0001062993-16-012287.txt : 20161114 0001062993-16-012287.hdr.sgml : 20161111 20161114135921 ACCESSION NUMBER: 0001062993-16-012287 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 75 CONFORMED PERIOD OF REPORT: 20160930 FILED AS OF DATE: 20161114 DATE AS OF CHANGE: 20161114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: China Advanced Construction Materials Group, Inc CENTRAL INDEX KEY: 0001392363 STANDARD INDUSTRIAL CLASSIFICATION: CONSTRUCTION SPECIAL TRADE CONTRACTORS [1700] IRS NUMBER: 208468508 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-34515 FILM NUMBER: 161993471 BUSINESS ADDRESS: STREET 1: 9 NORTH WEST FOURTH RING ROAD YINGU STREET 2: MANSION SUITE 1708 HAIDAN DISTRICT, CITY: BEIJING STATE: F4 ZIP: 100190 BUSINESS PHONE: 86 10 82525361 MAIL ADDRESS: STREET 1: 9 NORTH WEST FOURTH RING ROAD YINGU STREET 2: MANSION SUITE 1708 HAIDAN DISTRICT, CITY: BEIJING STATE: F4 ZIP: 100190 FORMER COMPANY: FORMER CONFORMED NAME: TJS Wood Flooring, Inc. DATE OF NAME CHANGE: 20070307 10-Q 1 form10q.htm FORM 10-Q China Advanced Construction Materials Group, Inc. - Form 10-Q - Filed by newsfilecorp.com

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, 2016

[_] 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: 001-34515

CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC.
(Eact Name of Registrant as Specified in Its Charter)

Nevada 20-8468508
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

9 North West Fourth Ring Road Yingu Mansion Suite 1708
Haidian District Beijing, People’s Republic of China 100190
(Address of principal executive offices, Zip Code)

+86 10 82525361
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [_]

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 [X]        No [_]

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 [_] Accelerated Filer                   [_]
Non-Accelerated Filer   [_] Smaller reporting company [X]
(Do not check if a smaller reporting company)  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [_] No [X]

The number of shares outstanding of each of the issuer’s classes of common equity, as of November 8, 2016 is as follows:

Class of Securities Shares Outstanding
Common Stock, $0.001 par value 2,387,658

1


TABLE OF CONTENTS

  PAGE
     
  PART I
FINANCIAL INFORMATION  
   
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
     
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 23
     
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 31 
     
ITEM 4. CONTROLS AND PROCEDURES 31 
     
  PART II
OTHER INFORMATION  
32 
     
ITEM 6. EXHIBITS 32 

2


PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

3


CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

    September 30,     June 30,  
    2016     2016  
ASSETS    
CURRENT ASSETS:            
   Cash and cash equivalents $  8,234,509   $  1,006,970  
   Restricted cash   4,569,781     4,097,621  
   Short term investments   29,984     -  
   Accounts receivable, net   38,998,762     40,288,552  
   Inventories   690,852     1,023,471  
   Other receivables, net   1,440,629     7,093,030  
   Prepayments and advances   33,796,223     37,209,699  
       Total current assets   87,760,740     90,719,343  
             
PROPERTY PLANT AND EQUIPMENT, net   4,424,310     4,709,794  
       
Total assets $  92,185,050   $  95,429,137  
             
LIABILITIES AND SHAREHOLDERS' EQUITY    
             
CURRENT LIABILITIES:            
   Short term loans, banks and bank guarantees $  17,990,400   $  16,555,440  
   Notes payable   20,539,040     18,060,480  
   Accounts payable   32,553,759     31,234,091  
   Customer deposits   1,143,642     4,272,144  
   Other payables   440,163     600,205  
   Other payables - shareholders   1,793,817     1,491,125  
   Accrued liabilities   1,623,728     1,992,214  
   Taxes payable   90,812     95,708  
Total current liabilities   76,175,361     74,301,407  
             
COMMITMENTS AND CONTINGENCIES            
             
SHAREHOLDERS' EQUITY:            
             
   Preferred stock $0.001 par value, 1,000,000 shares authorized, no shares
    issued or outstanding
  -     -  
   Common stock, $0.001 par value, 74,000,000 shares authorized, 2,387,658 and
   2,180,799 shares issued and outstanding as of September 30, 2016 and
   June 30, 2016, respectively
  2,388     2,181  
   Additional paid-in-capital   38,662,377     38,373,584  
   Accumulated deficit   (36,525,603 )   (31,204,831 )
   Statutory reserves   6,248,350     6,248,357  
   Accumulated other comprehensive income   7,622,177     7,708,439  
Total shareholders' equity   16,009,689     21,127,730  
Total liabilities and shareholders' equity $  92,185,050   $  95,429,137  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4


CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)

    For the three months ended  
    September 30,  
    2016     2015  
             
REVENUE $  7,456,862   $ 13,472,831  
             
COST OF REVENUE   8,409,274     11,855,331  
             
GROSS PROFIT (LOSS)   (952,412 )   1,617,500  
             
PROVISION FOR DOUBTFUL ACCOUNTS   (2,085,337 )   (894,784 )
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   (1,862,928 )   (1,544,688 )
RESEARCH AND DEVELOPMENT EXPENSES   (79,165 )   (130,446 )
             
LOSS FROM OPERATIONS   (4,979,842 )   (952,418 )
             
OTHER (EXPENSE) INCOME, NET            
 Other income, net   86,201     7,080  
 Interest income   8,401     171,836  
 Interest expense   (197,217 )   (178,675 )
 Finance expense   (238,315 )   (139,974 )
TOTAL OTHER (EXPENSE) INCOME, NET   (340,930 )   (139,733 )
             
LOSS BEFORE PROVISION FOR INCOME TAXES   (5,320,772 )   (1,092,151 )
             
PROVISION FOR INCOME TAXES   -     -  
             
NET LOSS $  (5,320,772 ) $ (1,092,151 )
             
COMPREHENSIVE LOSS            
 Net loss $  (5,320,772 ) $ (1,092,151 )
 Other comprehensive loss - foreign currency translation loss   (86,262 )   (1,583,107 )
             
COMPREHENSIVE LOSS $  (5,407,034 ) $ (2,675,258 )
             
LOSS PER COMMON SHARE            
 Weighted average number of shares:            
   Basic and Diluted   2,272,986     2,180,799  
             
 Loss per share:            
   Basic and Diluted $  (2.34 ) $ (0.50 )

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5


CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

    For the three months ended  
    September 30,  
    2016     2015  
             
CASH FLOWS FROM OPERATING ACTIVITIES:            
   Net loss $  (5,320,772 ) $  (1,092,151 )
   Adjustments to reconcile net loss to net cash provided by (used in) operating activities:            
           Depreciation   305,121     513,775  
           Stock-based compensation expense   289,000     311,719  
           Provision for doubtful accounts   2,085,337     894,784  
       Changes in operating assets and liabilities            
           Accounts receivable   (4,645,427 )   (3,073 )
           Inventories   328,810     12,072  
           Other receivables   6,332,111     (258,194 )
           Prepayments and advances   3,183,553     6,362,149  
           Accounts payable   4,518,381     3,367,535  
           Customer deposits   (3,113,460 )   (512,897 )
           Other payables   (158,050 )   (1,620,638 )
           Other payables - shareholders   156,109     -  
           Accrued liabilities   (361,577 )   (618,893 )
           Taxes payable   (4,527 )   147,821  
   Net cash provided by operating activities   3,594,609     7,504,009  
             
CASH FLOWS FROM INVESTING ACTIVITIES:            
   Investment in short-term investments   (29,999 )   -  
   Purchase of property, plant and equipment   (37,778 )   -  
         Net cash used in investing activities   (67,777 )   -  
             
CASH FLOWS FROM FINANCING ACTIVITIES:            
   Proceeds from short term loans, banks and bank guarantees   4,499,820     3,192,000  
   Payments of short term loans, banks and bank guarantees   (2,999,880 )   (12,129,600 )
   Proceeds from notes payable   11,549,538     14,922,600  
   Payments of notes payable   (8,999,640 )   (18,114,600 )
   Payable to shareholders, net   146,586     58,466  
   Principal payments on capital lease obligations   -     (74,831 )
   Change in restricted cash, net   (488,301 )   3,369,026  
         Net cash provided by (used in) financing activities   3,708,123     (8,776,939 )
             
EFFECTS OF EXCHANGE RATE CHANGE IN CASH AND CASH EQUIVALENTS   (7,416 )   (88,448 )
             
NET CHANGE IN CASH AND CASH EQUIVALENTS   7,227,539     (1,361,378 )
             
CASH AND CASH EQUIVALENTS, beginning of period   1,006,970     2,691,915  
             
CASH AND CASH EQUIVALENTS, end of period $  8,234,509   $  1,330,537  
             
SUPPLEMENTAL CASH FLOW INFORMATION:            
     Cash paid for interest expense $  150,783   $  206,905  
     Cash paid for income tax $  -   $  -  
             
NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES:            
     Property, plant and equipment additions not yet to pay $  -   $  220,837  
     Capital lease obligations offset with prepayments $  -   $  203,790  
     Capital lease obligations offset with advances on equipement purchases $  -   $  478,800  
             
OTHER NON-CASH TRANSACTIONS:            
     Accounts receivable offset with accounts payable upon execution of tri-party agreements $  3,076,804   $  -  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6


CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Organization and description of business

China Advanced Construction Materials Group, Inc. (“CADC Delaware”) was incorporated in the State of Delaware on February 15, 2007. CADC Delaware, through its 100% owned subsidiaries and its variable interest entities (“VIEs”), is engaged in producing general ready-mix concrete, customized mechanical refining concrete, and other concrete-related products that are mainly sold in the People’s Republic of China (“PRC”). CADC Delaware has a wholly owned subsidiary in the British Virgin Islands, Xin Ao Construction Materials, Inc. (“BVI-ACM”), which is a holding company with no operations. BVI-ACM has a wholly owned foreign enterprise, Beijing Ao Hang Construction Material Technology Co., Ltd. (“China-ACMH”), and China-ACMH has contractual agreements with an entity which is considered as a VIE.

On August 1, 2013, CADC Delaware consummated a reincorporation merger with its newly formed wholly owned subsidiary, China Advanced Construction Materials Group, Inc. (“China ACM”), a Nevada corporation, with CADC Delaware merging into China ACM and China ACM being the surviving company, for the purpose of changing CADC Delaware’s state of incorporation from Delaware to Nevada.

Beijing XinAo Concrete Group (“Xin Ao”), a VIE, is engaged in the business of consulting, concrete mixing and equipment rental services. Xin Ao has five wholly owned subsidiaries (collectively, and with “Xin Ao”, the “VIEs”) in the PRC: (1) Beijing Heng Yuan Zheng Ke Technical Consulting Co., Ltd (“Heng Yuan Zheng Ke”), (2) Beijing Hong Sheng An Construction Materials Co., Ltd (“Hong Sheng An”), (3) Beijing Heng Tai Hong Sheng Construction Materials Co., Ltd (“Heng Tai”), (4) Da Tong Ao Hang Wei Ye Machinery, Equipment Rental Co., Ltd (“Da Tong”) and (5) Luan Xian Heng Xin Technology Co., Ltd (“Heng Xin”). There were no operations since establishment of these five entities and the Company is not planning to pursue operations for these entities. As a result, the Company has determined to dissolve these entities between March 2016 and June 2016. As of the date of this report, Da Tong and Heng Xi have already been dissolved and the other three entities are still under the administrative process of dissolution.

China ACM, BVI-ACM, China-ACMH and the VIEs are collectively referred to as the “Company.”

Note 2 – Summary of significant accounting policies

Liquidity

In assessing the Company’s liquidity, the Company monitors and analyzes its cash on-hand and its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations.

The Company engages in the production of advanced construction materials for large scale infrastructure, commercial and residential developments. The Company’s business is capital intensive and the Company is highly leveraged. Debt financing in the form of short term bank loans, loans from related parties and bank acceptance notes, have been utilized to finance the working capital requirements and the capital expenditures of the Company. Due to recurring losses, the Company’s working capital was approximately $11.6 million as of September 30, 2016 as compared to $16.4 million as of June 30, 2016. As of September 30, 2016, the Company had cash on-hand of approximately $8.2 million and restricted cash balances of approximately $4.6 million with the remaining current assets mainly composed of accounts receivables, other receivables and prepayments and advances.

Although the Company believes that it can realize its current assets in the normal course of business, the Company’s ability to repay its current obligations will depend on the future realization of its current assets. Management has considered its historical experience, the economy, trends in the construction industry, the expected collectability of the accounts and other receivables and the realization of the prepayments on inventory, and provided for an allowance for doubtful accounts as of September 30, 2016. The Company expects to realize the balances net of the allowance within the normal operating cycle of a twelve month period. If the Company is unable to realize its current assets within the normal operating cycle of a twelve month period, the Company may have to consider its available source of funds through the following:

7


CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

  • Financial support and credit guarantee commitment from the Company’s majority shareholders (See Note 9 - Related party transactions).
  • Other available sources of financing from PRC banks and other financial institutions given the Company’s credit history.

Based on the above considerations, the Company’s management is of the opinion that it has sufficient funds to meet the Company’s working capital requirements and debt obligations as they become due. However, there is no assurance that management will be successful in their plan. There are a number of factors that could potentially arise that could result in shortfalls to the Company’s plan, such as the demand for the Company’s products, economic conditions, the competitive pricing in the concrete-mix industry, the Company’s operating results continuing to deteriorate and the Company’s bank and shareholders not being able to provide continued support.

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These financial statements include the accounts of all directly, indirectly owned subsidiaries and variable interest entities listed below. All material intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary to give a fair presentation have been included. Interim results are not necessarily indicative of results of a full year. The information in this Form 10-Q should be read in conjunction with information included in the annual report for the fiscal year ended June 30, 2016 on Form 10-K filed with the SEC on September 28, 2016 and have been consistently applied.

Principles of consolidation

The unaudited condensed consolidated financial statements reflect the activities of the following subsidiaries and VIEs. All material intercompany transactions have been eliminated.

        Ownership
Subsidiaries and VIEs   Place incorporated   percentage
BVI-ACM   British Virgin Island   100%
China-ACMH   Beijing, China   100%
Xin Ao   Beijing, China   VIE
Heng Yuan Zheng Ke   Beijing, China   VIE
Hong Sheng An   Beijing, China   VIE
Heng Tai   Beijing, China   VIE
Da Tong*   Datong, China   VIE
Heng Xin**   Luanxian, China   VIE

*Dissolved in August 2016
** Dissolved in November 2016

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 the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIEs. The primary beneficiary is required to consolidate the VIEs for financial reporting purposes.

Management makes ongoing assessments of whether China ACM is the primary beneficiary of Xin Ao and its subsidiaries. Based upon a series of contractual arrangements, the Company determined that Xin Ao and its subsidiaries are VIEs subject to consolidation and that China ACM is the primary beneficiary. Accordingly, the accounts of Xin Ao and its subsidiaries are consolidated with those of China ACM.

The carrying amount of the VIEs’ assets and liabilities are as follows:

8


CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

    September 30,     June 30,  
    2016     2016  
   Current assets $  87,571,976   $  90,518,451  
   Property, plant and equipment   4,424,310     4,709,794  
Total assets   91,996,286     95,228,245  
             
   Liabilities   (74,137,991 )   (72,579,677 )
             
   Intercompany payables*   (7,297,139 )   (7,355,650 )
             
Total liabilities   (81,435,130 )   (79,935,327 )
             
Net assets $  10,561,156   $  15,292,918  

* Payables to China - ACMH and BVI-ACM are eliminated upon consolidation.

Use of estimates and assumptions

The preparation of 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 financial statements, and the reported amounts of revenues and expenses during the reporting periods. The significant estimates and assumptions made in the preparation of the Company’s unaudited condensed consolidated financial statements include deferred income taxes, allowance for doubtful accounts, deferred stock-based compensation, the fair value and useful lives of property, plant and equipment. Actual results could be materially different from those estimates.

Foreign currency translation

The reporting currency of the Company is the U.S. dollar. The functional currency of China ACM and BVI-ACM is the U.S. dollar. China-ACMH and its VIEs use their local currency Chinese Renminbi (“RMB”) as their functional currency. In accordance with the US GAAP guidance on Foreign Currency Translation, the Company’s results of operations and cash flows are translated at the average exchange rates during the period, assets and liabilities are translated at the exchange rates at the balance sheet dates, and equity is translated at historical exchange rates. As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.

Asset and liability accounts at September 30 and June 30, 2016, were translated at RMB 6.67 to $1.00 and RMB 6.64 to $1.00, respectively. The average translation rates applied to the consolidated statements of operations and comprehensive loss and cash flows for the three months ended September 30, 2016 and 2015 were RMB 6.67 and RMB 6.27 to $1.00, respectively.

Translation gains (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. There were no foreign currency transaction gains or losses for each of the three months ended September 30, 2016 and 2015. The effects of foreign currency translation adjustments are included in shareholders’ equity as a component of accumulated other comprehensive income.

Revenue recognition

Revenue is realized or realizable and earned when four criteria are met:

  • Persuasive evidence of an arrangement exists (the Company considers its sales contracts to be pervasive evidence of an arrangement);

9


CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

  • Delivery has occurred;

  • The seller’s price to the buyer is fixed or determinable; and

  • Collectability of payment is reasonably assured.

The Company sells its concrete products primarily to major local construction companies. Sales agreements are signed with each customer. The agreements list all terms and conditions with the exception of delivery date and quantity, which are evidenced separately in purchase orders. The purchase price of products is fixed in the agreement and customers are not permitted to renegotiate after the contracts have been signed. The agreements include a cancellation clause if the Company or customers breach the contract terms specified in the agreement.

The Company recognizes revenue when title and ownership of the goods are transferred upon shipment to the customer by the Company and collectability of payment is reasonably assured.

The Company includes the shipping and handling fee in both revenue and cost of revenue.

Financial instruments

US GAAP regarding fair value of financial instruments and related fair value measurements define fair value, establish a three-level valuation hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The three levels of inputs are defined as follows:

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets;

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument;

Level 3 inputs to the valuation methodology are unobservable.

Current assets and current liabilities are reported in the consolidated balance sheets at face value or cost, which approximate fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest.

Cash and cash equivalents

The Company considers all highly liquid investments with the original maturity of three months or less at the date of purchase to be cash equivalents. The Company currently maintains substantially all of its day-to-day operating cash balances with major financial institutions within PRC and US. As of September 30 and June 30, 2016, the Company had deposits in excess of federally insured limits totaling approximately $8.2 million and $0.9 million, respectively.

Restricted cash

As of September 30 and June 30, 2016, restricted cash consisted of collateral representing cash deposits for bank guarantees and notes payable.

Accounts receivable

During the normal course of business, the Company extends unsecured credit to its customers. Accounts are considered past due after 30 days. In establishing the required allowance for doubtful accounts, management considers the historical experience, the economy, trends in the construction industry and the expected collectability of the overdue receivables. Management reviews its accounts receivable each reporting period to determine if the allowance for doubtful accounts is adequate. An estimate for doubtful accounts is recorded when collection of the full amount is no longer probable. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovering is considered remote. The Company provides a provision of 15% of allowance for doubtful accounts for accounts receivable balance that are past due more than 180 days but less than one year, 40% of allowance for doubtful accounts for accounts receivable past due from one to two years, 75% of allowance for doubtful accounts for accounts receivable past due beyond two years, 100% of allowance for doubtful accounts for accounts receivable past due beyond three years, plus additional amount as necessary, which the Company’s collection department had determined the collection of the full amount is remote with the approval from the Company’s management to provide 100% provision allowance for doubtful accounts. The Company’s management has continued to evaluate the reasonableness of the valuation allowance policy and update it if necessary.

10


CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Other receivables

Other receivables primarily include prepayments to be refunded by our suppliers if the supplies do not meet the Company’s specification need, advances to employees, due from unrelated entities, VAT tax refunds and other deposits. Management regularly reviews the aging of receivables and changes in payment trends and records allowance when management believes collection of amounts due are at risk. Accounts considered uncollectible are written off against the allowance after exhaustive efforts at collection are made. The Company provides a provision of 5% of allowance for doubtful accounts for other receivables balance that are aged within one year, 50% of allowance for doubtful accounts for other receivables aged from one to two years, 100% of allowance for doubtful accounts for other receivables aged beyond two years.

Inventories

Inventories consist of raw materials and are stated at the lower of cost or market, as determined using the weighted average cost method. Management compares the cost of inventories with the market value and an allowance is made for writing down the inventory to its market value, if lower than cost. As of September 30 and June 30, 2016, the Company determined that no reserves for obsolescence were necessary.

Prepayments and advances

Prepayments are funds deposited or advanced to outside vendors for future inventory purchases. As a standard practice in China, many of the Company’s vendors require a certain amount to be deposited with them as a guarantee that the Company will complete its purchases on a timely basis. This amount is refundable and bears no interest. The Company has legally binding contracts with its vendors, which require any outstanding prepayments to be returned to the Company when the contract ends.

The Company wrote off approximately $0.1 million on unrealizable prepayments for the three months ended September 30, 2016.

Property, plant and equipment

Property, plant and equipment are stated at cost. Expenditures for maintenance and repairs are charged to operations as incurred while additions, renewals and improvements are capitalized. Depreciation is provided over the estimated useful life of each class of depreciable assets and is computed using the straight-line method with 5% residual value. Leasehold improvements are amortized over the lesser of estimated useful lives or lease terms, as appropriate.

The estimated useful lives of assets are as follows:

  Useful life
   
Transportation equipment 7-10 years
   
Plant and machinery 10 years
   
Office equipment 5 years
   

Buildings and improvements

 3-20 years

11


CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Accounting for long-lived assets

The Company classifies its long-lived assets into: (i) machinery and equipment; (ii) transportation equipment; (iii) office and equipment; and (iv) buildings and improvements.

Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be fully recoverable. It is possible that these assets could become impaired as a result of technology or other industry changes. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

If the value of an asset is determined to be impaired, the impairment to be recognized is measured in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or the fair value, less disposition costs.

Due to recurring losses, the deterioration of the concrete-mix industry in the city of Beijing, PRC and competitive pricing pressure, the Company has performed an impairment analysis and determined its long-lived assets were impaired during the year ended June 30, 2016. As a result, the Company recorded an impairment charge of $2.6 million for the year ended June 30, 2016. These charges were related to the impairment of the Company’s transportation equipment and plant and machinery. The loss was determined using Level 3 inputs (See Note 6). There was no impairment charge for the three months ended September 30, 2016 and 2015.

Competitive pricing pressure and changes in interest rates could materially and adversely affect the Company’s estimates of future net cash flows to be generated by the long-lived assets, and thus could result in future impairment losses.

Stock-based compensation

The Company records stock-based compensation expense at fair value on the grant date and recognizes the expense over the employee's requisite service period. The Company’s expected volatility assumption is based on the historical volatility of Company’s stock. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is based on the Company’s current and expected dividend policy.

Income taxes

The Company accounts for income taxes in accordance with ASC 740, “Income Taxes,” which requires the Company to use the assets and liability method of accounting for income taxes. Under the assets and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carry forwards. Under this accounting standard, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized.

ASC 740-10, “Accounting for Uncertainty in Income Taxes,” defines uncertainty in income taxes and the evaluation of a tax position as a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. United States federal, state and local income tax returns prior to 2013 are not subject to examination by any applicable tax authorities.

12


CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Value Added Tax

Enterprises or individuals, who sell commodities, engage in repair and maintenance, or import and export goods in the PRC are subject to a value added tax. The standard VAT rate was 6% of gross sales for the Company’s industry, which was reduced to 3% of gross sales on July 1, 2014. Due to the fact that the Company uses recycled raw materials to manufacture its products, the State Administration of Taxation granted the Company a VAT tax exemption, which expired in June 2015. From July 2015 going forward, the Company is subject to VAT at the reduced rate of 3% of the gross sales price.

Research and development

Research and development costs are expensed as incurred. The cost of materials and equipment that are acquired or constructed for research and development activities, and have alternative future uses, either in research and development, marketing, or sales, are classified as property and equipment, and depreciated over their estimated useful lives..

Earnings (loss) per share

The Company reports earnings (loss) per share in accordance with the US GAAP, which requires presentation of basic and diluted earnings (loss) per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings (loss) per share excludes dilution and is computed by dividing income (loss) available to common shareholders by the weighted average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts, such as warrants, options, restricted stock based grants and convertible preferred stock, to issue common stock were exercised and converted into common stock. Common stock equivalents having an anti-dilutive effect on earnings per share are excluded from the calculation of diluted earnings per share. For each of the three months ended September 30, 2016 and 2015, diluted loss per share is the same as basic loss per share since the addition of any contingently issuable shares would be anti-dilutive.

Stock dividends or stock splits be accounted for retroactively if the stock dividends or stock splits occur during the period, or retroactively if the stock dividends or stock splits occur after the end of the period but before the release of the financial statements, by considering it outstanding of the entirety of each period presented. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

Comprehensive income (loss)

Comprehensive income (loss) consists of net income (loss) and foreign currency translation adjustments.

Recent Accounting Pronouncements

In August 2016, the FASB has issued Accounting Standards Update (ASU) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provide guidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from Equity Method Investees; (8) Beneficial Interests in Securitization Transactions; and Separately Identifiable Cash Flows and Application of the Predominance Principle. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. Management is evaluating the effect, if any, on the Company’s consolidated financial statements.

13


CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In October 2016, the FASB has issued Accounting Standards Update (ASU) No. 2016-17, Consolidation (Topic 810): Interests held through related parties that are under common control. The amendments in this ASU require that the reporting entity, in determining whether it satisfies the second characteristic of a primary beneficiary, to include all of its direct variable interests in a VIE and, on a proportionate basis, its indirect variable interests in a VIE held through related parties, including related parties that are under common control with the reporting entity. The amendments are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. Management does not believe the adoption of this ASU would have a material effect on the Company’s consolidated financial statements.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications have no effect on the accompanying unaudited condensed consolidated statements of operations and cash flows.

