UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended September 30, 2015

 

  ¨ 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 Taibai Road,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 x 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 x No ¨

 

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

 

Large accelerated filer ¨ Accelerated filer ¨

Non-accelerated filer ¨

( Do not check if a smaller reporting company )

Smaller reporting company x

 

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

 

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: 36,936,088 shares of common stock, $.001 par value, as of November 6, 2015.

 

  

 

 

TABLE OF CONTENTS

 

        Page
         
PART I   FINANCIAL INFORMATION    
         
Item 1.   Financial Statements   3
         
    Consolidated Condensed Balance Sheets
As of September 30, 2015 and June 30, 2014 (Unaudited)
  3
         
    Consolidated Condensed Statements of Income and Comprehensive Income
For the Three Ended September 30, 2015 and 2014 (Unaudited)
  4
         
    Consolidated Condensed Statements of Cash Flows
For the Three Months Ended September 30, 2015 and 2014 (Unaudited)
  5
         
    Notes to Consolidated Condensed Financial Statements
As of September 30, 2015 (Unaudited)
  6
         
Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations   21
         
Item 3.   Quantitative and Qualitative Disclosures About Market Risk   33
         
Item 4.   Controls and Procedures   34
         
PART II   OTHER INFORMATION    
         
Item 6.   Exhibits   34
         
Signatures   35
     
Exhibits/Certifications    

 

 2 

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

CHINA GREEN AGRICULTURE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

   September 30, 2015   June 30, 2015 
         
ASSETS          
Current Assets          
Cash and cash equivalents  $94,360,932   $92,982,564 
Accounts receivable, net   67,400,965    68,528,598 
Other receivable, net   -    - 
Inventories   105,405,934    101,302,947 
Prepaid expenses and other current assets   399,698    459,400 
Advances to suppliers, net   69,212,954    40,910,837 
Total Current Assets   336,780,483    304,184,346 
           
Plant, Property and Equipment, Net   41,952,514    44,634,194 
Other Receivables, Net of current portion   -    - 
Deferred Asset, Net   39,914,570    51,527,209 
Other Assets   155,599    185,480 
Intangible Assets, Net   22,481,635    23,805,746 
Goodwill   5,037,356    5,245,643 
           
Total Assets  $446,322,157   $429,582,618 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current Liabilities          
Accounts payable  $2,873,268   $2,372,130 
Customer deposits   48,827,694    19,129,853 
Accrued expenses and other payables   5,178,476    4,952,977 
Amount due to related parties   2,021,273    2,068,102 
Taxes payable   434,471    4,504,542 
Short term loans   20,781,840    23,605,540 
Total Current Liabilities   80,117,022    56,633,144 
           
Commitment and Contingencies          
           
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,  36,928,413 and 35,905,198 shares issued and outstanding as of September 30, 2015 and June 30, 2015, respectively   36,928    35,905 
Additional paid-in capital   124,481,589    123,360,384 
Statutory reserve   25,763,051    25,030,688 
Retained earnings   205,327,568    198,814,259 
Accumulated other comprehensive income   10,595,999    25,708,238 
Total Stockholders' Equity   366,205,135    372,949,474 
           
Total Liabilities and Stockholders' Equity  $446,322,157   $429,582,618 

 

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

 

 3 

 

  

CHINA GREEN AGRICULTURE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

 

   Three Months Ended September 30, 
   2015   2014 
Sales          
Jinong  $34,707,804   $34,464,165 
Gufeng   18,234,832    15,986,074 
Yuxing   1,241,635    851,551 
Net sales   54,184,271    51,301,790 
Cost of goods sold          
Jinong   14,540,385    13,380,623 
Gufeng   14,745,674    12,599,185 
Yuxing   710,050    648,548 
Cost of goods sold   29,996,109    26,628,356 
Gross profit   24,188,162    24,673,434 
Operating expenses          
Selling expenses   2,343,755    735,637 
Selling expenses - amortization of deferred asset   9,712,715    10,331,084 
General and administrative expenses   2,753,642    3,119,632 
Total operating expenses   14,810,112    14,186,353 
Income from operations   9,378,050    10,487,081 
Other income (expense)          
Other income (expense)   (4,563)   41,955 
Interest income   78,662    29,385 
Interest expense   (429,035)   (455,744)
Total other income (expense)   (354,936)   (384,404)
Income before income taxes   9,023,114    10,102,677 
Provision for income taxes   1,777,442    2,003,595 
Net income   7,245,672    8,099,082 
Other comprehensive income (loss)          
Foreign currency translation gain (loss)   (15,112,239)   6,289 
Comprehensive income (loss)  $(7,866,567)  $8,105,371 
           
Basic weighted average shares outstanding   35,939,049    32,377,250 
Basic net earnings per share  $0.20   $0.25 
Diluted weighted average shares outstanding   35,939,049    32,377,250 
Diluted net earnings per share   0.20    0.25 

 

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

 

 4 

 

  

CHINA GREEN AGRICULTURE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

   Three Months Ended September 30, 
   2015   2014 
Cash flows from operating activities          
Net income  $7,245,672   $8,099,082 
Adjustments to reconcile net income to net cash provided by operating activities          
Issuance of common stock and stock options for compensation   1,122,228    1,475,164 
Depreciation and amortization   11,022,885    11,749,194 
Impairment of assets        - 
Loss on disposal of property, plant and equipment   349    - 
Changes in operating assets          
Accounts receivable   (1,617,744)   13,714,334 
Other current assets   42,097    (48,687)
Inventories   (8,249,452)   (25,081,049)
Advances to suppliers   (30,383,448)   (5,175,552)
Other assets   22,860    (22,310)
Changes in operating liabilities          
Accounts payable   595,769    (565,539)
Customer deposits   30,922,425    11,163,038 
Tax payables   (3,950,618)   2,011,259 
Accrued expenses and other payables   283,090    111,790 
Amount due to related parties   -    - 
Net cash provided by operating activities   7,056,113    17,430,724 
           
Cash flows from investing activities          
Purchase of plant, property, and equipment   (2,590)   (231,115)
Proceeds from other receivables   -    1,963,830 
Deferred assets   -    (4,291,918)
Net cash used in investing activities   (2,590)   (2,559,203)
           
Cash flows from financing activities          
Proceeds from the sale of common stock   -    200,000 
Proceeds from loans   3,192,000    4,869,000 
Repayment of loans   (5,107,200)   (5,923,950)
Payment of dividends   -    - 
Advance from related party   -    200,400 
Net cash used in financing activities   (1,915,200)   (654,550)
           
Effect of exchange rate change on cash and cash equivalents   (3,759,955)   8,724 
Net increase in cash and cash equivalents   1,378,368    14,225,695 
           
Cash and cash equivalents, beginning balance   92,982,564    26,890,321 
Cash and cash equivalents, ending balance  $94,360,932   $41,116,016 
           
Supplement disclosure of cash flow information          
Interest expense paid  $429,035   $455,744 
Income taxes paid  $5,728,060   $- 

 

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

  

 5 

 

  

CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

 

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, such as top-grade fruits, vegetables, flowers and colored seedlings.

 

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 TechTeam Jinong Humic 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 PRC controlled by Jinong through 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”).

 

The Company’s corporate structure as of September 30, 2015 is set forth in the diagram below:

 

 

 6 

 

 

CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

 

The unaudited consolidated financial statements were prepared by Company pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) were omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K. The results for the three months ended September 30, 2015, are not necessarily indicative of the results to be expected for the year ending June 30, 2016.

