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, 2010
 
o
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.)

3 rd Floor, Borough A, Block A, No. 181,
South Taibai Road, Xi’an, Shaanxi Province,
              People’s Republic of China  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 o

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 o   No o

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   o
Accelerated filer       x
Non-acce lerated filer    o
( Do not check if a smaller reporting company )
Smaller reporting company   o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o   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:  26,848,260 shares issued and 25,937,887 shares outstanding of Common Stock, $.001 par value, as of November 5, 2010.


 
TABLE OF CONTENTS
 
PART I      
  FINANCIAL INFORMATION  
Page
         
Item 1.
  Financial Statements.   3
         
    Consolidated Balance Sheets   4
    As of September 30, 2010 (Unaudited) and June 30, 2010    
         
    Consolidated Statements of Income and Comprehensive Income   5
    For the Three Months Ended September 30, 2010 and 2009 (Unaudited)    
         
    Consolidated Statements of Cash Flows   6
    For the Three Months Ended September 30, 2010 and 2009    
    (Unaudited)    
         
         
    Notes to Consolidated Financial Statements   7
    As of September 30, 2010 (Unaudited)    
         
Item 2.
  Management’s Discussion and Analysis of Financial Condition and Results of Operations   29
         
         
Item 3.
 
Quantitative and Qualitative Disclosures About Market Risk
  38
         
Item 4.
  Controls and Procedures   39
         
PART II     
  OTHER INFORMATION    
         
Item 1.
 
Legal Proceedings
  40
         
Item 1A.
 
Risk Factors
  40
         
Item 5.
 
Other Information
  40
         
Item 6.
 
Exhibits
  41
         
Signatures
  42
         
Exhibits/Certifications
  43
 
2

 
PART I - FINANCIAL INFORMATION

Item 1.
Financial Statements

CHINA GREEN AGRICULTURE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2010 AND JUNE 30, 2010
(UNAUDITED)
 
ASSETS
 
   
September 30, 2010
   
June 30, 2010
 
Current Assets
           
Cash and cash equivalents
  $ 53,947,094     $ 62,335,437  
Accounts receivable, net
    16,482,643       15,571,888  
Inventories
    27,248,954       11,262,647  
Other assets
    369,733       86,824  
Related party receivables
    68,668       -  
Advances to suppliers
    14,616,112       221,280  
Total Current Assets
    112,733,204       90,414,167  
                 
Plant, Property and Equipment, Net
    46,277,708       29,368,515  
                 
Construction In Progress
    1,179,818       257,077  
                 
Other Assets - Non Current
    3,181,561       1,098,704  
                 
Intangible Assets, Net
    27,302,650       11,585,570  
                 
Goodwill
    448,146       -  
                 
Total Assets
  $ 191,123,087     $ 131,787,942  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
                 
Current Liabilities
               
Accounts payable
  $ 2,251,015     $ 328,124  
Unearned revenue
    22,851,799       41,645  
Accrued expenses and other payables
    1,565,979       507,705  
Advances from other unrelated companies
    923,599       -  
Amount due to related parties
    444,877       68,164  
Taxes payable
    4,119,590       2,304,382  
Short term loans
    6,227,481       -  
Other short-term liability
    2,894,987       -  
Total Current Liabilities
    41,279,327       3,250,020  
                 
Commitments 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,   26,848,260  and 24,572,328 shares issued, and 25,937,887 and 24,572,328,shares outstanding as of September 30, 2010 and June 30, 2010, respectively)
    25,938       24,573  
Additional paid-in capital
    87,978,324       75,755,682  
Statuary reserve
    6,632,554       5,864,648  
Retained earnings
    50,556,287       43,536,408  
Accumulated other comprehensive income
    4,650,657       3,356,611  
Total Stockholders' Equity
    149,843,760       128,537,922  
                 
Total Liabilities and Stockholders' Equity
  $ 191,123,087     $ 131,787,942  
 
The accompanying notes are an integral part of these consolidated financial statements.
 
3

 
CHINA GREEN AGRICULTURE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF  INCOME AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(UNAUDITED)
 
   
For the Three Months Ended September 30,
 
   
2010
   
2009
 
 Sales
           
   Jinong
  $ 16,571,293     $ 10,178,649  
   Gufeng
    21,801,034       -  
   Jintai
    1,110,594       1,098,171  
 Net sales
  $ 39,482,921     $ 11,276,820  
 Cost of goods sold
               
   Jinong
    6,853,787       3,735,364  
   Gufeng
    18,900,513       -  
   Jintai
    589,294       582,497  
 Cost of goods sold
    26,343,594       4,317,862  
 Gross profit
    13,139,327       6,958,958  
 Operating expenses
               
 Selling expenses
    1,415,985       215,672  
 General and administrative expenses
    2,098,187       534,179  
 Total operating expenses
    3,514,172       749,850  
 Income from operations
    9,625,155       6,209,108  
 Other income (expense)
               
 Other income (expense)
    (11,943 )     966  
 Interest income
    64,991       29,266  
 Interest expense
    (176,675 )     (61,309 )
 Total other income (expense)
    (123,627 )     (31,077 )
 Income before income taxes
    9,501,528       6,178,031  
 Provision for income taxes
    1,713,743       930,757  
 Net income
    7,787,785       5,247,274  
Other comprehensive income
 
 Foreign currency translation gain/(loss)
    1,294,047       (24,930 )
 Comprehensive income
  $ 9,081,832     $ 5,222,344  
                 
Basic weighted average shares outstanding
    25,922,880       21,632,488  
Basic net earnings per share
  $ 0.30     $ 0.24  
Diluted weighted average shares outstanding
    26,035,426       21,650,546  
Diluted net earnings per share
    0.30       0.24  
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
4

 
CHINA GREEN AGRICULTURE INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(UNAUDITED)
 
   
2010
   
2009
 
Cash flows from operating activities
           
Net income
  $ 7,787,785     $ 5,247,274  
Adjustments to reconcile net income to net cash
               
provided by operating activities
               
Issuance of equity for compensation
    644,075       -  
Depreciation
    852,693       444,215  
Amortization
    81,143       43,185  
Decrease / (Increase) in current assets, net of effects from acquisitions:
               
Accounts receivable
    (383,146 )     (3,532,758 )
Other receivables
    16,653       (30,915 )
Inventories
    2,345,622       (974,125 )
Advances to suppliers
    (15,847,463 )     17,933  
Other assets
    (296,554 )     2,171  
(Decrease) / Increase in current liabilities, net of effects from acquisitions:
         
Accounts payable
    (3,972,787 )     (332,626 )
Unearned revenue
    3,347,743       43,432  
Tax payables
    1,750,338       2,653,822  
Other payables and accrued expenses
    (23,333 )     709,662  
Net cash (used in) / provided by operating activities
    (3,697,231 )     4,291,270  
                 
Cash flows from investing activities
               
Acquisition of plant, property, and equipment
    (776,669 )     (2,437,738 )
Acquisition of intangible assets
    -       (10,703,302 )
Acquisition of Gufeng, net of cash acquired
    (6,720,539 )     -  
Amounts increase in construction in progress
    (141,985 )     -  
Net cash used in investing activities
    (7,639,193 )     (13,141,040 )
                 
Cash flows from financing activities
               
Repayment of loan
    -       (979,876 )
Proceeds from loan
    2,240,468       -  
Proceeds from issuance of shares
    -       27,143,338  
Restricted cash
     -       24,766  
Net cash provided by financing activities
    2,240,468       26,188,228  
                 
Effect of exchange rate change on cash and cash equivalents
    707,613       23,057  
Net (decrease) increase in cash and cash equivalents
    (8,388,343 )     17,361,515  
                 
Cash and cash equivalents, beginning balance
    62,335,437       17,795,447  
Cash and cash equivalents, ending balance
  $ 53,947,094     $ 35,156,962  
                 
Supplement disclosure of cash flow information
               
Interest paid
  $ 179,941     $ 61,309  
Income taxes paid
  $ 11,738     $ -  
 
The accompanying notes are an integral part of these consolidated financial statements.
 
5

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

China Green Agriculture, Inc. (the “Company”, “we”, “us”), through its subsidiaries, is engaged in the research, development, production, distribution and sale of humic acid-based compound fertilizer, and the development, production and distribution of agricultural products. The Company was incorporated in 1987, but entered its current lines of business in December 2007.

The Company’s corporate structure as of September 30, 2010 is set forth in the diagram below:
 
 
6

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated condensed interim financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein.  It is suggested that these consolidated condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended June 30, 2010.  The Company follows the same accounting policies in preparation of interim reports.  Results of operations for the interim periods are not indicative of annual results.

Principle of consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Green New Jersey, Jinong, Jintai, Yuxing, Gufeng and Tianjuyuan. 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.

Subsequent Events

The Company evaluates events subsequent to the end of the fiscal quarter through the date the financial statements are filed with the Securities and Exchange Commission for recognition or disclosure in the consolidated financial statements. Events that provide additional evidence about material conditions that existed at the date of the balance sheet are evaluated for recognition in the consolidated financial statements. Events that provide evidence about conditions that did not exist at the date of the balance sheet but occurred after the balance sheet date are evaluated for disclosure in the notes to the consolidated financial statements.
 
7

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
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 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 balances at financial institutions which, from time to time, may exceed deposit insurance limits for the banks located in the United States. Balances at financial institutions or state owned banks within the PRC are not covered by insurance. 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.

Accounts receivable

The Company's policy is to maintain reserves for potential credit losses on accounts receivable. Management regularly reviews the composition of accounts receivable and analyzes customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves at each year-end. Accounts considered uncollectible are written off through a charge to the valuation allowance. As of September 30, 2010 and June 30, 2010, the Company had accounts receivable of $16,482,643 and $15,571,888, net of allowance for doubtful accounts of $234,804 and $193,403, respectively.

Inventories

Inventory is valued at the lower of cost (determined on a weighted average basis) or market. Inventories consist of raw materials, work in process, finished goods and packaging materials. The Company reviews its inventories regularly for possible obsolete goods and establishes reserves when determined necessary.

Property, plant and equipment

Property, plant and equipment are recorded at cost. Gains or losses on disposals are reflected as gain or loss in the year of disposal. The cost of improvements that extend the life of plant, property, and equipment are capitalized. These capitalized costs may include structural improvements, equipment, and fixtures. All ordinary repair and maintenance costs are expensed as incurred.

Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets:
 
Estimated Useful Life
Building
10-25 years
Agricultural assets
8 years
Machinery and equipment
5-15 years
Vehicles
3-5 years
 
8

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
Construction in Progress

Construction in progress represents the costs incurred in connection with the construction of buildings or new additions to the Company’s plant facilities. Costs classified to construction in progress include all costs of obtaining the asset and bringing it to the location and condition necessary for its intended use. No depreciation is provided for construction in progress until such time as the assets are completed and are placed into service. Interest incurred during construction is capitalized into construction in progress. All other interest is expensed as incurred.

Long-Lived Assets

The Company tests long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.

Intangible Assets

The Company records intangible assets acquired individually or as part of a group at fair value. Intangible assets with definitive lives are amortized over the useful life of the intangible asset, which is the period over which the asset is expected to contribute directly or indirectly to the entity’s future cash flows. The Company evaluates intangible assets for impairment at least annually and more often whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.
The Company has not recorded impairment of intangible assets as of September 30, 2010 and June 30, 2010, respectively.

Fair Value Measurement and Disclosures

Our accounting for Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy which requires classification based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:
 
9

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
Level one — Quoted market prices in active markets for identical assets or liabilities;

Level two — Inputs other than level one inputs that are either directly or indirectly observable; and

Level three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter.
 
The carrying values of cash and cash equivalents, trade and other receivables, trade and other payables approximate their fair values due to the short maturities of these instruments.

Revenue recognition

Sales revenue is recognized on the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.   As of September 30, 2010 and June 30, 2010, the Company had unearned revenues of $22,851,799 and $ 41,645, respectively.

The Company's 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.

Stock-Based Compensation

The costs of all employee stock options, as well as other equity-based compensation arrangements, are reflected in the consolidated financial statements based on the estimated fair value of the awards on the grant date. That cost is recognized over the period during which an employee is required to provide service in exchange for the award—the requisite service period (usually the vesting period). Stock compensation for stock granted to non-employees is determined as the fair value of the consideration received or the fair value of equity instruments issued, whichever is more reliably measured.

Income taxes

The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.
 