Note 3 – Accounts receivable, net

Accounts receivable, net consisted of the following:

    September 30, 2016     June 30, 2016  
             
Accounts receivable $  53,254,443   $  51,812,683  
             
Less: Allowance for doubtful accounts   (14,255,681 )   (11,524,131 )
             
Total accounts receivable, net $  38,998,762   $  40,288,552  

Movement of allowance for doubtful accounts is as follows:

    Three months ended     Year ended  
    September 30, 2016     June 30, 2016  
             
Beginning balance $  11,524,131   $  28,209,249  
Provision for doubtful accounts   2,702,640     2,591,465  
Less: write-off   -     (17,482,713 )
Exchange rate effect   28,910     (1,793,870 )
Ending balance $  14,255,681   $  11,524,131  

Note 4 – Inventories

Inventories consisted of the following:

14


CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

    September 30, 2016     June 30, 2016  
Raw materials $  690,852   $  1,023,471  

Note 5 – Other receivables, net

Other receivables

Other receivables consisted of the following:

    September 30, 2016     June 30, 2016  
Other receivables $  1,829,724   $  7,742,057  
Less: Allowance for doubtful accounts   (1,621,504 )   (2,334,672 )
Other receivables, net   208,220     5,407,385  
Other receivable from sale of Asset Group   1,232,409     1,685,645  
           Total $  1,440,629   $  7,093,030  

Movement of allowance for doubtful accounts is as follows:

    Three months ended     Year ended  
    September 30, 2016     June 30, 2016  
             
Beginning balance $  2,334,672   $  2,403,362  
Provision for (recovery of) doubtful accounts   (704,456 )   129,212  
Less: write-off   -     -  
Exchange rate effect   (8,712 )   (197,902 )
Ending balance $  1,621,504   $  2,334,672  

Other receivable from sale of Asset Group

On February 29, 2016, the Company terminated an operating lease for its concrete plant in the eastern suburban area of Beijing due to the fact that the plant was not operating at ideal capacity and the Company did not anticipate it would be in the foreseeable future. The Company entered into an agreement with the lessor to terminate its operating lease, which was originally effective from August 18, 2013 to August 17, 2021, and for the sale of certain of the Company’s assets and liabilities (“Asset Group”) at the leased location. Under the agreement, the carrying value of the Asset Group was determined to be RMB 13.7 million (approximately $2.1 million), and was settled for RMB 11.2 million (approximately $1.7 million). The Company recognized approximately $0.4 million loss from the sale of the Asset Group for the year ended June 30, 2016. Pursuant to the terms of the agreement, the remaining consideration of RMB 8.2 million (approximately $1.2 million) as of September 30, 2016 are to be paid by December 31, 2016.

In accordance with ASC 205, the Company did not report the sale of the Asset Group as discontinued operations as the sale of the Asset Group did not represent a strategic shift that has a major effect on the Company’s operations and financial results.

Note 6 – Property, plant and equipment

Property, plant and equipment consist of the following:


15


CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

    September 30, 2016     June 30, 2016  
             
Machinery and equipment $ 753,849   $ 754,997  
             
Transportation equipment   4,319,156     4,299,862  
             
Office equipment   1,167,510     1,172,059  
             
Buildings and improvements   313,687     314,909  
             
Total   6,554,202     6,541,827  
             
Less: Accumulated depreciation   (2,129,892 )   (1,832,033 )
             
Plant and equipment, net $  4,424,310     4,709,794  

Depreciation expense for the three months ended September 30, 2016 and 2015 amounted to approximately $0.3 million and $0.5 million, respectively.

Note 7 – Prepayments and advances

Prepayments and advances consisted of the following:

    September 30, 2016     June 30, 2016  
             
Advances on inventory purchases $  33,796,223   $  37,209,699  

Note 8 – Credit Facilities

Short term loans - banks:

The outstanding balances on these loans consisted of the following:

    September 30,     June 30,  
    2016     2016  
             
Loans from China Construction Bank, each with an interest rate from 4.35% per annum, due October and December 2016, and March and September 2017, among which, $1.5 million was paid in October 2016, guaranteed by Beijing Jinshengding Mineral Products Co., LTD and Mr. Xianfu Han.   13,492,800     12,404,320  
       
Loan from Bank of Beijing, interest rate at 5.66% per annum, due March 2017, guaranteed by Beijing Jinshengding Mineral Products Co., LTD and Mr. Xianfu Han.   4,497,600     4,515,120  
             
$ 17,990,400   $  16,555,440  

Beijing Jinshengding Mineral Products Co., LTD is a supplier to the Company. Mr. Xianfu Han is the Company’s Chief Executive Officer. Also see Note 9 – Related party transactions.

Interest expenses were approximately $0.2 million and $0.2 million for the three months ended September 30, 2016 and 2015, respectively.

16


CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Notes payable:

Bank notes are issued to a third party for inventory purchases. The notes payable are guaranteed by Beijing Jinshengding Mineral Products Co., LTD., Xianfu Han and his spouse, Chunying Wang, and Weili He and his spouse, Junkun Chen, and amounted to approximately $20.5 million and $18.1 million as of September 30, 2016 and June 30, 2016, respectively, and were non-interest bearing with expiration dates between October 2016 (repaid) and February 2017. The restricted cash for the notes was approximately $4.6 million and $4.1 million as of September 30 and June 30, 2016, respectively.

Note 9 – Related party transactions

Other payables – shareholders

Two shareholders have advanced funds to BVI-ACM for working capital purposes. The advances are non-interest bearing, unsecured, and are payable in cash on demand. These two shareholders are officers of the Company. They and their spouses also guaranteed certain short-term loans payable and notes payable of the Company (see Note 8). The other payables balance also includes the Company’s salary payables to the two shareholders.

Other payables - shareholders consisted of the following:

    September 30, 2016     June 30, 2016  
             
Xianfu Han $  890,735   $  715,086  
             
Weili He   903,082     776,039  
             
  $  1,793,817   $  1,491,125  

Note 10 – Income taxes

(a) Corporate income tax

China ACM was organized in the United States. China ACM had no taxable income for United States income tax purposes for the three months ended September 30, 2016 and 2015, respectively. As of September 30, 2016, China ACM’s net operating loss carry forward for United States income taxes was approximately $0.4 million. The net operating loss carry forward are available to reduce future years’ taxable income through year 2033. Management believes that the realization of the benefits from these losses appears uncertain due to the Company’s operating history and continued losses in the United States. Accordingly, the Company has provided a 100% valuation allowance on the deferred tax asset to reduce the asset to zero. As of September 30 and June 30, 2016, valuation allowance for deferred tax assets was approximately $0.2 million and $0.2 million, respectively. Management reviews this valuation allowance periodically and makes changes accordingly.

BVI-ACM was incorporated in the British Virgin Islands (“BVI”) and where its income tax rate is 0% under the current laws of the BVI.

China-ACMH and VIEs-Chinese operations

China-ACMH and VIEs are governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Chinese Enterprise Income Tax (“EIT”) law, the statutory corporate income tax rate applicable to most companies is 25%. In 2009, Xin Ao applied and received an Enterprise High-Tech Certificate. The certificate was awarded based on Xin Ao’s involvement in producing high-tech products, its research and development, as well as its technical services. As granted by the State Administration of Taxation of the PRC, Xin Ao is entitled to a reduction in its income tax rate from 25% to 15% until 2018.

17


CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The EIT Law imposes a 10% withholding income tax, subject to reduction based on tax treaties where applicable, for dividends distributed by a foreign invested enterprise to its immediate holding company outside China. Such dividends were exempted from PRC tax under the previous income tax law and regulations. The Company intends to permanently reinvest undistributed earnings of its Chinese operations located in the PRC. As a result, there is no deferred tax expense related to withholding tax on the future repatriation of these earnings.

Loss before provision for income taxes consisted of:

    Three months ended September 30,  
    2016     2015  
             
USA and BVI $  (643,524 ) $  (399,845 )
China   (4,677,248 )   (692,306 )
  $  (5,320,772 ) $  (1,092,151 )

Significant components of deferred tax assets were as follows:

    September 30, 2016     June 30, 2016  
Deferred tax assets            
   Allowance for doubtful accounts $  5,482,794   $  5,169,993  
   Impairment loss of long-lived assets   393,673     393,673  
   Net operating loss carryforward in China   1,364,681     975,894  
   Net operating loss carryforward in the U.S.   244,914     217,020  
   Valuation allowance   (7,486,062 )   (6,756,580 )
Total deferred tax assets - current $  -   $  -  

As of September 30 and June 30, 2016, the Company believes it is more likely than not that its China operations will be unable to fully utilize its deferred tax assets related to its allowance for doubtful accounts, impairment loss of long-lived assets and the net operating loss carry forward in China. As the Company continued to incur losses in its China operations, it is more likely than not that it will not have sufficient income to utilize its deferred tax assets. As of September 30, 2016, the Company has a net operating loss carry forward in China that expires in 2021.  As a result, the Company had provided 100% allowance on all the deferred tax assets of approximately $7.3 million and $6.5 million as of September 30 and June 30, 2016, respectively.

The Company has incurred losses from its U.S. operations during all periods presented. Accordingly, management provided approximately $0.3 million and $0.2 million of valuation allowance against the deferred tax assets related to the Company’s U.S. operations as of September 30, 2016 and June 30, 2016, respectively, since the deferred tax benefits of the net operating loss carry forward in the U.S. might not be utilized.

Changes to valuation allowance for deferred tax assets were as follows:

    Three months ended     Year ended  
    September 30, 2016     June 30, 2016  
For deferred tax assets            
Beginning balance $  6,756,580     3,064,527  
   Allowance for doubtful accounts   312,801     2,414,859  
   Impairment loss of long-lived assets   -     393,673  
   Change in net operating loss carry forward in China   388,787     975,894  
   Change in net operating loss carry forward in U.S.   27,894     (92,373 )
             
Ending balance $  7,486,062     6,756,580  

18


CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(b) Uncertain tax positions

There were no uncertain tax positions as of September 30 and June 30, 2016. Management does not anticipate any potential future adjustments which would result in a material change to its tax positions. For the three months ended September 30, 2016 and 2015, the Company did not incur any tax related interest and penalties.

Note 11 – Shareholders’ equity

Restricted Stock Grants

Restricted stock grants are measured based on the market price on the grant date. The Company has granted restricted shares of common stock to the members of the board of directors (the “Board”), senior management and consultants.

Effective August 20, 2016, the Board granted an aggregate of 106,859 shares of restricted common stock, which were issued with a market value of $308,823 to a consultant under the 2009 Plan. These shares shall be vested in two tranches upon achieving certain performance-based milestones. As of September 30, 2016, these shares have not vested and the milestones have not been determined by the Board.

Effective August 20, 2016, the Board granted an aggregate of 100,000 shares of restricted common stock, which were issued with a market value of $289,000 to two employees under the 2009 Plan. These shares are vested immediately upon grant.

For each of the three months ended September 30, 2016 and 2015, the Company recognized approximately $0.3 million of compensation expenses related to restricted stock grants.

Following is a summary of the restricted stock grants:

          Weighted Average     Aggregate  
          Grant Date     Intrinsic  
Restricted stock grants   Shares     Fair Value Per Share     Value  
Nonvested as of June 30, 2016   -   $  -   $  -  
Granted   206,859   $  2.89   $  597,823  
Vested   (100,000 ) $  2.89   $  289,000  
Nonvested as of September 30, 2016   106,859   $  2.89   $  308,823  

Note 12 – Reserves and dividends

The laws and regulations of the PRC require that before a foreign invested enterprise can legally distribute profits, it must first satisfy all its tax liabilities, provide for losses in previous years, and make allocations, in proportions determined at the discretion of the Board, after the statutory reserves. The statutory reserves include the surplus reserve fund and the common welfare fund.

The Company is required to transfer 10% of its net income, as determined in accordance with the PRC accounting rules and regulations, to a statutory surplus reserve fund until such reserve balance reaches 50% of the Company’s registered capital. As of June 30, 2016, the remaining reserve to fulfill the 50% registered capital requirement amounted to $1.9 million. As of September 30, 2016, the capital requirement amount reduced to approximately $1.7 million after the dissolution of Da Tong.

19


CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The transfer to this reserve must be made before the distribution of any dividends to the Company’s shareholders. The surplus reserve fund is non-distributable other than during liquidation. The surplus reserve fund can however be used to fund previous years’ losses, if any, and may be utilized for business expansion or converted into share capital by issuing new shares to existing shareholders in proportion to their shareholding or by increasing the par value of the shares currently held by them, provided that the remaining reserve balance after such issue is not less than 25% of the registered capital.

The Chinese government restricts distributions of registered capital and the additional investment amounts required by foreign invested enterprises. Approval by the Chinese government must be obtained before distributions of these amounts can be returned to the shareholders.

Note 13 – Employee post-retirement benefits

The Company offers a defined contribution plan to eligible employees which consists of two parts: (i) the first part, paid by the Company, is 20% of the employee’s compensation from the prior year and (ii) the second part, paid by the employee, is 8% of the employee’s compensation. The Company’s contributions of employment benefits were approximately $0.2 million for each of the three months ended September 30, 2016 and 2015.

Note 14 – Commitments and contingencies

Lease Commitments

The Company has a lease agreement for a concrete service plant with an unrelated party which will expire on September 30, 2017, with annual payments of approximately $202,000. The Company has a lease agreement for a roadway access in the west side entry of the concrete service plant with an unrelated party which will expire on June 30, 2019. The Company has a lease agreement to lease office space from a related party through October 31, 2018, with annual payments of approximately $24,000.

Operating lease expenses are allocated between the cost of revenue and selling, general, and administrative expenses. Total operating lease expenses for the three months ended September 30, 2016 and 2015 were approximately $60,000 and $200,000, respectively. Future annual lease payments under non-cancelable operating leases with a term of one year or more consist of the following:

Twelve months ending September 30,   Amount  
2017 $  241,000  
2018   39,000  
2019   13,000  
Total $  293,000  

Legal Contingencies

From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Company’s management does not expect any liability from the disposition of such claims and litigation individually or in the aggregate would have a material adverse impact on the Company’s unaudited condensed consolidated financial position, results of operations and cash flows.

Note 15 - Concentrations

For the three months ended September 30, 2016, the Company had two customers representing approximately 16.8% and 16.5% of total revenue. For the three months ended September 30, 2015, the Company had one customer representing approximately 12.4% of total revenue. As of September 30 and June 30, 2016, no customer accounting for more than 10% of the total balance of accounts receivable.

20


CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended September 30, 2016, the Company had two vendors representing approximately 10.7% and 10.2% of total purchases. For the three months ended September 30, 2015, the Company had one vendor representing approximately 10.1% of total purchases. As of September 30, 2016, the Company had one vendor accounting for approximately 10.7% of total balance of accounts payable. As of June 30, 2016, no vendor accounted for more than 10% of the total balance of accounts payable.

21


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

We are a holding company whose primary business operations are conducted through our wholly-owned subsidiaries Xin Ao Construction Materials, Inc. (“BVI-ACM”) and Beijing Ao Hang Construction Material Technology Co., Ltd. (“China-ACMH”), and our variable interest entities, Beijing XinAo Concrete Group (“Xin Ao”) and its subsidiaries. We engage in the production and supply of advanced construction materials for large scale commercial, residential, and infrastructure developments, and are primarily focused on producing and supplying a wide range of advanced ready-mix concrete materials for highly technical, large scale, and environmentally-friendly construction projects.

During the three months ended September 30, 2016, we supplied materials and provided services to our projects through one ready-mixed concrete plant in Beijing.

Our management believes that we have the ability to capture a greater share of the Beijing market via expanding relationships and networking, signing new contracts, and continually developing market-leading innovative and eco-friendly ready-mix concrete products.

Principal Factors Affecting Our Financial Performance

We believe that the following factors will continue to affect our financial performance:

  -

Large Scale Contractor Relationships. We have contracts with major construction contractors which are constructing key infrastructure, commercial and residential projects. Our sales efforts focus on large-scale projects and large customers which place large recurring orders and present less credit risk to us. For the three months ended September 30, 2016, two customers accounted for approximately 16.8% and 16.5% of our sales. Should we lose any large scale customers in the future and are unable to obtain additional customers, our revenues will suffer.

     
  -

Experienced Management. Management’s technical knowledge and business relationships give us the ability to secure major infrastructure projects, which provides us with leverage to acquire less sophisticated operators, increase production volumes, and implement quality standards and environmentally sensitive policies. If there were to be any significant turnover in our senior management, it could deplete the institutional knowledge held by our existing senior management team.

     
  -

Innovation Efforts. We strive to produce the most technically and scientifically advanced products for our customers and maintain close relationships with Tsinghua University, Xi’an University of Architecture and Technology and Beijing Dongfang Jianyu Institute of Concrete Science & Technology. We entered technical service contracts with these research institutes to further improve our production and products. If our research and development efforts are not sufficient to adapt to the change in technology in the industry, our products may not compete effectively.

     
  -

Competition. Our competition includes a number of state-owned and large private PRC-based manufacturers and distributors that produce and sell products similar to ours. We compete primarily on the basis of quality, technological innovation and price. Essentially, all of the contracts on which we bid are awarded through a competitive bid process, with award contracts often being made awarded to the lowest bidder, though other factors such as shorter schedules or prior experience with the customer are often just as important. Within our markets, we compete with many national, regional and local state- owned and private construction entities some of which have achieved greater market penetration or have greater financial and other resources than us. In addition, there are a number of larger national companies in our industry that could potentially establish a presence in our markets and compete with us for contracts. If we are unable to compete successfully in our markets, our relative market share and profits could be reduced.

Consolidated Results of Operations

Comparison of the three months ended September 30, 2016 and 2015

The following table sets forth key components of our results of operations for the three months ended September 30, 2016 and 2015, in US dollars:

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    Three months ended        
    September 30,        
                      Percentage  
    2016     2015     Change     Change  
Total revenue $  7,456,862   $  13,472,831   $  (6,015,969 )   (45)%  
Total cost of revenue   8,409,274     11,855,331     (3,446,057 )   (29)%  
Gross profit (loss)   (952,412 )   1,617,500     (2,569,912 )   (159)%  
Provision for doubtful accounts   (2,085,337 )   (894,784 )   (1,190,553 )   133%  
Selling, general and administrative expenses   (1,862,928 )   (1,544,688 )   (318,240 )   21%  
Research and development expenses   (79,165 )   (130,446 )   51,281     (39)%  
Loss from operations   (4,979,842 )   (952,418 )   (4,027,424 )   423%  
Other expense, net   (340,930 )   (139,733 )   (201,197 )   144%  
Loss before provision for income taxes   (5,320,772 )   (1,092,151 )   (4,228,621 )   387%  
Provision for income taxes   -     -     -     -%  
Net loss $  (5,320,772 ) $  (1,092,151 ) $  (4,228,621 )   387%  

Revenue. Our revenue is primarily generated from sales of our advanced ready-mix concrete products. For the three months ended September 30, 2016, we generated total revenue of approximately $7.5 million, as compared to approximately $13.5 million during the three months ended September 30, 2015, a decrease of approximately $6.0 million, or 45%. The decrease in revenue was principally due to the decreased sales volume by 37% resulting from the strengthened government’s control of inspection of overloaded transportation vehicles, which also affect our sales on our concrete truck transportation. In addition, due to the increasing competition in the concrete industry in the city of Beijing, our revenue decrease was also attributable to a decrease in our selling price of concrete during the three months ended September 30, 2016 as compared to the same period in 2015.

Cost of Revenue. Total cost of revenue, which consists of direct labor, rentals, depreciation, other overhead and raw materials, including inbound freight charges, was approximately $8.4 million for the three months ended September 30, 2016, as compared to approximately $11.9 million for the three months ended September 30, 2015, a decrease of approximately $3.4 million, or 29%. The decrease in cost of revenue was primarily associated with the decrease in our sales volume. The decrease in our cost of revenue was offset by the increase of the purchase unit price of cement for our production use during the three months ended September 30, 2016 as compared to the same period in 2015. As a result, our cost of revenue has decreased by 29% during the three months ended September 30, 2016 as opposed to 2015.

Gross Profit (Loss). Total gross loss was approximately $1.0 million for the three months ended September 30, 2016, as compared to approximately $1.6 million of gross profit for the three months ended September 30, 2015, a decrease of approximately $2.6 million, which was primarily due to the decrease of sales volume, the decrease of our selling price of concrete and the increase of the purchase unit price of cement for our production use during the three months ended September 30, 2016 as compared to the same period in 2015.

Provision for Doubtful Accounts. We incurred a provision for doubtful accounts charge of approximately $2.1 million for the three months ended September 30, 2016 as compared to approximately $0.9 million during the three months ended September 30, 2015, an increase of approximately $1.2 million, or 133%. In accordance with our allowance for doubtful accounts policy, at the end of each quarter, we conduct an aging analysis of each customer’s arrears to determine whether the allowance for doubtful accounts is adequate. In establishing the allowance for doubtful accounts, we consider the historical experience, the economy, trends in the construction industry, expected collectability of amounts receivable that are past due and the expected collectability of overdue receivables. An estimate of doubtful accounts is recorded when collection of the full amount is no longer probable. Known bad debts are written off against allowance for doubtful accounts when identified. After reviewing individual balances, we provide a provision of 15% for accounts receivable past due more than 180 days but less than one year, 40% for accounts receivable past due from one to two years, 75% for accounts receivable past due beyond two years, 100% for accounts receivable past due beyond three years, plus additional amounts as necessary.

As of September 30, 2016, our accounts receivable aging are as follows:

    Balance     1-90     91-180     181-360     361-720     over 720     Over 1,080  
          days     days     days     days     days     Days  
Accounts receivable $  53,254,443   $  7,422,116   $  6,575,480   $  22,708,858   $  12,100,656   $  3,279,638   $  1,167,695  
Allowance for doubtful accounts   (14,255,681 )   -     -     (3,407,692 )   (6,777,246 )   (2,903,048 )   (1,167,695 )
Accounts receivable, net $  38,998,762   $  7,422,116   $  6,575,480   $  19,301,166   $  5,323,410   $  376,590   $  -  

Selling, General and Administrative Expenses. Selling, general and administrative expenses consist of sales commissions, advertising and marketing costs, office rent and expenses, costs associated with staff and support personnel who manage our business activities, and professional fees paid to third parties. We incurred selling, general and administrative expenses of approximately $1.9 million for the three months ended September 30, 2016 as compared to approximately $1.5 million for the three months ended September 30, 2015, an increase of approximately $0.3 million. The increase was primarily due to a $0.3 million increase in salaries, social security and benefit expense and $0.2 million increase in professional fees offset by a $0.1 million decrease in meal and entertainment expenses and $0.1 million decrease in rental and other various G&A expenses as compared to the three months ended September 30, 2015.

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Research and Development Expenses. Research and development expenses were approximately $0.1 million for each of the three months ended September 30, 2016 and 2015, respectively. The Company’s research and development expenditures were maintained at a similar percentage year over year as to the revenue and was adjusted based on economic outlook plus discretionary spending on projects that were deemed to help improve our competitive advantage.

Loss from Operations. We incurred a loss from operations of approximately $5.0 million and $1.0 million for the three months ended September 30, 2016 and 2015, respectively. Such increase of approximately $4.0 million in loss from operations was primarily due to a $2.6 million decrease in gross profit and a $1.2 million increase in provision of doubtful accounts, 0.3 million increase in selling, general and administration expenses and was primarily offset by a $0.1 million decrease in research and development expenses.

Other Income (Expense), Net. Our other income (expense) consists of interest income (expense), finance expense and other non-operating income (expense). We earned interest income of approximately $8,000 and $0.2 million for the three months ended September 30, 2016 and 2015, respectively. The decrease in interest income was mainly due to approximately $30,000 short term investment held in a financial investment company on September 30, 2016 as opposed to $5.2 million balance held on September 30, 2015. Approximately $0.2 million of interest expense was recorded for each of the three months ended September 30, 2016 and 2015, respectively, and approximately $0.2 million and $0.1 million of finance expense was recorded for the three months ended September 30, 2016 and 2015, respectively.

Provision for Income Taxes. We did not incur provision for income for the three months ended September 30, 2016 and 2015 as we did not generate any income for tax provision and provided 100% allowance from net operating losses on deferred tax assets.

Net Loss. We incurred net loss of approximately $5.3 million for the three months ended September 30, 2016, as compared to a net income of approximately $1.1 million for the three months ended September 30, 2015, a negative change in the amount of $4.2 million. Such change was the result of the combination of the changes as discussed above.

Liquidity and Capital Resources

As of September 30, 2016, we had cash and cash equivalents of approximately $8.2 million and restricted cash of approximately $4.6 million, which was held by subsidiaries and VIEs outside the U.S in its entirety. We would be required to accrue and pay U.S. taxes if we were to repatriate these funds. Any company which is registered in mainland China must apply to the State Foreign Exchange Administration for approval in order to remit foreign currency to any foreign country. We currently do not intend to repatriate to the U.S. the cash and short-term investments held by our foreign subsidiaries. However, if we were to repatriate funds to the U.S., we would assess the feasibility and plan any transfer in accordance with foreign exchange regulations, taking into account tax consequences. As we conduct all of our operations in China, the inability to convert cash and short-term investments held in RMB to other currencies should not affect our liquidity.

In assessing our liquidity, we monitor and analyze our cash on-hand and our operating and capital expenditure commitments. Our liquidity needs are to meet our working capital requirements, operating expenses and capital expenditure obligations.

We engage in the production of advanced construction materials for large scale infrastructure, commercial and residential developments. Our business is capital intensive and we are highly leveraged. Debt financing in the form of short term bank loans, loans from related parties and bank acceptance notes, have been utilized to finance our working capital requirements and the capital expenditures. Due to recurring losses, working capital was approximately $11.6 million as of September 30, 2016 as compared to $16.4 million as of June 30, 2016. As of September 30, 2016, cash on-hand balances of approximately $8.2 million and restricted cash balance of approximately $4.6 million with the remaining current assets are mainly composed of accounts receivables, other receivables, and prepayments and advances.

Although we believe that we can realize our current assets, our ability to repay our current obligations will depend on the future realization of our current assets. Management has considered its historical experience, the economy, trends in the construction industry, the expected collectability of the accounts and other receivables and the realization of the prepayments on inventory and provided for an allowance for doubtful accounts as of September 30, 2016. We expect to realize the balances net of allowance within the normal operating cycle of a twelve month period. If we are unable to realize our current assets within the normal operating cycle of twelve months period, we may have to consider its available source of funds through the following:

  • Financial support and credit guarantee commitments from our shareholders.

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  • Other available sources of financing from PRC banks and other financial institutions given our credit history

Based on the above considerations, our management is of the opinion that we have sufficient funds to meet our working capital requirements and debt obligations as they become due. However, there is no assurance that management will be successful in their plan. There are a number of factors that could potentially arise that could result in shortfalls to the Company’s plan, such as the demand for our products, economic conditions, the competitive pricing in the concrete-mix industry, our operating results not continuing to deteriorate and our bank and shareholders being able to provide continued support.

The following table provides summary information about our net cash flow for financial statement periods presented in this report:

    For the three months ended  
    September 30,  
    2016     2015  
Net cash provided by operating activities $  3,594,609   $  7,504,009  
Net cash used in investing activities   (67,777 )   -  
Net cash provided by (used in) financing activities   3,708,123     (8,776,939 )
Effect of foreign currency translation on cash and cash equivalents   (7,416 )   (88,448 )
Net change in cash $  7,227,539   $  (1,361,378 )

Principal demands for liquidity are for working capital and general corporate purposes.

Operating Activities. Net cash provided by operating activities totaled approximately $3.6 million for the three months ended September 30, 2016, which was primarily attributable to the net loss adjusted to reconcile to net cash provided by operating activities of $2.7 million, primarily including adjustments for $0.3 million of depreciation, $0.3 million of stock-based compensation expense, and $2.1 million provision for doubtful accounts. Net cash from changes in operating assets and liabilities resulted in a net cash inflow of approximately $6.2 million, which mainly included cash inflow for reduction in inventories of $0.3 million, collection of other receivable of $6.3 million, realization of prepayments and advances of $3.2 million and additional accounts payable of $4.5 million, and was primarily offset by additional accounts receivable of $4.6 million, reduction of customer deposits of approximately $3.1 million and reduction of accrued liabilities of $0.4 million.

We are making improvements in our cash inflows from operating activities which will be accompanied by greater working capital needs for our operations.