 

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 and VIE Yuxing. All significant inter-company accounts and transactions have been eliminated in consolidation.

  

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 three months or less, when purchased, to be cash and cash equivalents. The Company maintains large sums of cash in two banks in China. The aggregate cash in such accounts and on hand as of September 30, 2015 and June 30, 2015 was $94,241,733 and $92,676,188, respectively. There is no insurance securing these deposits in China over $81,850 (RMB 500,000). In addition, the Company also had $119,199 and $306,376 in cash in two banks in the United States as of September 30, 2015 and June 30, 2015, respectively, with $500,000 secured by the U.S. Federal Deposit Insurance Corporation. 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.

 

Deferred assets

 

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 three months ended September 30, 2015 and 2014, the Company amortized $9,712,715 and $10,331,084, 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. These deferred assets are subject to annual impairment testing. The estimated amortization expense of the deferred assets for the twelve months ending September 30, 2016 and 2017 is $29,081,381 and $10,833,189, respectively.

 

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 (G.A.A.P), 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.

 

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 

 

 

CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

 

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

 

   Three Months Ended September 30, 
   2015   2014 
Net Income for Basic Earnings Per Share  $7,245,672   $8,099,082 
Basic Weighted Average Number of Shares   35,939,049    32,377,250 
Net Income Per Share – Basic  $0.20   $0.25 
Net Income for Diluted Earnings Per Share  $7,245,672   $8,099,082 
Diluted Weighted Average Number of Shares   35,939,049    32,377,250 
Net Income Per Share – Diluted  $0.20   $0.25 

 

Reclassification

 

Certain reclassifications have been made to the prior year consolidated financial statements to conform to the 2015 consolidated financial statement presentation. Such reclassifications did not affect total revenues, operating income or net income or cash flows as previously reported.

 

Recent accounting pronouncements

 

FASB Accounting Standards Update No. 2014-09

 

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09) , 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. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). Early adoption is not permitted. The Company is currently evaluating the impact of the pending adoption of ASU 2014-09 on its consolidated financial statements and has not yet determined the method by which it will adopt the standard beginning January 1, 2017.

 

FASB Accounting Standards Update No. 2015-01

 

In January 2015, the FASB issued Accounting Standards Update No. 2015-01, Income Statement – Extraordinary and Unusual items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (ASU 2015-01).  The amendment eliminates from U.S. GAAP the concept of extraordinary items.  This guidance is effective for the Company in the first quarter of fiscal 2017. Early adoption is permitted and allows the Company to apply the amendment prospectively or retrospectively. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

 

FASB Accounting Standards Update No. 2015-02

 

In February, 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This amendment provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). ASU 2015-02 is effective for periods beginning December 15, 2015. The adoption of ASU 2015-02 is not expected to have a material effect on the Company’s consolidated financial statements. Early adoption is permitted.

 

 8 

 

 

CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

 

FASB Accounting Standards Update No. 2015-14

 

In August, 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendment defers the effective date of ASU No. 2014-09 for all entities for one year. The guidance in ASU 2014-09 will now apply to public business entities, certain not-for-profit entities, and certain employee benefit plans from annual reporting periods beginning December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods after December 31, 2016, including interim reporting periods with that reporting period.

 

FASB Accounting Standards Update No. 2015-16

 

In September, 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805). ASU No. 2015-16 requires that an acquirer retrospectively adjust provisional amounts recognized in a business combination, during the measurement period. To simplify the accounting for adjustments made to provisional amounts, the amendments in the Update require that the acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amount is determined. The acquirer is required to also record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.  In addition an entity is required to present separately on the face of the income statement or disclose in the notes to the financial statements the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The adoption of ASU 2015-016 is not expected to have a material effect on the Company’s consolidated financial statements.

 

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:

 

   September 30,   June 30, 
   2015   2015 
Raw materials  $57,012,477   $48,294,614 
Supplies and packing materials  $601,818   $529,398 
Work in progress  $288,577   $348,670 
Finished goods  $47,503,062   $52,130,265 
Total  $105,405,934   $101,302,947 

 

NOTE 4 - PROPERTY, PLANT AND EQUIPMENT

 

Property, plant and equipment consisted of the following:

 

   September 30,   June 30, 
   2015   2015 
Building and improvements  $39,370,396   $43,699,066 
Auto   709,224    900,562 
Machinery and equipment   25,000,033    23,173,209 
Agriculture assets   800,083    833,165 
Total property, plant and equipment   65,879,736    68,606,002 
Less: accumulated depreciation   (23,927,222)   (23,971,808)
Total  $41,952,514   $44,634,194 

 

 9 

 

 

CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

 

NOTE 5 - INTANGIBLE ASSETS

 

Intangible assets consisted of the following:

 

   September 30,   June 30, 
   2015   2015 
Land use rights, net  $11,032,821   $11,554,776 
Technology patent, net   180,781    251,008 
Customer relationships, net   4,869,992    5,337,372 
Trademarks   6,398,041    6,662,590 
Total  $22,481,635   $23,805,746 

 

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 $11,504,665). 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 $164,423). The intangible asset is being amortized over the grant period of 50 years using the straight line method.

 

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 $1,145,218). The intangible asset is being amortized over the grant period of 50 years.

 

The Land Use Rights consisted of the following:

 

   September 30,   June 30, 
   2015   2015 
Land use rights  $12,814,306   $13,344,160 
Less: accumulated amortization   (1,781,485)   (1,789,384)
Total land use rights, net  $11,032,821   $11,554,776 

 

TECHNOLOGY PATENT

 

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 RMB 9,200,000 (or $1,446,240) and is amortized over the remaining useful life of six years using the straight line method.

 

The technology know-how consisted of the following:

 

   September 30,   June 30, 
   2015   2015 
Technology know-how  $2,369,801   $2,467,789 
Less: accumulated amortization   (2,189,020)   (2,216,781)
Total technology know-how, net  $180,781   $251,008 

 

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 $10,218,000) and is amortized over the remaining useful life of ten years.

 

   September 30,   June 30, 
   2015   2015 
Customer relationships  $10,218,000   $10,640,500 
Less: accumulated amortization   (5,348,008)   (5,303,128)
Total customer relationships, net  $4,869,992   $5,337,372 

 

 10 

 

 

CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

 

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 $6,398,040) and is subject to an annual impairment test.

 

AMORTIZATION EXPENSE

 

Estimated amortization expenses of intangible assets for the next five twelve months periods ended September 30, 2015, are as follows:

 

AMORTIZATION TABLE    
Year Ends  Expense ($) 
September 30, 2016   1,458,867 
September 30, 2017   1,278,086 
September 30, 2018   1,278,086 
September 30, 2019   1,278,086 
September 30, 2020   1,278,086 

 

NOTE 6 - ACCRUED EXPENSES AND OTHER PAYABLES

 

Accrued expenses and other payables consisted of the following:

 

   September 30,   June 30, 
   2015   2015 
Payroll payable  $8,354   $18,451 
Welfare payable   161,388    168,061 
Accrued expenses   3,851,258    3,554,733 
Other payables   1,025,896    1,098,705 
Other levy payable   131,580    113,027 
Total  $5,178,476   $4,952,977 

 

NOTE 7 - AMOUNT DUE TO RELATED PARTIES

 

As of September 30, 2015 and June 30, 2015, the amount due to related parties was $2,021,273 and $2,068,102, respectively.  At September 30, 2015 and June 30, 2015, $1,139,143 and $1,184,643, 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.

