CGA(CGA) - 2025 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements for the quarter ended September 30, 2024, including Balance Sheets, Statements of Operations, Stockholders' Equity, and Cash Flows, with notes on accounting policies and specific financial accounts Condensed Consolidated Balance Sheets Total assets increased to $171.6 million from $163.2 million as of September 30, 2024, with liabilities rising to $68.6 million and equity to $103.0 million Condensed Consolidated Balance Sheets (as of Sept 30, 2024 vs. June 30, 2024) | Account | September 30, 2024 ($) | June 30, 2024 ($) | | :--- | :--- | :--- | | Total Current Assets | 127,577,546 | 127,685,890 | | Total Non-current Assets | 44,046,506 | 35,560,793 | | Total Assets | 171,624,052 | 163,246,683 | | Total Current Liabilities | 62,444,640 | 61,291,253 | | Total Liabilities | 68,625,856 | 63,147,503 | | Total Stockholders' Equity | 102,998,196 | 100,099,180 | Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Net sales for the quarter ended September 30, 2024, were $17.36 million, resulting in a net loss of $1.84 million and basic net loss per share of $(0.12) Statement of Operations Highlights (Three Months Ended Sept 30) | Metric | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Net Sales | 17,364,939 | 22,397,862 | | Gross Profit | 3,986,570 | 4,649,854 | | Loss from Operations | (1,765,024) | (1,785,907) | | Net Loss | (1,842,225) | (1,784,193) | | Basic Net Loss Per Share | (0.12) | (0.13) | - A significant foreign currency translation gain of $4.74 million resulted in a comprehensive income of $2.90 million for the quarter, a sharp reversal from the comprehensive loss of $2.62 million in the prior year's quarter[12] Condensed Consolidated Statements of Cash Flows Net cash used in operations was $2.55 million, and in investing activities $8.54 million, leading to a $7.30 million decrease in cash and equivalents by September 30, 2024 Cash Flow Summary (Three Months Ended Sept 30) | Activity | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | (2,553,911) | (626,510) | | Net cash used in investing activities | (8,544,101) | (1,507,026) | | Net cash provided by (used in) financing activities | 1,983,456 | (1,383,960) | | Net decrease in cash and cash equivalents | (7,295,015) | (3,856,365) | | Cash and cash equivalents, ending balance | 51,477,572 | 67,285,823 | Notes to Condensed Consolidated Financial Statements Key notes include the company's Bitcoin mining expansion, digital asset accounting, going concern uncertainty, segment performance, related party transactions, and a pending lawsuit - The company is engaged in fertilizer and agricultural product businesses in the PRC, and recently expanded into Bitcoin mining in the U.S. through its subsidiary Antaeus Tech Inc., established in March 2023[17][22] - The company's financial statements are prepared on a going concern basis, but management notes that recurring operating losses and negative cash flows raise substantial doubt about its ability to continue as a going concern[41] - As of September 30, 2024, the company held Bitcoin valued at $11,225, a significant decrease from $53,693 at the end of the previous quarter. The company accounts for digital assets as indefinite-lived intangible assets and adopted ASU 2023-08, measuring them at fair value[33][51][52] - A lawsuit was filed on May 28, 2024, against the Company and its former co-CEO, alleging misuse of funds stored in cryptocurrency wallets to purchase mining sites. The Company intends to move to dismiss the lawsuit[84] Segment Revenues (Three Months Ended Sept 30) | Segment | 2024 Revenue ($) | 2023 Revenue ($) | | :--- | :--- | :--- | | Jinong (Fertilizer) | 7,421,658 | 9,288,758 | | Gufeng (Fertilizer) | 7,439,542 | 10,421,274 | | Yuxing (Agriculture) | 2,340,443 | 2,342,716 | | Antaeus (Bitcoin) | 163,295 | 345,114 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the quarter ended September 30, 2024, highlighting a 22.5% decrease in net sales, stable net loss, segment performance, liquidity, cash flow, and critical accounting policies Results of Operations Net sales for Q1 FY2025 decreased 22.5% to $17.4 million, resulting in a net loss of $1.84 million, primarily due to lower sales in fertilizer segments Quarterly Performance vs. Prior Year | Metric | Q1 FY2025 ($) | Q1 FY2024 ($) | Change % | | :--- | :--- | :--- | :--- | | Net Sales | 17,364,939 | 22,397,862 | -22.5% | | Gross Profit | 3,986,570 | 4,649,854 | -14.3% | | Net Loss | (1,842,225) | (1,784,193) | 3.3% | - The decrease in net sales was mainly attributed to lower unit sales prices for the Jinong segment and lower sales volume for the Gufeng segment[121][122] - The Antaeus (Bitcoin) segment saw a 52.7% decrease in net sales and generated a gross loss of $(38,416) compared to a gross profit of $76,568 in the prior year, mainly due to higher costs[123][130] Liquidity and Capital Resources Cash and cash equivalents decreased by $7.3 million to $51.5 million as of September 30, 2024, primarily due to cash used in operations and a new long-term equity investment Key Balance Sheet Changes (QoQ) | Account | Sept 30, 2024 ($) | June 30, 2024 ($) | Change % | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 51,477,572 | 58,772,587 | -12.4% | | Accounts Receivable, net | 22,322,256 | 16,493,068 | +35.3% | | Inventories | 35,368,718 | 37,826,456 | -6.5% | | Total Loans Payable | 11,684,180 | 9,322,500 | +25.3% | - Net cash used in investing activities increased significantly to $8.5 million from $1.5 million YoY, mainly due to a new long-term equity investment of $8.5 million[147] - Net cash from financing activities was $2.0 million, a reversal from $1.4 million used in the prior year, primarily due to new loan proceeds of $5.7 million[148] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces market risks including foreign currency fluctuations, interest rate changes on loans, heightened credit risk from customers, inflation, and ongoing economic uncertainty from the pandemic - Currency Risk: Substantially all revenues and expenses are in RMB, creating exposure to fluctuations against the reporting currency, the U.S. dollar. A 3.6% appreciation of the RMB against the USD occurred between July 1 and September 30, 2024[168][169] - Credit Risk: The company has experienced higher credit risk since 2020 due to the COVID-19 pandemic's impact on its customers, many of whom are small and medium-sized enterprises in the PRC[172] - Interest Rate Risk: The company is exposed to interest rate risk on its short-term bank loans, which totaled $5.5 million as of September 30, 2024. These loans have fixed rates but are subject to change upon renewal[170] - Pandemic Risk: The COVID-19 outbreak continues to pose a risk by creating economic uncertainty that could adversely affect demand, supply chains, and overall financial condition[174][175] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2024, with no material changes to internal control over financial reporting - Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and found them to be effective as of the end of the reporting period, September 30, 2024[178] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[179] PART II OTHER INFORMATION Item 1. Legal Proceedings The company discloses a lawsuit filed May 28, 2024, against it and its former co-CEO, alleging misuse of funds for cryptocurrency mining site purchases, which the company intends to dismiss - A lawsuit was filed against the Company and its former co-CEO, Mr. Zhibiao Pan, on May 28, 2024[181] - The plaintiff alleges the Company used his funds from cryptocurrency wallets to purchase mining sites. The Company plans to respond to the lawsuit in December 2024 and intends to move for dismissal[181] Item 6. Exhibits This section provides an index of exhibits filed with the 10-Q report, including CEO/CFO certifications and Inline XBRL data files - The report includes a list of exhibits, such as CEO/CFO certifications (Sections 302 and 906) and XBRL interactive data files[186][190]