10

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
Foreign currency translation

The reporting currency of the Company is the US dollar. The functional currency of the Company and Green New Jersey is the US dollar. The functional currency of Jinong and its subsidiaries Jintai and Yuxing is the Chinese Yuan or Renminbi (“RMB”). For the subsidiaries whose functional currencies are other than the US dollar, all asset and liability accounts were translated at the exchange rate on the balance sheet date; stockholder's equity is translated at the historical rates and items in the cash flow statements are translated at the average rate in each applicable period. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of shareholders’ equity. The resulting translation gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

Fair values of financial instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The Company's financial instruments primarily consist of cash and cash equivalents, accounts receivable, other receivables, advances to suppliers, accounts payable, other payables, tax payable, and related party advances and borrowings.
 
As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented on the balance sheet. This is attributed to the short maturities of the instruments and that interest rates on the borrowings approximate those that would have been available for loans of similar remaining maturity and risk profile at respective balance sheet dates.

Statement of cash flows
 
11

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
The Company's cash flows from operations are calculated based on the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance sheet.
 
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.
 
The components of basic and diluted earnings per share as of September 30, 2010 and 2009 were as follows:

   
2010
   
2009
 
Net Income for Basic Earnings Per Share
 
$    
7,787,785
   
$    
5,247,274
 
Basic Weighted Average Number of Shares
   
25,922,880
     
21,632,488
 
Net Income per Share – Basic
   
0.30
     
0.24
 
Net Income for Diluted Earnings Per Share
   
7,787,785
     
5,247,274
 
Diluted Weighted Average Number of Shares
   
26,035,426
     
21,650,546
 
Net Income per Share – Diluted
 
$
0.30
   
$
0.24
 

Recent accounting pronouncements

In January 2010, the FASB issued Accounting Standards Update No. 2010-06 (ASU 2010-06), Fair Value Measurements and Disclosures which amends ASC Topic 820, adding new requirements for disclosures for Levels 1 and 2, separate disclosures of purchases, sales, issuances, and settlements relating to Level 3 measurements and clarification of existing fair value disclosures.  ASU 2010-06 is effective for interim and annual periods beginning after December 15, 2009, except for the requirement to provide Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will be effective for fiscal year beginning after December 15, 2010 (the Company’s fiscal year 2011); early adoption is permitted.  The Company is currently evaluating the impact of adopting ASU -2010-06 on its financial statements.

In July 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.” ASU No. 2010-20 amends the guidance with ASC Topic 310, “Receivables” to facilitate financial statement users’ evaluation of (1) the nature of credit risk inherent in the entity’s portfolio of financing receivables; (2) how that risk is analyzed and assessed in arriving at the allowance for credit losses; and (3) the changes and reasons for those changes in the allowance for credit losses. The amendments in ASU No. 2010-20 also require an entity to provide additional disclosures such as a rollforward schedule of the allowance for credit losses on a portfolio segment basis, credit quality indicators of financing receivables and the aging of past due financing receivables. The Company is required to adopt ASU No. 2010-20 as of December 15, 2010 and is currently evaluating the impact the new disclosure requirements will have on its financials statements and notes.
 
12

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
NOTE 3 – ACQUISITION

Beijing Gufeng Chemical Products Co., Ltd. (“Gufeng”) and its wholly-owned subsidiary Beijing Tianjuyuan Fertilizer Co., Ltd. (“Tianjuyuan”):

Gufeng was founded in 1993. Its wholly-owned subsidiary Tianjuyuan was founded in 2001 and was acquired by Gufeng on May 4, 2010. Both companies are based in Beijing, and registered to produce compound fertilizer, blended fertilizer, organic compound fertilizer and mixed, organic-inorganic compound fertilizer and sell their products throughout China and abroad.

On July 2, 2010, the Company acquired Gufeng and its wholly-owned subsidiary Tianjuyuan by purchasing all of Gufeng’s outstanding equity interests and delivering acquisition consideration of approximately $8.8 million cash and approximately 1.4 million shares of the Company’s common stock (valued at approximately $11.6 million) to the former shareholders of Gufeng or their designees (the “Gufeng Shareholders”). Additionally, the Company may be required to deliver up to an additional 0.9 million shares of common stock, which are being held in escrow (the “Escrowed Shares”), to be released based upon achievement of following conditions:

1)  If Gufeng achieves certain sales revenue targets for its fiscal year ending June 30, 2011 (the “Sales Target”), 341,390 of the Escrowed Shares will be released from escrow to the Gufeng Shareholders, which is subject to adjustment based on a three-tier system.   If Gufeng achieves at least 80% of the Sales Target, then 227,593 of the Escrowed Shares will be released from escrow to the Gufeng Shareholder, and if Gufeng achieves at least 60% of the Sales Target, then 113,797 of the Escrowed Shares will be released from escrow to the Gufeng Shareholders.

2)  If Gufeng achieves certain net profit after tax targets for its fiscal year ending June 30, 2011 (the “Profit Target”), 341,390 of the Escrowed Shares will be released from escrow to the Gufeng Shareholders, which is subject to adjustment based on a three-tier system.   If Gufeng achieves at least 80% of the Profit Target, then 227,593 of the Escrowed Shares will be released from escrow to the Gufeng Shareholders, and if Gufeng achieves at least 60% of the Profit Target, then 113,797 of the Escrowed Shares will be released from escrow to the Gufeng Shareholders.

3)  If Gufeng obtains a land use right with respect to certain real property located in China, along with ownership of the buildings thereon, then 227,593 of the Escrowed Shares will be released from escrow to the Gufeng Shareholders.
 
13

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
Any Escrowed Shares that are not released from escrow to the Gufeng Shareholders for failure to achieve the conditions described above will be forfeited and returned to the Company for cancellation.  While the Escrowed Shares are held in escrow, the Gufeng Shareholders will retain all voting rights with respect to the Shares.

The Company has recognized a liability based on the acquisition date fair value of the acquisition-related contingent consideration based on the probability of the achievement of the targets. Based on the Company’s estimation, an initial liability of $2.9 million (341,390 shares) was recorded. Changes in the fair value of the acquisition-related contingent consideration subsequent to the acquisition date, including changes from events after the acquisition date, such as changes in the Company’s estimate of the revenue and net income expected to be achieved and changes in their stock price, are being recognized in earnings in the period in which the estimated fair value changes. The accompanying consolidated financial statements include the financial results of these companies from the date of acquisition.

The estimated fair values of net assets acquired and presented below are preliminary and are based on the information that was available as of the acquisition date and prior to the filing of this Form 10-Q. The Company believes that the information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed; however, the Company is awaiting the finalization of certain third-party valuations to finalize those fair values. Thus, the preliminary measurements of fair value set forth below are subject to change. The Company expects to finalize the valuation and complete the purchase price allocations as soon as practicable, but no later than one year from the respective acquisition date.

The following table summarizes the fair values of the assets acquired and liabilities assumed from the acquisition of Gufeng. Since the acquisition and the initial preliminary purchase price allocation were included in the Company’s Form 8-K for the quarter ended June 30, 2010, net adjustments of $12.5 million were made to the fair values of the assets acquired and liabilities assumed with a corresponding adjustment to goodwill. These adjustments are summarized in the table presented below.

($ in millions)
   
Purchase Price
  $ 23.3  
Fair Value of Assets Acquired:
       
Current assets
    25.1  
Fixed assets
    17.3  
Intangible assets
    15.8  
Other assets
    -  
Total Assets Acquired
  $ 58.2  
   
Fair Value of Liabilities Assumed:
       
Current liabilities
  $ 15.9  
Deferred revenue
    19.4  
Deferred tax liabilities, net
    -  
Total Liabilities Assumed
  $ 35.3  
   
Goodwill (1)
  $ 0.4  
(1)   The goodwill of $0.4 million is non-deductible for tax purposes.
 
14

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
The following table summarizes the preliminary fair value of amortizable and indefinite-lived intangible assets as of their respective acquisition dates:

   
Gufeng at July 2, 2010
 
($ in millions)
 
Fair Value
   
Estimated useful life
(in years)
 
Amortizable intangible assets:
           
  Customer relationships
  $ 8.4       10  
                 
Indefinite-lived intangibles:
               
  Trademarks
  $ 7.4          
                 
Total intangible assets acquired
  $ 15.8          
                 

Pro Forma Condensed Combined Financial Information

The following unaudited pro forma condensed combined comparative financial information presents the results of operations of the Company as they may have appeared if the acquisition of Gufeng had been completed on July 1, 2009.

   
For the Three Months Ended September 30,
 
($ in millions, except per share data)
 
2009
 
Net Sales
  $ 28.8  
Net Income
  $ 6.8  
Basic earnings per share
  $ 0.30  
Diluted earnings per share
  $ 0.29  

Acquisition related expenses consist of integration related professional services, certain business combination adjustments after the measurement period or purchase price allocation period has ended, and certain other operating expenses, net.
 
15

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
A pretax charges approximating $0.2 million were recorded for acquisition and integration related costs in the period ended September 30, 2010.  These charges were recorded as General and administrative expenses.  As the acquisition took place on July 2, 2010, statement of income for the period ended September 30, 2010 included the operations of the Company and Gufeng.

NOTE 4 – INVENTORIES

Inventories consisted of the following as of September 30, 2010 and June 30, 2010:

   
September 30,
2010
   
June 30,
2010
 
Raw materials
  $ 5,829,268     $ 314,268  
Supplies and packing materials
    657,819       113,146  
Work in progress
    2,203,926       10,686,325  
Finished goods
    18,557,941       148,909  
Total
  $ 27,248,954     $ 11,262,647  

NOTE 5 – OTHER CURRENT ASSETS

As of September 30, 2010 and June, 30 2010, other current assets comprised of the following:

   
September 30,
2010
   
June 30,
2010
 
Advancement
  $ 65,630     $ 41,875  
Promotion material
    304,103       44,949  
Total
  $ 369,733     $ 86,824  

Advancement represents advances made to non-related parties and employees. The amounts were unsecured, interest free, and due on demand.

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following as of September 30, 2010 and June, 30, 2010:

   
September 30,
2010
   
June, 30,
2010
 
Building and improvements
  $ 32,277,792     $ 11,719,363  
Auto
    961,775       117,295  
Machinery and equipment
    21,398,234       21,628,525  
Agriculture assets
    1,365,316       1,528,898  
Total property, plant and equipment
    56,003,117       34,994,081  
Less: accumulated depreciation
    (9,725,409 )     (5,625,566 )
Total property, plant and equipment, net
  $ 46,277,708     $ 29,368,515  
 
16

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
Depreciation expense for the three months ended September 30, 2010 and 2009 were $852,963 and $444,215, respectively.

Agriculture assets consist of reproductive trees that are expected to be commercially productive for a period of eight years.

NOTE 7 – CONSTRUCTION IN PROGRESS

As of September 30, 2010 and June 30, 2010, construction in progress, representing construction for a new product line and other buildings amounted to $1,179,818 and $257,077, respectively.

NOTE 8 - INTANGIBLE ASSETS AND GOODWILL

The intangible assets comprised of the following as of September 30, 2010 and June 30, 2010:

   
September 30,
2010
   
June 30,
2010
 
Land use right, net
  $ 11,708,070     $ 11,495,059  
Technology patent, net
    69,790       90,512  
Customer relationships, net
    8,159,802       -  
Trademarks
    7,364,988       -  
  Total
  $ 27,302,650     $ 11,585,570  

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 $10,938,628 (or RMB 73,184,895). The intangible asset is being amortized over the grant period of 50 years.
 
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 $156,334 (or RMB 1,045,950). The intangible asset is being amortized over the grant period of 50 years.
 
17

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
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 Yanling District, Shaanxi Province. The fair value of the related intangible asset at the time of the contribution was determined to be $1,088,872 (or RMB 7,285,099). The intangible asset is being amortized over the grant period of 50 years.

The Land Use Rights consist of the following as of September 30, 2010 and June 30, 2010:

   
September 30,
2010
   
June 30,
2010
 
Land use rights
  $ 12,183,834     $ 11,866,105  
Less: accumulated amortization
    (475,764 )     (371,047 )
Total Land use rights, net
  $ 11,708,070     $ 11,495,059  

TECHNOLOGY PATENT

On August 16, 2001, Jinong was issued a technology patent related to a proprietary formula used in the production of humid acid. The fair value of the related intangible asset was determined to be the respective cost of $878,121 (or RMB 5,875,068). The intangible asset is being amortized over the patent period of 10 years.

The technology know-how consisted of the following as of September 30, 2010 and June 30, 2010:

   
September 30,
2010
   
June 30,
2010
 
Technology know-how
  $ 878,121     $ 866,338  
Less: accumulated amortization
    (808,331 )     (775,826 )
 Total Technology know-how, net
  $ 69,790     $ 90,512  

CUSTOMER RELATIONSHIP

On July 2, 2010, the Company acquired Gufeng and its wholly-owned subsidiary Tianjuyuan. The preliminary fair value on the acquired customer relationships was estimated to be $8,369,028 (or RMB 80,720,740) and is amortized over the remaining useful life of ten years. See Note 3.

