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OFFON

CHINA GREEN AGRICULTURE, INC.

(CGA)
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CHINA GREEN AGRICULTURE : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

02/10/2021 | 05:19pm EDT
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited condensed
consolidated financial statements and the notes to those financial statements
appearing elsewhere in this report. This discussion and analysis contain
forward-looking statements that involve significant risks and uncertainties. As
a result of many factors, such as the slow-down of the macro-economic
environment in China and its impact on economic growth in general, the
competition in the fertilizer industry and the impact of such competition on
pricing, revenues and margins, the weather conditions in the areas where our
customers are based, the cost of attracting and retaining highly skilled
personnel, the prospects for future acquisitions, and the factors set forth
elsewhere in this report, our actual results may differ materially from those
anticipated in these forward-looking statements. With these risks and
uncertainties, there can be no assurance that the forward-looking statements
contained in this report will in fact occur. You should not place undue reliance
on the forward-looking statements contained in this report.



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



Unless the context indicates otherwise, as used in the notes to the financial
statements of the Company, the following are the references herein of all the
subsidiaries of the Company (i) Green Agriculture Holding Corporation ("Green
New Jersey"), a wholly-owned subsidiary of Green Nevada incorporated in the
State of New Jersey; (ii) Shaanxi 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 in the PRC ("VIE") controlled
by Jinong through contractual agreements; (iv) Shaanxi Lishijie Agrochemical
Co., Ltd. ("Lishijie"), a VIE controlled by Jinong through contractual
agreements; (v) Songyuan Jinyangguang Sannong Service Co., Ltd.
("Jinyangguang"), a VIE in the PRC controlled by Jinong through contractual
agreements; (vi) Weinan City Linwei District Wangtian Agricultural Materials
Co., Ltd. ("Wangtian"), a VIE controlled by Jinong through contractual
agreements; (vii) Aksu Xindeguo Agricultural Materials Co., Ltd. ("Xindeguo"), a
VIE controlled by Jinong through contractual agreements; (vii) Xinjiang Xinyulei
Eco-agriculture Science and Technology Co., Ltd ("Xinyulei"), a VIE controlled
by Jinong through contractual agreements; (ix) Sunwu County Xiangrong
Agricultural Materials Co., Ltd. ("Xiangrong"), a VIE controlled by Jinong
through contractual agreements; (x) Anhui Fengnong Seed Co., Ltd. ("Fengnong"),
a VIE controlled by Jinong through contractual agreements; (xi) Beijing Gufeng
Chemical Products Co., Ltd., a wholly-owned subsidiary of Jinong in the PRC
("Gufeng"); and (xii) Beijing Tianjuyuan Fertilizer Co., Ltd., Gufeng's
wholly-owned subsidiary in the PRC ("Tianjuyuan"). Yuxing, Lishijie,
Jinyangguang, Wangtian, Xindeguo, Xinyulei, Xiangrong and Fengnong may also
collectively be referred to as the "the VIE Companies"; Lishijie, Jinyangguang,
Wangtian, Xindeguo, Xinyulei, Xiangrong and Fengnong may also collectively be
referred to as "the sales VIEs" or "the sales VIE companies".



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



Overview



We are engaged in 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
production (Yuxing).



The fertilizer business conducted by Jinong and Gufeng generated approximately
73.2% and 71.9% of our total revenues for the six months Ended December 31, 2020
and 2019, respectively. The sales VIEs generated 21.3% and 23.1% of our revenues
for the six months Ended December 31, 2020 and 2019, respectively. Yuxing serves
as a research and development base for our fertilizer products.



Fertilizer Products



As of December 31, 2020, we had developed and produced a total of 676 different
fertilizer products in use, of which 91 were developed and produced by Jinong,
334 by Gufeng, and 251 by the VIE Companies.



  24





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



           Three Months Ended
              December 31,             Change 2019 to 2020
            2020          2019         Amount            %
              (metric tons)
Jinong       21,228       22,086            (858 )       -3.9 %
Gufeng       66,865       65,483           1,381          2.1 %
             88,093       87,569             523          0.6 %




            Three Months Ended
               December 31,
           2020            2019
            (revenue per tons)
Jinong   $     690       $     667
Gufeng         330             341




            Six Months Ended
              December 31,             Change 2019 to 2020
           2020          2019           Amount           %
              (metric tons)
Jinong      37,099        40,709           (3,610 )      -8.9 %
Gufeng     111,689       117,935           (6,246 )      -5.3 %
           148,788       158,643           (9,856 )      -6.2 %




            Six Months Ended
              December 31,
            2020           2019
           (revenue per tons)
Jinong   $      830       $  843
Gufeng          352          330



For the three months ended December 31, 2020, we sold approximately 88,093 tons
of fertilizer products, as compared to 87,569 metric tons for the three months
ended December 31, 2019. For the three months ended December 31, 2020, Jinong
sold approximately 21,228 metric tons of fertilizer products, as compared to
22,086 metric tons for the three months ended December 31, 2019. For the three
months ended December 31, 2020, Gufeng sold approximately 66,865 metric tons of
fertilizer products, as compared to 65,483 metric tons for the three months
ended December 31, 2019.



For the six months ended December 31, 2020, we sold approximately 148,788 metric
tons of fertilizer products, as compared to 158,643 metric tons for the six
months ended December 31, 2019. For the six months ended December 31, 2020,
Jinong sold approximately 37,099 metric tons of fertilizer products, a decrease
of 3,610 metric tons, or 8.9%, as compared to 40,709 metric tons for the six
months ended December 31, 2019. For the six months ended December 31, 2020,
Gufeng sold approximately 111,689 metric tons of fertilizer products, a decrease
of 6,246 metric tons, or 5.3% as compared to 117,935 metric tons for the six
months ended December 31, 2019.



