Convertible Notes Payable

9 Months Ended

Mar. 31, 2017

Convertible Notes Payable [Abstract]

CONVERTIBLE NOTES PAYABLE

NOTE 9 – CONVERTIBLE NOTES PAYABLE

In connection with the acquisition of the VIE Companies, the Company’s subsidiary, Jinong, issued to the VIE Companies’ shareholders convertible notes payable in the aggregate amount of RMB63,000,000 ($9,142,182), 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 stock 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 notes, 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 maturity 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 RMB56,286,294 ($8,167,929) and RMB44,330,692 ($6,383,620) as of March 31, 2017 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 March 31, 2017, the amortization of this discount into interest expense was $249,125.