   
September 30,
2010
   
June 30,
2010
 
Customer relationships
  $ 8,369,028     $ -  
Less: accumulated amortization
    (209,226 )     -  
Total Customer relationships, net
  $ 8,159,802     $ -  

TRADEMARKS
 
18

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
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 $7,364,988 and is subject to an annual impairment test. See Note 3.

Total amortization expenses of intangible assets for the periods ended September 30, 2010 and 2009 were $290,369 and $43,185, respectively.
 
AMORTIZATION EXPENSE

Estimated amortization expenses of intangible assets for the next twelve month periods September 30, are as follows:

 September 30, 2011
  $ 1,150,369  
 September 30, 2012
    1,080,579  
 September 30, 2013
    1,080,579  
 September 30, 2014
    1,080,579  
 September 30, 2015
    1,080,579  

NOTE 9 - AMOUNT DUE TO RELATED PARTIES

As of September 30, 2010 and June 30, 2010, the amount due to related parties was $444,877 and $68,164, respectively.  These amounts represent unsecured, non-interest bearing loans that are due on demand.  These loans are not subject to written agreements.  The large increase in amounts due to related parties as of September 30, 2010 is attributable to the previously outstanding loans payable by Gufeng to Mr. Qing Xin Jiang, the Chief Executive Officer and former controlling shareholder of Gufeng, which we acquired in the Gufeng acquisition.

NOTE 10 - ACCRUED EXPENSES AND OTHER PAYABLES

Accrued expenses and other payables consisted of the following as of September 30, 2010 and June 30, 2010:

   
September 30,
2010
   
June 30,
2010
 
Payroll payable
  $ 211,050     $ 8,848  
Welfare payable
    319,010       164,051  
Accrued expenses
    888,773       334,806  
Other levy payable
    147,146       -  
Total
  $ 1,565,979     $ 507,705  
 
19

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 

NOTE 11 - LOAN PAYABLES

As of September 30, 2010and June 30, 2010, the loan payables were as follows:

   
September 30,
2010
   
June 30,
2010
 
Short term loans payable:
  $ 6,227,481     $ -  
Total
  $ 6,227,481     $ -  

The interest expense from these short-term loans was $176,675 and $61,309 for the three months ended September 30, 2010 and 2009, respectively.

NOTE 12 - TAXES PAYABLE

Enterprise Income Tax

Effective January 1, 2008, the new Enterprise Income Tax (“EIT”) law of the PRC replaced the existing tax laws for Domestic Enterprises (“DES”) and Foreign Invested Enterprises (“FIEs”). The new 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, and accordingly, it made provision for income taxes for the three months ended September 30, 2010 and 2009 of $1,713,743 and $930,757, 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 $426,334 for the three months ended September 30, 2010. Jintai has been exempt from paying income tax since its formation as it produces products which fall into the tax exemption list set out in the EIT. This exemption is expected to last as long as the applicable provisions of the EIT do not change.

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. The VAT exemption applies to all agricultural products sold by Jingtai, and all but a nominal amount of agricultural products sold by Jinong.
 
20

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
Income Taxes and Related Payables

Taxes payable consisted of the following as of September 30, 2010 and June 30, 2010:

   
September 30,
2010
   
June 30,
2010
 
VAT provision (credit)
  $ 40,718       (24,655 )
Income tax payable
    3,766,933       2,020,253  
Other levies
    311,939       308,784  
Total
  $ 4,119,590       2,304,382  

Income Taxes in the Consolidated Statements of Operations and Comprehensive Income

Income taxes consisted of the following as of September 30, 2010 and 2009:
 
   
2010
   
2009
 
Current Tax
  $ 1,713,743     $ 930,757  
Deferred Tax
    -       -  
Total
  $ 1,713,743     $ 930,757  

Tax Rate Reconciliation

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 operations 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, 2010 and 2009 for the following reasons:
 
21

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
September 30, 2010
 
China
   
United States
       
   
15% - 25%
   
34%
   
Total
 
                               
Pretax income (loss)
    10,702,296             (1,200,768 )           9,501,528  
                                     
Expected income tax expense (benefit)
    2,636,058       9.50 %     (408,261 )     34.00 %        
High-tech income benefits on Jinong
    (858,273 )     -3.09 %                        
Income tax benefit of nontaxable income on Jintai
    (109,368 )     -0.39 %                        
Income tax benefit of nontaxable income on Yuxing
    45,326       0.16 %                        
Change in valuation allowance on deferred tax asset from US tax benefit
                    408,261       -34.00 %        
Actual tax expense
    1,713,743       6.17 %     -       0.00 %     18.04 %
 
September 30, 2009
 
China
   
United States
       
   
15%
   
34%
   
Total
 
                               
Pretax income (loss)
    6,513,257             (335,226 )           6,178,031  
                                     
Expected income tax expense (benefit)
    993,774       15.00 %     (113,977 )     34.00 %        
Income tax benefit of nontaxable income on Jintai
    (65,694 )     -2.02 %                        
Income tax benefit of nontaxable income on Yuxing
    2,677       -0.16 %                        
Change in valuation allowance on deferred tax asset  from US tax benefit
                    113,977       -34.00 %        
Actual tax expense
    930,757       3.35 %     -       0.00 %     15.07 %
 
 
NOTE 13 – STOCKHOLDERS’ EQUITY

Reclassification of Temporary Equity

On December 26, 2007 the Company issued 6,313,617 shares (the “Shares”) of common stock to 31 accredited investors (the “Investors”) at $3.25 per share in a private placement (the “Private Placement”). The Securities Purchase Agreement (“SPA”) set forth a contingency which gave the Investors the right to redeem the Shares in the event the Share Exchange was forced to be unwound as a result of any material adverse effect due to PRC governmental actions. As a result of the redemption feature, the Company recorded the Private Placement as temporary equity. In July 2009, the Investors and the Company entered into a Waiver and Consent where the Investors consented to waive all their rights associated with the liquidated damages under Section 4.16 of SPA. As a result, such temporary equity was no longer necessary for the purposes of the Company’s balance sheet as of June 30, 2010.

Common Stock
 
22

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
The Company issued 4,025,000 shares of common stock at a public offering price of $7.15 per share in an underwritten offering and received total gross proceeds of approximately $28.8 million on July 24, 2009. The shares were sold under the Company's previously filed shelf registration statement, which was declared effective by the SEC on June 12, 2009. The Company uses the net proceeds to expand its production facilities through the construction of new greenhouse at Yuxing.
 
The Company completed the sale of 1,282,052 shares of common stock at a public offering price of $15.60 per share on November 25, 2009 in a registered direct offering for gross proceeds of $20,000,011. On December 16, 2009, the placement agent exercised rights to place up to 320,512 additional shares of common stock at a price of $15.60 per share, for additional gross proceeds of $4,999,987. The shares were sold under the Company's previously filed shelf registration statement, which was declared effective by the SEC on June 12, 2009.

On January 3, 2010, the Company made a one-time grant of an aggregate of 120,000 shares of restricted common stock of the Company to certain members of management and officers under the 2009 Equity Incentive Plan of the Company. Pursuant to the terms of the grant, one-third of the shares vested on February 2, 2010, one-third of the shares will vest on December 31, 2010 if certain financial targets are achieved and the remaining one-third of the shares will vest on December 31, 2011 if certain financial targets are achieved. Additionally, the Company made a one-time grant of an aggregate of 22,961 shares of performance-based restricted common stock to certain officers, which vests in three equal installments on September 30, 2010, 2011 and 2012 because the Company achieved both net sales and income from operations targets for the fiscal year ended June 30, 2010.
 
On February 10, 2010, the Company made a one-time grant of an aggregate of 50,700 shares of restricted common stock to certain independent directors and key employees under the 2009 Equity Incentive Plan. Pursuant to the terms of the grant, one-third of the shares vested on March 10, 2010, one-third of the shares will vest on December 31, 2010 if certain financial targets are achieved and the remaining one-third of the shares will vest on December 31, 2011 if certain financial targets are achieved. Additionally, the Company also granted to certain independent directors and key employees an aggregate of 70,500 shares of performance-based restricted common stock, which automatically vests in three equal installments on September 30, 2010, 2011 and 2012 because the Company achieved both net sales and income from operations targets for the fiscal year ended June 30, 2010.
 
On February 10, 2010, the Company issued a total of 8,000 shares of restricted common stock under its 2009 Equity Incentive Plan to a consultant pursuant to the terms of a service agreement, half of which was vested on August 9, 2010 and half of which was forfeited due to the disengagement of the service on September 15, 2010.
 
On July 2, 1010, the Company issued a total of 2,275,931 shares of common stock to Gufeng’s previous shareholders or their designees. Of the shares being issued in the acquisition, 40% will be held in escrow pending satisfaction of certain conditions such as make good targets set for Gufeng for the fiscal year ended June 30, 2011. See Note 3.
 
23

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
Preferred Stock

Under the Company’s articles of incorporation, the board of directors 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, 2010, the Company had 20,000,000 shares of preferred stock authorized, with a par value of $.001 per share, of which no shares are outstanding.

NOTE 14 – STOCK OPTIONS

On August 17, 2009, some directors, officers and employees exercised 84,500 options to purchase an aggregate of 84,500 shares of common stock in a cashless manner and received 61,239 shares of common stock as a result of the cashless exercise.

On January 3, 2010, the Company made a one-time grant of options to purchase an aggregate of 150,000 shares of common stock to certain officers and directors under the 2009 Equity Incentive Plan at an exercise price of $14.70 per share, the closing price of common stock on the previous trading day. Pursuant to the terms of the grant, one-third of the options vested on February 2, 2010, one-third of the options will vest on December 31, 2010 if certain financial targets are achieved and the remaining one-third of the options will vest on December 31, 2011 if certain financial targets are achieved.

On January 3, 2010, the Company also made a grant of performance-based options to purchase an aggregate of 45,291 shares of common stock to certain officers and directors under the 2009 Equity Incentive Plan at an exercise price of $14.70 per share, the closing price of the common stock on the previous trading day. Pursuant to the terms of the grant, the options automatically vest in three equal installments on September 30, 2010, 2011 and 2012 because the Company achieved both net sales and income from operations targets for the fiscal year ended June 30, 2010.
 
On February 3, 2010, one independent director resigned and all his vested and unvested options were forfeited pursuant to his grant agreement with the Company.
 
24

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
On February 7, 2010, the Company appointed a new independent director and issued to him performance-based options to purchase 10,000 shares of common stock under the 2009 Equity Incentive Plan at an exercise price of $14.02 per share, the closing price of the common stock on the previous trading day. Pursuant to the terms of the grant, one-third of the options vested on March 8, 2010, one-third of the options will vest on December 31, 2010 if certain financial targets are achieved and the remaining one-third of the options will vest on December 31, 2011 if certain financial targets are achieved.
 
The Company’s calculations are made using the Black-Scholes option-pricing model with the following weighted average assumptions: expected life of 2 years; 75.2%-75.6% stock price volatility; risk-free interest rate of 1.63% and no dividends during the expected term. Stock compensation expense is recognized based on awards expected to vest. The forfeitures are estimated at the time of grant and revised in subsequent periods pursuant to actual forfeitures, if it is different from those estimates. During the three months ended September 30, 2010 and 2009, the Company recognized stock-based compensation expense of $644,075 and $0, respectively.
 
Options outstanding as of September 30, 2010 and related weighted average price and intrinsic value are as follows:

 
Exercise Prices
 
Total
Options
Outstanding
 
Weighted
Average
Remaining Life
(Years)
 
Total
Weighted
Average
Exercise Price
 
Options
Exercisable
   
 
 
Aggregate Intrinsic Value
$14.02-14.70
 
195,291
 
1.56
 
$14.67
 
65,100
   
 
-

 
The following table summarizes the options outstanding as of September 30, 2010:
 
 
Options
Outstanding
 
Outstanding, July 1, 2008
    121,500  
Granted
    28,000  
Forfeited/Canceled
    (28,000 )
Exercised
    -  
Outstanding, June 30, 2009
    121,500  
Granted
    205,291  
Forfeited/Canceled
    (22,000 )
Exercised
    (109,500 )
Outstanding, June 30, 2010
    195,291  
         
Outstanding, September 30, 2010
    195,291  
 
25

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
NOTE 15 – SIGNIFICANT RISKS AND UNCERTAINTIES INCLUDING BUSINESS AND CREDIT CONCENTRATIONS AND LITIGIATION
 
Market Concentration
All of the Company's revenue-generated operations are all 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 others, the political, economic and legal environments and foreign currency exchange. The Company's results may be adversely affected by, among other things, changes in governmental policies with respexct to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation.
 