Our sales of fertilizer products to customers in five provinces within China
accounted for approximately 67.0% of our fertilizer revenue for the three months
ended December 31, 2020. Specifically, the provinces and their respective
percentage contributing to our fertilizer revenues were Hebei (29.4%),
Heilongjiang (11.1%), Inner Mongolia (10.9%), Liaoning (10.1%) and Shaanxi
(5.6%).



As of December 31, 2020, we had a total of 1,922 distributors covering 22
provinces, 4 autonomous regions and 4 central government-controlled
municipalities in China. Jinong had 1,090 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 3.8% of its fertilizer revenues for
the three months ended December 31, 2020. Gufeng had 334 distributors, including
some large state-owned enterprises. Gufeng's top five distributors accounted for
78.7% of its revenues for the three months ended December 31, 2020.



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 and municipalities that accounted for 93.7% of our
agricultural products revenue for the three months ended December 31, 2020 were
Shaanxi (85.4%), Shanghai (6.3%), and Guangdong (2.0%).



Recent Developments



New Products


During the three months ended December 31, 2020, Jinong did not launch any new
fertilizer product. During the three months ended December 31, 2020, Gufeng did
not launch any new fertilizer products but add 4 new distributors.



  25






Strategic Acquisitions



On June 30, 2016 and January 1, 2017, through Jinong, we entered (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").



June 30, 2016:



                                                                       Cash         Principal of
                                                                   Payment for        Notes for
                                                                   Acquisition       Acquisition
Company Name       Business Scope                                    (RMB[1])           (RMB)
Shaanxi Lishijie   Sales of pesticides, agricultural chemicals,
Agrochemical       chemical fertilizers, agricultural materials;
Co., Ltd.          Manufacture and sales of mulches.                 10,000,000         3,000,000

Songyuan           Promotion and consulting services regarding
Jinyangguang       agricultural technologies; Retail sales of
Sannong Service    chemical fertilizers (including compound
Co., Ltd.          fertilizers and organic fertilizers);
                   Wholesale and retail sales of pesticides,
                   agricultural machinery and accessories;
                   Collection of agricultural 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; Recycling and complex
                   utilization of straw and stalk; Technology
                   transfer and training; Recycling of
                   agricultural materials ; Ecological industry
                   planning.                                          8,000,000        12,000,000
Shenqiu County     Cultivation of crops; Storage, sales,
Zhenbai            preliminary processing and logistics
Agriculture Co.,   distribution of agricultural by-products;
Ltd.               Promotion and application of agricultural
                   technologies; Purchase and sales of
                   agricultural materials; Electronic commerce.       3,000,000        12,000,000

Weinan City        Promotion and application of new agricultural
Linwei District    technologies; Professional prevention of
Wangtian           plant diseases and insect pests; Sales of
Agricultural       plant protection products, plastic mulches,
Materials Co.,     material, chemical fertilizers, pesticides,
Ltd.               agricultural medicines, micronutrient
                   fertilizers, hormones, agricultural machinery
                   and medicines, and gardening tools.                6,000,000        12,000,000

Aksu Xindeguo      Wholesale and retail sales of pesticides;
Agricultural       Sales of chemical fertilizers, packaged
Materials Co.,     seeds, agricultural mulches, micronutrient
Ltd.               fertilizers, compound fertilizers, plant
                   growth regulators, agricultural machineries,
                   and water economizers; Consulting services
                   for agricultural technologies; Purchase and
                   sales of agricultural by- products.               10,000,000        12,000,000

Xinjiang           Sales of chemical fertilizers, packaged
Xinyulei           seeds, agricultural mulches, micronutrient
Eco-agriculture    fertilizers, organic fertilizers, plant
Science and        growth regulators, agricultural machineries,
Technology Co.,    and water economizers; Purchase and sales of
Ltd                agricultural by-products; Cultivation of
                   fruits and vegetables; Consulting services
                   and training for agricultural technologies;
                   Storage services; Sales of articles of daily
                   use, food and oil; On-line sales of the
                   above-mentioned products.

Total                                                                37,000,000        51,000,000



(1) The exchange rate between RMB and U.S. dollars on June 30, 2016 is

RMB1=US$0.1508, according to the exchange rate published by Bank of China.

(2) On November 30, 2017, the Company, through its wholly-owned subsidiary

Jinong, discontinued the strategic acquisition agreements and the series of

contractual agreements with the shareholders of Zhenbai. In return, the

shareholders of Zhenbai agreed to tender the whole payment consideration in

the SAA back to the Company with early termination penalties. The convertible

    notes paid to Zhenbai's shareholders and the accrued interest has been
    forfeited.




  26






January 1, 2017:



                                                                       Cash         Principal of
                                                                   Payment for        Notes for
                                                                   Acquisition       Acquisition
Company Name               Business Scope                            (RMB[1])           (RMB)
Sunwu County Xiangrong     Sales of pesticides, agricultural
Agricultural Materials     chemicals, chemical fertilizers,
Co., Ltd.                  agricultural materials; Manufacture
                           and sales of mulches.                     

