Correspondence 0001213900-24-083598 from Enlightify Inc. (ENFY)
Enlightify Inc.
Date: Oct. 1, 2024 · CIK: 0000857949 · Accession: 0001213900-24-083598
AI Filing Summary & Sentiment
File numbers found in text: 001-34260
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CHINA GREEN AGRICULTURE, INC.
Third floor,
Borough A, Block A. No. 181, South Taibai Road, Xi’an, Shaanxi Province, PRC 710065
October 1, 2024
Via Edgar
Securities and Exchange Commission
Division of Corporation Finance
Office of Industrial Applications and Services
100 F Street, NE
Washington, D.C. 20549
Attention: Juan Grana
Re: China Green Agriculture, Inc.
Form 10-K for the Fiscal Year Ended June 30, 2023
Filed December 15, 2023
File No. 001-34260
Dear Mr. Grana:
China Green Agriculture, Inc.,
a Nevada corporation (the “Company” or “we”), is in receipt of the letters from the staff (the “Staff”)
of the Securities and Exchange Commission (the “Commission”) dated September 20, 2024 (the “Comment Letter”) to
the Company, with respect to the Company’s Annual Report on Form 10-K for the year ended June 30, 2023, and Amendment No. 1 thereto
(the “Form 10-K”).
We hereby file via EDGAR our
response to the Comment Letters. The text of the Staff’s comment is set forth in italics below, followed by the response of the Company.
Part I, Item 1. Business, page 1
1. We note your response to comment 5. Please clearly disclose
how you will refer to the holding company, subsidiaries, and VIEs in future filings.
RESPONSE:
As indicated in Appendix A attached to our previous letter,
we will refer to China Green Agriculture, Inc. as “us”, “we” or “the Company.” The Company’s
wholly-owned subsidiary, Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd. will be referred to as “Jinong” and Xi’an
Hu County Yuxing Agriculture Technology Development Co., Ltd. will be referred to as the “VIE” or “Yuxing”.
2. We note your response to comment 7. Please elaborate further
on why you believe that you, your subsidiaries and the VIEs are not subject to CSRC regulations. Please also further discuss the consequences
to you and risks to your investors if you inadvertently conclude that such permissions or approvals are not required, or applicable laws,
regulations, or interpretations change and you are required to obtain such permissions or approvals in the future.
RESPONSE: It is the Company’s understanding, after consulting
with Chinese counsel, that it neither it nor its subsidiaries is subject to CSRC regulations because they neither offer nor sell securities
in China. We note that the “Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies”
issued by the CSRC on February 17, 2023 applies only to “Domestic Companies,” i.e. companies established under the laws of
the PRC. With respect to the VIE, as you have noted it is not directly controlled by CGA. Nevertheless, we have expanded the discussion
in Appendix D (attached) to discuss the effects if the Company “inadvertently” concludes such permissions are not required.
3. We note your response to comment 8. Please disclose your
intentions to distribute earnings or settle amounts owed under the VIE agreements. Quantify any cash flows and transfers of other
assets by type that have occurred between the holding company, its subsidiaries, and the consolidated VIEs, and disclose the
direction of transfer. Quantify any dividends or distributions that a subsidiary or consolidated VIE have made to the holding
company and which entity made such transfer, and their tax consequences. Finally, please further discuss the impact of SAFE and PRC
controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC on your ability to
distribute earnings from the company, including your subsidiaries and/or the consolidated VIEs, to the parent company and U.S.
investors as well as the ability to settle amounts owed under the VIE agreements.
RESPONSE: See revised Appendix E
4. We note your response to comment 9. Please revise your summary
of risk factors to discuss the risks stemming from your contractual arrangements with the VIE, and from the impact on your liquidity
of SAFE and PRC controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Please also
specifically discuss risks arising from rules and regulations in China changing quickly with little advance notice
RESPONSE: We have revised Appendix F (attached), the Summary of Risk
Factors, to discuss these matters.
5. We note your response to comment 13. Please create an Enforceability
of Civil Liabilities section, separate from and in addition to your risk factor, for the discussion of the enforcement risks related
to civil liabilities due to your officers and directors being located in the PRC.
