China Green Agriculture, Inc
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2016 or ☐ TRANSITION REPORT UNDER 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 incorporation or organization) (I.R.S. Employer Identification No.) Third floor, Borough A, Block A. No. 181, South Taibai Road Xi’an, Shaanxi Province, PRC 710065 (Address of principal executive offices)(Zip Code) Registrant’s telephone number: +86-29-88266368 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, $0.001 Par Value Per Share NYSE Securities registered pursuant to Section 12(g) of the Act: None. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has 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 report(s)), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐ 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 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 ☐ Smaller reporting company ☒ Do not check if a smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $39,916,798 as of December 31, 2015, based on the closing price $1.52 of the Company’s common stock on such date. The number of outstanding shares of the registrant’s common stock on October 3, 2016, was 37,648,605. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s definitive Proxy Statement for the 2016 Annual Meeting of Stockholders, which the registrant plans to file with the Securities and Exchange Commission within 120 days after June 30, 2016 are incorporated by reference in Part III of this Form 10-K to the extent described herein. TABLE OF CONTENTS TO ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR ENDED JUNE 30, 2016 PAGE PART I Item 1. Business 1 Item 1A. Risk Factors 21 Item 1B. Unresolved Staff Comments 38 Item 2. Properties 38 Item 3. Legal Proceedings 40 Item 4. Mine Safety Disclosures 40 PART II Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 41 Item 6. Selected Financial Data 43 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 44 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 55 Item 8. Financial Statements and Supplementary Data 56 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 56 Item 9A. Controls and Procedures 56 Item 9B. Other Information 57 PART III Item 10. Directors, Executive Officers and Corporate Governance 58 Item 11. Executive Compensation 64 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters 73 Item 13. Certain Relationships and Related Transactions, and Director Independence 74 Item 14. Principal Accountant Fees and Services 76 PART IV Item 15. Exhibits and Financial Statement Schedules 77 SIGNATURES S-1 EXHIBIT INDEX E-1 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA F-1 PART I Item 1. Business We, the Company, are primarily engaged in the research, development, production and sale of various types of fertilizers and agricultural products in the People’s Republic of China (“PRC”) through our wholly-owned Chinese subsidiaries, Jinong (fertilizer production), Gufeng (fertilizer production), our VIE, Yuxing (agricultural products production), and another six VIE companies that we newly acquired in June 2016. Our primary business is of fertilizer products, specifically humic acid-based compound fertilizer produced through Jinong; and compound fertilizer, blended fertilizer, organic compound fertilizer, slow-release fertilizers, highly-concentrated water-soluble fertilizers and mixed organic-inorganic compound fertilizer produced through Gufeng. In addition, through Yuxing, we develop and produce agricultural products, such as top-grade fruits, vegetables, flowers and colored seedlings. On June 30, 2016, the Company, through its wholly-owned subsidiary Jinong, entered into strategic acquisition agreements and a series of contractual agreements with the shareholders of the following six companies that are organized under the laws of the PRC and would be deemed as variable interest entities (the “VIEs”): Shaanxi Lishijie Agrochemical Co., Ltd., Songyuan Jinyangguang Sannong Service Co., Ltd., Shenqiu County Zhenbai Agriculture Co., Ltd., Weinan City Linwei District Wangtian Agricultural Materials Co., Ltd., Aksu Xindeguo Agricultural Materials Co., Ltd., and Xinjiang Xinyulei Eco-agriculture Science and Technology Co., Ltd. (collectively hereafter referred to as “the VIE Companies.”) Fertilizer production was our core business and we generated approximately $260,378,357, $259,030,774, and $229,917,266, or 96.9%, 98.4 % and 98.4% of our total revenues for the years ended June 30, 2016, 2015 and 2014, respectively. Our total annual production capacity was 555,000 metric tons as of June 30, 2016. As of June 30, 2016, we sold our products through a network of 1,904 regional distributors covering 27 provinces, 4 autonomous regions and 3 central government-controlled municipalities in China. We do not rely on any single distributor. Our top five distributors accounted for an approximately 40% of our fertilizer revenues for the fiscal year ended June 30, 2016, of which Sino-agri Holding Company Limited accounted for 23.3% of the total fertilizer revenues. As of June 30, 2016, we developed 688 different fertilizer products. We conduct our research and development activities through Yuxing, Jinong’s VIE, which tests new fertilizers and grow high quality flowers, vegetables and seedlings for commercial sale. During the fiscal years ended June 30, 2016, 2015 and 2014, our revenues were $268,785,020, $263,354,288 and $233,402,088, respectively, and our net income were $25,925,734 $31,445,126 and $25,514,695, respectively. 1 Recent Developments Strategic Acquisitions: On June 30, 2016, through Jinong, we entered into (i) Strategic Acquisition Agreements (the “SAA”), and (ii) Agreements for Convertible Notes (the “ACN”), with the shareholders of the companies as identified below (the “Targets”). Cash Principal of Payment for Notes for Acquisition Acquisition Company Name Business Scope (RMB[1]) (RMB) Shaanxi Lishijie Sales of pesticides, agricultural chemicals, chemical fertilizers, agricultural materials; Agrochemical Co., Manufacture and sales of mulches. Ltd. 10,000,000 3,000,000 Songyuan Promotion and consulting services regarding agricultural technologies; Retail sales of Jinyangguang chemical fertilizers (including compound fertilizers and organic fertilizers); Wholesale and Sannong Service Co., retail sales of pesticides, agricultural machineries and accessories; Collection of agricultural Ltd. information; Development of saline-alkali soil; Promotion and development of high- efficiency agriculture and related information technology solutions for agriculture, agricultural and biological engineering high technologies; E-commerce; Cultivation of freshwater fish, poultry, fruits, flowers, vegetables, and seeds; Recycle and complex utilization of straw and stalk; Technology transfer and training; Recycle of agricultural economic; Ecological industry planning. 8,000,000 12,000,000 Shenqiu County Cultivation of crops; Storage, sales, preliminary processing and logistics distribution of Zhenbai Agriculture agricultural by-products; Promotion and application of agricultural technologies;