4,000,000 6,000,000


Anhui Fengnong Seed Co.,   Wholesale and retail sales of
Ltd.                       pesticides; Sales of chemical
                           fertilizers, packaged seeds,
                           agricultural mulches, micronutrient
                           fertilizers, compound fertilizers and
                           plant growth regulators                    4,000,000         6,000,000

Total                                                                 8,000,000        12,000,000



(1) The exchange rate between RMB and U.S. dollars on January 1, 2017 is

RMB1=US$0.144, according to the exchange rate published by Bank of China.





Pursuant to the SAA and the ACN, the shareholders of the Targets, while
retaining possession of the equity interests and continuing to be the legal
owners of such interests, agreed to pledge and entrust all their equity
interests, including the proceeds thereof but excluding any claims or
encumbrances, and the operations and management of its business to Jinong, in
exchange of an aggregate amount of RMB45,000,000 (approximately $6,885,000) to
be paid by Jinong within three days following the execution of the SAA, ACN and
the VIE Agreements, and convertible notes with an aggregate face value of RMB
63,000,000 (approximately $9,639,000) with an annual fixed compound interest
rate of 3% and term of three years.



Jinong acquired the Targets using the VIE arrangement based on our need to further develop our business and comply with the regulatory requirements under the PRC laws.




As our business focuses on the production of fertilizer, all our business
activities intertwine with those in the agriculture industry in China.
Specifically, we deal with compliance, regulation, safety, inspection, and
licenses in fertilizer production, farmland use and transfer, growing and
distribution of agriculture goods, agriculture basic supplies, seeds,
pesticides, and trades of grains. It is an industry in which heavy regulations
get implemented and strictly enforced. In addition, E-commerce, which is also
under strict government regulation in the PRC, has lately become a sales and
distribution channel for agricultural products. Currently, we are developing an
online platform to connect the physical distribution network we either own
or
lease.



Compared with the regulatory environment in other jurisdictions, the regulatory
environment in the PRC is unique. For example, the "M&A Rules" purports to
require that an offshore special purpose vehicle controlled directly or
indirectly by PRC companies or individuals and formed for purposes of overseas
listing through acquisition of PRC domestic interests held by such PRC companies
or individuals obtain the approval of the China Securities Regulatory Commission
(the "CSRC") prior to the listing and trading of such special purpose vehicle's
securities on an overseas stock exchange. On September 21, 2006, the CSRC
published procedures regarding its approval of overseas listings by special
purpose vehicles.



For both e-commerce and agriculture industries, PRC regulators limit the
investment from foreign entities and set particularly rules for foreign-owned
entities to conduct business. We expect these limitations on foreign-owned
entities will continue to exist in e-commerce and agriculture industries. The
VIE arrangement, however, provides feasibility for obtaining administrative
approval process and avoiding industry restrictions that can be imposed on an
entity that is a wholly-owned subsidiary of a foreign entity. The VIE agreements
reduce uncertainty and the current limitation risk. It is our understanding that
the VIE agreements, as well as the control we obtained through VIE arrangement,
are valid and enforceable. Such legal structure does not violate the known,
published, and current PRC laws. While there are substantial uncertainties
regarding the interpretation and application of PRC Laws and future PRC laws and
regulations, and there can be no assurance that the PRC authorities will take a
view that is not contrary to or otherwise different from our belief and
understanding stated above, we believe the substantial difficulty that we
experienced previously to conduct business in agriculture as a foreign ownership
can be greatly reduced by the VIE arrangement. Further, as an integral part of
the VIE arrangement, the underlying equity pledge agreements provide legal
protection for the control we obtained. Pursuant to the equity pledge
agreements, we have completed the equity pledge processes with the Targets to
ensure the complete control of the interests in the Targets. The shareholders of
the Targets are not entitled to transfer any shares to a third party under the
exclusive option agreements. If necessary, they may transfer shares to our
company without consideration.



While the VIE arrangement provides us with the feasibility to conduct our
business in the E-Commerce and agriculture industries, validity and
enforceability of VIE arrangement is subject to (i) any applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or similar laws
affecting creditors' rights generally, (ii) possible judicial or administrative
actions or any PRC Laws affecting creditors' rights, (iii) certain equitable,
legal or statutory principles affecting the validity and enforceability of
contractual rights generally under concepts of public interest, interests of the
State, national security, reasonableness, good faith and fair dealing, and
applicable statutes of limitation; (iv) any circumstance in connection with
formulation, execution or implementation of any legal documents that would be
deemed materially mistaken, clearly unconscionable, fraudulent, coercive at the
conclusions thereof; and (v) judicial discretion with respect to the
availability of indemnifications, remedies or defenses, the calculation of
damages, the entitlement to attorney's fees and other costs, and the waiver of
immunity from jurisdiction of any court or from legal process. Validity and
enforceability of VIE arrangement is also subject to risk derived from the
discretion of any competent PRC legislative, administrative or judicial bodies
in exercising their authority in the PRC. As a result, there can no assurance
that any of such PRC Laws will not be changed, amended or replaced in the
immediate future or in the longer term with or without retrospective effect.



  27






Results of Operations



Three Months ended December 31, 2020 Compared to the Three Months ended December
31, 2019.