 

On June 29, 2014, 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, 2014 with monthly rent of RMB24,480 (approximately $3,848).

 

NOTE 8- LOAN PAYABLES

 

As of September 30, 2015, the short-term loan payables consisted of ten loans which mature on dates ranging from October 28, 2015 through August 2, 2016 with interest rates ranging from 5.20% to 7.80%. The loans No. 4 and 8 below are collateralized by Tianjuyan’s land use right and building ownership right. The loan No.6 is collateralized by deposit. The loan No.5 is collateralized by Jinong’s land use right and Jinong’s credit. The loans No. 7 and 9 are guaranteed by Jinong’s credit. The loans No. 1, 2 and 3 are guaranteed by a bonding company in Zhongguancun Beijing, and counter guaranteed by Jinong’s credit.

 

 11 

 

 

CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

 

 

No.

   Payee  Loan period per agreement  Interest
Rate
  

September 30, 2015

 
 1   Beijing International Trust Co., Ltd 

Oct 28, 2014- Oct 28, 2015

   7.80%  $1,257,600 
 2   Beijing International Trust Co., Ltd  Dec 16, 2014 - Dec 13, 2015   7.28%   314,400 
 3   Beijing International Trust Co., Ltd  Dec 16, 2015- Dec 16, 2015   7.28%   1,257,600 
 4   Agriculture Bank of China-Pinggu Branch  Jan 21, 2015-Jan 20, 2016   6.16%   1,257,600 
 5   Bank of Tianjin- Beijing Branch  Feb 3, 2015- Jan 27, 2016   6.16%   6,288,000 
 6   Bank of Tianjin- Beijing Branch 

Feb11 2015- Feb 10, 2016

   5.60%   4,433,040 
 7   China Merchants Bank- Cahoyangmen Branch  Mar 16,2015- Mar 15, 2016   6.96%   786,000 
 8   Agriculture Bank of China-Pinggu Branch  May 12, 2015- April 29, 2016   5.89%   2,043,600 
 9   Bank of Beijing- Pinggu Branch 

Aug 11, 2015- Aug 2, 2016

   5.82%   1,572,000 
 10   China Merchants Bank- Cahoyangmen Branch  Sep 9, 2015- Mar 8, 2016   5.20%   1,572,000 
                   
     Total          $20,781,840 

 

As of June 30, 2015, the short-term loan payables consisted of ten loans which mature on dates ranging from August 5, 2015 through April 29, 2016 with interest rates ranging from 5.60% to 7.80%. The loans No 6 and 10 were collateralized by Tianjuyuan’s land use right and building ownership right. The loan No.8 was collateralized by Gufeng’s deposit. The loan No.7 was collateralized by Jinong’s land use right and Jinong’s credit. The loans No. 2 and 9 were guaranteed by Jinong’s credit. The loans No.3, 4 and 5 were guaranteed by a bonding company in Zhongguancun Beijing, and counter guaranteed by Jinong’s credit. The loan No.1 was guaranteed by Jinong and Tianjuyuan’s deposit.

 

No.   Payee  Loan period per agreement  Interest
Rate
   June 30, 2015 
 1   Beijing Bank – Pinggu Branch  Aug 6, 2014 – Aug 5, 2015   6.72%  $1,637,000 
 2   China Merchants Bank – Chaoyang Branch  Aug 27, 2014 – Aug 26, 2015   7.80%   1,637,000 
 3   Beijing International Trust Co., Ltd  Sep 24, 2014 – Sep 23, 2015   7.80%   1,637,000 
 4   Beijing International Trust Co., Ltd  Oct 28, 2014 – Oct 27, 2015   7.80%   1,637,000 
 5   Beijing International Trust Co., Ltd  Dec 26, 2014 – Dec 15, 2015   7.28%   1,637,000 
 6   Agriculture Bank of China-Pinggu Branch  Jan 21, 2015 – Jan 20, 2016   6.16%   1,309,600 
 7   Tianjin Bank – Beijing Branch  Feb 3, 2015 – Jan 27, 2016   6.16%   6,548,000 
 8   Tianjin Bank – Beijing Branch  Feb 11, 2015 – Feb 10, 2016   5.60%   4,616,340 
 9   China Merchants Bank – Chaoyang Branch  Mar 16, 2015 – Mar 15, 2016   6.96%   818,500 
 10   Agriculture Bank of China-Pinggu Branch  May 12, 2015 – Apr 29, 2016   5.89%   2,128,100 
     Total          $23,605,540 

 

The interest expense from short-term loans were $429,035 and $455,744 for the three months ended September 30, 2015 and 2014, respectively.

 

 12 

 

 

CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

 

NOTE 9 – 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 three months ended September 30, 2015 and 2014 of $1,220,708 and $1,516,587, 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 $556,733 and $487,008 for the three months ended September 30, 2015 and 2014, 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 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:

 

   September 30,   June 30, 
   2015   2015 
VAT provision  $25,788   $27,251 
Income tax payable   -    3,778,339 
Other levies   408,683    698,952 
Total  $434,471   $4,504,542 

 

Tax Rate Reconciliation

 

Our effective tax rates were approximately 19.7% and 19.8% for the three months ended September 30, 2015 and 2014, 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 three months ended September 30, 2015 and 2014, for the following reasons:

 

September 30, 2015                        
   China   United States         
   15% - 25%   34%   Total 
                         
Pretax income (loss)  $10,616,945         (1,593,831)       $9,023,114      
                               
Expected income tax expense (benefit)   2,654,236    25.0%   (541,903)   34.0%   2,112,333      
High-tech income benefits on Jinong   (787,682)   (7.4)%   -    -    (787,682)     
Losses from subsidiaries in which no benefit is recognized   (89,112)   (0.8)%   -    -    (89,112)     
Change in valuation allowance on deferred tax asset from US tax benefit   -         541,903    (34.0)%   541,903      
Actual tax expense  $1,777,442    16.7%  $-    -%  $1,777,442    19.7%

 

 13 

 

 

CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

 

September 30, 2014                        
   China   United States         
   15% - 25%   34%   Total 
                         
Pretax income (loss)  $12,208,311        $(2,105,634)       $10,102,677      
                               
Expected income tax expense (benefit)   3,052,078    25.0%   (715,916)   34.0%   2,336,162      
High-tech income benefits on Jinong   (591,405)   (4.8)%   -    -    (591,405)     
Losses from subsidiaries in which no benefit is recognized   (457,078)   (3.7)%   -    -    (457,078)     
Change in valuation allowance on deferred tax asset from US tax benefit   -         715,916    (34.0)%   715,916      
Actual tax expense  $2,003,595    16.4%  $-    -%  $2,003,595    19.8%

 

NOTE 10 – STOCKHOLDERS’ EQUITY

 

Common Stock

 

On September 12, 2014, the Company’ Compensation Committee, approved the issuance of 87,719 shares of common stock to its ten employees under the Company’s Amended and Restated 2012 Employee Stock Purchase Plan for a cash contribution of a total of $200,000. The issuance is at the closing price $2.28 per share on September 11, 2014.

 

During the three months ended September 30, 2014, the Company issued 23,752 shares of common stock for professional fees valued at $54,444. The shares were valued at the market price on the date of issuance.

 

During the three months ended September 30, 2015, the Company issued 23,215 shares of common stock for professional fees valued at $45,734. The shares were valued at the market price on the date of issuance.

 

On September 30, 2014, the Company granted an aggregate of 1,750,000 shares of restricted stock under the 2009 Equity Incentive Plan (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.