Investing Activities. Net cash used in investing activities was approximately $68,000 for the three months ended September 30, 2016, which was primarily attributable to approximately a $30,000 investment in short term investments and approximately $38,000 to purchase of equipment.

Financing Activities. Net cash provided by financing activities totaled approximately $3.7 million for the three months ended September 30, 2016, which was primarily attributable to $4.5 million cash proceeds from bank loans and bank guarantees, $11.5 million proceeds from notes payable and $0.1 million borrowing from shareholders, and was offset by $3.0 million for repayments of bank loans and bank guarantees, $9.0 for repayments of notes payable and $0.5 million increase in restricted cash.

Cash and cash equivalents. As of September 30, 2016, we had cash and cash equivalents of approximately $8.2 million as compared to approximately $1.0 million as of June 30, 2016. We believe that our cash and revenues from ongoing operations, in addition to closely managing our accounts payable and accounts receivable and the ability to obtain loan financing, is sufficient to meet our liquidity and capital requirements for all of our ongoing operations. However, we may need to raise additional capital if we undertake any plan for expansion.

Loan Facilities

We had a total of approximately $18.0 million and $16.6 million outstanding on loans and credit facilities as of September 30, 2016 and June 30, 2016, respectively. See Note 8 to our unaudited condensed consolidated financial statements included elsewhere in this report.

Critical Accounting Policies and Estimates

While our significant accounting policies are more fully described in Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this report, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis:

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Principles of consolidation

The accompanying unaudited condensed consolidated financial statements include the financial statements of China ACM and its wholly owned subsidiaries, BVI-ACM, China-ACMH, its variable interest entity Xin Ao and its subsidiaries (collectively, the “Company”). All significant inter-company transactions and balances have been eliminated in consolidation. In accordance with FASB ASC 810, Consolidation of Variable Interest Entities, variable interest entities, or 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 the 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. In connection with the adoption of this ASC810, the Company concludes that Xin Ao is a VIE and China ACM is the primary beneficiary. The financial statements of Xin Ao and its subsidiaries are then consolidated with China ACM’s financial statements.

Use of estimates and assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“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 financial statements, and the reported amounts of revenues and expenses during the reporting periods. The significant estimates and assumptions made in the preparation of the Company’s unaudited condensed consolidated financial statements include deferred income taxes, allowance for doubtful accounts, deferred stock-based compensation, the fair value and useful lives of property, plant and equipment. Actual results could be materially different from those estimates.

Revenue recognition

Revenue is realized or realizable and earned when four criteria are met:

  • Persuasive evidence of an arrangement exists (the Company considers its sales contracts to be pervasive evidence of an arrangement);
  • Delivery has occurred;
  • The seller’s price to the buyer is fixed or determinable; and
  • Collectability of payment is reasonably assured.

The Company sells its concrete products primarily to major local construction companies. Sales agreements are signed with each customer. The agreements list all terms and conditions with the exception of delivery date and quantity, which are evidenced separately in purchase orders. The purchase price of products is fixed in the agreement and customers are not permitted to renegotiate after the contracts have been signed. The agreements include a cancellation clause if the Company or the customers breach the contract terms specified in the agreement.

The Company recognizes revenue when title and ownership of the goods are transferred upon shipment to the customer by the Company and collectability of payment is reasonably assured.

The Company includes the shipping and handling fee in both revenue and cost of revenue.

Financial instruments

US GAAP regarding fair value of financial instruments and related fair value measurements define fair value, establish a three-level valuation hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The three levels of inputs are defined as follows:

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets;

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument;

Level 3 inputs to the valuation methodology are unobservable.

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Cash, restricted cash, investments, accounts receivable, other assets, short term loans, accounts payable, and accrued expenses and current capital lease obligations qualify as financial instruments, and their carrying amounts are reported in the consolidated balance sheets at face value or cost, which approximate fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest.

Accounts receivable

During the normal course of business, we extends unsecured credit to its customers. Accounts are considered past due after 30 days. In establishing the required allowance for doubtful accounts, management considers the historical experience, the economy, trends in the construction industry, and the expected collectability of the overdue receivable. Management reviews its accounts receivable each reporting period to determine if the allowance for doubtful accounts is adequate. An estimate for doubtful accounts is recorded when collection of the full amount is no longer probable. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovering is considered remote. We provide a provision of 15% of allowance for doubtful accounts for accounts receivable balance that are past due more than 180 days but less than one year, 40% of allowance for doubtful accounts for accounts receivable past due from one to two years, 75% of allowance for doubtful accounts for accounts receivable past due beyond two years, 100% of allowance for doubtful accounts for accounts receivable past due beyond three years, plus additional amount as necessary, which our collection department had determined the collection of the full amount is remote with the approval from our management to provide 100% provision allowance for doubtful accounts. Our management have continued to evaluate the reasonableness of the valuation allowance policy and update it if necessary.

Accounting for long-lived assets

We classify our long-lived assets into: (i) machinery and equipment; (ii) transportation equipment; (iii) office and equipment; and (iv) buildings and improvements.

Long-lived assets held and used by us are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be fully recoverable. It is possible that these assets could become impaired as a result of technology or other industry changes. If circumstances require a long-lived asset or asset group to be tested for possible impairment, we first compare undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

We make various assumptions and estimates regarding estimated future cash flows and other factors in determining the fair values of the respective assets. We use set criteria that are reviewed and approved by various levels of management, and estimates the fair value of the asset or asset group by using discounted cash flow analyses. If these estimates or their related assumptions change in the future, there may be a requirement to record impairment charges for the underlying assets at such time. Any such resulting impairment charges could be material to our results of operations.

If the value of an asset is determined to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or the fair value, less disposition costs.

Due to recurring losses, the deterioration of the concrete-mix industry in the city of Beijing, PRC and because of competitive pricing pressure, we have performed an impairment analysis and determined its long-lived assets are impaired. As a result, we recorded an impairment charge of $2.6 million for the year ended June 30, 2016. These charges were related to the impairment of our transportation equipment and plant and machinery. The loss was determined using Level 3 inputs. There was no impairment charge for the three months ended September 30, 2016 and 2015.

We used the discounted cash flows model to determine the fair value of these assets. The key assumptions that were included in the model are the estimated revenue and purchase price of our raw materials based on our historical experience and current market demand and discount rate. We believed these assumptions provided us the best estimates of projecting our future cash flows on these assets, net of any related cash outflow of our cost, expenses and taxes in related to these revenues. Potential future events might occur, which will further reduce the current selling price of our inventory sold or increase our cost that are associated with our revenues that could result in a future impairment charge.

In addition, competitive pricing pressure and changes in interest rates could materially and adversely affect the Company’s estimates of future net cash flows to be generated by the long-lived assets, and thus could result in future impairment losses

27


Income taxes

We accounts for income taxes in accordance with ASC 740, Income Taxes, which requires us to use the assets and liability method of accounting for income taxes. Under the assets and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carry forward. Under this accounting standard, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized.

ASC 740-10, Accounting for Uncertainty in Income Taxes, defines uncertainty in income taxes and the evaluation of a tax position as a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred.

United States federal, state and local income tax returns prior to 2013 are not subject to examination by any applicable tax authorities.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.

Recently issued accounting pronouncements

Refer to Note 2 of the unaudited condensed consolidated financial statements for a discussion of recent accounting standards and pronouncements.

Interest Rate Risk

At times when we have short-term loans outstanding, we are exposed to interest rate risk due primarily to our short-term bank loans. Although the interest rates for our short- term loans are typically fixed for the terms of the loans, the terms are typically twelve months and interest rates are subject to change upon renewal. The interest rates are approximately 6.0% for RMB bank loans with a term of twelve months or less.

Credit Risk

The Company is exposed to credit risk from its cash in bank and fixed deposits, and accounts and note receivable, other receivables and advances on equipment purchases. The credit risk on cash in bank and fixed deposits is limited because the counterparties are recognized financial institutions. However, the Company’s cash in bank deposited in the financial institutions in the PRC is not insured. Accounts and note receivable, other receivables and advances on inventory purchases are subjected to credit evaluations. An allowance has been made for estimated unrecoverable amounts which have been determined by reference to past default experience and the current economic environment.

Foreign Exchange Risk

The value of the RMB against the U.S. dollar and other currencies is affected by, among other things, changes in China’s political and economic conditions. The RMB does not fluctuate with 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 RMB may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term. In August 2015, China’s currency dropped by a cumulative 4.4% against the U.S. dollar on hopes of boosting the domestic economy, making Chinese exports cheaper and imports into China more expensive by that amount. The effect on trade can be substantial. The trend of depreciation of RMB continued in the year 2016. Compared with the lowest point from RMB versus USD in 2015, RMB has depreciated by 9.1% compared to the exchange rate as of September 30, 2016. Moreover, it is possible that in the future, PRC authorities may lift restrictions on fluctuations in the RMB exchange rate and lessen intervention in the foreign exchange market.

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Because substantially all of our earnings and cash assets are denominated in RMB, but our reporting currency is the U.S. dollar, fluctuations in the exchange rate between the U.S. dollar and the RMB will affect our balance sheet and our earnings per share in U.S. dollars. In addition, appreciation or depreciation in the value of the RMB relative to the U.S. dollar would affect our financial results reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. Fluctuations in the exchange rate will also affect the relative value of any dividend we issue in the future that will be exchanged into U.S. dollars and earnings from, and the value of, any dollar-denominated investments we make in the future.

Very limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not be able to successfully hedge our exposure at all. In addition, our foreign currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currencies.

Most of the transactions of the Company are settled in RMB and U.S. dollars. In the opinion of the directors, the Company is not exposed to significant foreign currency risk.

Inflation

Inflationary factors, such as increases in the cost of raw materials and overhead costs, could impair our operating results. Inflation has had a material impact on our financial position or results of operations for the three months ended September 30, 2016, a high rate of inflation in the future may have a continued adverse effect on our ability to maintain current levels of gross margin and selling, general and administrative expenses as a percentage of sales revenue if the selling prices of our products do not increase with these increased costs.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures. The term “disclosure controls and procedures,” as defined by regulations of the SEC, means controls and other procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit to the SEC under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit to the SEC under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions to be made regarding required disclosure. Each of our Chief Executive Officer and our Interim Chief Financial Officer have evaluated the design and operating effectiveness of our disclosure controls and procedures as of September 30, 2016. Based upon their evaluation, these executive officers have concluded that our disclosure controls and procedures were not effective as of September 30, 2016, due to the ineffective internal controls over financial reporting that stemmed from the fact that we do not have any full-time accounting personnel who have U.S. GAAP experience. Despite the material weakness reported above, our management believes that our unaudited condensed consolidated financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented due to the fact that we have retained a consultant who has U.S. GAAP experience to assist us in the preparation of our unaudited condensed consolidated financial statements.

Changes in Internal Control Over Financial Reporting

During the quarter ended September 30, 2016, there were no changes in our internal control over financial reporting identified in connection with the evaluation performed during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

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PART II

OTHER INFORMATION

ITEM 6. EXHIBITS

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

31


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 14, 2016

CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC.

 

  By: /s/ Xianfu Han
    Xianfu Han, Chief Executive Officer
    (Principal Executive Officer)
     
  By: /s/ Weili He
    Weili He, Interim Chief Financial Officer
    (Principal Financial Officer and Principal Accounting
    Officer)

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EXHIBIT INDEX

Exhibit No. Description
   
31.1

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

31.2

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

32.1

Certifications of Chief Executive Officer and Interim Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

33


EX-31.1 2 exhibit31-1.htm EXHIBIT 31.1 China Advanced Construction Materials Group, Inc. - Exhibit 31.1 - Filed by newsfilecorp.com

Exhibit 31.1

CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002

I, Xianfu Han, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of China Advanced Construction Materials Group, 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 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) 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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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 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 the registrant’s board of directors (or persons performing the equivalent functions):


  a)

all significant deficiencies and material weaknesses in the design or operation of internal control 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 14, 2016

  /s/ Xianfu Han
  Xianfu Han
  Chief Executive Officer
  (Principal Executive Officer)


EX-31.2 3 exhibit31-2.htm EXHIBIT 31.2 China Advanced Construction Materials Group, Inc. - Exhibit 31.2 - Filed by newsfilecorp.com

Exhibit 31.2

CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002

I, Weili He, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of China Advanced Construction Materials Group, 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 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) 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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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 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 the registrant’s board of directors (or persons performing the equivalent functions):


  a)

all significant deficiencies and material weaknesses in the design or operation of internal control 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 14, 2016

  /s/ Weili He
  Weili He
  Interim Chief Financial Officer
  (Principal Financial Officer and
  Principal Accounting Officer)


EX-32.1 4 exhibit32-1.htm EXHIBIT 32.1 China Advanced Construction Materials Group, Inc. - Exhibit 32.1 - Filed by newsfilecorp.com

Exhibit 32.1

CERTIFICATIONS 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, each in his capacity as an executive officer of CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, 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 quarter ended September 30, 2016 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

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

IN WITNESS WHEREOF, each of the undersigned has executed this statement this 14th day of November, 2016.

  /s/ Xianfu Han
  Xianfu Han
  Chief Executive Officer
  (Principal Executive Officer)
   
  /s/ Weili He
  Weili He
  Interim Chief Financial Officer
  (Principal Financial Officer and
  Principal Accounting Officer)

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.

The forgoing certification is being furnished to the Securities and Exchange Commission pursuant to § 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.