                                               2020              2019            Change $         Change %
Sales
Jinong                                     $  14,901,875     $  14,521,485           380,390            2.6 %
Gufeng                                        22,436,394        22,266,549           169,845            0.8 %
Yuxing                                         2,682,195         2,461,510           220,685            9.0 %
Sales VIEs                                     8,320,878        10,315,465        (1,994,587 )        -19.3 %
Net sales                                     48,341,342        49,565,009        (1,223,667 )         -2.5 %
Cost of goods sold
Jinong                                        10,921,417        10,127,892           793,525            7.8 %
Gufeng                                        19,846,423        19,755,967            90,456            0.5 %
Yuxing                                         2,140,856         2,110,321            30,535            1.4 %
Sales VIEs                                     7,008,527         8,750,344        (1,741,817 )        -19.9 %
Cost of goods sold                            39,917,223        40,744,524          (827,301 )         -2.0 %
Gross profit                                   8,424,119         8,820,485          (396,366 )         -4.5 %
Operating expenses
Selling expenses                               3,349,155         3,856,972          (507,817 )        -13.2 %
General and administrative expenses           43,537,527        32,761,531        10,775,996           32.9 %
Total operating expenses                      46,886,682        36,618,503        10,268,179           28.0 %
Income (loss) from operations                (38,462,563 )     (27,798,018
)     (10,664,545 )         38.4 %
Other income (expense)
Other income (expense)                           (49,064 )         (73,263 )          24,199          -33.0 %
Interest income                                   20,987            53,262           (32,275 )        -60.6 %
Interest expense                                 (67,185 )         (87,496 )          20,311          -23.2 %
Total other income (expense)                     (95,262 )        (107,497 )          12,235          -11.4 %
Income (loss) before income taxes            (38,557,825 )     (27,905,515 )     (10,652,310 )         38.2 %
Provision for income taxes                     1,478,838          (824,635         2,303,473         -279.3 %
Net income (loss)                          $ (40,036,663 )   $ (27,080,880 )     (12,955,783 )         47.8 %
Other comprehensive income (loss)
Foreign currency translation gain (loss)      11,927,692        10,330,982 )       1,596,710           15.5 %
Comprehensive income (loss)                $ (28,108,971 )   $ (16,749,898
)     (11,359,073 )         67.8 %




  28






Net Sales



Total net sales for the three months ended December 31, 2020 were $48,341,342 a
decrease of $1,223,667 or 2.5%, from $49,565,009 for the three months ended
December 31, 2019. This decrease was principally a result of the negative impact
on sales volumes due to the COVID-19 pandemic, especially for VIEs' net sales.



For the three months ended December 31, 2020, Jinong's net sales increased
$380,390, or 2.6%, to $14,901,875 from $14,521,485 for the three months ended
December 31, 2019. This increase was mainly due to Jinong's higher sales price
in the last three months. Jinong's revenue per ton is $690 for the three months
ended December 31, 2020, increased $23 or 3.4%, as compared to $667 for the
three months ended December 31, 2019.



For the three months ended December 31, 2020, Gufeng's net sales were
$22,436,394, an increase of $169,845 or 0.8%, from $22,266,549 for the three
months ended December 31, 2019. This increase was mainly due to Gufeng's higher
sales volume in the last three months. Gufeng sold approximately 66,865 metric
tons of fertilizer products for the three months ended December 31, 2020,
increased 1,381 tons or 2.1%, as compared to 65,483 metric tons for the three
months ended December 31, 2019.



For the three months ended December 31, 2020, Yuxing's net sales were $2,682,195, an increase of $220,685 or 9.0%, from $2,461,510 for the three months ended December 31, 2019. The increase was mainly due to the increase in market demand during the three months ended December 31, 2020.




For the three months ended December 31, 2020, VIEs' net sales were $8,320,878, a
decrease of $1,994,587 or 19.3%, from $10,315,465 for the three months ended
December 31, 2019. The decrease was mainly due to the decrease in market demand
during the three months ended December 31, 2020.



Cost of Goods Sold



Total cost of goods sold for the three months ended December 31, 2020 was
$39,917,223, a decrease of $827,301, or 2.0%, from $40,744,524 for the three
months ended December 31, 2019. The decrease was mainly due to 19.9% decrease in
VIEs' cost of goods sold.



Cost of goods sold by Jinong for the three months ended December 31, 2020 was
$10,921,417, an increase of $793,525, or 7.8%, from $10,127,892 for the three
months ended December 31, 2019. The increase in cost of goods was primarily due
to higher product cost in the fiscal year 2021.



Cost of goods sold by Gufeng for the three months ended December 31, 2020 was
$19,846,423, a slightly increase of $90,456, or 0.5%, from $19,755,967 for the
three months ended December 31, 2019. This increase was primarily due to the
0.8% increase in net sale in the fiscal year 2021.



For three months ended December 31, 2020, cost of goods sold by Yuxing was $2,140,856, an increase of $30,535, or 1.4%, from $2,110,321 for the three months ended December 31, 2019. This increase was mainly due to Yuxing's higher net sales in the fiscal year 2021.




For three months ended December 31, 2020, cost of goods sold by VIEs was
$7,008,527, a decrease of $1,741,817, or 19.9%, from $8,750,344 for the three
months ended December 31, 2019. This decrease was mainly due to VIEs' lower net
sales in the fiscal year 2021.



Gross Profit



Total gross profit for the three months ended December 31, 2020 decreased by
$396,366, or 4.5%, to $8,424,119, as compared to $8,820,485 for the three months
ended December 31, 2019. Gross profit margin was 17.4% and 17.8% for the three
months Ended December 31, 2020 and 2019, respectively.



Gross profit generated by Jinong decreased by $413,135, or 9.4%, to $3,980,458
for the three months ended December 31, 2020 from $4,393,593 for the three
months ended December 31, 2019. Gross profit margin from Jinong's sales was
approximately 26.7% and 30.3% for the three months Ended December 31, 2020 and
2019, respectively. The decrease in gross profit margin was mainly due to the
higher product cost for Jinong in the fiscal year 2021.