 

 14 

 

 

CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

 

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.

 

The following table sets forth changes in compensation-related restricted stock awards during three months ended September 30, 2015:

 

           Grant Date 
   Number of   Fair Value of   Fair Value 
   Shares   Shares   Per share 
Outstanding (unvested) at June 30, 2015   1,708,000   $1,797,992      
Granted   1,000,000    1,660,000   $1.66 
Forfeited   -    -      
Vested   (512,500)   (1,076,494)     
Outstanding (unvested) at September 30, 2015   2,195,500   $2,381,498      

 

As of September 30, 2015, the unamortized expense related to the grant of restricted shares of common stock of $2,381,498 will be amortized into expense through December 31, 2016. 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.

 

Dividend

  

On October 1, 2014, the Company's Board of Directors declared a cash dividend of $0.10 per share to the Company's stockholders of common stock. The dividend payable represented a total payment to the stockholders of $3,296,156. The cash dividend of $2,161,904 was paid on January 30, 2015 to stockholders of record as of the close of business on the record date of October 31, 2014. Certain stockholders, including the Company’s Chairman, Mr. Li, elected to waive the dividend payment due to them and directed the Company to retain the funds for working capital purposes.

 

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 September 30, 2015, the Company had 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 11 –CONCENTRATIONS AND LITIGATION

 

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.

 

 15 

 

 

CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

 

Vendor and Customer Concentration

 

There were two vendors from which the Company purchased 23.2% and 22.5% of its raw materials for the three months ended September 30, 2015. Total purchase from these two vendors amounted to $19,034,614 as September 30, 2014. The total amount payable to these two vendors as of September 30, 2015 was $4,758,654.

 

There were two vendors from which the Company purchased 21.5% and 12.5% of its raw materials for the three months ended September 30, 2014. Total purchase from these two vendors amounted to $16,907,966 as September 30, 2014. The total amount payable to these two vendors as of September 30, 2014 was $4,700,415.

 

One customer was accounted for 26.0% of the Company’s sales for the three months ended September 30, 2015. One customer was accounted for 11.5% of the Company’s sales for the three months ended September 30, 2014.

 

Litigation

 

On October 15, 2010, a class action lawsuit was filed against the Company and certain of its current and former officers in the United States District Court for the District of Nevada (the "Nevada Federal Court") on behalf of purchasers of the Company’s common stock between November 12, 2009 and September 1, 2010. The last version of the complaint alleges that the Company and certain current and former officers and directors violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, as amended, by making material misstatements and omissions in the Company’s financial statements, securities offering documents, and related disclosures during the class period. On October 7, 2011, the defendants moved to dismiss the amended complaint and to strike portions of it. On November 2, 2012, the Court issued an order dismissing the claims for violation of sections 11, 12(a)(2) and 15 of the Securities Act of 1933 as to all defendants and dismissing two individual defendants from the complaint but allowing the claims for violations of section 10(b) and 20(a) of the Securities Exchange Act of 1934 to continue with respect to the Company and the remaining of the individual defendants. The Nevada Federal Court also denied the defendants’ motion to strike. The parties to the securities class action held mediation on March 7, 2013, which led to an agreement in principle to settle the case for a payment of $ 2.5 million by the Company’s insurers in exchange for a release of all claims against all defendants. On August 12, 2014, the Nevada Federal Court entered an order and final judgment granting final approval to the settlement and dismissing all claims in accordance with the settlement agreement. The Company’s insurers funded the full amount of the settlement of $2.5 million.

 

NOTE 12 – SEGMENT REPORTING

 

As of September 30, 2015, the Company was organized into three main business segments based on location and product: Jinong (fertilizer production), Gufeng (fertilizer production), and Yuxing (agricultural products production). Each of the three 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.

 

 16 

 

 

CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

 

   Three Months Ended September 30, 
   2015   2014 
Revenues from unaffiliated customers:          
Jinong  $34,707,804   $34,464,165 
Gufeng   18,234,832    15,986,074 
Yuxing   1,241,635    851,551 
Consolidated  $54,184,271   $51,301,790 
           
Operating income :          
Jinong  $7,955,654   $9,933,764 
Gufeng   2,609,953    2,395,978 
Yuxing   406,297    262,993 
Reconciling item (1)   -    - 
Reconciling item (2)   (517,360)   (684,934)
Reconciling item (2)—stock compensation   (1,076,494)   (1,420,720)
Consolidated  $9,378,050   $10,487,081 
           
Net income:          
Jinong  $6,812,851   $8,431,966 
Gufeng   1,620,367    1,410,711 
Yuxing   406,285    362,039 
Reconciling item (1)   24    20 
Reconciling item (2)   (1,598,855)   (2,105,654)
Consolidated  $7,245,672   $8,099,082 
           
Depreciation and Amortization:          
Jinong  $9,933,982   $10,568,570 
Gufeng   745,595    836,514 
Yuxing   343,308    344,110 
Consolidated  $11,022,885   $11,749,194 
           
Interest expense:          
Gufeng   429,035    455,744 
Consolidated  $429,035   $455,744 
           
Capital Expenditure:          
Jinong  $0   $4,254,471 
Gufeng   1,787    9,187 
Yuxing   803    259,375 
Consolidated  $2,590   $4,523,033 

 

   As of 
   September 30,   June 30, 
   2015   2015 
Identifiable assets:          
Jinong  $212,731,651   $219,259,401 
Gufeng   190,111,406    165,267,975 
Yuxing   43,356,924    44,745,889 
Reconciling item (1)   124,996    312,198 
Reconciling item (2)   (2,820)   (2,845)
Consolidated  $446,322,157   $429,582,618 

 

(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.

 

 17 

 

 

CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

 

NOTE 13 - COMMITMENTS AND CONTINGENCIES

 

On June 29, 2014, 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, 2014 with monthly rent of $3,848 (RMB 24,480).

 

 

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 $480 (RMB 3,053).

 

Accordingly, the Company recorded an aggregate of $1,440 and $3,975 as rent expenses for the three months ended September 30, 2015 and 2014, respectively. Rent expenses for the next five years months ended September 30, are as follows:

 

Years ending September 30,
2016  $1,440 
2017   1,440 
2018   1,440 
2019   1,440 
2020   1,440 

 

NOTE 14 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.

 

As a result of the VIE Agreements, Green Nevada is able to exercise control over Yuxing and was entitled to substantially all of the economic benefits of Yuxing through its subsidiary, Jinong. Therefore, Green Nevada consolidates Yuxing in accordance with ASC 810-10 (“Consolidation of Variable Interest Entities”) since the date of the VIE Agreements.

