x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934.
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934.
|
Nevada
|
36-3526027
|
|||
(State
or other jurisdiction of
|
(IRS
Employer
|
|||
incorporation
or organization)
|
Identification
No.)
|
Large
accelerated filer
o
|
Accelerated
filer
o
|
Non-accelerated
filer
o
Do
not check if a smaller reporting company
|
Smaller
reporting company
x
|
TABLE
OF CONTENTS
|
||
PART
I
|
FINANCIAL
INFORMATION
|
Page
|
Item
1.
|
Financial
Statements.
|
1
|
Consolidated
Balance Sheets
As
of September 30, 2008 and June 30, 2008 (Unaudited)
|
1
|
|
Consolidated
Income Statements
For
the Three Months Ended September 30, 2008 and 2007
(Unaudited)
|
2
|
|
Consolidated
Statements of Cash Flows
For
the Three Months Ended September 30, 2008 and 2007
(Unaudited)
|
3
|
|
Notes
to Consolidated Financial Statements
As
of September 30, 2008 (Unaudited)
|
4
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
|
25
|
Item
4.
|
Controls
and Procedures.
|
34
|
PART
II
|
OTHER
INFORMATION
|
|
Item
6.
|
Exhibits
|
35
|
Signatures
|
36
|
|
Exhibits/Certifications
|
September
30, 2008
|
|
June
30, 2008
|
|||||
(Unaudited)
|
|||||||
Current
Assets
|
|||||||
Cash
and cash equivalents
|
$
|
16,919,102
|
$
|
16,612,416
|
|||
Restricted
cash
|
165,081
|
193,392
|
|||||
Accounts
receivable, net
|
6,340,147
|
3,590,552
|
|||||
Inventories
|
6,572,248
|
3,988,979
|
|||||
Other
assets
|
104,926
|
128,091
|
|||||
Advances
to suppliers
|
579,582
|
512,845
|
|||||
Total
Current Assets
|
30,681,086
|
25,026,275
|
|||||
Plant,
Property and Equipment, Net
|
17,829,481
|
18,199,456
|
|||||
Construction
In Progress
|
5,155,894
|
5,115,492
|
|||||
Intangible
Assets, Net
|
1,153,538
|
1,180,159
|
|||||
Total
Assets
|
$
|
54,819,998
|
$
|
49,521,382
|
|||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|||||||
Current
Liabilities
|
|||||||
Accounts
payable
|
$
|
263,332
|
$
|
232,417
|
|||
Unearned
revenue
|
180,924
|
88,950
|
|||||
Other
payables and accrued expenses
|
439,015
|
455,228
|
|||||
Registration
rights liability
|
704,494
|
506,142
|
|||||
Advances
from other unrelated companies
|
336,151
|
344,628
|
|||||
Amount
due to related parties
|
31,121
|
31,121
|
|||||
Taxes
payable
|
7,480,835
|
5,878,275
|
|||||
Short
term loans
|
4,084,550
|
4,201,925
|
|||||
Total
Current Liabilities
|
13,520,422
|
11,738,686
|
|||||
Common
Stock, $.001 par value, 6,313,617 shares subject to
redemption
|
20,519,255
|
20,519,255
|
|||||
Commitment
|
—
|
—
|
|||||
Stockholders'
Equity
|
|||||||
Preferred
Stock, $.001 par value, 20,000,000 shares authorized, Zero shares
issued
and outstanding
|
—
|
—
|
|||||
Common
stock, $.001 par value, 780,000,000 shares authorized, 12,068,085
shares
issued and outstanding
|
12,068
|
12,068
|
|||||
Additional
paid-in capital
|
1,225,209
|
1,200,077
|
|||||
Statury
reserve
|
2,280,394
|
1,882,797
|
|||||
Retained
earnings
|
14,864,409
|
11,764,079
|
|||||
Accumulated
other comprehensive income
|
2,398,240
|
2,404,419
|
|||||
Total
Stockholders' Equity
|
20,780,321
|
17,263,442
|
|||||
Total
Liabilities and Stockholders' Equity
|
$
|
54,819,998
