   December 31,   June 30, 
   2016   2016 
VAT provision  $(255,765)  $2,218 
Income tax payable   1,482,816    3,445,480 
Other levies   614,131    656,520 
Total  $1,841,182   $4,104,218 

 

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The provision for income taxes consists of the following:

 

   December 31,
2016
   June 30,
2016
 
Current tax - foreign  $3,092,769   $7,371,967 
Deferred tax   -    - 
   $3,092,769   $7,371,967 

 

Tax Rate Reconciliation

 

Our effective tax rates were approximately 19.4% and 26.7% for six months ended December 31, 2016 and 2015, respectively. Substantially all of the Company’s income before income taxes and related tax expense are from PRC sources. Actual income tax benefit reported in the consolidated statements of income and comprehensive income differ from the amounts computed by applying the US statutory income tax rate of 34% to income before income taxes for the six months ended December 31, 2016 and 2015 for the following reasons:

 

December 31, 2016                        
   China   United States         
   15% - 25%   34%   Total     
                         
Pretax income (loss)  $17,806,630         (1,856,270)       $15,950,360      
                               
Expected income tax expense (benefit)   4,451,658    25.0%   (631,132)   34.0%   3,820,526      
High-tech income benefits on Jinong   (1,139,344)   (6)%   -    -    (1,139,344)     
Losses from subsidiaries in which no benefit is recognized   (219,544)   (1)%   -    -    (219,544)     
Change in valuation allowance on deferred tax asset from US tax benefit   -         631,132    (34.0)%   631,132      
Actual tax expense  $3,092,769    17%  $-    -%  $3,092,769    19.4%

 

December 31, 2015                        
   China   United States         
   15% - 25%   34%   Total     
                         
Pretax income (loss)  $14,575,200         (3,107,045)       $11,468,155      
                               
Expected income tax expense (benefit)   3,643,800    25.0%   (1,056,395)   34.0%   2,587,405      
High-tech income benefits on Jinong   (1,145,841)   (7.9)%   -    -    (1,145,841)     
Losses from subsidiaries in which no benefit is recognized   564,034    3.9%   -    -    564,034      
Change in valuation allowance on deferred tax asset from US tax benefit   -         1,056,395    (34.0)%   1,056,395      
Actual tax expense  $3,061,993    21%  $-    -%  $3,061,993    26.7%

 

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NOTE 11 - STOCKHOLDERS’ EQUITY

 

Common Stock

 

On September 30, 2014, the Company granted an aggregate of 1,750,000 shares of restricted stock under the 2009 Plan to certain executive officers, directors and employees, among which (i) 240,000 shares of restricted stock to Mr. Tao Li, the CEO; (ii) 100,000 shares of restricted stock to Mr. Ken Ren, the CFO, (iii) 40,000 shares of restricted stock to Mr. Yizhao Zhang, 30,000 shares of restricted stock to Ms. Yiru Shi, and 20,000 shares of restricted stock to Mr. Lianfu Liu, each an independent director of the Company; and (iv) 1,320,000 shares of restricted stock to key employees.   The stock grants are subject to time-based vesting schedules, vesting in various installments until March 31, 2015 for the CFO and the three independent directors, until June 30, 2015 for the CEO and until December 31, 2016 for the employees. The value of the restricted stock awards was $3,675,000 and is based on the fair value of the Company’s common stock on the grant date. This amount is being amortized to compensation expense over the vesting periods for the various awards. As of June 30, 2016 the unamortized portion of the compensation expense was $235,264 which was fully amortized to expense during the period ended December 31, 2016.

 

On September 28, 2015, the Company granted an aggregate of 1,000,000 shares of restricted stock under the 2009 Plan to certain key employees. The stock grants are subject to time-based vesting schedules, vesting in various installments until June 30, 2016. The value of the restricted stock awards was $1,660,000 and is based on the fair value of the Company’s common stock on the grant date. This amount is being amortized to compensation expense over the vesting periods for the various awards.

 

On June 26, 2016, the Company granted an aggregate of 670,000 shares of restricted stock under the 2009 Plan to certain key employees. The stock grants vest immediately. The value of the restricted stock awards was $897,800 and is based on the fair value of the Company’s common stock on the grant date.

 

On December 30, 2016, the Company granted an aggregate of 870,000 shares of restricted stock under the 2009 Plan to certain key employees. The stock grants vest immediately. The value of the restricted stock awards was $1,044,000 and is based on the fair value of the Company’s common stock on the grant date.

 

The following table sets forth changes in compensation-related restricted stock awards during years ended December 31, 2016 and 2015:

 

       Fair   Grant Date 
   Number of   Value of   Fair Value 
   Shares   Shares   Per share 
Outstanding (unvested) at June 30, 2016   588,000   $235,264      
Granted   870,000    1,044,000   $      - 
Forfeited   -           
Vested   (1,458,000)   (1,279,264)     
Outstanding (unvested) at December 31, 2016   -   $-      

 

As of December 31, 2016, the unamortized expense related to the grant of restricted shares of common stock was nil. The fair value of the restricted common stock awards was based on the closing price of the Company’s common stock on the grant date. The fair value of the common stock awarded is amortized over the various vesting terms of each grant.

  

 16 

 

 

Preferred Stock

 

Under the Company’s Articles of Incorporation, the Board has the authority, without further action by stockholders, to designate up to 20,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges, qualifications and restrictions granted to or imposed upon the preferred stock, including dividend rights, conversion rights, voting rights, rights and terms of redemption, liquidation preference and sinking fund terms, any or all of which may be greater than the rights of the common stock. If the Company sells preferred stock under its registration statement on Form S-3, it will fix the rights, preferences, privileges, qualifications and restrictions of the preferred stock of each series in the certificate of designation relating to that series and will file the certificate of designation that describes the terms of the series of preferred stock the Company offers before the issuance of the related series of preferred stock.

 

As of December 31, 2016, the Company has 20,000,000 shares of preferred stock authorized, with a par value of $.001 per share, of which no shares are issued or outstanding.

 

NOTE 12 - CONCENTRATIONS

 

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 environment and foreign currency exchange. The Company’s results may be adversely affected by, among other things, changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation.

 

Vendor and Customer Concentration

 

There were two vendors from which the Company purchased 20.1% and 14.6% of its raw materials for the three month ended December 31, 2016. Total purchase from these two venders amounted to $10,100,403 as of December 31, 2016. 

 

There were two vendors from which the Company purchased 29.8% and 16.4% of its raw materials for the three months ended December 31, 2015. Total purchase from these two vendors amounted to $40,065,118 as of December 31, 2015. 

 

None customer accounted over 10% of the Company’s sales for the three months ended December 31, 2016. 

 

One customer was accounted for 26.6% of the Company’s sales for the three months ended December 31, 2015.

 

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NOTE 13 - SEGMENT REPORTING

 

As of December 31, 2016, the Company was organized into four main business segments based on location and product, including fertilizer production with Jinong, fertilizer production with Gufeng , agricultural products production with Yuxing and distribution of agricultural products with the acquisition of the VIE Companies completed as of June 30, 2016. Each of the four operating segments referenced above has separate and distinct general ledgers. The chief operating decision maker (“CODM”) receives financial information, including revenue, gross margin, operating income and net income produced from the various general ledger systems to make decisions about allocating resources and assessing performance; however, the principal measure of segment profitability or loss used by the CODM is net income by segment

 

   Three Months Ended
December 31,
   Six Months Ended
December 31,
 
Revenues from unaffiliated customers:  2016   2015   2016   2015 
Jinong  $26,825,674   $31,302,561   $58,253,394   $66,010,365 
Gufeng   21,066,559    23,579,674    36,876,073    41,814,506 
Yuxing   2,454,314    2,083,765    3,809,725    3,325,400 
VIES   8,398,466    -    21,690,443    - 
Consolidated  $58,745,013   $56,966,000   $120,629,635   $111,150,271 
                     
Operating income :                    
Jinong  $5,740,784   $3,698,620   $12,120,004   $11,654,274 
Gufeng   1,906,816    3,052,879    2,991,899    5,662,832 
Yuxing   330,780    511,213    487,810    917,510 
VIES    637,284    -    2,440,764    - 
Reconciling item (1)   -    -    -    - 
Reconciling item (2)   -    297,606    -    (219,754)
Reconciling item (2)--stock compensation   (1,510,148)   (1,780,587)   (1,856,270)   (2,857,081)
Consolidated  $7,105,516   $5,779,731   $16,184,207   $15,157,781 
                     
Net income:                    
Jinong  $4,849,485   $3,187,514   $10,195,773   $10,000,365 
Gufeng   1,268,439    2,049,897    1,984,925    3,670,264 
Yuxing   330,509    513,099    487,589    919,384 
VIES    567,726    -    2,045,574    - 
Reconciling item (1)   -    5    -    29 
Reconciling item (2)   (1,510,148)   (1,477,980)   (1,856,270)   (3,076,835)
Consolidated  $5,506,011   $4,272,535   $12,857,591   $11,513,207 
                     
Depreciation and Amortization:                    
Jinong  $3,675,142   $9,358,107   $9,988,231   $19,292,089 
Gufeng   631,041    728,466    1,258,350    1,474,061 
Yuxing   306,210    336,433    620,126    679,741 
VIES    123,070    -    249,202    - 
Consolidated  $4,735,463   $10,423,006   $12,115,909   $21,445,891 
                     
Interest expense:                    
Jinong   55,979    -    113,352    - 
Gufeng   58,306    302,644    118,439    731,679 
Consolidated  $114,285   $302,644   $231,791   $731,679 
                     
Capital Expenditure:                    
Jinong  $571   $6,643   $1,793   $6,643 
Gufeng   556    -    4,999    1,770 
Yuxing   -    6,449    548    7,252 
VIES    -    -    -    - 
Consolidated  $1,127   $13,092   $7,340   $15,665 

 

 18 

 

 

   As of 
   December 31,   June 30, 
   2016   2016 
Identifiable assets:        
Jinong  $194,544,513   $198,599,977 
Gufeng   143,819,547    149,891,328 
Yuxing   41,925,427    45,448,157 
VIES June 30, 2016   23,666,211    24,675,499 
Reconciling item (1)   23,487    170,444 
Reconciling item (2)   (2,878)   (2,878)
Consolidated  $403,976,307   $418,782,527 

 

(1)    Reconciling amounts refer to the unallocated assets or expenses of Green New Jersey.

(2)    Reconciling amounts refer to the unallocated assets or expenses of the Parent Company.

 

NOTE 14 - COMMITMENTS AND CONTINGENCIES

 

On June 29, 2016, Jinong signed an office lease with Kingtone Information.  Pursuant to the lease, Jinong rented 612 square meters (approximately 6,588 square feet) of office space from Kingtone Information. The lease provided for a two-year term effective as of July 1, 2016 with monthly rent of $3,525 (RMB 24,480).

 

In January 2008, Jintai signed a ten-year land lease with Xi’an Jinong Hi-tech Agriculture Demonstration Zone for a monthly rent of $749 (RMB 5,200).

 

In February 2004, Tianjuyuan signed a fifty-year lease with the village committee of Dong Gao Village and Zhen Nan Zhang Dai Village in the Beijing Ping Gu District, at a monthly rent of $426 (RMB 2,958).

 

Accordingly, the Company recorded an aggregate of $28,198 and $28,261 as rent expenses for the six months ended December 31, 2016 and 2015, respectively. Rent expenses for the next five years ended December 31, are as follows:

 

Years ending December 31,    
2017  $56,396 
2018   47,411 
2019   47,411 
2020   47,411 
2021   47,411 

 

 19 

 

 

NOTE 15 - BUSINESS COMBINATIONS

 

On June 30, 2016, the Company, through its wholly-owned subsidiary Jinong, entered into strategic acquisition agreements and also into a series of contractual agreements to qualify as VIEs with the shareholders of the VIE Companies.

 

Jinong, the VIE Companies, and the shareholders of the VIE Companies also entered into a series of contractual agreements for the VIE Companies to qualify as VIEs (the “VIE Agreements”). The VIE Agreements are as follows:

 

Entrusted Management Agreements

 

Pursuant to the terms of certain Entrusted Management Agreements dated June 30, 2016, between Jinong and the shareholders of the VIE Companies (the “Entrusted Management Agreements”), the VIE Companies and their shareholders agreed to entrust the operations and management of its business to Jinong. According to the Entrusted Management Agreement, Jinong possesses the full and exclusive right to manage the VIE Companies’ operations, assets and personnel, has the right to control all of the VIE Companies' cash flows through an entrusted bank account, is entitled to the VIE Companies' net profits as a management fee, is obligated to pay all of the VIE Companies’ payables and loan payments, and bears all losses of the VIE Companies. The Entrusted Management Agreements will remain in effect until (i) the parties mutually agree to terminate the agreement; (ii) the dissolution of the VIE Companies; or (iii) Jinong acquires all of the assets or equity of the VIE Companies (as more fully described below under “Exclusive Option Agreements”).

 

Exclusive Technology Supply Agreements

 

Pursuant to the terms of certain Exclusive Technology Supply Agreements dated June 30, 2016, between Jinong and the VIE Companies (the “Exclusive Technology Supply Agreements”), Jinong is the exclusive technology provider to the VIE Companies. The VIE Companies agreed to pay Jinong all fees payable for technology supply prior to making any payments under the Entrusted Management Agreement. The Exclusive Technology Supply Agreements shall remain in effect until (i) the parties mutually agree to terminate the agreement; (ii) the dissolution of the VIE Companies; or (iii) Jinong acquires the VIE Companies (as more fully described below under “Exclusive Option Agreements”).

 

Shareholder’s Voting Proxy Agreements

 

Pursuant to the terms of certain Shareholder’s Voting Proxy Agreements dated June 30, 2016, among Jinong and the shareholders of the VIE Companies (the “Shareholder’s Voting Proxy Agreements”), the shareholders of the VIE Companies irrevocably appointed Jinong as their proxy to exercise on such shareholders’ behalf all of their voting rights as shareholders pursuant to PRC law and the Articles of Association of the VIE Companies, including the appointment and election of directors of the VIE Companies. Jinong agreed that it shall maintain a board of directors, the composition and appointment of which shall be approved by the Board of the Company. The Shareholder’s Voting Proxy Agreements will remain in effect until Jinong acquires all of the assets or equity of the VIE Companies.

 

Exclusive Option Agreements

 

Pursuant to the terms of certain Exclusive Option Agreements dated June 30, 2016, among Jinong, the VIE Companies, and the shareholders of the VIE Companies (the “Exclusive Option Agreements”), the shareholders of the VIE Companies granted Jinong an irrevocable and exclusive purchase option (the “Option”) to acquire the VIE Companies’ equity interests and/or remaining assets, but only to the extent that the acquisition does not violate limitations imposed by PRC law on such transactions. The Option is exercisable at any time at Jinong’s discretion so long as such exercise and subsequent acquisition of the VIE Companies does not violate PRC law. The consideration for the exercise of the Option is to be determined by the parties and memorialized in the future by definitive agreements setting forth the kind and value of such consideration. Jinong may transfer all rights and obligations under the Exclusive Option Agreements to any third parties without the approval of the shareholders of the VIE Companies so long as a written notice is provided. The Exclusive Option Agreements may be terminated by mutual agreements or by 30 days written notice by Jinong.

 

 20 

 

 

Equity Pledge Agreements

 

Pursuant to the terms of certain Equity Pledge Agreements dated June 30, 2016, among Jinong and the shareholders of the VIE Companies (the “Pledge Agreements”), the shareholders of the VIE Companies pledged all of their equity interests in the VIE Companies to Jinong, including the proceeds thereof, to guarantee all of Jinong's rights and benefits under the Entrusted Management Agreements, the Exclusive Technology Supply Agreements, the Shareholder’ Voting Proxy Agreements and the Exclusive Option Agreements. Prior to termination of the Pledge Agreements, the pledged equity interests cannot be transferred without Jinong's prior written consent. The Pledge Agreements may be terminated only upon the written agreement of the parties.

 

Non-Compete Agreements

 

Pursuant to the terms of certain Non-Compete Agreements dated June 30, 2016, among Jinong and the shareholders of the VIE Companies (the “Non-Compete Agreements”), the shareholders of the VIE Companies agreed that during the period beginning on the initial date of their services with Jinong, and ending five (5) years after termination of their services with Jinong, without Jinong’s prior written consent, they will not provide services or accept positions including but not limited to partners, directors, shareholders, managers, proxies or consultants, provided by any profit making organizations with businesses that may compete with Jinong. They will not solicit or interfere with any of the Jinong’s customers, or solicit, induce, recruit or encourage any person engaged or employed by Jinong to terminate his or her service or engagement. In the event that the shareholders of the VIE Companies breach the non-compete obligations contained therein, Jinong is entitled to all loss and damages; in the event that the damages are difficult to determine, remedies bore the shareholders of the VIE Companies shall be no less than 50% of the salaries and other expenses Jinong provided in the past.

 

The Company entered into these VIE Agreements as a way for the Company to have more control over the distribution of its products. The transactions are accounted for as business combinations in accordance with ASC 805. A summary of the purchase price allocations at fair value is below:

 

Cash  $708,737 
Accounts receivable   6,422,850 
Advances to suppliers   1,803,180 
Prepaid expenses and other current assets   807,645 
Inventories   7,787,043 
Machinery and equipment   140,868 
Intangible assets   270,900 
Other assets   3,404,741 
Good will   3,158,179 
Accounts payable   (3,962,670)
Customer deposits   (3,486,150)
Accrued expenses and other payables   (4,653,324)
Taxes payable   (16,912)
Purchase price  $12,385,087 

 

A summary of the purchase consideration paid for the VIE Companies is below:

 

Cash  $5,568,500 
Convertible notes   6,671,769 
Derivative liability   144,818 
   $12,385,087 

 

The cash component of the purchase price for these acquisitions was paid in September 2016.

 

NOTE 16 - VARIABLE INTEREST ENTITIES

 

In accordance with accounting standards regarding consolidation of variable interest entities, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which a company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

 

Green Nevada through one of its subsidiaries, Jinong, entered into a series of agreements (the “VIE Agreements”) with Yuxing for it to qualify as a VIE, effective June 16, 2013.

 

The Company has concluded, based on the contractual arrangements, that Yuxing is a VIE and that the Company’s wholly-owned subsidiary, Jinong, absorbs a majority of the risk of loss from the activities of Yuxing, thereby enabling the Company, through Jinong, to receive a majority of Yuxing expected residual returns.

 

On June 30, 2016, the Company, through its wholly-owned subsidiary Jinong, entered into strategic acquisition agreements and also into a series of contractual agreements to qualify as VIEs with the shareholders of the VIE Companies.

 

 21 

 

 

Jinong, the VIE Companies, and the shareholders of the VIE Companies also entered into a series of contractual agreements for the VIE Companies to qualify as VIEs (the “VIE Agreements”).

 

As a result of these contractual arrangements, with Yuxing and the VIE Companies the Company is entitled to substantially all of the economic benefits of Yuxing and the VIE Companies. The following financial statement amounts and balances of the VIEs were included in the accompanying consolidated financial statements as of December 31, 2016 and June 30, 2016:

 

   December 31,   June 30, 
   2016   2016 
         
ASSETS        
Current Assets        
Cash and cash equivalents  $1,030,482   $1,017,841 
Accounts receivable, net   9,596,532    7,050,201 
Inventories   23,999,754    26,370,202 
Other current assets   1,709,991    1,875,912 
Advances to suppliers   2,119,048    4,900,524 
Total Current Assets   38,455,807    41,214,680 
           
Plant, Property and Equipment, Net   12,292,713    13,377,817 
Other assets   216,136    334,264 
Intangible Assets, Net   12,017,863    12,913,776 
Goodwill   3,021,632    3,158,179 
Total Assets  $66,004,151   $70,998,716 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current Liabilities          
Accounts payable  $4,308,607   $3,840,052 
Customer deposits   1,803,140    3,486,150 
Accrued expenses and other payables   3,304,318    5,580,642 
Amount due to related parties   39,722,237    43,478,158 
Total Current Liabilities   49,560,557    56,385,002 
           
Stockholders' equity   16,443,594    14,613,714 
           
Total Liabilities and Stockholders' Equity  $66,004,151   $70,998,716 

  

   Three months ended
December 31,
   Six months ended
December 31,
 
   2016   2015   2016   2015 
Revenue  $10,852,779   $2,083,765   $25,500,167   $3,325,400 
Expenses   9,954,543    1,570,665    22,967,005    2,406,015 
Net income (loss)  $898,236   $513,100   $2,533,162   $919,385 

 

NOTE 17 – SUBSEQUENT EVENTS

 

On January 1, 2017, the Company, through its wholly-owned subsidiary Jinong, entered into strategic acquisition agreements and a series of contractual agreements with the shareholders of the following two companies that are organized under the laws of the PRC and would be deemed VIEs Sunwu County Xiangrong Agricultural Materials Co., Ltd. (“Xiangrong”), and Anhui Fengnong Seed Co., Ltd. (“Fengnong”). Jinong, entered into (i) Strategic Acquisition Agreements (the “SAA”), and (ii) Agreements for Convertible Notes (the “ACN”), with the shareholders of the two companies (“Targets”). The transaction represented by the SAA, ACN and the VIE Agreements as defined below are collectively referred to as the “Strategic Acquisitions.”

 

 

Company Name

  Business Scope  Cash Payment for Acquisition (USD)   Principal of Notes for Acquisition (USD) 
Sunwu County Xiangrong Agricultural Materials Co., Ltd.  Sales of pesticides, agricultural chemicals, chemical fertilizers, agricultural materials; Manufacture and sales of mulches.  $576,000   $864,000 
Anhui Fengnong Seed Co., Ltd.  Wholesale and retail sales of pesticides; Sales of chemical fertilizers, packaged seeds, agricultural mulches, micronutrient fertilizers, compound fertilizers and plant growth regulators  $576,000   $864,000 
Total     $1,152,000   $1,728,000 

 

 

 22 

 

 

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 should be read in conjunction with our consolidated financial statements and the notes to those financial statements appearing elsewhere in this report. This discussion and analysis contains forward-looking statements that involve significant risks and uncertainties. As a result of many factors, such as the slow-down of the macro-economic environment in China and its impact on economic growth in general, the competition in the fertilizer industry and the impact of such competition on pricing, revenues and margins, the weather conditions in the areas where our customers are based, the cost of attracting and retaining highly skilled personnel, the prospects for future acquisitions, and the factors set forth elsewhere in this report, our actual results may differ materially from those anticipated in these forward-looking statements. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this report will in fact occur. You should not place undue reliance on the forward-looking statements contained in this report.

 

The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by U.S. federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. Further, the information about our intentions contained in this report is a statement of our intention as of the date of this report and is based upon, among other things, the existing regulatory environment, industry conditions, market conditions and prices, and our assumptions as of such date. We may change our intentions, at any time and without notice, based upon any changes in such factors, in our assumptions or otherwise.