 

 18 

 

 

CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

 

The following financial statement amounts and balances of the VIE were included in the accompanying consolidated financial statements as of September 30, 2015 and June 30, 2015:

 

   September 30   June 30, 
   2015   2015 
         
ASSETS          
Current Assets          
Cash and cash equivalents  $54,435   $79,867 
Accounts receivable, net   39,080    72,748 
Inventories   18,209,054    18,138,137 
Other current assets   45,893    48,845 
Advances to suppliers   47,320    61,739 
Total Current Assets   18,395,782    18,401,336 
           
Plant, Property and Equipment, Net   14,790,026    15,692,975 
Construction In Progress   66,185    68,921 
Intangible Assets, Net   10,104,931    10,582,657 
Total Assets  $43,356,924   $44,745,889 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current Liabilities          
Accounts payable  $182,944   $159,730 
Accrued expenses and other payables   172,037    222,871 
Amount due to related parties   41,761,421    43,488,198 
Total Current Liabilities   42,116,402    43,870,799 
           
Stockholders' equity   1,240,522    875,090 
           
Total Liabilities and Stockholders' Equity  $43,356,924   $44,745,889 

 

 19 

 

 

CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

 

   Three Months Ended September 30, 
   2015   2014 
Revenue  $1,241,635   $851,551 
Expenses   835,350    489,512 
Net income  $406,285   $362,039 

 

 20 

 

 

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 global financial markets 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 following discussion, “Company”, “we,” “us,” and “our,” refer to (i) China Green Agriculture, Inc. (“Green Nevada”), a corporation incorporated in the State of Nevada; (ii) Green Agriculture Holding Corporation (“Green New Jersey”), a wholly-owned subsidiary of Green Nevada incorporated in the State of New Jersey; (iii) Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd. (“Jinong”), a wholly-owned subsidiary of Green New Jersey organized under the laws of the PRC; (iv) Xi’an Hu County Yuxing Agriculture Technology Development Co., Ltd. (“Yuxing”), a Variable Interest Entity (“VIE”) controlled by Jinong in the PRC; (v) Beijing Gufeng Chemical Products Co., Ltd. (“Gufeng”), a wholly-owned subsidiary of Jinong in the PRC, and (vi) Beijing Tianjuyuan Fertilizer Co., Ltd. (“Tianjuyuan”), a wholly-owned subsidiary of Gufeng in the PRC.

 

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 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, Yuxing. 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. For financial reporting purposes, our operations are organized into three business segments: fertilizer products (Jinong), fertilizer products (Gufeng) and agricultural products (Yuxing).

 

The fertilizer business conducted by Jinong and Gufeng generated approximately 97.7% and 98.3% of our total revenues for the three months ended September 30, 2015 and 2014, respectively. Yuxing serves as a research and development base for our fertilizer products.  

 

Fertilizer Products

 

As of September 30, 2015, we had developed and produced a total of 459 different fertilizer products in use, of which 127 were developed and produced by Jinong and 332 by Gufeng.

 

 21 

 

 

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 September 30,     Change 2014 to 2015  
    2015     2014     Amount     %  
    (metric tons)              
Jinong     10,064       14,618       (4,554 )     (31.2 )%
Gufeng     45,622       38,101       7,521       19.7 %
      55,686       52,719       2,967          
                                 
      Three Months Ended September 30,                  
    2015     2014                  
      (revenue per tons)                  
Jinong   $ 3,449     $ 2,358                  
Gufeng     400       420                  

 

For the three months ended September 30, 2015, we sold approximately 55,686 metric tons of fertilizer products, as compared to 52,719 metric tons for the three months ended September 30, 2014. For the three months ended September 30, 2015, Jinong sold approximately 10,064 metric tons of fertilizer products, as compared to 14,618 metric tons for the three months ended September 30, 2014. The decrease was due to Jinong’s implementation of its sales strategy that focus on producing high-margin liquid fertilizer in replacing powder fertilizer during the last three months. For the three months ended September 30, 2015, Gufeng sold approximately 45,622 metric tons of fertilizer products, as compared to 38,101 metric tons for the three months ended September 30, 2014.  The increase was mainly due to the large amount sales to China National Agricultural Means of Production Group Corporation ("Sino-agri Group") during the last quarter compared with the same period last year.

 

Our sales of fertilizer products to five provinces accounted for approximately 53.3% of our fertilizer revenue for three months ended September 30, 2015. Specifically, the provinces and their respective percentage contributed to our fertilizer revenues were: Beijing (27.1%), Shaanxi (10.7%), Shandong (6.8%), Hebei (5.5%) and Heilongjiang (3.2%).

 

As of September 30, 2015, we had a total of 1,325 distributors covering 27 provinces, four autonomous regions and three central government-controlled municipalities in China. Jinong had 1,037 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 1.9% of its fertilizer revenues for the three months ended September 30, 2015. Gufeng had 288 distributors, including some large state-owned enterprises. Gufeng’s top five distributors accounted for 87.2% of its revenues for the three months ended September 30, 2015.

 

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 81.7% of our agricultural products revenue for the three months ended September 30, 2015 were Shaanxi (74.7%), Sichuan (3.6%), and Ningxia (3.4%).

 

Recent Developments

 

New Products

 

During the three months ended September 30, 2015, Jinong did not launch any new fertilizer product. However, Jinong added 27 new distributors during this period. Jinong’s new distributors accounted for approximately $1,318,975, or 3.8% of Jinong’s fertilizer revenues for the three months ended September 30, 2015. 

 

 22 

 

 

During the three months ended September 30, 2015, Gufeng did not launched any new fertilizer products. However, Gufeng added six new distributors during the three months ended September 30, 2015, which accounted for approximately $38,849, or 0.2%, of Gufeng’s fertilizer revenues.

 

Business Development

 

Cooperation with Sino-agri Group  

 

In October 2014, the Company's wholly-owned subsidiaries organized under the laws of the PRC, Gufeng and Jinong, both entered into a strategic cooperation agreement with Sino-agri Mining Resource Exploration Co., Ltd. ("Sino-agri"), a key subsidiary of Sino-agri Group.

 

Sino-agri Group is a nationwide large-scale enterprise group that integrates production, circulation and service as well as specializes in the agricultural means of production, such as chemical fertilizers, pesticides, seeds, agricultural machinery & implements, etc. It is an enterprise with the corresponding level of the All-China Federation of Supply and Marketing Cooperatives and an exclusively-invested enterprise of China CO-OP Group (http://www.chinacoop.coop/English/About%20China%20co-ops), which have the total assets of RMB30 billion, sales revenue of more than RMB72 billion, and the sales volume of more than 25 million tons for the agricultural materials. (For more information, please visit:   http://english.sino-agri.com/show.php?id=10).

 

The objective of the strategic cooperation agreement between Sino-argi and Gufeng is for Sino-argi and Gufeng to work together with sales goals in three years. Specifically, pursuant to the agreement, Sino-agri sold 150,000 metric tons of compound fertilizers produced by Gufeng ("Gufeng Fertilizers") during the calendar year 2015, and will sell 300,000-metric-ton Gufeng fertilizers during 2016 and 500,000-metric-ton Gufeng Fertilizers in 2017 to promote Gufeng's flagship products.

 

To accomplish the sales goals of the agreement, Sino-agri and Gufeng are committed to strengthen the production and marketing of Gufeng Fertilizers comprehensively. Specifically, Gufeng will team up with Sino-agri to secure raw materials supplies by leveraging Sino-agri's global access to related raw materials. With that, Gufeng delivers Sino-agri customized Gufeng’s Fertilizers upon the orders from Sino-agri's heterogeneous customers. In the next three-year period, Gufeng will be able to tap needed financial credit facilities from Sino-agri to fill the Sino-agri orders. In addition to Gufeng’s Fertilizers, Gufeng is committed to offer product support for Sino-agri's clients which includes, but not limit to, soil testing, fertilizer comparison and testing, as well as fertilizer solutions. In parallel, Sino-agri will give priority to purchase Gufeng Fertilizer to replenish its compound fertilizer inventory.