Vendor and Customer Concentration
There was one vendor from which the Company purchased more than 10% of its raw materials for the three months ended September 30, 2010. There is no accounts payable to this vender as of September 30, 2010.

There were three vendors from which the Company purchased more than 10% of its raw materials for the three months ended September 30, 2009 with each vendor individually accounting for about 13%, 12% and 10%. Accounts payable to those venders amounted to $0 as of September 30, 2009.

There was no customer that accounted over 10% of the total sales as of three months ended September 30, 2010 and September 30, 2009.
 
Concentration of Cash
The Company maintains large sums of cash in three major banks in China. The aggregate balance in such accounts as of September 30, 2010 was $51,199,499. There is no insurance securing these deposits in China. In addition, the Company also had $2,747,595 in cash in two banks in the United States as of September 30, 2010, with $500,000 secured by the U.S. Federal Deposit Insurance Corporation.

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 on behalf of purchasers of the Company’s common stock between November 12, 2009 and September 1, 2010.  The complaint alleges that the Company and certain of its current and former officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, by making material misstatements and omissions about the Company’s true financial condition. The complaint alleges, among other things, that the financial statements for the fiscal year ended June 30, 2010 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission are materially false and misleading on the basis that such financial statements materially differ from certain financial information the Company reported to certain governmental agencies in the People’s Republic of China.  The plaintiffs claim that such allegedly misleading financial statements inflated the price of the Company’s common stock and seek monetary damages in an amount to be determined at trial.
 
26

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
The Company believes the allegations are without merit and it intends to vigorously defend this lawsuit. However, it is possible that additional similar complaints and related derivative actions may be filed in the future. If this does occur, the Company expects that all similar class action complaints will eventually be consolidated into a single action.

NOTE 16 – SEGMENT REPORTING

The Company was organized into four main business segments: fertilizer production (Jinong & Gufeng), agricultural products production (Jintai) and future research and development center that is currently under construction (Yuxing). The following tables present a summary of our businesses’ and operating segments’ results.

   
For the three months ended September 30,
 
   
2010
   
2009
 
Revenues from unaffiliated customers:
           
   Jinong
  $ 16,571,293     $ 10,178,649  
   Gufeng
    21,801,034       -  
   Jintai
    1,110,594       1,098,171  
   Yuxing
    -       -  
Consolidated
  $ 39,482,921     $ 11,276,820  
                 
Operating income :
               
Jinong
  $ 8,519,558     $ 6,124,274  
Gufeng
    1,922,981       -  
Jintai
    437,446       437,906  
Yuxing
    (54,062 )     (17,846 )
Reconciling item (1)
    -       -  
Reconciling item (2)
    (556,693 )     (335,226 )
Reconciling item (2)--stock compensation
    (644,075 )     -  
Consolidated
  $ 9,625,155     $ 6,209,108  
                 
Net income:
               
Jinong
  $ 7,295,318     $ 5,159,879  
Gufeng
    1,307,706       -  
Jintai
    437,473       437,956  
Yuxing
    (53,731 )     (17,846 )
Reconciling item (1)
    1,787       2,512  
Reconciling item (2)
    (1,200,768 )     (335,226 )
Consolidated
  $ 7,787,785     $ 5,247,274  
                 
Depreciation and Amortization:
               
Jinong
  $ 578,765     $ 444,215  
Gufeng
    268,613       -  
Jintai
    31,374       25,346  
Yuxing
    55,084       17,839  
Consolidated
  $ 933,836     $ 487,400  
                 
Interest expense:
               
Jinong
  $ -     $ 61,309  
Gufeng
    176,675       -  
Consolidated
  $ 176,675     $ 61,309  
                 
Capital Expenditure:
               
Jinong
  $ 553,899     $ 2,437,738  
Gufeng
    209,432       -  
Jintai
    -       -  
Yuxing
    13,338       10,703,302  
Consolidated
  $ 776,669     $ 13,141,040  
                 
Identifiable assets:
 
As of 09/30/10
   
As of 06/30/10
 
Jinong
  $ 95,724,716     $ 103,519,520  
Gufeng
    64,428,315       -  
Jintai
    13,144,736       12,198,845  
Yuxing
    15,077,316       12,748,003  
Reconciling item (1)
    2,753,409       3,311,943  
Reconciling item (2)
    (5,405 )     (9,631 )
Consolidated
  $ 191,123,087     $ 131,787,942  
 
(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.
 
27

 
CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 
NOTE 17 - COMMITMENTS AND LEASES

 
In July 2007, Jinong signed an office lease with the Group Company and started to pay the rent for $954 (RMB 6,460) per month. On September 30, 2010, Jinong cancelled the lease agreement with the Group Company without penalty and signed a two year lease starting from July 1, 2010 directly with Xi’an Kingtone Information Technology Co., Ltd. (“Kingtone Information”), who owns the property. Kingtone Information is a Variable Interest Entity (“VIE”) with Kingtone Wirelessinfo Solution Holoding Ltd. (“Kingtone Wirelessinfo”), whose Chairman and majority shareholder is Mr. Tao Li, the Chairman, President and Chief Executive Officer of the Company. According to the new lease agreement, the monthly rent is $1,596 (RMB 10,800).
 
In January 2008, Jintai signed a ten year land lease with Xi’an Jinong Hi-tech Agriculture Demonstration Zone for a monthly rent of $768 (RMB 5,200).
 
In February 2004, Tianjuyuan signed a fifty year lease with village committee of Dong Gao Village and Zhen Nan Zhang Dai Village in the Beijing Ping Gu District, with a monthly rent of $437 (RMB 2,958).
 
Accordingly, the Company recorded an aggregate of $8,403 and $5,113 as rent expenses for the three months ended September 30, 2010 and 2009, respectively. Rent expenses for the next twelve month periods ended September 30, 2010 is as follows:
 
 September 30, 2011
 
$
33,611
 
 September 30, 2012
   
28,824
 
 September 30, 2013
   
14,464
 
 September 30, 2014
   
14,464
 
 September 30, 2015
   
14,464
 
         
 
28


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 this 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 Jintai Agriculture Technology Development Company (“Jintai”), wholly-owned subsidiary of Jinong in the PRC, (v) Xi’an Hu County Yuxing Agriculture Technology Development Co., Ltd. (“Yuxing”), a wholly-owned subsidiary of Jinong in the PRC; (vi) Beijing Gufeng Chemical Products Co., Ltd., a wholly-owned subsidiary of Jinong in the PRC (“Gufeng”), and (vii) Beijing Tianjuyuan Fertilizer Co., Ltd., Gufeng’s wholly-owned subsidiary in the PRC (“Tianjuyuan”).

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 the research, development, production and sale of various types of fertilizers and agricultural products in the PRC through our wholly-owned Chinese subsidiaries, Jinong, Jintai, Yuxing, Gufeng and Tianjuyuan.  Our primary business is fertilizer products, specifically humic-acid based compound fertilizer produced by Jinong and compound fertilizer, blended fertilizer, organic compound fertilizer and mixed organic-inorganic compound fertilizer produced by Gufeng and Tianjuyuan. In addition, through Jintai and Yuxing, we develop and produce agricultural products, such as top-grade fruits, vegetables, flowers and colored seedlings. For financial reporting purposes, our operations are organized into four business segments: fertilizer products (Jinong), fertilizer products (Gufeng), agricultural products (Jintai) and future research and development (Yuxing).

29

 
Jintai and Yuxing also serve as a research and development base for our fertilizer products. The fertilizer business conducted by Jinong and Gufeng, which we acquired in July 2010, generated approximately 97.2% and 90.3% of our total revenues for the three months ended September 30, 2010 and 2009, respectively. See “Recent Developments” for a discussion of the Gufeng acquisition.

Fertilizer Products

As of September 30, 2010, we had a total of 464 different fertilizer products, of which 162 were developed and produced by Jinong and 302 by Gufeng.

For the three months ended September 30, 2010, we sold approximately 86,463 metric tons of fertilizer products, as compared to 4,315 metric tons for the three months ended September 30, 2009, which did not include sales of products by Gufeng. During the 2010 period, Jinong sold approximately 10,641 metric tons of fertilizer products, as compared to 4,315 for the three months ended September 30, 2009. Gufeng sold approximately 75,822 metric tons of fertilizer products during the 2010 period.

For the three months ended September 30, 2010, the top five provinces of our total fertilizer sales accounted for 28.2% of total fertilizer revenues. The five provinces and their respective percentage contribution to total revenues were Hebei (7.6%), Heilongjiang (6.1%), Liaoning (5.2%), Jilin (4.8%) and Shaanxi (4.6%). Jinong’s sales to the top five provinces accounted for approximately 36.0% of Jinong’s fertilizer revenue (or 15.1% of our total revenues). The five provinces and their respective percentage contribution to Jinong’s fertilizer revenues were Shaanxi (11.0%), Shandong (8.3%), Anhui (6.1%), Sichuan (5.6%) and Henan (5.0%). For the three months ended September 30, 2010, Gufeng’s sales of fertilizer products to the top five provinces accounted for approximately 40.5% of Gufeng’s fertilizer revenue (or 22.4% of the total revenues). The five provinces and their respective percentage contribution to Gufeng’s fertilizer revenues were Hebei (10.1%), Liaoning (9.4%), Jilin (8.6%), Heilongjiang (7.2%) and Inner Mongolia (5.2%).

A significant portion of our revenues are derived from sales in other countries. Gufeng exports blended fertilizer through contracted distributors to other countries including India, Zimbabwe, Mongolia, the Philippines and Brazil. The export revenues accounted for 55.3% of Gufeng’s fertilizer revenues (or 30.5% of total revenues) for the three months ended September 30, 2010.In addition, we export humic-acid based compound fertilizer products and blended fertilizer products via contracted distributors. Jinong exports its humic-acid based compound fertilizers to other countries, including India, Ecuador, Pakistan and Lebanon. However, the revenues from Jinong’s export products currently account for less than 1% of our fertilizer revenues.

30

 
As of September 30, 2010, we had a total of 740 distributors covering 21 provinces, four autonomous regions and three central government-controlled municipalities in China. Jinong had 588 distributors in China. Jinong’s sales are not dependent on any one or group of distributors. Its top five distributors accounted for 2.0% of Jinong’s fertilizer revenues (or 0.8% of our total revenues) for the three months ended September 30, 2010. Gufeng had 152 distributors, including some large state-owned enterprises. Its top five distributors accounted for 58.7% of Gufeng’s revenues (or 32.4% of our total revenues) for the three months ended September 30, 2010.

Agricultural Products

Through Jintai, 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 Jintai’s and Yuxing’s greenhouse facilities to conduct research and development activities for our fertilizer products. The three PRC provinces, which accounted for 100% of our agricultural products revenue (or 2.8% of our total revenues) for the three months ended September 30, 2010, were Shaanxi (86.5%), Shanxi (8.3%) and Sichuan (5.2%).  Jintai’s top three customers accounted for 28.7% of Jintai’s sales (or 0.8% of our total revenues) for the three months ended September 30, 2010.

Recent Developments

As we previously reported on our Current Report on Form 8-K filed with the Commission on July 7, 2010, we acquired Gufeng and its wholly-owned subsidiary Tianjuyuan on July 2, 2010. As a result of the acquisition by the Company, Gufeng and Tianjuyuan became wholly-owned subsidiaries of Jinong and our indirect subsidiaries. Our acquisition of Gufeng improves our competitive position by (i) increasing our maximum production capacity of fertilizers from 55,000 metric tons to 355,000 metric tons per year, (ii) adding over 152 new distributors to our existing nationwide distribution network of 588 distributors as of September 30, 2010, and (iii) broadening our fertilizer portfolio of organic and non-organic fertilizer products to serve a larger base of end-users.

During the three months ended September 30, 2010, Jinong launched five new humic-acid based liquid and powder fertilizer products, including three powder fertilizers, one functional fertilizer and one broad-spectrum fertilizer. These new products generated approximately $226,174, or 1.4%, of Jinong’s fertilizer revenues for the three months ended September 30, 2010. Jinong also added 13 new distributors during the three months ended September 30, 2010. Jinong’s new distributors accounted for approximately $227,904, or 1.4%, of Jinong fertilizer revenues for the three months ended September 30, 2010.

During the three months ended September 30, 2010, Gufeng launched two new blended fertilizers. These new products generated approximately $1,040,087, or 4.8%, of Gufeng’s fertilizer revenues for the three months ended September 30, 2010. Gufeng also added two new distributors during the three months ended September 30, 2010, which accounted for approximately $32,798, or 0.2%, of Gufeng’s fertilizer revenues.