 

Unless the context indicates otherwise, as used in the notes to the financial statements of the Company, the following are the references herein of all the subsidiaries of the Company (i) Green Agriculture Holding Corporation (“Green New Jersey”), a wholly-owned subsidiary of Green Nevada, incorporated in the State of New Jersey; (ii) Shaanxi TechTeamJinongHumic Acid Product Co., Ltd. (“Jinong”), a wholly-owned subsidiary of Green New Jersey organized under the laws of the People’s Republic of China (the “PRC”); (iii) Xi’an Hu County Yuxing Agriculture Technology Development Co., Ltd. (“Yuxing”), a Variable Interest Entity (“VIE”) in the PRC controlled by Jinong through a series of contractual agreements; (iv) Beijing Gufeng Chemical Products Co., Ltd., a wholly-owned subsidiary of Jinong in the PRC (“Gufeng”), (v) Beijing Tianjuyuan Fertilizer Co., Ltd., Gufeng’s wholly-owned subsidiary in the PRC (“Tianjuyuan”), Shaanxi Lishijie Agrochemical Co., Ltd.(“Lishijie”), a VIE in the PRC controlled by Jinong, SongyuanJinyangguangSannong Service Co., Ltd., (“Jinyangguang”), a VIE in the PRC controlled by Jinong, Shenqiu County Zhenbai Agriculture Co., Ltd. (“Zhenbai”), a VIE in the PRC controlled by Jinong, Weinan City Linwei District Wangtian Agricultural Materials Co., Ltd. (“Wangtian”), a VIE in the PRC controlled by Jinong, AksuXindeguo Agricultural Materials Co., Ltd. (“Xindeguo”), a VIE in the PRC controlled by Jinong, Xinjiang Xinyulei Eco-agriculture Science and Technology co., Ltd. (“Xinyulei”), a VIE in the PRC controlled by Jinong. Sunwu County Xiangrong Agricultural Materials Co., Ltd. (“Xiangrong”). Anhui Fengnong Seed Co., Ltd.(“Fengnong”). Yuxing, Lishijie, Jinyangguang, Zhenbai, Wangtian, Xindeguo, Xinyulei, Xiangrong and Fengnong may also collectively be referred to as the “the VIE Companies”

 

Unless the context otherwise requires, all references to (i) “PRC” and “China” are to the People’s Republic of China; (ii) “U.S. dollar,” “$” and “US$” are to United States dollars; and (iii) “RMB”, “Yuan” and Renminbi are to the currency of the PRC or China.

 

Overview

 

We are engaged in the research, development, production and sale of various types of fertilizers and agricultural products in the PRC through our wholly-owned Chinese subsidiaries, Jinong and Gufeng (including Gufeng’s subsidiary Tianjuyuan), and our VIE Companies. Our primary business is fertilizer products, specifically humic-acid based compound fertilizer produced by Jinong and compound fertilizer, blended fertilizer, organic compound fertilizer, slow-release fertilizer, highly-concentrated water-soluble fertilizer and mixed organic-inorganic compound fertilizer produced by Gufeng. In addition, through Yuxing, we develop and produce various agricultural products, such as top-grade fruits, vegetables, flowers and colored seedlings. Also through the VIE Companies, we have entered the distribution business of agricultural business. For financial reporting purposes, our operations are organized into four business segments: fertilizer products (Jinong), fertilizer products (Gufeng), agricultural products (Yuxing) and fertilizer product distribution (VIE Companies).

 

 23 

 

 

The fertilizer business conducted by Jinong and Gufeng generated approximately 78.9% and 97.0% of our total revenues for the six months ended December 31, 2016 and 2015, respectively. Yuxing serves as a research and development base for our fertilizer products. The VIE Companies serves as in-house distribution channels for our fertilizer products, forming a vertical business integration.

 

Fertilizer Products

 

As of December 31, 2016, we had developed and produced a total of 668 different fertilizer products in use, of which 132 were developed and produced by Jinong and 332 by Gufeng, and 224 by the VIE companies.

 

Below is a table that shows the metric tons of fertilizer sold by Jinong and Gufeng and the revenue per ton for the periods indicated:

 

   Three Months Ended December 31,   Change from 2015 to 2016 
   2016   2015   Amount   % 
   (metric tons)         
Jinong   8,955    9,539    (584)   (6.1)%
Gufeng   63,167    62,775    392    0.6%
    72,122    72,314    (192)     

 

    Three Months Ended December 31, 
    2016    2015 
    (revenue per ton) 
Jinong  $2,996   $3,374 
Gufeng   334    367 

 

    Six Months Ended
December 31,
    Change from 2015 to 2016 
    2016    2015    Amount    % 
    (metric tons)           
Jinong   18,635    19,603    (968)   (4.9)%
Gufeng   108,698    108,397    301    0.3%
    127,333    128,000    (667)     

 

    

Six Months Ended
December 31,

 
    2016    2015 
    (revenue per ton) 
Jinong  $3,126   $3,406 
Gufeng   339    384 

 

For the three months ended December 31, 2016, we sold approximately 72,122 metric tons of fertilizer products, as compared to 72,314 metric tons for the three months ended December 31, 2015. For the three months ended December 31, 2016, Jinong sold approximately 8,955 metric tons of fertilizer products, a decrease of 584 metric tons, or 6.1%, as compared to 9,539 metric tons for the three months ended December 31, 2015. For the three months ended December 31, 2016, Gufeng sold approximately 63,167 metric tons of fertilizer products, as compared to 62,775 metric tons for the three months ended December 31, 2015.

 

For the six months ended December 31, 2016, we sold approximately 127,333 metric tons of fertilizer products, as compared to 128,000 metric tons for the six months ended December 31, 2015. For the six months ended December 31, 2016, Jinong sold approximately 18,635 metric tons of fertilizer products, a decrease of 968 metric tons, or 4.9%, as compared to 19,603 metric tons for the six months ended December 31, 2015. For the six months ended December 31, 2016, Gufeng sold approximately 108,698 metric tons of fertilizer products, as compared to 108,397 metric tons for the six months ended December 31, 2015. 

 

 24 

 

 

Our sales of fertilizer products to five provinces accounted for approximately 49.8% of our fertilizer revenue for the three months ended December 31, 2016. Specifically, the provinces and their respective percentage contributed to our fertilizer revenues were: Hebei (18.3%), Heilongjiang (10.8%), Shaanxi (8.5%), Liaoning (6.0%), and Inner Mongolia (6.1%).

 

As of December 31, 2016, we had a total of 1,919 distributors covering 27 provinces, four autonomous regions and three central government-controlled municipalities in China. Jinong had 1,086 distributors in China. Jinong’s sales are not dependent on any single distributor or any group of distributors. Jinong’s top five distributors accounted for 2.6% of its fertilizer revenues for the three months ended December 31, 2016. Gufeng had 305 distributors, including some large state-owned enterprises. Gufeng’s top five distributors accounted for 77.3% of its revenues for the three months ended December 31, 2016.

 

Agricultural Products

 

Through Yuxing, we develop, produce and sell high-quality flowers, green vegetables and fruits to local marketplaces and various horticulture and planting companies. We also use certain of Yuxing’s greenhouse facilities to conduct research and development activities for our fertilizer products. The three PRC provinces that accounted for 85.5% of our agricultural products revenue for the three months ended December 31, 2016 were Shaanxi (74.8%), Sichuan (6.5%), and Gansu (4.2%).

 

Recent Developments

 

New products and distributors

 

During the three months ended December 31, 2016, Jinong did not launch any new fertilizer product. However, Jinong added 2 new distributors during this period. Gufeng did not launch any new fertilizer products, but added four new distributors during the three months ended December 31, 2016.

 

Strategic Acquisitions

 

As previously reported, on January 1, 2017, through Jinong, as authorized by our board of directors and Jinong, we entered into (i) Strategic Acquisition Agreements (the “SAA”), and (ii) Agreements for Convertible Notes (the “ACN”), with the shareholders of the companies as listed below (the “Targets”). The transaction represented by the SAA, ACN and the VIE Agreements as defined below are collectively referred to as the “Strategic Acquisitions.”

 

Company Name  Business Scope 

Cash Payment for Acquisition

(RMB[1])

  

Principal of Notes for Acquisition

(RMB)

 
Sunwu County Xiangrong Agricultural Materials Co., Ltd.  Sales of pesticides, agricultural chemicals, chemical fertilizers, agricultural materials; Manufacture and sales of mulches.   4,000,000    6,000,000 
Anhui Fengnong Seed Co., Ltd.  Wholesale and retail sales of pesticides; Sales of chemical fertilizers, packaged seeds, agricultural mulches, micronutrient fertilizers, compound fertilizers and plant growth regulators   4,000,000    6,000,000 
Total      8,000,000    12,000,000 

 

[1] RMB: Abbreviation for renminbi, the official currency of the People’s Republic of China where Jinong and the Targets operate. The exchange rate between RMB and U.S. dollars on January 1, 2017 is RMB1=US$0.144, according to the exchange rate published by Bank of China.

 

Pursuant to the SAA and the ACN, the shareholders of the Targets, while be in possession of the equity interests and will continue to be the legal owners of such interests, agreed to pledge and entrust all of their equity interests, including the proceeds thereof but excluding any claims or encumbrances, and the operations and management of its business to Jinong, in exchange of an aggregated amount of RMB8,000,000 (approximately $1,152,000) to be paid by Jinong within three days following the execution of the SAA, ACN and the VIE Agreements, and convertible notes with an aggregated face value of RMB12,000,000 (approximately $1,728,000) with an annual fixed compound interest rate of 3% and term of three years.

 

 25 

 

 

Results of Operations

 

Three months ended December 31, 2016 Compared to the Three months ended December 31, 2015.

 

   Three Months Ended December 31,         
   2016   2015   Change$   Change% 
Sales                
Jinong  $26,825,674   $31,302,561    (4,476,887)   -14.3%
Gufeng   21,066,559    23,579,674    (2,513,115)   -10.7%
Yuxing   2,454,314    2,083,765    370,549    17.8%
VIEs   8,398,466    -           
Net sales   58,745,013    56,966,000    1,779,013    3.1%
Cost of goods sold                    
Jinong   12,332,360    13,434,686    (1,102,326)   -8.2%
Gufeng   18,138,659    19,712,848    (1,574,189)   -8.0%
Yuxing   1,934,046    1,182,898    751,148    63.5%
VIEs   7,159,707    -           
Cost of goods sold   39,564,772    34,330,432    5,234,340    15.2%
Gross profit   19,180,241    22,635,568    (3,455,327)   -15.3%
Operating expenses                    
Selling expenses   3,965,382    5,285,103    (1,319,721)   -25.0%
Selling expenses - amortization of deferred asset   3,475,438    8,664,752    (5,189,314)   -59.9%
General and administrative expenses   4,633,905    2,905,982    1,727,923    59.5%
Total operating expenses   12,074,725    16,855,837    (4,781,112)   -28.4%
Income from operations   7,105,516    5,779,731    1,325,785    22.9%
Other income (expense)                    
Other income (expense)   (114,115)   729    (114,844)   -15753.6%
Interest income   76,494    74,270    2,224    3.0%
Interest expense   (93,246)   (302,644)   209,398    -69.2%
Total other income (expense)   (130,867)   (227,645)   96,778    -42.5%
Income before income taxes   6,974,649    5,552,086    1,422,563    25.6%
Provision for income taxes   1,468,638    1,284,551    184,087    14.3%
Net income   5,506,011    4,267,535    1,238,476    29.0%
Other comprehensive income (loss)                    
Foreign currency translation gain (loss)   (1,205,884)   (7,616,129)   6,410,245    -84.2%
Comprehensive income (loss)  $4,300,127   $(3,348,594)   7,648,721    -228.4%
                     
Basic weighted average shares outstanding   37,658,062    36,933,002    725,060    2.0%
Basic net earnings per share  $0.15   $0.12    0    26.5%
Diluted weighted average shares outstanding   37,658,062    36,933,002    725,060    2.0%
Diluted net earnings per share   0.15    0.12    0    26.5%

 

Net Sales

 

Total net sales for the three months ended December 31, 2016 were $58,745,013, an increase of $1,779,013, or 3.1%, from $56,966,000 for the three months ended December 31, 2015.

 

This increase was largely due to the inclusion of VIEs’ net sales during the three months ended December 31, 2016, which contributed approximately $8.4 million, or 14.3%, of the total net sales. The total net sales without including VIEs’ net sales for the three months ended December 31, 2016 were $50,346,547, a decrease of $6,619,453, or 11.6%, from the same period a year ago.

 

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For the three months ended December 31, 2016, Jinong’s net sales decreased by $4,476,887, or 14.3%, to $26,825,674 from $31,302,561 for the three months ended December 31, 2015. This decrease was mainly attributable to the decrease in Jinong’s sales volume, which was result of Jinong’s implementation of its new sales strategy that further focuses on producing high-margin liquid fertilizer during the last three months.

 

For the three months ended December 31, 2016, Gufeng’s net sales were $21,066,559, a decrease of $2,513,115 or 10.7% from $23,579,674 for the three months ended December 31, 2015. This decrease was mainly attributable to Gufeng’s lowering selling prices to answer to market demand during the three months ended December 31, 2016.

 

For the three months ended December 31, 2016, Yuxing’s net sales were $2,454,314, an increase of $370,549 or 17.8%, from $2,083,765 during the three months ended December 31, 2015. The increase was mainly attributable to the increase in market demand and the higher prices on Yuxing’s top-grade flowers.

 

Cost of Goods Sold

 

Total cost of goods sold for the three months ended December 31, 2016 was $39,564,772, an increase of $5,234,340, or 15.2%, from $34,330,432 for the three months ended December 31, 2015. The increase was mainly due to the production and sale of VIEs’ products, which accounted for $7,159,707, or 18.1% of total cost of goods sold. The total cost of goods sold without including VIEs’ cost of goods sold for the three months ended December 31, 2016 was $32,405,065, a decrease of $1,925,367, or 5.6%, from the same period a year ago. 

 

Cost of goods sold by Jinong for the three months ended December 31, 2016 was $12,332,360, a decrease of $1,102,326, or 8.2%, from $13,434,686 for the three months ended December 31, 2015. The decrease in cost of goods sold was primarily attributable to the decreased in net sales during the last three months.

 

Cost of goods sold by Gufeng for the three months ended December 31, 2016 was $18,138,659, a decrease of $1,574,189, or 8.0%, from $19,712,848 for the three months ended December 31, 2015. This decrease was primarily attributable to the less products sold during the last three months. 

 

For the three months ended December 31, 2016, cost of goods sold by Yuxing was $1,934,046, an increase of $751,148, or 63.5%, from $1,182,898 for the three months ended December 31, 2015. This increase was mainly due to the increase in Yuxing’s net sales and the labor cost.

 

Gross Profit

 

Total gross profit for the three months ended December 31, 2016 decreased by $3,455,327 to $19,180,241, as compared to $22,635,568 for the three months ended December 31, 2015. Gross profit margin was 32.6% and 39.7% for the three months ended December 31, 2016 and 2015, respectively. The decrease in gross profit margin was mainly due to the Jinong, Gufeng and Yuxing’s decreased gross margins for the three months ended December 31, 2016, compared to the same period last year.

 

Gross profit generated by Jinong decreased by $3,374,561, or 18.9%, to $14,493,314 for the three months ended December 31, 2016 from $17,867,875 for the three months ended December 31, 2015. Gross profit margin from Jinong’s sales was approximately 54.0% and 57.1% for the three months ended December 31, 2016 and 2015, respectively. The decrease in gross profit margin was mainly due to the higher raw material cost and packaging cost.

 

For the three months ended December 31, 2016, gross profit generated by Gufeng was $2,927,900, a decrease of $938,926, or 24.3%, from $3,866,826 for the three months ended December 31, 2015. Gross profit margin from Gufeng’s sales was approximately 13.9% and 16.4% for the three months ended December 31, 2016 and 2015, respectively. The decrease in gross profit percentage was mainly due to the increased weight for lower-margin products sales in Gufeng’s total sales answering to market demand.

 

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For the three months ended December 31, 2016, gross profit generated by Yuxing was $520,268, a decrease of $380,599, or 42.2% from $900,867 for the three months ended December 31, 2015.  The gross profit margin was approximately 21.2% and 43.2% for the three months ended December 31, 2016 and 2015, respectively. The decrease in gross profit margin was mainly due to the higher labor cost during the three months ended December 31, 2016. 

 

Gross profit generated by VIEs were $1,238,759 with a gross profit margin of approximately 14.7% for the three months ended December 31, 2016.

 

Selling Expenses

 

Our selling expenses consisted primarily of salaries of sales personnel, advertising and promotion expenses, freight-out costs and related compensation. Selling expenses were $3,965,382, or 6.8%, of net sales for the three months ended December 31, 2016, as compared to $5,285,103 or 9.3% of net sales for the three months ended December 31, 2015, a decrease of $1,319,721, or 25.0%. The selling expenses of VIEs were $248,248, or 3.0%, of VIEs’ net sales. The selling expenses of Yuxing were $11,264 or 0.5% of Yuxing’s net sales for the three months ended December 31, 2016, as compared to $135,466, or 6.5% of Yuxing’s net sales for the three months ended December 31, 2015. The selling expenses of Gufeng were $68,080 or 0.3% of Gufeng’s net sales for the three months ended December 31, 2016, as compared to $110,972, or 0.5% of Gufeng’s net sales for the three months ended December 31, 2015. The selling expenses of Jinong for the three months ended December 31, 2016 were $3,637,790 or 13.6% of Jinong’s net sales, as compared to selling expenses of $5,038,665, or 16.1% of Jinong’s net sales for the three months ended December 31, 2015.

 

Selling Expenses – amortization of deferred assets

 

Our selling expenses - amortization of our deferred assets were $3,475,438, or 5.9%, of net sales for the three months ended December 31, 2016, as compared to $8,664,752 or 15.2% of net sales for the three months ended December 31, 2015, a decrease of $5,189,314, or 59.9%. This decrease was due to the fact that some of the deferred assets were fully amortized and therefore no amortization was recorded on the fully amortized assets during the three months ended December 31, 2016. 

 

General and Administrative Expenses

 

General and administrative expenses consisted primarily of related salaries, rental expenses, business development, depreciation and travel expenses incurred by our general and administrative departments and legal and professional expenses including expenses incurred and accrued for certain litigations. General and administrative expenses were $4,633,905, or 7.9% of net sales for the three months ended December 31, 2016, as compared to $2,905,982, or 5.1%, of net sales for the three months ended December 31, 2015, an increase of $1,727,923, or 59.5%. The increase in general and administrative expenses was mainly due to VIEs, which had $208,164 general and administrative expenses during the last three months.

 

Total Other Expenses

 

Total other expenses consisted of income from subsidies received from the PRC government, interest income, interest expenses and bank charges. The total other expense for the three months ended December 31, 2016 was $130,867, as compared to $227,645 for the three months ended December 31, 2015, a decrease of $96,778, or 42.5%. The decrease in total other expense was partly resulted from interest expense decreased by $209,398 or 69.2%, to $130,867 during the three months ended December 31, 2016 as compared to $302,644 during the three months ended December 31, 2015, due to a lesser amount of short-term loans.

 

Income Taxes

 

Jinong is subject to a preferred tax rate of 15% as a result of its business being classified as a High-Tech project under the PRC Enterprise Income Tax Law (“EIT”) that became effective on January 1, 2008. Jinong incurred income tax expenses of $891,953 for the three months ended December 31, 2016, as compared to $584,959 for the three months ended December 31, 2015, an increase of $306,994, or 52.5%.

 

Gufeng, subject to a tax rate of 25%, incurred income tax expenses of $484,768 for the three months ended December 31, 2016, as compared to $699,591 for the three months ended December 31, 2015, a decrease of $214,823, or 30.7%.

 

Yuxing has no income tax for the three months ended December 31, 2016 as a result of being exempted from paying income tax due to the fact its products fall into the tax exemption list set out in the EIT.

 

Net Income

 

Net income for the three months ended December 31, 2016 was $5,506,011, an increase of $1,238,476, or 29.0%, compared to $4,267,535 for the three months ended December 31, 2015. Net income as a percentage of total net sales was approximately 9.4% and 7.5% for the three months ended December 31, 2016 and 2015, respectively.

 

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Six months ended December 31, 2016 Compared to the Six months ended December 31, 2015.

 

   Six Months Ended
December 31,
         
   2016   2015   Change $   Change % 
Sales                
Jinong  $58,253,394   $66,010,365    (7,756,971)   -11.8%
Gufeng   36,876,073    41,814,506    (4,938,433)   -11.8%
Yuxing   3,809,725    3,325,400    484,325    14.6%
VIEs   21,690,443    -           
Net sales   120,629,635    111,150,271    9,479,364    8.5%
Cost of goods sold                    
Jinong   25,601,590    27,975,071    (2,373,481)   -8.5%
Gufeng   31,523,736    34,458,522    (2,934,786)   -8.5%
Yuxing   2,979,654    1,892,948    1,086,706    57.4%
VIEs   17,913,386    -           
Cost of goods sold   78,018,366    64,326,541    13,691,825    21.3%
Gross profit   42,611,269    46,823,730    (4,212,461)   -9.0%
Operating expenses                    
Selling expenses   8,977,450    7,628,858    1,348,592    17.7%
Selling expenses - amortization of deferred asset   9,584,220    18,377,467    (8,793,247)   -47.8%
General and administrative expenses   7,865,392    5,659,624    2,205,768    39.0%
Total operating expenses   26,427,062    31,665,949    (5,238,887)   -16.5%
Income from operations   16,184,207    15,157,781    1,026,426    6.8%
Other income (expense)                    
Other income (expense)   (155,172)   (3,834)   (151,338)   3947.3%
Interest income   153,116    152,932    184    0.1%
Interest expense   (231,791)   (731,679)   499,888    -68.3%
Total other income (expense)   (233,847)   (582,581)   348,734    -59.9%
Income before income taxes   15,950,360    14,575,200    1,375,160    9.4%
Provision for income taxes   3,092,769    3,061,993    30,776    1.0%
Net income   12,857,591    11,513,207    1,344,384    11.7%
Other comprehensive income (loss)                    
Foreign currency translation gain (loss)   (16,447,063)   (22,728,368)   6,281,305    -27.6%
Comprehensive income (loss)  $(3,589,472)  $(11,215,161)   7,625,689    -68.0%
                     
Basic weighted average shares outstanding   37,653,333    36,436,026    1,217,307    3.3%
Basic net earnings per share  $0.34   $0.32    0    8.1%
Diluted weighted average shares outstanding   37,653,333    36,436,026    1,217,307    3.3%
Diluted net earnings per share   0.34    0.32    0    8.1%

 

Net Sales

 

Total net sales for the six months ended December 31, 2016 were $120,629,635, an increase of $9,479,364, or 8.5%, from $111,150,271 for the six months ended December 31, 2015.

 

This increase was largely due to the inclusion of VIEs’ net sales during the six months ended December 31, 2016, which contributed approximately $21.7 million, or 18.0%, of the total net sales. The total net sales without including VIEs’ net sales for the six months ended December 31, 2016 were $98,939,192, a decrease of $12,211,079, or 11.0%, from the same period a year ago.

 

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For the six months ended December 31, 2016, Jinong’s net sales decreased of $7,756,971, or 11.8%, to $58,253,394 from $66,010,365 for the six months ended December 31, 2015. This decrease was mainly attributable to the decrease in Jinong’s sales volume, which was result of Jinong’s implementation of its new sales strategy that further focuses on producing high-margin liquid fertilizer during the last six months.

 

For the six months ended December 31, 2016, Gufeng’s net sales were $36,876,073, a decrease of $4,938,433 or 11.8% from $41,814,506 for the six months ended December 31, 2015. This decrease was mainly attributable to Gufeng’s lowering selling prices to answer to market demand during the six months ended December 31, 2016.

 

For the six months ended December 31, 2016, Yuxing’s net sales were $3,809,725, an increase of $484,325 or 14.6%, from $3,325,400 during the six months ended December 31, 2015. The increase was mainly attributable to the increase in market demand and higher prices on Yuxing’s top-grade flowers.