EX-101.INS 5 cadc-20160930.xml XBRL INSTANCE FILE --06-30 cadc China Advanced Construction Materials Group, Inc 2016-09-30 0001392363 No Smaller Reporting Company No 10-Q false 2387658 Yes 2017 Q1 0001392363 2016-11-08 0001392363 2016-07-01 2016-09-30 0001392363 2016-09-30 0001392363 2016-06-30 0001392363 2015-07-01 2015-09-30 0001392363 2015-06-30 0001392363 2015-09-30 shares iso4217:USD iso4217:USD shares pure utr:Y iso4217:CNY utr:D 8234509 1006970 4569781 4097621 29984 0 38998762 40288552 690852 1023471 1440629 7093030 33796223 37209699 87760740 90719343 4424310 4709794 92185050 95429137 17990400 16555440 20539040 18060480 32553759 31234091 1143642 4272144 440163 600205 1793817 1491125 1623728 1992214 90812 95708 76175361 74301407 0 0 0 0 2388 2181 38662377 38373584 -36525603 -31204831 6248350 6248357 7622177 7708439 16009689 21127730 92185050 95429137 0.001 0.001 1000000 1000000 0 0 0 0 0.001 0.001 74000000 74000000 2387658 2180799 2387658 2180799 7456862 13472831 8409274 11855331 -952412 1617500 2085337 894784 1862928 1544688 79165 130446 -4979842 -952418 86201 7080 8401 171836 197217 178675 238315 139974 -340930 -139733 -5320772 -1092151 0 0 -5320772 -1092151 -86262 -1583107 -5407034 -2675258 2272986 2180799 -2.34 -0.50 305121 513775 289000 311719 4645427 3073 -328810 -12072 -6332111 258194 -3183553 -6362149 4518381 3367535 -3113460 -512897 -158050 -1620638 156109 0 -361577 -618893 -4527 147821 3594609 7504009 29999 0 37778 0 -67777 0 4499820 3192000 2999880 12129600 11549538 14922600 8999640 18114600 146586 58466 0 74831 -488301 3369026 3708123 -8776939 -7416 -88448 7227539 -1361378 2691915 1330537 150783 206905 0 0 0 220837 0 203790 0 478800 3076804 0 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Note 1 &#8211; Organization and description of business</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> China Advanced Construction Materials Group, Inc. (&#8220;CADC Delaware&#8221;) was incorporated in the State of Delaware on February 15, 2007. CADC Delaware, through its 100% owned subsidiaries and its variable interest entities (&#8220;VIEs&#8221;), is engaged in producing general ready-mix concrete, customized mechanical refining concrete, and other concrete-related products that are mainly sold in the People&#8217;s Republic of China (&#8220;PRC&#8221;). CADC Delaware has a wholly owned subsidiary in the British Virgin Islands, Xin Ao Construction Materials, Inc. (&#8220;BVI-ACM&#8221;), which is a holding company with no operations. BVI-ACM has a wholly owned foreign enterprise, Beijing Ao Hang Construction Material Technology Co., Ltd. (&#8220;China-ACMH&#8221;), and China-ACMH has contractual agreements with an entity which is considered as a VIE. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">On August 1, 2013, CADC Delaware consummated a reincorporation merger with its newly formed wholly owned subsidiary, China Advanced Construction Materials Group, Inc. (&#8220;China ACM&#8221;), a Nevada corporation, with CADC Delaware merging into China ACM and China ACM being the surviving company, for the purpose of changing CADC Delaware&#8217;s state of incorporation from Delaware to Nevada.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Beijing XinAo Concrete Group (&#8220;Xin Ao&#8221;), a VIE, is engaged in the business of consulting, concrete mixing and equipment rental services. Xin Ao has five wholly owned subsidiaries (collectively, and with &#8220;Xin Ao&#8221;, the &#8220;VIEs&#8221;) in the PRC: (1) Beijing Heng Yuan Zheng Ke Technical Consulting Co., Ltd (&#8220;Heng Yuan Zheng Ke&#8221;), (2) Beijing Hong Sheng An Construction Materials Co., Ltd (&#8220;Hong Sheng An&#8221;), (3) Beijing Heng Tai Hong Sheng Construction Materials Co., Ltd (&#8220;Heng Tai&#8221;), (4) Da Tong Ao Hang Wei Ye Machinery, Equipment Rental Co., Ltd (&#8220;Da Tong&#8221;) and (5) Luan Xian Heng Xin Technology Co., Ltd (&#8220;Heng Xin&#8221;). There were no operations since establishment of these five entities and the Company is not planning to pursue operations for these entities. As a result, the Company has determined to dissolve these entities between March 2016 and June 2016. As of the date of this report, Da Tong and Heng Xi have already been dissolved and the other three entities are still under the administrative process of dissolution.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">China ACM, BVI-ACM, China-ACMH and the VIEs are collectively referred to as the &#8220;Company.&#8221;</p> 1.00 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Note 2 &#8211; Summary of significant accounting policies</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Liquidity</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> In assessing the Company&#8217;s liquidity, the Company monitors and analyzes its cash on-hand and its operating and capital expenditure commitments. The Company&#8217;s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company engages in the production of advanced construction materials for large scale infrastructure, commercial and residential developments. The Company&#8217;s business is capital intensive and the Company is highly leveraged. Debt financing in the form of short term bank loans, loans from related parties and bank acceptance notes, have been utilized to finance the working capital requirements and the capital expenditures of the Company. Due to recurring losses, the Company&#8217;s working capital was approximately $11.6 million as of September 30, 2016 as compared to $16.4 million as of June 30, 2016. As of September 30, 2016, the Company had cash on-hand of approximately $8.2 million and restricted cash balances of approximately $4.6 million with the remaining current assets mainly composed of accounts receivables, other receivables and prepayments and advances.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Although the Company believes that it can realize its current assets in the normal course of business, the Company&#8217;s ability to repay its current obligations will depend on the future realization of its current assets. Management has considered its historical experience, the economy, trends in the construction industry, the expected collectability of the accounts and other receivables and the realization of the prepayments on inventory, and provided for an allowance for doubtful accounts as of September 30, 2016. The Company expects to realize the balances net of the allowance within the normal operating cycle of a twelve month period. If the Company is unable to realize its current assets within the normal operating cycle of a twelve month period, the Company may have to consider its available source of funds through the following:</p> <ul style="TEXT-ALIGN: justify"> <li style="font-family: times new roman,times,serif; font-size: 10pt;"> Financial support and credit guarantee commitment from the Company&#8217;s majority shareholders (See Note 9 - Related party transactions).</li> <li style="font-family: times new roman,times,serif; font-size: 10pt;"> Other available sources of financing from PRC banks and other financial institutions given the Company&#8217;s credit history.</li> </ul> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Based on the above considerations, the Company&#8217;s management is of the opinion that it has sufficient funds to meet the Company&#8217;s working capital requirements and debt obligations as they become due. However, there is no assurance that management will be successful in their plan. There are a number of factors that could potentially arise that could result in shortfalls to the Company&#8217;s plan, such as the demand for the Company&#8217;s products, economic conditions, the competitive pricing in the concrete-mix industry, the Company&#8217;s operating results continuing to deteriorate and the Company&#8217;s bank and shareholders not being able to provide continued support.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Basis of presentation</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (&#8220;US GAAP&#8221;) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (&#8220;SEC&#8221;). These financial statements include the accounts of all directly, indirectly owned subsidiaries and variable interest entities listed below. All material intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary to give a fair presentation have been included. Interim results are not necessarily indicative of results of a full year. The information in this Form 10-Q should be read in conjunction with information included in the annual report for the fiscal year ended June 30, 2016 on Form 10-K filed with the SEC on September 28, 2016 and have been consistently applied.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Principles of consolidation</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The unaudited condensed consolidated financial statements reflect the activities of the following subsidiaries and VIEs. All material intercompany transactions have been eliminated.</p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="70%"> <tr valign="top"> <td align="left"> &#160;</td> <td align="left" width="2%"> &#160;</td> <td align="left" width="30%"> &#160;</td> <td align="center" width="2%"> &#160;</td> <td align="center" width="30%"> Ownership</td> </tr> <tr valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 1px solid"> Subsidiaries and VIEs</td> <td align="right" width="2%"> &#160;</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="30%"> Place incorporated</td> <td align="center" width="2%"> &#160;</td> <td align="center" style="BORDER-BOTTOM: #000000 1px solid" width="30%"> percentage</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> BVI-ACM</td> <td align="right" bgcolor="#e6efff" width="2%"> &#160;</td> <td align="right" bgcolor="#e6efff" width="30%"> British Virgin Island</td> <td align="right" bgcolor="#e6efff" width="2%"> &#160;</td> <td align="right" bgcolor="#e6efff" width="30%"> 100%</td> </tr> <tr valign="top"> <td align="left"> China-ACMH</td> <td align="right" width="2%"> &#160;</td> <td align="right" width="30%"> Beijing, China</td> <td align="right" width="2%"> &#160;</td> <td align="right" width="30%"> 100%</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Xin Ao</td> <td align="right" bgcolor="#e6efff" width="2%"> &#160;</td> <td align="right" bgcolor="#e6efff" width="30%"> Beijing, China</td> <td align="right" bgcolor="#e6efff" width="2%"> &#160;</td> <td align="right" bgcolor="#e6efff" width="30%"> VIE</td> </tr> <tr valign="top"> <td align="left"> Heng Yuan Zheng Ke</td> <td align="right" width="2%"> &#160;</td> <td align="right" width="30%"> Beijing, China</td> <td align="right" width="2%"> &#160;</td> <td align="right" width="30%"> VIE</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Hong Sheng An</td> <td align="right" bgcolor="#e6efff" width="2%"> &#160;</td> <td align="right" bgcolor="#e6efff" width="30%"> Beijing, China</td> <td align="right" bgcolor="#e6efff" width="2%"> &#160;</td> <td align="right" bgcolor="#e6efff" width="30%"> VIE</td> </tr> <tr valign="top"> <td align="left"> Heng Tai</td> <td align="right" width="2%"> &#160;</td> <td align="right" width="30%"> Beijing, China</td> <td align="right" width="2%"> &#160;</td> <td align="right" width="30%"> VIE</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Da Tong*</td> <td align="right" bgcolor="#e6efff" width="2%"> &#160;</td> <td align="right" bgcolor="#e6efff" width="30%"> Datong, China</td> <td align="right" bgcolor="#e6efff" width="2%"> &#160;</td> <td align="right" bgcolor="#e6efff" width="30%"> VIE</td> </tr> <tr valign="top"> <td align="left"> Heng Xin**</td> <td align="right" width="2%"> &#160;</td> <td align="right" width="30%"> Luanxian, China</td> <td align="right" width="2%"> &#160;</td> <td align="right" width="30%"> VIE</td> </tr> </table> </div> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> *Dissolved in August 2016 ** Dissolved in November 2016</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> 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 the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIEs. The primary beneficiary is required to consolidate the VIEs for financial reporting purposes.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Management makes ongoing assessments of whether China ACM is the primary beneficiary of Xin Ao and its subsidiaries. Based upon a series of contractual arrangements, the Company determined that Xin Ao and its subsidiaries are VIEs subject to consolidation and that China ACM is the primary beneficiary. Accordingly, the accounts of Xin Ao and its subsidiaries are consolidated with those of China ACM.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The carrying amount of the VIEs&#8217; assets and liabilities are as follows:</p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left"> &#160;</td> <td align="left" width="1%"> &#160;</td> <td align="center" width="22%"> September 30,</td> <td align="center" width="2%"> &#160;</td> <td align="center" width="1%"> &#160;</td> <td align="center" width="22%"> June 30,</td> <td align="left" width="2%"> &#160;</td> </tr> <tr valign="top"> <td align="left"> &#160;</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="1%"> &#160;</td> <td align="center" style="BORDER-BOTTOM: #000000 1px solid" width="22%"> 2016</td> <td align="center" width="2%"> &#160;</td> <td align="center" style="BORDER-BOTTOM: #000000 1px solid" width="1%"> &#160;</td> <td align="center" style="BORDER-BOTTOM: #000000 1px solid" width="22%"> 2016</td> <td align="left" width="2%"> &#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> &#160; &#160;Current assets</td> <td align="left" bgcolor="#e6efff" width="1%"> $</td> <td align="right" bgcolor="#e6efff" width="22%"> 87,571,976</td> <td align="left" bgcolor="#e6efff" width="2%"> &#160;</td> <td align="left" bgcolor="#e6efff" width="1%"> $</td> <td align="right" bgcolor="#e6efff" width="22%"> 90,518,451</td> <td align="left" bgcolor="#e6efff" width="2%"> &#160;</td> </tr> <tr valign="top"> <td align="left"> &#160; &#160;Property, plant and equipment</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="1%"> &#160;</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="22%"> 4,424,310</td> <td align="left" width="2%"> &#160;</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="1%"> &#160;</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="22%"> 4,709,794</td> <td align="left" width="2%"> &#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Total assets</td> <td align="left" bgcolor="#e6efff" width="1%"> &#160;</td> <td align="right" bgcolor="#e6efff" width="22%"> 91,996,286</td> <td align="left" bgcolor="#e6efff" width="2%"> &#160;</td> <td align="left" bgcolor="#e6efff" width="1%"> &#160;</td> <td align="right" bgcolor="#e6efff" width="22%"> 95,228,245</td> <td align="left" bgcolor="#e6efff" width="2%"> &#160;</td> </tr> <tr> <td> &#160;</td> <td width="1%"> &#160;</td> <td width="22%"> &#160;</td> <td width="2%"> &#160;</td> <td width="1%"> &#160;</td> <td width="22%"> &#160;</td> <td width="2%"> &#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> &#160; &#160;Liabilities</td> <td align="left" bgcolor="#e6efff" width="1%"> &#160;</td> <td align="right" bgcolor="#e6efff" width="22%"> (74,137,991</td> <td align="left" bgcolor="#e6efff" width="2%"> )</td> <td align="left" bgcolor="#e6efff" width="1%"> &#160;</td> <td align="right" bgcolor="#e6efff" width="22%"> (72,579,677</td> <td align="left" bgcolor="#e6efff" width="2%"> )</td> </tr> <tr> <td> &#160;</td> <td width="1%"> &#160;</td> <td width="22%"> &#160;</td> <td width="2%"> &#160;</td> <td width="1%"> &#160;</td> <td width="22%"> &#160;</td> <td width="2%"> &#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> &#160; &#160;Intercompany payables*</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="1%"> &#160;</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="22%"> (7,297,139</td> <td align="left" bgcolor="#e6efff" width="2%"> )</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="1%"> &#160;</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="22%"> (7,355,650</td> <td align="left" bgcolor="#e6efff" width="2%"> )</td> </tr> <tr> <td> &#160;</td> <td width="1%"> &#160;</td> <td width="22%"> &#160;</td> <td width="2%"> &#160;</td> <td width="1%"> &#160;</td> <td width="22%"> &#160;</td> <td width="2%"> &#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Total liabilities</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="1%"> &#160;</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="22%"> (81,435,130</td> <td align="left" bgcolor="#e6efff" width="2%"> )</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="1%"> &#160;</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="22%"> (79,935,327</td> <td align="left" bgcolor="#e6efff" width="2%"> )</td> </tr> <tr> <td> &#160;</td> <td width="1%"> &#160;</td> <td width="22%"> &#160;</td> <td width="2%"> &#160;</td> <td width="1%"> &#160;</td> <td width="22%"> &#160;</td> <td width="2%"> &#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Net assets</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" width="1%"> $</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" width="22%"> 10,561,156</td> <td align="left" bgcolor="#e6efff" width="2%"> &#160;</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" width="1%"> $</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" width="22%"> 15,292,918</td> <td align="left" bgcolor="#e6efff" width="2%"> &#160;</td> </tr> </table> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> * Payables to China - ACMH and BVI-ACM are eliminated upon consolidation.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Use of estimates and assumptions</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The preparation of 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 financial statements, and the reported amounts of revenues and expenses during the reporting periods. The significant estimates and assumptions made in the preparation of the Company&#8217;s unaudited condensed consolidated financial statements include deferred income taxes, allowance for doubtful accounts, deferred stock-based compensation, the fair value and useful lives of property, plant and equipment. Actual results could be materially different from those estimates.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Foreign currency translation</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The reporting currency of the Company is the U.S. dollar. The functional currency of China ACM and BVI-ACM is the U.S. dollar. China-ACMH and its VIEs use their local currency Chinese Renminbi (&#8220;RMB&#8221;) as their functional currency. In accordance with the US GAAP guidance on Foreign Currency Translation, the Company&#8217;s results of operations and cash flows are translated at the average exchange rates during the period, assets and liabilities are translated at the exchange rates at the balance sheet dates, and equity is translated at historical exchange rates. As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Asset and liability accounts at September 30 and June 30, 2016, were translated at RMB6.67 to $1.00 and RMB6.64 to $1.00, respectively. The average translation rates applied to the consolidated statements of operations and comprehensive loss and cash flows for the three months ended September 30, 2016 and 2015 were RMB6.67 and RMB6.27 to $1.00, respectively.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Translation gains (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. There were no foreign currency transaction gains or losses for each of the three months ended September 30, 2016 and 2015. The effects of foreign currency translation adjustments are included in shareholders&#8217; equity as a component of accumulated other comprehensive income.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Revenue recognition</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Revenue is realized or realizable and earned when four criteria are met:</p> <ul style="TEXT-ALIGN: justify"> <li style="font-family: times new roman,times,serif; font-size: 10pt;"> Persuasive evidence of an arrangement exists (the Company considers its sales contracts to be pervasive evidence of an arrangement);</li> </ul> <ul style="TEXT-ALIGN: justify"> <li style="font-family: times new roman,times,serif; font-size: 10pt;"> <p style="margin-bottom: 12px; font-family: times new roman,times,serif; font-size: 10pt;"> Delivery has occurred;</p> </li> <li style="font-family: times new roman,times,serif; font-size: 10pt;"> <p style="margin-bottom: 12px; font-family: times new roman,times,serif; font-size: 10pt;"> The seller&#8217;s price to the buyer is fixed or determinable; and</p> </li> <li style="font-family: times new roman,times,serif; font-size: 10pt;"> <p style="margin-bottom: 12px; font-family: times new roman,times,serif; font-size: 10pt;"> Collectability of payment is reasonably assured.</p> </li> </ul> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company sells its concrete products primarily to major local construction companies. Sales agreements are signed with each customer. The agreements list all terms and conditions with the exception of delivery date and quantity, which are evidenced separately in purchase orders. The purchase price of products is fixed in the agreement and customers are not permitted to renegotiate after the contracts have been signed. The agreements include a cancellation clause if the Company or customers breach the contract terms specified in the agreement.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company recognizes revenue when title and ownership of the goods are transferred upon shipment to the customer by the Company and collectability of payment is reasonably assured.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company includes the shipping and handling fee in both revenue and cost of revenue.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Financial instruments</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> US GAAP regarding fair value of financial instruments and related fair value measurements define fair value, establish a three-level valuation hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The three levels of inputs are defined as follows:</p> <p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;"> Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets;</p> <p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;"> Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument;</p> <p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;"> Level 3 inputs to the valuation methodology are unobservable.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Current assets and current liabilities are reported in the consolidated balance sheets at face value or cost, which approximate fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Cash and cash equivalents</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company considers all highly liquid investments with the original maturity of three months or less at the date of purchase to be cash equivalents. The Company currently maintains substantially all of its day-to-day operating cash balances with major financial institutions within PRC and US. As of September 30 and June 30, 2016, the Company had deposits in excess of federally insured limits totaling approximately $8.2 million and $0.9 million, respectively.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Restricted cash</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> As of September 30 and June 30, 2016, restricted cash consisted of collateral representing cash deposits for bank guarantees and notes payable.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Accounts receivable</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> During the normal course of business, the Company extends unsecured credit to its customers. Accounts are considered past due after 30 days. In establishing the required allowance for doubtful accounts, management considers the historical experience, the economy, trends in the construction industry and the expected collectability of the overdue receivables. Management reviews its accounts receivable each reporting period to determine if the allowance for doubtful accounts is adequate. An estimate for doubtful accounts is recorded when collection of the full amount is no longer probable. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovering is considered remote. The Company provides a provision of 15% of allowance for doubtful accounts for accounts receivable balance that are past due more than 180 days but less than one year, 40% of allowance for doubtful accounts for accounts receivable past due from one to two years, 75% of allowance for doubtful accounts for accounts receivable past due beyond two years, 100% of allowance for doubtful accounts for accounts receivable past due beyond three years, plus additional amount as necessary, which the Company&#8217;s collection department had determined the collection of the full amount is remote with the approval from the Company&#8217;s management to provide 100% provision allowance for doubtful accounts. The Company&#8217;s management has continued to evaluate the reasonableness of the valuation allowance policy and update it if necessary.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Other receivables</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Other receivables primarily include prepayments to be refunded by our suppliers if the supplies do not meet the Company&#8217;s specification need, advances to employees, due from unrelated entities, VAT tax refunds and other deposits. Management regularly reviews the aging of receivables and changes in payment trends and records allowance when management believes collection of amounts due are at risk. Accounts considered uncollectible are written off against the allowance after exhaustive efforts at collection are made. The Company provides a provision of 5% of allowance for doubtful accounts for other receivables balance that are aged within one year, 50% of allowance for doubtful accounts for other receivables aged from one to two years, 100% of allowance for doubtful accounts for other receivables aged beyond two years.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Inventories</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Inventories consist of raw materials and are stated at the lower of cost or market, as determined using the weighted average cost method. Management compares the cost of inventories with the market value and an allowance is made for writing down the inventory to its market value, if lower than cost. As of September 30 and June 30, 2016, the Company determined that no reserves for obsolescence were necessary.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Prepayments and advances</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Prepayments are funds deposited or advanced to outside vendors for future inventory purchases. As a standard practice in China, many of the Company&#8217;s vendors require a certain amount to be deposited with them as a guarantee that the Company will complete its purchases on a timely basis. This amount is refundable and bears no interest. The Company has legally binding contracts with its vendors, which require any outstanding prepayments to be returned to the Company when the contract ends.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company wrote off approximately $0.1 million on unrealizable prepayments for the three months ended September 30, 2016.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Property, plant and equipment</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Property, plant and equipment are stated at cost. Expenditures for maintenance and repairs are charged to operations as incurred while additions, renewals and improvements are capitalized. Depreciation is provided over the estimated useful life of each class of depreciable assets and is computed using the straight-line method with 5% residual value. Leasehold improvements are amortized over the lesser of estimated useful lives or lease terms, as appropriate.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The estimated useful lives of assets are as follows:</p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="80%"> <tr valign="top"> <td align="left"> &#160;</td> <td align="center" style="BORDER-BOTTOM: #000000 1px solid" width="25%"> Useful life</td> </tr> <tr> <td align="left"> &#160;</td> <td align="center" width="25%"> &#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Transportation equipment</td> <td align="center" bgcolor="#e6efff" width="25%"> 7 - 10 years</td> </tr> <tr> <td align="left"> &#160;</td> <td align="center" width="25%"> &#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Plant and machinery</td> <td align="center" bgcolor="#e6efff" width="25%"> 10 years</td> </tr> <tr> <td align="left"> &#160;</td> <td align="center" width="25%"> &#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Office equipment</td> <td align="center" bgcolor="#e6efff" width="25%"> 5 years</td> </tr> <tr> <td align="left"> &#160;</td> <td align="center" width="25%"> &#160;</td> </tr> <tr> <td align="left" bgcolor="#e6efff"> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;"> Buildings and improvements</p> </td> <td align="center" bgcolor="#e6efff" width="25%"> 3 - 20 years</td> </tr> </table> </div> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Accounting for long-lived assets</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company classifies its long-lived assets into: (i) machinery and equipment; (ii) transportation equipment; (iii) office and equipment; and (iv) buildings and improvements.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be fully recoverable. It is possible that these assets could become impaired as a result of technology or other industry changes. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> If the value of an asset is determined to be impaired, the impairment to be recognized is measured in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or the fair value, less disposition costs.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Due to recurring losses, the deterioration of the concrete-mix industry in the city of Beijing, PRC and competitive pricing pressure, the Company has performed an impairment analysis and determined its long-lived assets were impaired during the year ended June 30, 2016. As a result, the Company recorded an impairment charge of $2.6 million for the year ended June 30, 2016. These charges were related to the impairment of the Company&#8217;s transportation equipment and plant and machinery. The loss was determined using Level 3 inputs (See Note 6). There was no impairment charge for the three months ended September 30, 2016 and 2015.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Competitive pricing pressure and changes in interest rates could materially and adversely affect the Company&#8217;s estimates of future net cash flows to be generated by the long-lived assets, and thus could result in future impairment losses.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Stock-based compensation</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company records stock-based compensation expense at fair value on the grant date and recognizes the expense over the employee's requisite service period. The Company&#8217;s expected volatility assumption is based on the historical volatility of Company&#8217;s stock. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is based on the Company&#8217;s current and expected dividend policy.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Income taxes</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company accounts for income taxes in accordance with ASC 740, &#8220;Income Taxes,&#8221; which requires the Company to use the assets and liability method of accounting for income taxes. Under the assets and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carry forwards. Under this accounting standard, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> ASC 740-10, &#8220;Accounting for Uncertainty in Income Taxes,&#8221; defines uncertainty in income taxes and the evaluation of a tax position as a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. United States federal, state and local income tax returns prior to 2013 are not subject to examination by any applicable tax authorities.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Value Added Tax</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Enterprises or individuals, who sell commodities, engage in repair and maintenance, or import and export goods in the PRC are subject to a value added tax. The standard VAT rate was 6% of gross sales for the Company&#8217;s industry, which was reduced to 3% of gross sales on July 1, 2014. Due to the fact that the Company uses recycled raw materials to manufacture its products, the State Administration of Taxation granted the Company a VAT tax exemption, which expired in June 2015. From July 2015 going forward, the Company is subject to VAT at the reduced rate of 3% of the gross sales price.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Research and development</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Research and development costs are expensed as incurred. The cost of materials and equipment that are acquired or constructed for research and development activities, and have alternative future uses, either in research and development, marketing, or sales, are classified as property and equipment, and depreciated over their estimated useful lives..</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Earnings (loss) per share</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company reports earnings (loss) per share in accordance with the US GAAP, which requires presentation of basic and diluted earnings (loss) per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings (loss) per share excludes dilution and is computed by dividing income (loss) available to common shareholders by the weighted average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts, such as warrants, options, restricted stock based grants and convertible preferred stock, to issue common stock were exercised and converted into common stock. Common stock equivalents having an anti-dilutive effect on earnings per share are excluded from the calculation of diluted earnings per share. For each of the three months ended September 30, 2016 and 2015, diluted loss per share is the same as basic loss per share since the addition of any contingently issuable shares would be anti-dilutive.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Stock dividends or stock splits be accounted for retroactively if the stock dividends or stock splits occur during the period, or retroactively if the stock dividends or stock splits occur after the end of the period but before the release of the financial statements, by considering it outstanding of the entirety of each period presented. Dilution is computed by applying the treasury stock method. 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The amendments provide guidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from Equity Method Investees; (8) Beneficial Interests in Securitization Transactions; and Separately Identifiable Cash Flows and Application of the Predominance Principle. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. Management is evaluating the effect, if any, on the Company&#8217;s consolidated financial statements.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> In October 2016, the FASB has issued Accounting Standards Update (ASU) No. 2016-17, Consolidation (Topic 810): Interests held through related parties that are under common control. The amendments in this ASU require that the reporting entity, in determining whether it satisfies the second characteristic of a primary beneficiary, to include all of its direct variable interests in a VIE and, on a proportionate basis, its indirect variable interests in a VIE held through related parties, including related parties that are under common control with the reporting entity. The amendments are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. Management does not believe the adoption of this ASU would have a material effect on the Company&#8217;s consolidated financial statements.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Reclassifications</u></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications have no effect on the accompanying unaudited condensed consolidated statements of operations and cash flows.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Liquidity</u> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In assessing the Company&#8217;s liquidity, the Company monitors and analyzes its cash on-hand and its operating and capital expenditure commitments. The Company&#8217;s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company engages in the production of advanced construction materials for large scale infrastructure, commercial and residential developments. The Company&#8217;s business is capital intensive and the Company is highly leveraged. Debt financing in the form of short term bank loans, loans from related parties and bank acceptance notes, have been utilized to finance the working capital requirements and the capital expenditures of the Company. Due to recurring losses, the Company&#8217;s working capital was approximately $11.6 million as of September 30, 2016 as compared to $16.4 million as of June 30, 2016. As of September 30, 2016, the Company had cash on-hand of approximately $8.2 million and restricted cash balances of approximately $4.6 million with the remaining current assets mainly composed of accounts receivables, other receivables and prepayments and advances. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Although the Company believes that it can realize its current assets in the normal course of business, the Company&#8217;s ability to repay its current obligations will depend on the future realization of its current assets. Management has considered its historical experience, the economy, trends in the construction industry, the expected collectability of the accounts and other receivables and the realization of the prepayments on inventory, and provided for an allowance for doubtful accounts as of September 30, 2016. The Company expects to realize the balances net of the allowance within the normal operating cycle of a twelve month period. 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However, there is no assurance that management will be successful in their plan. 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These financial statements include the accounts of all directly, indirectly owned subsidiaries and variable interest entities listed below. All material intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary to give a fair presentation have been included. Interim results are not necessarily indicative of results of a full year. 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The significant estimates and assumptions made in the preparation of the Company&#8217;s unaudited condensed consolidated financial statements include deferred income taxes, allowance for doubtful accounts, deferred stock-based compensation, the fair value and useful lives of property, plant and equipment. Actual results could be materially different from those estimates.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Foreign currency translation</u> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The reporting currency of the Company is the U.S. dollar. The functional currency of China ACM and BVI-ACM is the U.S. dollar. China-ACMH and its VIEs use their local currency Chinese Renminbi (&#8220;RMB&#8221;) as their functional currency. 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The Company provides a provision of 15% of allowance for doubtful accounts for accounts receivable balance that are past due more than 180 days but less than one year, 40% of allowance for doubtful accounts for accounts receivable past due from one to two years, 75% of allowance for doubtful accounts for accounts receivable past due beyond two years, 100% of allowance for doubtful accounts for accounts receivable past due beyond three years, plus additional amount as necessary, which the Company&#8217;s collection department had determined the collection of the full amount is remote with the approval from the Company&#8217;s management to provide 100% provision allowance for doubtful accounts. 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It is possible that these assets could become impaired as a result of technology or other industry changes. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. 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As a result, the Company recorded an impairment charge of $2.6 million for the year ended June 30, 2016. These charges were related to the impairment of the Company&#8217;s transportation equipment and plant and machinery. The loss was determined using Level 3 inputs (See Note 6). 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The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is based on the Company&#8217;s current and expected dividend policy.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Income taxes</u> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company accounts for income taxes in accordance with ASC 740, &#8220;Income Taxes,&#8221; which requires the Company to use the assets and liability method of accounting for income taxes. 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The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. 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From July 2015 going forward, the Company is subject to VAT at the reduced rate of 3% of the gross sales price. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Research and development</u> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Research and development costs are expensed as incurred. 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Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts, such as warrants, options, restricted stock based grants and convertible preferred stock, to issue common stock were exercised and converted into common stock. Common stock equivalents having an anti-dilutive effect on earnings per share are excluded from the calculation of diluted earnings per share. For each of the three months ended September 30, 2016 and 2015, diluted loss per share is the same as basic loss per share since the addition of any contingently issuable shares would be anti-dilutive.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Stock dividends or stock splits be accounted for retroactively if the stock dividends or stock splits occur during the period, or retroactively if the stock dividends or stock splits occur after the end of the period but before the release of the financial statements, by considering it outstanding of the entirety of each period presented. Dilution is computed by applying the treasury stock method. 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font-size: 10pt;margin:inherit;">Buildings and improvements</p> </td> <td align="center" bgcolor="#e6efff" width="25%"> 3 - 20 years </td> </tr> </table> 7 10 10 5 3 20 11600000 16400000 8200000 4600000 6.67 1.00 6.64 1.00 6.67 6.27 1.00 8200000 900000 30 0.15 180 0.40 0.75 1.00 1.00 0.05 0.50 1.00 100000 0.05 2600000 0.50 0.06 0.03 0.03 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Note 3 &#8211; Accounts receivable, net</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Accounts receivable, net consisted of the following:</p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left">&#160;</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="center" style="BORDER-BOTTOM: #000000 1px solid" width="22%">September 30, 2016</td> <td align="center" width="2%">&#160;</td> <td align="center" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="center" style="BORDER-BOTTOM: #000000 1px solid" width="22%">June 30, 2016</td> <td align="left" width="2%">&#160;</td> </tr> <tr> <td align="left">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="22%">&#160;</td> <td align="right" width="2%">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="22%">&#160;</td> <td align="right" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Accounts receivable</td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="22%"> 53,254,443 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="22%"> 51,812,683 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> <tr> <td align="left">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="22%">&#160;</td> <td align="right" width="2%">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="22%">&#160;</td> <td align="right" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Less: Allowance for doubtful accounts</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="22%"> (14,255,681 </td> <td align="left" bgcolor="#e6efff" width="2%">)</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="22%"> (11,524,131 </td> <td align="left" bgcolor="#e6efff" width="2%">)</td> </tr> <tr> <td align="left">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="22%">&#160;</td> <td align="right" width="2%">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="22%">&#160;</td> <td align="right" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Total accounts receivable, net</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" width="22%"> 38,998,762 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" width="22%"> 40,288,552 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> </table> <p align="justify" style="font-family: times new roman,times,serif; 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font-size: 10pt;"> <u>Other receivable from sale of Asset Group</u> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On February 29, 2016, the Company terminated an operating lease for its concrete plant in the eastern suburban area of Beijing due to the fact that the plant was not operating at ideal capacity and the Company did not anticipate it would be in the foreseeable future. The Company entered into an agreement with the lessor to terminate its operating lease, which was originally effective from August 18, 2013 to August 17, 2021, and for the sale of certain of the Company&#8217;s assets and liabilities (&#8220;Asset Group&#8221;) at the leased location. Under the agreement, the carrying value of the Asset Group was determined to be RMB13.7 million (approximately $2.1 million), and was settled for RMB11.2 million (approximately $1.7 million). The Company recognized approximately $0.4 million loss from the sale of the Asset Group for the year ended June 30, 2016. 