Results of Operations

31

 
The following table shows the operating results of the Company on a consolidated basis for the three months ended September 30, 2010 and 2009.  It should be noted that our consolidated results for the 2009 period do not include the results of Gufeng and its subsidiary, Tianjuyuan, which were acquired on July 2, 2010.

 
   
Three months ended
   
Three months ended
 
   
September 30, 2010
   
September 30, 2009
 
Net Sales
  $ 39,482,921     $ 11,276,820  
Jinong
    16,571,293       10,178,649  
Gufeng
    21,801,034       n/a  
Jintai
    1,110,594       1,098,171  
Cost of Goods Sold
    26,343,594       4,317,862  
Jinong
    6,853,787       3,735,364  
Gufeng
    18,900,513       n/a  
Jintai
    589,294       582,497  
Gross Profit
    13,139,327       6,958,958  
Selling Expenses
    1,415,985       215,672  
General and Administrative Expenses
    2,098,187       534,179  
Income from Operations
    9,625,155       6,209,108  
Total Other Income (expense)
    (123,627 )     (31,077 )
Income Before Income Taxes
    9,501,528       6,178,031  
Provision for Income Taxes
    1,713,743       930,757  
Net Income
    7,787,785       5,247,274  
Net Income Per Share (Basic and Fully Diluted)
    0.30       0.24  
Basic Weighted Average Shares Outstanding
    25,922,880       21,632,488  
Diluted Weighted Average Shares Outstanding
    26,035,426       21,650,546  

Net Sales

Our net sales for the quarter ended September 30, 2010 were $39,482,921, an increase of $28,206,101, or 250.1%, from $11,276,820 for the three months ended September 30, 2009, largely due to the inclusion of Gufeng’s net sales during the 2010 period, which contributed $21,801,034, or 55.2%, of the total net sales. The total net sales without including Gufeng’s net sales for the three months ended September 30, 2010 were $17,681,887, an increase of $6,405,067, or 56.8%, from the same period a year ago.

32

 
For the three months ended September 30, 2010, Jinong’s net sales increased $6,392,643, or 62.8%, to $16,571,293 from $10,178,649 from the three months ended September 30, 2009. This increase was mainly attributable to the sales of more new products including our liquid fertilizers, powder fertilizers, and particularly, the lower-margin granular fertilizers released since our 40,000 metric-ton production line began production in August 2009.

Jintai’s net sales, which include sales of agricultural products, increased by $12,423, or 1.1%, to $1,110,594 for the three months ended September 30, 2010 from $1,098,171 for the same period in 2009. As its greenhouse facility reached its full capacity in fiscal 2010, we do not expect any further significant sales growth of agriculture products from Jintai in the near future. Our Yuxing segment had no revenues during the period ended September 30, 2010. However, since we completed 100 sunlight greenhouses at Yuxing, we expect that sales revenue of agriculture products will increase when Yuxing begins to produce agriculture products later this fiscal year.

Cost of Goods Sold

Total cost of goods sold for the three months ended September 30, 2010 were $26,343,594, an increase of $22,025,732, from $4,317,862 for the three months ended September 30, 2009, mainly due to the costs attributable to the production and sale of Gufeng’s products, which accounted for 71.7% of total cost of goods sold. The total cost of goods sold without including Gufeng’s cost of goods sold for the three months ended September 30, 2010 was $7,443,081, an increase of $3,125,219, or 72.4%, from the same period a year ago.

Cost of goods sold by Jinong for the three months ended September 30, 2010 were $6,853,787, an increase of $3,118,422, or 83.5%, from $3,735,364 for the same period in 2009.  As a percentage of total net sales, cost of goods sold by Jinong accounted for approximately 17.4% and 33.1% for the three months ended September 30, 2010 and 2009, respectively. The increase in cost of goods sold was primarily attributable to the increase in raw materials and packaging materials as a result of our newly introduced powder and liquid fertilizer products.

Cost of goods sold by Gufeng for the three months ended September 30, 2010 were $18,900,513, which accounted for 47.9% of total net sales.

Cost of goods sold by Jintai for the three months ended September 30, 2010 were $589,294, an increase of $6,797, or 1.2%, from $582,497 for the same period in 2009.  As a percentage of total net sales, cost of goods sold by Jintai accounted for approximately 1.5% and 5.2% for the three months ended September 30, 2010 and 2009, respectively. The increase in amortization expense was slightly offset by the decrease in direct materials and overhead expenses.

Gross Profit

Gross profit for the three months ended September 30, 2010 increased by $6,180,369, or 88.8%, to $13,139,327, as compared to $6,958,958 for the three months ended September 30, 2009.  Gross profit margin was approximately 33.3% and 61.7% for the three months ended September 30, 2010 and 2009, respectively. The decrease in gross profit margin was mainly due to the recent acquisition of Gufeng, which mainly sells low-margin granular fertilizer products. The gross profit without including Gufeng’s gross profit was $10,238,806 with a gross profit margin of 57.9%.

33

 
Gross profit generated by Jinong increased by $3,274,221, or 50.8%, to $9,717,506 for the three months ended September 30, 2010 from $6,443,285 for the three months ended September 30, 2009. Gross profit margin from Jinong’s sales was approximately 58.6% and 63.3% for the three months ended September 30, 2010 and 2009, respectively. The main reason for the decrease in Jinong’s gross profit margin was the change in product mix during the 2010 period.  While we have experienced fast growth in our higher-margin liquid fertilizer products, we have recently penetrated the granular and powder fertilizer market with a view toward maximizing our marketing efforts, despite the relative lower profit margins on granular fertilizer.

Gross profit generated by Gufeng was $2,900,521 with a gross profit margin of approximately 13.3% for the three months ended September 30, 2010.

 Gross profit from Jintai increased by $5,627, or 1.1%, for the three months ended September 30, 2010, to $521,300, as compared to $515,674 for the three months ended September 30, 2009.  Gross profit margin from Jintai sales was approximately 46.9% and 47.0% for the three months ended September 30, 2010 and 2009, respectively.

Selling Expenses

Our selling expenses consist primarily of salaries of sales personnel, advertising and promotion expenses, freight-out costs and related compensation. Selling expenses were $1,415,985, or 3.6%, of net sales for the three months ended September 30, 2010 as compared to $215,672, or 1.9%, of net sales for the three months ended September 30, 2009, an increase of $1,200,313, or 556.5%. This increase was primarily due to the inclusion of Gufeng’s selling expenses for the 2010 period. The selling expenses of Gufeng were $516,585, or 2.4%, of Gufeng’s net sales.  The selling expenses of Jinong were $892,930, or 5.4%, of Jinong’s net sales. The main reason for the increase in Jinong’s selling expenses was its expanded marketing efforts and the increase in shipping costs.

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. General and administrative expenses were $2,098,187, or 5.3%, of net sales, for the three months ended September 30, 2010, as compared to $534,179, or 4.7%, of net sales, for the three months ended September 30, 2009, an increase of $1,564,008. The general and administrative expenses of Gufeng were $552,285, of which $342,463 was the non-cash amortization expenses from its estimated intangible assets. The acquisition related expenses, which mainly included professional services related to the acquisition, were $236,143 for the three months ended September 30, 2010. In addition, the non-cash stock compensation expense was $644,075 for the three months ended September 30, 2010, compared to $0 for the same period a year ago.

34

 
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 expenses for the three months ended September 30, 2010 was $123,627, as compared to total other expenses of $31,077 for the three months ended September 30, 2009, an increase of $92,550, or 297.8%.  The increase was mainly attributable to the $176,676 interest expense from Gufeng’s outstanding 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 $1,287,409 for the three months ended September 30, 2010, as compared to $930,757 for the same period in 2009, an increase of $356,652, or 38.3%, which was primarily attributable to our increased operating income.

Gufeng, subject to a tax rate of 25%, incurred income tax expenses of $426,334 for the three months ended September 30, 2010.

Jintai has been exempt from paying income tax since its formation as it produces products which fall into the tax exemption list set out in the EIT. This exemption is expected to last as long as the applicable provisions of the EIT do not change.

Net Income

Net income for the three months ended September 30, 2010 was $7,787,785, an increase of $2,540,511, or 48.4%, compared $5,247,274 for the three months ended September 30, 2009. The increase was attributable to the increase in gross profit. Net income as a percentage of total net sales was approximately 19.7% and 46.5% for the three months ended September 30, 2010 and 2009, respectively.

Discussion of Segment Profitability Measures

As of September 30, 2010, we were engaged in the following businesses: the production and sale of fertilizers through Jinong, Gufeng and Tianjuyuan, and the production and sale of high-quality agricultural products and research and development on new fertilizer products by Jintai. Upon the completion of its research and development center, Yuxing’s main business will be to conduct research and development on new fertilizer products and sell high-quality agricultural products. For financial reporting purposes, our operations were organized into four business segments: fertilizer products (Jinong), fertilizer products (Gufeng), agricultural products (Jintai) and future research and development (Yuxing). Each of the segments has its own annual budget with regard to development, production and sales.

35

 
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 (the “Public Offerings”).

As of September 30, 2010, cash and cash equivalents were $53,947,094, a decrease of $8,388,343 from $62,335,437 as of June 30, 2010.

 We intend to use some remaining net proceeds from the Public Offerings (approximately $15.0 million) to acquire new businesses, upgrade production lines and complete the greenhouse facilities for agriculture products of Yuxing located on 88-acres of land in Hu County, 18 kilometers southeast of Xi’an city. 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. Notwithstanding the foregoing, we may seek additional financing for expansion purposes, which may include additional 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.

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

   
Three Months   Ended
 September 30
 
   
2010
   
2009
 
Net cash provided by / (used in) operating activities
  $ (3,697,231 )   $ 4,291,270  
Net cash used in investing activities
    (7,639,193 )     (13,141,040 )
Net cash provided by financing activities
    2,240,468       26,188,228  
Effect of exchange rate change on cash and cash equivalents
    707,613       23,057  
Net increase in cash and cash equivalents
    (8,388,343 )     17,361,515  
Cash and cash equivalents, beginning balance
    62,335,437       17,795,447  
Cash and cash equivalents, ending balance
  $ 53,947,094     $ 35,156,962  

Operating Activities

Net cash used in operating activities was $3,697,231 for the three months ended September 30, 2010, a decrease of $7,988,501 from the $4,291,270 net cash provided by operating activities for the three months ended September 30, 2009. The decrease was mainly due to an increase in the advancement to suppliers from Gufeng.

Investing Activities

Net cash used in investing activities in the three months ended September 30, 2010 was $7,639,193, which was mainly used to acquire Gufeng. The net cash used in investing activities for the same period in 2009 was $13,141,040, most of which was used to procure Land Use Rights for Yuxing in July 2009.

36

 
Financing Activities

Net cash provided by financing activities in the three months ended September 30, 2010 totaled $2,240,468, mainly due to the short-term loans borrowed by Gufeng with its local banks. The net cash provided by financing activities for the same period in 2009 was $26,188,228, mainly due to our public offering in July 2009.

Accounts Receivable

We had accounts receivable of $16,482,643 as of September 30, 2010, as compared to $15,571,888 as of June 30, 2010, an increase of $910,755, or 5.8%. The increase was primarily due to the increase in sales during the period ended September 30, 2010, including Gufeng’s sales.
 
Our allowance for doubtful accounts was $234,804 of September 30, 2010, as compared to $193,403 as of June 30, 2010, an increase of $41,401, or 21.4%.

Inventories

We had an inventory of $27,248,954 as of September 30, 2010, as compared to $11,262,647 as of June 30, 2010, an increase of $15,986,307, or 141.9%.  This increase was mainly due to the recent acquisition of Gufeng, which had an estimated fair value of $14,522,749 in inventory as of September 30, 2010. Inventories in other subsidiaries was $12,726,205 as of September 30, 2010, as compared to $11,262,647 as of June 30, 2010, an increase of $1,463,558, or 13%, mainly due to the increased work in progress at Jintai’s greenhouse facilities with more high-end flowers.

Accounts Payable

We had accounts payable of $2,251,015 as of September 30, 2010 as compared to $328,124 as of June 30, 2010, representing an increase of $1,922,891, of which $1,768,997 was attributable to Gufeng. Neither Jintai nor Yuxing had any accounts payable as of September 30, 2010.

