| BUSINESS COMBINATIONS | NOTE
19 – BUSINESS COMBINATIONS On
June 30, 2016, the Company, through its wholly-owned subsidiary Jinong, entered into strategic acquisition agreements and also into a
series of contractual agreements to qualify as VIEs with the shareholders of Shaanxi Lishijie Agrochemical Co., Ltd., Songyuan Jinyangguang
Sannong Service Co., Ltd., Shenqiu County Zhenbai Agriculture Co., Ltd., Weinan City Linwei District Wangtian Agricultural Materials
Co., Ltd., Aksu Xindeguo Agricultural Materials Co., Ltd., and Xinjiang Xinyulei Eco-agriculture Science and Technology Co., Ltd. Subsequently,
on January 1, 2017, Jinong entered into similar strategic acquisition agreements and a series of contractual agreements to qualify as
VIEs with the shareholders of Sunwu County Xiangrong Agricultural Materials Co., Ltd., and Anhui Fengnong Seed Co., Ltd. On
November 30, 2017, the Company, through its wholly owned subsidiary Jinong, discontinued the strategic acquisition agreements and the
series of contractual agreements with the shareholders of Zhenbai. On
June 2, 2021, the Company, through its wholly owned subsidiary Jinong, discontinued the strategic acquisition agreements and the series
of contractual agreements with the shareholders of Xindeguo, Xinyulei and Xiangrong. On
December 1, 2021, the Company, through its wholly owned subsidiary Jinong, discontinued the strategic acquisition agreements and the
series of contractual agreements with the shareholders of Lishijie. On
December 31, 2021, the Company, through its wholly owned subsidiary Jinong, discontinued the strategic acquisition agreements and the
series of contractual agreements with the shareholders of Fengnong. On
March 31, 2022, the Company, through its wholly owned subsidiary Jinong, discontinued the strategic acquisition agreements and the series
of contractual agreements with the shareholders of Jinyangguang and Wangtian. The
VIE Agreements are as follows: Entrusted
Management Agreements Pursuant
to the terms of certain Entrusted Management Agreements dated June 30, 2016 and January 1, 2017, between Jinong and the shareholders
of the sales VIE Companies (the “Entrusted Management Agreements”), the sales VIE Companies and their shareholders agreed
to entrust the operations and management of its business to Jinong. According to the Entrusted Management Agreement, Jinong possesses
the full and exclusive right to manage the sales VIE Companies’ operations, assets and personnel, has the right to control all
the sales VIE Companies’ cash flows through an entrusted bank account, is entitled to the sales VIE Companies’ net profits
as a management fee, is obligated to pay all the sales VIE Companies’ payables and loan payments, and bears all losses of the sales
VIE Companies. The Entrusted Management Agreements will remain in effect until (i) the parties mutually agree to terminate the agreement;
(ii) the dissolution of the sales VIE Companies; or (iii) Jinong acquires all the assets or equity of the sales VIE Companies (as more
fully described below under “Exclusive Option Agreements”). Exclusive
Technology Supply Agreements Pursuant
to the terms of certain Exclusive Technology Supply Agreements dated June 30, 2016 and January 1, 2017, between Jinong and the sales
VIE companies (the “Exclusive Technology Supply Agreements”), Jinong is the exclusive technology provider to the sales VIE
companies. The sales VIE companies agreed to pay Jinong all fees payable for technology supply prior to making any payments under the
Entrusted Management Agreement. The Exclusive Technology Supply Agreements shall remain in effect until (i) the parties mutually agree
to terminate the agreement; (ii) the dissolution of the sales VIE companies; or (iii) Jinong acquires the sales VIE companies (as more
fully described below under “Exclusive Option Agreements”). Shareholder’s
Voting Proxy Agreements Pursuant
to the terms of certain Shareholder’s Voting Proxy Agreements dated June 30, 2016 and January 1, 2017, among Jinong and the shareholders
of the sales VIE companies (the “Shareholder’s Voting Proxy Agreements”), the shareholders of the sales VIE companies
irrevocably appointed Jinong as their proxy to exercise on such shareholders’ behalf all of their voting rights as shareholders
pursuant to PRC law and the Articles of Association of the sales VIE companies, including the appointment and election of directors of
the sales VIE companies. Jinong agreed that it shall maintain a board of directors, the composition and appointment of which shall be
approved by the Board of the Company. The Shareholder’s Voting Proxy Agreements will remain in effect until Jinong acquires all
the assets or equity of the sales VIE companies. Exclusive
Option Agreements Pursuant
to the terms of certain Exclusive Option Agreements dated June 30, 2016 and January 1, 2017, among Jinong, the sales VIE companies, and
the shareholders of the sales VIE companies (the “Exclusive Option Agreements”), the shareholders of the sales VIE companies