RESPONSE: Please see Appendix G, Enforcement of Civil Liabilities,
to be inserted in the “Business” section of the 10-K.
If you or any other member of the Staff have any questions with regard
to the foregoing responses, would like to discuss any of the matters covered in this letter, or otherwise require additional information,
please contact our counsel, Robert J. Zepfel, at rjz@haddanzepfel.com.
Sincerely,
/s/ Zhuoyu Li
Zhuoyu Li, CEO
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Appendix D (revised)
Permits and Licenses Required from the PRC Authorities
for Our Operations
The operations of the businesses that we own and
operate are subject to PRC laws and regulations. The laws and regulations governing relevant industries in China are relatively new and
quickly evolving, thus bringing uncertainties to their interpretation and enforcement.
We conduct our operations primarily through our
subsidiaries in China, and one subsidiary in the United States of America. Our operations in China are governed by PRC laws and regulations.
We and the affiliated entities are required to obtain certain licenses, permits or filing from relevant governmental authorities in China
in order to operate our business. As of the date of this report, our subsidiaries in China and the United States of America have obtained
business licenses from the PRC and U.S. government authorities necessary for our business operations in China and the United States. Given
the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government
authorities, and the promulgation of new laws and regulations and amendment to the existing ones, we may be required to obtain additional
licenses, permits, registrations, filings or approvals for our business operations in the future. Any lack of or failure to maintain requisite
approvals, licenses or permits applicable to us or our subsidiaries may have a material adverse impact on our business, results of operations,
financial condition and prospects and cause the value of any securities we offer to significantly decline or become worthless.
On December 28, 2021, the Cyberspace Administration
of China (the “CAC”) and other PRC regulatory authorities jointly revised and promulgated the Measures for Cybersecurity Review
(the “Cybersecurity Review Measures”), which became effective on February 15, 2022. Under the current Cybersecurity Review
Measures, subject to any further interpretation of the CAC and other relevant authorities, we believe we are not subject to the cybersecurity
review by the CAC, as we are primarily engaged in the production of fertilizer and similar products and do not process any data in our
business for others. Under current PRC laws, regulations and regulatory rules, as of the date of this report, including the final new
measures that became effective on February 15, 2022. we believe that we and our PRC subsidiaries, (i) are not required to obtain permissions
from the CSRC, (ii) are not required to go through cybersecurity review by the CAC and (iii) have not received or were denied such requisite
permissions by any PRC authority.
However, we cannot guarantee that the regulators
will agree with us. As of the date hereof, there remains uncertainty as to how the Cybersecurity Review Measures will be interpreted or
implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation
and interpretation related to the draft measures. We have not been involved in any investigations on cybersecurity review made by the
CAC, and we have not received any inquiry, notice, warning, or sanctions in such respect. However, as these are new regulations, there
remains uncertainties as to how they will be interpreted or implemented in the context of an overseas offering.
In addition, we do not believe we are subject to
the China Securities Regulation Commission as we are not a “domestic” company and do not offer securities in China. Of course,
we cannot guarantee that CRSC will agree with us, and there remains uncertainty as to how the China Securities Regulatory Commission will
interpret or implement its rules. It may adopt new laws, regulations or rules, and we may not be able to comply with any such laws, regulations
or rules. If we are found to be in violation of current or future rules and regulations, we could be subject to fines, sanctions, penalties
or regulatory orders.
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Appendix E
Cash Flows through Our Organization
We are a holding company, and we conduct most of
our operations through our PRC subsidiaries, the VIE and one subsidiary in the United States, and we plan to diversify our operations
further in the future. For instance, we are currently working on integrating assets in the United States, which is part of our broader
strategy to expand our global presence and operational capabilities. Cash is transferred through our organization in the following manner:
(1) Within our corporate structure, the cross-border transfer of funds from CGA to its Chinese subsidiaries and controlled entities is
in compliance with the laws and regulations of the PRC. CGA may make loans to its PRC subsidiaries subject to the approval, registration,
and filing with governmental authorities and limitation of amount, or we may make additional capital contributions to our wholly foreign-owned
subsidiaries in China; (2) the Company paid a dividend to its shareholders of $ 0.10 per share in 2015, but has paid none since then;
(3) CGA relies on dividends and other distributions on equity paid by its PRC subsidiaries for its cash needs, , to service any debt it
may incur and to pay its operating expenses. For the operating companies in the PRC, they will first transfer funds to Green New Jersey
in accordance with applicable laws and regulations of the PRC, and then Green New Jersey will transfer legally available funds to CGA.