 

Cost of Goods Sold

 

Total cost of goods sold for the six months ended December 31, 2016 was $78,018,366, an increase of $13,691,825, or 21.3%, from $64,326,541 for the six months ended December 31, 2015. This increase was mainly due to the production and sale of VIEs’ products, which accounted for $17,913,386, or 23.0% of total cost of goods sold. The total cost of goods sold without including VIEs’ cost of goods sold for the three months ended December 31, 2016 was $60,104,980, a decrease of $4,221,561, or 6.6%, from the same period a year ago.

 

Cost of goods sold by Jinong for the six months ended December 31, 2016 was $25,601,590, a decrease of $2,373,481, or 8.5%, from $27,975,071 for the six months ended December 31, 2015. The decrease was primarily attributable to its lower net sales.

 

Cost of goods sold by Gufeng for the six months ended December 31, 2016 was $31,523,736, a decrease of $2,934,786, or 8.5%, from $34,458,522 for the six months ended December 31, 2015. This decrease was primarily attributable to the less products sold during the last six months. .

 

For the six months ended December 31, 2016, cost of goods sold by Yuxing was $2,979,654, an increase of $1,086,706, or 57.4%, from $1,892,948 for the six months ended December 31, 2015. This increase was mainly due to the increase in Yuxing’s net sales and the higher labor costs.

 

Gross Profit

 

Total gross profit for the six months ended December 31, 2016 decreased by $4,212,461 to $42,611,269, as compared to $46,823,730 for the six months ended December 31, 2015. Gross profit margin was 35.3% and 42.1% for the six months ended December 31, 2016 and 2015, respectively.

 

Gross profit generated by Jinong decreased by $5,383,490, or 14.2%, to $32,651,804 for the six months ended December 31, 2016 from $38,035,294 for the six months ended December 31, 2015. Gross profit margin from Jinong’s sales was approximately 56.1% and 57.6% for the six months ended December 31, 2016 and 2015, respectively. The decrease in gross profit margin was mainly due to higher raw material cost and higher packaging cost.  

 

For the six months ended December 31, 2016, gross profit generated by Gufeng was $5,352,337, a decrease of $2,003,647, or 27.2%, from $7,355,984 for the six months ended December 31, 2015. Gross profit margin from Gufeng’s sales was approximately 14.6% and 17.6% for the six months ended December 31, 2016 and 2015, respectively. The decrease in gross profit percentage was mainly due to the increased weight for lower-margin products sales in Gufeng’s total sales answering to market demand.

 

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For the six months ended December 31, 2016, gross profit generated by Yuxing was $830,071, a decrease of $602,381, or 42.1% from $1,432,452for the six months ended December 31, 2015.  The gross profit margin was approximately 21.8% and 43.1% for the six months ended December 31, 2016 and 2015, respectively. The decrease in gross profit margin was mainly due to the higher labor cost during the six months ended December 31, 2016.Gross profit generated by VIEs were $3,777,057 with a gross profit margin of approximately 17.4% for the six months ended December 31, 2016.

 

Selling Expenses

 

Our selling expenses consisted primarily of salaries of sales personnel, advertising and promotion expenses, freight-out costs and related compensation. Selling expenses were $8,977,450, or 7.4%, of net sales for the six months ended December 31, 2016, as compared to $7,628,858 or 6.9% of net sales for the six months ended December 31, 2015, an increase of $1,348,592, or 17.7%. This increase was primarily due to Jinong, and the inclusion of VIEs’ selling expenses for the six months ended December 31, 2016. The selling expenses of VIEs were $602,156, or 2.8%, of VIEs’ net sales. The selling expenses of Yuxing were $18,975 or 0.5% of Yuxing’s net sales for the six months ended December 31, 2016, as compared to $143,171, or 4.3% of Yuxing’s net sales for the six months ended December 31, 2015. The selling expenses of Gufeng were $213,408 or 0.6% of Gufeng’s net sales for the six months ended December 31, 2016, as compared to $263,657, or 0.6% of Gufeng’s net sales for the six months ended December 31, 2015. The selling expenses of Jinong for the six months ended December 31, 2016 were $8,142,911 or 14.0% of Jinong’s net sales, as compared to selling expenses of $7,222,030, or 10.9% of Jinong’s net sales for the six months ended December 31, 2015. The increase in Jinong’s selling expenses was due to Jinong’s expanded marketing efforts and the increase in shipping costs.

 

Selling Expenses – amortization of deferred assets

 

Our selling expenses - amortization of our deferred assets were $9,584,220, or 7.9%, of net sales for the six months ended December 31, 2016, as compared to $18,377,467 or 16.5% of net sales for the six months ended December 31, 2015, a decrease of $8,793,247, or 47.8%. This decrease was due to the fact that some of the deferred assets were fully amortized and therefore no amortization was recorded on the fully amortized assets during the six months ended December 31, 2016. 

 

General and Administrative Expenses

 

General and administrative expenses consisted primarily of related salaries, rental expenses, business development, depreciation and travel expenses incurred by our general and administrative departments and legal and professional expenses including expenses incurred and accrued for certain litigations. General and administrative expenses were $7,865,392, or 6.5% of net sales for the six months ended December 31, 2016, as compared to $5,659,624, or 5.1%, of net sales for the six months ended December 31, 2015, an increase of $2,205,768, or 39.0%. The increase in general and administrative expenses was mainly due to VIEs, which had $734,137 general and administrative expenses during the last three months.

 

Total Other Expenses

 

Total other expenses consisted of income from subsidies received from the PRC government, interest income, interest expenses and bank charges. The total other expense for the six months ended December 31, 2016 was $233,847, as compared to $582,581 for the six months ended December 31, 2015, a decrease of $348,734, or 59.9%. The decrease in total other expense was partly resulted from interest expense decreased by $499,888 or 68.3%, to $231,791 during the six months ended December 31, 2016 as compared to $731,679 during the six months ended December 31, 2015, due to a lesser amount of short-term loans.

 

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Income Taxes

 

Jinong is subject to a preferred tax rate of 15% as a result of its business being classified as a High-Tech project under the PRC Enterprise Income Tax Law (“EIT”) that became effective on January 1, 2008. Jinong incurred income tax expenses of $1,879,465 for the six months ended December 31, 2016, as compared to $1,805,667 for the six months ended December 31, 2015, an increase of $73,798, or 4.1%.

 

Gufeng, subject to a tax rate of 25%, incurred income tax expenses of $792,503 for the six months ended December 31, 2016, as compared to $1,256,325 for the six months ended December 31, 2015, a decrease of $463,822, or 36.9%.

 

Yuxing has no income tax for the six months ended December 31, 2016 as a result of being exempted from paying income tax due to its products fall into the tax exemption list set out in the EIT.

 

Net Income

 

Net income for the six months ended December 31, 2016 was $12,857,591, an increase of $1,344,384, or 11.7%, compared to $11,513,207 for the six months ended December 31, 2015. Net income as a percentage of total net sales was approximately 10.7% and 10.4 % for the six months ended December 31, 2016 and 2015, respectively.

 

Discussion of Segment Profitability Measures

 

As of December 31, 2016, we were engaged in the following businesses: i) the production and sale of fertilizers through Jinong and Gufeng, ii) the production and sale of high-quality agricultural products by Yuxing, and iii) the distribution of agricultural products through the VIE Companies For financial reporting purpose, our operations were organized into four main business segments based on locations and products: Jinong (fertilizer production), Gufeng (fertilizer production), Yuxing (agricultural products production) and VIE Companies (agricultural products distribution). Each of the segments has its own annual budget with regard to development, production and sales.

 

Each of the four operating segments referenced above has separate and distinct general ledgers. The chief operating decision maker (“CODM”) makes decisions with respect to resources allocation and performance assessment upon receiving financial information, including revenue, gross margin, operating income and net income produced from the various general ledger systems; however, net income by segment is the principal benchmark to measure profit or loss adopted by the CODM.

 

For Jinong, the net income increased by $195,406 or 2.0% to $10,195,772 for the six months ended December 31, 2016 from $10,000,366 for the six months ended December 31, 2015.

 

For Gufeng, the net income decreased by $1,685,340 or 45.9% to $1,984,925 for the six months ended December 31, 2016 from $3,670,265 for the six months ended December 31, 2015.

 

For Yuxing, the net income increased by $431,526 or 46.9% to $487,859 for the six months ended December 31, 2016 from $919,385 for the six months ended December 31, 2015.

 

For the VIE Companies, as we did not have such business segment during the six months ended December 31, 2015, the net income increased by $2,045,574 or 100% during the six months ended December 31, 2016.

 

Liquidity and Capital Resources

 

Our principal sources of liquidity include cash from operations, borrowings from local commercial banks and net proceeds of offerings of our securities consummated in July 2009 and November/December 2009 (collectively the “Public Offerings”).

 

As of December 31, 2016, cash and cash equivalents were $116,574,852, an increase of 13,678,366, or 13.3%, from $102,896,486 as of June 30, 2016.

 

We intend to use our working capital to acquire new businesses, upgrade production lines and complete Yuxing’s new greenhouse facilities for agriculture products located on 88 acres of land in Hu County, 18 kilometers southeast of Xi’an city. Our liquidity needs have generally consisted of working capital necessary to finance receivables, raw material and finished goods inventory. We believe that we have sufficient cash on hand and positive projected cash flow from operations to support our business growth for the next twelve months to the extent we do not have further significant acquisitions or expansions. However, if events or circumstances occur and we do not meet our operating plan as expected, we may be required to seek additional capital and/or to reduce certain discretionary spending, which could have a material adverse effect on our ability to achieve our business objectives. Notwithstanding the foregoing, we may seek additional financing as necessary for expansion purposes and when we believe market conditions are most advantageous, which may include additional debt and/or equity financings. There can be no assurance that any additional financing will be available on acceptable terms, if at all. Any equity financing may result in dilution to existing stockholders and any debt financing may include restrictive covenants.

 

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The following table sets forth a summary of our cash flows for the periods indicated:

 

   Six Months Ended
December 31,
 
   2016   2015 
Net cash provided by operating activities  $18,178,990   $15,686,820 
Net cash used in investing activities   (74,353)   (15,665)
Net cash provided by (used in) financing activities   300,000    (3,276,000)
Effect of exchange rate change on cash and cash equivalents   (4,726,271)   (5,810,344)
Net increase (decrease) in cash and cash equivalents   13,678,366    6,584,811 
Cash and cash equivalents, beginning balance   102,896,486    92,982,564 
Cash and cash equivalents, ending balance  $116,574,852   $99,567,375 

 

Operating Activities

 

Net cash provided by operating activities was $18,178,990 for the six months ended December 31, 2016, an increase of $2,492,170, or 15.9%, compared to $15,686,820 for the six months ended December 31, 2015. The increase was mainly attributable to the decrease in net income, account receivable and customer deposit, offset by an increase in inventories and advance to suppliers during the six months ended December 31, 2016 as compared to the same period in 2015.

 

Investing Activities

 

Net cash used in investing activities for the six months ended December 31, 2016 was $74,353, an increase of $58,688, or 374.6% from $15,665 for the six months ended December 31, 2015. During the six months ended December 31, 2016, we purchased more plants, property and equipments compared to the same period last year.

 

Financing Activities

 

Net cash provided by financing activities for the six months ended December 31, 2016 was $300,000, compared to cash used in financing activities of $3,276,000 for the six months ended December 31, 2015, which was largely due to we had nil proceeds and repayment of loans for the three months ended December 31, 2016.

 

As of December 31, 2016 and June 30, 2016, our loans payable were as follows:

 

   December 31,
2016
   June 30,
2016
 
Short term loans payable:  $4,463,783   $4,665,500 
Total  $4,463,783   $4,665,500 

 

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Accounts Receivable

 

We had accounts receivable of $125,035,022 as of December 31, 2016, as compared to $117,055,376 as of June 30, 2016, an increase of $7,979,646 or 6.8%, which was mainly attributable to Gufeng. As of December 31, 2016, Gufeng had account receivable of $64,297,179, an increase of $16,951,117, comparing to $47,346,062 as of June 30, 2016.

 

Allowance for doubtful accounts in account receivable for the six months ended December 31, 2016 was $4,343,762, from $397,123 as of June 30, 2016. And the allowance for doubtful accounts as a percentage of accounts receivable was 3.0% as of December 31, 2016 and 0.3% as of June 30, 2016.

 

Deferred assets

 

We had deferred assets of $3,536,984 as of December 31, 2016, as compared to $13,431,621 as of June 30, 2016. We have been assisting our distributors in certain marketing efforts and developing standard stores to enhance our competitive advantages and market shares since December 31, 2015. Based on the distributor agreements, the amount owed by the distributors in certain marketing efforts and store development will be expensed over three years as long as the distributors are actively selling our products. If a distributor defaults, breaches, or terminates the agreement with us earlier than the realization of contractual terms, the unamortized portion of the amount owed by the distributor has to be refunded to us immediately. The Company’s Chairman and CEO, Mr. Li, provided credit backup to guarantee toward potential losses to the Company of any amounts due from distributors in this matter.

 

Inventories

 

We had an inventory of $64,255,981 as of December 31, 2016, as compared to $87,436,315 as of June 30, 2016, a decrease of $23,180,334, or 26.5%.  The decrease was primarily attributable to Gufeng’s inventory. Gufeng’s inventory was $38,703,152 as of December 31, 2016, compared to $60,183,741 as of June 30, 2016. 

 

Advances to Suppliers

 

We had advances to suppliers of $28,707,243 as of December 31, 2016 as compared to $26,863,959 as of June 30, 2016, representing an increase of $1,843,284 or 6.9% which was due to the large acquisition of raw material during the last six months. To ensure our ability to deliver compound fertilizer to the distributor timely prior to the planting season, we need to have sufficient raw material in stock to stabilize the production. To build up the inventory, we typically make advance payment to the suppliers to secure the supply of raw material of basic fertilizer. Our inventory level may fluctuate from time to time, depending how fast the raw material gets consumed and replenished during the production process, and how fast the finished goods get sold. The replenishment of raw material relies on the management’s estimate of numerous factors, including but not limited to, the raw material’s future price, and spot price along with their volatility, as well as the seasonal demand and future price of finished fertilizer products. Such estimate may not be accurate, and the purchase decision of raw materials based on the estimate can cause excessive inventories in slow sales and insufficient inventories in peak times.

 

Accounts Payable

 

We had accounts payable of $5,577,064 as of December 31, 2016 as compared to $5,246,153 as of June 30, 2016, representing an increase of $330,911, or 6.3%. The increase was primarily due to the VIEs, which had $4,308,607 accounts payable as of December 31, 2016.

 

Unearned Revenue (Customer Deposits)

 

We had unearned revenue of $5,413,319 as of December 31, 2016 as compared to $8,578,341 as of June 30, 2016, representing a decrease of $3,165,022, or 36.9%.  The decrease was mainly attributable to Gufeng’s $2,427,946 unearned revenue as of December 31, 2016, compared to $4,381,169 unearned revenue as of June 30, 2016, caused by the advancement deposits made by client. This decrease was seasonal fluctuation and we expect to deliver products to our customers during the next three months at which time we will recognize the revenue.

 

We do not have any off-balance sheet arrangements.

 

 34 

 

 

Critical Accounting Policies and Estimates

 

Management’s discussion and analysis of its financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. Our financial statements reflect the selection and application of accounting policies which require management to make significant estimates and judgments. See Note 2 to our consolidated financial statements, “Basis of Presentation and Summary of Significant Accounting Policies.” We believe that the following paragraphs reflect the most critical accounting policies that currently affect our financial condition and results of operations:

 

Use of estimates

 

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those estimates.

 

Revenue recognition

 

Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, we have no other significant obligations and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

 

Our revenue consists of invoiced value of goods, net of a value-added tax (VAT). No product return or sales discount allowance is made as products delivered and accepted by customers are normally not returnable and sales discounts are normally not granted after products are delivered.

 

Cash and cash equivalents

 

For statement of cash flows purposes, we consider all cash on hand and in banks, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents.

 

Accounts receivable

 

Our policy is to maintain reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Any accounts receivable of Jinong and Gufeng that is outstanding for more than 180 days will be accounted as allowance for bad debts, and any accounts receivable of Yuxing that is outstanding for more than 90 days will be accounted as allowance for bad debts.

 

Deferred assets

 

Deferred assets represent amounts the Company advanced to the distributors in their marketing and stores development to expand our competitive advantage and market shares. Based on the distributor agreements, the amount owed by the distributors in certain marketing efforts and store development will be expensed over three years as long as the distributors are actively selling our products. If a distributor defaults, breaches, or terminates the agreement with us earlier than the realization the contractual terms, the unamortized portion of the amount owed by the distributor has to be refunded to us immediately. The Company’s Chairman and CEO, Mr. Li, provided credit backup guarantee toward potential losses to the Company of any amounts due from distributors in this matter.  

 

Segment reporting

 

FASB ASC 280 requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.

 

As of December 31, 2016, we were organized into three main business segments: Jinong (fertilizer production), Gufeng (fertilizer production) and Yuxing (agricultural products production).

 

 35 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Disclosures About Market Risk

 

We may be exposed to changes in financial market conditions in the normal course of business. Market risk generally represents the risk that losses may occur as a result of movements in interest rates and equity prices. We currently do not, in the normal course of business, use financial instruments that are subject to changes in financial market conditions.

 

Currency Fluctuations and Foreign Currency Risk

 

Substantially all of our revenues and expenses are denominated in RMB. However, we use U.S. dollar for financial reporting purposes. Conversion of RMB into foreign currencies is regulated by the People’s Bank of China through a unified floating exchange rate system. Although the PRC government has stated its intention to support the value of RMB, there can be no assurance that such exchange rate will not again become volatile or that RMB will not devalue significantly against U.S. dollar. Exchange rate fluctuations may adversely affect the value, in U.S. dollar terms, of our net assets and income derived from our operations in the PRC.

 

Our reporting currency is U.S. dollar. Except for U.S. holding companies, all of our consolidated revenues, consolidated costs and expenses, and our assets are denominated in RMB. As a result, we are exposed to foreign exchange risk as our revenues and results of operations may be affected by fluctuations in the exchange rate between U.S. dollars and RMB. If RMB depreciates against U.S. dollar, the value of our RMB revenues, earnings and assets as expressed in our U.S. dollar financial statements will decline. Assets and liabilities are translated at the exchange rates as of the balance sheet dates, revenues and expenses are translated at the average exchange rates, and shareholders’ equity is translated at historical exchange rates. Any resulting translation adjustments are not included in determining net income but are included in determining other comprehensive income, a component of shareholders’ equity. As of December 31, 2016, our accumulated other comprehensive income was $22.1 million. We have not entered into any hedging transactions in an effort to reduce our exposure to foreign exchange risk. The value of RMB against U.S. dollar and other currencies is affected by, among other things, changes in the PRC’s political and economic conditions. In 2016, China’s currency dropped by a cumulative 6.8% against the U.S. dollar. The effect on trade can be substantial. Moreover, it is possible that, in the future, PRC authorities may lift restrictions on fluctuations in RMB exchange rate and lessen intervention in the foreign exchange market.

 

Interest Rate Risk

 

We deposit surplus funds with Chinese banks earning daily interest. We do not invest in any instruments for trading purposes. All of our outstanding debt instruments carry fixed rates of interests. The amount of short-term debt outstanding as of December 31, 2016 and June 30, 2016 was $4.5 million and $4.7 million, respectively. We are exposed to interest rate risk primarily with respect to our short-term bank loans. Although the interest rates, which are based on the banks’ prime rates with respect to our short-term loans, are fixed for the terms of the loans, the terms are typically three to twelve months for short-term bank loans and interest rates are subject to change upon renewal. There were no material changes in interest rates for short-term bank loans renewed during the three months ended December 31, 2016. The original loan term on average is one year, and the remaining average life of the short term-loans is approximately five months.

 

Management monitors the banks’ prime rates in conjunction with our cash requirements to determine the appropriate level of debt balances relative to other sources of funds. We have not entered into any hedging transactions in an effort to reduce our exposure to interest rate risk.

 

Credit Risk

 

We have not experienced significant credit risk, as most of our customers are long-term customers with superior payment records. Our receivables are monitored regularly by our credit managers.

 

Inflation Risk

 

Inflationary factors such as increases in the cost of our products and overhead costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and selling, general and administrative expenses as a percentage of net revenues if the selling prices of our products do not increase with these increased costs.

 

 36 

 

 

Item 4. Controls and Procedures

 

(a) Evaluation of disclosure controls and procedures

 

At the conclusion of the period ended December 31, 2016 we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based upon that evaluation, our CEO and CFO concluded that as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective and adequately designed to ensure that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that such information was accumulated and communicated to our management, including our CEO and CFO, in a manner that allowed for timely decisions regarding required disclosure.

 

(b) Changes in internal controls

 

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the quarter ended December 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

There are no other actions, suits, proceedings, inquiries 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 2. Unregistered Sales of Equity Securities and Use of Proceeds

  

There were no unregistered sales of the Company’s equity securities during the three months ended December 31, 2016, that were not otherwise disclosed in a Current Report on Form 8-K.  

 

Item 3. Defaults Upon Senior Securities

 

There has been no default in the payment of principal, interest, sinking or purchase fund installment, or any other material default, with respect to any indebtedness of the Company. 

 

Item 4. Mine Safety Disclosures

 

Not applicable. 

 

Item 5. Other Information

 

There is no other information required to be disclosed under this item which was not previously disclosed.

 

Item 6. Exhibits

 

The exhibits required by this item are set forth in the Exhibit Index attached hereto.

 

 37 

 

 

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.

 

  CHINA GREEN AGRICULTURE, INC.
     
Date: February 14, 2017 By: /s/ Tao Li
  Name: Tao Li
  Title: Chief Executive Officer
    (principal executive officer)
     
Date: February 14, 2017

By:

Name:

Title:

/s/ Zhuoyu “Richard” Li

Zhuoyu “Richard” Li

President

(deputy executive officer)

     
Date: February 14, 2017 By: /s/ Ken Ren
  Name: Ken Ren
  Title: Chief Financial Officer
    (principal financial officer and
principal accounting officer)

 

 38 

 

 

EXHIBIT INDEX

 

No.   Description
     
10.1**   Form Entrust Management Agreement
     
10.2**   Form Exclusive Option Agreement
     
10.3**   Form Exclusive Product Supply Agreement
     
10.4**   Form Non-Competition Agreement
     
10.5**   Form Pledge of Equity Agreement
     
10.6**   Form Shareholder’s Voting Proxy Agreement
     
10.7**   Form Strategic Acquisition Contract
     
21.1*   List of Subsidiaries of the Company
     
31.1*   Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
31.2*   Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32.1+   Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
32.2+   Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
101.INS*   XBRL Instance Document
     
101.SCH*   XBRL Taxonomy Extension Schema Document
     
101.CAL*   XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF*   XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB*   XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE*   XBRL Taxonomy Extension Presentation Linkbase Document

 

*     Filed herewith

**   To be filed by amendment

+     In accordance with the SEC Release 33-8238, deemed being furnished and not filed. 

 

 

39

 

EX-21.1 2 f10q1216ex21i_chinagreenagri.htm LIST OF SUBSIDIARIES OF THE COMPANY

Exhibit 21.1

 

SUBSIDIAIRES OF CHINA GREEN AGRICULTURE, INC.

 

Name   Place of Incorporation
     
Green Agriculture Holding Corporation   New Jersey
Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd.   People's Republic of China
Beijing Gufeng Chemical Products Co., Ltd.   People's Republic of China
Beijing Tianjuyuan Fertilizer Co., Ltd.   People's Republic of China

 

VARIABLE INTEREST ENTITIES OF CHINA GREEN AGRICULTURE, INC.