 

The objective of the strategic cooperation agreement between Sino-argi and Jinong is to require both parties to achieve the following sales goals in the next three years: Sino-agri Group sells 10,000 metric tons high-concentrated fertilizer produced by Jinong in the calendar year of 2015; 20,000 metric tons in 2016 and 50,000 metric tons in 2017. The mission under the agreement is to establish a long-term strategic partnership that is mutually beneficial to both parties. To take advantage of Sino-agri Group's state-owned advantage in fertilizer distribution both domestic and overseas, Jinong will work with Sino-agri Group to improve Jinong's supply chain management in the procurement of raw material, and the sale of concentrated fertilizer products. Specifically, Sino-agri Group will provide quality raw materials and favorite lead time to Jinong. In return, Jinong will deliver to Sino-agri quality concentrated fertilizer at fair market price. In addition, Sino-agri Group shall offer large support of working capital and investment to Jinong if Jinong needs liquidity and capital investment to expand production. In the meantime, Jinong concentrates on differentiating the market demand for Sino-agri and will customize corresponding product development and production process respectively.

 

 23 

 

 

We are very excited for having entered this partnership with Sino-agri, and the result was satisfactory Sino-agri has purchased a total of at $63,818,569fertilizer products during the three months ended September 30, 2015, which accounted for 24.5% of the total sales of fertilizer products from Company. We believe our partnership with Sino-agri will be extraordinary. These agreements are win-win showcases between us and the large state-owned enterprise in China. 

 

Cooperation with 900LH.com

 

The Company’s affiliate, 900LH.com Food Co., Ltd. ("900LH.com", previously announced as Xi'an Gem Grain Co., Ltd) has entered into an agreement to jointly build an “Agricultural Comprehensive Development Base Project” (the “Project”) with the Shiquan County Government in China on January 16, 2015. The total investment on the Project is expected to be three billion RMB (about 480 million USD).  900LH.com is a subsidiary of Xi'an Techteam Investment Holding (Group) Co., Ltd, ("Techteam Investment"). Techteam Investment is a holding company owned and controlled by Mr. Tao Li, Chairman and CEO of the Company. 900LH.com focuses on the production and sales of high-end organic agricultural products. It has contracted with more than 200 planting and breeding bases globally and prefers to utilize and promote the Company's fertilizers. The scope of the Project includes the development of Panlong Valley farm of 900LH.com, where the Company showcases its products. Panlong Valley is located at Shiquan County, Shaanxi Province, 150 miles southwest of Xi'an.

 

During the first phase of the foregoing project, 900LH.coml focused on building an ecological farm base. The base included leisure farming, sightseeing, and sales of agriculture products. The total investment of the first phase would be one billion RMB (160 million USD approximately) including the cost of relocating local residents. In the second phase, the ecological farm will develop into a modern agriculture farm. The modern farm’s operation will include but not limit to, planting, breeding, agricultural products processing, and tourism. The investment of the second phase would be two billion RMB (320 million USD approximately).

 

The Company and 900LH.com have entered into an agreement that the Company’s fertilizers will be exclusively supplied to all plants and agricultural products in the Project and 900LH.com will promote the Company’s fertilizers to all its affiliated farms. In the Project, 900LH.com, the Company, and the government in Shaanxi Province collaborate closely.

 

A New Business Model

 

The Company has made progress on its proprietary online sales platform of agriculture basic materials. Distributors of the Company has started to set up stores on the platform to sell the Company’s products and other types of products such as pesticides and seeds they distribute for various manufacturers.  The Company will compensate the distributors for their online sales performance of the Company's products accordingly.  The platform began operating in March 2015.

 

 24 

 

 

Results of Operations

 

Three months ended September 30, 2015 Compared to the Three months ended September 30, 2014.

 

   Three Months Ended September 30, 
   2015   2014   change $   change % 
Sales                    
Jinong  $34,707,804   $34,464,165   $243,639    0.7%
Gufeng   18,234,832    15,986,074    2,248,758    14.1%
Yuxing   1,241,635    851,551    390,084    45.8%
Net sales   54,184,271    51,301,790    2,882,481    5.6%
Cost of goods sold                    
Jinong   14,540,385    13,380,623    1,159,762    8.7%
Gufeng   14,745,674    12,599,185    2,146,489    17.0%
Yuxing   710,050    648,548    61,502    9.5%
Cost of goods sold   29,996,109    26,628,356    3,367,753    12.6%
Gross profit   24,188,162    24,673,434    (485,272)   -2.0%
Operating expenses                    
Selling expenses   2,343,755    735,637    1,608,118    218.6%
Selling expenses - amortization of deferred asset   9,712,715    10,331,084    (618,369)   -6.0%
General and administrative expenses   2,753,642    3,119,632    (365,990)   -11.7%
Total operating expenses   14,810,112    14,186,353    623,759    4.4%
Income from operations   9,378,050    10,487,081    (1,109,031)   -10.6%
Other income (expense)                    
Other income (expense)   (4,563)   41,955    (46,518)   -110.9%
Interest income   78,662    29,385    49,277    167.7%
Interest expense   (429,035)   (455,744)   26,709    -5.9%
Total other income (expense)   (354,936)   (384,404)   29,468    -7.7%
Income before income taxes   9,023,114    10,102,677    (1,079,563)   -10.7%
Provision for income taxes   1,777,442    2,003,595    (226,153)   -11.3%
Net income   7,245,672    8,099,082    (853,410)   -10.5%
Other comprehensive income (loss)                    
Foreign currency translation gain (loss)   (15,112,239)   6,289    (15,118,528)   -240396.4%
                     
Comprehensive income (loss)  $(7,866,567)  $8,105,371   $(15,971,938)   -197.1%
                     
Basic weighted average shares outstanding   35,939,049    32,377,250    3,561,799    11.0%
Basic net earnings per share  $0.20   $0.25   $(0.05)   -19.4%
Diluted weighted average shares outstanding   35,939,049    32,377,250    3,561,799    11.0%
                     
Diluted net earnings per share  $0.20   $0.25   $(0.05)   -19.4%

 

Net Sales

 

Total net sales for the three months ended September 30, 2015 were $54,184,271, an increase of $2,882,481 or 5.6%, from $51,301,790 for the three months ended September 30, 2014. This increase was due to an increase in net sales from all three business segments.

 

For the three months ended September 30, 2015, Jinong’s net sales increased $243,639, or 0.7%, to $34,707,804 from $34,464,165 for the three months ended September 30, 2014. This increase was mainly attributable to Jinong’s higher priced liquid fertilizer sold despite the decrease in Jinong’s sales volume during the three months ended September 30, 2015.

 

For the three months ended September 30, 2015, Gufeng’s net sales were $18,234,832, an increase of $2,248,758, or 14.1% from $15,986,074 for the three months ended September 30, 2014. The increase was mainly attributable to Gufeng’s expanding of its marketing promotion strategy, especially the large amount sale to Sino-agri Group during the three months ended September 30, 2015.

 

For the three months ended September 30, 2015, Yuxing’s net sales were $1,241,635, an increase of $390,084 or 45.8%, from $851,551 for the three months ended September 30, 2014. The increase was mainly attributable to the increase in market demand and the higher prices on Yuxing’s top grade flowers during the three months ended September 30, 2015.

 

 25 

 

 

Cost of Goods Sold

 

Total cost of goods sold for the three months ended September 30, 2015 was $29,996,109, an increase of $3,367,753, or 12.6%, from $26,628,356 for the three months ended September 30, 2014. This increase was mainly due to the 5.6% increase in net sales and an increase in the cost of raw materials.

 

Cost of goods sold by Jinong for the three months ended September 30, 2015 was $14,540,385, an increase of $1,159,762, or 8.7%, from $13,380,623 for the three months ended September 30, 2014. The increase in cost of goods was primarily attributable to higher raw materials cost.