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<td align="left">&#160;</td> <td align="left" width="1%">&#160;</td> <td align="center" width="22%">Three months ended</td> <td align="center" width="2%">&#160;</td> <td align="center" width="1%">&#160;</td> <td align="center" width="22%">Year ended</td> <td align="left" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left">&#160;</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="center" style="BORDER-BOTTOM: #000000 1px solid" width="22%">September 30, 2016</td> <td align="center" width="2%">&#160;</td> <td align="center" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="center" style="BORDER-BOTTOM: #000000 1px solid" width="22%">June 30, 2016</td> <td align="left" width="2%">&#160;</td> </tr> <tr> <td>&#160;</td> <td width="1%">&#160;</td> <td width="22%">&#160;</td> <td width="2%">&#160;</td> <td width="1%">&#160;</td> <td width="22%">&#160;</td> <td width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Beginning balance</td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="22%"> 2,334,672 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="22%"> 2,403,362 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left">Provision for (recovery of) doubtful accounts</td> <td align="left" width="1%">&#160;</td> <td align="right" width="22%"> (704,456 </td> <td align="left" width="2%">)</td> <td align="left" width="1%">&#160;</td> <td align="right" width="22%"> 129,212 </td> <td align="left" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Less: write-off</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="22%"> - </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> <td 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align="center" style="BORDER-BOTTOM: #000000 1px solid" width="21%">September 30, 2016</td> <td align="center" width="2%">&#160;</td> <td align="center" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="center" style="BORDER-BOTTOM: #000000 1px solid" width="21%">June 30, 2016</td> <td align="left" width="2%">&#160;</td> </tr> <tr> <td align="left">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="21%">&#160;</td> <td align="right" width="2%">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="21%">&#160;</td> <td align="right" width="2%">&#160;</td> </tr> <tr> <td align="left" bgcolor="#e6efff">Machinery and equipment</td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="21%"> 753,849 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="21%"> 754,997 </td> 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width="21%">&#160;</td> <td align="right" width="2%">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="21%">&#160;</td> <td align="right" width="2%">&#160;</td> </tr> <tr> <td align="left" bgcolor="#e6efff">Machinery and equipment</td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="21%"> 753,849 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" width="1%">$</td> <td align="right" bgcolor="#e6efff" width="21%"> 754,997 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> <tr> <td align="left">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="21%">&#160;</td> <td align="right" width="2%">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="21%">&#160;</td> <td align="right" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Transportation equipment</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="21%"> 4,319,156 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="21%"> 4,299,862 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> <tr> <td align="left">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="21%">&#160;</td> <td align="right" width="2%">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="21%">&#160;</td> <td align="right" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Office equipment</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="21%"> 1,167,510 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="21%"> 1,172,059 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> <tr> <td align="left">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="21%">&#160;</td> <td align="right" width="2%">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="21%">&#160;</td> <td align="right" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Buildings and improvements</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="21%"> 313,687 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="21%"> 314,909 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> <tr> <td align="left">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="21%">&#160;</td> <td align="right" width="2%">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="21%">&#160;</td> <td align="right" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Total</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="21%"> 6,554,202 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="21%"> 6,541,827 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> <tr> <td align="left">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="21%">&#160;</td> <td align="right" width="2%">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="21%">&#160;</td> <td align="right" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Less: Accumulated depreciation</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="21%"> (2,129,892 </td> <td align="left" bgcolor="#e6efff" width="2%">)</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="21%"> (1,832,033 </td> <td align="left" bgcolor="#e6efff" width="2%">)</td> </tr> <tr> <td align="left">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="21%">&#160;</td> <td align="right" width="2%">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="21%">&#160;</td> <td align="right" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" 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width="1%">$</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" width="22%"> 37,209,699 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> </table> 33796223 37209699 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Note 8 &#8211; Credit Facilities</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i> <u>Short term loans - banks:</u> </i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The outstanding balances on these loans consisted of the following:</p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left">&#160;</td> <td align="left" width="1%">&#160;</td> <td align="center" width="17%">September 30,</td> <td align="center" width="2%">&#160;</td> 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font-size: 10pt;"> <b>Note 10 &#8211; Income taxes</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>(a) Corporate income tax</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> China ACM was organized in the United States. China ACM had no taxable income for United States income tax purposes for the three months ended September 30, 2016 and 2015, respectively. As of September 30, 2016, China ACM&#8217;s net operating loss carry forward for United States income taxes was approximately $0.4 million. The net operating loss carry forward are available to reduce future years&#8217; taxable income through year 2033. Management believes that the realization of the benefits from these losses appears uncertain due to the Company&#8217;s operating history and continued losses in the United States. Accordingly, the Company has provided a 100% valuation allowance on the deferred tax asset to reduce the asset to zero. As of September 30 and June 30, 2016, valuation allowance for deferred tax assets was approximately $0.2 million and $0.2 million, respectively. Management reviews this valuation allowance periodically and makes changes accordingly. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> BVI-ACM was incorporated in the British Virgin Islands (&#8220;BVI&#8221;) and where its income tax rate is 0% under the current laws of the BVI. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i>China-ACMH and VIEs-Chinese operations</i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> China-ACMH and VIEs are governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Chinese Enterprise Income Tax (&#8220;EIT&#8221;) law, the statutory corporate income tax rate applicable to most companies is 25%. 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&#160;Net operating loss carryforward in the U.S.</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="17%"> 244,914 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="17%"> 217,020 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left">&#160; &#160;Valuation allowance</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="17%"> (7,486,062 </td> <td align="left" width="2%">)</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="17%"> (6,756,580 </td> <td align="left" width="2%">)</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Total deferred tax assets - current</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" width="17%"> &#160; - </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" width="17%"> &#160; - </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> </table> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> As of September 30 and June 30, 2016, the Company believes it is more likely than not that its China operations will be unable to fully utilize its deferred tax assets related to its allowance for doubtful accounts, impairment loss of long-lived assets and the net operating loss carry forward in China. 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Accordingly, management provided approximately $0.3 million and $0.2 million of valuation allowance against the deferred tax assets related to the Company&#8217;s U.S. operations as of September 30, 2016 and June 30, 2016, respectively, since the deferred tax benefits of the net operating loss carry forward in the U.S. might not be utilized. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Changes to valuation allowance for deferred tax assets were as follows:</p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left">&#160;</td> <td align="left" width="1%">&#160;</td> <td align="center" width="17%">Three months ended</td> <td align="center" width="2%">&#160;</td> <td align="center" width="1%">&#160;</td> <td align="center" width="17%">Year ended</td> <td align="left" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left">&#160;</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="center" style="BORDER-BOTTOM: #000000 1px solid" width="17%">September 30, 2016</td> <td align="center" width="2%">&#160;</td> <td align="center" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="center" style="BORDER-BOTTOM: #000000 1px solid" width="17%">June 30, 2016</td> <td align="left" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">For deferred tax assets</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="left" bgcolor="#e6efff" width="17%">&#160;</td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="left" bgcolor="#e6efff" width="17%">&#160;</td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left">Beginning balance</td> <td align="left" width="1%">$</td> <td align="right" width="17%"> 6,756,580 </td> <td align="left" width="2%">&#160;</td> <td align="left" width="1%">&#160;</td> <td align="right" width="17%"> 3,064,527 </td> <td align="left" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">&#160; &#160;Allowance for doubtful accounts</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="17%"> 312,801 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="17%"> 2,414,859 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left">&#160; &#160;Impairment loss of long-lived assets</td> <td align="left" width="1%">&#160;</td> <td align="right" width="17%"> - </td> <td align="left" width="2%">&#160;</td> <td align="left" width="1%">&#160;</td> <td align="right" width="17%"> 393,673 </td> <td align="left" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">&#160; &#160;Change in net operating loss carry forward in China</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="17%"> 388,787 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="17%"> 975,894 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">&#160; &#160;Change in net operating loss carry forward in U.S.</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="17%"> 27,894 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="17%"> (92,373 </td> <td align="left" bgcolor="#e6efff" width="2%">)</td> </tr> <tr> <td align="left">&#160;</td> <td align="right" width="1%">&#160;</td> <td align="right" width="17%">&#160;</td> <td align="right" width="2%">&#160;</td> <td align="right" style="BORDER-BOTTOM: medium none #000000; " width="1%">&#160;</td> <td align="right" style="BORDER-BOTTOM: medium none #000000; " width="17%">&#160;</td> <td align="right" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Ending balance</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" width="17%"> 7,486,062 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: 3px double #000000; 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Management does not anticipate any potential future adjustments which would result in a material change to its tax positions. 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- </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" width="17%"> &#160; - </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> </table> 5482794 5169993 393673 393673 1364681 975894 244914 217020 -7486062 -6756580 0 0 <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left">&#160;</td> <td align="left" width="1%">&#160;</td> <td align="center" width="17%">Three months ended</td> <td align="center" width="2%">&#160;</td> <td align="center" width="1%">&#160;</td> <td align="center" width="17%">Year ended</td> <td align="left" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left">&#160;</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="center" style="BORDER-BOTTOM: #000000 1px solid" width="17%">September 30, 2016</td> <td align="center" width="2%">&#160;</td> <td align="center" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="center" style="BORDER-BOTTOM: #000000 1px solid" width="17%">June 30, 2016</td> <td align="left" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">For deferred tax assets</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="left" bgcolor="#e6efff" width="17%">&#160;</td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="left" bgcolor="#e6efff" width="17%">&#160;</td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left">Beginning balance</td> <td align="left" width="1%">$</td> <td align="right" width="17%"> 6,756,580 </td> <td align="left" width="2%">&#160;</td> <td align="left" width="1%">&#160;</td> <td align="right" width="17%"> 3,064,527 </td> <td align="left" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">&#160; 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font-size: 10pt;"> <b>Note 12 &#8211; Reserves and dividends</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The laws and regulations of the PRC require that before a foreign invested enterprise can legally distribute profits, it must first satisfy all its tax liabilities, provide for losses in previous years, and make allocations, in proportions determined at the discretion of the Board, after the statutory reserves. 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The Vie's Assets And Liabilities 9 Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 10 Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 10 Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 11 Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 11 Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 12 Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 12 Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 13 Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 13 Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 14 Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 14 Summary Of Significant Accounting Policies Schedule Of Estimated Useful Lives Of Assets 1 Summary Of Significant Accounting Policies Schedule Of Estimated Useful Lives Of Assets 1 Summary Of Significant Accounting Policies Schedule Of Estimated Useful Lives Of Assets 2 Summary Of Significant Accounting Policies Schedule Of Estimated Useful Lives Of Assets 2 Summary Of Significant Accounting Policies Schedule Of Estimated Useful Lives Of Assets 3 Summary Of Significant Accounting Policies Schedule Of Estimated Useful Lives Of Assets 3 Summary Of Significant Accounting Policies Schedule Of Estimated Useful Lives Of Assets 4 Summary Of Significant Accounting Policies Schedule Of Estimated Useful Lives Of Assets 4 Summary Of Significant Accounting Policies Schedule Of Estimated Useful Lives Of Assets 5 Summary Of Significant Accounting Policies Schedule Of Estimated Useful Lives Of Assets 5 Summary Of Significant Accounting Policies Schedule Of Estimated Useful Lives Of Assets 6 Summary Of Significant Accounting Policies Schedule Of Estimated Useful Lives Of Assets 6 Accounts Receivable, Net Schedule Of Accounts, Notes, Loans And Financing Receivable 1 Accounts Receivable, Net Schedule Of Accounts, Notes, Loans And Financing Receivable 1 Accounts Receivable, Net Schedule Of Accounts, Notes, Loans And Financing Receivable 2 Accounts Receivable, Net Schedule Of Accounts, Notes, Loans And Financing Receivable 2 Accounts Receivable, Net Schedule Of Accounts, Notes, Loans And Financing Receivable 3 Accounts Receivable, Net Schedule Of Accounts, Notes, Loans And Financing Receivable 3 Accounts Receivable, Net Schedule Of Accounts, Notes, Loans And Financing Receivable 4 Accounts Receivable, Net Schedule Of Accounts, Notes, Loans And Financing Receivable 4 Accounts Receivable, Net Schedule Of Accounts, Notes, Loans And Financing Receivable 5 Accounts Receivable, Net Schedule Of Accounts, Notes, Loans And Financing Receivable 5 Accounts Receivable, Net Schedule Of Accounts, Notes, Loans And Financing Receivable 6 Accounts Receivable, Net Schedule Of Accounts, Notes, Loans And Financing Receivable 6 Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 1 Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 1 Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 2 Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 2 Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 3 Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 3 Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 4 Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 4 Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 5 Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 5 Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 6 Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 6 Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 7 Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 7 Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 8 Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 8 Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 9 Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 9 Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 10 Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 10 Inventories Schedule Of Inventory, Current 1 Inventories Schedule Of Inventory, Current 1 Inventories Schedule Of Inventory, Current 2 Inventories Schedule Of Inventory, Current 2 Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 1 Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 1 Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 2 Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 2 Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 3 Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 3 Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 4 Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 4 Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 5 Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 5 Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 6 Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 6 Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 7 Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 7 Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 8 Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 8 Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 9 Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 9 Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 10 Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 10 Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 1 Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 1 Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 2 Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 2 Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 3 Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 3 Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 4 Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 4 Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 5 Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 5 Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 6 Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 6 Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 7 Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 7 Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 8 Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 8 Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 9 Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 9 Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 10 Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 10 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 1 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 1 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 2 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 2 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 3 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 3 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 4 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 4 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 5 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 5 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 6 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 6 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 7 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 7 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 8 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 8 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 9 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 9 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 10 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 10 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 11 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 11 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 12 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 12 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 13 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 13 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 14 Property, Plant And Equipment Schedule Of Property, Plant And Equipment 14 Prepayments And Advances Schedule Of Deferred Costs, Capitalized, Prepaid, And Other Assets Disclosure 1 Prepayments And Advances Schedule Of Deferred Costs, Capitalized, Prepaid, And Other Assets Disclosure 1 Prepayments And Advances Schedule Of Deferred Costs, Capitalized, Prepaid, And Other Assets Disclosure 2 Prepayments And Advances Schedule Of Deferred Costs, Capitalized, Prepaid, And Other Assets Disclosure 2 Credit Facilities Schedule Of Short-term Debt 1 Credit Facilities Schedule Of Short-term Debt 1 Credit Facilities Schedule Of Short-term Debt 2 Credit Facilities Schedule Of Short-term Debt 2 Credit Facilities Schedule Of Short-term Debt 3 Credit Facilities Schedule Of Short-term Debt 3 Credit Facilities Schedule Of Short-term Debt 4 Credit Facilities Schedule Of Short-term Debt 4 Credit Facilities Schedule Of Short-term Debt 5 Credit Facilities Schedule Of Short-term Debt 5 Credit Facilities Schedule Of Short-term Debt 6 Credit Facilities Schedule Of Short-term Debt 6 Credit Facilities Schedule Of Short-term Debt 7 Credit Facilities Schedule Of Short-term Debt 7 Credit Facilities Schedule Of Short-term Debt 8 Credit Facilities Schedule Of Short-term Debt 8 Credit Facilities Schedule Of Short-term Debt 9 Credit Facilities Schedule Of Short-term Debt 9 Related Party Transactions Schedule Of Related Party Transactions 1 Related Party Transactions Schedule Of Related Party Transactions 1 Related Party Transactions Schedule Of Related Party Transactions 2 Related Party Transactions Schedule Of Related Party Transactions 2 Related Party Transactions Schedule Of Related Party Transactions 3 Related Party Transactions Schedule Of Related Party Transactions 3 Related Party Transactions Schedule Of Related Party Transactions 4 Related Party Transactions Schedule Of Related Party Transactions 4 Related Party Transactions Schedule Of Related Party Transactions 5 Related Party Transactions Schedule Of Related Party Transactions 5 Related Party Transactions Schedule Of Related Party Transactions 6 Related Party Transactions Schedule Of Related Party Transactions 6 Income Taxes Schedule Of Income Before Income Tax, Domestic And Foreign 1 Income Taxes Schedule Of Income Before Income Tax, Domestic And Foreign 1 Income Taxes Schedule Of Income Before Income Tax, Domestic And Foreign 2 Income Taxes Schedule Of Income Before Income Tax, Domestic And Foreign 2 Income Taxes Schedule Of Income Before Income Tax, Domestic And Foreign 3 Income Taxes Schedule Of Income Before Income Tax, Domestic And Foreign 3 Income Taxes Schedule Of Income Before Income Tax, Domestic And Foreign 4 Income Taxes Schedule Of Income Before Income Tax, Domestic And Foreign 4 Income Taxes Schedule Of Income Before Income Tax, Domestic And Foreign 5 Income Taxes Schedule Of Income Before Income Tax, Domestic And Foreign 5 Income Taxes Schedule Of Income Before Income Tax, Domestic And Foreign 6 Income Taxes Schedule Of Income Before Income Tax, Domestic And Foreign 6 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 1 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 1 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 2 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 2 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 3 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 3 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 4 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 4 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 5 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 5 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 6 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 6 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 7 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 7 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 8 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 8 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 9 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 9 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 10 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 10 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 11 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 11 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 12 Income Taxes Schedule Of Deferred Tax Assets And Liabilities 12 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 1 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 1 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 2 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 2 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 3 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 3 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 4 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 4 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 5 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 5 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 6 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 6 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 7 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 7 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 8 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 8 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 9 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 9 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 10 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 10 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 11 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 11 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 12 Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 12 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 1 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 1 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 2 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 2 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 3 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 3 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 4 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 4 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 5 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 5 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 6 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 6 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 7 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 7 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 8 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 8 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 9 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 9 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 10 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 10 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 11 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 11 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 12 Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 12 Commitments And Contingencies Schedule Of Future Annual Lease Payments 1 Commitments And Contingencies Schedule Of Future Annual Lease Payments 1 Commitments And Contingencies Schedule Of Future Annual Lease Payments 2 Commitments And Contingencies Schedule Of Future Annual Lease Payments 2 Commitments And Contingencies Schedule Of Future Annual Lease Payments 3 Commitments And Contingencies Schedule Of Future Annual Lease Payments 3 Commitments And Contingencies Schedule Of Future Annual Lease Payments 4 Commitments And Contingencies Schedule Of Future Annual Lease Payments 4 Total current assets Prepayments Total other assets Total assets Total current liabilities Total shareholders' equity Total liabilities and shareholders' equity REVENUE COST OF REVENUE GROSS PROFIT (LOSS) PROVISION FOR DOUBTFUL ACCOUNTS SELLING, GENERAL AND ADMINISTRATIVE EXPENSES RESEARCH AND DEVELOPMENT EXPENSES LOSS FROM TERMINATION OF LEASE IMPAIRMENT LOSS OF LONG-LIVED ASSETS LOSS FROM OPERATIONS Interest expense Finance Expense TOTAL OTHER (EXPENSE) INCOME, NET LOSS BEFORE PROVISION FOR INCOME TAXES PROVISION FOR INCOME TAXES NET LOSS Other comprehensive loss - foreign currency translation loss COMPREHENSIVE LOSS (ComprehensiveIncomeNetOfTax) Basic and diluted (EarningsPerShareBasicAndDiluted) Accounts receivable Inventories (IncreaseDecreaseInInventories) Other receivables Prepayments and advances (IncreaseDecreaseInPrepaidExpense) Accounts payable (IncreaseDecreaseInAccountsPayable) Customer deposits (IncreaseDecreaseInCustomerDeposits) Other payables (IncreaseDecreaseInOtherCurrentLiabilities) Increase Decrease Increase Decrease In Other Current Liabilities Shareholders Accrued liabilities (IncreaseDecreaseInAccruedLiabilities) Taxes payable (IncreaseDecreaseInAccruedTaxesPayable) Net cash provided by operating activities Investment in short-term investments Purchase of property, plant and equipment Net cash used in investing activities Payments of short term loans and bank guarantees Payments of notes payable Payable for rent Principal payments on capital lease obligations Change in restricted cash, net Net cash provided by (used in) financing activities NET CHANGE IN CASH AND CASH EQUIVALENTS NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES: Property Plant And Equipment Additions Not Yet To Pay Capital Lease Obligations Offset With Prepayments Capital Lease Obligations Offset With Advances On Equipement Purchases Other Receivables [Text Block] Prepayments [Text Block] Accounting For Longlived Assets Policy [Text Block] Deferred Tax Assets Current [Member] Deferred Tax Assets Noncurrent [Member] Schedule Of Stockholders Equity Note Warrants Or Rights Activity [Text Block] Scheduleofwarrantsvaluation [Table Text Block] Organization And Description Of Business Zero Three Three Eight Zero Zerozw Six H Nine T P L Sb Three Three Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five S M Hg S D C B Swt P Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five R V Two Nine Sixg One Cs Wc Six Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Fivef One Qpp Six F K Six Z Vf Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five L Ninen Ninex Kh One C Onel X Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five Lstq Eight Kfbtw Sixd Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Fivect Seven Ds J Five Wty Dh Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five Eightd Six Dk Sevens Nine V Eight W J Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Fiveqv Ninew P Xm K F Six Three B Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five S Rd Q N Seven Jp Five M Nine F Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Fiveh Trrwm X D H Fourf Eight Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five X Eight Sevenrg Xr Dm T Vy Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five Four Bfx Fm Nine B Two Hg C Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five Two D R Wdr Zero Sevenz F X Zero Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five M M Tp Zerog X Twok Lcr Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five H N Fiveth Seven Df Rm W G Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five One Tp Z Dpv M Sl Pp Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five Bv Three Wc Bd N G Nine Tb Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Fiveng K Eight Fourq T P Twoh K D Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Fivedn D Q Nk Lg J Seven Twop Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five V C G Kz Sv W Three Jy R Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Fiveplc H Zeroc Two Qmb V B Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five Eight Pc C Onefpxfrd Three Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Fivevdkt Six Eight C Zt Kw W Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five Zero Two K Zds H Qx One Four Zero Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five N Nt L F S One F Q Z M Two Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five Five R T J Cn N C Z T P Nine Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five C Fivedxb Eightcq H Eight Qp Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five Td X Zero W Hbl Shky Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five Tt W Fourg Fourv Three B Sevens Seven Summary Of Significant Accounting Policies Zero Three Three Eight Zero Three Eight Seven Five R Five W Eightq Zerogy Pb B H Other Receivables Net Zero Three Three Eight Zero Zero Seven N T One T M One C M Bp Six Other Receivables Net Zero Three Three Eight Zero Zeros Seven T Zero T K L Niners K M Other Receivables Net Zero Three Three Eight Zero Zero C Two Two X Z Dl R W Mzw Other Receivables Net Zero Three Three Eight Zero Zero Rvn G P P Fourgy M Bp Other Receivables Net Zero Three Three Eight Zero Zero V L Xrgs Threepv Zero N J Other Receivables Net Zero Three Three Eight Zero Zero K Vk Twoqk T X Ts K Eight Other Receivables Net Zero Three Three Eight Zero Zerogv W Mz Nineky Three Mk Six Property Plant And Equipment Zero Three Three Eight Zero Zero B J Seven Kw L W D Sevenzf Seven Property Plant And Equipment Zero Three Three Eight Zero Zero G K Five One Zdlfx Rx One Credit Facilities Zero Three Three Eight Zero Zerolylw Six P Lf Six Nine Two H Credit Facilities Zero Three Three Eight Zero Zero P T T K Seven Onezc Fivey Ld Credit Facilities Zero Three Three Eight Zero Zero K Fzdkz Threeg Bb Dt Credit Facilities Zero Three Three Eight Zero Zero Ld Fiveg Five Fourqs Kv D Two Credit Facilities Zero Three Three Eight Zero Zerot C J B J Two Onex G Two Dw Credit Facilities Zero Three Three Eight Zero Zeroqt Swnrh T G Jx Three Income Taxes Zero Three Three Eight Zero Zeroh Ws B Tsqtcrbr Income Taxes Zero Three Three Eight Zero Zeroqw Z Z R X W D V Ws G Income Taxes Zero Three Three Eight Zero Zero Sevencn Xl X D Onesqd F Income Taxes Zero Three Three Eight Zero Zero Zero Ny Sixk J Vw Fourx Seven N Income Taxes Zero Three Three Eight Zero Zerop Five C Bwr W C Six D Sp Income Taxes Zero Three Three Eight Zero Zeroq Sixmk Eight Td Bb Four K Eight Income Taxes Zero Three Three Eight Zero Zero Eight G N H Twob Sevens Lv Wb Income Taxes Zero Three Three Eight Zero Zero Rq Six S L Three Nm G L Tk Income Taxes Zero Three Three Eight Zero Zero Zero L C Fdm Tn N Fourw T Income Taxes Zero Three Three Eight Zero Zero Onewk Z B Five Onew Nine S Threev Income Taxes Zero Three Three Eight Zero Zero T C Zp Five Fourt Eightr D N C Income Taxes Zero Three Three Eight Zero Zero Oneb B Threeq K H X Bk Tm Income Taxes Zero Three Three Eight Zero Zero L Three Ninev Qpt One Three K P K Income Taxes Zero Three Three Eight Zero Zero M Fv Bn H T Vl N Z L Shareholders Equity Zero Three Three Eight Zero Zero Two Zeroh N Six Oner Four Zero Eight Gx Shareholders Equity Zero Three Three Eight Zero Zerol F W Fr Vyg K P Vw Shareholders Equity Zero Three Three Eight Zero Zerotzy Ty Two Tp Five C One T Shareholders Equity Zero Three Three Eight Zero Zero Blzx Bb Xx Four G One Five Shareholders Equity Zero Three Three Eight Zero Zeroc P T Kg S Pcsn Cd Reserves And Dividends Zero Three Three Eight Zero Zero Zero H Fourb B Ll Fourq Eights B Reserves And Dividends Zero Three Three Eight Zero Zero Eightg C Sevenxs Vm Zy C H Reserves And Dividends Zero Three Three Eight Zero Zero Sixxht H Dr Two V Seven R K Reserves And Dividends Zero Three Three Eight Zero Zero S Eightvh Threez K X C Ones P Reserves And Dividends Zero Three Three Eight Zero Zeromn Npnr Twochy Nf Reserves And Dividends Zero Three Three Eight Zero Zero Tvl L Vyss Four R H K Employee Postretirement Benefits Zero Three Three Eight Zero Zeroq S Five Sb J Kkl F S K Employee Postretirement Benefits Zero Three Three Eight Zero Zero Lwr T J T Fff V Kf Employee Postretirement Benefits Zero Three Three Eight Zero Zero Q Vllrrkngmhz Commitments And Contingencies Zero Three Three Eight Zero Zero L Z B Qr D Two Q Sevenkz W Commitments And Contingencies Zero Three Three Eight Zero Zero Two H Onetz F Q G G Nnm Commitments And Contingencies Zero Three Three Eight Zero Zero F P Four P Q D Qsv Lwp Commitments And Contingencies Zero Three Three Eight Zero Zero Seven Qx Five Four Dd K Twoq Nines Concentrations Zero Three Three Eight Zero Zerob Nine P Z P Zylhlt Seven Concentrations Zero Three Three Eight Zero Zeroqf Kz Seven Pp Four Sv Z Six Concentrations Zero Three Three Eight Zero Zero T Xkg T Vt H T Lg K Concentrations Zero Three Three Eight Zero Zero Eightpzw Eightr Seven Fivewv M X Concentrations Zero Three Three Eight Zero Zero Mz Seven Twoxw Twovy V J Z Concentrations Zero Three Three Eight Zero Zero Lf N T Cr W Kp P Seven B Concentrations Zero Three Three Eight Zero Zerozbgnf Fiveyw Rn N J Concentrations Zero Three Three Eight Zero Zero C Vr Xc Threebh Seven Cm Five Concentrations Zero Three Three Eight Zero Zerok St P V Zeroh Five Nnfy Schedule Of Ownership Of Subsidiaries And Vieaposs Zero Three Three Eight Zero Three Eight Seven Five Fq Ws Zero Eight Dns T K One Schedule Of Ownership Of Subsidiaries And Vieaposs Zero Three Three Eight Zero Three Eight Seven Five Three Kzwl Vsf P Two G N Schedule Of Carrying Amount Of The Vieaposs Assets And Liabilities Zero Three Three Eight Zero Three Eight Seven Five Tsk Hg J S Q Threegt Five Schedule Of Carrying Amount Of The Vieaposs Assets And Liabilities Zero Three Three Eight Zero Three Eight Seven Five L Sixr Sixbpc One Fourw V R Schedule Of Carrying Amount Of The Vieaposs Assets And Liabilities Zero Three Three Eight Zero Three Eight Seven Fiveh Sevenxy Gp Tzd N Tp Schedule Of Carrying Amount Of The Vieaposs Assets And Liabilities Zero Three Three Eight Zero Three Eight Seven Fivez Kkps H F Sp W Zeros Schedule Of Carrying Amount Of The Vieaposs Assets And Liabilities Zero Three Three Eight Zero Three Eight Seven Five Jf J Two Sixh Wpfz Oney Schedule Of Carrying Amount Of The Vieaposs Assets And Liabilities Zero Three Three Eight Zero Three Eight Seven Fivef Eight Mz Qp Ft Q One Onex Schedule Of Carrying Amount Of The Vieaposs Assets And Liabilities Zero Three Three Eight Zero Three Eight Seven Five Spk R Four P Seven Bn Kwh Schedule Of Carrying Amount Of The Vieaposs Assets And Liabilities Zero Three Three Eight Zero Three Eight Seven Five R Wd Crmc Nh Eightg J Schedule Of Carrying Amount Of The Vieaposs Assets And Liabilities Zero Three Three Eight Zero Three Eight Seven Five Tm Eightbx F Vrvh K Four Schedule Of Carrying Amount Of The Vieaposs Assets And Liabilities Zero Three Three Eight Zero Three Eight Seven Five V T C Eightq Nine Z Eight Tttl Schedule Of Carrying Amount Of The Vieaposs Assets And Liabilities Zero Three Three Eight Zero Three Eight Seven Five Threem Nine Eights N Threeck Gw G Schedule Of Carrying Amount Of The Vieaposs Assets And Liabilities Zero Three Three Eight Zero Three Eight Seven Five B Three L Seven Q V Qgw Fivem K Schedule Of Carrying Amount Of The Vieaposs Assets And Liabilities Zero Three Three Eight Zero Three Eight Seven Five Jnxl Dl Seven L Mf F G Schedule Of Carrying Amount Of The Vieaposs Assets And Liabilities Zero Three Three Eight Zero Three Eight Seven Five Xt Two Dq Wv T Dg T Five Schedule Of Estimated Useful Lives Of Assets Zero Three Three Eight Zero Three Eight Seven Fiverv B Sz Sevend Hf Sh Z Schedule Of Estimated Useful Lives Of Assets Zero Three Three Eight Zero Three Eight Seven Five Fivels T Sevenc Nnm One M Two Schedule Of Estimated Useful Lives Of Assets Zero Three Three Eight Zero Three Eight Seven Five Three Nineh Five T Zb Mrk Eight D Schedule Of Estimated Useful Lives Of Assets Zero Three Three Eight Zero Three Eight Seven Five N Cd Wp M Mlw Cg Five Schedule Of Estimated Useful Lives Of Assets Zero Three Three Eight Zero Three Eight Seven Five Seven Mw G One Five N Ws Dm M Schedule Of Estimated Useful Lives Of Assets Zero Three Three Eight Zero Three Eight Seven Fivezcq M Vz D R Nine S L J Schedule Of Accounts Notes Loans And Financing Receivable Zero Three Three Eight Zero Zerow Ftn F Pwk Zerog R R Schedule Of Accounts Notes Loans And Financing Receivable Zero Three Three Eight Zero Zero Sw Two C Tm P Mn Pk Eight Schedule Of Accounts Notes Loans And Financing Receivable Zero Three Three Eight Zero Zero Fourp Fb Dmm T Cr Xd Schedule Of Accounts Notes Loans And Financing Receivable Zero Three Three Eight Zero Zerol S Eight Threevntrcn Ninec Schedule Of Accounts Notes Loans And Financing Receivable Zero Three Three Eight Zero Zeroqd Fivev B Eight Wvg One R Five Schedule Of Accounts Notes Loans And Financing Receivable Zero Three Three Eight Zero Zero D Pv Fourb Gt L Two P Gc Schedule Of Allowance For Doubtful Accounts Zero Three Three Eight Zero Zerotr Tq One T T Q Onecds Schedule Of Allowance For Doubtful Accounts Zero Three Three Eight Zero Zero Mrrpp Wgw Fourz Kw Schedule Of Allowance For Doubtful Accounts Zero Three Three Eight Zero Zeros K Three S F Fivew Twor T Td Schedule Of Allowance For Doubtful Accounts Zero Three Three Eight Zero Zeroy Eight B T Fourqcgwxy Q Schedule Of Allowance For Doubtful Accounts Zero Three Three Eight Zero Zeros G Ms T Vp Jwx Zero H Schedule Of Allowance For Doubtful Accounts Zero Three Three Eight Zero Zeroth F W D P D C Hst V Schedule Of Allowance For Doubtful Accounts Zero Three Three Eight 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X Schedule Of The Summary Of Restricted Stock Grants Zero Three Three Eight Zero Zero G K Sevencgw G K Rs V Three Schedule Of The Summary Of Restricted Stock Grants Zero Three Three Eight Zero Zero Ry H R Threel N S Kt Two Six Schedule Of The Summary Of Restricted Stock Grants Zero Three Three Eight Zero Zero Eight Three Dl Q P G Zero Khg X Schedule Of The Summary Of Restricted Stock Grants Zero Three Three Eight Zero Zero T Xy Xx T F D Wx R Four Schedule Of The Summary Of Restricted Stock Grants Zero Three Three Eight Zero Zero Ts B Three N L Qnx Fourz J Schedule Of The Summary Of Restricted Stock Grants Zero Three Three Eight Zero Zero Mcq Three Six Kmc Z Ks C Schedule Of The Summary Of Restricted Stock Grants Zero Three Three Eight Zero Zeroc B S V D Onet Threel Mzg Schedule Of Future Annual Lease Payments Zero Three Three Eight Zero Zerom Z Zx Twoc Vz Nine Ns G Schedule Of Future Annual Lease Payments Zero Three Three Eight Zero Zerofd Nine Twokmk S K T Cn Schedule Of Future Annual Lease Payments Zero Three Three Eight Zero Zero Fourd Nine Q Five Twocn L Four H Nine Schedule Of Future Annual Lease Payments Zero Three Three Eight Zero Zerocrw Ninev N Three N Km Bm EX-101.PRE 10 cadc-20160930_pre.xml XBRL PRESENTATION FILE XML 11 R1.htm IDEA: XBRL DOCUMENT v3.5.0.2
Document and Entity Information - shares
3 Months Ended
Sep. 30, 2016
Nov. 08, 2016
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Sep. 30, 2016  
Trading Symbol cadc  
Entity Registrant Name China Advanced Construction Materials Group, Inc  
Entity Central Index Key 0001392363  
Current Fiscal Year End Date --06-30  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   2,387,658
Entity Current Reporting Status Yes  
Entity Voluntary Filers No  
Entity Well Known Seasoned Issuer No  
Document Fiscal Year Focus 2017  
Document Fiscal Period Focus Q1  
XML 12 R2.htm IDEA: XBRL DOCUMENT v3.5.0.2
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
Sep. 30, 2016
Jun. 30, 2016
CURRENT ASSETS:    
Cash and cash equivalents $ 8,234,509 $ 1,006,970
Restricted cash 4,569,781 4,097,621
Short term investments 29,984 0
Accounts receivable, net 38,998,762 40,288,552
Inventories 690,852 1,023,471
Other receivables, net 1,440,629 7,093,030
Prepayments and advances 33,796,223 37,209,699
Total current assets 87,760,740 90,719,343
PROPERTY PLANT AND EQUIPMENT, net 4,424,310 4,709,794
Total assets 92,185,050 95,429,137
CURRENT LIABILITIES:    
Short term loans, banks and bank guarantees 17,990,400 16,555,440
Notes payable 20,539,040 18,060,480
Accounts payable 32,553,759 31,234,091
Customer deposits 1,143,642 4,272,144
Other payables 440,163 600,205
Other payables - shareholders 1,793,817 1,491,125
Accrued liabilities 1,623,728 1,992,214
Taxes payable 90,812 95,708
Total current liabilities 76,175,361 74,301,407
COMMITMENTS AND CONTINGENCIES 0 0
SHAREHOLDERS' EQUITY:    
Preferred stock $0.001 par value, 1,000,000 shares authorized, no shares issued or outstanding 0 0
Common stock, $0.001 par value, 74,000,000 shares authorized, 2,387,658 and 2,180,799 shares issued and outstanding as of September 30, 2016 and June 30, 2016, respectively 2,388 2,181
Additional paid-in-capital 38,662,377 38,373,584
Accumulated deficit (36,525,603) (31,204,831)
Statutory reserves 6,248,350 6,248,357
Accumulated other comprehensive income 7,622,177 7,708,439
Total shareholders' equity 16,009,689 21,127,730
Total liabilities and shareholders' equity $ 92,185,050 $ 95,429,137
XML 13 R3.htm IDEA: XBRL DOCUMENT v3.5.0.2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Sep. 30, 2016
Jun. 30, 2016
Preferred Stock, Par Value Per Share $ 0.001 $ 0.001
Preferred Stock, Shares Authorized 1,000,000 1,000,000
Preferred Stock, Shares Issued 0 0
Preferred Stock, Shares Outstanding 0 0
Common Stock, Par Value Per Share $ 0.001 $ 0.001
Common Stock, Shares Authorized 74,000,000 74,000,000
Common Stock, Shares, Issued 2,387,658 2,180,799
Common Stock, Shares, Outstanding 2,387,658 2,180,799
XML 14 R4.htm IDEA: XBRL DOCUMENT v3.5.0.2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($)
3 Months Ended
Sep. 30, 2016
Sep. 30, 2015
REVENUE $ 7,456,862 $ 13,472,831
COST OF REVENUE 8,409,274 11,855,331
GROSS PROFIT (LOSS) (952,412) 1,617,500
PROVISION FOR DOUBTFUL ACCOUNTS (2,085,337) (894,784)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (1,862,928) (1,544,688)
RESEARCH AND DEVELOPMENT EXPENSES (79,165) (130,446)
LOSS FROM OPERATIONS (4,979,842) (952,418)
OTHER (EXPENSE) INCOME, NET    
Other income, net 86,201 7,080
Interest income 8,401 171,836
Interest expense (197,217) (178,675)
Finance expense (238,315) (139,974)
TOTAL OTHER (EXPENSE) INCOME, NET (340,930) (139,733)
LOSS BEFORE PROVISION FOR INCOME TAXES (5,320,772) (1,092,151)
PROVISION FOR INCOME TAXES 0 0
NET LOSS (5,320,772) (1,092,151)
COMPREHENSIVE LOSS    
Net loss (5,320,772) (1,092,151)
Other comprehensive loss - foreign currency translation loss (86,262) (1,583,107)
COMPREHENSIVE LOSS $ (5,407,034) $ (2,675,258)
Weighted average number of shares:    
Basic and Diluted 2,272,986 2,180,799
Loss per share:    
Basic and Diluted $ (2.34) $ (0.50)
XML 15 R5.htm IDEA: XBRL DOCUMENT v3.5.0.2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
3 Months Ended
Sep. 30, 2016
Sep. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (5,320,772) $ (1,092,151)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:    
Depreciation 305,121 513,775
Stock-based compensation expense 289,000 311,719
Provision for doubtful accounts 2,085,337 894,784
Changes in operating assets and liabilities    
Accounts receivable (4,645,427) (3,073)
Inventories 328,810 12,072
Other receivables 6,332,111 (258,194)
Prepayments and advances 3,183,553 6,362,149
Accounts payable 4,518,381 3,367,535
Customer deposits (3,113,460) (512,897)
Other payables (158,050) (1,620,638)
Other payables - shareholders 156,109 0
Accrued liabilities (361,577) (618,893)
Taxes payable (4,527) 147,821
Net cash provided by operating activities 3,594,609 7,504,009
CASH FLOWS FROM INVESTING ACTIVITIES:    
Investment in short-term investments (29,999) 0
Purchase of property, plant and equipment (37,778) 0
Net cash used in investing activities (67,777) 0
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from short term loans, banks and bank guarantees 4,499,820 3,192,000
Payments of short term loans, banks and bank guarantees (2,999,880) (12,129,600)
Proceeds from notes payable 11,549,538 14,922,600
Payments of notes payable (8,999,640) (18,114,600)
Payable to shareholders, net 146,586 58,466
Principal payments on capital lease obligations 0 (74,831)
Change in restricted cash, net (488,301) 3,369,026
Net cash provided by (used in) financing activities 3,708,123 (8,776,939)
EFFECTS OF EXCHANGE RATE CHANGE IN CASH AND CASH EQUIVALENTS (7,416) (88,448)
NET CHANGE IN CASH AND CASH EQUIVALENTS 7,227,539 (1,361,378)
CASH AND CASH EQUIVALENTS, beginning of period 1,006,970 2,691,915
CASH AND CASH EQUIVALENTS, end of period 8,234,509 1,330,537
SUPPLEMENTAL CASH FLOW INFORMATION:    
Cash paid for interest expense 150,783 206,905
Cash paid for income tax 0 0
NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES:    
Property, plant and equipment additions not yet to pay 0 220,837
Capital lease obligations offset with prepayments 0 203,790
Capital lease obligations offset with advances on equipement purchases 0 478,800
OTHER NON-CASH TRANSACTIONS:    
Accounts receivable offset with accounts payable upon execution of tri-party agreements $ 3,076,804 $ 0
XML 16 R6.htm IDEA: XBRL DOCUMENT v3.5.0.2
Organization and description of business
3 Months Ended
Sep. 30, 2016
Organization and description of business [Text Block]