For the three months ended December 31, 2020, gross profit generated by Gufeng
was $2,589,971, an increase of $79,389, or 3.2%, from $2,510,582 for the three
months ended December 31, 2019. Gross profit margin from Gufeng's sales was
approximately 11.5% and 11.3% for the six months Ended December 31, 2020 and
2019, respectively.



  29






For the three months ended December 31, 2020, gross profit generated by Yuxing
was $541,339, an increase of $190,150, or 54.1% from $351,189 for the three
months ended December 31, 2019. The gross profit margin was approximately 20.2%
and 14.3% for the three months Ended December 31, 2020 and 2019, respectively.
The increase in gross profit percentage was mainly due to the decrease in
product costs.



Gross profit generated by VIEs decreased by $252,770, or 16.2%, to $1,312,351
for the three months ended December 31, 2020 from $1,565,121 for the three
months ended December 31, 2019. Gross profit margin from VIE's sales was
approximately 15.8% and 15.2% for the three months Ended December 31, 2020 and
2019, respectively, which was slightly decreased.



Selling Expenses



Our selling expenses consisted primarily of salaries of sales personnel,
advertising and promotion expenses, freight-out costs and related compensation.
Selling expenses were $3,349,155, or 6.9%, of net sales for the three months
ended December 31, 2020, as compared to $3,856,972, or 7.8%, of net sales for
the three months ended December 31, 2019, a decrease of $507,817, or 13.2%. The
decrease in selling expense was caused by the decrease in marketing activities
due to the impact of the COVID-19 pandemic.



The selling expenses of Jinong for the six months ended December 31, 2020 were
$2,777,239 or 18.6% of Jinong's net sales, as compared to selling expenses of
$3,527,188 or 24.3% of Jinong's net sales for the three months ended December
31, 2019.The selling expenses of Yuxing were $9,871 or 0.4% of Yuxing's net
sales for the six months ended December 31, 2020, as compared to $8,872 or 0.4%
of Yuxing's net sales for the three months ended December 31, 2019. The selling
expenses of Gufeng were $73,249 or 0.3% of Gufeng's net sales for the three
months ended December 31, 2020, as compared to $80,593 or 0.4% of Gufeng's net
sales for the three months ended December 31, 2019.



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 litigation. General
and administrative expenses were $43,537,527, or 90.1% of net sales for the
three months ended December 31, 2020, as compared to $32,761,531, or 66.1% of
net sales for the three months ended December 31, 2019, an increase of
$10,775,996, or 32.9%. The increase in general and administrative expenses was
mainly due to higher general and administrative expenses for Gufeng. Gufeng's
general and administrative expenses increased $8,812,154 for the three months
ended December 31, 2020 comparing with same period last year. With the impact of
COVID-19 pandemic, the overdue outstanding accounts receivable increased
significantly comparing with the previous years. Numerous distributors
encountered significant difficulties and/or hardships in their business amid the
pandemic. The company accrued bad debts expense based on the principle of
conservatism, which increased the General and Administrative Expenses.



  30





Total Other Income (Expenses)




Total other income (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 December 31, 2020 was $49,064, as
compared to $73,263 for the three months ended December 31, 2019, a decrease in
expense of $24,199 or 33.0%. The decrease in total other expense resulted from
lower accretion expense. Accretion expense decreased due primarily to the
expiration of convertible notes on December 2019 and no accretion expense for
fiscal year 2021.



Income Taxes



Jinong is subject to a preferred tax rate of 15% because 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 0 for the three months ended December 31, 2020, as compared to $
(949,683) for the three months ended December 31, 2019, an increase of $949,683,
or 100.0%.


Gufeng is subject to a tax rate of 25%, incurred 0 income tax expenses for the
three months ended December 31, 2020, as compared to $(68,015) for the three
months ended December 31, 2019, an increase of $68,015, or 100.0%.



Yuxing has no income tax for the six months Ended December 31, 2020 and 2019
because of being exempted from paying income tax due to its products fall into
the tax exemption list set out in the EIT.



Net income (loss)



Net loss for the three months ended December 31, 2020 was $40,036,663, an
increase in loss of $12,955,783, or 47.8%, compared to net loss of $27,080,880
for the three months ended December 31, 2019. Net loss as a percentage of total
net sales was approximately -82.8% and -54.6% for the three months Ended
December 31, 2020 and 2019, respectively.



Six months ended December 31, 2020 Compared to the Six months ended December 31,
2019.