 

Name   Place of Incorporation
     
Xi’an Hu County Yuxing Agriculture Technology Development Co, Ltd.   People's Republic of China
Shaanxi Lishijie Agrochemical Co., Ltd.   People's Republic of China
Songyuan Jinyangguang Sannong Service Co., Ltd   People's Republic of China
Shenqiu County Zhenbai Agriculture Co., Ltd.   People's Republic of China
Weinan City Linwei District Wangtian Agricultural Materials Co., Ltd.   People's Republic of China
Aksu Xindeguo Agricultural Materials Co., Ltd.   People's Republic of China
Xinjiang Xinyulei Eco-agriculture Science and Technology co., LTD   People's Republic of China
Sunwu County Xiangrong Agricultural Materials Co., Ltd.   People's Republic of China
Anhui Fengnong Seed Co., Ltd.   People's Republic of China

 

 

EX-31.1 3 f10q1216ex31i_chinagreen.htm CERTIFICATION

Exhibit 31.1

 

CERTIFICATION PURSUANT TO

SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

 

I, Tao Li certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q (this “Report”) of China Green Agriculture, Inc.;

 

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

 

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

 

4. The registrant's other certifying officer(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 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 registrant's board of directors (or persons performing the equivalent function):

 

(a) all significant deficiencies and material weaknesses in the design or operation of internal controls 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: February 14, 2017

 

/s/ Tao Li  
Name: Tao Li  
Title: Chief Executive Officer  
(principal executive officer)  
     
/s/ Zhuoyu “Richard” Li  
Name: Zhuoyu “Richard” Li  
Title: President  
(deputy executive officer )  

 

EX-31.2 4 f10q1216ex31ii_chinagreen.htm CERTIFICATION

Exhibit 31.2

 

CERTIFICATION PURSUANT TO

SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

 

I, Ken Ren, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q (this “Report”) of China Green Agriculture, Inc.;

 

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

 

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

 

4. The registrant's other certifying officer(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 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 registrant's board of directors (or persons performing the equivalent function):

 

(a) all significant deficiencies and material weaknesses in the design or operation of internal controls 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: February 14, 2017

 

/s/ Ken Ren  
Name: Ken Ren  
Title: Chief Financial Officer  
(principal financial officer and principal accounting officer)  

 

EX-32.1 5 f10q1216ex32i_chinagreen.htm CERTIFICATION

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

The undersigned hereby certifies, each in his capacity as an executive officer of China Green Agriculture, Inc. (the “Company”), for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

 

1. The Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2015 as filed with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: February 14, 2017

 

/s/ Tao Li  
Name: Tao Li  
Title: Chief Executive Officer  
(principal executive officer)  
     
/s/ Zhuoyu “Richard” Li  
Name: Zhuoyu “Richard” Li  
Title: President  
(deputy executive officer )  

 

/s/ Ken Ren  
Name: Ken Ren  
Title: Chief Financial Officer  
(principal financial officer and principal accounting officer)  

 

This certification accompanies each Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Exchange Act, as amended.

 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

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Anhui Fengnong Seed Co., Ltd. Sales of pesticides, agricultural chemicals, chemical fertilizers, agricultural materials; Manufacture and sales of mulches. Wholesale and retail sales of pesticides; Sales of chemical fertilizers, packaged seeds, agricultural mulches, micronutrient fertilizers, compound fertilizers and plant growth regulators 576000 576000 1152000 864000 864000 1728000 Reconciling amounts refer to the unallocated assets or expenses of Green New Jersey. Reconciling amounts refer to the unallocated assets or expenses of the Parent Company. 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Document and Entity Information - shares
6 Months Ended
Dec. 31, 2016
Feb. 07, 2017
Document and Entity Information [Abstract]    
Entity Registrant Name China Green Agriculture, Inc.  
Entity Central Index Key 0000857949  
Amendment Flag false  
Current Fiscal Year End Date --06-30  
Document Type 10-Q  
Document Period End Date Dec. 31, 2016  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2017  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   38,535,161
XML 14 R2.htm IDEA: XBRL DOCUMENT v3.6.0.2
Consolidated Balance Sheets (Unaudited) - USD ($)
Dec. 31, 2016
Jun. 30, 2016
Current Assets    
Cash and cash equivalents $ 116,574,852 $ 102,896,486
Accounts receivable, net 125,035,022 117,055,376
Inventories 64,255,981 87,436,315
Prepaid expenses and other current assets 1,725,644 1,329,098
Advances to suppliers, net 28,707,243 26,863,959
Total Current Assets 336,298,742 335,581,234
Plant, Property and Equipment, Net 34,201,866 37,569,739
Deferred Asset, Net 3,536,984 13,431,621
Other Assets 309,495 379,047
Intangible Assets, Net 21,993,441 23,840,048
Goodwill 7,635,779 7,980,838
Total Assets 403,976,307 418,782,527
Current Liabilities    
Accounts payable 5,577,064 5,246,153
Customer deposits 5,413,319 8,578,341
Accrued expenses and other payables 9,067,827 16,414,392
Amount due to related parties 2,726,125 2,473,004
Taxes payable 1,841,182 4,104,218
Short term loans 4,463,783 4,665,500
Interest payable 110,155
Derivative liability 64,780 144,818
Total Current Liabilities 29,264,235 41,626,426
Long-term Liabilities
Convertible notes payable 6,534,263 6,671,769
Total Liabilities 35,798,498 48,298,195
Stockholders' Equity    
Preferred Stock, $.001 par value, 20,000,000 shares authorized, zero shares issued and outstanding
Common stock, $.001 par value, 115,197,165 shares authorized, 38,518,605 and 36,978,605 shares issued and outstanding as of December 31, 2016 and June 30, 2016, respectively 38,518 37,648
Additional paid-in capital 128,876,011 127,593,932
Statutory reserve 28,317,770 27,203,861
Retained earnings 233,088,961 221,345,279
Accumulated other comprehensive loss (22,143,451) (5,696,388)
Total Stockholders' Equity 368,177,809 370,484,332
Total Liabilities and Stockholders' Equity $ 403,976,307 $ 418,782,527
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Consolidated Balance Sheets (Parenthetical) (Unaudited) - $ / shares
Dec. 31, 2016
Jun. 30, 2016
Statement of Financial Position [Abstract]    
Preferred Stock, par value $ 0.001 $ 0.001
Preferred Stock, shares authorized 20,000,000 20,000,000
Preferred Stock, shares issued 0 0
Preferred Stock, shares outstanding 0 0
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 115,197,165 115,197,165
Common stock, shares issued 38,518,605 36,978,605
Common stock, shares outstanding 38,518,605 36,978,605
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Consolidated Statements of Income and Comprehensive Income (Loss) (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Sales        
Net sales $ 58,745,013 $ 56,966,000 $ 120,629,635 $ 111,150,271
Cost of goods sold        
Cost of goods sold 39,564,772 34,330,432 78,018,366 64,326,541
Gross profit 19,180,241 22,635,568 42,611,269 46,823,730
Operating expenses        
Selling expenses 3,965,382 5,285,103 8,977,450 7,628,858
Selling expenses - amortization of deferred asset 3,475,438 8,664,752 9,584,220 18,377,467
General and administrative expenses 4,633,905 2,905,982 7,865,392 5,659,624
Total operating expenses 12,074,725 16,855,837 26,427,062 31,665,949
Income from operations 7,105,516 5,779,731 16,184,207 15,157,781
Other income (expense)        
Other income (expense) (114,115) 729 (155,172) (3,834)
Interest income 76,494 74,270 153,116 152,932
Interest expense (93,246) (302,644) (231,791) (731,679)
Total other income (expense) (130,867) (227,645) (233,847) (582,581)
Income before income taxes 6,974,649 5,552,086 15,950,360 14,575,200
Provision for income taxes 1,468,638 1,284,551 3,092,769 3,061,993
Net income 5,506,011 4,267,535 11,513,207
Other comprehensive income (loss)        
Foreign currency translation gain (loss) (1,205,884) (7,616,129) (16,447,063) (22,728,368)
Comprehensive income (loss) $ 4,300,127 $ (3,348,594) $ (3,589,472) $ (11,215,161)
Basic weighted average shares outstanding 37,658,062 36,933,002 37,653,333 36,436,026
Basic net earnings per share $ 0.15 $ 0.12 $ 0.34 $ 0.32
Diluted weighted average shares outstanding 37,658,062 36,933,002 37,653,333 36,436,026
Diluted net earnings per share $ 0.15 $ 0.12 $ 0.34 $ 0.32
Jinong        
Sales        
Net sales $ 26,825,674 $ 31,302,561 $ 58,253,394 $ 66,010,365
Cost of goods sold        
Cost of goods sold 12,332,360 13,434,686 25,601,590 27,975,071
Gufeng        
Sales        
Net sales 21,066,559 23,579,674 36,876,073 41,814,506
Cost of goods sold        
Cost of goods sold 18,138,659 19,712,848 31,523,736 34,458,522
Yuxing        
Sales        
Net sales 2,454,314 2,083,765 3,809,725 3,325,400
Cost of goods sold        
Cost of goods sold 1,934,046 1,182,898 2,979,654 1,892,948
VIEs        
Sales        
Net sales 8,398,466 21,690,443
Cost of goods sold        
Cost of goods sold $ 7,159,707 $ 17,913,386
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Consolidated Statements of Cash Flows (Unaudited) - USD ($)
6 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Cash flows from operating activities    
Net income $ 11,513,207
Adjustments to reconcile net income to net cash provided by operating activities    
Issuance of common stock and stock options for compensation 1,282,949 2,378,736
Depreciation and amortization 12,115,909 21,445,891
Loss on disposal of property, plant and equipment 109,304 345
Amortization of debt discount 155,335
Change in fair value of derivative liability (75,918)
Changes in operating assets    
Accounts receivable (13,419,107) (1,295,393)
Amount due from related parties (154,303)
Other current assets (467,184) 88,817
Inventories 19,962,979 (23,618,284)
Advances to suppliers (3,091,976) (9,078,019)
Other assets 121,719 40,385
Changes in operating liabilities    
Accounts payable 564,376 130,081
Customer deposits (2,875,222) 16,653,368
Tax payables (2,146,115) (2,646,182)
Accrued expenses and other payables (7,029,002) 228,171
Interest payable 113,352
Net cash provided by operating activities 18,178,990 15,686,820
Cash flows from investing activities    
Purchase of plant, property, and equipment (74,353) (15,665)
Net cash used in investing activities (74,353) (15,665)
Cash flows from financing activities    
Proceeds from the sale of common stock
Proceeds from loans 4,424,000
Repayment of loans (7,900,000)
Advance from related party 300,000 200,000
Net cash provided by financing activities 300,000 (3,276,000)
Effect of exchange rate change on cash and cash equivalents (4,726,271) (5,810,344)
Net increase in cash and cash equivalents 13,678,366 6,584,811
Cash and cash equivalents, beginning balance 102,896,486 92,982,564
Cash and cash equivalents, ending balance 116,574,852 99,567,375
Supplement disclosure of cash flow information    
Interest expense paid 231,791 731,679
Income taxes paid $ 7,047,713 $ 2,763,253
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Organization and Description of Business
6 Months Ended
Dec. 31, 2016
Organization and Description of Business [Abstract]  
ORGANIZATION AND DESCRIPTION OF BUSINESS

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

 

China Green Agriculture, Inc. (the “Company”, “Parent Company” or “Green Nevada”), through its subsidiaries, is engaged in the research, development, production, distribution and sale of humic acid-based compound fertilizer, compound fertilizer, blended fertilizer, organic compound fertilizer, slow-release fertilizers, highly-concentrated water-soluble fertilizers and mixed organic-inorganic compound fertilizer and the development, production and distribution of agricultural products.

 

Unless the context indicates otherwise, as used in the notes to the financial statements of the Company, the following are the references herein of all the subsidiaries of the Company (i) Green Agriculture Holding Corporation (“Green New Jersey”), a wholly-owned subsidiary of Green Nevada, incorporated in the State of New Jersey; (ii) Shaanxi TechTeamJinongHumic Acid Product Co., Ltd. (“Jinong”), a wholly-owned subsidiary of Green New Jersey organized under the laws of the PRC; (iii) Xi’an Hu County Yuxing Agriculture Technology Development Co., Ltd. (“Yuxing”), a Variable Interest Entity (“VIE”) in the in the People’s Republic of China (the “PRC”) controlled by Jinong through a series of contractual agreements; (iv) Beijing Gufeng Chemical Products Co., Ltd., a wholly-owned subsidiary of Jinong in the PRC (“Gufeng”), and (v) Beijing Tianjuyuan Fertilizer Co., Ltd., Gufeng’s wholly-owned subsidiary in the PRC (“Tianjuyuan”). 

 

On June 30, 2016 the Company, through its wholly-owned subsidiary Jinong, entered into strategic acquisition agreements and a series of contractual agreements with the shareholders of the following six companies that are organized under the laws of the PRC and would be deemed VIEs: Shaanxi Lishijie Agrochemical Co., Ltd. (“Lishijie”), SongyuanJinyangguangSannong Service Co., Ltd. (“Jinyangguang”), Shenqiu County Zhenbai Agriculture Co., Ltd. (“Zhenbai”), Weinan City Linwei District Wangtian Agricultural Materials Co., Ltd. (“Wangtian”), AksuXindeguo Agricultural Materials Co., Ltd. (“Xindeguo”), and Xinjiang Xinyulei Eco-agriculture Science and Technology co., Ltd. (“Xinyulei”). On January 1, 2017, the Company, through its wholly-owned subsidiary Jinong, entered into strategic acquisition agreements and a series of contractual agreements with the shareholders of the following two companies that are organized under the laws of the PRC and would be deemed VIEs Sunwu County Xiangrong Agricultural Materials Co., Ltd. (“Xiangrong”), and Anhui Fengnong Seed Co., Ltd. (“Fengnong”). Please refer to Subsequent event in Note 17.

 

Yuxing, Lishijie, Jinyangguang, Zhenbai, Wangtian, Xindeguo, Xinyulei, Xiangrong and Fengnong may also collectively be referred to as the “the VIE Companies”

 

The Company’s current corporate structure as of is set forth in the diagram below:

 

notes_chart.jpg

XML 19 R7.htm IDEA: XBRL DOCUMENT v3.6.0.2
Basis of Presentation and Summary of Significant Accounting Policies
6 Months Ended
Dec. 31, 2016
Basis of Presentation and Summary of Significant Accounting Policies [Abstract]  
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principle of consolidation

 

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Green New Jersey, Jinong, Gufeng, Tianjuyuan, Yuxing and the VIE Companies. All significant inter-company accounts and transactions have been eliminated in consolidation.

  

VIE assessment

 

A VIE is an entity (1) that has total equity at risk that is not sufficient to finance its activities without additional subordinated financial support from other entities, (2) where the group of equity holders does not have the power to direct the activities of the entity that most significantly impact the entity’s economic performance, or the obligation to absorb the entity’s expected losses or the right to receive the entity’s expected residual returns, or both, or (3) where the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both, and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. In order to determine if an entity is considered a VIE, the Company first perform a qualitative analysis, which requires certain subjective decisions regarding its assessments, including, but not limited to, the design of the entity, the variability that the entity was designed to create and pass along to its interest holders, the rights of the parties, and the purpose of the arrangement. If the Company cannot conclude after a qualitative analysis whether an entity is a VIE, it performs a quantitative analysis. The qualitative analysis considered the design of the entity, the risks that cause variability, the purpose for which the entity was created, and the variability that the entity was designed to pass along to its variable interest holders. When the primary beneficiary could not be identified through a qualitative analysis, we used internal cash flow models to compute and allocate expected losses or expected residual returns to each variable interest holder based upon the relative contractual rights and preferences of each interest holder in the VIE’s capital structure.

 

Use of estimates

 

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those results.

 

Cash and cash equivalents and concentration of cash

 

For statement of cash flows purposes, the Company considers all cash on hand and in banks, certificates of deposit with state owned banks in the Peoples Republic of China (“PRC”) and banks in the United States, and other highly-liquid investments with maturities of six months or less, when purchased, to be cash and cash equivalents. The Company maintains large sums of cash in three major banks in China. The aggregate cash in such accounts and on hand as of December 31, 2016 and June 30, 2016 were $116,574,852 and $102,896,486, respectively. In addition, the Company also had $20,538 and $167,495 in cash in two banks in the United States as of December 31, 2016 and June 30, 2016, respectively. Cash overdraft as of balance sheet date will be reflected as liabilities in the balance sheet. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts.

 

Accounts receivable

 

The Company's policy is to maintain reserves for potential credit losses on accounts receivable. Management regularly reviews the composition of accounts receivable and analyzes customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves at each year-end. Accounts considered uncollectible are written off through a charge to the valuation allowance. As of December 31, 2016 and June 30, 2016, the Company had accounts receivable of $125,035,022 and $117,055,376, net of allowance for doubtful accounts of $4,343,762 and $397,123, respectively. The Company adopts no policy to accept product returns post to the sales delivery.

 

Inventories

 

Inventory is valued at the lower of cost (determined on a weighted average basis) or market. Inventories consist of raw materials, work in process, finished goods and packaging materials. The Company reviews its inventories regularly for possible obsolete goods and establishes reserves when determined necessary.

 

Deferred asset

 

Deferred assets represent amounts that the distributors owed to the Company in their marketing efforts and developing standard stores to expand the Company’s products’ competitiveness and market shares. The amount owed to the Company to assist its distributors will be expensed over three years which is the term as stated in the cooperation agreement, as long as the distributors are actively selling the Company’s products. For the six months ended December 31, 2016 and 2015, the Company amortized $9,584,220 and $21,430,699, respectively, of the deferred assets. If a distributor breaches, defaults, or terminates the agreement with the Company within the three-year period, the outstanding unamortized portion of the amount owed will become payable to the Company immediately. The Company’s Chairman, Mr. Li, guaranteed to the Company of amounts remaining unpaid due from distributors.

 

The deferred assets consist of items inside the distributors’ stores such as furniture, racks, cabinets, and display units, and items outside or attached to the distributors’ stores such as signage and billboards. These types of assets would be capitalized as fixed assets if the Company actually owned the stores or utilized the assets for its own operations. These assets would also be capitalized as leasehold improvements if the Company leased these stores from the distributors. Therefore, the Company believes that under the U.S. generally accepted accounting principles, these types of assets purchases are properly capitalized. In addition, the Company believes that these assets are properly classified as deferred assets because if a distributor breaches, defaults, or terminates the agreement with the Company within a three-year period, a proportionate amount expended by the Company is to be repaid by the distributor. The Chairman of the Board of directors of the Company guaranteed to the Company of amounts remaining unpaid due from distributors.

 

The assets inside the distributors’ stores are custom made to fit the layout of each individual store and the signage and billboards are also custom designed to fit the specific location. The assets were purchased by the Company directly from the manufacturers and installed in the distributors’ stores. The Company wants to maintain control over the quality of the items being purchased as well as making them uniform among all the distributor locations.

 

Intangible Assets

 

The Company records intangible assets acquired individually or as part of a group at fair value. Intangible assets with definitive lives are amortized over the useful life of the intangible asset, which is the period over which the asset is expected to contribute directly or indirectly to the entity’s future cash flows. The Company evaluates intangible assets for impairment at least annually and more often whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.

 

Customer deposits

 

Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as customer deposits. When all revenue recognition criteria are met, the customer deposits are recognized as revenue. As of December 31, 2016 and June 30, 2016, the Company had customer deposits of $5,413,319 and $8,578,341, respectively.

 

Earnings per share

 

Basic earnings per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and stock awards.

 

The components of basic and diluted earnings per share consist of the following:

 

    Three Months Ended
December 31,
 
    2016     2015  
Net Income for Basic Earnings Per Share   $ 5,506,011     $ 4,267,535  
Basic Weighted Average Number of Shares     37,658,062       36,933,002  
Net Income Per Share – Basic   $ 0.15     $ 0.12  
Net Income for Diluted Earnings Per Share   $ 5,506,011     $ 4,267,535  
Diluted Weighted Average Number of Shares     37,658,062       36,933,002  
Net Income Per Share – Diluted   $ 0.15     $ 0.12  

 

    Six Months Ended
December 31,
 
    2016     2015  
Net Income for Basic Earnings Per Share   $ 12,857,591     $ 11,513,207  
Basic Weighted Average Number of Shares     37,653,333       36,436,026  
Net Income Per Share – Basic   $ 0.34     $ 0.32  
Net Income for Diluted Earnings Per Share   $ 12,857,591     $ 11,513,207  
Diluted Weighted Average Number of Shares     37,653,333       36,436,026  
Net Income Per Share – Diluted   $ 0.34     $ 0.32  

 

Recent accounting pronouncements

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. This pronouncement is effective for annual reporting periods beginning after December 15, 2016, and is to be applied using one of two retrospective application methods, with early application not permitted. The Company is currently evaluating the impact of the pending adoption of ASU 2014-09 on its consolidated financial statements.

 

In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. The new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. This update is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. The Company does not anticipate the adoption of this ASU will have a significant impact on its consolidated financial position, results of operations, or cash flows.

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance in ASU No. 2016-02 supersedes the lease recognition requirements in ASC Topic 840, Leases (FAS 13). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect this standard will have on its consolidated financial statements.

 

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share Based Payment Accounting, to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance will be effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of the adoption of this newly issued guidance to its consolidated financial statements.

  

On November 17, 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. It is intended to reduce diversity in the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. The new standard requires that restricted cash and restricted cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. ASU 2016-18 is effective for annual periods beginning after December 15, 2017 including interim periods within those fiscal years. Earlier adoption is permitted. The Company maintains restricted cash balances and upon adoption of this standard, the Company will show restricted cash as part of cash and restricted cash equivalents.

 

In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Clarifying the Definition of a Business, which clarifies and provides a more robust framework to use in determining when a set of assets and activities is a business. The amendments in this update should be applied prospectively on or after the effective date. This update is effective for annual periods beginning after December 15, 2017, and interim periods within those periods. Early adoption is permitted for acquisition or deconsolidation transactions occurring before the issuance date or effective date and only when the transactions have not been reported in issued or made available for issuance financial statements. The Company does not expect the adoption to have any significant impact on its Consolidated Financial Statements.

 

In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. Under the new standard, goodwill impairment would be measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill. This ASU eliminates existing guidance that requires an entity to determine goodwill impairment by calculating the implied fair value of goodwill by hypothetically assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. This update is effective for annual periods beginning after December 15, 2019, and interim periods within those periods. Early adoption is permitted for interim or annual goodwill impairment test performed on testing dates after January 1, 2017. The Company will apply this guidance to applicable impairment tests after the adoption date.

 

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements.