Off-Balance Sheet Arrangements

As of September 30, 2010, we did 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 (“US GAAP”). 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 more critical accounting policies that currently affect our financial condition and results of operations:

37

 
Use of estimates

The preparation of consolidated financial statements in conformity with US GAAP 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, no other significant obligations of the Company exist and collectability is reasonably assured.  Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

The Company's revenue consists of invoiced value of goods, net of 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 purposes of the statement of cash flows, the Company considers 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

The Company's policy is to maintain reserves for potential credit losses on accounts receivable. The Company reviews its accounts receivable outstanding balance and its assessment of the collectability of specific customer accounts, the aging of accounts receivable, its history of bad debts, and the general condition of the industry at each fiscal year-end to determine if the bad debt allowance is adequate.

Segment reporting

Statement of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure About Segments of an Enterprise and Related Information" 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, 2010, the Company, through its subsidiaries is engaged in the following businesses: fertilizer products (Jinong), fertilizer products (Gufeng), agricultural products (Jintai) and future research and development (Yuxing).
 
 
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 use financial instruments in the normal course of business 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 the 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 the 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 the U.S. dollar. Except for the 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 the RMB depreciates against the 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 exchange rates at the balance sheet dates and revenue 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, 2010, our accumulated other comprehensive income was $4.93 million. We have not entered into any hedging transactions in an effort to reduce our exposure to foreign exchange risk. The value of the Renminbi against the U.S. dollar and other currencies is affected by, among other things, changes in China’s political and economic conditions. Since July 2005, the Renminbi has not been pegged to the U.S. dollar. Although the People’s Bank of China regularly intervenes in the foreign exchange market to prevent significant short-term fluctuations in the exchange rate, the Renminbi may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term. Moreover, it is possible that in the future, PRC authorities may lift restrictions on fluctuations in the Renminbi exchange rate and lessen intervention in the foreign exchange market.
 
38

 
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, 2010 and June 30, 2010 was $6.23 million and $0, 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, 2010. The original loan term on average is one year, and the remaining average life of the short term-loans is nine 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 product 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.

 
Item 4.
Controls and Procedures
 
(a)               Evaluation of disclosure controls and procedures . At the conclusion of the period ended September 30, 2010 we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, 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 Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this 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 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 Chief Executive Officer and Chief Financial Officer, in a manner that allowed for timely decisions regarding required disclosure.
 
(b)    Changes in internal controls . During the period covered by this report, there was no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

39


PART II      OTHER INFORMATION

Item 1.
Legal Proceedings

On October 15, 2010, a class action lawsuit was filed against us and certain of our current and former officers in the United States District Court for the District of Nevada on behalf of purchasers of our common stock between November 12, 2009 and September 1, 2010.  The complaint alleges that we and certain of our current and former officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, by making material misstatements and omissions about our true financial condition. The complaint alleges, among other things, that the financial statements for the fiscal year ended June 30, 2010 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission are materially false and misleading on the basis that such financial statements materially differ from certain financial information we reported to certain governmental agencies in the People’s Republic of China.  The plaintiffs claim that such allegedly misleading financial statements inflated the price of our common stock and seek monetary damages in an amount to be determined at trial.
 
We believe the allegations are without merit and we intend to vigorously defend this lawsuit. However, it is possible that additional similar complaints and related derivative actions may be filed in the future. If this does occur, we expect that all similar class action complaints will eventually be consolidated into a single action.

Item 1A.
Risk Factors

A class action lawsuit was filed against us alleging violations of the federal securities laws, an unfavorable outcome of which could have a material adverse effect on our business .
 
As described in Item 1. “Legal Proceedings” of Part II of this Quarterly Report on Form 10-Q, a class action lawsuit was filed in the United States District Court for the District of Nevada on behalf of purchasers of our common stock between November 12, 2009 and September 1, 2010, alleging that we and certain of our current and former officers violated the federal securities laws. It is possible that additional similar complaints and related derivative actions may be filed in the future. The expense of defending such litigation, and possible additional similar litigations, may be substantial and the time required to defend the actions could divert management’s attention from the day-to-day operations of our business, which could adversely affect our business, results of operations and cash flows. In addition, an unfavorable outcome in such litigation or litigations could have a material adverse effect on our business, results of operations and cash flows.

Item 5.
Other Information

On August 10, 2010, Xi’an Hu County Yuxing Agriculture Technology Development Co., Ltd., one of our indirect wholly-owned PRC subsidiaries (“Yuxing”), entered into a Project Construction Contract (the “Construction Contract”) with Xi’an Kingtone Information Technology Co., Ltd., a PRC company (“Kingtone Information”), pursuant to which Kingtone Information is responsible for developing certain electronic control systems for Yuxing.  Mr. Tao Li, our chairman, president and chief executive officer, is a principal shareholder and the chairman of Kingtone Information.  Kintone Information is an indirect contractually-controlled subsidiary of Kingtone Wirelessinfo Solution Holding, Ltd. (Nasdaq:  KONE), a publicly traded British Virgin Islands company (“Kingtone”).  Mr. Li beneficially owns a controlling interest in Kingtone and serves as Kingtone’s chairman.
 
40

 
The total contracted value of the Construction Contract, including value-added taxes and other taxes, is RMB 3.03 million, or approximately $452,000. Work on this project started in August 2010, and is expected to be completed in November 2010. Pursuant to the Construction Contract, Kingtone Information will design, plan, construct and purchase materials for the electronic control systems to be used in 28 greenhouses of Yuxing. The Construction Contract sets forth a warranty period, which is the earlier of (a) 18 months after the construction raw materials are delivered, inspected and accepted, and (b) 12 months after the inspection and acceptance of the work completed. During the warranty period, Yuxing is entitled to receive maintenance and repair services from Kingtone Information at no cost. A copy of the Construction Contract is filed herewith as Exhibit 10.1.
 
On September 30, 2010, our indirect wholly-owned subsidiary Shaanxi TechTeam Jinong Humid Acid Product Co., Ltd. entered into a Lease Agreement (the “Lease”) with Kingtone Information with respect to our executive offices located at 3rd Floor, Borough A, Block A, No. 181, South Taibai Road, Xi’an, Shaanxi Province, People’s Republic of China 710065.  Pursuant to the Lease, effective as of July 1, 2010, we rent this office space from Kingtone Information at a monthly rent of RMB 10,800 (approximately $1,614) for a two-year rental term ending on June 30, 2012.  Rent is payable on a quarterly basis. A copy of the Lease is filed herewith as Exhibit 10.2.
 
The foregoing description of the Construction Contract and Lease do not purport to be complete and are qualified in their entirety by reference to the Construction Contract and Lease which are attached as Exhibit 10.1 and Exhibit 10.2 to this Quarterly Report on Form 10-Q.
 
On November 7, 2010, in order to comply with the corporate governance rules of the New York Stock Exchange, our board of directors adopted an Amended and Restated Code of Ethics of our company.  A copy of the Amended and Restated Code of Ethics is filed herewith as Exhibit 14.1.



Item 6.
Exhibits

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

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SIGNATURES

Pursuant to the requirements of the Securities 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 12, 2010        
By:
/s/ Tao Li  
    Name: Tao Li  
    Title: President and Chief Executive Officer  
    (principal executive officer)  
 
 
Date:  November 12, 2010        
By:
/s/ Ken Ren  
    Name: Ken Ren  
    Title: Chief Financial Officer  
    (principal financial officer and principal accounting officer)  

42


EXHIBIT INDEX
 
No.
Description

10.1
Project Construction Contract dated August 10, 2010 between Xi’an Hu County Yuxing Agriculture Science & Technology Co., Ltd. and Xi’an Kingtone Information Technology Co., Ltd.

10.2
Lease Agreement dated September 30, 2010 between Shaanxi TechTeam Jinong Humid Acid Product Co., Ltd. and Xi’an Kingtone Information Technology Co., Ltd.

14.1
Amended and Restated Code of Ethics of China Green Agriculture, Inc.

31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 

31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
43

 
Exhibit 10.1
Project Construction Contract

Contact No.: LHGK-2010-007

Party A: Xi’an Hu County Yuxing Agriculture Technology Development Co., Ltd.

Party B:  Xi’an Kingtone Information Co., Ltd.

Signing Date:  August 10, 2010
Place of Signing:  Xi’an

NOW, THEREFORE, in consideration of the Contract Law of the People’s Republic of China, and through mutual friendly negotiation on issues in respect thereof, both Parties hereto enter into the agreement as follows (“Contract”):

Article 1   Project Overview

 
1.
Project Name: Sunlight Greenhouse Automation and Weak Electricity System
 
2.
Project Location: Yuxing Modern Agricultural Science & Technology Park, Hu County, Xi’an
 
3.
Project Duration: Within three months after the commencement of the Contract
 
4.
Scope:
    Party B shall work on the 28 greenhouses located at Yuxing Modern Agricultural Science & Technology Park, Hu County, including the design and overall plan of an automation system, surveillance system (including greenhouse and road), background music system, surrounding protective system and integrated pipeline system; as well as purchase and construction of all the said systems.
 
Party B shall ensure that the system is reliable, complete and advanced to fulfill the user’s production requirements.
In terms of the technical requirements and material supply list, refer to the Project Proposal for details.

Article 2  Quality Assurance and Technical Requirements

 
1.
The systems and services provided by Party B shall comply with relevant national and industry specifications and requirements.
 
2.
All products supplied by Party B must be brand new, original, and without outside or inside defects.
 
 
 

 
 
Article 3.  Warranty and After-sale Services

 
1.
The warranty period is within 18 months since the acceptance of the goods or within 12 months since the acceptance of the project, whichever is earlier.
 
2.
In the course of the warranty period, party B shall maintain or replace the breakdown and damaged parts incurred by non-human factors free of charge. The damage or breakdown caused by human factors must be timely maintained or replaced by Party B on a paid basis.
 
3.
Beyond the guarantee period, Party B shall provide technical service and components on a paid basis.

Article 4  Fees and Method of Payment

 
1.
Contract Price: RMB 3.03 million, of which RMB   1.5 million for equipment (with a 17% Value Added Tax (“VAT”) invoice) and RMB 1 .53 million for construction (with a construction invoice).
 
2.
Method of Payment
 
a)
Party A shall pay 40% of the total contract price, RMB 1,212,000, to Party B within five days upon the signing of the Contract.
 
b)
Party A shall pay 30% of the total contract price, RMB 909,000, to Party B within five days upon the acceptance of the main equipment.
 
c)
Party A shall pay 25% of the total contract price, RMB 757,500, to Party B within one month upon receiving the billing notice and inspection documents from Party B.
 
d)
Party A shall pay the remaining 5% of the total contract price in full, RMB 151,500, to Party B within 15 days upon receiving the billing notice from Party B, on the condition that there is no quality problem after the expiration of the guarantee period.

Article 5.   Place and Time of Installation

 
1.
Time: Party B shall deliver the goods, free of charge, to the place designated by Part A within the duration of the project per the Contract. Part B shall provide installation, testing, training, and technical support services to Party A.
 
2.
During installation, all imported products must have inspection certificates issued by Import and Export Commodities Inspection Department of the State; all domestic products must have factory certification.
3. 
Place: as designated by Party A.
 
 
 

 
 
Article 6. Obligations of Both Parties

Party A’s Obligations
 
1)
Supply Part B with water, electricity, and temporary storage room, and construction site;
 
2)
Timely arrange the payment of the contract amount to Party B;
 
3)
Assist Party B to solve specific problems during the construction period;
 
4)
Fulfill its obligations under the Contract.

Party B’s Obligations
 
1)
Complete the construction in due time;
 
2)
Construct as per the drawings;
 
3)
Construct should proceed timely per the Contract;
 
4)
Construct per the engineering design, and in accordance with the relevant provisions issued by the State;
  5) Cooperate with the staff or delegate from Party A for regular inspection and testing.

Article 7.  Responsibilities of Both Parties

 
1.
Party A is responsible for all the losses, including economic loss, resulted in terms of breaching its obligations under the Contract.
 
2.
Party B is responsible for all the losses, including economic loss, resulted in terms of breaching its obligations under the Contract.

Article 8.   Delay of the Project

The starting date is as set and agreed upon by both parties, with a construction term of three months. Shall the following events happen, the project completion date will be postponed accordingly:
 
1)
Changes of construction scope resulting in the increase of workloads;
 
2)
Water or power failure affecting the construction, but no fault of Party B;
 
3)
Force majeure, natural disasters;
 
4)
Other factors in construction site which affect the construction progress;
 
5)
Party A’s failure to pay the construction fees per the Contract

Article 9   Force Majeure

The failure of either party to perform all or part of its obligations under the Contract due to force majeure shall not be deemed as a breach of Contract. The affected party shall notify the other party within ten days after the occurrence of such force majeure. After confirmed and verified by the local authority (above county level) of the said force majeure, the project can be postponed, be fully or partially performed between the parties hereto, and may be partly or fully exempted from its liabilities for breach of Contract.
 