                                               2020              2019            Change $         Change %
Sales
Jinong                                        29,431,187        33,576,301        (4,145,114 )        -12.3 %
Gufeng                                        38,264,597        38,589,766          (325,169 )         -0.8 %
Yuxing                                         5,105,683         5,001,221           104,462            2.1 %
Sales VIEs                                    19,698,107        23,219,292        (3,521,185 )        -15.2 %
Net sales                                     92,499,574       100,386,580        (7,887,006 )         -7.9 %
Cost of goods sold
Jinong                                        21,606,881        20,620,422           986,459            4.8 %
Gufeng                                        33,824,240        34,209,975          (385,735 )         -1.1 %
Yuxing                                         4,182,928         4,162,317            20,611            0.5 %
Sales VIEs                                    16,149,737        19,414,134        (3,264,397 )        -16.8 %
Cost of goods sold                            75,763,786        78,406,848        (2,643,062 )         -3.4 %
Gross profit                                  16,735,788        21,979,732        (5,243,944 )        -23.9 %
Operating expenses
Selling expenses                               8,061,111         7,487,327           573,784            7.7 %
General and administrative expenses           76,481,622        49,103,323        27,378,300           55.8 %
Total operating expenses                      84,542,733        56,590,650        27,952,084           49.4 %
Income (loss) from operations                (67,806,945 )     (34,610,918
)     (33,196,028 )         95.9 %
Other income (expense)
Other income (expense)                           (54,229 )        (103,454 )          49,225          -47.6 %
Interest income                                   43,392           106,886           (63,494 )        -59.4 %
Interest expense                                (123,953 )        (164,698 )          40,745          -24.7 %
Total other income (expense)                    (134,790 )        (161,266 )          26,476          -16.4 %
Income (loss) before income taxes            (67,941,736 )     (34,772,183 )     (33,169,552 )         95.4 %
Provision for income taxes                     3,047,841          (375,504 )       3,423,345         -911.7 %
Net income (loss)                            (70,989,577 )     (34,396,679 )     (36,592,897 )        106.4 %
Other comprehensive income (loss)
Foreign currency translation gain (loss)      25,395,536        (7,036,503 )      32,432,039         -460.9 %
Comprehensive income (loss)                  (45,594,041 )     (41,433,182
)      (4,160,858 )         10.0 %




  31






Net Sales


Total net sales for the six months ended December 31, 2020 were $92,499,574 a
decrease of $7,887,006 or 7.9%, from $100,386,580 for the six months ended
December 31, 2019. This decrease was primarily due to a decrease in VIEs' net
sales.


For the six months ended December 31, 2020, Jinong's net sales decreased $4,145,114, or 12.3%, to $29,431,187 from $33,576,301 for the six months ended December 31, 2019. This decrease was mainly attributable to the decrease in Jinong's sales volume in the last six months.

For the six months ended December 31, 2020, Gufeng's net sales were $38,264,597, a decrease of $325,169, or 0.8%, from $38,589,766 for the six months ended December 31, 2019. This decrease was mainly attributable to the decrease in Gufeng's sales volume in the last six months.

For the six months ended December 31, 2020, Yuxing's net sales were $5,105,683, an increase of $104,462 or 2.1%, from $5,001,221 for the six months ended December 31, 2019.

For the six months ended December 31, 2020, VIEs' net sales were $19,698,107, a decrease of $3,521,185, or 15.2%, from $23,219,292 for the six months ended December 31, 2019. This decrease was mainly attributable to the decrease in market demands in the last six months.



Cost of Goods Sold



Total cost of goods sold for the six months ended December 31, 2020 was
$75,763,786, a decrease of $2,643,062, or 3.4%, from $78,406,848 for the six
months ended December 31, 2019. The decrease was mainly due to the decrease in
Gufeng's and VIEs' cost of goods sold which decreased 1.1% and 16.8%
respectively.



Cost of goods sold by Jinong for the six months ended December 31, 2020 was $21,606,881, an increase of $986,459, or 4.8%, from $20,620,422 for the six months ended December 31, 2019. The increase in cost of goods was primarily due to the increase in products cost during the last six months.

Cost of goods sold by Gufeng for the six months ended December 31, 2020 was $33,824,240, a decrease of $385,735, or 1.1%, from $34,209,975 for the six months ended December 31, 2019. This decrease was primarily due to the 0.8% decrease in net sale during the last six months.




For six months ended December 31, 2020, cost of goods sold by Yuxing was
$4,182,928, an increase of $20,611, or 0.5%, from $4,162,317 for the six months
ended December 31, 2019. This increase was mainly due to the 2.1% increase in
Yuxing's net sales during the last six months.



For six months ended December 31, 2020, cost of goods sold by VIEs was $16,149,737, a decrease of $3,264,397, or 16.8%, from $19,414,134 for the six months ended December 31, 2019. This decrease was mainly due to the 15.2% decrease in VIEs' net sales during the last six months.



Gross Profit


Total gross profit for the six months ended December 31, 2020 decreased by
$5,243,944, or 23.9%, to $16,735,788, as compared to $21,979,732 for the six
months ended December 31, 2019. Gross profit margin was 23.9% and 21.9% for the
six months Ended December 31, 2020 and 2019, respectively.



Gross profit generated by Jinong decreased by $5,131,573 or 39.6%, to $7,824,306
for the six months ended December 31, 2020 from $12,955,879 for the six months
ended December 31, 2019. Gross profit margin from Jinong's sales was
approximately 26.6% and 38.6% for the six months Ended December 31, 2020 and
2019, respectively. The decrease in gross profit margin was mainly due to the
lower sales prices.



For the six months ended December 31, 2020, gross profit generated by Gufeng was
$4,440,357, an increase of $60,566, or 1.4%, from $4,379,791 for the six months
ended December 31, 2019. Gross profit margin from Gufeng's sales was
approximately 11.6% and 11.3% for the six months Ended December 31, 2020 and
2019, respectively. The slightly increase in gross profit margin was mainly due
to the increase in unit sales price.



  32






For the six months ended December 31, 2020, gross profit generated by Yuxing was
$922,755, an increase of $83,851, or 10.0% from $838,904 for the six months
ended December 31, 2019. The gross profit margin was approximately 18.1% and
16.8% for the six months Ended December 31, 2020 and 2019, respectively. The
increase in gross profit percentage was mainly due to the decrease in product
costs.