|
$
|
49,521,382
|
2008
|
2007
|
||||||
Net
sales
|
$
|
8,880,002
|
$
|
7,191,021
|
|||
Cost
of goods sold
|
3,930,893
|
2,773,761
|
|||||
Gross
profit
|
4,949,109
|
4,417,260
|
|||||
Operating
expenses
|
|||||||
Selling
expenses
|
216,376
|
151,705
|
|||||
General
and administrative expenses
|
437,129
|
150,617
|
|||||
Total
operating expenses
|
653,505
|
302,322
|
|||||
Income
from operations
|
4,295,604
|
4,114,938
|
|||||
Other
income (expense)
|
|||||||
Other
income (expense)
|
4,655
|
9,301
|
|||||
Interest
income
|
140,395
|
124
|
|||||
Interest
expense
|
(320,864
|
)
|
(92,569
|
)
|
|||
Bank
charges
|
(380
|
)
|
(22
|
)
|
|||
Total
other expense
|
(176,194
|
)
|
(83,166
|
)
|
|||
Income
before income taxes
|
4,119,410
|
4,031,772
|
|||||
Provision
for income taxes
|
621,483
|
—
|
|||||
Net
income
|
3,497,927
|
4,031,772
|
|||||
Other
comprehensive items
|
|||||||
Foreign
currency translation gain/(loss)
|
(6,179
|
)
|
174,461
|
||||
Comprehensive
income
|
$
|
3,491,748
|
$
|
4,206,233
|
|||
Basic
and diluted weighted average shares outstanding
|
18,381,702
|
10,770,669
|
|||||
Basic
and diluted net earnings per share *
|
$
|
0.19
|
$
|
0.37
|
2008
|
2007
|
||||||
Cash
flows from operating activities
|
|||||||
Net
income
|
$
|
3,497,927
|
$
|
4,031,772
|
|||
Adjustments
to reconcile net income to net cash provide by operating
activities
|
|||||||
Share
capital contribution - rental and interest paid by
shareholders
|
—
|
14,337
|
|||||
Issuance
of stock options for compensation
|
25,133
|
||||||
Depreciation
|
368,094
|
208,898
|
|||||
Amortization
|
26,740
|
24,253
|
|||||
Decrease
/ (Increase) in current assets
|
|||||||
Accounts
receivable
|
(2,750,170
|
)
|
(4,095,432
|
)
|
|||
Other
receivables
|
8,258
|
69,214
|
|||||
Inventories
|
(2,583,908
|
)
|
(150,870
|
)
|
|||
Advances
to suppliers
|
(66,825
|
)
|
(318,984
|
)
|
|||
Other
assets
|
15,756
|
(2,374
|
)
|
||||
(Decrease)
/ Increase in current liabilities
|
|||||||
Accounts
payable
|
30,941
|
287,180
|
|||||
Unearned
revenue
|
91,989
|
94,036
|
|||||
Tax
payables
|
1,603,503
|
757,460
|
|||||
Advances
from unrelated parties
|
(341,719
|
)
|
|||||
Other
payables and accrued expenses
|
174,431
|
(16,975
|
)
|
||||
Net
cash provided by operating activities
|
441,868
|
560,796
|
|||||
Cash
flows from investing activities
|
|||||||
Acquisition
of plant, property, and equipment
|
(897
|
)
|
—
|
||||
Additions
to construction in progress
|
(41,223
|
)
|
—
|
||||
Net
cash used in investing activities
|
(42,120
|
)
|
—
|
||||
Cash
flows from financing activities
|
|||||||
Repayment
of loan
|
(116,701
|
)
|
—
|
||||
Restricted
cash
|
28,311
|
—
|
|||||
(Payments)/proceeds
to/from related parties
|
—
|
(536,621
|
)
|
||||
Net
cash used in financing activities
|
(88,391
|
)
|
(536,621
|
)
|
|||
Effect
of exchange rate change on cash and cash
equivalents
|
(4,671
|
)
|
1,509
|
||||
Net
increase in cash and cash equivalents
|
306,686
|
25,684
|
|||||
Cash
and cash equivalents, beginning balance
|
16,612,416
|
81,716
|
|||||
Cash
and cash equivalents, ending balance
|
$
|
16,919,102
|
$
|
107,400
|
|||
Supplement