CGA may then distribute dividends to its shareholders in proportion to their respective shareholdings. The Company and its subsidiaries
generate and retain cash generated from operating activities and re-invest it in our business. (4) The ability of our entities in the
PRC to distribute dividends is based upon their distributable earnings. Current PRC regulations permit companies to pay dividends to their
respective shareholders only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations.
We currently do not have our own cash management policy and procedures that dictate how funds are transferred.
For the years ended June 30, 2022, 2023 and 2024,
the CGA provided loans of RMB277 million, RMB58.4 million and RMB62.3 million, respectively, to Gufeng through Jinong, and received repayments
of RMB50.2 million, RMB0.6 million and RMB1.6 million, respectively. For the years ended June 30, 2022, 2023 and 2024, CGA provided loans
of RMB20.1 million, RMB5.3 million and RMB10.1 million, respectively, to the VIE through Jinong, and received repayments of RMB5.1 million,
RMB1.8 million and RMB1 million, respectively. For the years ended June 30, 2022, 2023 and 2024, no assets other than cash were transferred
between CGA and subsidiaries or the VIE, no subsidiaries paid dividends or made other distributions to CGA, and no dividends or distributions
were paid to investors. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and
expand our business.
Effects of PRC foreign exchange regulations
on our ability to transfer assets within our organization
Current foreign exchange and other regulations
in the PRC may restrict our PRC subsidiaries and VIE in their ability to transfer their net assets to CGA and its subsidiaries and to
investors. The PRC government imposes controls on the convertibility of the Renminbi (RMB) into foreign currencies and, in certain cases,
the remittance of currency out of China. Under our current corporate structure, CGA as the holding company may rely on dividend payments
from its subsidiaries to fund any cash and financing requirements CGA may have. Under existing PRC foreign exchange regulations, payments
of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions,
can be made in foreign currencies without prior approval of the State Administration of Foreign Exchange (the “SAFE”) by complying
with certain procedural requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated
from the operations of our PRC subsidiaries in China may be used to pay dividends to CGA. However, approval from or registration with
appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay
capital expenses such as the repayment of loans denominated in foreign currencies. As a result, we need to obtain SAFE approval to use
cash generated from the operations of our PRC subsidiaries and VIE to pay off their respective debt in a currency other than Renminbi
owed to entities outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi.
In light of the flood of capital outflows of China
in 2016 due to the weakening Renminbi, the PRC government has imposed more restrictive foreign exchange policies and stepped-up scrutiny
of major outbound capital movement including overseas direct investment. More restrictions and substantial vetting process are put in
place by SAFE to regulate cross-border transactions falling under the capital account. If any of CGA’s shareholders regulated by
such policies fail to satisfy the applicable overseas direct investment filing or approval requirement timely or at all, it may be subject
to penalties from the relevant PRC authorities. The PRC government may at its discretion further restrict access in the future to foreign
currencies for current account transactions. If the foreign exchange control system prevents CGA from obtaining sufficient foreign currencies
to satisfy CGA’s foreign currency demands, CGA may not be able to pay dividends in foreign currencies to its shareholders.
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Appendix F
Summary of Risk Factors
The Company is a holding company incorporated in
Nevada, the United States, with no material operations of its own. We conduct our business through our operating subsidiary in China.
This structure involves unique risks to investors, and you may never directly hold equity interests in the operating entities. Investment
in our Common Stock involves significant risks. You should carefully consider all of the information in this report before making an investment
in our Common Stock. Below please find a summary of the principal risks we face, organized under relevant headings.
Investing in our securities involves a high degree
of risk. The following is a summary of significant risk factors and uncertainties that may affect our business, which are discussed in
more detail below under “Item 1A. Risk Factors” included in this Annual Report on Form 10-K:
● The Chinese government may intervene or influence our operations
in China at any time, or may exert more control over offerings conducted outside China by and/or foreign investment