Gross profit generated by VIEs decreased by $256,788, or 6.7%, to $3,548,370 for
the six months ended December 31, 2020 from $3,805,158 for the six months ended
December 31, 2019. Gross profit margin from VIE's sales was approximately 18.0%
and 16.4% for the six months Ended December 31, 2020 and 2019, respectively. The
increase in gross profit percentage was mainly due to the decrease in product
costs.



Selling Expenses



Our selling expenses consisted primarily of salaries of sales personnel,
advertising and promotion expenses, freight-out costs and related compensation.
Selling expenses were $8,061,111, or 8.7%, of net sales for the six months ended
December 31, 2020, as compared to $7,487,327, or 7.5%, of net sales for the six
months ended December 31, 2019, an increase of $573,784 or 7.7%.



The selling expenses of Jinong for the six months ended December 31, 2020 were
$7,033,876 or 23.9% of Jinong's net sales, as compared to selling expenses of
$6,827,383 or 20.3% of Jinong's net sales for the six months ended December 31,
2019.The selling expenses of Yuxing were $21,688 or 0.4% of Yuxing's net sales
for the six months ended December 31, 2020, as compared to $18,224 or 0.4% of
Yuxing's net sales for the six months ended December 31, 2019. The selling
expenses of Gufeng were $140,730 or 0.4% of Gufeng's net sales for the six
months ended December 31, 2020, as compared to $149,884 or 0.4% of Gufeng's net
sales for the six months ended December 31, 2019.



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 litigation. General
and administrative expenses were $76,481,622, or 82.7% of net sales for the six
months ended December 31, 2020, as compared to $49,103,323, or 48.9% of net
sales for the six months ended December 31, 2019, an increase of $27,378,300, or
55.8%.



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 six months ended December 31, 2020 was $54,229, as compared to
$103,454, for the six months ended December 31, 2019, a decrease in expense of
$49,225, or 47.6%. The decrease in total other expense resulted from the
decrease in accretion expenses. Accretion expense decreased due primarily to the
expiration of convertible notes on December 2019 and no accretion expense for
fiscal year 2021.



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 $273,796 for the six months ended December 31, 2020, as compared to
$(857,195) for the six months ended December 31, 2019, an increase of
$1,130,991, or 131.9%.



Gufeng is subject to a tax rate of 25%, incurred 0 income tax expenses for the
six months ended December 31, 2020, as compared to $(136,291) for the six months
ended December 31, 2019, an increase of $136,291, or 100.0%.



Yuxing has no income tax for the six months Ended December 31, 2020 and 2019 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 (loss)



Net loss for the six months ended December 31, 2020 was $70,989,577, an increase
of $36,592,897, or 106.4%, compared to $34,396,679 for the six months ended
December 31, 2019. Net income (loss) as a percentage of total net sales was
approximately -76.7% and -34.3% for the six months Ended December 31, 2020
and
2019, respectively.


Discussion of Segment Profitability Measures




As of December 31, 2020, we were engaged in the following businesses: the
production and sale of fertilizers through Jinong and Gufeng, the production and
sale of high-quality agricultural products by Yuxing, and the sales of
agriculture materials by the sales VIEs. For financial reporting purpose, our
operations were organized into four main business segments based on locations
and products: Jinong (fertilizer production), Gufeng (fertilizer production) and
Yuxing (agricultural products production) and the sales VIEs. Each of the
segments has its own annual budget about development, production and sales.


  33






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


For Jinong, the net loss increased by $433,366, or 8.9%, to $5,290,807 for six months ended December 31, 2020, from $4,857,441 for the six months ended December 31, 2019. The increase in net loss was principally due to higher general and administrative expense.

For Gufeng, the net loss increased by $27,814,747, or 83.8%, to $61,009,636 for
six months ended December 31, 2020 from $33,194,889 for six months ended
December 31, 2019. The increase was principally due to the increase in general
and administrative expense.



For Yuxing, the net income increased $9,061 or 3.1%, to $304,559 for six months
ended December 31, 2020 from $295,498 for six months ended December 31, 2019.
The increase was mainly due to higher sales.



For the sales VIEs, the net income (loss) was $(1,734,009) for period ended
December 31, 2020, decreased by $5,957,718, or 141.1%, from $4,223,709 for six
months ended December 31, 2019. The decrease was mainly due to the increase in
general and administrative expenses for the sales VIEs.



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.

As of December 31, 2020, cash and cash equivalents were $9,826,386, a decrease of $2,108,391, or 17.7%, from $11,934,778 as of June 30, 2020.




We intend to use some of the remaining net proceeds from our securities
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 2016. 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.



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



                                                                     Six Months Ended
                                                                       December 31,
                                                                   2020             2019
Net cash provided by (used in) operating activities            $ (6,237,210 )   $ (2,074,331 )
Net cash provided by (used in) investing activities                (212,290 )        (50,533 )
Net cash provided by (used in) financing activities                 306,000

10,939,200

Effect of exchange rate change on cash and cash equivalents 4,035,108

       (2,367,640 )
Net increase in cash and cash equivalents                        (2,108,392 )      6,446,696
Cash and cash equivalents, beginning balance                     11,934,778

72,259,804

Cash and cash equivalents, ending balance                      $  9,826,386
    $ 78,706,500




Operating Activities



Net cash used in operating activities was $6,237,210 for the six months ended
December 31, 2020, an increase of $4,162,879, or 200.7%, from cash used in
operating activities of $2,074,331 for the six months ended December 31, 2019.
The increase was mainly due to an increase in net loss during the six months
ended December 31, 2020 as compared to the same period in 2019.



