Overview

China Green Agriculture, Inc. is engaged in the research, development, production, and sale of various types of fertilizers, agricultural products, and Bitcoin in China and the United States through its wholly-owned subsidiaries and a variable interest entity (VIE).

The company’s primary business is fertilizer products, specifically humic-acid based compound fertilizer produced by Jinong and various other fertilizer products produced by Gufeng. Additionally, through Yuxing, the company develops and produces agricultural products such as top-grade fruits, vegetables, flowers, and colored seedlings. The company also engages in the mining of digital assets Bitcoin through its U.S. subsidiary Antaeus.

For financial reporting purposes, the company’s operations are organized into four business segments: fertilizer products (Jinong), fertilizer products (Gufeng), agricultural products (Yuxing), and Bitcoin (Antaeus). The fertilizer business generated approximately 88.8% and 92.1% of the company’s total revenues for the years ended June 30, 2024 and 2023, respectively. Yuxing generated 9.8% and 7.8% of revenues, while Antaeus generated 1.3% and 0.2% for the same periods.

Recent Developments

During the three months ending June 30, 2024, Jinong discontinued 7 obsolete products and terminated 150 unqualified distributors, while Gufeng did not introduce any new fertilizer products or onboard new distributors.

Results of Operations

Fiscal Year ended June 30, 2024 Compared to the Year ended June 30, 2023

Net Sales:

• Total net sales decreased by 22.8% to $95,845,788, primarily due to lower sales from Gufeng.
• Jinong’s net sales decreased by 18.1% to $32,954,490 due to a reduction in unit price.
• Gufeng’s net sales decreased by 29.5% to $52,189,666 due to reduced sales volume.
• Yuxing’s net sales decreased by 2.5% to $9,416,451 due to decreased market demand.
• Antaeus’ net sales increased by 511.0% to $1,285,181.

Cost of Goods Sold:

• Total cost of goods sold decreased by 25.5% to $76,123,808, in line with the decrease in net sales.

Gross Profit:

• Total gross profit decreased by 10.0% to $19,721,980, with gross profit margins of 20.6% and 17.7% for fiscal years 2024 and 2023, respectively.

Selling Expenses:

• Selling expenses decreased by 6.5% to $7,790,881, or 8.1% of net sales.

General and Administrative Expenses:

• General and administrative expenses increased by 49.9% to $40,779,553, or 42.5% of net sales, mainly due to higher bad debts expense.

Net Loss:

• Net loss increased by 113.9% to $28,405,315, or -29.6% of net sales, primarily due to the increase in general and administrative expenses.

Discussion of Segment Profitability Measures

• Jinong’s net loss decreased by 29.4% to $2,983,399 due to lower product cost.
• Gufeng’s net loss increased by 206.0% to $19,219,575 primarily due to higher general and administrative expenses.
• Yuxing’s net income decreased by 205.1% to a net loss of $802,575 mainly due to higher general and administrative expenses.
• Antaeus’ net loss increased by 319.8% to $1,544,831.

Liquidity and Capital Resources

• As of June 30, 2024, cash and cash equivalents were $58,772,587, a decrease of 17.4% from June 30, 2023.
• Net cash used in operating activities was $9,872,781, an increase of 897.1% from fiscal year 2023, mainly due to higher net loss.
• Net cash used in investing activities was $6,102,903, an increase of 1191.0% from fiscal year 2023, primarily due to long-term equity investment.
• Net cash provided by financing activities was $3,274,064, a decrease of 83.4% from fiscal year 2023, mainly due to lower proceeds from the sale of common stock.

Critical Accounting Policies and Estimates

The company’s critical accounting policies and estimates include the use of estimates, revenue recognition, cash and cash equivalents, accounts receivable, assets held for sale, deferred assets, segment reporting, and the impact of currency fluctuations and foreign currency risk, interest rate risk, credit risk, inflation risk, and risks of epidemics, pandemics, or other outbreaks.