 

Cost of goods sold by Gufeng for the three months ended September 30, 2015 was $14,745,674, an increase of $2,146,489, or 17.0%, from $12,599,185 for the three months ended September 30, 2014. This increase was primarily attributable to an increase in the cost of raw materials and an increase in the sales of fertilizer products.

 

For three months ended September 30, 2015, cost of goods sold by Yuxing was $710,050, an increase of $61,502, or 9.5%, from $648,548 for the three months ended September 30, 2014. This increase was mainly due to the increase in Yuxing’s net sales. 

 

Gross Profit

 

Total gross profit for the three months ended September 30, 2015 decreased by $485,272, or 2.0%, to $24,188,162, as compared to $24,673,434 for the three months ended September 30, 2014. Gross profit margin was 44.6% and 48.1% for the three months ended September 30, 2015 and 2014, respectively.

 

Gross profit generated by Jinong decreased by $916,123, or 4.3%, to $20,167,419 for the three months ended September 30, 2015 from $21,083,542 for the three months ended September 30, 2014. Gross profit margin from Jinong’s sales was approximately 58.1% and 61.2% for the three months ended September 30, 2015 and 2014, respectively. The decrease in gross profit margin was mainly due to higher raw material cost and higher packaging cost.

 

For the three months ended September 30, 2015, gross profit generated by Gufeng was $3,489,158, an increase of $102,269, or 3.0%, from $3,386,889 for the three months ended September 30, 2014. Gross profit margin from Gufeng’s sales was approximately 19.1% and 21.2% for the three months ended September 30, 2015 and 2014, respectively. The decrease in gross profit percentage was mainly due to the increased weight for sales of lower-margin products in Gufeng’s total sales answering to market demand. 

 

For the three months ended September 30, 2015, gross profit generated by Yuxing was $531,585, an increase of $328,582, or 161.9% from $203,003 for the three months ended September 30, 2014. The gross profit margin was approximately 42.8% and 23.8% for the three months ended September 30, 2015 and 2014, respectively. The increase in gross profit margin was mainly due to the higher priced top grade flowers that Yuxing sold during the three months ended September 30, 2015.

 

 26 

 

 

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 $2,343,755, or 4.3%, of net sales for the three months ended September 30, 2015, as compared to $735,637 or 1.4% of net sales for the three months ended September 30, 2014, an increase of $1,608,118, or 218.6%. The selling expenses of Yuxing were $7,705 or 0.6% of Yuxing’s net sales for the three months ended September 30, 2015, as compared to $7,138, or 0.8% of Yuxing’s net sales for the three months ended September 30, 2014. The selling expenses of Gufeng were $152,685 or 0.8% of Gufeng’s net sales for the three months ended September 30, 2015, as compared to $185,978, or 1.2% of Gufeng’s net sales for the three months ended September 30, 2014. The selling expenses of Jinong for the three months ended September 30, 2015 were $2,183,365 or 6.3% of Jinong’s net sales, as compared to selling expenses of $542,521, or 1.6% of Jinong’s net sales for the three months ended September 30, 2014. The increase in Jinong’s selling expenses was due to Jinong’s expanded marketing efforts.

 

Selling Expenses – amortization of deferred assets

 

Our selling expenses - amortization of our deferred assets were $9,712,715, or 17.9%, of net sales for the three months ended September 30, 2015, as compared to $10,331,084 or 20.1% of net sales for the three months ended September 30, 2014, a decrease of $618,369, or 6.0%. 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 September 30, 2015.

 

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 $2,753,642, or 5.1% of net sales for the three months ended September 30, 2015, as compared to $3,119,632, or 6.1%, of net sales for the three months ended September 30, 2014, a decrease of $365,990, or 11.7%.  The decrease in general and administrative expenses was mainly due to the related expense in the stock compensation awarded to the employees which amounted to $1,076,494 for the three months ended September 30, 2015 as compared to $1,420,720 for the three months ended September 30, 2014.

 

Total Other Expenses

 

Total other expenses consisted of income from subsidies received from the PRC government, interest income, interest expenses and bank charges. Total other expense for the three months ended September 30, 2015 was $354,936, as compared to $384,404 for the three months ended September 30, 2014, a decrease in expense of $29,468, or 7.7%. The decrease in total other expense was partly resulted from an increase in interest income by $49,277 or 167.7%, to $78,662 during the three months ended September 30, 2015 as compared to $29,385 during the three months ended September 30, 2014, due to the increased deposit in the banks. There was also a $4,563 other expense during the three months ended September 30, 2015, as compared to other income $41,955 during the three months ended September 30, 2014. Interest expense decreased by $26,709 or 5.9%, to $429,035 during the three months ended September 30, 2015 as compared to $455,744 during the three months ended September 30, 2014, 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 $1,220,708 for the three months ended September 30, 2015, as compared to $1,516,587 for the three months ended September 30, 2014, a decrease of $295,879, or 19.5%. The decrease was due to the decrease in Jinong’s net income.

  

Gufeng is subject to a tax rate of 25%, incurred income tax expenses of $556,734 for the three months ended September 30, 2015, as compared to $487,008 for the three months ended September 30, 2014, an increase of $69,726, or 14.3%, which was primarily due to Gufeng’s increased net income.

 

Yuxing has no income tax for the three months ended September 30, 2015 and 2014 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 three months ended September 30, 2015 was $7,245,672, a decrease of $853,410, or 10.5%, compared to $8,099,082 for the three months ended September 30, 2014. The decrease was attributable to higher cost of goods sold and an increase in selling expenses, offset by an increase in net sales and lower general and administrative expenses. Net income as a percentage of total net sales was approximately 13.4% and 15.8% for the three months ended September 30, 2015 and 2014, respectively.

 

 27 

 

 

Foreign Currency Translation gain (loss)

 

Foreign currency translation loss for the three months ended September 30, 2015 was $15,112,239, a decrease of $16,301,741, compared to foreign currency translation gain of $6,289 for the three months ended September 30, 2014. The loss was attributable to the significant drop the exchange rate between the Chinese Renminbi and the US Dollars that occurred during the quarter ended September 30, 2015.

 

Discussion of Segment Profitability Measures

 

As of September 30, 2015, we were engaged in the following businesses: the production and sale of fertilizers through Jinong and Gufeng and the production and sale of high-quality agricultural products by Yuxing. For financial reporting purpose, our operations were organized into three main business segments based on locations and products: Jinong (fertilizer production), Gufeng (fertilizer production) and Yuxing (agricultural products production). Each of the segments has its own annual budget with regard to development, production and sales. 

 

Each of the three 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 decreased by $1,619,115, or 19.2% to $6,812,851 for three months ended September 30, 2015, from $8,431,966 for the three months ended September 30, 2014. The decrease was principally due to higher selling expenses.

 

For Gufeng, the net income increased by $209,656 or 14.9% to $1,620,367 for three months ended September 30, 2015 from $1,410,711 for three months ended September 30, 2014. The increase was principally due to the increase in net sales.

 

For Yuxing, the net income increased 44,246 or 12.2% to $406,285 for three months ended September 30, 2015 from $362,039 for three months ended September 30, 2014. The increase was mainly due to the higher net sales.

 

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 September 30, 2015, cash and cash equivalents were $94,360,932, an increase of $1,378,368, or 1.5%, from $92,982,564 as of June 30, 2015.