XML 20 R8.htm IDEA: XBRL DOCUMENT v3.6.0.2
Inventories
6 Months Ended
Dec. 31, 2016
Inventories [Abstract]  
INVENTORIES

NOTE 3 - INVENTORIES

 

Inventories consisted of the following:

 

  December 31,  June 30, 
  2016  2016 
Raw materials $23,724,037  $29,926,762 
Supplies and packing materials $599,843  $444,373 
Work in progress $422,539  $408,820 
Finished goods $39,509,562  $56,656,360 
Total $64,255,981  $87,436,315
XML 21 R9.htm IDEA: XBRL DOCUMENT v3.6.0.2
Property, Plant and Equipment
6 Months Ended
Dec. 31, 2016
Property, Plant and Equipment [Abstract]  
PROPERTY, PLANT AND EQUIPMENT

NOTE 4 - PROPERTY, PLANT AND EQUIPMENT

 

Property, plant and equipment consisted of the following:

 

  December 31,  June 30, 
  2016  2016 
Building and improvements $40,614,431  $42,489,975 
Auto  899,674   937,642 
Machinery and equipment  17,993,602   19,015,420 
Agriculture assets  732,865   765,983 
Total property, plant and equipment  60,240,572   63,209,020 
Less: accumulated depreciation  (26,038,706)  (25,639,281)
Total $34,201,866  $37,569,739
XML 22 R10.htm IDEA: XBRL DOCUMENT v3.6.0.2
Intangible Assets
6 Months Ended
Dec. 31, 2016
Intangible Assets [Abstract]  
INTANGIBLE ASSETS

NOTE 5 - INTANGIBLE ASSETS

 

Intangible assets consisted of the following:

 

  December 31,  June 30, 
  2016  2016 
Land use rights, net $9,816,682  $10,381,215 
Technology patent, net  4,053   4,462 
Customer relationships, net  5,515,101   6,403,343 
Non-compete agreement  797,090   925,678 
Trademarks  5,860,515   6,125,350 
Total $21,993,441  $23,840,048 

 

LAND USE RIGHT

 

On September 25, 2009, Yuxing was granted a land use right for approximately 88 acres (353,000 square meters or 3.8 million square feet) by the People’s Government and Land & Resources Bureau of Hu County, Xi’an, Shaanxi Province. The fair value of the related intangible asset was determined to be the respective cost of RMB73,184,895 (or $10,538,113). The intangible asset is being amortized over the grant period of 50 years using the straight line method.

  

On August 13, 2003, Tianjuyuan was granted a certificate of Land Use Right for a parcel of land of approximately 11 acres (42,726 square meters or 459,898 square feet) at Ping Gu District, Beijing. The purchase cost was recorded at RMB1,045,950 (or $150,609). The intangible asset is being amortized over the grant period of 50 years.

 

On August 16, 2001, Jinong received a land use right as a contribution from a shareholder, which was granted by the People’s Government and Land & Resources Bureau of Yangling District, Shaanxi Province. The fair value of the related intangible asset at the time of the contribution was determined to be RMB7,285,099 (or $1,049,003). The intangible asset is being amortized over the grant period of 50 years.

 

The Land Use Rights consisted of the following:

 

  December 31,  June 30, 
  2016  2016 
Land use rights $11,737,725  $12,268,150 
Less: accumulated amortization  (1,921,043)  (1,886,935)
Total land use rights, net $9,816,682  $10,381,215 

 

TECHNOLOGY PATENT

 

On August 16, 2001, Jinong was issued a technology patent related to a proprietary formula used in the production of humid acid. The fair value of the related intangible asset was determined to be the respective cost of RMB 5,875,068 (or $845,969) and is being amortized over the patent period of 10 years using the straight line method. This technology patent has been fully amortized.

 

On July 2, 2010, the Company acquired Gufeng and its wholly-owned subsidiary Tianjuyuan. The fair value on the acquired technology patent was estimated to be RMB9,200,000 (or $1,324,736) and is amortized over the remaining useful life of six years using the straight line method.

 

The technology know-how consisted of the following:

 

  December 31,  June 30, 
  2016  2016 
Technology know-how $2,174,973  $2,273,260 
Less: accumulated amortization  (2,170,920)  (2,268,798)
Total technology know-how, net $4,053  $4,462 

 

CUSTOMER RELATIONSHIP

 

On July 2, 2010, the Company acquired Gufeng and its wholly-owned subsidiary Tianjuyuan. The fair value on the acquired customer relationships was estimated to be RMB65,000,000 (or $9,360,000) and is amortized over the remaining useful life of ten years. On June 30, 2016, the Company acquired the VIE Companies. The fair value on the acquired customer relationships was estimated to be RMB16,442,531 (or $2,367,609) and is amortized over the remaining useful life of seven to ten years.

 

  December 31,  June 30, 
  2016  2016 
Customer relationships $11,727,154  $12,257,100 
Less: accumulated amortization  (6,212,053)  (5,853,757)
Total customer relationships, net $5,515,101  $6,403,343 

  

NON-COMPETE AGREEMENT

 

On July 2, 2010, the Company acquired Gufeng and its wholly-owned subsidiary Tianjuyuan. The fair value on the acquired non-compete agreement was estimated to be RMB1,320,000 (or $190,080) and is amortized over the remaining useful life of five years using the straight line method.  On June 30, 2016, the Company acquired the VIE Companies. The fair value on the acquired non-compete agreements were estimated to be RMB6,150,683 (or $885,698) and is amortized over the remaining useful life of five years using the straight line method.

 

  December 31,  June 30, 
  2016  2016 
Non-compete agreement $1,075,726  $1,124,338 
Less: accumulated amortization  (278,636)  (198,660)
Total non-compete agreement, net $797,090  $925,678 

 

TRADEMARKS

 

On July 2, 2010, the Company acquired Gufeng and its wholly-owned subsidiary Tianjuyuan. The preliminary fair value on the acquired trademarks was estimated to be RMB40,700,000 (or $5,860,515) and is subject to an annual impairment test.

 

AMORTIZATION EXPENSE

 

Estimated amortization expenses of intangible assets for the next five twelve months periods ended December 31, 2016, are as follows:

 

Years Ending December 31, Expense ($) 
2017  1,635,094 
2018  1,635,094 
2019  1,635,094 
2020  1,635,094 
2021  1,078,551
XML 23 R11.htm IDEA: XBRL DOCUMENT v3.6.0.2
Accrued Expenses and Other Payables
6 Months Ended
Dec. 31, 2016
Accrued Expenses and Other Payables [Abstract]  
ACCRUED EXPENSES AND OTHER PAYABLES

NOTE 6 - ACCRUED EXPENSES AND OTHER PAYABLES

 

Accrued expenses and other payables consisted of the following:

 

  December 31,  June 30, 
  2016  2016 
Payroll payable $77,039  $58,704 
Welfare payable  147,829   154,510 
Accrued expenses  4,574,577   4,450,306 
Other payables  4,147,620   11,624,653 
Other levy payable  120,762   126,219 
Total $9,067,827  $16,414,392
XML 24 R12.htm IDEA: XBRL DOCUMENT v3.6.0.2
Amount Due to Related Parties
6 Months Ended
Dec. 31, 2016
Amount Due To Related Parties [Abstract]  
AMOUNT DUE TO RELATED PARTIES

NOTE 7 - AMOUNT DUE TO RELATED PARTIES

 

As of December 31, 2016 and June 30, 2016, the amount due to related parties was $2,726,125 and $2,473,004, respectively.  As of December 31, 2016 and June 30, 2016, $1,007,951 and $1,092,243, respectively were amounts that Gufeng borrowed from a related party, Xi’an Techteam Science & Technology Industry (Group) Co. Ltd., a company controlled by Mr. Tao Li, Chairman and CEO of the Company, representing unsecured, non-interest bearing loans that are due on demand.  These loans are not subject to written agreements.

 

At the end of December 2015, Yuxing entered into a sales agreement with the Company’s affiliate, 900LH.com Food Co., Ltd. ("900LH.com", previously announced as Xi'an Gem Grain Co., Ltd) pursuant to which Yuxing is to supply various vegetables to 900LH.com for its incoming seasonal sales at the holidays and year ends (the “Sales Agreement”). The contingent contracted value of the Sales Agreement is RMB 25,500,000 (approximately $3,671,822). For the six months ended December 31, 2016, Yuxing has sold approximately $839,562 products to 900LH.com.

  

On June 29, 2016, Jinong signed an office lease with Kingtone Information Technology Co., Ltd. (“Kingtone Information”), where Mr. Tao Li, Chairman and CEO of the Company, serves as its Chairman. Pursuant to the lease, Jinong rented 612 square meters (approximately 6,588 square feet) of office space from Kingtone Information. The lease provided for a two-year term effective as of July 1, 2016 with monthly rent of RMB26,684 (approximately $3,842).

XML 25 R13.htm IDEA: XBRL DOCUMENT v3.6.0.2
Loan Payables
6 Months Ended
Dec. 31, 2016
Loan Payables [Abstract]  
LOAN PAYABLES

NOTE 8 - LOAN PAYABLES

 

As of December 31, 2016, the short-term loan payables consisted of three loans which mature on dates ranging from January 19, 2016 through July 28, 2017 with interest rates ranging from 4.87% to 5.22%. The loans No. 1 and 2 below are collateralized by Tianjuyan’s land use right and building ownership right. The loans No. 3 is guaranteed by Jinong’s credit.

 

No. Payee Loan period per agreement Interest Rate  December 31,
2016
 
1 Agriculture Bank of China-Pinggu Branch May 18, 2016 – Mar. 17, 2017  4.87% $1,871,909 
2 Agriculture Bank of China-Pinggu Branch Jan. 19, 2016 – Jan. 17, 2017  5.00%  1,151,944 
3 Beijing Bank-Pinggu Branch July 28, 2016 – July 28, 2017  5.22%  1,439,930 
  Total       $4,463,783 

 

As of June 30, 2016, the short-term loan payables consisted of three loans which mature on dates ranging from May 18, 2016 through March 17, 2017 with interest rates ranging from 4.87% to 5.82%. The loans No. 1 and 3 below are collateralized by Tianjuyan’s land use right and building ownership right. The loans No. 2 is guaranteed by Jinong’s credit.

 

No. Payee Loan period per agreement Interest Rate  June 30,
2016
 
1 Agriculture Bank of China-Pinggu Branch May. 18, 2016 – Mar. 17, 2017  4.87% $1,956,500 
2 Beijing Bank-Pinggu Branch Aug. 11, 2015 – Aug. 2, 2016  5.82%  1,505,000 
3 Agriculture Bank of China-Pinggu Branch Jan. 19, 2016 – Jan. 17, 2017  5.00%  1,204,000 
  Total       $4,665,500 

 

The interest expense from short-term loans was $231,791 and $731,679 for the six months ended December 31, 2016 and 2015, respectively.

XML 26 R14.htm IDEA: XBRL DOCUMENT v3.6.0.2
Convertible Notes Payable
6 Months Ended
Dec. 31, 2016
Convertible Notes Payable [Abstract]  
CONVERTIBLE NOTES PAYABLE

NOTE 9 - CONVERTIBLE NOTES PAYABLE

 

In connection with the acquisition of the VIE Companies, the Company subsidiary, Jinong, issued to the VIE Companies shareholders convertible notes payable in the aggregate amount of RMB 51,000,000 ($7,344,000) with a term of three years and an annual interest rate of 3%. The convertible notes take priority over the preferred stock and common stock of Jinong, and any other class or series of capital stocks Jinong issues in the future in terms of interests and payments in the event of any liquidation, dissolution or winding up of Jinong. On or after the third anniversary of the issuance date of the note, noteholders may request Jinong to process the note conversion to convert the note into shares of the Company’s common stock. The notes cannot be converted prior to the mature date. The per share conversion price of the notes is the higher of the following: (i) $5.00 per share or (ii) 75% of the closing price of the Company’s common stock on the date the noteholder delivers the conversion notice.

 

 The Company determined that the fair value of the convertible notes payable was RMB 45,379,032 ($6,534,263) and RMB 44,330,692 ($6,383,620) as of December 31, 2016 and June 30, 2016, respectively, which was due to the lower than market interest rate and the conversion feature. The difference between the fair value of the notes and the face amount of the notes will be amortized to interest expense over the three year life of the notes. As of December 31, 2016, the amortization of this discount into interest expenses was $1,048,340.

XML 27 R15.htm IDEA: XBRL DOCUMENT v3.6.0.2
Taxes Payable
6 Months Ended
Dec. 31, 2016
Taxes Payable [Abstract]  
TAXES PAYABLE

NOTE 10 - TAXES PAYABLE

 

Enterprise Income Tax

 

Effective January 1, 2008, the Enterprise Income Tax (“EIT”) law of the PRC replaced the tax laws for Domestic Enterprises (“DEs”) and Foreign Invested Enterprises (“FIEs”). The EIT rate of 25% replaced the 33% rate that was applicable to both DEs and FIEs. The two year tax exemption and three year 50% tax reduction tax holiday for production-oriented FIEs was eliminated. Since January 1, 2008, Jinong became subject to income tax in China at a rate of 15% as a high-tech company, as a result of the expiration of its tax exemption on December 31, 2007. Accordingly, it made provision for income taxes for the six months ended December 31, 2016 and 2015 of $1,879,465 and $1,805,667, respectively, which is mainly due to the operating income from Jinong. Gufeng is subject to 25% EIT rate and thus it made provision for income taxes of $792,503 and $1,256,325 for the six months ended December 31, 2016 and 2015, respectively.

 

Value-Added Tax

 

All of the Company’s fertilizer products that are produced and sold in the PRC were subject to a Chinese Value-Added Tax (VAT) of 13% of the gross sales price. On April 29, 2008, the PRC State of Administration of Taxation (SAT) released Notice #56, “Exemption of VAT for Organic Fertilizer Products”, which allows certain fertilizer products to be exempt from VAT beginning June 1, 2008. The Company submitted the application for exemption in May 2009, which was granted effective September 1, 2009, continuing through December 31, 2015. On August 10, 2015 and August 28, 2015, the SAT released Notice #90. “Reinstatement of VAT for Fertilizer Products”, and Notice #97, “Supplementary Reinstatement of VAT for Fertilizer Products”, which restore the VAT of 13% of the gross sales price on certain fertilizer products includes non organic fertilizer products starting from September 1, 2015, but granted tax payers a reduced rate of 3% from September 1, 2015 through June 30, 2016.

 

Income Taxes and Related Payables

 

Taxes payable consisted of the following:

 

  December 31,  June 30, 
  2016  2016 
VAT provision $(255,765) $2,218 
Income tax payable  1,482,816   3,445,480 
Other levies  614,131   656,520 
Total $1,841,182  $4,104,218 

 

The provision for income taxes consists of the following:

 

  December 31, 
2016
  June 30,
2016
 
Current tax - foreign $3,092,769  $7,371,967 
Deferred tax  -   - 
  $3,092,769  $7,371,967 

 

Tax Rate Reconciliation

 

Our effective tax rates were approximately 19.4% and 26.7% for six months ended December 31, 2016 and 2015, respectively. Substantially all of the Company’s income before income taxes and related tax expense are from PRC sources. Actual income tax benefit reported in the consolidated statements of income and comprehensive income differ from the amounts computed by applying the US statutory income tax rate of 34% to income before income taxes for the six months ended December 31, 2016 and 2015 for the following reasons:

 

December 31, 2016                  
  China  United States       
  15% - 25%  34%  Total    
                   
Pretax income (loss) $17,806,630       (1,856,270)     $15,950,360     
                         
Expected income tax expense (benefit)  4,451,658   25.0%  (631,132)  34.0%  3,820,526     
High-tech income benefits on Jinong  (1,139,344)  (6)%  -   -   (1,139,344)    
Losses from subsidiaries in which no benefit is recognized  (219,544)  (1)%  -   -   (219,544)    
Change in valuation allowance on deferred tax asset from US tax benefit  -       631,132   (34.0)%  631,132     
Actual tax expense $3,092,769   17% $-   -% $3,092,769   19.4%

 

December 31, 2015                  
  China  United States       
  15% - 25%  34%  Total    
                   
Pretax income (loss) $14,575,200       (3,107,045)     $11,468,155     
                         
Expected income tax expense (benefit)  3,643,800   25.0%  (1,056,395)  34.0%  2,587,405     
High-tech income benefits on Jinong  (1,145,841)  (7.9)%  -   -   (1,145,841)    
Losses from subsidiaries in which no benefit is recognized  564,034   3.9%  -   -   564,034     
Change in valuation allowance on deferred tax asset from US tax benefit  -       1,056,395   (34.0)%  1,056,395     
Actual tax expense $3,061,993   21% $-   -% $3,061,993   26.7%
XML 28 R16.htm IDEA: XBRL DOCUMENT v3.6.0.2
Stockholders' Equity
6 Months Ended
Dec. 31, 2016
Stockholders' Equity [Abstract]  
STOCKHOLDERS' EQUITY

NOTE 11 - STOCKHOLDERS’ EQUITY

 

Common Stock

 

On September 30, 2014, the Company granted an aggregate of 1,750,000 shares of restricted stock under the 2009 Plan to certain executive officers, directors and employees, among which (i) 240,000 shares of restricted stock to Mr. Tao Li, the CEO; (ii) 100,000 shares of restricted stock to Mr. Ken Ren, the CFO, (iii) 40,000 shares of restricted stock to Mr. Yizhao Zhang, 30,000 shares of restricted stock to Ms. Yiru Shi, and 20,000 shares of restricted stock to Mr. Lianfu Liu, each an independent director of the Company; and (iv) 1,320,000 shares of restricted stock to key employees.   The stock grants are subject to time-based vesting schedules, vesting in various installments until March 31, 2015 for the CFO and the three independent directors, until June 30, 2015 for the CEO and until December 31, 2016 for the employees. The value of the restricted stock awards was $3,675,000 and is based on the fair value of the Company’s common stock on the grant date. This amount is being amortized to compensation expense over the vesting periods for the various awards. As of June 30, 2016 the unamortized portion of the compensation expense was $235,264 which was fully amortized to expense during the period ended December 31, 2016.

 

On September 28, 2015, the Company granted an aggregate of 1,000,000 shares of restricted stock under the 2009 Plan to certain key employees. The stock grants are subject to time-based vesting schedules, vesting in various installments until June 30, 2016. The value of the restricted stock awards was $1,660,000 and is based on the fair value of the Company’s common stock on the grant date. This amount is being amortized to compensation expense over the vesting periods for the various awards.

 

On June 26, 2016, the Company granted an aggregate of 670,000 shares of restricted stock under the 2009 Plan to certain key employees. The stock grants vest immediately. The value of the restricted stock awards was $897,800 and is based on the fair value of the Company’s common stock on the grant date.

 

On December 30, 2016, the Company granted an aggregate of 870,000 shares of restricted stock under the 2009 Plan to certain key employees. The stock grants vest immediately. The value of the restricted stock awards was $1,044,000 and is based on the fair value of the Company’s common stock on the grant date.

 

The following table sets forth changes in compensation-related restricted stock awards during years ended December 31, 2016 and 2015:

 

          Fair     Grant Date  
    Number of     Value of     Fair Value  
    Shares     Shares     Per share  
Outstanding (unvested) at June 30, 2016     588,000     $ 235,264          
Granted     870,000       1,044,000     $       -  
Forfeited     -                  
Vested     (1,458,000 )     (1,279,264 )        
Outstanding (unvested) at December 31, 2016     -     $ -          

 

As of December 31, 2016, the unamortized expense related to the grant of restricted shares of common stock was nil. The fair value of the restricted common stock awards was based on the closing price of the Company’s common stock on the grant date. The fair value of the common stock awarded is amortized over the various vesting terms of each grant.

   

Preferred Stock

 

Under the Company’s Articles of Incorporation, the Board has the authority, without further action by stockholders, to designate up to 20,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges, qualifications and restrictions granted to or imposed upon the preferred stock, including dividend rights, conversion rights, voting rights, rights and terms of redemption, liquidation preference and sinking fund terms, any or all of which may be greater than the rights of the common stock. If the Company sells preferred stock under its registration statement on Form S-3, it will fix the rights, preferences, privileges, qualifications and restrictions of the preferred stock of each series in the certificate of designation relating to that series and will file the certificate of designation that describes the terms of the series of preferred stock the Company offers before the issuance of the related series of preferred stock.

 

As of December 31, 2016, the Company has 20,000,000 shares of preferred stock authorized, with a par value of $.001 per share, of which no shares are issued or outstanding.

XML 29 R17.htm IDEA: XBRL DOCUMENT v3.6.0.2
Concentrations
6 Months Ended
Dec. 31, 2016
Concentrations [Abstract]  
CONCENTRATIONS

NOTE 12 - CONCENTRATIONS

 

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 environment and foreign currency exchange. The Company’s results may be adversely affected by, among other things, changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation.

 

Vendor and Customer Concentration

 

There were two vendors from which the Company purchased 20.1% and 14.6% of its raw materials for the three month ended December 31, 2016. Total purchase from these two venders amounted to $10,100,403 as of December 31, 2016. 

 

There were two vendors from which the Company purchased 29.8% and 16.4% of its raw materials for the three months ended December 31, 2015. Total purchase from these two vendors amounted to $40,065,118 as of December 31, 2015. 

 

None customer accounted over 10% of the Company’s sales for the three months ended December 31, 2016. 

 

One customer was accounted for 26.6% of the Company’s sales for the three months ended December 31, 2015.

XML 30 R18.htm IDEA: XBRL DOCUMENT v3.6.0.2
Segment Reporting
6 Months Ended
Dec. 31, 2016
Segment Reporting [Abstract]  
SEGMENT REPORTING

NOTE 13 - SEGMENT REPORTING

 

As of December 31, 2016, the Company was organized into four main business segments based on location and product, including fertilizer production with Jinong, fertilizer production with Gufeng , agricultural products production with Yuxing and distribution of agricultural products with the acquisition of the VIE Companies completed as of June 30, 2016. Each of the four operating segments referenced above has separate and distinct general ledgers. The chief operating decision maker (“CODM”) receives financial information, including revenue, gross margin, operating income and net income produced from the various general ledger systems to make decisions about allocating resources and assessing performance; however, the principal measure of segment profitability or loss used by the CODM is net income by segment

 

    Three Months Ended
December 31,
    Six Months Ended
December 31,
 
Revenues from unaffiliated customers:   2016     2015     2016     2015  
Jinong   $ 26,825,674     $ 31,302,561     $ 58,253,394     $ 66,010,365  
Gufeng     21,066,559       23,579,674       36,876,073       41,814,506  
Yuxing     2,454,314       2,083,765       3,809,725       3,325,400  
VIES     8,398,466       -       21,690,443       -  
Consolidated   $ 58,745,013     $ 56,966,000     $ 120,629,635     $ 111,150,271  
                                 
Operating income :                                
Jinong   $ 5,740,784     $ 3,698,620     $ 12,120,004     $ 11,654,274  
Gufeng     1,906,816       3,052,879       2,991,899       5,662,832  
Yuxing     330,780       511,213       487,810       917,510  
VIES     637,284       -       2,440,764       -  
Reconciling item (1)     -       -       -       -  
Reconciling item (2)     -       297,606       -       (219,754 )
Reconciling item (2)--stock compensation     (1,510,148 )     (1,780,587 )     (1,856,270 )     (2,857,081 )
Consolidated   $ 7,105,516     $ 5,779,731     $ 16,184,207     $ 15,157,781  
                                 
Net income:                                
Jinong   $ 4,849,485     $ 3,187,514     $ 10,195,773     $ 10,000,365  
Gufeng     1,268,439       2,049,897       1,984,925       3,670,264  
Yuxing     330,509       513,099       487,589       919,384  
VIES     567,726       -       2,045,574       -  
Reconciling item (1)     -       5       -       29  
Reconciling item (2)     (1,510,148 )     (1,477,980 )     (1,856,270 )     (3,076,835 )
Consolidated   $ 5,506,011     $ 4,272,535     $ 12,857,591     $ 11,513,207  
                                 
Depreciation and Amortization:                                
Jinong   $ 3,675,142     $ 9,358,107     $ 9,988,231     $ 19,292,089  
Gufeng     631,041       728,466       1,258,350       1,474,061  
Yuxing     306,210       336,433       620,126       679,741  
VIES     123,070       -       249,202       -  
Consolidated   $ 4,735,463     $ 10,423,006     $ 12,115,909     $ 21,445,891  
                                 
Interest expense:                                
Jinong     55,979       -       113,352       -  
Gufeng     58,306       302,644       118,439       731,679  
Consolidated   $ 114,285     $ 302,644     $ 231,791     $ 731,679  
                                 
Capital Expenditure:                                
Jinong   $ 571     $ 6,643     $ 1,793     $ 6,643  
Gufeng     556       -       4,999       1,770  
Yuxing     -       6,449       548       7,252  
VIES     -       -       -       -  
Consolidated   $ 1,127     $ 13,092     $ 7,340     $ 15,665  

 

    As of  
    December 31,     June 30,  
    2016     2016  
Identifiable assets:            
Jinong   $ 194,544,513     $ 198,599,977  
Gufeng     143,819,547       149,891,328  
Yuxing     41,925,427       45,448,157  
VIES June 30, 2016     23,666,211       24,675,499  
Reconciling item (1)     23,487       170,444  
Reconciling item (2)     (2,878 )     (2,878 )
Consolidated   $ 403,976,307     $ 418,782,527  

 

(1)    Reconciling amounts refer to the unallocated assets or expenses of Green New Jersey.