Note 1 – Organization and description of business

China Advanced Construction Materials Group, Inc. (“CADC Delaware”) was incorporated in the State of Delaware on February 15, 2007. CADC Delaware, through its 100% owned subsidiaries and its variable interest entities (“VIEs”), is engaged in producing general ready-mix concrete, customized mechanical refining concrete, and other concrete-related products that are mainly sold in the People’s Republic of China (“PRC”). CADC Delaware has a wholly owned subsidiary in the British Virgin Islands, Xin Ao Construction Materials, Inc. (“BVI-ACM”), which is a holding company with no operations. BVI-ACM has a wholly owned foreign enterprise, Beijing Ao Hang Construction Material Technology Co., Ltd. (“China-ACMH”), and China-ACMH has contractual agreements with an entity which is considered as a VIE.

On August 1, 2013, CADC Delaware consummated a reincorporation merger with its newly formed wholly owned subsidiary, China Advanced Construction Materials Group, Inc. (“China ACM”), a Nevada corporation, with CADC Delaware merging into China ACM and China ACM being the surviving company, for the purpose of changing CADC Delaware’s state of incorporation from Delaware to Nevada.

Beijing XinAo Concrete Group (“Xin Ao”), a VIE, is engaged in the business of consulting, concrete mixing and equipment rental services. Xin Ao has five wholly owned subsidiaries (collectively, and with “Xin Ao”, the “VIEs”) in the PRC: (1) Beijing Heng Yuan Zheng Ke Technical Consulting Co., Ltd (“Heng Yuan Zheng Ke”), (2) Beijing Hong Sheng An Construction Materials Co., Ltd (“Hong Sheng An”), (3) Beijing Heng Tai Hong Sheng Construction Materials Co., Ltd (“Heng Tai”), (4) Da Tong Ao Hang Wei Ye Machinery, Equipment Rental Co., Ltd (“Da Tong”) and (5) Luan Xian Heng Xin Technology Co., Ltd (“Heng Xin”). There were no operations since establishment of these five entities and the Company is not planning to pursue operations for these entities. As a result, the Company has determined to dissolve these entities between March 2016 and June 2016. As of the date of this report, Da Tong and Heng Xi have already been dissolved and the other three entities are still under the administrative process of dissolution.

China ACM, BVI-ACM, China-ACMH and the VIEs are collectively referred to as the “Company.”

XML 17 R7.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of significant accounting policies
3 Months Ended
Sep. 30, 2016
Summary of significant accounting policies [Text Block]

Note 2 – Summary of significant accounting policies

Liquidity

In assessing the Company’s liquidity, the Company monitors and analyzes its cash on-hand and its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations.

The Company engages in the production of advanced construction materials for large scale infrastructure, commercial and residential developments. The Company’s business is capital intensive and the Company is highly leveraged. Debt financing in the form of short term bank loans, loans from related parties and bank acceptance notes, have been utilized to finance the working capital requirements and the capital expenditures of the Company. Due to recurring losses, the Company’s working capital was approximately $11.6 million as of September 30, 2016 as compared to $16.4 million as of June 30, 2016. As of September 30, 2016, the Company had cash on-hand of approximately $8.2 million and restricted cash balances of approximately $4.6 million with the remaining current assets mainly composed of accounts receivables, other receivables and prepayments and advances.

Although the Company believes that it can realize its current assets in the normal course of business, the Company’s ability to repay its current obligations will depend on the future realization of its current assets. Management has considered its historical experience, the economy, trends in the construction industry, the expected collectability of the accounts and other receivables and the realization of the prepayments on inventory, and provided for an allowance for doubtful accounts as of September 30, 2016. The Company expects to realize the balances net of the allowance within the normal operating cycle of a twelve month period. If the Company is unable to realize its current assets within the normal operating cycle of a twelve month period, the Company may have to consider its available source of funds through the following:

  • Financial support and credit guarantee commitment from the Company’s majority shareholders (See Note 9 - Related party transactions).
  • Other available sources of financing from PRC banks and other financial institutions given the Company’s credit history.

Based on the above considerations, the Company’s management is of the opinion that it has sufficient funds to meet the Company’s working capital requirements and debt obligations as they become due. However, there is no assurance that management will be successful in their plan. There are a number of factors that could potentially arise that could result in shortfalls to the Company’s plan, such as the demand for the Company’s products, economic conditions, the competitive pricing in the concrete-mix industry, the Company’s operating results continuing to deteriorate and the Company’s bank and shareholders not being able to provide continued support.

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These financial statements include the accounts of all directly, indirectly owned subsidiaries and variable interest entities listed below. All material intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary to give a fair presentation have been included. Interim results are not necessarily indicative of results of a full year. The information in this Form 10-Q should be read in conjunction with information included in the annual report for the fiscal year ended June 30, 2016 on Form 10-K filed with the SEC on September 28, 2016 and have been consistently applied.

Principles of consolidation

The unaudited condensed consolidated financial statements reflect the activities of the following subsidiaries and VIEs. All material intercompany transactions have been eliminated.

        Ownership
Subsidiaries and VIEs   Place incorporated   percentage
BVI-ACM   British Virgin Island   100%
China-ACMH   Beijing, China   100%
Xin Ao   Beijing, China   VIE
Heng Yuan Zheng Ke   Beijing, China   VIE
Hong Sheng An   Beijing, China   VIE
Heng Tai   Beijing, China   VIE
Da Tong*   Datong, China   VIE
Heng Xin**   Luanxian, China   VIE

*Dissolved in August 2016 ** Dissolved in November 2016

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 the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIEs. The primary beneficiary is required to consolidate the VIEs for financial reporting purposes.

Management makes ongoing assessments of whether China ACM is the primary beneficiary of Xin Ao and its subsidiaries. Based upon a series of contractual arrangements, the Company determined that Xin Ao and its subsidiaries are VIEs subject to consolidation and that China ACM is the primary beneficiary. Accordingly, the accounts of Xin Ao and its subsidiaries are consolidated with those of China ACM.

The carrying amount of the VIEs’ assets and liabilities are as follows:

    September 30,     June 30,  
    2016     2016  
   Current assets $ 87,571,976   $ 90,518,451  
   Property, plant and equipment   4,424,310     4,709,794  
Total assets   91,996,286     95,228,245  
             
   Liabilities   (74,137,991 )   (72,579,677 )
             
   Intercompany payables*   (7,297,139 )   (7,355,650 )
             
Total liabilities   (81,435,130 )   (79,935,327 )
             
Net assets $ 10,561,156   $ 15,292,918  

* Payables to China - ACMH and BVI-ACM are eliminated upon consolidation.

Use of estimates and assumptions

The preparation of 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 financial statements, and the reported amounts of revenues and expenses during the reporting periods. The significant estimates and assumptions made in the preparation of the Company’s unaudited condensed consolidated financial statements include deferred income taxes, allowance for doubtful accounts, deferred stock-based compensation, the fair value and useful lives of property, plant and equipment. Actual results could be materially different from those estimates.

Foreign currency translation

The reporting currency of the Company is the U.S. dollar. The functional currency of China ACM and BVI-ACM is the U.S. dollar. China-ACMH and its VIEs use their local currency Chinese Renminbi (“RMB”) as their functional currency. In accordance with the US GAAP guidance on Foreign Currency Translation, the Company’s results of operations and cash flows are translated at the average exchange rates during the period, assets and liabilities are translated at the exchange rates at the balance sheet dates, and equity is translated at historical exchange rates. As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.

Asset and liability accounts at September 30 and June 30, 2016, were translated at RMB6.67 to $1.00 and RMB6.64 to $1.00, respectively. The average translation rates applied to the consolidated statements of operations and comprehensive loss and cash flows for the three months ended September 30, 2016 and 2015 were RMB6.67 and RMB6.27 to $1.00, respectively.

Translation gains (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. There were no foreign currency transaction gains or losses for each of the three months ended September 30, 2016 and 2015. The effects of foreign currency translation adjustments are included in shareholders’ equity as a component of accumulated other comprehensive income.

Revenue recognition

Revenue is realized or realizable and earned when four criteria are met:

  • Persuasive evidence of an arrangement exists (the Company considers its sales contracts to be pervasive evidence of an arrangement);
  • Delivery has occurred;

  • The seller’s price to the buyer is fixed or determinable; and

  • Collectability of payment is reasonably assured.

The Company sells its concrete products primarily to major local construction companies. Sales agreements are signed with each customer. The agreements list all terms and conditions with the exception of delivery date and quantity, which are evidenced separately in purchase orders. The purchase price of products is fixed in the agreement and customers are not permitted to renegotiate after the contracts have been signed. The agreements include a cancellation clause if the Company or customers breach the contract terms specified in the agreement.

The Company recognizes revenue when title and ownership of the goods are transferred upon shipment to the customer by the Company and collectability of payment is reasonably assured.

The Company includes the shipping and handling fee in both revenue and cost of revenue.

Financial instruments

US GAAP regarding fair value of financial instruments and related fair value measurements define fair value, establish a three-level valuation hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The three levels of inputs are defined as follows:

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets;

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument;

Level 3 inputs to the valuation methodology are unobservable.

Current assets and current liabilities are reported in the consolidated balance sheets at face value or cost, which approximate fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest.

Cash and cash equivalents

The Company considers all highly liquid investments with the original maturity of three months or less at the date of purchase to be cash equivalents. The Company currently maintains substantially all of its day-to-day operating cash balances with major financial institutions within PRC and US. As of September 30 and June 30, 2016, the Company had deposits in excess of federally insured limits totaling approximately $8.2 million and $0.9 million, respectively.

Restricted cash

As of September 30 and June 30, 2016, restricted cash consisted of collateral representing cash deposits for bank guarantees and notes payable.

Accounts receivable

During the normal course of business, the Company extends unsecured credit to its customers. Accounts are considered past due after 30 days. In establishing the required allowance for doubtful accounts, management considers the historical experience, the economy, trends in the construction industry and the expected collectability of the overdue receivables. Management reviews its accounts receivable each reporting period to determine if the allowance for doubtful accounts is adequate. An estimate for doubtful accounts is recorded when collection of the full amount is no longer probable. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovering is considered remote. The Company provides a provision of 15% of allowance for doubtful accounts for accounts receivable balance that are past due more than 180 days but less than one year, 40% of allowance for doubtful accounts for accounts receivable past due from one to two years, 75% of allowance for doubtful accounts for accounts receivable past due beyond two years, 100% of allowance for doubtful accounts for accounts receivable past due beyond three years, plus additional amount as necessary, which the Company’s collection department had determined the collection of the full amount is remote with the approval from the Company’s management to provide 100% provision allowance for doubtful accounts. The Company’s management has continued to evaluate the reasonableness of the valuation allowance policy and update it if necessary.

Other receivables

Other receivables primarily include prepayments to be refunded by our suppliers if the supplies do not meet the Company’s specification need, advances to employees, due from unrelated entities, VAT tax refunds and other deposits. Management regularly reviews the aging of receivables and changes in payment trends and records allowance when management believes collection of amounts due are at risk. Accounts considered uncollectible are written off against the allowance after exhaustive efforts at collection are made. The Company provides a provision of 5% of allowance for doubtful accounts for other receivables balance that are aged within one year, 50% of allowance for doubtful accounts for other receivables aged from one to two years, 100% of allowance for doubtful accounts for other receivables aged beyond two years.

Inventories

Inventories consist of raw materials and are stated at the lower of cost or market, as determined using the weighted average cost method. Management compares the cost of inventories with the market value and an allowance is made for writing down the inventory to its market value, if lower than cost. As of September 30 and June 30, 2016, the Company determined that no reserves for obsolescence were necessary.

Prepayments and advances

Prepayments are funds deposited or advanced to outside vendors for future inventory purchases. As a standard practice in China, many of the Company’s vendors require a certain amount to be deposited with them as a guarantee that the Company will complete its purchases on a timely basis. This amount is refundable and bears no interest. The Company has legally binding contracts with its vendors, which require any outstanding prepayments to be returned to the Company when the contract ends.

The Company wrote off approximately $0.1 million on unrealizable prepayments for the three months ended September 30, 2016.

Property, plant and equipment

Property, plant and equipment are stated at cost. Expenditures for maintenance and repairs are charged to operations as incurred while additions, renewals and improvements are capitalized. Depreciation is provided over the estimated useful life of each class of depreciable assets and is computed using the straight-line method with 5% residual value. Leasehold improvements are amortized over the lesser of estimated useful lives or lease terms, as appropriate.

The estimated useful lives of assets are as follows:

  Useful life
   
Transportation equipment 7 - 10 years
   
Plant and machinery 10 years
   
Office equipment 5 years
   

Buildings and improvements

3 - 20 years

Accounting for long-lived assets

The Company classifies its long-lived assets into: (i) machinery and equipment; (ii) transportation equipment; (iii) office and equipment; and (iv) buildings and improvements.

Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be fully recoverable. It is possible that these assets could become impaired as a result of technology or other industry changes. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

If the value of an asset is determined to be impaired, the impairment to be recognized is measured in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or the fair value, less disposition costs.

Due to recurring losses, the deterioration of the concrete-mix industry in the city of Beijing, PRC and competitive pricing pressure, the Company has performed an impairment analysis and determined its long-lived assets were impaired during the year ended June 30, 2016. As a result, the Company recorded an impairment charge of $2.6 million for the year ended June 30, 2016. These charges were related to the impairment of the Company’s transportation equipment and plant and machinery. The loss was determined using Level 3 inputs (See Note 6). There was no impairment charge for the three months ended September 30, 2016 and 2015.

Competitive pricing pressure and changes in interest rates could materially and adversely affect the Company’s estimates of future net cash flows to be generated by the long-lived assets, and thus could result in future impairment losses.

Stock-based compensation

The Company records stock-based compensation expense at fair value on the grant date and recognizes the expense over the employee's requisite service period. The Company’s expected volatility assumption is based on the historical volatility of Company’s stock. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is based on the Company’s current and expected dividend policy.

Income taxes

The Company accounts for income taxes in accordance with ASC 740, “Income Taxes,” which requires the Company to use the assets and liability method of accounting for income taxes. Under the assets and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carry forwards. Under this accounting standard, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized.

ASC 740-10, “Accounting for Uncertainty in Income Taxes,” defines uncertainty in income taxes and the evaluation of a tax position as a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. United States federal, state and local income tax returns prior to 2013 are not subject to examination by any applicable tax authorities.

Value Added Tax

Enterprises or individuals, who sell commodities, engage in repair and maintenance, or import and export goods in the PRC are subject to a value added tax. The standard VAT rate was 6% of gross sales for the Company’s industry, which was reduced to 3% of gross sales on July 1, 2014. Due to the fact that the Company uses recycled raw materials to manufacture its products, the State Administration of Taxation granted the Company a VAT tax exemption, which expired in June 2015. From July 2015 going forward, the Company is subject to VAT at the reduced rate of 3% of the gross sales price.

Research and development

Research and development costs are expensed as incurred. The cost of materials and equipment that are acquired or constructed for research and development activities, and have alternative future uses, either in research and development, marketing, or sales, are classified as property and equipment, and depreciated over their estimated useful lives..

Earnings (loss) per share

The Company reports earnings (loss) per share in accordance with the US GAAP, which requires presentation of basic and diluted earnings (loss) per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings (loss) per share excludes dilution and is computed by dividing income (loss) available to common shareholders by the weighted average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts, such as warrants, options, restricted stock based grants and convertible preferred stock, to issue common stock were exercised and converted into common stock. Common stock equivalents having an anti-dilutive effect on earnings per share are excluded from the calculation of diluted earnings per share. For each of the three months ended September 30, 2016 and 2015, diluted loss per share is the same as basic loss per share since the addition of any contingently issuable shares would be anti-dilutive.

Stock dividends or stock splits be accounted for retroactively if the stock dividends or stock splits occur during the period, or retroactively if the stock dividends or stock splits occur after the end of the period but before the release of the financial statements, by considering it outstanding of the entirety of each period presented. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

Comprehensive income (loss)

Comprehensive income (loss) consists of net income (loss) and foreign currency translation adjustments.

Recent Accounting Pronouncements

In August 2016, the FASB has issued Accounting Standards Update (ASU) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provide guidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from Equity Method Investees; (8) Beneficial Interests in Securitization Transactions; and Separately Identifiable Cash Flows and Application of the Predominance Principle. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. Management is evaluating the effect, if any, on the Company’s consolidated financial statements.

In October 2016, the FASB has issued Accounting Standards Update (ASU) No. 2016-17, Consolidation (Topic 810): Interests held through related parties that are under common control. The amendments in this ASU require that the reporting entity, in determining whether it satisfies the second characteristic of a primary beneficiary, to include all of its direct variable interests in a VIE and, on a proportionate basis, its indirect variable interests in a VIE held through related parties, including related parties that are under common control with the reporting entity. The amendments are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. Management does not believe the adoption of this ASU would have a material effect on the Company’s consolidated financial statements.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications have no effect on the accompanying unaudited condensed consolidated statements of operations and cash flows.

XML 18 R8.htm IDEA: XBRL DOCUMENT v3.5.0.2
Accounts receivable, net
3 Months Ended
Sep. 30, 2016
Accounts receivable, net [Text Block]

Note 3 – Accounts receivable, net

Accounts receivable, net consisted of the following:

    September 30, 2016     June 30, 2016  
             
Accounts receivable $ 53,254,443   $ 51,812,683  
             
Less: Allowance for doubtful accounts   (14,255,681 )   (11,524,131 )
             
Total accounts receivable, net $ 38,998,762   $ 40,288,552  

Movement of allowance for doubtful accounts is as follows:

    Three months ended     Year ended  
    September 30, 2016     June 30, 2016  
             
Beginning balance $ 11,524,131   $ 28,209,249  
Provision for doubtful accounts   2,702,640     2,591,465  
Less: write-off   -     (17,482,713 )
Exchange rate effect   28,910     (1,793,870 )
Ending balance $ 14,255,681   $ 11,524,131  
XML 19 R9.htm IDEA: XBRL DOCUMENT v3.5.0.2
Inventories
3 Months Ended
Sep. 30, 2016
Inventories [Text Block]

Note 4 – Inventories

Inventories consisted of the following:

    September 30, 2016     June 30, 2016  
Raw materials $ 690,852   $ 1,023,471  
XML 20 R10.htm IDEA: XBRL DOCUMENT v3.5.0.2
Other receivables, net
3 Months Ended
Sep. 30, 2016
Other receivables, net [Text Block]

Note 5 – Other receivables, net

Other receivables

Other receivables consisted of the following:

    September 30, 2016     June 30, 2016  
Other receivables $ 1,829,724   $ 7,742,057  
Less: Allowance for doubtful accounts   (1,621,504 )   (2,334,672 )
Other receivables, net   208,220     5,407,385  
Other receivable from sale of Asset Group   1,232,409     1,685,645  
           Total $ 1,440,629   $ 7,093,030  

Movement of allowance for doubtful accounts is as follows:

    Three months ended     Year ended  
    September 30, 2016     June 30, 2016  
             
Beginning balance $ 2,334,672   $ 2,403,362  
Provision for (recovery of) doubtful accounts   (704,456 )   129,212  
Less: write-off   -     -  
Exchange rate effect   (8,712 )   (197,902 )
Ending balance $ 1,621,504   $ 2,334,672  

Other receivable from sale of Asset Group

On February 29, 2016, the Company terminated an operating lease for its concrete plant in the eastern suburban area of Beijing due to the fact that the plant was not operating at ideal capacity and the Company did not anticipate it would be in the foreseeable future. The Company entered into an agreement with the lessor to terminate its operating lease, which was originally effective from August 18, 2013 to August 17, 2021, and for the sale of certain of the Company’s assets and liabilities (“Asset Group”) at the leased location. Under the agreement, the carrying value of the Asset Group was determined to be RMB13.7 million (approximately $2.1 million), and was settled for RMB11.2 million (approximately $1.7 million). The Company recognized approximately $0.4 million loss from the sale of the Asset Group for the year ended June 30, 2016. Pursuant to the terms of the agreement, the remaining consideration of RMB8.2 million (approximately $1.2 million) as of September 30, 2016 are to be paid by December 31, 2016.