 

On January 30, 2015, we paid $2,161,904 on dividend previously announced on October 1, 2014 to our stockholders of common stock on October 31, 2014, the record date. Certain stockholders, including the Company’s Chairman, Mr. Li, elected to waive the dividend payment and directed the Company to retain the funds for working capital purposes.

 

We intend to use some of the remaining net proceeds from the Public Offerings, as well as other working capital if required, 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. Yuxing purchased a set of agricultural products testing equipment for the year of 2015. 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.

 

 28 

 

 

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

 

   Three Months Ended September 30, 
   2015   2014 
Net cash provided by operating activities  $7,056,113   $17,430,724 
Net cash used in investing activities   (2,590)   (2,559,203)
Net cash used in financing activities   (1,915,200)   (654,550)
Effect of exchange rate change on cash and cash equivalents   (3,759,955)   8,724 
Net increase in cash and cash equivalents   1,378,368    14,225,695 
Cash and cash equivalents, beginning balance   92,982,564    26,890,321 
Cash and cash equivalents, ending balance  $94,360,932   $41,116,016 

 

Operating Activities

 

Net cash provided in operating activities was $7,056,113 for the three months ended September 30, 2015, a decrease of $10,374,611, or 59.5% from cash provided by operating activities of $17,430,724 for the three months ended September 30, 2014. The decrease was mainly attributable to the decrease in net income, account receivable and advances to suppliers and a decrease in taxes payable, offset by a decrease in inventories and an increase in customer deposits during the three months ended September 30, 2015 as compared to the same period in 2014.

 

Investing Activities

 

Net cash used in investing activities for the three months ended September 30, 2015 was $2,590, a decrease of $2,556,613, or 99.9% from cash used in investing activities of $2,559,203 for the three months ended September 30, 2014. During the three months ended September 30, 2014, Jinong assisted its distributors in marketing to expand its competitive product advantage and market share by advancing them $4,291,918 as compared to $0 during the three months ended September 30, 2015. In addition, during the three months ended September 30, 2014 we received $1,963,830 from the payment on other receivables compared to $0 during the three months ended September 30, 2015.

 

Financing Activities

 

Net cash used in financing activities for the three months ended September 30, 2015 was $1,915,200, an increase of $1,260,650 or 192.6% from $654,550 for the three months ended September 30, 2014. During the three months ended September 30, 2015, we received $3,192,000 from the proceeds from loans and repaid loans of $5,107,200 compared to $4,869,000 of proceeds and $5,923,950 repayments during the three months ended September 30, 2014.  In addition, during the three months ended September 30, 2014, we received proceeds of $200,000 from the sale of our common stock while we did not have any proceeds from such an item during the three months ended September 30, 2015.  

 

As of September 30, 2015 and June 30, 2015, our loans payable were as follows:

 

   September 30, 2015   June 30, 2015 
Short term loans payable:  $20,781,840   $23,605,540 
Total  $20,781,840   $23,605,540 

 

 29 

 

 

Accounts Receivable

 

We had accounts receivable of $67,400,965 as of September 30, 2015, as compared to $68,528,598 as of June 30, 2015, a decrease of $1,127,633 or 1.6%. As of September 30, 2015, Jinong had accounts receivable of $67,117,505, a decrease of $442,764, or 0.7, comparing to $67,560,269 as of June 30, 2015. As of September 30, 2015, Gufeng had accounts receivable of $244,380, a decrease of $651,200, or 72.7%, comparing to $895,580 as of June 30, 2015.

 

Allowance for doubtful accounts in account receivable for the three months ended September 30, 2015 was $308,310, an increase of $387 from $307,923 as of June 30 30, 2015. And the allowance for doubtful accounts as a percentage of accounts receivable was 0.46% as of September 30, 2015 and 0.45% as of June 30, 2015.

 

Deferred assets

 

We had deferred assets of $39,914,570 as of September 30, 2015, as compared to $51,527,209 as of June 30, 2015. We assisted the distributors in certain marketing efforts and developing standard stores to expand our competitive advantage and market shares since December 31, 2013. 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 contractual terms, the unamortized portion of the amount owed by the distributor is payable 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.

 

Inventories

 

We had inventories of $105,405,934 as of September 30, 2015, as compared to $101,302,947 as of June 30, 2015, an increase of $4,102,987, or 4.1%. The increase was primarily attributable to Gufeng’s inventory. As of September 30, 2015, Gufeng’s inventory was $86,243,536 as a result of the acquisition of raw materials at lower prices for the production and accumulation of finished fertilizer products in expecting a huge demand in the near future. These products are expected to be sold and shipped during the coming year.

 

Advances to Suppliers

 

We had advances to suppliers of $69,212,954 as of September 30, 2015 as compared to $40,910,837 as of June 30, 2015, representing an increase of $28,302,117 or 69.2% due to the large acquisition of raw material this quarter. 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 $2,873,268 as of September 30, 2015 as compared to $2,372,130 as of June 30, 2015, representing an increase of $501,138, or 21.1%. The increase was primarily due to the increase in Gufeng’s account payable from $1,456,781 as of June 30, 2015 to $1,877,739 as of September 30, 2015 and the increase in account payable was result from the different timing of payments to vendors.

 

Customer Deposits

 

We had customer deposits of $48,827,694 as of September 30, 2015 as compared to $19,129,853 as of June 30, 2015, representing an increase of $29,697,841, or 155.2%. The increase was mainly attributable to Gufeng’s $48,352,649 in customer deposits as of September 30, 2015, compared to $18,811,820 as of June 30, 2015. We expect to deliver products to our customers during the next three months at which time we expect to recognize the revenue.

 

 30 

 

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements.

 

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.

 

 31 

 

 

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 September 30, 2015, we were organized into three main business segments: Jinong (fertilizer production), Gufeng (fertilizer production) and Yuxing (agricultural products production).

 

 32 

 

 

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 September 30, 2015, our accumulated other comprehensive income was $26.4 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 August 2015, China’s currency dropped by a cumulative 4.4% against the U.S. dollar on hopes of boosting the domestic economy, making Chinese exports cheaper and imports into China more expensive by that amount. 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 September 30, 2015 and June 30, 2015 was $20.8 million and $23.6 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 September 30, 2015. 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.

 

 33 

 

  

Item 4. Controls and Procedures

 

(a) Evaluation of disclosure controls and procedures

 

At the conclusion of the period ended September 30, 2015 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 September 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II – OTHER INFORMATION

 

Item 6. Exhibits

 

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

 

 34 

 

 

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: November 13, 2015 By: /s/ Tao Li
  Name: Tao Li
  Title: President and Chief Executive Officer
    (principal executive officer)
     
     
     
Date: November 13, 2015 By: /s/ Ken Ren
  Name: Ken Ren
  Title: Chief Financial Officer
    (principal financial officer and principal accounting officer)

 

 35 

 

 

EXHIBIT INDEX

 

No.   Description
     
31.1   Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
31.2   Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32.1   Certification of Principal Executive Officer and Principal 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

 

 36 



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: November 13, 2015

 

/s/ Tao Li  
Name: Tao Li  
Title: President and Chief Executive Officer  
(principal executive officer)  

 

   



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: November 13, 2015

 

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

 

   



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 September 30, 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: November 13, 2015

 

/s/ Tao Li  
Name: Tao Li  
Title: President and Chief Executive Officer  
(principal 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.

 

   

China Green Agriculture (NYSE:CGA)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more China Green Agriculture Charts.
China Green Agriculture (NYSE:CGA)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more China Green Agriculture Charts.