(2)    Reconciling amounts refer to the unallocated assets or expenses of the Parent Company.

XML 31 R19.htm IDEA: XBRL DOCUMENT v3.6.0.2
Commitments and Contingencies
6 Months Ended
Dec. 31, 2016
Commitments and Contingencies [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 14 - COMMITMENTS AND CONTINGENCIES

 

On June 29, 2016, Jinong signed an office lease with Kingtone Information.  Pursuant to the lease, Jinong rented 612 square meters (approximately 6,588 square feet) of office space from Kingtone Information. The lease provided for a two-year term effective as of July 1, 2016 with monthly rent of $3,525 (RMB 24,480).

 

In January 2008, Jintai signed a ten-year land lease with Xi’an Jinong Hi-tech Agriculture Demonstration Zone for a monthly rent of $749 (RMB 5,200).

 

In February 2004, Tianjuyuan signed a fifty-year lease with the village committee of Dong Gao Village and Zhen Nan Zhang Dai Village in the Beijing Ping Gu District, at a monthly rent of $426 (RMB 2,958).

 

Accordingly, the Company recorded an aggregate of $28,198 and $28,261 as rent expenses for the six months ended December 31, 2016 and 2015, respectively. Rent expenses for the next five years ended December 31, are as follows:

 

Years ending December 31,   
2017 $56,396 
2018  47,411 
2019  47,411 
2020  47,411 
2021  47,411 
XML 32 R20.htm IDEA: XBRL DOCUMENT v3.6.0.2
Business Combinations
6 Months Ended
Dec. 31, 2016
Business Combinations [Abstract]  
BUSINESS COMBINATIONS

NOTE 15 - BUSINESS COMBINATIONS

 

On June 30, 2016, the Company, through its wholly-owned subsidiary Jinong, entered into strategic acquisition agreements and also into a series of contractual agreements to qualify as VIEs with the shareholders of the VIE Companies.

 

Jinong, the VIE Companies, and the shareholders of the VIE Companies also entered into a series of contractual agreements for the VIE Companies to qualify as VIEs (the “VIE Agreements”). The VIE Agreements are as follows:

 

Entrusted Management Agreements

 

Pursuant to the terms of certain Entrusted Management Agreements dated June 30, 2016, between Jinong and the shareholders of the VIE Companies (the “Entrusted Management Agreements”), the VIE Companies and their shareholders agreed to entrust the operations and management of its business to Jinong. According to the Entrusted Management Agreement, Jinong possesses the full and exclusive right to manage the VIE Companies’ operations, assets and personnel, has the right to control all of the VIE Companies' cash flows through an entrusted bank account, is entitled to the VIE Companies' net profits as a management fee, is obligated to pay all of the VIE Companies’ payables and loan payments, and bears all losses of the VIE Companies. The Entrusted Management Agreements will remain in effect until (i) the parties mutually agree to terminate the agreement; (ii) the dissolution of the VIE Companies; or (iii) Jinong acquires all of the assets or equity of the VIE Companies (as more fully described below under “Exclusive Option Agreements”).

 

Exclusive Technology Supply Agreements

 

Pursuant to the terms of certain Exclusive Technology Supply Agreements dated June 30, 2016, between Jinong and the VIE Companies (the “Exclusive Technology Supply Agreements”), Jinong is the exclusive technology provider to the VIE Companies. The VIE Companies agreed to pay Jinong all fees payable for technology supply prior to making any payments under the Entrusted Management Agreement. The Exclusive Technology Supply Agreements shall remain in effect until (i) the parties mutually agree to terminate the agreement; (ii) the dissolution of the VIE Companies; or (iii) Jinong acquires the VIE Companies (as more fully described below under “Exclusive Option Agreements”).

 

Shareholder’s Voting Proxy Agreements

 

Pursuant to the terms of certain Shareholder’s Voting Proxy Agreements dated June 30, 2016, among Jinong and the shareholders of the VIE Companies (the “Shareholder’s Voting Proxy Agreements”), the shareholders of the VIE Companies irrevocably appointed Jinong as their proxy to exercise on such shareholders’ behalf all of their voting rights as shareholders pursuant to PRC law and the Articles of Association of the VIE Companies, including the appointment and election of directors of the VIE Companies. Jinong agreed that it shall maintain a board of directors, the composition and appointment of which shall be approved by the Board of the Company. The Shareholder’s Voting Proxy Agreements will remain in effect until Jinong acquires all of the assets or equity of the VIE Companies.

 

Exclusive Option Agreements

 

Pursuant to the terms of certain Exclusive Option Agreements dated June 30, 2016, among Jinong, the VIE Companies, and the shareholders of the VIE Companies (the “Exclusive Option Agreements”), the shareholders of the VIE Companies granted Jinong an irrevocable and exclusive purchase option (the “Option”) to acquire the VIE Companies’ equity interests and/or remaining assets, but only to the extent that the acquisition does not violate limitations imposed by PRC law on such transactions. The Option is exercisable at any time at Jinong’s discretion so long as such exercise and subsequent acquisition of the VIE Companies does not violate PRC law. The consideration for the exercise of the Option is to be determined by the parties and memorialized in the future by definitive agreements setting forth the kind and value of such consideration. Jinong may transfer all rights and obligations under the Exclusive Option Agreements to any third parties without the approval of the shareholders of the VIE Companies so long as a written notice is provided. The Exclusive Option Agreements may be terminated by mutual agreements or by 30 days written notice by Jinong.

 

Equity Pledge Agreements

 

Pursuant to the terms of certain Equity Pledge Agreements dated June 30, 2016, among Jinong and the shareholders of the VIE Companies (the “Pledge Agreements”), the shareholders of the VIE Companies pledged all of their equity interests in the VIE Companies to Jinong, including the proceeds thereof, to guarantee all of Jinong's rights and benefits under the Entrusted Management Agreements, the Exclusive Technology Supply Agreements, the Shareholder’ Voting Proxy Agreements and the Exclusive Option Agreements. Prior to termination of the Pledge Agreements, the pledged equity interests cannot be transferred without Jinong's prior written consent. The Pledge Agreements may be terminated only upon the written agreement of the parties.

 

Non-Compete Agreements

 

Pursuant to the terms of certain Non-Compete Agreements dated June 30, 2016, among Jinong and the shareholders of the VIE Companies (the “Non-Compete Agreements”), the shareholders of the VIE Companies agreed that during the period beginning on the initial date of their services with Jinong, and ending five (5) years after termination of their services with Jinong, without Jinong’s prior written consent, they will not provide services or accept positions including but not limited to partners, directors, shareholders, managers, proxies or consultants, provided by any profit making organizations with businesses that may compete with Jinong. They will not solicit or interfere with any of the Jinong’s customers, or solicit, induce, recruit or encourage any person engaged or employed by Jinong to terminate his or her service or engagement. In the event that the shareholders of the VIE Companies breach the non-compete obligations contained therein, Jinong is entitled to all loss and damages; in the event that the damages are difficult to determine, remedies bore the shareholders of the VIE Companies shall be no less than 50% of the salaries and other expenses Jinong provided in the past.

 

The Company entered into these VIE Agreements as a way for the Company to have more control over the distribution of its products. The transactions are accounted for as business combinations in accordance with ASC 805. A summary of the purchase price allocations at fair value is below:

 

Cash $708,737 
Accounts receivable  6,422,850 
Advances to suppliers  1,803,180 
Prepaid expenses and other current assets  807,645 
Inventories  7,787,043 
Machinery and equipment  140,868 
Intangible assets  270,900 
Other assets  3,404,741 
Good will  3,158,179 
Accounts payable  (3,962,670)
Customer deposits  (3,486,150)
Accrued expenses and other payables  (4,653,324)
Taxes payable  (16,912)
Purchase price $12,385,087 

 

A summary of the purchase consideration paid for the VIE Companies is below:

 

Cash $5,568,500 
Convertible notes  6,671,769 
Derivative liability  144,818 
  $12,385,087 

 

The cash component of the purchase price for these acquisitions was paid in September 2016.

XML 33 R21.htm IDEA: XBRL DOCUMENT v3.6.0.2
Variable Interest Entities
6 Months Ended
Dec. 31, 2016
Variable Interest Entities [Abstract]  
VARIABLE INTEREST ENTITIES

NOTE 16 - VARIABLE INTEREST ENTITIES

 

In accordance with accounting standards regarding consolidation of variable interest entities, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which a company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

 

Green Nevada through one of its subsidiaries, Jinong, entered into a series of agreements (the “VIE Agreements”) with Yuxing for it to qualify as a VIE, effective June 16, 2013.

 

The Company has concluded, based on the contractual arrangements, that Yuxing is a VIE and that the Company’s wholly-owned subsidiary, Jinong, absorbs a majority of the risk of loss from the activities of Yuxing, thereby enabling the Company, through Jinong, to receive a majority of Yuxing expected residual returns.

 

On June 30, 2016, the Company, through its wholly-owned subsidiary Jinong, entered into strategic acquisition agreements and also into a series of contractual agreements to qualify as VIEs with the shareholders of the VIE Companies.

 

Jinong, the VIE Companies, and the shareholders of the VIE Companies also entered into a series of contractual agreements for the VIE Companies to qualify as VIEs (the “VIE Agreements”).

 

As a result of these contractual arrangements, with Yuxing and the VIE Companies the Company is entitled to substantially all of the economic benefits of Yuxing and the VIE Companies. The following financial statement amounts and balances of the VIEs were included in the accompanying consolidated financial statements as of December 31, 2016 and June 30, 2016:

 

  December 31,  June 30, 
  2016  2016 
       
ASSETS      
Current Assets      
Cash and cash equivalents $1,030,482  $1,017,841 
Accounts receivable, net  9,596,532   7,050,201 
Inventories  23,999,754   26,370,202 
Other current assets  1,709,991   1,875,912 
Advances to suppliers  2,119,048   4,900,524 
Total Current Assets  38,455,807   41,214,680 
         
Plant, Property and Equipment, Net  12,292,713   13,377,817 
Other assets  216,136   334,264 
Intangible Assets, Net  12,017,863   12,913,776 
Goodwill  3,021,632   3,158,179 
Total Assets $66,004,151  $70,998,716 
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current Liabilities        
Accounts payable $4,308,607  $3,840,052 
Customer deposits  1,803,140   3,486,150 
Accrued expenses and other payables  3,304,318   5,580,642 
Amount due to related parties  39,722,237   43,478,158 
Total Current Liabilities  49,560,557   56,385,002 
         
Stockholders' equity  16,443,594   14,613,714 
         
Total Liabilities and Stockholders' Equity $66,004,151  $70,998,716 

  

  Three months ended
December 31,
  Six months ended
December 31,
 
  2016  2015  2016  2015 
Revenue $10,852,779  $2,083,765  $25,500,167  $3,325,400 
Expenses  9,954,543   1,570,665   22,967,005   2,406,015 
Net income (loss) $898,236  $513,100  $2,533,162  $919,385
XML 34 R22.htm IDEA: XBRL DOCUMENT v3.6.0.2
Subsequent Events
6 Months Ended
Dec. 31, 2016
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 17 – SUBSEQUENT EVENTS

 

On January 1, 2017, the Company, through its wholly-owned subsidiary Jinong, entered into strategic acquisition agreements and a series of contractual agreements with the shareholders of the following two companies that are organized under the laws of the PRC and would be deemed VIEs Sunwu County Xiangrong Agricultural Materials Co., Ltd. (“Xiangrong”), and Anhui Fengnong Seed Co., Ltd. (“Fengnong”). Jinong, entered into (i) Strategic Acquisition Agreements (the “SAA”), and (ii) Agreements for Convertible Notes (the “ACN”), with the shareholders of the two companies (“Targets”). The transaction represented by the SAA, ACN and the VIE Agreements as defined below are collectively referred to as the “Strategic Acquisitions.”

 

 

Company Name

  Business Scope   Cash Payment for Acquisition (USD)     Principal of Notes for Acquisition (USD)  
Sunwu County Xiangrong Agricultural Materials Co., Ltd.   Sales of pesticides, agricultural chemicals, chemical fertilizers, agricultural materials; Manufacture and sales of mulches.   $ 576,000     $ 864,000  
Anhui Fengnong Seed Co., Ltd.   Wholesale and retail sales of pesticides; Sales of chemical fertilizers, packaged seeds, agricultural mulches, micronutrient fertilizers, compound fertilizers and plant growth regulators   $ 576,000     $ 864,000  
Total       $ 1,152,000     $ 1,728,000  
XML 35 R23.htm IDEA: XBRL DOCUMENT v3.6.0.2
Basis of Presentation and Summary of Significant Accounting Policies (Policies)
6 Months Ended
Dec. 31, 2016
Basis of Presentation and Summary of Significant Accounting Policies [Abstract]  
Principle of consolidation

Principle of consolidation

 

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Green New Jersey, Jinong, Gufeng, Tianjuyuan, Yuxing and the VIE Companies. All significant inter-company accounts and transactions have been eliminated in consolidation.

VIE assessment

VIE assessment

 

A VIE is an entity (1) that has total equity at risk that is not sufficient to finance its activities without additional subordinated financial support from other entities, (2) where the group of equity holders does not have the power to direct the activities of the entity that most significantly impact the entity’s economic performance, or the obligation to absorb the entity’s expected losses or the right to receive the entity’s expected residual returns, or both, or (3) where the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both, and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. In order to determine if an entity is considered a VIE, the Company first perform a qualitative analysis, which requires certain subjective decisions regarding its assessments, including, but not limited to, the design of the entity, the variability that the entity was designed to create and pass along to its interest holders, the rights of the parties, and the purpose of the arrangement. If the Company cannot conclude after a qualitative analysis whether an entity is a VIE, it performs a quantitative analysis. The qualitative analysis considered the design of the entity, the risks that cause variability, the purpose for which the entity was created, and the variability that the entity was designed to pass along to its variable interest holders. When the primary beneficiary could not be identified through a qualitative analysis, we used internal cash flow models to compute and allocate expected losses or expected residual returns to each variable interest holder based upon the relative contractual rights and preferences of each interest holder in the VIE’s capital structure.

Use of estimates

Use of estimates

 

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those results.

Cash and cash equivalents and concentration of cash

Cash and cash equivalents and concentration of cash

 

For statement of cash flows purposes, the Company considers all cash on hand and in banks, certificates of deposit with state owned banks in the Peoples Republic of China (“PRC”) and banks in the United States, and other highly-liquid investments with maturities of six months or less, when purchased, to be cash and cash equivalents. The Company maintains large sums of cash in three major banks in China. The aggregate cash in such accounts and on hand as of December 31, 2016 and June 30, 2016 were $116,574,852 and $102,896,486, respectively. In addition, the Company also had $20,538 and $167,495 in cash in two banks in the United States as of December 31, 2016 and June 30, 2016, respectively. Cash overdraft as of balance sheet date will be reflected as liabilities in the balance sheet. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts.

Accounts receivable

Accounts receivable

 

The Company's policy is to maintain reserves for potential credit losses on accounts receivable. Management regularly reviews the composition of accounts receivable and analyzes customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves at each year-end. Accounts considered uncollectible are written off through a charge to the valuation allowance. As of December 31, 2016 and June 30, 2016, the Company had accounts receivable of $125,035,022 and $117,055,376, net of allowance for doubtful accounts of $4,343,762 and $397,123, respectively. The Company adopts no policy to accept product returns post to the sales delivery.

Inventories

Inventories

 

Inventory is valued at the lower of cost (determined on a weighted average basis) or market. Inventories consist of raw materials, work in process, finished goods and packaging materials. The Company reviews its inventories regularly for possible obsolete goods and establishes reserves when determined necessary.

Deferred asset

Deferred asset

 

Deferred assets represent amounts that the distributors owed to the Company in their marketing efforts and developing standard stores to expand the Company’s products’ competitiveness and market shares. The amount owed to the Company to assist its distributors will be expensed over three years which is the term as stated in the cooperation agreement, as long as the distributors are actively selling the Company’s products. For the six months ended December 31, 2016 and 2015, the Company amortized $9,584,220 and $21,430,699, respectively, of the deferred assets. If a distributor breaches, defaults, or terminates the agreement with the Company within the three-year period, the outstanding unamortized portion of the amount owed will become payable to the Company immediately. The Company’s Chairman, Mr. Li, guaranteed to the Company of amounts remaining unpaid due from distributors.

 

The deferred assets consist of items inside the distributors’ stores such as furniture, racks, cabinets, and display units, and items outside or attached to the distributors’ stores such as signage and billboards. These types of assets would be capitalized as fixed assets if the Company actually owned the stores or utilized the assets for its own operations. These assets would also be capitalized as leasehold improvements if the Company leased these stores from the distributors. Therefore, the Company believes that under the U.S. generally accepted accounting principles, these types of assets purchases are properly capitalized. In addition, the Company believes that these assets are properly classified as deferred assets because if a distributor breaches, defaults, or terminates the agreement with the Company within a three-year period, a proportionate amount expended by the Company is to be repaid by the distributor. The Chairman of the Board of directors of the Company guaranteed to the Company of amounts remaining unpaid due from distributors.

 

The assets inside the distributors’ stores are custom made to fit the layout of each individual store and the signage and billboards are also custom designed to fit the specific location. The assets were purchased by the Company directly from the manufacturers and installed in the distributors’ stores. The Company wants to maintain control over the quality of the items being purchased as well as making them uniform among all the distributor locations.

Intangible Assets

Intangible Assets

 

The Company records intangible assets acquired individually or as part of a group at fair value. Intangible assets with definitive lives are amortized over the useful life of the intangible asset, which is the period over which the asset is expected to contribute directly or indirectly to the entity’s future cash flows. The Company evaluates intangible assets for impairment at least annually and more often whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.

Customer deposits

Customer deposits

 

Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as customer deposits. When all revenue recognition criteria are met, the customer deposits are recognized as revenue. As of December 31, 2016 and June 30, 2016, the Company had customer deposits of $5,413,319 and $8,578,341, respectively.

Earnings per share

Earnings per share

 

Basic earnings per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and stock awards.

 

The components of basic and diluted earnings per share consist of the following:

 

  Three Months Ended
December 31,
 
  2016  2015 
Net Income for Basic Earnings Per Share $5,506,011  $4,267,535 
Basic Weighted Average Number of Shares  37,658,062   36,933,002 
Net Income Per Share – Basic $0.15  $0.12 
Net Income for Diluted Earnings Per Share $5,506,011  $4,267,535 
Diluted Weighted Average Number of Shares  37,658,062   36,933,002 
Net Income Per Share – Diluted $0.15  $0.12 

 

  Six Months Ended
December 31,
 
  2016  2015 
Net Income for Basic Earnings Per Share $12,857,591  $11,513,207 
Basic Weighted Average Number of Shares  37,653,333   36,436,026 
Net Income Per Share – Basic $0.34  $0.32 
Net Income for Diluted Earnings Per Share $12,857,591  $11,513,207 
Diluted Weighted Average Number of Shares  37,653,333   36,436,026 
Net Income Per Share – Diluted $0.34  $0.32

 

Recent accounting pronouncements

Recent accounting pronouncements

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. This pronouncement is effective for annual reporting periods beginning after December 15, 2016, and is to be applied using one of two retrospective application methods, with early application not permitted. The Company is currently evaluating the impact of the pending adoption of ASU 2014-09 on its consolidated financial statements.

 

In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. The new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. This update is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. The Company does not anticipate the adoption of this ASU will have a significant impact on its consolidated financial position, results of operations, or cash flows.

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance in ASU No. 2016-02 supersedes the lease recognition requirements in ASC Topic 840, Leases (FAS 13). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect this standard will have on its consolidated financial statements.

 

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share Based Payment Accounting, to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance will be effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of the adoption of this newly issued guidance to its consolidated financial statements.

  

On November 17, 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. It is intended to reduce diversity in the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. The new standard requires that restricted cash and restricted cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. ASU 2016-18 is effective for annual periods beginning after December 15, 2017 including interim periods within those fiscal years. Earlier adoption is permitted. The Company maintains restricted cash balances and upon adoption of this standard, the Company will show restricted cash as part of cash and restricted cash equivalents.

 

In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Clarifying the Definition of a Business, which clarifies and provides a more robust framework to use in determining when a set of assets and activities is a business. The amendments in this update should be applied prospectively on or after the effective date. This update is effective for annual periods beginning after December 15, 2017, and interim periods within those periods. Early adoption is permitted for acquisition or deconsolidation transactions occurring before the issuance date or effective date and only when the transactions have not been reported in issued or made available for issuance financial statements. The Company does not expect the adoption to have any significant impact on its Consolidated Financial Statements.

 

In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. Under the new standard, goodwill impairment would be measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill. This ASU eliminates existing guidance that requires an entity to determine goodwill impairment by calculating the implied fair value of goodwill by hypothetically assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. This update is effective for annual periods beginning after December 15, 2019, and interim periods within those periods. Early adoption is permitted for interim or annual goodwill impairment test performed on testing dates after January 1, 2017. The Company will apply this guidance to applicable impairment tests after the adoption date.

 

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements.