disclosure of cash flow information
|
|||||||
Interest
expense paid
|
$
|
(122,511
|
)
|
$
|
(92,674
|
)
|
|
Income
taxes paid
|
$
|
—
|
$
|
—
|
|
Estimated
Useful Life
|
|||
Building
|
10-40
years
|
|||
Leasehold
improvements
|
3-5
years
|
|||
Machinery
and equipment
|
5-15
years
|
|||
Vehicles
|
3-5
years
|
For
the three months ended
|
|||||||
September
30, 2008
|
|
September
30, 2007
|
|||||
Revenues
from unaffiliated customers:
|
|||||||
Fertilizer
|
$
|
7,625,501
|
$
|
5,588,757
|
|||
Agricultural
products
|
1,254,501
|
1,602,264
|
|||||
Consolidated
|
$
|
8,880,002
|
$
|
7,191,021
|
|||
Operating
income (expenses) :
|
|||||||
Fertilizer
|
$
|
4,125,086
|
$
|
3,131,416
|
|||
Agricultural
products
|
454,104
|
983,522
|
|||||
Reconciling
item (1)
|
—
|
—
|
|||||
Reconciling
item (2)
|
(283,586
|
)
|
—
|
||||
Consolidated
|
$
|
4,295,604
|
$
|
4,114,938
|
|||
Identifiable
assets:
|
|||||||
Fertilizer
|
$
|
48,728,908
|
$
|
19,373,276
|
|||
Agricultural
products
|
5,349,876
|
2,325,120
|
|||||
Reconciling
item (1)
|
576,132
|
—
|
|||||
Reconciling
item (2)
|
165,081
|
—
|
|||||
Consolidated
|
$
|
54,819,998
|
$
|
21,698,396
|
|||
Net
income:
|
|||||||
Fertilizer
|
$
|
3,521,739
|
$
|
3,048,148
|
|||
Agricultural
products
|
454,229
|
983,624
|
|||||
Reconciling
item (1)
|
4,043
|
—
|
|||||
Reconciling
item (2)
|
(482,084
|
)
|
—
|
||||
Consolidated
|
$
|
3,497,927
|
$
|
4,031,772
|
|||
Depreciation
and amortization:
|
|||||||
Fertilizer
|
$
|
367,103
|
$
|
233,151
|
|||
Agricultural
products
|
27,731
|
—
|
|||||
Reconciling
item (1)
|
—
|
—
|
|||||
Reconciling
item (2)
|
—
|
—
|
|||||
Consolidated
|
$
|
394,834
|
$
|
233,151
|
|||
Capital
expenditures:
|
|||||||
Fertilizer
|
$
|
42,120
|
$
|
—
|
|||
Agricultural
products
|
—
|
—
|
|||||
Reconciling
item (1)
|
—
|
—
|
|||||
Reconciling
item (2)
|
—
|
—
|
|||||
Consolidated
|
$
|
42,120
|
$
|
—
|
|||
Interest
expense:
|
|||||||
Fertilizer
|
$
|
122,365
|
$
|
92,569
|
|||
Agricultural
products
|
—
|
—
|
|||||
Reconciling
item (1)
|
—
|
—
|
|||||
Reconciling
item (2)
|
198,498
|
—
|
|||||
Consolidated
|
$
|
320,864
|
$
|
92,569
|
September
30, 2008
|
June
30, 2008
|
||||||
Raw
materials
|
$
|
1,383,121
|
$
|
77,000
|
|||
Supplies
and packing materials
|
1,103,825
|
207,138
|
|||||
Work
in progress
|
3,941,483
|
3,570,127
|
|||||
Finished
goods
|
143,820
|
134,714
|
|||||
Totals
|
$
|
6,572,248
|
$
|
3,988,979
|
September
30, 2008
|
June
30, 2008
|
||||||
Other
receivable
|
$
|
71,996
|
$
|
93,987
|
|||
Promotion
material
|
32,930
|
34,104
|
|||||
Total
|
$
|
104,926
|
$
|
128,091
|
September
30, 2008
|
June
30, 2008
|
||||||
Building
and improvements
|
$
|
8,794,392
|
$
|
8,795,804
|
|||
Vehicles
|
23,749
|
23,753
|
|||||
Machinery
and equipment
|
10,262,918
|
10,263,668
|
|||||
Agriculture
assets
|
887,518
|
887,518
|
|||||
Total
|
19,968,577
|
19,970,743
|
|||||
Less:
accumulated depreciation
|
(2,139,096
|
)
|
(1,771,287
|
)
|
|||
Total
property, plant and equipment
|
$
|
17,829,481
|
$
|
18,199,456
|
September
30, 2008
|
June
30, 2008
|
||||||
Land
use right, net
|
$
|
910,573
|
$
|
915,864
|
|||
Technology
know-how, net
|