In accordance with ASC 205, the Company did not report the sale of the Asset Group as discontinued operations as the sale of the Asset Group did not represent a strategic shift that has a major effect on the Company’s operations and financial results.

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Property, plant and equipment
3 Months Ended
Sep. 30, 2016
Property, plant and equipment [Text Block]

Note 6 – Property, plant and equipment

Property, plant and equipment consist of the following:

    September 30, 2016     June 30, 2016  
             
Machinery and equipment $ 753,849   $ 754,997  
             
Transportation equipment   4,319,156     4,299,862  
             
Office equipment   1,167,510     1,172,059  
             
Buildings and improvements   313,687     314,909  
             
Total   6,554,202     6,541,827  
             
Less: Accumulated depreciation   (2,129,892 )   (1,832,033 )
             
Plant and equipment, net $ 4,424,310     4,709,794  

Depreciation expense for the three months ended September 30, 2016 and 2015 amounted to approximately $0.3 million and $0.5 million, respectively.

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Prepayments and advances
3 Months Ended
Sep. 30, 2016
Prepayments and advances [Text Block]

Note 7 – Prepayments and advances

Prepayments and advances consisted of the following:

    September 30, 2016     June 30, 2016  
             
Advances on inventory purchases $ 33,796,223   $ 37,209,699  
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Credit Facilities
3 Months Ended
Sep. 30, 2016
Credit Facilities [Text Block]

Note 8 – Credit Facilities

Short term loans - banks:

The outstanding balances on these loans consisted of the following:

    September 30,     June 30,  
    2016     2016  
             
Loans from China Construction Bank, each with an interest rate from 4.35% per annum, due October and December 2016, and March and September 2017, among which, $1.5 million was paid in October 2016, guaranteed by Beijing Jinshengding Mineral Products Co., LTD and Mr. Xianfu Han.   13,492,800     12,404,320  
             
Loan from Bank of Beijing, interest rate at 5.66% per annum, due March 2017, guaranteed by Beijing Jinshengding Mineral Products Co., LTD and Mr. Xianfu Han.   4,497,600     4,515,120  
             
  $ 17,990,400   $ 16,555,440  

Beijing Jinshengding Mineral Products Co., LTD is a supplier to the Company. Mr. Xianfu Han is the Company’s Chief Executive Officer. Also see Note 9 – Related party transactions.

Interest expenses were approximately $0.2 million and $0.2 million for the three months ended September 30, 2016 and 2015, respectively.

Notes payable:

Bank notes are issued to a third party for inventory purchases. The notes payable are guaranteed by Beijing Jinshengding Mineral Products Co., LTD., Xianfu Han and his spouse, Chunying Wang, and Weili He and his spouse, Junkun Chen, and amounted to approximately $20.5 million and $18.1 million as of September 30, 2016 and June 30, 2016, respectively, and were non-interest bearing with expiration dates between October 2016 (repaid) and February 2017. The restricted cash for the notes was approximately $4.6 million and $4.1 million as of September 30 and June 30, 2016, respectively.

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Related party transactions
3 Months Ended
Sep. 30, 2016
Related party transactions [Text Block]

Note 9 – Related party transactions

Other payables – shareholders

Two shareholders have advanced funds to BVI-ACM for working capital purposes. The advances are non-interest bearing, unsecured, and are payable in cash on demand. These two shareholders are officers of the Company. They and their spouses also guaranteed certain short-term loans payable and notes payable of the Company (see Note 8). The other payables balance also includes the Company’s salary payables to the two shareholders.

Other payables - shareholders consisted of the following:

    September 30, 2016     June 30, 2016  
             
Xianfu Han $ 890,735   $ 715,086  
             
Weili He   903,082     776,039  
             
  $ 1,793,817   $ 1,491,125  
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Income taxes
3 Months Ended
Sep. 30, 2016
Income taxes [Text Block]

Note 10 – Income taxes

(a) Corporate income tax

China ACM was organized in the United States. China ACM had no taxable income for United States income tax purposes for the three months ended September 30, 2016 and 2015, respectively. As of September 30, 2016, China ACM’s net operating loss carry forward for United States income taxes was approximately $0.4 million. The net operating loss carry forward are available to reduce future years’ taxable income through year 2033. Management believes that the realization of the benefits from these losses appears uncertain due to the Company’s operating history and continued losses in the United States. Accordingly, the Company has provided a 100% valuation allowance on the deferred tax asset to reduce the asset to zero. As of September 30 and June 30, 2016, valuation allowance for deferred tax assets was approximately $0.2 million and $0.2 million, respectively. Management reviews this valuation allowance periodically and makes changes accordingly.

BVI-ACM was incorporated in the British Virgin Islands (“BVI”) and where its income tax rate is 0% under the current laws of the BVI.

China-ACMH and VIEs-Chinese operations

China-ACMH and VIEs are governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Chinese Enterprise Income Tax (“EIT”) law, the statutory corporate income tax rate applicable to most companies is 25%. In 2009, Xin Ao applied and received an Enterprise High-Tech Certificate. The certificate was awarded based on Xin Ao’s involvement in producing high-tech products, its research and development, as well as its technical services. As granted by the State Administration of Taxation of the PRC, Xin Ao is entitled to a reduction in its income tax rate from 25% to 15% until 2018.

The EIT Law imposes a 10% withholding income tax, subject to reduction based on tax treaties where applicable, for dividends distributed by a foreign invested enterprise to its immediate holding company outside China. Such dividends were exempted from PRC tax under the previous income tax law and regulations. The Company intends to permanently reinvest undistributed earnings of its Chinese operations located in the PRC. As a result, there is no deferred tax expense related to withholding tax on the future repatriation of these earnings.

Loss before provision for income taxes consisted of:

    Three months ended September 30,  
    2016     2015  
             
USA and BVI $ (643,524 ) $ (399,845 )
China   (4,677,248 )   (692,306 )
  $ (5,320,772 ) $ (1,092,151 )

Significant components of deferred tax assets were as follows:

    September 30, 2016     June 30, 2016  
Deferred tax assets            
   Allowance for doubtful accounts $ 5,482,794   $ 5,169,993  
   Impairment loss of long-lived assets   393,673     393,673  
   Net operating loss carryforward in China   1,364,681     975,894  
   Net operating loss carryforward in the U.S.   244,914     217,020  
   Valuation allowance   (7,486,062 )   (6,756,580 )
Total deferred tax assets - current $   -   $   -  

As of September 30 and June 30, 2016, the Company believes it is more likely than not that its China operations will be unable to fully utilize its deferred tax assets related to its allowance for doubtful accounts, impairment loss of long-lived assets and the net operating loss carry forward in China. As the Company continued to incur losses in its China operations, it is more likely than not that it will not have sufficient income to utilize its deferred tax assets. As of September 30, 2016, the Company has a net operating loss carry forward in China that expires in 2021.  As a result, the Company had provided 100% allowance on all the deferred tax assets of approximately $7.3 million and $6.5 million as of September 30 and June 30, 2016, respectively.

The Company has incurred losses from its U.S. operations during all periods presented. Accordingly, management provided approximately $0.3 million and $0.2 million of valuation allowance against the deferred tax assets related to the Company’s U.S. operations as of September 30, 2016 and June 30, 2016, respectively, since the deferred tax benefits of the net operating loss carry forward in the U.S. might not be utilized.

Changes to valuation allowance for deferred tax assets were as follows:

    Three months ended     Year ended  
    September 30, 2016     June 30, 2016  
For deferred tax assets            
Beginning balance $ 6,756,580     3,064,527  
   Allowance for doubtful accounts   312,801     2,414,859  
   Impairment loss of long-lived assets   -     393,673  
   Change in net operating loss carry forward in China   388,787     975,894  
   Change in net operating loss carry forward in U.S.   27,894     (92,373 )
             
Ending balance $ 7,486,062     6,756,580  

(b) Uncertain tax positions

There were no uncertain tax positions as of September 30 and June 30, 2016. Management does not anticipate any potential future adjustments which would result in a material change to its tax positions. For the three months ended September 30, 2016 and 2015, the Company did not incur any tax related interest and penalties.

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Shareholders equity
3 Months Ended
Sep. 30, 2016
Shareholders equity [Text Block]

Note 11 – Shareholders’ equity

Restricted Stock Grants

Restricted stock grants are measured based on the market price on the grant date. The Company has granted restricted shares of common stock to the members of the board of directors (the “Board”), senior management and consultants.

Effective August 20, 2016, the Board granted an aggregate of 106,859 shares of restricted common stock, which were issued with a market value of $308,823 to a consultant under the 2009 Plan. These shares shall be vested in two tranches upon achieving certain performance-based milestones. As of September 30, 2016, these shares have not vested and the milestones have not been determined by the Board.

Effective August 20, 2016, the Board granted an aggregate of 100,000 shares of restricted common stock, which were issued with a market value of $289,000 to two employees under the 2009 Plan. These shares are vested immediately upon grant.

For each of the three months ended September 30, 2016 and 2015, the Company recognized approximately $0.3 million of compensation expenses related to restricted stock grants.

Following is a summary of the restricted stock grants:

          Weighted Average     Aggregate  
          Grant Date     Intrinsic  
Restricted stock grants   Shares     Fair Value Per Share     Value  
Nonvested as of June 30, 2016   -   $   -   $   -  
Granted   206,859   $ 2.89   $ 597,823  
Vested   (100,000 ) $ 2.89   $ 289,000  
Nonvested as of September 30, 2016   106,859   $ 2.89   $ 308,823  
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Reserves and dividends
3 Months Ended
Sep. 30, 2016
Reserves and dividends [Text Block]

Note 12 – Reserves and dividends

The laws and regulations of the PRC require that before a foreign invested enterprise can legally distribute profits, it must first satisfy all its tax liabilities, provide for losses in previous years, and make allocations, in proportions determined at the discretion of the Board, after the statutory reserves. The statutory reserves include the surplus reserve fund and the common welfare fund.

The Company is required to transfer 10% of its net income, as determined in accordance with the PRC accounting rules and regulations, to a statutory surplus reserve fund until such reserve balance reaches 50% of the Company’s registered capital. As of June 30, 2016, the remaining reserve to fulfill the 50% registered capital requirement amounted to $1.9 million. As of September 30, 2016, the capital requirement amount reduced to approximately $1.7 million after the dissolution of Da Tong.

The transfer to this reserve must be made before the distribution of any dividends to the Company’s shareholders. The surplus reserve fund is non-distributable other than during liquidation. The surplus reserve fund can however be used to fund previous years’ losses, if any, and may be utilized for business expansion or converted into share capital by issuing new shares to existing shareholders in proportion to their shareholding or by increasing the par value of the shares currently held by them, provided that the remaining reserve balance after such issue is not less than 25% of the registered capital.

The Chinese government restricts distributions of registered capital and the additional investment amounts required by foreign invested enterprises. Approval by the Chinese government must be obtained before distributions of these amounts can be returned to the shareholders.

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Employee post-retirement benefits
3 Months Ended
Sep. 30, 2016
Employee post-retirement benefits [Text Block]

Note 13 – Employee post-retirement benefits

The Company offers a defined contribution plan to eligible employees which consists of two parts: (i) the first part, paid by the Company, is 20% of the employee’s compensation from the prior year and (ii) the second part, paid by the employee, is 8% of the employee’s compensation. The Company’s contributions of employment benefits were approximately $0.2 million for each of the three months ended September 30, 2016 and 2015.

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Commitments and contingencies
3 Months Ended
Sep. 30, 2016
Commitments and contingencies [Text Block]

Note 14 – Commitments and contingencies

Lease Commitments

The Company has a lease agreement for a concrete service plant with an unrelated party which will expire on September 30, 2017, with annual payments of approximately $202,000. The Company has a lease agreement for a roadway access in the west side entry of the concrete service plant with an unrelated party which will expire on June 30, 2019. The Company has a lease agreement to lease office space from a related party through October 31, 2018, with annual payments of approximately $24,000.

Operating lease expenses are allocated between the cost of revenue and selling, general, and administrative expenses. Total operating lease expenses for the three months ended September 30, 2016 and 2015 were approximately $60,000 and $200,000, respectively. Future annual lease payments under non-cancelable operating leases with a term of one year or more consist of the following:

Twelve months ending September 30,   Amount  
2017 $ 241,000  
2018   39,000  
2019   13,000  
Total $ 293,000  

Legal Contingencies

From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Company’s management does not expect any liability from the disposition of such claims and litigation individually or in the aggregate would have a material adverse impact on the Company’s unaudited condensed consolidated financial position, results of operations and cash flows.

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Concentrations
3 Months Ended
Sep. 30, 2016
Concentrations [Text Block]

Note 15 - Concentrations

For the three months ended September 30, 2016, the Company had two customers representing approximately 16.8% and 16.5% of total revenue. For the three months ended September 30, 2015, the Company had one customer representing approximately 12.4% of total revenue. As of September 30 and June 30, 2016, no customer accounting for more than 10% of the total balance of accounts receivable.

For the three months ended September 30, 2016, the Company had two vendors representing approximately 10.7% and 10.2% of total purchases. For the three months ended September 30, 2015, the Company had one vendor representing approximately 10.1% of total purchases. As of September 30, 2016, the Company had one vendor accounting for approximately 10.7% of total balance of accounts payable. As of June 30, 2016, no vendor accounted for more than 10% of the total balance of accounts payable.

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Summary of Significant Accounting Policies (Policies)
3 Months Ended
Sep. 30, 2016
Liquidity [Policy Text Block]

Liquidity

In assessing the Company’s liquidity, the Company monitors and analyzes its cash on-hand and its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations.

The Company engages in the production of advanced construction materials for large scale infrastructure, commercial and residential developments. The Company’s business is capital intensive and the Company is highly leveraged. Debt financing in the form of short term bank loans, loans from related parties and bank acceptance notes, have been utilized to finance the working capital requirements and the capital expenditures of the Company. Due to recurring losses, the Company’s working capital was approximately $11.6 million as of September 30, 2016 as compared to $16.4 million as of June 30, 2016. As of September 30, 2016, the Company had cash on-hand of approximately $8.2 million and restricted cash balances of approximately $4.6 million with the remaining current assets mainly composed of accounts receivables, other receivables and prepayments and advances.

Although the Company believes that it can realize its current assets in the normal course of business, the Company’s ability to repay its current obligations will depend on the future realization of its current assets. Management has considered its historical experience, the economy, trends in the construction industry, the expected collectability of the accounts and other receivables and the realization of the prepayments on inventory, and provided for an allowance for doubtful accounts as of September 30, 2016. The Company expects to realize the balances net of the allowance within the normal operating cycle of a twelve month period. If the Company is unable to realize its current assets within the normal operating cycle of a twelve month period, the Company may have to consider its available source of funds through the following:

  • Financial support and credit guarantee commitment from the Company’s majority shareholders (See Note 9 - Related party transactions).
  • Other available sources of financing from PRC banks and other financial institutions given the Company’s credit history.

Based on the above considerations, the Company’s management is of the opinion that it has sufficient funds to meet the Company’s working capital requirements and debt obligations as they become due. However, there is no assurance that management will be successful in their plan. There are a number of factors that could potentially arise that could result in shortfalls to the Company’s plan, such as the demand for the Company’s products, economic conditions, the competitive pricing in the concrete-mix industry, the Company’s operating results continuing to deteriorate and the Company’s bank and shareholders not being able to provide continued support.

Basis of presentation [Policy Text Block]

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These financial statements include the accounts of all directly, indirectly owned subsidiaries and variable interest entities listed below. All material intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary to give a fair presentation have been included. Interim results are not necessarily indicative of results of a full year. The information in this Form 10-Q should be read in conjunction with information included in the annual report for the fiscal year ended June 30, 2016 on Form 10-K filed with the SEC on September 28, 2016 and have been consistently applied.

Principles of consolidation [Policy Text Block]

Principles of consolidation

The unaudited condensed consolidated financial statements reflect the activities of the following subsidiaries and VIEs. All material intercompany transactions have been eliminated.

        Ownership
Subsidiaries and VIEs   Place incorporated   percentage
BVI-ACM   British Virgin Island   100%
China-ACMH   Beijing, China   100%
Xin Ao   Beijing, China   VIE
Heng Yuan Zheng Ke   Beijing, China   VIE
Hong Sheng An   Beijing, China   VIE
Heng Tai   Beijing, China   VIE
Da Tong*   Datong, China   VIE
Heng Xin**   Luanxian, China   VIE

*Dissolved in August 2016 ** Dissolved in November 2016

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 the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIEs. The primary beneficiary is required to consolidate the VIEs for financial reporting purposes.

Management makes ongoing assessments of whether China ACM is the primary beneficiary of Xin Ao and its subsidiaries. Based upon a series of contractual arrangements, the Company determined that Xin Ao and its subsidiaries are VIEs subject to consolidation and that China ACM is the primary beneficiary. Accordingly, the accounts of Xin Ao and its subsidiaries are consolidated with those of China ACM.

The carrying amount of the VIEs’ assets and liabilities are as follows:

    September 30,     June 30,  
    2016     2016  
   Current assets $ 87,571,976   $ 90,518,451  
   Property, plant and equipment   4,424,310     4,709,794  
Total assets   91,996,286     95,228,245  
             
   Liabilities   (74,137,991 )   (72,579,677 )
             
   Intercompany payables*   (7,297,139 )   (7,355,650 )
             
Total liabilities   (81,435,130 )   (79,935,327 )
             
Net assets $ 10,561,156   $ 15,292,918  

* Payables to China - ACMH and BVI-ACM are eliminated upon consolidation.

Use of estimates and assumptions [Policy Text Block]

Use of estimates and assumptions

The preparation of 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 financial statements, and the reported amounts of revenues and expenses during the reporting periods. The significant estimates and assumptions made in the preparation of the Company’s unaudited condensed consolidated financial statements include deferred income taxes, allowance for doubtful accounts, deferred stock-based compensation, the fair value and useful lives of property, plant and equipment. Actual results could be materially different from those estimates.

Foreign currency translation [Policy Text Block]

Foreign currency translation

The reporting currency of the Company is the U.S. dollar. The functional currency of China ACM and BVI-ACM is the U.S. dollar. China-ACMH and its VIEs use their local currency Chinese Renminbi (“RMB”) as their functional currency. In accordance with the US GAAP guidance on Foreign Currency Translation, the Company’s results of operations and cash flows are translated at the average exchange rates during the period, assets and liabilities are translated at the exchange rates at the balance sheet dates, and equity is translated at historical exchange rates. As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.

Asset and liability accounts at September 30 and June 30, 2016, were translated at RMB6.67 to $1.00 and RMB6.64 to $1.00, respectively. The average translation rates applied to the consolidated statements of operations and comprehensive loss and cash flows for the three months ended September 30, 2016 and 2015 were RMB6.67 and RMB6.27 to $1.00, respectively.

Translation gains (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. There were no foreign currency transaction gains or losses for each of the three months ended September 30, 2016 and 2015. The effects of foreign currency translation adjustments are included in shareholders’ equity as a component of accumulated other comprehensive income.

Revenue recognition [Policy Text Block]

Revenue recognition

Revenue is realized or realizable and earned when four criteria are met:

  • Persuasive evidence of an arrangement exists (the Company considers its sales contracts to be pervasive evidence of an arrangement);
  • Delivery has occurred;

  • The seller’s price to the buyer is fixed or determinable; and

  • Collectability of payment is reasonably assured.

The Company sells its concrete products primarily to major local construction companies. Sales agreements are signed with each customer. The agreements list all terms and conditions with the exception of delivery date and quantity, which are evidenced separately in purchase orders. The purchase price of products is fixed in the agreement and customers are not permitted to renegotiate after the contracts have been signed. The agreements include a cancellation clause if the Company or customers breach the contract terms specified in the agreement.

The Company recognizes revenue when title and ownership of the goods are transferred upon shipment to the customer by the Company and collectability of payment is reasonably assured.

The Company includes the shipping and handling fee in both revenue and cost of revenue.

Financial instruments [Policy Text Block]

Financial instruments

US GAAP regarding fair value of financial instruments and related fair value measurements define fair value, establish a three-level valuation hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The three levels of inputs are defined as follows:

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets;

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument;

Level 3 inputs to the valuation methodology are unobservable.

Current assets and current liabilities are reported in the consolidated balance sheets at face value or cost, which approximate fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest.

Cash and cash equivalents [Policy Text Block]

Cash and cash equivalents

The Company considers all highly liquid investments with the original maturity of three months or less at the date of purchase to be cash equivalents. The Company currently maintains substantially all of its day-to-day operating cash balances with major financial institutions within PRC and US. As of September 30 and June 30, 2016, the Company had deposits in excess of federally insured limits totaling approximately $8.2 million and $0.9 million, respectively.

Restricted cash [Policy Text Block]

Restricted cash

As of September 30 and June 30, 2016, restricted cash consisted of collateral representing cash deposits for bank guarantees and notes payable.

Accounts receivable [Policy Text Block]

Accounts receivable

During the normal course of business, the Company extends unsecured credit to its customers. Accounts are considered past due after 30 days. In establishing the required allowance for doubtful accounts, management considers the historical experience, the economy, trends in the construction industry and the expected collectability of the overdue receivables. Management reviews its accounts receivable each reporting period to determine if the allowance for doubtful accounts is adequate. An estimate for doubtful accounts is recorded when collection of the full amount is no longer probable. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovering is considered remote. The Company provides a provision of 15% of allowance for doubtful accounts for accounts receivable balance that are past due more than 180 days but less than one year, 40% of allowance for doubtful accounts for accounts receivable past due from one to two years, 75% of allowance for doubtful accounts for accounts receivable past due beyond two years, 100% of allowance for doubtful accounts for accounts receivable past due beyond three years, plus additional amount as necessary, which the Company’s collection department had determined the collection of the full amount is remote with the approval from the Company’s management to provide 100% provision allowance for doubtful accounts. The Company’s management has continued to evaluate the reasonableness of the valuation allowance policy and update it if necessary.

Other receivables [Policy Text Block]

Other receivables

Other receivables primarily include prepayments to be refunded by our suppliers if the supplies do not meet the Company’s specification need, advances to employees, due from unrelated entities, VAT tax refunds and other deposits. Management regularly reviews the aging of receivables and changes in payment trends and records allowance when management believes collection of amounts due are at risk. Accounts considered uncollectible are written off against the allowance after exhaustive efforts at collection are made. The Company provides a provision of 5% of allowance for doubtful accounts for other receivables balance that are aged within one year, 50% of allowance for doubtful accounts for other receivables aged from one to two years, 100% of allowance for doubtful accounts for other receivables aged beyond two years.

Inventories [Policy Text Block]

Inventories

Inventories consist of raw materials and are stated at the lower of cost or market, as determined using the weighted average cost method. Management compares the cost of inventories with the market value and an allowance is made for writing down the inventory to its market value, if lower than cost. As of September 30 and June 30, 2016, the Company determined that no reserves for obsolescence were necessary.

Prepayments and advances [Policy Text Block]

Prepayments and advances

Prepayments are funds deposited or advanced to outside vendors for future inventory purchases. As a standard practice in China, many of the Company’s vendors require a certain amount to be deposited with them as a guarantee that the Company will complete its purchases on a timely basis. This amount is refundable and bears no interest. The Company has legally binding contracts with its vendors, which require any outstanding prepayments to be returned to the Company when the contract ends.

The Company wrote off approximately $0.1 million on unrealizable prepayments for the three months ended September 30, 2016.

Property, plant and equipment [Policy Text Block]

Property, plant and equipment

Property, plant and equipment are stated at cost. Expenditures for maintenance and repairs are charged to operations as incurred while additions, renewals and improvements are capitalized. Depreciation is provided over the estimated useful life of each class of depreciable assets and is computed using the straight-line method with 5% residual value. Leasehold improvements are amortized over the lesser of estimated useful lives or lease terms, as appropriate.

The estimated useful lives of assets are as follows:

  Useful life
   
Transportation equipment 7 - 10 years
   
Plant and machinery 10 years
   
Office equipment 5 years
   

Buildings and improvements

3 - 20 years
Accounting for long-lived assets [Policy Text Block]

Accounting for long-lived assets

The Company classifies its long-lived assets into: (i) machinery and equipment; (ii) transportation equipment; (iii) office and equipment; and (iv) buildings and improvements.

Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be fully recoverable. It is possible that these assets could become impaired as a result of technology or other industry changes. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

If the value of an asset is determined to be impaired, the impairment to be recognized is measured in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or the fair value, less disposition costs.

Due to recurring losses, the deterioration of the concrete-mix industry in the city of Beijing, PRC and competitive pricing pressure, the Company has performed an impairment analysis and determined its long-lived assets were impaired during the year ended June 30, 2016. As a result, the Company recorded an impairment charge of $2.6 million for the year ended June 30, 2016. These charges were related to the impairment of the Company’s transportation equipment and plant and machinery. The loss was determined using Level 3 inputs (See Note 6). There was no impairment charge for the three months ended September 30, 2016 and 2015.

Competitive pricing pressure and changes in interest rates could materially and adversely affect the Company’s estimates of future net cash flows to be generated by the long-lived assets, and thus could result in future impairment losses.

Stock-based compensation [Policy Text Block]

Stock-based compensation

The Company records stock-based compensation expense at fair value on the grant date and recognizes the expense over the employee's requisite service period. The Company’s expected volatility assumption is based on the historical volatility of Company’s stock. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is based on the Company’s current and expected dividend policy.

Income taxes [Policy Text Block]

Income taxes

The Company accounts for income taxes in accordance with ASC 740, “Income Taxes,” which requires the Company to use the assets and liability method of accounting for income taxes. Under the assets and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carry forwards. Under this accounting standard, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized.

ASC 740-10, “Accounting for Uncertainty in Income Taxes,” defines uncertainty in income taxes and the evaluation of a tax position as a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. United States federal, state and local income tax returns prior to 2013 are not subject to examination by any applicable tax authorities.

Value Added Tax [Policy Text Block]

Value Added Tax

Enterprises or individuals, who sell commodities, engage in repair and maintenance, or import and export goods in the PRC are subject to a value added tax. The standard VAT rate was 6% of gross sales for the Company’s industry, which was reduced to 3% of gross sales on July 1, 2014. Due to the fact that the Company uses recycled raw materials to manufacture its products, the State Administration of Taxation granted the Company a VAT tax exemption, which expired in June 2015. From July 2015 going forward, the Company is subject to VAT at the reduced rate of 3% of the gross sales price.

Research and development [Policy Text Block]

Research and development

Research and development costs are expensed as incurred. The cost of materials and equipment that are acquired or constructed for research and development activities, and have alternative future uses, either in research and development, marketing, or sales, are classified as property and equipment, and depreciated over their estimated useful lives..