granted Jinong an irrevocable and exclusive purchase option (the “Option”) to acquire the sales VIE companies’ equity
interests and/or remaining assets, but only to the extent that the acquisition does not violate limitations imposed by PRC law on such
transactions. The Option is exercisable at any time at Jinong’s discretion so long as such exercise and subsequent acquisition
of the sales VIE companies does not violate PRC law. The consideration for the exercise of the Option is to be determined by the parties
and memorialized in the future by definitive agreements setting forth the kind and value of such consideration. Jinong may transfer all
rights and obligations under the Exclusive Option Agreements to any third parties without the approval of the shareholders of the sales
VIE companies so long as a written notice is provided. The Exclusive Option Agreements may be terminated by mutual agreements or by 30
days written notice by Jinong. Equity
Pledge Agreements Pursuant
to the terms of certain Equity Pledge Agreements dated June 30, 2016 and January 1, 2017, among Jinong and the shareholders of the sales
VIE companies (the “Pledge Agreements”), the shareholders of the sales VIE companies pledged all of their equity interests
in the sales VIE companies to Jinong, including the proceeds thereof, to guarantee all of Jinong’s rights and benefits under the
Entrusted Management Agreements, the Exclusive Technology Supply Agreements, the Shareholder’ Voting Proxy Agreements and the Exclusive
Option Agreements. Prior to termination of the Pledge Agreements, the pledged equity interests cannot be transferred without Jinong’s
prior written consent. The Pledge Agreements may be terminated only upon the written agreement of the parties. Non-Compete
Agreements Pursuant
to the terms of certain Non-Compete Agreements dated June 30, 2016 and January 1, 2017, among Jinong and the shareholders of the sales
VIE companies (the “Non-Compete Agreements”), the shareholders of the sales VIE companies agreed that during the period beginning
on the initial date of their services with Jinong, and ending five (5) years after termination of their services with Jinong, without
Jinong’s prior written consent, they will not provide services or accept positions including but not limited to partners, directors,
shareholders, managers, proxies or consultants, provided by any profit making organizations with businesses that may compete with Jinong.
They will not solicit or interfere with any of the Jinong’s customers, or solicit, induce, recruit or encourage any person engaged
or employed by Jinong to terminate his or her service or engagement. If the shareholders of the sales VIE companies breach the non-compete
obligations contained therein, Jinong is entitled to all loss and damages; if the damages are difficult to determine, remedies bore the
shareholders of the sales VIE companies shall be no less than 50% of the salaries and other expenses Jinong provided in the past. The
Company entered these VIE Agreements as a way for the Company to have more control over the distribution of its products. The transactions
are accounted for as business combinations in accordance with ASC 805. A summary of the purchase price allocations at fair value is below: For
acquisitions made on June 30, 2016:
Cash $ 708,737
Accounts receivable 6,422,850
Advances to suppliers 1,803,180
Prepaid expenses and other current assets 807,645
Inventories 7,787,043
Machinery and equipment 140,868
Intangible assets 270,900
Other assets 3,404,741
Goodwill 3,158,179
Accounts payable (3,962,670 )
Customer deposits (3,486,150 )
Accrued expenses and other payables (4,653,324 )
Taxes payable (16,912 )
Purchase price $ 12,385,087 A
summary of the purchase consideration paid is below:
Cash $ 5,568,500
Convertible notes 6,671,769
Derivative liability 144,818
$ 12,385,087 The
cash component of the purchase price for these acquisitions made on June 30, 2016 was paid in July and August 2016. For
acquisitions made on January 1, 2017:
Working Capital $ 941,192
Machinery and equipment 222,875
Intangible assets 1440
Goodwill 684,400
Customer Relationship 522,028
Non-compete Agreement 392,852
Purchase price $ 2,764,787 A
summary of the purchase consideration paid is below:
Cash $ 1,201,888
Convertible notes 1,559,350
Derivative liability 3,549
$ 2,764,787 The
cash component of the purchase price for these acquisitions made on January 1, 2017 was paid during March 2017. On
November 30, 2017, the Company, through its wholly owned subsidiary Jinong, discontinued the strategic acquisition agreements and the
series of contractual agreements with the shareholders of Zhenbai. In return, the shareholders of Zhenbai agreed to tender the whole
payment consideration in the SAA back to the Company with early termination penalties. The convertible notes paid to Zhenbai’s
shareholders, and the accrued interest has been forfeited. For