242,965
|
264,295
|
|||||
Total
|
$
|
1,153,538
|
$
|
1,180,159
|
September
30, 2008
|
June
30, 2008
|
||||||
Land
use right
|
$
|
1,062,898
|
$
|
1,062,898
|
|||
Less:
accumulated amortization
|
(152,324
|
)
|
(147,034
|
)
|
|||
Total
|
$
|
910,573
|
$
|
915,864
|
September
30, 2008
|
June
30, 2008
|
||||||
Technology
Know-how
|
$
|
857,174
|
$
|
857,174
|
|||
Less:
accumulated amortization
|
(614,209
|
)
|
(592,879
|
)
|
|||
Total
|
$
|
242,965
|
$
|
264,295
|
September
30, 2009
|
$
|
106,975
|
||
September
30, 2010
|
106,975
|
|||
September
30, 2011
|
87,498
|
|||
September
30, 2012
|
21,258
|
|||
September
30, 2013
|
21,258
|
|||
Total
|
$
|
343,964
|
September
30, 2008
|
June
30, 2008
|
||||||
Payroll
payable
|
$
|
13,847
|
$
|
15,379
|
|||
Welfare
payable
|
176,216
|
178,500
|
|||||
Accrued
expenses
|
135,758
|
148,070
|
|||||
Other
levy payable
|
113,194
|
113,279
|
|||||
Total
|
$
|
439,015
|
$
|
455,228
|
September
30, 2008
|
June
30, 2008
|
||||||
Short
term loans payable:
|
|||||||
Xi’an
Commercial Bank Xincheng Branch
|
$
|
2,188,152
|
$
|
2,188,502
|
|||
Xi’an
Beilin District Rural Credit Union Wenyibeilu Branch
|
554,332
|
554,421
|
|||||
Agriculture
Bank Yanglingshifangqu Branch
|
1,342,066
|
1,459,002
|
|||||
Total
|
$
|
4,084,550
|
$
|
4,201,925
|
September
30, 2008
|
June
30, 2008
|
||||||
VAT
payable
|
$
|
5,476,791
|
4,495,140
|
||||
Income
tax payable
|
1,659,770
|
1,038,651
|
|||||
Other
levies
|
344,274
|
344,484
|
|||||
Total
|
$
|
7,480,535
|
5,878,275
|
2008
|
|
2007
|
|||||
Current
income tax - Provision for China income and local tax
|
$
|
621,483
|
$
|
—
|
|||
Deferred
taxes
|
—
|
—
|
|||||
Total
provision for income taxes
|
$
|
621,483
|
$
|
—
|
2008
|
2007
|
||||||
Tax
at statutory rate
|
34
|
%
|
34
|
%
|
|||
Foreign
tax rate difference
|
(19
|
%)
|
(19
|
%)
|
|||
Net
operating loss in other tax jurisdiction for where no benefit is
realized
|
0
|
%
|
(15
|
%)
|
|||
Total
|
15
|
%
|
0
|
%
|
1.
|
$2,000,000
is held pending the company hiring a qualified CFO. The Company
appointed
a CFO in April 2008.
|
2.
|
$2,000,000
is held pending the company hiring two independent directors, therefore
constituting a majority independent directors in the board. The
Company
appointed a majority of independent directors in April 2008.
|
3.
|
$250,000
is for the retaining of an Investors Relation firm.
|
i)
|
Making
up cumulative prior years' losses, if any;
|
ii)
|
Allocations
to the "Statutory surplus reserve" of at least 10% of income after
tax, as
determined under PRC accounting rules and regulations, until the
fund
amounts to 50% of the Company's registered capital;
|
iii)
|
Allocations
of 5-10% of income after tax, as determined under PRC accounting
rules and
regulations, to the Company's "Statutory common welfare fund",
which is
established for the purpose of providing employee facilities and
other
collective
benefits
to
the Company's employees; and statutory
common welfare fund is no longer required per the new cooperation
law
executed in 2006.
|
iv)
|
Allocations
to the discretionary surplus reserve, if approved in the shareholders'
general meeting.
