NOTE 17 – VARIABLE INTEREST ENTITIES

In accordance with accounting standards regarding consolidation of variable interest entities, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which a company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

Green Nevada through one of its subsidiaries, Jinong, entered into a series of agreements (the “VIE Agreements”) with Yuxing for it to qualify as a VIE, effective June 16, 2013.

The Company has concluded, based on the contractual arrangements, that Yuxing is a VIE and that the Company’s wholly-owned subsidiary, Jinong, absorbs a majority of the risk of loss from the activities of Yuxing, thereby enabling the Company, through Jinong, to receive a majority of Yuxing expected residual returns.

On June 30, 2016 and January 1, 2017, 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 the sales VIE Companies.

Jinong, the sales VIE Companies, and the shareholders of the sales VIE Companies also entered into a series of contractual agreements for the sales VIE Companies to qualify as VIEs (the “VIE Agreements”).

On November 30, 2017, the Company, through its wholly-owned subsidiary Jinong, exited the VIE agreements with the shareholders of Zhenbai.

As a result of these contractual arrangements, with Yuxing and the sales VIE Companies the Company is entitled to substantially all of the economic benefits of Yuxing and the VIE Companies. The following financial statement amounts and balances of the VIEs were included in the accompanying consolidated financial statements as of June 30, 2018 and June 30, 2017:

	June 30,			June 30,
	2018			2017

ASSETS
Current Assets
Cash and cash equivalents	$	982,312		$	374,587
Accounts receivable, net		38,295,505			30,687,859
Inventories		21,133,970			21,314,940
Other current assets		988,051			2,195,156
Related party receivable		(359,005	)		0
Advances to suppliers		848,458			2,380,812
Total Current Assets		61,889,291			56,953,354

Plant, Property and Equipment, Net		11,206,667			12,418,906
Other assets		226,654			225,508
Intangible Assets, Net		11,348,180			13,002,818
Goodwill		3,319,732			3,837,038
Total Assets	$	87,990,524		$	86,437,624

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Short-term loan	$	0			166,311
Accounts payable	$	25,584,614		$	18,355,921
Customer deposits		841,694			1,375,785
Accrued expenses and other payables		3,896,340			3,833,868
Amount due to related parties		43,339,286			42,741,043
Total Current Liabilities		73,661,934			66,472,928
Long-term Loan		0			3,549
Total Liabilities	$	73,661,934			66,476,477

Stockholders’ equity		14,328,590			19,961,147

Total Liabilities and Stockholders’ Equity	$	87,990,524		$	86,437,624

	Years Ended June 30,
	2018			2017
Revenue	$	77,351,284		$	74,124,754
Expenses		80,535,970			71,572,295
Net income	$	(3,184,686	)	$	2,552,459