  34






Investing Activities


Net cash used in investing activities for the six months ended December 31, 2020
was $212,290, compared to cash used in investing activities of $50,533 for the
six months ended December 31, 2019. The different was due to Company purchased
more plant, property and equipment during the last six months compared to the
same period last year.



Financing Activities


Net cash provided by financing activities for the six months ended December 31, 2020 was $306,000, compared to $10,939,200 net cash provided in financing activities for the six months ended December 31, 2019, which was largely attribute to $10,252,000 proceeds from the sale of common stock for the six months ended December 31, 2019, compared to 0 in the same period this year.




As of December 31, 2020 and June 30, 2020, our loans payable was as follows:



                             December 31,       June 30,
                                 2020             2020
Short term loans payable:   $    4,131,000     $ 3,537,500
Total                       $    4,131,000     $ 3,537,500




Accounts Receivable



We had accounts receivable of $102,412,975 as of December 31, 2020, as compared
to $105,693,326 as of June 30, 2020, a decrease of $3,280,351, or 3.1%. The
decrease was primarily attributable to Gufeng's accounts receivable. As of
December 31, 2020, Gufeng's accounts receivable was $47,494,318, a decrease of
$2,073,642, or 4.2%, compared to $49,567,960 as of June 30, 2020.



Allowance for doubtful accounts in accounts receivable for the six months ended
December 31, 2020 was $31,196,455, a decrease of $7,269,745, or 18.9%, from
$38,466,220 as of June 30, 2020. And the allowance for doubtful accounts as a
percentage of accounts receivable was 23.3% as of December 31, 2020 and 26.7% as
of June 30, 2020.



Deferred assets


We had no deferred assets as of December 31, 2020 and June 30, 2020. During the
three months, we assisted the distributors in certain marketing efforts and
developing standard stores 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 if 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 deferred assets had been fully amortized
as of
December 31, 2020.



Inventories



We had inventories of $90,830,515 as of December 31, 2020, as compared to
$98,921,081 as of June 30, 2020, a decrease of $8,090,566, or 8.2%. The decrease
was primarily attributable to Gufeng's inventory. As of December 31, 2020,
Gufeng's inventory was $58,837,515, compared to $75,129,594 as of June 30, 2020,
a decrease of $16,292,079, or 21.7%.



Advances to Suppliers



We had advances to suppliers of $34,409,623 as of December 31, 2020 as compared
to $65,081,818 as of June 30, 2020, representing a decrease of $30,672,195, or
47.1%. Our inventory level may fluctuate from time to time, depending how
quickly the raw material is consumed and replenished during the production
process, and how soon the finished goods are sold. The replenishment of raw
material relies on management's estimate of numerous factors, including but not
limited to, the raw materials future price, and spot price along with
its 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 times of slow sales and insufficient inventories in peak times.



  35






Accounts Payable


We had accounts payable of $17,527,362 as of December 31, 2020 as compared to
$17,719,093 as of June 30, 2020, representing a decrease of $191,731, or 1.1%.
The decrease was primarily due to the decrease of accounts payable for VIEs.
They have accounts payable of $15,479,228 as of December 31, 2020 as compared to
$16,315,837 as of June 30, 2020, representing a decrease of $836,609, or 5.1%.



Unearned Revenue (Customer Deposits)

We had customer deposits of $8,881,013 as of December 31, 2020 as compared to
$7,342,590 as of June 30, 2020, representing an increase of $1,538,423, or
21.0%. The increase was mainly attributable to VIEs' $1,094,291 unearned revenue
as of December 31, 2020, compared to $86,430 unearned revenue as of June 30,
2020, increased $1,007,861, or 1166.1%, caused by the advance deposits made by
clients. This increase was due to seasonal fluctuation and we expect to deliver
products to our customers during the next three months at which time we will
recognize the revenue.


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 unaudited condensed 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 unaudited condensed
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 unaudited condensed 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 unaudited condensed 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 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 are outstanding for more than 180 days will be accounted as
allowance for bad debts, and any accounts receivable of Yuxing that are
outstanding for more than 90 days will be accounted as allowance for bad debts.



  36






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 if the distributors are actively selling our products. If a
distributor defaults, breaches, or terminates the agreement with us earlier than
the realization of the contractual terms, the unamortized portion of the amount
owed by the distributor is to be refunded to us immediately. The deferred assets
had been fully amortized as of December 31, 2020.



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 way
management disaggregates a company.



As of December 31, 2020, we were organized into ten main business units:
Jinong (fertilizer production), Gufeng (fertilizer production), Yuxing
(agricultural products production), Lishijie (agriculture sales), Jinyangguang
(agriculture sales), Wangtian (agriculture sales), Xindeguo (agriculture sales),
Xinyulei (agriculture sales), Fengnong (agriculture sales) and Xiangrong
(agriculture sales). For financial reporting purpose, our operations were
organized into four main business segments based on locations and products:
Jinong (fertilizer production), Gufeng (fertilizer production) and Yuxing
(agricultural products production) and the sales VIEs. Each of the segments has
its own annual budget regarding development, production and sales.

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Financials (USD)
Sales 2020 249 M - -
Net income 2020 -137 M - -
Net cash 2020 7,41 M - -
P/E ratio 2020 -0,12x
Yield 2020 -
Capitalization 130 M 130 M -
EV / Sales 2019 -0,13x
EV / Sales 2020 0,04x
Nbr of Employees -
Free-Float -
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