|
Risk-free
interest rate
|
2.27%
|
Expected
life of the options
|
3
year
|
Expected
volatility
|
252%
|
Expected
dividend yield
|
0
%
|
Risk-free
interest rate
|
1.87%
|
Expected
life of the options
|
2
year
|
Expected
volatility
|
540%
|
Expected
dividend yield
|
0
%
|
Risk-free
interest rate
|
2.22%
|
Expected
life of the options
|
2
year
|
Expected
volatility
|
544%
|
Expected
dividend yield
|
0
%
|
Risk-free
interest rate
|
2.22%
|
Expected
life of the options
|
2
year
|
Expected
volatility
|
538%
|
Expected
dividend yield
|
0
%
|
Exercise
Prices
|
Total
Options
Outstanding
|
Weighted
Average
Remaining
Life
(Years)
|
Total
Weighted
Average
Exercise
Price
|
Options
Exercisable
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic
Value
|
||||||
$3.25-$6
|
121,500
|
|
2.05
|
|
$4.49
|
|
69,000
|
|
$4.15
|
|
1,860
|
|
Options
Outstanding
|
|||
Outstanding,
June 30, 2008
|
121,500
|
|||
Granted
|
28,000
|
|||
Forfeited/Canceled
|
(28,000
|
)
|
||
Exercised
|
—
|
|||
Outstanding,
September 30, 2008
|
121,500
|
September
30, 2009
|
$
|
20,418
|
||
September
30, 2010
|
20,418
|
|||
September
30, 2011
|
20,418
|
|||
September
30, 2012
|
20,418
|
|||
September
30, 2013
|
20,418
|
|||
Total
|
$
|
102,090
|
Three
months ended
|
Three
months ended
|
||||||
September
30, 2008
|
September
30, 2007
|
||||||
Net
Sales
|
$
|
8,880,002
|
$
|
7,191,021
|
|||
Cost
of Goods Sold
|
3,930,893
|
2,773,761
|
|||||
Gross
Profit
|
4,949,109
|
4,417,260
|
|||||
Selling
Expenses
|
216,376
|
151,705
|
|||||
General
and Administrative Expenses
|
437,129
|
150,617
|
|||||
Income
from Operations
|
4,295,604
|
4,114,938
|
|||||
Total
Other Income (expense)
|
(176,194
|
)
|
(83,166
|
)
|
|||
Income
Before Income Taxes
|
4,119,410
|
4,031,772
|
|||||
Provision
for Income Taxes
|
621,483
|
—
|
|||||
Net
Income
|
3,497,927
|
4,031,772
|
Three
months ended September 30
|
|||||||
2008
|
2007
|
||||||
Net
cash provided by / (used in) operating activities
|
411,868
|
560,796
|
|||||
Net
cash used in investing activities
|
(42,120
|
)
|
—
|
||||
Net
cash provided by financing activities
|
(88,391
|
)
|
(536,621
|
)
|
|||
Effect
of exchange rate change on cash and cash equivalents
|
(4,671
|
)
|
1,509
|
||||
Net
increase in cash and cash equivalents
|
306,686
|
25,684
|
|||||
Cash
and cash equivalents, beginning balance
|
16,612,416
|
81,716
|
|||||
Cash
and cash equivalents, ending balance
|
16,919,102
|
107,400
|
Short
term loans payable:
|
Amount
Outstanding
|
Repayment
Terms
|
Expiration
Date
|
Xi’an
Commercial Bank Xincheng Branch
|
$2,188,152
|
Annual
Interest Rate: 10.585%, repaid on a monthly basis
|
04/01/2009
|
Xi’an
Beilin District Rural Credit Union Wenyibeilu Branch
|
$554,332
|
Annual
Interest Rate: 11.795%, repaid on a monthly basis
|
09/16/2009
|
Agriculture
Bank Yanglingshifangqu Branch
|
$1,342,066
|
Annual
Interest Rate: 9.71%, repaid on a monthly basis
|
12/28/2008
|
Total
|
$4,084,550
|
|
|
CHINA
GREEN AGRICULTURE, INC.
|
||
Date:
November 10, 2008
|
BY:
|
/s/
Tao Li
|
Tao
Li
|
||
President
and Chief Executive Officer
|
||
(principal
executive officer)
|
||
Date:
November 10, 2008
|
BY:
|
/s/
Ying Yang
|
Ying
Yang
|
||
Chief
Financial Officer
|
||
(principal
financial officer and accounting
officer)
|