 
 

 
 
Article 10 Inspection and Test Run

Party B shall timely provide the completion report to Party A after finishing the project.  Project completion date is set as the date when Party A signs the completion report. The month thereafter is the test run period. Following its expiration, if Party A has no rectification opinions, Part A shall conduct a quality assessment, check and accept the project within 15 days.

If Party A has rectification opinions, Party B shall conduct amendment accordingly to meet Party A’s requirements. Party A shall then redo the quality assessment and acceptance of the project within 15 days. Once the project meets the quality and acceptance standards, Party A may transact quality assurance procedures. Party B shall provide all relevant engineering documents to Party A.

Article 11   Technical Support and Services

 
1.
Once the systems are under construction, Party B shall dispatch professionals and technical personnel to guide the implementation in the different stages of construction to ensure proper progress.
 
 
2.
Party B shall strictly abide by the procedures and regulations to conduct installation and testing of the systems. Party B shall accept the inspections or supervision from Party A.
 
 
3.
Party B shall provide technical training to the personnel from Party A.
 
Article 12  After-sales services
 
Party B shall provide free maintenance services to Party A during the warranty period. After its expiration, Party B shall provide such services by charging Party A maintenance fee. Within the warranty period, Party B shall respond within 2 hours and dispatch the personnel to the site within 8 hours upon receiving Party A’s notification, and conduct free maintenance.
 
Article 13.   Liability for Breach of Contract
 
Party A shall bear the liability and compensate Party B with the liquidated damages, at ten thousandth of the total contract price, per day, in the event of failing to timely provide the necessary instructions, confirm, approve, and fulfill its obligations under the Contract, and failing to pay, or other conducts that hinder the contract to be carried out, etc.
 
Party B shall bear the liability and compensate Party A with the liquidated damages, at ten thousandth of the total contract price, per day, in the event of failing to timely provide the necessary instructions, confirm, approve, and fulfill its obligations under the Contract, failing to deliver timely, and other conducts that prevent the contract to be carried out.  Party B shall bear liability for the following issues: the equipment and technology provided by Party B does not meet the technical requirements; fails to deliver projects on time or in accordance with the quality and technical requirements as stipulated in the Contract; does not provide equipment warranty services.
 
 
 

 
 
Article 14  Alternation and Termination of the Contract
 
Unless otherwise specified under the Contract, no party can alter, terminate or cancel the Contract without consent from the other party.
 
If continuing to perform the Contract will damage the national and public interests, both parties should alter, suspend, or terminate the Contract. If both sides cannot reach a settlement on this issue, they shall solve the dispute according to Article 15 of this Contract.
 
Article  15  Miscellaneous
 
 
1.
The laws and regulations in the People’s Republic of China are applicable to the Contract. Any disputes arisen during the execution of the Contract herein shall be settled through friendly negotiation by the two parties. Otherwise, the disputes can be solved through arbitration by Xi'an Arbitration Commission;
 
2.
The Contract can be altered, added or adjusted upon written notice, and becomes effective upon signing and sealing by the two parties;
 
3.
The Contract shall have four copies, two copies for each party. The Contract shall enter into force upon signature or sealed by two parties.

Party A:
Party B
Xi’an Hu County Yuxing Agriculture
Xi’an Kingtone Information Co., Ltd (Seal)
Technology Development Co., Ltd. (Seal)
 
Address: North Xi’an Village,
Address: No.181 Taibai Road South,
Weifeng Town, Hu County
Borough A, Block A , 3rd floor,  Xi’an
Xi’an,  Shaanxi
Shaanxi
   
Legal Representative:
Legal Representative:
Appointed Representative: Qingqing Zhang
Appointed Representative: Peng Zhang
Telephone: 029-84999286
Telephone:029-88231591
Issuing Bank: SPD Bank Xi'an Branch
Issuing Bank: SPD Bank Xi'an Branch
in Xi’an High-tech Development Zone
in Xi’an High-tech Development Zone
Bank Account: 72040158000017563
Bank Account: 72040158000007060
Signing Date: August 10, 2010
Signing Date: August 10, 2010
 
 
 

 

Exhibit 10.2
Lease Agreement

Lessor (Hereinafter referred to as Party A):
Xi’an Kingtone Information Technology Co., Ltd.

Lessee (Hereinafter referred to as Party B):
Shaanxi TechTeam Jinong Humid Acid Product Co., Ltd.

Through friendly consultation, the parties reach a consensus on the lease. To specify   each party’s rights and responsibilities, the parties hereby enter into the following agreement pursuant to the Contract Law of the People’s Republic of China, (“Agreement”):

Article 1

Party A shall guarantee that the Premises to be leased to Party B, which is identified in Article 2, is in compliance with the relevant lease regulations and laws in the People’s Republic of China.

Article 2
The Premises

1.
The Premises is located at 3F, Borough A, Block A, No. 181 South Taibai Road, Gaoxin District, Xi’an.
2.
The gross area is 360 square meters, and the net area is 323 square meters.

Article 3
The Ownership

Party A shall provide the property ownership certificate, identification (i.e., business licence) and other documents, Party B shall provide identification documents. Both parties can copy the other party’s document after verification. All copies are only used for the  purpose of the Agreement.

Article 4
Lease Term and Usage

1.
The lease term of the Premises shall be two years, from July 1, 2010 to June 30, 2012.
2.
Party B shall guarantee that the Premises will only be used as offices.
3.
Upon the expiration of the Agreement, Party A shall be entitled to take back the Premises, and Party B shall return the Premises on schedule.
4.
If Party B wishes to extend the lease, Party B shall give a three-month’s notice to Party A in advance. With Party A’s consent, parties may enter into a renewed lease agreement between each other.
 

 
Article 5
Rent and Payment

1.
The monthly rent shall be RMB 10,800.
2.
The security deposit shall be one month rent, RMB 10,800.
3.
The rent shall be paid on a quarterly basis. Party B shall make the payment to Party A by cash or transfer at the end of each quarter. Party A shall provide payment receipts and invoices.

Article 6
Transfer and Sublet

1.
During the lease period, Party A shall have the rights to transfer the Premises, the Agreement shall be still valid to both new owner and Party B.
2.
Party B is not allowed to sublet the Premises to any third party without prior written consent of Party A.
3.
If Party A wishes to sell the Premises, Party A shall give a three-month notice to Party B in advance. Party B shall have the preemptive right to purchase the Premises under the same terms and conditions.

Article 7
Modification and Termination of The Agreement

1.
The Agreement can be modified or terminated by both parties’ negotiation and consent.
2.
Party A shall have the right to terminate the Agreement and take back the Premise if:
(1)
Party B sublets the Premises to any third party without prior written consent of Party A;
(2)
Party B makes any structural alterations to the Premises without the prior written consent of Party A;
(3)
Party B damages the Premises and does not fix it during reasonable period Party A raised;
(4)
Party B changes the usage of the Premises without the prior written consent of Party A; or
(5)
Party B uses the Premises to store dangerous goods or conducts illegal activities.
3.
The Agreement shall be terminated upon expiration.
4.
In case of a force majeure that the Agreement cannot be executed in accordance with the originally stipulated terms, the Agreement shall be terminated.

Article 8
The Return of the Premises and Inspection
 
1.
Party A shall guarantee that the Premises, including the facilities and equipment, is in a good condition.
2.
Upon the expiration of the Agreement, Party B shall return the Premises, facilities and equipment to Party A.
3.
Party B shall maintain and keep the Premises and its facilities and equipment in a good condition, cannot leave goods to affect the usage of the Premises. Party A shall have the right to dispose of the goods left
 

 
Article 9
Breach of the Agreement by Party B

During the lease period, Party A shall have the right to terminate the Agreement and take back the Premises if:
(1)
Party B sublets the Premises to any third party without prior written consent of Party A;
(2)
Party B makes any structural alterations or damage to the Premises without the prior written consent of Party A; or
(3)
Party B changes the usage of the Premises or conducts illegal activities

Article 10
Conditional Discharge

1.
In case of a force majeure that the contract cannot be executed in accordance with the originally stipulated terms, both Party A and Party B do not take responsibilities.
2.
In case of the removal or transformation of the Premises in accordance with the national policies, each party is not responsible for other party’s losses.

Article 11

For any unaddressed matters, Party A and Party B may enter into supplementary agreement(s). The supplementary terms and the appendixes are part of the Agreement and have the same legal effect as the Agreement.

Article 12

The Agreement is made in two original copies. Each Party shall have one copy of the Agreement, and each copy shall have the same legal effect.
 


Party A: Xi’an Kingtone Information Technology Co., Ltd.
(Corporate Seal Affixed)
Date: September 30, 2010
 
Party B: Shaanxi TechTeam Jinong Humid Acid Product Co., Ltd.
(Corporate Seal Affixed)
Date: September 30, 2010
 

Exhibit 14.1
 
AMENDED AND RESTATED CODE OF ETHICS
 
OF
 
CHINA GREEN AGRICULTURE, INC.
 
I.
Objectives
 
China Green Agriculture, Inc., a Nevada corporation (the “ Company ”), is committed to the highest level of ethical behavior. The Company's business success depends upon the reputation of the Company and its directors, officers and employees to perform with the highest level of integrity and principled business conduct.
 
This Amended and Restated Code of Ethics (“ Code ”) applies to all directors, officers and employees of the Company, including the directors, officers and employees of each of its subsidiaries (collectively, the “ Covered Persons ”). This Code is designed to deter wrongdoing and to promote all of the following:
 
 
·
honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
 
 
·
full, fair, accurate, timely, and understandable disclosure in reports and documents that the Company files with, or submits to, the Securities and Exchange Commission (the “ Commission ”), and in other public communications made by the Company;
 
 
·
compliance with applicable governmental laws, rules and regulations; the prompt internal reporting to an appropriate person or persons identified herein for receiving notice of violations or potential violations of this Code; and
 
 
·
accountability for adherence to this Code.
 
Current versions of the Code will be maintained on the Company's website and distributed periodically to all Covered Persons. Compliance with the Code is, first and foremost, the individual responsibility of every Covered Person. The Company will post any amendments or waivers to the Code on the Company's website.
 
This Code is not intended to cover every applicable law, or to provide answers to all questions that might arise; for such, the Company relies on each person's sense of what is right, including a sense of when it is appropriate to seek guidance from others on an appropriate course of conduct.
 
II.
Honest And Ethical Conduct
 
Each Covered Person must always conduct himself or herself in an honest and ethical manner. Each Covered Person must act with the highest standards of personal and professional integrity and must not tolerate others who attempt to deceive or evade responsibility for actions.  Honest and ethical conduct must be a driving force in every decision made by a Covered Person while performing his or her duties for the Company. When in doubt as to whether an action is honest and ethical, each Covered Person shall seek advice from his or her immediate supervisor or senior management, as appropriate.
 
 
 

 
 
III.
Conflicts Of Interest
 
The term “conflict of interest” refers to any circumstance that would cast doubt on a Covered Person's ability to act objectively when representing the Company's interest. Covered Persons should not use their position or association with the Company for their own or their family's personal gain, and should avoid situations in which their personal interests (or those of their family) conflict or overlap, or appear to conflict or overlap, with the Company's best interests.
 
The following are examples of activities that give rise to a conflict of interest. These examples do not in any way limit the general scope of the Company's policy regarding conflicts of interest.
 
 
·
Where a Covered Person's association with (or financial interest in) another person or entity would reasonably be expected to interfere with the Covered Person's independent judgment as to the Company's best interest, that association or financial interest creates a conflict of interest.
 
 
·
The holding of a financial interest by a Covered Person in any present or potential competitor,  customer,  supplier, or contractor of the Company creates a conflict of interest, except where the business or enterprise in which the Covered Person holds such financial interest is publicly owned, and the financial interest of the Covered Person in such public entity constitutes less than one percent (1%) of the ownership of that business or enterprise.
 
 
·
The acceptance by a Covered Person of a membership on the board of directors, or serving as a consultant or advisor to any board or any management, of a business that is a present or potential competitor, customer, supplier, or contractor of the Company, creates a conflict of interest, unless such relationship is pre-approved in writing by the Chief Executive Officer of the Company.
 
 
·
Engaging in any transaction involving the Company, from which the Covered Person can benefit financially or otherwise, apart from the usual compensation received in the ordinary course of business, creates a conflict of interest. Such transactions include lending or borrowing money, guaranteeing debts, or accepting gifts, entertainment, or favors from a present or potential competitor, customer, supplier, or contractor of the Company.

 
·
The use or disclosure of any unpublished information regarding the Company, obtained by a Covered Person in connection with his or her employment for personal benefit, creates a conflict of interest.
 