XML 36 R24.htm IDEA: XBRL DOCUMENT v3.6.0.2
Basis of Presentation and Summary of Significant Accounting Policies (Tables)
6 Months Ended
Dec. 31, 2016
Basis of Presentation and Summary of Significant Accounting Policies [Abstract]  
Components of basic and diluted earnings per share
  Three Months Ended
December 31,
 
  2016  2015 
Net Income for Basic Earnings Per Share $5,506,011  $4,267,535 
Basic Weighted Average Number of Shares  37,658,062   36,933,002 
Net Income Per Share – Basic $0.15  $0.12 
Net Income for Diluted Earnings Per Share $5,506,011  $4,267,535 
Diluted Weighted Average Number of Shares  37,658,062   36,933,002 
Net Income Per Share – Diluted $0.15  $0.12 

 

  Six Months Ended
December 31,
 
  2016  2015 
Net Income for Basic Earnings Per Share $12,857,591  $11,513,207 
Basic Weighted Average Number of Shares  37,653,333   36,436,026 
Net Income Per Share – Basic $0.34  $0.32 
Net Income for Diluted Earnings Per Share $12,857,591  $11,513,207 
Diluted Weighted Average Number of Shares  37,653,333   36,436,026 
Net Income Per Share – Diluted $0.34  $0.32
XML 37 R25.htm IDEA: XBRL DOCUMENT v3.6.0.2
Inventories (Tables)
6 Months Ended
Dec. 31, 2016
Inventories [Abstract]  
Schedule of inventories
  December 31,  June 30, 
  2016  2016 
Raw materials $23,724,037  $29,926,762 
Supplies and packing materials $599,843  $444,373 
Work in progress $422,539  $408,820 
Finished goods $39,509,562  $56,656,360 
Total $64,255,981  $87,436,315
XML 38 R26.htm IDEA: XBRL DOCUMENT v3.6.0.2
Property, Plant and Equipment (Tables)
6 Months Ended
Dec. 31, 2016
Property, Plant and Equipment [Abstract]  
Schedule of property, plant and equipment
  December 31,  June 30, 
  2016  2016 
Building and improvements $40,614,431  $42,489,975 
Auto  899,674   937,642 
Machinery and equipment  17,993,602   19,015,420 
Agriculture assets  732,865   765,983 
Total property, plant and equipment  60,240,572   63,209,020 
Less: accumulated depreciation  (26,038,706)  (25,639,281)
Total $34,201,866  $37,569,739
XML 39 R27.htm IDEA: XBRL DOCUMENT v3.6.0.2
Intangible Assets (Tables)
6 Months Ended
Dec. 31, 2016
Schedule of impaired intangible assets
  December 31,  June 30, 
  2016  2016 
Land use rights, net $9,816,682  $10,381,215 
Technology patent, net  4,053   4,462 
Customer relationships, net  5,515,101   6,403,343 
Non-compete agreement  797,090   925,678 
Trademarks  5,860,515   6,125,350 
Total $21,993,441  $23,840,048
Schedule of finite-lived intangible assets, future amortization expense
Years Ending December 31, Expense ($) 
2017  1,635,094 
2018  1,635,094 
2019  1,635,094 
2020  1,635,094 
2021  1,078,551
LAND USE RIGHT [Member]  
Schedule of impaired intangible assets
  December 31,  June 30, 
  2016  2016 
Land use rights $11,737,725  $12,268,150 
Less: accumulated amortization  (1,921,043)  (1,886,935)
Total land use rights, net $9,816,682  $10,381,215
TECHNOLOGY PATENT [Member]  
Schedule of impaired intangible assets
  December 31,  June 30, 
  2016  2016 
Technology know-how $2,174,973  $2,273,260 
Less: accumulated amortization  (2,170,920)  (2,268,798)
Total technology know-how, net $4,053  $4,462
CUSTOMER RELATIONSHIP [Member]  
Schedule of impaired intangible assets
  December 31,  June 30, 
  2016  2016 
Customer relationships $11,727,154  $12,257,100 
Less: accumulated amortization  (6,212,053)  (5,853,757)
Total customer relationships, net $5,515,101  $6,403,343
NON-COMPETE AGREEMENT [Member]  
Schedule of impaired intangible assets
  December 31,  June 30, 
  2016  2016 
Non-compete agreement $1,075,726  $1,124,338 
Less: accumulated amortization  (278,636)  (198,660)
Total non-compete agreement, net $797,090  $925,678
XML 40 R28.htm IDEA: XBRL DOCUMENT v3.6.0.2
Accrued Expenses and Other Payables (Tables)
6 Months Ended
Dec. 31, 2016
Accrued Expenses and Other Payables [Abstract]  
Schedule of accrued expenses and other payables
  December 31,  June 30, 
  2016  2016 
Payroll payable $77,039  $58,704 
Welfare payable  147,829   154,510 
Accrued expenses  4,574,577   4,450,306 
Other payables  4,147,620   11,624,653 
Other levy payable  120,762   126,219 
Total $9,067,827  $16,414,392
XML 41 R29.htm IDEA: XBRL DOCUMENT v3.6.0.2
Loan Payables (Tables)
6 Months Ended
Dec. 31, 2016
Loan Payables [Abstract]  
Summary of loan payables
No. Payee Loan period per agreement Interest Rate  December 31,
2016
 
1 Agriculture Bank of China-Pinggu Branch May 18, 2016 – Mar. 17, 2017  4.87% $1,871,909 
2 Agriculture Bank of China-Pinggu Branch Jan. 19, 2016 – Jan. 17, 2017  5.00%  1,151,944 
3 Beijing Bank-Pinggu Branch July 28, 2016 – July 28, 2017  5.22%  1,439,930 
  Total       $4,463,783 

 

No. Payee Loan period per agreement Interest Rate  June 30,
2016
 
1 Agriculture Bank of China-Pinggu Branch May. 18, 2016 – Mar. 17, 2017  4.87% $1,956,500 
2 Beijing Bank-Pinggu Branch Aug. 11, 2015 – Aug. 2, 2016  5.82%  1,505,000 
3 Agriculture Bank of China-Pinggu Branch Jan. 19, 2016 – Jan. 17, 2017  5.00%  1,204,000 
  Total       $4,665,500
XML 42 R30.htm IDEA: XBRL DOCUMENT v3.6.0.2
Taxes Payable (Tables)
6 Months Ended
Dec. 31, 2016
Taxes Payable [Abstract]  
Schedule of taxes payable
  December 31,  June 30, 
  2016  2016 
VAT provision $(255,765) $2,218 
Income tax payable  1,482,816   3,445,480 
Other levies  614,131   656,520 
Total $1,841,182  $4,104,218 
Schedule of provision for income taxes
  December 31, 
2016
  June 30,
2016
 
Current tax - foreign $3,092,769  $7,371,967 
Deferred tax  -   - 
  $3,092,769  $7,371,967 
Schedule of effective income tax rate reconciliation
December 31, 2016                  
  China  United States       
  15% - 25%  34%  Total    
                   
Pretax income (loss) $17,806,630       (1,856,270)     $15,950,360     
                         
Expected income tax expense (benefit)  4,451,658   25.0%  (631,132)  34.0%  3,820,526     
High-tech income benefits on Jinong  (1,139,344)  (6)%  -   -   (1,139,344)    
Losses from subsidiaries in which no benefit is recognized  (219,544)  (1)%  -   -   (219,544)    
Change in valuation allowance on deferred tax asset from US tax benefit  -       631,132   (34.0)%  631,132     
Actual tax expense $3,092,769   17% $-   -% $3,092,769   19.4%

 

December 31, 2015                  
  China  United States       
  15% - 25%  34%  Total    
                   
Pretax income (loss) $14,575,200       (3,107,045)     $11,468,155     
                         
Expected income tax expense (benefit)  3,643,800   25.0%  (1,056,395)  34.0%  2,587,405     
High-tech income benefits on Jinong  (1,145,841)  (7.9)%  -   -   (1,145,841)    
Losses from subsidiaries in which no benefit is recognized  564,034   3.9%  -   -   564,034     
Change in valuation allowance on deferred tax asset from US tax benefit  -       1,056,395   (34.0)%  1,056,395     
Actual tax expense $3,061,993   21% $-   -% $3,061,993   26.7%
XML 43 R31.htm IDEA: XBRL DOCUMENT v3.6.0.2
Stockholders' Equity (Tables)
6 Months Ended
Dec. 31, 2016
Stockholders' Equity [Abstract]  
Schedule of compensation-related restricted stock awards
     Fair  Grant Date 
  Number of  Value of  Fair Value 
  Shares  Shares  Per share 
Outstanding (unvested) at June 30, 2016  588,000  $235,264     
Granted  870,000   1,044,000  $      - 
Forfeited  -         
Vested  (1,458,000)  (1,279,264)    
Outstanding (unvested) at December 31, 2016  -  $-     
XML 44 R32.htm IDEA: XBRL DOCUMENT v3.6.0.2
Segment Reporting (Tables)
6 Months Ended
Dec. 31, 2016
Segment Reporting [Abstract]  
Schedule of segment reporting information, by segment
    Three Months Ended
December 31,
    Six Months Ended
December 31,
 
Revenues from unaffiliated customers:   2016     2015     2016     2015  
Jinong   $ 26,825,674     $ 31,302,561     $ 58,253,394     $ 66,010,365  
Gufeng     21,066,559       23,579,674       36,876,073       41,814,506  
Yuxing     2,454,314       2,083,765       3,809,725       3,325,400  
VIES     8,398,466       -       21,690,443       -  
Consolidated   $ 58,745,013     $ 56,966,000     $ 120,629,635     $ 111,150,271  
                                 
Operating income :                                
Jinong   $ 5,740,784     $ 3,698,620     $ 12,120,004     $ 11,654,274  
Gufeng     1,906,816       3,052,879       2,991,899       5,662,832  
Yuxing     330,780       511,213       487,810       917,510  
VIES     637,284       -       2,440,764       -  
Reconciling item (1)     -       -       -       -  
Reconciling item (2)     -       297,606       -       (219,754 )
Reconciling item (2)--stock compensation     (1,510,148 )     (1,780,587 )     (1,856,270 )     (2,857,081 )
Consolidated   $ 7,105,516     $ 5,779,731     $ 16,184,207     $ 15,157,781  
                                 
Net income:                                
Jinong   $ 4,849,485     $ 3,187,514     $ 10,195,773     $ 10,000,365  
Gufeng     1,268,439       2,049,897       1,984,925       3,670,264  
Yuxing     330,509       513,099       487,589       919,384  
VIES     567,726       -       2,045,574       -  
Reconciling item (1)     -       5       -       29  
Reconciling item (2)     (1,510,148 )     (1,477,980 )     (1,856,270 )     (3,076,835 )
Consolidated   $ 5,506,011     $ 4,272,535     $ 12,857,591     $ 11,513,207  
                                 
Depreciation and Amortization:                                
Jinong   $ 3,675,142     $ 9,358,107     $ 9,988,231     $ 19,292,089  
Gufeng     631,041       728,466       1,258,350       1,474,061  
Yuxing     306,210       336,433       620,126       679,741  
VIES     123,070       -       249,202       -  
Consolidated   $ 4,735,463     $ 10,423,006     $ 12,115,909     $ 21,445,891  
                                 
Interest expense:                                
Jinong     55,979       -       113,352       -  
Gufeng     58,306       302,644       118,439       731,679  
Consolidated   $ 114,285     $ 302,644     $ 231,791     $ 731,679  
                                 
Capital Expenditure:                                
Jinong   $ 571     $ 6,643     $ 1,793     $ 6,643  
Gufeng     556       -       4,999       1,770  
Yuxing     -       6,449       548       7,252  
VIES     -       -       -       -  
Consolidated   $ 1,127     $ 13,092     $ 7,340     $ 15,665  

 

    As of  
    December 31,     June 30,  
    2016     2016  
Identifiable assets:            
Jinong   $ 194,544,513     $ 198,599,977  
Gufeng     143,819,547       149,891,328  
Yuxing     41,925,427       45,448,157  
VIES June 30, 2016     23,666,211       24,675,499  
Reconciling item (1)     23,487       170,444  
Reconciling item (2)     (2,878 )     (2,878 )
Consolidated   $ 403,976,307     $ 418,782,527  

 

(1)    Reconciling amounts refer to the unallocated assets or expenses of Green New Jersey.

(2)    Reconciling amounts refer to the unallocated assets or expenses of the Parent Company.

XML 45 R33.htm IDEA: XBRL DOCUMENT v3.6.0.2
Commitments and Contingencies (Tables)
6 Months Ended
Dec. 31, 2016
Commitments and Contingencies [Abstract]  
Schedule of payments for rent expenses
Years ending December 31,   
2017 $56,396 
2018  47,411 
2019  47,411 
2020  47,411 
2021  47,411 
XML 46 R34.htm IDEA: XBRL DOCUMENT v3.6.0.2
Business Combinations (Tables)
6 Months Ended
Dec. 31, 2016
Business Combinations [Abstract]  
Schedule of purchase price allocations at fair value

Cash $708,737 
Accounts receivable  6,422,850 
Advances to suppliers  1,803,180 
Prepaid expenses and other current assets  807,645 
Inventories  7,787,043 
Machinery and equipment  140,868 
Intangible assets  270,900 
Other assets  3,404,741 
Good will  3,158,179 
Accounts payable  (3,962,670)
Customer deposits  (3,486,150)
Accrued expenses and other payables  (4,653,324)
Taxes payable  (16,912)
Purchase price $12,385,087 

  

Cash $5,568,500 
Convertible notes  6,671,769 
Derivative liability  144,818 
  $12,385,087
XML 47 R35.htm IDEA: XBRL DOCUMENT v3.6.0.2
Variable Interest Entities (Tables)
6 Months Ended
Dec. 31, 2016
Variable Interest Entities [Abstract]  
Schedule of VIEs consolidated financial statements

  December 31,  June 30, 
  2016  2016 
       
ASSETS      
Current Assets      
Cash and cash equivalents $1,030,482  $1,017,841 
Accounts receivable, net  9,596,532   7,050,201 
Inventories  23,999,754   26,370,202 
Other current assets  1,709,991   1,875,912 
Advances to suppliers  2,119,048   4,900,524 
Total Current Assets  38,455,807   41,214,680 
         
Plant, Property and Equipment, Net  12,292,713   13,377,817 
Other assets  216,136   334,264 
Intangible Assets, Net  12,017,863   12,913,776 
Goodwill  3,021,632   3,158,179 
Total Assets $66,004,151  $70,998,716 
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current Liabilities        
Accounts payable $4,308,607  $3,840,052 
Customer deposits  1,803,140   3,486,150 
Accrued expenses and other payables  3,304,318   5,580,642 
Amount due to related parties  39,722,237   43,478,158 
Total Current Liabilities  49,560,557   56,385,002 
         
Stockholders' equity  16,443,594   14,613,714 
         
Total Liabilities and Stockholders' Equity $66,004,151  $70,998,716 

  

  Three months ended
December 31,
  Six months ended
December 31,
 
  2016  2015  2016  2015 
Revenue $10,852,779  $2,083,765  $25,500,167  $3,325,400 
Expenses  9,954,543   1,570,665   22,967,005   2,406,015 
Net income (loss) $898,236  $513,100  $2,533,162  $919,385 
XML 48 R36.htm IDEA: XBRL DOCUMENT v3.6.0.2
Subsequent Events (Tables)
6 Months Ended
Dec. 31, 2016
Subsequent Events [Abstract]  
Summary of subsequent events strategic acquisitions

Company Name

  Business Scope   Cash Payment for Acquisition (USD)     Principal of Notes for Acquisition (USD)  
Sunwu County Xiangrong Agricultural Materials Co., Ltd.   Sales of pesticides, agricultural chemicals, chemical fertilizers, agricultural materials; Manufacture and sales of mulches.   $ 576,000     $ 864,000  
Anhui Fengnong Seed Co., Ltd.   Wholesale and retail sales of pesticides; Sales of chemical fertilizers, packaged seeds, agricultural mulches, micronutrient fertilizers, compound fertilizers and plant growth regulators   $ 576,000     $ 864,000  
Total       $ 1,152,000     $ 1,728,000  
XML 49 R37.htm IDEA: XBRL DOCUMENT v3.6.0.2
Basis of Presentation and Summary of Significant Accounting Policies (Details) - USD ($)
3 Months Ended 6 Months Ended 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Jun. 30, 2016
Jun. 30, 2015
Basis of Presentation and Summary of Significant Accounting Policies [Abstract]            
Net Income for Basic Earnings Per Share $ 5,506,011 $ 4,267,535 $ 11,513,207
Basic Weighted Average Number of Shares 37,658,062 36,933,002 37,653,333 36,436,026    
Net Income Per Share - Basic $ 0.15 $ 0.12 $ 0.34 $ 0.32    
Net Income for Diluted Earnings Per Share $ 5,506,011 $ 4,267,535 $ 12,857,591 $ 11,513,207    
Diluted Weighted Average Number of Shares 37,658,062 36,933,002 37,653,333 36,436,026    
Net Income Per Share - Diluted $ 0.15 $ 0.12 $ 0.34 $ 0.32    
XML 50 R38.htm IDEA: XBRL DOCUMENT v3.6.0.2
Basis of Presentation and Summary of Significant Accounting Policies (Details Textual) - USD ($)
6 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Jun. 30, 2016
Basis of Presentation and Summary of Significant Accounting Policies (Textual)      
Aggregate cash in accounts and on hand $ 116,574,852   $ 102,896,486
Accounts receivable 125,035,022   117,055,376
Allowance for doubtful accounts 4,343,762   397,123
Amortization of deferred assets 9,584,220 $ 21,430,699  
Customer deposits 5,413,319   8,578,341
United States Banks [Member]      
Basis of Presentation and Summary of Significant Accounting Policies (Textual)      
Deposits in banks $ 20,538   $ 167,495
XML 51 R39.htm IDEA: XBRL DOCUMENT v3.6.0.2
Inventories (Details) - USD ($)
Dec. 31, 2016
Jun. 30, 2016
Inventories [Abstract]    
Raw materials $ 23,724,037 $ 29,926,762
Supplies and packing materials 599,843 444,373
Work in progress 422,539 408,820
Finished goods 39,509,562 56,656,360
Total $ 64,255,981 $ 87,436,315
XML 52 R40.htm IDEA: XBRL DOCUMENT v3.6.0.2
Property, Plant and Equipment (Details) - USD ($)
Dec. 31, 2016
Jun. 30, 2016
Property, Plant and Equipment [Line Items]    
Total property, plant and equipment $ 60,240,572 $ 63,209,020
Less: accumulated depreciation (26,038,706) (25,639,281)
Total 34,201,866 37,569,739
Building and improvements [Member]    
Property, Plant and Equipment [Line Items]    
Total property, plant and equipment 40,614,431 42,489,975
Auto [Member]    
Property, Plant and Equipment [Line Items]    
Total property, plant and equipment 899,674 937,642
Machinery and equipment [Member]    
Property, Plant and Equipment [Line Items]    
Total property, plant and equipment 17,993,602 19,015,420
Agriculture assets [Member]    
Property, Plant and Equipment [Line Items]    
Total property, plant and equipment $ 732,865 $ 765,983
XML 53 R41.htm IDEA: XBRL DOCUMENT v3.6.0.2
Intangible Assets (Details) - USD ($)
Dec. 31, 2016
Jun. 30, 2016
Finite-Lived Intangible Assets [Line Items]    
Intangible assets $ 21,993,441 $ 23,840,048
Land use rights, net [Member]    
Finite-Lived Intangible Assets [Line Items]    
Intangible assets 9,816,682 10,381,215
Technology patent, net [Member]    
Finite-Lived Intangible Assets [Line Items]    
Intangible assets 4,053 4,462
Customer relationships, net [Member]    
Finite-Lived Intangible Assets [Line Items]    
Intangible assets 5,515,101 6,403,343
Non-Compete Agreement [Member]    
Finite-Lived Intangible Assets [Line Items]    
Intangible assets 797,090 925,678
Trademarks [Member]    
Finite-Lived Intangible Assets [Line Items]    
Intangible assets $ 5,860,515 $ 6,125,350
XML 54 R42.htm IDEA: XBRL DOCUMENT v3.6.0.2
Intangible Assets (Details 1) - Land use right [Member] - USD ($)
Dec. 31, 2016
Jun. 30, 2016
Finite-Lived Intangible Assets [Line Items]    
Land use rights $ 11,737,725 $ 12,268,150
Less: accumulated amortization (1,921,043) (1,886,935)
Total land use rights, net $ 9,816,682 $ 10,381,215
XML 55 R43.htm IDEA: XBRL DOCUMENT v3.6.0.2
Intangible Assets (Details 2) - Technology Patent [Member] - USD ($)
Dec. 31, 2016
Jun. 30, 2016
Finite-Lived Intangible Assets [Line Items]    
Technology know-how $ 2,174,973 $ 2,273,260
Less: accumulated amortization (2,170,920) (2,268,798)
Total technology know-how, net $ 4,053 $ 4,462
XML 56 R44.htm IDEA: XBRL DOCUMENT v3.6.0.2
Intangible Assets (Details 3) - Customer Relationship [Member] - USD ($)
Dec. 31, 2016
Jun. 30, 2016
Finite-Lived Intangible Assets [Line Items]    
Customer relationships $ 11,727,154 $ 12,257,100
Less: accumulated amortization (6,212,053) (5,853,757)
Total customer relationships, net $ 5,515,101 $ 6,403,343
XML 57 R45.htm IDEA: XBRL DOCUMENT v3.6.0.2
Intangible Assets (Details 4) - Non-Compete Agreement [Member] - USD ($)
Dec. 31, 2016
Jun. 30, 2016
Finite-Lived Intangible Assets [Line Items]    
Non-compete agreement $ 1,075,726 $ 1,124,338
Less: accumulated amortization (278,636) (198,660)
Total non-compete agreement, net $ 797,090 $ 925,678
XML 58 R46.htm IDEA: XBRL DOCUMENT v3.6.0.2
Intangible Assets (Details 5)
Dec. 31, 2016
USD ($)
Intangible Assets [Abstract]  
2017 $ 1,635,094
2018 1,635,094
2019 1,635,094
2020 1,635,094
2021 $ 1,078,551
XML 59 R47.htm IDEA: XBRL DOCUMENT v3.6.0.2
Intangible Assets (Details Textual)
1 Months Ended 12 Months Ended
Jul. 02, 2010
USD ($)
Sep. 25, 2009
USD ($)
a
Aug. 13, 2003
USD ($)
a
Aug. 16, 2001
USD ($)
Jun. 30, 2016
USD ($)
Jun. 30, 2016
CNY (¥)
Jul. 02, 2010
CNY (¥)
Sep. 25, 2009
CNY (¥)
a
Aug. 13, 2003
CNY (¥)
a
Aug. 16, 2001
CNY (¥)
Land use rights, net [Member]                    
Intangible Assets (Textual)                    
Intangible asets land use right   88 11         88 11  
Fair value of intangible assets   $ 10,538,113 $ 150,609 $ 1,049,003       ¥ 73,184,895 ¥ 1,045,950 ¥ 7,285,099
Amortization period of intangible assets   50 years 50 years 50 years            
Technology Patent [Member]                    
Intangible Assets (Textual)                    
Fair value of intangible assets $ 1,324,736     $ 845,969     ¥ 9,200,000     ¥ 5,875,068
Amortization period of intangible assets       10 years            
Amortization method description
Amortized over the remaining useful life of six years using the straight line method.
                 