the discontinuation of Zhenbai made on November 30, 2017, the Company gave up the control of the following assets in Zhenbai:
Working Capital $ 1,179,352
Intangible assets 896,559
Customer Relationship 684,727
Non-compete Agreement 211,833
Goodwill 538,488
Total Asset $ 2,614,401 In
return, the purchase consideration returned to the Company from Zhenbai’s shareholders is summarized below:
Cash $ 461,330
Interest Payable 83,039
Convertible notes 1,724,683
Derivative liability 13,353
Total Payback $ 2,282,406
Net Loss (331,995 ) On
June 10, 2021, the Company, through its wholly owned subsidiary Jinong, discontinued the strategic acquisition agreements and the series
of contractual agreements with the shareholders of Xindeguo and Xinyulei. In return, the shareholders of Xindeguo and Xinyulei agreed
to pay cash with amount of RMB1,850,000 (approximately $286,935) to the Company. For
the discontinuation of Xindeguo and Xinyulei made on June 10, 2021, the Company gave up the control of the following assets in Xindeguo
and Xinyulei:
Working Capital $ (1,135,366 )
Intangible Assets 28,050
Long-term equity investment 139,320
Goodwill 1,257,784
Total Asset 288,898 In
return, the purchase consideration returned to the Company from Xindeguo and Xinyulei’s shareholders is summarized below:
Cash $ 286,380
Total Payback $ 288,898
Net Gain (Loss) (2,518 ) On
June 10, 2021, the Company, through its wholly owned subsidiary Jinong, discontinued the strategic acquisition agreements and the series
of contractual agreements with the shareholders of Xiangrong. In return, the shareholders of Xiangrong agreed to pay cash with amount
of RMB24,430,000 (approximately $3,789,093) to the Company. For
the discontinuation of Xiangrong made on June 10, 2021, the Company gave up the control of the following assets in Xiangrong:
Working Capital $ 2,930,551
Intangible assets 23,890
Goodwill 316,200
Total Asset $ 3,270,641 In
return, the purchase consideration returned to the Company from Xiangrong’s shareholders is summarized below:
Cash $ 3,781,764
Total Payback $ 3,270,641
Net Gain (Loss) 511,123 On
December 1, 2021, the Company, through its wholly owned subsidiary Jinong, discontinued the strategic acquisition agreements and the
series of contractual agreements with the shareholders of Lishijie. In return, the shareholders of Lishijie agreed to pay cash with amount
of RMB3,500,000 (approximately $550,550) to the Company before December 31, 2021. For
the discontinuation of Lishijie made on November 1, 2021, the Company gave up the control of the following assets in Lishijie:
Working Capital $ 358,715
Intangible assets 128,677
Total Asset $ 487,392 In
return, the purchase consideration returned to the Company from Lishijie’s shareholders is summarized below:
Cash $ 550,550
Total Payback $ 487,392
Net Gain (Loss) 63,158 On
December 31, 2021, the Company, through its wholly owned subsidiary Jinong, discontinued the strategic acquisition agreements and the
series of contractual agreements with the shareholders of Fengnong. In return, the shareholders of Fengnong agreed to pay cash with amount
of RMB8,750,000 (approximately $1,376,375) to the Company. For
the discontinuation of Fengnong made on December 31, 2021, the Company gave up the control of the following assets in Fengnong:
Working Capital $ 805,005
Fixed Assets 91,033
Intangible Assets 86,456
Total Asset 982,494 In
return, the purchase consideration returned to the Company from Fengnong’s shareholders is summarized below:
Cash $ 1,376,375
Total Payback $ 982,494
Net Gain (Loss) 393,881 On
March 31, 2022, the Company, through its wholly owned subsidiary Jinong, discontinued the strategic acquisition agreements and the series
of contractual agreements with the shareholders of Jinyangguang. In return, the shareholders of Jinyangguang agreed to pay cash with
amount of RMB3,200,000 (approximately $503,360) to the Company before April 30, 2022. For
the discontinuation of Jinyangguang made on March 31, 2022, the Company gave up the control of the following assets in Jinyangguang:
Working Capital $ (621,154 )
Intangible assets $ 103,532
Total Asset $ (517,622 ) In
return, the purchase consideration returned to the Company from Jinyangguang’s shareholders is summarized below:
Cash $ 503,360
Total Payback $ (517,622 )
Net Gain (Loss) $ 1,020,982 On
March 31, 2022, the Company, through its wholly owned subsidiary Jinong, discontinued the strategic acquisition agreements and the series
of contractual agreements with the shareholders of Wangtian. In return, the shareholders of Wangtian agreed to pay cash with amount of
RMB8,500,000 (approximately $1,337,050) to the Company. For
the discontinuation of Wangtian made on March 31, 2022, the Company gave up the control of the following assets in Wangtian:
Working Capital $ 833,252
Fixed Assets 34,394
Intangible Assets 170,514
Total Asset 1,038,160 In
return, the purchase consideration returned to the Company from Wangtian’s shareholders is summarized below:
Cash $ 1,337,050
Total Payback $ 1,038,160
Net Gain (Loss) 298,890 |