 
 

 
 
It is our policy and it is expected that all Covered Persons should endeavor to avoid all situations that present an actual or apparent conflict of interest. All actual or apparent conflicts of interest must be handled honestly and ethically. If a Covered Person suspects that he or she may have a conflict of interest, that Covered Person is required to report the situation to, and to seek guidance from, his or her immediate supervisor or senior management, as appropriate. For purposes of this Code, directors, the Chief Executive Officer and the Chief Financial Officer shall report any such conflict or potential conflict situations to the Chairman of the Audit Committee. Officers (other than the Chief Executive Officer and Chief Financial Officer) and employees of the Company shall report any such situations to their immediate supervisor. It is the responsibility of the Chairman of Audit Committee or the Chairman of the Board, as applicable, to determine if a conflict of interest exists or whether such situation is likely to impair the Covered Persons ability to perform his or her assigned duties with the Company, and if such situation is determined to present a conflict, to determine the necessary resolution.
 
IV.
Compliance With Applicable Laws, Rules And Regulations
 
Full compliance with the letter and the spirit of all applicable governmental laws, rules and regulations, and applicable rules and listing standards of any national securities exchange on which the Company's securities may be listed, is one of the foundations on which the Company's ethical policies are built. All directors and executive officers of the Company must understand and take responsibility for the Company's compliance with the applicable governmental laws, rules and regulations of the cities, states and countries in which the Company operates, and for complying with the applicable rules and listing standards of any national securities exchange on which the Company's securities may be listed.
 
V.
Rules To Promote Full, Fair, Accurate, Timely and Understandable Disclosure
 
As a public Company, the Company has a responsibility to report financial information to security holders so that they are provided with accurate information in all material respects about the Company's financial condition and results of operations. It is the policy of the Company to fully and fairly disclose the financial condition of the Company in compliance with applicable accounting principles, laws, rules and regulations. Further, it is the Company's policy to promote full, fair, accurate, timely and understandable disclosure in all Company reports required to be filed with or submitted to the Commission, as required by applicable laws, rules and regulations then in effect, and in other public communications made by the Company.
 
Covered Persons may be called upon to provide or prepare necessary information to ensure that the Company's public reports are complete, fair and understandable. The Company expects Covered Persons to take this responsibility seriously and to provide accurate information related to the Company's public disclosure requirements. A Covered Person who is unsure of whether any particular disclosure is required under any applicable laws, rules or regulations shall discuss the situation with the their immediate supervisor, senior management, or outside counsel, as the case may require, to prevent the possible misunderstandings.
 
All books and records of the Company shall fully and fairly reflect all Company transactions in accordance with accounting principles generally accepted in the United States of America, and any other financial reporting or accounting regulations to which the Company is subject. No entries to the Company's books and records shall be made or omitted to intentionally conceal or disguise the true nature of any transaction. Covered Persons shall maintain all Company books and records in accordance with the Company's established disclosure controls and procedures and internal controls for financial reporting, as such controls may be amended from time to time.
 
 
 

 
 
The Company is committed to developing and operating a system of internal control over financial reporting to ensure all internal transactions are properly authorized and recorded and comply with all applicable laws. The internal controls include but are not limited to written policies and procedures, superior examination and monitoring, budget control and other inspection and settlement. The Company is committed to developing and operating a system of disclosure procedures to ensure all information is disclosed in accordance with the requirement of related supervision authorities and rules.
 
All Covered Persons must report any questionable accounting or auditing matters that may come to their attention. This applies to all reports or records prepared for internal or external purposes. If any Covered Person has concerns or complaints regarding questionable accounting or auditing matters of the Company, the Covered Person shall report such matters to his or her immediate supervisor. If the immediate supervisor is involved in the questionable accounting or auditing matter, or does not timely resolve the Covered Person's concern, the Covered Person should submit their concerns to the internal audit department and/or the Chairman of the Audit Committee. The internal audit department and/or the Chairman of the Audit Committee will then exercise the discretion to do further investigation. Any result will be reported to the Audit Committee. The reporting of any such matters may be done on a confidential basis, at the election of the Covered Person making the report.
 
VI.
Competition and Fair Dealing
 
The Company seeks to outperform its competitors fairly and honestly. The Company does not seek competitive advantages through illegal or unethical business practices. Each Covered Person shall endeavor to deal fairly with the Company's customers, service providers, suppliers, competitors and employees. No Covered Person shall take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any unfair dealing practice.
 
The purpose of business entertainment and gifts in a commercial setting is to create good will and sound working relationships, not to gain unfair advantage with customers. No gift or entertainment should ever be offered, given, provided or accepted by any Company employee, family member of an employee or agent unless it: (i) is not a cash gift, (ii) is consistent with customary business practices, (iii) is not excessive in value, (iv) cannot be construed as a bribe or payoff, and (v) does not violate any laws or regulations. Please discuss with the Chief Financial Officer any gifts which you are not certain are appropriate.
 
VII.
Corporate Opportunities
 
Covered Persons are prohibited from (i) taking for themselves opportunities that are discovered through the use of Company property, information or position, (ii) using Company property, information or position for personal gain, and (c) competing with the Company. Covered Persons have a duty to the Company to advance its legitimate interest when the opportunity to do so arises.
 
 
 

 
 
VIII.
Confidentiality
 
Covered Persons must maintain the confidentiality of non-public, proprietary information regarding the Company, its customers or its suppliers, and shall use that information only to further the business interests of the Company, except where disclosure or other use is authorized by the Company or legally mandated. This includes information disseminated to employees in an effort to keep them informed or in connection with their work activities, but with the instruction, confidential labeling, or reasonable expectation that the information be kept confidential.
 
IX.
Trading on Inside Information
 
Inside information includes any non-public information, whether favorable or unfavorable, that investors generally consider important in making investment decisions. Examples include financial results not yet released, imminent regulatory approval/disapproval of an alliance or other significant matter such as the purchase or sale of a business unit or significant assets, threatened litigation, or other significant facts about a business. No information obtained as the result of employment at, or a director's service on the Board of, the Company may be used for personal profit or as the basis for a “tip” to others, unless such information has previously been made generally available to the public, and even in such circumstances, such information may be subject to other duties.
 
X.
Protection and Proper Use of Company Assets
 
Covered Persons should protect the Company's assets and ensure their efficient use. Theft, carelessness and waste have an adverse impact on the Company and its profitability. Company assets may only be used for legitimate Company business purposes.
 
XI.
Foreign Corrupt Practices Act
 
The Foreign Corrupt Practices Act (“ FCPA ”) prohibits the making of a payment and/or the offering of anything of value to any foreign government official, government agency, political party or political candidate in exchange for a business favor or when otherwise intended to influence the action taken by any such individual or agency or to gain any competitive or improper business advantage. It is very important to know that the prohibitions of the FCPA apply to actions taken by all Covered Persons and by all outside parties engaged directly or indirectly by the Company (e.g., consultants, professional advisers, etc.). Given the complexity of the FCPA and the severe penalties associated with its violation, all Covered Persons are urged to contact their immediate supervisor or senior management at any time with any questions concerning the Company's and their obligations under and in compliance with the FCPA.
 
XII.
Discipline
 
Violation of this Code may result in serious consequences for the Company, its corporate reputation and credibility and the confidence level of its customers and investors. Sanctions against the Company for criminal or civil wrongdoing could include substantial fines and restrictions on future operations. Individual employees could be required to pay significant fines or be sentenced to prison. Therefore, violations will be taken seriously.
 
 
 

 
 
Company-imposed disciplinary action will be coordinated with the employee's immediate supervisor and senior management. The overall seriousness of the matter will be considered in determining disciplinary action to be taken: which might include consequences up to and including dismissal. Individual cases may require an employee to reimburse the Company for losses or damages. The Company may even refer an employee for criminal prosecution, civil enforcement or a combination of the above.
 
Disciplinary action may also be taken against supervisors or executives who condone, permit or have knowledge of illegal or unethical conduct by subordinates and do not take corrective action.
 
Disciplinary action may be taken against employees who make false statements in connection with investigations of violations of this Code.
 
All employees will be held to the standards in this Code. Violating the Code, even if directed to do so by senior management is not justifiable. If a manager or executive officer solicits actions in violation of this Code, an employee should contact the other members of senior management or the Chairman of the Audit Committee.
 
XIII.
Reporting and Compliance procedure
 
Every Covered Person has the responsibility to ask questions, seek guidance, report suspected violations and express concerns regarding compliance with this Code. Any employee, officer or director who knows or believes that any other employee or representative of the Company has engaged or is engaging in Company-related conduct that violates applicable law or this Code should report such information to senior management or the Chairman of the Audit Committee. Covered Persons may report such conduct openly or anonymously without fear of retaliation. The Company will not discipline, discriminate against or retaliate against any employee who reports such conduct, unless it is determined that the report was made with knowledge that it was false, or who cooperates in any investigation or inquiry regarding such conduct. Any supervisor who receives a report of a violation of this Code must immediately inform senior management or Chairman of the Audit Committee.
 
Covered Persons may report violations of this Code on a confidential or anonymous basis, while the Company encourages reporting person to identify himself or herself when reporting violations so that the Company may follow up with the reporting person, as necessary, for additional information.
 
If a member of senior management or the Chairman of the Audit Committee receives information regarding an alleged violation of this Code, he or she shall, in consultation with outside counsel, as appropriate, (a) evaluate such information, (b) if the alleged violation involves an executive officer or a director, inform the Chief Executive Officer and Board of Directors of the alleged violation, (c) determine whether it is necessary to conduct an informal inquiry or a formal investigation and, if so, initiate such inquiry or investigation and (d) report the results of any such inquiry or investigation, together with a recommendation as to disposition of the matter, to the Chief Executive Officer for action, or if the alleged violation involves an executive officer or a director, report the results of any such inquiry or investigation to the Board of Directors or a committee thereof. Covered Persons are expected to cooperate fully with any inquiry or investigation by the Company regarding an alleged violation of this Code.
 
 
 

 
 
Failure to cooperate with any such inquiry or investigation may result in disciplinary action, up to and including discharge.
 
The Company shall determine whether violations of this Code have occurred and, if so, shall determine the disciplinary measures to be taken against any employee who has violated this Code. In the event that the alleged violation involves an executive officer or a director, the Chief Executive Officer and the Board of Directors, respectively, shall determine whether a violation of this Code has occurred and, if so, shall determine the disciplinary measures to be taken against such executive officer or director.
 
Failure to comply with the standards outlined in this Code will result in disciplinary action including, but not limited to, reprimands, warnings, probation or suspension without pay, demotions, reductions in salary, discharge and restitution. Certain violations of this Code may require the Company to refer the matter to the appropriate governmental or regulatory authorities for investigation or prosecution. Moreover, any supervisor who directs or approves of any conduct in violation of this Code, or who has knowledge of such conduct and does not immediately report it, also will be subject to disciplinary action, up to and including discharge.
 
XIV.
Waiver of the Code
 
While some of the policies contained in this Code must be strictly adhered to and no exceptions can be allowed, in other cases exceptions may be possible. Any request for a waiver of any provision of this Code must be in writing and addressed to the Board or the Audit Committee, if made by a director or officer; or the Chief Executive Officer or Chief Financial Officer, if made by an employee.  Any waiver of this Code with respect to an officer or director must be approved by the Board or the Audit Committee, after consultation with the Company's corporate or outside counsel, and will be disclosed as required by law, Commission regulations, or the rules and listing standards of any national securities exchange on which the Company's securities may be listed.
 
XV.
Dissemination and Amendment
 
This Code shall be distributed to each employee, officer and director of the Company upon commencement of his or her employment or other relationship with the Company. The Company reserves the right to amend, alter or terminate this Code at any time for any reason.
 
 
 

 
 
  Exhibit 31.1

CERTIFICATION

I, Tao Li certify that:

1.
I have reviewed this report on Form 10-Q 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)) 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 12, 2010  
       
         
/s/ Tao Li
   
 
 
Name: Tao Li
   
 
 
Title: President and Chief Executive Officer
   
 
 
(principal executive officer)        
 


  Exhibit 31.2


CERTIFICATION

I, Ken Ren, certify that:

1.
I have reviewed this report on Form 10-Q 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)) 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 12, 2010  
       
         
/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, in his capacity as Chief 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, 2010 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; 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 12, 2010  
       
         
/s/ Tao Li
   
 
 
Name: Tao Li
   
 
 
Title: President and Chief Executive Officer
   
 
 
(principal executive 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 Securities Exchange Act of 1934, 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.
 

 
Exhibit 32.2

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, in his capacity as an 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 her knowledge:

(1)   The Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2010 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.