Earnings (loss) per share [Policy Text Block]

Earnings (loss) per share

The Company reports earnings (loss) per share in accordance with the US GAAP, which requires presentation of basic and diluted earnings (loss) per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings (loss) per share excludes dilution and is computed by dividing income (loss) available to common shareholders by the weighted average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts, such as warrants, options, restricted stock based grants and convertible preferred stock, to issue common stock were exercised and converted into common stock. Common stock equivalents having an anti-dilutive effect on earnings per share are excluded from the calculation of diluted earnings per share. For each of the three months ended September 30, 2016 and 2015, diluted loss per share is the same as basic loss per share since the addition of any contingently issuable shares would be anti-dilutive.

Stock dividends or stock splits be accounted for retroactively if the stock dividends or stock splits occur during the period, or retroactively if the stock dividends or stock splits occur after the end of the period but before the release of the financial statements, by considering it outstanding of the entirety of each period presented. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

Comprehensive income (loss) [Policy Text Block]

Comprehensive income (loss)

Comprehensive income (loss) consists of net income (loss) and foreign currency translation adjustments.

Recent Accounting Pronouncements [Policy Text Block]

Recent Accounting Pronouncements

In August 2016, the FASB has issued Accounting Standards Update (ASU) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provide guidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from Equity Method Investees; (8) Beneficial Interests in Securitization Transactions; and Separately Identifiable Cash Flows and Application of the Predominance Principle. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. Management is evaluating the effect, if any, on the Company’s consolidated financial statements.

In October 2016, the FASB has issued Accounting Standards Update (ASU) No. 2016-17, Consolidation (Topic 810): Interests held through related parties that are under common control. The amendments in this ASU require that the reporting entity, in determining whether it satisfies the second characteristic of a primary beneficiary, to include all of its direct variable interests in a VIE and, on a proportionate basis, its indirect variable interests in a VIE held through related parties, including related parties that are under common control with the reporting entity. The amendments are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. Management does not believe the adoption of this ASU would have a material effect on the Company’s consolidated financial statements.

Reclassifications [Policy Text Block]

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications have no effect on the accompanying unaudited condensed consolidated statements of operations and cash flows.

XML 32 R22.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of significant accounting policies (Tables)
3 Months Ended
Sep. 30, 2016
Schedule of Ownership of Subsidiaries and VIE's [Table Text Block]
        Ownership
Subsidiaries and VIEs   Place incorporated   percentage
BVI-ACM   British Virgin Island   100%
China-ACMH   Beijing, China   100%
Xin Ao   Beijing, China   VIE
Heng Yuan Zheng Ke   Beijing, China   VIE
Hong Sheng An   Beijing, China   VIE
Heng Tai   Beijing, China   VIE
Da Tong*   Datong, China   VIE
Heng Xin**   Luanxian, China   VIE
Schedule of carrying amount of the VIE's assets and liabilities [Table Text Block]
    September 30,     June 30,  
    2016     2016  
   Current assets $ 87,571,976   $ 90,518,451  
   Property, plant and equipment   4,424,310     4,709,794  
Total assets   91,996,286     95,228,245  
             
   Liabilities   (74,137,991 )   (72,579,677 )
             
   Intercompany payables*   (7,297,139 )   (7,355,650 )
             
Total liabilities   (81,435,130 )   (79,935,327 )
             
Net assets $ 10,561,156   $ 15,292,918  
Schedule of Estimated Useful Lives of Assets [Table Text Block]
  Useful life
   
Transportation equipment 7 - 10 years
   
Plant and machinery 10 years
   
Office equipment 5 years
   

Buildings and improvements

3 - 20 years
XML 33 R23.htm IDEA: XBRL DOCUMENT v3.5.0.2
Accounts receivable, net (Tables)
3 Months Ended
Sep. 30, 2016
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]
    September 30, 2016     June 30, 2016  
             
Accounts receivable $ 53,254,443   $ 51,812,683  
             
Less: Allowance for doubtful accounts   (14,255,681 )   (11,524,131 )
             
Total accounts receivable, net $ 38,998,762   $ 40,288,552  
Schedule of Allowance for Doubtful Accounts [Table Text Block]
    Three months ended     Year ended  
    September 30, 2016     June 30, 2016  
             
Beginning balance $ 11,524,131   $ 28,209,249  
Provision for doubtful accounts   2,702,640     2,591,465  
Less: write-off   -     (17,482,713 )
Exchange rate effect   28,910     (1,793,870 )
Ending balance $ 14,255,681   $ 11,524,131  
XML 34 R24.htm IDEA: XBRL DOCUMENT v3.5.0.2
Inventories (Tables)
3 Months Ended
Sep. 30, 2016
Schedule of Inventory, Current [Table Text Block]
    September 30, 2016     June 30, 2016  
Raw materials $ 690,852   $ 1,023,471  
XML 35 R25.htm IDEA: XBRL DOCUMENT v3.5.0.2
Other receivables, net (Tables)
3 Months Ended
Sep. 30, 2016
Schedule of Other Receivables and Allowance for Doubtful Accounts [Table Text Block]
    September 30, 2016     June 30, 2016  
Other receivables $ 1,829,724   $ 7,742,057  
Less: Allowance for doubtful accounts   (1,621,504 )   (2,334,672 )
Other receivables, net   208,220     5,407,385  
Other receivable from sale of Asset Group   1,232,409     1,685,645  
           Total $ 1,440,629   $ 7,093,030  
Schedule of Movement of Allowance for Doubtful Accounts [Table Text Block]
    Three months ended     Year ended  
    September 30, 2016     June 30, 2016  
             
Beginning balance $ 2,334,672   $ 2,403,362  
Provision for (recovery of) doubtful accounts   (704,456 )   129,212  
Less: write-off   -     -  
Exchange rate effect   (8,712 )   (197,902 )
Ending balance $ 1,621,504   $ 2,334,672  
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.5.0.2
Property, plant and equipment (Tables)
3 Months Ended
Sep. 30, 2016
Schedule of Property, Plant and Equipment [Table Text Block]
    September 30, 2016     June 30, 2016  
             
Machinery and equipment $ 753,849   $ 754,997  
             
Transportation equipment   4,319,156     4,299,862  
             
Office equipment   1,167,510     1,172,059  
             
Buildings and improvements   313,687     314,909  
             
Total   6,554,202     6,541,827  
             
Less: Accumulated depreciation   (2,129,892 )   (1,832,033 )
             
Plant and equipment, net $ 4,424,310     4,709,794  
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.5.0.2
Prepayments and advances (Tables)
3 Months Ended
Sep. 30, 2016
Schedule of Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Table Text Block]
    September 30, 2016     June 30, 2016  
             
Advances on inventory purchases $ 33,796,223   $ 37,209,699  
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.5.0.2
Credit Facilities (Tables)
3 Months Ended
Sep. 30, 2016
Schedule of Short-term Debt [Table Text Block]
    September 30,     June 30,  
    2016     2016  
             
Loans from China Construction Bank, each with an interest rate from 4.35% per annum, due October and December 2016, and March and September 2017, among which, $1.5 million was paid in October 2016, guaranteed by Beijing Jinshengding Mineral Products Co., LTD and Mr. Xianfu Han.   13,492,800     12,404,320  
             
Loan from Bank of Beijing, interest rate at 5.66% per annum, due March 2017, guaranteed by Beijing Jinshengding Mineral Products Co., LTD and Mr. Xianfu Han.   4,497,600     4,515,120  
             
  $ 17,990,400   $ 16,555,440  
XML 39 R29.htm IDEA: XBRL DOCUMENT v3.5.0.2
Related party transactions (Tables)
3 Months Ended
Sep. 30, 2016
Schedule of Related Party Transactions [Table Text Block]
    September 30, 2016     June 30, 2016  
             
Xianfu Han $ 890,735   $ 715,086  
             
Weili He   903,082     776,039  
             
  $ 1,793,817   $ 1,491,125  
XML 40 R30.htm IDEA: XBRL DOCUMENT v3.5.0.2
Income taxes (Tables)
3 Months Ended
Sep. 30, 2016
Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block]
    Three months ended September 30,  
    2016     2015  
             
USA and BVI $ (643,524 ) $ (399,845 )
China   (4,677,248 )   (692,306 )
  $ (5,320,772 ) $ (1,092,151 )
Schedule of Deferred Tax Assets and Liabilities [Table Text Block]
    September 30, 2016     June 30, 2016  
Deferred tax assets            
   Allowance for doubtful accounts $ 5,482,794   $ 5,169,993  
   Impairment loss of long-lived assets   393,673     393,673  
   Net operating loss carryforward in China   1,364,681     975,894  
   Net operating loss carryforward in the U.S.   244,914     217,020  
   Valuation allowance   (7,486,062 )   (6,756,580 )
Total deferred tax assets - current $   -   $   -  
Schedule of Changes to Valuation Allowance for Deferred Tax Assets [Table Text Block]
    Three months ended     Year ended  
    September 30, 2016     June 30, 2016  
For deferred tax assets            
Beginning balance $ 6,756,580     3,064,527  
   Allowance for doubtful accounts   312,801     2,414,859  
   Impairment loss of long-lived assets   -     393,673  
   Change in net operating loss carry forward in China   388,787     975,894  
   Change in net operating loss carry forward in U.S.   27,894     (92,373 )
             
Ending balance $ 7,486,062     6,756,580  
XML 41 R31.htm IDEA: XBRL DOCUMENT v3.5.0.2
Shareholders equity (Tables)
3 Months Ended
Sep. 30, 2016
Schedule of the summary of Restricted stock grants [Table Text Block]
          Weighted Average     Aggregate  
          Grant Date     Intrinsic  
Restricted stock grants   Shares     Fair Value Per Share     Value  
Nonvested as of June 30, 2016   -   $   -   $   -  
Granted   206,859   $ 2.89   $ 597,823  
Vested   (100,000 ) $ 2.89   $ 289,000  
Nonvested as of September 30, 2016   106,859   $ 2.89   $ 308,823  
XML 42 R32.htm IDEA: XBRL DOCUMENT v3.5.0.2
Commitments and contingencies (Tables)
3 Months Ended
Sep. 30, 2016
Schedule of Future annual lease payments [Table Text Block]
Twelve months ending September 30,   Amount  
2017 $ 241,000  
2018   39,000  
2019   13,000  
Total $ 293,000  
XML 43 R33.htm IDEA: XBRL DOCUMENT v3.5.0.2
Organization and description of business (Narrative) (Details)
3 Months Ended
Sep. 30, 2016
Organization And Description Of Business 1 100.00%
XML 44 R34.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of significant accounting policies (Narrative) (Details) - 3 months ended Sep. 30, 2016
USD ($)
d
CNY (¥)
d
Summary Of Significant Accounting Policies 1 $ 11,600,000  
Summary Of Significant Accounting Policies 2 16,400,000  
Summary Of Significant Accounting Policies 3 8,200,000  
Summary Of Significant Accounting Policies 4 4,600,000  
Summary Of Significant Accounting Policies 5 | ¥   ¥ 6.67
Summary Of Significant Accounting Policies 6 1.00  
Summary Of Significant Accounting Policies 7 | ¥   6.64
Summary Of Significant Accounting Policies 8 1.00  
Summary Of Significant Accounting Policies 9 | ¥   6.67
Summary Of Significant Accounting Policies 10 | ¥   ¥ 6.27
Summary Of Significant Accounting Policies 11 1.00  
Summary Of Significant Accounting Policies 12 8,200,000  
Summary Of Significant Accounting Policies 13 $ 900,000  
Summary Of Significant Accounting Policies 14 | d 30 30
Summary Of Significant Accounting Policies 15 15.00% 15.00%
Summary Of Significant Accounting Policies 16 | d 180 180
Summary Of Significant Accounting Policies 17 40.00% 40.00%
Summary Of Significant Accounting Policies 18 75.00% 75.00%
Summary Of Significant Accounting Policies 19 100.00% 100.00%
Summary Of Significant Accounting Policies 20 100.00% 100.00%
Summary Of Significant Accounting Policies 21 5.00% 5.00%
Summary Of Significant Accounting Policies 22 50.00% 50.00%
Summary Of Significant Accounting Policies 23 100.00% 100.00%
Summary Of Significant Accounting Policies 24 $ 100,000  
Summary Of Significant Accounting Policies 25 5.00% 5.00%
Summary Of Significant Accounting Policies 26 $ 2,600,000  
Summary Of Significant Accounting Policies 27 50.00% 50.00%
Summary Of Significant Accounting Policies 28 6.00% 6.00%
Summary Of Significant Accounting Policies 29 3.00% 3.00%
Summary Of Significant Accounting Policies 30 3.00% 3.00%
XML 45 R35.htm IDEA: XBRL DOCUMENT v3.5.0.2
Other receivables, net (Narrative) (Details) - 3 months ended Sep. 30, 2016
USD ($)
CNY (¥)
Other Receivables, Net 1 | ¥   ¥ 13,700,000.0
Other Receivables, Net 2 $ 2,100,000.0  
Other Receivables, Net 3 | ¥   11,200,000.0
Other Receivables, Net 4 1,700,000.0  
Other Receivables, Net 5 400,000.0  
Other Receivables, Net 6 | ¥   ¥ 8,200,000
Other Receivables, Net 7 $ 1,200,000.0  
XML 46 R36.htm IDEA: XBRL DOCUMENT v3.5.0.2
Property, plant and equipment (Narrative) (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Property, Plant And Equipment 1 $ 300,000.0
Property, Plant And Equipment 2 $ 500,000.0
XML 47 R37.htm IDEA: XBRL DOCUMENT v3.5.0.2
Credit Facilities (Narrative) (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Credit Facilities 1 $ 200,000.0
Credit Facilities 2 200,000.0
Credit Facilities 3 20,500,000.0
Credit Facilities 4 18,100,000.0
Credit Facilities 5 4,600,000.0
Credit Facilities 6 $ 4,100,000
XML 48 R38.htm IDEA: XBRL DOCUMENT v3.5.0.2
Income taxes (Narrative) (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Income Taxes 1 $ 400,000.0
Income Taxes 2 100.00%
Income Taxes 3 $ 200,000.0
Income Taxes 4 $ 200,000.0
Income Taxes 5 0.00%
Income Taxes 6 25.00%
Income Taxes 7 25.00%
Income Taxes 8 15.00%
Income Taxes 9 10.00%
Income Taxes 10 100.00%
Income Taxes 11 $ 7,300,000.0
Income Taxes 12 6,500,000.0
Income Taxes 13 300,000.0
Income Taxes 14 $ 200,000.0
XML 49 R39.htm IDEA: XBRL DOCUMENT v3.5.0.2
Shareholders equity (Narrative) (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
shares
Shareholders Equity 1 | shares 106,859
Shareholders Equity 2 $ 308,823
Shareholders Equity 3 | shares 100,000
Shareholders Equity 4 $ 289,000
Shareholders Equity 5 $ 300,000.0
XML 50 R40.htm IDEA: XBRL DOCUMENT v3.5.0.2
Reserves and dividends (Narrative) (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Reserves And Dividends 1 10.00%
Reserves And Dividends 2 50.00%
Reserves And Dividends 3 50.00%
Reserves And Dividends 4 $ 1,900,000.0
Reserves And Dividends 5 $ 1,700,000.0
Reserves And Dividends 6 25.00%
XML 51 R41.htm IDEA: XBRL DOCUMENT v3.5.0.2
Employee post-retirement benefits (Narrative) (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Employee Post-retirement Benefits 1 20.00%
Employee Post-retirement Benefits 2 8.00%
Employee Post-retirement Benefits 3 $ 200,000.0
XML 52 R42.htm IDEA: XBRL DOCUMENT v3.5.0.2
Commitments and contingencies (Narrative) (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Commitments And Contingencies 1 $ 202,000
Commitments And Contingencies 2 24,000
Commitments And Contingencies 3 60,000
Commitments And Contingencies 4 $ 200,000
XML 53 R43.htm IDEA: XBRL DOCUMENT v3.5.0.2
Concentrations (Narrative) (Details)
3 Months Ended
Sep. 30, 2016
Concentrations 1 16.80%
Concentrations 2 16.50%
Concentrations 3 12.40%
Concentrations 4 10.00%
Concentrations 5 10.70%
Concentrations 6 10.20%
Concentrations 7 10.10%
Concentrations 8 10.70%
Concentrations 9 10.00%
XML 54 R44.htm IDEA: XBRL DOCUMENT v3.5.0.2
Schedule of Ownership of Subsidiaries and VIE's (Details)
3 Months Ended
Sep. 30, 2016
Summary Of Significant Accounting Policies Schedule Of Ownership Of Subsidiaries And Vie's 1 100.00%
Summary Of Significant Accounting Policies Schedule Of Ownership Of Subsidiaries And Vie's 2 100.00%
XML 55 R45.htm IDEA: XBRL DOCUMENT v3.5.0.2
Schedule of carrying amount of the VIE's assets and liabilities (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 1 $ 87,571,976
Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 2 90,518,451
Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 3 4,424,310
Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 4 4,709,794
Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 5 91,996,286
Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 6 95,228,245
Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 7 (74,137,991)
Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 8 (72,579,677)
Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 9 (7,297,139)
Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 10 (7,355,650)
Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 11 (81,435,130)
Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 12 (79,935,327)
Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 13 10,561,156
Summary Of Significant Accounting Policies Schedule Of Carrying Amount Of The Vie's Assets And Liabilities 14 $ 15,292,918
XML 56 R46.htm IDEA: XBRL DOCUMENT v3.5.0.2
Schedule of Estimated Useful Lives of Assets (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
yr
Summary Of Significant Accounting Policies Schedule Of Estimated Useful Lives Of Assets 1 | $ $ 7
Summary Of Significant Accounting Policies Schedule Of Estimated Useful Lives Of Assets 2 10
Summary Of Significant Accounting Policies Schedule Of Estimated Useful Lives Of Assets 3 10
Summary Of Significant Accounting Policies Schedule Of Estimated Useful Lives Of Assets 4 5
Summary Of Significant Accounting Policies Schedule Of Estimated Useful Lives Of Assets 5 | $ $ 3
Summary Of Significant Accounting Policies Schedule Of Estimated Useful Lives Of Assets 6 20
XML 57 R47.htm IDEA: XBRL DOCUMENT v3.5.0.2
Schedule of Accounts, Notes, Loans and Financing Receivable (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Accounts Receivable, Net Schedule Of Accounts, Notes, Loans And Financing Receivable 1 $ 53,254,443
Accounts Receivable, Net Schedule Of Accounts, Notes, Loans And Financing Receivable 2 51,812,683
Accounts Receivable, Net Schedule Of Accounts, Notes, Loans And Financing Receivable 3 (14,255,681)
Accounts Receivable, Net Schedule Of Accounts, Notes, Loans And Financing Receivable 4 (11,524,131)
Accounts Receivable, Net Schedule Of Accounts, Notes, Loans And Financing Receivable 5 38,998,762
Accounts Receivable, Net Schedule Of Accounts, Notes, Loans And Financing Receivable 6 $ 40,288,552
XML 58 R48.htm IDEA: XBRL DOCUMENT v3.5.0.2
Schedule of Allowance for Doubtful Accounts (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 1 $ 11,524,131
Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 2 28,209,249
Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 3 2,702,640
Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 4 2,591,465
Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 5 0
Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 6 (17,482,713)
Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 7 28,910
Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 8 (1,793,870)
Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 9 14,255,681
Accounts Receivable, Net Schedule Of Allowance For Doubtful Accounts 10 $ 11,524,131
XML 59 R49.htm IDEA: XBRL DOCUMENT v3.5.0.2
Schedule of Inventory, Current (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Inventories Schedule Of Inventory, Current 1 $ 690,852
Inventories Schedule Of Inventory, Current 2 $ 1,023,471
XML 60 R50.htm IDEA: XBRL DOCUMENT v3.5.0.2
Schedule of Other Receivables and Allowance for Doubtful Accounts (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 1 $ 1,829,724
Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 2 7,742,057
Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 3 (1,621,504)
Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 4 (2,334,672)
Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 5 208,220
Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 6 5,407,385
Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 7 1,232,409
Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 8 1,685,645
Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 9 1,440,629
Other Receivables, Net Schedule Of Other Receivables And Allowance For Doubtful Accounts 10 $ 7,093,030
XML 61 R51.htm IDEA: XBRL DOCUMENT v3.5.0.2
Schedule of Movement of Allowance for Doubtful Accounts (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 1 $ 2,334,672
Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 2 2,403,362
Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 3 (704,456)
Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 4 129,212
Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 5 0
Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 6 0
Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 7 (8,712)
Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 8 (197,902)
Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 9 1,621,504
Other Receivables, Net Schedule Of Movement Of Allowance For Doubtful Accounts 10 $ 2,334,672
XML 62 R52.htm IDEA: XBRL DOCUMENT v3.5.0.2
Schedule of Property, Plant and Equipment (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Property, Plant And Equipment Schedule Of Property, Plant And Equipment 1 $ 753,849
Property, Plant And Equipment Schedule Of Property, Plant And Equipment 2 754,997
Property, Plant And Equipment Schedule Of Property, Plant And Equipment 3 4,319,156
Property, Plant And Equipment Schedule Of Property, Plant And Equipment 4 4,299,862
Property, Plant And Equipment Schedule Of Property, Plant And Equipment 5 1,167,510
Property, Plant And Equipment Schedule Of Property, Plant And Equipment 6 1,172,059
Property, Plant And Equipment Schedule Of Property, Plant And Equipment 7 313,687
Property, Plant And Equipment Schedule Of Property, Plant And Equipment 8 314,909
Property, Plant And Equipment Schedule Of Property, Plant And Equipment 9 6,554,202
Property, Plant And Equipment Schedule Of Property, Plant And Equipment 10 6,541,827
Property, Plant And Equipment Schedule Of Property, Plant And Equipment 11 (2,129,892)
Property, Plant And Equipment Schedule Of Property, Plant And Equipment 12 (1,832,033)
Property, Plant And Equipment Schedule Of Property, Plant And Equipment 13 4,424,310
Property, Plant And Equipment Schedule Of Property, Plant And Equipment 14 $ 4,709,794
XML 63 R53.htm IDEA: XBRL DOCUMENT v3.5.0.2
Schedule of Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Prepayments And Advances Schedule Of Deferred Costs, Capitalized, Prepaid, And Other Assets Disclosure 1 $ 33,796,223
Prepayments And Advances Schedule Of Deferred Costs, Capitalized, Prepaid, And Other Assets Disclosure 2 $ 37,209,699
XML 64 R54.htm IDEA: XBRL DOCUMENT v3.5.0.2
Schedule of Short-term Debt (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Credit Facilities Schedule Of Short-term Debt 1 4.35%
Credit Facilities Schedule Of Short-term Debt 2 $ 1,500,000.0
Credit Facilities Schedule Of Short-term Debt 3 13,492,800
Credit Facilities Schedule Of Short-term Debt 4 $ 12,404,320
Credit Facilities Schedule Of Short-term Debt 5 5.66%
Credit Facilities Schedule Of Short-term Debt 6 $ 4,497,600
Credit Facilities Schedule Of Short-term Debt 7 4,515,120
Credit Facilities Schedule Of Short-term Debt 8 17,990,400
Credit Facilities Schedule Of Short-term Debt 9 $ 16,555,440
XML 65 R55.htm IDEA: XBRL DOCUMENT v3.5.0.2
Schedule of Related Party Transactions (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Related Party Transactions Schedule Of Related Party Transactions 1 $ 890,735
Related Party Transactions Schedule Of Related Party Transactions 2 715,086
Related Party Transactions Schedule Of Related Party Transactions 3 903,082
Related Party Transactions Schedule Of Related Party Transactions 4 776,039
Related Party Transactions Schedule Of Related Party Transactions 5 1,793,817
Related Party Transactions Schedule Of Related Party Transactions 6 $ 1,491,125
XML 66 R56.htm IDEA: XBRL DOCUMENT v3.5.0.2
Schedule of Income before Income Tax, Domestic and Foreign (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Income Taxes Schedule Of Income Before Income Tax, Domestic And Foreign 1 $ (643,524)
Income Taxes Schedule Of Income Before Income Tax, Domestic And Foreign 2 (399,845)
Income Taxes Schedule Of Income Before Income Tax, Domestic And Foreign 3 (4,677,248)
Income Taxes Schedule Of Income Before Income Tax, Domestic And Foreign 4 (692,306)
Income Taxes Schedule Of Income Before Income Tax, Domestic And Foreign 5 (5,320,772)
Income Taxes Schedule Of Income Before Income Tax, Domestic And Foreign 6 $ (1,092,151)
XML 67 R57.htm IDEA: XBRL DOCUMENT v3.5.0.2
Schedule of Deferred Tax Assets and Liabilities (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Income Taxes Schedule Of Deferred Tax Assets And Liabilities 1 $ 5,482,794
Income Taxes Schedule Of Deferred Tax Assets And Liabilities 2 5,169,993
Income Taxes Schedule Of Deferred Tax Assets And Liabilities 3 393,673
Income Taxes Schedule Of Deferred Tax Assets And Liabilities 4 393,673
Income Taxes Schedule Of Deferred Tax Assets And Liabilities 5 1,364,681
Income Taxes Schedule Of Deferred Tax Assets And Liabilities 6 975,894
Income Taxes Schedule Of Deferred Tax Assets And Liabilities 7 244,914
Income Taxes Schedule Of Deferred Tax Assets And Liabilities 8 217,020
Income Taxes Schedule Of Deferred Tax Assets And Liabilities 9 (7,486,062)
Income Taxes Schedule Of Deferred Tax Assets And Liabilities 10 (6,756,580)
Income Taxes Schedule Of Deferred Tax Assets And Liabilities 11 0
Income Taxes Schedule Of Deferred Tax Assets And Liabilities 12 $ 0
XML 68 R58.htm IDEA: XBRL DOCUMENT v3.5.0.2
Schedule of Changes to Valuation Allowance for Deferred Tax Assets (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 1 $ 6,756,580
Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 2 3,064,527
Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 3 312,801
Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 4 2,414,859
Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 5 0
Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 6 393,673
Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 7 388,787
Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 8 975,894
Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 9 27,894
Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 10 (92,373)
Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 11 7,486,062
Income Taxes Schedule Of Changes To Valuation Allowance For Deferred Tax Assets 12 $ 6,756,580
XML 69 R59.htm IDEA: XBRL DOCUMENT v3.5.0.2
Schedule of the summary of Restricted stock grants (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 1 $ 0
Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 2 0
Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 3 0
Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 4 $ 206,859
Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 5 2.89
Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 6 $ 597,823
Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 7 $ (100,000)
Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 8 2.89
Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 9 $ 289,000
Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 10 $ 106,859
Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 11 2.89
Shareholders Equity Schedule Of The Summary Of Restricted Stock Grants 12 $ 308,823
XML 70 R60.htm IDEA: XBRL DOCUMENT v3.5.0.2
Schedule of Future annual lease payments (Details)
3 Months Ended
Sep. 30, 2016
USD ($)
Commitments And Contingencies Schedule Of Future Annual Lease Payments 1 $ 241,000
Commitments And Contingencies Schedule Of Future Annual Lease Payments 2 39,000
Commitments And Contingencies Schedule Of Future Annual Lease Payments 3 13,000
Commitments And Contingencies Schedule Of Future Annual Lease Payments 4 $ 293,000
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