Customer Relationships [Member]                    
Intangible Assets (Textual)                    
Fair value of intangible assets $ 9,360,000       $ 2,367,609 ¥ 16,442,531 65,000,000      
Amortization period of intangible assets 10 years                  
Amortization period of intangible assets description         Seven to ten years.          
Non-Compete Agreement [Member]                    
Intangible Assets (Textual)                    
Fair value of intangible assets $ 190,080       $ 885,698 ¥ 6,150,683 1,320,000      
Amortization period of intangible assets 5 years       5 years          
Trademarks [Member]                    
Intangible Assets (Textual)                    
Fair value of intangible assets $ 5,860,515           ¥ 40,700,000      
XML 60 R48.htm IDEA: XBRL DOCUMENT v3.6.0.2
Accrued Expenses and Other Payables (Details) - USD ($)
Dec. 31, 2016
Jun. 30, 2016
Accrued Expenses and Other Payables [Abstract]    
Payroll payable $ 77,039 $ 58,704
Welfare payable 147,829 154,510
Accrued expenses 4,574,577 4,450,306
Other payables 4,147,620 11,624,653
Other levy payable 120,762 126,219
Total $ 9,067,827 $ 16,414,392
XML 61 R49.htm IDEA: XBRL DOCUMENT v3.6.0.2
Amount Due to Related Parties (Details)
1 Months Ended 6 Months Ended
Jun. 29, 2016
USD ($)
Jun. 29, 2016
CNY (¥)
Dec. 31, 2016
USD ($)
Dec. 31, 2016
CNY (¥)
Jun. 30, 2016
USD ($)
Amount Due To Related Parties (Textual)          
Amount due to related parties     $ 2,726,125   $ 2,473,004
Revenue from related parties     839,562    
Xian Tech Team Science And Technology Industry Group Co Ltd [Member] | Gufeng          
Amount Due To Related Parties (Textual)          
Amount due to related parties     1,007,951   $ 1,007,951
Kingtone Information Technology Co., Ltd. [Member]          
Amount Due To Related Parties (Textual)          
Ground lease | m² 612 612      
Monthly rental expenses $ 3,842 ¥ 26,684      
900LH.com [Member]          
Amount Due To Related Parties (Textual)          
Total contracted value of sales agreement     $ 3,671,822 ¥ 25,500,000  
XML 62 R50.htm IDEA: XBRL DOCUMENT v3.6.0.2
Loan Payables (Details) - USD ($)
6 Months Ended 12 Months Ended
Dec. 31, 2016
Jun. 30, 2016
Short-term Debt [Line Items]    
Short term loans payables $ 4,463,783 $ 4,665,500
Agriculture Bank of China-Pinggu Branch [Member]    
Short-term Debt [Line Items]    
Loan period per agreement, Start May 18, 2016 May 18, 2016
Loan period per agreement, End Mar. 17, 2017 Mar. 17, 2017
Interest Rate 4.87% 4.87%
Short term loans payables $ 1,871,909 $ 1,956,500
Agriculture Bank of China-Pinggu Branch 1 [Member]    
Short-term Debt [Line Items]    
Loan period per agreement, Start Jan. 19, 2016 Aug. 11, 2015
Loan period per agreement, End Jan. 17, 2017 Aug. 02, 2016
Interest Rate 5.00% 5.82%
Short term loans payables $ 1,151,944 $ 1,505,000
Beijing Bank - Pinggu Branch [Member]    
Short-term Debt [Line Items]    
Loan period per agreement, Start Jul. 28, 2016 Jan. 19, 2016
Loan period per agreement, End Jul. 28, 2017 Jan. 17, 2017
Interest Rate 5.22% 5.00%
Short term loans payables $ 1,439,930 $ 1,204,000
XML 63 R51.htm IDEA: XBRL DOCUMENT v3.6.0.2
Loan Payables (Details Textual) - USD ($)
6 Months Ended 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Jun. 30, 2016
Loan Payables (Textual)      
Interest expense $ 231,791 $ 731,679  
Loan Payables [Member] | Minimum [Member]      
Loan Payables (Textual)      
Loans payable, interest rates 4.87%   4.87%
Loans payable, maturity date Jan. 19, 2016   May 18, 2016
Loan Payables [Member] | Maximum [Member]      
Loan Payables (Textual)      
Loans payable, interest rates 5.22%   5.82%
Loans payable, maturity date Jul. 28, 2017   Mar. 17, 2017
XML 64 R52.htm IDEA: XBRL DOCUMENT v3.6.0.2
Convertible Notes Payable (Details)
6 Months Ended
Dec. 31, 2016
USD ($)
Dec. 31, 2016
CNY (¥)
Jun. 30, 2016
USD ($)
Jun. 30, 2016
CNY (¥)
Convertible Notes Payable (Textual)        
Convertible notes payable, term 3 years      
Aggregate amount of convertible notes payable $ 7,344,000 ¥ 51,000,000    
Fair value of convertible notes payable $ 6,534,263 ¥ 45,379,032 $ 6,383,620 ¥ 44,330,692
Debt conversion annual interest rate 3.00%      
Debt conversion description The per share conversion price of the notes is the higher of the following: (i) $5.00 per share or (ii) 75% of the closing price of the Company's common stock on the date the noteholder delivers the conversion notice.      
Interest expense $ 1,048,340      
XML 65 R53.htm IDEA: XBRL DOCUMENT v3.6.0.2
Taxes Payable (Details) - USD ($)
Dec. 31, 2016
Jun. 30, 2016
Taxes Payable [Abstract]    
VAT provision $ (255,765) $ 2,218
Income tax payable 1,482,816 3,445,480
Other levies 614,131 656,520
Total $ 1,841,182 $ 4,104,218
XML 66 R54.htm IDEA: XBRL DOCUMENT v3.6.0.2
Taxes Payable (Details 1) - USD ($)
3 Months Ended 6 Months Ended 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Jun. 30, 2016
Taxes Payable [Abstract]          
Current tax - foreign     $ 3,092,769   $ 7,371,967
Deferred tax      
Income Tax Expense (Benefit) $ 1,468,638 $ 1,284,551 $ 3,092,769 $ 3,061,993 $ 7,371,967
XML 67 R55.htm IDEA: XBRL DOCUMENT v3.6.0.2
Taxes Payable (Details 2) - USD ($)
3 Months Ended 6 Months Ended 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Jun. 30, 2016
Taxes Payable [Line Items]          
Pretax income (loss) $ 6,974,649 $ 5,552,086 $ 15,950,360 $ 14,575,200  
Expected income tax expense (benefit)     3,820,526 2,587,405  
High-tech income benefits on Jinong     (1,139,344) (1,145,841)  
Losses from subsidiaries in which no benefit is recognized     (219,544) 564,034  
Change in valuation allowance on deferred tax asset from US tax benefit     631,132 1,056,395  
Actual tax expense $ 1,468,638 $ 1,284,551 $ 3,092,769 $ 3,061,993 $ 7,371,967
Actual tax expense, Percentage     19.40% 26.70%  
China15% - 25% [Member]          
Taxes Payable [Line Items]          
Pretax income (loss)     $ 17,806,630 $ 14,575,200  
Expected income tax expense (benefit)     4,451,658 3,643,800  
High-tech income benefits on Jinong     (1,139,344) (1,145,841)  
Losses from subsidiaries in which no benefit is recognized     (219,544) 564,034  
Change in valuation allowance on deferred tax asset from US tax benefit      
Actual tax expense     $ 3,092,769 $ 3,061,993  
Expected income tax expense (benefit), Percentage     25.00% 25.00%  
High-tech income benefits on Jinong, Percentage     (6.00%) (7.90%)  
Losses from subsidiaries in which no benefit is recognized, Percentage     (1.00%) 3.90%  
Change in valuation allowance on deferred tax asset from US tax benefit, Percentage      
Actual tax expense, Percentage     17.00% 21.00%  
China15% - 25% [Member] | Minimum [Member]          
Taxes Payable [Line Items]          
Actual tax expense, Percentage     15.00% 15.00%  
China15% - 25% [Member] | Maximum [Member]          
Taxes Payable [Line Items]          
Actual tax expense, Percentage     25.00% 25.00%  
United States 34% [Member]          
Taxes Payable [Line Items]          
Pretax income (loss)     $ (1,856,270) $ (3,107,045)  
Expected income tax expense (benefit)     (631,132) (1,056,395)  
High-tech income benefits on Jinong      
Losses from subsidiaries in which no benefit is recognized      
Change in valuation allowance on deferred tax asset from US tax benefit     631,132 1,056,395  
Actual tax expense      
Expected income tax expense (benefit), Percentage     34.00% 34.00%  
High-tech income benefits on Jinong, Percentage      
Losses from subsidiaries in which no benefit is recognized, Percentage      
Change in valuation allowance on deferred tax asset from US tax benefit, Percentage     (34.00%) (34.00%)  
Actual tax expense, Percentage      
XML 68 R56.htm IDEA: XBRL DOCUMENT v3.6.0.2
Taxes Payable (Details Textual) - USD ($)
1 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended
Jan. 31, 2008
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Jun. 30, 2016
Taxes Payable (Textual)            
Income tax expense (benefit)   $ 1,468,638 $ 1,284,551 $ 3,092,769 $ 3,061,993 $ 7,371,967
Value added tax rate       13.00%    
Effective income tax rate reconciliation, percentage       19.40% 26.70%  
Effective income tax rate reconciliation, federal       34.00% 34.00%  
September 1, 2015 through June 30, 2016 [Member]            
Taxes Payable (Textual)            
VAT Reduced rate       3.00%    
Enterprise Income Tax [Member]            
Taxes Payable (Textual)            
New enterprise income tax rate 25.00%          
Existing enterprise income tax rate 33.00%          
Income tax rate reconciliation tax holidays 50.00%          
High tech income tax rate 15.00%          
Enterprise Income Tax [Member] | Jinong [Member]            
Taxes Payable (Textual)            
Income tax expense (benefit)       $ 1,879,465 $ 1,805,667  
Enterprise Income Tax [Member] | Gufeng [Member]            
Taxes Payable (Textual)            
Income tax expense (benefit)       $ 792,503 $ 1,256,325  
Effective income tax rate reconciliation, percentage       25.00% 25.00%  
XML 69 R57.htm IDEA: XBRL DOCUMENT v3.6.0.2
Stockholders' Equity (Details) - Restricted Stock [Member]
6 Months Ended
Dec. 31, 2016
USD ($)
$ / shares
shares
Number of Shares, Outstanding (unvested) 588,000
Number of Shares, Granted 870,000
Number of Shares, Forfeited
Number of Shares, Vested (1,458,000)
Number of Shares, Outstanding (unvested)
Fair Value of Shares, Outstanding (unvested) | $ $ 235,264
Fair Value of Shares, Granted | $ 1,044,000
Fair Value of Shares, Vested | $ (1,279,264)
Fair Value of Shares, Outstanding (unvested) | $
Grant Date Fair Value Per share, Granted | $ / shares
XML 70 R58.htm IDEA: XBRL DOCUMENT v3.6.0.2
Stockholders' Equity (Details Textual) - USD ($)
1 Months Ended 6 Months Ended
Jun. 26, 2016
Sep. 30, 2014
Dec. 30, 2016
Sep. 28, 2015
Dec. 31, 2016
Jun. 30, 2016
Stockholders' Equity (Textual)            
Restricted stock          
Preferred Stock, shares authorized         20,000,000 20,000,000
Preferred Stock, par value         $ 0.001 $ 0.001
Unamortized compensation expense           $ 235,264
Preferred Stock, shares issued         0 0
Preferred Stock, shares outstanding         0 0
Preferred stock, Description         Under the Company's Articles of Incorporation, the Board has the authority, without further action by stockholders, to designate up to 20,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges, qualifications and restrictions granted to or imposed upon the preferred stock, including dividend rights, conversion rights, voting rights, rights and terms of redemption, liquidation preference and sinking fund terms, any or all of which may be greater than the rights of the common stock.  
2009 Plan [Member]            
Stockholders' Equity (Textual)            
Restricted stock   1,750,000        
Restricted stock, value   $ 3,675,000        
Vesting period, description   The stock grants are subject to time-based vesting schedules, vesting in various installments until March 31, 2015 for the CFO and the three independent directors, until June 30, 2015 for the CEO and until December 31, 2016 for the employees.        
Mr. Tao Li [Member] | 2009 Plan [Member]            
Stockholders' Equity (Textual)            
Restricted stock   240,000        
Mr. Ken Ren [Member] | 2009 Plan [Member]            
Stockholders' Equity (Textual)            
Restricted stock   100,000        
Mr. Yizhao Zhang [Member] | 2009 Plan [Member]            
Stockholders' Equity (Textual)            
Restricted stock   40,000        
Ms. Yiru Shi [Member] | 2009 Plan [Member]            
Stockholders' Equity (Textual)            
Restricted stock   30,000        
Mr. Lianfu Liu [Member] | 2009 Plan [Member]            
Stockholders' Equity (Textual)            
Restricted stock   20,000        
Key employees [Member] | 2009 Plan [Member]            
Stockholders' Equity (Textual)            
Restricted stock 670,000 1,320,000 870,000 1,000,000    
Restricted stock, value $ 897,800   $ 1,044,000 $ 1,660,000    
Vesting period, description The stock grants vest immediately.   The stock grants vest immediately. The stock grants are subject to time-based vesting schedules, vesting in various installments until June 30, 2016.    
XML 71 R59.htm IDEA: XBRL DOCUMENT v3.6.0.2
Concentrations (Details)
3 Months Ended
Dec. 31, 2016
USD ($)
Vendors
Dec. 31, 2015
USD ($)
Vendors
Customer
Supplier Concentration Risk [Member]    
Concentrations (Textual)    
Number of vendors | Vendors 2 2
Total purchase amount | $ $ 10,100,403 $ 40,065,118
Supplier Concentration Risk [Member] | Vendor One [Member]    
Concentrations (Textual)    
Concentration risk percentage 20.10% 29.80%
Supplier Concentration Risk [Member] | Vendor Two [Member]    
Concentrations (Textual)    
Concentration risk percentage 14.60% 16.40%
Customer Concentration Risk [Member] | Sales Revenue, Net [Member]    
Concentrations (Textual)    
Concentration risk percentage 10.00% 26.60%
Number of customer | Customer   1
XML 72 R60.htm IDEA: XBRL DOCUMENT v3.6.0.2
Segment Reporting (Details) - USD ($)
3 Months Ended 6 Months Ended 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Jun. 30, 2016
Jun. 30, 2015
Schedule of segment reporting information, by segment            
Revenues from unaffiliated customers $ 58,745,013 $ 56,966,000 $ 120,629,635 $ 111,150,271    
Operating income 7,105,516 5,779,731 16,184,207 15,157,781    
Stock compensation     (1,282,949) (2,378,736)    
Net income 5,506,011 4,267,535 11,513,207
Depreciation and Amortization 4,735,463 10,423,006 12,115,909 21,445,891    
Interest expense 93,246 302,644 231,791 731,679    
Capital Expenditure 1,127 13,092 7,340 15,665    
Identifiable assets 403,976,307   403,976,307   418,782,527  
Jinong [Member]            
Schedule of segment reporting information, by segment            
Revenues from unaffiliated customers 26,825,674 31,302,561 58,253,394 66,010,365    
Operating income 5,740,784 3,698,620 12,120,004 11,654,274    
Net income 4,849,485 3,187,514 10,195,773 10,000,365    
Depreciation and Amortization 3,675,142 9,358,107 9,988,231 19,292,089    
Interest expense 55,979 113,352    
Capital Expenditure 571 6,643 1,793 6,643    
Identifiable assets 194,544,513   194,544,513   198,599,977  
Gufeng [Member]            
Schedule of segment reporting information, by segment            
Revenues from unaffiliated customers 21,066,559 23,579,674 36,876,073 41,814,506    
Operating income 1,906,816 3,052,879 2,991,899 5,662,832    
Net income 1,268,439 2,049,897 1,984,925 3,670,264    
Depreciation and Amortization 631,041 728,466 1,258,350 1,474,061    
Interest expense 58,306 302,644 118,439 731,679    
Capital Expenditure 556 4,999 1,770    
Identifiable assets 143,819,547   143,819,547   149,891,328  
Yuxing [Member]            
Schedule of segment reporting information, by segment            
Revenues from unaffiliated customers 2,454,314 2,083,765 3,809,725 3,325,400    
Operating income 330,780 511,213 487,810 917,510    
Net income 330,509 513,099 487,589 919,384    
Depreciation and Amortization 306,210 336,433 620,126 679,741    
Capital Expenditure 6,449 548 7,252    
Identifiable assets 41,925,427   41,925,427   45,448,157  
VIES [Member]            
Schedule of segment reporting information, by segment            
Revenues from unaffiliated customers 8,398,466 21,690,443    
Operating income 637,284 2,440,764    
Net income 567,726 2,045,574    
Depreciation and Amortization 123,070 249,202    
Capital Expenditure    
Identifiable assets 23,666,211   23,666,211   24,675,499  
Green New Jersey [Member] | Segment Reconciling Items [Member]            
Schedule of segment reporting information, by segment            
Operating income [1]    
Net income [1] 5 29    
Identifiable assets [1] 23,487   23,487   170,444  
Parent Company [Member] | Segment Reconciling Items [Member]            
Schedule of segment reporting information, by segment            
Operating income [2] 297,606 (219,754)    
Stock compensation [2] (1,510,148) (1,780,587) (1,856,270) (2,857,081)    
Net income [2] (1,510,148) $ (1,477,980) (1,856,270) $ (3,076,835)    
Identifiable assets [2] $ (2,878)   $ (2,878)   $ (2,878)  
[1] Reconciling amounts refer to the unallocated assets or expenses of Green New Jersey.
[2] Reconciling amounts refer to the unallocated assets or expenses of the Parent Company.
XML 73 R61.htm IDEA: XBRL DOCUMENT v3.6.0.2
Segment Reporting (Details Textual) - Segments
6 Months Ended 12 Months Ended
Dec. 31, 2016
Jun. 30, 2016
Segment reporting (Textual)    
Number of business segments 3  
Number of operating segments   4
XML 74 R62.htm IDEA: XBRL DOCUMENT v3.6.0.2
Commitments and Contingencies (Details)
Dec. 31, 2016
USD ($)
Commitments and Contingencies [Abstract]  
2017 $ 56,396
2018 47,411
2019 47,411
2020 47,411
2021 $ 47,411
XML 75 R63.htm IDEA: XBRL DOCUMENT v3.6.0.2
Commitments and Contingencies (Details Textual)
1 Months Ended 6 Months Ended
Jun. 29, 2016
USD ($)
ft²
Jun. 29, 2016
CNY (¥)
ft²
Jan. 31, 2008
USD ($)
Jan. 31, 2008
CNY (¥)
Feb. 29, 2004
USD ($)
Feb. 29, 2004
CNY (¥)
Dec. 31, 2016
USD ($)
Dec. 31, 2015
USD ($)
Commitments and Contingencies (Textual)                
Monthly rent expenses | $             $ 28,198 $ 28,261
Xi'an Jinong Hi-tech Agriculture Demonstration Zone [Member]                
Commitments and Contingencies (Textual)                
Monthly rent expenses     $ 749 ¥ 5,200        
Lease term     10 years 10 years        
Dong Gao [Member]                
Commitments and Contingencies (Textual)                
Monthly rent expenses         $ 426 ¥ 2,958    
Lease term         50 years 50 years    
Zhen Nan Zhang Dai [Member]                
Commitments and Contingencies (Textual)                
Monthly rent expenses         $ 426 ¥ 2,958    
Lease term         50 years 50 years    
Kingtone Information [Member]                
Commitments and Contingencies (Textual)                
Monthly rent expenses $ 3,525 ¥ 24,480            
Lease term 2 years 2 years            
Description of Lease Pursuant to the lease, Jinong rented 612 square meters (approximately 6,588 square feet) of office space from Kingtone Information. Pursuant to the lease, Jinong rented 612 square meters (approximately 6,588 square feet) of office space from Kingtone Information.            
Pursuant to lease in square feet | ft² 6,588 6,588            
XML 76 R64.htm IDEA: XBRL DOCUMENT v3.6.0.2
Business Combinations (Details)
Dec. 31, 2016
USD ($)
Business Combinations [Abstract]  
Cash $ 708,737
Accounts receivable 6,422,850
Advances to suppliers 1,803,180
Prepaid expenses and other current assets 807,645
Inventories 7,787,043
Machinery and equipment 140,868
Intangible assets 270,900
Other assets 3,404,741
Good will 3,158,179
Accounts payable (3,962,670)
Customer deposits (3,486,150)
Accrued expenses and other payables (4,653,324)
Taxes payable (16,912)
Purchase price $ 12,385,087
XML 77 R65.htm IDEA: XBRL DOCUMENT v3.6.0.2
Business Combinations (Details 1)
Dec. 31, 2016
USD ($)
Business Combinations [Abstract]  
Cash $ 5,568,500
Convertible notes 6,671,769
Derivative liability 144,818
Purchase price $ 12,385,087
XML 78 R66.htm IDEA: XBRL DOCUMENT v3.6.0.2
Variable Interest Entities (Details) - USD ($)
3 Months Ended 6 Months Ended 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2014
Current Assets              
Cash and cash equivalents $ 116,574,852 $ 99,567,375 $ 116,574,852 $ 99,567,375 $ 102,896,486 $ 92,982,564  
Accounts receivable, net 125,035,022   125,035,022   117,055,376    
Inventories 64,255,981   64,255,981   87,436,315    
Advances to suppliers 28,707,243   28,707,243   26,863,959    
Total Current Assets 336,298,742   336,298,742   335,581,234    
Plant, Property and Equipment, Net 34,201,866   34,201,866   37,569,739    
Other assets 309,495   309,495   379,047    
Intangible Assets, Net 21,993,441   21,993,441   23,840,048    
Goodwill 7,635,779   7,635,779   7,980,838    
Total Assets 403,976,307   403,976,307   418,782,527    
Current Liabilities              
Accounts payable 5,577,064   5,577,064   5,246,153    
Customer deposits 5,413,319   5,413,319   8,578,341    
Amount due to related parties 2,726,125   2,726,125   2,473,004    
Total Current Liabilities 29,264,235   29,264,235   41,626,426    
Stockholders' equity 368,177,809   368,177,809   370,484,332 25,708,238 $ 22,840,491
Total Liabilities and Stockholders' Equity 403,976,307   403,976,307   418,782,527    
Revenue 58,745,013 56,966,000 120,629,635 111,150,271      
Expenses 12,074,725 16,855,837 26,427,062 31,665,949      
Net income 5,506,011 4,267,535 11,513,207  
Variable Interest Entity [Member]              
Current Assets              
Cash and cash equivalents 1,030,482   1,030,482   1,017,841    
Accounts receivable, net 9,596,532   9,596,532   7,050,201    
Inventories 23,999,754   23,999,754   26,370,202    
Other current assets 1,709,991   1,709,991   1,875,912    
Advances to suppliers 2,119,048   2,119,048   4,900,524    
Total Current Assets 38,455,807   38,455,807   41,214,680    
Plant, Property and Equipment, Net 12,292,713   12,292,713   13,377,817    
Other assets 216,136   216,136   334,264    
Intangible Assets, Net 12,017,863   12,017,863   12,913,776    
Goodwill 3,021,632   3,021,632   3,158,179    
Total Assets 66,004,151   66,004,151   70,998,716    
Current Liabilities              
Accounts payable 4,308,607   4,308,607   3,840,052    
Customer deposits 1,803,140   1,803,140   3,486,150    
Accrued expenses and other payables 3,304,318   3,304,318   5,580,642    
Amount due to related parties 39,722,237   39,722,237   43,478,158    
Total Current Liabilities 49,560,557   49,560,557   56,385,002    
Stockholders' equity 16,443,594   16,443,594   14,613,714    
Total Liabilities and Stockholders' Equity 66,004,151   66,004,151   $ 70,998,716    
Revenue 10,852,779 2,083,765 25,500,167 3,325,400      
Expenses 9,954,543 1,570,665 22,967,005 2,406,015      
Net income $ 898,236 $ 513,100 $ 2,533,162 $ 919,385      
XML 79 R67.htm IDEA: XBRL DOCUMENT v3.6.0.2
Subsequent Events (Details) - Subsequent Event [Member]
1 Months Ended
Jan. 01, 2017
USD ($)
Subsequent Event [Line Items]  
Cash Payment for Acquisition (USD) $ 1,152,000
Principal of Notes for Acquisition (USD) $ 1,728,000
Sunwu County Xiangrong Agricultural Materials Co Ltd [Member]  
Subsequent Event [Line Items]  
Company Name Sunwu County Xiangrong Agricultural Materials Co., Ltd.
Business Scope Sales of pesticides, agricultural chemicals, chemical fertilizers, agricultural materials; Manufacture and sales of mulches.
Cash Payment for Acquisition (USD) $ 576,000
Principal of Notes for Acquisition (USD) $ 864,000
Anhui Fengnong Seed Co Ltd [Member]  
Subsequent Event [Line Items]  
Company Name Anhui Fengnong Seed Co., Ltd.
Business Scope Wholesale and retail sales of pesticides; Sales of chemical fertilizers, packaged seeds, agricultural mulches, micronutrient fertilizers, compound fertilizers and plant growth regulators
Cash Payment for Acquisition (USD) $ 576,000
Principal of Notes for Acquisition (USD) $ 864,000
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